In launching the newly created $6.2 billion Sempra Energy, amerger of the holding companies for Southern California Gas and SanDiego Gas and Electric, its leaders have indicated there will beseveral natural gas and electricity deals unfolding in the next fewweeks and months that will mark its quest to become “one of the topfive energy services companies in North America.”

Making it clear that nonutility ventures promise the most growth(in the 5-6% range annually), Sempra’s new CEO, Dick Farman, saidthat nevertheless his $10-billion-in-assets holding company alsowill be expanding its utility operations outside of Californiathrough the purchase of small and medium-sized companies around theU.S., with or without repeal of the Public Utility Holding CompanyAct (PUHCA). (He expects Congress to repeal PUHCA next year.)

Farman said Sempra will take more “high profile” actions in thesecond half of this year to establish a new national brandingcampaign this fall, divest SoCalGas’ rights to buy the Californiapart of two interstate gas pipelines, sell SDG&ampE’s power plants,and expand into other regions by acquisition, alliance or throughextending its existing operations.

Headquartered in San Diego, Sempra will have the base of 6million utility meters serving a population of 21 million in thesouthern half of California through SoCalGas and SDG&ampE, whichwill remain separate utility operations. It also includes fivenonutility subsidiaries covering energy services, trading, powerplant development, international gas and electric projects andfinancing affordable housing projects. A sixth subsidiary will ownregulated energy operations outside of California, such as gasutility operations it currently is developing in North Carolina andMaine.

“We intend to be a major player in the quickly developing energymarketplace nationally,” said Farman, CEO who will head the holdingcompany two years before retiring in mid-year 2000. “There aregoing to be opportunities throughout the United States as thesmaller and medium-size utilities become part of the consolidationthat is taking place as part of the restructuring of the utilityindustry.

“We’ll be in the energy utility business-whether electric orgas-wherever it makes sense for our shareholders and our customers.

“However, over the next three- to five-year period, unregulated,energy-related businesses will be very, very important to SempraEnergy’s future. We’re going to nurture those energy-relatedactivities that increasingly will play an important role forSempra.”

Sempra is currently building a $55 million gas distributionsystem to serve about 150,000 customers in North Carolina, and itis about to start a similar project in Maine to serve about 100,000customers.

Overall, Farman said that the new holding company is “designedto thrive and grow as electric industry deregulation spreads fromthe Pacific shore eastward to the Atlantic coastline.” Electricrestructuring is still in its “infant stage,” Farman said andSempra and many others are “betting competition will intensify overtime” to the ultimate benefit of American consumers.

Richard Nemec, Los Angeles

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