Edison Says It Would Cut SDG&E; Rates 10% : No Response Yet to Rival Merger Proposal; Both Utilities Say Deadline Could be Extended

Howard Allen, SCEcorp chairman and chief executive, on Monday promised a 10% electric rate decrease for San Diego Gas & Electric’s residential customers if the San Diego-based utility’s directors agree to a merger with Southern California Edison.

Allen said in a prepared statement that he found it “difficult to believe” that SDG&E;’s board could “look at the benefits to consumers, the communities served and shareholders, and not support” the $2-billion stock-swap merger Edison proposed to SDG&E; in late July.

Spokesmen for both utilities said Monday that a Friday deadline set by Edison for SDG&E;’s response could be extended.

“If they need more time to study it, we’ll be flexible,” Edison spokesman Lewis M. Phelps said. “But we would like some response by Aug. 12. We have not gotten any response yet from SDG&E.;”

Condition of Merger

An SDG&E; spokesman on Monday declined to comment on the merger proposal. However, Chairman Thomas Page said last week that he wants to complete SDG&E;’s previously announced merger with Tucson Electric Power, an Arizona-based utility.

“Our utility is not up for sale,” Page said.

Edison predicated its proposal on SDG&E; abandoning the Tucson merger.

Edison’s proposal calls for SDG&E; to turn its 1 million customers, including 60,000 Orange County residents and businesses, over to the Rosemead-based utility. If completed, the merger would create the nation’s single largest electric utility, with 4.8 million customers.

Chairman Allen on Monday repeated his July 26 claim that the financial benefits of SCE’s proposal outweigh those contained in SDG&E;’s proposed Tucson merger.

SDG&E;’s shareholders would realize an immediate 10% dividend increase and a 17% gain in earnings per share if SDG&E; merges with Edison, according to Allen. And, he said, Edison’s merger proposal promises a “better opportunity” for future dividend growth.

Allen said that within six months of completing the proposed merger, Edison would seek regulatory approval for a 10% residential rate decrease because of “increased efficiency.” SCE’s merger proposal would not immediately affect electric rates for SDG&E;’s commercial and industrial customers, a spokesman said.

Would Be ‘Treated Fairly’

Allen said SDG&E;’s 4,500 employees would be “treated fairly” in the proposed consolidation. Hundreds of jobs would probably be duplicated if the merger occurred, but Edison would use “normal attrition and early retirements of employees of both companies” to reduce payrolls, he said.

Allen said Edison found jobs for all but 1% of the 800 employees whose jobs were eliminated during a recently completed reorganization.

“We will give the same individual consideration and humane treatment to any employees of either SDG&E; or Edison affected by merger-related force reductions,” he said.

Allen also promised that Edison would become active in San Diego’s civic and charitable circles by maintaining SDG&E;’s financial support for local community services and organizations.

He said Edison would maintain the level of support SDG&E; is providing to civic, cultural, charitable and educational organizations in SDG&E;’s service territory.