Pacific Enterprises 10-Q 4 May 10 2010 Q1 Quarterly report Financial data

DOCUMENT AND ENTITY INFORMATION

DOCUMENT AND ENTITY INFORMATION
	3 Months Ended Mar. 31, 2010
Document and Entity Information
Entity Registrant Name	Sempra Energy
Entity Central Index Key	0001032208
Document Type	10-Q
Document Period End Date	2010-03-31
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Shares Outstanding	247,539,008

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS ( Sempra Energy Consolidated, USD $)
In Millions	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Sempra Energy Consolidated
Current assets:
Cash and cash equivalents	$222	$110
Restricted cash	44	35
Trade accounts receivable, net	848	971
Other accounts and notes receivable, net	130	159
Due from unconsolidated affiliates	29	41
Income taxes receivable	156	221
Deferred income taxes, net current assets	5	10
Inventories	160	197
Regulatory assets	90	54
Fixed-price contracts and other derivatives, current assets	85	77
Insurance receivable related to wildfire litigation (Note 10)	194	273
Other current assets	144	147
Total current assets	2,107	2,295
Investments and other assets:
Regulatory assets arising from fixed-price contracts and other derivatives - noncurrent	251	241
Regulatory assets arising from pension and other postretirement benefit obligations	978	959
Other regulatory assets	739	603
Nuclear decommissioning trusts	706	678
Investment in RBS Sempra Commodities LLP	2,178	2,172
Other investments	2,202	2,151
Goodwill and other intangible assets	523	524
Sundry	598	608
Total investments and other assets	8,175	7,936
Property, plant and equipment:
Property, plant and equipment	25,391	25,034
Less accumulated depreciation and amortization	(6,901)	(6,753)
Property, plant and equipment, net	18,490	18,281
Total assets	28,772	28,512
Current liabilities:
Short-term debt	912	618
Accounts payable - trade	554	522
Accounts payable - other	115	171
Due to unconsolidated affiliates	6	29
Dividends and interest payable	223	190
Accrued compensation and benefits	162	264
Regulatory balancing accounts, net	517	382
Current portion of long-term debt	327	573
Fixed-price contracts and other derivatives, current liabilities	108	95
Customer deposits	144	145
Reserve for wildfire litigation (Note 10)	300	270
Other current liabilities	870	629
Total current liabilities	4,238	3,888
Long-term debt	7,198	7,460
Deferred credits and other liabilities:
Due to unconsolidated affiliate	0	2
Customer advances for construction	147	146
Pension and other postretirement benefit obligations, net of plan assets	1,268	1,252
Deferred income taxes, net noncurrent liabilities	1,419	1,318
Deferred investment tax credits	53	54
Regulatory liabilities arising from removal obligations	2,598	2,557
Asset retirement obligations	1,298	1,277
Other regulatory liabilities	172	181
Fixed-price contracts and other derivatives, noncurrent liabilities	309	312
Deferred credits and other	698	735
Total deferred credits and other liabilities	7,962	7,834
Contingently redeemable preferred stock of subsidiary	79	79
Commitments and contingencies (Note 10)
Equity:
Preferred stock	0	0
Common stock	2,462	2,418
Retained earnings	6,981	6,971
Deferred compensation	(11)	(13)
Accumulated other comprehensive income (loss)	(372)	(369)
Total shareholders' equity	9,060	9,007
Preferred stock of subsidiaries	100	100
Other noncontrolling interests	135	144
Total equity	9,295	9,251
Total liabilities and equity	28,772	28,512
San Diego Gas and Electric Company and Subsidiary
Current assets:
Cash and cash equivalents	14	13
Restricted cash	17	8
Trade accounts receivable, net	228	229
Other accounts and notes receivable, net	63	85
Due from unconsolidated affiliates	1	8
Income taxes receivable	13	59
Deferred income taxes, net current assets	44	41
Inventories	62	61
Regulatory assets arising from fixed-price contracts and other derivatives - current	65	30
Regulatory assets	4	4
Fixed-price contracts and other derivatives, current assets	34	40
Insurance receivable related to wildfire litigation (Note 10)	194	273
Other current assets	26	35
Total current assets	765	886
Investments and other assets:
Due from unconsolidated affiliate	1	2
Deferred taxes recoverable in rates	449	415
Regulatory assets arising from fixed-price contracts and other derivatives - noncurrent	250	241
Regulatory assets arising from pension and other postretirement benefit obligations	349	342
Other regulatory assets	158	53
Nuclear decommissioning trusts	706	678
Sundry	42	43
Total investments and other assets	1,955	1,774
Property, plant and equipment:
Property, plant and equipment	10,359	10,156
Less accumulated depreciation and amortization	(2,644)	(2,587)
Property, plant and equipment, net	7,715	7,569
Total assets	10,435	10,229
Current liabilities:
Short-term debt	60	33
Accounts payable - trade	174	249
Due to unconsolidated affiliates	29	0
Accrued compensation and benefits	53	104
Regulatory balancing accounts, net	195	159
Current portion of long-term debt	46	45
Fixed-price contracts and other derivatives, current liabilities	52	51
Customer deposits	57	56
