Southern California Edison ratepayers could be getting charged twice for $700.4 million worth of wildfire safety work, according to an audit by state regulators but Edison says the audit is inaccurate.
A team hired by the California Public Utilities Commission to audit the company said SCE earmarked $700.4 million worth of maintenance projects out of accounts already paid for by ratepayers, and placed those expenditures in a reimbursement account that is eligible for yet another rate hike.
According to the audit, the questions include $51 million in operating expenses plus almost $650 million in construction projects that were paid for by ratepayers between 2018 and 2020. The work was done, but the $700 million or so in costs were billed to a so-called incremental account.
That’s a financial column that the state regulators use to track money that Edison spent on mandatory fire mitigation work. SCE claims it is eligible to collect that money in the future – in effect – possibly being reimbursed twice.
Last summer, the CPUC hired Crowe LLP to conduct an independent audit of wildfire mitigation expenditures by the six investor-owned utilities in California. The results were released last month by the California Office of Energy Infrastructure Safety, a new state department that has taken over safety inspections for the CPUC.
In its report, Crowe said that SCE needs to prove that the work was actually done before the current rate hike request is considered, and prove that ratepayers have not already paid for it.
Edison has 5 million customer accounts in its service area from Santa Barbara to Palm Springs. The $700.4 million potential overcharge equals roughly $140 dollars per customer account.
As part of the audit, SCE executives were given an opportunity to respond in writing. They said the auditors were not looking at the accounting columns the same way that CPUC state regulators have. SCE said customer-paid accounts have already been refunded the majority of the general rate funded projects that were held questionable by Crowe LLP.
SCE also said the audit has what they call “material flaws from a factual perspective.”
But the power company agreed with one Crowe LLP’s finding, that improvements need to be made in the way it reports its general rate case expenses, and wildfire mitigation expenses.
It’s up to the CPUC to decide what to do about the alleged $700 million in possible double-billing by the power company.
The audit was released the same week that the CPUC penalized SCE and its parent company $550 million for rule violations that led to the Woolsey Fire, as well as four other deadly blazes in the region. SCE was held responsible for the fires, which led to the deaths of 31 people either burned to death or buried in seas of mud unleashed from fire-ravaged mountainsides in heavy rain near Santa Barbara.
The money will come from Edison International shareholders and not ratepayers, the state says.
In a vote last month, the CPUC penalized SCE and Edison International in three different ways:
SCE shareholders will pay a $110 million penalty to California’s General Fund,
SCE shareholders will be disallowed from collecting $375 million for cost recovery, and
SCE shareholders must contribute $65 million in shareholder funds to safety measures.
That’s a total haircut of $550 million. In those two years, SCE made $25 billion in profits, meaning the fine amounts to 2.2 percent of the company’s profits.
And the company has just raised its estimate in the 2017-2018 Southern California fire damages from $6.2 billion to $7.5 billion, according to Bloomberg News.
The SCE fires killed three people in the Malibu mountains in 2018, just after five people burned to death in Ventura County.
Another 23 people were killed when fire-related mudflows swept through the seaside city of Montecito.
These mudflows were caused by an SCE-caused fire, that stripped the steep mountains near Santa Barbara of trees and brush.
The fines penalize SCE for its negligence in causing the Woolsey Fire, the 2018 monster that destroyed 467 houses in Malibu, plus another 1,200 or so houses north of Malibu, and killed three people.
Woolsey alone destroyed $1.6 billion worth of property inside the Malibu city limits.
Published in partnership with KBUU Radio Malibu