DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION | |
3 Months Ended
Mar. 31, 2010 | |
Document and Entity Information | |
Entity Registrant Name | Sempra Energy |
Entity Central Index Key | 0001032208 |
Document Type | 10-Q |
Document Period End Date | 2010-03-31 |
Amendment Flag | false |
Document Fiscal Year Focus | 2,010 |
Document Fiscal Period Focus | Q1 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Shares Outstanding | 247,539,008 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS ( Sempra Energy Consolidated, USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
Sempra Energy Consolidated | ||
Current assets: | ||
Cash and cash equivalents | $222 | $110 |
Restricted cash | 44 | 35 |
Trade accounts receivable, net | 848 | 971 |
Other accounts and notes receivable, net | 130 | 159 |
Due from unconsolidated affiliates | 29 | 41 |
Income taxes receivable | 156 | 221 |
Deferred income taxes, net current assets | 5 | 10 |
Inventories | 160 | 197 |
Regulatory assets | 90 | 54 |
Fixed-price contracts and other derivatives, current assets | 85 | 77 |
Insurance receivable related to wildfire litigation (Note 10) | 194 | 273 |
Other current assets | 144 | 147 |
Total current assets | 2,107 | 2,295 |
Investments and other assets: | ||
Regulatory assets arising from fixed-price contracts and other derivatives - noncurrent | 251 | 241 |
Regulatory assets arising from pension and other postretirement benefit obligations | 978 | 959 |
Other regulatory assets | 739 | 603 |
Nuclear decommissioning trusts | 706 | 678 |
Investment in RBS Sempra Commodities LLP | 2,178 | 2,172 |
Other investments | 2,202 | 2,151 |
Goodwill and other intangible assets | 523 | 524 |
Sundry | 598 | 608 |
Total investments and other assets | 8,175 | 7,936 |
Property, plant and equipment: | ||
Property, plant and equipment | 25,391 | 25,034 |
Less accumulated depreciation and amortization | (6,901) | (6,753) |
Property, plant and equipment, net | 18,490 | 18,281 |
Total assets | 28,772 | 28,512 |
Current liabilities: | ||
Short-term debt | 912 | 618 |
Accounts payable - trade | 554 | 522 |
Accounts payable - other | 115 | 171 |
Due to unconsolidated affiliates | 6 | 29 |
Dividends and interest payable | 223 | 190 |
Accrued compensation and benefits | 162 | 264 |
Regulatory balancing accounts, net | 517 | 382 |
Current portion of long-term debt | 327 | 573 |
Fixed-price contracts and other derivatives, current liabilities | 108 | 95 |
Customer deposits | 144 | 145 |
Reserve for wildfire litigation (Note 10) | 300 | 270 |
Other current liabilities | 870 | 629 |
Total current liabilities | 4,238 | 3,888 |
Long-term debt | 7,198 | 7,460 |
Deferred credits and other liabilities: | ||
Due to unconsolidated affiliate | 0 | 2 |
Customer advances for construction | 147 | 146 |
Pension and other postretirement benefit obligations, net of plan assets | 1,268 | 1,252 |
Deferred income taxes, net noncurrent liabilities | 1,419 | 1,318 |
Deferred investment tax credits | 53 | 54 |
Regulatory liabilities arising from removal obligations | 2,598 | 2,557 |
Asset retirement obligations | 1,298 | 1,277 |
Other regulatory liabilities | 172 | 181 |
Fixed-price contracts and other derivatives, noncurrent liabilities | 309 | 312 |
Deferred credits and other | 698 | 735 |
Total deferred credits and other liabilities | 7,962 | 7,834 |
Contingently redeemable preferred stock of subsidiary | 79 | 79 |
Commitments and contingencies (Note 10) | ||
Equity: | ||
Preferred stock | 0 | 0 |
Common stock | 2,462 | 2,418 |
Retained earnings | 6,981 | 6,971 |
Deferred compensation | (11) | (13) |
Accumulated other comprehensive income (loss) | (372) | (369) |
Total shareholders' equity | 9,060 | 9,007 |
Preferred stock of subsidiaries | 100 | 100 |
Other noncontrolling interests | 135 | 144 |
Total equity | 9,295 | 9,251 |
Total liabilities and equity | 28,772 | 28,512 |
San Diego Gas and Electric Company and Subsidiary | ||
Current assets: | ||
Cash and cash equivalents | 14 | 13 |
Restricted cash | 17 | 8 |
Trade accounts receivable, net | 228 | 229 |
Other accounts and notes receivable, net | 63 | 85 |
Due from unconsolidated affiliates | 1 | 8 |
Income taxes receivable | 13 | 59 |
Deferred income taxes, net current assets | 44 | 41 |
Inventories | 62 | 61 |
Regulatory assets arising from fixed-price contracts and other derivatives - current | 65 | 30 |
Regulatory assets | 4 | 4 |
Fixed-price contracts and other derivatives, current assets | 34 | 40 |
Insurance receivable related to wildfire litigation (Note 10) | 194 | 273 |
Other current assets | 26 | 35 |
Total current assets | 765 | 886 |
Investments and other assets: | ||
Due from unconsolidated affiliate | 1 | 2 |
Deferred taxes recoverable in rates | 449 | 415 |
Regulatory assets arising from fixed-price contracts and other derivatives - noncurrent | 250 | 241 |
Regulatory assets arising from pension and other postretirement benefit obligations | 349 | 342 |
Other regulatory assets | 158 | 53 |
Nuclear decommissioning trusts | 706 | 678 |
Sundry | 42 | 43 |
Total investments and other assets | 1,955 | 1,774 |
Property, plant and equipment: | ||
Property, plant and equipment | 10,359 | 10,156 |
Less accumulated depreciation and amortization | (2,644) | (2,587) |
Property, plant and equipment, net | 7,715 | 7,569 |
Total assets | 10,435 | 10,229 |
Current liabilities: | ||
Short-term debt | 60 | 33 |
Accounts payable - trade | 174 | 249 |
Due to unconsolidated affiliates | 29 | 0 |
Accrued compensation and benefits | 53 | 104 |
Regulatory balancing accounts, net | 195 | 159 |
Current portion of long-term debt | 46 | 45 |
Fixed-price contracts and other derivatives, current liabilities | 52 | 51 |
Customer deposits | 57 | 56 |
Reserve for wildfire litigation (Note 10) | 300 | 270 |
Other current liabilities | 205 | 157 |
Total current liabilities | 1,171 | 1,124 |
Long-term debt | 2,622 | 2,623 |
Deferred credits and other liabilities: | ||
Customer advances for construction | 22 | 23 |
Pension and other postretirement benefit obligations, net of plan assets | 373 | 370 |
Deferred income taxes, net noncurrent liabilities | 821 | 774 |
Deferred investment tax credits | 26 | 26 |
Regulatory liabilities arising from removal obligations | 1,363 | 1,330 |
Asset retirement obligations | 595 | 585 |
Fixed-price contracts and other derivatives, noncurrent liabilities | 263 | 265 |
Deferred credits and other | 140 | 145 |
Total deferred credits and other liabilities | 3,603 | 3,518 |
Contingently redeemable preferred stock | 79 | 79 |
Commitments and contingencies (Note 10) | ||
Equity: | ||
Common stock | 1,138 | 1,138 |
Retained earnings | 1,694 | 1,611 |
Accumulated other comprehensive income (loss) | (10) | (10) |
Total shareholders' equity | 2,822 | 2,739 |
Other noncontrolling interests | 138 | 146 |
Total equity | 2,960 | 2,885 |
Total liabilities and equity | 10,435 | 10,229 |
Pacific Enterprises and Subsidiaries | ||
Current assets: | ||
Cash and cash equivalents | 180 | 49 |
Trade accounts receivable, net | 491 | 567 |
Other accounts and notes receivable, net | 30 | 44 |
Due from unconsolidated affiliates | 155 | 12 |
Income taxes receivable | 0 | 36 |
Inventories | 47 | 93 |
Regulatory assets | 9 | 9 |
Other current assets | 40 | 39 |
Total current assets | 952 | 849 |
Investments and other assets: | ||
Due from unconsolidated affiliate | 507 | 513 |
