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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): July 1, 1994 . . . . . . . . . . . .
SAN DIEGO GAS & ELECTRIC COMPANY
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Exact name of registrant as specified in its charter)
CALIFORNIA 1-3779 95-1184800
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
101 ASH STREET, SAN DIEGO, CALIFORNIA 92101
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Address of principal executive offices) (Zip Code)
(619) 696-2000
Registrant's telephone number, including area code . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Former name or former address, if changed since last report.)
FORM 8-K
Item 5. Other Events
On July 1, 1994 a California Public Utilities Commission Administrative Law
Judge issued a preliminary decision approving the Base Rates component of
SDG&E's Performance-Based Ratemaking Plans. Additional information is
included in the attached press release.
On July 5, 1994, SDG&E announced a series of writedowns related to non-earning
assets of the utility and its subsidiaries for the second quarter. The total
amount of the one-time charges is approximately $80 million after-tax or
$0.67 per common share. Additional information is included in the attached
press release.
Item 7. Financial Statements and Exhibits
(c) Exhibits
28.1 July 5, 1994 San Diego Gas & Electric Company Press Release
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAN DIEGO GAS & ELECTRIC COMPANY
(Registrant)
By: /s/ F. H. Ault
-----------------------------------------
F. H. Ault, Vice President and Controller
FOR IMMEDIATE RELEASE EXHIBIT 28.1
PERFORMANCE-BASED RATES Writedowns
Art Larson (619) 696-4307 or Gretchen Griswold ((619) 696-4309
David M. Kusumoto (619) 696-4289
'TRADITIONAL' UTILITY RATEMAKING A STEP AWAY FROM
OBSOLESCENCE, SAYS SDG&E;
COMPANY ALSO ANNOUNCES $80 MILLION WRITEDOWN
SAN DIEGO, July 5, 1994 -- An administrative law judge approved late
Friday a precedent-setting ratemaking plan for San Diego Gas & Electric (NYSE:
SDO) which now requires final approval from the California Public Utilities
Commission (CPUC), perhaps as early as August, company officials announced
today.
The so-called "Performance-Based Rates" plan would align shareholders' and
customers' interests through a revenue-sharing mechanism allowing both groups to
benefit when the company's financial performance results in earnings in excess
of the authorized rate of return plus 1 percent. Company shareholders absorb
the full impact if earnings fail to meet the authorized rate of return --
with no risk whatsoever to customers.
The plan also ties SDG&E's earnings to its ability to meet a number of
performance measures -- including keeping its prices among the lowest in
California among investor-owned utilities.
(MORE)
SDG&E RATE PLAN APPROVED/WRITEDOWNS ANNOUNCED 2-2-2-2
-- MOST COMPREHENSIVE PERFORMANCE-BASED PLAN IN THE NATION --
"The CPUC's approval of the Administrative Law Judge Mark Wetzell's July 1
recommendation would make SDG&E's performance-based plan the nation's most
comprehensive," said SDG&E President, Chairman and CEO Thomas A. Page.
"This is the next-to-last step in breaking the long-standing practice of
setting rates based on expenses and sheer volume of money invested -- with a
built-in shareholder return -- in facilities built on customers' behalf," Page
said. "As the commission takes action on this proposal, the next chapter is
opened in making California's electric industry more competitive, because
keeping rates down is the universal goal of the plan."
Under the proposal, SDG&E's earnings will depend on cost control and its
performance in key areas of employee safety, customer satisfaction, system
reliability and rate comparison. These key targets provide SDG&E with the
opportunity to receive up to an additional $19 million in rewards, or as much as
$21 million in penalties. This gives SDG&E tangible incentives to keep its
prices competitive with national and state rates while ensuring its high levels
of service and reliability are maintained or improved.
-- A COLLABORATIVE EFFORT: CONSUMER GROUPS ENDORSED PLAN LAST FALL --
Last fall, a settlement of this plan was reached with two groups
representing customers -- the Public Utilities Commission's Division of
Ratepayer Advocates and the Federal Executive Agencies, representing the
U.S. Navy, the company's largest customer.
(MORE)
SDG&E RATE PLAN APPROVED/WRITEDOWNS ANNOUNCED 3-3-3-3
SDG&E currently charges the lowest overall (system average) rates among
investor-owned utilities in California. In its most recent survey of 1993
summer residential electric rates, the National Association of Regulatory
Utility Commissioners placed SDG&E 43rd highest among nearly 200 utilities,
below the rates charged by Pacific Gas & Electric, based in San Francisco,
and Southern California Edison, based in Rosemead, California.
Two other PBR mechanisms have already been approved by the PUC. The
"competitive gas procurement" and "electric generation and dispatch" mechanisms
involve beating market-based benchmarks associated with buying natural gas and
other fuel and purchased power resources -- as well as improving overall
electric system performance. Significant customer savings have been accrued
since implementation of the two mechanisms on Aug. 1, 1993.
-- SDG&E REPORTS SERIES OF WRITEDOWNS: DIVIDEND NOT AFFECTED --
In an unrelated event, the company today announced a series of writedowns
related to the utility and its subsidiaries for the second quarter. The total
amount of the one-time charges is approximately $80 million after-tax, or 67
cents per common share.
"This one-time writedown does not have an impact on SDG&E's current
dividend," said Page.
"The purpose of one of the company's goals of increasing earnings per share
is to allow dividend growth at about the industry average," Page added. The
SDG&E board of directors reviews the dividend on at least an annual basis, which
typically occurs prior to the annual meeting in April.
(MORE)
SDG&E RATE PLAN APPROVED/WRITEDOWNS ANNOUNCED 4-4-4-4
Wahlco Environmental Systems, Inc., 80-percent owned by SDG&E, will incur
a one-time charge of approximately $56 million after-tax, which will reduce
SDG&E's earnings per share by approximately 47 cents.
This one-time charge consists primarily of a $50 million reduction in
goodwill with the balance representing write-downs of patents and other
intangible assets (based on Wahlco's expectations in light of a depressed air
pollution control market and increased competitive and margin pressures), assets
associated with closed operations that are being reduced to net realizable
value, costs associated with severance payments, and other costs associated
with closing facilities.
Phase One Development, Inc., a wholly owned subsidiary, will incur a
one-time charge of approximately $11 million after-tax, or 9 cents per SDG&E
common share. The charge relates to the write-down of properties to market
value. Phase One operates business parks in Colorado Springs and in San Diego,
and the Belmont commercial mall in San Diego.
The utility will record a charge of approximately $13 million after-tax, or
11 cents per share. The charge results primarily from writing down non-earning
assets, partly in response to the rapidly changing electric services industry in
California.
SDG&E will announce its second quarter results on July 25 and Wahlco will
announce its second quarter results during the week of Aug. 1, 1994.