Reserve for wildfire litigation (Note 10)	300	270
Other current liabilities	205	157
Total current liabilities	1,171	1,124
Long-term debt	2,622	2,623
Deferred credits and other liabilities:
Customer advances for construction	22	23
Pension and other postretirement benefit obligations, net of plan assets	373	370
Deferred income taxes, net noncurrent liabilities	821	774
Deferred investment tax credits	26	26
Regulatory liabilities arising from removal obligations	1,363	1,330
Asset retirement obligations	595	585
Fixed-price contracts and other derivatives, noncurrent liabilities	263	265
Deferred credits and other	140	145
Total deferred credits and other liabilities	3,603	3,518
Contingently redeemable preferred stock	79	79
Commitments and contingencies (Note 10)
Equity:
Common stock	1,138	1,138
Retained earnings	1,694	1,611
Accumulated other comprehensive income (loss)	(10)	(10)
Total shareholders' equity	2,822	2,739
Other noncontrolling interests	138	146
Total equity	2,960	2,885
Total liabilities and equity	10,435	10,229
Pacific Enterprises and Subsidiaries
Current assets:
Cash and cash equivalents	180	49
Trade accounts receivable, net	491	567
Other accounts and notes receivable, net	30	44
Due from unconsolidated affiliates	155	12
Income taxes receivable	0	36
Inventories	47	93
Regulatory assets	9	9
Other current assets	40	39
Total current assets	952	849
Investments and other assets:
Due from unconsolidated affiliate	507	513
Regulatory assets arising from pension and other postretirement benefit obligations	629	617
Other regulatory assets	131	131
Sundry	39	40
Total investments and other assets	1,306	1,301
Property, plant and equipment:
Property, plant and equipment	9,381	9,299
Less accumulated depreciation and amortization	(3,666)	(3,615)
Property, plant and equipment, net	5,715	5,684
Total assets	7,973	7,834
Current liabilities:
Accounts payable - trade	244	207
Accounts payable - other	68	120
Due to unconsolidated affiliates	84	87
Income taxes payable	23	0
Deferred income taxes, net current liabilities	9	5
Accrued compensation and benefits	67	86
Regulatory balancing accounts, net	321	223
Current portion of long-term debt	266	11
Customer deposits	85	87
Other current liabilities	215	162
Total current liabilities	1,382	988
Long-term debt	1,024	1,283
Deferred credits and other liabilities:
Customer advances for construction	125	123
Pension and other postretirement benefit obligations, net of plan assets	656	644
Deferred income taxes, net noncurrent liabilities	294	273
Deferred investment tax credits	27	28
Regulatory liabilities arising from removal obligations	1,235	1,227
Asset retirement obligations	671	662
Deferred taxes refundable in rates	168	175
Deferred credits and other	199	203
Total deferred credits and other liabilities	3,375	3,335
Commitments and contingencies (Note 10)
Equity:
Preferred stock	80	80
Common stock	1,462	1,462
Retained earnings	655	691
Accumulated other comprehensive income (loss)	(25)	(25)
Total shareholders' equity	2,172	2,208
Preferred stock of subsidiaries	20	20
Total equity	2,192	2,228
Total liabilities and equity	7,973	7,834
Southern California Gas Company and Subsidiaries
Current assets:
Cash and cash equivalents	180	49
Trade accounts receivable, net	491	567
Other accounts and notes receivable, net	30	44
Income taxes receivable	150	6
Deferred income taxes, net current assets	0	35
Inventories	47	93
Regulatory assets	9	9
Other current assets	40	40
Total current assets	947	843
Investments and other assets:
Regulatory assets arising from pension and other postretirement benefit obligations	629	617
Other regulatory assets	131	131
Sundry	11	14
Total investments and other assets	771	762
Property, plant and equipment:
Property, plant and equipment	9,380	9,297
Less accumulated depreciation and amortization	(3,666)	(3,615)
Property, plant and equipment, net	5,714	5,682
Total assets	7,432	7,287
Current liabilities:
Accounts payable - trade	244	207
Accounts payable - other	68	120
Due to unconsolidated affiliates	0	3
Income taxes payable	27	0
Deferred income taxes, net current liabilities	11	6
Accrued compensation and benefits	67	86
Regulatory balancing accounts, net	321	223
Current portion of long-term debt	266	11
Customer deposits	85	87
Other current liabilities	210	158
Total current liabilities	1,299	901
Long-term debt	1,024	1,283
Deferred credits and other liabilities:
Customer advances for construction	125	123
Pension and other postretirement benefit obligations, net of plan assets	656	644
Deferred income taxes, net noncurrent liabilities	300	280
Deferred investment tax credits	27	28
Regulatory liabilities arising from removal obligations	1,235	1,227
Asset retirement obligations	671	662
Deferred taxes refundable in rates	168	175
Deferred credits and other	196	198
Total deferred credits and other liabilities	3,378	3,337
Commitments and contingencies (Note 10)
Equity:
Preferred stock	22	22
Common stock	866	866
Retained earnings	868	903
Accumulated other comprehensive income (loss)	(25)	(25)
Total shareholders' equity	1,731	1,766
Total equity	1,731	1,766
Total liabilities and equity	$7,432	$7,287

