We make statements in this report that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based uponon assumptions with respect to the future, involve risks and uncertainties, and are not guarantees of performance. Future results may differ materially from those expressed in the forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the filing date of this report. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or other factors.

In this report, when we useforward-looking statements can be identified by words such as “believes,” “expects,” “anticipates,” “plans,” “estimates,” “projects,” “forecasts,” “contemplates,” “assumes,” “depends,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “target,” “pursue,” “outlook,” “maintain,” or similar expressions, or when we discuss our guidance, strategy, plans, goals, vision, mission, opportunities, projections initiatives, objectives or intentions, we are making forward-looking statements.intentions.

Factors, among others, that could cause our actual results and future actions to differ materially from those described in any forward-looking statements include risks and uncertainties relating to:

We caution you not to rely unduly on any forward-looking statements. You should review and consider carefully the risks, uncertainties and other factors that affect our business as described herein and in other reports that we file with the SEC.

This report on Form 10-K includes information for the following separate registrants:

We are a Fortune 500California-based energy-services holding company. Our operating unitsbusinesses invest in, develop and operate energy infrastructure, and provide electric and gas services to customers in North and South America. We wereSempra Energy was formed in 1998 through a business combination of Enova and PE, the holding companies of our regulated public utilities in California: SDG&E, which began operations in 1881, and SoCalGas, which began operations in 1867. We have since expanded our regulated public utility presence into Texas through our 2018 and 2020 acquisitions of an aggregate indirect 80.45% interest in Oncor and, in 2019, Oncor’s acquisition of InfraREIT and our acquisition of an indirect 50% interest in Sharyland Utilities. Since our formation in 1998,1995, we have expanded our investment in regulated utility operations through business acquisitions in 2011 in South America. Additionally, in response to changes in Mexican gas regulation in 1995, we entered the energy infrastructure businesshad a strong and growing presence in Mexico through what is now known as IEnova, the first energy infrastructure company to be listed on the Mexican Stock Exchange. IEnova has a diverse portfolio of projects and assets serving Mexico’s growing energy needs. Our energy infrastructure footprint continues to expand across North America, through LNG development projects and assets in Louisiana, Texas and Mexico, including our indirect 50.2% interest in Cameron LNG JV, which commenced commercial operation of the first of three liquefaction trains in August 2019.

In 2018, we announced a multi-phase portfolio optimization initiative designed to sharpen our strategic focus on North America. We have since executed on that initiative by completing the sales of our renewables businesses and our non-utility natural gas storage assets in the U.S., through renewable energy generation projects and LNG and natural gas midstream projects and assets. In August 2017, we enteredby entering into the Merger Agreementagreements to acquire an indirect ownership interest in Oncor, a regulated electric distribution and transmission business that operates the largest distribution and transmission system in Texas.sell our South American businesses. We expect to complete the Merger to closesales of our South American businesses in the first half of 2018.

Our objectivemission is to increase shareholder value by developing, investing in and operating utilities and long-term-contractedbe North America’s premier energy infrastructure assets and operating our companies in a safe and reliable manner.

We discussoperate our business through the Merger and financing of the Merger Consideration, ring-fencing measures, additional regulatory commitments, governance mechanisms and restrictions, as well as the Stipulation, in Notes 3 and 18 of the Notes to Consolidated Financial Statements, “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Factors Influencing Future Performance.”following reportable segments:

SDG&E is a regulated public utility that provides electric services to a population of approximately 3.63.7 million and natural gas services to approximately 3.33.4 million of that population, covering a 4,100 square mile service territory in Southern California that encompasses San Diego County and an adjacent portion of southern Orange County.

SDG&E’s 500-kV Southwest Powerlink transmission line, which is shared with Arizona Public Service Company and Imperial Irrigation District, extends from Palo Verde, Arizona to San Diego, California. SDG&E’s share of the line is 1,162 MW, although it can be less under certain system conditions. SDG&E’s Sunrise Powerlink is a 500-kV transmission line constructed and operated by SDG&E with import capability of 1,000 MW of power.

