Judge Clears Study by Water Authority of SDG&E; Takeover

Superior Court referee Harold F. Wolters on Monday cleared the way for the San Diego County Water Authority to complete a $100,000 preliminary study to determine the feasibility of a government takeover of San Diego Gas & Electric.

Wolters recommended that SDG&E; be denied a preliminary injunction prohibiting the Water Authority from spending more money to complete the study. Wolter’s recommendation is expected to be made official later today, when it is signed by Superior Court Presiding Judge Michael Greer.

Wolters recommended that SDG&E;’s Feb. 10 lawsuit against the Water Authority be brought to trial “as soon as possible” in order to settle “issues of serious consequences to all concerned, not the least of whom is the taxpayer.”

In his seven-page recommendation, Wolters wrote that the countywide authority “does have certain areas of statutory authority, an inherent power, to make some studies.”

‘Relevant’ Information

Wolters suggested that the survey being conducted by Seattle-based R. W. Beck & Associates would generate “relevant” information that the public agency could use during regulatory reviews of SDG&E;’s proposed merger with Rosemead-based Southern California Edison. The authority might also use study results to lobby for support in Sacramento for legislation that enabling governmental agencies to own and operate gas and electric utilities, Wolters wrote.

But Wolters, a retired Superior Court judge, warned that the proposed study raised “issues of serious consequence” for the county’s taxpayers and the authority’s board of directors.

Wolters cautioned that “the proposed expenditure is substantial and could end up as wasted” and that “the taxpayer is not without remedy.”

Although Wolters clearly recommended that a temporary restraining order be lifted and that SDG&E;’s request for a temporary injunction be denied, spokesmen for SDG&E; and the Water Authority disagreed on other key parts of the recommended decision.

“What it means is we can proceed with the feasibility study,” CWA spokesman Jim Melton said Monday. “We’re going to notify R. W. Beck & Associates first thing in the morning and tell them to proceed.

“The clean-cut bottom line is that we can proceed. The referee lifted the temporary restraining order, and he said we have the authority to conduct the feasibility study.”

But Mary Wood, SDG&E; assistant general counsel, commented, “I don’t think it’s that simple.” Wolters’ recommended ruling warned that taxpayers could hold CWA directors personally liable if they exceed their authority, Wood said.

“Based on the material he’s seen to date,” Wolters “believes that SDG&E; would prevail at a trial on the question that the Water Authority doesn’t have the authority to own and operate SDG&E; or to condemn its assets,” Woods said.

O’Connor Pleased

Wolters wrote that he “seriously doubts that either the city of San Diego or the Water Agency, either jointly or individually, has the current power to condemn all of the SDG&E; assets.”

San Diego Mayor Maureen O’Connor was pleased by the recommended ruling, according to spokesman Paul Downey. “We believe it’s the first of hopefully many victories for the citizens of San Diego in this fight,” he said.

The city gave the CWA an initial $25,000 grant to begin the feasibility study. The authority since has authorized $75,000 more to complete the initial study. CWA board members have budgeted nearly $1 million to conduct the study, pay legal fees and press for legislative approval of the bill that would allow governmental agencies to take over utilities.

Melton said first results from that study should be available in about two months. The Water Authority also intends to hire a project director to guide the study, lawsuits and lobbying effort, Melton said.

Melton on Monday said the Water Authority will “continue our efforts to get required legislation passed.”

SDG&E; had maintained that the state constitution and the public utility code prohibit public agencies such as the Water Authority from taking over private utilities. The utility also has maintained that those laws and regulations prohibit public agencies from using taxpayer funds to conduct feasibility studies.

SDG&E; has not yet determined if it will appeal Wolter’s proposed ruling, once it is signed by Greer.