Gretchen Griswold, (619) 696-4309      FOR IMMEDIATE RELEASE


                      SAN DIEGO GAS & ELECTRIC FILES APPLICATION 
                           TO FORM A HOLDING COMPANY
     
           SAN DIEGO, Nov. 7, 1994 -- The San Diego Gas & Electric
(NYSE: SDO) board of directors today authorized the company to move
forward with forming a holding company, the first step of which is
to file an application with the California Public Utilities
Commission (CPUC).

           "The changes in the California utility industry and
movement toward a competitive marketplace have made it clear that
we need a more flexible corporate structure," said SDG&E Division
Manager Henry Morse who is managing the process.

           Under its current structure, all of SDG&E's utility-
related business is combined or vertically integrated.  This
includes the generation of electricity, the transmission of
electricity (carrying electricity between the generation source and
the local distribution system), and the distribution of electricity
(carrying electricity from the transmission system to the meter). 
It is very likely, as industry restructuring discussions evolve to
form policy, that the business defined as "utility" will change. 
The generation of electricity, for example, may no longer be
considered a "utility" business and may become a separate
competitive venture.
                                 (MORE)






SDG&E FILES HOLDING COMPANY APPLICATION  2-2-2-2

"A holding company would allow SDG&E to protect the customers of
its regulated utility business from any effects from this or any
other non-utility or competitive ventures,"
Morse said.

SDG&E will pursue optimal flexibility -- provided by a holding
company -- to participate in any new categories of business created
by this restructuring.

Under the structure being proposed, SDG&E would become a subsidiary
to a parent company, alongside its existing subsidiaries,
including: Enova, which invests in affordable housing tax credits;
Califia, an equipment leasing firm; and Pacific Diversified
Capital, which includes commercial/industrial real estate holdings
and 80 percent interest in Wahlco Environmental Systems, Inc.

Shareholders will be asked to vote on the holding company at the
April 25, 1995, annual meeting. If the application receives all
shareholder and regulatory approvals, shareholders would simply
receive a one-for-one swap of holding company stock for SDG&E
stock.  There should be no immediate effect on their investment
once the transaction is completed.

"We hope to have the structure in place by mid-summer 1995 to
accommodate any opportunities or challenges which may arise from
the restructuring of the state's electric utility industry," said
Morse.



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