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81 California Attorney General Reports and Opinions 1 (1998)

handle is hein.sag/sagca0081 and id is 1 raw text is: ATORNEY GENERAL'S OPINIONS Opinion No. 97-1216--January 2, 1998 Requested by: THE PUBLIC UTILITIES COMMISSION Opinion by: DANIEL E. LUNGREN, Attorney General J. Lindsay Bower, Deputy THE PUBLIC UTILITIES COMMISSION has requested an advisory opinion, pursuant to Public Utilities Code section 854, on the following questions: 1. Will the proposed merger between Pacific Enterprises and Enova Corporation adversely affect competition? 2. What mitigation measures could be adopted to avoid any adverse effects on competition that do result? CONCLUSIONS 1. The proposed merger between Pacific Enterprises and Enova Corpora- tion should not by itself adversely affect competition in the markets for interstate gas or wholesale electricity. 2. The merger may eliminate the disciplining effect of San Diego Gas & Electric as a potential competitor in the partially regulated intrastate gas transmission market. We recommend that the Commission consider requir- ing the merged entity to auction offsetting volumes of transportation rights within that system. ANALYSIS The proposed merger of Pacific Enterprises and Enova Corporation is a response to the mandatory restructuring of the electric industry which began on January 1, 1998. Through their subsidiaries, Pacific is the leading southern California supplier of intrastate gas transmission services, Enova is an electric distributor and a relatively minor participant in the wholesale electricity market, and both firms distribute gas within their respective service areas. As regulated utilities doing substantial business within this state, the parties have submitted their application under Public Utility Code section 854. This memorandum responds to a Commission request for an opinion on the competitive effects of the transaction. Challenges to the merger have primarily focused upon alleged effects in the markets for wholesale electricity, interstate gas and intrastate gas transmission. Through Southern California Gas Company (SoCalGas), Pacific provides gas transmission services to many of the gas-fired genera- tion plants within southern California, including plants now owned by San (Manhew Render & Co., Inc.) January 1998 1

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