SEMPRA ENERGY FINANCIAL REPORT TABLE OF CONTENTS | ||||
Page | ||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||
Our Business | 2 | |||
Executive Summary | ||||
Business Strategy | 9 | |||
Key Events and Issues in 2015 | 9 | |||
Results of Operations | ||||
Overall Results of Operations of Sempra Energy and Factors Affecting the Results | 12 | |||
Segment Results | 15 | |||
Changes in Revenues, Costs and Earnings | 21 | |||
Book Value Per Share | 39 | |||
Capital Resources and Liquidity | ||||
Overview | 39 | |||
Cash Flows from Operating Activities | 44 | |||
Cash Flows from Investing Activities | 46 | |||
Cash Flows from Financing Activities | 52 | |||
Credit Ratings | 59 | |||
Factors Influencing Future Performance | ||||
California Utilities | 60 | |||
Sempra International | 66 | |||
Sempra U.S. Gas & Power | 68 | |||
Other Sempra Energy Matters | 73 | |||
Litigation | 73 | |||
Market Risk | 73 | |||
Critical Accounting Policies and Estimates, and Key Noncash Performance Indicators | 77 | |||
Information Regarding Forward-Looking Statements | 84 | |||
Common Stock Data | 86 | |||
Performance Graph – Comparative Total Shareholder Returns | 87 | |||
Five-Year Summaries | 88 | |||
Controls and Procedures | ||||
Evaluation of Disclosure Controls and Procedures | 91 | |||
Management’s Report on Internal Control over Financial Reporting | 91 | |||
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure | 92 | |||
Reports of Independent Registered Public Accounting Firm | 93 | |||
Consolidated Financial Statements | ||||
Sempra Energy | 99 | |||
San Diego Gas & Electric Company | 106 | |||
Southern California Gas Company | 113 | |||
Notes to Consolidated Financial Statements | 119 | |||
Glossary | 250 | |||
This Financial Report is a combined report for the following separate companies (each a separate Securities and Exchange Commission registrant): | ||||
Sempra Energy | San Diego Gas & Electric Company | Southern California Gas Company |
§ | A description of our business |
§ | An executive summary |
§ | A discussion and analysis of our operating results for 2013 through 2015 |
§ | Information about our capital resources and liquidity |
§ | Major factors expected to influence our future operating results |
§ | A discussion of market risk affecting our businesses |
§ | A table of accounting policies that we consider critical to our financial condition and results of operations |
§ | Sempra Energy and its consolidated entities |
§ | SDG&E |
§ | SoCalGas |
CALIFORNIA UTILITIES | ||
MARKET | SERVICE TERRITORY | |
SAN DIEGO GAS & ELECTRIC COMPANY (SDG&E) A regulated public utility; infrastructure supports electric generation, transmission and distribution, and natural gas distribution | § Provides electricity to a population of 3.6 million (1.4 million meters) § Provides natural gas to a population of 3.3 million (0.9 million meters) | Serves the county of San Diego, California and an adjacent portion of southern Orange County covering 4,100 square miles |
SOUTHERN CALIFORNIA GAS COMPANY (SOCALGAS) A regulated public utility; infrastructure supports natural gas distribution, transmission and storage | § Residential, commercial, industrial, utility electric generation and wholesale customers § Covers a population of 21.6 million (5.9 million meters) | Southern California and portions of central California (excluding San Diego County, the city of Long Beach and the desert area of San Bernardino County) covering 20,000 square miles |
SEMPRA INTERNATIONAL | ||
MARKET | GEOGRAPHIC REGION | |
SEMPRA SOUTH AMERICAN UTILITIES Develops, owns and operates, or holds interests in electric transmission, distribution and generation infrastructure | § Provides electricity to a population of approximately 2 million (approximately 672,000 meters) in Chile and approximately 4.9 million consumers (approximately 1,053,000 meters) in Peru | § Chile § Peru |
SEMPRA MEXICO Develops, owns and operates, or holds interests in: § natural gas transmission pipelines and propane and ethane systems § a natural gas distribution utility § electric generation facilities, including wind § a terminal for the import of liquefied natural gas (LNG) § marketing operations for the purchase of LNG and the purchase and sale of natural gas | § Natural gas § Wholesale electricity § Liquefied natural gas | § Mexico |
SEMPRA U.S. GAS & POWER | ||
MARKET | GEOGRAPHIC REGION | |
SEMPRA RENEWABLES Develops, owns, operates, or holds interests in renewable energy generation projects | § Wholesale electricity | § U.S.A. |
SEMPRA NATURAL GAS Develops, owns and operates, or holds interests in: § natural gas pipelines and storage facilities § natural gas distribution utilities § a terminal in the U.S. for the import and export of LNG and sale of natural gas § marketing operations | § Natural gas § Liquefied natural gas § Wholesale electricity | § U.S.A. |
SEMPRA RENEWABLES OPERATING FACILITIES | |||||||
Capacity in Megawatts at December 31, 2015 | |||||||
Name | Generating capacity | PPA term in years | First in service(1) | Location | |||
Wholly owned facility: | |||||||
Copper Mountain Solar 1 | 58 | 20 | 2008 | Boulder City, Nevada | |||
Jointly owned facilities(2): | |||||||
Auwahi Wind | 11 | 20 | 2012 | Maui, Hawaii | |||
Broken Bow 2 Wind | 38 | 25 | 2014 | Custer County, Nebraska | |||
Cedar Creek 2 Wind | 125 | 25 | 2011 | New Raymer, Colorado | |||
Flat Ridge 2 Wind | 235 | 20 and 25 | 2012 | Wichita, Kansas | |||
Fowler Ridge 2 Wind | 100 | 20 | 2009 | Benton County, Indiana | |||
Mehoopany Wind | 71 | 20 | 2012 | Wyoming County, Pennsylvania | |||
Total wind | 580 | ||||||
California solar partnership | 55 | 25 | 2013 | Tulare and Kings Counties, California | |||
Copper Mountain Solar 2 | 75 | 25 | 2012 | Boulder City, Nevada | |||
Copper Mountain Solar 3 | 125 | 20 | 2014 | Boulder City, Nevada | |||
Mesquite Solar 1 | 75 | 20 | 2011 | Arlington, Arizona | |||
Total solar | 330 | ||||||
Total MW in operation | 968 |
(1) (2) | If placed in service in phases, indicates the year the first phase went into service. Sempra Renewables has a 50-percent interest in each of these facilities and accounts for them as equity method investments. The generating capacity represents Sempra Renewables’ share only. | ||||||||
§ | U.S. utilities |
§ | South American utilities and Mexican midstream, including LNG |
§ | U.S. natural gas midstream, including LNG, and renewables |
§ | California Utilities: |
□ | In October 2015, SoCalGas discovered a leak at one of its natural gas injection and withdrawal wells at its Aliso Canyon natural gas storage facility located in the northern part of the San Fernando Valley in Los Angeles County, resulting in numerous complaints filed against SoCalGas and Sempra Energy, governmental investigations, and an order being issued by the Governor of California proclaiming a state of emergency to exist in Los Angeles County. On February 18, 2016, DOGGR confirmed that the leaking well had been permanently sealed and taken out of service (page 228). |
□ | In September 2015, the California Utilities filed settlement agreements with the CPUC that resolve all material matters related to their 2016 General Rate Case (2016 GRC) proceeding, except for the revenue requirement implications of certain income tax benefits associated with flow-through repair allowance deductions (page 216). |
□ | In September 2015, the California Utilities filed an application with the CPUC seeking authority to recover the full cost of the Pipeline Safety & Reliability Project, which involves construction of an approximately 47-mile, 36-inch natural gas transmission pipeline with an estimated cost of $600 million (page 224). |
□ | In September 2015, SDG&E filed an application with the CPUC requesting to recover an estimated $379 million in costs related to the October 2007 wildfires in rates over a six- to ten-year period (page 222). |
□ | In July 2015, the CPUC adopted a revised Administrative Law Judge (ALJ)-proposed decision that establishes comprehensive reform for residential electric rate design. In addition, the CPUC adopted a successor net energy metering, or NEM, tariff in January 2016 (page 63). |
□ | In October 2015, the SONGS co-owners (Edison, SDG&E and the City of Riverside) reached an agreement with Nuclear Electric Insurance Limited (NEIL) to resolve all of SONGS’ insurance claims arising out of the failures of the replacement steam generators. SDG&E’s share is approximately $80 million, of which $75 million was allocated to ratepayers (page 214). |
□ | In November 2015, the CPUC approved a one-year extension until April 2017 for SDG&E and SoCalGas to file their next Cost of Capital application, maintaining both companies’ current authorized rates of return and capital structure through December 2017 (page 217). |
§ | Sempra Mexico: |
□ | In July 2015, Sempra Mexico’s subsidiary, IEnova, entered into an agreement to purchase PEMEX’s 50-percent interest in GdC, which upon closing would increase its interest from 50 percent to 100 percent. As we discuss in Note 3 of the Notes to Consolidated Financial Statements, the parties are in the process of restructuring the transaction in response to issues raised in the review of the transaction by Mexico’s antitrust commission. Any restructured transaction remains subject to satisfactory completion of the Mexican antitrust review and may require further approvals from other Mexican authorities (page 150). |
§ | Sempra Natural Gas: |
□ | In February 2015, Rockies Express received FERC approval for a project that had previously secured binding financial commitments with four shippers totaling 1.2 Bcf per day of capacity for east-to-west transportation services for a term of 20 years originating at or near Clarington, Ohio. This capacity went into service in August 2015 (page 7). |
□ | In March 2015, Rockies Express requested FERC approval of the Zone 3 Capacity Enhancement Project, an expansion of REX’s east-to-west capability of 0.8 Bcf per day that has an estimated cost of $530 million (page 70). |
□ | In April 2015, Sempra Natural Gas sold the remaining 625-MW block of the Mesquite Power plant, together with a related power sales contract, for net cash proceeds of $347 million (page 151). |
§ | Sempra Natural Gas’ Cameron liquefaction projects: |
□ | In February 2015, Cameron LNG JV filed the U.S. Department of Energy (DOE) FTA application and the pre-filing application at FERC for two additional liquefaction trains and one additional full containment LNG storage tank at the Cameron LNG liquefaction facility, and in May 2015, filed the corresponding DOE Non-FTA permit application. The DOE FTA approval was received in July 2015 and the FERC application was submitted in September 2015 and formally noticed in October 2015. The Cameron LNG liquefaction project, comprised of Cameron LNG JV’s existing facilities and three liquefaction trains, is currently under construction and is expected to achieve commercial operation of all three trains in 2018, and have the first year of full operations in 2019 (page 71). |
□ | In April 2015, Cameron LNG JV filed with the DOE for authorization to match the total export volumes allowed to be exported to Non-FTA countries with the volumes under the FERC permit for FTA countries for the current three-train liquefaction construction project (page 71). |
§ | Sempra Energy’s other LNG liquefaction development projects: |
□ | In February 2015, Sempra Natural Gas, IEnova, and a subsidiary of PEMEX entered into a Memorandum of Understanding (MOU) to collaborate in the development of a potential natural gas liquefaction project at IEnova’s existing regasification terminal at Energía Costa Azul (page 68). |
□ | In March 2015, Sempra Natural Gas submitted requests to the FERC to initiate the pre-filing review for the proposed Port Arthur LNG natural gas liquefaction and export facility in Port Arthur, Texas, and the proposed Port Arthur pipeline project (page 72). |
□ | In March and June 2015, Sempra Natural Gas filed permit applications with the DOE for authorization to export the LNG produced from the proposed Port Arthur LNG facility to all current and future FTA and Non-FTA countries, respectively. The DOE FTA approval was received in August 2015 (page 72). |
□ | In June 2015, Sempra Natural Gas entered into a non-binding MOU with an affiliate of Woodside Petroleum Ltd. (Woodside) to commence discussions and assessments for the potential development of the proposed Port Arthur LNG liquefaction project. In February 2016, Sempra Natural Gas and Woodside entered into a project development agreement for the joint development of the proposed Port Arthur LNG liquefaction project (page 72). |
§ | Sempra Mexico: |
□ | In June 2015, the 155-MW first phase of Sempra Mexico’s Energía Sierra Juárez wind generation project began commercial operations (page 68). |
□ | In July 2015, Sempra Mexico entered into the San Isidro - Samalayuca pipeline (San Isidro pipeline) natural gas transportation services agreement with the CFE for a 25-year term, denominated in U.S. dollars. Sempra Mexico will be responsible for the development, construction and operation of the approximately 14-mile pipeline, with an estimated cost of $110 million (page 68). |
□ | In August 2015, Sempra Mexico completed construction of the final section of the first segment of the Sonora pipeline, a 500-mile natural gas pipeline network in northern Mexico (page 67). |
□ | In December 2015, Sempra Mexico, through its joint venture with PEMEX, completed construction of the 140-mile pipeline to transport ethane from Tabasco, Mexico to Veracruz, Mexico (page 5). |
□ | In December 2015, Sempra Mexico, through its joint venture with PEMEX, completed construction and testing of the two compression stations related to the 72-mile Los Ramones I pipeline to transport natural gas from Frontera, Tamaulipas to Ramones, Nuevo León, in Mexico. The pipeline started operations in December 2014 (page 5). |
§ | Sempra South American Utilities: |
□ | In September 2015, Luz del Sur began commercial operation of Santa Teresa, a 100-MW hydroelectric power plant in Peru’s Cusco region (page 5). |
□ | In November 2015, Chilquinta Energía’s joint venture, Eletrans S.A., completed construction of a 220-kV transmission line in Chile (page 67). |
§ | Sempra Renewables: |
□ | In March 2015, Sempra Renewables acquired a 100-percent interest in the Black Oak Getty Wind project, a 78-MW wind farm under development in Stearns County, Minnesota (page 150). |
□ | In March 2015, the CPUC approved Sempra Renewables’ 20-year power sale agreement with Edison for all of the solar power from the 94-MW Copper Mountain Solar 4 facility beginning in 2020 (page 69). |
□ | In April 2015, the 58-MW second phase of Sempra Renewables’ Copper Mountain Solar 2 facility was placed in service (page 7). |
□ | In April 2015, Sempra Renewables’ 250-MW Copper Mountain Solar 3 facility achieved full commercial operation (page 69). |
□ | In June 2015, Sempra Renewables signed a 20-year power sale agreement with Edison, approved by the CPUC in December 2015, for 100 MW of solar power from the second phase of Mesquite Solar (Mesquite Solar 2) (page 69). |
□ | In July 2015, Sempra Renewables signed a 25-year power sale agreement with the Western Area Power Administration on behalf of the U.S. Department of the Navy for 150 MW of solar power from the third phase of Mesquite Solar (Mesquite Solar 3) (page 69). |
§ | Overall results of our operations and factors affecting those results |
§ | Our segment results |
§ | Significant changes in revenues, costs and earnings between periods |
OVERALL OPERATIONS OF SEMPRA ENERGY FROM 2011 TO 2015 |
(Dollars and shares in millions, except per share amounts) |
§ | $40 million higher earnings from CPUC base operations and from electric transmission |
§ | $15 million reduction to the loss from plant closure in 2015 primarily based on CPUC approval of a compliance filing related to SDG&E’s authorized recovery of its investment in SONGS compared to a $21 million increase to the loss in 2014, as we discuss in Note 13 of the Notes to Consolidated Financial Statements |
§ | $34 million higher earnings primarily due to a lower effective tax rate, including $11 million earnings impact from higher favorable resolution of prior years’ income tax items in 2015 |
§ | $31 million higher earnings from CPUC base operating margin authorized for 2015 |
§ | $11 million of earnings from a retroactive increase, approved by the CPUC in 2015, in authorized General Rate Case (GRC) revenue requirement for years 2012 through 2014 due to increased rate base, as we discuss in “SoCalGas Matters – Increase to CPUC-Authorized Annual Revenue Requirement” in Note 14 of the Notes to Consolidated Financial Statements |
§ | $21 million higher earnings from operations, mainly in Peru, due to an increase in volumes and rates, which rates include foreign currency adjustments |
§ | $7 million business interruption proceeds for the Santa Teresa hydroelectric power plant, which was expected to begin commercial operation in September 2014, but did not commence operation until September 2015 due to construction delays |
§ | $(20) million lower earnings from foreign currency effects |
§ | $37 million higher pipeline earnings, primarily due to the start of operations of certain pipelines in the fourth quarter of 2014 |
§ | $31 million favorable variance due to effects from foreign currency and inflation, including amounts in earnings from our joint ventures |
§ | $(5) million losses in 2015 from operations at our Mexicali power plant compared to $(13) million earnings for the same period in 2014, primarily due to lower capacity revenues and lower volumes |
§ | $(14) million gain in 2014 from the sale of a 50-percent equity interest in the first phase of the Energía Sierra Juárez project |
§ | $(24) million gains in 2014 from the sale of 50-percent equity interests in Copper Mountain Solar 3 and Broken Bow 2 Wind |
§ | $36 million gain on the April 2015 sale of the remaining 625-MW block of the 1,250-MW Mesquite Power natural gas-fired power plant, and a related power sale contract |
§ | $11 million higher equity earnings at Rockies Express due to additional capacity placed in service in 2015 |
§ | $(29) million lower results from LNG marketing operations, primarily driven by the effect of lower natural gas prices |
§ | $(25) million tax benefit in 2014 due to the release of Louisiana state valuation allowance against a deferred tax asset associated with Cameron LNG developments |
§ | $39 million higher income tax benefits, including $18 million lower U.S. income tax expense in 2015 as a result of lower planned repatriation of current year earnings from certain non-U.S. subsidiaries, as we discuss below under “Changes in Revenues, Costs and Earnings – Income Taxes” |
§ | $(11) million lower investment gains in 2015 on dedicated assets in support of our executive retirement and deferred compensation plans, net of the decrease in deferred compensation liability associated with the investments |
§ | $119 million charge in 2013 for loss from plant closure associated with SDG&E’s investment in SONGS, compared to a $(21) million charge in 2014 to adjust the total loss from plant closure, as we discuss in Note 13 of the Notes to Consolidated Financial Statements |
§ | $24 million higher CPUC base operating margin authorized for 2014 and lower non-refundable operating costs |
§ | $15 million favorable resolution of prior years’ income tax items in 2014 compared to a $2 million unfavorable resolution in 2013 |
§ | $(52) million favorable impact on 2013 earnings from the retroactive application for 2012 of the final decision in the 2012 GRC, which was approved by the CPUC in May 2013 and effective retroactive to January 1, 2012 |
§ | $24 million higher CPUC base operating margin authorized for 2014, net of higher non-refundable operating costs |
§ | $(30) million higher income tax expense primarily due to lower favorable resolution of prior years’ income tax items in 2014, higher reversal through book depreciation of previously recognized tax benefits for a certain portion of utility fixed assets and lower deductions for self-developed software expenditures |
§ | $(25) million favorable impact on 2013 earnings from the retroactive application for 2012 of the final decision in the 2012 GRC |
§ | $18 million income tax benefit related to Peruvian tax reform, offset by $(6) million income tax expense related to Chilean tax reform |
§ | $30 million favorable impact due to the effects on tax-related balances from foreign currency and inflation |
§ | $24 million higher AFUDC in 2014 related to equity associated with construction of the natural gas pipeline in Sonora |
§ | $14 million gain from the sale of a 50-percent equity interest in the first phase of the Energía Sierra Juárez project in 2014 |
§ | $13 million income tax expense in 2013 due to Mexican tax reform |
§ | $(21) million impact of higher earnings attributable to noncontrolling interests at IEnova ($47 million in 2014 compared to $26 million in 2013) |
§ | $24 million gains in 2014 from the sale of 50-percent equity interests in Copper Mountain Solar 3 and Broken Bow 2 Wind |
§ | $19 million higher deferred income tax benefits, including the benefits from projects placed in service in 2014 and a $5 million reduction of benefits in 2013 as a result of U.S. Treasury grant sequestration |
§ | $(24) million gains in 2013 from the sale of 50-percent equity interests in Mesquite Solar 1 and Copper Mountain Solar 2 |
§ | $25 million tax benefit due to the release in 2014 of a Louisiana state valuation allowance against a deferred tax asset associated with Cameron LNG developments |
§ | $(44) million gain in 2013 on the sale of the first 625-MW block of the Mesquite Power plant |
§ | $63 million income tax expense in 2013 resulting from a corporate reorganization in connection with the IEnova stock offerings |
§ | $(38) million income tax expense in 2014 for repatriation of current year foreign earnings |
SEMPRA ENERGY EARNINGS (LOSSES) BY SEGMENT | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Years ended December 31, | |||||||||||||||||||||||||
2015 | 2014 | 2013 | |||||||||||||||||||||||
California Utilities: | |||||||||||||||||||||||||
SDG&E(1) | $ | 587 | 43 | % | $ | 507 | 44 | % | $ | 404 | 41 | % | |||||||||||||
SoCalGas(2) | 419 | 31 | 332 | 29 | 364 | 37 | |||||||||||||||||||
Sempra International: | |||||||||||||||||||||||||
Sempra South American Utilities | 175 | 13 | 172 | 15 | 153 | 15 | |||||||||||||||||||
Sempra Mexico | 213 | 16 | 192 | 16 | 122 | 12 | |||||||||||||||||||
Sempra U.S. Gas & Power: | |||||||||||||||||||||||||
Sempra Renewables | 63 | 5 | 81 | 7 | 62 | 6 | |||||||||||||||||||
Sempra Natural Gas | 44 | 3 | 50 | 4 | 64 | 6 | |||||||||||||||||||
Parent and other(3) | (152 | ) | (11 | ) | (173 | ) | (15 | ) | (168 | ) | (17 | ) | |||||||||||||
Earnings | $ | 1,349 | 100 | % | $ | 1,161 | 100 | % | $ | 1,001 | 100 | % |
(1) | For 2013, amount is after preferred dividends and call premium on preferred stock. | ||||||||||||||||||||||||
(2) | After preferred dividends. | ||||||||||||||||||||||||
(3) | Includes after-tax interest expense ($157 million in 2015 and $144 million in each of 2014 and 2013), intercompany eliminations recorded in consolidation and certain corporate costs. |
EARNINGS BY SEGMENT – CALIFORNIA UTILITIES |
(Dollars in millions) |
§ | $587 million in 2015 |
§ | $507 million in 2014 |
§ | $404 million in 2013 ($411 million before preferred dividends and call premium) |
§ | $15 million reduction to the loss from plant closure in 2015 primarily based on the CPUC approval of a compliance filing related to SDG&E’s authorized recovery of its investment in SONGS compared to a $21 million charge in 2014 to adjust the total loss from plant closure; |
§ | $26 million higher earnings from electric transmission operations primarily due to higher rate base; |
§ | $14 million higher CPUC base operating margin authorized for 2015, and lower non-refundable operating costs; |
§ | $7 million lower generation major maintenance costs; and |
§ | $7 million higher favorable resolution of prior years’ income tax items; offset by |
§ | $7 million higher earnings in 2014 associated with SDG&E’s annual FERC formulaic rate adjustment. |
§ | $119 million charge in 2013 for loss from plant closure associated with SDG&E’s investment in SONGS, compared to a $21 million charge in 2014 to adjust the total loss from plant closure; |
§ | $24 million higher CPUC base operating margin authorized for 2014 and lower non-refundable operating costs; |
§ | $15 million favorable resolution of prior years’ income tax items in 2014 compared to a $2 million unfavorable resolution in 2013; and |
§ | $3 million lower litigation expense in 2014; offset by |
§ | $52 million favorable impact on 2013 earnings from the retroactive application for 2012 of the final decision in the 2012 GRC; and |
§ | $7 million lower earnings from electric transmission operations primarily due to lower FERC-authorized return on equity. |
§ | $419 million in 2015 ($420 million before preferred dividends) |
§ | $332 million in 2014 ($333 million before preferred dividends) |
§ | $364 million in 2013 ($365 million before preferred dividends) |
§ | $34 million higher earnings primarily due to a lower effective tax rate, including $11 million earnings impact from higher favorable resolution of prior years’ income tax items in 2015; |
§ | $31 million higher CPUC base operating margin authorized for 2015, and lower non-refundable operating costs; |
§ | $11 million of earnings from a retroactive increase, approved by the CPUC in 2015, in authorized GRC revenue requirement for years 2012 through 2014 due to increased rate base; |
§ | $10 million from an increase in AFUDC related to equity; and |
§ | $8 million higher regulatory awards; offset by |
§ | $8 million higher interest expense. |
§ | $25 million favorable impact on 2013 earnings from the retroactive application for 2012 of the final decision in the 2012 GRC; |
§ | $15 million lower favorable resolution of prior years’ income tax items in 2014; |
§ | $15 million increase in income tax expense primarily due to higher reversal through book depreciation of previously recognized tax benefits for a certain portion of utility fixed assets, and from lower deductions for self-developed software expenditures; |
§ | $5 million write-off in 2014 of certain costs incurred associated with the Pipeline Safety Enhancement Plan (PSEP) that were disallowed for recovery in the final PSEP decision; and |
§ | $4 million insurance recovery in 2013 of previously expensed costs; offset by |
§ | $24 million higher CPUC base operating margin authorized for 2014, net of higher non-refundable operating costs; and |
§ | $9 million from an increase in AFUDC related to equity. |
EARNINGS BY SEGMENT – SEMPRA INTERNATIONAL |
(Dollars in millions) |
§ | $175 million in 2015 |
§ | $172 million in 2014 |
§ | $153 million in 2013 |
§ | $21 million higher earnings from operations, mainly in Peru, due to an increase in volumes and rates, which rates include foreign currency adjustments; |
§ | $7 million business interruption proceeds for the Santa Teresa hydroelectric power plant, which was expected to begin commercial operation in September 2014, but did not commence operation until September 2015 due to construction delays; |
§ | $4 million higher earnings from early termination fees from commercial power contracts; |
§ | $4 million decrease in earnings attributable to noncontrolling interests in 2015; and |
§ | $3 million lower net interest expense, mainly in Chile, related to inflationary effect on local bonds; offset by |
§ | $20 million lower earnings from foreign currency effects; |
§ | $9 million higher income tax expense, including $18 million income tax benefit in 2014 related to Peruvian tax reform, offset by $6 million income tax expense in 2014 related to Chilean tax reform, as we discuss below in “Results of Operations – Changes in Revenues, Costs and Earnings – Income Taxes;” and |
§ | $8 million lower earnings associated with the relocation of electrical infrastructure. |
§ | $18 million income tax benefit related to Peruvian tax reform, offset by $6 million income tax expense related to Chilean tax reform; |
§ | $12 million higher earnings associated with the relocation of electrical infrastructure; |
§ | $11 million equity losses in 2013 related to the sale of our investments in two Argentine natural gas utility holding companies; and |
§ | $10 million higher earnings from operations mainly due to an increase in volume, primarily from customer growth; offset by |
§ | $16 million lower earnings from foreign currency effects; |
§ | $5 million increase in earnings attributable to noncontrolling interests in 2014; and |
§ | $5 million higher interest expense mainly in Chile related to the inflationary effect on local bonds. |
§ | $213 million in 2015 |
§ | $192 million in 2014 |
§ | $122 million in 2013 |
§ | $37 million higher pipeline earnings, primarily due to the start of operations of certain pipelines in the fourth quarter of 2014; and |
§ | $31 million favorable variance due to effects from foreign currency and inflation, including amounts in earnings from our joint ventures; offset by |
§ | $5 million losses in 2015 from operations at our Mexicali power plant compared to $13 million earnings for the same period in 2014, primarily due to lower capacity revenues and lower volumes; |
§ | $14 million gain in 2014 from the sale of a 50-percent equity interest in the first phase of the Energía Sierra Juárez project; |
§ | $10 million unfavorable impact from income taxes ($5 million expense in 2015 compared to $5 million benefit in 2014); and |
§ | $6 million increase in earnings attributable to noncontrolling interests at IEnova. |
The increase in earnings of $70 million (57%) in 2014 compared to 2013 was primarily due to: |
§ | $30 million favorable impact ($29 million benefit in 2014 and $1 million expense in 2013) primarily due to the effects on tax-related balances from foreign currency and inflation; |
§ | $24 million higher earnings from operations mainly due to prior year’s scheduled major maintenance and improved results at our Mexicali power plant, and start of operations of a section of the Sonora pipeline; |
§ | $24 million higher AFUDC in 2014 related to equity associated with construction of the natural gas pipeline in Sonora; |
§ | $14 million gain from the sale of a 50-percent equity interest in the first phase of the Energía Sierra Juárez wind project in 2014; and |
§ | $13 million income tax expense in 2013 due to Mexican tax reform; offset by |
§ | $21 million higher earnings attributable to noncontrolling interests at IEnova in 2014; and |
§ | $15 million unfavorable translation effect primarily on Peso-denominated receivables. |
EARNINGS BY SEGMENT – SEMPRA U.S. GAS & POWER |
(Dollars in millions) |
§ | $63 million in 2015 |
§ | $81 million in 2014 |
§ | $62 million in 2013 |
§ | $24 million gains in 2014 from the sale of 50-percent equity interests in Copper Mountain Solar 3 and Broken Bow 2 Wind; offset by |
§ | $5 million gain in 2015 from the sale of the Rosamond Solar development project, as we discuss in Note 3 of the Notes to Consolidated Financial Statements; and |
§ | $4 million higher earnings from increased solar capacity, offset by lower earnings from decreased production at wind projects. |
§ | $24 million gains in 2014 from the sale of 50-percent equity interests in Copper Mountain Solar 3 and Broken Bow 2 Wind; and |
§ | $19 million higher deferred income tax benefits, including the benefits of projects placed in service in 2014 and a $5 million reduction of benefits in 2013 as a result of U.S. Treasury grant sequestration; offset by |
§ | $24 million gains in 2013 from the sale of 50-percent equity interests in Mesquite Solar 1 and Copper Mountain Solar 2. |
§ | $44 million in 2015 |
§ | $50 million in 2014 |
§ | $64 million in 2013 |
§ | $29 million lower results from LNG marketing operations, primarily driven by the effect of lower natural gas prices; |
§ | $25 million tax benefit in 2014 due to the release of Louisiana state valuation allowance against a deferred tax asset associated with Cameron LNG developments; and |
§ | $10 million development expense associated with the potential expansion of our LNG business; offset by |
§ | $36 million gain in 2015 on the sale of the remaining 625-MW block of the Mesquite Power plant and a related power sale contract, net of related expenses; |
§ | $11 million higher equity earnings from Rockies Express due to additional capacity placed in service in 2015; and |
§ | $9 million lower net losses from the Mesquite Power plant due to the sale of the remaining block in April 2015. |
§ | $44 million gain in 2013 on the sale of the first 625-MW block of its Mesquite Power plant, net of related expenses; and |
§ | $15 million lower results from gas storage operations and natural gas marketing activities; offset by |
§ | $25 million tax benefit due to the release in 2014 of a Louisiana state valuation allowance against a deferred tax asset associated with Cameron LNG developments; |
§ | $10 million lower operating costs at the Mesquite Power plant, primarily depreciation due to the classification of the remaining 625-MW block as an asset held for sale; and |
§ | $9 million higher net intercompany interest income. |
§ | $152 million in 2015 |
§ | $173 million in 2014 |
§ | $168 million in 2013 |
§ | $39 million higher income tax benefits, including |
□ | $18 million lower U.S. income tax expense in 2015 as a result of lower planned repatriation of current year earnings from certain non-U.S. subsidiaries, |
□ | $14 million of income tax benefits in 2015 associated with the resolution of prior years’ income tax items, and |
□ | $5 million higher income tax benefits from a decrease in state valuation allowances; offset by |
§ | $11 million lower investment gains in 2015 on dedicated assets in support of our executive retirement and deferred compensation plans, net of the decrease in deferred compensation liability associated with the investments. |
§ | $38 million income tax expense in 2014 from the repatriation of current year foreign earnings; |
§ | $9 million lower investment gains on dedicated assets in support of our executive retirement and deferred compensation plans, net of the decrease in deferred compensation liability associated with the investments; |
§ | $9 million higher net interest expense; and |
§ | $8 million lower income tax benefits in 2014, excluding income tax items discussed separately; offset by |
§ | $63 million income tax expense in 2013 resulting from a corporate reorganization in connection with the IEnova stock offerings. |
§ | SDG&E |
§ | SoCalGas |
§ | Sempra Mexico’s Ecogas |
§ | Sempra Natural Gas’ Mobile Gas and Willmut Gas |
§ | SDG&E |
§ | Sempra South American Utilities’ Chilquinta Energía and Luz del Sur |
UTILITIES REVENUES AND COST OF SALES | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Electric revenues: | ||||||||||||
SDG&E | $ | 3,719 | $ | 3,785 | $ | 3,537 | ||||||
Sempra South American Utilities | 1,447 | 1,434 | 1,383 | |||||||||
Eliminations and adjustments | (8 | ) | (10 | ) | (9 | ) | ||||||
Total | 5,158 | 5,209 | 4,911 | |||||||||
Natural gas revenues: | ||||||||||||
SoCalGas | 3,489 | 3,855 | 3,736 | |||||||||
SDG&E | 500 | 544 | 529 | |||||||||
Sempra Mexico | 81 | 109 | 97 | |||||||||
Sempra Natural Gas | 103 | 113 | 109 | |||||||||
Eliminations and adjustments | (77 | ) | (72 | ) | (73 | ) | ||||||
Total | 4,096 | 4,549 | 4,398 | |||||||||
Total utilities revenues | $ | 9,254 | $ | 9,758 | $ | 9,309 | ||||||
Cost of electric fuel and purchased power: | ||||||||||||
SDG&E | $ | 1,151 | $ | 1,309 | $ | 1,019 | ||||||
Sempra South American Utilities | 985 | 972 | 913 | |||||||||
Total | $ | 2,136 | $ | 2,281 | $ | 1,932 | ||||||
Cost of natural gas: | ||||||||||||
SoCalGas | $ | 921 | $ | 1,449 | $ | 1,362 | ||||||
SDG&E | 153 | 208 | 204 | |||||||||
Sempra Mexico | 49 | 74 | 63 | |||||||||
Sempra Natural Gas | 31 | 44 | 35 | |||||||||
Eliminations and adjustments | (20 | ) | (17 | ) | (18 | ) | ||||||
Total | $ | 1,134 | $ | 1,758 | $ | 1,646 |
§ | $66 million decrease at SDG&E, including: |
□ | $158 million lower cost of electric fuel and purchased power, which we discuss below, and |
□ | $57 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses, offset by |
□ | $88 million higher revenues from CPUC-authorized 2015 attrition and, starting in 2015, authorized revenues for the recovery of the SONGS regulatory assets pursuant to an amended settlement agreement approved by the CPUC in 2014, which we discuss below in “Depreciation and Amortization” and in Note 13 of the Notes to Consolidated Financial Statements, and |
□ | $52 million higher authorized revenues from electric transmission; offset by |
§ | $13 million increase at Sempra South American Utilities, including: |
□ | higher rates and volumes at Luz del Sur, offset by foreign currency effects, and |
□ | $9 million business interruption proceeds in 2015, offset by |
□ | foreign currency effects at Chilquinta Energía, offset by higher rates and volumes, and |
□ | lower revenues and volumes associated with the transfer of certain non-regulated customers from Chilquinta Energía to Tecnored, an energy-services subsidiary of Sempra South American Utilities. Our energy-service companies are part of our energy-related businesses, which revenues are discussed below in “Energy-Related Businesses: Revenues and Cost of Sales.” |
§ | $248 million increase at SDG&E, including: |
□ | $290 million increase in cost of electric fuel and purchased power, which we discuss below, |
□ | $39 million increase in authorized revenues from 2014 attrition, and |
□ | $32 million higher authorized revenues from electric transmission, offset by |
□ | $61 million favorable impact on 2013 revenues from the retroactive application of the 2012 GRC decision for the period from January 2012 through December 2012, and |
□ | $47 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses; and |
§ | $51 million increase at Sempra South American Utilities primarily due to higher rates and volumes at both Luz del Sur and Chilquinta Energía, offset by foreign currency exchange rate effects. |
§ | $158 million decrease at SDG&E, which we discuss below; offset by |
§ | $13 million increase at Sempra South American Utilities driven primarily by higher rates and volumes at both Luz del Sur and Chilquinta Energía, offset by foreign currency exchange rate effects. |
§ | $290 million increase at SDG&E, which we discuss below; and |
§ | $59 million increase at Sempra South American Utilities driven primarily by higher rates and volumes at both Luz del Sur and Chilquinta Energía, offset by foreign currency exchange rate effects. |
§ | decreases in cost of natural gas sold at both SoCalGas and SDG&E, as we discuss below; and |
§ | $28 million lower revenues at Sempra Mexico primarily due to foreign currency effects and lower natural gas prices at Ecogas; offset by |
§ | $65 million higher revenues from CPUC-authorized 2015 attrition at the California Utilities; |
§ | $45 million higher recovery of costs at SoCalGas associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses; |
§ | $19 million increase at SoCalGas from a retroactive increase, approved by the CPUC in 2015, in authorized GRC revenue requirement for years 2012 through 2014 due to increased rate base; and |
§ | $13 million higher regulatory awards at SoCalGas. |
§ | increases in cost of natural gas sold at both SoCalGas and SDG&E, as we discuss below; |
§ | increases of $52 million and $8 million at SoCalGas and SDG&E, respectively, in authorized revenues from 2014 attrition; and |
§ | $30 million higher revenues from the advanced metering infrastructure project at SoCalGas; offset by |
§ | $30 million favorable impact on the California Utilities’ 2013 revenues from the retroactive application of the 2012 GRC decision for the period from January 2012 through December 2012; and |
§ | $18 million lower recovery of costs at SoCalGas associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses. |
SDG&E | ||||||||||||||||||||||||
ELECTRIC DISTRIBUTION AND TRANSMISSION | ||||||||||||||||||||||||
(Volumes in millions of kilowatt-hours, dollars in millions) | ||||||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||
Customer class | Volumes | Revenue | Volumes | Revenue | Volumes | Revenue | ||||||||||||||||||
Residential | 7,143 | $ | 1,486 | 7,338 | $ | 1,370 | 7,392 | $ | 1,283 | |||||||||||||||
Commercial | 6,877 | 1,508 | 6,974 | 1,418 | 6,722 | 1,080 | ||||||||||||||||||
Industrial | 2,161 | 380 | 2,067 | 342 | 1,962 | 257 | ||||||||||||||||||
Direct access(1) | 3,652 | 230 | 3,648 | 205 | 3,593 | 151 | ||||||||||||||||||
Street and highway lighting | 83 | 15 | 88 | 15 | 87 | 12 | ||||||||||||||||||
19,916 | 3,619 | 20,115 | 3,350 | 19,756 | 2,783 | |||||||||||||||||||
CAISO shared transmission revenue - net(2) | 292 | 162 | 268 | |||||||||||||||||||||
Other revenues | 213 | 205 | 172 | |||||||||||||||||||||
Balancing accounts | (405 | ) | 68 | 314 | ||||||||||||||||||||
Total(3) | $ | 3,719 | $ | 3,785 | $ | 3,537 | ||||||||||||||||||
(1) | Tariffs for the Direct Access program, which offers all customers the option to purchase their electric commodity services from a third-party Energy Service Provider instead of continuing to receive these services from SDG&E, increased in both 2015 and 2014. | |||||||||||||||||||||||
(2) | California Independent System Operator (CAISO). CAISO shared transmission revenue changes are primarily due to timing differences offset by corresponding changes in balancing accounts. | |||||||||||||||||||||||
(3) | Includes sales to affiliates of $8 million in 2015, $10 million in 2014 and $9 million in 2013. |
§ | $158 million lower cost of electric fuel and purchased power, including: |
□ | a decrease in cost of purchased power due to declining natural gas prices, and |
□ | a decrease in consumption due to energy efficiency initiatives, including an increase in rooftop solar installations, offset by |
□ | an increase from the incremental purchase of renewable energy at higher prices; and |
§ | $57 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses; offset by |
§ | $88 million higher revenues from CPUC-authorized 2015 attrition and, starting in 2015, authorized revenues for the recovery of the SONGS regulatory assets pursuant to an amended settlement agreement approved by the CPUC in 2014, which we discuss below in “Depreciation and Amortization” and in Note 13 of the Notes to Consolidated Financial Statements; and |
§ | $52 million higher authorized revenues from electric transmission. |
§ | $290 million increase in cost of electric fuel and purchased power, including: |
□ | an increase in purchased power primarily due to the incremental purchase of renewable energy at higher prices, offset by |
□ | a decrease in cost of electric fuel primarily due to planned outages at SDG&E-owned generation facilities; |
§ | $39 million increase in authorized revenues from 2014 attrition; and |
§ | $32 million higher authorized revenues from electric transmission; offset by |
§ | $61 million favorable impact on 2013 revenues from the retroactive application of the 2012 GRC decision for the period from January 2012 through December 2012; and |
§ | $47 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses. |
SDG&E | ||||||||||||||||||||||||
NATURAL GAS SALES AND TRANSPORTATION | ||||||||||||||||||||||||
(Volumes in billion cubic feet, dollars in millions) | ||||||||||||||||||||||||
Natural gas sales | Transportation | Total | ||||||||||||||||||||||
Customer class | Volumes | Revenue | Volumes | Revenue | Volumes | Revenue | ||||||||||||||||||
2015: | ||||||||||||||||||||||||
Residential | 24 | $ | 295 | ― | $ | 2 | 24 | $ | 297 | |||||||||||||||
Commercial and industrial | 14 | 96 | 8 | 14 | 22 | 110 | ||||||||||||||||||
Electric generation plants(1) | ― | ― | 27 | 1 | 27 | 1 | ||||||||||||||||||
38 | $ | 391 | 35 | $ | 17 | 73 | 408 | |||||||||||||||||
Other revenues | 40 | |||||||||||||||||||||||
Balancing accounts | 52 | |||||||||||||||||||||||
Total(2) | $ | 500 | ||||||||||||||||||||||
2014: | ||||||||||||||||||||||||
Residential | 25 | $ | 304 | ― | $ | 2 | 25 | $ | 306 | |||||||||||||||
Commercial and industrial | 14 | 106 | 8 | 10 | 22 | 116 | ||||||||||||||||||
Electric generation plants(1) | ― | ― | 26 | 2 | 26 | 2 | ||||||||||||||||||
39 | $ | 410 | 34 | $ | 14 | 73 | 424 | |||||||||||||||||
Other revenues | 40 | |||||||||||||||||||||||
Balancing accounts | 80 | |||||||||||||||||||||||
Total(2) | $ | 544 | ||||||||||||||||||||||
2013: | ||||||||||||||||||||||||
Residential | 31 | $ | 323 | ― | $ | 1 | 31 | $ | 324 | |||||||||||||||
Commercial and industrial | 15 | 98 | 9 | 13 | 24 | 111 | ||||||||||||||||||
Electric generation plants | ― | ― | 25 | 15 | 25 | 15 | ||||||||||||||||||
46 | $ | 421 | 34 | $ | 29 | 80 | 450 | |||||||||||||||||
Other revenues | 42 | |||||||||||||||||||||||
Balancing accounts | 37 | |||||||||||||||||||||||
Total(2) | $ | 529 | ||||||||||||||||||||||
(1) | Lower electric generation plants revenue in 2015 and 2014 compared to 2013 is due to refunds of previous overcollections to adjust forecasted rates to actual. | |||||||||||||||||||||||
(2) | Includes sales to affiliates of $2 million in 2015 and $3 million in each of 2014 and 2013. |
§ | lower cost of natural gas sold, as we discuss below; offset by |
§ | $8 million increase in revenues from CPUC-authorized 2015 attrition. |