Regulatory assets arising from pension and other postretirement benefit obligations | 629 | 617 |
Other regulatory assets | 131 | 131 |
Sundry | 39 | 40 |
Total investments and other assets | 1,306 | 1,301 |
Property, plant and equipment: | ||
Property, plant and equipment | 9,381 | 9,299 |
Less accumulated depreciation and amortization | (3,666) | (3,615) |
Property, plant and equipment, net | 5,715 | 5,684 |
Total assets | 7,973 | 7,834 |
Current liabilities: | ||
Accounts payable - trade | 244 | 207 |
Accounts payable - other | 68 | 120 |
Due to unconsolidated affiliates | 84 | 87 |
Income taxes payable | 23 | 0 |
Deferred income taxes, net current liabilities | 9 | 5 |
Accrued compensation and benefits | 67 | 86 |
Regulatory balancing accounts, net | 321 | 223 |
Current portion of long-term debt | 266 | 11 |
Customer deposits | 85 | 87 |
Other current liabilities | 215 | 162 |
Total current liabilities | 1,382 | 988 |
Long-term debt | 1,024 | 1,283 |
Deferred credits and other liabilities: | ||
Customer advances for construction | 125 | 123 |
Pension and other postretirement benefit obligations, net of plan assets | 656 | 644 |
Deferred income taxes, net noncurrent liabilities | 294 | 273 |
Deferred investment tax credits | 27 | 28 |
Regulatory liabilities arising from removal obligations | 1,235 | 1,227 |
Asset retirement obligations | 671 | 662 |
Deferred taxes refundable in rates | 168 | 175 |
Deferred credits and other | 199 | 203 |
Total deferred credits and other liabilities | 3,375 | 3,335 |
Commitments and contingencies (Note 10) | ||
Equity: | ||
Preferred stock | 80 | 80 |
Common stock | 1,462 | 1,462 |
Retained earnings | 655 | 691 |
Accumulated other comprehensive income (loss) | (25) | (25) |
Total shareholders' equity | 2,172 | 2,208 |
Preferred stock of subsidiaries | 20 | 20 |
Total equity | 2,192 | 2,228 |
Total liabilities and equity | 7,973 | 7,834 |
Southern California Gas Company and Subsidiaries | ||
Current assets: | ||
Cash and cash equivalents | 180 | 49 |
Trade accounts receivable, net | 491 | 567 |
Other accounts and notes receivable, net | 30 | 44 |
Income taxes receivable | 150 | 6 |
Deferred income taxes, net current assets | 0 | 35 |
Inventories | 47 | 93 |
Regulatory assets | 9 | 9 |
Other current assets | 40 | 40 |
Total current assets | 947 | 843 |
Investments and other assets: | ||
Regulatory assets arising from pension and other postretirement benefit obligations | 629 | 617 |
Other regulatory assets | 131 | 131 |
Sundry | 11 | 14 |
Total investments and other assets | 771 | 762 |
Property, plant and equipment: | ||
Property, plant and equipment | 9,380 | 9,297 |
Less accumulated depreciation and amortization | (3,666) | (3,615) |
Property, plant and equipment, net | 5,714 | 5,682 |
Total assets | 7,432 | 7,287 |
Current liabilities: | ||
Accounts payable - trade | 244 | 207 |
Accounts payable - other | 68 | 120 |
Due to unconsolidated affiliates | 0 | 3 |
Income taxes payable | 27 | 0 |
Deferred income taxes, net current liabilities | 11 | 6 |
Accrued compensation and benefits | 67 | 86 |
Regulatory balancing accounts, net | 321 | 223 |
Current portion of long-term debt | 266 | 11 |
Customer deposits | 85 | 87 |
Other current liabilities | 210 | 158 |
Total current liabilities | 1,299 | 901 |
Long-term debt | 1,024 | 1,283 |
Deferred credits and other liabilities: | ||
Customer advances for construction | 125 | 123 |
Pension and other postretirement benefit obligations, net of plan assets | 656 | 644 |
Deferred income taxes, net noncurrent liabilities | 300 | 280 |
Deferred investment tax credits | 27 | 28 |
Regulatory liabilities arising from removal obligations | 1,235 | 1,227 |
Asset retirement obligations | 671 | 662 |
Deferred taxes refundable in rates | 168 | 175 |
Deferred credits and other | 196 | 198 |
Total deferred credits and other liabilities | 3,378 | 3,337 |
Commitments and contingencies (Note 10) | ||
Equity: | ||
Preferred stock | 22 | 22 |
Common stock | 866 | 866 |
Retained earnings | 868 | 903 |
Accumulated other comprehensive income (loss) | (25) | (25) |
Total shareholders' equity | 1,731 | 1,766 |
Total equity | 1,731 | 1,766 |
Total liabilities and equity | $7,432 | $7,287 |
1_CONDENSED CONSOLIDATED BALANC
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $) | ||
In Millions | Mar. 31, 2010
Sempra Energy Consolidated | Dec. 31, 2009
Sempra Energy Consolidated |
Sempra Energy Consolidated | ||
Property, plant and equipment related to VIEs | $645 | |
Long-term debt related to VIEs | 421 | |
Shareholders' equity: | ||
Preferred stock, shares authorized | 50 | 50 |
Preferred stock, shares issued | 0 | 0 |
Common stock, shares authorized | 750 | 750 |
Common stock, shares outstanding | 247 | 247 |
San Diego Gas and Electric Company and Subsidiary | ||
Property, plant and equipment related to VIEs | 645 | |
Long-term debt related to VIEs | $421 | |
Shareholders' equity: | ||
Common stock, shares authorized | 255 | 255 |
Common stock, shares outstanding | 117 | 117 |
Pacific Enterprises and Subsidiaries | ||
Shareholders' equity: | ||
Common stock, shares authorized | 600 | 600 |
Common stock, shares outstanding | 84 | 84 |
Southern California Gas Company and Subsidiaries | ||
Shareholders' equity: | ||
Common stock, shares authorized | 100 | 100 |
Common stock, shares outstanding | 91 | 91 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | ||
In Millions, except Share data in Thousands | 3 Months Ended
Mar. 31, 2010 Sempra Energy Consolidated | 3 Months Ended
Mar. 31, 2009 Sempra Energy Consolidated |
Sempra Energy Consolidated | ||
REVENUES | ||
Sempra Utilities | $1,912 | $1,642 |
Sempra Global and parent | 622 | 466 |
Total revenues | 2,534 | 2,108 |
Sempra Utilities: | ||
Cost of natural gas | (758) | (540) |
Cost of electric fuel and purchased power | (148) | (171) |
Sempra Global and parent: | ||
Cost of natural gas, electric fuel and purchased power | (338) | (268) |
Other cost of sales | (25) | (17) |
Litigation expense | (168) | 7 |
Other operation and maintenance | (576) | (523) |
Depreciation and amortization | (210) | (183) |
Franchise fees and other taxes | (90) | (82) |
Equity earnings (losses): | ||
RBS Sempra Commodities LLP | 7 | 153 |
Other | 8 | 7 |
Other income, net | 8 | 3 |
Interest income | 4 | 6 |
Interest expense | (109) | (82) |
Income before income taxes and equity earnings of certain unconsolidated subsidiaries | 139 | 418 |
Income tax expense | (58) | (109) |
Equity earnings, net of income tax | 19 | 16 |
Net income | 100 | 325 |
Losses (earnings) attributable to noncontrolling interests | 8 | (7) |
Preferred dividends of subsidiaries | (2) | (2) |
Earnings | 106 | 316 |
Basic earnings per common share: | ||
Basic earnings per common share | 0.43 | 1.31 |
Basic earnings per common share, weighted-average number of shares outstanding (thousands) | 246,083 | 241,766 |
Diluted earnings per common share: | ||
Diluted earnings per common share | 0.42 | 1.29 |
Diluted earnings per common share, weighted-average number of shares outstanding (thousands) | 250,373 | 245,017 |
Dividends declared per share of common stock | 0.39 | 0.39 |
San Diego Gas and Electric Company and Subsidiary | ||
Utility operating revenues | ||
Electric | 563 | 553 |
Natural gas | 179 | 179 |
Total utility operating revenues | 742 | 732 |
Utility operating expenses | ||
Utility cost of natural gas | 89 | 87 |
