2 Energy Debt Deals Criticized

A consumer activist group Monday blasted as costly and misleading a pair of deals between San Diego Gas & Electric and the state to wipe out nearly $750 million in future balloon payments by consumers and to sell the utility’s transmission lines.

“The residents of San Diego and their elected officials should be taking unprecedented steps to block an ill-conceived deal that could end up costing San Diego dearly for the next decade,” said Michael Shames, executive director of the Utility Consumers’ Action Network.

SDG&E; Chairman Edwin A. Guiles said the proposals are “a pretty balanced deal for customers.”

One of the deals was trumpeted June 18 by SDG&E; and Gov. Gray Davis as a way to eliminate, without raising rates, nearly $750 million in electricity debts that the utility had amassed buying power for its customers in San Diego and south Orange County. SDG&E; was guaranteed repayment by legislation signed last fall that capped electricity rates for SDG&E; customers.

UCAN contends that the $747-million debt “is a fiction, if not a fraud” because it would shrink to merely $43 million if SDG&E; were to credit certain unpaid penalties assessed by regulators, some of which are tied up in court. Under the deal with the state, the lawsuit would be dropped.

Guiles responded that the agreement “gets us down the road without having to litigate. . . . We feel that the shareholders have contributed a lot to get this [electricity debt] down to zero.”

The second deal, announced at the same time but not linked to the debt agreement, would sell SDG&E;’s 1,800 miles of transmission lines to the state, easing the state closer to its goal of a state-controlled power grid. UCAN said the state is paying too much for transmission lines and for electricity under a 10-year agreement with a sister company of SDG&E.;

Shares of SDG&E; parent Sempra Energy fell 24 cents to close at $25.45 on the New York Stock Exchange.