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CONTACT: Kyle DeVine                June 19, 1996   CPUC - 525
         213-897-4225                             (A.95-10-035)

                    CPUC APPROVES SDG&E MICAM

    The California Public Utilities Commission (CPUC) today
approved a proposal to replace the standard CPUC cost of capital
proceeding with a new Market Indexed Capital Adjustment Mechanism
(MICAM) for San Diego Gas and Electric Company (SDG&E).
    SDG&E will implement this beginning with determining its 1998
cost of capital; the utility will participate in this year's CPUC
proceeding which will set their 1997 cost of capital.
    MICAM would save the utility money by permitting it to
redirect staff to other assignments, and provide more
predictability in determining the cost of capital which will be
useful to the company and investors.  To assure ratepayers will
not be harmed by using it rather than the CPUC standard
proceeding, the mechanism will be evaluated during the third
year's use.
    Under MICAM, SDG&E would no longer participate in the
Commission annual proceeding which updates the cost of capital
components and the overall rates of return used to set the major
energy utilities rates.  Instead, MICAM would make automatic
adjustments depending on year-to-year changes in utility bond
rates.

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