Utility cost of electric fuel and purchased power | 148 | 171 |
Utility operation and maintenance | 232 | 181 |
Utility depreciation and amortization | 92 | 77 |
Utility franchise fees and other taxes | 43 | 41 |
Total utility operating expenses | 604 | 557 |
Utility operating income | 138 | 175 |
Equity earnings (losses): | ||
Other income, net | 0 | 17 |
Interest expense | (31) | (25) |
Income before income taxes and equity earnings of certain unconsolidated subsidiaries | 107 | 167 |
Income tax expense | (31) | (60) |
Net income | 76 | 107 |
Losses (earnings) attributable to noncontrolling interests | 8 | (7) |
Earnings | 84 | 100 |
Preferred dividend requirements | (1) | (1) |
Earnings attributable to common shares | 83 | 99 |
Pacific Enterprises and Subsidiaries | ||
Utility operating revenues | ||
Total utility operating revenues | 1,182 | 920 |
Utility operating expenses | ||
Utility cost of natural gas | 674 | 455 |
Utility operation and maintenance | 261 | 251 |
Utility depreciation and amortization | 75 | 72 |
Utility franchise fees and other taxes | 37 | 32 |
Total utility operating expenses | 1,047 | 810 |
Utility operating income | 135 | 110 |
Equity earnings (losses): | ||
Other income, net | 4 | 1 |
Interest income | 0 | 1 |
Interest expense | (17) | (17) |
Income before income taxes and equity earnings of certain unconsolidated subsidiaries | 122 | 95 |
Income tax expense | (57) | (36) |
Net income | 65 | 59 |
Earnings | 65 | 59 |
Preferred dividend requirements | (1) | (1) |
Earnings attributable to common shares | 64 | 58 |
Southern California Gas Company and Subsidiaries | ||
Utility operating revenues | ||
Total utility operating revenues | 1,182 | 920 |
Utility operating expenses | ||
Utility cost of natural gas | 674 | 455 |
Utility operation and maintenance | 262 | 251 |
Utility depreciation and amortization | 75 | 72 |
Utility franchise fees and other taxes | 37 | 32 |
Total utility operating expenses | 1,048 | 810 |
Utility operating income | 134 | 110 |
Equity earnings (losses): | ||
Other income, net | 4 | 1 |
Interest income | 0 | 1 |
Interest expense | (17) | (17) |
Income before income taxes and equity earnings of certain unconsolidated subsidiaries | 121 | 95 |
Income tax expense | (56) | (36) |
Net income | 65 | 59 |
Earnings | $65 | $59 |
CONDENSED STATEMENTS OF CONSOLI
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 Sempra Energy Consolidated | 3 Months Ended
Mar. 31, 2009 Sempra Energy Consolidated |
Sempra Energy Consolidated | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $100 | $325 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 210 | 183 |
Deferred income taxes and investment tax credits | 61 | (29) |
Equity earnings | (34) | (176) |
Other adjustments to reconcile net income to net cash provided by operating activities | 7 | 49 |
Net change in other working capital components | 534 | 491 |
Distributions from RBS Sempra Commodities LLP | 0 | 305 |
Changes in other assets | 18 | 10 |
Changes in other liabilities | (8) | (19) |
Net cash provided by operating activities | 888 | 1,139 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Expenditures for property, plant and equipment | (446) | (492) |
Expenditures for investments and acquisition of businesses, net of cash acquired | (74) | (25) |
Distributions from investments | 24 | 5 |
Purchases of nuclear decommissioning and other trust assets | (44) | (45) |
Proceeds from sales by nuclear decommissioning and other trusts | 46 | 42 |
Other cash flows from investing activities | (2) | (7) |
Net cash used in investing activities | (496) | (522) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Common dividends paid | (86) | (86) |
Preferred dividends paid by subsidiaries | (2) | (2) |
Issuances of common stock | 14 | 10 |
Repurchases of common stock | (2) | 0 |
Issuances of debt (maturities greater than 90 days) | 12 | 22 |
Payments on debt (maturities greater than 90 days) | (507) | (6) |
Increase (decrease) in short-term debt, net | 294 | (77) |
Purchase of noncontrolling interest | 0 | (94) |
Other cash flows from financing activities | (3) | 5 |
Net cash provided by (used in) financing activities | (280) | (228) |
Increase (decrease) in cash and cash equivalents | 112 | 389 |
Cash and cash equivalents, beginning of period | 110 | 331 |
Cash and cash equivalents, end of period | 222 | 720 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest payments, net of amounts capitalized | 71 | 56 |
Income tax payments, net of refunds | 73 | 52 |
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES | ||
Dividends declared but not paid | 99 | 98 |
San Diego Gas and Electric Company and Subsidiary | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | 76 | 107 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Utility depreciation and amortization | 92 | 77 |
Deferred income taxes and investment tax credits | 9 | 5 |
Other adjustments to reconcile net income to net cash provided by operating activities | 0 | (12) |
Net change in other working capital components | 101 | 77 |
Changes in other assets | 5 | 7 |
Changes in other liabilities | (8) | (16) |
Net cash provided by operating activities | 275 | 245 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Expenditures for property, plant and equipment | (290) | (229) |
Purchases of nuclear decommissioning trust assets | (43) | (43) |
Proceeds from sales by nuclear decommissioning trusts | 40 | 42 |
Decrease (increase) in notes receivable from unconsolidated affiliates, net | 2 | 33 |
Net increase in restricted cash | (9) | 0 |
Net cash used in investing activities | (300) | (197) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Common dividends paid | 0 | (150) |
Preferred dividends paid | (1) | (1) |
Issuances of long-term debt | 3 | 22 |
Payments on long-term debt | (3) | 0 |
Increase (decrease) in short-term debt, net | 27 | 98 |
Capital contribution received by Otay Mesa VIE | 0 | 4 |
Net cash provided by (used in) financing activities | 26 | (27) |
Increase (decrease) in cash and cash equivalents | 1 | 21 |
Cash and cash equivalents, beginning of period | 13 | 19 |
Cash and cash equivalents, end of period | 14 | 40 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest payments, net of amounts capitalized | 10 | 14 |
Income tax payments, net of refunds | (26) | 1 |
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES | ||
Dividends declared but not paid | 1 | 1 |
Pacific Enterprises and Subsidiaries | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | 65 | 59 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Utility depreciation and amortization | 75 | 72 |
Deferred income taxes and investment tax credits | 16 | 6 |
Other adjustments to reconcile net income to net cash provided by operating activities | (1) | 2 |
Net change in other working capital components | 339 | 357 |
Changes in other assets | 1 | 7 |
Changes in other liabilities | (3) | (6) |
Net cash provided by operating activities | 492 | 497 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Expenditures for property, plant and equipment | (114) | (112) |
Decrease (increase) in notes receivable from unconsolidated affiliates, net | (146) | 3 |
Net cash used in investing activities | (260) | (109) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Common dividends paid | (100) | 0 |
Preferred dividends paid | (1) | (1) |
