SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
...X..Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
March 31, 1994
For the quarterly period ended..................................................
Or
......Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________________ to __________________________
Commission File Number 1-3779
SAN DIEGO GAS & ELECTRIC COMPANY
................................................................................
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-1184800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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..............................
No Change
................................................................................
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes...X... No......
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
116,479,790
Common Stock outstanding March 31, 1994 ........................................
PART I - FINANCIAL INFORMATION
SAN DIEGO GAS & ELECTRIC COMPANY
STATEMENTS OF CONSOLIDATED INCOME
(In thousands except per share amounts)
Three Months Ended
March 31,
1994 1993
--------------------
(Unaudited)
Operating Revenues
Electric . . . . . . . . . . . . . . . . . . . . . $ 375,904 $ 368,841
Gas . . . . . . . . . . . . . . . . . . . . . . . 98,850 99,590
Diversified operations . . . . . . . . . . . . . . 29,664 23,912
---------- ----------
Total operating revenues . . . . . . . . . . . 504,418 492,343
---------- ----------
Operating Expenses
Electric fuel . . . . . . . . . . . . . . . . . . 34,876 42,501
Purchased power . . . . . . . . . . . . . . . . . 81,525 79,686
Gas purchased for resale . . . . . . . . . . . . . 49,674 54,673
Maintenance . . . . . . . . . . . . . . . . . . . 16,361 15,641
Depreciation and decommissioning . . . . . . . . . 65,197 60,726
Property and other taxes . . . . . . . . . . . . . 11,377 11,610
Other . . . . . . . . . . . . . . . . . . . . . . 118,137 106,807
Income taxes . . . . . . . . . . . . . . . . . . . 47,139 42,913
---------- ----------
Total operating expenses . . . . . . . . . . . 424,286 414,557
---------- ----------
Operating Income . . . . . . . . . . . . . . . . . . 80,132 77,786
---------- ----------
Other Income and (Deductions)
Allowance for equity funds used during
construction . . . . . . . . . . . . . . . . . . 2,685 5,334
Taxes on nonoperating income . . . . . . . . . . . (536) (624)
Other--net . . . . . . . . . . . . . . . . . . . . 1,966 2,412
---------- ----------
Total other income and (deductions) . . . . . 4,115 7,122
---------- ----------
Income Before Interest Charges . . . . . . . . . . . 84,247 84,908
---------- ----------
Interest Charges
Long-term debt . . . . . . . . . . . . . . . . . . 22,644 25,158
Short-term debt and other . . . . . . . . . . . . 2,981 2,336
Allowance for borrowed funds used during
construction . . . . . . . . . . . . . . . . . . (1,174) (1,163)
---------- ----------
Net interest charges . . . . . . . . . . . . . 24,451 26,331
---------- ----------
Net Income (before preferred dividend requirements) 59,796 58,577
Preferred Dividend Requirements . . . . . . . . . . 1,916 2,182
---------- ----------
Earnings Applicable to Common Shares . . . . . . . . $ 57,880 $ 56,395
========== ==========
Average Common Shares Outstanding . . . . . . . . . 116,492 115,450
========== ==========
Earnings Per Common Share . . . . . . . . . . . . . $ 0.50 $ 0.49
========== ==========
Dividends Declared Per Common Share . . . . . . . . $ 0.38 $ 0.37
========== ==========
See notes to consolidated financial statments.