§ | higher cost of natural gas sold, offset by lower volumes, as we discuss below; and |
§ | $8 million increase in authorized revenues from 2014 attrition; offset by |
§ | $5 million favorable impact from the retroactive application of the 2012 GRC decision for the period from January 2012 through December 2012. |
SOCALGAS | ||||||||||||||||||||||||
NATURAL GAS SALES AND TRANSPORTATION | ||||||||||||||||||||||||
(Volumes in billion cubic feet, dollars in millions) | ||||||||||||||||||||||||
Natural gas sales | Transportation | Total | ||||||||||||||||||||||
Customer class | Volumes | Revenue | Volumes | Revenue | Volumes | Revenue | ||||||||||||||||||
2015: | ||||||||||||||||||||||||
Residential | 198 | $ | 2,037 | 3 | $ | 15 | 201 | $ | 2,052 | |||||||||||||||
Commercial and industrial | 93 | 622 | 282 | 271 | 375 | 893 | ||||||||||||||||||
Electric generation plants | ― | ― | 193 | 41 | 193 | 41 | ||||||||||||||||||
Wholesale | ― | ― | 156 | 27 | 156 | 27 | ||||||||||||||||||
291 | $ | 2,659 | 634 | $ | 354 | 925 | 3,013 | |||||||||||||||||
Other revenues | 181 | |||||||||||||||||||||||
Balancing accounts | 295 | |||||||||||||||||||||||
Total(1) | $ | 3,489 | ||||||||||||||||||||||
2014: | ||||||||||||||||||||||||
Residential | 195 | $ | 2,170 | 3 | $ | 16 | 198 | $ | 2,186 | |||||||||||||||
Commercial and industrial | 92 | 743 | 293 | 260 | 385 | 1,003 | ||||||||||||||||||
Electric generation plants | ― | ― | 211 | 42 | 211 | 42 | ||||||||||||||||||
Wholesale | ― | ― | 150 | 24 | 150 | 24 | ||||||||||||||||||
287 | $ | 2,913 | 657 | $ | 342 | 944 | 3,255 | |||||||||||||||||
Other revenues | 103 | |||||||||||||||||||||||
Balancing accounts | 497 | |||||||||||||||||||||||
Total(1) | $ | 3,855 | ||||||||||||||||||||||
2013: | ||||||||||||||||||||||||
Residential | 234 | $ | 2,204 | 2 | $ | 8 | 236 | $ | 2,212 | |||||||||||||||
Commercial and industrial | 100 | 691 | 293 | 242 | 393 | 933 | ||||||||||||||||||
Electric generation plants | ― | ― | 200 | 44 | 200 | 44 | ||||||||||||||||||
Wholesale | ― | ― | 170 | 27 | 170 | 27 | ||||||||||||||||||
334 | $ | 2,895 | 665 | $ | 321 | 999 | 3,216 | |||||||||||||||||
Other revenues | 101 | |||||||||||||||||||||||
Balancing accounts | 419 | |||||||||||||||||||||||
Total(1) | $ | 3,736 | ||||||||||||||||||||||
(1) | Includes sales to affiliates of $75 million in 2015, $69 million in 2014 and $70 million in 2013. |
§ | the decrease in the cost of natural gas sold, as we discuss below; offset by |
§ | $57 million higher revenues from CPUC-authorized 2015 attrition; |
§ | $45 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses; |
§ | $19 million increase from a retroactive increase, approved by the CPUC in 2015, in authorized GRC revenue requirement for years 2012 through 2014 due to increased rate base; and |
§ | $13 million higher regulatory awards. |
§ | an increase in the market price of natural gas purchased, offset by lower volumes, as we discuss below; |
§ | $52 million increase in authorized revenues from 2014 attrition; and |
§ | $30 million higher revenues from the advanced metering infrastructure project; offset by |
§ | $25 million favorable impact from the retroactive application of the 2012 GRC decision for the period from January 2012 through December 2012; and |
§ | $18 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses. |
OTHER UTILITIES | ||||||||||||||||||||||||
NATURAL GAS AND ELECTRIC REVENUES | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||
Volumes | Revenue | Volumes | Revenue | Volumes | Revenue | |||||||||||||||||||
Natural Gas Sales (billion cubic feet): | ||||||||||||||||||||||||
Sempra Mexico – Ecogas | 25 | $ | 81 | 24 | $ | 109 | 24 | $ | 97 | |||||||||||||||
Sempra Natural Gas: | ||||||||||||||||||||||||
Mobile Gas (including transportation) | 47 | 85 | 38 | 89 | 40 | 88 | ||||||||||||||||||
Willmut Gas | 3 | 18 | 3 | 24 | 3 | 21 | ||||||||||||||||||
Total | 75 | $ | 184 | 65 | $ | 222 | 67 | $ | 206 | |||||||||||||||
Electric Sales (million kilowatt hours): | ||||||||||||||||||||||||
Sempra South American Utilities: | ||||||||||||||||||||||||
Luz del Sur | 7,549 | $ | 885 | 7,287 | $ | 854 | 6,984 | $ | 785 | |||||||||||||||
Chilquinta Energía | 2,887 | 504 | 2,944 | 530 | 2,856 | 537 | ||||||||||||||||||
10,436 | 1,389 | 10,231 | 1,384 | 9,840 | 1,322 | |||||||||||||||||||
Other service revenues | 58 | 50 | 61 | |||||||||||||||||||||
Total | $ | 1,447 | $ | 1,434 | $ | 1,383 | ||||||||||||||||||
ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||
Sempra South American Utilities | $ | 97 | 10 | % | $ | 100 | 8 | % | $ | 112 | 9 | % | ||||||||||||
Sempra Mexico | 588 | 60 | 709 | 55 | 578 | 46 | ||||||||||||||||||
Sempra Renewables | 36 | 4 | 35 | 3 | 82 | 7 | ||||||||||||||||||
Sempra Natural Gas | 550 | 56 | 866 | 68 | 799 | 64 | ||||||||||||||||||
Intersegment revenues, eliminations | ||||||||||||||||||||||||
and adjustments(1) | (294 | ) | (30 | ) | (433 | ) | (34 | ) | (323 | ) | (26 | ) | ||||||||||||
Total revenues | $ | 977 | 100 | % | $ | 1,277 | 100 | % | $ | 1,248 | 100 | % | ||||||||||||
COST OF SALES(2) | ||||||||||||||||||||||||
Sempra South American Utilities | $ | 22 | 7 | % | $ | 11 | 2 | % | $ | ― | ― | % | ||||||||||||
Sempra Mexico | 221 | 66 | 350 | 63 | 253 | 58 | ||||||||||||||||||
Sempra Renewables | ― | ― | ― | ― | 3 | 1 | ||||||||||||||||||
Sempra Natural Gas | 375 | 112 | 617 | 112 | 497 | 114 | ||||||||||||||||||
Eliminations and adjustments(1) | (283 | ) | (85 | ) | (426 | ) | (77 | ) | (318 | ) | (73 | ) | ||||||||||||
Total cost of natural gas, electric fuel | ||||||||||||||||||||||||
and purchased power | $ | 335 | 100 | % | $ | 552 | 100 | % | $ | 435 | 100 | % | ||||||||||||
Sempra South American Utilities | $ | 64 | 43 | % | $ | 68 | 42 | % | $ | 84 | 47 | % | ||||||||||||
Sempra Mexico | 15 | 10 | 14 | 8 | 10 | 6 | ||||||||||||||||||
Sempra Natural Gas | 79 | 54 | 89 | 55 | 91 | 51 | ||||||||||||||||||
Eliminations and adjustments(1) | (10 | ) | (7 | ) | (8 | ) | (5 | ) | (7 | ) | (4 | ) | ||||||||||||
Total other cost of sales | $ | 148 | 100 | % | $ | 163 | 100 | % | $ | 178 | 100 | % | ||||||||||||
(1) | Includes eliminations of intercompany activity. | |||||||||||||||||||||||
(2) | Excludes depreciation and amortization, which are shown separately on the Consolidated Statements of Operations. |
Revenues from our energy-related businesses decreased by $300 million (23%) to $977 million in 2015. The decrease included
§ | $316 million decrease at Sempra Natural Gas mainly from lower natural gas prices and volumes and lower power revenues due to the sale of the remaining block of Mesquite Power and a related power sale contract in April 2015, as well as from the deconsolidation of Cameron LNG, LLC as of October 1, 2014; and |
§ | $121 million lower revenues at Sempra Mexico primarily due to lower natural gas prices and volumes in its gas business and lower power prices and volumes and capacity revenues in its power business, offset by higher transportation revenues from a section of the Sonora natural gas pipeline that commenced operations in the fourth quarter of 2014; offset by |
§ | $139 million primarily from lower intercompany eliminations associated with sales between Sempra Natural Gas and Sempra Mexico. |
§ | $131 million higher revenues at Sempra Mexico primarily due to higher natural gas and power prices and volumes, and higher transportation revenues from the start of operations of a section of the Sonora natural gas pipeline; and |
§ | $67 million increase at Sempra Natural Gas mainly from the favorable impact of higher natural gas prices and volumes in 2014 from its LNG marketing operations, offset by lower revenues from its natural gas marketing activities; offset by |
§ | $110 million higher intercompany eliminations primarily associated with sales between Sempra Natural Gas and Sempra Mexico; and |
§ | $47 million lower revenues at Sempra Renewables mainly due to the deconsolidation of Mesquite Solar 1 and Copper Mountain Solar 2 in 2013. |
§ | $242 million decrease at Sempra Natural Gas primarily due to lower natural gas costs and volumes and lower electric fuel costs due to the sale of the remaining block of Mesquite Power in April 2015; and |
§ | $129 million decrease at Sempra Mexico primarily due to lower natural gas costs and volumes; offset by |
§ | $143 million primarily from lower intercompany eliminations of costs associated with sales between Sempra Natural Gas and Sempra Mexico. |
§ | $120 million increase at Sempra Natural Gas primarily due to higher natural gas costs and volumes; and |
§ | $97 million increase at Sempra Mexico primarily due to higher natural gas costs and volumes; offset by |
§ | $108 million higher intercompany eliminations of costs primarily associated with sales between Sempra Natural Gas and Sempra Mexico. |
OPERATION AND MAINTENANCE | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Years ended December 31, | |||||||||||||||||||||||||
2015 | 2014 | 2013 | |||||||||||||||||||||||
California Utilities: | |||||||||||||||||||||||||
SDG&E | $ | 1,017 | 35 | % | $ | 1,076 | 37 | % | $ | 1,157 | 39 | % | |||||||||||||
SoCalGas | 1,370 | 47 | 1,321 | 45 | 1,324 | 44 | |||||||||||||||||||
Sempra International: | |||||||||||||||||||||||||
Sempra South American Utilities | 160 | 6 | 173 | 6 | 170 | 6 | |||||||||||||||||||
Sempra Mexico | 126 | 4 | 121 | 4 | 124 | 4 | |||||||||||||||||||
Sempra U.S. Gas & Power: | |||||||||||||||||||||||||
Sempra Renewables | 50 | 2 | 50 | 2 | 46 | 1 | |||||||||||||||||||
Sempra Natural Gas | 177 | 6 | 181 | 6 | 167 | 6 | |||||||||||||||||||
Parent and other(1) | (5 | ) | ― | 13 | ― | 7 | ― | ||||||||||||||||||
Total operation and maintenance | $ | 2,895 | 100 | % | $ | 2,935 | 100 | % | $ | 2,995 | 100 | % | |||||||||||||
(1) | Includes intercompany eliminations recorded in consolidation. |
§ | $59 million decrease at SDG&E, which we discuss below; and |
§ | $18 million decrease at Parent and Other primarily due to lower employee benefit and deferred compensation costs; offset by |
§ | $49 million increase at SoCalGas, which we discuss below. |
§ | $81 million decrease at SDG&E, which we discuss below; and |
§ | $3 million decrease at SoCalGas, which we discuss below; offset by |
§ | $14 million increase at Sempra Natural Gas primarily due to higher operating expenses at its LNG operations. |
§ | $53 million lower expenses associated with CPUC-authorized refundable programs, for which all costs incurred are fully recovered in revenue (refundable program expenses); and |
§ | $8 million lower non-refundable operating costs, including $11 million lower major maintenance costs at its electric generating facilities, as well as labor, contract services and administrative and support costs. |
§ | $44 million lower expenses associated with CPUC-authorized refundable programs, including $61 million due to lower operation and maintenance expenses at SONGS, for which all costs incurred are fully recovered in revenue (refundable program expenses); |
§ | $23 million lower non-refundable operating costs, including labor, contract services and administrative and support costs; and |
§ | $8 million lower litigation expense. |
§ | $18 million lower expenses associated with CPUC-authorized refundable programs for which all costs incurred are fully recovered in revenue (refundable program expenses); offset by |
§ | $9 million higher non-refundable operating costs, including labor, contract services and administrative and support costs; and |
§ | $7 million insurance recovery in 2013 of previously expensed costs. |
§ | $1,250 million in 2015 |
§ | $1,156 million in 2014 |
§ | $1,113 million in 2013 |
§ | $74 million higher depreciation and amortization at SDG&E mainly from $42 million from the start of amortization of SONGS regulatory assets and from higher utility plant base. As we discuss in Note 13 of the Notes to Consolidated Financial Statements, based on an amended settlement agreement approved by the CPUC in 2014, SDG&E is authorized to recover in rates its remaining investment in SONGS, including base plant and construction work in progress; and |
§ | $30 million higher depreciation at SoCalGas from higher utility plant base; offset by |
§ | $12 million lower depreciation expense at Sempra Natural Gas primarily due to the deconsolidation of Cameron LNG, LLC as of October 1, 2014. |
§ | $33 million higher depreciation at SoCalGas from higher utility plant base; |
§ | $18 million net increase in depreciation at SDG&E mainly from higher utility plant base, offset by lower depreciation from the retirement of SONGS; and |
§ | lower depreciation in 2013 of $18 million at SDG&E and $15 million at SoCalGas due to the retroactive application to the period of January 1 to December 2012 of the extension of the useful lives of depreciable assets as adopted in the 2012 GRC; offset by |
§ | $16 million lower depreciation at Sempra Renewables mainly related to the deconsolidation of Mesquite Solar 1 and Copper Mountain Solar 2 in 2013; and |
§ | $20 million lower depreciation expense at Sempra Natural Gas largely due to the classification of the second block of the Mesquite Power plant as an asset held for sale in January 2014. |
§ | $27 million ($16 million after-tax) for Copper Mountain Solar 3 |
§ | $19 million ($14 million after-tax) for the first phase of the Energía Sierra Juárez Wind project |
§ | $14 million ($8 million after-tax) for the Broken Bow 2 Wind project |
§ | $36 million ($22 million after-tax) for Mesquite Solar 1 |
§ | $4 million ($2 million after-tax) for Copper Mountain Solar 2 |
§ | $104 million in 2015 |
§ | $81 million in 2014 |
§ | $31 million in 2013 |
§ | $19 million higher equity earnings from Rockies Express mainly due to east-to-west capacity placed in service in 2015; and |
§ | $4 million higher earnings at Sempra Renewables due to higher earnings from increased solar capacity, offset by lower earnings from decreased production at wind projects. |
§ | $20 million equity earnings in 2014 compared to $12 million equity losses in 2013 from investments at Sempra Renewables, including Mesquite Solar 1, the California solar partnership, Fowler Ridge 2 Wind and Copper Mountain Solar 2; and |
§ | $13 million higher equity earnings from Rockies Express. |
§ | $126 million in 2015 |
§ | $137 million in 2014 |
§ | $140 million in 2013 |
§ | $24 million lower investment gains in 2015 on dedicated assets in support of our executive retirement and deferred compensation plans; and |
§ | $14 million lower electrical infrastructure income in Peru; offset by |
§ | $11 million lower net losses on interest rate and foreign exchange instruments in 2015; |
§ | $9 million higher income from the sale of other investments; |
§ | $8 million lower foreign currency losses in 2015; and |
§ | $1 million increase in equity-related AFUDC, including |
□ | $10 million increase at SoCalGas, offset by |
□ | $10 million decrease at Sempra Mexico related to construction of the Sonora natural gas pipeline. |
§ | $15 million losses on interest rate and foreign exchange instruments in 2014 compared to $17 million gains in 2013; |
§ | $12 million higher foreign currency losses, primarily at Sempra Mexico; and |
§ | $12 million lower investment gains on dedicated assets in support of our executive retirement and deferred compensation plans; offset by |
§ | $31 million increase in equity-related AFUDC, including |
□ | $24 million increase at Sempra Mexico related to construction of the Sonora natural gas pipeline, and |
□ | $9 million increase at SoCalGas; and |
§ | $17 million higher income from relocation of electrical infrastructure in Peru. |
INTEREST EXPENSE | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated | $ | 561 | $ | 554 | $ | 559 | ||||||
SDG&E | 204 | 202 | 197 | |||||||||
SoCalGas | 84 | 69 | 69 |
§ | $24 million increase in long-term debt interest at Parent and Other primarily due to debt issuances in 2014 and 2015, net of maturities; and |
§ | $15 million increase at SoCalGas primarily due to debt issuances in 2014 and 2015; offset by |
§ | $33 million increase in capitalized interest at Sempra Natural Gas primarily related to its investment in Cameron LNG JV, which has not commenced its planned principal operations. |
INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||
Income | Effective | Income | Effective | Income | Effective | |||||||||||||||||||
tax | income | tax | income | tax | income | |||||||||||||||||||
expense | tax rate | expense | tax rate | expense | tax rate | |||||||||||||||||||
Sempra Energy Consolidated | $ | 341 | 20 | % | $ | 300 | 20 | % | $ | 366 | 26 | % | ||||||||||||
SDG&E | 284 | 32 | 270 | 34 | 191 | 31 | ||||||||||||||||||
SoCalGas | 138 | 25 | 139 | 29 | 116 | 24 | ||||||||||||||||||
§ | $21 million higher favorable resolution of prior years’ income tax items in 2015; |
§ | $20 million U.S income tax expense in 2015 on the planned repatriation of current year earnings from certain non-U.S. subsidiaries, compared to $38 million in 2014, discussed below; and |
§ | $17 million charge in 2014 to reduce certain tax regulatory assets attributed to SDG&E’s investment in SONGS, as we discuss in Note 13 of the Notes to Consolidated Financial Statements; offset by |
§ | $25 million tax benefit in 2014 due to the release of Louisiana state valuation allowance against a deferred tax asset associated with Cameron LNG developments. |
§ | $63 million income tax expense recorded in the first quarter of 2013 resulting from a corporate reorganization in connection with the IEnova stock offerings. We discuss the stock offerings further in Note 1 of the Notes to Consolidated Financial Statements; |
§ | higher income tax benefit in 2014 from foreign currency translation and inflation adjustments; |
§ | $25 million tax benefit in 2014 due to the release of Louisiana state valuation allowance against a deferred tax asset associated with Cameron LNG developments; and |
§ | higher deferred income tax benefits related to renewable energy projects; offset by |
§ | $38 million U.S. income tax expense in 2014 on the repatriation of a portion of 2014 earnings from certain non-U.S. subsidiaries; and |
§ | $17 million charge in 2014 to reduce certain tax regulatory assets attributed to SDG&E’s investment in SONGS. |
§ | $17 million charge in 2014 to reduce certain tax regulatory assets attributed to SDG&E’s investment in SONGS; offset by |
§ | higher favorable resolution of prior years’ income tax items in 2014. |
§ | $10 million higher favorable resolution of prior years’ income tax items in 2015; |
§ | higher deductions for certain repairs expenditures that are capitalized for financial statement purposes; and |
§ | higher deductions for self-developed software expenditures. |
§ | $15 million lower favorable resolution of prior years’ income tax items in 2014; |
§ | higher unfavorable impact on our effective tax rate in 2014 from the reversal through book depreciation of previously recognized tax benefits for a certain portion of utility fixed assets; and |
§ | lower deductions for self-developed software expenditures. |
§ | repairs expenditures related to a certain portion of utility plant assets |
§ | the equity portion of AFUDC |
§ | a portion of the cost of removal of utility plant assets |
§ | utility self-developed software expenditures |
§ | depreciation on a certain portion of utility plant assets |
§ | state income taxes |
§ | Higher Corporate Tax Rate: The new corporate income tax rate is 30 percent for 2014 and future years. In 2013, we recorded $13 million additional income tax expense related to the revaluation of deferred tax liabilities. |
§ | Tax Consolidation: The tax reform legislation removed the ability to utilize the NOLs of one company to offset the tax liabilities of another within a Mexican consolidated group (deconsolidation rule). As a result of the deconsolidation rule and IEnova’s corporate reorganization, we made a payment of $81 million in 2014 against current tax liabilities and taxes on prior intercompany distributions in excess of previously taxed earnings. |
§ | 10-Percent Dividends Tax: The law instituted a “corporate” tax on dividends, payable by the Mexican entity that distributes the dividend to its foreign shareholder, which increased Mexico’s income tax rate to an effective 37 percent. Under the law, this tax is reduced or offset in accordance with bilateral tax treaties. The dividends from our Mexican entities to Sempra Energy will be to a country which has a bilateral tax treaty with Mexico that we expect will fully offset the tax. Accordingly, we do not expect this rule to have a material financial impact. |
MEXICAN CURRENCY AND INFLATION IMPACT ON INCOME TAXES AND RELATED ECONOMIC HEDGING ACTIVITY | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Income tax benefit (expense) on currency exchange | ||||||||||||
rate movement of monetary assets and liabilities | $ | 27 | $ | 22 | $ | (6 | ) | |||||
Translation of non-U.S. deferred income tax balances | 10 | 15 | 1 | |||||||||
Income tax expense on inflation | (3 | ) | (3 | ) | ― | |||||||
Total impact included in Income Tax Benefit (Expense) | 34 | 34 | (5 | ) | ||||||||
After-tax (losses) gains on Mexican peso exchange rate | ||||||||||||
instruments (included in Other Income, Net) | (2 | ) | (17 | ) | 4 | |||||||
Net impact on Sempra Energy Consolidated | ||||||||||||
Statements of Operations | $ | 32 | $ | 17 | $ | (1 | ) |
§ | $85 million in 2015 |
§ | $38 million in 2014 |
§ | $24 million in 2013 |
§ | start of operations in December 2014 of Los Ramones I, a pipeline that IEnova owns through GdC, a joint venture with PEMEX; |
§ | higher earnings from the Energía Sierra Juárez wind-powered electric generation facility commencing operations in the second quarter of 2015; and |
§ | equity-related AFUDC for the Los Ramones Norte pipeline project, which IEnova is developing under a joint venture with PEMEX and affiliates of PEMEX. |
§ | $7 million decrease in earnings attributable to noncontrolling interests at Sempra South American Utilities, before adjustments for the effects of foreign currency translation; offset by |
§ | $6 million increase in earnings attributable to noncontrolling interests of IEnova in 2015. |
§ | $21 million increase in earnings attributable to noncontrolling interests of IEnova in 2014; and |
§ | $5 million increase in earnings attributable to noncontrolling interests at Sempra South American Utilities in 2014; offset by |
§ | $4 million decrease in earnings attributable to noncontrolling interest at Otay Mesa VIE in 2014. |
§ | $47.56 in 2015 |
§ | $45.98 in 2014 |
§ | $45.03 in 2013 |
§ | $3 billion issuances of debt, including $444 million at SDG&E and $599 million at SoCalGas |
§ | $373 million net cash proceeds from Sempra Natural Gas’ sale of the remaining block of the Mesquite Power plant and a related power sale contract, and Sempra Renewables’ sale of the Rosamond Solar development project |
§ | $60 million withdrawals from the Nuclear Decommissioning Trust assets at SDG&E for SONGS decommissioning costs. We discuss the Nuclear Decommissioning Trusts further in Note 13 of the Notes to Consolidated Financial Statements |
§ | $43 million in net repayments of advances to unconsolidated affiliates |
§ | $(3.2) billion in expenditures for property, plant and equipment, including $(1.1) billion at SDG&E and $(1.4) billion at SoCalGas |
§ | $(1.9) billion of debt retirements and paydowns, including debt retirements of $(547) million at SDG&E |
§ | $(628) million common dividends paid |
§ | $(622) million net decrease in short-term debt |
§ | $(174) million for joint venture investments at Sempra Natural Gas, including $(113) million for Rockies Express to repay project debt and $(59) million for Cameron LNG JV, including $(49) million of capitalized interest on Sempra Natural Gas’ investment in Cameron LNG JV, which has not commenced its planned principal operations |
AVAILABLE FUNDS AT DECEMBER 31, 2015 | ||||||||||||||
(Dollars in millions) | ||||||||||||||
Sempra Energy | ||||||||||||||
Consolidated | SDG&E | SoCalGas | ||||||||||||
Unrestricted cash and cash equivalents(1) | $ | 403 | $ | 20 | $ | 58 | ||||||||
Available unused credit(2) | 3,707 | 582 | 750 | |||||||||||
(1 | ) | Amounts at Sempra Energy Consolidated include $301 million held in non-U.S. jurisdictions that are unavailable to fund U.S. operations unless repatriated, as we discuss below. | ||||||||||||
(2 | ) | Available credit is the total available on Sempra Energy's, Sempra Global's and the California Utilities' credit facilities that we discuss in Note 5 of the Notes to Consolidated Financial Statements. Borrowings on the shared line of credit at SDG&E and SoCalGas are limited to $750 million for each utility and a combined total of $1 billion. SDG&E's available funds reflect commercial paper outstanding of $168 million supported by the line. |
§ | finance capital expenditures |
§ | meet liquidity requirements |
§ | fund shareholder dividends |
§ | provide funding to new business acquisitions or start-ups |
§ | repay maturing long-term debt |
COMMERCIAL PAPER STATISTICS | ||||||||||||
(Dollars in millions) | ||||||||||||
Sempra Energy Consolidated | SDG&E | SoCalGas | ||||||||||
Amount outstanding at December 31, 2015 | $ | 503 | $ | 168 | $ | ― | ||||||
Weighted average interest rate at December 31, 2015 | 0.854 | % | 1.015 | % | 0.00 | % | ||||||
Maximum month-end amount outstanding during 2015(1) | $ | 1,940 | $ | 414 | $ | 220 | ||||||
Monthly weighted average amount outstanding during 2015 | $ | 980 | $ | 129 | $ | 34 | ||||||
Monthly weighted average interest rate during 2015 | 0.55 | % | 0.383 | % | 0.145 | % |
(1) | The largest amount outstanding at the end of the last day of any month during the year. |
§ | common stock dividend payments ($628 million) by Sempra Energy; |
§ | equity method investment of $113 million for Rockies Express; and |
§ | interest payments on debt (approximately $250 million); offset by |
§ | long-term debt issuance at Sempra Energy ($1.3 billion); |
§ | common stock dividends received from SDG&E ($300 million) and SoCalGas ($50 million); and |
§ | net cash proceeds from Sempra Natural Gas’ sale of the remaining block of the Mesquite Power plant and a related power sale contract ($347 million). |
§ | settlement reached with Nuclear Energy Insurance Limited (NEIL) for insurance claims covering power replacement costs associated with the permanent retirement of SONGS. Consistent with terms of the SONGS settlement, after reimbursement of legal fees and 5-percent allocation to shareholders, the net proceeds of $75 million were credited to ERRA; we discuss SONGS in Note 13 of the Notes to Consolidated Financial Statements |
§ | CPUC approval to access Nuclear Decommissioning Trust funds for reimbursement of nuclear decommissioning costs incurred in 2013 and 2014, as we discuss in Note 14 of the Notes to Consolidated Financial Statements |
§ | decrease in natural gas prices |
§ | continued collection of $221 million in ERRA Trigger revenue requirement as approved by the CPUC in the first quarter of 2014. The ERRA Trigger rate increase was effective on April 1, 2014 and continued through December 31, 2015. |
CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
2015 | 2015 change | 2014 | 2014 change | 2013 | ||||||||||||||||||||||||
Sempra Energy Consolidated | $ | 2,905 | $ | 744 | 34 | % | $ | 2,161 | $ | 377 | 21 | % | $ | 1,784 | ||||||||||||||
SDG&E | 1,664 | 567 | 52 | 1,097 | 378 | 53 | 719 | |||||||||||||||||||||
SoCalGas | 880 | 115 | 15 | 765 | 84 | 12 | 681 |
§ | $544 million net decrease in net undercollected regulatory balancing accounts in 2015 at the California Utilities (including long-term amounts included in regulatory assets) compared to a $277 million net increase in 2014. Over- and undercollected regulatory balancing accounts reflect the difference between customer billings and recorded or CPUC-authorized costs. These differences are required to be balanced over time. See further discussion of changes in regulatory balances at both SDG&E and SoCalGas below; |
§ | $245 million higher net income, adjusted for noncash items included in earnings, in 2015 compared to 2014, primarily due to improved operations at the California Utilities, as well as higher pipeline earnings at Sempra Mexico, as we discuss in “Results of Operations” above; |
§ | $65 million decrease in inventories in 2015 compared to a $133 million increase in 2014, primarily due to mandated natural gas withdrawals, as well as lower volume added to storage at SoCalGas in 2015 as a result of a moratorium on natural gas injections at its Aliso Canyon natural gas storage facility; and |
§ | $126 million decrease in settlement payments and associated legal fees for wildfire claims at SDG&E in 2015 compared to 2014; offset by |
§ | $157 million decrease in accounts payable in 2015 compared to a $109 million increase in 2014, primarily due to lower average cost of natural gas purchased at SoCalGas, as well as the moratorium on natural gas injections at its Aliso Canyon storage facility; |
§ | $179 million in purchases of greenhouse gas allowances ($117 million at SDG&E and $62 million at SoCalGas); |
§ | $99 million increase in accounts receivable in 2015 compared to a $44 million decrease in 2014. The 2015 increase was primarily due to an increase in physical gas sales at SoCalGas; and |
§ | $325 million receivable for expected insurance recovery of certain expenditures related to the natural gas leak at the Aliso Canyon storage facility, and $274 million reserve for accrued expenditures expected to be paid in 2016 related to the leak. We discuss the Aliso Canyon leak further in Note 15 of the Notes to Consolidated Financial Statements, in “Factors Influencing Future Performance” below and in “Risk Factors” in our 2015 Annual Report on Form 10-K. |
§ | $277 million increase in net undercollected regulatory balancing accounts in 2014 at the California Utilities (including long-term amounts included in regulatory assets) compared to a $411 million increase in 2013; |
§ | $44 million decrease in accounts receivable in 2014 compared to a $273 million increase in 2013; the change was mainly due to a $30 million decrease at SoCalGas in 2014 compared to a $113 million increase in 2013, primarily due to a decrease in physical gas sales in December 2014 compared to December 2013, and a $39 million decrease in natural gas sales at Sempra Natural Gas in 2014 compared to a $69 million increase in 2013; |
§ | $109 million increase in accounts payable in 2014 compared to a $28 million decrease in 2013, mainly due to an increase in 2014 related to natural gas purchased at SoCalGas; and |
§ | $82 million decrease in settlement payments and associated legal fees for wildfire claims at SDG&E in 2014 compared to 2013; offset by |
§ | $133 million increase in inventory in 2014 compared to a $116 million decrease in 2013; the 2014 increase was mainly due to a $113 million increase at SoCalGas, primarily due to higher natural gas storage volume; and |
§ | $86 million lower net income, adjusted for noncash items included in earnings, in 2014. |
§ | $474 million decrease in net undercollected regulatory balancing accounts in 2015 compared to a $47 million increase in 2014 (including long-term amounts included in regulatory assets in 2014). The 2015 decrease was primarily associated with the electric commodity accounts; |
§ | $126 million decrease in settlement payments and associated legal fees for wildfire claims in 2015 compared to 2014; and |
§ | $102 million higher net income, adjusted for noncash items included in earnings, in 2015 compared to 2014, primarily due to improved operations; offset by |
§ | $117 million in purchases of greenhouse gas allowances in 2015; and |
§ | $88 million income tax payments, net of income tax refunds, in 2015 due to full utilization of net operating losses carried forward in 2015. |
§ | $47 million increase in net undercollected regulatory balancing accounts in 2014 (including long-term amounts included in regulatory assets) compared to a $301 million increase in 2013; and |
§ | $82 million decrease in settlement payments and associated legal fees for wildfire claims in 2014 compared to 2013. |
§ | $70 million decrease in net undercollected regulatory balancing accounts in 2015 (including long-term amounts included in regulatory assets) compared to a $230 million decrease in net overcollected regulatory balancing accounts in 2014, primarily due to changes associated with the fixed cost balancing accounts; |
§ | $102 million decrease in inventories in 2015 compared to a $113 million increase in 2014, primarily due to mandated natural gas withdrawals, as well as lower volume added to storage in 2015 as a result of a moratorium on natural gas injections at the Aliso Canyon natural gas storage facility; and |
§ | $110 million higher net income, adjusted for noncash items included in earnings, in 2015 compared to 2014, primarily due to improved operations; offset by |
§ | $143 million decrease in accounts payable in 2015 compared to a $156 million increase in 2014, primarily due to lower average cost of natural gas purchased, as well as the moratorium on natural gas injections at its Aliso Canyon facility; |
§ | $90 million increase in accounts receivable in 2015 compared to a $30 million decrease in 2014. The increase in 2015 was primarily due to an increase in physical gas sales in 2015; |
§ | $62 million in purchases of greenhouse gas allowances in 2015; and |
§ | $325 million receivable for expected insurance recovery of certain expenditures related to the natural gas leak at the Aliso Canyon storage facility, and $274 million reserve for accrued expenditures expected to be paid in 2016 related to the leak. |
§ | $156 million increase in accounts payable in 2014 compared to a $54 million decrease in 2013, primarily due to a $75 million increase in natural gas purchases in 2014 compared to a $65 million decrease in 2013; |
§ | $30 million decrease in accounts receivable in 2014 compared to a $113 million increase in 2013, primarily due to a decrease in physical gas sales in December 2014 compared to December 2013; and |
§ | $27 million higher net income, adjusted for noncash items included in earnings, in 2014 compared to 2013; offset by |
§ | $230 million decrease in net overcollected regulatory balancing accounts in 2014 (including long-term amounts included in regulatory assets) compared to $110 million decrease in 2013; and |
§ | $113 million increase in inventory in 2014 compared to an $82 million decrease in 2013, primarily due to higher volume of natural gas added to storage in 2014 compared to 2013 as a result of colder than normal weather in the fourth quarter of 2013, which left a lower volume of natural gas in storage at the end of 2013 compared to the end of 2012, combined with higher gas prices in 2014. |
CONTRIBUTIONS TO PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | |||||||||||||||||||
Sempra Energy Consolidated | $ | 33 | $ | 128 | $ | 133 | $ | 11 | $ | 16 | $ | 27 | ||||||||||||
SDG&E | 2 | 56 | 51 | 7 | 14 | 14 | ||||||||||||||||||
SoCalGas | 6 | 39 | 59 | 1 | ― | 9 |
CASH USED IN INVESTING ACTIVITIES | ||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
2015 | 2015 change | 2014 | 2014 change | 2013 | ||||||||||||||||||||||||
Sempra Energy Consolidated | $ | (2,885 | ) | $ | (457 | ) | (14 | )% | $ | (3,342 | ) | $ | 1,653 | 98 | % | $ | (1,689 | ) | ||||||||||
SDG&E | (1,086 | ) | (40 | ) | (4 | ) | (1,126 | ) | 153 | 16 | (973 | ) | ||||||||||||||||
SoCalGas | (1,402 | ) | 298 | 27 | (1,104 | ) | 376 | 52 | (728 | ) |
§ | $347 million of net proceeds received from Sempra Natural Gas’ sale of the remaining 625-MW block of its Mesquite Power plant and a related power sale contract in 2015; |
§ | $43 million net decrease in advances to unconsolidated affiliates in 2015 compared to $167 million net increase in advances in 2014; |
§ | $60 million decrease in Nuclear Decommissioning Trust assets at SDG&E in 2015 due to withdrawals for SONGS decommissioning costs incurred in 2013 and 2014. We discuss the Nuclear Decommissioning Trusts further in Note 13 of the Notes to Consolidated Financial Statements; and |
§ | $26 million proceeds received from Sempra Renewables’ sale of the Rosamond Solar development project; offset by |
§ | in 2014, $148 million cash proceeds, net of cash sold, from Sempra Renewables’ sale of 50-percent equity interests in Copper Mountain Solar 3 ($66 million) and Broken Bow 2 Wind ($58 million), and Sempra Mexico’s sale of a 50-percent equity interest in Energía Sierra Juárez ($24 million); and |
§ | $33 million higher capital expenditures in 2015. |
§ | $551 million increase in capital expenditures; |
§ | $371 million of proceeds received in 2013 from Sempra Natural Gas’ sale of the first block of its Mesquite Power plant; |
§ | $214 million invested in Sempra Renewables’ joint venture partnerships in 2014; |
§ | $238 million U.S. Treasury grant proceeds received in 2013; |
§ | $153 million higher increase in net advances to affiliates in 2014; and |
§ | $50 million distribution in 2013 from RBS Sempra Commodities LLP (RBS Sempra Commodities). |
§ | $60 million decrease in Nuclear Decommissioning Trust assets in 2015 as a result of CPUC authorization to access trust funds for SONGS decommissioning costs incurred in 2013 and 2014; and |
§ | $30 million expenditures related to a long-term service agreement in 2014; offset by |
§ | $33 million increase in capital expenditures. |
§ | $248 million increase in capital expenditures; and |
§ | $50 million increase in net advances to Sempra Energy in 2015. |
§ | $342 million increase in capital expenditures; and |
§ | $34 million decrease in net advances to Sempra Energy in 2013. |
SEMPRA ENERGY CONSOLIDATED | ||||||||
CAPITAL EXPENDITURES AND INVESTMENTS/ACQUISITIONS | ||||||||
(Dollars in millions) | ||||||||
Property, plant and equipment | Investments and acquisition of businesses | |||||||
2015 | $ | 3,156 | $ | 200 | ||||
2014 | 3,123 | 240 | ||||||
2013 | 2,572 | 22 | ||||||
2012 | 2,956 | 445 | ||||||
2011 | 2,844 | 941 |
(Dollars in millions) | 2015 | 2014 | 2013 | |||||||||
SDG&E | $ | 1,133 | $ | 1,100 | $ | 978 | ||||||
SoCalGas | 1,352 | 1,104 | 762 |
§ | $737 million for improvements to natural gas, including pipeline safety, and electric generation and distribution systems |
§ | $396 million for improvements to electric transmission systems |
§ | $1.1 billion for improvements to distribution, transmission and storage systems, and for pipeline safety, including $361 million for the Pipeline Safety Enhancement Plan (PSEP) |
§ | $206 million for advanced metering infrastructure |
§ | $12 million for other natural gas projects |
§ | $33 million for construction of Mesquite Solar 3 |
§ | $23 million for construction of Copper Mountain Solar 4 |
§ | $14 million for construction of the Black Oak Getty wind project |
§ | $6 million for construction of Mesquite Solar 2 |
§ | $114 million for construction of Broken Bow 2 Wind |
§ | $74 million for construction of Copper Mountain Solar 3 |
§ | $93 million for Copper Mountain Solar 3 |
§ | $46 million for Mesquite Solar 1 |
§ | $26 million for Broken Bow 2 Wind |
§ | $9 million for Copper Mountain Solar 2 |
§ | $55 million for development of the Cameron Interstate Pipeline and other LNG liquefaction development costs, and $7 million for additional capacity at Bay Gas in 2015 |
§ | $135 million for Cameron LNG terminal and liquefaction project before formation of Cameron LNG JV, and $58 million for additional capacity at Bay Gas and Mississippi Hub in 2014 |
§ | $36 million for Cameron LNG terminal and liquefaction project, and $29 million for development of approximately 13 Bcf of additional capacity at Bay Gas and Mississippi Hub in 2013 |
EXPENDITURES FOR INVESTMENTS AND ACQUISITION OF BUSINESSES(1) | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Renewables: | ||||||||||||
Auwahi Wind | $ | ― | $ | ― | $ | 1 | ||||||
Black Oak Getty Wind(2) | 3 | ― | ― | |||||||||
Broken Bow 2 Wind | ― | ― | 11 | |||||||||
California solar partnership | ― | 121 | ― | |||||||||
Copper Mountain Solar 2 | ― | 3 | ― | |||||||||
Copper Mountain Solar 3 | 5 | 86 | ― | |||||||||
Flat Ridge 2 Wind | 3 | ― | 4 | |||||||||
Mehoopany Wind | 13 | 4 | 1 | |||||||||
Sempra Natural Gas: | ||||||||||||
Cameron LNG JV(3) | 59 | 18 | ― | |||||||||
Mississippi Hub LLC(4) | 2 | ― | 3 | |||||||||
Rockies Express Pipeline LLC(5) | 113 | ― | ― | |||||||||
Willmut Gas Company | ― | ― | 2 | |||||||||
Parent and other | 2 | 8 | ― | |||||||||
Total | $ | 200 | $ | 240 | $ | 22 | ||||||
(1) Net of cash acquired. | ||||||||||||
(2) Excludes accrued purchase price of $5 million. | ||||||||||||
(3) Includes capitalized interest of $49 million and $12 million in 2015 and 2014, respectively, on Sempra Natural Gas' investment, as the joint venture has not commenced planned principal operations. | ||||||||||||
(4) Investment in industrial development bonds. | ||||||||||||
(5) Repayment of project debt that matured in early 2015. |
DISTRIBUTIONS FROM INVESTMENTS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Renewables(1) | $ | 15 | $ | 11 | $ | 67 | ||||||
Sempra Natural Gas(2) | ― | ― | 31 | |||||||||
Parent and other(3) | ― | 2 | 54 | |||||||||
Total | $ | 15 | $ | 13 | $ | 152 | ||||||
(1) Distributions in 2013 include $15 million related to U.S. Treasury grant proceeds received at the Auwahi Wind joint venture. | ||||||||||||
(2) Distributions at Sempra Natural Gas in 2013 were from Rockies Express. | ||||||||||||
(3) Distributions in 2013 include $50 million from RBS Sempra Commodities LLP. |
§ | $2.7 billion at the California Utilities for capital projects and plant improvements ($1.3 billion at SDG&E and $1.4 billion at SoCalGas), excluding incremental amounts that may result from the natural gas leak at the Aliso Canyon facility or the related increased requirements for all natural gas storage facilities |
§ | $2.4 billion at our other subsidiaries for acquisition of our joint venture partner’s 50-percent interest in GdC, capital projects in Mexico and South America, and development of LNG, natural gas and renewable generation projects |
§ | $800 million for improvements to natural gas, including pipeline safety, and electric generation and distribution systems |
§ | $500 million for improvements to electric transmission systems |
§ | $1.2 billion for improvements to distribution, transmission and storage systems, and for pipeline safety, including $350 million for the PSEP |
§ | $100 million for advanced metering infrastructure |
§ | $100 million for other natural gas projects |
§ | $6 billion at SDG&E |
§ | $5.9 billion at SoCalGas |
§ | approximately $220 million for capital projects in South America (approximately $160 million and $60 million in Peru and Chile, respectively), primarily related to improvements to electric transmission and distribution systems |
§ | approximately $450 million to $500 million for capital projects, including approximately $400 million for the development of the Sonora, Ojinaga and San Isidro – Samalayuca pipeline projects, all developed solely by Sempra Mexico |
§ | funds for the acquisition of our joint venture partner’s 50-percent interest in GdC, as we discuss in Note 3 of the Notes to Consolidated Financial Statements. |
§ | approximately $400 million (net of financing and partnership structures) for the development of wind and solar renewable projects, including Black Oak Getty Wind, Mesquite Solar 2, Mesquite Solar 3 and Copper Mountain Solar 4 |
§ | approximately $250 million for development of LNG and natural gas transportation projects, including |
□ | approximately $80 million equity investment in Rockies Express |
□ | approximately $50 million capitalized interest on our investment in the Cameron LNG JV, and $80 million for development of the Cameron Interstate Pipeline |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
2015 | 2015 change | 2014 | 2014 change | 2013 | ||||||||||||||||
Sempra Energy Consolidated | $ | (173 | ) | $ | (1,027 | ) | $ | 854 | $ | 516 | $ | 338 | ||||||||
SDG&E | (566 | ) | (576 | ) | 10 | (184 | ) | 194 | ||||||||||||
SoCalGas | 495 | 98 | 397 | 406 | (9 | ) |
§ | $622 million net decrease in short-term debt in 2015 compared to a $412 million net increase in 2014; and |
§ | $280 million lower issuances of debt, including a decrease in commercial paper and other short-term debt borrowings with maturities greater than 90 days of $630 million (issuances of $633 million in 2015 compared to $1.3 billion in 2014), offset by higher issuances of long-term debt of $350 million (issuances of $2.4 billion in 2015 compared to $2 billion in 2014); offset by |
§ | $180 million lower payments on debt, including lower payments of long-term debt of $467 million (payments of $736 million in 2015 compared to $1.2 billion in 2014), offset by higher payments of commercial paper and other short-term debt with maturities greater than 90 days of $287 million (payments of $1.1 billion in 2015 compared to $831 million in 2014); |
§ | $74 million purchase of noncontrolling interests in 2014; and |
§ | $52 million tax benefit related to share-based compensation in 2015 (see additional discussion in Note 6 of the Notes to Consolidated Financial Statements). |
§ | $1.2 billion higher issuances of debt, including an increase in issuances of long-term debt of $373 million ($2 billion in 2014 compared to $1.6 billion in 2013) and an increase in commercial paper and other short-term debt with maturities greater than 90 days of $818 million ($1.3 billion increase in 2014 compared to $445 million in 2013); and |
