State Decision Could Trim SDG&E; Earnings $30 Million

SAN DIEGO — Diego Gas & Electric could be forced to reduce its 1987 net earnings by as much as $30 million if state regulators fail to reverse an earlier decision to disallow from the rate base $69 million in disputed construction costs for San Onofre Nuclear Generating Station Units 2 and 3.

Earnings for the year would be reduced by $30 million at the worst if SDG&E; shareholders are forced to absorb all of the $69 million in construction costs, SDG&E; said. In that case, the average residential customer bills would fall by as much as 25 cents a month.

The state Public Utility Commission has granted SDG&E;’s request for a rehearing on about $20 million of the disputed construction costs. If SDG&E; prevails at the as-yet-unscheduled rehearing and SDG&E; shareholders are forced to absorb $49 million, earnings would be reduced by $20 million.

The utility does not expect the commission to grant a requested rehearing on the remaining $49 million, although the PUC has not yet formally denied SDG&E;’s request.

Last December, SDG&E; told the commission it would not contest $12 million in cost overruns at the nuclear power plant. That decision reduced fourth-quarter 1986 earnings by $5 million.

SDG&E; has argued that it completed work on the two nuclear generating units in a timely and prudent basis. And, last October, a PUC administrative law judge ruled that SDG&E;’s portion of the power plant was completed in a reasonable manner.

However, commissioners ignored that report and voted to force SDG&E;’s shareholders to absorb the disputed costs.

Southern California Edison Co. owns 75% of the plant, SDG&E; owns 20% and several municipal utilities own the rest. The $4.5-billion plant was completed in 1984 and cost 10 times the utilities’ original estimate.