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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): September 6, 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.)
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FORM 8-K
Item 5. Other Events
On September 6, 1994 SDG&E announced that it had reached an
understanding with the California Public Utilities Commission's
Division of Ratepayer Advocates to negotiate a settlement on the
recovery of costs associated with the San Onofre Nuclear Generating
Station. Additional information is included in the attached press
release and Memorandum of Understanding.
Item 7. Financial Statements and Exhibits
(c) Exhibits
28.1 September 6, 1994 San Diego Gas & Electric Company Press
Release
28.2 Memorandum of Understanding Between SDG&E and DRA Re Ratemaking
for SONGS Units 2 & 3
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
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F. H. Ault, Vice President and Controller
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EXHIBIT 28.1
FOR IMMEDIATE RELEASE
SDG&E SEEKS FASTER RECOVERY OF NUCLEAR
PLANT COSTS WITHOUT RAISING RATES
David Kusumoto, (619) 696-4289
FOR IMMEDIATE RELEASE
SAN DIEGO, CA, Sept. 6, 1994 -- An "understanding" has been
reached to negotiate a settlement between San Diego Gas & Electric
and the California Public Utilities Commission's (CPUC) Division of
Ratepayer Advocates (DRA) on the recovery of costs associated with
the San Onofre Nuclear Generating Station (SONGS), utility
officials announced today.
Among the elements that the "memorandum of understanding"
directs both parties to negotiate is a plan to accelerate from 19
years to eight years the recovery of construction and other capital
costs associated with the two remaining operating units at San
Onofre.
SDG&E owns 20 percent of SONGS while Southern California
Edison Company (SCE) retains majority ownership and operational
responsibility. SCE has signed a similar memorandum of
understanding with the DRA.
If a settlement agreement is reached with the DRA and approved
by the CPUC, SDG&E officials say it could play a pivotal role in
making future electricity produced at the plant competitive with
other sources of generation while not increasing rates for
customers.
"Today's news is the first step toward positioning the plant
for tomorrow's competitive electricity marketplace," said Thomas A.
Page, chairman, president and chief executive officer of SDG&E.
"This is the path we pledged to follow in our comments to the
Commission's 'Blue Book' proposal for restructuring the electric
industry."
Among the terms to be negotiated is a proposal to recover
SONGS' units 2 and 3 capital costs over an eight-year period
beginning Feb. 1, 1996, through 2003 -- rather than the anticipated
operational life of the units, which extends to 2013. During the
eight-year period, the rate of return would be reduced from the
current authorized level of 9.03 percent to 7.52 percent.
"Moving up the recovery of capital costs while decreasing the
PUC-authorized rate of return will result in a balance of
shareholder and customer interests that will not increase customer
rates," Page added.
SDG&E also proposes a pay-for-performance plan that would
encourage continued efficient operation of the plant while
protecting customers from subsidizing inefficient operations.
Under the plan, customers would pay about four cents for every
kilowatt-hour of electricity produced by the plants during the
eight-year period. This pricing plan would replace the traditional
ratemaking treatment for the ongoing operating and capital expenses
for SONGS.
SDG&E and the DRA are working to complete a definitive
settlement agreement, and they will hold a settlement conference in
the near future to explain the settlement terms. SDG&E and the DRA
will seek PUC approval of the proposed settlement by the end of
1994. The Commission can accept, modify or reject SDG&E and the
DRA's proposal.
SONGS 2 and 3 began commercial operation in August 1983 and
April 1984, respectively, with SDG&E's share of the capacity at 214
megawatts for Unit 2 and 216 megawatts for Unit 3.
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EXHIBIT 28.2
Memorandum of Understanding Between SDG&E and DRA
Re Ratemaking for SONGS Units 2 & 3
This MOU is not a settlement agreement or stipulation between SDG&E
and DRA, but forms the basis for a future settlement or
stipulation. SDG&E and DRA agree not to publicly disclose the
terms of this MOU until the similar MOU between Edison and DRA has
been approved by Edison's Board. SDG&E and DRA will conduct these
negotiations in confidence pursuant to Rule 51.9 of the
Commission's Rules of Practice and Procedure. SDG&E and DRA will
make all reasonable efforts to negotiate the settlement or
stipulation in time for the Commission's approval to be effective
1/1/95.
