SoCal Edison to Pay Tucson Over Failed SDG&E; Merger
Southern California Edison will pay Tucson Electric Power $40 million to settle a lawsuit generated by Edison’s ill-fated attempt to merge with San Diego Gas & Electric in 1991, the companies said Wednesday.
The out-of-court settlement that will reduce Edison’s third-quarter net income by $24 million ended a jury trial that began last week in Superior Court in San Diego.
Edison “thought we had a stronger case but we opted to settle because the damages were so potentially large,” Edison spokesman Lew Phelps said Wednesday. Tucson Electric had sought $8.9 billion in compensatory and punitive damages, Phelps said.
The agreement “settles any and all activity related to that whole (merger) situation,” Tucson Electric Chief Operating Officer Kevern Joyce said Wednesday.
The $40-million payment includes $25 million to settle claims that Edison illegally interfered with Tucson Electric’s planned merger with SDG&E.; Edison also agreed to pay $15 million for “litigation and related expenses.”
“It looks like Tucson, which desperately needs cash, sold out because they probably had a stronger case than Edison,” said Michael Shames, executive director of Utility Consumers Action Network, a San Diego-based consumer group.
Tucson Electric’s common stock sold for nearly $60 per share during the go-go 1980s, but the stock since has plummeted to about $4. The company, which is burdened with a glut of high-priced electrical generating capacity, has flirted with bankruptcy in recent months.
The civil lawsuit followed a complicated series of merger offers and counter-offers involving Tucson Electric, SDG&E; and Edison.
Tucson Electric officials had maintained that Edison illegally interfered with their own ill-fated attempt to merge with SDG&E; in 1988. Financially troubled Tucson eventually abandoned its bid to merge with SDG&E; and Edison’s bid to merge with SDG&E; was denied by the state Public Utilities Commission in 1991.
In a related move, Edison and Tucson Electric signed a 10-year power exchange agreement that becomes effective in 1995. Tucson Electric will purchase electrical power from Edison during the summer, when its demand is highest, and transmit power to Edison during the winter. Tucson Electric will pay Edison $1.2 million annually for the power swap, which is subject to regulatory approval.
