Sempra Energy disclosed last week that some of power lines of subsidiary San Diego Gas & Electric (SDG&E) may have contributed to the major wildfires that destroyed parts of Southern California last month.

In a Form 10-Q Securities and Exchange Commission filing for 3Q2007, Sempra included a statement titled, "Subsequent Event -- Southern California Wildfires." In the statement, Sempra noted that "major wildfires throughout Southern California destroyed many homes, damaged utility infrastructure and disrupted utility services" in October.

"The causes of the more than 20 fires remain under investigation, including the possible role in some of the San Diego County fires of SDG&E power lines affected by high winds," the filing stated. "On Oct. 21, 2007, [California] Gov. Arnold Schwarzenegger declared a state of emergency for seven California counties, including the County of San Diego and six counties within SoCalGas' [Southern California Gas'] service territory.

In a conference call to discuss quarterly earnings on Thursday, Sempra CEO Don Felsinger said SDG&E had established a special account with the California Public Utility Commission (CPUC) to recover the costs it incurred in the wildfires and added that he thought the financial health of the utility would be unaffected. All of the affected utilities plan to apply to CPUC "to recover any material incremental costs of restoring utility services and utility facilities damaged by the wildfires in cost recovery proceedings applicable to disaster events."

In a statement, SDG&E said, "this investigation is still ongoing, and it would be premature to speculate on what might be its eventual findings...No electric system can be completely protected from such severe weather. We maintain and operate our system safely, in compliance with stringent state regulatory requirements."

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