Mexico’s Baja California transmission system is connected to SDG&E’s system via two 230-kV interconnections with combined capacity of up to 408 MW in the north-to-south direction and 800 MW in the south-to-north direction, although it can be less under certain system conditions.

Edison’s transmission system is connected to SDG&E’s system via five 230-kV transmission lines.

We use certain financial and non-financial metrics to measure how effective our businesses are in achieving their key business objectives. For SDG&E, these&E’s key noncash performance indicators include goals related to safety (including activities designed to help reduce the risk of wildfires), number of customers, electricity sold, system average rate and natural gas volumes transported and sold. Additional noncash performance indicators include goals related to safety,

SoCalGas is a regulated public utility that owns and operates a natural gas distribution, transmission and storage system that supplies natural gas to a population of approximately 21.822 million, covering a 24,000 square mile service territory that encompasses Southern California and portions of central California (excluding San Diego County, the cityCity of Long Beach and the desert area of San Bernardino County).

We provide additional information ondescribe SoCalGas’ natural gas utility operations below in “California Utilities’ Natural Gas Utility Operations.”

Key noncash performance indicators for SoCalGas include goals related to safety, number of customers and natural gas volumes transported and sold. Additional noncash performance indicators include goals related to safety, customer service, customercompany reputation, environmental considerations, natural gas demand by customer segment, on-time and on-budget completion of major projects and initiatives, and service reliability.

Most core customers purchase natural gas directly from SoCalGas or SDG&E. While core customers are those whose installed capacity is greater than 5,000 kW. Customers with installed capacity between 500 kW and 5,000 kW may choosepermitted to be classified as regulated or non-regulated. Non-regulated customers that can buy power from other sources, such aspurchase directly from producers, marketers or brokers, the generator,California Utilities are classified as tollingobligated to provide reliable supplies of natural gas to serve the requirements of their core customers. Both regulatedA substantial portion of SoCalGas’ and non-regulatedSDG&E’s revenues are from core customers.

Noncore customers pay transmissionat SoCalGas consist primarily of electric generation, wholesale, and large commercial and industrial customers. A portion of SoCalGas’ noncore customers are non-end-users. SoCalGas’ non-end-users include wholesale customers consisting primarily of other utilities, including SDG&E, or municipally owned natural gas distribution tariffssystems. Noncore customers at SDG&E consist primarily of electric generation and large commercial customers.

Noncore customers are responsible for the transportationprocurement of their electricity throughnatural gas requirements, as the system. There is no riskregulatory framework does not allow us to recover the cost of stranded costs for Chilquinta Energía because PPAs with generators are not take-or-pay contracts; rather, Chilquinta Energía only purchases power taken by itsnatural gas procured and delivered to noncore customers.

Demand for electricitynatural gas largely depends on the growthhealth and stabilityexpansion of the ChileanSouthern California economy, customer growth and preferences, prices policies and environmental regulations driving the substitution of alternative energy products, for wood and coal,consumer preference, environmental regulations, legislation, andCalifornia’s energy policy supporting increased electrification of the public and private transportation sector,renewable power generation, and the effectiveness and expansion of energy efficiency programs and distributed generation resources.

One of the larger sources for natural gas demand is electric generation. Natural gas-fired electric generation within Southern California (and demand for natural gas supplied to such plants) competes with electric power generated throughout the western U.S. Natural gas transported for electric generating plant customers may be affected by the overall demand for electricity, growth in self-generation from rooftop solar, the addition of renewable powermore efficient gas technologies, new energy efficiency initiatives, and the extent that regulatory changes in electric transmission infrastructure investment divert electric generation from the amount of hydroelectric power, the market price of oil andCalifornia

The natural gas distribution business is seasonal, and cash provided from operating activities generally is greater during and immediately following the winter heating months. As is prevalent in the industry, but subject to current regulatory limitations, SoCalGas usually injects natural gas into storage during the summer months (April through October), which reduces cash provided by operating activities during this period, and usually withdraws natural gas from storage during the winter months (November through March), which increases cash provided by operating activities, when customer demand is higher.

