(Effective Until Closing of 
               Transaction with Pacific Enterprises, Inc.) 
 
                   SAN DIEGO GAS & ELECTRIC COMPANY 
                            SEVERANCE PLAN 
 
 
I.          PURPOSE AND OBJECTIVE 
 
            To provide a separation pay allowance to help meet Eligible 
            Employees' immediate financial burden associated with being 
            involuntarily and permanently terminated under conditions 
            described in the Plan.  This Plan supersedes the previous 
            Severance Plan dated August 22, 1994, as of the Effective 
            Date. 
 
II.         RESPONSIBILITY 
 
            The Company, through its Division and Department heads, is 
            responsible for administering the Plan. 
 
            The Company, through its Human Resources Division, is 
            responsible for providing further interpretation and 
            guidance. 
 
            The business decisions, the manner in which they are carried 
            out that may result in the termination of an employee, and 
            the reason for termination (including resignation in lieu of 
            discharge) are decisions to be made by the Company in its 
            sole discretion.  In making these decisions, the Company is 
            not required to treat similarly situated employees in the 
            same manner. 
 
III.        ELIGIBILITY 
 
            A.  "Eligible Employee" includes an employee whose job is 
                terminated by the Company, who is not covered by any 
                other severance plan adopted by the Company, and who: 
 
                1.    is a regular non-bargaining unit employee working 
                      as a full-time, part-time, or call-in employee of 
                      the Company, or a regular non-bargaining unit 
                      full-time, part-time or call-in employee on 
                      medical leave, military leave or long-term 
                      disability; 
 
                2.    has received written notice that employment will 
                      be terminated; 
 
                3.    continues as a satisfactory employee until 
                      released by the Company in accordance with its 
                      business needs; 
 
 
                4.    abides by such other written terms and conditions 
                      as the Company has established as a condition for 
                      participation in, or payment of, benefits from the 
                      Plan; and 
 
                5.    is not excluded as provided below. 
 
 
            B.  Eligible Employees exclude employees: 
 
                1.    whose employment terminates due to death; 
 
                2.    whose employment terminates because of 
                      unsatisfactory performance, the employee is 
                      discharged for cause, and/or resigns in lieu of 
                      discharge for cause, all as determined by the 
                      Company; 
 
                3.    who accept employment with an organization that is 
                      affiliated (directly or indirectly) with the 
                      Company; 
 
                4.    who voluntarily terminate employment with the 
                      Company for any reason except as provided in IV.C 
                      below; or 
 
                5.    who are temporary workers (agency or independent), 
                      interns, independent contractors, employment 
                      contract employees, student employees, or 
                      employees covered by a collective bargaining 
                      agreement that does not provide for Plan 
                      participation. 
 
            C.  Participation in the Plan commences when an 
                EligibleEmployee receives the notice of employment 
                termination referred to above.  An Eligible Employee who 
                commences participation in the Plan is called a 
                "Participant" in the Plan. 
 
 
IV.         BENEFITS 
 
            A.  Introduction.  For purposes of determining Plan 
                Benefits, the following shall apply: 
 
                1.   "Annual Pay" means Base Salary multiplied by 52. 
 
                2.   "Base Salary" means average regular straight time 
                     weekly base pay in effect during the month 
                     preceding termination of employment with the 
                     Company, excluding overtime, shift differentials, 
                     Bonus Awards and other special payments determined 
                     by the Company in its sole discretion. 
 
                3.   "Years of Continuous Service" means the number of 
                     years since Hire Date a person has been 
                     continuously employed as an active regular full- 
                     time, part-time or call-in employee of the Company 
                     or its predecessors, as determined by the Company. 
 
                     An Eligible Employee who is a call-in or regular 
                     part-time employee entitled to these benefits will 
                     receive pro-rated severance benefits as follows: 
 
                     a.  Add the total number of hours worked during the 
                         preceding ten (10) years. 
 
                     b.  Divide by 2,087 hours for non-exempt employees 
                         and 2,080 hours for exempt employees. 
 
                     c.  The resulting number, excluding fraction, will 
                         constitute Years of Continuous Service 
                         completed under the Plan. 
 
                4.   "Hire Date" shall be, except as provided in a 
                     collective bargaining agreement, the date a person 
                     was hired by SDG&E as a non-bargaining unit regular 
                     full-time employee, a non-bargaining unit regular 
                     part-time employee, or a non-bargaining unit call- 
                     in Employee, whichever occurred first. 
 
