Utilities’ Prophecy of Lower Bills Draws Fire

The average San Diego County residential utility bill will be $50 to $60 less each year if Southern California Edison’s proposed merger with San Diego Gas & Electric Co. is approved, utility officials said Friday at a special legislative hearing on the merger.

But San Diego Mayor Maureen O’Connor and a representative of utility consumers said they believe the takeover would increase gas and electric rates or, at best, leave them unaffected.

Michael Peevey, an Edison vice president, said the takeover, which would create the largest investor-owned power company in the United States, would save ratepayers about $1.7 billion during the next decade. He said the savings would come through the elimination of administrative duplication and the more efficient use of the two utilities’ power plants.

Lower Cost Claim

“The combined companies will have lower costs and therefore lower rates than Southern California Edison or SDG&E; could achieve separately,” Peevey said. Although SDG&E;’s rates have been falling of late while Edison’s have been rising, the San Diego company, if left on its own, eventually would be forced to build expensive new power plants to satisfy the energy demand of the county’s rapidly growing population, said Peevey and Ron Fuller, an SDG&E; vice president.

“We believe the Edison offer is a very good one for our customers,” Fuller said. “The Edison offer provides us what we need to provide lower rates in the 1990s. We have to do something.”

But O’Connor, who has helped lead the opposition to the Edison takeover, said she does not believe that Rosemead-based SCEcorp, Edison’s parent company, would fulfill its promise. Describing the proposed Edison-SDG&E; conglomerate as a “monster utility,” O’Connor said that Edison has given assurances to its shareholders that would conflict with the interests of customers.

Validity Questioned

“The profit must come from somewhere,” she said. “I fear it will come from increased rates from San Diego.”

Michael Shames, executive director of the Utility Consumers Action Network, a San Diego consumer group, also questioned the validity of the Edison claim.

“I just see that as further evidence of Edison’s rich fantasy life,” Shames said. He said SDG&E;’s costs without the merger need not increase as much as Edison contends they will.

“It’s like a car salesman saying this car is priced at $15,000 but he can give it to you for $12,000,” Shames said. “But the car doesn’t really sell for $15,000 in the first place.”

Shames also complained that Peevey overestimated the potential savings for San Diegans because most of SDG&E;’s residential customers use far more electricity than the utility’s “average” customer does.

More Questions

Another consumer group leader questioned Edison’s pledge to reduce rates in San Diego, potentially at the expense of Edison customers. “You can’t reduce one group of customers’ rates and not the other group’s,” said Sylvia Siegel, executive director of San Francisco-based Toward Utility Rate Normalization. “You can’t do that because (the merger would create) one company.”

Assemblywoman Gwen Moore (D-Los Angeles), chairwoman of the Assembly Utilities and Commerce Committee, and Sen. Herschel Rosenthal (D-Los Angeles), chairman of the Senate Energy and Public Utilities Committees, held Friday’s special joint hearing to investigate the merger even though, under current law, the Legislature has no direct voice in the matter, which will eventually be decided by the Public Utilities Commission.

Already this year, more than half a dozen bills have been introduced that could affect the merger. Several concern a proposal to thwart the merger by allowing the San Diego County Water Authority to take over SDG&E; and run it as a municipal utility. Other bills would set guidelines for the PUC to use when it decides whether to approve the merger.

$3-Million Increase

Rosenthal announced Friday that he will seek a $3-million increase in the PUC’s budget this year to pay for more representation for consumers at the commission’s hearings on the merger. He said Southern California Edison has vowed to spend $15 million or more to get the commission’s approval.

Some of the extra money proposed by Rosenthal would be used by the PUC to hire consultants and part would be allocated to public groups to help them prepare the cases they intend to present to the commission.

“This will not make the playing field level, but it will no longer be lopsided,” said Rosenthal, who will pursue the funding during a Monday Senate hearing.

However, Shames complained that the funds would not help consumer groups unless they are handed out almost immediately. “I’m preparing my budget right now,” Shames said.

Rosenthal also said he and Sen. Wadie Deddeh (D-Bonita) have proposed that the commission open a temporary office in San Diego because several hearings on the issue will be held there this year.

Commission officials said Friday that the utilities are now scheduled to present documents supporting their case April 17, a month later than had been planned. They said the change will probably mean that the PUC will not reach a decision until early 1990.

Times staff writer Greg Johnson contributed to this article.