SECURITIES AND EXCHANGE COMMISSION  
 
WASHINGTON, D.C. 20549  
FORM 10-K 
 
(Mark One) 
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange 
Act of 1934 For the fiscal year ended                      December 31, 1995
   OR 
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934 For the transition period from                     to      
                Exact 
               Name of                                                   
Commission     Registrant                                 IRS Employer     
File           as specified        State of               Identification   
Number         in its charter      Incorporation          Number
----------     --------------      --------------         --------------      
1-3779         SAN DIEGO GAS &                                             
               ELECTRIC COMPANY      California           95-1184800        
                                                                     
1-11439        ENOVA CORPORATION     California           33-0643023        
                                                                        
101 ASH STREET, SAN DIEGO, CALIFORNIA                                    92101
-----------------------------------------                           ---------- 
(Address of principal executive offices)                            (Zip Code) 
 
Registrant's telephone number, including area code               (619)696-2000 
                                                                -------------- 
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: 
                                                         Name of each exchange 
Title of each class                                        on which registered 
-------------------                                      --------------------- 
San Diego Gas & Electric Company 
Preference Stock (Cumulative) 
  Without Par Value (except $1.70 and $1.7625 Series)                American   
  Cumulative Preferred Stock, $20 Par Value (except 4.60% Series)    American   
 
Enova Corporation                                          
Common Stock, Without Par Value                           New York and Pacific  
 
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: 
San Diego Gas & Electric Company                          None 
Enova Corporation                                         None 
 
Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months and (2) has been subject to such filing 
requirements for the past 90 days.  
Yes [ X ]   No  [   ]    
  
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 
of Regulation S-K is not contained herein, and will not be contained, to the 
best of registrant's knowledge, in definitive proxy or information statements 
incorporated by reference in Part III of this Form 10-K or any amendment to 
this Form 10-K.  [  ]   
 
Exhibit Index on page 34.  Glossary on page 42.  
 
Aggregate market value of the voting stock held by non-affiliates of the 
registrant as of January 31, 1996: 
Enova Corporation Common Stock                                $2.8 Billion 
San Diego Gas & Electric Company Preferred Stock              $18 Million 
 
Common Stock outstanding without par value as of January 31, 1996: 
 
Enova Corporation:                                          116,563,375 
 
San Diego Gas & Electric Company:            Wholly owned by Enova Corporation 
 
DOCUMENTS INCORPORATED BY REFERENCE: 
 
Portions of the 1995 Annual Report to Shareholders are incorporated by 
reference into Parts I, II, and IV. 
 
Portions of the March 1996 Proxy Statement prepared for the April 1996 annual 
meeting of shareholders are incorporated by reference into Part III. 
 
<PAGE> 
 
TABLE OF CONTENTS 
 
PART I 
Item 1.   Business . . . . . . . . . . . . . . . . . . . . . .  3 
Item 2.   Properties . . . . . . . . . . . . . . . . . . . . . 26 
Item 3.   Legal Proceedings  . . . . . . . . . . . . . . . . . 27 
Item 4.   Submission of Matters to a Vote of Security Holders. 31 
          Executive Officers of the Registrant . . . . . . . . 31 
PART II 
Item 5.   Market for Registrant's Common Equity and Related 
             Stockholder Matters . . . . . . . . . . . . . . . 32 
Item 6.   Selected Financial Data  . . . . . . . . . . . . . . 32 
Item 7.   Management's Discussion and Analysis of Financial   
             Condition and Results of Operations . . . . . . . 32 
Item 8.   Financial Statements and Supplementary Data  . . . . 32 
Item 9.   Changes in and Disagreements with Accountants on  
              Accounting and Financial Disclosure  . . . . . . 32 
 
PART III 
Item 10.  Directors and Executive Officers of the Registrant . 33 
Item 11.  Executive Compensation . . . . . . . . . . . . . . . 33 
Item 12.  Security Ownership of Certain Beneficial Owners  
              and Management . . . . . . . . . . . . . . . . . 33 
Item 13.  Certain Relationships and Related Transactions . . . 33 
 
PART IV 
Item 14.  Exhibits, Financial Statement Schedules and Reports 
              on Form 8-K  . . . . . . . . . . . . . . . . . . 34 
 
Independent Auditors' Consent  . . . . . . . . . . . . . . . . 41 
 
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 42 
 
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 
 
                                      2 
 
<PAGE> 
 
PART I - Enova Corporation: 
 
Part I - San Diego Gas & Electric Company beginning on page 3 of this Annual 
Report on Form 10-K incorporated herein by reference. 
 
PART I - San Diego Gas & Electric Company: 
 
ITEM 1. BUSINESS 
 
Description of Business 
On December 6, 1995 San Diego Gas & Electric Company announced the formation 
of Enova Corporation as the parent company for itself and its subsidiaries. On
January 1, 1996 Enova Corporation became the parent of SDG&E. SDG&E's 
outstanding common stock was converted on a share-for-share basis into Enova 
Corporation common stock. SDG&E's debt securities, preferred stock and 
preference stock were unaffected and remain with SDG&E. On January 31, 1996 
SDG&E's ownership interests in its subsidiaries were transferred to Enova 
Corporation at book value, completing the organizational restructuring into 
the new parent company framework. Thus, the consolidated financial statements 
of SDG&E incorporated herein, which include SDG&E and its subsidiaries, also 
reflect what is now Enova Corporation and its subsidiaries. Beginning on 
January 1, 1996, SDG&E's financial statements for periods prior to 1996 will 
be restated to reflect the net results of nonutility subsidiaries as 
discontinued operations in accordance with Accounting Principles Board Opinion
No. 30 "Reporting the Effects of a Disposal of a Segment of Business." 
 
SDG&E is an operating public utility engaged in the electric and gas 
businesses. It generates and purchases electric energy and distributes it to 
1.2 million customers in San Diego County and an adjacent portion of Orange 
County, California. It also purchases and distributes natural gas to 700,000 
customers in San Diego County and also transports gas for others in SDG&E's 
service territory. Factors affecting SDG&E's utility operations include 
regulation, deregulation, competition, nonutility generation, customers' 
bypass of its electric and gas systems, population growth, changes in interest 
and inflation rates, and environmental and other laws. 
 
SDG&E has diversified into other businesses. Enova Financial, Inc. invests in 
limited partnerships representing approximately 800 affordable-housing 
projects located throughout the United States. Califia Company leases computer 
equipment. The investments in Enova Financial and Califia are expected to 
provide income tax benefits over the next several years. Enova Energy, Inc. is
an energy management consulting firm offering services to utilities and large 
consumers. Pacific Diversified Capital Company is the parent company for non-
utility subsidiaries, Phase One Development, Inc., which is engaged in real 
estate development, and Enova Technologies, Inc. Enova Technologies, whose 
ownership was transferred directly to Enova Corporation after December 31, 
1995, is in the business of developing new technologies generally related to 
utilities and energy, including certain research transferred from the utility. 
Enova Technologies has entered into a joint venture with Philips Home Services 
to establish a new electronic consumer network using the Philips screen phone 
as the network platform. Enova International was formed after December 31, 
1995 to develop and operate natural-gas and power projects outside the United 
States.  
 
                                           3 
<PAGE> 
 
 
As a result of the formation of Enova Corporation and the subsequent 
restructuring, Enova and its subsidiaries have more flexibility to pursue non-
regulated business opportunities than in the past. As new non-regulated 
businesses are undertaken, risks will increase. The intent is for rewards to 
increase correspondingly. 
 
Additional information regarding SDG&E's subsidiaries is described in 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" beginning on page 18 in the 1995 Annual Report to Shareholders and 
in Notes 1 and 3 of the "Notes to Consolidated Financial Statements" beginning 
on page 35 of the 1995 Annual Report to Shareholders.  
 
GOVERNMENT REGULATION 
 
Local Regulation 
SDG&E has separate electric and gas franchises with the two counties and the 
25 cities in its service territory. These franchises allow SDG&E to locate 
facilities for the transmission and distribution of electricity and gas in the 
streets and other public places. The franchises do not have fixed terms, 
except for the electric and gas franchises with the cities of Chula Vista 
(expiring in 1997), Encinitas (2012), San Diego (2021), and Coronado (2028); 
and the gas franchises with the city of Escondido (2036) and the county of San 
Diego (2030). 
 
State Regulation 
The California Public Utilities Commission consists of five members appointed 
by the governor and confirmed by the senate for six-year terms. The commission 
regulates SDG&E's rates and conditions of service, sales of securities, rate 
of return, rates of depreciation, uniform systems of accounts, examination of 
records, and long-term resource procurement. The CPUC also conducts various 
reviews of utility performance and conducts investigations into various 
matters, such as deregulation, competition and the environment, to determine 
its future policies.  
 
The California Energy Commission has discretion over electric-demand forecasts 
for the state and for specific service territories. Based upon these 
forecasts, the CEC determines the need for additional energy sources and for 
conservation programs. The CEC sponsors alternative-energy research and 
development projects, promotes energy conservation programs, and maintains a 
state-wide plan of action in case of energy shortages. In addition, the CEC 
certifies power-plant sites and related facilities within California. 
 
Federal Regulation 
The Federal Energy Regulatory Commission regulates transmission access, the 
uniform systems of accounts, rates of depreciation and electric rates 
involving sales for resale. The FERC also regulates the interstate sale and 
transportation of natural gas. 
 
The Nuclear Regulatory Commission oversees the licensing, construction and 
operation of nuclear facilities. NRC regulations require extensive review of 
the safety, radiological and environmental aspects of these facilities. 
Periodically, the NRC requires that newly developed data and techniques be 
used to reanalyze the design of a nuclear power plant and, as a result, 
requires plant modifications as a condition of continued operation in some 
cases. 
 
                                          4 
<PAGE> 
 
 
Licenses and Permits 
SDG&E obtains a number of permits, authorizations and licenses in connection 
with the construction and operation of its generating plants. Discharge 
permits, San Diego Air Pollution Control District permits and NRC licenses are 
the most significant examples. The licenses and permits may be revoked or 
modified by the granting agency if facts develop or events occur that differ 
significantly from the facts and projections assumed in granting the approval. 
Furthermore, discharge permits and other approvals are granted for a term less 
than the expected life of the facility. They require periodic renewal, which 
results in continuing regulation by the granting agency. 
 
Other regulatory matters are described throughout this report. 
 
COMPETITION 
 
This topic is discussed in "Electric Operations" and "Rate Regulation" herein, 
in "Management's Discussion and Analysis of Financial Condition and Results of 
Operations" beginning on page 18 of the 1995 Annual Report to Shareholders, 
and in Note 11 of the "Notes to Consolidated Financial Statements" beginning 
on page 35 of the 1995 Annual Report to Shareholders. 
 
SOURCES OF REVENUE 
 
(In Millions of Dollars)                  1995      1994      1993 
------------------------------------------------------------------- 
Utility revenue by type of customer: 
 
Electric- 
        Residential                      $  610    $  612    $  615 
        Commercial                          589       600       572 
        Industrial                          250       231       250 
        Other                                55        67        77 
                                         ------    ------    ------ 
           Total Electric                 1,504     1,510     1,514 
                                         ------    ------    ------ 
Gas- 
        Residential                         189       204       195 
        Commercial                           60        65        63 
        Industrial                           25        31        40 
        Other                                36        46        49 
                                         ------    ------    ------ 
           Total Gas                        310       346       347 
                                         ------    ------    ------ 
           Total Utility                  1,814     1,856     1,861 
                                         ------    ------    ------ 
Diversified Operations                       57        56        36 
                                         ------    ------    ------ 
           Total                         $1,871    $1,912    $1,897 
                                         ======    ======    ====== 
 
 
Industry segment information is contained in "Statements of Consolidated 
Financial Information by Segments of Business" on page 34 of the 1995 Annual 
Report to Shareholders. 
 
                                         5 
<PAGE> 
 
CONSTRUCTION EXPENDITURES 
 
Construction expenditures, excluding nuclear fuel and the allowance for equity
funds used during construction, were $221 million in 1995 and are estimated to
be about $220 million in 1996. 
 
ELECTRIC OPERATIONS 
 
Introduction 
In December 1995 the CPUC issued its policy decision on the restructuring of 
California's electric utility industry to stimulate competition and reduce 
rates. These matters are discussed in "Competition-California" herein, 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" beginning on page 18 of the 1995 Annual Report to Shareholders, 
and in Note 11 of the "Notes to Consolidated Financial Statements" beginning 
on page 35 of the 1995 Annual Report to Shareholders. 
 
Resource Planning 
SDG&E's ability to provide energy at the lowest possible cost has been based 
on a combination of production from its own plants and purchases from other 
producers. The purchases have been a combination of short-term and long-term 
contracts and spot purchases. Most resource acquisitions are obtained through 
a competitive bidding process. In  December 1994 the CPUC issued a decision 
ordering SDG&E, Pacific Gas & Electric and Southern California Edison to go 
forward with the Biennial Resource Plan Update proceeding, allowing qualified 
nonutility power producers that cogenerate or use renewable energy 
technologies to bid for a portion of SDG&E's future capacity needs. As a 
result of the decision, SDG&E would be required to enter into contracts 
(ranging in term from 17 to 30 years) to purchase 500 mw of power, including 
341 mw from cogenerators, 94 mw from geothermal sources, and the remainder 
from wind and other sources. The present value of ratepayer payments beginning
in 1997 over the life of these contracts was estimated to be $2.3 billion. 
Prices under these contracts could significantly exceed the future market 
price. In February 1995 the FERC issued an order declaring the BRPU auction 
procedures unlawful under federal law. In July 1995 the CPUC issued a ruling 
encouraging SDG&E, PG&E and Edison to reach settlements with the auction 
winners. SDG&E has reached settlement with two auction winners. Settlement 
discussions with the others are ongoing. 
 
In 1995 SDG&E also negotiated contracts for 760 mw of short-term purchased 
power.  
 
The CPUC has also ordered utilities in the state to implement pilot 
demonstration projects to allow others to bid to supply utilities' customers 
with energy-conservation services, which could reduce the need for generation 
capacity. 
 
Additional information concerning resource planning is provided in 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" beginning on page 18 of the 1995 Annual Report to Shareholders and
in Notes 10 and 11 of the "Notes to Consolidated Financial Statements" 
beginning on page 35 of the 1995 Annual Report to Shareholders. 
 
