SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
FORM 10-K

(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the fiscal year ended December 31, 1994
------------------------------------------------
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
(State or other jurisdiction of incorporation or organization)
95-1184800
(I.R.S. Employer Identification No.)
101 ASH STREET, SAN DIEGO, CALIFORNIA
(Address of principal executive offices)
92101
(Zip code)
(619) 696-2000
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
Preference Stock (Cumulative)
Without Par Value (except $1.70
and $1.7625 Series) American and Pacific
Cumulative Preferred Stock, $20
Par Value (except 4.60% Series) American and Pacific
Common Stock, Without Par Value New York and Pacific

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
------ -------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

Exhibit Index on page 31, Glossary on page 39.

Aggregate market value of the voting stock held by non-affiliates of the
registrant as of January 31, 1995:
Common Stock $2.4 Billion
Preferred Stock $15 Million

As of January 31, 1995, there were 116,532,416 shares of common stock,
without par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 1994 Annual Report to Shareholders are incorporated by
reference into Parts I, II, and IV.

Portions of the March 1995 Proxy Statement prepared for the April 1995
annual meeting of shareholders are incorporated by reference into Part III.

INDEX

PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . 21
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . 22
Item 4. Submission of Matters to a Vote of Security Holders. 27
Executive Officers of the Registrant . . . . . . . . 27
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . 28
Item 6. Selected Financial Data . . . . . . . . . . . . . . 28
Item 7. Management's Discussion and Analysis of Financial .
Condition and Results of Operations . . . . . . . 28
Item 8. Financial Statements and Supplementary Data . . . . 28
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . 28

PART III
Item 10. Directors and Executive Officers of the Registrant . 28
Item 11. Executive Compensation . . . . . . . . . . . . . . . 28
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . 28
Item 13. Certain Relationships and Related Transactions . . . 28

PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . 29

Independent Auditors' Consent . . . . . . . . . . . . . . . . 37

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 38

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

PART I

Item 1. Business

Description of Business

San Diego Gas & Electric Company is an operating public utility
organized and existing under the laws of the State of California.
SDG&E is engaged principallyin the electric and natural gas
business. It generates and purchases electricenergy and
distributes it to 1.1 million customers in San Diego County and a
portion of Orange County, California. It also purchases and
distributes natural gas to 696,000 customers in San Diego County.
In addition, it transports electricity and natural gas for others.
Factors affecting SDG&E's utility operations include regulation,
deregulation, competition, nonutility generation, customers' bypass
of its electric and gas system, population growth, changes in
interest and inflation rates, and environmental and other laws.

SDG&E's diversified interests include four subsidiaries: Enova
Corporation, which invests in affordable-housing projects; Enova
Energy Management, which provides energy management consulting
services to utilities and large consumers; Califia Company, which
conducts leasing activities; and Pacific Diversified Capital
Company, which is a holding company for SDG&E's other subsidiaries.
PDC owns an 80-percent share in Wahlco Environmental Systems, a
supplier of air pollution control and energy-saving products and
services for utilities and other industries. PDC's other
subsidiary, Phase One Development, is a commercial real estate
developer.

SDG&E is seeking approval to form a holding company. Under the
proposed structure, SDG&E would become a subsidiary of the parent
company, as would SDG&E's existing subsidiaries. SDG&E believes
that it must change its corporate structure to respond to changes
in the California utility industry and the movement toward a more
competitive marketplace.

Additional information concerning SDG&E's subsidiaries and the
formation of a holding company is described in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" beginning on page 18 in the 1994 Annual Report to
Shareholders and in Notes 1 through 3 of the "Notes to Consolidated
Financial Statements" beginning on page 32 of the 1994 Annual
Report to Shareholders.

Government Regulation

Local Regulation
SDG&E has separate electric and gas franchises with the two
counties and 25 cities in its service territory. These franchises
allow SDG&E to locate facilities for the transmission and
distribution of electricity and gas in the streets and other public
places. The franchises do not have fixed terms, except for the
electric and gas franchises with the cities of Chula Vista (1997),
Encinitas (2012), San Diego (2021), and Coronado (2028); and the
gas franchises with the city of Escondido (2036) and the county of
San Diego (2030).

State Regulation
The California Public Utilities Commission consists of five members
appointed by the governor and confirmed by the senate for six-year
terms. The commission regulates SDG&E's rates and conditions of
service, sales of securities, rate of return, rates of
depreciation, uniform systems of accounts, examination of records,
and long-term resource procurement. The CPUC also conducts various
reviews of utility performance and conducts investigations into
various matters, such as deregulation, competition and the
environment, to determine its future policies.

The California Energy Commission has discretion over
electric-demand forecasts for the state and for specific service
territories. Based upon these forecasts, the CEC determines the
need for additional energy sources and for conservation programs.
The CEC sponsors alternative-energy research and development
projects, promotes energy conservation programs, and maintains a
statewide plan of action in case of energy shortages.
In addition, the CEC certifies power-plant sites and related
facilities within California.

Federal Regulation
The Federal Energy Regulatory Commission regulates transmission
access, the uniform systems of accounts, rates of depreciation and
electric rates involving sales for resale. The FERC also regulates
the interstate sale and transportation of natural gas.

The Nuclear Regulatory Commission oversees the licensing,
construction and operation of nuclear facilities. NRC regulations
require extensive review of the safety, radiological and
environmental aspects of these facilities. Periodically, the NRC
requires that newly developed data and techniques be used to
reanalyze the design of a nuclear power plant and, as a result,
requires plant modifications as a condition of continued operation
in some cases.

Licenses and Permits
SDG&E obtains a number of permits, authorizations and licenses in
connection with the construction and operation of its generating
plants. Discharge permits, San Diego Air Pollution Control
District permits and NRC licenses are the most significant
examples. The licenses and permits may be revoked or modified by
the granting agency if facts develop or events occur that differ
significantly from the facts and projections assumed in granting
the approval. Furthermore, discharge permits and other approvals
are granted for a term less than the expected life of the facility.
They require periodic renewal, which results in continuing
regulation by the granting agency.

Other regulatory matters are described throughout this report.

Competition

This topic is discussed in "Electric Operations" and "Rate
Regulation" herein and in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" beginning on page 18
of the 1994 Annual Report to Shareholders and in Note 11 of the
"Notes to Consolidated Financial Statements" on page 38 of the 1994
Annual Report to Shareholders.

Sources of Revenue

(In Millions of Dollars) 1994 1993 1992
- -------------------------------------------------------------------
Utility revenue by type of customer:

Electric-
Residential $ 612 $ 615 $ 601
Commercial 600 572 543
Industrial 231 250 245
Other 67 77 58
------ ------ ------
Total Electric 1,510 1,514 1,447
------ ------ ------
Gas-
Residential 204 195 181
Commercial 65 63 61
Industrial 31 40 54
Other 46 49 41
------ ------ ------
Total Gas 346 347 337
------ ------ ------
Total Utility 1,856 1,861 1,784
------ ------ ------
Diversified Operations 126 119 87
------ ------ ------
Total $1,982 $1,980 $1,871
====== ====== ======

Industry segment information is contained in "Statements of
Consolidated Financial Information by Segments of Business" on page
31 of the 1994 Annual Report to Shareholders.

Construction Expenditures

Construction expenditures, excluding nuclear fuel and the allowance
for equity funds used during construction, were $264 million in 1994
and are estimated to be about $240 million annually over the next
5 years.

Electric Operations

Resource Planning
SDG&E's ability to provide energy at the lowest possible cost has
been based on a combination of production from its own plants and
purchases from other producers. The purchases have been a
combination of short-term and long-term contracts and spot
purchases. All resource acquisitions are obtained through a
competitive bidding process. The CPUC's recent decisions on the
Biennial Resource Plan Update proceedings required SDG&E to allow
qualified nonutility power producers that cogenerate or use
renewable energy technologies to bid for a portion of SDG&E's
future capacity needs. As a result of the decisions SDG&E would be
required to enter into contracts (ranging in term from 17 to 30
years) to purchase 500 mw of power, including 341 mw from
cogenerators, 94 mw from geothermal sources, and the remainder from
wind and other sources. On January 17, 1995 SDG&E filed a petition
with the FERC, contending that the CPUC's BRPU orders and auction
rules do not comply with the Public Utility Regulatory Policies Act
and that the FERC should require the CPUC to comply with PURPA. On
February 22, 1995 the FERC ruled unanimously that the CPUC violated
PURPA because, among other things the CPUC excluded other potential
suppliers from the bidding process, which would result in the
utilities paying more to the winning bidders than they would pay if
the utilities purchased the same quantities of power elsewhere. The
FERC acknowledged the CPUC's right, for environmental reasons, to
favor particular resources over others so long as the state does
not set prices above the purchasing utility's avoided cost. The
FERC held that the BRPU auction procedures were unlawful and that
SDG&E and Edison cannot lawfully be compelled to enter into
contracts resulting from the current BRPU auction until the CPUC
corrects the auction procedures.

In 1994 SDG&E also negotiated contracts for 745 mw of short-term
purchased-power. The CPUC has also ordered utilities in the state
to implement pilot demonstration projects to allow others to bid to
supply utilities' customers with energy-conservation services that
could reduce the need for generation capacity.

Additional information concerning resource planning and industry
restructuring is discussed in Note 11 of the "Notes to Consolidated
Financial Statements" on page 38 of the Annual Report to
Shareholders and in "Management's Discussion & Analysis of
Financial Condition and Results of Operations" beginning on page 18
of the 1994 Annual Report to Shareholders.

Electric Resources
Based on generating plants in service and purchased-power contracts
in place as of January 31, 1995, the net megawatts of electric
power expected to be available to SDG&E during the next summer
(normally the time of highest demand) are as follows:

Source Net Megawatts
--------------------------------------------------
Gas/Oil generating plants 1,611
Nuclear generating plants* 214
Combustion turbines 332
Long-term contracts with other utilities 675
Short-term contracts with other utilities 666
Contracts with others 470
-----
Total 3,968

*Excludes San Onofre Nuclear Generating Station Unit 3 (216 mw)
which is scheduled for refueling from July through August 1995.

SDG&E's record system peak demand of 3,294 mw occurred on August
12, 1994 when the net system capability, including power purchases,
was 3,767 mw.

Gas/Oil Generating Plants: SDG&E's South Bay and Encina power
plants are equipped to burn either natural gas or fuel oil. The
four South Bay units went into operation between 1960 and 1971 and
can generate 690 mw. The five Encina units began operation between
1954 and 1978 and can generate 921 mw. SDG&E sold and leased back
Encina Unit 5 (315 mw) in 1978. The lease term is through 2004,
with renewal options for up to 15 additional years.

SDG&E has 19 combustion turbines that were placed in service from
1966 to 1979. They are located at various sites and are used only
in times of peak demand.

The Silver Gate plant is in storage and its 230 mw are not included
in the system's capability. Silver Gate is not scheduled to return
to service. The plant would have to comply with various
environmental rules and regulations before returning to service.
The cost of compliance could be significant.

Additional information concerning SDG&E's power plants is described
under "Environmental Matters" and "Electric Properties" herein and
in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" beginning on page 18 of the 1994 Annual
Report to Shareholders.

Nuclear Generating Plants: SDG&E owns 20 percent of the three
nuclear units at San Onofre Nuclear Generating Station. The cities
of Riverside and Anaheim own a total of 5 percent of SONGS 2 and 3.
Southern California Edison Company owns the remaining interests and
operates the units.

In November 1992 the CPUC issued a decision to permanently shut
down SONGS 1. SDG&E and Edison filed a decommissioning plan in
November 1994, although final decommissioning will not occur until
SONGS 2 and 3 are also decommissioned. The unit's spent nuclear
fuel has been removed from the reactor and stored on-site. In
March 1993 the NRC issued a Possession-Only License for SONGS 1,
and the unit was placed in a long-term storage condition in May
1994.

SONGS 2 and 3 began commercial operation in August 1983 and April
1984, respectively. SDG&E's share of the capacity is 214 mw of
SONGS 2 and 216 mw of SONGS 3.

Between 1992 and 1994, SDG&E spent $79 million on capital
modifications and additions for all three units and expects to
spend $29 million in 1995 on SONGS 2 and 3. SDG&E deposits funds
in an external trust to provide for the future dismantling and
decontamination of the units. The shutdown of SONGS 1 does not
affect

contributions to the trust. For additional information, see
Note 6 of the "Notes to Consolidated Financial Statements" on page
34 of the 1994 Annual Report to Shareholders.