2
SAN DIEGO GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
March 31, December 31,
1994 1993
----------- ------------
(Unaudited)
ASSETS
Utility plant--at original cost . . . . . . . . . $5,173,902 $5,134,251
Accumulated depreciation and decommissioning . . . (2,046,174) (2,016,618)
----------- -----------
Utility plant--net . . . . . . . . . . . . . . . 3,127,728 3,117,633
----------- -----------
Investments and other property . . . . . . . . . . 465,937 464,101
---------- -----------
Current assets
Cash and temporary investments . . . . . . . . . 20,924 17,450
Accounts receivable . . . . . . . . . . . . . . 189,883 205,712
Notes receivable . . . . . . . . . . . . . . . . 29,201 29,201
Inventories . . . . . . . . . . . . . . . . . . 77,586 84,922
Other . . . . . . . . . . . . . . . . . . . . . 36,033 40,810
----------- -----------
Total current assets . . . . . . . . . . . . 353,627 378,095
----------- -----------
Construction funds held by trustee . . . . . . . . 21,279 58,042
Goodwill . . . . . . . . . . . . . . . . . . . . . 53,845 53,921
Deferred taxes recoverable in rates . . . . . . . 300,054 311,564
Deferred charges and other assets . . . . . . . . 310,167 318,880
----------- -----------
Total . . . . . . . . . . . . . . . . . . . $4,632,637 $4,702,236
=========== ===========
CAPITALIZATION AND LIABILITIES
Capitalization
Common equity . . . . . . . . . . . . . . . . . $1,528,938 $1,516,240
Preferred stock not subject to mandatory
redemption . . . . . . . . . . . . . . . . . . 93,493 93,493
Preferred stock subject to mandatory redemption 25,000 25,000
Long-term debt . . . . . . . . . . . . . . . . . 1,401,269 1,411,948
----------- -----------
Total capitalization . . . . . . . . . . . . 3,048,700 3,046,681
----------- -----------
Current liabilities
Short-term borrowings . . . . . . . . . . . . . 45,775 131,197
Long-term debt redeemable within one year . . . 88,000 88,000
Current portion of long-term debt . . . . . . . 74,143 76,161
Accounts payable . . . . . . . . . . . . . . . . 139,020 166,622
Dividends payable . . . . . . . . . . . . . . . 46,178 44,962
Taxes accrued . . . . . . . . . . . . . . . . . 95,279 36,830
Interest accrued . . . . . . . . . . . . . . . . 23,229 20,396
Regulatory balancing accounts overcollected--net 32,259 33,179
Other . . . . . . . . . . . . . . . . . . . . . 111,147 104,353
----------- -----------
Total current liabilities . . . . . . . . . 655,030 701,700
----------- -----------
Customer advances for construction . . . . . . . . 40,703 41,729
Accumulated deferred income taxes--net . . . . . . 508,371 520,076
Accumulated deferred investment tax credits . . . 112,684 114,159
Deferred credits and other liabilities . . . . . . 267,149 277,891
----------- -----------
Total . . . . . . . . . . . . . . . . . . . $4,632,637 $4,702,236
=========== ===========
See notes to consolidated financial statements.
3
SAN DIEGO GAS & ELECTRIC COMPANY
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In thousands of dollars)
Three Months Ended
March 31,
1994 1993
----------------------
(Unaudited)
Cash Flows From Operating Activities
Net income . . . . . . . . . . . . . . . . . . . . $ 59,796 $ 58,577
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and decommissioning . . . . . . . 65,197 60,726
Amortization of deferred charges and
other assets . . . . . . . . . . . . . . . . 3,260 955
Amortization of deferred credits and other
liabilities . . . . . . . . . . . . . . . . (7,436) (3,050)
Allowance for equity funds used
during construction . . . . . . . . . . . . (2,685) (5,334)
Deferred income taxes and investment
tax credits . . . . . . . . . . . . . . . . (4,970) (10,774)
Other--net . . . . . . . . . . . . . . . . . . (309) (5,904)
Changes in working capital components net of effects
from purchases of subsidiaries
Accounts and notes receivable . . . . . . . . 15,829 (5,937)
Regulatory balancing accounts . . . . . . . . (920) 14,488
Inventories . . . . . . . . . . . . . . . . . 7,336 10,833
Other current assets . . . . . . . . . . . . . 4,777 (319)
Accrued interest and taxes . . . . . . . . . . 61,649 55,010
Accounts payable and other current
liabilities . . . . . . . . . . . . . . . . (20,808) (23,281)
---------- ----------
Net cash provided by operating activities 180,716 145,990
---------- ----------
Cash Flows From Financing Activities
Dividends paid . . . . . . . . . . . . . . . . (44,962) (43,298)