                                        6 
<PAGE> 
 
Electric Resources 
Based on generating plants in service and purchased-power contracts in place 
as of January 31, 1996, the net megawatts of electric power expected to be 
available to SDG&E during the next summer (normally the time of highest 
demand) are as follows: 
 
    Source                               Net Megawatts 
    -------------------------------------------------- 
    Gas/oil generating plants                    1,641 
    Combustion turbines                            332 
    Nuclear generating plants                      430 
    Long-term contracts with other utilities       675 
    Short-term contracts with other utilities      350 
    Contracts with others                          510 
                                                 ----- 
            Total                                3,938    
                                                 ===== 
 
SDG&E's 1995 system peak demand of 3,260 mw occurred on August 30, when the 
net system capability, including power purchases, was 3,857 mw. The all-time 
record is 3,335 mw which was reached on August 17, 1992. 
 
Gas/Oil Generating Plants: SDG&E's South Bay and Encina power plants are 
equipped to burn either natural gas or fuel oil. The four South Bay units went 
into operation between 1960 and 1971 and can generate 690 mw. The five Encina 
units began operation between 1954 and 1978 and can generate 951 mw. SDG&E 
sold and leased back Encina Unit 5 (330 mw) in 1978. The lease term is through
2004, with renewal options for up to 15 additional years. 
 
SDG&E has 19 combustion turbines that were placed in service from 1966 to 
1979. They are located at various sites and are used only in times of peak 
demand. 
 
Nuclear Generating Plants: SDG&E owns 20 percent of the three nuclear units at 
San Onofre Nuclear Generating Station. The cities of Riverside and Anaheim own 
a total of 5 percent of SONGS 2 and 3. Southern California Edison Company owns 
the remaining interests and operates the units. 
 
SDG&E is currently recovering its existing capital investment in SONGS 1 over 
a four-year period that began in November 1992, when the CPUC issued a 
decision to permanently shut down the unit. SDG&E and Edison filed a 
decommissioning plan in November 1994, although final decommissioning will not 
occur until SONGS 2 and 3 are also decommissioned. The unit's spent nuclear 
fuel has been removed from the reactor and stored on-site. In March 1993 the 
NRC issued a Possession-Only License for SONGS 1, and the unit was placed in a 
long-term storage condition in May 1994. 
 
SONGS 2 and 3 began commercial operation in August 1983 and April 1984, 
respectively. SDG&E's share of the capacity is 214 mw of SONGS 2 and 216 mw of
SONGS 3. 
 
Between 1993 and 1995, SDG&E spent $69 million on capital modifications and 
additions for all three units and expects to spend $16 million in 1996 on 
SONGS. SDG&E deposits funds in an external trust to provide for 
 
                                          7 
<PAGE> 
 
the future dismantling and decontamination of the units. The shutdown of 
SONGS 1 does not affect contributions to the trust. 
 
In 1983 the CPUC adopted performance-based incentive plans for SONGS that set 
a Target Capacity Factor range of 55 percent to 80 percent for Units 2 and 3. 
Energy costs or savings outside that range were shared equally by SDG&E and 
its customers. Since the TCF was adopted, these units have operated above 55 
percent for each of their fuel cycles and have exceeded 80 percent a total of 
seven times in the fourteen completed cycles. However, there can be no 
assurance that they will continue to achieve a 55 percent capacity factor. 
 
In January 1996 the CPUC approved the accelerated recovery of the existing 
capital costs of Units 2 and 3. The decision allows SDG&E to recover more than 
$750 million over an eight-year period beginning in 1996, rather than over the 
anticipated operational life of the units, which is expected to extend to 
2013. During the eight-year period, the authorized rate of return on the 
equity portion of the investment will be 90 percent of SDG&E's embedded cost 
of debt and the return on the debt-financed component will be at 7.52 percent 
(SDG&E's 1995 authorized cost of debt). The decision includes a performance 
incentive plan that encourages continued, efficient operation of the plant 
during the eight-year period. During the eight-year period, customers will pay
about four cents per kilowatt-hour. This pricing structure replaces the 
traditional method of recovering the units' operating expenses and capital 
improvements. This is intended to make the units more competitive with other 
sources.  
 
Additional Information: Additional information concerning SDG&E's power 
plants, the SONGS units, nuclear decommissioning and the CPUC's industry 
restructuring proposal is presented under "Environmental Matters," "Electric 
Properties" and "Legal Proceedings" herein, in "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" beginning on page 
18 of the 1995 Annual Report to Shareholders, and in Notes 6, 10 and 11 of the
"Notes to Consolidated Financial Statements" beginning on page 35 of the 1995 
Annual Report to Shareholders. 
 
 
                                         8 
<PAGE> 
 
Purchased Power: The following table lists contracts with the various suppliers:
 
                                                         Megawatt    
      Supplier                    Period                Commitment      Source
------------------------------------------------------------------------------
Long-Term Contracts with Other Utilities:   
   
Bonneville Power         May Through September 1996       300     Hydro Power
Administration                   
                         
Comision Federal de      Through August 1996              150     Geothermal
Electricidad (Mexico)                                   
                                                       
Portland General         Through December 1998             50     Hydro storage
Electric                 Through December 2013             75     Coal   
                                                     
Public Service Company   Through April 2001               100     System supply
of New Mexico                                            ----- 
               Total summer availability (see page 7)     675 
                                                         ===== 
Short-Term Contracts with Other Utilities:   
                                                     
Portland General         July Through September 1996      100     System Supply
Electric                 October 1996                      40*                
  
Public Service Company   January through May  1996        130*    System Supply
of New Mexico            June through September 1996      110  
                         October through December 1996    130* 
                                             
Puget Sound Power &      June through September 1996       40     System Supply
Light    
                                                       
Salt River Project       Through December 1996            100     System Supply
                                                         ----- 
               Total summer availability (see page 7)     350 
                                                         ===== 
Contracts with Others:   
   
Cities of Azusa, Banning  Through December 1996            40     Coal   
and Colton   
   
Electric Clearinghouse    Through December 1996            50     System Supply
 
Enron Power Marketing     Through December 1996           120     System Supply
                          September 1996                  150* 
 
Goal Line Limited         Through December 2024            50     Cogeneration
Partnership   
                                                              
Illinova Power Marketing  Through December 1996            70     System Supply
   
Sithe Energies USA        Through December 2019           102     Cogeneration
   
Yuma Cogeneration         Through June 2024                50     Cogeneration
   
Other                     Various                          28     Various 
                                                          ----- 
               Total summer availability (see page 7)     510 
                                                          ===== 
* Not included in total summer availability. 
 
The commitments with CFE and BPA are for energy and capacity. All short-term 
contracts with other utilities and the commitments with Electric Clearinghouse
and Enron are for firm energy only. All other contracts are for capacity only.  
 
Costs under contracts with qualifying facilities (identified above as sourced 
from cogeneration) represent SDG&E's avoided cost. Contracts with power 
marketers are at market value at the time the contracts were negotiated. 
Charges under contracts with other utilities are based on  
 
                                           9 
<PAGE> 
 
the selling utility's costs, including a return on and depreciation of the 
utility's rate base (or lease payments in cases where the utility does not own 
the property), fuel expenses, operating and maintenance expenses, transmission 
expenses, administrative and general expenses, and state and local taxes. 
 
Energy costs under the CFE contract are indexed to changes in Mayan crude oil 
prices and the dollar/peso exchange rate. 
 
The locations of the utilities which have long-term supply contracts with 
SDG&E and the primary transmission lines (and their capacities) used by SDG&E
are shown on the following map of the Western United States. Where applicable, 
interconnection to the primary lines is provided by contract.  
    
 
    
    
 
 
 
 
 
 
 
 
                         [ MAP ]    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
Long-Term Contracts with Other Utilities    
Bonneville Power Administration: In 1993 SDG&E and BPA entered into a four-
year agreement for the exchange of capacity and energy. SDG&E provides BPA 
with off-peak, non-firm energy in exchange for firm summer capacity and 
associated energy. In addition, SDG&E makes energy available for BPA to 
purchase during the period of January through April of each year. To 
facilitate the exchange, SDG&E has agreements with Southern California Edison
and the Los Angeles Department of Water and  Power for 200 MW of firm 
transmission service from the Nevada-Oregon border to SONGS. 
 
                                           10 
<PAGE> 
 
Comision Federal de Electricidad: The 10-year agreement under which SDG&E 
purchases firm energy and capacity of 150 MW from CFE will terminate on 
September 1, 1996. 
 
Portland General Electric: In 1985 SDG&E and PGE entered into an agreement for
the purchase of 75 MW of capacity from PGE's Boardman Coal Plant from January 
1989 through December 2013. SDG&E pays a monthly capacity charge plus a charge 
based upon the amount of energy received. In addition, SDG&E has 50 MW of 
available hydro storage service with PGE through December 1998. SDG&E has also 
purchased 75 MW of transmission service from PGE in the northern section of 
the Pacific Intertie through December 2013.  
 
Public Service Company of New Mexico: In 1985 SDG&E and PNM entered into an 
agreement for the purchase of 100 MW of capacity from PNM's system from June 
1988 through April 2001. SDG&E pays a capacity charge plus a charge based on 
the amount of energy received. 
 
Short-Term Contracts with Other Utilities    
Portland General Electric: In November 1995 SDG&E and PGE entered into 
agreements for the purchase of up to 100 MW of firm energy from July 1996 
through September 1996 and 40 MW in October 1996. The energy charge is based 
on the amount of energy received. 
 
Public Service Company of New Mexico: In November 1995 SDG&E and PNM entered 
into an agreement for the purchase of up to 130 MW of firm energy through 
1996, of which 110 MW will be available during the summer peak. The energy 
charge is based on the amount of energy received.  
 
Puget Sound Power & Light: In November 1995 SDG&E and PSP&L entered into an 
agreement for the purchase of up to 40 MW of firm energy from June through 
September 1996. The energy charge is based on the amount of energy received. 
 
Salt River Project: In October 1995 SDG&E and SRP entered into an agreement 
for the purchase of up to 100 MW of firm energy through December 1996. The 
energy charge is based on the amount of energy received. 
 
Contracts with Others     
Cities of Azusa, Banning and Colton: In 1993 SDG&E and the cities entered into
an agreement for the purchase of 40 MW of capacity. The agreement was extended 
through December 1996. SDG&E pays a capacity charge plus a charge based on the 
amount of energy received. 
 
Electric Clearinghouse: In October 1995 SDG&E and EC entered into an agreement 
for the purchase of up to 50 MW of firm energy through December 1996. The 
energy charge is based on the amount of energy received. 
 
Enron Power Marketing: In October 1995 SDG&E and Enron entered into an 
agreement for the purchase of 120 MW of firm energy through December 1996 and
an option on an additional 150 MW in September 1996. The energy charge is 
based on the amount of energy received. 
 
Goal Line Limited Partnership: In December 1990 SDG&E and Goal Line entered 
into a 30-year agreement for the purchase of 50 MW of firm 
 
                                        11 
<PAGE> 
 
capacity, beginning in February 1995. SDG&E pays a firm capacity charge plus a
charge based on the amount of energy received. 
 
Illinova Power Marketing: In November 1995 SDG&E and Illinova entered into an 
agreement for the purchase of up to 70 MW of capacity from January 1996 
through December 1996. SDG&E pays a capacity charge for the months of June 
through September plus a charge based on the amount of energy received.  
 
Sithe Energies USA: In April 1985 SDG&E entered into three 30-year agreements 
for the purchase of 102 MW of firm capacity from December 1989 through 
December 2019. SDG&E pays a firm capacity charge plus a charge based on the 
amount of energy received. 
 
Yuma Cogeneration: In March 1990 SDG&E and Yuma Cogeneration entered into a 
30-year agreement for the purchase of 50 MW of firm capacity which began in 
June 1994. SDG&E pays a firm capacity charge plus a charge based on the amount
of energy received. 
 
Other: SDG&E currently purchases capacity and energy from 115 as-available 
Qualifying Facilities. SDG&E also has two 20-year agreements with Pacific 
Energy and two 22-year agreements with Landfill Generating Partners for the 
purchase of 5 MW of firm capacity through the years 2007-2011. SDG&E pays a 
capacity charge plus a charge based on the amount of energy received. These 
account for 28 MW of capacity annually. 
 
Additional information concerning SDG&E's purchased-power contracts is 
described in "Legal Proceedings" herein, in "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" beginning on page 
18 of the 1995 Annual Report to Shareholders, and in Notes 10 and 11 of the 
"Notes to Consolidated Financial Statements" beginning on page 35 of the 1995 
Annual Report to Shareholders. 
 
Power Pools     
In 1964 SDG&E, PG&E, and Edison entered into the California Power Pool 
Agreement. It provides for the transfer of electrical capacity and energy by 
purchase, sale or exchange during emergencies and at other mutually determined
times.  
 
SDG&E is a participant in the Western Systems Power Pool, which includes an 
electric power and transmission rate agreement with utilities and power 
agencies located throughout the United States and Canada. More than 100 
investor-owned and municipal utilities, state and federal power agencies, 
energy brokers, and power marketers share power and information in order to 
increase efficiency and competition in the bulk power market. Participants are 
able to target and coordinate delivery of cost-effective sources of power from
outside their service territories through a centralized exchange of 
information. 
 
Transmission Arrangements    
In addition to interconnections with other California utilities, SDG&E has 
firm transmission capabilities for purchased power from the Northwest, the 
Southwest and Mexico.  
 
Pacific Intertie: The Pacific Intertie, consisting of AC and DC transmission 
lines, enables SDG&E to purchase and receive surplus coal and hydroelectric 
power from the Northwest. SDG&E, PG&E, Edison and others share transmission 
capacity on the Pacific Intertie under an agreement that expires in July 2007.
SDG&E's share of the intertie is  
 
                                      12 
<PAGE> 
 
266 MW through July 2007, and SDG&E has obtained 200 MW of additional transfer 
capacity through 1996. (Repairs necessitated by damages caused by the January 
17, 1994 Northridge earthquake and by a major fire at the DC terminal at 
Sylmar in October 1994 have been completed.) 
 
