San Diego Utility Pays City $27 Million For Fires

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An electric utility said Tuesday that it agreed to pay the city of San Diego, Calif. $27 million to settle claims over 2007 wildfires that devastated wide sections of the city.

San Diego Gas & Electric Co.’s payment will reimburse the city for costs of firefighting, property damage and loss of lease revenue, the city attorney’s office said. It does not affect pending claims by homeowners and businesses.

The settlement, announced as wildfires spread in the drought-stricken West, removes one of the utility’s highest-profile plaintiffs but represents only a tiny fraction of total claims.

The utility has settled claims for about $1.5 billion, a figure that it expects will reach about $2 billion when all complaints are resolved, said company spokeswoman Stephanie Donovan. Most are from people who lost their homes.

Government investigators found SDG&E’s power lines were at least partly responsible for three fires that killed two people, destroyed 1,347 homes and charred 324 square miles. The October fires that swept Southern California claimed a total of about 1,500 homes and five lives.

The city sued the utility and Cox Communications Inc. in San Diego Superior Court in 2008. Investigators faulted SDG&E power lines for two fires and said another began when a Cox cable came into contact with a SDG&E power line.

“This is a fair settlement of the city’s claims and avoids years of additional litigation, including a trial and appeals,” said City Attorney Jan Goldsmith.

The city is the latest governmental entity to settle with SDG&E, a unit of Sempra Energy. The utility agreed to pay San Diego County $24.5 million in December and, in a joint settlement with Cox announced in 2009, paid $17 million to the state.

SDG&E still faces about 950 unsettled claims, mostly homeowners, said Donovan. A trial is scheduled for March 2013 in San Diego Superior Court.

SDG&E’s insurance will cover $1.1 billion of the claims, and Cox paid the utility $444 million. The utility expects rate increases will cover the remaining costs.