1_CONDENSED CONSOLIDATED BALANC

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $)
In Millions	Mar. 31, 2010 Sempra Energy Consolidated	Dec. 31, 2009 Sempra Energy Consolidated
Sempra Energy Consolidated
Property, plant and equipment related to VIEs	$645
Long-term debt related to VIEs	421
Shareholders' equity:
Preferred stock, shares authorized	50	50
Preferred stock, shares issued	0	0
Common stock, shares authorized	750	750
Common stock, shares outstanding	247	247
San Diego Gas and Electric Company and Subsidiary
Property, plant and equipment related to VIEs	645
Long-term debt related to VIEs	$421
Shareholders' equity:
Common stock, shares authorized	255	255
Common stock, shares outstanding	117	117
Pacific Enterprises and Subsidiaries
Shareholders' equity:
Common stock, shares authorized	600	600
Common stock, shares outstanding	84	84
Southern California Gas Company and Subsidiaries
Shareholders' equity:
Common stock, shares authorized	100	100
Common stock, shares outstanding	91	91

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Share data in Thousands	3 Months Ended Mar. 31, 2010 Sempra Energy Consolidated	3 Months Ended Mar. 31, 2009 Sempra Energy Consolidated
Sempra Energy Consolidated
REVENUES
Sempra Utilities	$1,912	$1,642
Sempra Global and parent	622	466
Total revenues	2,534	2,108
Sempra Utilities:
Cost of natural gas	(758)	(540)
Cost of electric fuel and purchased power	(148)	(171)
Sempra Global and parent:
Cost of natural gas, electric fuel and purchased power	(338)	(268)
Other cost of sales	(25)	(17)
Litigation expense	(168)	7
Other operation and maintenance	(576)	(523)
Depreciation and amortization	(210)	(183)
Franchise fees and other taxes	(90)	(82)
Equity earnings (losses):
RBS Sempra Commodities LLP	7	153
Other	8	7
Other income, net	8	3
Interest income	4	6
Interest expense	(109)	(82)
Income before income taxes and equity earnings of certain unconsolidated subsidiaries	139	418
Income tax expense	(58)	(109)
Equity earnings, net of income tax	19	16
Net income	100	325
Losses (earnings) attributable to noncontrolling interests	8	(7)
Preferred dividends of subsidiaries	(2)	(2)
Earnings	106	316
Basic earnings per common share:
Basic earnings per common share	0.43	1.31
Basic earnings per common share, weighted-average number of shares outstanding (thousands)	246,083	241,766
Diluted earnings per common share:
Diluted earnings per common share	0.42	1.29
Diluted earnings per common share, weighted-average number of shares outstanding (thousands)	250,373	245,017
Dividends declared per share of common stock	0.39	0.39
San Diego Gas and Electric Company and Subsidiary
Utility operating revenues
Electric	563	553
Natural gas	179	179
Total utility operating revenues	742	732
Utility operating expenses
Utility cost of natural gas	89	87
Utility cost of electric fuel and purchased power	148	171
Utility operation and maintenance	232	181
Utility depreciation and amortization	92	77
Utility franchise fees and other taxes	43	41
Total utility operating expenses	604	557
Utility operating income	138	175
Equity earnings (losses):
Other income, net	0	17
Interest expense	(31)	(25)
Income before income taxes and equity earnings of certain unconsolidated subsidiaries	107	167
Income tax expense	(31)	(60)
Net income	76	107
Losses (earnings) attributable to noncontrolling interests	8	(7)
Earnings	84	100
Preferred dividend requirements	(1)	(1)
Earnings attributable to common shares	83	99
Pacific Enterprises and Subsidiaries
Utility operating revenues
Total utility operating revenues	1,182	920
Utility operating expenses
Utility cost of natural gas	674	455
Utility operation and maintenance	261	251
Utility depreciation and amortization	75	72
Utility franchise fees and other taxes	37	32
Total utility operating expenses	1,047	810
Utility operating income	135	110
Equity earnings (losses):
Other income, net	4	1
Interest income	0	1
Interest expense	(17)	(17)
Income before income taxes and equity earnings of certain unconsolidated subsidiaries	122	95
Income tax expense	(57)	(36)
Net income	65	59
Earnings	65	59
Preferred dividend requirements	(1)	(1)
Earnings attributable to common shares	64	58
Southern California Gas Company and Subsidiaries
Utility operating revenues
Total utility operating revenues	1,182	920
Utility operating expenses
Utility cost of natural gas	674	455
Utility operation and maintenance	262	251
Utility depreciation and amortization	75	72
Utility franchise fees and other taxes	37	32
Total utility operating expenses	1,048	810
Utility operating income	134	110
Equity earnings (losses):
Other income, net	4	1
Interest income	0	1
Interest expense	(17)	(17)
Income before income taxes and equity earnings of certain unconsolidated subsidiaries	121	95
Income tax expense	(56)	(36)
Net income	65	59
Earnings	$65	$59

CONDENSED STATEMENTS OF CONSOLI

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (USD $)
In Millions	3 Months Ended Mar. 31, 2010 Sempra Energy Consolidated	3 Months Ended Mar. 31, 2009 Sempra Energy Consolidated
Sempra Energy Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$100	$325
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	210	183
Deferred income taxes and investment tax credits	61	(29)
Equity earnings	(34)	(176)
Other adjustments to reconcile net income to net cash provided by operating activities	7	49
Net change in other working capital components	534	491
Distributions from RBS Sempra Commodities LLP	0	305
Changes in other assets	18	10
Changes in other liabilities	(8)	(19)
Net cash provided by operating activities	888	1,139
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(446)	(492)
Expenditures for investments and acquisition of businesses, net of cash acquired	(74)	(25)
Distributions from investments	24	5
Purchases of nuclear decommissioning and other trust assets	(44)	(45)
Proceeds from sales by nuclear decommissioning and other trusts	46	42
Other cash flows from investing activities	(2)	(7)
Net cash used in investing activities	(496)	(522)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid	(86)	(86)
Preferred dividends paid by subsidiaries	(2)	(2)
Issuances of common stock	14	10
Repurchases of common stock	(2)	0
Issuances of debt (maturities greater than 90 days)	12	22
Payments on debt (maturities greater than 90 days)	(507)	(6)
Increase (decrease) in short-term debt, net	294	(77)
Purchase of noncontrolling interest	0	(94)
Other cash flows from financing activities	(3)	5
Net cash provided by (used in) financing activities	(280)	(228)
Increase (decrease) in cash and cash equivalents	112	389
Cash and cash equivalents, beginning of period	110	331
Cash and cash equivalents, end of period	222	720
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	71	56
Income tax payments, net of refunds	73	52
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Dividends declared but not paid	99	98
San Diego Gas and Electric Company and Subsidiary
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	76	107
Adjustments to reconcile net income to net cash provided by operating activities:
Utility depreciation and amortization	92	77
Deferred income taxes and investment tax credits	9	5
Other adjustments to reconcile net income to net cash provided by operating activities	0	(12)
Net change in other working capital components	101	77
Changes in other assets	5	7
Changes in other liabilities	(8)	(16)
Net cash provided by operating activities	275	245
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(290)	(229)
Purchases of nuclear decommissioning trust assets	(43)	(43)
Proceeds from sales by nuclear decommissioning trusts	40	42
Decrease (increase) in notes receivable from unconsolidated affiliates, net	2	33
Net increase in restricted cash	(9)	0
Net cash used in investing activities	(300)	(197)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid	0	(150)
Preferred dividends paid	(1)	(1)
Issuances of long-term debt	3	22
Payments on long-term debt	(3)	0
Increase (decrease) in short-term debt, net	27	98
Capital contribution received by Otay Mesa VIE	0	4
Net cash provided by (used in) financing activities	26	(27)
Increase (decrease) in cash and cash equivalents	1	21
Cash and cash equivalents, beginning of period	13	19
Cash and cash equivalents, end of period	14	40
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	10	14
Income tax payments, net of refunds	(26)	1
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Dividends declared but not paid	1	1
Pacific Enterprises and Subsidiaries
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	65	59
Adjustments to reconcile net income to net cash provided by operating activities:
Utility depreciation and amortization	75	72
Deferred income taxes and investment tax credits	16	6
Other adjustments to reconcile net income to net cash provided by operating activities	(1)	2
Net change in other working capital components	339	357
Changes in other assets	1	7
Changes in other liabilities	(3)	(6)
Net cash provided by operating activities	492	497
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(114)	(112)
Decrease (increase) in notes receivable from unconsolidated affiliates, net	(146)	3
Net cash used in investing activities	(260)	(109)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid	(100)	0
Preferred dividends paid	(1)	(1)
Net cash provided by (used in) financing activities	(101)	(1)
Increase (decrease) in cash and cash equivalents	131	387
Cash and cash equivalents, beginning of period	49	206
Cash and cash equivalents, end of period	180	593
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	9	9
Income tax payments, net of refunds	23	23
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Dividends declared but not paid	1	1
Southern California Gas Company and Subsidiaries
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	65	59
Adjustments to reconcile net income to net cash provided by operating activities:
Utility depreciation and amortization	75	72
Deferred income taxes and investment tax credits	16	6
Other adjustments to reconcile net income to net cash provided by operating activities	(1)	2
Net change in other working capital components	346	357
Changes in other assets	1	7
Changes in other liabilities	(1)	(4)
Net cash provided by operating activities	501	499
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(114)	(112)
Decrease (increase) in notes receivable from unconsolidated affiliates, net	(156)	0
Net cash used in investing activities	(270)	(112)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid	(100)	0
Net cash provided by (used in) financing activities	(100)	0
Increase (decrease) in cash and cash equivalents	131	387
Cash and cash equivalents, beginning of period	49	206
Cash and cash equivalents, end of period	180	593
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	9	8
Income tax payments, net of refunds	$23	$23

