Merger Study May Delay New Line, Edison Says

Southern California Edison executives fear that the state’s slow-moving review of its proposed merger with San Diego Gas & Electric will stall construction of a planned electric-transmission line that would give its customers easier access to electricity produced by nuclear and coal-fired power plants in the Southwest.

Edison, in recent filings with the state Public Utilities Commission, said that failure to begin construction of the line by mid-1990 will have a “significant” impact on its existing customers--and SDG&E;’s customers, if the proposed utility merger is completed.

Transmission lines play an important role for publicly owned utilities in Southern California that increasingly are becoming dependent on power produced by out-of-state utilities. Edison has been reluctant to share space on its lines, and municipal utilities have been in court for nearly two decades seeking improved access to the Rosemead-based utility’s massive web of transmission lines.

Edison’s failure to begin construction of the line between the Palo Verde nuclear plant in Arizona and an Edison substation called Devers to the east of Los Angeles will not have an immediate impact on SDG&E;’s electric rates, said Michael Shames, executive director of Utility Consumers Action Network, a San Diego-based consumer group opposed to the Edison-SDG&E; merger.

But the proposed Palo Verde-Devers line “does have an impact on the economics of the proposed merger,” Shames said Monday. “Some of the (merger) benefits predicted by Edison are premised on the building of that line. So a delay could change the mathematics of the merger.”

The PUC has ordered Edison to “consider the future with the Devers-Palo Verde line in, and out, of its cost analysis,” PUC spokesman spokesman Phil Weismehl said Monday. “In effect, as we go through the merger review, we’ve asked that their evaluations include assumptions that it is or isn’t going to be built.”

Other Utilities Concerned

And the possibility that Edison won’t begin construction next summer has caused concern as well among executives at municipal electric utilities in Southern California who already are planning where to buy power during the mid-1990s.

“We’re in limbo,” said Art Devine, executive director of the Southern California Public Power Authority, a Glendale-based group that represents several municipally operated electric utilities including those in Los Angeles, Anaheim and Riverside. “Our feeling is that we’d like the line to be built as soon as possible . . . because it would improve (transmission) and reliability.”

SDG&E;, which already owns the Southwest Powerlink, a 500-megawatt line stretching between San Diego and Arizona, would not own any of the proposed line. Edison would own 63.2%, the Los Angeles Department of Water & Power would own 30.7%, and a consortium of other publicly owned utilities in Southern California would own the rest.

While the PUC last year granted Edison a “certificate of need” to build the line, commissioners were uncertain how the merger would affect the need for an expensive new transmission line so they agreed to review that certificate if the merger was completed.

Edison has argued that the line makes economic sense with or without the merger.

Accord Necessary

Edison still hopes to build the line, but to do so it must reach an agreement with the the LADWP. Prior to announcing its intended merger with SDG&E;, Edison had signed an agreement with the LADWP, Southern California’s largest municipally owned utility, that called for construction to begin by June of this year.

Shortly after announcing the proposed merger with SDG&E;, Edison renegotiated that agreement to include a June, 1990, construction start-up date. At the time, that date seemed fairly safe to Edison management, which expected the PUC to quickly complete the merger review.

But the PUC now is considering a plan that would link review of the transmission line to the already complex merger review, a move that would push Edison beyond next June’s construction start-up deadline.