SDG&E Settles Fire-Related Claims

By Published On: July 2, 2009

San Diego Gas & Electric, without acknowledging any liability, has decided to pay almost $690 million to settle claims related to wildfires that scorched about 200,000 acres in fall 2007. The Sempra Energy-owned utility, which is set to pay the money to 75 homeowners’ insurance companies, maintains that it was extreme, unseasonably hot weather and strong winds that damaged power lines and utility equipment. “SDG&E does not acknowledge any fault or liability,” said spokesperson Stephanie Donovan June 30. Another 20 companies are still in settlement negotiations with SDG&E. Settlements could come in a few weeks. The combined final amount doled out is expected to be upward of $1 billion. Also, about 1,000 lawsuits have been filed by people seeking compensation for uninsured or underinsured homes that were damaged or destroyed in the blazes. SDG&E has $1.1 billion in liability insurance, according to a June 26 Security & Exchange Commission filing. The utility says that if payouts eventually exceed its insurance coverage amount, then it may ask permission to raise rates to make up the difference. As of late June, insurers have paid or will pay about $1.6 billion on more than 20,000 claims relating to the three fires. SDG&E has paid for the insurance companies’ claims against Cox Communications, Donovan said, and will seek reimbursement from the cable TV and telecommunications company. It was during October 2007 when three fires--the Witch Creek, Guejito and Rice Canyon blazes--burned over 3,000 structures in San Diego County during a two-week span. Forty people were injured and two were killed. The California Department of Forestry and Fire Protection submitted a report a year ago that found that two of the fires were caused by SDG&E power lines. The Witch Creek fire was caused, the report states, by two power lines placed too close together arcing during high winds. And in the Rice Canyon fire, SDG&E failed to trim a tree branch that fell on lines in another location, causing them to break and ignite, the investigation found. The Guejito fire is believed to have started when a Cox Communications fiber-optic lashing wire contacted a power line. A subsequent California Public Utilities Commission staff report said the lashing wire and power line had been improperly designed. SDG&E at the time said that the CPUC report was “full of speculation and faulty conclusions” and had “sparse evidence” to support its findings. But now, Donovan said, the utility prefers to settle rather than go through a potentially lengthy and expensive trial.

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