1. SDG&E will accelerate the recovery of its share of SONGS 2 &
3 sunk costs commencing on 2/1/96 and terminating on 12/31/03
("8-Year Period).
2. The sunk costs SDG&E will recover is a SONGS 2 & 3 rate base
amount of $764 million less the accumulated deferred taxes of
$166 million.
3. During the 8-Year Period, SDG&E will earn a return on SONGS 2
& 3 sunk costs equivalent to 7.52% on rate base.
4. SDG&E will remove the revenue requirement in rates as of
1/31/96 for items identified as SONGS 2 & 3 sunk costs.
Starting 2/1/96, the SONGS 2 & 3 sunk costs shall be placed in
rates and recovered over 8 years.
5. DRA and SDG&E shall negotiate terms and conditions in the
final settlement document consistent with those on the SONGS
1 model to address permanent closure of SONGS 2 and/or 3.
6. On 2/1/96, SDG&E will reduce its ERAM Margin by the amount of
O & M expenses to be recovered through the Incremental Cost
Incentive Pricing ("ICIP").
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1 The amount to be amortized will consist of SDG&E's SONGS
2 & 3 sunk costs based on Edison's billings related to
the period ending 1/31/96 and will include amounts for
Marine Mitigation costs; Design Basis Documentation; COD
Adjustment; and MS Inventory.
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7. From 2/1/96 through 12/31/03, SDG&E must accept on behalf of
its customers all of its share of SONGS 2 & 3 output. The
following Incremental Cost Incentive Pricing ("ICIP") subject
to verification, by year, shall apply to recovery of SDG&E's
incremental costs:
For: 1996 - 3.80 cents/kWh 2000 - 4.05 cents/kWh
1997 - 3.85 cents/kWh 2001 - 4.10 cents/kWh
1998 - 4.00 cents/kWh 2002 - 4.15 cents/kWh
1999 - 4.00 cents/kWh 2003 - 4.15 cents/kWh
8. Subsequent to 12/31/03, SDG&E may sell power generated by
SONGS 2 and 3 to any customer.
9. Subsequent to 2/1/96, there will be no apparent need for
SONGS 2 or 3 reasonableness reviews. SDG&E retains the option
to produce power at any level or permanently close either
SONGS 2 and/or 3 at any time.
10. The Nuclear Unit Incentive Procedure for SONGS 2 & 3 shall
terminate at the completion of Fuel Cycle 7 operations.
11. It is intended by this MOU that the annual rate impact of the
accelerated amortization shall not exceed the levels of the
rate reductions available that are attributable to SDG&E
receiving a lower rate of reurn on its SONGS 2 & 3 investment
as well as the termination of the SONGS 1 amortization during
the 8-Year Period.
12. SDG&E will continue the current ratemaking treatment of SONGS
2 & 3 decommissioning expenses, unamortized loss on reacquired
debt, and DOE decommissioning expense from EPAct 1992. SDG&E
may also seek recovery of assessments, retrospective premiums
or other costs associated with worker or third party claims.
__________________________ __________________________
By: Edwin A. Guiles /date By: James D. Pretti /date
San Diego Gas & Electric Division of Ratepayer
Company Advocates
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FEB 410
Form 8-K
September 7, 1994
Securities and Exchange Commission
450 Fifth St., N.W.
Washington, DC 20549-1004
Ladies and Gentlemen:
The Current Report on Form 8-K, of San Diego Gas & Electric
Company, announcing the understanding between San Diego Gas &
Electric and the California Public Utilities Commission's Division
of Ratepayer Advocates to negotiate a settlement on the recovery of
costs associated with the San Onofre Nuclear Generating Station, is
hereby being transmitted to you.
Sincerely,
James P. Trent
Manager-Accounting Services
JPT/RCK:kn