In 1983 the CPUC adopted performance-based incentive plans for
SONGS that set a Target Capacity Factor range of 55 to 80 percent
for SONGS 2 and 3. Energy costs or savings outside that range are
shared equally by SDG&E and its customers. Since the TCF was
adopted, these units have operated above 55 percent for each of
their fuel cycles. In addition to always attaining the minimum
TCF, SONGS 2 and 3 have exceeded the range a total of five times in
the twelve completed cycles. However, there can be no assurance
that they will continue to achieve a 55 percent capacity factor.
SONGS Unit 2 was shut down on February 11, 1995 to begin its
scheduled 55-day refueling after operating continuously for 552
days. If the refueling is completed on schedule, SONGS 2 would be
eligible for a Target Capacity Factor incentive reward.

On November 15, 1994 SDG&E, Edison and the CPUC's Division of
Ratepayer Advocates signed a settlement agreement on the
accelerated recovery of SONGS Units 2 and 3 capital costs. The
agreement would allow SDG&E to recover more than $750 million over
an eight-year period beginning in February 1996, rather than over
the anticipated operational life of the units, which is expected to
extend to 2013. During the eight-year period, the authorized rate
of return would be reduced from 9.76 percent to 7.52 percent
(SDG&E's 1995 authorized cost of debt). The agreement also
includes an incentive plan that would encourage continued,
efficient operation of the plant. However continued operation of
SONGS beyond the eight-year period would be at the owners'
discretion. Under the plan, customers would pay about four cents
per kilowatt-hour during the eight-year period. This pricing plan
would replace the traditional method of recovering the units'
operating expenses and capital improvements. This is intended to
make the plants more competitive with other sources. SDG&E is
unable to predict the impact of this proposal, if approved, on the
results of its operations. However, it is expected to be considered
in conjunction with the CPUC's industry restructuring proposal. A
CPUC decision is expected in the first half of 1995.

Additional information concerning the SONGS units and the CPUC's
industry restructuring proposal is presented under "Environmental
Matters" and "Legal Proceedings" herein, in "Management's
Discussion & Analysis of Financial Condition and Results of
Operations" beginning on page 18 of the 1994 Annual Report to
Shareholders, and in Notes 10 and 11 of the "Notes to Consolidated
Financial Statements" beginning on page 36 of the 1994 Annual
Report to Shareholders.

Purchased Power: The following table lists contracts with other
utilities and others:

Megawatt
Supplier Period Commitment Source
- ------------------------------------------------------------------------------
Long-Term Contracts with Other Utilities:

Bonneville Power May Through September 300 Hydro Power
Administration (1995 and 1996)

Comision Federal de Through August 1996 150 Geothermal
Electricidad (Mexico)

Portland General Through December 1998 50 Hydro storage
Electric Company Through December 2013 75 Coal

Public Service Company Through April 2001 100 System supply
of New Mexico

Short-Term Contracts with Other Utilities:

Imperial Irrigation District Through March 1995 200 System Supply

PacifiCorp Through December 1995 200 System Supply

Rocky Mountain Through December 1995 66 Coal
Generation Cooperative

Salt River Project Through December 1995 200 System Supply

Contracts with Others:

Cities of Azusa, Banning Through December 1995 40 Coal
and Colton

Enron Power Marketing, Inc. Through March 1995 and 50 System Supply
June through September
1995

Goal Line Limited Through December 2024 50 Cogeneration
Partnership

Louis Dreyfus Electric June through September 150 System Supply
Power, Inc. 1995

Sithe Energies Through December 2019 102 Cogeneration
USA, Inc.

Yuma Cogeneration Through June 2024 50 Cogeneration
Associates

Other Various 28 Various

The commitment with CFE is for energy and capacity. The others are
for capacity only. The capacity charges are based on the costs of
the generating facilities from which purchases are made. These
charges generally cover costs such as operating and maintenance
expenses, transmission expenses, administrative and general
expenses, state and local taxes, lease payments, depreciation, and
a return on the seller's rate base (if a utility) or other markup
on the seller's cost.

Energy costs under the CFE contract are indexed to changes in Mayan
crude oil prices and the dollar/peso exchange rate. Energy costs
under the other contracts are based primarily on the cost of fuel
used to generate the power.

The locations of the suppliers which have long-term contracts with
SDG&E and the primary transmission lines (and their capacities)
used by SDG&E are shown on the following map of the Western United
States. The transmission capacity shown for the Pacific Intertie
does not reflect the effects of the fire at the DC terminal at
Sylmar discussed under "Transmission Arrangements - Pacific
Intertie" herein. Where applicable, interconnection to the primary
lines is provided by contract.

[ MAP ]

Long-Term Contracts with Other Utilities
Bonneville Power Administration: In 1993 SDG&E and BPA entered
into a four-year agreement for the exchange of capacity and energy.
SDG&E provides BPA with off-peak, non-firm energy in exchange for
firm summer capacity and associated energy. In addition, SDG&E
makes energy available for BPA to purchase during the period of
January through April of each year. To facilitate the exchange,
SDG&E has agreements with Southern California Edison and the Los
Angeles Department of Water & Power for 200 mw of firm transmission
service from the Nevada-Oregon border to SONGS.

Comision Federal de Electricidad: In 1986 SDG&E began the 10-year
term of a purchase agreement under which SDG&E purchases firm
energy and capacity of 150 mw from CFE. The agreement will
terminate on September 1, 1996.

Portland General Electric Company: In 1985 SDG&E and PGE entered
into an agreement for the purchase of 75 mw of capacity from PGE's
Boardman Coal Plant from January 1989 through December 2013. SDG&E
pays a monthly capacity charge plus a charge based upon the amount
of energy received. In addition, SDG&E has 50 mw of available
hydro storage service with PGE through December 1998. SDG&E has
also purchased 75 mw of transmission service from PGE in the
northern section of the Pacific Intertie through December 2013.

Public Service Company of New Mexico: In 1985 SDG&E and PNM
entered into an agreement for the purchase of 100 mw of capacity
from PNM's system from June 1988 through April 2001. SDG&E pays a
capacity charge plus a charge based on the amount of energy
received.

Short-Term Contracts with Other Utilities
Imperial Irrigation District: In April 1994 SDG&E and IID entered
into agreements for the purchase of up to 200 mw of firm energy
from July 1994 through March 1995. The energy charge is based on
the amount of energy received.

PacifiCorp: In October 1994 SDG&E entered into an agreement with
PacifiCorp for the purchase of 200 mw of capacity through 1995.
SDG&E pays a capacity charge plus a charge based on the amount of
energy received.

Rocky Mountain Generation Cooperative: In November 1994 SDG&E and
RMGC entered into an agreement for the purchase of 66 mw of
capacity through December 1995. SDG&E pays a capacity charge plus
a charge based on the amount of energy received.

Salt River Project: In November 1994 SDG&E and SRP entered into an
agreement for the purchase of 200 mw of capacity through December
1995. SDG&E pays a capacity charge plus a charge based on the
amount of energy received.

Contracts with Others
Cities of Azusa, Banning and Colton: In 1993 SDG&E and the cities
entered into an agreement for the purchase of 40 mw of capacity
from January 1995 through December 1995. SDG&E pays a capacity
charge plus a charge based on the amount of energy received.

Enron Power Marketing, Inc.: In April 1994 SDG&E and Enron
entered into an agreement for the purchase of 50 mw of firm energy
from July 1994 through March 1995. In November 1994 SDG&E and
Enron entered into an agreement for the purchase of 50 mw of firm
energy from June through September 1995. The energy charge is based
on the amount of energy received.

Goal Line Limited Partnership: In December 1990 SDG&E and Goal
Line entered into a 30-year agreement for the purchase of 50 mw of
capacity which began in February 1995. SDG&E pays a capacity
charge plus a charge based on the amount of energy received.

Louis Dreyfus Electric Power, Inc.: In November 1994 SDG&E and
Dreyfus entered into an agreement for the purchase of 150 mw of
firm energy from June through September 1995. The energy charge is
based on the amount of energy received.

Sithe Energies USA, Inc.: In April 1985 SDG&E entered into three
30-year agreements for the purchase of 102 mw of capacity from
December 1989 through December 2019. SDG&E pays a capacity charge
plus a charge based on the amount of energy received.

Yuma Cogeneration Associates: In March 1990 SDG&E and Yuma
Cogeneration Associates entered into a 30-year agreement for the
purchase of 50 mw of capacity which began in June 1994. SDG&E pays
a capacity charge plus a charge based on the amount of energy
received.

Other: SDG&E currently purchases capacity and energy from 115
as-available Qualifying Facilities. SDG&E also has four 20-year
agreements with Pacific Energy and Landfill Generating Partners for
the purchase of 5 mw of firm capacity through the years 2006-2011.
SDG&E pays a capacity charge plus a charge based on the amount of
energy received. These account for approximately 28 mw of capacity
annually.

Additional information concerning SDG&E's purchased-power contracts
is described in "Legal Proceedings" herein and in "Management's
Discussion & Analysis of Financial Condition and Results of
Operations" beginning on page 18 of the 1994 Annual Report to
Shareholders, and in Notes 10 and 11 of the "Notes to Consolidated
Financial Statements" beginning on page 36 of the 1994 Annual
Report to Shareholders.

Power Pools
In 1964 SDG&E, Pacific Gas & Electric, and Edison entered into the
California Power Pool Agreement. It provides for the transfer of
electrical capacity and energy by purchase, sale or exchange during
emergencies and at other mutually determined times.

SDG&E is a participant in the Western Systems Power Pool, which
involves an electric power and transmission rate agreement with
utilities and power agencies located from British Columbia through
the western states and as far east as the Mississippi River. The
64 investor-owned and municipal utilities, state and federal power
agencies, energy brokers and power marketers share power and
information in order to increase efficiency and competition in the
bulk power market. Participants are able to target and coordinate
delivery of cost-effective sources of power from outside their
service territories through a centralized exchange of information.

Transmission Arrangements
In addition to interconnections with other California utilities,
SDG&E has firm transmission capabilities for purchased power from
the Northwest, the Southwest and Mexico.

Pacific Intertie: The Pacific Intertie enables SDG&E to purchase
and receive surplus coal and hydroelectric power from the
Northwest. SDG&E, PG&E, and Edison share transmission capacity on
the Pacific Intertie under an agreement that expires in July 2007.
SDG&E's share of the intertie is 466 mw through 1996 and 266 mw
through July 2007. In October 1994 a major fire at the DC terminal
at Sylmar reduced SDG&E's rights on the DC line by 100 mw. Repairs
are not expected to be completed until October 1995. This is not
expected to have a significant impact on SDG&E's transmission
capabilities within California.

Southwest Powerlink: SDG&E's 500-kilovolt Southwest Powerlink
transmission line, which it shares with Arizona Public Service
Company and IID, extends from Palo Verde, Arizona to San Diego and
enables SDG&E to import power from the Southwest. SDG&E's share of
the line is 914 mw, although it can be less, depending on specific
system conditions.

Mexico Interconnection: Mexico's Baja California Norte system is
connected to SDG&E's system via two 230-kilovolt interconnections
with firm capability of 408 mw. SDG&E uses this interconnection
for transactions with CFE.

Additional Transmission Capabilities: Through an agreement with
Edison, SDG&E has obtained the option to purchase 100 mw of
transmission service on the existing Palo Verde - Devers
transmission line in the late 1990s. The agreement is contingent
upon Edison's construction of its second transmission line
connecting the Palo Verde Nuclear Generating Station in Arizona to
the Devers substation near Palm Springs, California. This
agreement also provides SDG&E with the option to exchange up to 200
mw of Southwest Powerlink transmission rights for up to 200
additional mw of Edison's rights on the existing Palo Verde -
Devers transmission line. This exchange would enable both
utilities to further diversify their transmission paths.

Transmission Access
As a result of the enactment of the National Energy Policy Act of
1992, the FERC has established rules to implement the Act's
transmission access provisions. These rules specify FERC-required
procedures for others' requests for transmission service.

Additional information regarding transmission access is described
in "Management's Discussion & Analysis of Financial Condition and
Results of Operations" beginning on page 18 of the 1994 Annual
Report to Shareholders.

