SCE Asks State to Approve Its Bid for SDG
Rosemead-based SCEcorp on Friday formally requested state approval to acquire San Diego Gas & Electric and merge it into SCE’s Southern California Edison subsidiary. SCE previously had given regulators informal notice of its intended $2.16-billion stock-swap offer.
In the filing, SCE described its proposed merger as “potentially superior” to SDG&E;'s proposed merger with Tucson Electric Power, a coal-rich public utility in Arizona. However, SCE acknowledged that the state Public Utilities Commission has the authority to determine if either merger would be in the public interest.
SCE notified the PUC of its intent to file the request two weeks ago in a letter from Chairman Howard Allen. SDG&E; spokesman David Smith said federal Securities and Exchange Commission regulations prohibited SDG&E; from commenting on SCE’s application.
SCE asked commissioners to conduct a “single consolidated proceeding” that would compare and contrast SCE’s proposal with SDG&E;'s merger plans with Tucson Electric. Conducting one hearing would serve “interests of both ratepayers and shareholders . . . focusing on the key public-interest issues and the relative merits of the competing merger proposals,” according to the filing.
In a claim that clashed with a recent SDG&E; electric rate forecast, SCE claimed that “efficiencies” generated by its merger with SDG&E; would produce lower long-term rates for customers of both utilities.
“Edison has an excess of electric capacity that is projected to exist for 8 to 10 years . . . (while) SDG&E; has need for additional electric capacity,” according to the filing.
In an apparent attempt to reduce employee unrest at SDG&E;, SCE’s filing suggested that normal attrition and retirement would account for the 1,000 jobs that the proposed merger would eliminate.
SCE unveiled its surprise bid for SDG&E; in July, just a month after SDG&E; announced its friendly merger plan with Tucson Electric. SCE twice sweetened its stock-swap offer, but, in September, SDG&E;'s board of directors unanimously rejected SCE’s offer in order to concentrate on the Tucson Electric deal.
SCE since has asked a Superior Court judge in San Diego to force SDG&E; to turn over its shareholder list. SCE wants to communicate directly with SDG&E;'s shareholders, possibly to initiate a stock swap or a proxy battle. That court challenge has been postponed until Nov. 15.