SCEcorp to Ask OK for Hostile Bid for SDG&E; : Regulators’ Permission Would Be Required

SCEcorp, which in September was thwarted in a $2.16-billion friendly merger bid with San Diego Gas & Electric, will soon formally ask state regulators for permission to begin a hostile takeover of the San Diego utility, SCE spokesman Lewis Phelps said Friday.

The application is important because it could allow the state Public Utilities Commission to hold hearings to consider the SDG&E;/SCE merger’s potential benefits to power users. That process evidently could run concurrent with public hearings that the PUC is conducting to review SDG&E;’s previously announced merger with Tucson Electric Power.

Rosemead-based SCE, the parent company of Southern California Edison, informally advised the state Public Utilities Commission of its intent to file the application in a letter this week from SCE Chairman Howard Allen. Phelps refused to say when the merger application would be filed. A merger of the two companies would create the nation’s largest utility.

William L. Reed, SDG&E;’s director of regulatory affairs, said the application by SCE would ultimately work out well for SDG&E; because it will force SCE to “fully disclose and support what they see as the benefits of a merger . . . in the context of the already existing proposal of the SDG&E; and Tucson Electric merger.”

Statute Dispute

In a related development on Friday, the PUC agreed to hold hearings on the legality of SCE’s recent acquisition of 1,000 shares of SDG&E; common stock. SDG&E; had petitioned the PUC for a declaration that the stock purchase was illegal, maintaining that it violated a statute that prohibits a California utility from acquiring another regulated utility’s stock.

SCE, which has argued that the statute does not apply to holding companies that own utility subsidiaries, had asked the commission to dismiss SDG&E;’s petition. A Superior Court judge in San Diego will hear arguments on that point of law Monday. SCE has asked the judge to order SDG&E; to turn over the shareholder lists.

According to recent SCE court filings in San Diego Superior Court, SCE acquired the shares in order to gain access to SDG&E;’s shareholder lists, which SCE may use to initiate a proxy fight, a special shareholder meeting or a stock-swap offer.

Times staff writer Chris Kraul contributed to this report.