Fuel and Purchased-Power Costs
The following table shows the percentage of each electric fuel
source used by SDG&E and compares the costs of the fuels with each
other and with the total cost of purchased power:

Percent of Kwhr Cents per Kwh
- -------------------------------------------------------------------
1994 1993 1992 1994 1993 1992
----- ----- ----- ---- ---- ----
Natural gas 22.4% 24.4% 27.4% 3.1 3.4 3.1
Nuclear fuel 21.8 17.2 22.3 0.5 0.6 0.8
Fuel oil 1.4 3.7 0.6 2.6 2.5 4.0
----- ----- ----- ----- ----- -----
Total generation 45.6 45.3 50.3
Purchased power-net 54.4 54.7 49.7 3.7 3.5 3.8
----- ----- ------ ----- ----- -----
Total 100.0% 100.0% 100.0%

The cost of purchased power includes capacity costs as well as the
costs of fuel. The cost of natural gas includes transportation
costs. The costs of natural gas, nuclear fuel and fuel oil do not
include SDG&E's capacity costs. While fuel costs are significantly
less for nuclear units than for other units, capacity costs are
higher.

Electric Fuel Supply
Natural Gas: Information concerning natural gas is provided in
"Natural Gas Operations" herein.

Nuclear Fuel: The nuclear-fuel cycle includes services performed by
others. These services and the dates through which they are under
contract are as follows:

Mining and milling of uranium concentrate(1) 1995
Conversion of uranium concentrate to uranium hexafluoride(2) 1995
Enrichment of uranium hexafluoride(3) 1998
Fabrication of fuel assemblies 2000
Storage and disposal of spent fuel(4) -

1 SDG&E's contracted supplier of uranium concentrate is United
States Enrichment Corporation. However, the majority is supplied
by purchases from the spot market.

2 Competitive bids will be sought in 1995 for a multi-year
contract to supply conversion services beginning in 1996.

3 The Department of Energy is committed to offer any required
enrichment services through 2014.

4 Spent fuel is being stored at SONGS, where storage capacity will
be adequate at least through 2003. If necessary, modifications in
fuel-storage technology can be implemented to provide on-site
storage capacity for operation through 2014, the expiration date of
the NRC operating license. The DOE's plan is to provide a permanent
storage site for the spent nuclear fuel by 2010.

Pursuant to the Nuclear Waste Policy Act of 1982, SDG&E entered
into a contract with the DOE for spent-fuel disposal. Under the
agreement, the DOE is responsible for the ultimate disposal of
spent fuel. SDG&E is paying a disposal fee of $1 per megawatt-hour
of net nuclear generation. Disposal fees average $3 million per
year. SDG&E recovers these disposal fees in customer rates.

To the extent not currently provided by contract, the availability
and the cost of the various components of the nuclear fuel cycle
for SDG&E's nuclear facilities cannot be estimated at this time.

Additional information concerning nuclear fuel costs is discussed
in Note 10 of the "Notes to Consolidated Financial Statements"
beginning on page 36 of the 1994 Annual Report to Shareholders.

Fuel Oil: SDG&E has no long-term commitments to purchase fuel oil.
The use of fuel oil is dependent upon price differences between it
and alternative fuels, primarily natural gas. During 1994 SDG&E
burned 337,000 barrels of fuel oil. Fuel oil usage in 1995 will
depend on its price relative to natural gas and the availability of
natural gas and other alternatives. The lowest-priced fuel is used
in order to minimize fuel costs for electric generation.

Natural Gas Operations

SDG&E purchases natural gas for resale to its customers and for
fuel in its generating plants. All natural gas is delivered to
SDG&E under a transportation and storage agreement with Southern
California Gas Company through two transmission pipelines with a
combined capacity of 430 million cubic feet per day.

During 1994 SDG&E purchased approximately 95 billion cubic feet of
natural gas. The majority of SDG&E's natural gas requirements are
met through contracts of less than one year. SDG&E purchases
natural gas primarily from various spot-market suppliers and from
suppliers under short-term contracts. These supplies originate in
New Mexico, Oklahoma and Texas, and are transported to the SoCal
Gas Company pipeline at the California border by El Paso Natural
Gas Company and by Transwestern Pipeline Company. SDG&E also
purchases natural gas under long-term contracts with four Canadian
suppliers. This natural gas is transported to SDG&E's system over
Alberta Natural Gas, Pacific Gas Transmission, and PG&E pipelines.
The contracts have varying terms through 2004.

Additional information concerning SDG&E's gas operations is
described under "Legal Proceedings" herein and in "Management's
Discussion & Analysis of Financial Condition and Results of
Operations" beginning on page 18 of the 1994 Annual Report to
Shareholders and Note 10 of the "Notes to Consolidated Financial
Statements" beginning on page 36 of the 1994 Annual Report to
Shareholders.

Rate Regulation

Introduction
In April 1994 the CPUC announced its proposal to restructure
California's regulated electric utility industry to stimulate
competition and to lower rates. The proposed regulatory framework
would be phased in by 2002, allowing utility customers to purchase
their energy from either utility or nonutility suppliers. The
utilities would continue to provide transmission and distribution
services to customers that chose to purchase their energy from
other providers. The CPUC also proposed that the cost of providing
these services and the cost of serving remaining utility customers
would be recovered through a performance-based ratemaking process.
SDG&E is currently participating in a performance-based ratemaking
process on an experimental basis which commenced in 1993 and runs
through 1998. The CPUC is holding several hearings to consider
whether its proposal or some other form of a competitive market
should be developed and how the cost of the transition to
competition should be shared among utility shareholders and
customers. The CPUC has stated that it expects to issue a final
decision by May 1995 and require implementation by September 1995.
SDG&E cannot predict the impact of the CPUC's final decision.
However, it is expected to change significantly the following
ratemaking mechanisms that are currently in effect.

Base Rates
Base rates allow SDG&E to recover the cost of operating and
maintaining the utility system, taxes, depreciation, and other
non-fuel business costs. In addition, SDG&E files an annual
application to establish its cost of capital, which reflects the
cost of debt and equity.

Cost of Capital
On November 22, 1994 the CPUC issued its decision on the 1995 Cost
of Capital proceeding. The Commission authorized higher returns in
1995 for the six California investor-owned utilities to maintain
the utilities' financial integrity, compensate investors for the
increased costs of doing business, and recognize the increased
levels of risk arising from industry restructuring. SDG&E was
authorized a return on equity of 12.05 percent for an overall rate
of return of 9.76 percent. SDG&E's 1994 authorized return on equity
and rate of return were 10.85 percent and 9.03 percent,
respectively.

Fuel and Energy Rates
The CPUC requires balancing accounts for fuel and purchased energy
costs and for sales volumes. The CPUC sets balancing account rates
based on estimated costs and sales volumes. Revenues are adjusted
upward or downward to reflect the differences between authorized
and actual volumes and costs. These differences are accumulated in
the balancing accounts and represent amounts to be either recovered
from customers or returned to them. These balancing accounts were
overcollected by $112 million at December 31, 1994. The CPUC
adjusts SDG&E's rates annually to amortize the accumulated
differences. As a result, changes in SDG&E's fuel and
purchased-power costs or changes in electric and natural gas sales
volumes normally have not affected SDG&E's net income. As described
under "Performance-Based Ratemaking" SDG&E can realize rewards or
penalties depending on the achievement of certain benchmarks for
operations and expenses.

Electric Fuel Costs and Sales Volumes
Rates to recover electric fuel and purchased-power costs are
determined in the Energy Cost Adjustment Clause proceeding. This
proceeding normally takes place annually, in two phases. In the
forecast phase, prices are set based on the estimated cost of fuel
and purchased power for the following year and are adjusted to
reflect any changes from the previous period. These adjustments
are made by amortizing any accumulation in the balancing accounts
described above. In the second phase, the reasonableness review,
the CPUC evaluates the prudence of SDG&E's nuclear and natural gas
storage operations. As described under "Performance-Based
Ratemaking", reviews of fuel and purchased-power transactions,
electric operations and natural gas transactions now are required
only if SDG&E's fuel and energy expenses vary significantly from
the established benchmarks.

The Electric Revenue Adjustment Mechanism compensates for
variations in sales volume compared to the estimates used for
setting the non-fuel component of rates. ERAM is designed to
stabilize revenues, which may otherwise vary due to changes in
sales volumes resulting from weather fluctuations and other
factors. Any accumulation in the ERAM balancing account is
amortized when new rates are set in the ECAC proceeding.

Natural Gas Costs and Sales Volumes
Rates to recover the cost of purchasing and transporting natural
gas to SDG&E are determined in the Biennial Cost Allocation
Proceeding. The BCAP proceeding normally occurs every two years
and is updated in the interim year for purposes of amortizing any
accumulation in the balancing accounts.

Balancing accounts for natural gas costs and sales volumes are
similar to those for electric fuel costs and sales volumes. The
natural gas balancing accounts include the Purchased Gas Account
for natural gas costs and the Gas Fixed Cost Account for sales
volumes. Balancing account coverage includes both core customers
(primarily residential and commercial customers) and noncore
customers (primarily large industrial customers). However, SDG&E
receives balancing account coverage on only 75 percent of noncore
GFCA overcollections and undercollections.

Performance-Based Ratemaking
SDG&E implemented performance-based ratemaking in 1993 for natural
gas procurement and transportation, and electric generation and
purchased energy, and in 1994 for base rates.

The CPUC approved the first two mechanisms on a two-year
experimental basis beginning August 1, 1993. SDG&E plans to file a
request with the CPUC to continue the two mechanisms beyond their
July 31, 1995 expiration until the CPUC has evaluated their
effectiveness. These mechanisms measure SDG&E's ability to
purchase and transport natural gas, and to generate or purchase
energy at the lowest possible cost, by comparing SDG&E's
performance against various market benchmarks. SDG&E's shareholders
and customers share in any savings or excess costs within
predetermined ranges.

Under the natural gas procurement and transportation mechanism, if
SDG&E's expenses exceed the benchmark by more than 2 percent, SDG&E
will recover one-half of the excess over 2 percent from customers.
However, if expenses fall below the index, SDG&E's shareholders and
customers will share equally in the savings.

The benchmark to measure SDG&E's electric generation and purchased
energy performance (generation and dispatch) is based upon the
difference between SDG&E's actual and authorized electric fuel and
short-term purchased energy expenses. SDG&E is at risk for about
one-half of the expenses that exceed the authorized amount by 6
percent or less. SDG&E is allowed to recover expenses exceeding the
6 percent range, subject to a reasonableness review by the CPUC.
SDG&E's customers will receive about one-half of the savings should
expenses fall below the authorized amount by 6 percent or less.
SDG&E's customers receive 100 percent of the additional savings
should expenses fall below the authorized amount by 6 percent or
more.

On August 3, 1994 the CPUC approved the Base Rate component of
SDG&E's Performance-Based Ratemaking proposal, implementing the
base-rate mechanism beginning in 1994 and ending in 1998, thereby
replacing the traditional general rate case application. The
base-rate mechanism has three segments. The first is a formula
similar to the traditional attrition mechanism used to determine
SDG&E's annual revenue requirement for operating, maintenance and
capital costs. SDG&E's initial revenue requirements were based on
SDG&E's 1993 General Rate Case decision. The second is a set of
indicators which determine performance standards for customer
rates, employee safety, electric system reliability and customer
satisfaction. Each indicator specifies a range of possible
shareholder benefits and risks. SDG&E could be penalized up to a
total of $21 million should it fall significantly below these
standards or earn up to $19 million if it exceeds all of the
performance targets. The third segment sets limits on SDG&E's rate
of return. If SDG&E realizes an actual rate of return that exceeds
its authorized rate of return from 1 percent to 1 1/2 percent, it
is required to return 25 percent of the excess over 1 percent to
customers. If SDG&E's rate of return exceeds the authorized level
by more than 1 1/2 percent, SDG&E will also return 50 percent of
the excess over 1 1/2 percent to customers. SDG&E will be at risk
if its rate of return falls less than 3 percent below the
authorized level. However, if SDG&E's rate of return is 3 percent
or more below or above the authorized level, a rate case review
would automatically occur. SDG&E may request a rate case review if
at any time its rate of return drops 1 1/2 percent or more below
the authorized level.