§ | $412 million net increase in short-term debt in 2014 compared to $256 million in 2013; offset by |
§ | $574 million net proceeds received in 2013 from the sale of noncontrolling interests at Sempra Mexico; and |
§ | $246 million higher payments on debt, including higher payments of long-term debt of $219 million ($1.2 billion in 2014 compared to $984 million in 2013), and higher payments of commercial paper and other short-term debt with maturities greater than 90 days of $27 million ($831 million in 2014 compared to $804 million in 2013). |
§ | $523 million higher payments on long-term debt in 2015; |
§ | $131 million net decrease in short-term debt in 2015 compared to a $187 million net increase in 2014; and |
§ | $100 million increase in common stock dividends paid ($300 million in 2015 compared to $200 million in 2014); offset by |
§ | $344 million higher issuances of debt with maturities greater than 90 days in 2015. |
§ | $350 million lower issuance of long-term debt; and |
§ | $200 million common stock dividends paid in 2014; offset by |
§ | $175 million lower payments on long-term debt; and |
§ | $128 million higher net increase in short-term debt. |
§ | $250 million payments of long-term debt in 2014; and |
§ | $50 million lower common stock dividends paid in 2015; offset by |
§ | $148 million lower issuances of long-term debt in 2015; and |
§ | $50 million net decrease in short-term debt in 2015 compared to an $8 million net increase in 2014. |
§ | $747 million net proceeds from the issuance of long-term debt in 2014; offset by |
§ | $250 million payment of long-term debt in 2014; |
§ | $50 million increase in common stock dividends paid ($100 million in 2014 compared to $50 million in 2013); and |
§ | $34 million lower net increase in short-term debt. |
LONG-TERM DEBT(1) | ||||||||||||
(Dollars in millions) | ||||||||||||
At December 31, | ||||||||||||
2015 | 2014(2) | 2013(2) | ||||||||||
Sempra Energy Consolidated | $ | 14,041 | $ | 12,555 | $ | 12,321 | ||||||
SDG&E | 4,505 | 4,648 | 4,514 | |||||||||
SoCalGas | 2,490 | 1,891 | 1,402 | |||||||||
(1) Includes current portion of long-term debt. | ||||||||||||
(2) As adjusted for the retrospective adoption of Accounting Standards Update (ASU) 2015-03, as we discuss in Note 2 of the Notes to Consolidated Financial Statements. |
Sempra Energy | ||||||
Consolidated | SDG&E | SoCalGas | ||||
Weighted average life to maturity, in years | 11.1 | 15.3 | 15.0 | |||
Weighted average interest rate | 4.44 | % | 4.37 | % | 3.94 | % |
ISSUANCES OF LONG-TERM DEBT | ||||||||||||
(Dollars in millions) | ||||||||||||
Amount at issuance | Rate | Maturing | ||||||||||
Sempra Energy: | ||||||||||||
Notes, November 2015 | $ | 400 | 2.85 | % | 2020 | |||||||
Notes, November 2015 | 350 | 3.75 | 2025 | |||||||||
Notes, March 2015 | 500 | 2.40 | 2020 | |||||||||
Notes, June 2014 | 500 | 3.55 | 2024 | |||||||||
Notes, November 2013 | 500 | 4.05 | 2023 | |||||||||
Sempra Mexico: | ||||||||||||
Notes, February 2013 | 100 | 2.66 | 2018 | |||||||||
Notes, February 2013 | 298 | 4.12 | 2023 | |||||||||
SDG&E: | ||||||||||||
First mortgage bonds at variable rates (0.48% at December 31, 2015), | ||||||||||||
March 2015 | 140 | 0.48 | 2017 | |||||||||
First mortgage bonds, March 2015 | 250 | 1.914 | 2022 | |||||||||
366-day commercial paper, May 2014 | 100 | 0.40 | 2015 | |||||||||
First mortgage bonds, September 2013 | 450 | 3.60 | 2023 | |||||||||
SoCalGas: | ||||||||||||
First mortgage bonds, June 2015 | 250 | 1.55 | 2018 | |||||||||
First mortgage bonds, June 2015 | 350 | 3.20 | 2025 | |||||||||
First mortgage bonds, September 2014 | 500 | 3.15 | 2024 | |||||||||
First mortgage bonds, March 2014 | 250 | 4.45 | 2044 |
§ | for general working capital purposes; |
§ | to support their electric (at SDG&E) and natural gas (SDG&E and SoCalGas) procurement programs; |
§ | to repay commercial paper at SDG&E and SoCalGas; and |
§ | to replenish amounts expended and fund future expenditures for the expansion and improvement of their utility plants. |
§ | $250 million of SDG&E’s 5.3-percent first mortgage bonds due in 2015 |
§ | $169 million early redemption of SDG&E’s 4.9-percent to 5.5-percent debt instruments maturing between 2021 and 2027 |
§ | $100 million of SDG&E’s 366-day commercial paper due in 2015 |
§ | $55 million early redemption of Bay Gas’ variable-rate industrial development bonds due in 2037 |
§ | $51 million of Sempra Mexico’s variable-rate notes due in 2017 |
§ | $18 million of SDG&E’s 1.914-percent amortizing first mortgage bonds due in 2022 |
§ | $500 million of Sempra Energy’s 2-percent notes due in 2014 |
§ | $300 million of Sempra Energy’s notes at variable rates due in 2014 |
§ | $250 million of SoCalGas’ 5.5-percent notes due in 2014 |
§ | $62 million of 5.1-percent to 6.75-percent Luz del Sur bank loans maturing in 2015 and 2016 |
§ | $54 million of 5.72-percent to 6.47-percent Series A Luz del Sur notes maturing in 2014 |
§ | $400 million of Sempra Energy’s 6-percent notes due in 2013 |
§ | $250 million of Sempra Energy’s 8.9-percent notes due in 2013, including $200 million at variable rates after fixed-to-floating interest rate swaps |
§ | $60 million of SDG&E’s 5.85-percent Pollution Control Revenue Bonds (PCRBs) due in 2021 |
§ | $115 million of SDG&E’s 5.9-percent PCRBs due in 2014 |
§ | $14 million of SDG&E’s 6.8-percent PCRBs due in 2015 |
§ | $86 million of 2.75-percent Series A Chilean public bonds maturing in 2014 |
§ | $52 million in 2015 |
§ | $56 million in 2014 |
§ | $62 million in 2013 |
§ | $628 million in 2015 |
§ | $598 million in 2014 |
§ | $606 million in 2013 |
§ | $50 million in 2015 |
§ | $100 million in 2014 |
§ | $50 million in 2013 |
TOTAL CAPITALIZATION AND DEBT-TO-CAPITALIZATION RATIOS(1) | ||||||||||||
(Dollars in millions) | ||||||||||||
December 31, 2015 | ||||||||||||
Sempra Energy | ||||||||||||
Consolidated(2) | SDG&E(2) | SoCalGas | ||||||||||
Total capitalization | $ | 27,242 | $ | 9,949 | $ | 5,639 | ||||||
Debt-to-capitalization ratio | 54 | % | 47 | % | 44 | % | ||||||
December 31, 2014 | ||||||||||||
Sempra Energy | ||||||||||||
Consolidated(2) | SDG&E(2) | SoCalGas | ||||||||||
Total capitalization | $ | 26,388 | $ | 9,886 | $ | 4,722 | ||||||
Debt-to-capitalization ratio | 54 | % | 50 | % | 41 | % |
(1) | As adjusted for the retrospective adoption of Accounting Standards Update 2015-03, as we discuss in Note 2 of the Notes to Consolidated Financial Statements |
(2) | Includes noncontrolling interest and debt of Otay Mesa Energy Center LLC with no significant impact. |
§ | Sempra Energy Consolidated: comprehensive income exceeding dividends, partially offset by a net increase in debt |
§ | SDG&E: comprehensive income exceeding dividends and decrease in both long-term and short-term debt |
§ | SoCalGas: primarily an increase in long-term debt, partially offset by comprehensive income exceeding dividends |
PRINCIPAL CONTRACTUAL COMMITMENTS OF SEMPRA ENERGY CONSOLIDATED | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
2016 | 2017 and 2018 | 2019 and 2020 | Thereafter | Total | ||||||||||||||||||
Long-term debt | $ | 897 | $ | 2,223 | $ | 1,822 | $ | 8,821 | $ | 13,763 | ||||||||||||
Interest on long-term debt(1) | 592 | 1,073 | 849 | 4,727 | 7,241 | |||||||||||||||||
Operating leases | 71 | 134 | 107 | 283 | 595 | |||||||||||||||||
Capital leases(2) | 7 | 21 | 26 | 697 | 751 | |||||||||||||||||
Purchased-power contracts | 741 | 1,507 | 1,496 | 7,169 | 10,913 | |||||||||||||||||
Natural gas contracts | 358 | 647 | 206 | 199 | 1,410 | |||||||||||||||||
LNG contract(3) | 330 | 888 | 1,021 | 5,524 | 7,763 | |||||||||||||||||
Construction commitments | 1,174 | 65 | 22 | 10 | 1,271 | |||||||||||||||||
Build-to-suit lease | 10 | 20 | 21 | 256 | 307 | |||||||||||||||||
SONGS decommissioning | 96 | 119 | 140 | 312 | 667 | |||||||||||||||||
Sunrise Powerlink wildfire mitigation fund | 3 | 6 | 6 | 102 | 117 | |||||||||||||||||
Other asset retirement obligations | 33 | 74 | 65 | 1,416 | 1,588 | |||||||||||||||||
Pension and other postretirement benefit | ||||||||||||||||||||||
obligations(4) | 131 | 428 | 475 | 1,164 | 2,198 | |||||||||||||||||
Environmental commitments(5) | 25 | 19 | 3 | 12 | 59 | |||||||||||||||||
Other | 98 | 27 | 18 | 45 | 188 | |||||||||||||||||
Total | $ | 4,566 | $ | 7,251 | $ | 6,277 | $ | 30,737 | $ | 48,831 | ||||||||||||
(1 | ) | We calculate expected interest payments using the stated interest rate for fixed-rate obligations, including floating-to-fixed interest rate swaps. We calculate expected interest payments for variable-rate obligations, including fixed-to-floating interest rate swaps, based on forward rates in effect at December 31, 2015. | ||||||||||||||||||||
(2 | ) | Of the present value of the net minimum lease payments, $500 million will be recorded as a capital lease obligation when construction of the peaker plant facility is completed and delivery of contracted power commences, which is scheduled to occur in June 2017. | ||||||||||||||||||||
(3 | ) | Sempra Natural Gas has a purchase agreement with a major international company for the supply of LNG to the Energía Costa Azul terminal. The multi-year agreement is priced using a predetermined formula based on natural gas market indices. The expected payments under the contract are based on forward prices of the applicable market index from 2016 to 2025 and an estimated one percent escalation per year beyond 2025 through contract termination in 2029. We provide more information about this contract in Note 15 of the Notes to Consolidated Financial Statements. | ||||||||||||||||||||
(4 | ) | Amounts represent expected company contributions to the plans for the next 10 years. | ||||||||||||||||||||
(5 | ) | Excludes amounts related to the natural gas leak at SoCalGas' Aliso Canyon natural gas storage facility. |
PRINCIPAL CONTRACTUAL COMMITMENTS OF SDG&E | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
2016 | 2017 and 2018 | 2019 and 2020 | Thereafter | Total | ||||||||||||||||
Long-term debt | $ | 46 | $ | 393 | $ | 356 | $ | 3,509 | $ | 4,304 | ||||||||||
Interest on long-term debt(1) | 189 | 374 | 340 | 2,277 | 3,180 | |||||||||||||||
Operating leases | 25 | 44 | 34 | 70 | 173 | |||||||||||||||
Capital leases(2) | 5 | 19 | 26 | 694 | 744 | |||||||||||||||
Purchased-power contracts | 521 | 1,006 | 923 | 6,071 | 8,521 | |||||||||||||||
Construction commitments | 67 | 58 | 22 | 10 | 157 | |||||||||||||||
SONGS decommissioning | 96 | 119 | 140 | 312 | 667 | |||||||||||||||
Sunrise Powerlink wildfire mitigation fund | 3 | 6 | 6 | 102 | 117 | |||||||||||||||
Other asset retirement obligations | 3 | 7 | 7 | 144 | 161 | |||||||||||||||
Pension and other postretirement benefit | ||||||||||||||||||||
obligations(3) | 7 | 101 | 110 | 258 | 476 | |||||||||||||||
Environmental commitments | 2 | 2 | 2 | 10 | 16 | |||||||||||||||
Total | $ | 964 | $ | 2,129 | $ | 1,966 | $ | 13,457 | $ | 18,516 | ||||||||||
(1) | SDG&E calculates expected interest payments using the stated interest rate for fixed-rate obligations, including floating-to-fixed interest rate swaps. SDG&E calculates expected interest payments for variable-rate obligations based on forward rates in effect at December 31, 2015. | |||||||||||||||||||
(2) | Of the present value of the net minimum lease payments, $500 million will be recorded as a capital lease obligation when construction of the peaker plant facility is completed and delivery of contracted power commences, which is scheduled to occur in June 2017. | |||||||||||||||||||
(3) | Amounts represent expected SDG&E contributions to the plans for the next 10 years. |
PRINCIPAL CONTRACTUAL COMMITMENTS OF SOCALGAS | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
2016 | 2017 and 2018 | 2019 and 2020 | Thereafter | Total | ||||||||||||||||
Long-term debt | $ | 8 | $ | 500 | $ | ― | $ | 2,005 | $ | 2,513 | ||||||||||
Interest on long-term debt(1) | 99 | 186 | 162 | 1,173 | 1,620 | |||||||||||||||
Natural gas contracts | 127 | 208 | 73 | 105 | 513 | |||||||||||||||
Operating leases | 38 | 75 | 61 | 131 | 305 | |||||||||||||||
Capital leases | 1 | ― | ― | ― | 1 | |||||||||||||||
Construction commitments | 11 | 7 | ― | ― | 18 | |||||||||||||||
Environmental commitments(2) | 6 | 16 | 1 | 2 | 25 | |||||||||||||||
Pension and other postretirement benefit | ||||||||||||||||||||
obligations(3) | 78 | 246 | 284 | 767 | 1,375 | |||||||||||||||
Asset retirement obligations | 29 | 66 | 57 | 1,231 | 1,383 | |||||||||||||||
Total | $ | 397 | $ | 1,304 | $ | 638 | $ | 5,414 | $ | 7,753 | ||||||||||
(1) | SoCalGas calculates interest payments using the stated interest rate for fixed-rate obligations. | |||||||||||||||||||
(2) | Excludes amounts related to the natural gas leak at the Aliso Canyon natural gas storage facility. | |||||||||||||||||||
(3) | Amounts represent expected SoCalGas contributions to the plans for the next 10 years. |
§ | contracts between consolidated affiliates |
§ | intercompany debt |
§ | individual contracts that have annual cash requirements less than $1 million |
§ | employment contracts |
§ | $55 million for Sempra Energy Consolidated |
§ | $20 million for SDG&E |
§ | $27 million for SoCalGas |
§ | SONGS Steam Generator Replacement Project |
§ | Settlement Agreement to Resolve the CPUC’s Order Instituting Investigation (OII) into the SONGS Outage (SONGS OII) |
§ | Settlement with Nuclear Electric Insurance Limited (NEIL) |
§ | Nuclear Regulatory Commission Proceedings |
§ | Nuclear Decommissioning and Funding |
§ | Nuclear Decommissioning Trusts |
§ | Asset Retirement Obligation and Spent Nuclear Fuel |
§ | Legal Proceedings – SDG&E – Lawsuit Against Mitsubishi Heavy Industries, Ltd. |
§ | Environmental Issues |
§ | Nuclear Insurance |
§ | U.S. Department of Energy (DOE) Nuclear Fuel Disposal |
§ | stopping the leak; |
§ | protecting public health and safety; |
§ | ensuring accountability; and |
§ | strengthening oversight. |
§ | Bay Gas, a facility located 40 miles north of Mobile, Alabama, that provides underground storage and delivery of natural gas. Sempra Natural Gas owns 91 percent of the project. It is the easternmost salt dome storage facility on the Gulf Coast, with direct service to the Florida market and markets across the Southeast, Mid-Atlantic and Northeast regions. |
§ | Mississippi Hub, located 45 miles southeast of Jackson, Mississippi, an underground salt dome natural gas storage project with access to shale basins of East Texas and Louisiana, traditional gulf supplies and LNG, with multiple interconnections to serve the Southeast and Northeast regions. |
§ | LA Storage, a salt cavern development project in Cameron Parish, Louisiana. Sempra Natural Gas owns 77 percent of the project and ProLiance Transportation LLC owns the remaining 23 percent. The project’s location provides access to several LNG facilities in the area. |
NOMINAL AMOUNT OF LONG-TERM DEBT AT DECEMBER 31(1) | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
Sempra Energy | Sempra Energy | |||||||||||||||||||||||
Consolidated | SDG&E | SoCalGas | Consolidated | SDG&E | SoCalGas | |||||||||||||||||||
Utility fixed-rate | $ | 6,362 | $ | 3,849 | $ | 2,513 | $ | 6,049 | $ | 4,136 | $ | 1,913 | ||||||||||||
Utility variable-rate | 455 | 455 | ― | 325 | 325 | ― | ||||||||||||||||||
Non-utility fixed-rate | 6,780 | ― | ― | 5,733 | ― | ― | ||||||||||||||||||
Non-utility variable-rate | 166 | ― | ― | 240 | ― | ― | ||||||||||||||||||
(1) | Excluding commercial paper classified as long-term debt at Sempra Energy and SDG&E, capital lease obligations, build-to-suit lease and interest rate swaps, and before reductions/increases for unamortized discount/premium and reductions for debt issuance costs. |
§ | prospective counterparties’ financial condition (including credit ratings) |
§ | collateral requirements |
§ | the use of standardized agreements that allow for the netting of positive and negative exposures associated with a single counterparty |
§ | downgrade triggers |
(Dollars in millions) | Hypothetical effects | |||||
Translation of 2015 earnings to U.S. dollars(1) | $ | (2 | ) | |||
Transactional exposure(2) | 3 | |||||
Translation of net assets of foreign subsidiaries and investment in foreign entities(3) | (17 | ) |
(1 | ) | Amount represents the impact to earnings, primarily at our South American businesses, for a change in the average exchange rate throughout the reporting period. | ||||
(2 | ) | Amount primarily represents the effects of currency exchange rate movement from year-end 2015 on monetary assets and liabilities and translation of non-U.S. deferred income tax balances at our Mexican subsidiaries, which we discuss in "Results of Operations – Changes in Revenues, Costs and Earnings – Income Taxes" above. | ||||
(3 | ) | Amount represents the effects of currency exchange rate movement from year-end 2015 recorded to other comprehensive income at the end of each reporting period, primarily at our South American businesses. |
CRITICAL ACCOUNTING POLICIES AND ESTIMATES | |||
SEMPRA ENERGY, SDG&E AND SOCALGAS | |||
CONTINGENCIES | |||
Assumptions & Approach Used | We accrue losses for the estimated impacts of various conditions, situations or circumstances involving uncertain outcomes. For loss contingencies, we accrue the loss if an event has occurred on or before the balance sheet date and: § information available through the date we file our financial statements indicates it is probable that a loss has been incurred, given the likelihood of uncertain future events, and § the amount of the loss can be reasonably estimated. We do not accrue contingencies that might result in gains. We continuously assess contingencies for litigation claims, environmental remediation and other events. | ||
Effect if Different Assumptions Used | Details of our issues in this area are discussed in Note 15 of the Notes to Consolidated Financial Statements. | ||
REGULATORY ACCOUNTING | |||
Assumptions & Approach Used | As regulated entities, the California Utilities’ rates, as set and monitored by regulators, are designed to recover the cost of providing service and provide the opportunity to earn a competitive return on their investments. The California Utilities record regulatory assets, which are generally costs that would otherwise be charged to expense, if it is probable that, through the ratemaking process, the utility will recover that asset from customers in future rates. Similarly, regulatory liabilities are recorded for amounts recovered in rates in advance or in excess of costs incurred. The California Utilities assess probabilities of future rate recovery associated with regulatory account balances at the end of each reporting period and whenever new and/or unusual events occur, such as: § changes in the regulatory and political environment or the utility’s competitive position § issuance of a regulatory commission order § passage of new legislation To the extent that circumstances associated with regulatory balances change, the regulatory balances are evaluated and adjusted if appropriate. | ||
Effect if Different Assumptions Used | Adverse legislative or regulatory actions could materially impact the amounts of our regulatory assets and liabilities and could materially adversely impact our financial statements. Details of the California Utilities’ regulatory assets and liabilities and additional factors that management considers when assessing probabilities associated with regulatory balances are discussed in Notes 1, 13, 14 and 15 of the Notes to Consolidated Financial Statements. | ||
SEMPRA ENERGY, SDG&E AND SOCALGAS (CONTINUED) | |||
INCOME TAXES | |||
Assumptions & Approach Used | Our income tax expense and related balance sheet amounts involve significant management estimates and judgments. Amounts of deferred income tax assets and liabilities, as well as current and noncurrent accruals, involve judgments and estimates of the timing and probability of recognition of income and deductions by taxing authorities. When we evaluate the anticipated resolution of income tax issues, we consider § past resolutions of the same or similar issue § the status of any income tax examination in progress § positions taken by taxing authorities with other taxpayers with similar issues The likelihood of deferred tax recovery is based on analyses of the deferred tax assets and our expectation of future taxable income, based on our strategic planning. | ||
Effect if Different Assumptions Used | Actual income taxes could vary from estimated amounts because of: § future impacts of various items, including changes in tax laws, regulations, interpretations and rulings § our financial condition in future periods § the resolution of various income tax issues between us and taxing authorities We discuss details of our issues in this area in Note 6 of the Notes to Consolidated Financial Statements. | ||
Assumptions & Approach Used | For an uncertain position to qualify for benefit recognition, the position must have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. If we do not have a more likely than not position with respect to a tax position, then we do not recognize any of the potential tax benefit associated with the position. A tax position that meets the “more likely than not” recognition is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon the effective resolution of the tax position. | ||
Effect if Different Assumptions Used | Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows. We discuss additional information related to accounting for uncertainty in income taxes in Note 6 of the Notes to Consolidated Financial Statements. | ||
SEMPRA ENERGY, SDG&E AND SOCALGAS (CONTINUED) | |||
DERIVATIVES | |||
Assumptions & Approach Used | We record derivative instruments at fair value on the balance sheet. Depending on the purpose for the contract and the applicability of hedge accounting, the impact of instruments may be offset in earnings, on the balance sheet, or in other comprehensive income. We also use normal purchase or sale accounting for certain contracts. As discussed elsewhere in this report, whenever possible, we use exchange quoted prices or other third-party pricing to estimate fair values; if no such data is available, we use internally developed models and other techniques. The assumed collectability of derivative assets and receivables considers § events specific to a given counterparty § the tenor of the transaction § the credit-worthiness of the counterparty | ||
Effect if Different Assumptions Used | The application of hedge accounting to certain derivatives and the normal purchase or sale accounting election are made on a contract-by-contract basis. Using hedge accounting or the normal purchase or sale election in a different manner could materially impact Sempra Energy’s results of operations. However, such alternatives would not have a significant impact on the California Utilities’ results of operations because regulatory accounting principles generally apply to their contracts. We provide details of our derivative financial instruments in Note 9 of the Notes to Consolidated Financial Statements. | ||
DEFINED BENEFIT PLANS | |||
Assumptions & Approach Used | To measure our pension and other postretirement obligations, costs and liabilities, we rely on several assumptions. We consider current market conditions, including interest rates, in making these assumptions. We review these assumptions annually and update when appropriate. The critical assumptions used to develop the required estimates include the following key factors: § discount rates § expected return on plan assets § health care cost trend rates § mortality rates § rate of compensation increases § termination and retirement rates § utilization of postretirement welfare benefits § payout elections (lump sum or annuity) § lump sum interest rates | ||
SEMPRA ENERGY, SDG&E AND SOCALGAS (CONTINUED) | |||
DEFINED BENEFIT PLANS (CONTINUED) | |||
Effect if Different Assumptions Used | The actuarial assumptions we use may differ materially from actual results due to: § return on plan assets § changing market and economic conditions § higher or lower withdrawal rates § longer or shorter participant life spans § more or fewer lump sum versus annuity payout elections made by plan participants § retirement rates These differences, other than those related to the California Utilities’ plans, where rate recovery offsets the effects of the assumptions on earnings, may result in a significant impact to the amount of pension and postretirement benefit expense we record. For plans other than those at the California Utilities, the approximate annual effect on earnings of a 100 basis point increase or decrease in the assumed discount rate would be less than $1 million and the effect of a 100 basis point increase or decrease in the assumed rate of return on plan assets would be less than $3 million. We provide additional information, including the impact of increases and decreases in the health care cost trend rate, in Note 7 of the Notes to Consolidated Financial Statements. | ||
SEMPRA ENERGY AND SDG&E | |||
ASSET RETIREMENT OBLIGATIONS | |||
Assumptions & Approach Used | SDG&E’s legal asset retirement obligations (AROs) related to the decommissioning of SONGS are estimated based on a site specific study performed no less than every three years. The estimate of the obligations includes § estimated decommissioning costs, including labor, equipment, material and other disposal costs § inflation adjustment applied to estimated cash flows § discount rate based on a credit-adjusted risk-free rate § expected initiation and duration of decommissioning activities | ||
Effect if Different Assumptions Used | Changes in the estimated decommissioning costs, or in the assumptions and judgments made by management underlying these estimates, could cause revisions to the estimated total cost associated with retiring the assets. SDG&E’s nuclear decommissioning expenses are subject to rate recovery and, therefore, rate-making accounting treatment is applied to SDG&E’s nuclear decommissioning activities. SDG&E recognizes a regulatory asset, or liability, to the extent that its SONGS ARO exceeds, or is less than, the amount collected from customers and the amount earned in SDG&E’s Nuclear Decommissioning Trusts. We provide additional detail in Notes 13 and 15 of the Notes to the Consolidated Financial Statements. | ||
SEMPRA ENERGY | |||
IMPAIRMENT TESTING OF LONG-LIVED ASSETS, INCLUDING INTANGIBLE ASSETS | |||
Assumptions & Approach Used | Whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable, we consider if the estimated future undiscounted cash flows are less than the carrying amount of the assets. If so, we estimate the fair value of these assets to determine the extent to which cost exceeds fair value. For these estimates, we may consider data from multiple valuation methods, including data from market participants. We exercise judgment to estimate the future cash flows and the useful lives of long-lived assets and to determine our intent to use the assets. Our intent to use or dispose of assets is subject to re-evaluation and can change over time. | ||
Effect if Different Assumptions Used | If an impairment test is required, the fair value of long-lived assets can vary if differing estimates and assumptions are used in the valuation techniques applied as indicated by changing market or other conditions. We discuss impairment of long-lived assets in Note 1 of the Notes to Consolidated Financial Statements. | ||
IMPAIRMENT TESTING OF GOODWILL | |||
Assumptions & Approach Used | On an annual basis or whenever events or changes in circumstances necessitate an evaluation, we consider whether goodwill may be impaired. For our annual goodwill impairment testing, we have the option to first make a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before applying the two-step, quantitative goodwill impairment test. If we elect to perform the qualitative assessment, we evaluate relevant events and circumstances, including but not limited to, macroeconomic conditions, industry and market considerations, cost factors, changes in key personnel and the overall financial performance of the reporting unit. If, after assessing these qualitative factors, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform the two-step goodwill impairment test. When we perform the two-step, quantitative goodwill impairment test, we exercise judgment to develop estimates of the fair value of the reporting unit and compare that to the carrying value. Our fair value estimates are developed from the perspective of a knowledgeable market participant. We consider observable transactions in the marketplace for similar investments, if available, as well as an income-based approach such as discounted cash flow analysis. A discounted cash flow analysis may be based directly on anticipated future revenues and expenses and may be performed based on free cash flows generated within the reporting unit. Critical assumptions that affect our estimates of fair value may include § consideration of market transactions § future cash flows § the appropriate risk-adjusted discount rate § country risk § entity risk | ||
Effect if Different Assumptions Used | When determining if goodwill is impaired, the fair value of the reporting unit and goodwill can vary if differing estimates and assumptions are used in the valuation techniques applied as indicated by changing market or other conditions. As a result, recognizing a goodwill impairment may or may not be required. Sempra Energy has $819 million of goodwill on its Consolidated Balance Sheet at December 31, 2015, of which $722 million is attributable to our operations in South America. Based on our quantitative assessment of the goodwill attributable to our operations in South America, we determined that the estimated fair values of the reporting units to which this goodwill was allocated exceeded their carrying values as of October 1, 2015, our most recent goodwill impairment testing date. We discuss goodwill in Note 1 of the Notes to Consolidated Financial Statements. | ||
SEMPRA ENERGY (CONTINUED) | |||
CARRYING VALUE OF EQUITY METHOD INVESTMENTS | |||
Assumptions & Approach Used | We generally account for investments under the equity method when we have significant influence over, but do not have control of, the investee. We consider whether the fair value of each equity investment as a whole, not the underlying net assets, has declined and whether that decline is other than temporary. To help evaluate whether a decline in fair value below cost has occurred and if the decline is other than temporary, we may develop fair value estimates for the investment. Our fair value estimates are developed from the perspective of a knowledgeable market participant. In the absence of observable transactions in the marketplace for similar investments, we consider an income-based approach such as discounted cash flow analysis or, with less weighting, the replacement cost of the underlying net assets. A discounted cash flow analysis may be based directly on anticipated future distributions from the investment, or may be performed based on free cash flows generated within the entity and adjusted for our ownership share total. When calculating estimates of fair or realizable values, we also consider whether we intend to hold or sell the investment. For certain held investments, critical assumptions may include § equity sale offer price for the investment § transportation rates for natural gas § the appropriate risk-adjusted discount rate § the availability and costs of natural gas and liquefied natural gas § competing fuels (primarily propane) and electricity § estimated future power generation and associated tax credits § renewable power price expectations | ||
Effect if Different Assumptions Used | The risk assumptions applied by other market participants to value the investments could vary significantly or the appropriate approaches could be weighted differently. These differences could impact whether or not the fair value of the investment is less than its cost, and if so, whether that condition is other than temporary. This could result in an impairment charge or a different amount of impairment charge, and, in cases where an impairment charge has been recorded, additional loss or gain upon sale. We provide additional details in Notes 4 and 10 of the Notes to Consolidated Financial Statements. |
§ | local, regional, national and international economic, competitive, political, legislative, legal and regulatory conditions, decisions and developments; |
§ | actions and the timing of actions, including general rate case decisions, new regulations, issuances of permits to construct, operate, and maintain facilities and equipment and to use land, franchise agreements and licenses for operation, by the California Public Utilities Commission, California State Legislature, U.S. Department of Energy, California Division of Oil, Gas, and Geothermal Resources, Federal Energy Regulatory Commission, Nuclear Regulatory Commission, California Energy Commission, U.S. Environmental Protection Agency, Pipeline and Hazardous Materials Safety Administration, California Air Resources Board, South Coast Air Quality Management District, Mexican Competition Commission, cities and counties, and other regulatory, governmental and environmental bodies in the United States and other countries in which we operate; |
§ | the timing and success of business development efforts and construction, maintenance and capital projects, including risks in obtaining, maintaining or extending permits, licenses, certificates and other authorizations on a timely basis and risks in obtaining adequate and competitive financing for such projects; |
§ | deviations from regulatory precedent or practice that result in a reallocation of benefits or burdens among shareholders and ratepayers, and delays in regulatory agency authorization to recover costs in rates from customers; |
§ | the availability of electric power, natural gas and liquefied natural gas, and natural gas pipeline and storage capacity, including disruptions caused by failures in the North American transmission grid, moratoriums on the ability to withdraw natural gas from or inject natural gas into storage facilities, pipeline explosions and equipment failures; |
§ | energy markets; the timing and extent of changes and volatility in commodity prices; and the impact on the value of our natural gas storage assets from low natural gas prices, low volatility of natural gas prices and the inability to procure favorable long-term contracts for natural gas storage services; |
§ | the resolution of civil and criminal litigation and regulatory investigations; |
§ | risks posed by decisions and actions of third parties who control the operations of investments in which we do not have a controlling interest, and risks that our partners or counterparties will be unable or unwilling to fulfill their contractual commitments; |
§ | capital markets conditions, including the availability of credit and the liquidity of our investments, and inflation, interest and currency exchange rates; |
§ | cybersecurity threats to the energy grid, natural gas storage and pipeline infrastructure, the information and systems used to operate our businesses and the confidentiality of our proprietary information and the personal information of our customers and employees; terrorist attacks that threaten system operations and critical infrastructure; and wars; |
§ | the ability to win competitively bid infrastructure projects against a number of strong competitors willing to aggressively bid for these projects; |
§ | weather conditions, natural disasters, catastrophic accidents, equipment failures and other events that may disrupt our operations, damage our facilities and systems, cause the release of greenhouse gasses, radioactive materials and harmful emissions, and subject us to third-party liability for property damage or personal injuries, some of which may not be covered by insurance; |
§ | disallowance of regulatory assets associated with, or decommissioning costs of, the San Onofre Nuclear Generating Station facility due to increased regulatory oversight, including motions to modify settlements; |
§ | expropriation of assets by foreign governments and title and other property disputes; |
§ | the impact on reliability of San Diego Gas & Electric Company’s (SDG&E) electric transmission and distribution system due to increased amount and variability of power supply from renewable energy sources and increased reliance on natural gas and natural gas transmission systems; |
§ | the impact on competitive customer rates of the growth in distributed and local power generation and the corresponding decrease in demand for power delivered through SDG&E’s electric transmission and distribution system; |
§ | the inability or determination not to enter into long-term supply and sales agreements or long-term firm capacity agreements due to insufficient market interest, unattractive pricing or other factors; and |
§ | other uncertainties, all of which are difficult to predict and many of which are beyond our control. |
QUARTERLY COMMON STOCK DATA | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
quarter | quarter | quarter | quarter | |||||||||||||
2015 | ||||||||||||||||
Market price | ||||||||||||||||
High | $ | 116.21 | $ | 111.09 | $ | 106.70 | $ | 105.78 | ||||||||
Low | $ | 104.64 | $ | 98.67 | $ | 89.44 | $ | 90.52 | ||||||||
2014 | ||||||||||||||||
Market price | ||||||||||||||||
High | $ | 97.48 | $ | 105.25 | $ | 107.81 | $ | 116.30 | ||||||||
Low | $ | 86.73 | $ | 95.15 | $ | 96.13 | $ | 98.34 |
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA FOR SEMPRA ENERGY | |||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||
At December 31 or for the years then ended | |||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||||||
Revenues | |||||||||||||||||||||
Utilities: | |||||||||||||||||||||
Electric | $ | 5,158 | $ | 5,209 | $ | 4,911 | $ | 4,568 | $ | 3,833 | |||||||||||
Natural gas | 4,096 | 4,549 | 4,398 | 3,873 | 4,489 | ||||||||||||||||
Energy-related businesses | 977 | 1,277 | 1,248 | 1,206 | 1,714 | ||||||||||||||||
Total revenues | $ | 10,231 | $ | 11,035 | $ | 10,557 | $ | 9,647 | $ | 10,036 | |||||||||||
Income from continuing operations | $ | 1,448 | $ | 1,262 | $ | 1,088 | $ | 920 | $ | 1,381 | |||||||||||
Earnings from continuing operations | |||||||||||||||||||||
attributable to noncontrolling interests | (98 | ) | (100 | ) | (79 | ) | (55 | ) | (42 | ) | |||||||||||
Call premium on preferred stock of subsidiary | ― | ― | (3 | ) | ― | ― | |||||||||||||||
Preferred dividends of subsidiaries | (1 | ) | (1 | ) | (5 | ) | (6 | ) | (8 | ) | |||||||||||
Earnings/Income from continuing operations | |||||||||||||||||||||
attributable to common shares | $ | 1,349 | $ | 1,161 | $ | 1,001 | $ | 859 | $ | 1,331 | |||||||||||
Attributable to common shares: | |||||||||||||||||||||
Earnings/Income from continuing operations | |||||||||||||||||||||
Basic | $ | 5.43 | $ | 4.72 | $ | 4.10 | $ | 3.56 | $ | 5.55 | |||||||||||
Diluted | $ | 5.37 | $ | 4.63 | $ | 4.01 | $ | 3.48 | $ | 5.51 | |||||||||||
Dividends declared per common share | $ | 2.80 | $ | 2.64 | $ | 2.52 | $ | 2.40 | $ | 1.92 | |||||||||||
Return on common equity | 11.7 | % | 10.4 | % | 9.4 | % | 8.6 | % | 14.2 | % | |||||||||||
Effective income tax rate | 20 | % | 20 | % | 26 | % | 6 | % | 23 | % | |||||||||||
Price range of common shares: | |||||||||||||||||||||
High | $ | 116.21 | $ | 116.30 | $ | 93.00 | $ | 72.87 | $ | 55.97 | |||||||||||
Low | $ | 89.44 | $ | 86.73 | $ | 70.61 | $ | 54.70 | $ | 44.78 | |||||||||||
Weighted average rate base: | |||||||||||||||||||||
SDG&E | $ | 7,671 | $ | 7,253 | $ | 7,244 | $ | 6,295 | $ | 5,071 | |||||||||||
SoCalGas | $ | 4,269 | $ | 3,879 | $ | 3,499 | $ | 3,178 | $ | 2,948 | |||||||||||
AT DECEMBER 31 | |||||||||||||||||||||
Current assets(1) | $ | 2,891 | $ | 4,184 | $ | 3,997 | $ | 3,695 | $ | 2,332 | |||||||||||
Total assets(2) | $ | 41,150 | $ | 39,651 | $ | 37,165 | $ | 36,412 | $ | 33,184 | |||||||||||
Current liabilities(1) | $ | 4,612 | $ | 5,069 | $ | 4,369 | $ | 4,258 | $ | 4,152 | |||||||||||
Long-term debt (excludes current portion)(2)(3) | $ | 13,134 | $ | 12,086 | $ | 11,174 | $ | 11,534 | $ | 10,013 | |||||||||||
Short-term debt(4) | $ | 1,529 | $ | 2,202 | $ | 1,692 | $ | 1,271 | $ | 785 | |||||||||||
Contingently redeemable preferred stock | |||||||||||||||||||||
of subsidiary(5) | $ | ― | $ | ― | $ | ― | $ | 79 | $ | 79 | |||||||||||
Sempra Energy shareholders’ equity | $ | 11,809 | $ | 11,326 | $ | 11,008 | $ | 10,282 | $ | 9,775 | |||||||||||
Common shares outstanding | 248.3 | 246.3 | 244.5 | 242.4 | 239.9 | ||||||||||||||||
Book value per share | $ | 47.56 | $ | 45.98 | $ | 45.03 | $ | 42.43 | $ | 40.74 | |||||||||||
(1) | Reflects the adoption of Accounting Standards Update (ASU) 2015-17 on a prospective basis for the year ended December 31, 2015, which requires the presentation of deferred tax assets and liabilities as noncurrent on the balance sheet. | ||||||||||||||||||||
(2) | As adjusted for the retrospective adoption of ASU 2015-03, as we discuss in Note 2 of the Notes to Consolidated Financial Statements. | ||||||||||||||||||||
(3) | Includes capital lease obligations. | ||||||||||||||||||||
(4) | Includes long-term debt due within one year and current portion of capital lease obligations. | ||||||||||||||||||||
(5) | SDG&E redeemed all series of its outstanding shares of contingently redeemable stock in 2013, as we discuss in Note 11 of the Notes to Consolidated Financial Statements. |
FIVE-YEAR SUMMARIES OF SELECTED FINANCIAL DATA FOR SDG&E AND SOCALGAS | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
At December 31 or for the years then ended | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
SDG&E: | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Operating revenues | $ | 4,219 | $ | 4,329 | $ | 4,066 | $ | 3,694 | $ | 3,373 | ||||||||||
Operating income | 1,058 | 959 | 782 | 809 | 755 | |||||||||||||||
Dividends on preferred stock | ― | ― | 4 | 5 | 5 | |||||||||||||||
Earnings attributable to common shares | 587 | 507 | 404 | 484 | 431 | |||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Total assets(1) | $ | 16,515 | $ | 16,260 | $ | 15,337 | $ | 14,705 | $ | 13,517 | ||||||||||
Long-term debt (excludes current portion)(1)(2) | 4,455 | 4,283 | 4,485 | 4,253 | 4,020 | |||||||||||||||
Short-term debt(3) | 218 | 611 | 88 | 16 | 19 | |||||||||||||||
Contingently redeemable preferred stock(4) | ― | ― | ― | 79 | 79 | |||||||||||||||
SDG&E shareholder's equity | 5,223 | 4,932 | 4,628 | 4,222 | 3,739 | |||||||||||||||
SoCalGas: | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Operating revenues | $ | 3,489 | $ | 3,855 | $ | 3,736 | $ | 3,282 | $ | 3,816 | ||||||||||
Operating income | 608 | 521 | 539 | 420 | 486 | |||||||||||||||
Dividends on preferred stock | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
Earnings attributable to common shares | 419 | 332 | 364 | 289 | 287 | |||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Total assets(1) | $ | 12,104 | $ | 10,446 | $ | 9,138 | $ | 9,062 | $ | 8,468 | ||||||||||
Long-term debt (excludes current portion)(1)(2) | 2,481 | 1,891 | 1,150 | 1,400 | 1,057 | |||||||||||||||
Short-term debt(3) | 9 | 50 | 294 | 4 | 257 | |||||||||||||||
SoCalGas shareholders’ equity | 3,149 | 2,781 | 2,549 | 2,235 | 2,193 | |||||||||||||||
(1) | As adjusted for the retrospective adoption of ASU 2015-03, as we discuss in Note 2 of the Notes to Consolidated Financial Statements. | |||||||||||||||||||
(2) | Includes capital lease obligations. | |||||||||||||||||||
(3) | Includes long-term debt due within one year and current portion of capital lease obligations. | |||||||||||||||||||
(4) | SDG&E redeemed all series of its outstanding shares of contingently redeemable stock in 2013, as we discuss in Note 11 of the Notes to Consolidated Financial Statements. |
SEMPRA ENERGY | ||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(Dollars in millions, except per share amounts) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
REVENUES | ||||||||||||
Utilities | $ | 9,254 | $ | 9,758 | $ | 9,309 | ||||||
Energy-related businesses | 977 | 1,277 | 1,248 | |||||||||
Total revenues | 10,231 | 11,035 | 10,557 | |||||||||
EXPENSES AND OTHER INCOME | ||||||||||||
Utilities: | ||||||||||||
Cost of natural gas | (1,134 | ) | (1,758 | ) | (1,646 | ) | ||||||
Cost of electric fuel and purchased power | (2,136 | ) | (2,281 | ) | (1,932 | ) | ||||||
Energy-related businesses: | ||||||||||||
Cost of natural gas, electric fuel and purchased power | (335 | ) | (552 | ) | (435 | ) | ||||||
Other cost of sales | (148 | ) | (163 | ) | (178 | ) | ||||||
Operation and maintenance | (2,895 | ) | (2,935 | ) | (2,995 | ) | ||||||
Depreciation and amortization | (1,250 | ) | (1,156 | ) | (1,113 | ) | ||||||
Franchise fees and other taxes | (423 | ) | (408 | ) | (374 | ) | ||||||
Plant closure adjustment (loss) | 26 | (6 | ) | (200 | ) | |||||||
Gain on sale of equity interests and assets | 70 | 62 | 114 | |||||||||
Equity earnings, before income tax | 104 | 81 | 31 | |||||||||
Other income, net | 126 | 137 | 140 | |||||||||
Interest income | 29 | 22 | 20 | |||||||||
Interest expense | (561 | ) | (554 | ) | (559 | ) | ||||||
Income before income taxes and equity earnings | ||||||||||||
of certain unconsolidated subsidiaries | 1,704 | 1,524 | 1,430 | |||||||||
Income tax expense | (341 | ) | (300 | ) | (366 | ) | ||||||
Equity earnings, net of income tax | 85 | 38 | 24 | |||||||||
Net income | 1,448 | 1,262 | 1,088 | |||||||||