Net cash provided by (used in) financing activities | (101) | (1) |
Increase (decrease) in cash and cash equivalents | 131 | 387 |
Cash and cash equivalents, beginning of period | 49 | 206 |
Cash and cash equivalents, end of period | 180 | 593 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest payments, net of amounts capitalized | 9 | 9 |
Income tax payments, net of refunds | 23 | 23 |
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES | ||
Dividends declared but not paid | 1 | 1 |
Southern California Gas Company and Subsidiaries | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | 65 | 59 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Utility depreciation and amortization | 75 | 72 |
Deferred income taxes and investment tax credits | 16 | 6 |
Other adjustments to reconcile net income to net cash provided by operating activities | (1) | 2 |
Net change in other working capital components | 346 | 357 |
Changes in other assets | 1 | 7 |
Changes in other liabilities | (1) | (4) |
Net cash provided by operating activities | 501 | 499 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Expenditures for property, plant and equipment | (114) | (112) |
Decrease (increase) in notes receivable from unconsolidated affiliates, net | (156) | 0 |
Net cash used in investing activities | (270) | (112) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Common dividends paid | (100) | 0 |
Net cash provided by (used in) financing activities | (100) | 0 |
Increase (decrease) in cash and cash equivalents | 131 | 387 |
Cash and cash equivalents, beginning of period | 49 | 206 |
Cash and cash equivalents, end of period | 180 | 593 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest payments, net of amounts capitalized | 9 | 8 |
Income tax payments, net of refunds | $23 | $23 |
GENERAL
GENERAL | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
General | NOTE 1. GENERAL Principles of ConsolidationSempra EnergySempra Energy's Condensed Consolidated Financial Statements include the accounts of Sempra Energy, a California-based Fortune 500 holding company, its consolidated subsidiaries, and variable interest entities. Sempra Energys principal subsidiaries are San Diego Gas Electric Company (SDGE) and Southern California Gas Company (SoCalGas), which we collectively refer to as the Sempra Utilities; and Sempra Global, which is the holding company for Sempra Commodities, Sempra Generation, Sempra Pipelines Storage, Sempra LNG and other, smaller businesses. Sempra Energy uses the equity method to account for investments in affiliated companies over which we have the ability to exercise significant influence, but not control. We discuss our investments in unconsolidated subsidiaries in Note 4 below and Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. SDGESDGE's Condensed Consolidated Financial Statements include its accounts and the accounts of Otay Mesa Energy Center LLC (Otay Mesa VIE) and Orange Grove Energy L.P. (Orange Grove VIE), which are variable interest entities of which SDGE is the primary beneficiary, as we discuss in Note 5 under "Variable Interest Entities." SDGEs common stock is wholly owned by Enova Corporation, which is a wholly owned subsidiary of Sempra Energy. Pacific Enterprises and SoCalGasThe Condensed Consolidated Financial Statements of Pacific Enterprises include the accounts of Pacific Enterprises (PE) and its subsidiary, SoCalGas. Sempra Energy owns all of PEs common stock and PE owns all of SoCalGas common stock. SoCalGas Condensed Consolidated Financial Statements include its subsidiaries, which comprise less than one percent of its consolidated financial position and results of operations. PE's operations consist solely of those of SoCalGas and additional items (e.g., cash, intercompany accounts and equity) attributable to serving as a holding company for SoCalGas. Basis of PresentationThis is a combined report of Sempra Energy, SDGE, PE and SoCalGas. We provide separate information for SDGE, PE and SoCalGas as required. In the Notes to Condensed Consolidated Financial Statements (except in Note 11), when only information for SoCalGas is provided, it is the same for PE. References in this report to "we," "our" and "Sempra Energy Consolidated" are to Sempra Energy and its consolidated entities, unless otherwise indicated by the context. We have eliminated intercompany accounts and transactions within each set of consolidated financial statements.We have prepared the Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) and in accordance with the interim-period-reporting requirements of Form 10-Q. Results of operations for interim periods are not necessarily indicative of results for the entire year. We evaluated events and transactions that occurred after March 31, 2010 through the date the financial statements were issued, and in the opinion of management, the accompanying statements reflect all adjustments necessary for a fair presentation. Th |
NEW ACCOUNTING STANDARDS
NEW ACCOUNTING STANDARDS | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
New Accounting Standards | NOTE 2. NEW ACCOUNTING STANDARDS We describe below recent pronouncements that have had or may have a significant effect on our financial statements. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our financial condition, results of operations, or disclosures. SEMPRA ENERGY, SDGE, PE AND SOCALGAS Accounting Standards Update (ASU) 2009-17, "Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" (ASU 2009-17): ASU 2009-17 amends Financial Accounting Standards Board (FASB) Interpretation No. 46(R), Consolidation of Variable Interest Entities an interpretation of ARB No. 51 (FIN 46(R)), which provides consolidation guidance related to variable interest entities. ASU 2009-17 amends FASB Accounting Standards Codification (ASC) Topic 810, Consolidations, and requires a qualitative approach for identifying the primary beneficiary of a variable interest entity based on 1) the power to direct activities that most significantly impact the economic performance of the entity, and 2) the obligation to absorb losses or right to receive benefits that could be significant to the entity; ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; and separate disclosure by the primary beneficiary on the face of the balance sheet to identify 1) assets that can only be used to settle obligations of the variable interest entity, and 2) liabilities for which creditors do not have recourse to the primary beneficiary. We adopted ASU 2009-17 on January 1, 2010 and it did not have a material effect on earnings, nor on presentation on the interim Condensed Consolidated Balance Sheets for Sempra Energy and SDGE. We provide the required additional disclosure in Note 5.ASU 2010-06, "Improving Disclosures About Fair Value Measurements" (ASU 2010-06): ASU 2010-06 amends ASC Topic 820, Fair Value Measurements and Disclosures, and requires the following additional fair value measurement disclosures: transfers into and out of Levels 1 and 2 segregation of classes of assets and liabilities measured at fair value valuation techniques and inputs used for Level 2 and Level 3 instruments detailed activity for Level 3 instruments, including separate presentation of purchases, sales, issuances and settlements We adopted ASU 2010-06 on January 1, 2010, and we provide the additional disclosure in Note 8. |