                5.   "Final Salary" means the Participant's Base Salary 
                     plus his or her Bonus Awards. 
 
                6.   "Bonus Awards" means the gross cash amounts awarded  
                     under the San Diego Gas & Electric Company Senior 
                     Management Incentive Compensation Plan or 
                     Compensation Incentive Plan during the 12-month 
                     period ending on the date of the Participant's 
                     termination of employment divided by 52. 
 
                7.   If, in the sole judgment of the Company, an 
                     Eligible Employee is terminated, and the Eligible 
                     Employee's services can be used for a period equal 
                     to the weeks of Plan Benefits or if there is a 
                     reasonable possibility that a job for which the 
                     Eligible Employee is qualified may become open 
                     within such period, the Company may, in its sole 
                     discretion, permit an Eligible Employee to elect 
                     between remaining on the payroll for the period of 
                     time equal to the Plan Benefits or receiving the 
                     actual Plan Benefits. 
 
 
 
 
 
 
            B.       Benefits Without Change in Control or Other 
                     Corporate Events. 
 
                     1.  Basic Benefit.  In the absence of termination 
                         in connection with certain corporate events 
                         described in Section IV.C., Plan Benefits will 
                         be paid in one lump sum at termination  
                         accordance with one of the following schedules, 
                         as determined in Paragraph 2. 
 
 
                               Schedule A                    Schedule B 
                             Without Release                With Release 
Years of Continuous             Weeks of                      Weeks of 
Service Completed            Base Salary Paid          Final Salary Paid 
 
Less than 2                           1                           2 
 
At least 2, but less than 4           1                           3 
 
At least 4, but less than 6           2                           4 
 
At least 6, but less than 8           2                           5 
 
At least 8, but less than 10          2                           6 
 
At least 10, but less than 12         3                           7 
 
At least 12, but less than 14         4                           8 
 
At least 14, but less than 15         5                           9 
 
At least 15, but less than 16         5                          10 
 
At least 16, but less than 17         5                          11 
 
At least 17, but less than 18         6                          12 
 
At least 18, but less than 19         6                          13 
 
At least 19, but less than 20         6                          14 
 
At least 20, but less than 21         7                          15 
 
At least 21, but less than 22         7                          16 
 
At least 22, but less than 23         7                          17 
 
At least 23, but less than 24         8                          18 
 
At least 24, but less than 25         8                          19 
 
At least 25, but less than 26         8                          20 
 
At least 26, but less than 27         9                          21 
 
At least 27, but less than 28         9                          22 
 
At least 28, but less than 29         10                         23 
 
At least 29, but less than 30         10                         24 
 
         30 or more                   10                         26 
 
 
                     2.  Release from Claims.  Participants who sign a 
                         release of all known and unknown claims in such 
                         form as the Company determines shall receive 
                         Plan Benefits under Schedule B of Paragraph 1. 
                         Other Participants shall receive Plan Benefits 
                         under Schedule A of Paragraph 1. 
 
                         a.  As an additional benefit, Participants 
                             under age 40 who sign such a release will 
                             receive continuation of all group medical 
                             insurance, and 50% of the AD&D and 50% of 
                             the life insurance in force as of the  
                             of termination for the Participant and 
                             existing covered dependents for the number 
                             of weeks of Final Salary (minimum of four) 
                             represented by Schedule B of Paragraph 1. 
                             The Company will continue to pay its share 
                             of the premiums, and the Company will 
                             deduct the Participant's share of such 
                             premiums from the Participant's lump sum 
                             check. 
 
                         b.  As an additional benefit, Participants over 
                             age 40 who sign such a release which waives 
                             claims under the Age Discrimination in 
                             Employment Act will receive continuation of 
                             all group medical insurance, and 50% of the 
                             AD&D and 50% of the life insurance in force 
                             as of the date of termination for the 
                             employee and existing covered dependents 
                             for the number of weeks of Final Salary 
                             (minimum of four) represented by Schedule B 
                             of Paragraph 1.  The Company will continue 
                             to pay its share of the premiums, and the 
                             Company will also pay the Participant's 
                             share of such premiums.  Company will not 
                             pay for dependent coverage for life and 
                             AD&D. 
 
 
                         c.  For purposes of computing Plan Benefits 
                             under this Section IV.B., Participants who 
                             are participants in the Senior Management 
                             Incentive Plan and who sign such release 
                             shall receive, at a minimum, the same Plan 
                             Benefits as Participants who have completed 
                             exactly 18 Years of Continuous Service. 
 
