PUC Decision : Ex-SDG&E; Directors Can Testify on Merger Advice

Two former San Diego Gas & Electric Co. board members can testify about legal advice that the board relied on when it approved a proposed $2.4-billion merger with Southern California Edison, according to a state Public Utilities Commission decision issued Tuesday.

The ruling runs counter to SDG&E;’s claim that Charles (Red) Scott and O. Morris Sievert, who resigned to protest the November vote, are prohibited from discussing legal advice that has traditionally been treated as confidential information. The utility unsuccessfully argued that the legal advice is covered by the attorney-client privilege.

PUC Administrative Law Judge Edward W. O’Neill ruled Tuesday that SDG&E;’s attorney-client privilege evaporated shortly after the board vote, when an SDG&E; executive gave a detailed analysis of the merger in a speech in Phoenix.

Might Appeal Ruling

“I’m shocked and disappointed with the ruling,” Jeff Guttero, SDG&E; assistant general counsel, said Tuesday. “And I’m not exactly clear on what (O’Neill) meant when he said that we’d waived the attorney-client relationship.”

Guttero told O’Neill on Tuesday that the utility might lodge an appeal with the full PUC once a written decision is issued. It was unclear when O’Neill would release a written decision.

If O’Neill’s ruling stands, it will clear the way for the city of San Diego to resume depositions with Scott and Sievert, both of whom have expressed doubts about the quality of legal advice that SDG&E;’s board received before the vote.

During depositions earlier this year in San Diego, Scott and Sievert stopped short of revealing the confidential legal advice. The two San Diego businessmen instead agreed to honor SDG&E;’s confidentiality request until the issue was resolved by a PUC law judge.

“What happened today is an important decision,” Robert Wright, Sievert’s San Diego-based attorney, said Tuesday. “Of course, it remains to be seen if SDG&E; appeals to a higher level.”

Could Haunt SDG&E;

Michael Shames, executive director of Utility Consumers Action Network, a San Diego-based consumer group, said the ruling clears the way for Scott and Sievert to resume testifying about information board members had when they endorsed the proposed merger.

“The judge determined that whatever attorney-client privilege did exist disappeared when (utility executive Stephen Baum) made that speech,” Shames said.

Shames also suggested that the law judge’s decision might haunt SDG&E; when utility executives take the stand during the PUC’s upcoming review of the proposed merger.

“I think it broadens the (questions that) intervenors can ask when they cross-examine (SDG&E; Chairman) Tom Page” and other SDG&E; executives, Shames said.