Earnings attributable to noncontrolling interests | (98 | ) | (100 | ) | (79 | ) | ||||||
Call premium on preferred stock of subsidiary | ― | ― | (3 | ) | ||||||||
Preferred dividends of subsidiaries | (1 | ) | (1 | ) | (5 | ) | ||||||
Earnings | $ | 1,349 | $ | 1,161 | $ | 1,001 | ||||||
Basic earnings per common share | $ | 5.43 | $ | 4.72 | $ | 4.10 | ||||||
Weighted-average number of shares outstanding, basic (thousands) | 248,249 | 245,891 | 243,863 | |||||||||
Diluted earnings per common share | $ | 5.37 | $ | 4.63 | $ | 4.01 | ||||||
Weighted-average number of shares outstanding, diluted (thousands) | 250,923 | 250,655 | 249,332 | |||||||||
See Notes to Consolidated Financial Statements. |
SEMPRA ENERGY | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Years ended December 31, 2015, 2014 and 2013 | ||||||||||||||||||||
Sempra Energy shareholders' equity | ||||||||||||||||||||
Pretax | Income tax | Net-of-tax | Noncontrolling | |||||||||||||||||
amount | (expense) benefit | amount | interests (after-tax) | Total | ||||||||||||||||
2015: | ||||||||||||||||||||
Net income | $ | 1,691 | $ | (341 | ) | $ | 1,350 | $ | 98 | $ | 1,448 | |||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustments | (260 | ) | ― | (260 | ) | (30 | ) | (290 | ) | |||||||||||
Financial instruments | (80 | ) | 33 | (47 | ) | 5 | (42 | ) | ||||||||||||
Pension and other postretirement benefits | (3 | ) | 1 | (2 | ) | ― | (2 | ) | ||||||||||||
Total other comprehensive loss | (343 | ) | 34 | (309 | ) | (25 | ) | (334 | ) | |||||||||||
Comprehensive income | 1,348 | (307 | ) | 1,041 | 73 | 1,114 | ||||||||||||||
Preferred dividends of subsidiary | (1 | ) | ― | (1 | ) | ― | (1 | ) | ||||||||||||
Comprehensive income, after | ||||||||||||||||||||
preferred dividends of subsidiary | $ | 1,347 | $ | (307 | ) | $ | 1,040 | $ | 73 | $ | 1,113 | |||||||||
2014: | ||||||||||||||||||||
Net income | $ | 1,462 | $ | (300 | ) | $ | 1,162 | $ | 100 | $ | 1,262 | |||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustments | (193 | ) | ― | (193 | ) | (20 | ) | (213 | ) | |||||||||||
Financial instruments | (106 | ) | 42 | (64 | ) | (1 | ) | (65 | ) | |||||||||||
Pension and other postretirement benefits | (20 | ) | 8 | (12 | ) | ― | (12 | ) | ||||||||||||
Total other comprehensive loss | (319 | ) | 50 | (269 | ) | (21 | ) | (290 | ) | |||||||||||
Comprehensive income | 1,143 | (250 | ) | 893 | 79 | 972 | ||||||||||||||
Preferred dividends of subsidiary | (1 | ) | ― | (1 | ) | ― | (1 | ) | ||||||||||||
Comprehensive income, after | ||||||||||||||||||||
preferred dividends of subsidiary | $ | 1,142 | $ | (250 | ) | $ | 892 | $ | 79 | $ | 971 | |||||||||
2013: | ||||||||||||||||||||
Net income | $ | 1,375 | $ | (366 | ) | $ | 1,009 | $ | 79 | $ | 1,088 | |||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustments | 111 | ― | 111 | (27 | ) | 84 | ||||||||||||||
Financial instruments | 13 | (4 | ) | 9 | 19 | 28 | ||||||||||||||
Pension and other postretirement benefits | 47 | (19 | ) | 28 | ― | 28 | ||||||||||||||
Total other comprehensive income (loss) | 171 | (23 | ) | 148 | (8 | ) | 140 | |||||||||||||
Comprehensive income | 1,546 | (389 | ) | 1,157 | 71 | 1,228 | ||||||||||||||
Preferred dividends of subsidiaries | (5 | ) | ― | (5 | ) | ― | (5 | ) | ||||||||||||
Comprehensive income, after | ||||||||||||||||||||
preferred dividends of subsidiaries | $ | 1,541 | $ | (389 | ) | $ | 1,152 | $ | 71 | $ | 1,223 | |||||||||
See Notes to Consolidated Financial Statements. |
SEMPRA ENERGY | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(Dollars in millions) | |||||||||
December 31, | December 31, | ||||||||
2015 | 2014(1) | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 403 | $ | 570 | |||||
Restricted cash | 27 | 11 | |||||||
Trade accounts receivable, net | 1,283 | 1,242 | |||||||
Other accounts receivable, net | 190 | 152 | |||||||
Due from unconsolidated affiliates | 6 | 38 | |||||||
Income taxes receivable | 30 | 45 | |||||||
Deferred income taxes | ― | 305 | |||||||
Inventories | 298 | 396 | |||||||
Regulatory balancing accounts – undercollected | 307 | 746 | |||||||
Fixed-price contracts and other derivatives | 80 | 93 | |||||||
Asset held for sale, power plant | ― | 293 | |||||||
Other | 267 | 293 | |||||||
Total current assets | 2,891 | 4,184 | |||||||
Investments and other assets: | |||||||||
Restricted cash | 20 | 29 | |||||||
Due from unconsolidated affiliates | 186 | 188 | |||||||
Regulatory assets | 3,273 | 3,031 | |||||||
Nuclear decommissioning trusts | 1,063 | 1,131 | |||||||
Investments | 2,905 | 2,848 | |||||||
Goodwill | 819 | 931 | |||||||
Other intangible assets | 404 | 415 | |||||||
Dedicated assets in support of certain benefit plans | 464 | 512 | |||||||
Insurance receivable for Aliso Canyon costs | 325 | ― | |||||||
Sundry | 761 | 480 | |||||||
Total investments and other assets | 10,220 | 9,565 | |||||||
Property, plant and equipment: | |||||||||
Property, plant and equipment | 38,200 | 35,407 | |||||||
Less accumulated depreciation and amortization | (10,161 | ) | (9,505 | ) | |||||
Property, plant and equipment, net ($383 and $410 at December 31, 2015 and | |||||||||
2014, respectively, related to VIE) | 28,039 | 25,902 | |||||||
Total assets | $ | 41,150 | $ | 39,651 |
(1) | As adjusted for the retrospective adoption of ASU 2015-03. | ||||||||
See Notes to Consolidated Financial Statements. |
SEMPRA ENERGY | |||||||||
CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||||
(Dollars in millions) | |||||||||
December 31, | December 31, | ||||||||
2015 | 2014(1) | ||||||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term debt | $ | 622 | $ | 1,733 | |||||
Accounts payable – trade | 1,133 | 1,198 | |||||||
Accounts payable – other | 142 | 155 | |||||||
Due to unconsolidated affiliates | 14 | 2 | |||||||
Dividends and interest payable | 303 | 282 | |||||||
Accrued compensation and benefits | 423 | 373 | |||||||
Regulatory balancing accounts – overcollected | 34 | ― | |||||||
Current portion of long-term debt | 907 | 469 | |||||||
Fixed-price contracts and other derivatives | 56 | 55 | |||||||
Customer deposits | 153 | 153 | |||||||
Reserve for Aliso Canyon costs | 274 | ― | |||||||
Other | 551 | 649 | |||||||
Total current liabilities | 4,612 | 5,069 | |||||||
Long-term debt ($303 and $312 at December 31, 2015 and 2014, respectively, | |||||||||
related to VIE) | 13,134 | 12,086 | |||||||
Deferred credits and other liabilities: | |||||||||
Customer advances for construction | 149 | 144 | |||||||
Pension and other postretirement benefit plan obligations, net of plan assets | 1,152 | 1,064 | |||||||
Deferred income taxes | 3,157 | 3,003 | |||||||
Deferred investment tax credits | 32 | 37 | |||||||
Regulatory liabilities arising from removal obligations | 2,793 | 2,741 | |||||||
Asset retirement obligations | 2,126 | 2,048 | |||||||
Fixed-price contracts and other derivatives | 240 | 255 | |||||||
Deferred credits and other | 1,176 | 1,104 | |||||||
Total deferred credits and other liabilities | 10,825 | 10,396 | |||||||
Commitments and contingencies (Note 15) | |||||||||
Equity: | |||||||||
Preferred stock (50 million shares authorized; none issued) | ― | ― | |||||||
Common stock (750 million shares authorized; 248 million and 246 million | |||||||||
shares outstanding at December 31, 2015 and 2014, respectively; no par value) | 2,621 | 2,484 | |||||||
Retained earnings | 9,994 | 9,339 | |||||||
Accumulated other comprehensive income (loss) | (806 | ) | (497 | ) | |||||
Total Sempra Energy shareholders’ equity | 11,809 | 11,326 | |||||||
Preferred stock of subsidiary | 20 | 20 | |||||||
Other noncontrolling interests | 750 | 754 | |||||||
Total equity | 12,579 | 12,100 | |||||||
Total liabilities and equity | $ | 41,150 | $ | 39,651 |
(1) | As adjusted for the retrospective adoption of ASU 2015-03. | ||||||||
See Notes to Consolidated Financial Statements. |
SEMPRA ENERGY | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 1,448 | $ | 1,262 | $ | 1,088 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 1,250 | 1,156 | 1,113 | |||||||||
Deferred income taxes and investment tax credits | 239 | 146 | 334 | |||||||||
Gain on sale of equity interests and assets | (70 | ) | (62 | ) | (114 | ) | ||||||
Plant closure (adjustment) loss | (26 | ) | 6 | 200 | ||||||||
Equity earnings | (189 | ) | (119 | ) | (55 | ) | ||||||
Fixed-price contracts and other derivatives | (10 | ) | (25 | ) | (21 | ) | ||||||
Other | 75 | 108 | 13 | |||||||||
Net change in other working capital components | 699 | (375 | ) | (620 | ) | |||||||
Insurance receivable for Aliso Canyon costs | (325 | ) | ― | ― | ||||||||
Changes in other assets | (162 | ) | 19 | (171 | ) | |||||||
Changes in other liabilities | (24 | ) | 45 | 17 | ||||||||
Net cash provided by operating activities | 2,905 | 2,161 | 1,784 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Expenditures for property, plant and equipment | (3,156 | ) | (3,123 | ) | (2,572 | ) | ||||||
Expenditures for investments and acquisition of businesses | (200 | ) | (240 | ) | (22 | ) | ||||||
Proceeds from sale of equity interests and assets, net of cash sold | 373 | 149 | 570 | |||||||||
Proceeds from U.S. Treasury grants | ― | ― | 238 | |||||||||
Distributions from investments | 15 | 13 | 152 | |||||||||
Proceeds from sales by nuclear decommissioning and other trusts | 577 | 601 | 695 | |||||||||
Purchases of nuclear decommissioning and other trust assets | (531 | ) | (613 | ) | (697 | ) | ||||||
Increases in restricted cash | (100 | ) | (152 | ) | (356 | ) | ||||||
Decreases in restricted cash | 93 | 155 | 329 | |||||||||
Advances to unconsolidated affiliates | (31 | ) | (185 | ) | (14 | ) | ||||||
Repayments of advances to unconsolidated affiliates | 74 | 18 | ― | |||||||||
Other | 1 | 35 | (12 | ) | ||||||||
Net cash used in investing activities | (2,885 | ) | (3,342 | ) | (1,689 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Common dividends paid | (628 | ) | (598 | ) | (606 | ) | ||||||
Redemption of preferred stock of subsidiary | ― | ― | (82 | ) | ||||||||
Preferred dividends paid by subsidiaries | (1 | ) | (1 | ) | (5 | ) | ||||||
Issuances of common stock | 52 | 56 | 62 | |||||||||
Repurchases of common stock | (74 | ) | (38 | ) | (45 | ) | ||||||
Issuances of debt (maturities greater than 90 days) | 2,992 | 3,272 | 2,081 | |||||||||
Payments on debt (maturities greater than 90 days) | (1,854 | ) | (2,034 | ) | (1,788 | ) | ||||||
Proceeds from sale of noncontrolling interests, net of $25 in offering costs | ― | ― | 574 | |||||||||
(Decrease) increase in short-term debt, net | (622 | ) | 412 | 256 | ||||||||
Purchase of noncontrolling interests | ― | (74 | ) | ― | ||||||||
Net distributions to noncontrolling interests | (73 | ) | (104 | ) | (69 | ) | ||||||
Tax benefit related to share-based compensation | 52 | ― | ― | |||||||||
Other | (17 | ) | (37 | ) | (40 | ) | ||||||
Net cash (used in) provided by financing activities | (173 | ) | 854 | 338 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (14 | ) | (7 | ) | (4 | ) | ||||||
(Decrease) increase in cash and cash equivalents | (167 | ) | (334 | ) | 429 | |||||||
Cash and cash equivalents, January 1 | 570 | 904 | 475 | |||||||||
Cash and cash equivalents, December 31 | $ | 403 | $ | 570 | $ | 904 | ||||||
See Notes to Consolidated Financial Statements. |
SEMPRA ENERGY | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
CHANGES IN OTHER WORKING CAPITAL COMPONENTS | ||||||||||||
(Excluding cash and cash equivalents, and debt due within one year) | ||||||||||||
Accounts receivable | $ | (99 | ) | $ | 44 | $ | (273 | ) | ||||
Income taxes receivable, net | 39 | 62 | (38 | ) | ||||||||
Inventories | 65 | (133 | ) | 116 | ||||||||
Regulatory balancing accounts | 586 | (317 | ) | (198 | ) | |||||||
Regulatory assets and liabilities | (4 | ) | 8 | 1 | ||||||||
Other current assets | (18 | ) | (10 | ) | 15 | |||||||
Accounts payable | (157 | ) | 109 | (28 | ) | |||||||
Reserve for Aliso Canyon costs | 274 | ― | ― | |||||||||
Other current liabilities | 13 | (138 | ) | (215 | ) | |||||||
Net change in other working capital components | $ | 699 | $ | (375 | ) | $ | (620 | ) | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||||||
Interest payments, net of amounts capitalized | $ | 537 | $ | 536 | $ | 544 | ||||||
Income tax payments, net of refunds | 67 | 102 | 120 | |||||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||||||||||||
Acquisition of businesses: | ||||||||||||
Assets acquired | $ | 10 | $ | ― | $ | 13 | ||||||
Liabilities assumed | (2 | ) | ― | (2 | ) | |||||||
Accrued purchase price | (5 | ) | ― | ― | ||||||||
Cash paid | $ | 3 | $ | ― | $ | 11 | ||||||
Nuclear facility plant reclassified to regulatory asset, net of depreciation and amortization | $ | ― | $ | ― | $ | 512 | ||||||
Accrued capital expenditures | 566 | 433 | 437 | |||||||||
Increase in capital lease obligations for investment in property, plant and equipment | 24 | 60 | ― | |||||||||
Financing of build-to-suit property | 61 | 61 | 14 | |||||||||
Capital expenditures recoverable by U.S. Treasury grants receivable | ― | ― | 3 | |||||||||
Sequestration of U.S. Treasury grants receivable | ― | ― | (23 | ) | ||||||||
Redemption of industrial development bonds | 79 | ― | ― | |||||||||
Common dividends issued in stock | 55 | 42 | ― | |||||||||
Dividends declared but not paid | 180 | 166 | 157 | |||||||||
See Notes to Consolidated Financial Statements. |
SEMPRA ENERGY | ||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Years ended December 31, 2015, 2014 and 2013 | ||||||||||||||||||||||||
Accumulated | Sempra | |||||||||||||||||||||||
other | Energy | Non- | ||||||||||||||||||||||
Common | Retained | comprehensive | shareholders’ | controlling | Total | |||||||||||||||||||
stock | earnings | income (loss) | equity | interests | equity | |||||||||||||||||||
Balance at December 31, 2012 | $ | 2,217 | $ | 8,441 | $ | (376 | ) | $ | 10,282 | $ | 401 | $ | 10,683 | |||||||||||
Net income | 1,009 | 1,009 | 79 | 1,088 | ||||||||||||||||||||
Other comprehensive income (loss) | 148 | 148 | (8 | ) | 140 | |||||||||||||||||||
Share-based compensation expense | 40 | 40 | 40 | |||||||||||||||||||||
Common stock dividends declared | (615 | ) | (615 | ) | (615 | ) | ||||||||||||||||||
Preferred dividends of subsidiaries | (5 | ) | (5 | ) | (5 | ) | ||||||||||||||||||
Issuances of common stock | 62 | 62 | 62 | |||||||||||||||||||||
Repurchases of common stock | (45 | ) | (45 | ) | (45 | ) | ||||||||||||||||||
Sale of noncontrolling interests, net of | ||||||||||||||||||||||||
offering costs | 135 | 135 | 439 | 574 | ||||||||||||||||||||
Distributions to noncontrolling interests | (69 | ) | (69 | ) | ||||||||||||||||||||
Call premium on preferred stock | ||||||||||||||||||||||||
of subsidiary | (3 | ) | (3 | ) | (3 | ) | ||||||||||||||||||
Balance at December 31, 2013 | 2,409 | 8,827 | (228 | ) | 11,008 | 842 | 11,850 | |||||||||||||||||
Net income | 1,162 | 1,162 | 100 | 1,262 | ||||||||||||||||||||
Other comprehensive loss | (269 | ) | (269 | ) | (21 | ) | (290 | ) | ||||||||||||||||
Share-based compensation expense | 48 | 48 | 48 | |||||||||||||||||||||
Common stock dividends declared | (649 | ) | (649 | ) | (649 | ) | ||||||||||||||||||
Preferred dividends of subsidiary | (1 | ) | (1 | ) | (1 | ) | ||||||||||||||||||
Issuances of common stock | 97 | 97 | 97 | |||||||||||||||||||||
Repurchases of common stock | (38 | ) | (38 | ) | (38 | ) | ||||||||||||||||||
Distributions to noncontrolling interests | (107 | ) | (107 | ) | ||||||||||||||||||||
Equity contributed by noncontrolling | ||||||||||||||||||||||||
interests | 1 | 1 | ||||||||||||||||||||||
Purchase of noncontrolling interests in | ||||||||||||||||||||||||
subsidiary | (32 | ) | (32 | ) | (41 | ) | (73 | ) | ||||||||||||||||
Balance at December 31, 2014 | 2,484 | 9,339 | (497 | ) | 11,326 | 774 | 12,100 | |||||||||||||||||
Net income | 1,350 | 1,350 | 98 | 1,448 | ||||||||||||||||||||
Other comprehensive loss | (309 | ) | (309 | ) | (25 | ) | (334 | ) | ||||||||||||||||
Share-based compensation expense | 52 | 52 | 52 | |||||||||||||||||||||
Common stock dividends declared | (694 | ) | (694 | ) | (694 | ) | ||||||||||||||||||
Preferred dividends of subsidiary | (1 | ) | (1 | ) | (1 | ) | ||||||||||||||||||
Issuances of common stock | 107 | 107 | 107 | |||||||||||||||||||||
Repurchases of common stock | (74 | ) | (74 | ) | (74 | ) | ||||||||||||||||||
Tax benefit related to share-based | ||||||||||||||||||||||||
compensation | 52 | 52 | 52 | |||||||||||||||||||||
Distributions to noncontrolling interests | (80 | ) | (80 | ) | ||||||||||||||||||||
Equity contributed by noncontrolling | ||||||||||||||||||||||||
interests | 3 | 3 | ||||||||||||||||||||||
Balance at December 31, 2015 | $ | 2,621 | $ | 9,994 | $ | (806 | ) | $ | 11,809 | $ | 770 | $ | 12,579 | |||||||||||
See Notes to Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Operating revenues | ||||||||||||
Electric | $ | 3,719 | $ | 3,785 | $ | 3,537 | ||||||
Natural gas | 500 | 544 | 529 | |||||||||
Total operating revenues | 4,219 | 4,329 | 4,066 | |||||||||
Operating expenses | ||||||||||||
Cost of electric fuel and purchased power | 1,151 | 1,309 | 1,019 | |||||||||
Cost of natural gas | 153 | 208 | 204 | |||||||||
Operation and maintenance | 1,017 | 1,076 | 1,157 | |||||||||
Depreciation and amortization | 604 | 530 | 494 | |||||||||
Franchise fees and other taxes | 262 | 241 | 210 | |||||||||
Plant closure (adjustment) loss | (26 | ) | 6 | 200 | ||||||||
Total operating expenses | 3,161 | 3,370 | 3,284 | |||||||||
Operating income | 1,058 | 959 | 782 | |||||||||
Other income, net | 36 | 40 | 40 | |||||||||
Interest income | ― | ― | 1 | |||||||||
Interest expense | (204 | ) | (202 | ) | (197 | ) | ||||||
Income before income taxes | 890 | 797 | 626 | |||||||||
Income tax expense | (284 | ) | (270 | ) | (191 | ) | ||||||
Net income | 606 | 527 | 435 | |||||||||
Earnings attributable to noncontrolling interest | (19 | ) | (20 | ) | (24 | ) | ||||||
Earnings | 587 | 507 | 411 | |||||||||
Call premium on preferred stock | ― | ― | (3 | ) | ||||||||
Preferred dividend requirements | ― | ― | (4 | ) | ||||||||
Earnings attributable to common shares | $ | 587 | $ | 507 | $ | 404 | ||||||
See Notes to Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Years ended December 31, 2015, 2014 and 2013 | ||||||||||||||||||||
SDG&E shareholder's equity | ||||||||||||||||||||
Pretax | Income tax | Net-of-tax | Noncontrolling | |||||||||||||||||
amount | (expense) benefit | amount | interest (after-tax) | Total | ||||||||||||||||
2015: | ||||||||||||||||||||
Net income | $ | 871 | $ | (284 | ) | $ | 587 | $ | 19 | $ | 606 | |||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Financial instruments | ― | ― | ― | 6 | 6 | |||||||||||||||
Pension and other postretirement benefits | 7 | (3 | ) | 4 | ― | 4 | ||||||||||||||
Total other comprehensive income | 7 | (3 | ) | 4 | 6 | 10 | ||||||||||||||
Comprehensive income | $ | 878 | $ | (287 | ) | $ | 591 | $ | 25 | $ | 616 | |||||||||
2014: | ||||||||||||||||||||
Net income | $ | 777 | $ | (270 | ) | $ | 507 | $ | 20 | $ | 527 | |||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Financial instruments | ― | ― | ― | 2 | 2 | |||||||||||||||
Pension and other postretirement benefits | (5 | ) | 2 | (3 | ) | ― | (3 | ) | ||||||||||||
Total other comprehensive (loss) income | (5 | ) | 2 | (3 | ) | 2 | (1 | ) | ||||||||||||
Comprehensive income | $ | 772 | $ | (268 | ) | $ | 504 | $ | 22 | $ | 526 | |||||||||
2013: | ||||||||||||||||||||
Net income | $ | 602 | $ | (191 | ) | $ | 411 | $ | 24 | $ | 435 | |||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Financial instruments | ― | ― | ― | 17 | 17 | |||||||||||||||
Pension and other postretirement benefits | 3 | (1 | ) | 2 | ― | 2 | ||||||||||||||
Total other comprehensive income | 3 | (1 | ) | 2 | 17 | 19 | ||||||||||||||
Comprehensive income | $ | 605 | $ | (192 | ) | $ | 413 | $ | 41 | $ | 454 | |||||||||
See Notes to Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(Dollars in millions) | |||||||||
December 31, | December 31, | ||||||||
2015 | 2014(1) | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 20 | $ | 8 | |||||
Restricted cash | 23 | 8 | |||||||
Accounts receivable – trade, net | 331 | 285 | |||||||
Accounts receivable – other, net | 17 | 35 | |||||||
Due from unconsolidated affiliates | 1 | 1 | |||||||
Inventories | 75 | 73 | |||||||
Regulatory balancing accounts – net undercollected | 307 | 711 | |||||||
Regulatory assets | 107 | 54 | |||||||
Fixed-price contracts and other derivatives | 53 | 44 | |||||||
Other | 70 | 125 | |||||||
Total current assets | 1,004 | 1,344 | |||||||
Other assets: | |||||||||
Restricted cash | ― | 11 | |||||||
Deferred taxes recoverable in rates | 914 | 824 | |||||||
Other regulatory assets | 977 | 1,086 | |||||||
Nuclear decommissioning trusts | 1,063 | 1,131 | |||||||
Sundry | 301 | 246 | |||||||
Total other assets | 3,255 | 3,298 | |||||||
Property, plant and equipment: | |||||||||
Property, plant and equipment | 16,458 | 15,478 | |||||||
Less accumulated depreciation and amortization | (4,202 | ) | (3,860 | ) | |||||
Property, plant and equipment, net ($383 and $410 at December 31, 2015 | |||||||||
and 2014, respectively, related to VIE) | 12,256 | 11,618 | |||||||
Total assets | $ | 16,515 | $ | 16,260 |
(1) | As adjusted for the retrospective adoption of ASU 2015-03. | ||||||||
See Notes to Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||||
CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||||
(Dollars in millions) | |||||||||
December 31, | December 31, | ||||||||
2015 | 2014(1) | ||||||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term debt | $ | 168 | $ | 246 | |||||
Accounts payable | 377 | 441 | |||||||
Due to unconsolidated affiliates | 55 | 21 | |||||||
Income taxes payable | ― | 30 | |||||||
Deferred income taxes | ― | 53 | |||||||
Interest payable | 39 | 40 | |||||||
Accrued compensation and benefits | 129 | 124 | |||||||
Accrued franchise fees | 66 | 71 | |||||||
Current portion of long-term debt | 50 | 365 | |||||||
Asset retirement obligations | 99 | 120 | |||||||
Fixed-price contracts and other derivatives | 51 | 40 | |||||||
Customer deposits | 72 | 71 | |||||||
Other | 101 | 166 | |||||||
Total current liabilities | 1,207 | 1,788 | |||||||
Long-term debt ($303 and $312 at December 31, 2015 and 2014, respectively, | |||||||||
related to VIE) | 4,455 | 4,283 | |||||||
Deferred credits and other liabilities: | |||||||||
Customer advances for construction | 46 | 41 | |||||||
Pension and other postretirement benefit plan obligations, net of plan assets | 212 | 216 | |||||||
Deferred income taxes | 2,472 | 2,121 | |||||||
Deferred investment tax credits | 19 | 22 | |||||||
Regulatory liabilities arising from removal obligations | 1,629 | 1,557 | |||||||
Asset retirement obligations | 729 | 754 | |||||||
Fixed-price contracts and other derivatives | 106 | 153 | |||||||
Deferred credits and other | 364 | 333 | |||||||
Total deferred credits and other liabilities | 5,577 | 5,197 | |||||||
Commitments and contingencies (Note 15) | |||||||||
Equity: | |||||||||
Common stock (255 million shares authorized; 117 million shares outstanding; | |||||||||
no par value) | 1,338 | 1,338 | |||||||
Retained earnings | 3,893 | 3,606 | |||||||
Accumulated other comprehensive income (loss) | (8 | ) | (12 | ) | |||||
Total SDG&E shareholder’s equity | 5,223 | 4,932 | |||||||
Noncontrolling interest | 53 | 60 | |||||||
Total equity | 5,276 | 4,992 | |||||||
Total liabilities and equity | $ | 16,515 | $ | 16,260 |
(1) | As adjusted for the retrospective adoption of ASU 2015-03. | ||||||||
See Notes to Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 606 | $ | 527 | $ | 435 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 604 | 530 | 494 | |||||||||
Deferred income taxes and investment tax credits | 195 | 223 | 171 | |||||||||
Plant closure (adjustment) loss | (26 | ) | 6 | 200 | ||||||||
Fixed-price contracts and other derivatives | (4 | ) | (6 | ) | (8 | ) | ||||||
Other | (16 | ) | (23 | ) | (37 | ) | ||||||
Changes in other assets | (122 | ) | 191 | (150 | ) | |||||||
Changes in other liabilities | 13 | 18 | 19 | |||||||||
Changes in working capital components: | ||||||||||||
Accounts receivable | (10 | ) | (47 | ) | (40 | ) | ||||||
Due to/from affiliates, net | 21 | (10 | ) | 38 | ||||||||
Inventories | (2 | ) | 4 | (14 | ) | |||||||
Other current assets | (24 | ) | (16 | ) | 7 | |||||||
Income taxes | ― | 35 | (50 | ) | ||||||||
Accounts payable | (28 | ) | (23 | ) | 50 | |||||||
Regulatory balancing accounts | 474 | (208 | ) | (140 | ) | |||||||
Interest payable | (1 | ) | ― | 4 | ||||||||
Other current liabilities | (16 | ) | (104 | ) | (260 | ) | ||||||
Net cash provided by operating activities | 1,664 | 1,097 | 719 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Expenditures for property, plant and equipment | (1,133 | ) | (1,100 | ) | (978 | ) | ||||||
Proceeds from sales by nuclear decommissioning trusts | 577 | 601 | 685 | |||||||||
Purchases of nuclear decommissioning trust assets | (526 | ) | (609 | ) | (692 | ) | ||||||
Proceeds from sale of assets | ― | ― | 11 | |||||||||
Increase in restricted cash | (39 | ) | (84 | ) | (81 | ) | ||||||
Decrease in restricted cash | 35 | 96 | 82 | |||||||||
Expenditures related to long-term service agreement | ― | (30 | ) | ― | ||||||||
Net cash used in investing activities | (1,086 | ) | (1,126 | ) | (973 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Common dividends paid | (300 | ) | (200 | ) | ― | |||||||
Redemption of preferred stock | ― | ― | (82 | ) | ||||||||
Preferred dividends paid | ― | ― | (5 | ) | ||||||||
Issuances of debt (maturities greater than 90 days) | 444 | 100 | 450 | |||||||||
Payments on debt (maturities greater than 90 days) | (547 | ) | (24 | ) | (199 | ) | ||||||
(Decrease) increase in short-term debt, net | (131 | ) | 187 | 59 | ||||||||
Capital distributions made by Otay Mesa VIE | (30 | ) | (53 | ) | (26 | ) | ||||||
Other | (2 | ) | ― | (3 | ) | |||||||
Net cash (used in) provided by financing activities | (566 | ) | 10 | 194 | ||||||||
Increase (decrease) in cash and cash equivalents | 12 | (19 | ) | (60 | ) | |||||||
Cash and cash equivalents, January 1 | 8 | 27 | 87 | |||||||||
Cash and cash equivalents, December 31 | $ | 20 | $ | 8 | $ | 27 | ||||||
See Notes to Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||||||
Interest payments, net of amounts capitalized | $ | 199 | $ | 196 | $ | 187 | ||||||
Income tax payments (refunds), net | 88 | (4 | ) | 84 | ||||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||||||||||||
Nuclear facility plant reclassified to regulatory asset, net of depreciation and amortization | $ | ― | $ | ― | $ | 512 | ||||||
Accrued capital expenditures | 191 | 217 | 182 | |||||||||
Increase in capital lease obligations for investment in property, plant and equipment | 15 | 60 | ― | |||||||||
See Notes to Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Years ended December 31, 2015, 2014 and 2013 | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
other | SDG&E | |||||||||||||||||||||||
Common | Retained | comprehensive | shareholder’s | Noncontrolling | Total | |||||||||||||||||||
stock | earnings | income (loss) | equity | interest | equity | |||||||||||||||||||
Balance at December 31, 2012 | $ | 1,338 | $ | 2,895 | $ | (11 | ) | $ | 4,222 | $ | 76 | $ | 4,298 | |||||||||||
Net income | 411 | 411 | 24 | 435 | ||||||||||||||||||||
Other comprehensive income | 2 | 2 | 17 | 19 | ||||||||||||||||||||
Preferred stock dividends declared | (4 | ) | (4 | ) | (4 | ) | ||||||||||||||||||
Distributions to noncontrolling interest | (26 | ) | (26 | ) | ||||||||||||||||||||
Call premium on preferred stock | (3 | ) | (3 | ) | (3 | ) | ||||||||||||||||||
Balance at December 31, 2013 | 1,338 | 3,299 | (9 | ) | 4,628 | 91 | 4,719 | |||||||||||||||||
Net income | 507 | 507 | 20 | 527 | ||||||||||||||||||||
Other comprehensive (loss) income | (3 | ) | (3 | ) | 2 | (1 | ) | |||||||||||||||||
Common stock dividends declared | (200 | ) | (200 | ) | (200 | ) | ||||||||||||||||||
Distributions to noncontrolling interest | (53 | ) | (53 | ) | ||||||||||||||||||||
Balance at December 31, 2014 | 1,338 | 3,606 | (12 | ) | 4,932 | 60 | 4,992 | |||||||||||||||||
Net income | 587 | 587 | 19 | 606 | ||||||||||||||||||||
Other comprehensive income | 4 | 4 | 6 | 10 | ||||||||||||||||||||
Common stock dividends declared | (300 | ) | (300 | ) | (300 | ) | ||||||||||||||||||
Distributions to noncontrolling interest | (32 | ) | (32 | ) | ||||||||||||||||||||
Balance at December 31, 2015 | $ | 1,338 | $ | 3,893 | $ | (8 | ) | $ | 5,223 | $ | 53 | $ | 5,276 | |||||||||||
See Notes to Consolidated Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | ||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Operating revenues | $ | 3,489 | $ | 3,855 | $ | 3,736 | ||||||
Operating expenses | ||||||||||||
Cost of natural gas | 921 | 1,449 | 1,362 | |||||||||
Operation and maintenance | 1,370 | 1,321 | 1,324 | |||||||||
Depreciation and amortization | 461 | 431 | 383 | |||||||||
Franchise fees and other taxes | 129 | 133 | 128 | |||||||||
Total operating expenses | 2,881 | 3,334 | 3,197 | |||||||||
Operating income | 608 | 521 | 539 | |||||||||
Other income, net | 30 | 20 | 11 | |||||||||
Interest income | 4 | ― | ― | |||||||||
Interest expense | (84 | ) | (69 | ) | (69 | ) | ||||||
Income before income taxes | 558 | 472 | 481 | |||||||||
Income tax expense | (138 | ) | (139 | ) | (116 | ) | ||||||
Net income | 420 | 333 | 365 | |||||||||
Preferred dividend requirements | (1 | ) | (1 | ) | (1 | ) | ||||||
Earnings attributable to common shares | $ | 419 | $ | 332 | $ | 364 | ||||||
See Notes to Consolidated Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | ||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, 2015, 2014 and 2013 | ||||||||||||
Pretax | Income tax | Net-of-tax | ||||||||||
amount | (expense) benefit | amount | ||||||||||
2015: | ||||||||||||
Net income | $ | 558 | $ | (138 | ) | $ | 420 | |||||
Other comprehensive income (loss): | ||||||||||||
Financial instruments | 1 | (1 | ) | ― | ||||||||
Pension and other postretirement benefits | (2 | ) | 1 | (1 | ) | |||||||
Total other comprehensive loss | (1 | ) | ― | (1 | ) | |||||||
Comprehensive income | $ | 557 | $ | (138 | ) | $ | 419 | |||||
2014: | ||||||||||||
Net income/Comprehensive income | $ | 472 | $ | (139 | ) | $ | 333 | |||||
2013: | ||||||||||||
Net income | $ | 481 | $ | (116 | ) | $ | 365 | |||||
Other comprehensive income (loss): | ||||||||||||
Financial instruments | 1 | ― | 1 | |||||||||
Pension and other postretirement benefits | (2 | ) | 1 | (1 | ) | |||||||
Total other comprehensive loss | (1 | ) | 1 | ― | ||||||||
Comprehensive income | $ | 480 | $ | (115 | ) | $ | 365 | |||||
See Notes to Consolidated Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(Dollars in millions) | |||||||||
December 31, | December 31, | ||||||||
2015 | 2014(1) | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 58 | $ | 85 | |||||
Accounts receivable – trade, net | 635 | 586 | |||||||
Accounts receivable – other, net | 99 | 51 | |||||||
Due from unconsolidated affiliates | 48 | 4 | |||||||
Income taxes receivable | ― | 5 | |||||||
Inventories | 79 | 181 | |||||||
Regulatory balancing accounts – net undercollected | ― | 35 | |||||||
Regulatory assets | 7 | 5 | |||||||
Other | 40 | 36 | |||||||
Total current assets | 966 | 988 | |||||||
Other assets: | |||||||||
Regulatory assets arising from pension obligations | 699 | 617 | |||||||
Other regulatory assets | 636 | 472 | |||||||
Insurance receivable for Aliso Canyon costs | 325 | ― | |||||||
Sundry | 207 | 125 | |||||||
Total other assets | 1,867 | 1,214 | |||||||
Property, plant and equipment: | |||||||||
Property, plant and equipment | 14,171 | 12,886 | |||||||
Less accumulated depreciation and amortization | (4,900 | ) | (4,642 | ) | |||||
Property, plant and equipment, net | 9,271 | 8,244 | |||||||
Total assets | $ | 12,104 | $ | 10,446 |
(1) | As adjusted for the retrospective adoption of ASU 2015-03. | ||||||||
See Notes to Consolidated Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||||
CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||||
(Dollars in millions) | |||||||||
December 31, | December 31, | ||||||||
2015 | 2014(1) | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term debt | $ | ― | $ | 50 | |||||
Accounts payable – trade | 422 | 532 | |||||||
Accounts payable – other | 76 | 88 | |||||||
Due to unconsolidated affiliate | ― | 13 | |||||||
Income taxes payable | 3 | ― | |||||||
Deferred income taxes | ― | 53 | |||||||
Accrued compensation and benefits | 160 | 129 | |||||||
Regulatory balancing accounts – net overcollected | 34 | ― | |||||||
Current portion of long-term debt | 9 | ― | |||||||
Customer deposits | 76 | 75 | |||||||
Reserve for Aliso Canyon costs | 274 | ― | |||||||
Other | 184 | 149 | |||||||
Total current liabilities | 1,238 | 1,089 | |||||||
Long-term debt | 2,481 | 1,891 | |||||||
Deferred credits and other liabilities: | |||||||||
Customer advances for construction | 103 | 102 | |||||||
Pension obligation, net of plan assets | 716 | 633 | |||||||
Deferred income taxes | 1,532 | 1,212 | |||||||
Deferred investment tax credits | 14 | 16 | |||||||
Regulatory liabilities arising from removal obligations | 1,145 | 1,167 | |||||||
Asset retirement obligations | 1,354 | 1,255 | |||||||
Deferred credits and other | 372 | 300 | |||||||
Total deferred credits and other liabilities | 5,236 | 4,685 | |||||||
Commitments and contingencies (Note 15) | |||||||||
Shareholders’ equity: | |||||||||
Preferred stock | 22 | 22 | |||||||
Common stock (100 million shares authorized; 91 million shares outstanding; | |||||||||
no par value) | 866 | 866 | |||||||
Retained earnings | 2,280 | 1,911 | |||||||
Accumulated other comprehensive income (loss) | (19 | ) | (18 | ) | |||||
Total shareholders’ equity | 3,149 | 2,781 | |||||||
Total liabilities and shareholders’ equity | $ | 12,104 | $ | 10,446 |
(1) | As adjusted for the retrospective adoption of ASU 2015-03. | ||||||||
See Notes to Consolidated Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 420 | $ | 333 | $ | 365 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 461 | 431 | 383 | |||||||||
Deferred income taxes and investment tax credits | 127 | 130 | 117 | |||||||||
Other | (11 | ) | (7 | ) | (5 | ) | ||||||
Insurance receivable for Aliso Canyon costs | (325 | ) | ― | ― | ||||||||
Changes in other assets | (91 | ) | (131 | ) | (52 | ) | ||||||
Changes in other liabilities | (7 | ) | 29 | (4 | ) | |||||||
Changes in working capital components: | ||||||||||||
Accounts receivable | (90 | ) | 30 | (113 | ) | |||||||
Inventories | 102 | (113 | ) | 82 | ||||||||
Other current assets | 8 | (3 | ) | 3 | ||||||||
Accounts payable | (143 | ) | 156 | (54 | ) | |||||||
Income taxes | 8 | 17 | 51 | |||||||||
Due to/from affiliates, net | (11 | ) | (1 | ) | (57 | ) | ||||||
Regulatory balancing accounts | 112 | (109 | ) | (58 | ) | |||||||
Customer deposits | 1 | ― | (1 | ) | ||||||||
Reserve for Aliso Canyon costs | 274 | ― | ― | |||||||||
Other current liabilities | 45 | 3 | 24 | |||||||||
Net cash provided by operating activities | 880 | 765 | 681 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Expenditures for property, plant and equipment | (1,352 | ) | (1,104 | ) | (762 | ) | ||||||
(Increase) decrease in loans to affiliate, net | (50 | ) | ― | 34 | ||||||||
Net cash used in investing activities | (1,402 | ) | (1,104 | ) | (728 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Common dividends paid | (50 | ) | (100 | ) | (50 | ) | ||||||
Preferred dividends paid | (1 | ) | (1 | ) | (1 | ) | ||||||
Issuances of long-term debt | 599 | 747 | ― | |||||||||
Payments on long-term debt | ― | (250 | ) | ― | ||||||||
Debt issuance costs | (3 | ) | (7 | ) | ― | |||||||
(Decrease) increase in short-term debt, net | (50 | ) | 8 | 42 | ||||||||
Net cash provided by (used in) financing activities | 495 | 397 | (9 | ) | ||||||||
(Decrease) increase in cash and cash equivalents | (27 | ) | 58 | (56 | ) | |||||||
Cash and cash equivalents, January 1 | 85 | 27 | 83 | |||||||||
Cash and cash equivalents, December 31 | $ | 58 | $ | 85 | $ | 27 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||||||
Interest payments, net of amounts capitalized | $ | 79 | $ | 62 | $ | 65 | ||||||
Income tax payments (refunds), net | 1 | (10 | ) | (52 | ) | |||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITY | ||||||||||||
Accrued capital expenditures | $ | 189 | $ | 168 | $ | 130 | ||||||
See Notes to Consolidated Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Years ended December 31, 2015, 2014 and 2013 | ||||||||||||||||||||
Accumulated | ||||||||||||||||||||
other | Total | |||||||||||||||||||
Preferred | Common | Retained | comprehensive | shareholders’ | ||||||||||||||||
stock | stock | earnings | income (loss) | equity | ||||||||||||||||
Balance at December 31, 2012 | $ | 22 | $ | 866 | $ | 1,365 | $ | (18 | ) | $ | 2,235 | |||||||||
Net income | 365 | 365 | ||||||||||||||||||
Preferred stock dividends declared | (1 | ) | (1 | ) | ||||||||||||||||
Common stock dividends declared | (50 | ) | (50 | ) | ||||||||||||||||
Balance at December 31, 2013 | 22 | 866 | 1,679 | (18 | ) | 2,549 | ||||||||||||||
Net income | 333 | 333 | ||||||||||||||||||
Preferred stock dividends declared | (1 | ) | (1 | ) | ||||||||||||||||
Common stock dividends declared | (100 | ) | (100 | ) | ||||||||||||||||
Balance at December 31, 2014 | 22 | 866 | 1,911 | (18 | ) | 2,781 | ||||||||||||||
Net income | 420 | 420 | ||||||||||||||||||
Other comprehensive loss | (1 | ) | (1 | ) | ||||||||||||||||
Preferred stock dividends declared | (1 | ) | (1 | ) | ||||||||||||||||
Common stock dividends declared | (50 | ) | (50 | ) | ||||||||||||||||
Balance at December 31, 2015 | $ | 22 | $ | 866 | $ | 2,280 | $ | (19 | ) | $ | 3,149 | |||||||||
See Notes to Consolidated Financial Statements. |
§ | San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas), which are separate, reportable segments; |
§ | Sempra International, which includes our Sempra South American Utilities and Sempra Mexico reportable segments; and |
§ | Sempra U.S. Gas & Power, which includes our Sempra Renewables and Sempra Natural Gas reportable segments. |
§ | the nature of the event giving rise to the assessment; |
§ | existing statutes and regulatory code; |
§ | legal precedents; |
§ | regulatory principles and analogous regulatory actions; |
§ | testimony presented in regulatory hearings; |
§ | proposed regulatory decisions; |
§ | final regulatory orders; |
§ | a commission-authorized mechanism established for the accumulation of costs; |
§ | status of applications for rehearings or state court appeals; |
§ | specific approval from a commission; and |
§ | historical experience. |
SUMMARY OF REGULATORY BALANCING ACCOUNTS AT DECEMBER 31 | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Sempra Energy | ||||||||||||||||||||||||
Consolidated | SDG&E | SoCalGas | ||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Current: | ||||||||||||||||||||||||
Overcollected | $ | (1,200 | ) | $ | (1,730 | ) | $ | (756 | ) | $ | (1,195 | ) | $ | (444 | ) | $ | (535 | ) | ||||||
Undercollected | 1,473 | 2,476 | 1,063 | 1,906 | 410 | 570 | ||||||||||||||||||
Net current receivable (payable)(1) | 273 | 746 | 307 | 711 | (34 | ) | 35 | |||||||||||||||||
Noncurrent: | ||||||||||||||||||||||||
Undercollected(2) | 215 | 173 | ― | ― | 215 | 173 | ||||||||||||||||||
Total net receivable | $ | 488 | $ | 919 | $ | 307 | $ | 711 | $ | 181 | $ | 208 | ||||||||||||
(1) | At December 31, 2015, the net receivable at SDG&E and the net payable at SoCalGas are shown separately on Sempra Energy's Consolidated Balance Sheet. | |||||||||||||||||||||||
(2) | Long-term undercollected balance is included in Regulatory Assets (long-term) on Sempra Energy's Consolidated Balance Sheets and Other Regulatory Assets (long-term) on SoCalGas' Consolidated Balance Sheets. |
REGULATORY ASSETS (LIABILITIES) AT DECEMBER 31 | ||||||||
(Dollars in millions) | ||||||||
2015 | 2014 | |||||||
SDG&E: | ||||||||
Fixed-price contracts and other derivatives | $ | 99 | $ | 76 | ||||
Costs related to SONGS plant closure(1) | 257 | 308 | ||||||
Costs related to wildfire litigation | 362 | 373 | ||||||
Deferred taxes recoverable in rates | 914 | 824 | ||||||
Pension and other postretirement benefit plan obligations | 180 | 171 | ||||||
Removal obligations(2) | (1,629 | ) | (1,557 | ) | ||||
Unamortized loss on reacquired debt | 12 | 12 | ||||||
Environmental costs | 16 | 27 | ||||||
Legacy meters(1) | 32 | 47 | ||||||
Sunrise Powerlink fire mitigation | 117 | 116 | ||||||
Other | 9 | 10 | ||||||
Total SDG&E | 369 | 407 | ||||||
SoCalGas: | ||||||||
Pension and other postretirement benefit plan obligations | 629 | 613 | ||||||
Employee benefit costs | 51 | 52 | ||||||
Removal obligations(2) | (1,145 | ) | (1,167 | ) | ||||
Deferred taxes recoverable in rates | 330 | 195 | ||||||
Unamortized loss on reacquired debt | 11 | 12 | ||||||
Environmental costs | 22 | 22 | ||||||
Workers’ compensation | 13 | 23 | ||||||
Total SoCalGas | (89 | ) | (250 | ) | ||||
Other Sempra Energy: | ||||||||
Sempra Natural Gas | (7 | ) | (17 | ) | ||||
Sempra Mexico | 33 | 23 | ||||||
Total Other Sempra Energy | 26 | 6 | ||||||
Total Sempra Energy Consolidated | $ | 306 | $ | 163 | ||||
(1) | Regulatory assets earning a rate of return. | |||||||
(2) | Represents cumulative amounts collected in rates for future nonlegal asset removal costs. |
NET REGULATORY ASSETS (LIABILITIES) AS PRESENTED ON THE CONSOLIDATED BALANCE SHEETS AT DECEMBER 31 | ||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||||
Sempra | Sempra | |||||||||||||||||||||||||
Energy | Energy | |||||||||||||||||||||||||
Consolidated | SDG&E | SoCalGas | Consolidated | SDG&E | SoCalGas | |||||||||||||||||||||
Current regulatory assets(1) | $ | 115 | $ | 107 | $ | 7 | $ | 59 | $ | 54 | $ | 5 | ||||||||||||||
Noncurrent regulatory assets(2) | 3,058 | 1,891 | 1,120 | 2,858 | 1,910 | 916 | ||||||||||||||||||||
Current regulatory liabilities(3) | (2 | ) | ― | ― | (7 | ) | ― | ― | ||||||||||||||||||
Noncurrent regulatory liabilities(4) | (2,865 | ) | (1,629 | ) | (1,216 | ) | (2,747 | ) | (1,557 | ) | (1,171 | ) | ||||||||||||||
Total | $ | 306 | $ | 369 | $ | (89 | ) | $ | 163 | $ | 407 | $ | (250 | ) | ||||||||||||
(1 | ) | At Sempra Energy Consolidated, included in Other Current Assets. | ||||||||||||||||||||||||
(2 | ) | Excludes long-term undercollected balancing accounts at December 31, 2015 and 2014 of $215 million and $173 million, respectively, recorded at Sempra Energy Consolidated as Regulatory Assets (long-term) and at SoCalGas as Other Regulatory Assets (long-term). | ||||||||||||||||||||||||
(3 | ) | Included in Other Current Liabilities. | ||||||||||||||||||||||||
(4 | ) | At December 31, 2015 and 2014, $72 million and $6 million, respectively, at Sempra Energy Consolidated and $71 million and $4 million, respectively, at SoCalGas are included in Deferred Credits and Other. |
§ | Regulatory assets arising from the San Onofre Nuclear Generating Station (SONGS) plant closure are associated with SDG&E’s investment in SONGS as of the plant closure date and the cost of operations since Units 2 and 3 were taken offline, as we discuss further in Note 13. |
§ | Regulatory assets arising from costs related to wildfire litigation are costs in excess of liability insurance coverage and amounts recovered from third parties, as we discuss in Note 14 under “SDG&E Matters – Wildfire Claims Cost Recovery” and Note 15 under “SDG&E – 2007 Wildfire Litigation.” |
§ | Deferred taxes recoverable in rates are based on current regulatory ratemaking and income tax laws. SDG&E, SoCalGas and Sempra Mexico expect to recover net regulatory assets related to deferred income taxes over the lives of the assets that give rise to the accumulated deferred income tax liabilities. Regulatory assets include certain income tax benefits associated with flow-through repair allowance deductions, which we discuss further in “Joint Matters – CPUC General Rate Case (GRC) – 2016 General Rate Case (2016 GRC)” in Note 14. |
§ | Regulatory assets/liabilities related to pension and other postretirement benefit obligations are offset by corresponding liabilities/assets and are being recovered in rates as the plans are funded. |
§ | Regulatory assets related to unamortized losses on reacquired debt are recovered over the remaining amortization periods of the losses on reacquired debt. These periods range from 2 years to 12 years for SDG&E and from 6 years to 10 years for SoCalGas. |
§ | Regulatory assets related to environmental costs represent the portion of our environmental liability recognized at the end of the period in excess of the amount that has been recovered through rates charged to customers. We expect this amount to be recovered in future rates as expenditures are made. |
§ | The regulatory asset related to the legacy meters removed from service and replaced under the Smart Meter Program is their undepreciated value. SDG&E is recovering this asset over a remaining 2-year period in rate base. |
§ | The regulatory asset related to Sunrise Powerlink fire mitigation is offset by a corresponding liability for the funding of a trust to cover the mitigation costs. SDG&E expects to recover the regulatory asset in rates as the trust is funded over a remaining 54-year period. We discuss the trust further in Note 15. |
§ | The regulatory asset related to workers’ compensation represents accrued costs for future claims that will be recovered from customers in future rates as expenditures are made. |