Distribution revenues from residential and small business users are based on actual monthly consumption (kWh) and, depending on size and annual load factor, revenues from large commercial and tends to decreaseindustrial users are based either on actual monthly demand (kW) or the greater of actual monthly demand (kW) or 80% of peak monthly demand during the mild temperaturesprior eleven months.

Oncor’s service territory includes over 120 counties and more than 400 incorporated municipalities, including Dallas/Fort Worth and surrounding suburbs, as well as Waco, Wichita Falls, Odessa, Midland, Tyler and Killeen. Most of metropolitan Lima, Peru, with a service area covering approximately 1,394 square miles. Luz del Sur delivers approximately one-thirdOncor’s power lines have been constructed over lands of all power used in Peru. The remaining sharesothers pursuant to easements or along public highways, streets and rights-of-way as permitted by law.

Oncor’s revenues and results of Luz del Sur are held by noncontrolling interests and trade on the Lima Stock Exchange (Bolsa de Valores de Lima) under the symbol LUSURC1. The sharesoperations are subject to regulationseasonality, weather conditions and other electricity usage drivers, with revenues being highest in the summer.

Sharyland Utilities is a regulated and free customers’ load. Because the power purchased by Luz del Sur from generators is generally based on take-or-pay contracts, Luz del Sur is exposed to the risk of stranded costs associated with capacity charges, as we discuss in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Factors Influencing Future Performance.”

Our Sempra Mexico segment includes the operating companies of our subsidiary, IEnova, as well as certain holding companies and risk management activity.activities. IEnova develops, buildsowns and operates, or holds interests in, energy infrastructure in Mexico in two key energy markets: gas and owns or holds interests in:power. IEnova’s gas business offers pipeline services for natural gas, LPG and ethane, as well as storage for LNG and LPG and distribution of natural gas. Currently, IEnova is constructing marine and land terminals for the receipt, storage and delivery of liquid fuels. In its power business, IEnova operates a natural-gas-fired combined-cycle plant and wind and solar power generation facilities, and is constructing additional wind and solar power generation facilities.

Sempra Energy owns 66.4 percent66.6% of IEnova as of December 31, 2019, with the remaining shares held by noncontrolling interestsNCI and traded on the Mexican Stock Exchange under the symbol IENOVA. The Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, or CNBV), regulates the shares, which are registered with the Mexican National Securities Registry (Registro Nacional de Valores) maintained by the CNBV. We discuss IEnova’s noncontrolling interests and its acquisition and divestiture activities in Notes 1 and 3, respectively, of the Notes to Consolidated Financial Statements.

In 2017,At December 31, 2019, our pipeline assets in Mexico had design capacity of approximately 16,501 MMcf per day of natural gas, 204 MMcf per day of ethane gas, 106,000 barrels per day of ethane liquid, 34,000 barrels per day of LPG transmission and 80,000 barrels of LPG storage.

Sempra LNG has an agreement with Sempra Mexico to supply LNG to the ECA LNG Regasification facility. In connection with Sempra LNG & Midstream’s LNGLNG’s purchase agreement with Tangguh PSC, Sempra Mexico purchases from Sempra LNG & Midstream the LNG delivered to ECA by Tangguh PSC.PSC to the ECA LNG Regasification facility. Sempra Mexico uses the natural gas produced from this LNG and from natural gas purchased in the market or through Sempra LNG & Midstream’sLNG’s marketing operations to supply a contract for the sale of natural gas to Mexico’s national electric company, the CFE, at prices that are based on the SoCal Border index. If LNG volumes received from Tangguh PSC are not sufficient to satisfy the commitment to the CFE, Sempra Mexico may purchase natural gas from Sempra LNG & Midstream’s natural gasLNG’s marketing operations.

