SDG&E;, SCE Admit Merger May Mean Shift of 1,700 Jobs

Southern California Edison’s proposed merger with San Diego Gas & Electric would save the utilities $1.7 billion during the next decade, according to documents the two utilities have filed with the state Public Utilities Commission.

SDG&E; and Edison repeated their previous assertion that only 1,000 jobs would be lost after the proposed merger that would create the nation’s largest gas and electric utility. However, the filing suggested for the first time that 1,700 more employees probably will be transferred if the merger occurs. Edison Vice President Michael R. Peevey on Monday said it is too early to say which employees would face transfer.

According to the filings made Friday, 693 management personnel would lose jobs because of the merger. An additional 305 employees in customer service would lose jobs and 118 “power supply” employees would lose their jobs. Also, the filing acknowledges that “it is still possible, however, that additional reductions may be necessary.”

Counter to Testimony

SDG&E; and Edison have maintained that the 1,000 jobs to be eliminated would be spread between the two companies. However, that explanation runs counter to recent testimony by a pair of former SDG&E; board members who suggested that SDG&E; alone stands to lose 1,000 jobs.

Executives at both utilities maintained that the merger would lead to lower electric rates for the new company’s 4.8 million customers, improved service, a more reliable electric supply and reduced air pollution. “The merged companies will be a stronger, more efficient utility, with a diversified power supply and fuel mix,” according to the documents, which were filed late Friday.

The joint filing--an 8-inch-thick collection of documents--provided the first comprehensive analysis of how the combined company would operate. The PUC will use the complex and wide-ranging document during its upcoming review of the merger.

The filing drew immediate criticism from environmentalists, consumer groups and politicians in San Diego, who have opposed the proposed merger since it was announced Nov. 30.

The filing “seemed to ignore a lot of the concerns raised by us and other San Diegans,” said Michael Shames, executive director of Utility Consumers Action Network, a San Diego-based consumer group. “They tried to put a nice window dressing (on the proposed merger), but there’s still nothing that makes me think that this is a good deal for San Diego residents.”

San Diego Mayor Maureen O’Connor remained unimpressed by the utilities’ repeated promise of immediate rate reductions after a merger. “I say big deal. . . . We’re talking about the utility rates of this city for a lifetime,” O’Connor said. The promise of an immediate rate decrease “does not matter . . . that’s just another example of them putting out a little tiny carrot so they can get the whole ball of wax,” O’Connor said.

Investigations Urged

Peevey on Monday defended the proposed rate reductions as “clear and immediate recognition that there are benefits” for San Diegans.

According to the filing, SDG&E; Chairman Tom Page--who at first opposed the proposed merger--now believes it is “questionable” whether SDG&E; could continue to meet San Diego County’s increased demand for electricity without a merger partner. Standing alone, SDG&E; “could return to the dilemma of the 1970s--over-reliance on oil and gas generation,” according to Page.

Also Monday, a state senator called for three separate investigations of allegations that SDG&E; board members were improperly influenced by Edison before they voted to sell the utility.

Sen. Larry Stirling (R-San Diego) asked Atty. Gen. John K. Van de Kamp, San Diego County Dist. Atty. Edwin Miller, and the San Diego County Grand Jury to examine the charges, leveled earlier this month by two former SDG&E; board members.

The former directors, Charles (Red) Scott and O. Morris Sievert, said in sworn depositions that SCEcorp, Edison’s parent company, approached several SDG&E; directors about seats on the SCEcorp board of directors during merger negotiations between the two companies last year.

Scott described the offers as “bribes” and said he believes they must have influenced the judgment of his fellow SDG&E; directors.

Edison and SDG&E; officials have said the offers were legal and normal for two companies negotiating a merger. The investigative agencies queried by Stirling could not be reached for comment Monday.

The utilities’ detailed filing also acknowledged that Edison gave consideration to seeking PUC approval to share the anticipated cost savings between shareholders and customers. However, Edison abandoned that controversial proposal because it “would divert attention from the substantial benefits ratepayers will receive,” according to testimony by Edison Executive Vice President John E. Bryson.

“We are (now) confident that, over the long run, our shareholders will benefit from the strengthening of our core utility business through the merger,” according to Bryson.

The utilities also relied heavily upon what critics in the past have labeled “celebrity witnesses.”

James S. Schlesinger, former secretary of the U. S. Department of Energy, endorsed the proposed merger as a “sensible and worthwhile step” that will “yield real benefits, especially over time.”

Edison and SDG&E; also solicited favorable testimony from Ernest S. Liu, a general partner with Goldman, Sachs & Co., a New York-based investment firm. Lee C. White, formerly chairman of the Federal Power Commission and a past president of the Consumer Energy Council of America, was hired to testify about the merger’s effect on consumers.

Another Celebrity Witness

The merger also won praise from Lee M. Thomas, who served as administrator of the U. S. Environmental Protection Agency during the last half of the Reagan Administration. Thomas said the proposed merger’s environmental impact seems to be “consistent with the objectives of achieving long-term, stable improvements in air quality for Southern California.”

The merger would improve air quality in San Diego because the combined company would cut back on the use of older oil- and gas-fired electrical power plants in San Diego County, according to Thomas. The former EPA administrator also suggested that air quality in the Los Angeles area would be improved with or without a merger, largely because of tough new restrictions recently proposed by the South Coast Air Quality Management District.

Shames also scored the utilities’ promise to seek a 10% rate decrease for SDG&E;’s residential customers and a 5% rate cut for the San Diego-based utility’s commercial and agricultural customers.

“If I were in Los Angeles, I’d be protesting the proposed 5% to 10% rate decreases promised for San Diegans,” Shames said. “It means that (Edison customers) will be subsidizing SDG&E; rate cuts for a promise that they’ll get something back in the future.”

Shames also contended that the PUC probably would ignore the proposed rate decreases for San Diegans because “the law states that you can’t . . . discriminate and charge different rates in different service territories.”

The joint filing contradicted a pessimistic report by San Diego’s Air Pollution Control District, which predicted a massive increase in pollution following the conclusion for a merger.

Larry Berg, a South Coast Air Quality Management District board member, said: “Our major concern is that (a merger) is really dealing with emissions throughout Southern California. What (Edison) does in San Diego has an impact on us up here and vice versa.” Berg is chairman of the University of Southern California’s Institute of Politics and Government.

Shareholders of SDG&E; and SCEcorp, Edison’s Rosemead-based parent company, are expected to approve the proposed merger at meetings this week.

The merger also must be approved by a handful of regulatory agencies, including the state PUC and the Federal Energy Regulatory Commission. Opposition to the proposed merger has been intense in San Diego since SDG&E;’s board of directors voted Nov. 30 to accept SCEcorp’s $2.4-billion stock swap merger.

Times staff writer Daniel M. Weintraub in Sacramento contributed to this report.