Public Hearings Open Today on Utility Merger

It’s been 17 months since Southern California Edison and San Diego Gas & Electric agreed to merge and create the nation’s largest gas and electric utility with more than 4.8 million customers.

The utilities and groups that oppose the $2.4-billion stock swap merger have deluged the state Public Utilities Commission, which must approve the proposed merger, with thousands of pages of technical testimony about the proposed deal.

But today’s 3 p.m. and 7 p.m. public hearings in San Diego mark the first time that the PUC has opened its ongoing review directly to Southern Californians, who each month send utility bills to the two companies. During coming weeks, the PUC will host 13 public hearings in cities that would be affected by the merger.

The public hearings are being run in tandem with a lengthy series of evidentiary hearings, highly complex proceedings that are designed to help the PUC determine whether the merger will produce the long-term customer benefits claimed by the utilities.

The utilities believe that the merger will produce $1.7 billion in savings during the 1990s. Company executives argue that the plan will reduce electric rates and improve service for customers of both companies. They also maintain that the merger will improve air quality in San Diego.

Opponents, however, seriously doubt that the merger will produce long-term benefits for Edison and SDG&E; customers. They have maintained that the merger will damage air quality in both Greater Los Angeles and San Diego County. And, they believe that creating the nation’s largest gas and electric would end what little utility competition exists in Southern California.

Among opponents to the merger are the PUC’s Division of Ratepayer Advocates, a staff group that represents utility customers in PUC proceedings, and John Van de Kamp, the state attorney general. The merger also has drawn opposition from several municipally owned utilities in Los Angeles, Orange and Riverside counties that must use Edison’s transmission lines to carry electric power into their service territories.

The PUC isn’t scheduled to make a final decision on the merger until late this year or early in 1991.

The utilities and their opponents will use the evidentiary proceedings to make their cases, but the public hearings that begin today in San Diego “are the only opportunity that the public will have to speak face-to-face with a commissioner,” said Michael Shames, executive director of Utility Consumers Action Network, a San Diego-based consumer group. “The commissioners want to get a feeling for what San Diegans expect will happen if this merger occurs. They want to know why they are opposed to it or favor it.”

UCAN is one of several San Diego-based organizations, including the Sierra Club and the Chamber of Commerce, that oppose the merger. UCAN has joined forces with the San Diego-based Coalition for Local Control, an organization that includes representatives from civic, labor, business and citizen action groups.

While commissioners will use the ongoing evidentiary proceedings to determine whether the merger will produce any benefits for ratepayers, they will use testimony gathered during the public hearings “to determine what the ‘public interest’ in this merger actually is,” Shames said.

That input will be important, he said, because the PUC needs to determine how to best serve the public interest. “Maybe rates wouldn’t go down (after the merger) but service would be improved,” Shames said. “Or, they might have to decide what to do if (the evidence suggests) that rates will go down slightly but service won’t be improved. The public hearings will help them determine the public interest.”

Merger proponents and opponents tend to agree that San Diegans have the most at stake in the proposed merger, if only because it stands to lose SDG&E;, which is one of the county’s few remaining large, publicly owned companies.

San Diego Mayor Maureen O’Connor, who has adamantly opposed the merger, has described the merger as the most important issue of her political career. The City of San Diego already has agreed to spend $2.5 million to oppose the merger in evidentiary proceedings both at the PUC and the Federal Energy Regulatory Commission.

Elsewhere in Southern California, interest in the merger has been spotty.

In Edison’s service territory, “many people don’t recognize the enormity of this proposal,” said Sigrid Hawkes, an organizer for TURN, a Northern California-based consumer group that is expanding its membership in Southern California. “We’re trying to educate people about the issue and get them to the public hearings. Many of them don’t understand that this (hearing schedule) is their chance to say something.”

But interest has remained relatively strong in San Diego. Already, 246 San Diegans have written to the PUC’s Public Advisor’s Office expressing support or objection to the merger. About 40 San Diegans have expressed interest in going beyond merely attending the public hearings and becoming intervenors in the complex case.

“That’s a huge number for a utility proceeding,” Shames said. “That’s the largest number of people that I’ve ever heard of. It’s an astounding number, a graphic example of how people are interested in this merger.”

Will anything new be heard during the hearings?

“My guess is that, yes, something new will surface,” Shames said. “It’s been my experience that we get exposed to the ‘popular wisdom’ that eludes (utility industry observers),” Shames said. “I always learn a lot at public hearings.”

“It will be interesting,” said Robert Hudson, executive director of the Coalition for Local Control. “And the PUC will listen. Remember the $4.80 service charge that was repealed (after a public hearing in San Diego several years ago)? That’s the most obvious example of . . . the PUC listening to the public.”

“This is the only chance for San Diegans to express themselves on this merger,” Hudson said. “There’s not going to be any binding vote (taken) on it.”

“The PUC runs an honest game,” said Larry O’Donnell, founder of San Diegans for the Merger, a group that is funded in part by the utilities. “The hearings are designed so the . . . commissioners can have some feeling of what public sentiment is in the service territories, and we’ve asked our 2,000 members to make their views known.”

O’Donnell said his group today will give the PUC “tens of thousands” of names on petitions gathered in San Diego. The petitions urge the PUC to allow Edison to follow through with its promise of a 10% residential electric rate reduction if the merger is approved. Opponents have maintained that the PUC would not allow Edison to institute rate reductions in San Diego that weren’t matched elsewhere in its vast service territory.