Parties Comment on Track 2 PD in SDG&E's 2024 General Rate Case

On December 4, parties filed comments in response to an ALJ John Larsen proposed decision in Track 2 of SDG&E's Test Year 2024 General Rate Case submission. The PD addresses SDG&E's request to recover recorded Wildfire Mitigation Plan Memorandum Account costs for 2019-2022 (see our November 17 summary of the PD here).

The PD marks the CPUC's first full reasonableness review of SDG&E's wildfire-mitigation spending since Senate Bill 901 and Assembly Bill 1054 reshaped the wildfire regulatory framework. It substantially reduces SDG&E's requested cost recovery, disallowing approximately $192.6 million in O&M and $242.4 million in capital costs.

Parties' comments reflect a tension between SDG&E's claim that the PD unlawfully disavows previously-authorized wildfire-mitigation programs and intervenors, who argue that SDG&E's record is incomplete, inconsistent, and insufficient to justify the scale of spending it seeks to recover.

Party Comments

• SDG&E contends that the PD commits a fundamental legal error by: second-guessing programs prospectively approved in SDG&E's Wildfire Mitigation Plans, intruding on Energy Safety’s jurisdiction, and misapplying incrementality standards. SDG&E also contends that the PD disallows major cost categories (including drones, Public Safety Power Shutoff communications, vegetation management, data governance, and covered conductor installations) despite prior CPUC ratification and the utility’s 18-year record without a catastrophic fire.
• The Utility Consumers' Action Network supports the PD’s substantial disallowances, emphasizing that SDG&E has not demonstrated that its spending is incremental, cost-effective, or reasonably incurred. Utility Consumers' Action Network also draws attention to especially high unit costs for covered conductor installation relative to PG&E and SCE, while arguing they lack any meaningful justification.
• Cal Advocates argues that the PD errs, but only where it is too lenient, specifically by allowing labor and grid-hardening costs that SDG&E has not shown to be incremental or tied to High Fire-Threat Districts. Cal Advocates reiterates that SDG&E has failed to prove new hires or demonstrate that work was not performed by already-funded staff.
• TURN criticizes the PD for not imposing stronger consequences for what all intervenors describe as SDG&E’s inadequate or nonexistent cost-effectiveness showing. TURN asserts that the PD should've adopted deeper disallowances or should've required a resubmission, because cost-effectiveness is an indispensable element of any reasonableness review under the prudent-manager standard.
• Protect Our Communities Foundation goes further, arguing that the PD improperly approves large swaths of wildfire-mitigation spending despite:
  • Contradictory cost data SDG&E submitted to the Office of Infrastructure Safety and to the CPUC;
  • Widespread documentation deficiencies that trigger mandatory disallowance under the Public Utilities Code; and
  • Unresolved discrepancies regarding undergrounding, covered conductor, and overhead-hardening expenditures.

Protect Our Communities Foundation contends that accepting SDG&E’s testimony over its Office of Infrastructure Safety filings undermines statutory requirements for accurate records and inter-agency coordination.

INSTANT ANALYSIS: This PD takes wildfire oversight into stricter territory, indicating that Wildfire Mitigation Plan approval should not be construed as a rubber stamp for cost recovery. Parties' comments telegraph that the evolving regulatory posture on wildfires means cost recovery now depends on demonstrable incrementality, verifiable documentation, and credible cost-effectiveness. From a utility perspective, the rules of the game are being rewritten midstream. But to steelman the regulator's apparent view: WMP approval ≠ a blank check.