Southern California Gas Co., in a possible break with longstanding tradition, may impose fees for service calls that are now offered free and plans to cut its work force by 500 to 600 employees, mainly through attrition.
No final decision has been made on either the personnel cuts or the service fees, both of which would be aimed at slashing costs and improving competitiveness, gas company spokesman Richard Terrell said Friday.
The firm’s parent company, Pacific Enterprises, is struggling under a heavy debt load and sagging profits in its non-utility businesses.
Discussion of the possible actions follows the closure in May of 12 of the utility’s 47 branch payment offices, mainly in outlying suburbs. Those closings drew protests from community groups and a formal complaint that they would hurt poor, elderly and minority customers.
“What we see happening is that they want to reduce service in general in order to become what they say is ‘more competitive,’ ” said Susan Minato, a staff attorney with the Utility Workers Union of America, which represents about 5,000 gas company workers.
On Friday, Terrell acknowledged that new service call fees, if imposed, could apply to residential customers. But he insisted that no fee would apply to calls dealing with safety--including appliance adjustments or the lighting of pilot lights.
Terrell declined to speculate on the level of such fees or the savings that the company might realize. Any decisions affecting customers directly would have to be reviewed by the state Public Utilities Commission, he added.
Meanwhile, the company is in talks with Minato’s union and another representing about 1,000 workers on the best way to achieve the work force cuts. No layoffs are planned for at least the first three years of reductions, Terrell said.
“We want to work with unions to come up with a mutual understanding to do this in the quickest, smoothest way possible without dislocating any current employees,” he said. The 500 to 600 job cuts will come from both union and non-union ranks, Terrell added.
At the beginning of the year, Southern California Gas had 9,691 full-time employees, Terrell said.
Protests over the 12 branch office closures in May dissuaded the utility from shutting down--for the time being--another 25 offices, Terrell said. Customers use the offices to pay their bills in cash and to talk to utility employees.
The PUC is investigating the allegation that such closures disproportionately inconvenience poor, elderly and minority customers.
“On balance, we think that the closing of offices should be very carefully done because there are folks who are affected by the inability to use these facilities,” said Edmund J. Texeira, director of the PUC’s Division of Ratepayer Advocates. “The most adversely affected customers would be the lower-income folks, who don’t always have checking accounts.”
The PUC had not taken any action on the complaints, Texeira said.
Terrell said the closures affected only branch offices with low customer patronage. However, a gas company internal audit, obtained by The Times, concluded in part that “despite their relatively high costs, branch offices are justified because they provide an important service to the community and a local presence for SoCal Gas.”
Analysts speculated that the cost-cutting moves at profitable Southern California Gas were intended, in part, to boost the bottom line and take some of the pressure off the utility’s financially struggling parent company.
“The reality is their parent is not exactly burning up the golf course,” said David Fleischer, a natural gas analyst at Prudential Securities Inc. in New York. Besides Southern California Gas, Pacific Enterprises owns Thrifty Drug and Big 5 sporting goods stores.
Earlier this month, Pacific Enterprises announced a $110-million cut in its energy exploration and production budget for the coming year. It also plans an unspecified number of related layoffs and the sale of non-strategic assets in its retailing and energy exploration operations.
Pacific Enterprises has suffered from high debt and from weak profits in those two divisions.
But Terrell flatly denied that the utility’s possible actions were aimed at helping Pacific Enterprises.
He pointed out that the gas company, as a regulated utility, ultimately would have to pass on any cost savings to ratepayers.
While it is possible that immediate cost savings might generate higher profits for the gas company over the short-term--while the PUC adjusts the utility’s rates--Terrell said the program is designed to allow the utility to lower rates.
With lower rates, the utility would be a more attractive energy provider--especially to commercial and industrial customers, who can now bypass the utility to buy natural gas directly from producers or brokers.