GENERAL

GENERAL
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
General	NOTE 1. GENERAL Principles of ConsolidationSempra EnergySempra Energy's Condensed Consolidated Financial Statements include the accounts of Sempra Energy, a California-based Fortune 500 holding company, its consolidated subsidiaries, and variable interest entities. Sempra Energys principal subsidiaries are San Diego Gas Electric Company (SDGE) and Southern California Gas Company (SoCalGas), which we collectively refer to as the Sempra Utilities; and Sempra Global, which is the holding company for Sempra Commodities, Sempra Generation, Sempra Pipelines Storage, Sempra LNG and other, smaller businesses. Sempra Energy uses the equity method to account for investments in affiliated companies over which we have the ability to exercise significant influence, but not control. We discuss our investments in unconsolidated subsidiaries in Note 4 below and Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. SDGESDGE's Condensed Consolidated Financial Statements include its accounts and the accounts of Otay Mesa Energy Center LLC (Otay Mesa VIE) and Orange Grove Energy L.P. (Orange Grove VIE), which are variable interest entities of which SDGE is the primary beneficiary, as we discuss in Note 5 under "Variable Interest Entities." SDGEs common stock is wholly owned by Enova Corporation, which is a wholly owned subsidiary of Sempra Energy. Pacific Enterprises and SoCalGasThe Condensed Consolidated Financial Statements of Pacific Enterprises include the accounts of Pacific Enterprises (PE) and its subsidiary, SoCalGas. Sempra Energy owns all of PEs common stock and PE owns all of SoCalGas common stock. SoCalGas Condensed Consolidated Financial Statements include its subsidiaries, which comprise less than one percent of its consolidated financial position and results of operations. PE's operations consist solely of those of SoCalGas and additional items (e.g., cash, intercompany accounts and equity) attributable to serving as a holding company for SoCalGas. Basis of PresentationThis is a combined report of Sempra Energy, SDGE, PE and SoCalGas. We provide separate information for SDGE, PE and SoCalGas as required. In the Notes to Condensed Consolidated Financial Statements (except in Note 11), when only information for SoCalGas is provided, it is the same for PE. References in this report to "we," "our" and "Sempra Energy Consolidated" are to Sempra Energy and its consolidated entities, unless otherwise indicated by the context. We have eliminated intercompany accounts and transactions within each set of consolidated financial statements.We have prepared the Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) and in accordance with the interim-period-reporting requirements of Form 10-Q. Results of operations for interim periods are not necessarily indicative of results for the entire year. We evaluated events and transactions that occurred after March 31, 2010 through the date the financial statements were issued, and in the opinion of management, the accompanying statements reflect all adjustments necessary for a fair presentation. Th

NEW ACCOUNTING STANDARDS

NEW ACCOUNTING STANDARDS
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
New Accounting Standards	NOTE 2. NEW ACCOUNTING STANDARDS We describe below recent pronouncements that have had or may have a significant effect on our financial statements. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our financial condition, results of operations, or disclosures. SEMPRA ENERGY, SDGE, PE AND SOCALGAS Accounting Standards Update (ASU) 2009-17, "Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" (ASU 2009-17): ASU 2009-17 amends Financial Accounting Standards Board (FASB) Interpretation No. 46(R), Consolidation of Variable Interest Entities an interpretation of ARB No. 51 (FIN 46(R)), which provides consolidation guidance related to variable interest entities. ASU 2009-17 amends FASB Accounting Standards Codification (ASC) Topic 810, Consolidations, and requires a qualitative approach for identifying the primary beneficiary of a variable interest entity based on 1) the power to direct activities that most significantly impact the economic performance of the entity, and 2) the obligation to absorb losses or right to receive benefits that could be significant to the entity; ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; and separate disclosure by the primary beneficiary on the face of the balance sheet to identify 1) assets that can only be used to settle obligations of the variable interest entity, and 2) liabilities for which creditors do not have recourse to the primary beneficiary. We adopted ASU 2009-17 on January 1, 2010 and it did not have a material effect on earnings, nor on presentation on the interim Condensed Consolidated Balance Sheets for Sempra Energy and SDGE. We provide the required additional disclosure in Note 5.ASU 2010-06, "Improving Disclosures About Fair Value Measurements" (ASU 2010-06): ASU 2010-06 amends ASC Topic 820, Fair Value Measurements and Disclosures, and requires the following additional fair value measurement disclosures: transfers into and out of Levels 1 and 2 segregation of classes of assets and liabilities measured at fair value valuation techniques and inputs used for Level 2 and Level 3 instruments detailed activity for Level 3 instruments, including separate presentation of purchases, sales, issuances and settlements We adopted ASU 2010-06 on January 1, 2010, and we provide the additional disclosure in Note 8.

