‘Competition’ Debated at Utility Merger Hearing : Electricity: PUC may make final decision on proposed Edison takeover of SDG&E; on April 10.

Opponents and proponents of Southern California Edison’s planned merger with San Diego Gas & Electric Co. used a daylong public hearing here Wednesday to debate the complicated but still-unsettled question of how to define competition in the traditionally monopolistic utility industry.

Although decidedly arcane, that definition will play perhaps the central role when the state Public Utilities Commission determines if the controversial merger should be completed.

The PUC could cast a final vote at its April 10 meeting on what would be the biggest combination ever of shareholder-owned utilities. “We’ll make every effort to decide it then,” Commissioner G. Mitchell Wilk said as the PUC effectively ended 2 1/2 years of public review of the proposed merger.

Wednesday’s hearing focused on the controversy that state Atty. Gen. Dan Lungren, a conservative Republican, stirred last month when he rejected his predecessor John Van de Kamp’s interpretation of a state law passed to govern consideration of the Edison-SDG&E; merger.

The law, S.B. 52, prohibits large utility mergers that produce anti-competitive effects. Van de Kamp, a liberal Democrat, had issued an opinion last year saying only mergers that both save ratepayers money and in no way reduce competition can pass muster under the law. Lungren’s new opinion says saving money can “balance” any anti-competitive results of a merger.

Attorneys representing Edison and SDG&E; argued Wednesday that Lungren’s broader interpretation would allow the merger to proceed, because it would produce at least $1 billion in cost reductions that would be used to lower electric rates.

“Anti-competitive deals produce higher costs for customers, and pro-competitive deals produce lower costs,” SDG&E; Chairman Tom Page said after the hearing. “We’ve got a merger that will produce at least $1 billion in savings. How can that be anti-competitive?”

But merger opponents--including Michael Shames, executive director of the San Diego-based Utilities Consumer Action Network--disputed that definition of competition.

“I don’t think that the commissioners even believe that the promised $1 billion in savings exist,” Shames said. “They are not going to approve this merger.”

In fact, commissioners gave few clues Wednesday about how they would vote on the merger, that would create a utility with 4.8 million customers.

Newly appointed Commissioner Norman Shumway, a former congressman, said that his “mind is still very much open” about the long-discussed merger, which is opposed by San Diego officials and business leaders.

Commissioner John Ohanian indicated that he would approve the merger only if it provided “benefits” to ratepayers. In his judgment, Ohanian said, the competitive impacts of the merger will be relegated to second place behind customer benefits.

The commission directed opponents and proponents of the merger to submit written arguments on how to best define competition among utilities.