2 Civic Leaders Score Plan to Merge SDG&E;, Edison

The presidents of two local civic organizations have blasted SCEcorp’s proposal to blend San Diego Gas & Electric in with Southern California Edison as disastrous for a city that has already watched Pacific Southwest Airlines, Signal Co. and Wickes Cos. close their corporate headquarters.

“We might as well rename (the county) Branch Diego because that’s about all we’ll have left,” San Diego Chamber of Commerce President Lee Grissom said Friday. “We need that corporate headquarters here.”

Grissom and Dan Pegg, president of the San Diego Economic Development Corp., predicted that at least 1,000 jobs will be lost if SDG&E; is merged in with Edison. They argued that nonprofit organizations would lose the relatively easy access that they enjoy with SDG&E.; And, they predicted that San Diego would lose more ground in its effort to remain separate and distinct from Los Angeles.

Turning control of SDG&E; over to Edison “would clearly label San Diego as a division town,” Pegg said in a letter sent earlier this week to San Diego Mayor Maureen O’Connor and local newspaper editors.

“We would become the largest city in the United States whose utility was not headquartered within the community,” Pegg complained. That would be a “terrible step backward . . . and “a major mistake” for a city that strives to be a world-class city, Pegg wrote.

Grissom on Friday acknowledged, however, that San Diego’s civic leaders will be hard-pressed to stop the proposed merger should it be approved by SDG&E;’s shareholders and regulatory agencies.

“The city doesn’t have a checkmate on this deal,” Grissom said. “I don’t know what we can do.” Chamber executives will meet next week to discuss their options.

SCEcorp, Edison’s parent company, in late July surprised SDG&E; with a stock-swap merger offer that would blend SDG&E;’s 1 million customers in with Edison’s 3.8 million customers, a move that would create the nation’s largest utility. SDG&E; since has indicated that it expects to complete its previously announced merger with Tucson Electric Power, an Arizona-based utility.

In a related action Friday, SDG&E; acknowledged that SCEcorp had raised its stock-swap offer to 1.2 shares of SCEcorp for every share of SDG&E; outstanding common stock. SCEcorp on July 26 had offered to exchange 1.15 shares of SCEcorp. SDG&E;’s board of directors has until Sept. 1 to respond to the SCEcorp offer.

On Thursday, Grissom and Pegg, along with Chamber of Commerce Chairman William Nelson and former EDC Chairman Jack Raymond, spent more than two hours discussing the proposed Edison-SDG&E; merger during a visit with with Howard Allen, chairman of SCEcorp.

“Howard Allen is a charming man, and I can understand why they want SDG&E;, which is a jewel,” Grissom said. “But this deal doesn’t make any sense at all for San Diego.”

Grissom and Nelson on Friday said that Allen seems intent on merging SDG&E; into Edison. “My reaction is that (Allen’s) in this thing to stay,” Grissom said. “I don’t know that he’ll back away from it” should SDG&E; reject SCEcorp’s friendly bid Sept. 1.

Allen contended that Edison has “about a 50% chance of prevailing” should it pursue a hostile offer for SDG&E;, according to Grissom.

Allen told the San Diegans that he wants SDG&E; because Edison has excess electric generation capacity that could meet the dramatic demand increases that SDG&E; expects. Allen also acknowledged that Edison would like to control SDG&E;’s Southwest Powerlink transmission line, which links California to utilities in the Southwest.

Not Impressed With Promises

Grissom and Nelson said they were not swayed by Allen’s promises that rates would drop significantly after the proposed merger. “My own feeling is that (SDG&E; and Edison) rates will be comparable in a year or so anyway,” Grissom said.

Allen, in an admission that surprised Nelson, noted that San Diegans probably would enjoy better air service from Lindbergh Field if PSA had not been acquired by USAir Group. Allen at one time served on PSA’s board of directors.

Besides an initial loss of 1,000 jobs, Pegg’s letter predicted that SCEcorp’s acquisition of SDG&E; would create a significant ripple effect that would eliminate several thousand more jobs.

Pegg predicted that requests by community groups for corporate aid would lose “the sense of urgency . . . when the distance between the corporate headquarters and the customer base is so large and the executive power (has) no direct involvement in the community.”

Civic leaders also are concerned that losing SDG&E; to Edison would muddy San Diego’s carefully cultivated image as separate and distinct from Los Angeles.

“You’re dealing with the ‘L’ word--Los Angeles,” Nelson said. “There are some very intangible effects that will be felt” if Edison completes its merger with SDG&E;, he said.

Allen met with the San Diego civic leaders as part of his continuing effort to make Edison’s viewpoint known in San Diego, Nelson said.