RECENT INVESTMENT ACTIVITY

RECENT INVESTMENT ACTIVITY
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
Recent Investment Activity	NOTE 3. RECENT investment activitySEMPRA PIPELINES STORAGESempra Pipelines Storages Sempra Midstream is the general partner and 91-percent owner of Bay Gas Storage Company (Bay Gas) and owned 60 percent of Mississippi Hub, LLC (Mississippi Hub) through December 31, 2008. On January 16, 2009, Sempra Midstream purchased the remaining 40-percent ownership interest of Mississippi Hub for $94 million in cash.On April 30, 2010, Sempra Pipelines Storage completed the acquisition of the Mexican pipeline and natural gas infrastructure assets of El Paso Corporation for $300 million ($260 million, net of cash acquired and debt assumed).The acquisition involves El Paso Corporations wholly owned natural gas pipeline and compression assets in the Mexican border state of Sonora. It also includes El Paso Corporations 50-percent interest in a joint venture with PEMEX, the Mexican state-owned oil company. The joint venture operates two natural gas pipelines and a propane system in northern Mexico.

INVESTMENTS IN UNCONSOLIDATED E

INVESTMENTS IN UNCONSOLIDATED ENTITIES
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
Investments in Unconsolidated Entities	NOTE 4. INVESTMENTS IN UNCONSOLIDATED ENTITIES SEMPRA COMMODITIESRBS Sempra Commodities LLP (RBS Sempra Commodities) is a limited liability partnership formed in the United Kingdom to own and operate the commodities-marketing businesses previously operated through wholly owned subsidiaries of Sempra Energy. We account for our investment in RBS Sempra Commodities under the equity method, and report our share of partnership earnings in the Sempra Commodities segment. For the three months ended March 31, 2010 and 2009, we had $7 million and $153 million, respectively, of pretax equity earnings from RBS Sempra Commodities. The partnership income that is distributable to us on an annual basis is computed on the partnership's basis of accounting, International Financial Reporting Standards (IFRS), as adopted by the European Union. For the three months ended March 31, 2010, the partnership recorded a loss, on an IFRS basis, of $1 million. In the three months ended March 31, 2009, the distributable income, on an IFRS basis, was $114 million. On April 30, 2010, the partnership made a cash distribution to us of $197 million. In the first quarter 2009, we received cash distributions from the partnership of $305 million. We discuss the equity method investment in RBS Sempra Commodities further in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. We have indemnified the partnership for certain litigation and tax liabilities related to the businesses purchased by the partnership. We recorded these obligations at a fair value of $5 million on April 1, 2008, the date we formed the partnership. This liability is being amortized over its expected life. In November 2009, RBS announced its intention to divest its interest in RBS Sempra Commodities in connection with a directive from the European Commission to dispose of certain assets. On February 16, 2010, Sempra Energy, RBS and the partnership (Seller Parties) entered into an agreement (the Purchase Agreement) with J.P. Morgan Ventures Energy Corporation (J.P. Morgan Ventures), whereby J.P. Morgan Ventures will purchase the following businesses from the joint venture: the global oil, metals, coal, emissions (other than emissions related to the partnerships North American power business), plastics, agricultural commodities and concentrates commodities trading and marketing business the European power and gas business the investor products business The Purchase Agreement does not include RBS Sempra Commodities' North American power and natural gas trading businesses and its retail energy solutions business. These businesses have historically generated 40 to 60 percent of total earnings of the businesses in the partnership, and have averaged more than 50 percent. RBS and Sempra Energy are actively soliciting offers for the sale of these remaining businesses.The transaction is expected to close in summer 2010. J.P. Morgan Ventures will pay an aggregate purchase price equal to the estimated tangible book value at closing of the businesses purchased, generally computed on the basis of IFRS as adopted by the European Union, plus $468 million. Sempra Energy will be entitled to 53-1/

OTHER FINANCIAL DATA

OTHER FINANCIAL DATA
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
Other Financial Data	NOTE 5. OTHER FINANCIAL DATA VARIABLE INTEREST ENTITIESWe consolidate a variable interest entity (VIE) if we are the primary beneficiary of the VIEs activities. Our determination of whether we are the primary beneficiary is based upon qualitative and quantitative analyses, which assess the purpose and design of the VIE; the nature of the VIE's risks and the risks we absorb; the power to direct activities that most significantly impact the economic performance of the VIE; and the obligation to absorb losses or right to receive benefits that could be significant to the VIE. Otay Mesa VIESDGE has a 10-year agreement to purchase power generated at the Otay Mesa Energy Center (OMEC), a 573-megawatt (MW) generating facility that began commercial operations in October 2009. SDGE supplies all of the natural gas to fuel the power plant and purchases its electric generation output (i.e., tolling). The agreement provides SDGE with the option to purchase the power plant at the end of the contract term in 2019, or upon earlier termination of the purchased-power agreement, at a predetermined price subject to adjustments based on performance of the facility. If SDGE does not exercise its option, under certain circumstances, it may be required to purchase the power plant at a predetermined price. The facility owner, Otay Mesa Energy Center LLC (OMEC LLC), is a VIE (Otay Mesa VIE), of which SDGE is the primary beneficiary. SDGE has no OMEC LLC voting rights and does not operate OMEC.SDGE has the power to direct the dispatch of OMEC's electrical production. Based upon our analysis, this power most significantly impacts the economic performance of Otay Mesa VIE because of the associated exposure to the cost of natural gas, which fuels the plant, and the value of electricity produced. In addition, SDGE absorbs significant risks of Otay Mesa VIE under the tolling agreement, whereby SDGE is obligated to purchase and provide fuel to Otay Mesa VIE and purchase all output for the term of the agreement. Separately, through the put option, SDGE absorbs a significant portion of the risk that the value of Otay Mesa VIE could decline. Accordingly, Sempra Energy and SDGE have consolidated Otay Mesa VIE since the second quarter of 2007, and have continued to consolidate it in the first quarter of 2010. Otay Mesa VIE's equity of $138 million and $146 million is included on the Condensed Consolidated Balance Sheets in Other Noncontrolling Interests for Sempra Energy and in Noncontrolling Interests for SDGE at March 31, 2010 and December 31, 2009, respectively. OMEC LLC has a loan outstanding of $372 million at March 31, 2010, the proceeds of which were used for the construction of OMEC. The loan is with third party lenders and is secured by OMEC's property, plant and equipment. SDGE is not a party to the loan agreement and does not have any additional implicit or explicit financial responsibility to OMEC LLC. The loan matures in April2019 and bears interest at rates varying with market rates. In addition, OMEC LLC has entered into interest rate swap agreements to moderate its exposure to interest rate changes. We provide additional information concerning the interest r

