Van de Kamp Calls Utility Merger ‘a Bad Deal’ : Utilities: Plan also would worsen air pollution in Los Angeles, violates antitrust laws, attorney general says.

Southern California Edison’s proposal to create the nation’s largest electric utility by merging with San Diego Gas & Electric violates antitrust laws and would damage air quality in the Los Angeles Basin, state Atty. Gen. John Van de Kamp said Wednesday.

At press conferences in San Diego and Los Angeles, Van de Kamp described the $2.5-billion stock-swap merger as “not in the public interest . . . . From what I’ve seen thus far, this corporate marriage appears to be a bad deal for everyone except” Edison.

Van de Kamp, who questioned whether the proposed merger would generate lower rates for current Edison customers, also expressed doubt that state regulators would allow Edison to fulfill a pledge to cut electric rates in San Diego and southern Orange counties by 10% after the merger is completed.

Van de Kamp will oppose the proposed merger during regulatory reviews under way by the state Public Utilities Commission and the Federal Energy Regulatory Commission.

However, Van de Kamp said it was premature to consider a court challenge because state and federal regulators have not yet completed their reviews. He said he will not consider court action until regulators have “played through the entire administrative proceedings . . . that’s the only appropriate thing to do.”

The PUC, which begins public hearings in April, hopes to deliver a ruling early in 1991. Federal regulators, who begin merger-related hearings on Monday in Washington, expect to complete their review by year’s end.

In reply to Van de Kamp’s charges, Edison vice president Louis Phelps said Wednesday that they were “100% wrong.”

“The merger will benefit consumers by providing $1.7 million in lower rates and improved service,” Phelps said in a prepared statement. The merger would “result in cleaner air . . . (and) economic benefits to all of Southern California. . . . And it does not result in adverse competitive impacts,” Phelps said.

Van de Kamp denied that his opposition to the merger was linked to his bid to be the Democratic gubernatorial candidate in November. He maintained that his decision to oppose the merger was driven “by the evidence, which stands for itself.”

Van de Kamp said U.S. Sen. Pete Wilson, the leading Republican candidate in the governor’s race, “has some amount of discretion” as to whether he should oppose the merger. However, as a U.S. senator, Wilson will not play a “controlling” role in whether the merger succeeds, Van de Kamp said.

Larry O’Donnell, chairman of San Diegans for the Merger, said Van de Kamp was “carrying his gubernatorial campaign to Pete Wilson’s back yard. . . . He’s read the polls (that show opposition to the merger) and is trying to essentially run a . . . campaign . . . (on) the merger.”

Van de Kamp acknowledged that the merger has drawn strong opposition from many civic leaders in the county.

“San Diego does not want to become an energy suburb of Los Angeles County,” Van de Kamp said. “The loss of regional independence and local control are legitimate concerns, precisely the kinds of concerns that prompted the passage of antitrust laws in the first place.

“The people of Los Angeles are less interested in this merger than the people of San Diego (because) it touches them less directly. (But) there are certainly interests way beyond San Diego that are affected by this.”

Van de Kamp charged that the merger could cause a dramatic increase in air pollution in the Los Angeles Basin because Edison intends to use its excess plant capacity there to generate power for use in San Diego. Edison has maintained that air quality will not suffer because it is fitting its plants with state-of-the-art pollution controls.

Spokesmen for smaller, municipal utilities, which operate in areas not served by Edison, on Wednesday welcomed Van de Kamp’s decision to oppose the merger.

“We’re pleased that the attorney general has recognized the very real concern of the municipal utilities regarding transmission access if a merger takes place,” said Jerry Jordan, executive director of the California Municipal Utilities Assn.

Van de Kamp supported the municipal utilities’ contention that the proposed merger would cause antitrust problems because Edison would extend its already impressive web of transmission lines leading in and out of Southern California.

Edison in the past has been sued by publicly owned utilities--including municipal systems owned by Anaheim, Azusa and Riverside--for not granting wider access to its electric transmission lines. Most of Southern California’s municipal utilities meet their customers’ demand by using Edison’s transmission lines to import electric power generated by out-of-state utilities.

A merger with SDG&E; would give Edison “near-monopoly control of bulk power production and transmission into and out of the entire Southern California region,” Van de Kamp said. “History teaches us that, over time, such power is almost always used to enrich those who wield it at the expense of those who do not.”

Van de Kamp told Edison officials of his planned opposition last week during a three-hour meeting. SDG&E; spokesman Tom Murnane said SDG&E; officials were not invited to that meeting.