On October 31, 1994 SDG&E filed reports with the CPUC on the
results of the generation and dispatch and the gas procurement
mechanisms for the year ended July 31, 1994. SDG&E's fuel and
purchased power expenses fell below the benchmarks for these
mechanisms by $35 million. As a result, SDG&E's ECAC application
(see above) and its current Biennial Cost Allocation Proceeding
application request a shareholder reward of $8 million and that the
remainder of these savings be given to customers through lower
rates. SDG&E must file a report with the CPUC on the results of the
1994 PBR Base Rates mechanism by May 15, 1995. SDG&E expects to
determine the final 1994 PBR base rate reward or penalty in
September 1995 when the Edison Electric Institute publishes its
final report on 1994 national electric rates.

Energy Conservation Programs
Over the past several years, SDG&E has promoted conservation
programs to encourage efficient use of energy. The programs are
designed to conserve energy through the use of energy-efficiency
measures that will reduce customers' energy costs and reduce the
need to build additional power plants. The costs of these programs
are recovered from customers. The programs contain an incentive
mechanism that could increase or decrease SDG&E's earnings,
depending upon the performance of the programs in meeting specified
efficiency and expenditure targets. The CPUC has encouraged
expansion of these programs, authorizing annual expenditures of $54
million from 1993 through 1995. However, the CPUC has also ordered
utilities to conduct a test program to determine if unaffiliated
suppliers could offer energy conservation services at a lower cost.

Low Emission Vehicle Programs
Since 1991 SDG&E has conducted a CPUC-approved natural gas vehicle
program. The program includes building refueling stations,
demonstrating new technology, providing incentives and converting
portions of SDG&E's fleet vehicles to natural gas. The cost of
this program is being recovered in natural gas rates. In 1994 SDG&E
and the other investor-owned utilities in California filed
applications with the CPUC for funding to implement natural gas
vehicle and electric vehicle programs through the year 2000. A CPUC
decision is expected in the second quarter of 1995.

Electric Rates
The average price per kilowatt-hour charged to electric customers
was 9.7 cents in 1994 and 9.4 cents in 1993.

Natural Gas Rates
The average price per therm of natural gas charged to customers was
59.9 cents in 1994 and 55.1 cents in 1993.

Additional information concerning rate regulation is described in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" beginning on page 18 of the 1994 Annual
Report to Shareholders.

Environmental Matters
SDG&E's operations are guided by federal, state and local
environmental laws and regulations governing air quality, water
quality, hazardous substance handling and disposal, land use, and
solid waste. Compliance programs to meet these laws and
regulations increase the cost of electric and natural gas service
by requiring changes or delays in the location, design,
construction and operation of new facilities. SDG&E may also incur
significant costs to operate its facilities in compliance with
these laws and regulations and to clean up the environment as a
result of prior operations of SDG&E or others. The costs of
compliance with environmental laws and regulations are normally
recovered in customer rates.

Electric and Magnetic Fields
Scientists are researching the possibility that exposure to power
frequency magnetic fields causes adverse health effects. This
research, although often referred to as relating to electric and
magnetic fields, or EMFs, focuses on magnetic fields. To date,
some laboratory studies suggest that such exposure creates
biological effects, but those effects have not been shown to be
harmful.

The studies that have most concerned the public are certain
epidemiological studies. Some of those studies reported a weak
correlation between childhood leukemia and the proximity of homes
to certain power lines and equipment. Other studies reported weak
correlations between computer estimates of historic exposure and
disease. Various wire configuration categories and the computer
calculations were used as substitutes for historical exposure
measurements, which were not available. However, some of the
studies also measured actual field levels. When actual field
levels were measured, no correlation was found with disease.

Other epidemiological studies found no correlation between
estimated exposure and any disease. Scientists cannot explain why
some studies using estimates of past exposure report correlations
between estimated fields and disease, while others do not. Neither
can scientists explain why no studies correlate measured fields
with disease.

To respond to public concern and scientific uncertainty, the CPUC
created the California Consensus Group in 1991 and assigned this
group the responsibility of reaching agreement on interim measures
which could be implemented until science provides direction. In
November 1993 the CPUC adopted an interim policy regarding EMFs,
which implemented the Consensus Group's recommendations. Consistent
with the more than twenty major scientific reviews of available
research literature, the CPUC concluded that no health risk has
been identified with exposure to low-frequency magnetic fields. The
November 1993 decision also created two utility-funded programs (a
public education program and a research program), which directed
utilities to adopt a low-cost EMF-reduction policy for new
projects. The low-cost EMF-reduction policy entails design changes
to new projects to achieve a noticeable reduction of magnetic-field
levels. The CPUC indicated that utilities should use 4 percent of
the cost of new or upgraded facilities as a benchmark in developing
low-cost measures which produce a noticeable reduction in field
levels. In May 1994 SDG&E adopted design guidelines which
implement the low-cost measures, subject to safety, reliability,
efficiency and other operational criteria.

Litigation concerning EMFs is discussed under "Legal Proceedings"
herein.

Hazardous Substances
On May 4, 1994 the CPUC issued its decision on the Hazardous Waste
Collaborative, approving a mechanism for utilities to recover their
hazardous waste costs, including those related to Superfund sites
or similar sites requiring cleanup. Basically, the decision allows
utilities to recover 90 percent of their cleanup costs and related
third-party litigation costs and 70 percent of the related
insurance-litigation expenses.

BKK Corporation: SDG&E was one of several hundred companies using
the BKK Corporation's West Covina facility, which operated under a
permit for the disposal of hazardous waste prior to its 1984
closure. The site is listed for cleanup in the California
Superfund Site Priority List under the Hazardous Substance Account
Act, which imposes cleanup liability on the sites' owners,
operators or users. The California Department of Toxic Substances
Control is working with the site owner/operator to determine
whether a post-closure permit should be issued for the facility.
In addition, the U.S. Environmental Protection Agency is overseeing
BKK's assessment of potential releases from the site, including
releases into the groundwater, to determine whether any remediation
will be required. SDG&E believes the site owner/operator will
perform any required assessment and remedial activities. SDG&E is
unable to estimate the cost of cleaning up the site or what
liability, if any, it may have for such cleanup costs.

North American Environmental: In 1992 the U.S. Environmental
Protection Agency named SDG&E as a Potentially Responsible Party
(PRP), for the North American Environmental, Inc. site in
Clearfield, Utah. The EPA has evaluated the extent of the site's
contamination and potential remediation costs. All required cleanup
and corrective actions at the site have been completed. Any
individual liability among the PRPs has not been determined. The
contractor who had transported SDG&E's hazardous wastes to the site
has agreed to indemnify SDG&E against liability for remediation, if
any, associated with the site. Although SDG&E's ultimate liability,
if any, cannot be determined, it is not expected to be material.

Rosens: SDG&E was named as a PRP with respect to the Rosen's
Electrical Equipment Supply Company site in Pico Rivera,
California. Additional information concerning this site is
described in "Management's Discussion & Analysis of Financial
Condition and Results of Operations" beginning on page 18 of the
1994 Annual Report to Shareholders.

Waste Water Treatment: SDG&E is authorized to operate the
waste-water-treatment facilities at the Encina and South Bay power
plants under the California Hazardous Waste Treatment Permit Reform
Act of 1992. To comply with the state's regulations, construction
of secondary containment for the waste-water-treatment facilities
was completed in 1994 at a total cost of $3 million. New
waste-water-storage tanks for these facilities were installed in
1991. SDG&E received authorization to operate the new tanks from
the California Department of Toxic Substances Control pursuant to
a variance from the hazardous-waste-facility permitting
requirements. In June 1993 this variance was withdrawn due to a
change in the Department's policy. SDG&E and the Department
successfully negotiated a agreement that authorizes the continued
operation of these storage tanks without the need for a complete
hazardous-waste-facility permit. Recently, however, the California
legislature adopted a new law which supersedes the agreement and
allows the storage tanks to be operated as a part of and subject to
the same requirements governing the waste-water-treatment facility.

Underground Storage: California has enacted legislation to protect
ground water from contamination by hazardous substances.
Underground storage containers require permits, inspections and
periodic reports, as well as specific requirements for new tanks,
closure of old tanks and monitoring systems for all tanks. SDG&E's
capital program to comply with these requirements has cost $3
million to date. It is expected that cleanup of sites previously
contaminated by underground tanks will occur for an unknown number
of years. SDG&E cannot predict the cost of such cleanup.
Additionally, if a facility is reactivated, the removal and
replacement of existing tanks may be required. Specific known
underground locations requiring assessment and/or remediation are
indicated below:

On May 29, 1987 the San Diego Regional Water Quality Control Board
issued SDG&E a cleanup and abatement order for gasoline
contamination originating from an underground storage tank located
at SDG&E's Mountain Empire operation and maintenance facility. To
comply with the order SDG&E has implemented a "pump and treat"

program to remediate the site. Because the source of the area's
drinking water is near the contamination, the Environmental Health
Services Department and the Regional Board have required SDG&E to
further assess the extent of the contamination and may require
SDG&E to undertake alternative remediation to further protect the
drinking water from contamination. SDG&E is unable to estimate the
costs for the assessment or for alternative remediation.

On January 7, 1993 SDG&E was issued a notice of corrective action
by the Department of Health Services relative to soil contamination
from used motor oil associated with an underground tank located at
SDG&E's South Bay Operation and Maintenance facility. At present,
SDG&E is unable to estimate the extent of the contamination or the
potential remediation costs.

In 1993 SDG&E discovered a shallow underground tank-like structure
while installing underground electric facilities. The structure
was located under a public street immediately west of a former
generating facility. The past ownership, operation and use of the
structure is unknown. Hydrocarbon contamination has been found in
the vicinity of the structure, but it has not been established
whether the structure was the source of the contamination. The San
Diego County Department of Health Services has issued a cleanup and
abatement order to SDG&E. The order requires SDG&E to conduct a
site assessment to delineate the nature and scope of the
contamination. SDG&E's duty to meet these requirements has been
postponed pending the resolution of property ownership. SDG&E is
unable to estimate the nature and extent of the contamination or
the potential remediation costs.

Station B: Station B is located in downtown San Diego and was
operated as a generating facility from 1911 until June 1993.
During 1986, three 100,000-gallon underground diesel-fuel storage
tanks were removed. Pursuant to a cleanup and abatement order,
SDG&E remediated the existing hydrocarbon contamination. In the
course of the remediation effort, detectible levels of PCB were
discovered. Further analysis of PCB contamination in the area is
required before site closure. SDG&E has not completed its
assessment of such PCBs and therefore is unable to estimate the
cost of any PCB remediation, or whether or not any will be
required.

In addition, asbestos was used in the construction of the facility.
Renovation, reconditioning or demolition of the facility will
require the removal of the asbestos in a manner complying with all
applicable environmental, health and safety laws. The estimated
capital cost of this removal is between $3 million and $6 million.
Additionally, reuse of the facility may require the removal or
cleanup of PCBs, paints containing heavy metals or fuel oil. SDG&E
is assessing the extent of any possible contamination by these or
other hazardous materials at the facility. However, until the
assessment is completed, SDG&E is unable to estimate the extent of
any contamination or the cost of any associated remediation.

Encina Power Plant: During 1993 SDG&E discovered the presence of
hydrocarbon contamination in subsurface soil at its Encina power
plant. This contamination is located near the fuel-storage
facilities and is believed to be fuel oil originating from a 1950s
refueling spill. SDG&E has reported the discovery of the
contamination to governmental agencies and has determined it does
not pose a significant risk to the environment or to public health.
SDG&E is unable to estimate the costs of assessing and of
remediating the contamination.

Manufactured Gas Plant Sites: During the late 1800s and early 1900s
SDG&E and its predecessors manufactured gas from the combustion of
fuel oil at a manufactured gas plant in downtown San Diego and at
small facilities in the nearby cities of Escondido and Oceanside.
Although no tar pits common to town gas sites have been found at
the facilities, ash and other residual hazardous byproducts from
the gas-manufacturing process were found at the Escondido site
during grading for expansion of a substation. Remediation of the
Escondido site has been completed at a cost of $3 million. Based
upon its assessment and remediation activities, SDG&E has applied
to the Department of Health Services for a closure certification
for the Escondido site.

SDG&E and the Department of Health Services are aware that
hazardous substances resulting from the operation of the Escondido
manufactured-gas plant may be present on adjacent locations. SDG&E
will coordinate any required assessment or remediation of any such
locations with the department.

