Decision on SCE-SDG&E; Merger Due Today

After three years of politicking and debate over the proposed merger of Southern California Edison and San Diego Gas & Electric, California utility regulators are expected to break the logjam today when they cast their final vote on the proposal.

The five members of the Public Utilities Commission are expected to rule this morning on the marriage of the two utilities--a union that San Diego Mayor Maureen O’Connor and other city officials have opposed from the start.

If approved, the merger would create the nation’s largest investor-owned utility--with $18.2 billion in assets. It would serve 5.1 million customers in a service area covering 54,100 square miles.

If denied, both Edison and SDG&E; say they stand ready to continue as stand-alone utilities. But SDG&E; officials have said they would need to look elsewhere for additional power supplies to meet increased demand.

The merger must also be approved by the Federal Energy Regulatory Commission, which is expected to rule on it this summer.

Both utilities have maintained that the merger would hold electricity rates down because the companies would benefit from economies of scale. In a report issued in February, two PUC law judges found that the merger would produce about $1 billion in savings during the coming decade that could be used to lower rates.

But critics of the merger contend that rates may drop only a few cents on each residential bill. Furthermore, they have said that the merger would have a detrimental effect on the environment.

While Edison has crafted mitigation plans with air-quality officials in its service area, it is at odds with San Diego air quality officials, who say smog conditions will worsen if the two companies become one.

A majority of SDG&E;’s employees, meanwhile, also oppose the merger because they believe it will eliminate their jobs. Both utilities have maintained that no jobs will be lost.

Should the merger be approved, SDG&E; shareholders will receive 1.3 shares of SCEcorp common stock for each share of SDG&E; common stock. Preferred and preference stock will be traded evenly. SCEcorp is the parent holding company of Edison.