The LNG regasification business is impacted by worldwide LNG market prices. High LNG prices in markets outside the market in which IEnova’sSempra Mexico’s ECA LNG terminalRegasification facility operates have resulted and could continue to result in lower than expected deliveries of LNG cargoes to the ECA LNG terminal from third parties under existing supply agreements,Regasification facility, which could increase costs if IEnovaSempra Mexico is instead required to obtain LNG in the open market at prevailing prices. Any inability to obtain expected LNG cargoes could also impact IEnova’sSempra Mexico’s ability to maintain the minimum level of LNG required to keep the ECA LNG terminalRegasification facility in operation at the proper temperature. Prices in international LNG market prices also affect IEnova’s LNG marketing operations,markets through which IEnovaSempra Mexico must purchase natural gas in the international market to meet its contractual obligations to deliver natural gas to customers butmay also affect Sempra Mexico’s LNG marketing operations, which could have an adverse impact on its earnings, whichbut may be mitigated in part by the indemnity payments discussed below.above.

Sempra Mexico’s LNG marketing operations sell natural gas to the CFE and other customers under supply agreements. Sempra Mexico recognizes the revenue from the sale of natural gas upon transfer of the natural gas via pipelines to the customers at the agreed upon delivery points, and in the case of the CFE, at its thermoelectric power plants.

Ecogas relies on affiliates,supply and transportation services from Sempra LNG & Midstream and SoCalGas for the supply and transportation of natural gas that it distributes to its customers. If these affiliates fail to perform and IEnovaEcogas is unable to obtain supplies of natural gas from alternate sources, IEnovaEcogas could lose customers and sales volume and could also be exposed to commodity price risk and volatility.

Ecogas had been entitled to a 12-year periodfaces competition from other distributors of exclusivity with respect tonatural gas in each of its three distribution zones in Mexicali, Chihuahua and La Laguna-Durango. As the last of these exclusivity periods expired in 2011, Ecogas could face competition from other distributors of natural gas in all of these distribution zonesLaguna-Durango as other distributors of natural gas are now legally permitted to build or consider building natural gas distribution systems and compete with Ecogas for customers.systems.

The overall demand for natural gas distribution services increases during the winter months. Conversely, in the power business,months, while the overall demand for electricity is greaterincreases during the summer months.

IEnova competes with Mexican and foreign companies for certain new energy infrastructure projects in Mexico and someMexico. Some of its competitors (including but not limited to, public or state-operated companies and their subsidiaries and affiliates) may have better access to capital and greater financial and other resources, which could give them a competitive advantage in bidding for such projects. We discuss

Sempra Mexico’s pipeline and storage facilities businesses compete with other regulated and unregulated pipeline and storage facilities. They compete primarily on the basis of price (in terms of storage and transportation fees), available capacity and interconnections to downstream markets.

Key noncash performance indicators for Sempra Mexico include sales volume, plant or facility availability, capacity utilization and, for its distribution operations, customer count and consumption. Additional noncash performance indicators include obtaining and completing (on time and on budget) major projects, compliance with reliability and regulatory standards, and goals related to safety, environmental considerations and regulatory performance.

Sempra LNG & Midstreamdevelops projects for the export of LNG, holds an interest in a facility for the export of LNG, owns and operates natural gas pipelines, and buys, sells and transports natural gas through its marketing operations, all within the U.S. and Mexico.

In August 2019, commercial operation of Train 1 commenced under Cameron LNG JV’s tolling agreements. In February 2020, Train 2 reached substantial completion and we expect to commence commercial operation in the second half of 2014 on the natural gas liquefaction export facility using the existing regasification infrastructure contributed by Sempra LNG & Midstream. The joint venture has authorizationcoming days. We believe it is reasonable to export LNG to both FTA and non-FTA countries.