§ | Amortization expense on regulatory assets for the years ended December 31, 2015, 2014 and 2013 was $62 million, $20 million and $28 million, respectively, at Sempra Energy Consolidated, $60 million, $18 million and $26 million, respectively, at SDG&E, and $2 million in each year at SoCalGas. |
§ | quoted forward prices for commodities |
§ | time value |
§ | current market and contractual prices for the underlying instruments |
§ | volatility factors |
§ | other relevant economic measures |
COLLECTION ALLOWANCES | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated: | ||||||||||||
Allowances for collection of receivables at January 1 | $ | 34 | $ | 29 | $ | 31 | ||||||
Provisions for uncollectible accounts | 20 | 25 | 16 | |||||||||
Write-offs of uncollectible accounts | (22 | ) | (20 | ) | (18 | ) | ||||||
Allowances for collection of receivables at December 31 | $ | 32 | $ | 34 | $ | 29 | ||||||
SDG&E: | ||||||||||||
Allowances for collection of receivables at January 1 | $ | 7 | $ | 5 | $ | 6 | ||||||
Provisions for uncollectible accounts | 7 | 7 | 4 | |||||||||
Write-offs of uncollectible accounts | (5 | ) | (5 | ) | (5 | ) | ||||||
Allowances for collection of receivables at December 31 | $ | 9 | $ | 7 | $ | 5 | ||||||
SoCalGas: | ||||||||||||
Allowances for collection of receivables at January 1 | $ | 17 | $ | 12 | $ | 14 | ||||||
Provisions for uncollectible accounts | 11 | 15 | 7 | |||||||||
Write-offs of uncollectible accounts | (11 | ) | (10 | ) | (9 | ) | ||||||
Allowances for collection of receivables at December 31 | $ | 17 | $ | 17 | $ | 12 |
INVENTORY BALANCES AT DECEMBER 31 | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
|
| Natural gas |
| LNG | Materials and supplies | Total | |||||||||||||
|
| 2015 |
| 2014 |
| 2015 | 2014 | 2015 | 2014 | 2015 |
| 2014 | |||||||
SDG&E | $ | 6 |
| $ | 8 | $ | ― | $ | ― | $ | 69 | $ | 65 | $ | 75 |
| $ | 73 | |
SoCalGas |
| 49 | (1) |
| 155 |
| ― |
| ― |
| 30 |
| 26 |
| 79 | (1) |
| 181 | |
Sempra South American Utilities |
| ― |
|
| ― |
| ― |
| ― |
| 30 |
| 33 |
| 30 |
|
| 33 | |
Sempra Mexico |
| ― |
|
| ― |
| 3 |
| 9 |
| 10 |
| 9 |
| 13 |
|
| 18 | |
Sempra Renewables |
| ― |
|
| ― |
| ― |
| ― |
| 3 |
| 2 |
| 3 |
|
| 2 | |
Sempra Natural Gas |
| 94 |
|
| 83 |
| 3 |
| 5 |
| 1 |
| 1 |
| 98 |
|
| 89 | |
Sempra Energy Consolidated | $ | 149 |
| $ | 246 | $ | 6 | $ | 14 | $ | 143 | $ | 136 | $ | 298 |
| $ | 396 | |
(1) | As of December 31, 2015, SoCalGas recorded an estimated inventory loss related to the Aliso Canyon natural gas leak of $11 million, included in Insurance Receivable for Aliso Canyon Costs on Sempra Energy's and SoCalGas' Consolidated Balance Sheets. See additional discussion about the Aliso Canyon natural gas storage facility leak in Note 15. |
§ | regulatory assets to offset deferred tax liabilities if it is probable that the amounts will be recovered from customers; and |
§ | regulatory liabilities to offset deferred tax assets if it is probable that the amounts will be returned to customers. |
§ | labor |
§ | materials and contract services |
§ | expenditures for replacement parts incurred during a major maintenance outage of a generating plant |
PROPERTY, PLANT AND EQUIPMENT BY MAJOR FUNCTIONAL CATEGORY | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Property, plant | Depreciation rates for | ||||||||||||||||||||
and equipment at | years ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2013 | |||||||||||||||||
SDG&E: | |||||||||||||||||||||
Natural gas operations | $ | 1,642 | $ | 1,535 | 2.52 | % | 2.72 | % | 2.35 | % | |||||||||||
Electric distribution | 6,151 | 5,795 | 3.79 | 3.79 | 3.36 | ||||||||||||||||
Electric transmission(1) | 4,870 | 4,525 | 2.62 | 2.59 | 2.58 | ||||||||||||||||
Electric generation(2) | 1,891 | 1,862 | 3.89 | 3.86 | 3.76 | ||||||||||||||||
Other electric(3) | 981 | 851 | 5.73 | 7.09 | 7.58 | ||||||||||||||||
Construction work in progress(1) | 923 | 910 | NA | NA | NA | ||||||||||||||||
Total SDG&E | 16,458 | 15,478 | |||||||||||||||||||
SoCalGas: | |||||||||||||||||||||
Natural gas operations(4) | 13,241 | 12,098 | 3.83 | 3.89 | 3.70 | ||||||||||||||||
Other non-utility | 110 | 120 | 3.95 | 2.88 | 1.56 | ||||||||||||||||
Construction work in progress | 820 | 668 | NA | NA | NA | ||||||||||||||||
Total SoCalGas | 14,171 | 12,886 |
Estimated | Weighted average | ||||||||||||||||||||||||
Other operating units and parent(5): | useful lives | useful life | |||||||||||||||||||||||
Land and land rights | 289 | 290 | 26 to 55 years(6) | 40 | |||||||||||||||||||||
Machinery and equipment: | |||||||||||||||||||||||||
Utility electric distribution operations | 1,362 | 1,434 | 12 to 46 years | 43 | |||||||||||||||||||||
Generating plants | 782 | 596 | 5 to 80 years | 39 | |||||||||||||||||||||
LNG terminals | 1,124 | 1,122 | 5 to 43 years | 43 | |||||||||||||||||||||
Pipelines and storage | 2,311 | 2,003 | 3 to 55 years | 45 | |||||||||||||||||||||
Other | 233 | 213 | 1 to 50 years | 15 | |||||||||||||||||||||
Construction work in progress | 1,022 | 1,053 | NA | NA | |||||||||||||||||||||
Other | 448 | 332 | 2 to 80 years | 35 | |||||||||||||||||||||
7,571 | 7,043 | ||||||||||||||||||||||||
Total Sempra Energy Consolidated | $ | 38,200 | $ | 35,407 | |||||||||||||||||||||
(1) | At December 31, 2015, includes $374 million in electric transmission assets and $25 million in construction work in progress related to SDG&E's 91-percent interest in the Southwest Powerlink (SWPL) transmission line, jointly owned by SDG&E with other utilities. SDG&E, and each of the other owners, holds its undivided interest as a tenant in common in the property. Each owner is responsible for its share of the project and participates in decisions concerning operations and capital expenditures. | ||||||||||||||||||||||||
(2) | Includes capital lease assets of $258 million and $243 million at December 31, 2015 and 2014, respectively, primarily related to variable interest entities of which SDG&E is not the primary beneficiary. | ||||||||||||||||||||||||
(3) | Includes capital lease assets of $20 million and $19 million at December 31, 2015 and 2014, respectively. | ||||||||||||||||||||||||
(4) | Includes capital lease assets of $30 million and $27 million at December 31, 2015 and 2014, respectively. | ||||||||||||||||||||||||
(5) | The December 31, 2015 balances include $142 million, $204 million and $28 million and the December 31, 2014 balances include $150 million, $191 million and $24 million of utility plant, primarily pipelines and other distribution assets, at Ecogas, Mobile Gas and Willmut Gas, respectively. | ||||||||||||||||||||||||
(6) | Estimated useful lives are for land rights. |
ACCUMULATED DEPRECIATION | ||||||||
(Dollars in millions) | ||||||||
December 31, | ||||||||
2015 | 2014 | |||||||
SDG&E: | ||||||||
Accumulated depreciation: | ||||||||
Electric(1) | $ | 3,512 | $ | 3,192 | ||||
Natural gas | 690 | 668 | ||||||
Total SDG&E | 4,202 | 3,860 | ||||||
SoCalGas: | ||||||||
Accumulated depreciation of natural gas utility plant in service(2) | 4,810 | 4,555 | ||||||
Accumulated depreciation – other non-utility | 90 | 87 | ||||||
Total SoCalGas | 4,900 | 4,642 | ||||||
Other operating units and parent and other: | ||||||||
Accumulated depreciation – other(3) | 860 | 824 | ||||||
Accumulated depreciation of utility electric distribution operations | 199 | 179 | ||||||
1,059 | 1,003 | |||||||
Total Sempra Energy Consolidated | $ | 10,161 | $ | 9,505 | ||||
(1) | Includes accumulated depreciation for assets under capital lease of $34 million and $28 million at December 31, 2015 and 2014, respectively. Includes $224 million at December 31, 2015 related to SDG&E's 91-percent interest in the SWPL transmission line, jointly owned by SDG&E and other utilities. | |||||||
(2) | Includes accumulated depreciation for assets under capital lease of $29 million and $27 million at December 31, 2015 and 2014, respectively. | |||||||
(3) | The December 31, 2015 balances include $36 million, $35 million and $3 million and the December 31, 2014 balances include $37 million, $29 million and $2 million of accumulated depreciation for utility plant at Ecogas, Mobile Gas and Willmut Gas, respectively. |
CAPITALIZED FINANCING COSTS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated: | ||||||||||||
AFUDC related to debt | $ | 26 | $ | 22 | $ | 22 | ||||||
AFUDC related to equity | 107 | 106 | 75 | |||||||||
Other capitalized interest | 68 | 39 | 22 | |||||||||
Total Sempra Energy Consolidated | $ | 201 | $ | 167 | $ | 119 | ||||||
SDG&E: | ||||||||||||
AFUDC related to debt | $ | 14 | $ | 15 | $ | 16 | ||||||
AFUDC related to equity | 37 | 37 | 39 | |||||||||
Total SDG&E | $ | 51 | $ | 52 | $ | 55 | ||||||
SoCalGas: | ||||||||||||
AFUDC related to debt | $ | 12 | $ | 7 | $ | 6 | ||||||
AFUDC related to equity | 36 | 26 | 17 | |||||||||
Other capitalized interest | 1 | 1 | 1 | |||||||||
Total SoCalGas | $ | 49 | $ | 34 | $ | 24 |
§ | consideration of market transactions |
§ | future cash flows |
§ | the appropriate risk-adjusted discount rate |
§ | country risk |
§ | entity risk |
GOODWILL | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Sempra | ||||||||||||||||
South American | Sempra | Sempra | ||||||||||||||
Utilities | Mexico | Natural Gas | Total | |||||||||||||
Balance at December 31, 2013 | $ | 927 | $ | 25 | $ | 72 | $ | 1,024 | ||||||||
Foreign currency translation(1) | (93 | ) | ― | ― | (93 | ) | ||||||||||
Balance at December 31, 2014 | 834 | 25 | 72 | 931 | ||||||||||||
Foreign currency translation(1) | (112 | ) | ― | ― | (112 | ) | ||||||||||
Balance at December 31, 2015 | $ | 722 | $ | 25 | $ | 72 | $ | 819 |
(1) | We record the offset of this fluctuation to other comprehensive income (loss). |
OTHER INTANGIBLE ASSETS | ||||||||||||
(Dollars in millions) | ||||||||||||
Amortization period | December 31, | |||||||||||
(years) | 2015 | 2014 | ||||||||||
Storage rights | 46 | $ | 138 | $ | 138 | |||||||
Development rights | 50 | 322 | 322 | |||||||||
Other | 10 years to indefinite | 17 | 18 | |||||||||
477 | 478 | |||||||||||
Less accumulated amortization: | ||||||||||||
Storage rights | (22 | ) | (19 | ) | ||||||||
Development rights | (47 | ) | (40 | ) | ||||||||
Other | (4 | ) | (4 | ) | ||||||||
(73 | ) | (63 | ) | |||||||||
$ | 404 | $ | 415 |
§ | significant decreases in the market price of an asset |
§ | a significant adverse change in the extent or manner in which we use an asset or in its physical condition |
§ | a significant adverse change in legal or regulatory factors or in the business climate that could affect the value of an asset |
§ | a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection of continuing losses associated with the use of a long-lived asset |
§ | a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life |
§ | 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. |
AMOUNTS ASSOCIATED WITH OTAY MESA VIE | ||||||||
(Dollars in millions) | ||||||||
December 31, | ||||||||
2015 | 2014(1) | |||||||
Cash and cash equivalents | $ | 5 | $ | 5 | ||||
Restricted cash | 23 | 8 | ||||||
Inventories | 3 | 3 | ||||||
Other | ― | 1 | ||||||
Total current assets | 31 | 17 | ||||||
Restricted cash | ― | 11 | ||||||
Property, plant and equipment, net | 383 | 410 | ||||||
Total assets | $ | 414 | $ | 438 | ||||
Current portion of long-term debt | $ | 10 | $ | 10 | ||||
Fixed-price contracts and other derivatives | 14 | 16 | ||||||
Other | 5 | 3 | ||||||
Total current liabilities | 29 | 29 | ||||||
Long-term debt | 303 | 312 | ||||||
Fixed-price contracts and other derivatives | 23 | 31 | ||||||
Deferred credits and other | 6 | 6 | ||||||
Other noncontrolling interest | 53 | 60 | ||||||
Total liabilities and equity | $ | 414 | $ | 438 | ||||
(1) | As adjusted for the retrospective adoption of ASU 2015-03, as we discuss in Note 2. |
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Operating expenses | ||||||||||||
Cost of electric fuel and purchased power | $ | (83 | ) | $ | (83 | ) | $ | (91 | ) | |||
Operation and maintenance | 19 | 19 | 24 | |||||||||
Depreciation and amortization | 26 | 27 | 28 | |||||||||
Total operating expenses | (38 | ) | (37 | ) | (39 | ) | ||||||
Operating income | 38 | 37 | 39 | |||||||||
Interest expense | (19 | ) | (17 | ) | (15 | ) | ||||||
Income before income taxes/Net income | 19 | 20 | 24 | |||||||||
Earnings attributable to noncontrolling interest | (19 | ) | (20 | ) | (24 | ) | ||||||
Earnings attributable to common shares | $ | ― | $ | ― | $ | ― |
§ | fuel and storage tanks |
§ | natural gas distribution systems |
§ | hazardous waste storage facilities |
§ | asbestos-containing construction materials |
§ | decommissioning of nuclear power facilities |
§ | electric distribution and transmission systems |
§ | site restoration of a former power plant |
§ | power generation plant (natural gas) |
§ | natural gas transmission pipelines |
§ | underground natural gas storage facilities and wells |
§ | electric distribution and transmission systems |
§ | power generation plant (natural gas) |
§ | natural gas distribution and transportation systems |
§ | LNG terminal |
§ | certain power generation plants (solar) |
§ | natural gas distribution and transportation systems |
§ | underground natural gas storage facilities |
§ | power generation plant (natural gas) (sold in April 2015) |
CHANGES IN ASSET RETIREMENT OBLIGATIONS | ||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||
Sempra Energy | ||||||||||||||||||||||||||
Consolidated | SDG&E | SoCalGas | ||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
Balance as of January 1(1) | $ | 2,190 | $ | 2,152 | $ | 873 | $ | 913 | $ | 1,276 | $ | 1,199 | ||||||||||||||
Accretion expense | 92 | 97 | 40 | 43 | 49 | 52 | ||||||||||||||||||||
Liabilities incurred | 1 | 4 | ― | ― | ― | ― | ||||||||||||||||||||
Reclassification(2) | ― | (6 | ) | ― | ― | ― | ― | |||||||||||||||||||
Payments(3) | (80 | ) | (29 | ) | (79 | ) | (29 | ) | ― | ― | ||||||||||||||||
Net revisions, other(4) | 52 | (28 | ) | (6 | ) | (54 | ) | 58 | 25 | |||||||||||||||||
Balance at December 31(1) | $ | 2,255 | $ | 2,190 | $ | 828 | $ | 873 | $ | 1,383 | $ | 1,276 | ||||||||||||||
(1 | ) | The current portions of the obligations are included in Other Current Liabilities on the Consolidated Balance Sheets. | ||||||||||||||||||||||||
(2 | ) | Reclassification to liability held for sale - asset retirement obligation which is included in Other Current Liabilities on the Consolidated Balance Sheet at December 31, 2014. | ||||||||||||||||||||||||
(3 | ) | The increased payments at SDG&E are for the decommissioning of San Onofre Nuclear Generating Station Units 2 and 3, which we discuss in Note 13. | ||||||||||||||||||||||||
(4 | ) | The increases at SoCalGas in 2015 and 2014 are related to revisions in estimated cash flows. The decrease in 2014 at SDG&E is due to revised estimates in an updated decommissioning cost study for the San Onofre Nuclear Generating Station, which we discuss in Note 13. |
§ | information available through the date we file our financial statements indicates it is probable that a loss has been incurred, given the likelihood of uncertain future events; and |
§ | the amount of the loss can be reasonably estimated. |
§ | foreign currency translation adjustments |
§ | changes in unamortized net actuarial gain or loss and prior service cost related to pension and other postretirement benefits plans |
§ | unrealized gains or losses on available-for-sale securities |
§ | certain hedging activities |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) | |||||||||
SEMPRA ENERGY CONSOLIDATED | |||||||||
(Dollars in millions) | |||||||||
|
| Foreign |
|
| Pension | Total | |||
|
| currency |
| and other | accumulated other | ||||
|
| translation | Financial | postretirement | comprehensive | ||||
|
| adjustments | instruments | benefits | income (loss) | ||||
Balance as of December 31, 2012 | $ | (240) | $ | (35) | $ | (101) | $ | (376) | |
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income before |
|
|
|
|
|
|
|
| |
reclassifications |
| (159) |
| 2 |
| 20 |
| (137) | |
Amounts reclassified from accumulated other |
|
|
|
|
|
|
|
| |
comprehensive income |
| 270 | (2) | 7 |
| 8 |
| 285 | |
Net other comprehensive income |
| 111 |
| 9 |
| 28 |
| 148 | |
Balance as of December 31, 2013 |
| (129) |
| (26) |
| (73) |
| (228) | |
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss before |
|
|
|
|
|
|
|
| |
reclassifications |
| (193) |
| (70) |
| (26) |
| (289) | |
Amounts reclassified from accumulated other |
|
|
|
|
|
|
|
| |
comprehensive income |
| ― |
| 6 |
| 14 |
| 20 | |
Net other comprehensive loss |
| (193) |
| (64) |
| (12) |
| (269) | |
Balance as of December 31, 2014 |
| (322) |
| (90) |
| (85) |
| (497) | |
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss before |
|
|
|
|
|
|
|
| |
reclassifications |
| (260) |
| (57) |
| (10) |
| (327) | |
Amounts reclassified from accumulated other |
|
|
|
|
|
|
|
| |
comprehensive income |
| ― |
| 10 |
| 8 |
| 18 | |
Net other comprehensive loss |
| (260) |
| (47) |
| (2) |
| (309) | |
Balance as of December 31, 2015 | $ | (582) | $ | (137) | $ | (87) | $ | (806) | |
(1) | All amounts are net of income tax, if subject to tax, and exclude noncontrolling interests. | ||||||||
(2) | Represents cumulative foreign currency translation adjustment related to the impairment of our Argentine investments in 2006, which is substantially offset by an accrued liability established at that time. We provide additional information about these investments in Note 4. |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) | ||||||||
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||
(Dollars in millions) | ||||||||
Pension | Total | |||||||
and other | accumulated other | |||||||
postretirement | comprehensive | |||||||
benefits | income (loss) | |||||||
Balance as of December 31, 2012 | $ | (11 | ) | $ | (11 | ) | ||
Amounts reclassified from accumulated other | ||||||||
comprehensive income | 2 | 2 | ||||||
Net other comprehensive income | 2 | 2 | ||||||
Balance as of December 31, 2013 | (9 | ) | (9 | ) | ||||
Other comprehensive loss before | ||||||||
reclassifications | (5 | ) | (5 | ) | ||||
Amounts reclassified from accumulated other | ||||||||
comprehensive income | 2 | 2 | ||||||
Net other comprehensive loss | (3 | ) | (3 | ) | ||||
Balance as of December 31, 2014 | (12 | ) | (12 | ) | ||||
Other comprehensive income before | ||||||||
reclassifications | 3 | 3 | ||||||
Amounts reclassified from accumulated other | ||||||||
comprehensive income | 1 | 1 | ||||||
Net other comprehensive income | 4 | 4 | ||||||
Balance as of December 31, 2015 | $ | (8 | ) | $ | (8 | ) | ||
(1) | All amounts are net of income tax, if subject to tax, and exclude noncontrolling interests. |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) | ||||||||||||
SOUTHERN CALIFORNIA GAS COMPANY | ||||||||||||
(Dollars in millions) | ||||||||||||
Pension | Total | |||||||||||
and other | accumulated other | |||||||||||
Financial | postretirement | comprehensive | ||||||||||
instruments | benefits | income (loss) | ||||||||||
Balance as of December 31, 2012 | $ | (15 | ) | $ | (3 | ) | $ | (18 | ) | |||
Other comprehensive loss before | ||||||||||||
reclassifications | ― | (2 | ) | (2 | ) | |||||||
Amounts reclassified from accumulated other | ||||||||||||
comprehensive income | 1 | 1 | 2 | |||||||||
Net other comprehensive income (loss) | 1 | (1 | ) | ― | ||||||||
Balance as of December 31, 2013 | (14 | ) | (4 | ) | (18 | ) | ||||||
Other comprehensive loss before | ||||||||||||
reclassifications | ― | (3 | ) | (3 | ) | |||||||
Amounts reclassified from accumulated other | ||||||||||||
comprehensive income | ― | 3 | 3 | |||||||||
Net other comprehensive income | ― | ― | ― | |||||||||
Balance as of December 31, 2014 | (14 | ) | (4 | ) | (18 | ) | ||||||
Other comprehensive loss before | ||||||||||||
reclassifications | ― | (1 | ) | (1 | ) | |||||||
Net other comprehensive loss | ― | (1 | ) | (1 | ) | |||||||
Balance as of December 31, 2015 | $ | (14 | ) | $ | (5 | ) | $ | (19 | ) | |||
(1) | All amounts are net of income tax, if subject to tax, and exclude noncontrolling interests. |
RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||||
(Dollars in millions) | |||||||||||||
Details about accumulated | Amounts reclassified from accumulated other | Affected line item | |||||||||||
other comprehensive income (loss) components | comprehensive income (loss) | on Consolidated Statements of Operations | |||||||||||
Years ended December 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
Sempra Energy Consolidated: | |||||||||||||
Foreign currency translation adjustments | $ | ― | $ | ― | $ | 270 | Equity Earnings, Net of Income Tax(1) | ||||||
Financial instruments: | |||||||||||||
Interest rate and foreign exchange instruments | $ | 18 | $ | 21 | $ | 11 | Interest Expense | ||||||
Interest rate instruments | ― | (3 | ) | ― | Gain on Sale of Equity Interests and Assets | ||||||||
Interest rate instruments | 12 | 10 | 10 | Equity Earnings, Before Income Tax | |||||||||
Interest rate instruments | 13 | ― | ― | Equity Earnings, Net of Income Tax | |||||||||
Commodity contracts not subject to rate recovery | (14 | ) | (8 | ) | (1 | ) | Revenues: Energy-Related Businesses | ||||||
Total before income tax | 29 | 20 | 20 | ||||||||||
(4 | ) | (3 | ) | (4 | ) | Income Tax Expense | |||||||
Net of income tax | 25 | 17 | 16 | ||||||||||
(15 | ) | (11 | ) | (9 | ) | Earnings Attributable to Noncontrolling Interests | |||||||
$ | 10 | $ | 6 | $ | 7 | ||||||||
Pension and other postretirement benefits: | |||||||||||||
Net actuarial gain | $ | ― | $ | ― | $ | 3 | See note (2) below | ||||||
Amortization of actuarial loss | 14 | 23 | 10 | See note (2) below | |||||||||
Total before income tax | 14 | 23 | 13 | ||||||||||
(6 | ) | (9 | ) | (5 | ) | Income Tax Expense | |||||||
Net of income tax | $ | 8 | $ | 14 | $ | 8 | |||||||
Total reclassifications for the period, net of tax | $ | 18 | $ | 20 | $ | 285 | |||||||
SDG&E: | |||||||||||||
Financial instruments: | |||||||||||||
Interest rate instruments | $ | 12 | $ | 11 | $ | 9 | Interest Expense | ||||||
(12 | ) | (11 | ) | (9 | ) | Earnings Attributable to Noncontrolling Interest | |||||||
$ | ― | $ | ― | $ | ― | ||||||||
Pension and other postretirement benefits: | |||||||||||||
Net actuarial gain | $ | ― | $ | ― | $ | 2 | See note (2) below | ||||||
Amortization of actuarial loss | 1 | 3 | 1 | See note (2) below | |||||||||
Total before income tax | 1 | 3 | 3 | ||||||||||
― | (1 | ) | (1 | ) | Income Tax Expense | ||||||||
Net of income tax | $ | 1 | $ | 2 | $ | 2 | |||||||
Total reclassifications for the period, net of tax | $ | 1 | $ | 2 | $ | 2 | |||||||
SoCalGas: | |||||||||||||
Financial instruments: | |||||||||||||
Interest rate instruments | $ | 1 | $ | 1 | $ | 1 | Interest Expense | ||||||
(1 | ) | (1 | ) | ― | Income Tax Expense | ||||||||
Net of income tax | $ | ― | $ | ― | $ | 1 | |||||||
Pension and other postretirement benefits: | |||||||||||||
Amortization of actuarial loss | $ | ― | $ | 5 | $ | 1 | See note (2) below | ||||||
Total before income tax | ― | 5 | 1 | ||||||||||
― | (2 | ) | ― | Income Tax Expense | |||||||||
Net of income tax | $ | ― | $ | 3 | $ | 1 | |||||||
Total reclassifications for the period, net of tax | $ | ― | $ | 3 | $ | 2 | |||||||
(1) | Represents cumulative foreign currency translation adjustment related to the impairment of our Argentine investments in 2006, which is substantially offset by an accrued liability established at that time. We provide additional information about these investments in Note 4. | ||||||||||||
(2) | Amounts are included in the computation of net periodic benefit cost (see "Net Periodic Benefit Cost" in Note 7). |
NONCONTROLLING INTERESTS
OTHER NONCONTROLLING INTERESTS | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Percent ownership held by others | ||||||||||||||||
December 31, | December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
SDG&E: | ||||||||||||||||
Otay Mesa VIE | 100 | % | 100 | % | $ | 53 | $ | 60 | ||||||||
Sempra South American Utilities: | ||||||||||||||||
Chilquinta Energía subsidiaries(1) | 23.5 - 43.4 | 23.6 - 43.4 | 21 | 23 | ||||||||||||
Luz del Sur | 16.4 | 16.4 | 164 | 177 | ||||||||||||
Tecsur | 9.8 | 9.8 | 4 | 4 | ||||||||||||
Sempra Mexico: | ||||||||||||||||
IEnova, S.A.B. de C.V. | 18.9 | 18.9 | 468 | 452 | ||||||||||||
Sempra Natural Gas: | ||||||||||||||||
Bay Gas Storage Company, Ltd. | 9.1 | 9.1 | 25 | 23 | ||||||||||||
Liberty Gas Storage, LLC | 23.2 | 25.0 | 14 | 14 | ||||||||||||
Southern Gas Transmission Company | 49.0 | 49.0 | 1 | 1 | ||||||||||||
Total Sempra Energy | $ | 750 | $ | 754 | ||||||||||||
(1) | Chilquinta Energía has four subsidiaries with noncontrolling interests held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries. |
§ | Decoupled revenue – The regulatory framework permits the California Utilities to recover authorized revenue based on estimated annual demand forecasts approved in regular proceedings before the CPUC. Any difference between actual demand and the annual demand approved in the proceedings is recovered or refunded in authorized revenue in the subsequent year. This design, commonly known as “decoupling,” is intended to minimize any impact on earnings due to variability in volumetric demand for electricity and natural gas. |
§ | Commodity costs – The regulatory framework authorizes the California Utilities to recover the actual cost of natural gas procured and delivered to its core customers in rates substantially as incurred. Actual electricity procurement costs are recovered as power is delivered, or to the extent actual amounts vary from forecasts, generally recovered or refunded within the subsequent year. The California Utilities also record revenue from CPUC-approved incentive awards, some of which require approval by the CPUC prior to being recognized. We provide additional discussion on utility incentive mechanisms in Note 14. |
TOTAL UTILITIES REVENUES AT SEMPRA ENERGY CONSOLIDATED(1) | |||||||||||||
(Dollars in millions) | |||||||||||||
Years ended December 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
Electric revenues | $ | 5,158 | $ | 5,209 | $ | 4,911 | |||||||
Natural gas revenues | 4,096 | 4,549 | 4,398 | ||||||||||
Total | $ | 9,254 | $ | 9,758 | $ | 9,309 |
(1) | Excludes intercompany revenues. |
§ | pipeline capacity costs, and pipeline transportation and natural gas marketing costs at Sempra Natural Gas; |
§ | electric construction services costs at Sempra South American Utilities’ energy-services companies; and |
§ | energy management service fees and costs associated with construction of a pipeline interconnect at Sempra Mexico. |
AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES | ||||||||
(Dollars in millions) | ||||||||
December 31, | ||||||||
2015 | 2014 | |||||||
Sempra Energy Consolidated: | ||||||||
Total due from various unconsolidated affiliates - current | $ | 6 | $ | 38 | ||||
Sempra South American Utilities(1): | ||||||||
Eletrans S.A.: | ||||||||
4% Note(2) | $ | 72 | $ | 41 | ||||
Sempra Mexico(1): | ||||||||
Affiliate of joint venture with Petróleos Mexicanos(3) | ||||||||
Note due November 13, 2017(4)(5) | 3 | 44 | ||||||
Note due November 14, 2018(4) | 42 | 40 | ||||||
Note due November 14, 2018(4) | 34 | 33 | ||||||
Note due November 14, 2018(4) | 8 | 8 | ||||||
Energía Sierra Juárez: | ||||||||
Note due June 15, 2018(6) | 24 | 22 | ||||||
Sempra Natural Gas: | ||||||||
Cameron LNG JV | 3 | ― | ||||||
Total due from unconsolidated affiliates - noncurrent | $ | 186 | $ | 188 | ||||
Total due to various unconsolidated affiliates - current | $ | (14 | ) | $ | (2 | ) | ||
SDG&E: | ||||||||
Total due from various unconsolidated affiliates - current | $ | 1 | $ | 1 | ||||
Sempra Energy | $ | (34 | ) | $ | (17 | ) | ||
SoCalGas | (13 | ) | (4 | ) | ||||
Affiliate | (8 | ) | ― | |||||
Total due to unconsolidated affiliates - current | $ | (55 | ) | $ | (21 | ) | ||
Income taxes due from Sempra Energy(7) | $ | 28 | $ | 16 | ||||
SoCalGas: | ||||||||
Sempra Energy(8) | $ | 35 | $ | ― | ||||
SDG&E | 13 | 4 | ||||||
Total due from unconsolidated affiliates - current | $ | 48 | $ | 4 | ||||
Sempra Energy | $ | ― | $ | (13 | ) | |||
Total due to unconsolidated affiliate - current | $ | ― | $ | (13 | ) | |||
Income taxes due from Sempra Energy(7) | $ | 1 | $ | 9 | ||||
(1) | Amounts include principal balances plus accumulated interest outstanding. | |||||||
(2) | U.S. dollar-denominated loan, at a fixed interest rate with no stated maturity date, to provide project financing for the construction of transmission lines at Eletrans S.A., an affiliate of Chilquinta Energía. | |||||||
(3) | Petróleos Mexicanos (or PEMEX, the Mexican state-owned oil company). | |||||||
(4) | U.S. dollar-denominated loan, at a variable interest rate based on a 30-day LIBOR plus 450 basis points (4.93 percent at December 31, 2015), to finance the Los Ramones Norte pipeline project. | |||||||
(5) | In May 2015, $41 million was paid with proceeds from project financing at the affiliate. | |||||||
(6) | U.S. dollar-denominated loan, at a variable interest rate based on a 30-day LIBOR plus 637.5 basis points (6.80 percent at December 31, 2015), to finance the first phase of the Energía Sierra Juárez wind project. | |||||||
(7) | SDG&E and SoCalGas are included in the consolidated income tax return of Sempra Energy and are allocated income tax expense from Sempra Energy in an amount equal to that which would result from each company having always filed a separate return. | |||||||
(8) | Net receivable includes outstanding advances to Sempra Energy of $50 million at December 31, 2015 at an interest rate of 0.11 percent. |
REVENUES FROM UNCONSOLIDATED AFFILIATES | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated | $ | 26 | $ | 13 | $ | 4 | ||||||
SDG&E | 10 | 13 | 12 | |||||||||
SoCalGas | 75 | 69 | 70 |
COST OF SALES FROM UNCONSOLIDATED AFFILIATES | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated | $ | 107 | $ | 78 | $ | 78 | ||||||
SDG&E | 49 | 17 | 19 |
§ | The CPUC requires that SDG&E’s and SoCalGas’ common equity ratios be no lower than one percentage point below the CPUC-authorized percentage of each entity’s authorized capital structure. The authorized percentage at December 31, 2015 is 52 percent at both SDG&E and SoCalGas. |
§ | The FERC requires SDG&E to maintain a common equity ratio of 30 percent or above. |
§ | The California Utilities have a combined revolving credit line that requires each utility to maintain a ratio of consolidated indebtedness to consolidated capitalization (as defined in the agreement) of no more than 65 percent, as we discuss in Note 5. |
§ | Peru and Mexico require domestic corporations to maintain minimum legal reserves as a percentage of capital stock, resulting in restricted net assets of $35 million at Luz del Sur and $81 million at Sempra Energy’s consolidated Mexican subsidiaries at December 31, 2015. |
§ | Energía Sierra Juárez, a 50-percent owned and unconsolidated joint venture of Sempra Mexico (see Notes 3 and 4), has a long-term debt agreement that requires the establishment and funding of project and reserve accounts to which the proceeds of loans, letter of credit draws, project revenues and other amounts are deposited and applied in accordance with the debt agreement. The long-term debt agreement also limits the joint venture’s ability to incur liens, incur additional indebtedness, make acquisitions and undertake certain actions. Also, in connection with a debt agreement for the financing of Mexican value added tax, Energía Sierra Juárez had $10 million of restricted net assets at December 31, 2015. |
§ | Gasoductos de Chihuahua, Sempra Mexico’s joint venture with PEMEX (see Note 4), has a debt agreement that requires the joint venture to maintain a reserve account to pay the debt. Under these restrictions, net assets totaling $11 million are restricted at December 31, 2015. |
§ | Wholly owned Copper Mountain Solar 1 has a long-term debt agreement that requires the establishment and funding of project accounts to which the proceeds of loans, project revenues and other amounts are deposited and applied in accordance with the debt agreement. This long-term debt agreement also limits Copper Mountain Solar 1’s ability to incur liens, incur additional indebtedness, make acquisitions and undertake certain actions, while also requiring maintenance of certain debt ratios. Under these restrictions, net assets totaling $9 million are restricted at December 31, 2015. |
§ | 50-percent owned and unconsolidated joint ventures at Sempra Renewables have debt agreements that require each joint venture to maintain reserve accounts in order to pay the projects’ debt service and operation and maintenance requirements. We discuss Sempra Energy guarantees associated with these requirements in Note 4. At December 31, 2015, as a result of these requirements, there were total restricted net assets at these joint ventures of approximately $283 million. |
§ | Wholly owned Mobile Gas has long-term debt instruments containing restrictions relating to the payment of dividends and other distributions with respect to capital stock. Under these restrictions, net assets of approximately $116 million are restricted at December 31, 2015. |
§ | 91-percent owned Bay Gas has long-term debt instruments containing restrictions relating to the payment of dividends and other distributions if Bay Gas does not maintain a specified debt service coverage ratio. Bay Gas had no restricted net assets at December 31, 2015. |
§ | Sempra Natural Gas has an equity method investment in Cameron LNG JV, which has debt agreements that require the establishment and funding of project accounts to which the proceeds of loans, project revenues and other amounts are deposited and applied in accordance with the debt agreements. The debt agreements require the joint venture to maintain reserve accounts in order to pay the project debt service, and also contain restrictions related to the payment of dividends and other distributions to the members of the joint venture. We discuss Sempra Energy guarantees associated with Cameron LNG JV’s debt agreements in Note 4. Under these restrictions, net assets of Cameron LNG JV of approximately $3.5 billion are restricted at December 31, 2015. |
OTHER INCOME, NET | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated: | ||||||||||||
Allowance for equity funds used during construction | $ | 107 | $ | 106 | $ | 75 | ||||||
Investment gains(1) | 3 | 27 | 39 | |||||||||
Electrical infrastructure relocation income(2) | 7 | 21 | 4 | |||||||||
(Losses) gains on interest rate and foreign exchange instruments, net | (4 | ) | (15 | ) | 17 | |||||||
Sale of other investments | 11 | 2 | ― | |||||||||
Foreign currency transaction losses | (7 | ) | (15 | ) | (3 | ) | ||||||
Regulatory interest, net(3) | 3 | 6 | 5 | |||||||||
Sundry, net | 6 | 5 | 3 | |||||||||
Total | $ | 126 | $ | 137 | $ | 140 | ||||||
SDG&E: | ||||||||||||
Allowance for equity funds used during construction | $ | 37 | $ | 37 | $ | 39 | ||||||
Regulatory interest, net(3) | 3 | 6 | 4 | |||||||||
Sundry, net | (4 | ) | (3 | ) | (3 | ) | ||||||
Total | $ | 36 | $ | 40 | $ | 40 | ||||||
SoCalGas: | ||||||||||||
Allowance for equity funds used during construction | $ | 36 | $ | 26 | $ | 17 | ||||||
Regulatory interest, net(3) | ― | ― | 1 | |||||||||
Sundry, net | (6 | ) | (6 | ) | (7 | ) | ||||||
Total | $ | 30 | $ | 20 | $ | 11 | ||||||
(1) | Represents investment gains on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are partially offset by corresponding changes in compensation expense related to the plans. | |||||||||||
(2) | Income at Luz del Sur associated with the relocation of electrical infrastructure. | |||||||||||
(3) | Interest on regulatory balancing accounts. |
DECONSOLIDATION OF SUBSIDIARIES | ||||||||
(Dollars in millions) | ||||||||
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
Proceeds, net of transaction costs(1) | $ | 152 | $ | 169 | ||||
Cash | (10 | ) | ― | |||||
Restricted cash | (5 | ) | ― | |||||
Other current assets | (23 | ) | ― | |||||
Property, plant and equipment, net | (1,557 | ) | (727 | ) | ||||
Other assets | (65 | ) | (102 | ) | ||||
Accounts payable and accrued expenses | 188 | ― | ||||||
Due to affiliate | 39 | ― | ||||||
Long-term debt, including current portion | 251 | 443 | ||||||
Other liabilities | 12 | 50 | ||||||
Accumulated other comprehensive income | (7 | ) | ― | |||||
Gain on sale of equity interests(2) | (60 | ) | (40 | ) | ||||
(Increase) in equity method investments upon | ||||||||
deconsolidation | $ | (1,085 | ) | $ | (207 | ) | ||
(1) | Transaction costs were negligible in 2014 and $6 million in 2013. | |||||||
(2) | Included in Gain on Sale of Equity Interests and Assets on our Consolidated Statements of Operations. |
EQUITY METHOD AND OTHER INVESTMENT BALANCES | ||||||||
(Dollars in millions) | ||||||||
December 31, | ||||||||
2015 | 2014 | |||||||
Sempra South American Utilities: | ||||||||
Eletrans(1) | $ | (12 | ) | $ | (8 | ) | ||
Sempra Mexico: | ||||||||
Energía Sierra Juárez(2) | 30 | 25 | ||||||
Gasoductos de Chihuahua(3) | 489 | 409 | ||||||
Sempra Renewables: | ||||||||
Wind: | ||||||||
Auwahi Wind | 44 | 45 | ||||||
Broken Bow 2 Wind | 41 | 44 | ||||||
Cedar Creek 2 Wind | 75 | 82 | ||||||
Flat Ridge 2 Wind | 275 | 284 | ||||||
Fowler Ridge 2 Wind | 46 | 46 | ||||||
Mehoopany Wind | 92 | 82 | ||||||
Solar: | ||||||||
California solar partnership | 120 | 125 | ||||||
Copper Mountain Solar 2 | 32 | 61 | ||||||
Copper Mountain Solar 3 | 44 | 56 | ||||||
Mesquite Solar 1 | 86 | 86 | ||||||
Sempra Natural Gas: | ||||||||
Cameron LNG JV(4) | 983 | 1,007 | ||||||
Rockies Express Pipeline LLC(5) | 477 | 340 | ||||||
Parent and other: | ||||||||
RBS Sempra Commodities LLP | 67 | 71 | ||||||
Total equity method investments | 2,889 | 2,755 | ||||||
Other(6) | 16 | 93 | ||||||
Total | $ | 2,905 | $ | 2,848 | ||||
(1) | Includes losses on forward exchange contracts, which we discuss below. | |||||||
(2) | The carrying value of our equity method investment is $12 million higher than the underlying equity in the net assets of the investee at December 31, 2015 and 2014 due to the remeasurement of our retained investment to fair value. | |||||||
(3) | The carrying value of our equity method investment is $65 million higher than the underlying equity in the net assets of the investee at December 31, 2015 and 2014 due to equity method goodwill. | |||||||
(4) | The carrying value of our equity method investment is $143 million and $94 million higher than the underlying equity in the net assets of the investee at December 31, 2015 and 2014, respectively, primarily due to guarantees, which we discuss below, and interest capitalized on the investment, as the joint venture has not commenced its planned principal operations. | |||||||
(5) | The carrying value of our equity method investment is $357 million and $369 million lower than the underlying equity in the net assets of the investee at December 31, 2015 and 2014, respectively, due to an impairment charge recorded in 2012. | |||||||
(6) | Other includes Sempra Natural Gas’ $77 million investment in industrial development bonds at Mississippi Hub at December 31, 2014, which increased by $2 million and was fully redeemed in June 2015. |
EARNINGS (LOSSES) FROM EQUITY METHOD INVESTMENTS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Earnings (losses) recorded before income tax: | ||||||||||||
Sempra Renewables: | ||||||||||||
Wind: | ||||||||||||
Auwahi Wind | $ | 4 | $ | 4 | $ | 4 | ||||||
Broken Bow 2 Wind | (2 | ) | ― | ― | ||||||||
Cedar Creek 2 Wind | (6 | ) | (3 | ) | (4 | ) | ||||||
Flat Ridge 2 Wind | (12 | ) | (7 | ) | (8 | ) | ||||||
Fowler Ridge 2 Wind | 4 | 2 | (3 | ) | ||||||||
Mehoopany Wind | (1 | ) | (1 | ) | (2 | ) | ||||||
Solar: | ||||||||||||
California solar partnership | 6 | 6 | ― | |||||||||
Copper Mountain Solar 2 | 7 | 3 | ― | |||||||||
Copper Mountain Solar 3 | 8 | 2 | ― | |||||||||
Mesquite Solar 1 | 16 | 14 | 1 | |||||||||
Sempra Natural Gas: | ||||||||||||
Cameron LNG JV | 5 | 2 | ― | |||||||||
Rockies Express Pipeline LLC | 79 | 60 | 47 | |||||||||
Parent and other: | ||||||||||||
RBS Sempra Commodities LLP | (4 | ) | (2 | ) | (3 | ) | ||||||
Other | ― | 1 | (1 | ) | ||||||||
$ | 104 | $ | 81 | $ | 31 | |||||||
Earnings (losses) recorded net of income tax(1): | ||||||||||||
Sempra South American Utilities: | ||||||||||||
Sodigas Pampeana and Sodigas Sur | $ | ― | $ | ― | $ | (11 | ) | |||||
Eletrans | (4 | ) | (4 | ) | (4 | ) | ||||||
Sempra Mexico: | ||||||||||||
Energía Sierra Juárez | 6 | 3 | ― | |||||||||
Gasoductos de Chihuahua | 83 | 39 | 39 | |||||||||
$ | 85 | $ | 38 | $ | 24 | |||||||
(1) | As the earnings (losses) from these investments are recorded net of income tax, they are presented below the income tax expense line, so as not to impact our effective income tax rate. |
SUMMARIZED FINANCIAL INFORMATION | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Gross revenues | $ | 1,533 | $ | 1,296 | $ | 1,734 | ||||||
Operating expense | (845 | ) | (749 | ) | (1,287 | ) | ||||||
Income from operations | 688 | 547 | 447 | |||||||||
Interest expense | (312 | ) | (298 | ) | (251 | ) | ||||||
Net income/Earnings(1) | 440 | 291 | 222 |
At December 31, | ||||||||
2015 | 2014 | |||||||
Current assets | $ | 750 | $ | 865 | ||||
Noncurrent assets | 15,112 | 13,161 | ||||||
Current liabilities | 859 | 1,131 | ||||||
Noncurrent liabilities | 7,862 | 6,228 | ||||||
(1) | Except for Gasoductos de Chihuahua, Energía Sierra Juárez, Eletrans and the Argentine investments, there was no income tax recorded by the entities, as they are primarily domestic partnerships. |
LONG-TERM DEBT | ||||||||
(Dollars in millions) | ||||||||
December 31, | ||||||||
2015 | 2014(1) | |||||||
SDG&E | ||||||||
First mortgage bonds (secured by plant assets): | ||||||||
5.3% November 15, 2015 | $ | ― | $ | 250 | ||||
Bonds at variable rates (0.68% at December 31, 2015) March 9, 2017 | 140 | ― | ||||||
1.65% July 1, 2018(2) | 161 | 161 | ||||||
3% August 15, 2021 | 350 | 350 | ||||||
1.914% payable 2015 through February 2022 | 232 | ― | ||||||
3.6% September 1, 2023 | 450 | 450 | ||||||
6% June 1, 2026 | 250 | 250 | ||||||
5% to 5.25% payable 2015 through December 2027(2) | 105 | 150 | ||||||
5.875% January and February 2034(2) | 176 | 176 | ||||||
5.35% May 15, 2035 | 250 | 250 | ||||||
6.125% September 15, 2037 | 250 | 250 | ||||||
4% May 1, 2039(2) | 75 | 75 | ||||||
6% June 1, 2039 | 300 | 300 | ||||||
5.35% May 15, 2040 | 250 | 250 | ||||||
4.5% August 15, 2040 | 500 | 500 | ||||||
3.95% November 15, 2041 | 250 | 250 | ||||||
4.3% April 1, 2042 | 250 | 250 | ||||||
3,989 | 3,912 | |||||||
Other long-term debt (unsecured unless otherwise noted): | ||||||||
5.3% Notes July 1, 2021(2)(3) | ― | 39 | ||||||
5.5% Notes December 1, 2021(2)(3) | ― | 60 | ||||||
4.9% Notes March 1, 2023(2)(3) | ― | 25 | ||||||
5.2925% OMEC LLC loan | ||||||||
payable 2013 through April 2019 (secured by OMEC plant assets) | 315 | 325 | ||||||
366-day commercial paper borrowings May 2015, classified as long-term debt | ||||||||
(0.40% weighted average at December 31, 2014) | ― | 100 | ||||||
Capital lease obligations: | ||||||||
Purchased-power agreements | 243 | 233 | ||||||
Other | 1 | 1 | ||||||
559 | 783 | |||||||
4,548 | 4,695 | |||||||
Current portion of long-term debt | (50 | ) | (365 | ) | ||||
Unamortized discount on long-term debt | (10 | ) | (11 | ) | ||||
Unamortized long-term debt issuance costs | (33 | ) | (36 | ) | ||||
Total SDG&E | 4,455 | 4,283 | ||||||
SoCalGas | ||||||||
First mortgage bonds (secured by plant assets): | ||||||||
5.45% April 15, 2018 | 250 | 250 | ||||||
1.55% June 15, 2018 | 250 | ― | ||||||
3.15% September 15, 2024 | 500 | 500 | ||||||
3.2% June 15, 2025 | 350 | ― | ||||||
5.75% November 15, 2035 | 250 | 250 | ||||||
5.125% November 15, 2040 | 300 | 300 | ||||||
3.75% September 15, 2042 | 350 | 350 | ||||||
4.45% March 15, 2044 | 250 | 250 | ||||||
2,500 | 1,900 | |||||||
Other long-term debt (unsecured): | ||||||||
4.75% Notes May 14, 2016(2) | 8 | 8 | ||||||
5.67% Notes January 18, 2028 | 5 | 5 | ||||||
Capital lease obligations | 1 | 1 | ||||||
14 | 14 | |||||||
2,514 | 1,914 | |||||||
Current portion of long-term debt | (9 | ) | ― | |||||
Unamortized discount on long-term debt | (7 | ) | (8 | ) | ||||
Unamortized long-term debt issuance costs | (17 | ) | (15 | ) | ||||
Total SoCalGas | 2,481 | 1,891 |
LONG-TERM DEBT (CONTINUED) | |||||||||
(Dollars in millions) | |||||||||
December 31, | |||||||||
2015 | 2014(1) | ||||||||
Sempra Energy | |||||||||
Other long-term debt (unsecured): | |||||||||
6.5% Notes June 1, 2016, including $300 at variable rates after fixed-to-floating | |||||||||
rate swaps effective January 2011 (4.77% at December 31, 2015) | $ | 750 | $ | 750 | |||||
2.3% Notes April 1, 2017 | 600 | 600 | |||||||
6.15% Notes June 15, 2018 | 500 | 500 | |||||||
9.8% Notes February 15, 2019 | 500 | 500 | |||||||
2.4% Notes March 15, 2020 | 500 | ― | |||||||
2.85% Notes November 15, 2020 | 400 | ― | |||||||
2.875% Notes October 1, 2022 | 500 | 500 | |||||||
4.05% Notes December 1, 2023 | 500 | 500 | |||||||
3.55% Notes June 15, 2024 | 500 | 500 | |||||||
3.75% Notes November 15, 2025 | 350 | ― | |||||||
6% Notes October 15, 2039 | 750 | 750 | |||||||
Market value adjustments for interest rate swaps, net | (2 | ) | ― | ||||||
Build-to-suit lease(4) | 136 | 75 | |||||||
Sempra South American Utilities | |||||||||
Other long-term debt (unsecured): | |||||||||
Chilquinta Energía | |||||||||
