WHILE UTILITIES MAY ESCAPE LIABILITY FOR ECONOMIC DAMAGES CAUSED BY A NEGLIGENT INTERRUPTION OF SERVICE THROUGH A TARIFF THEY MAY NOT ESCAPE LIABILITY FOR FAILING TO EXERCISE THE HIGHEST DEGREE OF SKILL AND CARE RESULTING IN PERSONAL INJURY OR PROPERTY DAMAGE.
A fire caused by arcing Arizona Public Service [APS] power lines destroyed two of plaintiffs' homes. Plaintiffs sued APS for the loss of the homes and personal property on a negligent maintenance theory. The trial court granted defendant's motion for summary judgment ruling APS's tariff barred claims for property damage caused by fire. The Arizona Court of Appeals reversed and remanded.
APS's tariff provides:
5.3 Service Interruptions: Limitations on Liability of Company.
5.3.1 Company shall not be liable to the customer for any damages occasioned by Load Serving ESP's1 equipment or failure to perform, fluctuations, interruptions or curtailment of electric service, except where due to Company's willful misconduct or gross negligence. Company may, without incurring any liability therefore, suspend the customer's electric service for periods reasonably required to permit Company to accomplish repairs to or changes in any of Company's facilities. The customer needs to protect their own sensitive equipment from harm caused by variations or interruptions in power supply.
While this tariff is permitted under Arizona's Constitution to the extent it affects the Corporation Commission's rate making function, the tariff only applies to interruption of service. “Thus, the Commission may limit a utility's liability for economic damages resulting from service interruptions, which are appropriately considered in ratemaking decisions because of their contractual nature and potential magnitude, but may not limit liability for personal injury and property damages, which are not.” In fact, APS has a duty to exercise “the highest degree of skill and care to protect life and property in the generation and distribution of electricity from its plant to patrons.”
CLICK HERE to read the full case.