The three liquefaction trains are designed to have a nameplate capacity of 13.9 Mtpa of LNG with an expected export capability of 12 Mtpa of LNG, or approximately 1.7 Bcf per day. Cameron LNG JV has 20-year liquefaction and regasification tolling capacity agreements in place with ENGIE S.A. and affiliates of TOTAL S.A., Mitsubishi Corporation and Mitsui & Co., Ltd., which subscribe the full nameplate capacity of three trains at the facility. In addition, Cameron LNG JV is working on the development of up to two additional trains. We discuss Cameron LNG JV in Note 46 of the Notes to Consolidated Financial Statements and the construction of the first three trains and the potential for an additional two trains in “Item 7. Management’s DiscussionMD&A – Capital Resources and Analysis of Financial Condition and Results of OperationsLiquidity – Factors Influencing Future Performance”Sempra LNG” and in “Item 1A. Risk Factors.”

At current forward gas prices, U.S. Gulf Coast liquefaction is amongone of the most price competitive potential LNG supply in the world. Brownfield liquefaction is particularly price competitive,world, resulting from many factors, including:

Global LNG competition may limit U.S. LNG exports, as international liquefaction projects attempt to match U.S. Gulf Coast LNG production costs and customer contractual rights such as volume and destination flexibility. Host governments for international liquefaction projects are altering fiscal and tax regimes in an effort to make projects in their jurisdictions competitive relative to U.S. projects; however, sustained low oil prices may cause some of the international projects to become unfeasible due to their LNG price formulas’ link to oil prices. It is expected that U.S. LNG exports will increase competition for current and future global natural gas demand, and thereby facilitate development of a global commodity market for natural gas and LNG.

Our LNG liquefaction business’ major domestic and international competitors willcurrently include, among others, the following companies and their related LNG affiliates:

Additionally, our Cameron LNG JV partners, affiliates of ENGIE S.A., Mitsubishi Corporation (through a related company jointly established with Nippon Yusen Kabushiki Kaisha),co-owners and Mitsui & Co., Ltd.,customers compete globally to market and sell LNG to end users, including gas and electric utilities located in LNG importing countries around the world. By providing liquefaction services, Cameron LNG JV will competecompetes indirectly with liquefaction projects currently operating and those under development in the global LNG market. In addition to the U.S., these competitors are located in the Middle East, Southeast Asia, Africa, South America, Australia and Europe.

Sempra LNG & Midstream has 42 Bcfa 40-mile natural gas pipeline in south Louisiana. The Cameron Interstate Pipeline links the Cameron LNG facility in Cameron Parish, Louisiana, to five interstate pipelines that connect to major markets in the Midwest, Northeast and Southeast U.S.

In February 2019, Sempra LNG completed the sale of operational workingits non-utility natural gas storage capacityassets in the southeast U.S. (comprised of Mississippi Hub and a development project as follows:

Sempra LNG & Midstream provides natural gas marketing, trading and risk management services through the utilization and optimization of contracted LNG, natural gas supply transportation and storage capacity,transportation, as well as by optimizing its assets in the short-term services market. Additionally, it sells electricity under short-term and long-term contracts and into the spot market and other competitive markets.

Sempra LNG & Midstream’sLNG’s marketing operations have an LNG sale and purchase agreement with Tangguh PSC for the supply of the equivalent of 500 MMcf of natural gas per day from Tangguh PSC’s Indonesian liquefaction facility with delivery to Sempra Mexico’s ECA LNG receipt terminalRegasification facility at a price based on the SoCal Border index for natural gas. The LNG purchase agreement allows Tangguh PSC to divert deliveriescertain LNG volumes to other global markets in exchange for cash differential payments to Sempra LNG & Midstream.LNG. Sempra LNG & Midstreammay also may enter into short-term supply agreements to purchase LNG to be received, stored and regasified at the terminal for sale to other parties.

In additionSempra LNG is contracted to sell LNG or, if deliveries of LNG cargoes are not sufficient, Sempra LNG & Midstream is also contracted to sell natural gas, to Sempra Mexico that allows Sempra Mexico to satisfy its obligation under supply agreements with the CFE, TdM and other customers, and to supply the TdM power plant.customers. These revenues are adjusted for indemnity payments and profit sharing, as discussed in “Sempra Mexico – Gas Business – LNG”LNG Regasification” above.

