Senate Committee Kills County Plan to Block SDG&E-SCE; Merger

Rejecting the latest effort to block the planned merger of San Diego Gas & Electric and Southern California Edison, a Senate Committee on Tuesday defeated legislation that would have eased a government takeover of the privately owned San Diego utility.

The bill, by Sen. Larry Stirling (R-San Diego), received just three votes in its favor on the Agriculture and Water Resources Committee, where six votes were required for passage.

The committee members spent most of the two-hour hearing picking the measure apart. Almost every member of the panel found at least one provision in the bill distasteful.

The legislation would have changed the state law that governs the creation of municipal utility districts, creating a new law especially for San Diego that could have led to the founding of a government entity to condemn, acquire and operate SDG&E.;

Existing law allows the governing body of each city to decide whether to join a municipal utility district and then requires the approval of the voters in each city before that municipality becomes part of the district. Further, the district cannot be formed unless the approving cities represent at least two-thirds of the voting population in the proposed district.

Stirling’s bill would have allowed the county Board of Supervisors to call the election without the consent of the cities. If a majority of the county’s voters approved, each city would then have been required to join the district, even if its voters had rejected the idea.

Provisions for Certain Bonds

The bill also would have exempted the proposed San Diego County Utility District from state law prohibiting the use of certain types of bonds to finance the acquisition of utilities.

Stirling portrayed the measure as a “district bill” of concern only to San Diego. He asked committee members to permit San Diegans to “decide their own energy future” by studying the issue and then voting on whether to allow a government acquisition of SDG&E.;

Dale Mason, chairman of the San Diego County Water Authority, which supported the measure, described the provisions of the bill as a “measured response” that would allow for “careful, considered steps” before the utility could be acquired by a public agency.

But utility officials and a shareholders’ representative argued that existing law already provides a mechanism for public takeover and that Stirling’s bill would gut several safeguards contained in the current provisions.

Steven Wall, a private attorney working for SDG&E;, said the bill would allow voters in the city of San Diego to “steamroll” and “disenfranchise” voters in smaller cities, because a big majority in the city in favor of the public takeover could outweigh smaller negative votes in other parts of the county.

Before the vote, the committee’s chairman, Sen. Ruben Ayala (D-Chino), said he was uncomfortable with the provisions in the bill giving the proposed district the power to sell billions of dollars in bonds backed by the anticipated revenue from utility ratepayers. Another panel member wondered why San Diego deserved special treatment under the law, and a third expressed reservations about the potential loss to the state of $40 million in taxes paid annually by SDG&E.;