RECENT INVESTMENT ACTIVITY
RECENT INVESTMENT ACTIVITY | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
Recent Investment Activity | NOTE 3. RECENT investment activitySEMPRA PIPELINES STORAGESempra Pipelines Storages Sempra Midstream is the general partner and 91-percent owner of Bay Gas Storage Company (Bay Gas) and owned 60 percent of Mississippi Hub, LLC (Mississippi Hub) through December 31, 2008. On January 16, 2009, Sempra Midstream purchased the remaining 40-percent ownership interest of Mississippi Hub for $94 million in cash.On April 30, 2010, Sempra Pipelines Storage completed the acquisition of the Mexican pipeline and natural gas infrastructure assets of El Paso Corporation for $300 million ($260 million, net of cash acquired and debt assumed).The acquisition involves El Paso Corporations wholly owned natural gas pipeline and compression assets in the Mexican border state of Sonora. It also includes El Paso Corporations 50-percent interest in a joint venture with PEMEX, the Mexican state-owned oil company. The joint venture operates two natural gas pipelines and a propane system in northern Mexico. |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
Investments in Unconsolidated Entities | NOTE 4. INVESTMENTS IN UNCONSOLIDATED ENTITIES SEMPRA COMMODITIESRBS Sempra Commodities LLP (RBS Sempra Commodities) is a limited liability partnership formed in the United Kingdom to own and operate the commodities-marketing businesses previously operated through wholly owned subsidiaries of Sempra Energy. We account for our investment in RBS Sempra Commodities under the equity method, and report our share of partnership earnings in the Sempra Commodities segment. For the three months ended March 31, 2010 and 2009, we had $7 million and $153 million, respectively, of pretax equity earnings from RBS Sempra Commodities. The partnership income that is distributable to us on an annual basis is computed on the partnership's basis of accounting, International Financial Reporting Standards (IFRS), as adopted by the European Union. For the three months ended March 31, 2010, the partnership recorded a loss, on an IFRS basis, of $1 million. In the three months ended March 31, 2009, the distributable income, on an IFRS basis, was $114 million. On April 30, 2010, the partnership made a cash distribution to us of $197 million. In the first quarter 2009, we received cash distributions from the partnership of $305 million. We discuss the equity method investment in RBS Sempra Commodities further in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. We have indemnified the partnership for certain litigation and tax liabilities related to the businesses purchased by the partnership. We recorded these obligations at a fair value of $5 million on April 1, 2008, the date we formed the partnership. This liability is being amortized over its expected life. In November 2009, RBS announced its intention to divest its interest in RBS Sempra Commodities in connection with a directive from the European Commission to dispose of certain assets. On February 16, 2010, Sempra Energy, RBS and the partnership (Seller Parties) entered into an agreement (the Purchase Agreement) with J.P. Morgan Ventures Energy Corporation (J.P. Morgan Ventures), whereby J.P. Morgan Ventures will purchase the following businesses from the joint venture: the global oil, metals, coal, emissions (other than emissions related to the partnerships North American power business), plastics, agricultural commodities and concentrates commodities trading and marketing business the European power and gas business the investor products business The Purchase Agreement does not include RBS Sempra Commodities' North American power and natural gas trading businesses and its retail energy solutions business. These businesses have historically generated 40 to 60 percent of total earnings of the businesses in the partnership, and have averaged more than 50 percent. RBS and Sempra Energy are actively soliciting offers for the sale of these remaining businesses.The transaction is expected to close in summer 2010. J.P. Morgan Ventures will pay an aggregate purchase price equal to the estimated tangible book value at closing of the businesses purchased, generally computed on the basis of IFRS as adopted by the European Union, plus $468 million. Sempra Energy will be entitled to 53-1/ |
OTHER FINANCIAL DATA
OTHER FINANCIAL DATA | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
Other Financial Data | NOTE 5. OTHER FINANCIAL DATA VARIABLE INTEREST ENTITIESWe consolidate a variable interest entity (VIE) if we are the primary beneficiary of the VIEs activities. Our determination of whether we are the primary beneficiary is based upon qualitative and quantitative analyses, which assess the purpose and design of the VIE; the nature of the VIE's risks and the risks we absorb; the power to direct activities that most significantly impact the economic performance of the VIE; and the obligation to absorb losses or right to receive benefits that could be significant to the VIE. Otay Mesa VIESDGE has a 10-year agreement to purchase power generated at the Otay Mesa Energy Center (OMEC), a 573-megawatt (MW) generating facility that began commercial operations in October 2009. SDGE supplies all of the natural gas to fuel the power plant and purchases its electric generation output (i.e., tolling). The agreement provides SDGE with the option to purchase the power plant at the end of the contract term in 2019, or upon earlier termination of the purchased-power agreement, at a predetermined price subject to adjustments based on performance of the facility. If SDGE does not exercise its option, under certain circumstances, it may be required to purchase the power plant at a predetermined price. The facility owner, Otay Mesa Energy Center LLC (OMEC LLC), is a VIE (Otay Mesa VIE), of which SDGE is the primary beneficiary. SDGE has no OMEC LLC voting rights and does not operate OMEC.SDGE has the power to direct the dispatch of OMEC's electrical production. Based upon our analysis, this power most significantly impacts the economic performance of Otay Mesa VIE because of the associated exposure to the cost of natural gas, which fuels the plant, and the value of electricity produced. In addition, SDGE absorbs significant risks of Otay Mesa VIE under the tolling agreement, whereby SDGE is obligated to purchase and provide fuel to Otay Mesa VIE and purchase all output for the term of the agreement. Separately, through the put option, SDGE absorbs a significant portion of the risk that the value of Otay Mesa VIE could decline. Accordingly, Sempra Energy and SDGE have consolidated Otay Mesa VIE since the second quarter of 2007, and have continued to consolidate it in the first quarter of 2010. Otay Mesa VIE's equity of $138 million and $146 million is included on the Condensed Consolidated Balance Sheets in Other Noncontrolling Interests for Sempra Energy and in Noncontrolling Interests for SDGE at March 31, 2010 and December 31, 2009, respectively. OMEC LLC has a loan outstanding of $372 million at March 31, 2010, the proceeds of which were used for the construction of OMEC. The loan is with third party lenders and is secured by OMEC's property, plant and equipment. SDGE is not a party to the loan agreement and does not have any additional implicit or explicit financial responsibility to OMEC LLC. The loan matures in April2019 and bears interest at rates varying with market rates. In addition, OMEC LLC has entered into interest rate swap agreements to moderate its exposure to interest rate changes. We provide additional information concerning the interest r |