            C.       Benefits Upon Change in Control and Other Corporate 
                     Events. 
 
                     1.  In General. 
 
                          a.  Involuntary Termination upon Change in 
                              Control.  An otherwise Eligible Employee 
                              who is involuntarily terminated for other 
                              than cause, death, or disability within 
                              two years after a Change in Control will 
                              receive a Plan Benefit based upon Final 
                              Salary, pursuant to Paragraph 2 below.  A 
                              Change in Control shall mean: 
 
                              i.  a reorganization, merger or 
                                  consolidation of the Company with one 
                                  or more corporations; 
 
                              ii. the acquisition of beneficial 
                                  ownership, directly or indirectly, of 
                                  more than 30 percent of the voting 
                                  power of the outstanding stock of the 
                                  Company by one person, group, 
                                  association, corporation or  
                                  entity coupled with the election to 
                                  the Board of Directors of new members 
                                  who were not originally nominated by 
                                  the Board at the last annual meeting 
                                  and who constitute a new majority of 
                                  the Board; or 
 
                             iii. the sale of all or substantially all 
                                  the property of the Company. 
 
                              iv. Notwithstanding i., ii., or iii. 
                                  above, no Change in Control shall be 
                                  deemed to occur with respect to any 
                                  reorganization, merger, consolidation 
                                  or sale entered into voluntarily by 
                                  the Company: 
 
                                  (a)  in which the Company survives  
                                       a direct or indirect subsidiary 
                                       of a public company, or 
 
                                  (b)  in which members of the company's 
                                       Board of Directors constitute a 
                                       majority of the members of  
                                       Board of Directors of the 
                                       surviving company, and the 
                                       shareholders of the Company 
                                       constitute a majority of the 
                                       shareholders of the surviving 
                                       company. 
 
                          b.  Voluntary Termination for Good Reason.  An 
                              otherwise Eligible Employee who 
                              voluntarily terminates employment for Good 
                              Reason within two years following a Change 
                              in Control (as defined in Paragraph 2 
                              above), will receive a Plan Benefit based 
                              upon Final Salary, pursuant to Paragraph 2 
                              below.  Good Reason shall mean: 
 
                              i.  a significant reduction in Base 
                                  Salary for reasons not related to 
                                  performance, 
 
                              ii. elimination or significant reduction 
                                  of the aggregate value of health, 
                                  dental, disability and life coverage, 
                                  or 
 
                             iii. involuntary transfer to a new business 
                                  location outside the San Diego Gas & 
                                  Electric Company service territory. 
 
                          c.  Sale of Work Unit.  A Participant will 
                              receive a Plan Benefit based upon Final 
                              Salary, pursuant to Paragraph 2, below, if 
                              he or she is terminated under the 
                              following circumstances:  unless the 
                              purchaser of a work unit assumes the 
                              obligations of this Plan, such benefits 
                              will be paid to a Participant employed by 
                              such work unit who is either: (i) 
                              terminated following the sale of the work 
                              unit and not rehired by the purchaser 
                              within two months from the date of the 
                              sale and retained for a period of at least  
                              unacceptable performance is not an issue. 
 
                     2.  Corporate Event Benefit. 
 
                         In the event of termination in connection with 
                         certain corporate events described in this 
                         Section IV.C., Plan Benefits shall be paid in 
                         one lump sum at termination in an amount equal 
                         to Final Salary multiplied by the number of 
                         credits determined below and under Paragraph 3: 
 
 
 
                               Weeks of Final Salary 
 
Years of Continuous                   Schedule A              Schedule B 
Service Completed                  Without Release          With Release 
 
   Less than 2                           2                           4 
 
At least 2, but less than 4              2                           6 
 
At least 4, but less than 6              3                           8 
 
At least 6, but less than 8              3                          10 
 
At least 8, but less than 10             3                          12 
 
At least 10, but less than 12            4                          17 
 
At least 12, but less than 14            5                          21 
 
At least 14, but less than 15            6                          24 
 
At least 15, but less than 16            7                          27 
 
At least 16, but less than 17            8                          30 
 
At least 17, but less than 18            9                          33 
 
At least 18, but less than 19           10                          36 
 
At least 19, but less than 20           11                          39 
 
At least 20, but less than 21           12                          44 
 
At least 21, but less than 22           13                          47 
 
At least 22, but less than 23           14                          50 
 
At least 23, but less than 24           15                          53 
 
At least 24, but less than 25           16                          56 
 
At least 25, but less than 26           17                          61 
 
At least 26, but less than 27           18                          64 
 
At least 27, but less than 28           19                          67 
 
At least 28, but less than 29           20                          70 
 
At least 29, but less than 30           21                          73 
 
   30 or more                            22                         78 
 
 
                     3.  Release from Claims.  If Participantvoluntarily 
                         signs a release of all known and unknown claims 
                         in such form as the Company prepares, then the 
                         Participant shall be entitled to the severance 
                         payment under Schedule B of Paragraph 2, or, if 
                         greater, the amount in Schedule B of IV.B.1.   
                         Other Participants will receive benefits under 
                         Schedule A of Paragraph 2. 
 
