SDG&E pays $51.6 million in refunds after botched lightbulb program

San Diego Gas & Electric has finalized an agreement regarding a botched lightbulb project that will see the utility refund $51.6 million to ratepayers and pay a $5.5 million fine.

The California Public Utilities Commission on Thursday approved a deal SDG&E reached 10 months ago with two consumer groups, The Utility Reform Network, known as TURN, and the Public Advocates Office, an independent arm of the utilities commission.

“We do think this sends a clear signal to all utilities that at least this commission is going to be very vigorous in making sure that ratepayer funds are accounted for,” said Mark Toney, TURN’s executive director.

After the utilities commission launched a wide-ranging energy efficiency program, SDG&E initiated an Upstream Lighting Program to encourage residential customers to buy energy-saving lightbulbs. Under the project, SDG&E could earn a performance-based incentive.

In 2017, the program aimed to reach customers who would not typically buy energy-efficient bulbs because of their expense and prioritized stocking bulbs in small, independent grocery stores, drug stores and in lower-income markets.

Since many of the small stores did not keep sales records that are as detailed as big stores, lightbulb manufacturers had the option of invoicing SDG&E with shipment data instead of sales data. SDG&E’s Customer Programs department was in charge of reviewing the invoices and other documentation.

But in April 2019, a report from a consulting firm concluded that 95 percent of the bulbs supposedly delivered to “hard to reach” areas may not have been sold at all, were overstocked or missing entirely.

Outside investigators hired by SDG&E last year discovered a host of issues, including:

  • at least one manufacturer falsified invoices to SDG&E and the utility paid for bulbs that were never delivered or simply dumped at some locales
  • members of the SDG&E team did not follow correct procedures nor conduct inspections to make sure manufacturers and retailers were not overstocking bulbs
  • the Customer Programs team was aware of the violations by manufacturers by did nothing to correct them, and
  • some SDG&E employees raised concerns but four people at the manager/director levels still filed reports with the utilities commission without noting those concerns.

Under the settlement, the $51.6 million in refunds will come from shareholders, not SDG&E ratepayers. The package comprises $45.44 million for the money the utility spent on the lightbulb program from 2017 to 2019 and $6.12 million the company will return from incentives it earned from the program.

The $5.5 million fine is assessed for filing a false statement to the commission. The fine will be paid by shareholders of Sempra , the parent company of SDG&E. The money from the fine will go to California’s general fund.

SDG&E discontinued its upstream lighting program in January 2020,

“SDG&E took ownership of what went wrong and worked diligently with consumer advocates to develop the appropriate remedies and reach a fair settlement,” said utility spokeswoman Helen Gao in an email to the Union-Tribune.

Under the settlement SDG&E will provide whistleblower training at shareholder expense for all employees and conduct classes on “timely reporting.”

“The lessons learned from the program failure have resulted in meaningful changes, including new procedures and training, to strengthen accountability and prevent this from ever happening again,” Gao said.

Citing privacy and legal concerns dealing with personnel issues, SDG&E last year did not provide details on the number of employees involved in its upstream lighting program, how many were fired or how many remain with the utility.

The proposed agreement said only that “several employees had already left the company” and others had been let go. Those still at SDG&E “received significant and appropriate discipline” based on their roles.

“The Public Advocates Office applauds the Commission’s adoption of the proposed settlement agreement,” Amy Yip-Kikugawa, acting director of the Public Advocates Office, said in an email. “This settlement not only provides refunds to ratepayers for SDG&E’s imprudent management but also puts in place various safeguards to ensure that such violations will not occur in the future.”

Southern California Edison also had an issue with its own energy efficiency lighting program and conducted an independent investigation. Edison filed a reply with the utilities commission in March. The commission has not issued a proposed decision.