The proposed merger of Pacific Enterprises and Enova Corp. wascleared by the U.S. Department of Justice following a settlementagreement that calls for the merged company to divest itsgeneration assets and seek additional DOJ approval of any purchasesof existing power plants exceeding 500 MW of capacity inCalifornia. It calls for Enova to follow through on its previouslyannounced auction of San Diego Gas & Electric’s (Enova’sprimary electric utility subsidiary) two fossil-fuel power plants,located in Carlsbad and Chula Vista, CA. The agreement ends DOJ’sreview and clears the merger under the notification requirements ofthe Hart-Scott-Rodino Antitrust Improvement Act.

“Under California’s electric industry restructuring, SDG&Eand the state’s other electric utilities have been encouraged byregulators to exit the generation business,” said Enova ChairmanStephen L. Baum. “As a result, we announced in November 1997 ourplans to divest ourselves of SDG&E’s generating assets. TheDepartment of Justice obviously viewed our divestiture plans as akey issue in gaining accelerated clearance of the merger under theHart-Scott-Rodino Act. We have made this commitment and plan tocomplete the auction process for our generating assets by the endof this year.”

Although Sempra Energy, the company to be formed by the merger,must seek DOJ approval when acquiring existing power plants, itstill may acquire and operate generation facilities outside ofCalifornia or cogeneration or new generation facilities withinCalifornia, according to the settlement.

The merger, which was announced in October 1996, still needsfinal approval from the California Public Utilities Commission(CPUC), FERC and the Securities and Exchange Commission. Thecompanies expect to receive all regulatory approvals and beoperational by summer.

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