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Commentary : Local Control Is the Key Issue in Controversy Over SDG&E; Merger

<i> Mike Madigan is a senior vice president of Pardee Construction Co. and serves on the board of the San Diego County Water Authority. He was an aide to former Mayor Pete Wilson</i>

In the history of a city, there are certain special moments when matters of great municipal concern are brought before the citizenry for a decision. Such a moment is before us now regarding the fate of San Diego’s local power utility, which is in question because a majority of the San Diego Gas & Electric board of directors acquiesced to a buyout bid offered by Southern California Edison.

Such special moments demand special attention, and many of San Diego County’s elected officials and business leaders have seized upon this moment, calling for and insisting upon a most careful review of the pluses and minuses of the Edison proposal. They also want to examine alternatives, and have asked the San Diego County Water Authority, which represents about 95% of the population served by SDG&E;, to conduct a comprehensive investigation into possible municipal ownership of the utility.

These leaders are correct in their insistence on local review. Such issues as short- and long-term energy rates, new power plant construction, corporate citizenship and the suggestion that San Diego might be asked to subsidize Los Angeles’ air quality are worthy of our thoughtful consideration.

Rates, for example, are a prime concern to the ratepayers of this community and, although much has been promised, such as a 10% residential reduction by Edison, the fact is that it is too early to make promises because the facts are not yet known.

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The same is true of corporate citizenship concerns. SDG&E; has been a good corporate citizen for a long time. Would new owners, based elsewhere, maintain the same quality of corporate citizenship? Edison has promised short-term continued support, but two or three years is an exceedingly modest time in the lifetime of a city.

Extensive hearings by the California Public Utilities Commission and other regulatory bodies will address some of these questions, but only the opportunity to evaluate them at the local level is likely to lead to any community satisfaction. This local evaluation should also compare ownership by Edison with municipal ownership. Would a municipally owned utility result in lower rates, as some have suggested, or higher rates? Would it be a better or worse corporate citizen?

These are both important questions, but perhaps the issue of greatest concern is the matter of local policy direction, management and control.

We have not always seized the moment when issues of local control have awaited our review. For example, without sufficient debate we abdicated to Sacramento much of the local decision-making responsibility on educational matters with the passage of Proposition 13.

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But there also have been many examples in San Diego’s history when local control of decisions has made a difference.

One of the little-known, but significant, decisions in our municipal history was that made by San Diego’s Metropolitan Transit Development Board, in its very earliest days, to forgo federal funding of a study of fixed guideway transit. That decision led directly to the ability of this community to build the highly successful San Diego Trolley, which would not likely have been the federal decision.

Local control, asserted at a special moment, resulted in a local success.

Another example can be seen with the San Diego Unified Port District. The port is building our convention center, one of the cornerstones of both the city’s downtown revitalization program and of this region’s economic development effort.

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It is also funding an important piece of our light-rail transit system, has taken steps to reduce noise at our airport, and may yet provide public art along the waterfront.

Would these steps have been taken if control of our port were elsewhere?

Some San Diegans don’t think the port is responsive enough. But at least it is our port, and we can have an influence on the Board of Port Commissioners’ decisions.

Some people argue that, because San Diego County is an energy desert and must import its energy from somewhere else, local control of power utility decisions is not important. But San Diego also has to import 90% of its water, and I would suggest that there is value in having a local water authority.

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It is because the authority is under local control that it has mobilized so quickly to support the cities of San Diego and Poway and others in the important quest for a major water reclamation capability in the county.

Because it is the San Diego County Water Authority, it has always maintained a special interest in assuring an adequate and, within the limits of the possible, affordable supply of water to agriculture--an issue of importance to this, the 20th most important agricultural economy in the country. Water for agriculture is not a commensurately high priority to the city of Los Angeles, a fellow member of the Metropolitan Water District of Southern California, which supplies our imported water. That’s because local agriculture is not a high priority to that very urban city.

Similarly, affordable agricultural energy rates have been a policy of SDG&E;, and that’s just possibly the case because, as a local utility, it understands the importance of agriculture to San Diego. In contrast, Edison does not offer a similar agricultural energy program.

Coincidence? I don’t know. But it’s a concern because, here in San Diego, it’s an important consideration, and to date the board of SDG&E; has represented local control.

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Water reclamation, the trolley, our convention center. All special moments seized and acted on--locally.

And what of the future? The County Water Authority and the Metropolitan Water District are most interested in the potential of sea-water desalination.

There are studies that would suggest that such a program is best carried out with waste heat from power plants. Would a locally controlled utility be more responsive to this local issue than a utility headquartered and controlled somewhere else? It’s an important question.

All of the above examples involve government bodies. Is local control less important because SDG&E; is a private company?

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I would argue that it’s not, because, as a public utility, SDG&E; operates under the twin advantages of being a monopoly and holding a long-term franchise to do business in San Diego. In return for having granted those two valuable considerations, the public has a say in SDG&E; decisions through the Public Utilities Commission.

Given the momentous nature of the merger decision and the special advantages bestowed by the community on SDG&E; for these many years, it would seem reasonable that SDG&E; and its suitor, Edison, would not only allow but encourage the most thoughtful public consideration of the future of the utility in San Diego.

There will, of course, be an appropriate time for SDG&E; and Edison to make their case to both the public and their elected representatives, but that is when all the facts and opportunities of the situation are known, and that is still some time off. Unfortunately, some counsel within both corporations seems to be aimed at a preemptive strike, rather than thoughtful study. First there was the spate of full-page newspaper ads by Edison, then an incomplete survey by SDG&E;, and now SDG&E; has filed suit to halt a study by the County Water Authority of a possible government takeover of SDG&E.;

These actions have added considerably more heat than light to what should be respected by both parties as a very special moment in the life of this community.

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The timing of these moments is not always of our choosing as, indeed, this one is not. But having been chosen, we would be remiss, all of us--SDG&E; and Edison included--if we fail to take this opportunity to consider carefully, calmly and dispassionately the future of San Diego’s local utility.


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