Sempra LNG & Midstream also has an EMA with Sempra Mexico to provide energy marketing, scheduling and other related services to Sempra Mexico’s TdM power plant to support its sales of generated power into the California electricity market. We discuss the EMA in “Sempra Mexico – Power Business – Natural Gas-Fired Generation” above.

Key noncash performance indicators at Sempra LNG & Midstream include natural gas sales volume, plant or facility availability and capacity utilization. Additional noncash performance indicators include goals related to safety, environmental considerations and regulatory compliance, and on-time and on-budget completion of development projects.

The CPUC:

The CPUC also oversees and regulates newother products and services, including solar and wind energy, bioenergy, alternative energy storage and other forms of renewable energy. In addition, the CPUC’s safety and enforcement role includes inspections, investigations and penalty and citation processes for safety violations.

The CEC publishes electric demand forecasts for the state and for specific service territories. Based on these forecasts, the CEC:

The CEC conducts a 20-year forecast of available supplies and prices for every market sector that consumes natural gas in California. This forecast includes resource evaluation, pipeline capacity needs, natural gas demand and wellhead prices, and costs of transportation and distribution. This analysis is one of many resource materials used to support the California Utilities’ long-term investment decisions.

The state of California requires certain Californiaof its electric retail sellers, including SDG&E, to deliver a significant percentage of their retail energy sales from renewable energy sources. The rules governing this requirement, administered by both the CPUC and the CEC, are generally known as the RPS Program. We discuss this requirement as it applies to SDG&E in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Factors Influencing Future Performance.”

California AB 32, the California Global Warming Solutions Act of 2006, assigns responsibility to CARB for monitoring and establishing policies for reducing GHG emissions. The billlaw requires CARB to develop and adopt a comprehensive plan for achieving real, quantifiable and cost-effective GHG emission reductions, including a statewide GHG emissions cap, mandatory reporting rules, and regulatory and market mechanisms to achieve reductions of GHG emissions. CARB is a department within the California Environmental Protection Agency, an organization that reports directly to the Governor’s Office in the Executive Branch of California State Government.Office. Sempra LNG & Midstream and Sempra Mexico are also subject to the rules and regulations of CARB. We provide further discussion of GHG allowances and emissions in Note 1 of the Notes to Consolidated Financial Statements.

The operation and maintenance of SoCalGas’ natural gas storage facilities are regulated by DOGGR,CalGEM, as well as various other state and local agencies. We

At the state level, PURA requires owners or operators of transmission facilities to provide further discussionopen-access wholesale transmission services to third parties at rates and terms that are nondiscriminatory and comparable to the rates and terms of DOGGR’s increased regulations in “Item 7. Management’s Discussion and Analysisthe utility’s own use of Financial Condition and Results of Operations – Factors Influencing Future Performance.”its system. The PUCT has adopted rules implementing the state open-access requirements for all utilities that are subject to the PUCT’s jurisdiction over transmission services, including Oncor.

The California Utilities are also regulated at the federal level by the FERC, the NRC, the EPA, the DOE and the DOT.

The FERC regulates the California Utilities’ interstate sale and transportation of natural gas and the application of the uniform systems of accounts. In the case of SDG&E, the FERC also regulates the transmission and wholesale sales of electricity in interstate commerce, transmission access, rates of return on transmission investment, rates of depreciation and electric rates involving sales for resale. The Energy Policy Act governs procedures for requests for transmission service. The FERC approvedCalifornia IOUs’ transmission facilities are under the operational control of the California IOUs transfer of operationISO. Oncor and control of theirSharyland Utilities operate within the ERCOT market, which we discuss below. To a small degree related to limited interconnections to other markets, Oncor’s transmission facilities torevenues are provided under tariffs approved by the CAISO in 1998.FERC.

The NRC oversees the licensing, construction, operation and decommissioning of nuclear facilities in the U.S., including SONGS, in which SDG&E owns a 20-percent20% interest and which has beenwas permanently retired sincein 2013. NRC and various state regulations require extensive review of the safety, radiological and environmental aspects of these facilities. We provide further discussion of SONGS matters, including the closure and pending decommissioning of the facility, in Note 1315 of the Notes to Consolidated Financial Statements.