DEBT AND CREDIT FACILITIES

DEBT AND CREDIT FACILITIES
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
Debt and Credit Facilities	NOTE 6. DEBT AND CREDIT FACILITIES Committed Lines of CreditAt March 31, 2010, Sempra Energy Consolidated had $4.3 billion in committed lines of credit to provide liquidity and to support commercial paper and variable-rate demand notes, the major components of which are detailed below. Available unused credit on these lines at March 31, 2010 was $3.3 billion. We discuss the terms of our credit agreements in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.These amounts exclude lines of credit associated with Sempra Commodities, one of which we continue to guarantee, as we discuss below in "RBS Sempra Commodities." RBS has replaced Sempra Energy as guarantor on all uncommitted lines of credit associated with Sempra Commodities. To the extent that Sempra Energy's credit support arrangements, including Sempra Commodities' committed facilities, have not been terminated or replaced, RBS has indemnified Sempra Energy for any claims or losses arising in connection with those arrangements. Sempra EnergySempra Energy has a $1 billion, three-year syndicated revolving credit agreement expiring in 2011. Borrowings bear interest at benchmark rates plus a margin that varies with market index rates and Sempra Energy's credit ratings. At March 31, 2010, Sempra Energy had no outstanding borrowings under the facility. Sempra GlobalSempra Global has a $2.5 billion, three-year syndicated revolving credit agreement expiring in 2011. The facility also provides for issuance of up to $300 million of letters of credit on behalf of Sempra Global with the amount of borrowings otherwise available under the facility reduced by the amount of outstanding letters of credit. Sempra Energy guarantees Sempra Globals obligations under the credit facility. Borrowings bear interest at benchmark rates plus a margin that varies with market index rates and Sempra Energys credit ratings. At March 31, 2010, Sempra Global had letters of credit of $7 million outstanding and no outstanding borrowings under the facility. The facility provides support for $727 million of commercial paper outstanding at March 31, 2010. Sempra UtilitiesSDGE and SoCalGas have a combined $800 million, three-year syndicated revolving credit agreement expiring in 2011. The agreement permits each utility to individually borrow up to $600 million, subject to a combined limit of $800 million for both utilities. It also provides for the issuance of letters of credit on behalf of each utility subject to a combined letter of credit commitment of $200 million for both utilities. The amount of borrowings otherwise available under the facility is reduced by the amount of outstanding letters of credit. Borrowings under the facility bear interest at benchmark rates plus a margin that varies with market index rates and the borrowing utility's credit rating. Each utilitys obligations under the agreement are individual obligations, and a default by one utility would not constitute a default by the other utility or preclude borrowings by, or the issuance of letters of credit on behalf of, the other utility.At March 31, 2010, SDGE and SoCalGas had no outstanding borrowings under this facility. SD

DERIVATIVE FINANCIAL INSTRUMENT

DERIVATIVE FINANCIAL INSTRUMENTS
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
Derivative Financial Instruments	NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTSWe use derivative instruments primarily to manage exposures arising in the normal course of business. These exposures are commodity market risk and benchmark interest rate risk. Our use of derivatives for these risks is integrated into the economic management of our anticipated revenues, anticipated expenses, assets and liabilities. Derivatives may be effective in mitigating these risks that could lead to declines in anticipated revenues or increases in anticipated expenses, or that our asset values may fall or our liabilities increase. Accordingly, our derivative activity summarized below generally represents an impact that is intended to offset associated revenues, expenses, assets or liabilities that are not presented below. We record all derivatives at fair value on the Condensed Consolidated Balance Sheets. We designate each derivative as 1) a cash flow hedge, 2) a fair value hedge, or 3) undesignated.Depending on the applicability of hedge accounting and, for the Sempra Utilities and other operations subject to regulatory accounting, the requirement to pass impacts through to customers, the impact of derivative instruments may be offset in other comprehensive income (cash flow hedge), on the balance sheet (fair value hedges and regulatory offsets), or recognized in earnings. We classify cash flows from the settlements of derivative instruments as operating activities on the Condensed Statements of Consolidated Cash Flows. In certain cases, we apply the normal purchase or sale exception to derivative accounting and have other commodity contracts that are not derivatives. These contracts are not recorded at fair value and are therefore excluded from the disclosures below. HEDGE ACCOUNTINGWe may designate a derivative as a cash flow hedging instrument if it effectively converts anticipated revenues or expenses to a fixed dollar amount. We may utilize cash flow hedge accounting for derivative commodity instruments and interest rate instruments. Designating cash flow hedges is dependent on the business context in which the instrument is being used, the effectiveness of the instrument in offsetting the risk that a given future revenue or expense item may vary, and other criteria.We may designate an interest rate derivative as a fair value hedging instrument if it effectively converts our own debt from a fixed interest rate to a variable rate. The combination of the derivative and debt instruments results in fixing that portion of the fair value of the debt that is related to benchmark interest rates. Designating fair value hedges is dependent on the instrument being used, the effectiveness of the instrument in offsetting changes in the fair value of our debt instruments, and other criteria. ENERGY DERIVATIVESOur market risk is primarily related to natural gas and electricity price volatility and the specific physical locations where we transact. We use energy derivatives to manage these risks. The use of energy derivatives in our various businesses depends on the particular energy market, and the operating and regulatory environments applicable to the business. The Sempra Utilities use natural gas