DEBT AND CREDIT FACILITIES
DEBT AND CREDIT FACILITIES | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
Debt and Credit Facilities | NOTE 6. DEBT AND CREDIT FACILITIES Committed Lines of CreditAt March 31, 2010, Sempra Energy Consolidated had $4.3 billion in committed lines of credit to provide liquidity and to support commercial paper and variable-rate demand notes, the major components of which are detailed below. Available unused credit on these lines at March 31, 2010 was $3.3 billion. We discuss the terms of our credit agreements in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.These amounts exclude lines of credit associated with Sempra Commodities, one of which we continue to guarantee, as we discuss below in "RBS Sempra Commodities." RBS has replaced Sempra Energy as guarantor on all uncommitted lines of credit associated with Sempra Commodities. To the extent that Sempra Energy's credit support arrangements, including Sempra Commodities' committed facilities, have not been terminated or replaced, RBS has indemnified Sempra Energy for any claims or losses arising in connection with those arrangements. Sempra EnergySempra Energy has a $1 billion, three-year syndicated revolving credit agreement expiring in 2011. Borrowings bear interest at benchmark rates plus a margin that varies with market index rates and Sempra Energy's credit ratings. At March 31, 2010, Sempra Energy had no outstanding borrowings under the facility. Sempra GlobalSempra Global has a $2.5 billion, three-year syndicated revolving credit agreement expiring in 2011. The facility also provides for issuance of up to $300 million of letters of credit on behalf of Sempra Global with the amount of borrowings otherwise available under the facility reduced by the amount of outstanding letters of credit. Sempra Energy guarantees Sempra Globals obligations under the credit facility. Borrowings bear interest at benchmark rates plus a margin that varies with market index rates and Sempra Energys credit ratings. At March 31, 2010, Sempra Global had letters of credit of $7 million outstanding and no outstanding borrowings under the facility. The facility provides support for $727 million of commercial paper outstanding at March 31, 2010. Sempra UtilitiesSDGE and SoCalGas have a combined $800 million, three-year syndicated revolving credit agreement expiring in 2011. The agreement permits each utility to individually borrow up to $600 million, subject to a combined limit of $800 million for both utilities. It also provides for the issuance of letters of credit on behalf of each utility subject to a combined letter of credit commitment of $200 million for both utilities. The amount of borrowings otherwise available under the facility is reduced by the amount of outstanding letters of credit. Borrowings under the facility bear interest at benchmark rates plus a margin that varies with market index rates and the borrowing utility's credit rating. Each utilitys obligations under the agreement are individual obligations, and a default by one utility would not constitute a default by the other utility or preclude borrowings by, or the issuance of letters of credit on behalf of, the other utility.At March 31, 2010, SDGE and SoCalGas had no outstanding borrowings under this facility. SD |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
Derivative Financial Instruments | NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTSWe use derivative instruments primarily to manage exposures arising in the normal course of business. These exposures are commodity market risk and benchmark interest rate risk. Our use of derivatives for these risks is integrated into the economic management of our anticipated revenues, anticipated expenses, assets and liabilities. Derivatives may be effective in mitigating these risks that could lead to declines in anticipated revenues or increases in anticipated expenses, or that our asset values may fall or our liabilities increase. Accordingly, our derivative activity summarized below generally represents an impact that is intended to offset associated revenues, expenses, assets or liabilities that are not presented below. We record all derivatives at fair value on the Condensed Consolidated Balance Sheets. We designate each derivative as 1) a cash flow hedge, 2) a fair value hedge, or 3) undesignated.Depending on the applicability of hedge accounting and, for the Sempra Utilities and other operations subject to regulatory accounting, the requirement to pass impacts through to customers, the impact of derivative instruments may be offset in other comprehensive income (cash flow hedge), on the balance sheet (fair value hedges and regulatory offsets), or recognized in earnings. We classify cash flows from the settlements of derivative instruments as operating activities on the Condensed Statements of Consolidated Cash Flows. In certain cases, we apply the normal purchase or sale exception to derivative accounting and have other commodity contracts that are not derivatives. These contracts are not recorded at fair value and are therefore excluded from the disclosures below. HEDGE ACCOUNTINGWe may designate a derivative as a cash flow hedging instrument if it effectively converts anticipated revenues or expenses to a fixed dollar amount. We may utilize cash flow hedge accounting for derivative commodity instruments and interest rate instruments. Designating cash flow hedges is dependent on the business context in which the instrument is being used, the effectiveness of the instrument in offsetting the risk that a given future revenue or expense item may vary, and other criteria.We may designate an interest rate derivative as a fair value hedging instrument if it effectively converts our own debt from a fixed interest rate to a variable rate. The combination of the derivative and debt instruments results in fixing that portion of the fair value of the debt that is related to benchmark interest rates. Designating fair value hedges is dependent on the instrument being used, the effectiveness of the instrument in offsetting changes in the fair value of our debt instruments, and other criteria. ENERGY DERIVATIVESOur market risk is primarily related to natural gas and electricity price volatility and the specific physical locations where we transact. We use energy derivatives to manage these risks. The use of energy derivatives in our various businesses depends on the particular energy market, and the operating and regulatory environments applicable to the business. The Sempra Utilities use natural gas |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
