Utility Merger Plan Stirs Fear in S.D., Relief in South O.C.

A local group that opposes Southern California Edison’s proposed merger with San Diego Gas & Electric recently unveiled a TV ad comparing San Diego’s fate in such a merger to that of a man facing death in the electric chair.

An off-screen voice urged San Diegans to “get out of the chair and call 233-NO LA. Before it’s too late.”

The hard-hitting ad struck a responsive chord. In a city that prides itself on staying clear of the Los Angeles/Orange/Riverside/San Bernardino county megalopolis, the proposed merger has many business and civic leaders seeing red. Covering much of Central and Southern California--though not Los Angeles--the Edison utility giant with headquarters in Rosemead would, if it takes in San Diego, become the nation’s largest supplier of electricity, serving 4.8 million customers.

San Diego Mayor Maureen O’Connor recently described the proposed merger as the most important issue of her political career. That assessment came even as the city struggles with drugs and gang violence, an intensifying debate over growth controls and problems linked with the international border with Tijuana.

To San Diego merger foes, Edison’s bid to gobble up the city’s local utility symbolizes everything that is wrong with Los Angeles, with its smog, traffic and crime. The intensity of the feeling among community leaders can be gauged, for example, by Greater San Diego Chamber of Commerce President Lee Grissom, who derisively refers to Los Angeles as the dreaded “L-word.”

Many San Diegans took pride in a recent Los Angeles Times Magazine poll suggesting that many Los Angelenos would rather live in San Diego, where they hold the quality of life to be better.

On the Edison/SDG&E; merger question, a Times Poll in February showed that San Diegans with an opinion oppose the merger by a 4-1 margin, with two-thirds of the opponents saying they “strongly disapprove.”

While most of Orange County is served by Edison, SDG&E; provides service to a large section of South Orange County, including San Clemente, San Juan Capistrano, Dana Point, Laguna Hills, Laguna Niguel, Mission Viejo and the South Laguna section of Laguna Beach.

San Juan Capistrano Mayor Gary L. Hausdorfer, who is also head of the South Orange County Leadership Conference, said Wednesday that he knows of no Orange County opposition to the merger.

Hausdorfer said: “I’m very supportive of this,” adding that he believes that the change may result in lower electric rates for South County customers.

Mary Anderson, a director of the Laguna Hills Community Assn., said Wednesday that she looks forward to the switch.

“I would feel more comfortable with Southern California Edison,” she said. “We’ve had some problems with our (SDG&E;) services, outages, things like that, and I’ve been impressed with Edison.”

Anderson said about a month ago there was a power outage in her area of Laguna Hills for about four hours, during which she said SDG&E;’s performance was disappointing.

“They didn’t seem to know how to get the problem fixed,” she said.

Many San Diegans tend to distrust Edison’s management, the poll suggested. Although Edison executives have pledged to seek a 10% rate reduction for existing SDG&E; customers, the poll showed that, while 33% took the company at its word on that promise, 49% did not.

Merger foes believe that the quality of life in San Diego would deteriorate should control of SDG&E; move from the utility’s downtown office building to Edison’s headquarters in far-off Rosemead. The merger, they argue, will ultimately drive up electric rates--despite Edison’s claims to the contrary--and eliminate 1,000 local jobs.

San Diegans also fear that Edison will dirty the county’s relatively clean air by boosting dependence on three under-used electric generation plants owned by SDG&E.;

“We might as well rename (the county) Branch Diego because that’s about all we’ll have left,” Grissom complained shortly after the proposed merger was announced in 1988. “We need that corporate headquarters here.”

‘Division Town’

Turning control of SDG&E; over to Edison would “clearly label San Diego as a division town,” said Dan Pegg, president of the San Diego Economic Development Corp. “We would become the largest city in the United States whose utility was not headquartered within the community. . . . It (would be) a major mistake.”

University of San Diego professor Peter Navarro believes that the proposed merger would devastate San Diego by aligning Edison, generally known as a hard-nosed, pro-development force, with land developers who will build at an even greater rate.

“I just shudder to think of what will happen,” said Navarro, whose Prevent Los Angelization Now group hopes to place a growth control initiative on the ballot in June.

San Diego’s labor, business, civic and consumer group leaders, who generally do not agree on many things, nonetheless sat down in the same room and created the Coalition for Local Control. Grissom acknowledged that he had never been in the same room with the Sierra Club representative or the leader of a San Diego-based consumer group that monitors SDG&E.;

The organization, which hopes to derail the merger and keep “control” of SDG&E; in San Diego, is unfazed that SDG&E; is already owned largely by out-of-town investors.

The merger has spawned other groups. One group supports the merger, while another was formed to oppose a possible government takeover of SDG&E; intended to thwart Edison’s bid.

San Diego’s new-found fervor for the utility industry surfaced last winter, shortly after Edison made its uninvited bid for SDG&E.;

Curiously, for nearly a decade before the merger proposal, SDG&E; was the object of scorn in San Diego. During the early 1980s, SDG&E; managers gave serious thought to stripping the company logo from trucks and cars to protect employees from irate San Diegans who were upset by the utility’s notoriously high electric rates.

Why has the current love affair with SDG&E; blossomed?

“We have the reputation of our city at stake,” Great American Bank Chairman Gordon Luce said earlier this year. “I think this is a very unusual situation.”

Luce, a rock-solid Republican and proponent of the free-market system, has used acquisitions and mergers to transform Great American from a tiny San Diego thrift to a regional powerhouse with branches in California, Oregon and Arizona.

Other Mergers

But Luce, a native San Diegan, has set corporate etiquette aside and agreed to head the Coalition for Local Control. His opposition is based largely on a philosophical issue: Utilities, he argues, with their government-guaranteed monopolies, are unduly protected from free-market forces. Keeping SDG&E; alive, he reasons, would keep competition alive in Southern California’s utility industry.

San Diego’s business psyche has taken a beating in recent years with the departure of other large, publicly held companies--most notably PSA and Signal Cos., which was devoured by Allied-Signal Inc.

But ill will caused by those mergers pales in comparison to the open hostility generated by the proposed utility merger. SDG&E; Chairman Tom Page, for example, who just over a year ago was hailed as a hero for reducing SDG&E;’s electric rates, now finds himself cast as the villain for embracing Edison’s takeover bid.

It will take at least another year for state and federal regulators to complete their reviews of the merger.

NEXT STEP

The proposed merger is subject to approval by the state Public Utilities Commission and the Federal Energy Regulatory Commission. Both are conducting reviews that are not expected to conclude until late 1990. Their rulings will follow thereafter.