Short-term borrowings--net . . . . . . . . . . (85,422) 9,223
Issuance of long-term debt . . . . . . . . . . - 5,307
Repayment of long-term debt . . . . . . . . . (8,606) (90,209)
Sale (redemption) of common stock . . . . . . (920) 13,919
Redemption of preferred stock . . . . . . . . - (170)
---------- ----------
Net cash used by financing activities . . . (139,910) (105,228)
---------- -----------
Cash Flows From Investing Activities
Utility construction expenditures . . . . . . (68,084) (56,823)
Withdrawals from construction trust
funds - net . . . . . . . . . . . . . . . . 36,763 23,125
Contributions to decommissioning funds . . . . (5,505) (5,505)
Other--net . . . . . . . . . . . . . . . . . . (506) (1,430)
---------- -----------
Net cash used by investing activities . . . (37,332) (40,633)
---------- -----------
Net increase . . . . . . . . . . . . . . . . . . . . 3,474 129
Cash and temporary investments, beginning of period 17,450 11,079
---------- -----------
Cash and temporary investments, end of period . . . $ 20,924 $ 11,208
========== ===========
Supplemental Disclosure of Cash Flow Information
Income tax payments . . . . . . . . . . . . . . . $ - $ 4,950
========== ===========
Interest payments, net of amounts capitalized . . $ 21,618 $ 29,828
========== ===========
Supplemental Schedule of Noncash Investing and
Financing Activities
Real estate investments acquired . . . . . . . . $ - $ 30,088
Cash paid . . . . . . . . . . . . . . . . . . . - -
---------- -----------
Liabilities assumed . . . . . . . . . . . . . . $ - $ 30,088
========== ===========
See notes to consolidated financial statments.
4
SAN DIEGO GAS & ELECTRIC COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
SDG&E believes all adjustments necessary to present a fair statement of
the consolidated financial position and results of operations for the
periods covered by this report, consisting of recurring accruals, have
been made. Certain prior year amounts have been reclassified for
comparability.
SDG&E's significant accounting policies are described in the notes to
consolidated financial statements in its 1993 Annual Report to
Shareholders. SDG&E follows the same accounting policies for interim
reporting purposes.
This quarterly report should be read in conjunction with SDG&E's 1993
Annual Report on Form 10-K. The consolidated financial statements and
Management Discussion & Analysis of Financial Condition and Results of
Operations included in SDG&E's 1993 Annual Report to Shareholders were
incorporated by reference into SDG&E's 1993 Annual Report on Form 10-K
and filed as an exhibit thereto.
2. MATERIAL CONTINGENCIES
INVESTMENT IN WAHLCO ENVIRONMENTAL SYSTEMS, INC.
SDG&E's investment in and advances to Wahlco aggregate $80 million at
March 31, 1994. At March 31, 1994 Wahlco had consolidated net assets
of $69 million (including $53 million of goodwill). During the years
ended December 31, 1991, 1992 and 1993, Wahlco's net income (loss) was
$12 million,($13 million) and ($11 million). During those years Wahlco's
cash flow provided by (used in) operations was $7 million, ($7 million)
and ($12 million). For the three months ended March 31, 1994 Wahlco had
a net loss but its operations provided a positive cash flow.
Historically, Wahlco's primary and most profitable product line has been
flue gas conditioning equipment, which is sold to utilities with
coal-fired generating plants. Since the passage of the 1990 Clean Air
Act Amendments, Wahlco's prospects for future profitability have been
significantly associated with the size and timing of flue gas
conditioning equipment orders from utilities responding to that
legislation. Phase I of that legislation requires certain utilities to
submit compliance plans to the Environmental Protection Agency by
February 28, 1993 and to be in compliance by January 1, 1995. Phase II
requires the remaining utilities with coal-fired generation to be in
compliance by January 1, 2000.
Thus far, sales of and orders for flue gas conditioning equipment have
not reached anticipated levels. Therefore, SDG&E has been considering
alternative strategies relative to its investment in Wahlco. Continued
operating losses or implementation of an alternative strategy could lead
to the writeoff of a significant portion of SDG&E's investment in
Wahlco, resulting in a significant adverse effect on SDG&E's earnings.