Fair Value Measurements | NOTE 8. FAIR VALUE MEASUREMENTSFair Value of Financial InstrumentsThe fair values of certain of our financial instruments (cash, temporary investments, accounts and notes receivable, dividends and accounts payable, short-term debt and customer deposits) approximate their carrying amounts. The following table provides the carrying amounts and fair values of the remaining financial instruments at March 31, 2010 and December 31, 2009: FAIR VALUE OF FINANCIAL INSTRUMENTS (Dollars in millions) March 31, 2010 December 31, 2009 Carrying Fair Carrying Fair Amount Value Amount Value Sempra Energy Consolidated: Investments in affordable housing partnerships(1) $ 32 $ 61 $ 34 $ 59 Total long-term debt(2) 7,542 8,128 8,050 8,618 Due to unconsolidated affiliate 2 2 2 2 Preferred stock of subsidiaries 179 162 179 156 SDGE: Total long-term debt(3) $ 2,672 $ 2,765 $ 2,672 $ 2,828 Contingently redeemable preferred stock 79 76 79 76 PE and SoCalGas: Total long-term debt(4) $ 1,292 $ 1,354 $ 1,296 $ 1,382 PE: Preferred stock $ 80 $ 66 $ 80 $ 61 Preferred stock of subsidiary 20 20 20 19 $ 100 $ 86 $ 100 $ 80 SoCalGas: Preferred stock $ 22 $ 21 $ 22 $ 20 (1) We discuss our investments in affordable housing partnerships in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. (2) Before reductions for unamortized discount of $17 million at March 31, 2010 and December 31, 2009. (3) Before reductions for unamortized discount of $4 million at March 31, 2010 and December 31, 2009. (4) Before reductions for unamortized discount of $2 million at March 31, 2010 and December 31, 2009. Sempra Energy based the fair values of investments in affordable housing partnerships on the present value of estimated future cash flows, discounted at rates available for similar investments. All entities based the fair values of the long-term debt and preferred stock on their quoted market prices or quoted market prices for similar securities. Nuclear Decommissioning Trusts We discuss SDGE's investments in nuclear decommissioning trust funds in Note 7 of the Notes to Consolidated Financial Statements in the Annual Report. The following table shows the fair values and gross unrealized gains and losses for the securities held in the trust funds: NUCLEAR DECOMMISSIONING TRUSTS (Dollars in millions) Gross Gross Estimated Unrealized Unrealized Fair Cost Gains Losses Value As of March 31, 2010: Debt securities U.S. government(1) $ 138 $ 12 $ (2) $ 148 Municipal bonds(2) 76 2 (2) 76 Other securities(3) 27 2 - 29 Total debt securities 241 16 (4) 253 Equity securities 242 205 (4) 443 Cash and cash equivalents 10 - - 10 Total available-for-sale securities $ 493 $ 221 $ (8) $ 706 As of December 31, 2009: Debt securities U.S. government $ 141 $ 12 $ (3) $ 150 Municipal bonds 85 3 (3) 85 Other securities 12 1 - 13 Total debt securities 238 16 (6) 248 Equity securities 238 188 (5) 421 Cash and cash equivalents 9 - - 9 Total available-for-sale securities $ 485 $ 204 $ (11) $ |
SEMPRA UTILITIES' REGULATORY MA
SEMPRA UTILITIES' REGULATORY MATTERS | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
Sempra Utilities' Regulatory Matters | NOTE 9. SEMPRA UTILITIES' REGULATORY MATTERS POWER PROCUREMENT AND RESOURCE PLANNING Sunrise Powerlink Electric Transmission LineIn December 2008, the CPUC issued a final decision authorizing SDGE to construct a 500-kilovolt (kV) electric transmission line between the Imperial Valley and the San Diego region (Sunrise Powerlink). This line is designed to provide 1,000 MW of increased import capability into the San Diego area. The decision allows SDGE to construct the Sunrise Powerlink along a route that would generally run south of the Anza-Borrego Desert State Park. The decision also approves the environmental impact review conducted jointly by the CPUC and the Bureau of Land Management (BLM) and establishes a total project cost cap of $1.9 billion, including approximately $190 million for environmental mitigation costs. In January 2009, the BLM issued its decision approving the project, route and environmental review. After the issuance of the CPUC final decision, applications for rehearing before the CPUC were filed by the Utility Consumers Action Network (UCAN) and the Center for Biological Diversity/Sierra Club (CBD). The CPUC issued a final decision in July 2009 denying the requests for rehearing. UCAN and CBD jointly filed a petition with the California Supreme Court in August 2009 challenging the CPUC's decision with regard to implementation of the California Environmental Quality Act (CEQA). UCAN also filed a petition with the California Court of Appeal (Court of Appeal) challenging the decision on other legal grounds, which the Court of Appeal procedurally granted in March 2010. The UCAN/CBD appeal will be addressed by the California Supreme Court after the Court of Appeal rules on the first petition. Three appeals of the BLM decision approving the segment of the route within its jurisdiction were filed by individuals, a community organization, and the Viejas Indian tribe in March 2009. A request to stay the BLM decision was also filed. The Interior Board of Land Appeals (IBLA) dismissed the appeal filed by the individuals and issued a ruling in July 2009 denying the request for a stay. In addition, the Viejas Indian tribe withdrew its appeal in July 2009. The IBLA is still reviewing the one remaining appeal. The same project opponents who filed the BLM appeal also filed a lawsuit in Federal District Court in Sacramento, California, for Declaratory and Injunctive Relief regarding Sunrise Powerlink. The complaint alleges that the BLM failed to properly assess the environmental impacts of the approved Sunrise Powerlink route and the related potential development of renewable resources in east San Diego County and Imperial County. The complaint requests a declaration that the BLM violated Federal law in approving Sunrise Powerlink and an injunction against any construction activities.The Sunrise Powerlink also requires approval from the United States Forest Service (USFS). SDGE expects the USFS to issue a Record of Decision (ROD) approving the segment of the route within its jurisdiction in the first half of 2010. The USFS decision is also subject to administrative and judicial review.Sunrise Powerlink costs will be recovered in SD |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
Commitments and Contingencies | NOTE 10. COMMITMENTS AND CONTINGENCIESLegal ProceedingsWe record loss reserves for legal proceedings when it is probable that a loss has been incurred and the amounts of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to estimate with reasonable certainty the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from reserved amounts or exceed applicable insurance coverages and could materially adversely affect our business, cash flows, results of operations, and financial condition.At March 31, 2010, Sempra Energys reserves for legal proceedings, on a consolidated basis, were $636 million, of which $194 million is offset by an insurance receivable for wildfire litigation and $139 million is for previously resolved matters. At March 31, 2010, SDGE and SoCalGas had reserves of $322 million (including the $194 million offset) and $12 million, respectively. We provide additional information about previously resolved matters in Note 17 of the Notes to Consolidated Financial Statements in the Annual Report. SDGE 2007 Wildfire LitigationIn October 2007, San Diego County experienced several catastrophic wildfires. Reports issued by the California Department of Forestry and Fire Protection (Cal Fire) concluded that two of these fires (the Witch and Rice fires) were SDGE "power line caused" and that a third fire (the Guejito