Here's the Petition for Review we've been waiting to drop since last week's ruling by a California Court of Appeal declining to review the California PUC's decision to turn down the electric company's request for a rate increase to cover the compensation and damages that it must pay as the result of a southern California wildfire.
Recall that under California law, a utility company with the power of eminent domain (such as San Diego Gas & Electric) can be liable under an inverse condemnation theory if it can be shown that "any actual physical injury to real property" was "proximately caused by [a public] improvement as deliberately designed and constructed" by the utilty, whether or not foreseeable.
Two California intermediate appellate courts have applied that general rule to wildfires, even though that state's Supreme Court has not.
The petition argues that the two court of appeal opinions turn on the notion that an inverse condemnor may spread the cost of the public benefit (operating the utility) to the public itself as a matter of right. But, the petition argues, by making it discretionary by allowing the PUC to determine whether a utility can obtain a rate increase based on whether the utility was prudent -- and then turning the requested rate increase down, like the PUC did here -- violates the essential principle behind inverse condemnation.
What we call the "Armstrong" principle because the case everyone cites for it is Armstrong v. United States, 364 U.S. 40, 49 (1960) ("The Fifth Amendment's guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.").
And to deprive a utility of its ability to spread the costs automatically, would also itself be a taking, according to SDG&E's petition.
A San Francisco trial judge has rejected these arguments in a separate case because the utility in that case had not yet shown that it was categorically barred from cost spreading via a rate increase, but we think the SDG&E petition is the first one to make it up to the Cal Supreme Court.
Very interesting petition and arguments, crafted by very capable counsel. We shall follow along and update when there's a response. Stay tuned.
Petition for Review, San Diego Gas & Elec. Co. v. Public Utilities Comm'n, No. S___ (Nov. 26, 2018)