5
SAN DIEGO GAS & ELECTRIC COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NUCLEAR INSURANCE:
Public liability claims that could arise from a nuclear incident are
limited by law to $9.3 billion for each licensed nuclear facility. For
this exposure, SDG&E and the co-owners of the San Onofre units have
purchased primary insurance of $200 million, the maximum amount
available. The remaining coverage is provided by secondary financial
protection required by the Nuclear Regulatory Commission and provides
for loss sharing among utilities owning nuclear reactors if a costly
accident occurs. SDG&E could be assessed retrospective premium
adjustments of up to $50 million in the event of a nuclear incident
involving any of the licensed, commercial reactors in the United States,
if the amount of the loss exceeds $200 million.
Insurance coverage is provided for up to $2.8 billion of property damage
and decontamination liability. Coverage is also provided for the cost
of replacement power, which includes indemnity payments for up to two
years, after a waiting period of 21 weeks. Coverage is provided
primarily through mutual insurance companies owned by utilities with
nuclear facilities. If losses at any of the nuclear facilities covered
by the risk-sharing arrangements were to exceed the accumulated funds
available for these insurance programs, SDG&E could be assessed
retrospective premium adjustments of up to $8 million.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EARNINGS:
Earnings per share for the three months ended March 31, 1994 were up one
cent from the same period in 1993. The increase in earnings was due to
increased earnings at Califia and other, minor items, partially offset
by increased losses at Wahlco Environmental Systems, Inc.
As a result of many companies' delaying decisions on how to comply with
the Clean Air Act, the market for flue gas conditioning systems
(Wahlco's primary and most profitable product line) has not developed
in the United States. Wahlco also faces increasing competition from the
availability of federal pollution credits, suppliers of lower-cost
alternative systems and other options. In late 1993 Wahlco recorded a
restructuring charge to reflect the planned relocation of Wahlco's
manufacturing operations in Canada and West Virginia to its other U.S.
facilities. Additional information concerning Wahlco is provided in Note
2 of the notes to consolidated financial statements.
REGULATORY MATTERS:
CALIFORNIA PUBLIC UTILITIES COMMISSION PROPOSES INDUSTRY RESTRUCTURING
On April 20, 1994 the CPUC announced its proposal to restructure
California's regulated electric utility industry to stimulate
competition and to lower rates. The CPUC has also proposed to increase
access to California's transmission network, develop an active spot
market for electricity and to promote competition in the energy
efficiency services market.
The proposed regulatory framework would be phased in over a six-year
period. Beginning in 1996, the California utilities' largest customers
(i.e. receiving service at the transmission level) would be allowed to
purchase their energy from either utility or nonutility suppliers. Other
industrial and commercial customers would have this choice by between
1997 and 1999 depending on their level of service. Residential customers
would have this choice by 2002. The utilities would continue to provide
transmission and distribution services to customers that switch to other
suppliers. The cost of providing these services and the cost of serving
remaining utility customers would be recovered through a performance-
based ratemaking process, replacing traditional cost-of-service
ratemaking. However, to the extent a power plant is not competitive in
the restructured environment, the utility would continue to recover a
portion of the plant's cost from customers switching to other suppliers.
Comments from interested parties on the CPUC's proposal are due in May
1994 and hearings will be held in June 1994. A final CPUC decision is
expected in August 1994. SDG&E cannot predict the impact of the CPUC's
final decision and the transition to a more competitive environment on
SDG&E's financial condition and results of operations.
As a result of the CPUC's proposal, Moody's Investors Service and
Standard & Poor's have placed the financial ratings of SDG&E's, Southern
California Edison's and Pacific Gas & Electric's debt and preferred
stock under review for possible downgrade. The review, to be completed
after the CPUC decision, will focus on how the restructuring and
competition will affect the utilities' credit quality and cash flows.