fire) occurred when a wire securing a Cox Communications' fiber optic cable came into contact with an SDGE power line "causing an arc and starting the fire." Cal Fire reported that the Rice fire burned approximately 9,500 acres and damaged 206 homes and two commercial properties, and the Witch and Guejito fires merged and eventually burned approximately 198,000 acres, resulting in two fatalities, approximately 40 firefighters injured and approximately 1,141 homes destroyed.A September 2008 staff report issued by the CPUC's Consumer Protection and Safety Division reached substantially the same conclusions as the Cal Fire reports, but also contended that the power lines involved in the Witch and Rice fires and the lashing wire involved in the Guejito fire were not properly designed, constructed and maintained. In November 2008, the CPUC initiated proceedings to determine if any of its rules were violated and in October 2009, SDGE and the Consumer Protection and Safety Division entered into a settlement agreement, approved by the CPUC in April 2010, that resolves these proceedings by SDGE's payment of $14.75 million. Numerous parties have sued SDGE and Sempra Energy in San Diego County Superior Court seeking recovery of unspecified amounts of damages, including punitive damages, from the three fires. These include owners and insurers of properties that were destroyed or damaged in the fires and public entities seeking recovery of firefighting, emergency response, and environmental costs. They assert various bases for recovery, including inverse condemnation based upon a California Court of Appeal decision finding that another California investor-owned utility was subject to strict liability, without regard to foresee |
SEGMENT INFORMATION
SEGMENT INFORMATION | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Condensed Consolidated Financial Statements | |
Segment Information | NOTE 11. SEGMENT INFORMATIONWe have six separately managed reportable segments, as follows: SDGE provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County. SoCalGas is a natural gas distribution utility, serving customers throughout most of Southern California and part of central California. Sempra Commodities holds our investment in RBS Sempra Commodities, a joint venture with RBS. The partnership was formed from our commodities-marketing businesses previously reported in this segment. The partnership's commodity trading businesses serve customers in natural gas, electricity, petroleum and petroleum products, and base metals. Sempra Commodities also includes the operating results of Sempra Rockies Marketing, which holds firm service capacity on the Rockies Express Pipeline. On February 16, 2010, Sempra Energy, RBS and the partnership entered into an agreement to sell certain businesses within the partnership. We discuss this transaction and related agreements affecting the partnership in Note 4 above and in Notes 4 and 20 of the Notes to Consolidated Financial Statements in the Annual Report. Sempra Generation develops, owns and operates, or holds interests in, electric power plants and energy projects in Arizona, California, Nevada, Indiana, Hawaii and Mexico to serve wholesale electricity markets in the United States and Mexico. Sempra Pipelines Storage develops, owns and operates, or holds interests in, natural gas pipelines and storage facilities in the United States and Mexico, and companies that provide natural gas or electricity services in Argentina, Chile, Mexico and Peru. We are currently pursuing the sale of our interests in the Argentine utilities, which we discuss further in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. Sempra Pipelines Storage also operates a small natural gas distribution utility in Southwest Alabama. Sempra LNG develops, owns and operates receipt terminals for importing LNG, and has supply and marketing agreements to purchase LNG and sell natural gas. We evaluate each segment's performance based on its contribution to Sempra Energy's reported earnings. The Sempra Utilities operate in essentially separate service territories, under separate regulatory frameworks and rate structures set by the CPUC. The Sempra Utilities' operations are based on rates set by the CPUC and the FERC. We describe the accounting policies of our segments in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.In the first quarter of 2010, Sempra LNG became a reportable segment. We have revised segment disclosures for 2009 to reflect this.The following tables show selected information by segment from our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets. Amounts labeled as "all other" in the following tables consist primarily of parent organizations. SEGMENT INFORMATION (Dollars in millions) Three months ended March 31, 2010 2009 REVENUES SDGE $ 742 29 % $ 732 35 % SoCalGas 1,182 47 920 44 Sempra Commodities 23 1 13 1 Sempra Generat |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES (Policies) | |
3 Months Ended
Mar. 31, 2010 | |
Significant Accounting Policies | |
New Accounting Standards | NOTE 2. NEW ACCOUNTING STANDARDS We describe below recent pronouncements that have had or may have a significant effect on our financial statements. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our financial condition, results of operations, or disclosures. SEMPRA ENERGY, SDGE, PE AND SOCALGAS Accounting Standards Update (ASU) 2009-17, "Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" (ASU 2009-17): ASU 2009-17 amends Financial Accounting Standards Board (FASB) Interpretation No. 46(R), Consolidation of Variable Interest Entities an interpretation of ARB No. 51 (FIN 46(R)), which provides consolidation guidance related to variable interest entities. ASU 2009-17 amends FASB Accounting Standards Codification (ASC) Topic 810, Consolidations, and requires a qualitative approach for identifying the primary beneficiary of a variable interest entity based on 1) the power to direct activities that most significantly impact the economic performance of the entity, and 2) the obligation to absorb losses or right to receive benefits that could be significant to the entity; ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; and separate disclosure by the primary beneficiary on the face of the balance sheet to identify 1) assets that can only be used to settle obligations of the variable interest entity, and 2) liabilities for which creditors do not have recourse to the primary beneficiary. We adopted ASU 2009-17 on January 1, 2010 and it did not have a material effect on earnings, nor on presentation on the interim Condensed Consolidated Balance Sheets for Sempra Energy and SDGE. We provide the required additional disclosure in Note 5.ASU 2010-06, "Improving Disclosures About Fair Value Measurements" (ASU 2010-06): ASU 2010-06 amends ASC Topic 820, Fair Value Measurements and Disclosures, and requires the following additional fair value measurement disclosures: transfers into and out of Levels 1 and 2 segregation of classes of assets and liabilities measured at fair value valuation techniques and inputs used for Level 2 and Level 3 instruments detailed activity for Level 3 instruments, including separate presentation of purchases, sales, issuances and settlements We adopted ASU 2010-06 on January 1, 2010, and we provide the additional disclosure in Note 8. |