Utility Merger Antitrust Issue Said Resolved : Energy: The Justice Department reportedly has reached agreement with SDG&E; and Edison over antitrust issues raised by the proposed merger.

The U.S. Department of Justice has reached an agreement with Southern California Edison and San Diego Gas & Electric that “adequately resolves” antitrust issues generated by the utilities’ proposed merger, Edison Executive Vice President John E. Bryson said Tuesday.

A Justice Department spokesman was not available late Tuesday for comment on the agreement, but Bryson said that with the negotiated settlement in place, “the Justice Department’s antitrust division no longer has any concerns” about the proposed merger’s impact on utility competition in Southern California and the West.

“These conditions adequately resolve any concerns they might have had about competition,” Bryson said.

The agreement was hammered out during negotiations that began in April, shortly after the Federal Energy Regulatory Commission completed fact-finding hearings on the proposed merger, Bryson said. While the Justice Department did not take a formal position on the merger during those hearings, its antitrust division subsequently raised anti-competition concerns, Bryson said.

It was uncertain Tuesday afternoon whether the agreement would eliminate antitrust and anti-competition objections raised by state Atty. Gen. John Van de Kamp and state Public Utilities Commission staff members.

“If this is indeed the case, then as we’ve said before, (Edison Chairman) Howard Allen has friends in high places,” San Diego Mayor Maureen O’Connor, who had not yet seen the agreement, said.

Van de Kamp also had not yet seen the final agreement reached by the Justice Department and the utilities, but “we were sufficiently concerned with a previous version that Van de Kamp personally contacted the head of the Justice Department’s antitrust division,” Special Assistant Atty. Gen. Mike Strumwasser said Tuesday. Van de Kamp “spent an hour on the telephone . . . telling him why (the department) doesn’t seem to understand this case very well,” Strumwasser said.

Michael Shames, executive director of the Utility Consumers Action Network, a San Diego-based consumer group, described the agreement as “a step in the right direction” because “it’s Edison’s first concession that there would indeed be anti-competitive problems associated with the merger. . . . But I don’t think the conditions are going to appease the state attorney general, the PUC’s Division of Ratepayer Advocates or the utilities in this region.”

Bryson, however, maintained that the Justice Department agreement would “refine and advance the pro-competitive elements of this merger (as described in) our initial filings with” federal and state regulators.

The Justice Department will file its official version of the agreement with the FERC later this week, Edison spokesman Lew Phelps said. Justice Department officials believe that the conditions in the agreement “adequately resolve any concerns” about antitrust and anti-competition issues, he said. “The adequately resolve phrase is language that they have specifically authorized us to use in our FERC filings.”

The agreement reached would force the merged companies to give other utilities limited access to the extensive web of transmission lines that Edison and SDG&E; own in California and the West should federal and state officials approve the $1.5-billion stock-swap merger.

The combined companies’ transmission grid would play a vital role for utilities that hope to buy and sell--and then transmit--electrical power that is generated at coal-fired plants in the Southwest and hydropower plants in the Northwest.

Under the agreement reached Tuesday, utilities would compete for available transmission space on the combined utility companies’ transmission lines through a bidding system designed in part by a Justice Department economist, Bryson said.

Edison and a group of municipally owned electric utilities in cities such as Orange, Anaheim and Colton have been feuding about transmission access for more than 20 years. Strumwasser on Tuesday suggested that it would be difficult for the Justice Department’s agreement to solve that longstanding argument.