4.25% Series B Bonds payable 2014 through October 30, 2030(2) | 170 | 192 | |||||||
Luz del Sur | |||||||||
Bank loans 5.05% to 6.7% payable 2016 through December 2018 | 136 | 91 | |||||||
Notes at 4.75% to 8.75% payable 2014 through September 2029 | 292 | 345 | |||||||
Other bonds at 3.77% to 4.61% payable 2020 through May 2022 | 8 | 10 | |||||||
Capital lease | 6 | ― | |||||||
Sempra Mexico | |||||||||
Other long-term debt (unsecured): | |||||||||
Notes February 8, 2018 at variable rates (2.66% after floating-to-fixed rate cross-currency | |||||||||
swaps effective February 2013) | 75 | 88 | |||||||
6.3% Notes February 2, 2023 (4.12% after cross-currency swap) | 227 | 265 | |||||||
Notes at variable rates (1.28% at December 31, 2014) August 25, 2017(2)(3) | ― | 51 | |||||||
Sempra Renewables | |||||||||
Other long-term debt (secured by project assets): | |||||||||
Loan at variable rates (2.24% at December 31, 2015) payable 2012 through December 2028, | |||||||||
except for $69 at 4.54% after floating-to-fixed rate swaps effective June 2012(2) | 91 | 97 | |||||||
Sempra Natural Gas | |||||||||
First mortgage bonds (Mobile Gas, secured by plant assets): | |||||||||
4.14% September 30, 2021 | 20 | 20 | |||||||
5% September 30, 2031 | 42 | 42 | |||||||
Other long-term debt (unsecured unless otherwise noted): | |||||||||
Notes at 2.87% to 3.51% October 1, 2016(2) | 19 | 19 | |||||||
8.45% Notes payable 2012 through December 2017, secured by parent guarantee | 11 | 16 | |||||||
3.1% Notes December 30, 2018, secured by plant assets(2) | 5 | 5 | |||||||
4.5% Industrial development bonds July 1, 2024, secured by a promissory note(2)(3) | ― | 77 | |||||||
Industrial development bonds at variable rates (0.05% at December 31, 2014) | |||||||||
August 1, 2037, secured by letter of credit(2)(3) | ― | 55 | |||||||
7,086 | 6,048 | ||||||||
Current portion of long-term debt | (848 | ) | (104 | ) | |||||
Unamortized discount on long-term debt | (10 | ) | (9 | ) | |||||
Unamortized premium on long-term debt | 5 | 7 | |||||||
Unamortized debt issuance costs | (35 | ) | (30 | ) | |||||
Total other Sempra Energy | 6,198 | 5,912 | |||||||
Total Sempra Energy Consolidated | $ | 13,134 | $ | 12,086 | |||||
(1) | As adjusted for the retrospective adoption of ASU 2015-03. | ||||||||
(2) | Callable long-term debt not subject to make-whole provisions. | ||||||||
(3) | Early redemption in 2015. | ||||||||
(4) | We discuss this lease in Note 15. |
MATURITIES OF LONG-TERM DEBT(1) | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Total | ||||||||||||||||
Other | Sempra | |||||||||||||||
Sempra | Energy | |||||||||||||||
SDG&E | SoCalGas | Energy | Consolidated | |||||||||||||
2016 | $ | 46 | $ | 8 | $ | 843 | $ | 897 | ||||||||
2017 | 186 | ― | 668 | 854 | ||||||||||||
2018 | 207 | 500 | 662 | 1,369 | ||||||||||||
2019 | 320 | ― | 534 | 854 | ||||||||||||
2020 | 36 | ― | 932 | 968 | ||||||||||||
Thereafter | 3,509 | 2,005 | 3,307 | 8,821 | ||||||||||||
Total | $ | 4,304 | $ | 2,513 | $ | 6,946 | $ | 13,763 | ||||||||
(1) | Excludes capital lease obligations, build-to-suit lease and market value adjustments for interest rate swaps. |
CALLABLE LONG-TERM DEBT | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Total | ||||||||||||||||
Other | Sempra | |||||||||||||||
Sempra | Energy | |||||||||||||||
SDG&E | SoCalGas | Energy | Consolidated | |||||||||||||
Not subject to make-whole provisions | $ | 517 | $ | 8 | $ | 285 | $ | 810 | ||||||||
Subject to make-whole provisions | 3,472 | 2,505 | 6,661 | 12,638 |
2015 BANK LOAN DRAWS – LUZ DEL SUR | |||||||||
(Dollars in millions) | |||||||||
Amount at | |||||||||
Month issued | issuance | Interest rate | Maturity date | ||||||
May | $ | 13 | 5.18 | % | May 2018 | ||||
June | 22 | 5.18 | % | June 2018 | |||||
August | 9 | 6.70 | % | February 2018 | |||||
November | 15 | 6.55 | % | November 2017 |
RECONCILIATION OF FEDERAL INCOME TAX RATES TO EFFECTIVE INCOME TAX RATES | |||||||
Years ended December 31, | |||||||
2015 | 2014 | 2013 | |||||
Sempra Energy Consolidated: | |||||||
U.S. federal statutory income tax rate | 35 | % | 35 | % | 35 | % | |
Utility depreciation | 5 | 5 | 4 | ||||
U.S. tax on repatriation of foreign earnings | 1 | 2 | ― | ||||
Income tax restructuring related to IEnova stock offerings | ― | ― | 4 | ||||
State income taxes, net of federal income tax benefit | 1 | ― | 1 | ||||
Utility repairs expenditures | (5) | (5) | (5) | ||||
Tax credits | (4) | (4) | (3) | ||||
Self-developed software expenditures | (3) | (3) | (3) | ||||
Resolution of prior years’ income tax items | (3) | (1) | (3) | ||||
Non-U.S. earnings taxed at lower statutory income tax rates | (2) | (2) | (3) | ||||
Allowance for equity funds used during construction | (2) | (2) | (1) | ||||
Foreign exchange and inflation effects | (2) | (2) | ― | ||||
International tax reform | ― | (1) | 1 | ||||
Other, net | (1) | (2) | (1) | ||||
Effective income tax rate | 20 | % | 20 | % | 26 | % | |
SDG&E: | |||||||
U.S. federal statutory income tax rate | 35 | % | 35 | % | 35 | % | |
State income taxes, net of federal income tax benefit | 5 | 5 | 3 | ||||
Depreciation | 4 | 4 | 5 | ||||
SONGS tax regulatory asset write-off | ― | 2 | ― | ||||
Repairs expenditures | (4) | (4) | (4) | ||||
Self-developed software expenditures | (3) | (3) | (3) | ||||
Allowance for equity funds used during construction | (2) | (2) | (2) | ||||
Resolution of prior years’ income tax items | (2) | (2) | (1) | ||||
Variable interest entity | (1) | (1) | (1) | ||||
Other, net | ― | ― | (1) | ||||
Effective income tax rate | 32 | % | 34 | % | 31 | % | |
SoCalGas: | |||||||
U.S. federal statutory income tax rate | 35 | % | 35 | % | 35 | % | |
Depreciation | 8 | 8 | 6 | ||||
State income taxes, net of federal income tax benefit | 4 | 4 | 4 | ||||
Repairs expenditures | (10) | (9) | (9) | ||||
Self-developed software expenditures | (6) | (5) | (6) | ||||
Resolution of prior years’ income tax items | (3) | (2) | (5) | ||||
Allowance for equity funds used during construction | (2) | (2) | (1) | ||||
Other, net | (1) | ― | ― | ||||
Effective income tax rate | 25 | % | 29 | % | 24 | % |
§ | repairs expenditures related to a certain portion of utility plant fixed assets |
§ | the equity portion of AFUDC |
§ | a portion of the cost of removal of utility plant assets |
§ | utility self-developed software expenditures |
§ | depreciation on a certain portion of utility plant assets |
§ | state income taxes |
GEOGRAPHIC COMPONENTS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
U.S. | $ | 1,189 | $ | 1,014 | $ | 941 | ||||||
Non-U.S. | 515 | 510 | 489 | |||||||||
Total | $ | 1,704 | $ | 1,524 | $ | 1,430 |
INCOME TAX EXPENSE (BENEFIT) | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated: | ||||||||||||
Current: | ||||||||||||
U.S. federal | $ | 3 | $ | (10 | ) | $ | (70 | ) | ||||
U.S. state | (24 | ) | (7 | ) | (5 | ) | ||||||
Non-U.S. | 123 | 171 | 107 | |||||||||
Total | 102 | 154 | 32 | |||||||||
Deferred: | ||||||||||||
U.S. federal | 242 | 237 | 275 | |||||||||
U.S. state | 34 | 4 | 15 | |||||||||
Non-U.S. | (32 | ) | (91 | ) | 48 | |||||||
Total | 244 | 150 | 338 | |||||||||
Deferred investment tax credits | (5 | ) | (4 | ) | (4 | ) | ||||||
Total income tax expense | $ | 341 | $ | 300 | $ | 366 | ||||||
SDG&E: | ||||||||||||
Current: | ||||||||||||
U.S. federal | $ | 12 | $ | (5 | ) | $ | 9 | |||||
U.S. state | 77 | 52 | 11 | |||||||||
Total | 89 | 47 | 20 | |||||||||
Deferred: | ||||||||||||
U.S. federal | 233 | 220 | 149 | |||||||||
U.S. state | (35 | ) | 5 | 24 | ||||||||
Total | 198 | 225 | 173 | |||||||||
Deferred investment tax credits | (3 | ) | (2 | ) | (2 | ) | ||||||
Total income tax expense | $ | 284 | $ | 270 | $ | 191 | ||||||
SoCalGas: | ||||||||||||
Current: | ||||||||||||
U.S. federal | $ | (1 | ) | $ | 2 | $ | 4 | |||||
U.S. state | 12 | 7 | (5 | ) | ||||||||
Total | 11 | 9 | (1 | ) | ||||||||
Deferred: | ||||||||||||
U.S. federal | 122 | 117 | 103 | |||||||||
U.S. state | 7 | 15 | 16 | |||||||||
Total | 129 | 132 | 119 | |||||||||
Deferred investment tax credits | (2 | ) | (2 | ) | (2 | ) | ||||||
Total income tax expense | $ | 138 | $ | 139 | $ | 116 |
DEFERRED INCOME TAXES FOR SEMPRA ENERGY CONSOLIDATED | ||||||||
(Dollars in millions) | ||||||||
December 31, | ||||||||
2015 | 2014 | |||||||
Deferred income tax liabilities: | ||||||||
Differences in financial and tax bases of depreciable and amortizable assets | $ | 4,487 | $ | 4,074 | ||||
Regulatory balancing accounts | 745 | 915 | ||||||
Property taxes | 61 | 57 | ||||||
Differences in financial and tax bases of partnership interests(1) | 796 | 650 | ||||||
Other deferred income tax liabilities | 100 | 53 | ||||||
Total deferred income tax liabilities | 6,189 | 5,749 | ||||||
Deferred income tax assets: | ||||||||
Tax credits | 381 | 276 | ||||||
Net operating losses | 1,856 | 1,908 | ||||||
Compensation-related items | 252 | 244 | ||||||
Postretirement benefits | 446 | 433 | ||||||
Other deferred income tax assets | 179 | 156 | ||||||
Litigation and other accruals not yet deductible | 72 | 73 | ||||||
Deferred income tax assets before valuation allowances | 3,186 | 3,090 | ||||||
Less: valuation allowances | 34 | 39 | ||||||
Total deferred income tax assets | 3,152 | 3,051 | ||||||
Net deferred income tax liability(2) | $ | 3,037 | $ | 2,698 | ||||
(1) | Amounts primarily represent differences in financial and tax bases of depreciable and amortizable assets within our partnerships. | |||||||
(2) | At December 31, 2015, the net deferred income tax liability includes $120 million recorded as a noncurrent asset in Sundry on the Consolidated Balance Sheet. |
DEFERRED INCOME TAXES FOR SDG&E AND SOCALGAS | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
SDG&E | SoCalGas | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Deferred income tax liabilities: | ||||||||||||||||
Differences in financial and tax bases of | ||||||||||||||||
utility plant and other assets | $ | 2,392 | $ | 2,181 | $ | 1,473 | $ | 1,194 | ||||||||
Regulatory balancing accounts | 234 | 441 | 515 | 481 | ||||||||||||
Property taxes | 42 | 39 | 20 | 18 | ||||||||||||
Other | 5 | 5 | 5 | 10 | ||||||||||||
Total deferred income tax liabilities | 2,673 | 2,666 | 2,013 | 1,703 | ||||||||||||
Deferred income tax assets: | ||||||||||||||||
Net operating losses | ― | 297 | 110 | 64 | ||||||||||||
Postretirement benefits | 90 | 85 | 268 | 261 | ||||||||||||
Compensation-related items | 11 | 8 | 42 | 40 | ||||||||||||
State income taxes | 46 | 27 | 13 | 11 | ||||||||||||
Litigation and other accruals not yet deductible | 36 | 39 | 20 | 23 | ||||||||||||
Other | 18 | 36 | 28 | 39 | ||||||||||||
Total deferred income tax assets | 201 | 492 | 481 | 438 | ||||||||||||
Net deferred income tax liability | $ | 2,472 | $ | 2,174 | $ | 1,532 | $ | 1,265 |
SUMMARY OF UNRECOGNIZED INCOME TAX BENEFITS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated: | ||||||||||||
Total | $ | 87 | $ | 117 | $ | 90 | ||||||
Of the total, amounts related to tax positions that, | ||||||||||||
if recognized in future years, would | ||||||||||||
decrease the effective tax rate(1) | $ | (83 | ) | $ | (114 | ) | $ | (86 | ) | |||
increase the effective tax rate(1) | 32 | 21 | 19 | |||||||||
SDG&E: | ||||||||||||
Total | $ | 20 | $ | 14 | $ | 17 | ||||||
Of the total, amounts related to tax positions that, | ||||||||||||
if recognized in future years, would | ||||||||||||
decrease the effective tax rate(1) | $ | (16 | ) | $ | (11 | ) | $ | (14 | ) | |||
increase the effective tax rate(1) | 11 | 6 | 11 | |||||||||
SoCalGas: | ||||||||||||
Total | $ | 27 | $ | 19 | $ | 13 | ||||||
Of the total, amounts related to tax positions that, | ||||||||||||
if recognized in future years, would | ||||||||||||
decrease the effective tax rate(1) | $ | (27 | ) | $ | (19 | ) | $ | (13 | ) | |||
increase the effective tax rate(1) | 21 | 15 | 8 | |||||||||
(1) | Includes temporary book and tax differences that are treated as flow-through for ratemaking purposes, as discussed above. |
RECONCILIATION OF UNRECOGNIZED INCOME TAX BENEFITS | ||||||||||||
(Dollars in millions) | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated: | ||||||||||||
Balance as of January 1 | $ | 117 | $ | 90 | $ | 82 | ||||||
Increase in prior period tax positions | 10 | 37 | 26 | |||||||||
Decrease in prior period tax positions | ― | ― | (24 | ) | ||||||||
Increase in current period tax positions | 8 | 5 | 7 | |||||||||
Settlements with taxing authorities | (48 | ) | (15 | ) | (1 | ) | ||||||
Balance as of December 31 | $ | 87 | $ | 117 | $ | 90 | ||||||
SDG&E: | ||||||||||||
Balance as of January 1 | $ | 14 | $ | 17 | $ | 12 | ||||||
Increase in prior period tax positions | 5 | 2 | 7 | |||||||||
Decrease in prior period tax positions | ― | ― | (4 | ) | ||||||||
Increase in current period tax positions | 2 | ― | 2 | |||||||||
Settlements with taxing authorities | (1 | ) | (5 | ) | ― | |||||||
Balance as of December 31 | $ | 20 | $ | 14 | $ | 17 | ||||||
SoCalGas: | ||||||||||||
Balance as of January 1 | $ | 19 | $ | 13 | $ | 5 | ||||||
Increase in prior period tax positions | 2 | 2 | 4 | |||||||||
Increase in current period tax positions | 6 | 4 | 5 | |||||||||
Settlements with taxing authorities | ― | ― | (1 | ) | ||||||||
Balance as of December 31 | $ | 27 | $ | 19 | $ | 13 |
POSSIBLE DECREASES IN UNRECOGNIZED INCOME TAX BENEFITS WITHIN 12 MONTHS | ||||||||||||
(Dollars in millions) | ||||||||||||
At December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated: | ||||||||||||
Expiration of statutes of limitations on tax assessments | $ | (2 | ) | $ | ― | $ | (7 | ) | ||||
Potential resolution of audit issues with various | ||||||||||||
U.S. federal, state and local and non-U.S. taxing authorities | (32 | ) | (61 | ) | (63 | ) | ||||||
$ | (34 | ) | $ | (61 | ) | $ | (70 | ) | ||||
SDG&E: | ||||||||||||
Expiration of statutes of limitations on tax assessments | $ | (1 | ) | $ | ― | $ | ― | |||||
Potential resolution of audit issues with various | ||||||||||||
U.S. federal, state and local taxing authorities | (8 | ) | (9 | ) | (14 | ) | ||||||
$ | (9 | ) | $ | (9 | ) | $ | (14 | ) | ||||
SoCalGas: | ||||||||||||
Potential resolution of audit issues with various | ||||||||||||
U.S. federal, state and local taxing authorities | $ | (22 | ) | $ | (15 | ) | $ | (11 | ) |
INTEREST AND PENALTIES ASSOCIATED WITH UNRECOGNIZED INCOME TAX BENEFITS | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Interest and penalties | Accrued interest and penalties | |||||||||||||||||||
Years ended December 31, | December 31, | |||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | ||||||||||||||||
Sempra Energy Consolidated: | ||||||||||||||||||||
Interest (income) expense | $ | (2 | ) | $ | (4 | ) | $ | 1 | $ | 1 | $ | ― | ||||||||
Penalties | ― | (3 | ) | ― | ― | ― | ||||||||||||||
SDG&E: | ||||||||||||||||||||
Interest income | $ | ― | $ | (1 | ) | $ | ― | $ | ― | $ | ― | |||||||||
SoCalGas: | ||||||||||||||||||||
Interest income | $ | ― | $ | ― | $ | (1 | ) | $ | ― | $ | ― |
§ | recognize an asset for a plan’s overfunded status or a liability for a plan’s underfunded status in the statement of financial position; |
§ | measure a plan’s assets and its obligations that determine its funded status as of the end of the fiscal year (with limited exceptions); and |
§ | recognize changes in the funded status of pension and other postretirement benefit plans in the year in which the changes occur. Generally, those changes are reported in other comprehensive income and as a separate component of shareholders’ equity. |
§ | discount rates |
§ | expected return on plan assets |
§ | health care cost trend rates |
§ | mortality rates |
§ | rate of compensation increases |
§ | termination and retirement rates |
§ | utilization of postretirement welfare benefits |
§ | payout elections (lump sum or annuity) |
§ | lump sum interest rates |
PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS | ||||||||||||||||
SEMPRA ENERGY CONSOLIDATED | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
CHANGE IN PROJECTED BENEFIT OBLIGATION | ||||||||||||||||
Net obligation at January 1 | $ | 3,839 | $ | 3,459 | $ | 1,115 | $ | 973 | ||||||||
Service cost | 114 | 101 | 26 | 24 | ||||||||||||
Interest cost | 154 | 161 | 44 | 49 | ||||||||||||
Contributions from plan participants | ― | ― | 19 | 17 | ||||||||||||
Actuarial (gain) loss | (180 | ) | 441 | (172 | ) | 105 | ||||||||||
Benefit payments | (273 | ) | (217 | ) | (60 | ) | (58 | ) | ||||||||
Plan amendments | 5 | 4 | (9 | ) | 1 | |||||||||||
Special termination benefits | ― | ― | ― | 5 | ||||||||||||
Settlements and curtailments | (10 | ) | (110 | ) | ― | (1 | ) | |||||||||
Net obligation at December 31 | 3,649 | 3,839 | 963 | 1,115 | ||||||||||||
CHANGE IN PLAN ASSETS | ||||||||||||||||
Fair value of plan assets at January 1 | 2,807 | 2,789 | 1,054 | 1,012 | ||||||||||||
Actual return on plan assets | (73 | ) | 217 | (21 | ) | 67 | ||||||||||
Employer contributions | 33 | 128 | 11 | 16 | ||||||||||||
Contributions from plan participants | ― | ― | 19 | 17 | ||||||||||||
Benefit payments | (273 | ) | (217 | ) | (60 | ) | (58 | ) | ||||||||
Settlements | (10 | ) | (110 | ) | ― | ― | ||||||||||
Fair value of plan assets at December 31 | 2,484 | 2,807 | 1,003 | 1,054 | ||||||||||||
Funded status at December 31 | $ | (1,165 | ) | $ | (1,032 | ) | $ | 40 | $ | (61 | ) | |||||
Net recorded (liability) asset at December 31 | $ | (1,165 | ) | $ | (1,032 | ) | $ | 40 | $ | (61 | ) |
PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS | ||||||||||||||||
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
CHANGE IN PROJECTED BENEFIT OBLIGATION | ||||||||||||||||
Net obligation at January 1 | $ | 1,011 | $ | 939 | $ | 200 | $ | 171 | ||||||||
Service cost | 29 | 30 | 7 | 7 | ||||||||||||
Interest cost | 39 | 43 | 8 | 9 | ||||||||||||
Contributions from plan participants | ― | ― | 7 | 6 | ||||||||||||
Actuarial (gain) loss | (52 | ) | 101 | (43 | ) | 15 | ||||||||||
Benefit payments | (56 | ) | (25 | ) | (14 | ) | (13 | ) | ||||||||
Special termination benefits | ― | ― | ― | 5 | ||||||||||||
Settlements | ― | (87 | ) | ― | ― | |||||||||||
Transfer of liability (to) from other plans | (6 | ) | 10 | ― | ― | |||||||||||
Net obligation at December 31 | 965 | 1,011 | 165 | 200 | ||||||||||||
CHANGE IN PLAN ASSETS | ||||||||||||||||
Fair value of plan assets at January 1 | 828 | 819 | 164 | 146 | ||||||||||||
Actual return on plan assets | (24 | ) | 63 | (3 | ) | 11 | ||||||||||
Employer contributions | 2 | 56 | 7 | 14 | ||||||||||||
Contributions from plan participants | ― | ― | 7 | 6 | ||||||||||||
Benefit payments | (56 | ) | (25 | ) | (14 | ) | (13 | ) | ||||||||
Settlements | ― | (87 | ) | ― | ― | |||||||||||
Transfer of assets from other plans | 2 | 2 | ― | ― | ||||||||||||
Fair value of plan assets at December 31 | 752 | 828 | 161 | 164 | ||||||||||||
Funded status at December 31 | $ | (213 | ) | $ | (183 | ) | $ | (4 | ) | $ | (36 | ) | ||||
Net recorded liability at December 31 | $ | (213 | ) | $ | (183 | ) | $ | (4 | ) | $ | (36 | ) |
PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS | ||||||||||||||||
SOUTHERN CALIFORNIA GAS COMPANY | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
CHANGE IN PROJECTED BENEFIT OBLIGATION | ||||||||||||||||
Net obligation at January 1 | $ | 2,398 | $ | 2,110 | $ | 866 | $ | 753 | ||||||||
Service cost | 74 | 60 | 17 | 16 | ||||||||||||
Interest cost | 98 | 100 | 34 | 38 | ||||||||||||
Contributions from plan participants | ― | ― | 12 | 11 | ||||||||||||
Actuarial (gain) loss | (131 | ) | 300 | (125 | ) | 90 | ||||||||||
Benefit payments | (187 | ) | (163 | ) | (43 | ) | (43 | ) | ||||||||
Plan amendments | 3 | ― | (9 | ) | 1 | |||||||||||
Settlements | ― | (10 | ) | ― | ― | |||||||||||
Transfer of liability from other plans | ― | 1 | ― | ― | ||||||||||||
Net obligation at December 31 | 2,255 | 2,398 | 752 | 866 | ||||||||||||
CHANGE IN PLAN ASSETS | ||||||||||||||||
Fair value of plan assets at January 1 | 1,763 | 1,758 | 870 | 848 | ||||||||||||
Actual return on plan assets | (45 | ) | 138 | (18 | ) | 54 | ||||||||||
Employer contributions | 6 | 39 | 1 | ― | ||||||||||||
Contributions from plan participants | ― | ― | 12 | 11 | ||||||||||||
Benefit payments | (187 | ) | (163 | ) | (43 | ) | (43 | ) | ||||||||
Settlements | ― | (10 | ) | ― | ― | |||||||||||
Transfer of assets from other plans | ― | 1 | ― | ― | ||||||||||||
Fair value of plan assets at December 31 | 1,537 | 1,763 | 822 | 870 | ||||||||||||
Funded status at December 31 | $ | (718 | ) | $ | (635 | ) | $ | 70 | $ | 4 | ||||||
Net recorded (liability) asset at December 31 | $ | (718 | ) | $ | (635 | ) | $ | 70 | $ | 4 |
§ | an increase in weighted-average discount rates; |
§ | changes in salary scale at SoCalGas; |
§ | updated mortality rates; |
§ | a change in the rate used to convert annuity benefits to lump sums; and |
§ | the impact of updated census data at SDG&E; offset by |
§ | the impact of updated census data at Sempra Energy Consolidated and SoCalGas; and |
§ | changes in anticipated retirement rates. |
§ | the impact of updated census data; |
§ | changes in termination and retirement rates; |
§ | an increase in weighted-average discount rates; |
§ | a decrease in the actual versus expected 2016 claims costs; and |
§ | updated mortality rates; offset by |
§ | changes in health care cost trend rates; and |
§ | changes in salary scale at SoCalGas. |
§ | a decrease in weighted-average discount rates; |
§ | updated mortality rates; and |
§ | a change in the rate used to convert annuity benefits to lump sums at SoCalGas; offset by |
§ | the impact of updated census data at SoCalGas; and |
§ | a decrease in the cash balance interest crediting rate. |
§ | a decrease in weighted-average discount rates; |
§ | updated mortality rates; and |
§ | the impact of updated census data at SDG&E and SoCalGas; offset by |
§ | a decrease in anticipated retiree and spousal participation rates. |
PENSION AND OTHER POSTRETIREMENT BENEFIT OBLIGATIONS, NET OF PLAN ASSETS AT DECEMBER 31 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Sempra Energy Consolidated: | ||||||||||||||||
Noncurrent assets | $ | ― | $ | ― | $ | 70 | $ | 4 | ||||||||
Current liabilities | (43 | ) | (33 | ) | ― | ― | ||||||||||
Noncurrent liabilities | (1,122 | ) | (999 | ) | (30 | ) | (65 | ) | ||||||||
Net recorded (liability) asset | $ | (1,165 | ) | $ | (1,032 | ) | $ | 40 | $ | (61 | ) | |||||
SDG&E: | ||||||||||||||||
Current liabilities | $ | (5 | ) | $ | (3 | ) | $ | ― | $ | ― | ||||||
Noncurrent liabilities | (208 | ) | (180 | ) | (4 | ) | (36 | ) | ||||||||
Net recorded liability | $ | (213 | ) | $ | (183 | ) | $ | (4 | ) | $ | (36 | ) | ||||
SoCalGas: | ||||||||||||||||
Noncurrent assets | $ | ― | $ | ― | $ | 70 | $ | 4 | ||||||||
Current liabilities | (2 | ) | (2 | ) | ― | ― | ||||||||||
Noncurrent liabilities | (716 | ) | (633 | ) | ― | ― | ||||||||||
Net recorded (liability) asset | $ | (718 | ) | $ | (635 | ) | $ | 70 | $ | 4 |
AMOUNTS IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Sempra Energy Consolidated: | ||||||||||||||||
Net actuarial (loss) gain | $ | (84 | ) | $ | (82 | ) | $ | 2 | $ | (1 | ) | |||||
Prior service cost | (5 | ) | (2 | ) | ― | ― | ||||||||||
Total | $ | (89 | ) | $ | (84 | ) | $ | 2 | $ | (1 | ) | |||||
SDG&E: | ||||||||||||||||
Net actuarial loss | $ | (8 | ) | $ | (13 | ) | ||||||||||
Prior service credit | ― | 1 | ||||||||||||||
Total | $ | (8 | ) | $ | (12 | ) | ||||||||||
SoCalGas: | ||||||||||||||||
Net actuarial loss | $ | (4 | ) | $ | (5 | ) | ||||||||||
Prior service (cost) credit | (1 | ) | 1 | |||||||||||||
Total | $ | (5 | ) | $ | (4 | ) |
ACCUMULATED BENEFIT OBLIGATION | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Sempra Energy Consolidated | SDG&E | SoCalGas | ||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Accumulated benefit obligation | $ | 3,397 | $ | 3,555 | $ | 939 | $ | 978 | $ | 2,056 | $ | 2,182 |
OBLIGATIONS OF FUNDED PENSION PLANS | ||||||||
(Dollars in millions) | ||||||||
2015 | 2014 | |||||||
Sempra Energy Consolidated: | ||||||||
Projected benefit obligation | $ | 3,410 | $ | 3,592 | ||||
Accumulated benefit obligation | 3,183 | 3,343 | ||||||
Fair value of plan assets | 2,484 | 2,807 | ||||||
SDG&E: | ||||||||
Projected benefit obligation | $ | 927 | $ | 964 | ||||
Accumulated benefit obligation | 906 | 937 | ||||||
Fair value of plan assets | 752 | 828 | ||||||
SoCalGas: | ||||||||
Projected benefit obligation | $ | 2,236 | $ | 2,379 | ||||
Accumulated benefit obligation | 2,039 | 2,166 | ||||||
Fair value of plan assets | 1,537 | 1,763 |
NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
SEMPRA ENERGY CONSOLIDATED | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | |||||||||||||||||||
NET PERIODIC BENEFIT COST | ||||||||||||||||||||||||
Service cost | $ | 114 | $ | 101 | $ | 109 | $ | 26 | $ | 24 | $ | 28 | ||||||||||||
Interest cost | 154 | 161 | 148 | 44 | 49 | 44 | ||||||||||||||||||
Expected return on assets | (173 | ) | (171 | ) | (162 | ) | (68 | ) | (63 | ) | (58 | ) | ||||||||||||
Amortization of: | ||||||||||||||||||||||||
Prior service cost (credit) | 11 | 11 | 4 | (4 | ) | (5 | ) | (4 | ) | |||||||||||||||
Actuarial loss | 38 | 18 | 54 | ― | ― | 7 | ||||||||||||||||||
Settlement and curtailment charges | 4 | 31 | 2 | ― | (1 | ) | ― | |||||||||||||||||
Special termination benefits | ― | ― | ― | ― | 5 | 5 | ||||||||||||||||||
Regulatory adjustment | (110 | ) | (31 | ) | (20 | ) | 12 | 6 | 6 | |||||||||||||||
Total net periodic benefit cost | 38 | 120 | 135 | 10 | 15 | 28 | ||||||||||||||||||
CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS | ||||||||||||||||||||||||
RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
Net loss (gain) | 17 | 38 | (30 | ) | (4 | ) | 1 | (8 | ) | |||||||||||||||
Prior service cost | 4 | 4 | 1 | ― | ― | ― | ||||||||||||||||||
Amortization of actuarial loss | (14 | ) | (23 | ) | (9 | ) | ― | ― | (1 | ) | ||||||||||||||
Total recognized in other comprehensive income (loss) | 7 | 19 | (38 | ) | (4 | ) | 1 | (9 | ) | |||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive income (loss) | $ | 45 | $ | 139 | $ | 97 | $ | 6 | $ | 16 | $ | 19 |
NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | |||||||||||||||||||
NET PERIODIC BENEFIT COST | ||||||||||||||||||||||||
Service cost | $ | 29 | $ | 30 | $ | 32 | $ | 7 | $ | 7 | $ | 8 | ||||||||||||
Interest cost | 39 | 43 | 41 | 8 | 9 | 8 | ||||||||||||||||||
Expected return on assets | (54 | ) | (55 | ) | (52 | ) | (11 | ) | (10 | ) | (8 | ) | ||||||||||||
Amortization of: | ||||||||||||||||||||||||
Prior service cost | 8 | 2 | 2 | 3 | 2 | 4 | ||||||||||||||||||
Actuarial loss | 2 | 4 | 14 | ― | ― | ― | ||||||||||||||||||
Settlement charge | ― | 19 | 1 | ― | ― | ― | ||||||||||||||||||
Special termination benefits | ― | ― | ― | ― | 5 | 2 | ||||||||||||||||||
Regulatory adjustment | (20 | ) | 12 | 14 | ― | 1 | ― | |||||||||||||||||
Total net periodic benefit cost | 4 | 55 | 52 | 7 | 14 | 14 | ||||||||||||||||||
CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS | ||||||||||||||||||||||||
RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
Net (gain) loss | (6 | ) | 8 | (2 | ) | ― | ― | ― | ||||||||||||||||
Amortization of actuarial loss | (1 | ) | (3 | ) | (1 | ) | ― | ― | ― | |||||||||||||||
Total recognized in other comprehensive (loss) income | (7 | ) | 5 | (3 | ) | ― | ― | ― | ||||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive (loss) income | $ | (3 | ) | $ | 60 | $ | 49 | $ | 7 | $ | 14 | $ | 14 |
NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
SOUTHERN CALIFORNIA GAS COMPANY | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | |||||||||||||||||||
NET PERIODIC BENEFIT COST | ||||||||||||||||||||||||
Service cost | $ | 74 | $ | 60 | $ | 67 | $ | 17 | $ | 16 | $ | 17 | ||||||||||||
Interest cost | 98 | 100 | 90 | 34 | 38 | 34 | ||||||||||||||||||
Expected return on assets | (106 | ) | (104 | ) | (98 | ) | (56 | ) | (51 | ) | (48 | ) | ||||||||||||
Amortization of: | ||||||||||||||||||||||||
Prior service cost (credit) | 9 | 9 | 2 | (7 | ) | (8 | ) | (8 | ) | |||||||||||||||
Actuarial loss | 21 | 6 | 31 | ― | ― | 6 | ||||||||||||||||||
Settlement charge | ― | 4 | ― | ― | ― | ― | ||||||||||||||||||
Special termination benefits | ― | ― | ― | ― | ― | 2 | ||||||||||||||||||
Regulatory adjustment | (90 | ) | (43 | ) | (34 | ) | 12 | 5 | 6 | |||||||||||||||
Total net periodic benefit cost | 6 | 32 | 58 | ― | ― | 9 | ||||||||||||||||||
CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS | ||||||||||||||||||||||||
RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
Net loss | ― | 5 | 3 | ― | ― | ― | ||||||||||||||||||
Prior service cost | 2 | ― | ― | ― | ― | ― | ||||||||||||||||||
Amortization of actuarial loss | ― | (5 | ) | (1 | ) | ― | ― | ― | ||||||||||||||||
Total recognized in other comprehensive income | 2 | ― | 2 | ― | ― | ― | ||||||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive income | $ | 8 | $ | 32 | $ | 60 | $ | ― | $ | ― | $ | 9 | ||||||||||||
§ | have an outstanding issue of at least $50 million; |
§ | are non-callable (or callable with make-whole provisions); |
§ | exclude collateralized bonds; and |
§ | exclude the top and bottom 10 percent of yields to avoid relying on bonds which might be mispriced or misgraded. |
§ | The issuer is on review for downgrade by a major rating agency if the downgrade would eliminate the issuer from the portfolio. |
§ | Recent events have caused significant price volatility to which rating agencies have not reacted. |
§ | Lack of liquidity is causing price quotes to vary significantly from broker to broker. |
WEIGHTED-AVERAGE ASSUMPTIONS USED TO DETERMINE BENEFIT OBLIGATION AT DECEMBER 31 | ||||||||||
Pension benefits | Other postretirement benefits | |||||||||
2015 | 2014 | 2015 | 2014 | |||||||
Sempra Energy Consolidated: | ||||||||||
Discount rate | 4.46 | % | 4.09 | % | 4.49 | % | 4.15 | % | ||
Rate of compensation increase | 2.00-10.00 | 3.50-10.00 | 2.00-10.00 | 3.50-10.00 | ||||||
SDG&E: | ||||||||||
Discount rate | 4.35 | % | 4.00 | % | 4.50 | % | 4.15 | % | ||
Rate of compensation increase | 2.00-10.00 | 3.50-10.00 | 2.00-10.00 | 3.50-10.00 | ||||||
SoCalGas: | ||||||||||
Discount rate | 4.50 | % | 4.15 | % | 4.50 | % | 4.15 | % | ||
Rate of compensation increase | 2.00-10.00 | 3.50-10.00 | 2.00-10.00 | 3.50-10.00 |
WEIGHTED-AVERAGE ASSUMPTIONS USED TO DETERMINE NET PERIODIC BENEFIT COST FOR YEARS ENDED DECEMBER 31 | ||||||||||||||
Pension benefits | Other postretirement benefits | |||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | |||||||||
Sempra Energy Consolidated: | ||||||||||||||
Discount rate | 4.09 | % | 4.85 | % | 4.04 | % | 4.15 | % | 4.95 | % | 4.09 | % | ||
Expected return on plan assets | 7.00 | 7.00 | 7.00 | 6.98 | 6.97 | 6.96 | ||||||||
Rate of compensation increase | 2.00-10.00 | 3.50-10.00 | 3.50-9.50 | 2.00-10.00 | 3.50-10.00 | 3.50-9.50 | ||||||||
SDG&E: | ||||||||||||||
Discount rate | 4.00 | % | 4.69 | % | 3.94 | % | 4.15 | % | 5.00 | % | 4.10 | % | ||
Expected return on plan assets | 7.00 | 7.00 | 7.00 | 6.91 | 6.88 | 6.81 | ||||||||
Rate of compensation increase | 2.00-10.00 | 3.50-10.00 | 3.50-9.50 | 2.00-10.00 | 3.50-10.00 | N/A | ||||||||
SoCalGas: | ||||||||||||||
Discount rate | 4.15 | % | 4.94 | % | 4.10 | % | 4.15 | % | 4.95 | % | 4.10 | % | ||
Expected return on plan assets | 7.00 | 7.00 | 7.00 | 7.00 | 7.00 | 7.00 | ||||||||
Rate of compensation increase | 2.00-10.00 | 3.50-10.00 | 3.50-9.50 | 2.00-10.00 | 3.50-10.00 | 3.50-9.50 |
ASSUMED HEALTH CARE COST TREND RATES AT DECEMBER 31 | ||||||||||||||
Other postretirement benefit plans(1) | ||||||||||||||
Pre-65 retirees | Retirees aged 65 years and older | |||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | |||||||||
Health care cost trend rate assumed for next year | 8.10 | % | 7.75 | % | 8.25 | % | 5.50 | % | 5.25 | % | 5.50 | % | ||
Rate to which the cost trend rate is assumed to decline (the ultimate trend) | 5.00 | % | 5.00 | % | 5.00 | % | 4.50 | % | 4.50 | % | 4.50 | % | ||
Year the rate reaches the ultimate trend | 2022 | 2020 | 2020 | 2022 | 2020 | 2020 | ||||||||
(1) | Excludes Mobile Gas Plan. For Mobile Gas, the health care cost trend rate assumed for next year for all retirees was 8.10 percent, 7.75 percent and 7.50 percent in 2015, 2014 and 2013, respectively; the ultimate trend was 5.00 percent in 2015, 2014 and 2013; and the year the rate reaches the ultimate trend was 2022, 2020 and 2019 in 2015, 2014 and 2013, respectively. For Chilquinta Energía, the health care cost trend rate assumed for next year and all subsequent years was 3.00 percent in each of 2015, 2014 and 2013. |
EFFECT OF ONE-PERCENT CHANGE IN ASSUMED HEALTH CARE COST TREND RATES | ||||||||||||||
(Dollars in millions) | ||||||||||||||
| Sempra Energy |
|
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| |||||||||
| Consolidated |
| SDG&E |
| SoCalGas | |||||||||
| 1% | 1% |
| 1% | 1% |
| 1% | 1% | ||||||
| increase | decrease |
| increase | decrease |
| increase | decrease | ||||||
Effect on total of service and interest |
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cost components of net periodic |
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postretirement health care benefit cost | $ | 7 | $ | (5) |
| $ | 1 | $ | (1) |
| $ | 5 | $ | (4) |
Effect on the health care component of the |
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accumulated other postretirement |
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benefit obligations |
| 74 |
| (62) |
|
| 5 |
| (4) |
|
| 67 |
| (55) |
§ | 38 percent domestic equity |
§ | 26 percent international equity |
§ | 18 percent long credit |
§ | 5 percent global high yield credit |
§ | 5 percent real assets |
§ | 4 percent STRIPS |
§ | 4 percent long government |
§ | long-term cost |
§ | variability and level of contributions |
§ | funded status |
§ | a range of expected outcomes over varying confidence levels |
§ | Level 1, for securities valued using quoted prices from active markets for identical assets; |
§ | Level 2, for securities not traded on an active market but for which observable market inputs are readily available; and |
§ | Level 3, for securities and investments valued based on significant unobservable inputs. Investments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. |
FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PENSION PLANS | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Fair value at December 31, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
SDG&E: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | $ | 269 | $ | ― | $ | ― | $ | 269 | ||||||||
Foreign | 163 | ― | ― | 163 | ||||||||||||
Domestic preferred | ― | 2 | ― | 2 | ||||||||||||
Foreign preferred | 1 | ― | ― | 1 | ||||||||||||
Registered investment companies | 38 | ― | ― | 38 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 38 | ― | ― | 38 | ||||||||||||
Domestic municipal bonds | ― | 9 | ― | 9 | ||||||||||||
Foreign government bonds | ― | 3 | ― | 3 | ||||||||||||
Domestic corporate bonds(2) | ― | 103 | ― | 103 | ||||||||||||
Foreign corporate bonds | ― | 30 | ― | 30 | ||||||||||||
Common/collective trusts(3) | ― | 94 | ― | 94 | ||||||||||||
Registered investment companies | ― | 2 | ― | 2 | ||||||||||||
Other investments(4) | ― | ― | 1 | 1 | ||||||||||||
Total investment assets(5) | 509 | 243 | 1 | 753 | ||||||||||||
SoCalGas: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | 552 | ― | ― | 552 | ||||||||||||
Foreign | 334 | ― | ― | 334 | ||||||||||||
Domestic preferred | ― | 4 | ― | 4 | ||||||||||||
Foreign preferred | 2 | 1 | ― | 3 | ||||||||||||
Registered investment companies | 77 | ― | ― | 77 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 76 | ― | ― | 76 | ||||||||||||
Domestic municipal bonds | ― | 19 | ― | 19 | ||||||||||||
Foreign government bonds | ― | 6 | ― | 6 | ||||||||||||
Domestic corporate bonds(2) | ― | 209 | ― | 209 | ||||||||||||
Foreign corporate bonds | ― | 62 | ― | 62 | ||||||||||||
Common/collective trusts(3) | ― | 193 | ― | 193 | ||||||||||||
Registered investment companies | ― | 5 | ― | 5 | ||||||||||||
Other investments(4) | 1 | ― | 3 | 4 | ||||||||||||
Total investment assets(6) | 1,042 | 499 | 3 | 1,544 | ||||||||||||
Other Sempra Energy: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | 72 | ― | ― | 72 | ||||||||||||
Foreign | 43 | ― | ― | 43 | ||||||||||||
Domestic preferred | ― | 1 | ― | 1 | ||||||||||||
Registered investment companies | 9 | ― | ― | 9 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 10 | ― | ― | 10 | ||||||||||||
Domestic municipal bonds | ― | 3 | ― | 3 | ||||||||||||
Foreign government bonds | ― | 1 | ― | 1 | ||||||||||||
Domestic corporate bonds(2) | ― | 26 | ― | 26 | ||||||||||||
Foreign corporate bonds | ― | 8 | ― | 8 | ||||||||||||
Common/collective trusts(3) | ― | 25 | ― | 25 | ||||||||||||
Total other Sempra Energy(7) | 134 | 64 | ― | 198 | ||||||||||||
Total Sempra Energy Consolidated(8) | $ | 1,685 | $ | 806 | $ | 4 | $ | 2,495 | ||||||||
(1) | Investments in common stock of domestic corporations. | |||||||||||||||
(2) | Bonds of U.S. issuers from diverse industries, primarily investment-grade. | |||||||||||||||
(3) | Investments in common/collective trusts held in Sempra Energy’s Pension Master Trust. | |||||||||||||||
(4) | Investments in venture capital and real estate funds, stated at net asset value, and derivative financial instruments. | |||||||||||||||
(5) | Excludes cash and cash equivalents of $4 million, accounts payable of $7 million and transfers receivable from other plans of $2 million at SDG&E. | |||||||||||||||
(6) | Excludes cash and cash equivalents of $9 million and accounts payable of $16 million at SoCalGas. | |||||||||||||||
(7) | Excludes cash and cash equivalents of $1 million, accounts payable of $2 million and transfers payable to other plans of $2 million at Other Sempra Energy. | |||||||||||||||
(8) | Excludes cash and cash equivalents of $14 million and accounts payable of $25 million at Sempra Energy Consolidated. |
FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PENSION PLANS | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Fair value at December 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
SDG&E: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | $ | 307 | $ | ― | $ | ― | $ | 307 | ||||||||
Foreign | 186 | ― | ― | 186 | ||||||||||||
Domestic preferred | ― | 1 | ― | 1 | ||||||||||||
Foreign preferred | 1 | ― | ― | 1 | ||||||||||||
Registered investment companies | 40 | ― | ― | 40 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 38 | ― | ― | 38 | ||||||||||||
Domestic municipal bonds | ― | 11 | ― | 11 | ||||||||||||
Foreign government bonds | ― | 12 | ― | 12 | ||||||||||||
Domestic corporate bonds(2) | ― | 117 | ― | 117 | ||||||||||||
Foreign corporate bonds | ― | 36 | ― | 36 | ||||||||||||
Common/collective trusts(3) | ― | 62 | ― | 62 | ||||||||||||
Registered investment companies | ― | 10 | ― | 10 | ||||||||||||
Other investments(4) | ― | ― | 4 | 4 | ||||||||||||
Total investment assets(5) | 572 | 249 | 4 | 825 | ||||||||||||
SoCalGas: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | 651 | ― | ― | 651 | ||||||||||||
Foreign | 395 | ― | ― | 395 | ||||||||||||
Domestic preferred | ― | 3 | ― | 3 | ||||||||||||
Foreign preferred | 3 | 1 | ― | 4 | ||||||||||||
Registered investment companies | 86 | ― | ― | 86 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 80 | ― | ― | 80 | ||||||||||||
Domestic municipal bonds | ― | 24 | ― | 24 | ||||||||||||
Foreign government bonds | ― | 25 | ― | 25 | ||||||||||||
Domestic corporate bonds(2) | ― | 249 | ― | 249 | ||||||||||||
Foreign corporate bonds | ― | 77 | ― | 77 | ||||||||||||
Common/collective trusts(3) | ― | 132 | ― | 132 | ||||||||||||
Registered investment companies | ― | 21 | ― | 21 | ||||||||||||
Other investments(4) | 1 | ― | 8 | 9 | ||||||||||||
Total investment assets(6) | 1,216 | 532 | 8 | 1,756 | ||||||||||||
Other Sempra Energy: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | 81 | ― | ― | 81 | ||||||||||||
Foreign | 49 | ― | ― | 49 | ||||||||||||
Foreign preferred | ― | 1 | ― | 1 | ||||||||||||
Registered investment companies | 10 | ― | ― | 10 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 9 | ― | ― | 9 | ||||||||||||
Domestic municipal bonds | ― | 4 | ― | 4 | ||||||||||||
Foreign government bonds | ― | 3 | ― | 3 | ||||||||||||
Domestic corporate bonds(2) | ― | 30 | ― | 30 | ||||||||||||
Foreign corporate bonds | ― | 9 | ― | 9 | ||||||||||||
Common/collective trusts(3) | ― | 16 | ― | 16 | ||||||||||||
Registered investment companies | ― | 2 | ― | 2 | ||||||||||||
Other investments(4) | ― | ― | 1 | 1 | ||||||||||||
Total other Sempra Energy(7) | 149 | 65 | 1 | 215 | ||||||||||||
Total Sempra Energy Consolidated(8) | $ | 1,937 | $ | 846 | $ | 13 | $ | 2,796 | ||||||||
(1) | Investments in common stock of domestic corporations include, on a combined basis at SDG&E, SoCalGas and Other Sempra Energy, 11,558 shares of Sempra Energy common stock at a value of $1 million. | |||||||||||||||
(2) | Bonds of U.S. issuers from diverse industries, primarily investment-grade. | |||||||||||||||
(3) | Investments in common/collective trusts held in Sempra Energy’s Pension Master Trust. | |||||||||||||||
(4) | Investments in venture capital and real estate funds, stated at net asset value, and derivative financial instruments. | |||||||||||||||
(5) | Excludes cash and cash equivalents of $3 million at SDG&E. | |||||||||||||||
(6) | Excludes cash and cash equivalents of $7 million at SoCalGas. | |||||||||||||||
(7) | Excludes cash and cash equivalents of $1 million at Other Sempra Energy. | |||||||||||||||
(8) | Excludes cash and cash equivalents of $11 million at Sempra Energy Consolidated. |
FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF OTHER POSTRETIREMENT BENEFIT PLANS | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Fair value at December 31, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
SDG&E: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | $ | 39 | $ | ― | $ | ― | $ | 39 | ||||||||
Foreign | 24 | ― | ― | 24 | ||||||||||||
Registered investment companies | 41 | ― | ― | 41 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 5 | ― | ― | 5 | ||||||||||||
Domestic municipal bonds | ― | 3 | ― | 3 | ||||||||||||
Domestic corporate bonds(2) | ― | 15 | ― | 15 | ||||||||||||
Foreign corporate bonds | ― | 4 | ― | 4 | ||||||||||||
Common/collective trusts(3) | ― | 14 | ― | 14 | ||||||||||||
Registered investment companies | ― | 16 | ― | 16 | ||||||||||||
Total investment assets(4) | 109 | 52 | ― | 161 | ||||||||||||
SoCalGas: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | 123 | ― | ― | 123 | ||||||||||||
Foreign | 74 | ― | ― | 74 | ||||||||||||
Domestic preferred | ― | 1 | ― | 1 | ||||||||||||
Registered investment companies | 43 | ― | ― | 43 | ||||||||||||
Broad market funds | ― | 216 | ― | 216 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 42 | ― | ― | 42 | ||||||||||||
Domestic municipal bonds | ― | 7 | ― | 7 | ||||||||||||
Domestic corporate bonds(2) | ― | 87 | ― | 87 | ||||||||||||
Foreign government bonds | ― | 2 | ― | 2 | ||||||||||||
Foreign corporate bonds | ― | 28 | ― | 28 | ||||||||||||
Common/collective trusts(3) | ― | 151 | ― | 151 | ||||||||||||
Registered investment companies | ― | 49 | ― | 49 | ||||||||||||
Total investment assets(5) | 282 | 541 | ― | 823 | ||||||||||||
Other Sempra Energy: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | 5 | ― | ― | 5 | ||||||||||||
Foreign | 3 | ― | ― | 3 | ||||||||||||
Domestic preferred | ― | 1 | ― | 1 | ||||||||||||
Registered investment companies | 4 | ― | ― | 4 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 2 | ― | ― | 2 | ||||||||||||
Domestic corporate bonds(2) | ― | 1 | ― | 1 | ||||||||||||
Foreign government bonds | ― | 1 | ― | 1 | ||||||||||||
Foreign corporate bonds | ― | 1 | ― | 1 | ||||||||||||
Common/collective trusts(3) | ― | 1 | ― | 1 | ||||||||||||
Registered investment companies | ― | 1 | ― | 1 | ||||||||||||
Total other Sempra Energy | 14 | 6 | ― | 20 | ||||||||||||
Total Sempra Energy Consolidated(6) | $ | 405 | $ | 599 | $ | ― | $ | 1,004 | ||||||||
(1) | Investments in common stock of domestic corporations. | |||||||||||||||
(2) | Bonds of U.S. issuers from diverse industries, primarily investment-grade. | |||||||||||||||
(3) | Investments in common/collective trusts held in PBOP plan VEBA trusts and in the pension master trust. | |||||||||||||||
(4) | Excludes cash and cash equivalents of $1 million and accounts payable of $1 million held in SDG&E PBOP plan trusts. | |||||||||||||||
(5) | Excludes cash and cash equivalents of $3 million and accounts payable of $4 million held in SoCalGas PBOP plan trusts. | |||||||||||||||
(6) | Excludes cash and cash equivalents of $4 million and accounts payable of $5 million at Sempra Energy Consolidated. |
FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF OTHER POSTRETIREMENT BENEFIT PLANS | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Fair value at December 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
SDG&E: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | $ | 41 | $ | ― | $ | ― | $ | 41 | ||||||||
Foreign | 25 | ― | ― | 25 | ||||||||||||
Registered investment companies | 43 | ― | ― | 43 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 5 | ― | ― | 5 | ||||||||||||
Domestic municipal bonds | ― | 3 | ― | 3 | ||||||||||||
Domestic corporate bonds(2) | ― | 16 | ― | 16 | ||||||||||||
Foreign government bonds | ― | 2 | ― | 2 | ||||||||||||
Foreign corporate bonds | ― | 5 | ― | 5 | ||||||||||||
Common/collective trusts(3) | ― | 8 | ― | 8 | ||||||||||||
Registered investment companies | ― | 16 | ― | 16 | ||||||||||||
Total investment assets | 114 | 50 | ― | 164 | ||||||||||||