The DOT, through PHMSA, has established regulations regarding engineering standards and operating procedures applicable to the California Utilities’ natural gas transmission and distribution pipelines.pipelines, as well as natural gas storage facilities. The DOT has certified the CPUC to administer oversight and compliance with these regulations for the entities they regulate in California. The PHMSA also is in the process of promulgating regulations applicable to the California Utilities’ natural gas storage facilities. See “Other U.S. Regulation” belowbelow.

Oncor and further discussionSharyland Utilities operate within the ERCOT market, which represents approximately 90% of the electricity consumption in “Item 7. Management’s DiscussionTexas. ERCOT is the regional reliability coordinating organization for member electricity systems in Texas and Analysisthe ISO of Financial Conditionthe interconnected transmission grid for those systems. ERCOT is responsible for ensuring reliability, adequacy and Resultssecurity of Operations – Factors Influencing Future Performance.”the electric systems, as well as nondiscriminatory access to transmission service by all wholesale market participants in the ERCOT region. ERCOT’s membership consists of corporate and associate members, including electric cooperatives, municipal power agencies, independent generators, independent power marketers, transmission service providers, distribution services providers, independent retail electric providers and consumers.

The SCAQMD is the air pollution control agency responsible for regulating stationary sources of air pollution in the South Coast Air Basin in Southern California. The district’s territory covers all of Orange County and the urban portions of Los Angeles, San Bernardino and Riverside counties.

SoCalGas has natural gas franchises with the 12 counties and the 223 cities in its service territory. These franchises allow SoCalGas to locate, operate and maintain facilities for the transmission and distribution of natural gas. Most of the franchises have indefinite lives with no expiration date. Some franchises have fixed expiration dates, ranging from 20182020 to 2062.

The FERC regulates certain Sempra Renewables and Sempra LNG & Midstream assets pursuant to the Federal Power Act and Natural Gas Act, which provide for FERC jurisdiction over, among other things, sales of wholesale power in interstate commerce, transportation and storage of natural gas in interstate commerce, and siting and permitting of LNG terminals. In addition, certain Sempra Renewables power generation assets are required under the Federal Power Act to comply with reliability standards developed by the North American Electric Reliability Corporation. Bay Gas’ natural gas storage operations are also regulated by the Alabama Public Service Commission.facilities.

Sempra LNG & Midstream’sLNG’s investment in Cameron LNG JV is subject to regulations of the DOE regarding the export of LNG.

The FERC may regulate rates and terms of service based on a cost-of-service approach or, in geographic and product markets determined by the FERC to be sufficiently competitive, rates may be market-based. FERC-regulated rates at the following businesses areSempra LNG are:

The California Utilities, Sempra LNG & Midstream and businesses that Sempra LNG & Midstream invests in are subject to the DOT rules and regulations regarding pipeline safety. PHMSA, acting through the Office of Pipeline Safety, is responsible for administering the DOT’s national regulatory program to assure the safe transportation of natural gas, petroleum and other hazardous materials by pipelines, including pipelines associated with natural gas storage, and develops regulations and other approaches to risk management to assure safety in design, construction, testing, operation, maintenance and emergency response of pipeline facilities. The California Utilities, Sempra LNG & Midstream, Sempra Renewables and Sempra Mexico are also subject to regulation by the U.S. Commodity Futures Trading Commission.

Operations and projects in our Sempra Mexico segment are subject to regulation by the CRE, the Mexican Safety, Energy and Environment Agency (Agencia de Seguridad, Energía y Ambiente), the Mexican Secretary of Energy (Secretaría de Energía)a or SENER) and other labor and environmental agencies of city, state and federal governments in Mexico.

TheOur utilities in California Utilitiesand Texas obtain numerous permits, authorizations and licenses for, as applicable, the transmission and distribution of natural gas and electricity and the operation and construction of related assets, including electric generation and natural gas storage facilities, some of which may require periodic renewal.

