While the cost of common household goods like bread and milk increased 77 and 50 percent, respectively, from 1985 to 1995, the average residential electricity bill for customers of San Diego Gas & Electric Co. (SDG&E) dropped 13.6 percent over the same period, according to San Diego Chamber of Commerce statistics.

That trend shows no sign of abating. In fact, low rates are fast becoming a staple for the utility's 1.2 million electric customers.

So the Federal Energy Regulatory Commission (FERC) won't break up the electric utility industry. But it may happen anyway (em if not at the FERC's direction, then perhaps under pressure from state regulators who, some say, are threatening to link stranded-cost recovery to vertical disaggregation.

What would a breakup mean for bonds and bondholders?

As we reported last month ("New Corporate Structures Place Bondholders at Risk," May 1, 1996, p.

The California Public Utilities Commission (CPUC) has approved a corporate reorganization plan making San Diego Gas and Electric Co. (SDG&E) a wholly-owned subsidiary of a holding company structure formed by the utility. The utility said the reorganization would provide the separation of lines of business necessary to insulate regulated utility cash flows from the volatility and risk of competitive markets.

Standard & Poor's (S&P) plans to maintain negative outlooks on the three largest California electric utilities (em Southern California Edison (SCE), San Diego Gas & Electric (SDG&E), and Pacific Gas & Electric (PG&E). Although it considers the California Public Utilities Commission's (CPUC's) December 20 electric restructuring order "reasonably favorable," S&P will not reexamine the ratings until it is sure the plan will be finalized as proposed. S&P's concern is that some members of the California State Senate believe small customer interests would not be adequately protected.

Mark your calendars for April 29, 1996. That's the date of the "filing of the century," according to Donald Garber, group manager for strategic plans and projects at San Diego Gas & Electric Co.

Garber is talking about plans to file a draft operating agreement at the Federal Energy Regulatory Commission (FERC) for the proposed California Power Exchange. The April filing will mark an important step in executing the December 20 order by the California Public Utilities Commission (CPUC).

Michael W. Peters succeeds Raymond G. Kuhl as executive v.p. and g.m. at the new Michigan Electric Cooperative Association. Kuhl retired January 30. Peters was general counsel at the Association of Illinois Electric Cooperatives. MECA provides services to 14 co-ops.

MDU Resources Group, Inc. has elected Thomas S. Everist, a South Dakota businessman, to its board of directors.

Peter J. O'Shea, Jr. was named senior v.p. and general counsel at Consolidated Edison. O'Shea comes from ITT Corp., where he served as v.p.

The Government of Mexico on November 8 revealed its new natural gas regulations at a special conference of industry executives in Mexico City. The new rules promote use of natural gas; create a competitive, market-driven gas industry; encourage private investment; enhance customer choice; and protect the environment. Private-sector transmission, distribution, and storage of gas were all previously controlled by the state.

Conference attendee Thomas A. Page (em chairman of San Diego Gas & Electric Co.

In a recent article ("The Efficient Utility: Labor, Capital, and Profit," Sept. 1, 1995), Taylor and Thompson attempt to measure the

economic efficiencies of 19 investor-owned utilities.

The authors use a method of efficiency measurement proposed by M.J. Farrell in a pioneering paper published nearly 40 years ago.

California regulators and the utilities they oversee have been talking a lot in recent years about competition. But just being able to "talk the talk" isn't enough (em utility companies and the regulators who monitor them have got to "walk the walk." And on that score, they've just barely begun to crawl. Despite all the marketing hype, the monopoly mindset is still very apparent among industry officials and regulators.Take California's energy industry, for example.