SDG&E has not found any similar town gas site residuals at the San
Diego site. However, ash residue similar to that at Escondido was
found on property adjacent to SDG&E's Oceanside gas regulator
station. This ash residue has been covered with asphalt to prevent
public exposure. Some ash residue has also been observed in soil
adjacent to the San Diego site, which is a possible location for a
new sports arena for the City of San Diego. As a part of its
investigation of the site, the City is proposing to conduct a
sampling and analysis effort to determine whether or not the site
has been contaminated by hazardous materials.

Due to the possibility that town gas residuals exist under the San
Diego and Oceanside sites, and as a result of the proposed sampling
and analysis plan to be conducted by the City of San Diego, SDG&E
will implement an environmental assessment of the sites in 1995.
SDG&E is unable to estimate the cost of assessment and potential
remediation of these sites.

Litigation concerning hazardous substances is discussed in "Legal
Proceedings - Metropolitan Transit Development Board" herein.

Air Quality
The San Diego Air Pollution Control District regulates air quality
in San Diego County in conformance with the California and federal
Clean Air Acts. California's standards are more restrictive than
federal standards.

Although SDG&E facilities comply with very strict emission limits
and contribute only about 3 percent of the air emissions in San
Diego County, the APCD is required by the California Clean Air Act
to further reduce emissions from all San Diego industry. The APCD
has adopted Rule 69 to further reduce nitrogen oxide emissions from
SDG&E power plants. This rule will require the retrofit of the
Encina and South Bay power plants with catalytic converters to
remove approximately 87 percent of current nitrogen oxide
emissions. The estimated capital cost to comply with Rule 69 is
$110 million. In addition, annual operating costs will increase
about $6 million after all units have been retrofitted. SDG&E
expects this to be completed by 2001.

The acid rain section of the federal Clean Air Act Amendments of
1990 requires SDG&E to upgrade the continuous emission monitors at
its Encina and South Bay power plants to provide more-complete
emissions data. Installation of the required continuous emission
monitor upgrades was completed in 1994 at a cost of approximately
$5 million.

In 1990 the South Coast Air Quality Management District passed a
rule which will require SDG&E's older natural gas compressor
engines at its Moreno facility to either meet new stringent
nitrogen oxide emission levels or be converted to electric drive.
In October 1993 the Air Quality District adopted a new program
called RECLAIM, which will replace existing rules and require
SDG&E's natural gas compressor engines at its Moreno facility to
reduce their nitrogen oxide emission levels by about 10 percent a
year through 2003. This will be accomplished through the
installation of new emission monitoring equipment, operational
changes to take advantage of low emitting engines, and engine
retrofits. However, SDG&E is concluding negotiations with the Air
Quality District to reclassify three of these engines, which will
eliminate the need for certain monitoring equipment for those
engines. The cost of complying with the proposed rule is expected
to be $3 million.

Water Quality
Discharge permits are required to enable SDG&E to discharge its
cooling water and its treated in-plant waste water, and are,
therefore, a prerequisite to the continued operation of SDG&E's
power plants. The promulgation or modification of
water-quality-control plans by state and federal agencies may
impose increasingly stringent cooling-water and
treated-waste-water-discharge requirements on SDG&E in the future.

SDG&E is unable to predict the terms and conditions of any renewed
permits or their effects on plant or unit availability, the cost of
constructing new cooling-water-treatment facilities, or the cost of
modifying the existing treatment facilities. However, any
modifications required by such permits could involve substantial
expenditures, and certain plants or units may be unavailable for
electric generation during such modification. Additional
information concerning discharge permits for the South Bay, Encina
and SONGS plants is provided in

"Management's Discussion & Analysis of Financial Condition and Results
of Operations" beginning on page 18 of the 1994 Annual Report to
Shareholders.

Additional information concerning SDG&E's environmental matters is
described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" beginning on page 18 of the
1994 Annual Report to Shareholders and in Note 10 of the "Notes to
Consolidated Financial Statements" beginning on page 36 of the 1994
Annual Report to Shareholders. Litigation concerning hazardous
substances is discussed in "Legal Proceedings - Metropolitan
Transit Development Board" herein.

Other

Research, Development and Demonstration
SDG&E conducts research and development in areas that provide value
to SDG&E and its customers. Annual research, development and
demonstration costs averaged $7 million over the past three years.
The CPUC historically has permitted rate recovery of research,
development and demonstration expenditures.

Wages
SDG&E and Local 465, International Brotherhood of Electrical
Workers have a labor agreement through February 29, 1996.

Employees of Registrant
As of December 31, 1994 SDG&E had 3,998 employees compared to 4,166
at December 31, 1993. SDG&E's subsidiaries had 550 employees at
December 31, 1994 compared to 818 at December 31, 1993.

Foreign Operations
SDG&E foreign operations in 1994 included power purchases and sales
with CFE in Mexico and purchases of energy and natural gas from
suppliers in Canada and purchases of uranium from suppliers in
Canada and Brazil.

SDG&E's subsidiaries operated in various foreign locations in 1994,
including Great Britain, Australia, and Italy and sold products and
services to customers in additional foreign countries.

Additional information concerning foreign operations is described
under "Electric Operations" and "Natural Gas Operations" herein and
in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" beginning on page 18 of the 1994 Annual
Report to Shareholders and in Note 10 of the "Notes to Consolidated
Financial Statements" beginning on page 36 of the 1994 Annual
Report to Shareholders.

Item 2. Properties

Substantially all utility plant is subject to the lien of the July 1,
1940 mortgage and deed of trust and its supplemental indentures
between SDG&E and the First Trust of California N.A. as trustee,
securing the outstanding first mortgage bonds.

Information concerning SDG&E's properties is discussed below.
Additional information is described under "Electric Operations" and
"Gas Operations" herein and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
beginning on page 18 of the 1994 Annual Report to Shareholders and
in Notes 1 through 3, 6, 10 and 11 of the "Notes to Consolidated
Financial Statements" beginning on page 32 of the 1994 Annual
Report to Shareholders.

Electric Properties

As of December 31, 1994 SDG&E's installed generating capacity based
on summer ratings, was as follows:

Plant Location Net Megawatts
- -----------------------------------------------------------------
Encina Carlsbad 921
South Bay Chula Vista 690
San Onofre South of San Clemente 430*
Combustion Turbines (19) Various 332
Silver Gate** San Diego 0
- -----------------------------------------------------------------

*SDG&E's 20 percent share.
**Placed in storage in 1984. Net generating capability is 230 mw.

Except for San Onofre and some of the combustion turbines, these
plants are equipped to burn either oil or gas.

The 1994 system load factor was 57 percent and ranged from 55
percent to 64 percent for the past five years.

SDG&E's electric transmission and distribution facilities include
substations, and overhead and underground lines. Periodically
various areas of the service territory require expansion to handle
customer growth.

SDG&E owns an approved nuclear power-plant site near Blythe,
California.

Natural Gas Properties

SDG&E's natural gas facilities are located in San Diego and
Riverside counties and consist of the Moreno and Rainbow compressor
stations, the Encanto storage facility in San Diego, various
high-pressure transmission pipelines, high-pressure and
low-pressure distribution mains, and service lines. SDG&E's
natural gas system is sufficient to meet customer demand and
short-term growth. SDG&E is currently undergoing an expansion of
its high-pressure transmission lines to accommodate expected
long-term customer growth.

General Properties

The 21-story corporate office building at 101 Ash Street, San Diego
is occupied pursuant to a capital lease through the year 2005. The
lease has four separate five-year renewal options. SDG&E also
occupies an office complex at Century Park Court in San Diego
pursuant to an operating lease ending in the year 2007. The lease
can be renewed for two five-year periods.

In addition, SDG&E occupies eight operating and maintenance
centers, two business centers, seven district offices, and five
branch offices.

Subsidiary Properties

Wahlco Environmental Systems, Inc. has manufacturing facilities in
the continental United States, Puerto Rico, Great Britain and
Australia, and a sales office in Italy.

Item 3. Legal Proceedings

The Subsidiary Shareholder, Blackburn v. Watt, Graybill and Tang
proceedings, described in SDG&E's 1993 Annual Report on Form 10-K,
were concluded during the year ended December 31, 1994. Information
concerning the conclusion of these proceedings is contained in
SDG&E's Quarterly Reports on Form 10-Q for the three-month periods
ended March 31, 1994 and June 30, 1994.

Century Power

On April 1, 1987 Century Power Corporation, formerly Alamito
Company, submitted a filing to justify its rates for the following
24 months under a power sales and interconnection agreement with
SDG&E. The Federal Energy Regulatory Commission permitted the
rates to become effective as of June 1, 1987 subject to refund. In
1988 an administrative law judge ruled unreasonable a component of
rates based on the return on equity of Tucson Electric Power
Company, a supplier and former affiliate of Century. If the
decision stands, demand charges paid by SDG&E could be reduced by
$12 million, plus interest, to be refunded principally to SDG&E
customers. On September 23, 1993 SDG&E filed a motion requesting
the FERC to decide this matter. On December 23, 1993 the FERC
issued an order denying SDG&E's motion on the grounds that the
matter had been resolved under a settlement reached by the parties
in 1991 and approved by the FERC. On January 24, 1994 SDG&E filed
a request for rehearing.

On February 11, 1993 SDG&E filed a complaint with the FERC against
Tucson and Century, seeking to adjust its purchase costs under the
power sales and interconnection agreement with Century. The
complaint seeks summary disposition and moves for an order
directing Century and Tucson to refund amounts that they improperly
billed SDG&E in violation of the agreement. If successful, SDG&E
would be entitled to approximately $15 million, plus interest,
which would be refunded principally to SDG&E customers. On April
23, 1993 Tucson and Century filed answers to the complaint, denying
liability. In addition, Tucson brought a counterclaim of $3
million against SDG&E based on alleged underbillings.

SDG&E is unable to predict the ultimate outcome of this litigation.

American Trails

On August 23, 1985 Michael Bessey and others who owned American
Trails, a membership campground company, filed a complaint against
Wahlco, Inc. and others in the Superior Court of San Diego County
for breach of contract, negligence, fraud, intentional interference
with contract, breach of the implied covenant of good faith and
fair dealing, and breach of fiduciary duty in connection with
contingent payments, which were not realized following the
redemption of plaintiffs' interest in American Trails Partners No.
1. The plaintiffs were seeking compensatory damages in the amount
of $12 million and punitive damages in an unspecified amount.
Wahlco has cross-complained against the plaintiffs for defrauding
Wahlco into investing $3 million in American Trails.

On September 21, 1993 judgment was entered by the court in favor of
Wahlco and the other defendants and against the plaintiffs on all
of plaintiffs' claims. Wahlco was denied any recovery on its
cross-claims. As a result of the trial court's decision, all
claims and causes of action by the plaintiffs against Wahlco have
been determined in favor of Wahlco. Subsequently, the plaintiffs
filed a notice of appeal from the court's judgment and the appeal
is pending. Wahlco intends to continue defending this lawsuit
vigorously.

By agreements dated September 19, 1987, October 28, 1987, and March
1, 1990, Robert R. Wahler, as Trustee of the Wahler Family Trust;
John H. McDonald; and Westfore, a California limited partnership,
agreed, subject to certain exceptions, to indemnify Pacific
Diversified Capital Company and its subsidiaries in connection with
the American Trails litigation. Wahlco, Inc. is pursuing these
parties for indemnification pursuant to the indemnification
agreements.

SDG&E is unable to predict the ultimate outcome of this litigation.

Public Service Company of New Mexico

On October 27, 1993 SDG&E filed a complaint with the FERC against
Public Service Company of New Mexico, alleging that charges under
a 1985 power purchase agreement are unjust, unreasonable and
discriminatory. SDG&E requested that the FERC investigate the
rates charged under the agreement and establish December 26, 1993
as the effective refund date. The relief, if granted, would reduce
annual demand charges paid by SDG&E to PNM by up to $11 million per
year through April 2001. If approved, the proceeds would be
refunded principally to SDG&E customers.

On December 8, 1993 PNM answered the complaint and moved that it be
dismissed. PNM denied that the rates are unjust, unreasonable or
discriminatory and asserted that SDG&E's claims were barred by
certain orders issued by the FERC in 1988.

SDG&E is unable to predict the ultimate outcome of this litigation.