7
SONGS UNITS 2 & 3
On March 15, 1994 the CPUC's Division of Ratepayer Advocates issued its
report on Edison's 1995 General Rate Case proceeding. As a result of
Edison's request for a rate increase, the DRA suggests that the cost of
continuing to operate SONGS 2 & 3 would be more expensive than
alternative resources and the units should be shut down by 1998. As an
alternative recommendation, the DRA has also proposed a performance-
based pricing mechanism that would tie recovery of the cost of operating
the SONGS units to performance. A CPUC decision on Edison's GRC is
expected in late 1994.
If the CPUC's industry restructuring is implemented as proposed (see
preceding discussion) and the SONGS units are unable to produce
electricity competitively, then Edison and SDG&E would be allowed to
recover a portion of their investment in SONGS 2 & 3 through a proposed
"competition transition charge" paid by customers that switch to other
suppliers.
BIENNIAL RESOURCE PLAN UPDATE PROCEEDING
On March 16, 1994 the CPUC issued a proposed order to revise its June
1993 Biennial Resource Plan Update to lessen the decision's impact on
utilities' energy costs. The proposed revision would require prices for
BRPU energy to be capped at the lowest losing bid price determined in
the BRPU auction. In addition, the order would lower SDG&E's BRPU-
required capacity purchases from 491 mw to 368 mw. The capacity
reduction would be proportionately allocated between fossil resources
(such as natural gas and fuel oil) and renewable resources. The CPUC
has proposed to reassess in 1998 SDG&E's need for the remaining 123 mw
of capacity. SDG&E would be committed to begin purchasing BRPU energy
in late 1997. In addition, the CPUC indicated that it would review the
reasonableness of the auction selection process at a later date.
At the CPUC's April 20, 1994 conference the CPUC held that further
action on the BRPU proceeding would be delayed to consider comments on
the CPUC's proposed industry restructuring (discussed above). In
connection with the CPUC's proposed industry restructuring, the CPUC is
considering eliminating future BRPU proceedings and allowing the need
for future electric generating resources to be determined by market
demand. A CPUC decision is expected in June 1994. SDG&E cannot predict
the impact of the CPUC's industry restructuring decision on the current
BRPU proceeding.
SOUTH BAY REPOWER PROJECT
On March 4, 1994 SDG&E filed a request with the CPUC to withdraw its
application for approval of the 500 mw South Bay Repower project. SDG&E
wishes to postpone making a long-term commitment for additional capacity
as a result of uncertainty arising from the CPUC's proposal to
restructure California's electric utility industry and from the BRPU
proceeding. SDG&E will reconsider the need for the project once the
CPUC issues its decision on the restructuring proposal (see preceding
discussion) and provides clear direction on the process for utilities
to meet their needs for additional generating capacity. The CPUC's
Division of Ratepayer Advocates, the Utility Consumers' Action Network
and other interested parties have filed comments with the CPUC opposing
SDG&E's request, claiming that the CPUC should complete its review of
the project so that alternative proposals can be considered. A CPUC
decision on SDG&E's request to withdraw the application is expected in
the second quarter of 1994.
SDG&E has requested the California Energy Commission to extend the
review process for SDG&E's application for certification of the project
and to delay the CEC's final decision until early 1995. The extension
would allow SDG&E and the CEC to resolve various environmental concerns
about the plant's discharge of heated water into San Diego Bay and the
location and configuration of the plant's transmission lines. The CEC
is considering alternative generation projects that would lessen any
potential impact on the local environment. UCAN, the Independent Energy
Producers Association and a neighborhood group located near the
project's transmission path have filed a request with the CEC to
8
terminate the application due to these concerns. The CEC is expected to
decide on that request in the second quarter of 1994.
ENERGY COST ADJUSTMENT CLAUSE PROCEEDINGS
On March 9, 1994 the CPUC issued its decision finding SDG&E's electric
fuel and purchased-power expenses to be reasonable for the year ended
July 31, 1992. This decision included the finding that SDG&E's
administration of its Portland General Electric purchased-power contract
was reasonable during the three-year period ended July 31, 1992.
