Municipalities Unite in Show of Concern for SDG&E; Merger

Representatives of 12 San Diego County municipalities and the county government gathered to plot strategy Wednesday in a first--and largely symbolic--show of unified concern about the planned merger of San Diego Gas & Electric Co. and Southern California Edison Co.

The closed-door session in San Diego Mayor Maureen O’Connor’s office was devoted to a review of the cities’ options and produced no agreements. But a news conference after the session allowed O’Connor and other cities’ leaders flanking her to present a show of strength on the question of whether the proposed $2.4 billion takeover of SDG&E; by Edison’s parent company, SCEcorp, should be allowed.

“I think everybody’s cautious here (because) we want to have fair and open hearings,” O’Connor said. “But I think that there was united opinion in there that everyone is concerned” about the merger’s impact on SDG&E;’s 1 million customers.

Cautious Reaction

On the advice of attorneys, elected officials have so far used cautious terms to describe their reaction to the proposed merger. Expressions of outright opposition before hearings are held might jeopardize an official’s right to vote on the matter, said San Diego Assistant City Atty. Curtis Fitzpatrick.

O’Connor disclosed that she would urge SDG&E;’s Board of Directors to reconsider its Dec. 1 decision to merge with Rosemead-based SCEcorp in light of accusations Monday that Edison gave preferential treatment to a sister company in a pattern of “self-dealing” that has cost its customers at least $124 million in excessive electricity costs.

The California Public Utilities Commission’s Division of Ratepayer Advocates recommended that Edison be forced to refund the money.

To Distribute Letter

O’Connor said she will distribute the letter urging reconsideration at a meeting Monday of San Diego County members of the California League of Cities in an attempt to gain the backing of all of the county’s 17 cities for her initiative.

The cities of Carlsbad, Chula Vista, Coronado, Del Mar, El Cajon, Escondido, Imperial Beach, Lemon Grove, Poway, Santee, Solana Beach and San Diego were represented by mayors, vice mayors, council members or planning officials at Wednesday’s meeting. County Counsel Lloyd Harmon and an aide to County Supervisor Leon Williams represented the county.

San Diego and Chula Vista leaders have said that they hold the power to veto the merger based on their individual franchise agreements with SDG&E; contained in each city charter. Only Chula Vista’s City Council has acted, though, voting Tuesday night to begin the proceedings necessary to condemn and acquire SDG&E; assets within city limits.

‘Good for Shareholders’

“This is a good package for the shareholders,” Chula Vista Mayor Greg Cox said after Wednesday’s meeting. “It may not be for ratepayers.”

On Nov. 29, San Diego’s City Council voted in closed session to have City Atty. John Witt represent customers before the PUC and other state and federal regulatory bodies that must approve the merger. The council, which will ratify the resolution publicly Monday, also instructed City Manager John Lockwood to study the possibly of acquiring SDG&E; assets through condemnation.

O’Connor has taken a high-profile role in the campaign against the merger. Tuesday night, as SDG&E; employees filed into a company meeting on the merger held at the Civic Theater, O’Connor’s aides handed out flyers asking them to contact the mayor’s office with concerns about the deal.

Private Meeting

Fitzpatrick said Wednesday that the council will hold another private session Tuesday to discuss the takeover proposal in more detail. He added that city attorneys are preparing a separate ordinance, which will be presented to the council in January, outlining the criteria by which they might approve or reject the merger.

Other city councils have scheduled discussions of the matter for coming weeks.

The merger, if approved by the PUC and other regulatory bodies, would create the nation’s largest investor-owned utility, with 4.8 million customers and $8.2 billion in annual revenues.

Howard P. Allen, chairman of SCEcorp, has promised that Edison will seek a 10% cut in residential rates for SDG&E; customers within six months of completion of the merger. But local officials, who have been pleased by three successive years of declining electricity rates under SDG&E;, have questioned whether that is possible, given Edison’s higher rates. (Despite the recent decrease, SDG&E; still has some of the highest rates in the country).

1,000 Jobs Due for Ax

About 1,000 jobs, including many top-level jobs in San Diego, will be eliminated from the combined companies over the next few years, Allen has said.

Acquisition of the utility was mentioned along with other options at Wednesday’s session in O’Connor’s office, but officials did not discuss the financing of a rate study that would be needed before such a move could be taken, O’Connor and other officials said. The study, which could cost hundreds of thousands of dollars, would determine what effect acquisition would have on rates paid by SDG&E; customers.

The Utility Consumers Action Network, a nonprofit San Diego-based utility watchdog agency, has urged the county’s municipalities to jointly finance such a review through the San Diego Assn. of Governments.

Witt also offered to have his office serve as the lead agency representing county customers before the Public Utilities Commission, a process he said could cost $250,00 to $500,000.