The California Public Utilities Commission on Thursday approved the marriage of the parents of Southern California Gas and San Diego Gas & Electric, removing the last major obstacle to the $6-billion-plus merger between Los Angeles-based Pacific Enterprises and Enova Corp. of San Diego
Although it found the merger to be in the public interest, the PUC handed the utility firms a defeat on the thorny issue of how to split cost savings from the merger between ratepayers and shareholders.
Top executives of the firms said they were happy with the decision, but expressed disappointment with the cost-savings ruling.
The companies had wanted to split the savings equally between the two groups over 10 years. But the PUC voted to allow an equal split of a smaller amount over just five years and to revisit the matter at the end of that time.
"We would have preferred adoption of our 10-year savings period, because it provides more certainty to customers and shareholders," said Richard D. Farman, Pacific Enterprises' president and chief operating officer.
"We're really pleased with the whole rest of the decision," added Stephen L. Baum, chairman and chief executive of Enova.
Consumer groups applauded the five-year provision. Michael Shames, executive director of the San Diego-based Utility Consumer Action Network, said the 10-year proposal would have amounted to a more than $350-million "windfall" for the firms and their shareholders.
Under the five-year plan, ratepayers would receive $175 million after adjustments, while the merged company and its shareholders would get $144 million. In the 10-year plan, ratepayers would receive $557 million after adjustments and shareholders would receive $531 million.