UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | ||||||||||||||||||||||||
FORM 10-Q | ||||||||||||||||||||||||
(Mark One) | ||||||||||||||||||||||||
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||||||||||||||
For the quarterly period ended | June 30, | |||||||||||||||||||||||
or | ||||||||||||||||||||||||
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||||||||||||||
For the transition period from | to | |||||||||||||||||||||||
Commission File No. | Exact Name of Registrants as Specified in their Charters, Address and Telephone Number | States of Incorporation | I.R.S. Employer | Former name, former address and former fiscal year, if changed since last report | ||||||||||||||||||||
1-14201 | SEMPRA ENERGY | California | 33-0732627 | No change | ||||||||||||||||||||
488 8th Avenue | ||||||||||||||||||||||||
San Diego, California 92101 | ||||||||||||||||||||||||
(619)696-2000 | ||||||||||||||||||||||||
1-03779 | SAN DIEGO GAS & ELECTRIC COMPANY | California | 95-1184800 | No change | ||||||||||||||||||||
8326 Century Park Court | ||||||||||||||||||||||||
San Diego, California 92123 | ||||||||||||||||||||||||
(619)696-2000 | ||||||||||||||||||||||||
1-01402 | SOUTHERN CALIFORNIA GAS COMPANY | California | 95-1240705 | No change | ||||||||||||||||||||
555 West Fifth Street | ||||||||||||||||||||||||
Los Angeles, California 90013 | ||||||||||||||||||||||||
(213)244-1200 | ||||||||||||||||||||||||
Yes | X | No |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). | ||||||||||||||||||||||
Sempra Energy | Yes | X | No | |||||||||||||||||||
San Diego Gas & Electric Company | Yes | X | No | |||||||||||||||||||
Southern California Gas Company | Yes | X | No | |||||||||||||||||||
Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company | ||||||||
Sempra Energy | [ X ] | [ ] | [ ] | [ ] | [ ] | |||||||
San Diego Gas & Electric Company | [ ] | [ ] | [ X ] | [ ] | [ ] | |||||||
Southern California Gas Company | [ ] | [ ] | [ X ] | [ ] | [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ||||||||||||||||||||||
Sempra Energy | Yes | No | ||||||||||||||||||||
San Diego Gas & Electric Company | Yes | No | ||||||||||||||||||||
Southern California Gas Company | Yes | No | ||||||||||||||||||||
Sempra Energy | Yes | No | X | |||||||||||||||||||
San Diego Gas & Electric Company | Yes | No | X | |||||||||||||||||||
Southern California Gas Company | Yes | No | X | |||||||||||||||||||
Indicate the number of shares outstanding of each of the | ||||||||||||||||||||||
Common stock outstanding on July |
Sempra Energy | |||||||
San Diego Gas & Electric Company | Wholly owned by Enova Corporation, which is wholly owned by Sempra Energy | ||||||
Southern California Gas Company | Wholly owned by Pacific Enterprises, which is wholly owned by Sempra Energy |
SEMPRA ENERGY FORM 10-Q SAN DIEGO GAS & ELECTRIC COMPANY FORM 10-Q SOUTHERN CALIFORNIA GAS COMPANY FORM 10-Q TABLE OF CONTENTS | ||
Page | ||
PART I – FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II – OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 6. | ||
125 |
GLOSSARY | |
2016 GRC FD | final decision in the California Utilities’ 2016 General Rate Case |
AFUDC | allowance for funds used during construction |
Annual Report | Annual Report on Form 10-K for the year ended December 31, 2016 |
AOCI | Accumulated Other Comprehensive Income (Loss) |
ASU | Accounting Standards Update |
Bay Gas | Bay Gas Storage Company, Ltd. |
Bcf | billion cubic feet |
Blade | Blade Energy Partners |
CAISO | California Independent System Operator |
California Utilities | San Diego Gas & Electric Company and Southern California Gas Company, collectively |
Cameron LNG JV | Cameron LNG Holdings, LLC |
CARB | California Air Resources Board |
CCA | Community Choice Aggregation |
CCM | cost of capital adjustment mechanism |
CEC | California Energy Commission |
CEQA | California Environmental Quality Act |
CFCA | Core Fixed Cost Account |
CFE | Comisión Federal de Electricidad (Federal Electricity Commission in Mexico) |
Chilquinta Energía | Chilquinta Energía S.A. and its subsidiaries |
COFECE | Comisión Federal de Competencia Económica (Mexican Competition Commission) |
CPED | Consumer Protection and Enforcement Division |
CPI | Consumer Price Index |
CPUC | California Public Utilities Commission |
CRE | Comisión Reguladora de Energía (Energy Regulatory Commission in Mexico) |
CRR | congestion revenue right |