Southwest Powerlink: SDG&E's 500-kilovolt Southwest Powerlink transmission 
line, which it shares with Arizona Public Service Company and Imperial 
Irrigation District, extends from Palo Verde, Arizona to San Diego and enables 
SDG&E to import power from the Southwest. SDG&E's share of the line is 914 MW, 
although it can be less, depending on specific system conditions. 
 
Mexico Interconnection: Mexico's Baja California Norte system is connected to 
SDG&E's system via two 230-kilovolt interconnections with firm capability of 
408 MW. SDG&E uses this interconnection for transactions with CFE.  
 
Additional Transmission Capabilities: Various studies have been undertaken or 
are ongoing to determine the extent to which various path ratings may be 
increased. SDG&E expects to receive an allocation of approximately 64 MW East-
of-the-Colorado-River and 94 MW West-of-the-Colorado-River as a result of 
these various studies. 
 
Transmission Access    
As a result of the enactment of the National Energy Policy Act of 1992, the 
FERC has established rules to implement the Act's transmission access 
provisions. These rules specify FERC-required procedures for others' requests 
for transmission service. Additional information regarding transmission access 
is described in "Management's Discussion and Analysis of Financial Condition 
and Results of Operations" beginning on page 18 of the 1995 Annual Report to 
Shareholders. 
 
Fuel and Purchased-Power Costs    
The following table shows the percentage of each electric fuel source used by 
SDG&E and compares the costs of the fuels with each other and with the total 
cost of purchased power:  
 
                          Percent of Kwhr            Cents per Kwhr    
-----------------------------------------------------------------------    
                       1995    1994    1993        1995    1994    1993    
                       -----   -----   -----       ----    ----    ----    
Natural gas            21.7%   22.4%   24.4%        2.3     3.1     3.4    
Nuclear fuel           16.5    21.8    17.2         0.5     0.5     0.6    
Fuel oil                0.1     1.4     3.7         2.1     2.6     2.5    
                      -----   -----   -----              
Total generation       38.3    45.6    45.3    
Purchased power-net    61.7    54.4    54.7         3.3     3.7     3.5    
                      -----   -----   -----              
Total                 100.0%  100.0%  100.0%    
                      =====   =====   ===== 
 
The cost of purchased power includes capacity costs as well as the costs of 
fuel. The cost of natural gas includes transportation costs. The costs of 
natural gas, nuclear fuel and fuel oil do not include SDG&E's capacity costs. 
While fuel costs are significantly less for nuclear units than for other 
units, capacity costs are higher.     
 
Electric Fuel Supply 
Natural Gas: Information concerning natural gas is provided in "Natural Gas 
Operations" herein.  
 
                                     13 
<PAGE> 
 
Nuclear Fuel: The nuclear-fuel cycle includes services performed by others. 
These services and the dates through which they are under contract are as 
follows:  
									 
Mining and milling of uranium concentrate(1)                  -- 
Conversion of uranium concentrate to uranium hexafluoride(1)  -- 
Enrichment of uranium hexafluoride(2)                        1998 
Fabrication of fuel assemblies                               2000 
Storage and disposal of spent fuel(3)                         -- 
 
(1) Competitive bids are currently being sought for a multi-year contract to
supply uranium and conversion services beginning in mid-1996. 
 
(2) The United States Enrichment Corporation, a government-owned corporation, 
is committed to offer any required enrichment services through 2014.  
 
(3) Spent fuel is being stored at SONGS, where storage capacity will be 
adequate at least through 2003. If necessary, modifications in fuel-storage 
technology can be implemented to provide on-site storage capacity for 
operation through 2014, the expiration date of the NRC operating license. The 
DOE's plan is to provide a permanent storage site for the spent nuclear fuel 
by 2010. 
  
Pursuant to the Nuclear Waste Policy Act of 1982, SDG&E entered into a 
contract with the DOE for spent-fuel disposal. Under the agreement, the DOE is 
responsible for the ultimate disposal of spent fuel. SDG&E is paying a 
disposal fee of $0.91 per megawatt-hour of net nuclear generation. Disposal 
fees average $2.7 million per year. 
 
To the extent not currently provided by contract, the availability and the 
cost of the various components of the nuclear-fuel cycle for SDG&E's nuclear 
facilities cannot be estimated at this time.  
 
Additional information concerning nuclear-fuel costs is discussed in Note 10 
of the "Notes to Consolidated Financial Statements" beginning on page 35 of 
the 1995 Annual Report to Shareholders.  
 
Fuel Oil: SDG&E has no long-term commitments to purchase fuel oil. The use of 
fuel oil is dependent upon price differences between it and natural gas. 
During 1995 SDG&E burned 36,000 barrels of fuel oil. 
 
NATURAL-GAS OPERATIONS 
 
SDG&E purchases natural gas for resale to its customers and for fuel in its 
generating plants. All natural gas is delivered to SDG&E under a 
transportation and storage agreement with Southern California Gas Company 
through two transmission pipelines with a combined capacity of 430 million 
cubic feet per day.  
 
During 1995 SDG&E purchased approximately 89 billion cubic feet of natural 
gas. The majority of SDG&E's natural-gas requirements are met through 
contracts of less than one year. SDG&E purchases natural gas primarily from 
various spot-market suppliers and from suppliers under short-term contracts. 
These supplies originate in New Mexico, Oklahoma and Texas, and are 
transported to the SoCal Gas Company pipeline at the California border by El 
Paso Natural Gas Company and by Transwestern Pipeline Company. SDG&E also 
purchases natural gas under long-term 
 
                                       14 
<PAGE> 
 
contracts with four Canadian suppliers. These contracts have varying terms 
through 2004. Two of these suppliers have suspended sales to SDG&E while 
contractual disputes are in litigation. Natural gas from Canada is transported 
to SDG&E's system over Alberta Natural Gas, Pacific Gas Transmission, and PG&E 
pipelines. The natural gas transportation contracts have varying terms through
2023.   
 
Additional information concerning SDG&E's gas operations is provided under 
"Legal Proceedings" herein, in "Management's Discussion and Analysis of 
Financial Condition and Results of Operations" beginning on page 18 of the 
1995 Annual Report to Shareholders, and in Note 10 of the "Notes to 
Consolidated Financial Statements" beginning on page 35 of the 1995 Annual 
Report to Shareholders. 
 
RATE REGULATION 
 
Competition-California 
 
In December 1995 the CPUC issued its policy decision on the restructuring of 
California's electric utility industry to stimulate competition and reduce 
rates. The decision provides that, beginning in January 1998, customers can 
buy their electricity through a power exchange that will obtain power from the 
lowest-bidding suppliers. The exchange is a spot market with published 
pricing. An independent system operator (ISO) will schedule power transactions 
and access to the transmission system. Consumers also may to continue to 
purchase from their local utility under regulated tariffs. As a third option, 
a cross section of all customer groups (residential, industrial, commercial 
and agricultural) will be able to go directly to any energy supplier and enter 
into private contracts with generators, brokers or others (direct access). As 
the direct access mechanism has many technical issues to be resolved, a five-
year phase-in is planned. All California electricity customers of investor-
owned utilities will have the option to purchase generation services directly 
by 2003. The utilities will continue to provide transmission and distribution 
services to customers that choose to purchase their energy from other 
providers.  
 
Utilities will, within certain limits, be allowed recovery of generation-
related regulatory assets and the excess carrying amount of existing 
generation-investment costs over fair-market value over a transition period 
that ends in 2005. Obligations under long-term purchased-power contracts in 
excess of fair-market value will be recoverable over the duration of the 
contracts. The CPUC is currently working on building a consensus on the new 
market structure with the California legislature, the governor, utilities and 
customers. In addition, plans to implement the exchange and the ISO must be 
presented by the utilities to both the CPUC and the FERC by May 1996 for 
review and approval. This decision will change significantly some of the 
existing ratemaking mechanisms that are described below. 
 
Performance-based regulation will replace cost-of-service regulation for 
distribution services. SDG&E is currently participating in a performance-based 
ratemaking process on an experimental basis which commenced in 1993 and is 
expected to run through 1998. 
 
These matters are discussed in "Performance-Based Ratemaking" herein, 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" beginning on page 18 of the 1995 Annual Report to Shareholders, 
and in Note 11 of the "Notes to Consolidated Financial 
 
                                      15 
<PAGE> 
 
Statements" beginning on page 35 of the 1995 Annual Report to Shareholders. 
 
Competition-Federal 
 
In March 1995 the FERC issued a proposed rule that, if adopted, would require 
all public utilities to offer wholesale "open-access" transmission service on 
a nondiscriminatory basis. In addition, public utilities would be required to 
functionally price their generation and transmission services separately from 
each other. The FERC also stated its belief that utilities should be allowed 
to recover the costs of assets and obligations made uneconomic by the changed
regulatory environment. In October 1995 SDG&E filed for approval of its open-
access tariffs for its service territory with the FERC in conjunction with its 
request for a marketing license for Enova Energy, a wholly-owned subsidiary 
which desires to transact business at market-based rates in the wholesale 
energy market. In December 1995 the FERC issued a draft order approving 
SDG&E's open-access tariff, but rejecting Enova Energy's filing. This limits 
Enova Energy to cost-based rates. All non-rate terms and conditions were 
accepted subject to the outcome of the FERC's restructuring rulemaking. Final 
approval of the FERC's rule and the CPUC's industry restructuring plan would 
result in the creation of a bid-based wholesale electricity spot market with 
open-access transmission. The FERC is expected to issue a final rule during 
the first half of 1996. 
 
Base Rates 
 
SDG&E files annually under its base-rates performance-based ratemaking 
mechanism formula to offset the effects of inflation. Base rates allow SDG&E 
to recover the cost of operating and maintaining the utility system, taxes, 
depreciation, and other non-fuel business costs. In addition, SDG&E files an 
annual application to establish its cost of capital (see "Cost of Capital" 
below), which reflects the cost of debt and equity. Additional information 
concerning PBR is described under "Performance-Based Ratemaking" herein. 
 
Cost of Capital 
 
In November 1995 the CPUC issued its decision on the 1996 Cost of Capital 
proceeding, adopting an 11.6 percent return on equity for 1996 for SDG&E, 
PG&E, Edison, SoCal Gas, and Sierra Pacific Power, resulting in an overall 
rate of return for SDG&E of 9.37 percent. SDG&E's 1995 authorized return on 
equity and rate of return were 12.05 percent and 9.76 percent, respectively.  
 
In October 1995 SDG&E filed a proposal with the CPUC to implement a mechanism,
in lieu of the existing, litigated proceeding, to establish its cost of 
capital beginning in January 1997. Under the mechanism, each October SDG&E's 
authorized rate of return would be adjusted if single-A bond rates change by 
one percent or more from a previously established benchmark rate. For example, 
a one-percent change in single-A bond rates would result in a one-half percent 
change in SDG&E's return on equity. In addition, SDG&E's embedded costs of 
debt and preferred stock would be adjusted to reflect SDG&E's outstanding 
long-term debt and preferred stock at each September 30 if the return on 
equity adjustment described above is triggered. The adjustments would be 
effective on January 1 of the following year. The proposal suggests a three-
year trial period during which SDG&E's authorized capital structure would not
change. 
 
                                 16 
<PAGE> 
 
Balancing Accounts 
 
The CPUC requires balancing accounts for fuel and purchased energy costs and 
for sales volumes. The CPUC sets balancing account rates based on estimated 
costs and sales volumes. Revenues are adjusted upward or downward to reflect 
the differences between authorized and actual volumes and costs. These 
differences are accumulated in the balancing accounts and represent amounts to
be either recovered from customers or returned to them. These balancing 
accounts were overcollected by $171 million at December 31, 1995 and by $112 
million at December 31, 1994. The CPUC adjusts SDG&E's rates annually to 
amortize the accumulated balances. As a result, changes in SDG&E's fuel and 
purchased-power costs or changes in electric and natural-gas sales volumes 
normally have not affected SDG&E's net income. As described under 
"Performance-Based Ratemaking," SDG&E can realize rewards or penalties 
depending on the achievement of certain benchmarks for operations and 
expenses.  
 
It is uncertain whether the CPUC will continue to allow these or some other 
form of balancing accounts once its electric industry restructuring decision 
takes effect in 1998. 
 
Electric Fuel Costs and Sales Volumes 
 
Rates to recover electric-fuel and purchased-power costs are determined in the 
Energy Cost Adjustment Clause proceeding. This proceeding normally takes place 
annually, in two phases. In the forecast phase, prices are set based on the 
estimated cost of fuel and purchased power for the following year and are 
adjusted to reflect any changes from the previous period. These adjustments 
are made by amortizing any accumulation in the balancing accounts described 
above. In the second phase, the reasonableness review, the CPUC evaluates the 
prudence of SDG&E's nuclear and natural-gas-storage operations. As described 
under "Performance-Based Ratemaking," reviews of fuel and purchased-power 
transactions, electric operations and natural-gas transactions now are 
required only if SDG&E's fuel and energy expenses vary significantly from the 
established benchmarks. The Electric Revenue Adjustment Mechanism compensates 
for variations in sales volume compared to the estimates used for setting the 
non-fuel component of rates. ERAM is designed to stabilize revenues, which 
otherwise may vary due to changes in sales volumes resulting from weather 
fluctuations and other factors. Any accumulation in the ERAM balancing account
is amortized when new rates are set in the ECAC proceeding.  
 
Natural-Gas Costs and Sales Volumes  
 
Rates to recover the cost of purchasing and transporting natural gas to SDG&E 
are determined in the Biennial Cost Allocation Proceeding. The BCAP proceeding 
normally occurs every two years and is updated in the interim year for 
purposes of amortizing any accumulation in the balancing accounts. Balancing 
accounts for natural-gas costs and sales volumes are similar to those for 
electric fuel costs and sales volumes. The natural-gas balancing accounts 
include the Purchased Gas Account for natural-gas costs and the Gas Fixed Cost
Account for sales volumes. Balancing account coverage includes both core 
customers (primarily residential and commercial customers) and noncore 
customers (primarily large industrial customers). However, SDG&E does not 
receive balancing account coverage on 25 percent of noncore GFCA 
overcollections and undercollections.  
 
