2. Jurisdiction and Background

Applicants are public utilities subject to the jurisdiction of this Commission as defined in Section 218 of the Public Utilities Code.⁴ SCE, a California corporation and wholly-owned subsidiary of Edison International, provides electric service principally in southern California. SDG&E, a California corporation wholly owned by Sempra Energy, provides electric service in a portion of Orange County and electric and gas services in San Diego County. PG&E, a California corporation, provides electric and gas services in northern and central California.

SCE seeks to increase its ROE to 11.80% from 11.60% while SDG&E seeks to increase its ROE to 11.60% from 10.70%. PG&E seeks to increase its electric and gas operations ROE to 11.70% from 11.35%. SCE, SDG&E and PG&E propose to maintain their currently authorized capital structures.

On June 14, 2007, the applications were consolidated pursuant to Rule 7.4 of the Commission's Rules of Practice and Procedure. The consolidation of these applications does not necessarily mean that a uniform ROE should be applied to each of the utilities. This is because each of these utilities has unique factors and differences that need to be considered in arriving at a reasonable return. These unique factors and differences encompass three distinct areas: capital structure, long-term debt and preferred stock costs, and return on common equity.

⁴ All statutory references are to the Public Utilities Code unless otherwise stated.