One of Sempra Energy’s two major California utilities, San Diego Gas and Electric Co., on Thursday announced it has reached a settlement in its pending cost-of-service rate case with the independent consumer unit of the California Public Utilities Commission.

Terms of the settlement will remain confidential until it is formally filed with the CPUC Dec. 19, the utility said, but it noted the net effect will be lower retail electric rates and slightly higher natural gas transportation charges.

SDG&E said it had reached a “tentative settlement-in-principle” with the CPUC’s Office of Ratepayer Advocates (ORA), establishing how much the utility would be allowed to charge in customer rates next year to cover most of its costs, including operating and maintenance expenses. The cost of purchasing electricity and natural gas and transporting it to California is not covered by the settlement, SDG&E said in a prepared statement.

“While the specific rate impact will not be released until the formal submittal of the settlement, it will, if adopted, produce 2004 system average electric rates that are lower than rates in effect today, and will slightly increase gas delivery rates,” said SDG&E CEO Edwin Guiles.

Under the current CPUC process, written comments and briefs will be filed between the Dec. 19 and Feb. 19, 2004. After that, the CPUC can act on the case at anytime.

Guiles called the tentative settlement “fair to shareholders and reasonable to customers,” with the end result of allowing the utility to “provide safe, reliable energy” to its 1.3 million electric customers and 789,000 gas customers.

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