Canadian Natural Gas

During early 1991 SDG&E signed four long-term natural gas supply
contracts with Husky Oil Ltd., Canadian Hunter Ltd. and Noranda
Inc., Bow Valley Energy Inc., and Summit Resources Ltd.
Canadian-sourced natural gas began flowing to SDG&E under these
contracts on November 1, 1993. Disputes have arisen with each of
these producers with respect to events which are alleged by the
producers to have occurred justifying a revision to the pricing
terms of each contract, and possibly their termination.
Consequently, during December 1993 SDG&E filed complaints in the
United States Federal District Court, Southern District of
California, seeking a declaration of SDG&E's contract rights.
Specifically, SDG&E states that neither price revision nor contract
termination is warranted.

On March 14, 1994 SDG&E voluntarily dismissed its complaint against
Bow Valley without prejudice. On April 24, 1994 the court denied
the other defendants' motions to dismiss SDG&E's complaints. These
motions were based on jurisdictional grounds. Two of the
defendants, Bow Valley and Husky Oil, filed claims on June 12, 1994
and June 29, 1994 respectively, against SDG&E with Queens Bench in
Alberta, Canada, seeking a declaration that they are entitled to
damages or, in the alternative, that they may terminate their
respective natural gas supplies with SDG&E. SDG&E has answered
these claims. On February 27, 1995 SDG&E and Husky Oil reached a tentative
agreement dismissing all of their respective claims with prejudice.

Bow Valley and Summit Resources gave SDG&E notice that their
natural gas supply contracts with SDG&E were terminated pursuant to
provisions in the contract that purportedly give them the right to
do so. SDG&E has responded that the notices were inappropriate and
that it will seek both contract and tort damages.

SDG&E is unable to predict the ultimate outcome of this litigation.

Additional information concerning these contracts is provided under
"Natural Gas Operations" herein and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
beginning on page 18 of the 1994 Annual Report to Shareholders and
in Note 10 of the "Notes to Consolidated Financial Statements"
beginning on page 36 of the 1994 Annual Report to Shareholders.
Electric and Magnetic Fields

McCartin
On November 13, 1992 a group of 25 individual plaintiffs filed a
complaint against SDG&E in the Orange County Superior Court for
medical monitoring, intentional infliction of emotional distress,
negligent infliction of emotional distress, strict products
liability, negligent product liability, trespass, nuisance,
diminution in property value, inverse condemnation and injunctive
relief, alleging that plaintiffs have been damaged by EMFs from
SDG&E's power lines. The plaintiffs did not specify damages.

Trial began on April 11, 1994 on the inverse condemnation claim
only. The plaintiffs had dismissed all other claims prior to
trial. On May 13, 1994 the jury returned a verdict in favor of
SDG&E. The jury found that SDG&E's

power lines did not diminish the value of the plaintiffs' properties.
On May 16, 1994 the judge ratified the jury's verdict and on June 17, 1994
the judge signed the final judgment in SDG&E's favor. On August 19, 1994
the plaintiffs filed a notice of appeal of the trial court's decision.

SDG&E is unable to predict the ultimate outcome of this litigation.

Covalt
On December 16, 1993 Martin and Joyce Covalt filed a complaint
against SDG&E in Orange County Superior Court. The Covalt lawsuit
involves the same lawyers, allegations and neighborhood as the
McCartin lawsuit. On April 13, 1994 SDG&E filed a demurrer to
plaintiffs' claims. On June 22, 1994 an Orange County Superior
Court judge, different from the judge who presided over the
McCartin case, denied SDG&E's demurrer. On July 15, 1994 SDG&E
petitioned the California Court of Appeal to review the trial
judge's decision on the grounds that the California Public
Utilities Commission, not the courts, has exclusive jurisdiction
over power line health and safety issues. The Court of Appeal
agreed to consider SDG&E's petition on August 17, 1994 and stayed
the trial court proceedings. The Court of Appeal heard oral
argument on SDG&E's petition on November 16, 1994, but has not yet
issued a decision.

SDG&E is unable to predict the ultimate outcome of this litigation.

North City West
On June 14, 1993 the Peninsula at Del Mar Highlands Homeowners
Association filed a complaint with the Superior Court of San Diego
County against the City of San Diego and SDG&E to prevent SDG&E
from continuing construction of an electric substation in an area
which is known as North City West. In the complaint, plaintiffs
sought to have the city either revoke previously issued permits or
reopen the hearing process to address alleged EMF concerns. On July
6, 1993 the court denied the plaintiffs' motion for a temporary
restraining order. On July 30, 1993 the court denied the
plaintiffs' motion for a preliminary injunction. On September 28,
1993 the plaintiffs withdrew their complaint and the court
dismissed it without prejudice.

On August 18, 1993 the plaintiffs filed a complaint with the CPUC
requesting that construction of the substation be immediately
halted until the CPUC conducts an initial environmental assessment
and determines whether an environmental impact report is necessary.
On September 22, 1993 SDG&E moved to dismiss the complaint on the
grounds that the city's environmental review of the project in 1989
was proper and sufficient. On January 7, 1994 the CPUC dismissed
the plaintiffs' complaint, ruling that the city had performed all
appropriate environmental reviews. On February 7, 1994 the
plaintiffs filed an application with the CPUC, asking it to
reconsider its January 7, 1994 decision. On December 7, 1994 the
CPUC granted the plaintiff's request for a rehearing of the January
7, 1994 dismissal. The CPUC stated that the grounds upon which the
complaint originally was dismissed were insufficient. The
Administrative Law Judge assigned to the case has ordered public
participation and evidentiary hearings to examine whether the
substation which SDG&E completed in 1994, causes any unreasonable
environmental impacts or other health or safety concerns.

SDG&E is unable to predict the ultimate outcome of this litigation.

Metropolitan Transit Development Board

On October 13, 1993 MTDB filed a complaint in the San Diego County
Superior Court against Union Oil Company of California, Graybill
Terminal Company, Mary Dutton Boehm as the Executrix of the Estate
of Grayson W. Boehm, and SDG&E. MTDB owns property located
adjacent to an oil storage tank farm owned by the Graybill Terminal
Company and has alleged that contamination from the Graybill site
migrated beneath its property, contaminating the soil and ground
water.

MTDB has alleged that SDG&E stored petroleum products at the
Graybill site and was also responsible for certain renovations to
the site's fixtures and equipment which stored and/or transported
hazardous substances. MTDB has also stated that SDG&E at one time
owned and operated the MTDB property and also owned certain fuel
oil pipelines located on the property. MTDB's complaint alleges,
among other things, nuisance, trespass and negligence, and seeks
unspecified compensatory and special damages, indemnity, and
certain equitable and

declaratory relief. On November 24, 1993 SDG&E filed an answer to the
complaint, denying all of MTDB's allegations.

In January 1995 co-defendants Graybill Terminal Company and Union
Oil Company of California agreed to indemnify and defend SDG&E from
all stated claims of MTDB. Further, Graybill and Unocal agreed to
release SDG&E from any claims of equitable indemnity and
contribution, and will dismiss all related cross-complaints with
prejudice. A formal agreement is expected to be prepared and
executed in early 1995.

Transphase Systems

On May 3, 1993 Transphase Systems, Inc. filed a complaint against
Southern California Edison Company and SDG&E in the United States
District Court for the Central District of California. The
complaint alleged that Edison and SDG&E unlawfully constrained
Transphase from selling its thermal energy storage systems under
utility-sponsored demand-side management programs in violation of
federal and state antitrust and unfair competition laws. The
plaintiff claimed not less than $50 million in actual damages,
attorneys' fees, prejudgment interest and costs. The plaintiff also
sought certain injunctive relief.

On August 25, 1993 Transphase filed a motion for a preliminary
injunction to order SDG&E to cease competitive bidding activities
for all generation resources until demand-side-resource providers
were permitted to participate. On October 7, 1993 the court
dismissed all of Transphase's causes of action with prejudice. On
October 19, 1993 Transphase filed a notice of appeal of the court's
dismissal.

On May 12, 1994 the Ninth Circuit Court of Appeal denied the
appeal. On September 1, 1994 Transphase filed a petition with the
United States Supreme Court to have the court review the dismissal
of its case by the lower courts. On September 30, 1994 SDG&E filed
its opposition to the petition. On October 31, 1994 the U.S.
Supreme Court denied Transphase's petition, leaving in place the
District Court's original order dismissing all of Transphase's
claims.

Additional information concerning competitive bidding is described
under "Resource Planning" herein and in the "Management's
Discussion & Analysis of Financial Condition and Results of
Operations" beginning on page 18 of the 1994 Annual Report to
Shareholders.

James Litigation

On July 12, 1994 Glen James filed a complaint in the United States
District Court for the Southern District of California against
Edison, SDG&E, and Combustion Engineering. The allegations in the
complaint are substantially identical to those contained in the
complaint of R.C. Tang, which was filed against the same defendants
in 1993 and reported in SDG&E's 1993 Annual Report on Form 10-K and
its March 31, 1994 Quarterly Report on Form 10-Q. The complaint
alleges that the plaintiff was damaged by the emission of radiation
while serving as an electrical designer and engineer for outside
contractors performing services at the San Onofre Nuclear
Generating Station intermittently between 1982 and 1988. The
plaintiff has asked for general compensatory damages and punitive
damages.

On August 11, 1994 the defendants filed a motion to dismiss
plaintiff's complaint. A federal district court judge denied
defendants' motion on December 12, 1994. Trial is expected to
begin in the summer of 1995.

SDG&E is unable to predict the ultimate outcome of this litigation.

McLandrich Litigation

On February 6, 1995 Cheryl Marie McLandrich and Paul Michael
McLandrich, by and through their guardian, Linda McLandrich, filed
a complaint in the United States District Court for the Southern
District of California against Edison, SDG&E, and Combustion
Engineering. The allegations in the complaint are substantially
identical to those contained in the complaints of R.C. Tang and
Glen James described above. The complaint alleges that the death of
the plaintiffs' father, Gregory McLandrich, was the result of the
emission of radiation while serving as an

Edison nuclear engineer at SONGS. The plaintiffs have asked for general
compensatory damages and punitive damages. The Tang, James and McLandrich
complaints were all filed by the same attorneys.

SDG&E is unable to predict the ultimate outcome of this litigation.

Environmental Issues

Other legal matters related to environmental issues are described
under "Environmental Matters" herein.

Regulatory Issues

Other legal matters related to regulatory proceedings or actions
are described under Regulatory Matters herein.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 4. Executive Officers of the Registrant

Name Age Positions (1990 - Current)
- ----------------------------------------------------------------------------
Thomas A. Page 61 Chairman and Chief Executive
Officer since January 1983 and
President from 1983 through 1991
and since January 1994.

Stephen L. Baum 54 Executive Vice President since January 1993.
Senior Vice President - Law and Corporate
Affairs and General Counsel from January
1992 through December 1992.
Senior Vice President and General Counsel
from 1987 through 1991.

Donald E. Felsinger 47 Executive Vice President since January 1993.
Senior Vice President - Marketing and
Resource Development from January 1992
through December 1992.
Vice President - Marketing and Resource
Development from February 1989 through
December 1991.

Gary D. Cotton 54 Senior Vice President - Customer Operations
since January 1993.
Senior Vice President - Customer Services
from January 1992 through December 1992.
Senior Vice President - Engineering
and Operations from 1986 through 1991.

Edwin A. Guiles 45 Senior Vice President - Energy Supply
since January 1993.
Vice President - Engineering and Operations
from January 1992 through December 1992.
Vice President - Corporate Planning
from 1990 through 1991.

Nad A. Peterson 68 Senior Vice President and General Counsel
Counsel since June 1993 and
Corporate Secretary since January 1994.
Senior Vice President and Corporate
Secretary at Fluor Corporation from
1987 through 1992.

Frank H. Ault 50 Vice President and Controller since
January 1993.
Controller from May 1986 through
December 1992.

Kathleen A. Flanagan 44 Vice President - Corporate Communications
since July 1994.
Manager - Corporate Communications at
Southern California Edison from 1991
through 1994.
Director - Government Relations and
Public Affairs at Luz International
from 1989 to 1991.

Ronald K. Fuller 57 Vice President - Governmental and
Regulatory Services since April 1984.

Margot A. Kyd 41 Vice President - Human Resources since
January 1993.
Vice President - Administrative Services
from 1988 through 1992.

John L. Laun, III 47 Vice President - Customer & Marketing
Services since July 1994.
Division Manager - Corporate Communication
from June 1993 to July 1994.
Manager - Special Projects from
January 1992 to June 1993.
Director - Utility Consulting at Xenergy Inc.
from 1991 through 1992.
Senior Vice President - Utility Consulting
at Palmer Bellevue Corporation from 1989
through 1991.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

SDG&E's common stock is traded on the New York and Pacific stock
exchanges. At December 31, 1994 there were 70,356 holders of SDG&E
common stock. The quarterly common stock information required by
Item 5 is incorporated by reference from page 39 of SDG&E's 1994
Annual Report to Shareholders.