SoCalGas: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | 133 | ― | ― | 133 | ||||||||||||
Foreign | 81 | ― | ― | 81 | ||||||||||||
Domestic preferred | ― | 1 | ― | 1 | ||||||||||||
Foreign preferred | 1 | ― | ― | 1 | ||||||||||||
Registered investment companies | 45 | ― | ― | 45 | ||||||||||||
Broad market funds | ― | 222 | ― | 222 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 16 | ― | ― | 16 | ||||||||||||
Domestic municipal bonds | ― | 5 | ― | 5 | ||||||||||||
Domestic corporate bonds(2) | ― | 61 | ― | 61 | ||||||||||||
Foreign government bonds | ― | 5 | ― | 5 | ||||||||||||
Foreign corporate bonds | ― | 25 | ― | 25 | ||||||||||||
Common/collective trusts(3) | ― | 265 | ― | 265 | ||||||||||||
Registered investment companies | ― | 6 | ― | 6 | ||||||||||||
Other investments(4) | ― | ― | 2 | 2 | ||||||||||||
Total investment assets(5) | 276 | 590 | 2 | 868 | ||||||||||||
Other Sempra Energy: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Domestic(1) | 6 | ― | ― | 6 | ||||||||||||
Foreign | 3 | ― | ― | 3 | ||||||||||||
Registered investment companies | 4 | ― | ― | 4 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. Treasury securities | 1 | ― | ― | 1 | ||||||||||||
Domestic corporate bonds(2) | ― | 2 | ― | 2 | ||||||||||||
Common/collective trusts(3) | ― | 1 | ― | 1 | ||||||||||||
Registered investment companies | ― | 2 | ― | 2 | ||||||||||||
Total other Sempra Energy(6) | 14 | 5 | ― | 19 | ||||||||||||
Total Sempra Energy Consolidated(7) | $ | 404 | $ | 645 | $ | 2 | $ | 1,051 | ||||||||
(1) | Investments in common stock of domestic corporations include, on a combined basis at SDG&E, SoCalGas and Other Sempra Energy, 2,005 shares of Sempra Energy common stock at a value of $0.2 million. | |||||||||||||||
(2) | Bonds of U.S. issuers from diverse industries, primarily investment-grade. | |||||||||||||||
(3) | Investments in common/collective trusts held in PBOP plan VEBA trusts and in the pension master trust. | |||||||||||||||
(4) | Investments in venture capital and real estate funds, stated at net asset value, and derivative financial instruments. | |||||||||||||||
(5) | Excludes cash and cash equivalents of $2 million held in SoCalGas PBOP plan trusts. | |||||||||||||||
(6) | Excludes cash and cash equivalents of $1 million held in Other Sempra Energy PBOP plan trusts. | |||||||||||||||
(7) | Excludes cash and cash equivalents of $3 million at Sempra Energy Consolidated. |
LEVEL 3 INVESTMENT ASSETS | ||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Pension plans | Other postretirement benefit plans | |||||||||||||||||||||||||||||||
Level 3 investment assets | % of total investment assets | Level 3 investment assets | % of total investment assets | |||||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||
SDG&E | $ | 1 | $ | 4 | ― | % | ― | % | $ | ― | $ | ― | ― | % | ― | % | ||||||||||||||||
SoCalGas | 3 | 8 | ― | ― | ― | 2 | ― | ― | ||||||||||||||||||||||||
All other | ― | 1 | ― | ― | ― | ― | ― | ― | ||||||||||||||||||||||||
Sempra Energy Consolidated | $ | 4 | $ | 13 | ― | ― | $ | ― | $ | 2 | ― | ― |
LEVEL 3 RECONCILIATIONS | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
SDG&E | SoCalGas | All other | Sempra Energy Consolidated | |||||||||||||
PENSION PLANS | ||||||||||||||||
Balance at January 1, 2014 | $ | 6 | $ | 13 | $ | 2 | $ | 21 | ||||||||
Realized gains | 1 | 2 | ― | 3 | ||||||||||||
Unrealized losses | (1 | ) | (2 | ) | ― | (3 | ) | |||||||||
Sales | (2 | ) | (5 | ) | (1 | ) | (8 | ) | ||||||||
Balance at December 31, 2014 | 4 | 8 | 1 | 13 | ||||||||||||
Realized gains | 1 | 1 | ― | 2 | ||||||||||||
Unrealized gains | ― | 2 | ― | 2 | ||||||||||||
Sales | (4 | ) | (8 | ) | (1 | ) | (13 | ) | ||||||||
Balance at December 31, 2015 | $ | 1 | $ | 3 | $ | ― | $ | 4 | ||||||||
OTHER POSTRETIREMENT BENEFIT PLANS | ||||||||||||||||
Balance at January 1, 2014 | $ | 1 | $ | 2 | $ | ― | $ | 3 | ||||||||
Unrealized losses | (1 | ) | ― | ― | (1 | ) | ||||||||||
Balance at December 31, 2014 | ― | 2 | ― | 2 | ||||||||||||
Sales | ― | (2 | ) | ― | (2 | ) | ||||||||||
Balance at December 31, 2015 | $ | ― | $ | ― | $ | ― | $ | ― |
EXPECTED CONTRIBUTIONS | ||||||||||||
(Dollars in millions) | ||||||||||||
Sempra Energy | ||||||||||||
Consolidated | SDG&E | SoCalGas | ||||||||||
Pension plans | $ | 126 | $ | 5 | $ | 77 | ||||||
Other postretirement benefit plans | 5 | 2 | 1 |
EXPECTED BENEFIT PAYMENTS | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Sempra Energy Consolidated | SDG&E | SoCalGas | ||||||||||||||||||||||
Other | Other | Other | ||||||||||||||||||||||
Pension | postretirement | Pension | postretirement | Pension | postretirement | |||||||||||||||||||
benefits | benefits | benefits | benefits | benefits | benefits | |||||||||||||||||||
2016 | $ | 325 | $ | 47 | $ | 86 | $ | 8 | $ | 187 | $ | 36 | ||||||||||||
2017 | 310 | 50 | 84 | 9 | 187 | 38 | ||||||||||||||||||
2018 | 311 | 53 | 82 | 10 | 186 | 40 | ||||||||||||||||||
2019 | 298 | 56 | 80 | 10 | 180 | 42 | ||||||||||||||||||
2020 | 291 | 61 | 77 | 10 | 175 | 44 | ||||||||||||||||||
2021-2025 | 1,295 | 296 | 339 | 54 | 808 | 228 |
CONTRIBUTIONS TO SAVINGS PLANS | ||||||||||||
(Dollars in millions) | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated | $ | 43 | $ | 38 | $ | 35 | ||||||
SDG&E | 17 | 15 | 14 | |||||||||
SoCalGas | 21 | 18 | 17 |
§ | non-qualified stock options |
§ | incentive stock options |
§ | restricted stock |
§ | restricted stock units |
§ | stock appreciation rights |
§ | performance awards |
§ | stock payments |
§ | dividend equivalents |
§ | Non-Qualified Stock Options: Options have an exercise price equal to the market price of the common stock at the date of grant, are service-based, become exercisable over a four-year period, and expire 10 years from the date of grant. Vesting and/or the ability to exercise may be accelerated upon a change in control, in accordance with severance pay agreements, in accordance with the terms of the grant, or upon eligibility for retirement. Options are subject to forfeiture or earlier expiration when an employee terminates employment. |
§ | Performance-Based Restricted Stock Units: These restricted stock unit awards generally vest in Sempra Energy common stock at the end of three-year (for awards granted in 2015) or four-year performance periods based on Sempra Energy’s total return to shareholders relative to that of specified market indices or based on the compound annual growth rate of Sempra Energy’s earnings per common share (EPS). For awards granted in 2013 or earlier, if Sempra Energy’s total return to shareholders exceeds target levels, up to an additional 50 percent of the number of granted restricted stock units may be issued. For awards granted during or after 2014, up to an additional 100 percent of the granted restricted stock units may be issued if total return to shareholders or EPS growth exceeds target levels. If Sempra Energy’s total return to shareholders or EPS growth is below the target levels but above threshold performance levels, shares are subject to partial vesting on a pro rata basis. For awards granted in 2015 that vest based on Sempra Energy’s total return to shareholders, a modifier adds 20 percent to the award’s payout (as initially calculated based on total return to shareholders relative to that of specified market indices) for total shareholder return performance in the top quartile relative to historical benchmark data for Sempra Energy and reduces the award’s payout by 20 percent for performance in the bottom quartile. However, in no event will more than an additional 100 percent of the granted restricted stock units be issued. If performance falls within the second or third quartiles, the modifier is not triggered, and the payout is based solely on total return to shareholders relative to that of specified market indices. Also, vesting may be subject to earlier forfeiture upon termination of employment and accelerated vesting upon a change in control under the applicable long-term incentive plan, or in accordance with severance pay agreements. Dividend equivalents on shares subject to restricted stock units are reinvested to purchase additional shares that become subject to the same vesting conditions as the restricted stock units to which the dividends relate. |
§ | Other Performance-Based Restricted Stock Units: Restricted stock units were granted in 2014 and 2015 in connection with the creation of Cameron LNG JV. The 2014 awards vest to the extent that the Compensation Committee of Sempra Energy’s Board of Directors determines that the objectives of the joint venture are continuing to be achieved. These awards vest on the anniversary of the grant date over a period of either two or three years. The 2015 awards vest to the extent that the Compensation Committee of Sempra Energy’s Board of Directors determines that Sempra Energy has achieved positive cumulative net income for fiscal years 2015 through 2017 and Cameron LNG JV has commenced commercial operations of the first train. Vesting may be subject to earlier forfeiture upon termination of employment and accelerated vesting upon a change in control under the applicable long-term incentive plan, or in accordance with severance pay agreements. Dividend equivalents on shares subject to restricted stock units are reinvested to purchase additional shares that become subject to the same vesting conditions as the restricted stock units to which the dividends relate. |
§ | Service-Based Restricted Stock Units: Restricted stock units may also be service-based; these generally vest at the end of three-year (for awards granted in 2015) or four-year service periods. Vesting may be subject to earlier forfeiture upon termination of employment and accelerated vesting upon a change in control under the applicable long-term incentive plan, in accordance with severance pay agreements, or at the discretion of the Compensation Committee of Sempra Energy’s Board of Directors. Dividend equivalents on shares subject to restricted stock units are reinvested to purchase additional shares that become subject to the same vesting conditions as the restricted stock units to which the dividends relate. |
§ | Restricted Stock: Restricted stock awards are solely service-based and are generally exercisable at the end of four years of service. Vesting is subject to earlier forfeiture upon termination of employment and accelerated vesting upon a change in control under the applicable long-term incentive plan, in accordance with severance pay agreements or upon eligibility for retirement. Holders of restricted stock have full voting rights. They also have full dividend rights; however, dividends paid on restricted stock held by officers are reinvested to purchase additional shares that become subject to the same vesting conditions as the restricted stock to which the dividends relate. |
SHARE-BASED COMPENSATION EXPENSE – SEMPRA ENERGY CONSOLIDATED | ||||||||||||
(Dollars in millions, except per share amounts) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Share-based compensation expense, before income taxes | $ | 48 | $ | 46 | $ | 38 | ||||||
Income tax benefit | (19 | ) | (18 | ) | (15 | ) | ||||||
Share-based compensation expense, net of income taxes | $ | 29 | $ | 28 | $ | 23 | ||||||
Net share-based compensation expense, per common share | ||||||||||||
Basic | $ | 0.12 | $ | 0.11 | $ | 0.09 | ||||||
Diluted | $ | 0.12 | $ | 0.11 | $ | 0.09 |
SHARE-BASED COMPENSATION EXPENSE – SDG&E AND SOCALGAS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
SDG&E: | ||||||||||||
Compensation expense | $ | 8 | $ | 8 | $ | 8 | ||||||
Capitalized compensation cost | 4 | 3 | 3 | |||||||||
SoCalGas: | ||||||||||||
Compensation expense | $ | 10 | $ | 8 | $ | 8 | ||||||
Capitalized compensation cost | 2 | 2 | 1 |
NON-QUALIFIED STOCK OPTIONS | ||||||||||||||||
Weighted- | ||||||||||||||||
Weighted- | average | |||||||||||||||
Shares | average | remaining | Aggregate | |||||||||||||
under | exercise | contractual term | intrinsic value | |||||||||||||
option | price | (in years) | (in millions) | |||||||||||||
Outstanding at January 1, 2015 | 757,412 | $ | 53.84 | |||||||||||||
Exercised | (227,815 | ) | $ | 54.48 | ||||||||||||
Forfeited/canceled | (1,600 | ) | $ | 36.30 | ||||||||||||
Outstanding at December 31, 2015 | 527,997 | $ | 53.62 | 2.6 | $ | 21 | ||||||||||
Vested at December 31, 2015 | 527,997 | $ | 53.62 | 2.6 | $ | 21 | ||||||||||
Exercisable at December 31, 2015 | 527,997 | $ | 53.62 | 2.6 | $ | 21 |
§ | $12 million in 2015 |
§ | $33 million in 2014 |
§ | $41 million in 2013 |
2015 | 2014 | 2013 | |||||
Risk-free rate of return | 1.1 | % | 1.2 | % | 0.6 | % | |
Annual dividend yield(1) | N/A | N/A | 3.3 | ||||
Stock price volatility | 14 | 16 | 19 | ||||
(1) | Annual dividend yield was not used in valuations performed in 2015 or 2014. |
RESTRICTED STOCK AWARDS | ||||||||
Weighted- | ||||||||
average | ||||||||
grant-date | ||||||||
Shares | fair value | |||||||
Nonvested at January 1, 2015 | 9,238 | $ | 63.81 | |||||
Vested | (7,701 | ) | $ | 61.41 | ||||
Nonvested at December 31, 2015 | 1,537 | $ | 75.87 | |||||
Expected to vest at December 31, 2015 | 1,537 | $ | 75.87 |
RESTRICTED STOCK UNITS | ||||||||||||||||
Performance-based | Service-based | |||||||||||||||
restricted stock units(1) | restricted stock units | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
average | average | |||||||||||||||
grant-date | grant-date | |||||||||||||||
Units | fair value | Units | fair value | |||||||||||||
Nonvested at January 1, 2015 | 2,874,942 | $ | 54.55 | 303,237 | $ | 73.41 | ||||||||||
Granted | 438,318 | $ | 123.30 | 72,835 | $ | 111.43 | ||||||||||
Vested | (1,036,645 | ) | $ | 42.34 | (25,000 | ) | $ | 88.71 | ||||||||
Forfeited | (4,940 | ) | $ | 103.58 | (2,266 | ) | $ | 90.48 | ||||||||
Nonvested at December 31, 2015(2) | 2,271,675 | $ | 73.28 | 348,806 | $ | 80.14 | ||||||||||
Expected to vest at December 31, 2015 | 2,220,408 | $ | 72.89 | 338,086 | $ | 79.81 | ||||||||||
(1) | Includes restricted stock units issued in 2015 in connection with the creation of Cameron LNG JV. | |||||||||||||||
(2) | Each unit represents the right to receive one share of our common stock if applicable performance conditions are satisfied. For all performance-based restricted stock units, except for those issued in connection with the creation of Cameron LNG JV, up to an additional 50 percent (100 percent for awards granted during or after 2014) of the shares represented by the units may be issued if Sempra Energy exceeds target performance conditions. |
§ | The California Utilities use energy derivatives, both natural gas and electricity, for the benefit of customers, with the objective of managing price risk and basis risks, and stabilizing and lowering natural gas and electricity costs. These derivatives include fixed price natural gas and electricity positions, options, and basis risk instruments, which are either exchange-traded or over-the-counter financial instruments, or bilateral physical transactions. This activity is governed by risk management and transacting activity plans that have been filed with and approved by the CPUC. Natural gas and electricity derivative activities are recorded as commodity costs that are offset by regulatory account balances and are recovered in rates. Net commodity cost impacts on the Consolidated Statements of Operations are reflected in Cost of Electric Fuel and Purchased Power or in Cost of Natural Gas. |
§ | SDG&E is allocated and may purchase congestion revenue rights (CRRs), which serve to reduce the regional electricity price volatility risk that may result from local transmission capacity constraints. Unrealized gains and losses do not impact earnings, as they are offset by regulatory account balances. Realized gains and losses associated with CRRs, which are recoverable in rates, are recorded in Cost of Electric Fuel and Purchased Power on the Consolidated Statements of Operations. |
§ | Sempra Mexico and Sempra Natural Gas may use natural gas and electricity derivatives, as appropriate, to optimize the earnings of their assets which support the following businesses: LNG, natural gas transportation, power generation, and Sempra Natural Gas’ storage. Gains and losses associated with undesignated derivatives are recognized in Energy-Related Businesses Revenues or in Cost of Natural Gas, Electric Fuel and Purchased Power on the Consolidated Statements of Operations. Certain of these derivatives may also be designated as cash flow hedges. Sempra Mexico also uses natural gas energy derivatives with the objective of managing price risk and lowering natural gas prices at its Mexican distribution operations. These derivatives, which are recorded as commodity costs that are offset by regulatory account balances and recovered in rates, are recognized in Cost of Natural Gas on the Consolidated Statements of Operations. |
§ | From time to time, our various businesses, including the California Utilities, may use other energy derivatives to hedge exposures such as the price of vehicle fuel. |
NET ENERGY DERIVATIVE VOLUMES | |||||
December 31, | |||||
Segment and Commodity | 2015 | 2014 | |||
California Utilities: | |||||
SDG&E: | |||||
Natural gas | 70 million MMBtu | (1) | 55 million MMBtu | ||
Electricity | 1 million MWh | (2) | ― | ||
Congestion revenue rights | 36 million MWh | 27 million MWh | |||
SoCalGas – natural gas | 1 million MMBtu | 1 million MMBtu | |||
Energy-Related Businesses: | |||||
Sempra Natural Gas – natural gas | 43 million MMBtu | 29 million MMBtu | |||
(1) | Million British thermal units | ||||
(2) | Megawatt hours |
INTEREST RATE DERIVATIVES | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
December 31, 2015 | December 31, 2014 | ||||||||||||||||
Notional debt | Maturities | Notional debt | Maturities | ||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||
Cash flow hedges(1) | $ | 384 | 2016-2028 | $ | 399 | 2015-2028 | |||||||||||
Fair value hedges | 300 | 2016 | 300 | 2016 | |||||||||||||
SDG&E: | |||||||||||||||||
Cash flow hedge(1) | 315 | 2016-2019 | 325 | 2015-2019 | |||||||||||||
(1) | Includes Otay Mesa VIE. All of SDG&E’s interest rate derivatives relate to Otay Mesa VIE. |
DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED BALANCE SHEETS | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
December 31, 2015 | |||||||||||||||||
Deferred | |||||||||||||||||
credits | |||||||||||||||||
Current | Current | and other | |||||||||||||||
assets: | liabilities: | liabilities: | |||||||||||||||
Fixed-price | Investments | Fixed-price | Fixed-price | ||||||||||||||
contracts | and other | contracts | contracts | ||||||||||||||
and other | assets: | and other | and other | ||||||||||||||
derivatives(1) | Sundry | derivatives(2) | derivatives | ||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Interest rate and foreign exchange instruments(3) | $ | 4 | $ | 1 | $ | (15 | ) | $ | (156 | ) | |||||||
Commodity contracts not subject to rate recovery | 13 | ― | ― | ― | |||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Commodity contracts not subject to rate recovery | 245 | 32 | (239 | ) | (21 | ) | |||||||||||
Associated offsetting commodity contracts | (232 | ) | (20 | ) | 232 | 20 | |||||||||||
Associated offsetting cash collateral | (6 | ) | ― | 4 | ― | ||||||||||||
Commodity contracts subject to rate recovery | 28 | 49 | (61 | ) | (64 | ) | |||||||||||
Associated offsetting commodity contracts | (2 | ) | (2 | ) | 2 | 2 | |||||||||||
Associated offsetting cash collateral | ― | ― | 28 | 26 | |||||||||||||
Net amounts presented on the balance sheet | 50 | 60 | (49 | ) | (193 | ) | |||||||||||
Additional cash collateral for commodity contracts | |||||||||||||||||
not subject to rate recovery | 2 | ― | ― | ― | |||||||||||||
Additional cash collateral for commodity contracts | |||||||||||||||||
subject to rate recovery | 28 | ― | ― | ― | |||||||||||||
Total(4) | $ | 80 | $ | 60 | $ | (49 | ) | $ | (193 | ) | |||||||
SDG&E: | |||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Interest rate instruments(3) | $ | ― | $ | ― | $ | (14 | ) | $ | (23 | ) | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Commodity contracts not subject to rate recovery | ― | ― | (1 | ) | ― | ||||||||||||
Associated offsetting cash collateral | ― | ― | 1 | ― | |||||||||||||
Commodity contracts subject to rate recovery | 27 | 49 | (60 | ) | (64 | ) | |||||||||||
Associated offsetting commodity contracts | (2 | ) | (2 | ) | 2 | 2 | |||||||||||
Associated offsetting cash collateral | ― | ― | 28 | 26 | |||||||||||||
Net amounts presented on the balance sheet | 25 | 47 | (44 | ) | (59 | ) | |||||||||||
Additional cash collateral for commodity contracts | |||||||||||||||||
not subject to rate recovery | 1 | ― | ― | ― | |||||||||||||
Additional cash collateral for commodity contracts | |||||||||||||||||
subject to rate recovery | 27 | ― | ― | ― | |||||||||||||
Total(4) | $ | 53 | $ | 47 | $ | (44 | ) | $ | (59 | ) | |||||||
SoCalGas: | |||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Commodity contracts not subject to rate recovery | $ | ― | $ | ― | $ | (1 | ) | $ | ― | ||||||||
Associated offsetting cash collateral | ― | ― | 1 | ― | |||||||||||||
Commodity contracts subject to rate recovery | 1 | ― | (1 | ) | ― | ||||||||||||
Net amounts presented on the balance sheet | 1 | ― | (1 | ) | ― | ||||||||||||
Additional cash collateral for commodity contracts | |||||||||||||||||
subject to rate recovery | 1 | ― | ― | ― | |||||||||||||
Total | $ | 2 | $ | ― | $ | (1 | ) | $ | ― |
(1) | Included in Current Assets: Other for SoCalGas. | ||||||||||||||||
(2) | Included in Current Liabilities: Other for SoCalGas. | ||||||||||||||||
(3) | Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE. | ||||||||||||||||
(4) | Normal purchase contracts previously measured at fair value are excluded. |
DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED BALANCE SHEETS | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
December 31, 2014 | |||||||||||||||||
Deferred | |||||||||||||||||
credits | |||||||||||||||||
Current | Current | and other | |||||||||||||||
assets: | liabilities: | liabilities: | |||||||||||||||
Fixed-price | Investments | Fixed-price | Fixed-price | ||||||||||||||
contracts | and other | contracts | contracts | ||||||||||||||
and other | assets: | and other | and other | ||||||||||||||
derivatives(1) | Sundry | derivatives(2) | derivatives | ||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Interest rate and foreign exchange instruments(3) | $ | 10 | $ | 3 | $ | (17 | ) | $ | (109 | ) | |||||||
Commodity contracts not subject to rate recovery | 25 | ― | ― | ― | |||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Interest rate instruments | 8 | 27 | (7 | ) | (22 | ) | |||||||||||
Commodity contracts not subject to rate recovery | 143 | 32 | (135 | ) | (29 | ) | |||||||||||
Associated offsetting commodity contracts | (129 | ) | (27 | ) | 129 | 27 | |||||||||||
Associated offsetting cash collateral | (11 | ) | ― | ― | ― | ||||||||||||
Commodity contracts subject to rate recovery | 36 | 76 | (36 | ) | (20 | ) | |||||||||||
Associated offsetting commodity contracts | (3 | ) | (1 | ) | 3 | 1 | |||||||||||
Associated offsetting cash collateral | ― | ― | 23 | 13 | |||||||||||||
Net amounts presented on the balance sheet | 79 | 110 | (40 | ) | (139 | ) | |||||||||||
Additional cash collateral for commodity contracts | |||||||||||||||||
subject to rate recovery | 14 | ― | ― | ― | |||||||||||||
Total(4) | $ | 93 | $ | 110 | $ | (40 | ) | $ | (139 | ) | |||||||
SDG&E: | |||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Interest rate instruments(3) | $ | ― | $ | ― | $ | (16 | ) | $ | (31 | ) | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Commodity contracts subject to rate recovery | 32 | 76 | (32 | ) | (20 | ) | |||||||||||
Associated offsetting commodity contracts | ― | (1 | ) | ― | 1 | ||||||||||||
Associated offsetting cash collateral | ― | ― | 23 | 13 | |||||||||||||
Net amounts presented on the balance sheet | 32 | 75 | (25 | ) | (37 | ) | |||||||||||
Additional cash collateral for commodity contracts | |||||||||||||||||
subject to rate recovery | 12 | ― | ― | ― | |||||||||||||
Total(4) | $ | 44 | $ | 75 | $ | (25 | ) | $ | (37 | ) | |||||||
SoCalGas: | |||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Commodity contracts subject to rate recovery | $ | 4 | $ | ― | $ | (4 | ) | $ | ― | ||||||||
Associated offsetting commodity contracts | (3 | ) | ― | 3 | ― | ||||||||||||
Net amounts presented on the balance sheet | 1 | ― | (1 | ) | ― | ||||||||||||
Additional cash collateral for commodity contracts | |||||||||||||||||
subject to rate recovery | 2 | ― | ― | ― | |||||||||||||
Total | $ | 3 | $ | ― | $ | (1 | ) | $ | ― |
(1) | Included in Current Assets: Other for SoCalGas. | ||||||||||||||||
(2) | Included in Current Liabilities: Other for SoCalGas. | ||||||||||||||||
(3) | Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE. | ||||||||||||||||
(4) | Normal purchase contracts previously measured at fair value are excluded. |
FAIR VALUE HEDGE IMPACTS | |||||||||||||
(Dollars in millions) | |||||||||||||
Pretax gain (loss) on derivatives recognized in earnings | |||||||||||||
Years ended December 31, | |||||||||||||
Location | 2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated: | |||||||||||||
Interest rate instruments | Interest Expense | $ | 6 | $ | 8 | $ | 8 | ||||||
Interest rate instruments | Other Income, Net | (5 | ) | (3 | ) | (7 | ) | ||||||
Total(1) | $ | 1 | $ | 5 | $ | 1 | |||||||
(1) | There was no hedge ineffectiveness in 2015 or 2013. There were gains of $9 million from hedge ineffectiveness in 2014. All other changes in the fair value of the interest rate swap agreements are exactly offset by changes in the fair value of the underlying long-term debt and recorded in Other Income, Net. |
CASH FLOW HEDGE IMPACTS | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Pretax (loss) gain | Pretax (loss) gain reclassified | ||||||||||||||||||||||||
recognized in OCI | from AOCI into earnings | ||||||||||||||||||||||||
(effective portion) | (effective portion) | ||||||||||||||||||||||||
Years ended December 31, | Years ended December 31, | ||||||||||||||||||||||||
2015 | 2014 | 2013 | Location | 2015 | 2014 | 2013 | |||||||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||||||||||
Interest rate and foreign | |||||||||||||||||||||||||
exchange instruments(1) | $ | (18 | ) | $ | (24 | ) | $ | 1 | Interest Expense | $ | (18 | ) | $ | (21 | ) | $ | (11 | ) | |||||||
Gain on Sale of Equity | |||||||||||||||||||||||||
Interest rate instruments | ― | 3 | ― | Interests and Assets | ― | 3 | ― | ||||||||||||||||||
Equity Earnings, | |||||||||||||||||||||||||
Interest rate instruments | (80 | ) | (127 | ) | 15 | Before Income Tax | (12 | ) | (10 | ) | (10 | ) | |||||||||||||
Equity Earnings, | |||||||||||||||||||||||||
Interest rate instruments | (20 | ) | ― | ― | Net of Income Tax | (13 | ) | ― | ― | ||||||||||||||||
Commodity contracts not | Revenues: Energy-Related | ||||||||||||||||||||||||
subject to rate recovery | 12 | 19 | (4 | ) | Businesses | 14 | 8 | 1 | |||||||||||||||||
Total(2) | $ | (106 | ) | $ | (129 | ) | $ | 12 | $ | (29 | ) | $ | (20 | ) | $ | (20 | ) | ||||||||
SDG&E: | |||||||||||||||||||||||||
Interest rate instruments(1)(3) | $ | (6 | ) | $ | (9 | ) | $ | 8 | Interest Expense | $ | (12 | ) | $ | (11 | ) | $ | (9 | ) | |||||||
SoCalGas: | |||||||||||||||||||||||||
Interest rate instrument(3) | $ | ― | $ | ― | $ | ― | Interest Expense | $ | (1 | ) | $ | (1 | ) | $ | (1 | ) | |||||||||
(1) | Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE. | ||||||||||||||||||||||||
(2) | There was $2 million, $1 million and $1 million of losses from ineffectiveness related to these cash flow hedges in 2015, 2014 and 2013, respectively. | ||||||||||||||||||||||||
(3) | There was negligible hedge ineffectiveness related to these cash flow hedges at SDG&E and SoCalGas in 2015, 2014 and 2013. |
UNDESIGNATED DERIVATIVE IMPACTS | |||||||||||||
(Dollars in millions) | |||||||||||||
Pretax (loss) gain on derivatives recognized in earnings | |||||||||||||
Years ended December 31, | |||||||||||||
Location | 2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated: | |||||||||||||
Interest rate and foreign | |||||||||||||
exchange instruments | Other Income, Net | $ | (4 | ) | $ | (24 | ) | $ | 17 | ||||
Foreign exchange instruments | Equity Earnings, | ||||||||||||
Net of Income Tax | (4 | ) | (5 | ) | (4 | ) | |||||||
Commodity contracts not subject | Revenues: Energy-Related | ||||||||||||
to rate recovery | Businesses | 42 | 17 | (1 | ) | ||||||||
Commodity contracts not subject | Cost of Natural Gas, Electric | ||||||||||||
to rate recovery | Fuel and Purchased Power | ― | 3 | ― | |||||||||
Commodity contracts not subject | |||||||||||||
to rate recovery | Operation and Maintenance | (1 | ) | (4 | ) | 1 | |||||||
Commodity contracts subject | Cost of Electric Fuel | ||||||||||||
to rate recovery | and Purchased Power | (126 | ) | (10 | ) | 53 | |||||||
Commodity contracts subject | |||||||||||||
to rate recovery | Cost of Natural Gas | 1 | ― | ― | |||||||||
Total | $ | (92 | ) | $ | (23 | ) | $ | 66 | |||||
SDG&E: | |||||||||||||
Commodity contracts not subject | |||||||||||||
to rate recovery | Operation and Maintenance | $ | ― | $ | (1 | ) | $ | ― | |||||
Commodity contracts subject | Cost of Electric Fuel | ||||||||||||
to rate recovery | and Purchased Power | (126 | ) | (10 | ) | 53 | |||||||
Total | $ | (126 | ) | $ | (11 | ) | $ | 53 | |||||
SoCalGas: | |||||||||||||
Commodity contracts not subject | |||||||||||||
to rate recovery | Operation and Maintenance | $ | (1 | ) | $ | (2 | ) | $ | 1 | ||||
Commodity contracts subject | |||||||||||||
to rate recovery | Cost of Natural Gas | 1 | ― | ― | |||||||||
Total | $ | ― | $ | (2 | ) | $ | 1 |
§ | Nuclear decommissioning trusts reflect the assets of SDG&E’s nuclear decommissioning trusts, excluding cash balances. A third party trustee values the trust assets using prices from a pricing service based on a market approach. We validate these prices by comparison to prices from other independent data sources. Equity and certain debt securities are valued using quoted prices listed on nationally recognized securities exchanges or based on closing prices reported in the active market in which the identical security is traded (Level 1). Other debt securities are valued based on yields that are currently available for comparable securities of issuers with similar credit ratings (Level 2). |
§ | For commodity contracts, interest rate derivatives and foreign exchange instruments, we primarily use a market approach with market participant assumptions to value these derivatives. Market participant assumptions include those about risk, and the risk inherent in the inputs to the valuation techniques. These inputs can be readily observable, market corroborated, or generally unobservable. We have exchange-traded derivatives that are valued based on quoted prices in active markets for the identical instruments (Level 1). We also may have other commodity derivatives that are valued using industry standard models that consider quoted forward prices for commodities, time value, current market and contractual prices for the underlying instruments, volatility factors, and other relevant economic measures (Level 2). Level 3 recurring items relate to CRRs and long-term, fixed-price electricity positions at SDG&E, as we discuss below under “Level 3 Information.” |
§ | Rabbi Trust investments include marketable securities that we value using a market approach based on closing prices reported in the active market in which the identical security is traded (Level 1). Investments in marketable securities at December 31, 2015 and 2014 were negligible. |
RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Fair value at December 31, 2015 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Nuclear decommissioning trusts | |||||||||||||||||||||
Equity securities | $ | 619 | $ | ― | $ | ― | $ | ― | $ | 619 | |||||||||||
Debt securities: | |||||||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||||||
U.S. government corporations and agencies | 47 | 44 | ― | ― | 91 | ||||||||||||||||
Municipal bonds | ― | 156 | ― | ― | 156 | ||||||||||||||||
Other securities | ― | 182 | ― | ― | 182 | ||||||||||||||||
Total debt securities | 47 | 382 | ― | ― | 429 | ||||||||||||||||
Total nuclear decommissioning trusts(2) | 666 | 382 | ― | ― | 1,048 | ||||||||||||||||
Interest rate and foreign exchange instruments | ― | 5 | ― | ― | 5 | ||||||||||||||||
Commodity contracts not subject to rate recovery | 22 | 16 | ― | (4 | ) | 34 | |||||||||||||||
Commodity contracts subject to rate recovery | ― | 1 | 72 | 28 | 101 | ||||||||||||||||
Total | $ | 688 | $ | 404 | $ | 72 | $ | 24 | $ | 1,188 | |||||||||||
Liabilities: | |||||||||||||||||||||
Interest rate and foreign exchange instruments | $ | ― | $ | 171 | $ | ― | $ | ― | $ | 171 | |||||||||||
Commodity contracts not subject to rate recovery | 5 | 3 | ― | (4 | ) | 4 | |||||||||||||||
Commodity contracts subject to rate recovery | ― | 68 | 53 | (54 | ) | 67 | |||||||||||||||
Total | $ | 5 | $ | 242 | $ | 53 | $ | (58 | ) | $ | 242 | ||||||||||
Fair value at December 31, 2014 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Nuclear decommissioning trusts | |||||||||||||||||||||
Equity securities | $ | 655 | $ | ― | $ | ― | $ | ― | $ | 655 | |||||||||||
Debt securities: | |||||||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||||||
U.S. government corporations and agencies | 62 | 47 | ― | ― | 109 | ||||||||||||||||
Municipal bonds | ― | 129 | ― | ― | 129 | ||||||||||||||||
Other securities | ― | 207 | ― | ― | 207 | ||||||||||||||||
Total debt securities | 62 | 383 | ― | ― | 445 | ||||||||||||||||
Total nuclear decommissioning trusts(2) | 717 | 383 | ― | ― | 1,100 | ||||||||||||||||
Interest rate and foreign exchange instruments | ― | 48 | ― | ― | 48 | ||||||||||||||||
Commodity contracts not subject to rate recovery | 28 | 16 | ― | (11 | ) | 33 | |||||||||||||||
Commodity contracts subject to rate recovery | ― | 1 | 107 | 14 | 122 | ||||||||||||||||
Total | $ | 745 | $ | 448 | $ | 107 | $ | 3 | $ | 1,303 | |||||||||||
Liabilities: | |||||||||||||||||||||
Interest rate and foreign exchange instruments | $ | ― | $ | 155 | $ | ― | $ | ― | $ | 155 | |||||||||||
Commodity contracts not subject to rate recovery | 3 | 9 | ― | (4 | ) | 8 | |||||||||||||||
Commodity contracts subject to rate recovery | ― | 52 | ― | (36 | ) | 16 | |||||||||||||||
Total | $ | 3 | $ | 216 | $ | ― | $ | (40 | ) | $ | 179 | ||||||||||
(1) | Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset. | ||||||||||||||||||||
(2) | Excludes cash balances and cash equivalents. |
RECURRING FAIR VALUE MEASURES – SDG&E | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Fair value at December 31, 2015 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Nuclear decommissioning trusts | |||||||||||||||||||||
Equity securities | $ | 619 | $ | ― | $ | ― | $ | ― | $ | 619 | |||||||||||
Debt securities: | |||||||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||||||
U.S. government corporations and agencies | 47 | 44 | ― | ― | 91 | ||||||||||||||||
Municipal bonds | ― | 156 | ― | ― | 156 | ||||||||||||||||
Other securities | ― | 182 | ― | ― | 182 | ||||||||||||||||
Total debt securities | 47 | 382 | ― | ― | 429 | ||||||||||||||||
Total nuclear decommissioning trusts(2) | 666 | 382 | ― | ― | 1,048 | ||||||||||||||||
Commodity contracts not subject to rate recovery | ― | ― | ― | 1 | 1 | ||||||||||||||||
Commodity contracts subject to rate recovery | ― | ― | 72 | 27 | 99 | ||||||||||||||||
Total | $ | 666 | $ | 382 | $ | 72 | $ | 28 | $ | 1,148 | |||||||||||
Liabilities: | |||||||||||||||||||||
Interest rate instruments | $ | ― | $ | 37 | $ | ― | $ | ― | $ | 37 | |||||||||||
Commodity contracts not subject to rate recovery | 1 | ― | ― | (1 | ) | ― | |||||||||||||||
Commodity contracts subject to rate recovery | ― | 67 | 53 | (54 | ) | 66 | |||||||||||||||
Total | $ | 1 | $ | 104 | $ | 53 | $ | (55 | ) | $ | 103 | ||||||||||
Fair value at December 31, 2014 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Nuclear decommissioning trusts | |||||||||||||||||||||
Equity securities | $ | 655 | $ | ― | $ | ― | $ | ― | $ | 655 | |||||||||||
Debt securities: | |||||||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||||||
U.S. government corporations and agencies | 62 | 47 | ― | ― | 109 | ||||||||||||||||
Municipal bonds | ― | 129 | ― | ― | 129 | ||||||||||||||||
Other securities | ― | 207 | ― | ― | 207 | ||||||||||||||||
Total debt securities | 62 | 383 | ― | ― | 445 | ||||||||||||||||
Total nuclear decommissioning trusts(2) | 717 | 383 | ― | ― | 1,100 | ||||||||||||||||
Commodity contracts subject to rate recovery | ― | ― | 107 | 12 | 119 | ||||||||||||||||
Total | $ | 717 | $ | 383 | $ | 107 | $ | 12 | $ | 1,219 | |||||||||||
Liabilities: | |||||||||||||||||||||
Interest rate instruments | $ | ― | $ | 47 | $ | ― | $ | ― | $ | 47 | |||||||||||
Commodity contracts not subject to rate recovery | 1 | ― | ― | (1 | ) | ― | |||||||||||||||
Commodity contracts subject to rate recovery | ― | 51 | ― | (36 | ) | 15 | |||||||||||||||
Total | $ | 1 | $ | 98 | $ | ― | $ | (37 | ) | $ | 62 | ||||||||||
(1) | Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset. | ||||||||||||||||||||
(2) | Excludes cash balances and cash equivalents. |
RECURRING FAIR VALUE MEASURES – SOCALGAS | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Fair value at December 31, 2015 | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | ||||||||||||||||
Assets: | ||||||||||||||||||||
Commodity contracts subject to rate recovery | $ | ― | $ | 1 | $ | ― | $ | 1 | $ | 2 | ||||||||||
Total | $ | ― | $ | 1 | $ | ― | $ | 1 | $ | 2 | ||||||||||
Liabilities: | ||||||||||||||||||||
Commodity contracts not subject to rate recovery | $ | 1 | $ | ― | $ | ― | $ | (1 | ) | $ | ― | |||||||||
Commodity contracts subject to rate recovery | ― | 1 | ― | ― | 1 | |||||||||||||||
Total | $ | 1 | $ | 1 | $ | ― | $ | (1 | ) | $ | 1 | |||||||||
Fair value at December 31, 2014 | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | ||||||||||||||||
Assets: | ||||||||||||||||||||
Commodity contracts subject to rate recovery | $ | ― | $ | 1 | $ | ― | $ | 2 | $ | 3 | ||||||||||
Total | $ | ― | $ | 1 | $ | ― | $ | 2 | $ | 3 | ||||||||||
Liabilities: | ||||||||||||||||||||
Commodity contracts not subject to rate recovery | $ | 2 | $ | ― | $ | ― | $ | (2 | ) | $ | ― | |||||||||
Commodity contracts subject to rate recovery | ― | 1 | ― | ― | 1 | |||||||||||||||
Total | $ | 2 | $ | 1 | $ | ― | $ | (2 | ) | $ | 1 | |||||||||
(1) | Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset. |
LEVEL 3 RECONCILIATIONS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Balance at January 1 | $ | 107 | $ | 99 | $ | 61 | ||||||
Realized and unrealized (losses) gains | (134 | ) | 15 | 11 | ||||||||
Allocated transmission instruments | 12 | 19 | 51 | |||||||||
Settlements | 34 | (26 | ) | (24 | ) | |||||||
Balance at December 31 | $ | 19 | $ | 107 | $ | 99 | ||||||
Change in unrealized (losses) gains relating to | ||||||||||||
instruments still held at December 31 | $ | (27 | ) | $ | 8 | $ | 11 |
December 31, | ||||||||
(Dollars in millions) | 2015 | 2014 | ||||||
Sempra Energy Consolidated | $ | 30 | $ | 14 | ||||
SDG&E | 28 | 12 | ||||||
SoCalGas | 1 | 2 |
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Carrying | Fair Value | |||||||||||||||||||
amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Sempra Energy Consolidated: | ||||||||||||||||||||
Noncurrent due from unconsolidated affiliates(1) | $ | 175 | $ | ― | $ | 97 | $ | 69 | $ | 166 | ||||||||||
Total long-term debt(2)(3) | 13,761 | ― | 13,985 | 648 | 14,633 | |||||||||||||||
Preferred stock of subsidiary | 20 | ― | 23 | ― | 23 | |||||||||||||||
SDG&E: | ||||||||||||||||||||
Total long-term debt(3)(4) | $ | 4,304 | $ | ― | $ | 4,355 | $ | 315 | $ | 4,670 | ||||||||||
SoCalGas: | ||||||||||||||||||||
Total long-term debt(5) | $ | 2,513 | $ | ― | $ | 2,621 | $ | ― | $ | 2,621 | ||||||||||
Preferred stock | 22 | ― | 25 | ― | 25 | |||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Carrying | Fair Value | |||||||||||||||||||
amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Sempra Energy Consolidated: | ||||||||||||||||||||
Noncurrent due from unconsolidated affiliates(1) | $ | 184 | $ | ― | $ | 132 | $ | 38 | $ | 170 | ||||||||||
Total long-term debt(2)(3) | 12,347 | ― | 12,782 | 917 | 13,699 | |||||||||||||||
Preferred stock of subsidiary | 20 | ― | 23 | ― | 23 | |||||||||||||||
SDG&E: | ||||||||||||||||||||
Total long-term debt(3)(4) | $ | 4,461 | $ | ― | $ | 4,563 | $ | 425 | $ | 4,988 | ||||||||||
SoCalGas: | ||||||||||||||||||||
Total long-term debt(5) | $ | 1,913 | $ | ― | $ | 2,124 | $ | ― | $ | 2,124 | ||||||||||
Preferred stock | 22 | ― | 25 | ― | 25 | |||||||||||||||
(1) | Excluding accumulated interest outstanding of $11 million and $4 million at December 31, 2015 and 2014, respectively. | |||||||||||||||||||
(2) | Before reductions for unamortized discount (net of premium) and debt issuance costs of $107 million and $102 million at December 31, 2015 and 2014, respectively, and excluding build-to-suit and capital leases of $387 million and $310 million at December 31, 2015 and 2014, respectively. We discuss our long-term debt in Note 5. | |||||||||||||||||||
(3) | Level 3 instruments include $315 million and $325 million at December 31, 2015 and 2014, respectively, related to Otay Mesa VIE. | |||||||||||||||||||
(4) | Before reductions for unamortized discount and debt issuance costs of $43 million and $47 million at December 31, 2015 and 2014, respectively, and excluding capital leases of $244 million and $234 million at December 31, 2015 and 2014, respectively. | |||||||||||||||||||
(5) | Before reductions for unamortized discount and debt issuance costs of $24 million and $23 million at December 31, 2015 and 2014, respectively, and excluding capital leases of $1 million at both December 31, 2015 and 2014. |
NON-RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Estimated | Fair | % of | Inputs used to | ||||||||||||||||
fair | value | Fair value | develop | Range of | |||||||||||||||
value | Valuation technique | hierarchy | measurement | measurement | inputs | ||||||||||||||
Investment in | |||||||||||||||||||
Energía Sierra Juárez | $ | 26 | (1 | ) | Market approach | Level 2 | 100 | % | Equity sale offer price | 100 | % | ||||||||
(1) | At measurement date of July 16, 2014. At December 31, 2015, our investment in Energía Sierra Juárez had a carrying value of $30 million, reflecting subsequent equity method activity to record distributions and earnings. |
PREFERRED STOCK OUTSTANDING | ||||||||
(Dollars in millions, except per share amounts) | ||||||||
December 31, | ||||||||
2015 | 2014 | |||||||
$25 par value, authorized 1,000,000 shares: | ||||||||
6% Series, 79,011 shares outstanding | $ | 3 | $ | 3 | ||||
6% Series A, 783,032 shares outstanding | 19 | 19 | ||||||
SoCalGas - Total preferred stock | 22 | 22 | ||||||
Less: 50,970 shares of the 6% Series outstanding owned by Pacific Enterprises | (2 | ) | (2 | ) | ||||
Sempra Energy - Total preferred stock of subsidiary | $ | 20 | $ | 20 | ||||
§ | None of SoCalGas’ outstanding preferred stock is callable. |
§ | All outstanding series have one vote per share, cumulative preferences as to dividends and liquidation preferences of $25 per share plus any unpaid dividends. |
EARNINGS PER SHARE COMPUTATIONS AND DIVIDENDS DECLARED | ||||||||||||
(Dollars in millions, except per share amounts; shares in thousands) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Numerator: | ||||||||||||
Earnings/Income attributable to common shares | $ | 1,349 | $ | 1,161 | $ | 1,001 | ||||||
Denominator: | ||||||||||||
Weighted-average common shares outstanding for basic EPS(1) | 248,249 | 245,891 | 243,863 | |||||||||
Dilutive effect of stock options, restricted stock awards and | ||||||||||||
restricted stock units | 2,674 | 4,764 | 5,469 | |||||||||
Weighted-average common shares outstanding for diluted EPS | 250,923 | 250,655 | 249,332 | |||||||||
Earnings per share: | ||||||||||||
Basic | $ | 5.43 | $ | 4.72 | $ | 4.10 | ||||||
Diluted | $ | 5.37 | $ | 4.63 | $ | 4.01 | ||||||
Dividends declared per share of common stock | $ | 2.80 | $ | 2.64 | $ | 2.52 | ||||||
(1) | Includes fully vested restricted stock units held in our Deferred Compensation Plan of 491 in 2015, 212 in 2014 and none in 2013. These fully vested restricted stock units are included in weighted-average common shares outstanding for basic EPS because there are no conditions under which the corresponding shares will not be issued. |
COMMON STOCK ACTIVITY | |||||||
Years ended December 31, | |||||||
2015 | 2014 | 2013 | |||||
Common shares outstanding, January 1 | 246,330,884 | 244,461,327 | 242,368,836 | ||||
Restricted stock units vesting(1) | 1,499,062 | 989,027 | 1,491,170 | ||||
Stock options exercised | 227,815 | 699,783 | 1,237,348 | ||||
Savings plan issuance | 652,631 | 398,042 | ― | ||||
Common stock investment plan(2) | 249,665 | 205,203 | ― | ||||
Restricted stock issuances | ― | ― | 21,121 | ||||
Shares repurchased(3) | (661,977) | (422,498) | (657,148) | ||||
Common shares outstanding, December 31 | 248,298,080 | 246,330,884 | 244,461,327 | ||||
(1) | Includes dividend equivalents. | ||||||
(2) | Participants in the Direct Stock Purchase Plan may reinvest dividends to purchase newly issued shares. | ||||||
