Suitor Pledges Rate Cut After Utilities Merge : SCEcorp Chief Prods SDG&E;, Lists ‘Benefits’

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

Allen, in a prepared release issued Monday, said 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 that 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 declined to comment on SCE’s merger proposal. However, SDG&E; 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.

The proposed Edison/SDG&E; merger would create the nation’s largest electric utility with 4.8 million customers. However, Edison predicated its merger proposal on SDG&E; abandoning the Tucson merger.

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, Edison’s merger proposal promises a “better opportunity” for future dividend growth, Allen said.

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 Monday.