                                    17 
<PAGE> 
 
Performance-Based Ratemaking  
 
SDG&E implemented performance-based ratemaking in 1993 for natural-gas 
procurement and transportation, and for electric generation and purchased 
energy; and in 1994 for base rates. 
 
The CPUC has authorized the first two mechanisms to remain in effect beyond 
their authorized July 31, 1995 expiration until the Division of Ratepayer 
Advocates and the Commission Advisory and Compliance Division file their final 
reports for the year ended July 31, 1995 (expected during the first quarter of 
1996). Thereafter, SDG&E will be applying for an extension and modification in 
conjunction with the restructuring of California's electric utility industry, 
and the existing mechanisms are expected to remain in place until the CPUC 
acts on the application. These mechanisms measure SDG&E's ability to purchase 
and transport natural gas, and to generate or purchase energy at the lowest 
possible cost, by comparing SDG&E's performance against various market 
benchmarks. SDG&E's shareholders and customers share in any savings or excess 
costs within predetermined ranges.  
 
Natural Gas: Under the natural-gas procurement and transportation mechanism, 
if SDG&E's actual commodity cost exceeds the benchmark by more than two 
percent or falls below the benchmark, the excess costs or savings is shared 
equally between customers and shareholders. If the delivered cost of gas 
(including interstate transmission charges) falls below the index, 95 percent 
of the savings goes to customers and five percent of the savings goes to 
SDG&E's shareholders. 
 
Electric Generation & Dispatch: The benchmark to measure SDG&E's electric 
generation and purchased energy performance ("generation and dispatch") is 
based upon the difference between SDG&E's actual and authorized electric-fuel 
and short-term purchased-energy expenses. SDG&E shareholders will receive 30 
percent to 50 percent of over- or under-expenditures in specified bands within 
six percent of the benchmark. SDG&E is allowed to recover expenses exceeding 
the six percent range, subject to a reasonableness review by the CPUC. SDG&E's
customers will receive 100 percent of the additional savings should expenses 
fall below the benchmark by more than six percent. 
 
In October 1995 SDG&E filed reports with the CPUC on the results of the 
generation and dispatch and the gas procurement mechanisms for the year ended 
July 31, 1995. SDG&E's fuel and purchased power expenses fell below the 
benchmarks for these mechanisms by a total of $27.9 million ($2.8 million for 
G&D and $25.1 million for gas). As a result, SDG&E's ECAC application (see 
above) and its current Biennial Cost Allocation Proceeding application request 
a total shareholder award of $3.4 million ($0.8 million for G&D and $2.6 
million for gas) and that the remainder of these savings be given to customers
through lower rates. 
 
Base Rates: The base-rate component of SDG&E's Performance-Based Ratemaking 
mechanism is expected to continue through 1998, replacing the traditional 
general rate case application. The base-rate mechanism has three segments. The 
first is a formula similar to the traditional attrition mechanism used to 
determine SDG&E's annual revenue requirement for operating, maintenance and 
capital costs. SDG&E's initial revenue requirements were based on SDG&E's 1993 
General Rate Case decision. The second is a set of indicators which determine 
performance standards for customer rates, employee safety, electric system 
reliability and  
 
                                   18 
<PAGE> 
 
customer satisfaction. Each indicator specifies a range of possible 
shareholder benefits and risks. SDG&E can be penalized up to a total of $21 
million should it fall significantly below these standards or earn up to $19 
million if it exceeds all of the performance targets. The third segment sets 
limits on SDG&E's rate of return. If SDG&E realizes an actual rate of return 
that exceeds its authorized rate of return by one percent to one-and-one-half 
percent, it is required to return 25 percent of the excess over one percent to
customers. If SDG&E's rate of return exceeds the authorized level by more than 
one-and-one-half percent, SDG&E also will return 50 percent of the excess over 
one-and-one-half percent to customers. SDG&E will be at risk if its rate of 
return falls below the authorized level. However, if SDG&E's rate of return is 
three percent or more below or above the authorized level, a rate case review 
would automatically occur. SDG&E may request a rate case review if at any time 
its rate of return drops one-and-one-half percent or more below the authorized 
level.  
 
SDG&E must file a report with the CPUC on the results of the 1995 PBR base-
rates mechanism by May 15, 1996. SDG&E expects to determine the final 1995 PBR
base-rate award or penalty in September 1996 when the Edison Electric 
Institute publishes its final report on 1995 national electric rates.  
 
SONGS: In 1983 the CPUC adopted performance incentive plans for SONGS that set 
a Target Capacity Factor range of 55 percent to 80 percent for Units 2 and 3. 
Energy costs or savings outside that range were shared equally by shareholders 
and customers. In January 1996 the CPUC approved the accelerated recovery of 
the units' existing capital costs. The decision includes a performance 
incentive plan. Additional information concerning the SONGS units, including 
its new incentive plan, is presented under "Nuclear Generating Plants" herein. 
 
Energy Conservation Program 
 
Over the past several years, SDG&E has promoted conservation programs to 
encourage efficient use of energy. The programs are designed to conserve 
energy through the use of energy-efficiency measures that will reduce 
customers' energy costs and reduce the need to build additional power plants. 
The costs of these programs are recovered from customers. The programs contain 
an incentive mechanism that could increase or decrease SDG&E's earnings, 
depending upon the performance of the programs in meeting specified efficiency 
and expenditure targets. The CPUC has encouraged expansion of these programs, 
authorizing annual expenditures ranging from $54 million in 1993 to $60 
million in 1996. However, the CPUC has also ordered utilities to conduct a 
test program to determine if unaffiliated suppliers could offer energy 
conservation services at a lower cost. 
 
Low-Emission Vehicle Programs 
 
SDG&E has conducted a CPUC-approved natural-gas-vehicle program since 1991. 
The program includes building refueling stations, demonstrating new 
technology, providing incentives and converting portions of SDG&E's fleet 
vehicles to natural gas. The cost of this program is being recovered in 
natural-gas rates. In November 1995 the CPUC issued its decision authorizing 
funding for limited electric-vehicle and natural-gas-vehicle programs through 
the year 2000 to allow recovery of costs for operation and maintenance of 
SDG&E's EV and NGV fleets and NGV fueling stations, and to allow recovery of 
transition costs to meet  
 
                                   19 
<PAGE> 
 
existing commitments to customers. The decision requires the sale of SDG&E's 
NGV fueling stations located on customer property within six years. The CPUC 
approved a six-year program that provides a total of $5.3 million for SDG&E's 
electric-vehicle program and $6.7 million for its natural-gas-vehicle program 
over the six-year period. 
 
Electric Rates 
The average price per kilowatt-hour charged to electric customers was 9.8 
cents in 1995 and 9.7 cents in 1994. 
 
Natural-Gas Rates 
The average price per therm of natural gas charged to customers was 55.7 cents 
in 1995 and 59.9 cents in 1994.  
 
Additional information concerning rate regulation is provided in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" 
beginning on page 18 of the 1995 Annual Report to Shareholders.  
 
ENVIRONMENTAL MATTERS 
 
SDG&E's operations are guided by federal, state and local environmental laws 
and regulations governing air quality, water quality, hazardous substance 
handling and disposal, land use, and solid waste. Compliance programs to meet 
these laws and regulations increase the cost of electric and natural-gas 
service by requiring changes and/or delays in the location, design, 
construction and operation of new facilities. SDG&E may also incur significant
costs to operate its facilities in compliance with these laws and regulations 
and to clean up the environment as a result of prior operations of SDG&E or 
others. The costs of compliance with environmental laws and regulations are 
normally recovered in customer rates. However, the CPUC has issued a decision 
for restructuring the California electric utility industry to stimulate 
competition (see "Rate Regulation" herein). This decision will change the way 
utility rates are set and costs are recovered. Depending on the final outcome 
of industry restructuring and the impact of competition, the costs of 
compliance with environmental regulations may not be fully recoverable. 
 
Electric and Magnetic Fields 
Scientists are researching the possibility that exposure to low-frequency 
magnetic fields causes adverse health effects. This research, although often 
referred to as relating to electric and magnetic fields, or EMFs, focuses on 
magnetic fields. To date, some laboratory studies suggest that such exposure 
creates biological effects, but those effects have not been shown to be 
harmful. 
 
The studies that have most concerned the public are certain epidemiological 
studies. Some of those studies reported a weak correlation between childhood 
leukemia and the proximity of homes to certain power lines and equipment. 
Other studies reported weak correlations between computer estimates of 
historic exposure and disease. Various wire-configuration categories and 
computer calculations were used as substitutes for historical exposure 
measurements, which were not available. However, some of the studies also 
measured actual field levels. When actual field levels were measured, no 
correlation was found with disease. 
 
                                    20 
<PAGE> 
 
Other epidemiological studies found no correlation between estimated exposure 
and any disease. No studies correlate measured fields with disease. Scientists
cannot explain why some studies using estimates of past exposure report 
correlations between estimated fields and disease, while others do not. 
 
To respond to public concern and scientific uncertainty, the CPUC created the 
California Consensus Group in 1991 and assigned this group the responsibility 
of reaching agreement on interim measures which could be implemented until 
science provides direction. In November 1993 the CPUC adopted an interim EMF 
policy, which implemented the Consensus Group's recommendations. Consistent 
with the more-than-twenty major scientific reviews of available research 
literature, the CPUC concluded that no health risk has been identified with 
exposure to low-frequency magnetic fields. The November 1993 decision created
two utility-funded programs (a public education program and a research 
program) and directed utilities to adopt a low-cost EMF-reduction policy for 
new projects. This policy entails design changes to new projects to achieve a 
noticeable reduction of magnetic-field levels. The CPUC indicated that 
utilities should use four percent of the cost of new or upgraded facilities as 
a benchmark in developing low-cost measures which produce a noticeable 
reduction in field levels. In May 1994 SDG&E adopted design guidelines which 
implement the low-cost measures, subject to safety, reliability, efficiency 
and other operational criteria.  
 
Litigation concerning EMFs is discussed under "Legal Proceedings" herein. 
 
Hazardous Substances 
In May 1994 the CPUC issued its decision on the Hazardous Waste Collaborative, 
approving a mechanism for utilities to recover their hazardous waste costs, 
including those related to Superfund sites or similar sites requiring cleanup. 
Basically, the decision allows utilities to recover 90 percent of their 
cleanup costs and related third-party litigation costs, and 70 percent of the 
related insurance-litigation expenses. 
 
SDG&E disposes of its hazardous wastes at facilities owned and operated by 
other entities. Operations at these facilities may result in actual or 
threatened risks to the environment or public health. Where the owner or 
operator of such a facility fails to complete any corrective action required 
by regulatory agencies to abate such risks, applicable environmental laws may 
impose an obligation on SDG&E and others who disposed of hazardous wastes at 
the facility to undertake corrective actions. 
 
Rosens: The above-mentioned type of obligation has been imposed upon SDG&E 
with respect to the Rosen's Electrical Equipment Supply Company located in 
Pico Rivera, California. In December 1993, SDG&E and eight other entities were 
named as potentially responsible parties with respect to the Rosen's site. In 
December 1995 SDG&E and the other entities received an Imminent and 
Substantial Endangerment Determination and Remedial Action Order from the 
California Department of Toxic Substances Control requiring site assessment 
and remediation. Additional information concerning this site is described in 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" beginning on page 18 of the 1995 Annual Report to Shareholders.  
 
                                     21 
<PAGE> 
 
Underground Storage: California has enacted legislation to protect ground 
water from contamination by hazardous substances. Underground storage 
containers require permits, inspections and periodic reports, as well as 
specific requirements for new tanks, closure of old tanks and monitoring 
systems for all tanks. It is expected that cleanup of sites previously 
contaminated by underground tanks will occur for an unknown number of years. 
SDG&E cannot predict the cost of such cleanup. Specific known underground 
locations requiring assessment and/or remediation are indicated below: 
 
In May 1987 the San Diego Regional Water Quality Control Board issued SDG&E a 
cleanup and abatement order for gasoline contamination originating from an 
underground storage tank located at SDG&E's Mountain Empire Operation and 
Maintenance facility. SDG&E assessed the extent of the contamination and 
removed all contaminated soil and completed remediation of the site. SDG&E 
will continue to monitor the site to confirm its remediation. After such 
confirmation, SDG&E will apply for a site-closure letter from the Regional 
Board. 
 
In January 1993 SDG&E was issued a Notice of Unauthorized Release order by the 
San Diego County Division of Environmental Health Services relative to soil 
contamination from used motor oil associated with an underground tank located 
at SDG&E's South Bay Operation and Maintenance facility. SDG&E removed the 
tank and the associated contaminated soil. No actionable levels of 
contamination remain on the site. SDG&E has applied for and is awaiting the 
issuance of a site-closure letter from the San Diego County Division of 
Environmental Health Services. 
 
In 1993 SDG&E discovered a shallow underground tank-like structure while 
installing underground electric facilities under a public street immediately 
west of a former manufactured-gas plant. The past ownership, operation and use 
of the structure is unknown. Hydrocarbon contamination has been found in the 
vicinity of the structure, but it has not been established whether the 
structure was the source of the contamination. The San Diego County Division 
of Environmental Health Services has issued a Notice of Unauthorized Release 
order to SDG&E. The order requires SDG&E to conduct a site assessment to 
delineate the nature and scope of the contamination. SDG&E's duty to meet 
these requirements has been postponed pending the resolution of property 
ownership. SDG&E is unable to determine the extent of its responsibility, if 
any, or to estimate the nature and extent of the contamination or the 
potential remediation costs if SDG&E is found at all responsible. 
 
Station B: Station B is located in downtown San Diego and was operated as a 
steam and generating facility between 1911 and June 1993. During 1986, three 
100,000-gallon underground diesel-fuel storage tanks were removed from an 
adjacent substation. Pursuant to a cleanup and abatement order, SDG&E 
remediated the existing hydrocarbon contamination. In the course of the 
remediation effort, detectable levels of PCBs were discovered. Further 
information regarding the PCB contamination in the area was submitted by 
SDG&E, evidencing that no further action is required. SDG&E has applied for 
and is awaiting the issuance of a site-closure letter from the San Diego 
County Division of Environmental Health Services. 
 
