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Saturday, June 16, 2018

Power Companies’ Mistakes Can Cost Billions. Who Should Pay?/NY Times

More reasons why we should continue to invest heavily in transforming how we make and deliver power.

Utilities say they must be shielded from liability or the electric grid will suffer. Critics say that puts the burden on ratepayers, not investors.



FALLBROOK, Calif. — After flames rolled over the hills north of San Diego and engulfed vineyards, avocado groves and neighborhoods, hundreds in this area were left with only the charred remains of homes and businesses. For many, that moment in 2007 was the beginning of a long struggle to rebuild — if they did at all — and recover their financial losses.
And they had a villain in mind: San Diego Gas and Electric, whose fallen power poles had been found partly responsible. “It wasn’t campers; it wasn’t somebody throwing a match,” said Al Ransom, a 79-year-old retired Marine who sued the utility over losses that reached into the millions. “It was the utility. That was established.”
Now the question is whether an investor-owned utility’s customers — not its shareholders — should pay for the harm in such cases. A bill before the California Legislature would give utilities the ability to pass on the costs from legal settlements to ratepayers, even if the utilities were responsible for the fire.
Al Ransom sued San Diego Gas and Electric after the utility’s fallen power poles were found partly to blame for a 2007 fire. He and his wife, Cathie, used their retirement savings to restore the business they ran on their property.CreditMatchull Summers for The New York Times

Last year alone, wildfires in the state killed dozens of people, destroyed thousands of homes and businesses and damaged tens of thousands of other properties — losses estimated at $12 billion in all. Neglected maintenance around power lines belonging to the state’s biggest utility, Pacific Gas and Electric, has been blamed for some of the fires.

But critics assert that power providers across the nation want ratepayers to bear the financial burden when things go wrong, whether the cause is a natural disaster, a utility’s negligence or even poor decision-making by executives — in essence, that like crucial financial firms, they are too big to fail.
“Every other business in America, if they make bad decisions, they go out of business,” said Steve Campora, a lawyer for some of the victims of California fires over the past 10 years. “For some reason, there’s this notion that the utilities ought to be propped up.”

New vegetation has emerged in a recently burned area in northern San Diego County, near the origin of a major fire in December.CreditMatchull Summers for The New York Times

In North Carolina, Duke Energy has been seeking regulatory approval for more than $400 million in additional payments from its customers, in part to clean up leaking coal-ash basins at its power plants across the state.
■ South Carolina Electric and Gas and related utilities canceled the V.C. Summer nuclear plant last year after they ran up $9 billion in expenses for which consumers continue to foot the bill.
■ Florida Power and Light, Duke Energy, Gulf Power and TECO Energy lost $6.5 billion over a 15-year period in hedging the price of natural gas, betting that it would rise. Prices fell, and Florida consumers paid for the misjudgment.
“They just kept doing it and kept losing,” said Charles Rehwinkel, deputy public counsel for the Florida Legislature. “There was a seismic change in the price of natural gas and they just kept losing money.”

Just as the California Legislature is considering for its utilities, Mr. Rehwinkel said Florida allowed power companies to recover their costs on the hedging as long as they developed a plan for the program, even if it was flawed and failed. And with the ability to charge customers, he said, the utilities just kept spending money.
“Once they start it, they can’t stop,” Mr. Rehwinkel said. “It’s more addictive than crack.”
Jamie Court, president of Consumer Watchdog, a nonprofit advocacy organization in Los Angeles, said the companies have consistently sought to use their customers to fund their ambitions and failures while rewarding investors — even after regulators have found the utility at fault. “They socialize the risk and privatize the profits,” he said...."

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