SDG&E; Note Said Merger Would Increase Rates

Times Staff Writer

Shortly after Southern California Edison first made a bid for San Diego Gas & Electric Co. last summer, an internal memo at SDG&E; warned that such a merger would kill utility competition in Southern California and produce higher utility bills for consumers.

According to the document, electric utility competition in Southern California “would be dead” if the controversial merger was completed.

On Thursday, the four-page unsigned memo was made public by opponents of the $2.4 billion merger that the two utilities agreed on Nov. 30. For its part, SDG&E; acknowledged the memo, but downplayed its importance. A spokesman said it never reflected company policy.

The memo was released by Michael Shames, executive director of Utility Consumers Action Network. He refused to say how he got the document which was prepared on July 29, soon after Edison first made its bid for SDG&E.; At the time, SDG&E; was bent on completing a previously announced merger with Tucson Electric Power.


However, Shames said the document was leaked because “SDG&E; insiders want to tell us that the merger is a sham.” Shames and other opponents of the proposed merger maintain that the cost savings--and resulting electric rate decreases--claimed by Edison will not materialize.

Richard Manning, SDG&E;'s vice president of public affairs, acknowledged Thursday that the document was prepared by an SDG&E; public affairs staffer. But it was not “an official document of the company and it doesn’t reflect the mindset of the company at that time,” he said.

The document “didn’t go anywhere,” Manning said. “It was used within the division a little bit but there are no facts in there. It took us a heck of a long time to find it today.”

Shames took issue with Manning’s account, arguing that “with these kinds of conclusions and analysis, it’s clearly not a PR-generated report.”

Similarly, San Diego Mayor Maureen O’Connor, a strong opponent of the proposed merger, on Thursday maintained that public relations specialists “are not usually allowed to make such statements without having some kind of prior clearance . . . That memo is exactly what (SDG&E; executives) were saying in July, 1988--that this merger would be bad for San Diego.”

O’Connor has claimed that SDG&E; dropped its opposition to the Edison merger only after negotiating a windfall for SDG&E; shareholders and lucrative employment contracts for key SDG&E; executives.

“What SDG&E; has is called a credibility gap,” O’Connor said. “They think they have credibility and they don’t. Employees and managers are leaking things left and right.”

The leaked document also questioned Edison Chairman Howard Allen’s oft-repeated pledge to seek state Public Utilities Commission approval of a rate reduction for SDG&E;'s residential customers. And, the document suggested that rates in San Diego were going to go down even without the merger.


“Edison is claiming credit for something that is going to happen NO MATTER WHAT,” according to the document. "(Edison’s) goal to reduce rates to San Diego customers is just that--a goal--not a promise,” according to the document.

Manning said the document included “material compiled from various news releases and a letter released by (Edison Chairman) Howard Allen . . . It wasn’t an official paper because our board had not acted one way or another (on Edison’s offer) at that point,” Manning said.