Victory Is Sweet for S.D.’s Merger Foes

SAN DIEGO —  Reacting with the special joy savored by all victorious long shots, San Diego’s political, business and labor leaders greeted Wednesday’s rejection of the proposed merger between Southern California Edison and the San Diego Gas & Electric Co. with a blend of unrestrained euphoria and vest button-popping civic pride.

“It’s sweet to be the mayor of San Diego,” said a jubilant San Diego Mayor Maureen O’Connor, who spearheaded the anti-merger battle that was given little chance of success when it began three years ago. “Once again, San Diego defied the experts and won big.”

Both inside and outside City Hall, and even in portions of SDG&E;’s downtown headquarters--where many rank-and-file workers feared that the merger would mean, at best, relocation or, at worst, unemployment--the Public Utilities Commission’s action was hailed as a victory against daunting odds that will preserve a major local corporate citizen, save hundreds of jobs and retain low rates.

“It’s been a long time since David slew Goliath,” San Diego City Councilman Ron Roberts said. “I think what we’re seeing here is a reenactment. David won again--no question about it!”

Local disappointment over Wednesday’s decision was largely confined to SDG&E;’s top leaders, who, despite the stunning setback, continued to portray the proposed merger as the best method of guaranteeing low utility rates and a dependable source of energy in the future.

“To say that I’m disappointed would be an understatement,” said SDG&E; chairman and chief executive officer Tom Page. “We’ve been working on this merger as the superior alternative for meeting the energy needs for San Diego and southern Orange County. We felt that a very strong case had been made.”

The PUC, however, unanimously disagreed with Page’s assessment, pointedly faulting the proposed merger on many of the very issues that Page characterized as its strongest selling points. And though SCEcorp, Edison’s Rosemead-based parent company, could decide to appeal that decision within the next month, merger opponents dismissed that possibility as a mere legal formality that would be as expensive as it would be fruitless--and potentially divisive--to pursue.

“My . . . opinion is that the merger is dead,” said Michael Shames, the executive director of Utility Consumers Action Network, a San Diego-based consumer watchdog group that opposed the merger.

“The companies would be well-advised and prudent to abandon the merger, thus saving taxpayers and shareholders any more expense,” added San Diego City Atty. John Witt.

While many politicians and others rushed Wednesday to share in the afterglow of the against-the-odds victory, two people--O’Connor and Shames--were widely credited as being the individuals most deserving of a place in the spotlight.

O’Connor, who saw the proposed merger as an affront to San Diego’s civic pride, provided the political will to spend $6.2 million in public funds at a time of severe budget constraints on a lobbying battle that many thought was unwinnable against the considerable political might--and deep pockets--of SCEcorp and its formidable chairman, Howard Allen.

Simultaneously, the mayor helped to shape an unlikely coalition of opponents ranging from environmentalists and labor unions to the conservative Greater San Diego Chamber of Commerce that consistently hammered away at the merger’s negatives: the loss of more than 1,300 jobs in San Diego, potential adverse environmental impacts, the unclear advantages to ratepayers.

Arguably O’Connor’s most valuable ally in that battle was Shames, whose voluminous, critical analyses of the merger’s economic consequences became the cornerstone of the city’s opposition.

“Michael Shames has put in literally thousands of hours on this thing,” said Bob Hudson, executive director of Coalition for Local Control, a chamber-organized anti-merger group. “But without the city’s support, Michael would have been out there alone.”

Even San Diego City Councilman Bob Filner, a frequent O’Connor critic who questioned the wisdom of devoting scarce city dollars to the anti-merger battle, lavished praise on the mayor Wednesday.

“Let me make one admission: I didn’t think we would do it,” Filner said at a City Hall news conference in which most of the council flanked a beaming O’Connor. “I was wrong and the mayor led us to this victory. And I’m proud to say that she was right.”

One of the few dissonant voices Wednesday was that of former San Diego Mayor Roger Hedgecock, who argued that the merger’s apparent defeat “raises a lot of questions about where SDG&E; goes from here.”

“I don’t think this is a victory for the community,” Hedgecock said. “The only issue should be, not the egos or political agendas of the people involved, but how San Diego can best get a reliable source of energy at the most reasonable price. Since SDG&E; said we were going to get those things by being associated with Edison, that’s now an open question.”

Concurring with Hedgecock on that point, Filner said: “SDG&E; is not an energy producer--it’s an energy broker. We have local control, but we still face the problem of energy sufficiency. If this isn’t the way to accomplish that, we’re going to have to find another way.”

Despite the overwhelmingly positive reaction to Wednesday’s decision, other potentially thorny long-range questions also were raised--among them, the merger’s possible effect on future utility rates and energy supplies, and Page’s credibility in continuing to head an independent San Diego company that he fought for three years to merge with an outside firm.

For her part, O’Connor said that even if SDG&E;’s rates were to go up “a little bit,” the price increase would be “nothing in comparison to what Southern California Edison would eventually cost the ratepayers of San Diego in the long haul.”

As he has from the outset, Page stressed that SDG&E; has been “on a parallel planning track to move forward as a stand-alone company if we need to”--contingency planning aimed at finding alternative options to address the questions about energy rates, sources and shareholder earnings that he thought the merger would answer.

Contending that he has spent less than 10% of his time on merger activities over the past three years, Page argued that, if necessary, he will have little difficulty in becoming an equally forceful--and credible--advocate for SDG&E;’s future without the merger.

“My whole motivation was . . . to better serve my customers,” Page said.

Asked directly whether he is concerned that Wednesday’s decision could ultimately cost him his job, Page added: “I have no plans to be any place else.”

Like other merger opponents, O’Connor sought Wednesday to focus on the immediate victory, deferring consideration of some of the lingering questions posed by it to another day.

“Today we’re celebrating,” O’Connor said. “Tomorrow we’ll start looking at what’s next.”