(3) | From time to time, we purchase shares of our common stock from long-term incentive plan participants who elect to sell to us a sufficient number of vested restricted shares or units to meet minimum statutory tax withholding requirements. |
§ | remove from rate base, as of February 1, 2012, its investment in the SGRP and refund to its customers the amount collected for its investment in and any return on its investment in the SGRP since such date. As of February 1, 2012, SDG&E’s net book value in the SGRP was approximately $160 million; |
§ | be authorized to recover in rates its remaining investment in SONGS, including base plant and construction work in progress, generally over a ten-year period commencing February 1, 2012, together with a return on investment at a reduced rate equal to: |
□ | SDG&E’s weighted average return on debt, plus |
□ | 50 percent of SDG&E’s weighted average return on preferred stock, as authorized in the CPUC’s Cost of Capital proceeding then in effect (collectively, SONGS rate of return or SONGS ROR). |
§ | be authorized to recover in rates its recorded 2012 and 2013 operations and maintenance expenses; in addition, SDG&E was authorized to recover in rates the recorded costs for the 2012 refueling outage of Unit 2, subject to customary prudency review; |
§ | be authorized to recover in rates, subject to a reasonableness review, its 2014 recorded operation and maintenance expenses and non-operating operations and maintenance expenses; |
§ | be authorized to recover in rates its remaining investment in materials and supplies over a ten-year period commencing February 1, 2012, together with a return on investment at the SONGS ROR; |
§ | be authorized to recover in rates its remaining investment in nuclear fuel inventory and any costs incurred, or to be incurred, associated with nuclear fuel supply contracts over a ten-year period, together with a return equal to SDG&E’s commercial paper borrowing rate; |
§ | be authorized to recover in rates through its fuel and purchased power balancing account (ERRA), subject to the normal CPUC compliance reviews, all costs incurred to purchase power in the market to replace the power that would have been generated at SONGS if not for the outage and shutdown of SONGS, and to recover by December 31, 2015 any SONGS-related ERRA undercollections, which amounts have been collected. SDG&E’s replacement power purchase costs through June 6, 2013 (the date of SONGS’ retirement) were approximately $165 million, using the methodology followed in the SONGS OII; and |
§ | have a five-year funding commitment of $1 million per year to the University of California Energy Institute (or other existing University of California entity engaged in energy technology development) to create a Research Development and Demonstration program, whose goal would be to deploy new technologies, methodologies, and /or design modifications to reduce GHG emissions, particularly at current and future generating plants in California. This term was a modification requested by the CPUC. |
NUCLEAR DECOMMISSIONING TRUSTS | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
Gross | Gross | Estimated | |||||||||||||||
unrealized | unrealized | fair | |||||||||||||||
Cost | gains | losses | value | ||||||||||||||
At December 31, 2015: | |||||||||||||||||
Debt securities: | |||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||
U.S. government corporations and agencies(1) | $ | 89 | $ | 2 | $ | ― | $ | 91 | |||||||||
Municipal bonds(2) | 148 | 8 | ― | 156 | |||||||||||||
Other securities(2) | 194 | 1 | (13 | ) | 182 | ||||||||||||
Total debt securities | 431 | 11 | (13 | ) | 429 | ||||||||||||
Equity securities | 214 | 412 | (7 | ) | 619 | ||||||||||||
Cash and cash equivalents | 15 | ― | ― | 15 | |||||||||||||
Total | $ | 660 | $ | 423 | $ | (20 | ) | $ | 1,063 | ||||||||
At December 31, 2014: | |||||||||||||||||
Debt securities: | |||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||
U.S. government corporations and agencies | $ | 103 | $ | 6 | $ | ― | $ | 109 | |||||||||
Municipal bonds | 121 | 8 | ― | 129 | |||||||||||||
Other securities | 206 | 7 | (6 | ) | 207 | ||||||||||||
Total debt securities | 430 | 21 | (6 | ) | 445 | ||||||||||||
Equity securities | 215 | 444 | (4 | ) | 655 | ||||||||||||
Cash and cash equivalents | 30 | 1 | ― | 31 | |||||||||||||
Total | $ | 675 | $ | 466 | $ | (10 | ) | $ | 1,131 |
(1) | Maturity dates are 2016-2065. | ||||||||||||||||
(2) | Maturity dates are 2016-2115. |
SALES OF SECURITIES | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Proceeds from sales(1) | $ | 577 | $ | 601 | $ | 685 | ||||||
Gross realized gains | 29 | 11 | 26 | |||||||||
Gross realized losses | (15 | ) | (11 | ) | (18 | ) | ||||||
(1) | Excludes securities that are held to maturity. |
COST OF CAPITAL AND AUTHORIZED RATE STRUCTURE | ||||||||||||
SDG&E | SoCalGas | |||||||||||
Authorized weighting | Authorized rate of recovery | Weighted authorized ROR | Authorized weighting | Authorized rate of recovery | Weighted authorized ROR | |||||||
45.25% | 5.00% | 2.26% | Long-Term Debt | 45.60% | 5.77% | 2.63% | ||||||
2.75% | 6.22% | 0.17% | Preferred Stock | 2.40% | 6.00% | 0.14% | ||||||
52.00% | 10.30% | 5.36% | Common Equity | 52.00% | 10.10% | 5.25% | ||||||
100.00% | 7.79% | 100.00% | 8.02% |
§ | approved the utilities’ model for implementing PSEP; |
§ | approved a process, including a reasonableness review, to determine the amount that the utilities will be authorized to recover from ratepayers for the interim costs incurred through the date of the final decision to implement PSEP, which is recorded in the regulatory accounts authorized by the CPUC as noted above; |
§ | approved balancing account treatment, subject to a reasonableness review, for incremental costs yet to be incurred to implement PSEP; and |
§ | established the criteria to determine the amounts that would not be eligible for cost recovery, including: |
▢ | certain costs incurred or to be incurred searching for pipeline test records, |
▢ | the cost of pressure testing pipelines installed after July 1, 1961 for which the company has not found sufficient records of testing, and |
▢ | any undepreciated balances for pipelines installed after 1961 that were replaced due to insufficient documentation of pressure testing. |
§ | operational incentives |
§ | energy efficiency |
§ | energy efficiency |
§ | natural gas procurement |
§ | unbundled natural gas storage and system operator hub services |
§ | access to electric transmission infrastructure; |
§ | timely regulatory approval of contracted renewable energy projects; |
§ | the renewable energy project developers’ ability to obtain project financing and permitting; and |
§ | successful development and implementation of the renewable energy technologies. |
SUNRISE POWERLINK ELECTRIC TRANSMISSION LINE – PROPOSED REVISIONS TO TOTAL PROJECT COST CAP | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Total | ||||||||||||||||
Construction costs | Undergrounding on | Mitigation | (2012 dollars, net | |||||||||||||
and AFUDC | Alpine Blvd. | and monitoring costs | present value basis) | |||||||||||||
Final status report | $ | 1,490.9 | $ | 11.7 | $ | 384.8 | $ | 1,887.4 | ||||||||
2008 CPUC approval decision | 1,594.2 | 91.0 | 197.8 | 1,883.0 | ||||||||||||
Difference | $ | (103.3 | ) | $ | (79.3 | ) | $ | 187.0 | $ | 4.4 | ||||||
APPROVED INCREASES TO THE 2012 GRC ANNUAL REVENUE REQUIREMENTS | |||||||||
(Dollars in millions) | |||||||||
Pretax | After-tax | ||||||||
2012(1) | $ | 6.4 | $ | 3.8 | |||||
2013(1) | 6.3 | 3.7 | |||||||
2014(1) | 6.4 | 3.8 | |||||||
2015(2) | 6.6 | 3.9 | |||||||
$ | 25.7 | $ | 15.2 |
(1) | The approved increase to after-tax earnings was recorded in the second quarter of 2015. | ||||||||
(2) | The approved increase to after-tax earnings for the first and second quarters of 2015 of $1.4 million and $0.8 million, respectively, was recorded in the second quarter of 2015. The approved increase to after-tax earnings for the third and fourth quarters of 2015 of $0.6 million and $1.1 million, respectively, was recorded in the respective quarters. |
MAJOR PROJECTS – JOINT UTILITIES | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Project description | Estimated cost | Status | |||||||||||||
Southern Gas System Reliability Project | |||||||||||||||
§ | 2013 application seeking authority to recover the full cost of the project. | $ | 800 | to | $ | 850 | § | In March 2015, CPUC issued a revised project scope and updated schedule. | |||||||
§ | Will enhance reliability on the southern portions of the California Utilities’ integrated natural gas transmission system (Southern System). | § | If approved, and subject to environmental permitting, the project could commence construction in 2017 and be in service by the end of 2019. | ||||||||||||
§ | Also known as the North-South Gas Project. | ||||||||||||||
Pipeline Safety & Reliability Project | |||||||||||||||
§ | September 2015 application seeking authority to recover the full cost of the project, involving construction of an approximately 47-mile, 36-inch natural gas transmission pipeline in San Diego County. | $ | 600 | § | January 2016 ruling directing SDG&E and SoCalGas to file an amended application by March 21, 2016 and provide additional information and analysis regarding various project alternatives. | ||||||||||
§ | Will implement pipeline safety requirements and modernize the system; improve system reliability and resiliency by minimizing dependence on a single pipeline; and enhance operational flexibility to manage stress conditions by increasing system capacity. | § | After CPUC approval, and subject to timing of other approvals, will take approximately 24 to 36 months to construct. | ||||||||||||
MAJOR PROJECTS – SDG&E | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Project description | Estimated cost | Status | |||||||||||||
Cleveland National Forest (CNF) Transmission Projects | |||||||||||||||
§ | 2012 application for permit to construct various transmission line replacement projects in and around CNF. | $ | 400 | to | $ | 450 | § | Alternatives identified in July 2015 joint CPUC/USFS environmental impact report (EIR/EIS), if approved by CPUC and USFS, would result in an increase to the estimated cost of the projects. | |||||||
§ | To replace and fire-harden five existing transmission lines. | § | Separate USFS and CPUC decisions on the transmission projects expected in the first half of 2016. | ||||||||||||
§ | Various phases expected to be placed in service starting in 2016 and continuing through 2019. | ||||||||||||||
Sycamore-Peñasquitos Transmission Project | |||||||||||||||
§ | 230-kV transmission project to provide 16.7-mile transmission connection between Sycamore Canyon and Peñasquitos substations. | $ | 120 | to | $ | 150 | § | In March 2014, California ISO selected SDG&E in a competitively bid process to construct the project, which we originally estimated to cost $120 million to $150 million. | |||||||
§ | California ISO and state task force identified as necessary to ensure grid reliability given the closure of SONGS. | § | September 2015 draft EIR/EIS recommends an alternative that undergrounds more of the project than originally proposed. The CPUC may consider this alternative, which has an estimated cost of $250 million to $300 million. | ||||||||||||
§ | CPUC decision expected in the first half of 2016, with the line expected to be in service in mid-2017. | ||||||||||||||
South Orange County Reliability Enhancement | |||||||||||||||
§ | 2012 application for Certificate of Public Convenience and Necessity (CPCN) to enhance the capacity and reliability of electric service to the south Orange County area. | $ | 350 | to | $ | 400 | § | Final CPUC decision expected in the first half of 2016. | |||||||
§ | Replacing and upgrading approximately eight miles of transmission lines and rebuilding and upgrading a substation at an existing site. | § | Planned in phases; entire project expected to be in service in 2020. | ||||||||||||
South Bay Substation and Relocation Project | |||||||||||||||
§ | 2010 application with the CPUC for permit to construct new Bay Boulevard substation to replace the aging and obsolete South Bay substation. | $ | 145 | to | $ | 175 | § | July 2014 petition filed with the CPUC requesting modifications to the prior CPUC decision to authorize additional construction activities required by the coastal development permit. | |||||||
§ | Demolish existing substation when the Bay Boulevard substation has been constructed, energized and all transmission lines have been transferred. | § | CPUC approved the petition for modification in January 2015. Project expected to be in service in 2017. | ||||||||||||
Electric Vehicle Charging Program | |||||||||||||||
§ | April 2014 proposal for program to build and own a total of 5,500 electric vehicle charging units at estimated cost of $103 million, of which $59 million is capital investment. | $ | 45 | § | January 2016 CPUC final decision denies proposal but authorizes a 3-year, $45 million program providing up to 3,500 charging units. | ||||||||||
§ | Hourly Vehicle-to-Grid Integration rate to incent vehicle charging during times of the day that benefit the power grid. | ||||||||||||||
Distribution Resource Plan | |||||||||||||||
§ | July 2015 application filed with the CPUC submitting Distribution Resource Plan. Distributed energy resources (DER) are typically smaller power sources connected to the distribution grid and located near load centers. | TBD | § | SDG&E expects the CPUC to address the Distribution Resource Plan in a phased manner with more than one decision issued in the 2016 to 2017 time period. |
§ | Stopping the Leak: The Governor’s Order directs: subject to reliability restrictions, the CPUC and California Energy Commission to take all actions necessary to ensure that SoCalGas maximizes daily withdrawals of natural gas from the Aliso Canyon storage facility for use or storage elsewhere; the DOGGR to direct SoCalGas to take any and all viable and safe actions to capture leaking gas and odorants while relief wells are being completed; and the DOGGR to require SoCalGas to identify how it will stop the gas leak if relief wells fail to seal the leaking well, or if the existing leak worsens. |
§ | Protecting Public Health and Safety: State agencies will: continue the prohibition against SoCalGas injecting any gas into the Aliso Canyon storage facility until a comprehensive review, utilizing independent experts, of the safety of the storage wells and the air quality of the surrounding community is completed; expand real-time monitoring of emissions in the surrounding community; convene an independent panel of scientific and medical experts to review public health concerns stemming from the natural gas leak and evaluate whether additional measures are needed to protect public health; and take all actions necessary to ensure the continued reliability of natural gas and electricity supplies in the coming months during the moratorium on gas injections into the Aliso Canyon storage facility. |
§ | Ensuring Accountability: The CPUC will ensure that SoCalGas covers costs related to the natural gas leak and its response, while protecting ratepayers; and CARB will develop a program to fully mitigate the leak’s emissions of methane by March 31, 2016, with such program to be funded by SoCalGas. |
§ | Strengthening Oversight: The DOGGR will promulgate emergency regulations for gas storage facility operators throughout the state, requiring: at least daily inspection of gas storage well heads using gas leak detection technology such as infrared imaging; ongoing verification of the mechanical integrity of all gas storage wells; ongoing measurement of annular gas pressure or annular gas flow within wells; regular testing of all safety valves used in wells; minimum and maximum pressure limits for each gas storage facility in the state; and a comprehensive risk management plan for each facility that evaluates and prepares for risks, including corrosion potential of pipes and equipment. Additionally, the DOGGR, the CPUC, the CARB and the California Energy Commission will submit to the Governor’s Office a report that assesses the long-term viability of natural gas storage facilities in California. |
FUTURE MINIMUM PAYMENTS – SEMPRA ENERGY CONSOLIDATED | ||||||||||||
(Dollars in millions) | ||||||||||||
Storage and | ||||||||||||
transportation | Natural gas(1) | Total(1) | ||||||||||
2016 | $ | 258 | $ | 100 | $ | 358 | ||||||
2017 | 243 | 102 | 345 | |||||||||
2018 | 217 | 85 | 302 | |||||||||
2019 | 150 | 5 | 155 | |||||||||
2020 | 46 | 5 | 51 | |||||||||
Thereafter | 186 | 13 | 199 | |||||||||
Total minimum payments | $ | 1,100 | $ | 310 | $ | 1,410 | ||||||
(1) | Excludes amounts related to LNG purchase agreements discussed below. |
FUTURE MINIMUM PAYMENTS – SOCALGAS | ||||||||||||
(Dollars in millions) | ||||||||||||
Transportation | Natural gas | Total | ||||||||||
2016 | $ | 127 | $ | ― | $ | 127 | ||||||
2017 | 114 | 1 | 115 | |||||||||
2018 | 92 | 1 | 93 | |||||||||
2019 | 48 | 1 | 49 | |||||||||
2020 | 23 | 1 | 24 | |||||||||
Thereafter | 105 | ― | 105 | |||||||||
Total minimum payments | $ | 509 | $ | 4 | $ | 513 |
PAYMENTS UNDER NATURAL GAS CONTRACTS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated | $ | 1,200 | $ | 1,984 | $ | 1,680 | ||||||
SoCalGas | 975 | 1,735 | 1,464 |
LNG COMMITMENT AMOUNTS | ||||
(Dollars in millions) | ||||
2016 | $ | 330 | ||
2017 | 432 | |||
2018 | 456 | |||
2019 | 487 | |||
2020 | 534 | |||
Thereafter | 5,524 | |||
Total | $ | 7,763 |
§ | Long-term contracts: 38 percent (of which 33 percent is provided by renewable energy contracts expiring on various dates through 2041) |
§ | Other SDG&E-owned generation and tolling contracts (including OMEC): 56 percent |
§ | Spot market purchases: 6 percent |
FUTURE MINIMUM PAYMENTS – PURCHASED-POWER CONTRACTS | ||||||||
(Dollars in millions) | ||||||||
Sempra | ||||||||
Energy | ||||||||
Consolidated | SDG&E | |||||||
2016 | $ | 741 | $ | 521 | ||||
2017 | 726 | 504 | ||||||
2018 | 781 | 502 | ||||||
2019 | 776 | 493 | ||||||
2020 | 720 | 430 | ||||||
Thereafter | 7,169 | 6,071 | ||||||
Total minimum payments(1) | $ | 10,913 | $ | 8,521 | ||||
(1) | Excludes purchase agreements accounted for as capital leases and amounts related to Otay Mesa VIE, as it is consolidated by Sempra Energy and SDG&E. |
PAYMENTS UNDER PURCHASED-POWER CONTRACTS | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated | $ | 1,573 | $ | 1,574 | $ | 1,377 | ||||||
SDG&E(1) | 715 | 710 | 570 | |||||||||
(1) | Excludes DWR-allocated contracts. Under an operating agreement with the DWR that expired at the end of 2013, SDG&E acted as a limited agent on behalf of the DWR in the administration of energy contracts, including natural gas procurement functions under the DWR contracts allocated to SDG&E's customers. The commodity costs associated with these contracts are not included in SDG&E's or Sempra Energy's Consolidated Statements of Operations. |
RENT EXPENSE – OPERATING LEASES | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated | $ | 78 | $ | 78 | $ | 81 | ||||||
SDG&E | 27 | 26 | 23 | |||||||||
SoCalGas | 39 | 38 | 31 |
FUTURE MINIMUM PAYMENTS – OPERATING LEASES | ||||||||||||
(Dollars in millions) | ||||||||||||
Sempra | ||||||||||||
Energy | ||||||||||||
Consolidated | SDG&E | SoCalGas | ||||||||||
2016 | $ | 71 | $ | 25 | $ | 38 | ||||||
2017 | 71 | 25 | 39 | |||||||||
2018 | 63 | 19 | 36 | |||||||||
2019 | 57 | 18 | 33 | |||||||||
2020 | 50 | 16 | 28 | |||||||||
Thereafter | 283 | 70 | 131 | |||||||||
Total future minimum rental commitments | $ | 595 | $ | 173 | $ | 305 |
FUTURE MINIMUM PAYMENTS – POWER PURCHASE AGREEMENTS | ||||||
(Dollars in millions) | ||||||
2016 | $ | 39 | ||||
2017 | 77 | |||||
2018 | 104 | |||||
2019 | 104 | |||||
2020 | 104 | |||||
Thereafter | 1,910 | |||||
Total minimum lease payments(1) | 2,338 | |||||
Less: estimated executory costs | (523 | ) | ||||
Less: interest(2) | (1,072 | ) | ||||
Present value of net minimum lease payments(3) | $ | 743 | ||||
(1 | ) | This amount will be recorded over the lives of the leases as Cost of Electric Fuel and Purchased Power on Sempra Energy’s and SDG&E’s Consolidated Statements of Operations. This expense will receive ratemaking treatment consistent with purchased-power costs, which are recovered in rates. | ||||
(2 | ) | Amount necessary to reduce net minimum lease payments to present value at the inception of the leases. | ||||
(3 | ) | Includes $4 million in Current Portion of Long-Term Debt and $239 million in Long-Term Debt on Sempra Energy’s and SDG&E’s Consolidated Balance Sheets at December 31, 2015. Of the present value of net minimum lease payments, $500 million will be recorded as a capital lease obligation when construction of the peaker plant facility is completed and delivery of contracted power commences, which is scheduled to occur in June 2017. |
FUTURE MINIMUM PAYMENTS – BUILD-TO-SUIT LEASE | ||||
(Dollars in millions) | ||||
2016 | $ | 10 | ||
2017 | 10 | |||
2018 | 10 | |||
2019 | 10 | |||
2020 | 11 | |||
Thereafter | 256 | |||
Total minimum lease payments | $ | 307 |
§ | $61 million for the engineering, material procurement and construction costs primarily associated with the San Luis Rey Synchronous Condenser and Bay Boulevard Substation relocation projects; |
§ | $18 million related to nuclear fuel fabrication and other construction projects at SONGS; and |
§ | $78 million for infrastructure improvements for natural gas and electric transmission and distribution operations. |
CAPITAL EXPENDITURES FOR ENVIRONMENTAL ISSUES | ||||||||||||
(Dollars in millions) | ||||||||||||
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Sempra Energy Consolidated(1) | $ | 64 | $ | 45 | $ | 31 | ||||||
SDG&E | 24 | 23 | 13 | |||||||||
SoCalGas | 39 | 21 | 15 | |||||||||
(1) | In cases of non-wholly owned affiliates, includes only our share. |
STATUS OF ENVIRONMENTAL SITES | |||||
# Sites | # Sites | ||||
completed(1) | in process | ||||
SDG&E: | |||||
Manufactured-gas sites | 3 | ― | |||
Third-party waste-disposal sites | 2 | 1 | |||
SoCalGas: | |||||
Manufactured-gas sites | 39 | 3 | |||
Third-party waste-disposal sites | 5 | 2 |
(1) | There may be on-going compliance obligations for completed sites, such as regular inspections, adherence to land use covenants and water quality monitoring. |
ACCRUED LIABILITIES FOR ENVIRONMENTAL MATTERS | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
Waste | Former fossil- | Other | ||||||||||||||||||||
Manufactured- | disposal | fueled power | hazardous | |||||||||||||||||||
gas sites | sites (PRP)(1) | plants | waste sites | Total(2) | ||||||||||||||||||
SDG&E(3) | $ | ― | $ | 0.9 | $ | 0.7 | $ | 0.5 | $ | 2.1 | ||||||||||||
SoCalGas(4) | 23.1 | 2.0 | ― | ― | 25.1 | |||||||||||||||||
Other | 1.8 | 1.1 | ― | 15.0 | 17.9 | |||||||||||||||||
Total Sempra Energy | $ | 24.9 | $ | 4.0 | $ | 0.7 | $ | 15.5 | $ | 45.1 | ||||||||||||
(1 | ) | Sites for which we have been identified as a Potentially Responsible Party. | ||||||||||||||||||||
(2 | ) | Sempra Energy, SDG&E and SoCalGas have accrued $45 million, $2 million and $25 million, respectively, for environmental liabilities as of December 31, 2015. Of these amounts, $24 million, $1 million and $6 million were classified as current liabilities, and $21 million, $1 million and $19 million were classified as noncurrent liabilities on Sempra Energy’s, SDG&E’s and SoCalGas’ Consolidated Balance Sheets, respectively. | ||||||||||||||||||||
(3 | ) | Does not include SDG&E’s liability for SONGS marine mitigation. | ||||||||||||||||||||
(4 | ) | Does not include any SoCalGas accrued liabilities for environmental matters for the natural gas leak at the Aliso Canyon facility. We discuss matters related to the leak above under "Legal Proceedings – SoCalGas – Aliso Canyon Natural Gas Storage Facility Gas Leak." |
1. | SDG&E provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County. |
2. | SoCalGas is a natural gas distribution utility, serving customers throughout most of Southern California and part of central California. |
3. | Sempra South American Utilities develops, owns and operates, or holds interests in, electric transmission, distribution and generation infrastructure in Chile and Peru. |
4. | Sempra Mexico develops, owns and operates, or holds interests in, natural gas transmission pipelines and propane and ethane systems, a natural gas distribution utility, electric generation facilities (including wind), a terminal for the import of LNG, and marketing operations for the purchase of LNG and the purchase and sale of natural gas in Mexico. |
5. | Sempra Renewables develops, owns and operates, or holds interests in, wind and solar energy projects in Arizona, California, Colorado, Hawaii, Indiana, Kansas, Minnesota, Nebraska, Nevada and Pennsylvania to serve wholesale electricity markets in the United States. |
6. | Sempra Natural Gas develops, owns and operates, or holds interests in, natural gas pipelines and storage facilities, natural gas distribution utilities and a terminal for the import and export of LNG and sale of natural gas, all within the United States. Sempra Natural Gas also owned and operated the Mesquite Power plant, a natural gas-fired electric generation asset, the remaining 625-MW block of which was sold in April 2015, as we discuss in Note 3. |
SEGMENT INFORMATION | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||
SDG&E | $ | 4,219 | 41 | % | $ | 4,329 | 39 | % | $ | 4,066 | 39 | % | ||||||||||||
SoCalGas | 3,489 | 34 | 3,855 | 35 | 3,736 | 35 | ||||||||||||||||||
Sempra South American Utilities | 1,544 | 15 | 1,534 | 14 | 1,495 | 14 | ||||||||||||||||||
Sempra Mexico | 669 | 7 | 818 | 8 | 675 | 6 | ||||||||||||||||||
Sempra Renewables | 36 | ― | 35 | ― | 82 | 1 | ||||||||||||||||||
Sempra Natural Gas | 653 | 6 | 979 | 9 | 908 | 9 | ||||||||||||||||||
Adjustments and eliminations | (2 | ) | ― | (3 | ) | ― | (2 | ) | ― | |||||||||||||||
Intersegment revenues(1) | (377 | ) | (3 | ) | (512 | ) | (5 | ) | (403 | ) | (4 | ) | ||||||||||||
Total | $ | 10,231 | 100 | % | $ | 11,035 | 100 | % | $ | 10,557 | 100 | % | ||||||||||||
INTEREST EXPENSE | ||||||||||||||||||||||||
SDG&E | $ | 204 | $ | 202 | $ | 197 | ||||||||||||||||||
SoCalGas | 84 | 69 | 69 | |||||||||||||||||||||
Sempra South American Utilities | 32 | 33 | 27 | |||||||||||||||||||||
Sempra Mexico | 23 | 17 | 17 | |||||||||||||||||||||
Sempra Renewables | 3 | 5 | 23 | |||||||||||||||||||||
Sempra Natural Gas | 72 | 111 | 116 | |||||||||||||||||||||
All other | 263 | 241 | 241 | |||||||||||||||||||||
Intercompany eliminations | (120 | ) | (124 | ) | (131 | ) | ||||||||||||||||||
Total | $ | 561 | $ | 554 | $ | 559 | ||||||||||||||||||
INTEREST INCOME | ||||||||||||||||||||||||
SDG&E | $ | ― | $ | ― | $ | 1 | ||||||||||||||||||
SoCalGas | 4 | ― | ― | |||||||||||||||||||||
Sempra South American Utilities | 19 | 14 | 14 | |||||||||||||||||||||
Sempra Mexico | 7 | 4 | 2 | |||||||||||||||||||||
Sempra Renewables | 4 | 1 | 20 | |||||||||||||||||||||
Sempra Natural Gas | 75 | 115 | 88 | |||||||||||||||||||||
All other | ― | 1 | ― | |||||||||||||||||||||
Intercompany eliminations | (80 | ) | (113 | ) | (105 | ) | ||||||||||||||||||
Total | $ | 29 | $ | 22 | $ | 20 | ||||||||||||||||||
DEPRECIATION AND AMORTIZATION | ||||||||||||||||||||||||
SDG&E | $ | 604 | 48 | % | $ | 530 | 46 | % | $ | 494 | 44 | % | ||||||||||||
SoCalGas | 461 | 37 | 431 | 37 | 383 | 35 | ||||||||||||||||||
Sempra South American Utilities | 50 | 4 | 55 | 5 | 59 | 5 | ||||||||||||||||||
Sempra Mexico | 70 | 6 | 64 | 6 | 63 | 6 | ||||||||||||||||||
Sempra Renewables | 6 | ― | 5 | ― | 21 | 2 | ||||||||||||||||||
Sempra Natural Gas | 49 | 4 | 61 | 5 | 81 | 7 | ||||||||||||||||||
All other | 10 | 1 | 10 | 1 | 12 | 1 | ||||||||||||||||||
Total | $ | 1,250 | 100 | % | $ | 1,156 | 100 | % | $ | 1,113 | 100 | % | ||||||||||||
INCOME TAX EXPENSE (BENEFIT) | ||||||||||||||||||||||||
SDG&E | $ | 284 | $ | 270 | $ | 191 | ||||||||||||||||||
SoCalGas | 138 | 139 | 116 | |||||||||||||||||||||
Sempra South American Utilities | 67 | 58 | 67 | |||||||||||||||||||||
Sempra Mexico | 11 | 5 | 60 | |||||||||||||||||||||
Sempra Renewables | (49 | ) | (44 | ) | (19 | ) | ||||||||||||||||||
Sempra Natural Gas | 28 | (20 | ) | 40 | ||||||||||||||||||||
All other | (138 | ) | (108 | ) | (89 | ) | ||||||||||||||||||
Total | $ | 341 | $ | 300 | $ | 366 |
SEGMENT INFORMATION (CONTINUED) | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
At December 31 or for the years ended December 31, | ||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||
EARNINGS (LOSSES) | ||||||||||||||||||||||||
SDG&E(2) | $ | 587 | 43 | % | $ | 507 | 44 | % | $ | 404 | 41 | % | ||||||||||||
SoCalGas(3) | 419 | 31 | 332 | 29 | 364 | 37 | ||||||||||||||||||
Sempra South American Utilities | 175 | 13 | 172 | 15 | 153 | 15 | ||||||||||||||||||
Sempra Mexico | 213 | 16 | 192 | 16 | 122 | 12 | ||||||||||||||||||
Sempra Renewables | 63 | 5 | 81 | 7 | 62 | 6 | ||||||||||||||||||
Sempra Natural Gas | 44 | 3 | 50 | 4 | 64 | 6 | ||||||||||||||||||
All other | (152 | ) | (11 | ) | (173 | ) | (15 | ) | (168 | ) | (17 | ) | ||||||||||||
Total | $ | 1,349 | 100 | % | $ | 1,161 | 100 | % | $ | 1,001 | 100 | % | ||||||||||||
ASSETS(4) | ||||||||||||||||||||||||
SDG&E | $ | 16,515 | 40 | % | $ | 16,260 | 41 | % | $ | 15,337 | 41 | % | ||||||||||||
SoCalGas | 12,104 | 29 | 10,446 | 26 | 9,138 | 25 | ||||||||||||||||||
Sempra South American Utilities | 3,235 | 8 | 3,379 | 9 | 3,531 | 10 | ||||||||||||||||||
Sempra Mexico | 3,783 | 9 | 3,486 | 9 | 3,243 | 9 | ||||||||||||||||||
Sempra Renewables | 1,441 | 4 | 1,334 | 3 | 1,214 | 3 | ||||||||||||||||||
Sempra Natural Gas | 5,566 | 13 | 6,435 | 16 | 7,199 | 19 | ||||||||||||||||||
All other | 734 | 2 | 872 | 2 | 817 | 2 | ||||||||||||||||||
Intersegment receivables | (2,228 | ) | (5 | ) | (2,561 | ) | (6 | ) | (3,314 | ) | (9 | ) | ||||||||||||
Total | $ | 41,150 | 100 | % | $ | 39,651 | 100 | % | $ | 37,165 | 100 | % | ||||||||||||
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT | ||||||||||||||||||||||||
SDG&E | $ | 1,133 | 36 | % | $ | 1,100 | 35 | % | $ | 978 | 38 | % | ||||||||||||
SoCalGas | 1,352 | 43 | 1,104 | 35 | 762 | 30 | ||||||||||||||||||
Sempra South American Utilities | 154 | 5 | 174 | 6 | 200 | 8 | ||||||||||||||||||
Sempra Mexico | 302 | 10 | 325 | 10 | 371 | 14 | ||||||||||||||||||
Sempra Renewables | 81 | 2 | 190 | 6 | 176 | 7 | ||||||||||||||||||
Sempra Natural Gas | 87 | 3 | 212 | 7 | 83 | 3 | ||||||||||||||||||
All other | 47 | 1 | 18 | 1 | 2 | ― | ||||||||||||||||||
Total | $ | 3,156 | 100 | % | $ | 3,123 | 100 | % | $ | 2,572 | 100 | % | ||||||||||||
GEOGRAPHIC INFORMATION | ||||||||||||||||||||||||
Long-lived assets(5): | ||||||||||||||||||||||||
United States | $ | 26,132 | 84 | % | $ | 24,183 | 84 | % | $ | 22,654 | 84 | % | ||||||||||||
Mexico | 3,160 | 10 | 2,821 | 10 | 2,597 | 9 | ||||||||||||||||||
South America | 1,652 | 6 | 1,746 | 6 | 1,784 | 7 | ||||||||||||||||||
Total | $ | 30,944 | 100 | % | $ | 28,750 | 100 | % | $ | 27,035 | 100 | % | ||||||||||||
Revenues(6): | ||||||||||||||||||||||||
United States | $ | 8,119 | 79 | % | $ | 8,774 | 79 | % | $ | 8,478 | 80 | % | ||||||||||||
South America | 1,544 | 15 | 1,534 | 14 | 1,495 | 14 | ||||||||||||||||||
Mexico | 568 | 6 | 727 | 7 | 584 | 6 | ||||||||||||||||||
Total | $ | 10,231 | 100 | % | $ | 11,035 | 100 | % | $ | 10,557 | 100 | % | ||||||||||||
(1) | Revenues for reportable segments include intersegment revenues of $9 million, $75 million, $101 million, and $192 million for 2015, $10 million, $69 million, $91 million and $342 million for 2014, and $10 million, $70 million, $91 million and $232 million for 2013 for SDG&E, SoCalGas, Sempra Mexico and Sempra Natural Gas, respectively. | |||||||||||||||||||||||
(2) | For 2013, amount is after preferred dividends and call premium on preferred stock. | |||||||||||||||||||||||
(3) | After preferred dividends. | |||||||||||||||||||||||
(4) | December 31, 2014 and 2013 have been adjusted for the retrospective adoption of ASU 2015-03. | |||||||||||||||||||||||
(5) | Includes net property, plant and equipment and investments. | |||||||||||||||||||||||
(6) | Amounts are based on where the revenue originated, after intercompany eliminations. |
SEMPRA ENERGY | ||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||
Quarters ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
2015: | ||||||||||||||||
Revenues | $ | 2,682 | $ | 2,367 | $ | 2,481 | $ | 2,701 | ||||||||
Expenses and other income | $ | 2,076 | $ | 1,971 | $ | 2,211 | $ | 2,269 | ||||||||
Net income | $ | 458 | $ | 320 | $ | 282 | $ | 388 | ||||||||
Earnings attributable to Sempra Energy | $ | 437 | $ | 295 | $ | 248 | $ | 369 | ||||||||
Basic per-share amounts(1): | ||||||||||||||||
Net income | $ | 1.85 | $ | 1.29 | $ | 1.14 | $ | 1.56 | ||||||||
Earnings attributable to Sempra Energy | $ | 1.76 | $ | 1.19 | $ | 1.00 | $ | 1.48 | ||||||||
Weighted average common shares outstanding | 247.7 | 248.1 | 248.4 | 248.7 | ||||||||||||
Diluted per-share amounts(1): | ||||||||||||||||
Net income | $ | 1.83 | $ | 1.27 | $ | 1.12 | $ | 1.54 | ||||||||
Earnings attributable to Sempra Energy | $ | 1.74 | $ | 1.17 | $ | 0.99 | $ | 1.47 | ||||||||
Weighted average common shares outstanding | 251.2 | 251.5 | 251.0 | 251.5 | ||||||||||||
2014: | ||||||||||||||||
Revenues | $ | 2,795 | $ | 2,678 | $ | 2,815 | $ | 2,747 | ||||||||
Expenses and other income | $ | 2,408 | $ | 2,302 | $ | 2,368 | $ | 2,433 | ||||||||
Net income | $ | 266 | $ | 292 | $ | 383 | $ | 321 | ||||||||
Earnings attributable to Sempra Energy | $ | 247 | $ | 269 | $ | 348 | $ | 297 | ||||||||
Basic per-share amounts(1): | ||||||||||||||||
Net income | $ | 1.09 | $ | 1.19 | $ | 1.56 | $ | 1.31 | ||||||||
Earnings attributable to Sempra Energy | $ | 1.01 | $ | 1.10 | $ | 1.41 | $ | 1.21 | ||||||||
Weighted average common shares outstanding | 245.3 | 245.7 | 246.1 | 246.4 | ||||||||||||
Diluted per-share amounts(1): | ||||||||||||||||
Net income | $ | 1.07 | $ | 1.17 | $ | 1.53 | $ | 1.28 | ||||||||
Earnings attributable to Sempra Energy | $ | 0.99 | $ | 1.08 | $ | 1.39 | $ | 1.18 | ||||||||
Weighted average common shares outstanding | 249.7 | 250.1 | 250.8 | 251.3 | ||||||||||||
(1) | Earnings per share are computed independently for each of the quarters and therefore may not sum to the total for the year. | |||||||||||||||
§ | For the first quarter of 2015, $163 million higher Revenues and $113 million higher Net Income and Earnings Attributable to Sempra Energy |
§ | For the second quarter of 2015, $72 million lower Revenues and $48 million lower Net Income and Earnings Attributable to Sempra Energy |
§ | For the third quarter of 2015, $158 million lower Revenues and $113 million lower Net Income and Earnings Attributable to Sempra Energy |
§ | For the fourth quarter of 2015, $67 million higher Revenues and $48 million higher Net Income and Earnings Attributable to Sempra Energy |
SDG&E | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Quarters ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
2015: | ||||||||||||||||
Operating revenues | $ | 966 | $ | 972 | $ | 1,230 | $ | 1,051 | ||||||||
Operating expenses | 684 | 745 | 930 | 802 | ||||||||||||
Operating income | $ | 282 | $ | 227 | $ | 300 | $ | 249 | ||||||||
Net income | $ | 151 | $ | 130 | $ | 182 | $ | 143 | ||||||||
(Earnings) losses attributable to noncontrolling interest | (4 | ) | (4 | ) | (12 | ) | 1 | |||||||||
Earnings attributable to common shares | $ | 147 | $ | 126 | $ | 170 | $ | 144 | ||||||||
2014: | ||||||||||||||||
Operating revenues | $ | 987 | $ | 1,063 | $ | 1,233 | $ | 1,046 | ||||||||
Operating expenses | 766 | 821 | 957 | 826 | ||||||||||||
Operating income | $ | 221 | $ | 242 | $ | 276 | $ | 220 | ||||||||
Net income | $ | 101 | $ | 129 | $ | 169 | $ | 128 | ||||||||
Earnings attributable to noncontrolling interest | (2 | ) | (6 | ) | (12 | ) | ― | |||||||||
Earnings attributable to common shares | $ | 99 | $ | 123 | $ | 157 | $ | 128 | ||||||||
SOCALGAS | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Quarters ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
2015: | ||||||||||||||||
Operating revenues | $ | 1,048 | $ | 780 | $ | 620 | $ | 1,041 | ||||||||
Operating expenses | 728 | 686 | 633 | 834 | ||||||||||||
Operating income (loss) | $ | 320 | $ | 94 | $ | (13 | ) | $ | 207 | |||||||
Net income (loss) | $ | 214 | $ | 71 | $ | (8 | ) | $ | 143 | |||||||
Dividends on preferred stock | ― | (1 | ) | ― | ― | |||||||||||
Earnings (losses) attributable to common shares | $ | 214 | $ | 70 | $ | (8 | ) | $ | 143 | |||||||
2014: | ||||||||||||||||
Operating revenues | $ | 1,085 | $ | 917 | $ | 855 | $ | 998 | ||||||||
Operating expenses | 956 | 795 | 702 | 881 | ||||||||||||
Operating income | $ | 129 | $ | 122 | $ | 153 | $ | 117 | ||||||||
Net income | $ | 78 | $ | 81 | $ | 98 | $ | 76 | ||||||||
Dividends on preferred stock | ― | (1 | ) | ― | ― | |||||||||||
Earnings attributable to common shares | $ | 78 | $ | 80 | $ | 98 | $ | 76 |
§ | For the first quarter of 2015, $163 million higher Operating Revenues and $113 million higher Net Income and Earnings |
§ | For the second quarter of 2015, $72 million lower Operating Revenues and $48 million lower Net Income and Earnings |
§ | For the third quarter of 2015, $158 million lower Operating Revenues and $113 million lower Net Income and Earnings |
§ | For the fourth quarter of 2015, $67 million higher Operating Revenues and $48 million higher Net Income and Earnings |
GLOSSARY | ||||
2010 Tax Act | Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 | Cox | Cox Communications | |
2012 Tax Act | American Taxpayer Relief Act of 2012 | CPCN | Certificate of Public Convenience and Necessity | |
2014 Tax Act | Tax Increase Prevention Act of 2014 | CPUC | California Public Utilities Commission | |
2015 Tax Act | Protecting Americans from Tax Hikes Act of 2015 | CRE | Comisión Reguladora de Energía (Energy Regulatory Commission) (Mexico) | |
A4NR | Alliance for Nuclear Responsibility | CRRs | Congestion revenue rights | |
AB | Assembly Bill | DCE | Decommissioning cost estimate | |
AFUDC | Allowance for funds used during construction | DERS | Distributed Energy Resources Services | |
ALJ | Administrative Law Judge | DOE | U.S. Department of Energy | |
AOCI | Accumulated other comprehensive income (loss) | DOGGR | California Department of Conservation's Division of Oil, Gas, and Geothermal Resources | |
ARO | Asset retirement obligation | DWR | California Department of Water Resources | |
ASU | Accounting Standards Update | Ecogas | Ecogas México, S. de R.L. de C.V. | |
Bay Gas | Bay Gas Storage Company, Ltd. | Edison | Southern California Edison Company | |
Bcf | Billion cubic feet | EIA | Environmental impact authorization | |
Black-Scholes model | Black-Scholes option-pricing model | EIR/EIS | Environmental impact report/Environmental impact statement | |
BMV | La Bolsa Mexicana de Valores, S.A.B. de C.V. (Mexican Stock Exchange) | Eletrans | Eletrans, collectively for Eletrans S.A. and Eletrans II S.A. | |
Cal Fire | California Department of Forestry and Fire Protection | EMA | Energy Management Agreement | |
California Utilities | San Diego Gas & Electric Company and Southern California Gas Company | Enova | Enova Corporation | |
Cameron LNG JV | Cameron LNG Holdings, LLC | EPC | Engineering, procurement and construction | |
CARB | California Air Resources Board | EPS | Earnings per common share | |
CARE | California Alternate Rates for Energy | ERRA | Energy Resource Recovery Account | |
CCC | California Coastal Commission | EV | Electric vehicle | |
CCM | Cost of capital adjustment mechanism | FERC | Federal Energy Regulatory Commission | |
CFCA | Core Fixed Cost Account | Final 2012 GRC Decision | Final CPUC decision on 2012 General Rate Case | |
CFE | Comisión Federal de Electricidad (Federal Electricity Commission) (Mexico) | FTA | Free Trade Agreement | |
CFTC | U.S. Commodity Futures Trading Commission | Gazprom | Gazprom Marketing & Trading Mexico | |
Chilquinta Energía | Chilquinta Energía S.A. and its subsidiaries | GCIM | Gas cost incentive mechanism | |
CHP | Combined heat and power | GdC | Gasoductos de Chihuahua | |
Citizens | Citizens Sunrise Transmission, LLC | GHG | Greenhouse gas | |
CLF | Chilean Unidad de Fomento | GRC | General Rate Case | |
CNE | Comisión Nacional de Energía (National Energy Commission) (Chile) | HMRC | United Kingdom's Revenue and Customs Department | |
CNF | Cleveland National Forest | HRA | Health Reimbursement Account | |
COFECE | Comisión Federal de Competencia Económica (Mexican Competition Commission) | IEnova | Infraestructura Energética Nova, S.A.B. de C.V. | |
Con Edison Development | Consolidated Edison Development | IFMP | Irradiated fuel management plan |
GLOSSARY (CONTINUED) | ||||
IFRS | International Financial Reporting Standards | NOL | Net operating loss | |
IOUs | Investor-owned utilities | NRC | Nuclear Regulatory Commission | |
IRS | Internal Revenue Service | NYK | Nippon Yusen Kabushiki Kaisha | |
ISFSI | Independent spent fuel storage installation | OCI | Other comprehensive income (loss) | |
ISO | California Independent System Operator, also known as CAISO | OII | Order Instituting Investigation | |
ITC | Investment tax credits | OMEC | Otay Mesa Energy Center | |
JBIC | Japan Bank for International Cooperation | OMEC LLC | Otay Mesa Energy Center LLC | |
JP Morgan | J.P. Morgan Chase & Co. | ORA | Office of Ratepayer Advocates | |
kV | Kilovolt | OSINERGMIN | Organismo Supervisor de la Inversión en Energía y Minería (Energy and Mining Investment Supervisory Body) (Peru) | |
LA County DPH | Los Angeles County Department of Public Health | Otay Mesa VIE | Otay Mesa Energy Center LLC | |
LA Storage | LA Storage, LLC | OTC | Over-the-counter | |
Liberty | Liberty Gas Storage, LLC | PBOP | Other postretirement benefit plans | |
LIFO | Last-in first-out | PBOP plan trusts | Other postretirement benefit plan trusts | |
LNG | Liquefied natural gas | PCB | Polychlorinated Biphenyl | |
Luz del Sur | Luz del Sur S.A.A. and its subsidiaries | PCRB | Pollution Control Revenue Bonds | |
MLP | Master limited partnership | PE | Pacific Enterprises | |
MBFC | Mississippi Business Finance Corporation | PEMEX | Petróleos Mexicanos (Mexican state-owned oil company) | |
Mcf | Thousand cubic feet | PFM | Petition for modification | |
MDL | Multi-District Litigation | PG&E | Pacific Gas and Electric Company | |
Mercuria | Mercuria Energy Europe Trading Limited | PLR | Private Letter Ruling | |
MHI | Mitsubishi Heavy Industries, Ltd., Mitsubishi Nuclear Energy Systems, Inc., and Mitsubishi Heavy Industries America, Inc. | PPA | Power purchase agreement | |
Mississippi Hub | Mississippi Hub, LLC | PRP | Potentially Responsible Party | |
MMBtu | Million British thermal units (of natural gas) | PSDAR | Post-shutdown decommissioning activities report | |
MMcf | Million cubic feet | PSEP | Pipeline Safety Enhancement Plan | |
MMCRP | Mitigation Monitoring, Compliance, and Reporting Program | PTC | Production tax credit | |
Mobile Gas | Mobile Gas Service Corporation | RAMP | Risk Assessment Mitigation Phase | |
MOU | Memorandum of understanding | RBS | The Royal Bank of Scotland plc | |
Mtpa | Million tonnes per annum | RBS SEE | RBS Sempra Energy Europe | |
MW | Megawatt | RBS Sempra Commodities | RBS Sempra Commodities LLP | |
MWh | Megawatt hour | RECs | Renewable energy certificates | |
NDT | Nuclear Decommissioning Trusts | REX | Rockies Express pipeline | |
NEIL | Nuclear Electric Insurance Limited | Rockies Express | Rockies Express Pipeline LLC | |
NEM | Net energy metering | ROE | Return on equity | |
NEXI | Nippon Export and Investment Insurance | ROR | Rate of return |
GLOSSARY (CONTINUED) | ||||
RPS | Renewables Portfolio Standard | SWPL | Southwest Powerlink | |
RSAs | Restricted stock awards | Tallgrass | Tallgrass Energy Partners, L.P. | |
RSUs | Restricted stock units | Tangguh PSC | Tangguh PSC Contractors | |
S-MAP | Safety Model Assessment Proceeding | Tax Reform Bill | 2014 Chilean Tax Reform Bill | |
S&P | Standard & Poor's | TCAP | Triennial Cost Allocation Proceeding | |
San Isidro pipeline | San Isidro – Samalayuca pipeline | Tecnored | Tecnored S.A. | |
SAESA | Sociedad Austral de Electricidad Sociedad Anónima | Tecsur | Tecsur S.A. | |
SB | Senate Bill | TIMP | Transmission Integrity Management Program | |
SCAQMD | South Coast Air Quality Management District | TO3 | Electric Transmission Formula Rate | |
SCGC | Southern California Generation Coalition | TO4 | Electric Transmission Formula Rate | |
SDG&E | San Diego Gas & Electric Company | TSR | Total Shareholder Return | |
Securities Act | The U.S. Securities Act of 1933 | TURN | The Utility Reform Network | |
SEDATU | Secretaría de Desarrollo Agrario, Territorial y Urbano | USFS | United States Forest Service | |
SEMARNAT | Mexican environmental protection agency | U.S. GAAP | Accounting principles generally accepted in the United States of America | |
SFP | Secondary financial protection | VaR | Value at Risk | |
SGRP | Steam Generator Replacement Project | VAT | Value-added tax | |
SGS | Sempra Global Services, Inc. | VEBA | Voluntary Employee Beneficiary Association | |
Shell | Shell México Gas Natural | VIE | Variable interest entity | |
SoCalGas | Southern California Gas Company | WEMA | Wildfire Expense Memorandum Account | |
SONGS | San Onofre Nuclear Generating Station | Williams | Williams Midstream Natural Gas Liquids, Inc. | |
SONGS OII | CPUC’s Order Instituting Investigation (OII) into the SONGS Outage | Willmut Gas | Willmut Gas Company | |
SUE | Super user electric | Woodside | Woodside Petroleum Ltd. |