Council OKs $500,000 for Merger Fight : Utilities: Two state judges recently urged against combining SDG&E;, Edison.

Encouraged by an important victory last week, the San Diego City Council on Tuesday agreed to spend another $500,000 on its attempt to thwart the proposed merger of San Diego Gas & Electric Co. and Southern California Edison Co.

The 7-0 vote, with councilmen Bob Filner and Bruce Henderson absent, brings the city’s total allocations for attorneys, consultants and outside experts since 1988 to more than $6.2 million. Most of the money has been spent, but some will be paid out over the next few months.

The sum is just a fraction of the $87 million that the two electric utilities have spent on similar expenses, a cost borne by their shareholders. SDG&E;’s $18 million in spending includes the costs of its aborted merger with a Tucson utility.

“This is clearly not the time to tie the hands of our city attorney,” merger opponent Michael Shames, executive director of the Utility Consumers Action Network, told the council. “We’re extremely close to prevailing.”

Two state administrative law judges Friday recommended rejection of the $2.6-billion merger, arguing that it would lessen competition for electricity, give the merged companies undue control over transmission lines and accord them too much authority to negotiate contracts with power suppliers.

The merger would create the largest investor-owned utility in the country and affect more than 5 million Southern California ratepayers. Mayor Maureen O’Connor has vociferously led opposition to the plan, arguing that the merger won’t produce lower electric rates, air quality will suffer and the loss of another major corporate headquarters will hurt the city.

The state Public Utilities Commission, which must make the final decision on the merger, is expected to be the target of intense lobbying from all sides. A hearing before the PUC may be held as early as this spring.

In another closely watched legal matter, the council again postponed a decision on whether to pay more than $104,000 in fees to an attorney hired by council members Filner, Linda Bernhardt and John Hartley in last summer’s court battle over reapportionment. The matter will be discussed in two weeks.