Wildfires test limits of corporate generosity
The Witch Creek fire closes in Beth Edwards' ranch in 2007, as husband Victor Edwards walks the property. — Beth Edwards
In the days after devastating 2007 wildfires sparked by backcountry power lines, utility executives set up a new charity, the Sempra Energy Foundation, intent on helping victims of a conflagration that killed two and burned more than 1,300 homes in San Diego County.
In the months to follow, the nonprofit foundation funded by Sempra Energy investors distributed $5,158,000 among 1,238 property owners and renters who were left homeless by the fire or lost significant holdings. An additional $60,000 went to a dozen recovery groups that rallied behind people whose homes burned.
Five years after the fires, Sempra’s role as a corporate citizen has been thrust into the spotlight as subsidiary San Diego Gas & Electric seeks to recover at least $326 million from utility customers for fire and legal costs not covered by insurance. Another $1.4 billion in settlement demands still are pending in court.
With a key regulatory decision due next week, victims of the fires have drawn a line in the sand, insisting that utility investors pick up the final tab. Executives at Sempra and SDG&E say they will probably be allowed to recoup costs from thousands of settlements with individuals, businesses and government entities.
Renee Van Heel received $5,000 from the Sempra foundation after fleeing her uninsured Monta Elena home along with her husband and three school-aged sons. The family watched their tract house burn on “Good Morning America,” and they rebuilt after suing Sempra subsidiary SDG&E and settling out of court.
She’s grateful for the Sempra foundation’s initial charitable gift — and outraged that utility customers may end up paying for the fire’s destruction..
“Every little bit helped. We so appreciated it,” said Van Heel, who remains active in a support group for wildfire and disaster victims. “It makes no sense that our friends, and people I don’t even know, whose homes weren’t damaged, should have to pay for this.”
Van Heel was among more than 800 people who packed a public hearing in April to comment on an SDG&E proposal to create a wildfire expense balancing account that would streamline cost recovery from customers.
Under the most current proposal, investors would pay the first $10 million for each fire and 10 percent of costs thereafter, leaving the remaining 90 percent to utility customers. Whether costs from the 2007 wildfires will be allowed remained an open question this week as the California Public Utilities Commission prepared to vote on a final decision Thursday.
“Some commenters offered general praise for SDG&E as a corporate citizen,” a commissioner and administrative law judge later wrote, summarizing the public’s reaction at the hearing. “But a majority of the commenters opposed the Commission including the 2007 costs in the Wildfire Expense Balancing Account as well as the general concept.”
Those who criticized the plan included Dena Bielasz, who survived the Guejito fire by jumping into the swimming pool with her husband while their house burned. Another was the son of teacher Victoria Fox and property manager John Christopher Bain, who died at their home in the Guejito fire.
“We do not want this rate increase ever,” said Michael Bain. “It’s never going to happen.”
At the same time, SDG&E won general praise from representatives of the prevention and treatment BURN Institute, from the 211 San Diego health and disaster line, from an umbrella group for 30 volunteer fire departments and from the local American Red Cross, among many others.
Those groups are among the steady beneficiaries of $5 million in annual charitable giving by SDG&E — independent of the Sempra Energy Foundation — according to disclosures filed with the California Public Utilities Commission.
Frank Ault spoke in support of SDG&E’s cost recovery request on behalf of the San Diego Regional Fire and Emergency Services Foundation, an umbrella fundraising group for volunteer fire departments where he serves as board chairman. The foundation received $50,000 in charitable contributions from SDG&E last year.
“We were just addressing the fact that they are a good corporate citizen that tries to mitigate the impact of fires regardless of who starts it,” said Ault, a retired SDG&E accountant.
Ault said the utility called him in advance of the hearing and asked that he attend. His endorsement of the SDG&E proposal was based on his understanding fire costs would still be reviewed by regulators before charging customers. Critics of the plan say it would rubber-stamp costs.
Charitable giving in the immediate aftermath of the fires by the Sempra foundation came with no strings attached and no expectations in return, Sempra Energy spokeswoman Sabra Lattos said.
Recipients signed agreements to spend the funding for “purposes related to my needs resulting from the 2007 wildfires,” with no other caveats.
They still could sue San Diego Gas & Electric to recover uninsured losses — and did in many instances.
Such charitable corporate donations are tax deductible, but cannot be written off on a dollar-per-dollar basis, explained Leonard Sonnenberg, a certified public accountant whose San Diego firm caters mainly to nonprofits. Corporate investors typically reclaim a percentage of charitable giving at tax time, factored at the business’s corporate tax rate.
Pat Libby, director of the Institute for Nonprofit Education and Research at the University of San Diego, said Sempra has a long track record of philanthropy and would not have given to fire victims for tax purposes or “just to look good in the eyes of the public.”
“The deduction is lovely and it’s important and it does incentivize charitable giving,” Libby said. “But usually it has more to do with a particular corporate culture that emanates from the CEO or the board room.”
Since 2007, the Sempra foundation has moved on to other causes and other disasters, recently donating $50,000 to assist victims of Hurricane Sandy on the East Coast, and offered to match up to $50,000 in contributions from employees. The donations were channeled through the American Red Cross Relief Fund.
Beth Edwards of Ramona, whose family lost a barn, tractor, irrigation system and fencing on their 64-acre ranch when the 2007 fires swept across her property, says she now sees the charitable gift she received from Sempra in 2008 as self-serving.
Edwards said she paid her own legal fees in reaching a settlement with SDG&E, but may end up paying the utility’s costs and legal fees through her electricity bill.
“I feel like they did their best ... to give when it benefited them the most,” she said of Sempra Energy and SDG&E. “Do they help? Yes. But they help themselves first.”