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             California Public Utilities Commission
505 Van Ness Avenue, Room 5301            San Francisco, CA 94102
CONTACT: Armando Rendon             November 21, 1995    CPUC-099
         415-703-1366                                (A95-05-016)

       CPUC SETS 1996 RATES OF RETURN FOR ENERGY UTILITIES

     The California Public Utilities Commission (CPUC) today set
the return on common equity and the return on rate base for 1996
for five energy utilities in the state.  These rates of return
will be key factors in December when the Commission sets the
rates residential and commercial customers will pay for
electricity and natural gas service next year.
     The following table shows the 1996 and 1995 return rates for
Sierra Pacific Power Company (Sierra), Pacific Gas and Electric
Company (PG&E), San Diego Gas & Electric Company (SDG&E),
Southern California Edison Company (Edison), and Southern
California Gas Company (SoCalGas):
                 Return on Common Equity     Return on Rate Base
 Utility              1996     1995             1996     1995

Sierra               11.60%    11.30%           9.59%     9.42%
PG&E                 11.60     12.10            9.49      9.79
SDG&E                11.60     12.05            9.37      9.76
Edison               11.60     12.10            9.55      9.80
SoCalGas             11.60     12.00            9.42      9.67

     In the cost of capital proceeding, the Commission adopts a
rate of return for equity which reflects the underlying risk of
the utility's business.  To determine the appropriate rate, the
Commission examines the forecasts from several models, recognized
by the Commission in prior proceedings.  In applying these
forecasts, the Commission uses an incremental approach, which
considers such items as the expected change in interest rates.
     In this year's proceeding, the five energy utilities and
other parties, including the CPUC Division of Ratepayer Advocates
(DRA), submitted a joint agreement.  This joint agreement
proposed a 11.6 percent return on equity for all five utilities
                             -more-
and proposed the capital structure recommended by DRA.  After
examining the parties' testimony and applying its settlement
rules, the Commission adopted both the return on equity and the
capital structure as proposed in the joint agreement.
     The Commission develops the return on rate base by applying
the adopted return on equity, embedded cost of debt and return on
preferred stock to the capital structure for each utility.  The
Commission then adopts customer rates for gas or electric
service; a lower return on rate base by itself will lower
customer rates.
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