Asbestos was used in the construction of the Station B power plant. 
Renovation, reconditioning or demolition of the facility will require the 
removal of the asbestos in a manner complying with all applicable 
environmental, health and safety laws. Additionally, reuse of the  
 
                                    22 
<PAGE> 
 
facility may require the removal or cleanup of PCBs, paints containing heavy 
metals, fuel oil or other substances. SDG&E has assessed the extent of any 
possible contamination by these or other hazardous materials at the facility. 
The estimated cost of this removal effort is estimated to be between $4 
million and $5 million. 
 
Encina Power Plant: During 1993 SDG&E discovered the presence of hydrocarbon 
contamination in subsurface soil at its Encina power plant. This contamination 
was located near the fuel-storage facilities and believed to be fuel oil 
originating from a 1950s refueling spill. SDG&E believes that it has 
remediated the contamination to the extent required by the San Diego County 
Division of Environmental Health Services and has applied for and is awaiting 
the issuance of a site-closure letter. 
 
Manufactured-Gas Plant Sites: During the early 1900s SDG&E and its 
predecessors manufactured gas from oil at its Station A facility and at small 
facilities in Escondido and Oceanside. 
 
In 1995 SDG&E commenced an environmental assessment of Station A. Some 
significant amounts of residual by-products from the gas-manufacturing process
have been discovered on portions of the facility during the assessment. 
However, the magnitude of such contamination has yet to be determined. The 
assessment will be completed in 1996 at which time the extent of any required 
remediation activities can be determined. Sufficient information is not 
currently available to estimate clean-up costs. SDG&E will be able to estimate 
a range of costs after completion of the site assessment. 
 
Residual by-products from the gas-manufacturing process at the Escondido 
facility were remediated at a cost of approximately $3 million during the 
period of 1990 through 1993. A site-closure letter for SDG&E's Escondido's 
facility was obtained from the San Diego County Department of Environmental 
Health Services. However, contaminants similar to the ones found on the 
Escondido site have been observed on adjacent parcels of property. SDG&E will 
assess these contaminants in 1996. 
 
SDG&E will also undertake an environmental assessment of its Oceanside 
facility in 1996. Some materials similar to residual by-products from the 
operation of town gas sites have been observed on an adjacent parcel of 
property. SDG&E's assessment of the Oceanside facility will include an 
evaluation of such materials. 
 
Air Quality 
The San Diego Air Pollution Control District (APCD) regulates air quality in 
San Diego County in conformance with the California and federal Clean Air 
Acts. California's standards are more restrictive than federal standards. 
 
Although SDG&E facilities comply with very strict emission limits and 
contribute only about three percent of the air emissions in San Diego County, 
the APCD is required by the California Clean Air Act to further reduce 
emissions from all San Diego industry. In January 1994 the APCD adopted Rule 
69 to further reduce nitrogen dioxide (NOx) emissions from SDG&E's power 
plants. As adopted, the rule required the retrofit of each of the nine boilers 
at Encina and South Bay power plant generating units with catalytic converters
to remove approximately 87 percent of current NOx emissions. In addition, the 
NOx emissions from all units were required to remain below a system-wide cap. 
The estimated capital cost to comply with Rule 69 was $110 million, with 
annual operating costs  
 
                                   23 
<PAGE> 
 
expected to increase about $6 million after all units were retrofitted. In 
December 1995 the APCD adopted amendments to Rule 69 which eliminated the 
requirement that each unit be retrofitted with catalytic converters, but which
retained the system-wide cap with further system-wide emission reductions to 
be achieved by 2005. The rule change provides SDG&E with greater flexibility 
to utilize effective and cost-efficient methods to achieve the required NOx 
emission reduction milestones. The estimated capital costs for compliance with 
the amended rule is approximately $60 million. The California Air Resources 
Board (ARB) expressed concern that the amendments to Rule 69 did not meet the 
requirements of the California Clean Air Act. However, the ARB withheld any 
formal objections pending its review of SDG&E's Rule 69 compliance plan to be 
submitted in 1996. The ARB may seek to overturn some or all of the Rule 69 
amendments or otherwise impose more restrictive emissions limitations which 
would cause SDG&E's Rule 69 compliance costs to increase. 
 
In 1990 the South Coast Air Quality Management District passed a rule which 
will require SDG&E's older natural-gas-compressor engines at its Moreno 
facility to either meet new, stringent nitrogen oxide emission levels or be 
converted to electric drive. In October 1993 the Air Quality District adopted 
a new program called RECLAIM, which replaced existing rules and requires 
SDG&E's natural-gas-compressor engines at its Moreno facility to reduce their 
nitrogen oxide emission levels by about 10 percent a year through 2003. This 
will be accomplished through the installation of new emission-monitoring 
equipment, operational changes to take advantage of low-emitting engines, and
engine retrofits. SDG&E has concluded negotiations with the Air Quality 
District, reclassifying three of these engines and thus eliminating the need 
for certain expensive monitoring equipment for those engines. The cost of 
complying with RECLAIM may be as much as $3 million. 
 
Water Quality 
Discharge permits are required to enable SDG&E to discharge its cooling water 
and its treated in-plant waste water, and are, therefore, a prerequisite to 
the continued operation of SDG&E's power plants. The promulgation or 
modification of water-quality-control plans by state and federal agencies may 
impose increasingly stringent cooling-water and treated-waste-water-discharge 
requirements on SDG&E in the future. 
 
SDG&E is unable to predict the terms and conditions of any renewed permits or 
their effects on plant or unit availability, the cost of constructing new 
cooling-water-treatment facilities, or the cost of modifying the existing 
treatment facilities. However, any modifications required by such permits 
could involve substantial expenditures, and certain plants or units may be 
unavailable for electric generation during such modification. Additional 
information concerning discharge permits for the South Bay, Encina and SONGS 
plants is provided in "Management's Discussion and Analysis of Financial 
Condition and Results of Operations" beginning on page 18 of the 1995 Annual 
Report to Shareholders.  
 
Wood Pole Preservatives  
The Pacific Justice Center (Pacific), a for-profit law firm, and the Mateel 
Environmental Justice Foundation (Mateel), a nonprofit corporation, claim that 
SDG&E, other utilities and other parties have violated California's Safe 
Drinking Water and Toxic Enforcement Act (Proposition 65) by failing to warn 
persons who may come into contact with the preservatives used in treated wood 
utility poles and by allowing these preservatives to be released into sources 
of drinking 
 
                                   24 
<PAGE> 
 
water. Some preservatives used in wood poles are included on California's list 
of chemicals known to cause cancer or reproductive harm. Proposition 65 
requires that prior warning be given to individuals who may be exposed to such 
chemicals unless the exposure will not pose a significant risk and that these 
substances not be released into sources of drinking water in significant 
quantities or otherwise in violation of the law. Violations of the Proposition 
65 warning requirement can result in penalties of up to $2,500 per violation. 
SDG&E believes, on the basis of studies and other information, that exposure 
to wood poles containing these preservatives does not give rise to a 
significant risk and, therefore, no warning is required, and that significant 
quantities of these preservatives are not released into any source of drinking 
water. SDG&E and others have responded to the claims by denying their 
validity. On June 20, 1995 Mateel, represented by Pacific, filed a complaint 
in San Francisco County Superior Court against Pacific Bell, PG&E and two 
wood-pole manufacturers alleging the violations noted above. Although SDG&E 
was not named in this lawsuit, it is anticipated that Mateel may file a 
separate lawsuit against SDG&E and other utilities on the same grounds. SDG&E 
is cooperating with PG&E, Pacific Bell and others to achieve an effective and 
favorable resolution of this matter. 
 
Additional information concerning SDG&E's environmental matters is provided in 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" beginning on page 18 of the 1995 Annual Report to Shareholders and 
in Note 10 of the "Notes to Consolidated Financial Statements" beginning on 
page 35 of the 1995 Annual Report to Shareholders. 
 
OTHER 
 
Research, Development and Demonstration 
SDG&E conducts research and development in areas that provide value to SDG&E 
and its customers. Annual research, development and demonstration costs 
averaged $7 million over the past three years. The CPUC historically has 
permitted rate recovery of research, development and demonstration 
expenditures. 
 
Wages 
SDG&E and Local 465, International Brotherhood of Electrical Workers have a 
labor agreement through February 29, 1996. Negotiations are ongoing. 
 
Employees of Registrant 
As of December 31, 1995 SDG&E had 3,880 employees, compared to 3,998 at 
December 31, 1994. SDG&E's subsidiaries had 13 employees at December 31, 1995
compared to 550 at December 31, 1994 (of which 542 were employees of Wahlco 
Environmental Systems, Inc., which was sold on June 6, 1995).  
 
Foreign Operations 
SDG&E foreign operations in 1995 included power purchases and sales with CFE 
in Mexico; purchases of power and natural gas from suppliers in Canada; and 
purchases of uranium from suppliers in Canada, Australia, France, Niger, 
People's Republic of China and South Africa. 
 
SDG&E's subsidiary Wahlco Environmental Systems, which it sold on June 6, 
1995, operated in various foreign locations in 1995, including Great Britain,
Australia and Italy, and sold products and services to customers in additional 
foreign countries. 
 
                                   25 
<PAGE> 
 
Additional information concerning foreign operations is provided under 
"Electric Operations" and "Natural Gas Operations" herein, in "Management's 
Discussion and Analysis of Financial Condition and Results of Operations" 
beginning on page 18 of the 1995 Annual Report to Shareholders, and in Note 10
of the "Notes to Consolidated Financial Statements" beginning on page 35 of 
the 1995 Annual Report to Shareholders. 
 
ITEM 2. PROPERTIES 
 
Substantially all utility plant is subject to the lien of the July 1, 1940 
mortgage and deed of trust and its supplemental indentures between SDG&E and 
the First Trust of California N.A. as trustee, securing the outstanding first-
mortgage bonds. 
  
Information concerning SDG&E's properties is provided below. Additional 
information is provided under "Electric Operations" and "Gas Operations" 
herein, in "Management's Discussion and Analysis of Financial Condition and 
Results of Operations" beginning on page 18 of the 1995 Annual Report to 
Shareholders, and in Notes 1 through 3, 6, 10 and 11 of the "Notes to 
Consolidated Financial Statements" beginning on page 35 of the 1995 Annual 
Report to Shareholders. 
 
Electric Properties 
 
As of December 31, 1995 SDG&E's installed generating capacity based on summer
ratings, was as follows: 
 
Plant                      Location                Net Megawatts 
----------------------------------------------------------------- 
Encina                     Carlsbad                     951 
South Bay                  Chula Vista                  690 
San Onofre                 South of San Clemente        430* 
Combustion Turbines (19)   Various                      332 
----------------------------------------------------------------- 
 
 *SDG&E's 20 percent share. 
 
Except for San Onofre and some of the combustion turbines, these plants are 
equipped to burn either oil or gas. 
 
The 1995 system load factor was 58 percent and ranged from 56 percent to 64 
percent for the past five years. 
 
SDG&E's electric transmission and distribution facilities include substations,
and overhead and underground lines. Periodically various areas of the service 
territory require expansion to handle customer growth.  
 
SDG&E owns an approved nuclear power-plant site near Blythe, California. 
 
Natural-Gas Properties 
 
SDG&E's natural-gas facilities are located in San Diego and Riverside counties 
and consist of the Moreno and Rainbow compressor stations, various high-
pressure transmission pipelines, high-pressure and low-pressure distribution 
mains, and service lines. SDG&E's natural-gas system is sufficient to meet 
customer demand and short-term growth. SDG&E is currently undergoing an 
expansion of its high-pressure transmission lines to accommodate expected 
long-term customer growth.  
 
                                   26 
<PAGE> 
 
General Properties 
 
The 21-story corporate office building at 101 Ash Street, San Diego is 
occupied pursuant to a capital lease through the year 2005. The lease has four
separate five-year renewal options. SDG&E also occupies an office complex at 
Century Park Court in San Diego pursuant to an operating lease ending in the 
year 2007. The lease can be renewed for two five-year periods. 
 
In addition, SDG&E occupies eight operating and maintenance centers, two 
business centers, six district offices, and five branch offices. 
 
Subsidiary Properties 
 
Phase One Development, a subsidiary of Pacific Diversified Capital, holds one 
property in San Diego County for future development and sale. Other, developed
properties were sold during 1995. Wahlco Environmental Systems, sold on June 
6, 1995, had manufacturing facilities in the continental United States, Puerto 
Rico, Great Britain and Australia, and a sales office in Italy. 
 
ITEM 3. LEGAL PROCEEDINGS 
 
The McCartin proceeding, described in SDG&E's 1994 Annual Report on Form 10-K, 
was concluded during the year ended December 31, 1995. Information concerning 
the conclusion of this proceeding is contained in SDG&E's Quarterly Report on 
Form 10-Q for the three-month period ended June 30, 1995. 
 
Century Power 
 
This FERC proceeding, arising from a rate dispute among Century Power 
Corporation, Tucson Electric Power Company, and SDG&E, has been resolved. On 
October 23, 1995 SDG&E filed with the FERC an offer of settlement which would 
result in the dismissal of all claims among SDG&E, Tucson and Century with 
prejudice. On January 18, 1996 FERC approved the settlement and all claims 
were dismissed. 
 
American Trails 
 
Prior to Pacific Diversified Capital's purchase of Wahlco Environmental 
Systems, a complaint was filed in 1985 in the Superior Court of San Diego 
County against Wahlco and others by Michael Bessey and others who owned 
American Trails, a membership campground company, for, among other things, 
breach of contract, negligence and fraud. In 1993 the court found in favor of 
Wahlco for all claims and causes of action by the plaintiffs against Wahlco. 
Subsequently, the plaintiffs filed a notice of appeal from the court's 
judgment and the appeal is pending. Wahlco intends to continue defending this 
lawsuit vigorously. 
 
Robert R. Wahler, as Trustee of the Wahler Family Trust; John H. McDonald; and
Westfore, a California limited partnership; agreed, subject to certain 
exceptions, to indemnify Pacific Diversified and its subsidiaries in 
connection with the American Trails litigation. Under a settlement agreement 
entered into on November 26, 1995, Wahlco agreed to continue to pay all 
attorneys' fees and costs incurred in the pending  
 
                                      27 
<PAGE> 
 
American Trails appeal on behalf of all defendants, provided that all of the 
above parties are represented by the same counsel throughout. Costs at 
subsequent retrial, appeal and judgment, if any, would be borne by Wahlco 
subject to reimbursement by Wahler, McDonald and Westfore, under certain 
circumstances. 
 