Sempra South American Utilities and Sempra Mexico obtainobtains numerous permits, authorizations and licenses for their electric and natural gas distribution, generation and transmission systems from the local governmentsgovernment where the service is provided. The respective energy ministries in Chile or Peru granted the concessions to operate Chilquinta Energía’s and Luz del Sur’s distribution operations for indefinite terms, not requiring renewal. The permits for generation, transportation, storage and distribution operations at Sempra Mexico are generally for 30-year terms, with options for renewal under certain regulatory conditions.

Sempra Mexico and Sempra LNG & Midstream obtain licenses and permits for the construction, operation and expansion of LNG facilities and for the import and export of LNG and natural gas. Sempra Mexico also obtains licenses and permits for the construction and operation of terminalsfacilities for the receipt, storage and delivery of liquid fuels.

Sempra Renewables obtains permits, authorizations and licenses for the construction and operation of power generation facilities, and for the wholesale distribution of electricity.

Most of the permits and licenses associated with Sempra LNG’s construction and operations within the Sempra Renewables and Sempra LNG & Midstream businesses are for periods generally in alignment with the construction cycle or life of the asset and in many cases are greater than 20 years.

A cost of capital proceeding also addresses the automatic CCM, which applies market-based benchmarks to determine whether an adjustment toconsiders changes in interest rates based on the authorized return on rate base is required during the interim years between cost of capital proceedings.applicable 12-month average Moody’s utility bond index. The CCM did not operatewas reauthorized in 2017, but could operate in 2018 to change the rates effective for January 1, 2019. The market-based benchmark for SDG&E’s and SoCalGas’ CCM is the 12-month average monthly A-rated utility bond index, as published by Moody’s for the 12-month period from October 1st through September 30th (CCM Period) of each calculation year. Remaining unchanged from the last2020 cost of capital proceeding SDG&E’s and SoCalGas’will continue through 2022. The CCM, benchmark rate was set at 4.24 percent. If atif triggered, could automatically update the endauthorized cost of the CCM Period the monthly average benchmark rate falls outside of the established range of 3.24 percent to 5.24 percent, SDG&E’sdebt based on actual costs, and SoCalGas’update the authorized ROE would be adjusted, upwardup or downward,down by one-half of the difference betweenchange in the applicable 12-month average and the benchmark rate. In addition, the authorized recovery rate for SDG&E’s and SoCalGas’ cost of debt and preferred stock would be adjusted to their respective actual weighted-average costs, with no change to the authorized capital structure. All three adjustments with the new rate would become effective on January 1st of the following year in which the benchmark range was exceeded.Moody’s utility bond index.

SDG&E has incentive mechanisms associated with:

SoCalGas has incentive mechanisms associated with:

The PURA allows utilities to file, under certain circumstances, once per year and up to four rate adjustments between comprehensive base rate proceedings to recover distribution-related investments on tariffs that are set byan interim basis. The PUCT’s substantive rules also allow the CNE. The CNE’s review process for authorized distribution andTexas utilities to update their transmission rates generally remains in effect for a period of four years. The CNE reviews rates for four-year periods related to distribution and transmission separatelyperiodically on an alternatinginterim basis every two years.to reflect changes in invested capital. These “capital tracker” provisions encourage investment in the electric system to help ensure reliability and efficiency by allowing for timely recovery of and return on new investments.

Ecogas’ revenues are derived from service and distribution fees charged to its customers in pesos. The price Ecogas pays to purchase natural gas, which is based on international price indices, is passed through directly to its customers. The service and distribution fees charged by Ecogas are regulated by the CRE, which performs a review of rates every five years and monitors prices charged to end-users. The tariffs operate under a return-on-asset-base model. In the annual tariff adjustment, rates are adjusted to account for inflation or fluctuations in exchange rates, and inflation indexing includes separate U.S. and Mexican cost components so that U.S. costs can be included in the final distribution rates.