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
Fair Value Measurements	NOTE 8. FAIR VALUE MEASUREMENTSFair Value of Financial InstrumentsThe fair values of certain of our financial instruments (cash, temporary investments, accounts and notes receivable, dividends and accounts payable, short-term debt and customer deposits) approximate their carrying amounts. The following table provides the carrying amounts and fair values of the remaining financial instruments at March 31, 2010 and December 31, 2009: FAIR VALUE OF FINANCIAL INSTRUMENTS (Dollars in millions) March 31, 2010 December 31, 2009 Carrying Fair Carrying Fair Amount Value Amount Value Sempra Energy Consolidated: Investments in affordable housing partnerships(1) $ 32 $ 61 $ 34 $ 59 Total long-term debt(2) 7,542 8,128 8,050 8,618 Due to unconsolidated affiliate 2 2 2 2 Preferred stock of subsidiaries 179 162 179 156 SDGE: Total long-term debt(3) $ 2,672 $ 2,765 $ 2,672 $ 2,828 Contingently redeemable preferred stock 79 76 79 76 PE and SoCalGas: Total long-term debt(4) $ 1,292 $ 1,354 $ 1,296 $ 1,382 PE: Preferred stock $ 80 $ 66 $ 80 $ 61 Preferred stock of subsidiary 20 20 20 19 $ 100 $ 86 $ 100 $ 80 SoCalGas: Preferred stock $ 22 $ 21 $ 22 $ 20 (1) We discuss our investments in affordable housing partnerships in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. (2) Before reductions for unamortized discount of $17 million at March 31, 2010 and December 31, 2009. (3) Before reductions for unamortized discount of $4 million at March 31, 2010 and December 31, 2009. (4) Before reductions for unamortized discount of $2 million at March 31, 2010 and December 31, 2009. Sempra Energy based the fair values of investments in affordable housing partnerships on the present value of estimated future cash flows, discounted at rates available for similar investments. All entities based the fair values of the long-term debt and preferred stock on their quoted market prices or quoted market prices for similar securities. Nuclear Decommissioning Trusts We discuss SDGE's investments in nuclear decommissioning trust funds in Note 7 of the Notes to Consolidated Financial Statements in the Annual Report. The following table shows the fair values and gross unrealized gains and losses for the securities held in the trust funds: NUCLEAR DECOMMISSIONING TRUSTS (Dollars in millions) Gross Gross Estimated Unrealized Unrealized Fair Cost Gains Losses Value As of March 31, 2010: Debt securities U.S. government(1) $ 138 $ 12 $ (2) $ 148 Municipal bonds(2) 76 2 (2) 76 Other securities(3) 27 2 - 29 Total debt securities 241 16 (4) 253 Equity securities 242 205 (4) 443 Cash and cash equivalents 10 - - 10 Total available-for-sale securities $ 493 $ 221 $ (8) $ 706 As of December 31, 2009: Debt securities U.S. government $ 141 $ 12 $ (3) $ 150 Municipal bonds 85 3 (3) 85 Other securities 12 1 - 13 Total debt securities 238 16 (6) 248 Equity securities 238 188 (5) 421 Cash and cash equivalents 9 - - 9 Total available-for-sale securities $ 485 $ 204 $ (11) $

SEMPRA UTILITIES' REGULATORY MA

SEMPRA UTILITIES' REGULATORY MATTERS
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
Sempra Utilities' Regulatory Matters	NOTE 9. SEMPRA UTILITIES' REGULATORY MATTERS POWER PROCUREMENT AND RESOURCE PLANNING Sunrise Powerlink Electric Transmission LineIn December 2008, the CPUC issued a final decision authorizing SDGE to construct a 500-kilovolt (kV) electric transmission line between the Imperial Valley and the San Diego region (Sunrise Powerlink). This line is designed to provide 1,000 MW of increased import capability into the San Diego area. The decision allows SDGE to construct the Sunrise Powerlink along a route that would generally run south of the Anza-Borrego Desert State Park. The decision also approves the environmental impact review conducted jointly by the CPUC and the Bureau of Land Management (BLM) and establishes a total project cost cap of $1.9 billion, including approximately $190 million for environmental mitigation costs. In January 2009, the BLM issued its decision approving the project, route and environmental review. After the issuance of the CPUC final decision, applications for rehearing before the CPUC were filed by the Utility Consumers Action Network (UCAN) and the Center for Biological Diversity/Sierra Club (CBD). The CPUC issued a final decision in July 2009 denying the requests for rehearing. UCAN and CBD jointly filed a petition with the California Supreme Court in August 2009 challenging the CPUC's decision with regard to implementation of the California Environmental Quality Act (CEQA). UCAN also filed a petition with the California Court of Appeal (Court of Appeal) challenging the decision on other legal grounds, which the Court of Appeal procedurally granted in March 2010. The UCAN/CBD appeal will be addressed by the California Supreme Court after the Court of Appeal rules on the first petition. Three appeals of the BLM decision approving the segment of the route within its jurisdiction were filed by individuals, a community organization, and the Viejas Indian tribe in March 2009. A request to stay the BLM decision was also filed. The Interior Board of Land Appeals (IBLA) dismissed the appeal filed by the individuals and issued a ruling in July 2009 denying the request for a stay. In addition, the Viejas Indian tribe withdrew its appeal in July 2009. The IBLA is still reviewing the one remaining appeal. The same project opponents who filed the BLM appeal also filed a lawsuit in Federal District Court in Sacramento, California, for Declaratory and Injunctive Relief regarding Sunrise Powerlink. The complaint alleges that the BLM failed to properly assess the environmental impacts of the approved Sunrise Powerlink route and the related potential development of renewable resources in east San Diego County and Imperial County. The complaint requests a declaration that the BLM violated Federal law in approving Sunrise Powerlink and an injunction against any construction activities.The Sunrise Powerlink also requires approval from the United States Forest Service (USFS). SDGE expects the USFS to issue a Record of Decision (ROD) approving the segment of the route within its jurisdiction in the first half of 2010. The USFS decision is also subject to administrative and judicial review.Sunrise Powerlink costs will be recovered in SD