On June 6, 1995 Pacific Diversified sold its interest in Wahlco and, 
therefore, no longer retains any ownership or interest in Wahlco. 
 
Public Service Company of New Mexico 
 
On October 27, 1993 SDG&E filed a complaint with the FERC against Public 
Service Company of New Mexico, alleging that charges under a 1985 power-
purchase agreement are unjust, unreasonable and discriminatory. SDG&E 
requested that the FERC investigate the rates charged under the agreement and 
establish December 26, 1993 as the effective refund date. The relief, if 
granted, would reduce annual demand charges paid by SDG&E to PNM by up to $11 
million per year through April 2001. If approved, the proceeds would be 
refunded principally to SDG&E customers.  
 
On December 8, 1993 PNM answered the complaint and moved that it be dismissed. 
PNM denied that the rates are unjust, unreasonable or discriminatory and 
asserted that SDG&E's claims were barred by certain orders issued by the FERC 
in 1988.  
 
There have been no further developments in this case. SDG&E is unable to 
predict the ultimate outcome of this litigation. 
 
Canadian Natural Gas  
 
During early 1991 SDG&E signed four long-term natural-gas-supply contracts 
with Husky Oil Ltd., Canadian Hunter Ltd. and Noranda Inc., Bow Valley Energy 
Inc., and Summit Resources Ltd. Canadian-sourced natural gas began flowing to 
SDG&E under these contracts in 1993. Disputes have arisen with each of these 
producers with respect to events which are alleged by the producers to have 
occurred and to have justified a revision to the pricing terms of each 
contract, and possibly their termination. Consequently, during December 1993 
SDG&E filed complaints in the United States Federal District Court, Southern 
District of California, seeking a declaration of SDG&E's contract rights. 
Specifically, SDG&E states that neither price revision nor contract 
termination is warranted. 
 
In 1994 SDG&E voluntarily dismissed its complaint against Bow Valley without 
prejudice. In addition, the court denied the other defendants' motions to 
dismiss SDG&E's complaints. These motions were based on jurisdictional 
grounds. Two of the defendants, Bow Valley and Husky Oil, filed claims against
SDG&E with the Queens Bench in Alberta, Canada, seeking a declaration that 
they are entitled to damages or, in the alternative, that they may terminate 
their respective natural-gas shipments to SDG&E. SDG&E has answered these 
claims. In March 1995 SDG&E and Husky Oil reached an agreement dismissing all 
of their respective claims with prejudice.  
 
Bow Valley and Summit Resources gave SDG&E notice that their natural-gas-
supply contracts with SDG&E were terminated pursuant to provisions in the 
contract that purportedly give them the right to do so. SDG&E has responded 
that the notices were inappropriate and that it will seek both contract and 
tort damages.  
 
                                      28 
<PAGE> 
 
In July 1995 the United States Federal District Court, Southern District of 
California, dismissed SDG&E's lawsuit against Summit Resources. SDG&E's 
lawsuit in Federal District Court against Canadian Hunter is still proceeding. 
 
SDG&E is unable to predict the ultimate outcome of this litigation.  
 
Electric and Magnetic Fields  
 
Covalt: On December 16, 1993 Martin and Joyce Covalt filed a complaint against 
SDG&E in Orange County Superior Court. The Covalt lawsuit involves the same 
lawyers and issues as the lawsuits brought by McCartin and Zuidema, in which 
SDG&E prevailed and which were reported in previous Annual Reports on Form 10-
K. On April 13, 1994 SDG&E filed a demurrer to the Covalts' claims. On June 
22, 1994 an Orange County Superior Court judge, different from the judge who 
presided over the McCartin case, denied SDG&E's demurrer. On July 15, 1994 
SDG&E petitioned the California Court of Appeal to review the trial judge's 
decision on the grounds that the California Public Utilities Commission, not 
the courts, has exclusive jurisdiction over power-line health and safety 
issues. On February 28, 1995 the California Court of Appeal granted SDG&E's 
petition, completely dismissing the plaintiffs' lawsuit, ruling that the CPUC 
has exclusive jurisdiction over these claims. On March 30, 1995 the Court of 
Appeal denied the plaintiffs' petition for rehearing. On May 11, 1995 the 
California Supreme Court granted plaintiffs' request for review of the 
California Court of Appeal decision to dismiss the case. A decision is not 
expected before late 1996.  
 
SDG&E is unable to predict the ultimate outcome of this litigation. 
 
North City West: On June 14, 1993 the Peninsula at Del Mar Highlands 
Homeowners Association filed a complaint with the Superior Court of San Diego 
County against the City of San Diego and SDG&E to prevent SDG&E from 
constructing and operating an electric substation in an area which is known as 
North City West. In the complaint, plaintiffs sought to have the city either 
revoke previously issued permits or reopen the hearing process to address 
alleged EMF concerns. In 1993 the court denied the plaintiffs' motion for a 
temporary restraining order and motion for a preliminary injunction. 
Subsequently, the plaintiffs withdrew their complaint and the court dismissed 
it without prejudice. 
 
On August 18, 1993 the plaintiffs filed a complaint with the CPUC, requesting 
that the CPUC conduct an environmental assessment. This complaint is still 
pending. 
 
SDG&E is unable to predict the ultimate outcome of this litigation.  
 
SONGS Personal Injury Litigation 
 
James v. Southern California Edison Company, San Diego Gas & Electric Company 
and Combustion Engineering was tried and successfully defended in Federal 
District Court, Southern District of California. Mr. James, an employee of a 
SONGS contractor, was diagnosed with chronic myelogenous leukemia. He alleged 
his leukemia was caused by radiation exposure and from "fuel fleas" 
(radioactive fuel particles) from failed fuel rods. Plaintiffs sought $25 
million in compensatory damages and $100 million in punitive damages. On 
October 12, 1995 the jury  
 
                                 29 
<PAGE> 
 
determined there was no scientific link between the plaintiff's illness and 
the amount of radiation he was exposed to while at SONGS. The case is 
currently on appeal to the Ninth Circuit Court of Appeal. 
 
Three wrongful death lawsuits have been filed against Southern California 
Edison, San Diego Gas & Electric Company, Combustion Engineering, and the 
Institute of Nuclear Power Operations in Federal District Court, Southern 
District of California, by the heirs of former SONGS employees: McLandrich 
filed February 6, 1995, Mettler filed July 5, 1995, and Knapp filed August 31, 
1995. In McLandrich, the former employee allegedly developed leimyosarcoma, a 
rare form of cancer. In Mettler and Knapp, the former employees allegedly 
developed acute myelogenous leukemia. All plaintiffs attribute the illnesses 
to radiation exposure and "fuel fleas". Southern California Edison, co-owner 
and operator of SONGS, was dismissed from McLandrich based on the workers' 
compensation exclusive-remedy rule. SDG&E's motion on the same theory was 
denied. SDG&E has been granted permission to file a motion for summary 
judgment. The heirs of the plaintiffs in each case seek unspecified amounts in
compensatory and punitive damages. SDG&E is defending the lawsuits on the 
basis that the workers' compensation exclusive-remedy rule should apply for 
SDG&E as co-owner of the plant and that there is no scientific link between 
the illnesses and the alleged radiation exposure. All the SONGS personal 
injury lawsuits, including the two listed below, have involved the same 
lawyers for the plaintiffs. 
 
Two additional lawsuits have been filed wherein SDG&E was not named as a 
defendant. Kennedy v. Southern California Edison and Combustion Engineering, 
Inc., was filed in Federal District Court, Southern District of California on 
November 17, 1995. In this case, the wife of a current SONGS worker was 
diagnosed with chronic myelogenous leukemia (CML). She and her husband allege 
the CML was caused by exposure to radioactive particles that were transported 
home on the employee's clothing. In Rock v. Southern California Edison and 
Combustion Engineering, Inc. (filed November 28, 1995 in Federal District 
Court, Southern District of California), plaintiffs allege that the 18-year-
old son of a former temporary SONGS employee developed acute myelogenous 
leukemia from exposure to radioactive material that was transported home on 
the worker's clothing. Plaintiffs seek unspecified amounts in compensatory and 
punitive damages in both cases. 
 
SDG&E is unable to predict the ultimate outcome of this litigation. 
 
Environmental and Regulatory Issues 
 
Other legal matters related to environmental and regulatory issues are 
described under "Environmental Matters" and "Regulatory Matters" herein. 
 
 
                                    30 
<PAGE> 
 
Item 4.   Submission of Matter to a Vote of Security Holders 
          NONE. 
Item 4.   Executive Officers of the Registrant 
<TABLE>
<CAPTION>
Name                 Age  Positions* (1991 - Current) 
-----------------    ---  ------------------------------------------------------
<S>                  <C>  <C>
Thomas A. Page       62   Chairman (Enova) since December 1994. Chairman since January 1983.
                          President and Chief Executive Officer (Enova) from December 1994
                          through December 1995. 
                          Chief Executive Officer from January 1983 through December 1995.
                          President from 1983 through 1991 and from January 1994
                          through December 1995. 
                          
Stephen L. Baum      55   President and Chief Executive Officer (Enova) since January 1996.
                          Executive Vice President (Enova) from December 1994 through
                          December 1995. 
                          Executive Vice President from January 1993 through December 1995.
                          Senior Vice President - Law and Corporate Affairs and General
                          Counsel from January 1992 through December 1992.
                          Senior Vice President and General Counsel from 1987 through 1991.
                          
Donald E. Felsinger  48   President and Chief Executive Officer since January 1996.
                          Executive Vice President (Enova) from December 1994 through
                          December 1995.
                          Executive Vice President from January 1993 through December 1995.
                          Senior Vice President - Marketing and Resource Development
                          from January 1992 through December 1992.  
                          Vice President - Marketing and Resource Development from
                          February 1989 through December 1991. 
                            
Gary D. Cotton       55   Senior Vice President - Customer Operations since January 1993.
                          Senior Vice President - Customer Services from January 1992
                          through December 1992.   
                          Senior Vice President - Engineering and Operations from 1986
                          through 1991. 
                          
Edwin A. Guiles      46   Senior Vice President - Energy Supply since January 1993.
                          Vice President - Engineering and Operations from January 1992
                          through December 1992. 
                          Vice President - Corporate Planning from 1990 through 1991.
                          
David R. Kuzma       50   Senior Vice President, Chief Financial Officer and Treasurer
                          (Enova) since November 1995. 
                          Senior Vice President, Chief Financial Officer and Treasurer
                          since June 1995. 
                          Chief Financial Officer, Senior Vice President and Treasurer of
                          Florida Progress Corporation from 1991 to 1995. 
                           
Frank H. Ault        51   Vice President and Controller (Enova) since December 1994.
                          Vice President and Controller since January 1993. 
                          Controller from May 1986 through December 1992. 
                          
Kathleen A. Flanagan 45   Vice President - Corporate Communications since July 1994.
                          Manager - Corporate Communications at Southern California Edison
                          from 1991 to 1994. 
                          Director - Government Relations and Public Affairs at Luz
                          International from 1989 to 1991. 
 
Ronald K. Fuller     58   Vice President - Governmental and Regulatory Services from April
                          1984 until his retirement in December 1995. 
 
Margot A. Kyd        42   Vice President - Human Resources (Enova) since January 1996.
                          Vice President - Human Resources since January 1993. 
                          Vice President - Administrative Services from 1988 through 1992.
 
John L. Laun, III    48   Vice President - Customer and Marketing Services since July 1994.
                          Division Manager - Corporate Communications from June 1993 to July
                          1994. 
                          Manager - Special Projects from January 1992 to June 1993.
                          Director - Utility Consulting at Xenergy Inc. from 1991 through
                          1992. 
                          Senior Vice President - Utility Consulting at Palmer Bellevue
                          Corporation from 1989 through 1991. 
 
William L. Reed      44   Vice President - Regulatory Affairs since January 1996.
                          Vice President - Strategic Planning from August 1995 through
                          December 1995. 
                          Division Manager - Strategic Plans & Projects from August 1994
                          through July 1995. 
                          Director - Energy Management from April 1993 through July 1994.
                          Director - Regulatory Affairs from 1990 through March 1993.
</TABLE> 
*All positions are at SDG&E unless otherwise noted. 
 
                                     31 
<PAGE> 
 
PART II - Enova Corporation: 
 
Part II - San Diego Gas & Electric Company beginning on page 32 of this Annual 
Report on Form 10-K is incorporated herein by reference. 
 
PART II - San Diego Gas & Electric Company: 
 
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
 
Common stock is traded on the New York and Pacific stock exchanges. At 
December 31, 1995 there were 84,158 holders of common stock. The quarterly 
common stock information required by Item 5 is incorporated by reference from 
page 43 of the 1995 Annual Report to Shareholders. 
 
Item 6. Selected Financial Data 
<TABLE> 
In millions of dollars except per share amounts 
<CAPTION> 
                                    1995     1994     1993     1992     1991 
                                  -------- -------- -------- -------- --------
<S>                               <C>      <C>      <C>      <C>      <C> 
For the years ended December 31 
Operating revenues                $1,870.7 $1,912.2 $1,897.5 $1,789.0 $1,700.2
Operating income                    $345.7   $332.2   $303.9   $308.9   $304.9
Income from continuing operations   $233.3   $206.9   $227.5   $221.1   $198.7 
Net income (before preferred 
  dividend requirements)            $233.5   $143.5   $218.7   $210.7   $208.1
Earnings per common share from  
  continuing operations              $1.94    $1.71    $1.89    $1.86    $1.68 
Earnings per common share            $1.94    $1.17    $1.81    $1.77    $1.76
Dividends declared per common share  $1.56    $1.52    $1.48    $1.44  $1.3875
 
At December 31 
Total assets                      $4,670.4 $4,598.4 $4,642.9 $4,429.3 $3,978.4
Long-term debt and preferred stock  
  subject to mandatory redemption 
  (excludes current portion)*     $1,490.1 $1,479.2 $1,523.6 $1,647.3 $1,323.2
</TABLE> 
 
*Includes long-term debt redeemable within one year. 
 
