Insurance Companies Sue Energy Corporation After it Was Blamed for Helping Start Colorado Wildfire

Dozens of insurance companies are suing Minneapolis-based Xcel Energy to recoup money paid out to homes and businesses lost in Colorado`s most destructive wildfire in 2021.

The lawsuit was filed Thursday, a few weeks after investigators announced that a sparking power line owned by Xcel was one of the causes of a fire that, fanned by high winds, destroyed nearly 1,000 homes and left two people dead. Embers from a smoldering scrap wood fire set days before on a nearby property used by a Christian religious communal group was also found to have been another cause.

The two fires combined to cause a blaze fanned by high winds that is blamed for causing $2 billion in damage in a suburban area between Denver and Boulder.

In response to the allegations, Xcel re-issued a statement first given in response to the results the fire investigation, saying that it strongly objected to its findings.

“We strongly disagree with any suggestion that Xcel Energy’s power lines caused the second ignition, which according to the report started 80 to 110 feet away from Xcel Energy’s powerlines in an area with underground coal fire activity,” it said.

More than 150 insurance companies allege in the lawsuit that Xcel, which operates in eight states in the Midwest and West, failed to properly design, construct, inspect, maintain, repair or operate its electrical equipment before the Marshall Fire broke out on Dec. 30, 2021. The lawsuit, which seeks unspecified damages, said Xcel failed to de-energize its electrical equipment before the onset of strong winds.

The American Property Casualty Insurance Association, a trade group for insurance companies, said the lawsuit is part of a normal process known as subrogation that seeks to recover expenses from those found to be at fault in causing damage.

“Subrogation is a common process in insurance claims where insurers seek to recover money paid to policyholders from the responsible party, which is an important tool to help keep insurance costs affordable for policyholders,” Karen Collins, an assistant vice president for the group, said in a statement.

The smoldering fire at the Twelve Tribes property that was also blamed for sparking one of the fires that became the Marshall Fire had been buried by residents a few days before in a way that was approved by firefighters who stopped by to investigate, Boulder County Sheriff Curtis Johnson said at a news conference last month.

The lawsuit points out that the official report found that the group`s plan to manage their fire was “responsible” and that the fire, when stirred up by winds on Dec. 30, did not quickly spread because of factors including the property`s topography and lack of ground fuels.

In contrast, the lawsuit accused Xcel of failing to do business in a reasonable way. It also says the fire sparked by its power line spread quickly because it was on top of a flat mesa, allowing the fire to spread along the ground, and ignited nearby vegetation. The lawsuit claims “firebrands” — flaming or glowing fuel particles carried by the wind — from the power line-ignited fire sparked spot fires that eventually spread and burned homes in the communities of Louisville and Superior.

In its statement, Xcel said it reviewed its maintenance records and believes the system was properly maintained.

A lawsuit by businesses and residents was filed last year against Xcel Energy, and two other residents fled a lawsuit against Xcel on Monday. More lawsuits are expected to be filed, which lawyers hope to have considered by the same judge.

Top photo: The burned remains of a home destroyed by the Marshall Fire are shown, Jan. 7, 2022, in Louisville, Colo. On Thursday, July 6, 2023, dozens of insurance companies filed suit against Minneapolis-based Xcel Energy to recoup money paid out to homes and businesses lost in Colorado’s Marshall Fire, the state’s most destructive wildfire in 2021. (AP Photo/Jack Dempsey, File)