The DRA is currently reviewing the reasonableness of SDG&E's fuel and
purchased-power expenses for the year ended July 31, 1993. A CPUC
decision is expected in the fourth quarter of 1994.
On April 20, 1994 the CPUC issued its decision on the forecast phase
of SDG&E's 1994 Energy Cost Adjustment Clause proceeding, approving a
$57 million increase in electric rates to cover higher expected fuel and
purchased-power expenses and to recover prior undercollections from
customers. The fuel and purchased-power portion of the forecast also
establishes the generation and dispatch benchmark for shareholder gains
and losses under the Performance-Based Ratemaking mechanism for the year
beginning May 1, 1994. The rate increase is effective May 1, 1994.
DEMAND-SIDE MANAGEMENT
In the audit of one or more utilities' prior years' tax returns, the
Internal Revenue Service took the position that certain demand-side
management expenditures are intangible assets and must be capitalized,
instead of being deducted when incurred as SDG&E and other utilities
have been doing. Federal legislation has been proposed supporting the
current deductibility of these costs. SDG&E and other California
utilities have filed requests with the CPUC to establish a memorandum
account to track for future rate recovery the income taxes, and related
interest, resulting from this change if the IRS's present position is
imposed. SDG&E cannot predict the outcome of this issue.
HAZARDOUS WASTE COLLABORATIVE
On March 10, 1994 a CPUC Administrative Law Judge recommended approval
of the November 1993 hazardous waste collaborative settlement agreement
between the major California investor-owned utilities and the DRA. The
agreement would generally provide rate recovery of 90 percent of
expenses incurred by utilities to clean up hazardous wastes. Currently
SDG&E recovers hazardous waste expenses pursuant to CPUC reasonableness
reviews. A CPUC decision is expected in the second quarter of 1994.
OTHER OPERATING HIGHLIGHTS:
Electric fuel expense and gas purchased for resale decreased primarily
due to lower sales volumes.
Revenues from diversified operations during the three months ended March
31, 1994 were up over the corresponding 1993 period, primarily due to
Califia's increased leasing activities, partially offset by Wahlco
Environmental System's lower sales as a result of the continuing poor
market for air pollution control products.
Other operating expenses increased primarily due to Califia's increased
leasing activities.
9
LIQUIDITY AND CAPITAL RESOURCES:
Sources of cash for 1994 through 1998 are expected to consist of income
from operations and issuances of stock and debt. Cash requirements for
1994 through 1998 include the construction program and retirements of
long-term debt. SDG&E conducts a continuing review of its construction,
investment and financing programs. They are revised in response to
changes in competition, customer growth, inflation, customer rates, the
cost of capital and environmental and regulatory requirements.
SDG&E anticipates that it will continue to have short-term borrowings
in 1994 due to construction expenditures' continuing to exceed the
amount of available funds generated internally. SDG&E also plans to
issue up to $60 million of preference stock in 1994.
In conjunction with its employee savings and common stock investment
plans, SDG&E can either issue common stock or purchase it on the open
market. Currently, SDG&E is purchasing the stock on the open market.
SDG&E's utility capital structure is one factor that has enabled it to
obtain long-term financing at attractive rates. The following table
lists key financial ratios for SDG&E's utility operations. The capital
structures are shown net of construction funds held by trustee:
March 31, December 31,
1994 1993
or the twelve or the year
months then ended then ended
Pretax interest coverage 5.0X 4.7X
Internal cash generation 71% 78%
Construction
expenditures as a percent of
capitalization 12.8% 12.0%
Capital structure:
Common equity 47% 47%
Preferred stock 4% 4%
Debt and leases 49% 49%
Besides the effects of items discussed in the preceding pages, the only
significant change in cash flows for the three months ended March 31,
1994 compared to the corresponding 1993 period was related to the change
in accounts receivable which resulted primarily from lower sales volumes
in 1994.
Construction expenditures were $354 million in 1993 and are expected to
be approximately $260 million in 1994. The level of expenditures in the
next few years after 1994 will depend heavily on the CPUC's proposed
industry restructuring, whether SDG&E proceeds with its proposed South
Bay Repower project, the timing of expenditures to comply with air
emission reduction and other environmental requirements, and its plan to
transport natural gas to Mexico.