This summary should be read in conjunction with the consolidated financial 
statements and notes to consolidated financial statements contained in the 
1995 Annual Report to Shareholders. Prior periods have been restated to 
reflect discontinued operations, as described in note 3 
 
Item 7. Management's Discussion and Analysis of Financial Condition and 
Results of Operations 
 
The information required by Item 7 is incorporated by reference from pages 18 
through 26 of the 1995 Annual Report to Shareholders. 
 
Item 8. Financial Statements and Supplementary Data 
 
The information required by Item 8 is incorporated by reference from pages 28 
through 43 of the 1995 Annual Report to Shareholders. See Item 14 herein for a 
listing of financial statements included in the 1995 Annual Report to 
Shareholders. 
 
Item 9. Changes in and Disagreements with Accountants on Accounting and 
Financial Disclosure 
None. 
 
                                     32 
<PAGE> 
 
PART III - Enova Corporation: 
 
Part III - San Diego Gas & Electric Company beginning on page 33 of this 
Annual Report on Form 10-K is incorporated herein by reference. 
 
PART III - San Diego Gas & Electric Company: 
 
Item 10. Directors and Executive Officers of the Registrant 
 
The information required on Identification of Directors is incorporated by 
reference from "Election of Directors" in the March 1996 Proxy Statement. The 
information required on executive officers is incorporated by reference from 
Item 4 herein. 
 
Item 11. Executive Compensation 
 
The information required by Item 11 is incorporated by reference  from 
"Executive Compensation and Transactions with Management and  Others" in the 
March 1996 Proxy Statement.     
 
Item 12. Security Ownership of Certain Beneficial Owners and Management 
 
The information required by Item 12 is incorporated by reference from 
"Security Ownership of Management and Certain Beneficial  Holders" in the 
March 1996 Proxy Statement.     
 
Item 13. Certain Relationships and Related Transactions 
None. 
 
 
                                        33 
<PAGE> 
 
PART IV - Enova Corporation: 
 
Part IV - San Diego Gas & Electric Company beginning on page 34 of this Annual 
Report on Form 10-K is incorporated herein by reference. 
 
PART IV - San Diego Gas & Electric Company: 
 
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 
 
(a) The following documents are filed as part of this report: 
 
1. Financial statements 
                                                              Page in 
                                                           Annual Report* 
 
Responsibility Report for the Consolidated Financial  
 Statements. . . . . . . . . . . . . . . . . . . . . . . . . .   27 
 
Independent Auditors' Report . . . . . . . . . . . . . . . . .   27 
 
Statements of Consolidated Income for the years ended 
 December 31, 1995, 1994 and 1993  . . . . . . . . . . . . . .   28 
 
Consolidated Balance Sheets at December 31, 1995 and 1994  . .   29 
 
Statements of Consolidated Cash Flows for the years 
 ended December 31, 1995, 1994 and 1993  . . . . . . . . . . .   30 
 
Statements of Consolidated Changes in Capital Stock and  
 Retained Earnings for the years ended  
 December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . .  31 
 
Statements of Consolidated Capital Stock at  
 December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . .  32 
 
Statements of Consolidated Long-Term Debt at  
 December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . .  33 
 
Statements of Consolidated Financial Information by  
 Segments of Business for the years ended  
 December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . .  34 
 
Notes to Consolidated Financial Statements  . . . . . . . . . .  35 
 
Quarterly Financial Data (Unaudited)  . . . . . . . . . . . . .  43 
 
*Incorporated by reference from the indicated pages of the 1995 
Annual Report to Shareholders. 
 
 
2. Financial statement schedules 
 
   None 
 
 
                                       34 
<PAGE> 
 
 
3. Exhibits 
 
The Forms 8, 8-B/A, 8-K, S-4, 10-K and 10-Q referred to herein were  
filed under Commission File Number 1-3779 (SDG&E) or Commission File  
Number 1-11439 (Enova Corporation). 
 
Exhibit 3 -- Bylaws and Articles of Incorporation 
 
Bylaws 
 
3.1    Restated Bylaws (Incorporated by reference from the Registration 
       Statement on Form 8-B/A of Enova Corporation (Exhibit 3.2)). 
 
Articles of Incorporation 
 
3.2    Restated Articles of Incorporation of Enova Corporation  
       (Incorporated by reference from the Registration 
       Statement on Form 8-B/A of Enova Corporation (Exhibit 3.1)). 
 
Exhibit 4 -- Instruments Defining the Rights of Security Holders, 
             Including Indentures 
 
4.1    Mortgage and Deed of Trust dated July 1, 1940. (Incorporated 
       by reference from SDG&E Registration No. 2-49810, Exhibit 2A.) 
 
4.2    Second Supplemental Indenture dated as of March 1, 1948. 
       (Incorporated by reference from SDG&E Registration No. 2-49810, 
       Exhibit 2C.) 
 
4.3    Ninth Supplemental Indenture dated as of August 1, 1968. 
       (Incorporated by reference from SDG&E Registration No. 2-68420, 
       Exhibit 2D.) 
 
4.4    Tenth Supplemental Indenture dated as of December 1, 1968. 
       (Incorporated by reference from SDG&E Registration No. 2-36042, 
       Exhibit 2K.) 
 
4.5    Sixteenth Supplemental Indenture dated August 28, 1975. 
       (Incorporated by reference from SDG&E Registration No. 2-68420, 
       Exhibit 2E.) 
 
4.6    Thirtieth Supplemental Indenture dated September 28, 1983. 
       (Incorporated by reference from SDG&E Registration No. 33-34017, 
       Exhibit 4.3.) 
 
Exhibit 10 -- Material Contracts (Previously filed exhibits are 
              incorporated by reference from Forms S-4, 10-K or 
              10-Q as referenced below).  
 
Compensation 
 
10.1   Form of San Diego Gas & Electric Company Deferred 
       Compensation Agreement for Officers #1 (1996 compensation, 
       1997 bonus). 
 
10.2   Form of San Diego Gas & Electric Company Deferred 
       Compensation Agreement for Officers #1 (1995 compensation, 
       1996 bonus)(1994 SDG&E Form 10-K Exhibit 10.2). 
 
10.3   Form of San Diego Gas & Electric Company Deferred 
       Compensation Agreement for Officers #3 (1996 compensation, 
       1997 bonus). 
 
10.4   Form of San Diego Gas & Electric Company Deferred 
       Compensation Agreement for Officers #3 (1995 compensation, 
       1996 bonus)(1994 SDG&E Form 10-K Exhibit 10.1). 
 
                                  35 
<PAGE> 
 
10.5   Form of San Diego Gas & Electric Company Deferred 
       Compensation Agreement for Nonemployee Directors (1996 
       compensation). 
 
10.6   Form of San Diego Gas & Electric Company Deferred 
       Compensation Agreement for Nonemployee Directors (1995 
       compensation)(1994 SDG&E Form 10-K Exhibit 10.3). 
 
10.7   Form of San Diego Gas & Electric Company 1986 Long-Term 
       Incentive Plan 1995 restricted stock award agreement. 
 
10.8   Form of San Diego Gas & Electric Company 1986 Long-Term 
       Incentive Plan Special 1995 restricted stock award 
       agreement. 
 
10.9   Form of San Diego Gas & Electric Company 1986 Long-Term 
       Incentive Plan 1994 restricted stock award agreement two- 
       year vesting. 
 
10.10  Form of San Diego Gas & Electric Company 1986 Long-Term 
       Incentive Plan 1994 restricted stock award agreement 
       (1994 SDG&E Form 10-K Exhibit 10.4). 
 
10.11  Form of San Diego Gas & Electric Company 1986 Long-Term 
       Incentive Plan 1993 restricted stock award agreement 
       (1993 SDG&E Form 10-K Exhibit 10.4). 
 
10.12  Form of San Diego Gas & Electric Company 1986 Long-Term 
       Incentive Plan 1992 restricted stock award agreement 
       (1992 SDG&E Form 10-K Exhibit 10.4). 
 
10.13  Amended 1986 Long-Term Incentive Plan, amended and restated 
       effective April 25, 1995 (SDG&E's Amendment No. 2 to  
       Form S-4 filed February 28, 1995). 
 
10.14  Amended 1986 Long-Term Incentive Plan, Restatement as of 
       October 25, 1993 (1993 SDG&E Form 10-K Exhibit 10.6). 
 
10.15  San Diego Gas & Electric Company Retirement Plan for 
       Directors, restated as of October 24, 1994 (1994 SDG&E  
       Form 10-K Exhibit 10.5). 
 
10.16  Executive Incentive Plan dated April 23, 1985 (1991 SDG&E 
       Form 10-K Exhibit 10.39). 
 
10.17  Employment agreement between San Diego Gas & Electric 
       Company and Thomas A. Page, dated June 15, 1988 (1988 SDG&E  
       Form 10-K Exhibit 10E). 
 
10.18  Supplemental Pension Agreement with Thomas A. Page, dated as 
       of April 3, 1978 (1988 SDG&E Form 10-K Exhibit 10V). 
 
10.19  Supplemental Executive Retirement Plan restated as of  
       July 1, 1994 (1994 SDG&E Form 10-K Exhibit 10.14).  
 
Financing 
 
10.20  Loan agreement with the City of San Diego in connection with  
       the issuance of $16.7 million of Industrial Development  
       Bonds, dated as of June 1, 1995 (June 30, 1995 SDG&E  
       Form 10-Q Exhibit 10.2). 
 
10.21  Loan agreement with the City of San Diego in connection with  
       the issuance of $57.7 million of Industrial Development 
       Bonds, dated as of June 1, 1995 (June 30, 1995 SDG&E  
       Form 10-Q Exhibit 10.3). 
 
                                       36 
<PAGE> 
 
10.22  Loan agreement with the City of San Diego in connection with 
       the issuance of $92.9 million of Industrial Development 
       Bonds 1993 Series C dated as of July 1, 1993 (June 30, 1993 
       SDG&E Form 10-Q Exhibit 10.2). 
 
10.23  Loan agreement with the City of San Diego in connection with 
       the issuance of $70.8 million of Industrial Development Bonds 
       1993 Series A dated as of April 1, 1993 (March 31, 1993 SDG&E  
       Form 10-Q Exhibit 10.3). 
 
10.24  Loan agreement with the City of San Diego in connection with 
       the issuance of $14.9 million of Industrial Development Bonds  
       1993 Series B dated as of April 1, 1993 (March 31, 1993 SDG&E  
       Form 10-Q Exhibit 10.4). 
 
10.25  Loan agreement with the City of San Diego in connection with 
       the issuance of $118.6 million of Industrial Development 
       Bonds dated as of September 1, 1992 (Sept. 30, 1992 SDG&E  
       Form 10-Q Exhibit 10.1). 
 
10.26  Loan agreement with the City of Chula Vista in connection 
       with the issuance of $250 million of Industrial Development 
       Bonds, dated as of December 1, 1992 (1992 SDG&E Form 10-K  
       Exhibit 10.5). 
 
10.27  Loan agreement with the City of San Diego in connection with 
       the issuance of $25 million of Industrial Development 
       Bonds, dated as of September 1, 1987 (1992 SDG&E Form 10-K  
       Exhibit 10.6). 
 
10.28  Loan agreement with the City of San Diego in connection with 
       the issuance of $44.25 million of Industrial Development 
       Bonds, dated as of July 1, 1986 (1991 SDG&E Form 10-K 
       Exhibit 10.36). 
 
10.29  Loan agreement with the City of San Diego in connection with 
       the issuance of $81.35 million of Industrial Development 
       Bonds, dated as of December 1, 1986 (1991 SDG&E Form 10-K  
       Exhibit 10.37). 
 
10.30  Loan agreement with the California Pollution Control 
       Financing Authority in connection with the issuance of $60 
       million of Pollution Control Bonds dated as of June 1, 1993 
       (June 30, 1993 SDG&E Form 10-Q Exhibit 10.1). 
 
10.31  Loan agreement with the California Pollution Control Financing 
       Authority, dated as of December 1, 1991, in connection with 
       the issuance of $14.4 million of Pollution Control Bonds 
       (1991 SDG&E Form 10-K Exhibit 10.11). 
 
10.32  Loan agreement with the California Pollution Control Financing 
       Authority, dated as of December 1, 1985, in connection with 
       the issuance of $35 million of Pollution Control Bonds (1991 
       SDG&E Form 10-K Exhibit 10.10). 
 
10.33  Loan agreement with the California Pollution Control Financing 
       Authority dated as of December 1, 1984, in connection with 
       the issuance of $27 million of Pollution Control Bonds (1991 
       SDG&E Form 10-K Exhibit 10.40). 
 
10.34  Loan agreement with the California Pollution Control Financing 
       Authority dated as of May 1, 1984, in connection with the 
       issuance of $53 million of Pollution Control Bonds (1991 
       SDG&E Form 10-K Exhibit 10.41). 
 
                                     37 
<PAGE> 
 
Natural Gas Commodity, Transportation and Storage 
 
10.35  Long-Term Natural Gas Storage Service Agreement dated 
       January 12, 1994 between Southern California Gas Company and 
       SDG&E (1994 SDG&E Form 10-K Exhibit 10.42). 
 
10.36  Amendment to San Diego Gas & Electric Company and Southern 
       California Gas Company Restated Long-Term Wholesale Natural 
       Gas Service Contract dated March 26, 1993 (1993 SDG&E  
       Form 10-K Exhibit 10.53). 
 
10.37  San Diego Gas & Electric Company and Southern California Gas 
       Company Restated Long-Term Wholesale Natural Gas Service 
       Contract, dated September 1, 1990 (1990 SDG&E Form 10-K  
       Exhibit 10.9). 
 
10.38  Gas Purchase Agreement, dated March 12, 1991 between Husky 
       Oil Operations Limited and San Diego Gas & Electric Company 
       (1991 SDG&E Form 10-K Exhibit 10.1). 
 
10.39  Gas Purchase Agreement, dated March 12, 1991 between 
       Canadian Hunter Marketing Limited and San Diego Gas & 
       Electric Company (1991 SDG&E Form 10-K Exhibit 10.2). 
 
10.40  Gas Purchase Agreement, dated March 12, 1991 between Bow 
       Valley Industries Limited and San Diego Gas & Electric 
       Company (1991 SDG&E Form 10-K Exhibit 10.3). 
 