                         a.  As an additional benefit, a Participant 
                             under age 40 who signs such a release will 
                             receive continuation of all group medical 
                             insurance, and 50% of the AD&D and 50% of 
                             the life insurance in force as of the date 
                             of termination for the Participant and 
                             existing covered dependents for the number 
                             of weeks of Final Salary (minimum of four) 
                             represented in Schedule B of Paragraph 2.   
                             The Company will continue to pay its share 
                             of the premiums, and the Company will 
                             deduct the employee's share of such 
                             premiums from the Participant's lump  
                             check. 
 
                         b.  As an additional benefit, a Participant 
                             over age 40 who signs such a release which 
                             waives claims under the Age Discrimination 
                             in Employment Act will receive continuation 
                             of all group medical insurance, and 50% of 
                             the AD&D and 50% of the life insurance in 
                             force as of the date of termination for the 
                             Participant and existing covered dependents 
                             for the number of weeks of Final Salary 
                             (minimum of four) represented in Schedule B 
                             of Paragraph 2.  The Company will continue 
                             to pay its share of the premiums, and the 
                             Company will also pay the Participant's 
                             share of such premiums.  The Company will 
                             not pay for dependent coverage for life and 
                             AD&D. 
 
                         c.  For purposes of computing severance 
                             allowances pursuant to this IV.C., 
                             Participants who are participants in the 
                             Senior Management Incentive Plan and who 
                             sign such release will receive, at a 
                             minimum, the same Plan Benefits  
                             Paragraph 2 as Participants who have 
                             completed exactly 19 years of Continuous 
                             Service. 
 
 
 
 
V.     GENERAL 
 
       A.  The Board of Directors reserves the right to change, amend or 
           terminate the Plan at any time for any reason, however no 
           such amendment or termination shall affect the right to any 
           unpaid Plan Benefit of any Participant whose employment was 
           terminated prior to the adoption of the amendment or 
           resolution to terminate the Plan. 
 
       B.  The Company is the Plan Administrator and the Plan Sponsor 
           for purposes of the Employee Retirement Income Security Act 
           of 1974 ("ERISA").  The Company has the complete discretion 
           and responsibility to interpret the Plan.  All actions by the 
           Company are final, binding, and conclusive. 
 
       C.  As to participants in the Savings Plan and/or the Pension 
           Plan, participation will stop on the termination date.  The 
           employee will receive information about rights under those 
           plans. 
 
       D.  If an employee who is eligible for a Plan Benefit dies after 
           termination and prior to the payment of the Plan Benefit, the 
           Plan Benefit will be paid in a single lump sum to the spouse, 
           if any.  If no spouse survives, the payment will be made to 
           the employee's estate. 
 
       E.  To the full extent permitted by law, except as provided in 
           the Plan, no Plan Benefit hereunder shall be subject to 
           anticipation, alienation, sale, transfer, assignment, pledge, 
           encumbrance or change, and any attempt to do so shall be 
           void. 
 
       F.  The Effective Date of this Plan is October 12, 1996.  This 
           Plan is drawn under and shall be construed in accordance with 
           ERISA and, to the extent not preempted by ERISA, with the 
           laws of the State of California. 
 
       G.  The Company shall be responsible for paying all benefits 
           under the Plan.  The Plan shall be unfunded and benefits 
           hereunder shall be paid only from the general assets of the 
           Company.  All or part of any benefits paid under the Plan may 
           be credited to any statutory amounts to which employees are 
           entitled upon termination to the extent allowed by applicable 
           law. 
 
       H.  Claims for benefits should be made in writing to the Company 
           Attention: Human Resources Department, pursuant to the claims 
           procedure set forth in the Employee Handbook.  For a 
           discussion of other plan information and your ERISA rights, 
           please see the Employee Handbook. 
 
 
 
 
Adopted the _______ of October, 1996 
 
 
 
 
                                                                             
                                          Margot Kyd, Vice President 
                                          Human Resources