SDG&E; Allowed Time to Study Merger Proposal : Edison Heeds Plea for Consideration of $2-Billion Plan

SCEcorp, the parent company of Southern California Edison, has granted San Diego Gas & Electric’s request for more time to study SCEcorp’s $2-billion merger proposal, the utilities said Thursday. The stock-swap offer was to have lapsed this afternoon.

SDG&E; requested the extension to give its board of directors adequate time “to study and consider” the proposal, according to an SDG&E; spokesman who declined to make further comment on SCEcorp’s proposal.

Edison agreed to the extension late on Wednesday afternoon, according to a spokesman.

Earlier this week, Edison Chairman Howard Allen said that, within six months of completing the proposed merger, Edison would seek a 10% rate reduction for SDG&E;’s residential customers.

The proposed merger would swap 1.15 shares of SCEcorp for every share of SDG&E.; However, Edison conditioned its June 25 merger offer on SDG&E; abandoning a previously announced merger with Tucson Electric Power, an Arizona-based utility.

SDG&E; Chairman Thomas Page has said that SDG&E; does not intend to abandon the Tucson Electric merger.

On July 29, a disgruntled SDG&E; shareholder filed suit against the San Diego-based utility, complaining that SDG&E; board members were “breaching their fiduciary duties . . . by refusing to negotiate in good faith with SCE and attempting to create obstacles to SCE making its highest offer to SDG&E; shareholders.”

The suit alleged that SDG&E;’s managers were not seriously considering Edison’s merger proposal because their jobs would become “superfluous and unnecessary” should SDG&E; be merged in with Edison. The suit claims that SDG&E; managers would remain employed if the Tucson Electric merger is completed.

In a related matter, the state Public Utilities Commission on Monday will begin what evidently will be a year-long review of SDG&E;’s proposed merger with Tucson Electric. A number of interested parties--including Edison, the City of San Diego and a San Diego-based consumer group--are expected to take part in that review.

SDG&E;’s proposed merger with Tucson Electric is subject to nearly half-a-dozen regulatory approvals, including regulators in Arizona and the Federal Energy Regulatory Commission.