10.41  Gas Purchase Agreement, dated March 12, 1991 between Summit 
       Resources Limited and San Diego Gas & Electric Company (1991 
       SDG&E Form 10-K Exhibit 10.4). 
 
10.42  Service Agreement Applicable to Firm Transportation Service 
       under Rate Schedule FS-1, dated May 31, 1991 between Alberta 
       Natural Gas Company Ltd. and San Diego Gas & Electric 
       Company (1991 SDG&E Form 10-K Exhibit 10.5). 
 
10.43  Firm Transportation Service Agreement, dated December 31, 
       1991 between Pacific Gas and Electric Company and San Diego 
       Gas & Electric Company (1991 SDG&E Form 10-K Exhibit 10.7). 
 
10.44  Firm Transportation Service Agreement, dated April 25, 1991 
       between Pacific Gas Transmission Company and San Diego Gas 
       & Electric Company (March 31, 1991 SDG&E Form 10-Q  
       Exhibit 28.2). 
 
Nuclear   
 
10.45  Uranium enrichment services contract between the U.S. 
       Department of Energy (DOE assigned its rights to the U.S. 
       Enrichment Corporation, a U.S. government-owned corporation, 
       on July 1, 1993) and Southern California Edison Company, as 
       agent for SDG&E and others; Contract DE-SC05-84UEO7541, 
       dated November 5, 1984, effective June 1, 1984, as amended 
       (1991 SDG&E Form 10-K Exhibit 10.9). 
 
10.46  Fuel Lease dated as of September 8, 1983 between SONGS Fuel 
       Company, as Lessor and San Diego Gas & Electric Company, as 
       Lessee, and Amendment No. 1 to Fuel Lease, dated September 
       14, 1984 and Amendment No. 2 to Fuel Lease, dated March 2, 
       1987 (1992 SDG&E Form 10-K Exhibit 10.11). 
 
10.47  Nuclear Facilities Qualified CPUC Decommissioning Master 
       Trust Agreement for San Onofre Nuclear Generating Station, 
       approved November 25, 1987 (1992 SDG&E Form 10-K Exhibit 10.7). 
 
10.48  Amendment No. 1 to the Qualified CPUC Decommissioning Master 
 
                                     38 
<PAGE> 
 
       Trust Agreement dated September 22, 1994 (see Exhibit 10.47 
       herein). 
 
10.49  Second Amendment to the San Diego Gas & Electric Company 
       Nuclear Facilities Qualified CPUC Decommissioning Master 
       Trust Agreement for San Onofre Nuclear Generating Station 
       (see Exhibit 10.47 herein). 
 
10.50  Nuclear Facilities Non-Qualified CPUC Decommissioning Master 
       Trust Agreement for San Onofre Nuclear Generating Station, 
       approved November 25, 1987 (1992 SDG&E Form 10-K Exhibit 10.8). 
 
10.51  Second Amended San Onofre Agreement among Southern 
       California Edison Company, SDG&E, the City of Anaheim and 
       the City of Riverside, dated February 26, 1987 (1990 SDG&E  
       Form 10-K Exhibit 10.6). 
 
10.52  U. S. Department of Energy contract for disposal of spent 
       nuclear fuel and/or high-level radioactive waste, entered 
       into between the DOE and Southern California Edison Company, 
       as agent for SDG&E and others; Contract DE-CR01-83NE44418, 
       dated June 10, 1983 (1988 SDG&E Form 10-K Exhibit 10N). 
 
Purchased Power 
 
10.53  Public Service Company of New Mexico and San Diego Gas & 
       Electric Company 1988-2001 100 mw System Power Agreement 
       dated November 4, 1985 and Letter of Agreement dated April 
       28, 1986, June 4, 1986 and June 18, 1986 (1988 SDG&E  
       Form 10-K Exhibit 10H). 
 
10.54  San Diego Gas & Electric Company and Portland General 
       Electric Company Long-Term Power Sale and Transmission 
       Service agreements dated November 5, 1985 (1988 SDG&E Form 
       10-K Exhibit 10I). 
 
10.55  Comision Federal de Electricidad and San Diego Gas & 
       Electric Company Contract for the Purchase and Sale of 
       Electric Capacity and Energy dated November 20, 1980 and 
       additional Agreement to the contract dated March 22, 1985 
       (1988 SDG&E Form 10-K Exhibit 10J). 
 
10.56  Agreement with Arizona Public Service Company for Arizona 
       transmission system participation agreement - contract 
       790116 (1988 SDG&E Form 10-K Exhibit 10P). 
 
Other 
 
10.57  U. S. Navy contract for electric service, Contract 
       N62474-70-C-1200-P00414, dated September 29, 1988 (1988 SDG&E  
       Form 10-K Exhibit 10C). 
 
10.58  City of San Diego Electric Franchise (Ordinance No. 10466) 
       (1988 SDG&E Form 10-K Exhibit 10Q). 
 
10.59  City of San Diego Gas Franchise (Ordinance No. 10465) (1988 
       SDG&E Form 10-K Exhibit 10R). 
 
10.60  County of San Diego Electric Franchise (Ordinance No. 3207) 
       (1988 SDG&E Form 10-K Exhibit 10S). 
 
10.61  County of San Diego Gas Franchise (Ordinance No. 5669) (1988 
       SDG&E Form 10-K Exhibit 10T). 
 
10.62  Lease agreement dated as of March 25, 1992 with American 
       National Insurance Company as lessor of an office complex at 
       Century Park (1994 SDG&E Form 10-K Exhibit 10.70). 
 
                                      39 
<PAGE> 
 
10.63  Lease agreement dated as of June 15, 1978 with Lloyds Bank 
       California, as owner-trustee and lessor - Exhibit B to 
       financing agreement of SDG&E's Encina Unit 5 equipment trust 
       (1988 SDG&E Form 10-K Exhibit 10W). 
 
10.64  Amendment to Lease agreement dated as of July 1, 1993 with 
       Sanwa Bank California, as owner-trustee and lessor - Exhibit 
       B to secured loan agreement of SDG&E's Encina Unit 5 
       equipment trust (See Exhibit 10.63 herein). 
 
10.65  Lease agreement dated as of July 14, 1975 with New England 
       Mutual Life Insurance Company, as lessor (1991 SDG&E Form 10-K 
       Exhibit 10.42).  
 
10.66  Assignment of Lease agreement dated as of November 19, 1993 
       to Shapery Developers as lessor by New England Mutual 
       Life Insurance Company (See Exhibit 10.65 herein). 
 
Exhibit 12 -- Statement re: computation of ratios 
 
12.1   Computation of Ratio of Earnings to Combined Fixed Charges 
       and Preferred Stock Dividends for the years ended December 
       31, 1995, 1994, 1993, 1992 and 1991. 
 
Exhibit 13 -- The financial statements and other documents listed 
under Part IV Item 14(a)1. and Management's Discussion and Analysis 
of Financial Condition and Results of Operations listed under Part 
II Item 7 of this Form 10-K are incorporated by reference from the 
1995 Annual Report to Shareholders.  
 
Exhibit 22 - Subsidiaries - See "Part I, Item 1. Description of 
Business." 
 
Exhibit 24 - Independent Auditors' Consent, page 41. 
 
Exhibit 27 - Financial Data Schedules 
 
27.1   Financial Data Schedule for the year ended December 31, 
       1995. 
 
(b) Reports on Form 8-K: 
 
A Current Report on Form 8-K was filed on December 7, 1995 
announcing the CPUC's approval of SDG&E's application to form a  
holding company, the January 1, 1996 effective date of the 
new parent company, and associated changes in officers' 
responsibilities. 
 
A Current Report on Form 8-K was filed on February 2, 1996 to 
report that on January 31, 1996 SDG&E's ownership interests  
in its subsidiaries were transferred to Enova Corporation at  
book value, completing the organizational restructuring into  
the new parent company framework. 
 
 
                                     40 
<PAGE> 
 
INDEPENDENT AUDITORS' CONSENT 
 
 
We consent to the incorporation by reference of our report dated February 16,
1996 on San Diego Gas & Electric Company, appearing on page 27 of the 1995 
Annual Report to Shareholders of Enova Corporation and San Diego Gas & 
Electric Company incorporated by reference in this Annual Report on Form 10-K 
for the year ended December 31, 1995. 
 
We also consent to the incorporation by reference of the above-mentioned 
report in the Enova Corporation Post-Effective Amendment No. 1 to Registration 
Statement No. 33-59681 on Form S-3, Post-Effective Amendment No. 1 to 
Registration Statement No. 33-59683 on Form S-8 and Post-Effective Amendment 
No. 1 to Registration Statement No. 33-7108 on Form 8; and in the San Diego 
Gas & Electric Company Registration Statement No. 33-45599 on Form S-3, 
Registration Statement No. 33-52834 on Form S-3 and Registration Statement No. 
33-49837 on Form S-3. 
 
 
 
 
 
DELOITTE & TOUCHE LLP 
 
San Diego, California 
February 28, 1996 
 
 
 
                                     41 
<PAGE> 
 
SIGNATURES 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934,  the Registrant has duly caused this report to be signed on its 
behalf by the undersigned, hereunto duly authorized. The signatures of the 
undersigned companies relate only to matters having reference to such 
companies and their respective subsidiaries. 
 
      ENOVA CORPORATION.               SAN DIEGO GAS & ELECTRIC COMPANY 
 
By:   /s/ Stephen L. Baum              By:   /s/ Donald E. Felsinger 
     _____________________                   ________________________ 
      Stephen L. Baum                         Donald E. Felsinger 
      President and Chief                     President and Chief 
      Executive Officer                       Executive Officer 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report is signed below by the following persons on behalf of the Registrant in 
the capacities and on the dates indicated. The signatures of the undersigned 
companies relate only to matters having reference to such companies and their 
respective subsidiaries. 
 
Signature                   Title                          Date 
 
Principal Executive Officers: 
 
/s/ Stephen L.  Baum 
_________________________________________________________________________ 
Stephen L.  Baum            President and Chief Executive  February 26, 1996 
                            Officer (Enova) and a Director 
                            (Enova and SDG&E) 
/s/ Donald E. Felsinger 
__________________________________________________________________________ 
Donald E. Felsinger         President and Chief Executive  February 26, 1996 
                            Officer and a Director (SDG&E)  
Principal Financial Officer: 
 
/s/ David R. Kuzma 
__________________________________________________________________________ 
David R. Kuzma         Senior Vice President Chief Financial February 26, 1996 
                       Officer and Treasurer (Enova and SDG&E) 
Principal Accounting Officer: 
 
/s/  Frank H. Ault 
__________________________________________________________________________ 
Frank H. Ault Vice President and Controller (Enova and SDG&E)February 26, 1996
 
Directors (Enova and SDG&E): 
 
/s/ Thomas A. Page 
__________________________________________________________________________ 
Thomas A. Page              Chairman                        February 26, 1996 
 
/s/  Ann L. Burr 
___________________________________________________________________________ 
Ann L. Burr                 Director                         February 26, 1996 
 
/s/  Richard A. Collato 
___________________________________________________________________________ 
Richard A. Collato          Director                         February 26, 1996 
 
/s/  Daniel W. Derbes 
____________________________________________________________________________ 
Daniel W. Derbes            Director                         February 26, 1996 
 
/s/  Catherine T. Fitzgerald 
____________________________________________________________________________ 
Catherine T. Fitzgerald     Director                         February 26, 1996 
 
/s/  Robert H. Goldsmith 
____________________________________________________________________________ 
Robert H. Goldsmith         Director                         February 26, 1996 
 
/s/  William D. Jones 
____________________________________________________________________________ 
William D. Jones            Director                         February 26, 1996 
 
/s/  Ralph R. Ocampo 
____________________________________________________________________________ 
Ralph R. Ocampo             Director                         February 26, 1996
 
/s/  Thomas C. Stickel 
_____________________________________________________________________________ 
Thomas C. Stickel           Director                         February 26, 1996 
 
                                     42 
<PAGE> 
 
GLOSSARY 
 
APCD                 Air Pollution Control District 
 
BCAP                 Biennial Cost Allocation Proceeding 
 
BPA                  Bonneville Power Administration  
 
BRPU                 Biennial Resource Plan Update 
 
CEC                  California Energy Commission 
 
CFE                  Comision Federal de Electricidad 
 
CPUC                 California Public Utilities Commission 
 
DOE                  Department of Energy 
 
EC                   Electric Clearinghouse 
 
ECAC                 Energy Cost Adjustment Clause 
 
Edison               Southern California Edison Company and/or its parent,  
                     SCEcorp 
 
EMF                  Electric and magnetic fields 
 
Enron                Enron Power Marketing 
 
ERAM                 Electric Revenue Adjustment Mechanism 
 
EV                   Electric vehicle 
 
FERC                 Federal Energy Regulatory Commission 
 
G&D                  Electric Generation and Dispatch Mechanism 
 
GFCA                 Gas Fixed Cost Account 
 
Goal Line            Goal Line Limited Partnership 
 
IID                  Imperial Irrigation District 
 
Illinova             Illinova Power Marketing 
 
ISO                  Independent System Operator 
 
kv                   Kilovolt 
 
kwhr                 Kilowatt hour 
 
mw                   Megawatt 
 
NGV                  Natural-Gas Vehicle 
 
NOx                  Nitrogen Dioxide 
 
NRC                  Nuclear Regulatory Commission 
 
Pacific Intertie     A transmission line connecting San Diego to the Pacific  
                     Northwest 
 
PBR                  Performance-Based Ratemaking 
 
PCB                  Polychlorinated Biphenyl 
 
PG&E                 Pacific Gas and Electric Company 
 
                                         43 
<PAGE> 
 
PGE                  Portland General Electric Company 
 
PNM                  Public Service Company of New Mexico 
 
PSP&L                Puget Sound Power & Light 
 
RECLAIM              Regional Clean Air Incentive Market 
 
SDG&E                San Diego Gas & Electric Company 
 
SoCal Gas            Southern California Gas Company 
 
SONGS/San Onofre     San Onofre Nuclear Generating Station 
 
SRP                  Salt River Project 
 
Southwest Powerlink  A transmission line connecting San Diego to Phoenix and 
                     intermediate points 
 
TCF                  Target Capacity Factor 
 
 
 
 
 
                                     44