New Utility Takeover Challenge Proposed

San Diego should consider going to court to determine if the city can legally block San Diego Gas & Electric’s proposed merger with Southern California Edison by refusing to transfer city franchises from SDG&E; to Edison, City Councilman Bruce Henderson said Thursday.

Edison and SDG&E; have argued that the council has no voice in the franchise question because the merger would not constitute a transfer. However, Assistant City Atty. C. M. Fitzpatrick disputed that contention recently by saying that the merger would indeed constitute a transfer of the franchises.

“Assuming we say no to a transfer, this thing is inevitably going to be litigated,” said Henderson, who suggested that the city “litigate it right up front” before initiating a long and expensive merger review.

Henderson worries that a court might eventually award damages to the utilities if it is determined that the council wrongly stalled or prevented the merger by refusing to transfer the franchises. “If we litigate it right now, then Southern California Edison can’t allege that they’ve been damaged by (the city’s eventual) action,” Henderson said.

‘Fairly Prompt Response’

“The nice thing about declaratory relief actions is that you . . . theoretically can get a fairly prompt response,” Henderson said.

The franchises in question give SDG&E; the right to use municipal streets, highways and rights of way to transmit and distribute gas, steam and electricity. Without them, providing utility service would be impossible. Similar provisions exist in other cities within San Diego County.

During a merger-related hearing Tuesday afternoon at City Hall, Mayor Maureen O’Connor pressed SDG&E; and Edison officials to explain why the local utility will ask state regulators to approve an electric rate increase. “Just four to five months ago,” O’Connor said, SDG&E; Chairman Tom Page “said that rates were going down, not up.”

O’Connor reported that she has received tips from anonymous telephone callers who believe that SDG&E; wants to increase its electric rates to bring them in line with those charged by Edison. Rosemead-based Edison last week asked state regulators for permission to increase its residential electric rates.

Those calls might have been spurred by a letter that Tom Page mailed to Edison Chairman Howard Allen in late 1988.

The letter, which was made public by Michael Shames, executive director of Utility Consumers Action Network, a San Diego-based consumer group, argued that SDG&E;’s rates would remain lower than rates charged by Edison.

Page on Wednesday said that SDG&E;’s residential rates, which have drifted down for the past three years, would start to head up again as early as next year. “We would expect that rates would increase during 1990 and 1991 and continue to be higher” if the merger does not occur, Page said during a Wednesday night debate held at the California Western School of Law.

Page, who declined to specify what the rate increase would mean to the average SDG&E; residential customer, said the utility’s per-kilowatt hour rate, which now stands at 8.75 cents, would probably rise to as high as 9.5 cents a kilowatt hour.

Thursday’s council hearing drew a carefully orchestrated display of support from nearly 200 merger proponents who repeatedly broke into applause as speakers urged council members not to spend any more time or money on proposing the merger.

‘Best Interest’

The proposed merger is “in the best interest of the entire county,” according to Marc A. Moore, a retired Marine Corps general who now lives in Escondido. “Leaders with vision will see this merger as an opportunity to apply energy in solving the real challenges facing this community.”

Curtis Moring, president of the San Diego branch of the National Assn. for the Advancement of Colored People, argued that the city should not be “wasting all this time and money” opposing the merger when there is a shortage of police to tackle the city’s growing drug problem.

“How many people really care what the name of this utility is?” asked a retired North County resident.

Proponents and opponents of the controversial merger will get their chance to speak during three public hearings.

SDG&E; and Edison, along with groups supporting the merger, will testify during a 2 p.m. hearing Oct. 12. Organizations such as UCAN, that have joined the state Public Utilities Commission in its continuing review of the proposed merger, will appear at a 2 p.m. hearing Wednesday, Oct. 18. A general public hearing will be held at 6 p.m. Thursday, Nov. 2.

All hearings will take place in the council’s downtown meeting room.