Edison Turned On the Juice to Fight One Takeover Bid

City officials in South Gate didn’t get very far last year when they tried to take over Southern California Edison’s electrical distribution network in the lower-income bedroom community of about 77,000 people near Los Angeles.

Edison “stomped on” South Gate’s attempted takeover, according to Jerry Jordan, executive director of the Sacramento-based California Municipal Utilities Assn. “And I’m sure that they would very dramatically oppose any kind of municipalization in San Diego.”

SCEcorp, the parent company of Edison, hopes to complete a $2.4-billion stock swap merger with San Diego Gas & Electric, and SCEcorp Chairman Howard Allen would try to “roll over San Diego” if a municipalization threat materialized, according to one South Gate official. The official singled out Edison for orchestrating a high-profile campaign of opposition last year when the municipal government proposed a takeover of Edison’s system within South Gate.

South Gate city administrators spent $6,000 on their campaign to persuade residents that they would enjoy lower rates and equal service after a municipal takeover.

But Edison undertook a more costly effort that included newspaper advertisements and a mail campaign.

The newspaper ads were completely black except for a small image of a candle and the suggestion that citizens who didn’t want to be “left in the dark” after a municipal takeover should voice opposition before the City Council.

Edison spent about $25,000 to mail anti-municipalization letters--in Spanish and English--to its customers in South Gate. Customers also were provided with stamped, addressed post cards that were used to register opposition to the planned takeover.

Edison’s campaign focused on two major points, according to city officials: The giant utility claimed that a municipal takeover would not only raise electric rates but also lower service and challenged a South Gate study that valued the utility’s electrical plant and distribution system in the city at $15 million. Edison countered that the electrical system, along with a new substation, was worth almost four times that, $58 million.

Struck a Chord

Edison’s campaign struck a chord with South Gate residents. More than 5,000 cards eventually were mailed to City Hall--a return that one city official described as “overwhelming” in a municipality where elections typically draw about 2,500 voters.

“And then the telephone calls started to come in,” said the official, who asked not to be identified.

Edison also took legal steps to hinder the takeover by asking a Los Angeles Superior Court judge to prohibit the use of South Gate Redevelopment Agency funds in the takeover.

City officials believe that Edison’s campaign was largely responsible for the stunning turnout at a council hearing on the takeover. A typical council session in South Gate might normally draw 50 residents. However, more than 800 showed up.

Some residents shouted their opposition while city officials described the takeover proposal in a 30-minute slide show. A few threatened to stage a recall vote if the council supported the takeover.

One city official later complained that Edison “rigged the meeting” by planting vocal opponents who “made catcalls as if on cue. . . . Their campaign was, frankly, vicious and brutal.”

Voted Out of Office

The mayor and a second elected official were voted out of office in a subsequent election--evidently in large part for the role they played in the takeover attempt.

South Gate and Edison eventually mended their political fences: Late last year, Edison spent $70,000 to install 10 pumps that will heat water used at South Gate’s municipal swimming pool.

“After we finished that little problem with the city, we wanted to show we weren’t mad,” an Edison official said at the time.

“It is a good deal for us,” Mayor Henry C. Gonzalez said last December. “After our bitter struggle, things have gone well. It is a good relationship.”

In South Gate, Edison faced the potential loss of 23,000 residential, industrial and commercial customers. Even though customers there generated just $30 million of Edison’s $6.1 billion in annual revenue, the utility’s reaction to the proposed takeover was swift and determined.

If its fight in South Gate is any indication, it shows that the utility is more than willing to battle for its domain, particularly when much is at stake. Unlike small South Gate, SDG&E; sits in one of the nation’s fastest-growing markets for electricity. It has 1 million natural gas and electricity customers and $2.1 billion in revenue.

SCEcorp’s proposed merger with SDG&E; would create the nation’s largest electric utility, with 4.8 million customers.