10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no significant subsequent developments in the Century Power,
American Trails, Subsidiary Shareholder, Public Service Company of New Mexico
and Transphase proceedings. Background information concerning these and the
following proceedings is contained in SDG&E's 1993 Annual Report on Form 10-K.
Canadian Natural Gas:
On March 14, 1994, SDG&E voluntarily dismissed its complaint against Bow
Valley Energy Inc. without prejudice. SDG&E cannot predict the ultimate
outcome of this proceeding.
McCartin:
Trial began on April 11, 1994 and is expected to conclude in early May. SDG&E
filed a demurrer to the Covalt complaint on April 13, 1994. The Covalt
proceeding was not consolidated with the McCartin proceeding and each will be
handled separately. SDG&E cannot predict the ultimate outcome of these
proceedings.
North City West:
On February 16, 1994, SDG&E filed an answer with the CPUC to the motion for
reconsideration filed by one of the plaintiffs. A decision on the motion is
expected in the second quarter of 1994. SDG&E cannot predict the ultimate
outcome of this proceeding.
Blackburn vs. Watt:
On April 14, 1994, SDG&E filed a motion for summary judgment on the cross-
complaints filed against it. The motion will be heard by the court on May 13,
1994. SDG&E cannot predict the ultimate outcome of this proceeding.
Graybill/MTDB
Graybill:
Due to a potential conflict of interest, Graybill has retained new counsel,
resulting in a rescheduling of the trial to June 1994. SDG&E cannot predict
the ultimate outcome of this proceeding.
MTDB:
Trial has been scheduled to begin in October 1994. SDG&E cannot predict the
ultimate outcome of this proceeding.
Tang:
A settlement was reached on March 14, 1994 between the plaintiff and the
defendant owners of SONGS. Pursuant to the settlement agreement, the parties
agreed not to disclose the settlement amount to be paid to plaintiff.
However, it will not have a material adverse effect on the net income of
SDG&E. Pursuant to the settlement agreement, plaintiff dismissed her
complaint with prejudice.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The shareholders elected eight directors at the annual meeting on
April 26, 1994.
The name of each nominee and the number of shares voted for or withheld
were as follows:
Nominees Votes For Votes Withheld
-------- --------- --------------
Richard C. Atkinson 102,351,908 1,544,065
------------- -----------
Ann Burr 102,390,194 1,505,779
------------- -----------
Richard A. Collato 102,423,305 1,472,668
------------- -----------
Daniel W. Derbes 102,492,544 1,403,429
------------- -----------
Robert H. Goldsmith 102,323,739 1,572,234
------------- -----------
Ralph R. Ocampo 102,097,177 1,798,796
------------- -----------
Thomas A. Page 102,295,692 1,600,281
------------- -----------
Catherine Fitzgerald Wiggs 102,425,971 1,470,002
------------- -----------
Additional information concerning the election of the board of directors
is contained in SDG&E's March 1994 Proxy Statement and Notice of Annual
Meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 3(i) - Articles of Incorporation
3.1 Restated Articles of Incorporation of San Diego Gas & Electric
Company as amended through April 26, 1994
Exhibit 12 - Computation of ratios
12.1 Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends as required under SDG&E's August 1993
registration of 5,000,000 shares of Preference Stock (Cumulative).
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed on January 11, 1994 announcing
the retirement of Jack Thomas as President of San Diego Gas & Electric
Company.
A Current Report on Form 8-K was filed on March 31, 1994 announcing a
reorganization of SDG&E's treasurer's division in response to Malyn
Malquist's resignation as SDG&E vice president and treasurer.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report to be signed on its behalf
by the undersigned thereunto duly authorized.
SAN DIEGO GAS & ELECTRIC COMPANY
(Registrant)
April 28, 1994 By /s/ F. H. Ault
- -------------- ----------------------------
Date (Signature)
F. H. Ault
Vice President and Controller
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