Item 6. Selected Financial Data

The information required by Item 6 is incorporated by reference
from the Ten-Year Summary beginning on page 16 of SDG&E's 1994
Annual Report to Shareholders.

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The information required by Item 7 is incorporated by reference
from pages 18 through 23 of SDG&E's 1994 Annual Report to
Shareholders.

Item 8. Financial Statements and Supplementary Data

The information required by Item 8 is incorporated by reference
from pages 24 through 39 of SDG&E's 1994 Annual Report to
Shareholders. See Item 14 herein for a listing of financial
statements included in the 1994 Annual Report to Shareholders.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

The information required on Identification of Directors is
incorporated by reference from "Election of Directors" in SDG&E's
March 1995 Proxy Statement. The information required on executive
officers is incorporated by reference from Item 4 herein.

Item 11. Executive Compensation

The information required by Item 11 is incorporated by reference
from "Executive Compensation and Transactions with Management and
Others" in SDG&E's March 1995 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by Item 12 is incorporated by reference
from "Security Ownership of Management and Certain Beneficial
Holders" in SDG&E's March 1995 Proxy Statement.

Item 13. Certain Relationships and Related Transactions

None.

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) The following documents are filed as part of this report:

1. Financial statements
Page in
Annual Report*

Responsibility Report for the Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 24

Independent Auditors' Report . . . . . . . . . . . . . . . . . 24

Statements of Consolidated Income for the years ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . 25

Consolidated Balance Sheets at December 31, 1994 and 1993 . . 26

Statements of Consolidated Cash Flows for the year
ended December 31, 1994, 1993 and 1992 . . . . . . . . . . . 27

Statements of Consolidated Changes in Capital Stock and
Retained Earnings for the years ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . 28

Statements of Consolidated Capital Stock at
December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . 29

Statements of Consolidated Long-Term Debt at
December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . 30

Statements of Consolidated Financial Information by
Segments of Business for the years ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . 31

Notes to Consolidated Financial Statements . . . . . . . . . . 32

Quarterly Financial Data (Unaudited) . . . . . . . . . . . . . 39

*Incorporated by reference from the indicated pages of the 1994
Annual Report to Shareholders.

2. Financial statement schedules

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Allowance for doubtful accounts Balance at Charged to Deductions Balance at
(deducted from accounts receivable): Beginning of Year Operating Expenses (A) End of Year
----------------- ------------------ ---------- -----------

1994 $2,410 $4,738 $4,910 $2,238
1993 $2,154 $6,001 $5,745 $2,410
1992 $2,145 $5,017 $5,008 $2,154

(A) Accounts charged off during the year, net of recoveries of
accounts previously charged off.

All other schedules are omitted because of the absence of the
conditions under which they are required or because the required
information is included in the consolidated financial statements
and the notes to consolidated financial statements included herein.

INDEPENDENT AUDITORS' REPORT

San Diego Gas & Electric Company

We have audited the consolidated financial statements of San Diego
Gas & Electric Company and subsidiaries as of December 31, 1994 and
1993 and for each of the three years in the period ended December
31, 1994, and have issued our report thereon dated February 27,
1995 (which report contains an emphasis paragraph referring to the
Company's consideration of alternative strategies for its 80
percent owned subsidiary, Wahlco Environmental Systems, Inc.); such
consolidated financial statements and report are included in your
1994 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the consolidated financial
statement schedule of San Diego Gas & Electric Company and
subsidiaries, listed in Item 14. This consolidated financial
statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on
our audits. In our opinion, such consolidated financial statement
schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

DELOITTE & TOUCHE LLP
San Diego, California
February 27, 1995

3. Exhibits

The Forms 8, 8-K, 10-K and 10-Q referred to herein were filed under
Commission File Number 1-3779.

Exhibit 3 -- Bylaws and Articles of Incorporation

Bylaws

3.1 Restated Bylaws - December 20, 1993 (Incorporated by reference
from SDG&E's 1993 Form 10-K)

Articles of Incorporation

3.2 Restated Articles of Incorporation - April 26, 1994
(Incorporated by reference from SDG&E's March 31, 1994
Quarterly Report on Form 10-Q, Ex 3.1)

Exhibit 4 -- Instruments Defining the Rights of Security Holders,
Including Indentures

4.1 Mortgage and Deed of Trust dated July 1, 1940. (Incorporated
by reference from Registration No. 2-49810, Exhibit 2A.)

4.2 Second Supplemental Indenture dated as of March 1, 1948.
(Incorporated by reference from Registration No. 2-49810,
Exhibit 2C.)

4.3 Ninth Supplemental Indenture dated as of August 1, 1968.
(Incorporated by reference from Registration No. 2-68420,
Exhibit 2D.)

4.4 Tenth Supplemental Indenture dated as of December 1, 1968.
(Incorporated by reference from Registration No. 2-36042,
Exhibit 2K.)

4.5 Sixteenth Supplemental Indenture dated August 28, 1975.
(Incorporated by reference from Registration No. 2-68420,
Exhibit 2E.)

4.6 Thirtieth Supplemental Indenture dated September 28, 1983.
(Incorporated by reference from Registration No. 33-34017,
Exhibit 4.3.)

Exhibit 10 -- Material Contracts (Previously filed exhibits are
incorporated by reference from SDG&E's Forms 10-K or
Forms 10-Q as referenced below).

Compensation

10.1 Form of San Diego Gas & Electric Company Deferred
Compensation Agreement for Officers #3 (1995 compensation,
1996 bonus).

10.2 Form of San Diego Gas & Electric Company Deferred
Compensation Agreement for Officers #1 (1995 compensation,
1996 bonus).

10.3 Form of San Diego Gas & Electric Company Deferred
Compensation Agreement for Nonemployee Directors (1995
compensation).

10.4 Form of San Diego Gas & Electric Company 1986 Long-Term
Incentive Plan 1994 restricted stock award agreement.

10.5 San Diego Gas & Electric Company Retirement Plan for
Directors, restated as of October 24, 1994.

10.6 Form of San Diego Gas & Electric Company Deferred
Compensation Agreement for Officers #3 (1994
compensation) (1993 Form 10-K Exhibit 10.1).

10.7 Form of San Diego Gas & Electric Company Deferred
Compensation Agreement for Officers #1 (1994 compensation,
1995 incentive) (1993 Form 10-K Exhibit 10.2).

10.8 Form of San Diego Gas & Electric Company Deferred
Compensation Agreement for Nonemployee Directors (1994
compensation)(1993 Form 10-K Exhibit 10.3).

10.9 Form of San Diego Gas & Electric Company 1986 Long-Term
Incentive Plan 1993 restricted stock award agreement(1993
Form 10-K Exhibit 10.4).

10.10 Form of San Diego Gas & Electric Company Deferred
Compensation Agreement for Officers #3 (1993 compensation)
(1992 Form 10-K Exhibit 10.1).

10.11 Form of San Diego Gas & Electric Company Deferred
Compensation Agreement for Officers #1 (1993 compensation,
1994 incentive) (1992 Form 10-K Exhibit 10.2).

10.12 Form of San Diego Gas & Electric Company Deferred
Compensation Agreement for Nonemployee Directors (1993
compensation) (1992 Form 10-K Exhibit 10.3).

10.13 Form of San Diego Gas & Electric Company 1986 Long-Term
Incentive Plan 1992 restricted stock award agreement (1992
Form 10-K Exhibit 10.4).

10.14 Supplemental Executive Retirement Plan restated as of
July 1, 1994.

10.15 Amended 1986 Long-Term Incentive Plan, Restatement as of
October 25, 1993 (1993 Form 10-K Exhibit 10.6).

10.16 Executive Incentive Plan dated April 23, 1985 (1991 Form
10-K Exhibit 10.39).

10.17 Employment agreement between San Diego Gas & Electric
Company and Thomas A. Page, dated June 15, 1988 (1988 Form
10-K Exhibit 10E).

10.18 Supplemental Pension Agreement with Thomas A. Page, dated as
of April 3, 1978 (1988 Form 10-K Exhibit 10V).

Financing Agreements

10.19 Loan agreement with Mellon Bank, N.A dated as of January 3, 1995.

10.20 Loan agreement with First Interstate Bank of California
dated as of January 3, 1995

10.21 Loan agreement with CIBC Inc. dated as of December 1, 1993
as amended (1993 Form 10-K Exhibit 10.7).

10.22 Loan agreement with the California Pollution Control
Financing Authority in connection with the issuance of $60
million of Pollution Control Bonds dated as of June 1, 1993
(June 30, 1993 Form 10-Q Exhibit 10.1).

10.23 Loan agreement with the City of San Diego in connection with
the issuance of $92.7 million of Industrial Development
Bonds 1993 Series C dated as of July 1, 1993 (June 30, 1993
Form 10-Q Exhibit 10.2).

10.24 Loan agreement with Mellon Bank, N.A dated as of April 15,
1993 as amended (March 31,1993 Form 10-Q Exhibit 10.1).

10.25 Loan agreement with First Interstate Bank of California
dated as of April 15, 1993 as amended (March 31,1993 Form
10-Q Exhibit 10.2).

10.26 Loan agreement with the City of San Diego in connection with
the issuance of Industrial Development Bonds 1993 Series A
dated as of April 1, 1993 (March 31,1993 Form 10-Q Exhibit 10.3).

10.27 Loan agreement with the City of San Diego in connection with
the issuance of Industrial Development Bonds 1993 Series B
dated as of April 1, 1993 (March 31,1993 Form 10-Q Exhibit 10.4).

10.28 Loan agreement with the City of Chula Vista in connection
with the issuance of $250 million of Industrial Development
Revenue Bonds, dated as of December 1, 1992 (1992 Form 10-K
Exhibit 10.5).

10.29 Loan agreement with the City of San Diego in connection with
the issuance of $25 million of Industrial Development
Revenue Bonds, dated as of September 1, 1987 (1992 Form 10-K
Exhibit 10.6).

10.30 Loan agreement between Mellon Bank, N.A. and San Diego Gas
& Electric Company dated December 15, 1992, as amended (1992
Form 10-K Exhibit 10.10).

10.31 Loan Agreement with the City of San Diego in connection with
the issuance of $118.6 million of Industrial Development
Revenue Bonds dated as of September 1, 1992 (Sept 30, 1992
Form 10-Q Exhibit 10.1).

10.32 Loan agreement with California Pollution Control Financing
Authority, dated as of December 1, 1985, in connection with
the issuance of $35 million of pollution control bonds (1991
Form 10-K Exhibit 10.10).

10.33 Loan agreement with California Pollution Control Financing
Authority, dated as of December 1, 1991, in connection with
the issuance of $14.4 million of pollution control bonds
(1991 Form 10-K Exhibit 10.11).

10.34 Loan agreement with the City of San Diego in connection with
the issuance of $44.25 million of Industrial Development
Revenue Bonds, dated as of July 1, 1986 (1991 Form 10-K
Exhibit 10.36).

10.35 Loan agreement with the City of San Diego in connection with
the issuance of $81.35 million of Industrial Development
Revenue Bonds, dated as of December 1, 1986 (1991 Form 10-K
Exhibit 10.37).

10.36 Loan agreement with the City of San Diego in connection with
the issuance of $100 million of Industrial Development
Revenue Bonds, dated as of September 1, 1985 (1991 Form 10-K
Exhibit 10.38).

10.37 Loan agreement with California Pollution Control Financing
Authority dated as of December 1, 1984, in connection with
the issuance of $27 million of pollution control bonds (1991
Form 10-K Exhibit 10.40).

10.38 Loan agreement with California Pollution Control Financing
Authority dated as of May 1, 1984, in connection with the
issuance of $53 million of pollution control bonds (1991
Form 10-K Exhibit 10.41).

10.39 Loan agreement between Union Bank and SDG&E dated November
1, 1988 as amended (1989 Form 10-K Exhibit 10I).

10.40 Loan agreement between Bank of America National Trust &
Savings Association and SDG&E dated November 1, 1988 as
amended (1989 Form 10-K Exhibit 10J).

10.41 Loan agreement between First Interstate Bank of California
and SDG&E dated November 1, 1988 as amended (1989 Form 10-K
Exhibit 10K).