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
Commitments and Contingencies	NOTE 10. COMMITMENTS AND CONTINGENCIESLegal ProceedingsWe record loss reserves for legal proceedings when it is probable that a loss has been incurred and the amounts of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to estimate with reasonable certainty the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from reserved amounts or exceed applicable insurance coverages and could materially adversely affect our business, cash flows, results of operations, and financial condition.At March 31, 2010, Sempra Energys reserves for legal proceedings, on a consolidated basis, were $636 million, of which $194 million is offset by an insurance receivable for wildfire litigation and $139 million is for previously resolved matters. At March 31, 2010, SDGE and SoCalGas had reserves of $322 million (including the $194 million offset) and $12 million, respectively. We provide additional information about previously resolved matters in Note 17 of the Notes to Consolidated Financial Statements in the Annual Report. SDGE 2007 Wildfire LitigationIn October 2007, San Diego County experienced several catastrophic wildfires. Reports issued by the California Department of Forestry and Fire Protection (Cal Fire) concluded that two of these fires (the Witch and Rice fires) were SDGE "power line caused" and that a third fire (the Guejito fire) occurred when a wire securing a Cox Communications' fiber optic cable came into contact with an SDGE power line "causing an arc and starting the fire." Cal Fire reported that the Rice fire burned approximately 9,500 acres and damaged 206 homes and two commercial properties, and the Witch and Guejito fires merged and eventually burned approximately 198,000 acres, resulting in two fatalities, approximately 40 firefighters injured and approximately 1,141 homes destroyed.A September 2008 staff report issued by the CPUC's Consumer Protection and Safety Division reached substantially the same conclusions as the Cal Fire reports, but also contended that the power lines involved in the Witch and Rice fires and the lashing wire involved in the Guejito fire were not properly designed, constructed and maintained. In November 2008, the CPUC initiated proceedings to determine if any of its rules were violated and in October 2009, SDGE and the Consumer Protection and Safety Division entered into a settlement agreement, approved by the CPUC in April 2010, that resolves these proceedings by SDGE's payment of $14.75 million. Numerous parties have sued SDGE and Sempra Energy in San Diego County Superior Court seeking recovery of unspecified amounts of damages, including punitive damages, from the three fires. These include owners and insurers of properties that were destroyed or damaged in the fires and public entities seeking recovery of firefighting, emergency response, and environmental costs. They assert various bases for recovery, including inverse condemnation based upon a California Court of Appeal decision finding that another California investor-owned utility was subject to strict liability, without regard to foresee

SEGMENT INFORMATION

SEGMENT INFORMATION
	3 Months Ended Mar. 31, 2010
Notes to Condensed Consolidated Financial Statements
Segment Information	NOTE 11. SEGMENT INFORMATIONWe have six separately managed reportable segments, as follows: SDGE provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County. SoCalGas is a natural gas distribution utility, serving customers throughout most of Southern California and part of central California. Sempra Commodities holds our investment in RBS Sempra Commodities, a joint venture with RBS. The partnership was formed from our commodities-marketing businesses previously reported in this segment. The partnership's commodity trading businesses serve customers in natural gas, electricity, petroleum and petroleum products, and base metals. Sempra Commodities also includes the operating results of Sempra Rockies Marketing, which holds firm service capacity on the Rockies Express Pipeline. On February 16, 2010, Sempra Energy, RBS and the partnership entered into an agreement to sell certain businesses within the partnership. We discuss this transaction and related agreements affecting the partnership in Note 4 above and in Notes 4 and 20 of the Notes to Consolidated Financial Statements in the Annual Report. Sempra Generation develops, owns and operates, or holds interests in, electric power plants and energy projects in Arizona, California, Nevada, Indiana, Hawaii and Mexico to serve wholesale electricity markets in the United States and Mexico. Sempra Pipelines Storage develops, owns and operates, or holds interests in, natural gas pipelines and storage facilities in the United States and Mexico, and companies that provide natural gas or electricity services in Argentina, Chile, Mexico and Peru. We are currently pursuing the sale of our interests in the Argentine utilities, which we discuss further in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. Sempra Pipelines Storage also operates a small natural gas distribution utility in Southwest Alabama. Sempra LNG develops, owns and operates receipt terminals for importing LNG, and has supply and marketing agreements to purchase LNG and sell natural gas. We evaluate each segment's performance based on its contribution to Sempra Energy's reported earnings. The Sempra Utilities operate in essentially separate service territories, under separate regulatory frameworks and rate structures set by the CPUC. The Sempra Utilities' operations are based on rates set by the CPUC and the FERC. We describe the accounting policies of our segments in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.In the first quarter of 2010, Sempra LNG became a reportable segment. We have revised segment disclosures for 2009 to reflect this.The following tables show selected information by segment from our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets. Amounts labeled as "all other" in the following tables consist primarily of parent organizations. SEGMENT INFORMATION (Dollars in millions) Three months ended March 31, 2010 2009 REVENUES SDGE $ 742 29 % $ 732 35 % SoCalGas 1,182 47 920 44 Sempra Commodities 23 1 13 1 Sempra Generat

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES (Policies)
	3 Months Ended Mar. 31, 2010
Significant Accounting Policies
New Accounting Standards	NOTE 2. NEW ACCOUNTING STANDARDS We describe below recent pronouncements that have had or may have a significant effect on our financial statements. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our financial condition, results of operations, or disclosures. SEMPRA ENERGY, SDGE, PE AND SOCALGAS Accounting Standards Update (ASU) 2009-17, "Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" (ASU 2009-17): ASU 2009-17 amends Financial Accounting Standards Board (FASB) Interpretation No. 46(R), Consolidation of Variable Interest Entities an interpretation of ARB No. 51 (FIN 46(R)), which provides consolidation guidance related to variable interest entities. ASU 2009-17 amends FASB Accounting Standards Codification (ASC) Topic 810, Consolidations, and requires a qualitative approach for identifying the primary beneficiary of a variable interest entity based on 1) the power to direct activities that most significantly impact the economic performance of the entity, and 2) the obligation to absorb losses or right to receive benefits that could be significant to the entity; ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; and separate disclosure by the primary beneficiary on the face of the balance sheet to identify 1) assets that can only be used to settle obligations of the variable interest entity, and 2) liabilities for which creditors do not have recourse to the primary beneficiary. We adopted ASU 2009-17 on January 1, 2010 and it did not have a material effect on earnings, nor on presentation on the interim Condensed Consolidated Balance Sheets for Sempra Energy and SDGE. We provide the required additional disclosure in Note 5.ASU 2010-06, "Improving Disclosures About Fair Value Measurements" (ASU 2010-06): ASU 2010-06 amends ASC Topic 820, Fair Value Measurements and Disclosures, and requires the following additional fair value measurement disclosures: transfers into and out of Levels 1 and 2 segregation of classes of assets and liabilities measured at fair value valuation techniques and inputs used for Level 2 and Level 3 instruments detailed activity for Level 3 instruments, including separate presentation of purchases, sales, issuances and settlements We adopted ASU 2010-06 on January 1, 2010, and we provide the additional disclosure in Note 8.