U.S. Agency Urged to Ignore Ruling on Utility Merger

The Justice Department and the Federal Energy Regulatory Commission’s staff have urged the FERC to ignore key portions of an administrative law judge’s recommendation that described Edison’s proposed merger with San Diego Gas & Electric as anti-competitive and unlikely to generate economic benefits for Southern California electric utility customers.

In separate filings on Thursday with the FERC, the Justice Department and the FERC staff argued that FERC Administrative Law Judge George P. Lewnes failed to follow Justice Department guidelines in the Nov. 27 recommendation that urged the FERC to prohibit the merger on antitrust grounds.

The Justice Department argued that Lewnes’ recommendation was based upon “misperception and misapplication” of the Justice Department’s antitrust guidelines. The Justice Department argued that Lewnes also ignored Edison’s willingness to incorporate merger conditions that the Justice Department had designed to “address and alleviate” possible antitrust concerns.

Similarly, the FERC staff filing described Lewnes’ antitrust concerns as “contrary to accepted antitrust analysis.” The FERC staff filing also maintained that the two utilities had proven that the merger would produce economic benefits that would be shared by utility customers in Southern California.

Commissioners have the option of endorsing or ignoring Lewnes’ report when they make a final ruling on the controversial merger early in 1991. Commissioners also could ignore or endorse the merger-related reports issued by its own staff, the Justice Department or any other intervenor in the FERC’s ongoing merger review.

Merger opponents on Friday downplayed the significance of the three filings made Thursday.

“We think Lewnes’ recommendation is the correct one, and that it should be affirmed by the commissioners,” said David Bardin, a Washington-based attorney who represents the City of San Diego, a merger opponent, in FERC proceedings.

“There are no surprises” in the FERC staff and Justice Department filings, Bardin said. “The staff simply regurgitated what they’ve said before and the Justice Department regurgitated what it’s said,” Bardin said.

Edison, in a separate filing with FERC on Thursday, described the recommendation that Lewnes issued in late November as “fatally flawed.” Edison argued that “the logic of the initial decision (by Lewnes) would declare all mergers illegal. That plainly is not the law.”