Natural Gas Commodity, Transportation and Storage Contracts

10.42 Long-Term Natural Gas Storage Service Agreement dated
January 12, 1994 between Southern California Gas Company and
SDG&E.

10.43 Amendment to San Diego Gas & Electric Company and Southern
California Gas Company Restated Long-Term Wholesale Natural
Gas Service Contract dated March 26, 1993 (1993 Form 10-K
Exhibit 10.53).

10.44 Gas Purchase Agreement, dated March 12, 1991 between Husky
Oil Operations Limited and San Diego Gas & Electric Company
(1991 Form 10-K Exhibit 10.1).

10.45 Gas Purchase Agreement, dated March 12, 1991 between
Canadian Hunter Marketing Limited and San Diego Gas &
Electric Company (1991 Form 10-K Exhibit 10.2).

10.46 Gas Purchase Agreement, dated March 12, 1991 between Bow
Valley Industries Limited and San Diego Gas & Electric
Company (1991 Form 10-K Exhibit 10.3).

10.47 Gas Purchase Agreement, dated March 12, 1991 between Summit
Resources Limited and San Diego Gas & Electric Company (1991
Form 10-K Exhibit 10.4).

10.48 Service Agreement Applicable to Firm Transportation Service
under Rate Schedule FS-1, dated May 31, 1991 between Alberta
Natural Gas Company Ltd. and San Diego Gas & Electric
Company (1991 Form 10-K Exhibit 10.5).

10.49 Firm Transportation Service Agreement, dated December 31,
1991 between Pacific Gas and Electric Company and San Diego
Gas & Electric Company (1991 Form 10-K Exhibit 10.7).

10.50 Firm Transportation Service Agreement, dated April 25, 1991
between Pacific Gas Transmission Company and San Diego Gas
& Electric Company (March 31, 1991 Form 10-Q Exhibit 28.2).

10.51 San Diego Gas & Electric Company and Southern California Gas
Company Restated Long-Term Wholesale Natural Gas Service
Contract, dated September 1, 1990 (1990 Form 10-K Exhibit 10.9).

Nuclear

10.52 Uranium enrichment services contract between the U.S.
Department of Energy (DOE assigned its rights to the U.S.
Enrichment Corporation, a U.S. government-owned corporation,
on July 1, 1993) and Southern California Edison Company, as
agent for SDG&E and others; Contract DE-SC05-84UEO7541,
dated November 5, 1984, effective June 1, 1984, as amended
by modifications dated September 13, 1985, January 8, April
10, June 17 and August 8, 1986, March 26, 1987, February 20
and July 25, 1990, October 7, 1991, March 31, 1993 and March
17, 1994 (1991 Form 10-K Exhibit 10.9).

10.53 Fuel Lease dated as of September 8, 1983 between SONGS Fuel
Company, as Lessor and San Diego Gas & Electric Company, as
Lessee, and Amendment No. 1 to Fuel Lease, dated September
14, 1984 and Amendment No. 2 to Fuel Lease, dated March 2,
1987 (1992 Form 10-K Exhibit 10.11).

10.54 Agreement dated March 19, 1987, for the Purchase and Sale of
Uranium Concentrates between SDG&E and Saarberg-Interplan
Uran GmbH (assigned to Pathfinder Mines Corporation in June
1993) (1990 Form 10-K Exhibit 10.5).

10.55 Nuclear Facilities Qualified CPUC Decommissioning Master
Trust Agreement for San Onofre Nuclear Generating Station,
approved November 25, 1987 (1992 Form 10-K Exhibit 10.7).

10.56 Amendment No. 1 to the Qualified CPUC Decommissioning Master
Trust Agreement dated September 22, 1994 (see Exhibit 10.55
herein).

10.57 Second Amendment to the San Diego Gas & Electric Company
Nuclear Facilities Qualified CPUC Decommissioning Master
Trust Agreement for San Onofre Nuclear Generating Stations
(see Exhibit 10.55 herein).

10.58 Nuclear Facilities Non-Qualified CPUC Decommissioning Master
Trust Agreement for San Onofre Nuclear Generating Station,
approved November 25, 1987 (1992 Form 10-K Exhibit 10.8).

10.59 Second Amended San Onofre Agreement among Southern
California Edison Company, SDG&E, the City of Anaheim and
the City of Riverside, dated February 26, 1987 (1990 Form
10-K Exhibit 10.6).

10.60 U. S. Department of Energy contract for disposal of spent
nuclear fuel and/or high-level radioactive waste, entered
into between the DOE and Southern California Edison Company,
as agent for SDG&E and others; Contract DE-CR01-83NE44418,
dated June 10, 1983 (1988 Form 10-K Exhibit 10N).

Purchased Power

10.61 Public Service Company of New Mexico and San Diego Gas &
Electric Company 1988-2001 100 mw System Power Agreement
dated November 4, 1985 and Letter of Agreement dated April
28, 1986, June 4, 1986 and June 18, 1986 (1988 Form 10-K
Exhibit 10H).

10.62 San Diego Gas & Electric Company and Portland General
Electric Company Long-Term Power Sale and Transmission
Service agreements dated November 5, 1985 (1988 Form
10-K Exhibit 10I).

10.63 Comision Federal de Electricidad and San Diego Gas &
Electric Company Contract for the Purchase and Sale of
Electric Capacity and Energy dated November 20, 1980 and
additional Agreement to the contract dated March 22, 1985
(1988 Form 10-K Exhibit 10J).

10.64 Agreement with Arizona Public Service Company for Arizona
transmission system participation agreement - contract
790116 (1988 Form 10-K Exhibit 10P).

Other

10.65 U. S. Navy contract for electric service, Contract
N62474-70-C-1200-P00414, dated September 29, 1988 (1988 Form
10-K Exhibit 10C).

10.66 City of San Diego Electric Franchise (Ordinance No.10466)
(1988 Form 10-K Exhibit 10Q).

10.67 City of San Diego Gas Franchise (Ordinance No.10465) (1988
Form 10-K Exhibit 10R).

10.68 County of San Diego Electric Franchise (Ordinance No.3207)
(1988 Form 10-K Exhibit 10S).

10.69 County of San Diego Gas Franchise (Ordinance No.5669) (1988
Form 10-K Exhibit 10T).

10.70 Lease agreement dated as of March 25, 1992 with American
National Insurance Company as lessor of an office complex at
Century Park.

10.71 Lease agreement dated as of June 15, 1978 with Lloyds Bank
California, as owner-trustee and lessor - Exhibit B to
financing agreement of SDG&E's Encina Unit 5 equipment trust
(1988 Form 10-K Exhibit 10W).

10.72 Amendment to Lease agreement dated as of July 1, 1993 with
Sanwa Bank California, as owner-trustee and lessor - Exhibit
B to secured loan agreement of SDG&E's Encina Unit 5
equipment trust (See Exhibit 10.71 herein).

10.73 Lease agreement dated as of July 14, 1975 with New England
Mutual Life Insurance Company, as lessor (1991 Form 10-K
Exhibit 10.42).

10.74 Assignment of Lease agreement dated as of November 19, 1993
to Shapery Developers as lessor by New England Mutual
Life Insurance Company (See Exhibit 10.73 herein).

Exhibit 12 -- Statement re computation of ratios

12.1 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends for the years ended December
31, 1994, 1993, 1992, 1991 and 1990.

Exhibit 13 -- The financial statements and other documents listed
under Part IV Item 14(a)1. and Management's Discussion and Analysis
of Financial Condition and Results of Operations listed under Part
II Item 7 of this Form 10-K are incorporated by reference from the
1994 Annual Report to Shareholders.

Exhibit 22 - Subsidiaries - See "Part I, Item 1. Description of
Business."

Exhibit 24 - Independent Auditors' Consent, page 37.

Exhibit 27 - Financial Data Schedules

27.1 Financial Data Schedule for the year ended December 31,
1994.

(b) Reports on Form 8-K:

A Current Report on Form 8-K was filed on October 26, 1994
announcing the appointments of Thomas C. Stickel and William D.
Jones to SDG&E's Board of Directors.

A Current Report on Form 8-K was filed on November 8, 1994 to
report SDG&E's filing of an application with the California Public
Utilities Commission to form a holding company.

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference of our report
dated February 27, 1995 (which report contains an emphasis
paragraph referring to the Company's consideration of alternative
strategies for its 80 percent-owned subsidiary, Wahlco
Environmental Systems, Inc.) appearing on page 24 of the 1994
Annual Report to Shareholders of San Diego Gas & Electric Company
incorporated by reference in this Annual Report on Form 10-K for
the year ended December 31, 1994.

We also consent to the incorporation by reference of the
above-mentioned report in San Diego Gas & Electric Company
Post-Effective Amendment No. 1 to Registration Statement No.
33-46736 on Form S-3, Post-Effective Amendment No. 4 to
Registration Statement No. 2-71653 on Form S-8, Registration
Statement No. 33-7108 on Form S-8, Registration Statement No.
33-45599 on Form S-3, Registration Statement No. 33-52834 on Form
S-3 and Registration Statement No. 33-49837 on Form S-3.

DELOITTE & TOUCHE LLP
San Diego, California
February 28, 1995

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

February 27, 1995 By: /s/ Thomas A. Page
-------------------------------------
Thomas A. Page
Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report is signed below by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.

Signature Title Date

Principal Executive Officer:

/s/ Thomas A. Page
- ------------------------------------------------------------------------------
Thomas A. Page Chairman, President and Chief February 27, 1995
Executive Officer and a Director

Principal Financial Officer:

/s/ Stephen L. Baum
- ------------------------------------------------------------------------------
Stephen L. Baum Executive Vice President February 27, 1995

Principal Accounting Officer:

/s/ Frank H. Ault
- ------------------------------------------------------------------------------
Frank H. Ault Vice President and Controller February 27, 1995

Directors:

/s/ Richard C. Atkinson
- ------------------------------------------------------------------------------
Richard C. Atkinson Director February 27, 1995

/s/ Richard A. Collato
- ------------------------------------------------------------------------------
Richard A. Collato Director February 27, 1995

/s/ Daniel W. Derbes
- ------------------------------------------------------------------------------
Daniel W. Derbes Director February 27, 1995

/s/ Catherine T. Fitzgerald
- ------------------------------------------------------------------------------
Catherine T. Fitzgerald Director February 27, 1995

/s/ Robert H. Goldsmith
- ------------------------------------------------------------------------------
Robert H. Goldsmith Director February 27, 1995

/s/ William D. Jones
- ------------------------------------------------------------------------------
William D. Jones Director February 27, 1995

/s/ Ralph R. Ocampo
- ------------------------------------------------------------------------------
Ralph R. Ocampo Director February 27, 1995

/s/ Thomas C. Stickel
- ------------------------------------------------------------------------------
Thomas C. Stickel Director February 27, 1995

GLOSSARY

APCD Air Pollution Control District

BCAP Biennial Cost Allocation Proceeding

BPA Bonneville Power Administration

BRPU Biennial Resource Plan Update

CEC California Energy Commission

CFE Comision Federal de Electricidad

CPUC California Public Utilities Commission

DOE Department of Energy

ECAC Energy Cost Adjustment Clause

Edison Southern California Edison Company and/or its parent,
SCEcorp

EMF Electric and magnetic fields

Enron Enron Power Marketing

ERAM Electric Revenue Adjustment Mechanism

FERC Federal Energy Regulatory Commission

GFCA Gas Fixed Cost Account

IID Imperial Irrigation District

kv Kilovolt

kwh Kilowatt hour

MTDB Metropolitan Transit Development Board

mw Megawatt

NRC Nuclear Regulatory Commission

Pacific Intertie A transmission line connecting San Diego to the Pacific
Northwest

PCB Polychlorinated Biphenyl

PDC Pacific Diversified Capital Company

PG&E Pacific Gas and Electric Company

PGE Portland General Electric Company

PNM Public Service Company of New Mexico

PURPA Public Utility Regulatory Policies Act

RECLAIM Regional Clean Air Incentive Market

RMGC Rocky Mountain Generation Cooperative

SDG&E San Diego Gas & Electric Company

SONGS/San Onofre San Onofre Nuclear Generating Station

SRP Salt River Project

Southwest Powerlink A transmission line connecting San Diego to Phoenix and
intermediate points

TCF Target Capacity Factor

WES Wahlco Environmental Systems, Inc.