DA | Direct Access |
DEN | Ductos y Energéticos del Norte, S. de R.L. de C.V. |
DOE | U.S. Department of Energy |
DOGGR | California Department of Conservation’s Division of Oil, Gas, and Geothermal Resources |
DPH | Los Angeles County Department of Public Health |
Ecogas | Ecogas México, S. de R.L. de C.V. |
Edison | Southern California Edison Company |
Eletrans | Eletrans S.A., Eletrans II S.A. and Eletrans III S.A., collectively |
EnergySouth | EnergySouth Inc. |
EPA | U.S. Environmental Protection Agency |
EPC | engineering, procurement and construction |
EPS | earnings per common share |
ERRA | Energy Resource Recovery Account |
FERC | Federal Energy Regulatory Commission |
FTA | Free Trade Agreement |
GCIM | Gas Cost Incentive Mechanism |
GdC | Gasoductos de Chihuahua, S. de R.L. de C.V. |
GHG | greenhouse gas |
GRC | General Rate Case |
HLBV | hypothetical liquidation at book value |
HMRC | United Kingdom’s Revenue and Customs Department |
IEnova | Infraestructura Energética Nova, S.A.B. de C.V. |
IEnova Pipelines | IEnova Pipelines, S. de R.L. de C.V. |
IMG | Infraestructura Marina del Golfo |
IRS | Internal Revenue Service |
ISFSI | independent spent fuel storage installation |
JP Morgan | J.P. Morgan Chase & Co. |
kV | kilovolt |
LA Storage | LA Storage, LLC |
GLOSSARY (CONTINUED) | |
LNG | liquefied natural gas |
LPG | liquid petroleum gas |
Luz del Sur | Luz del Sur S.A.A. and its subsidiaries |
MHI | Mitsubishi Heavy Industries, Ltd., Mitsubishi Nuclear Energy Systems, Inc., and Mitsubishi Heavy Industries America, Inc., collectively |
Mississippi Hub | Mississippi Hub, LLC |
MMBtu | million British thermal units (of natural gas) |
Mobile Gas | Mobile Gas Service Corporation |
Mtpa | million tonnes per annum |
MW | megawatt |
MWh | megawatt hour |
NDT | Nuclear Decommissioning Trusts |
NEIL | Nuclear Electric Insurance Limited |
NEPA | National Environmental Policy Act |
NRC | Nuclear Regulatory Commission |
OCI | Other Comprehensive Income (Loss) |
OII | Order Instituting Investigation |
O&M | operation and maintenance expense |
OMEC | Otay Mesa Energy Center |
OMEC LLC | Otay Mesa Energy Center LLC |
ORA | CPUC Office of Ratepayer Advocates |
Otay Mesa VIE | OMEC LLC VIE |
PEMEX | Petróleos Mexicanos (Mexican state-owned oil company) |
PG&E | Pacific Gas and Electric Company |
PHMSA | Pipeline and Hazardous Materials Safety Administration |
PP&E | property, plant and equipment |
PPA | power purchase agreement |
PSEP | Pipeline Safety Enhancement Plan |
RAMP | Risk Assessment Mitigation Phase |
RBS | The Royal Bank of Scotland plc |
RBS SEE | RBS Sempra Energy Europe |
RBS Sempra Commodities | RBS Sempra Commodities LLP |
Rockies Express | Rockies Express Pipeline LLC |
ROE | return on equity |
RSA | restricted stock award |
RSU | restricted stock unit |
SB | Senate Bill |
SCAQMD | South Coast Air Quality Management District |
SDCA | United States District Court for the Southern District of California |
SDG&E | San Diego Gas & Electric Company |
SEC | United States Securities and Exchange Commission |
SEDATU | Secretaría de Desarrollo Agrario, Territorial y Urbano (Mexican agency in charge of agriculture, land and urban development) |
SFP | secondary financial protection |
SoCalGas | Southern California Gas Company |
SONGS | San Onofre Nuclear Generating Station |
SONGS OII | CPUC’s Order Instituting Investigation into the SONGS Outage |
TdM | Termoeléctrica de Mexicali |
TransCanada | TransCanada Corporation |
Tribunal | International Chamber of Commerce International Court of Arbitration Tribunal |
TURN | The Utility Reform Network |
U.S. GAAP | accounting principles generally accepted in the United States of America |
Valero Energy | Valero Energy Corporation |
VAT | value-added tax |
Ventika | Ventika, S.A.P.I. de C.V. and Ventika II, S.A.P.I. de C.V., collectively |
VIE | variable interest entity |
Willmut Gas | Willmut Gas Company |
actions and the timing of actions, including |
▪ | the timing and success of business development efforts and construction |
▪ | the resolution of civil and criminal litigation and regulatory |
▪ | deviations from regulatory precedent or practice that result in a reallocation of benefits or burdens among shareholders and |
▪ | the availability of electric power, natural gas and liquefied natural gas, and natural gas pipeline and storage capacity, including disruptions caused by failures in the |
▪ | changes in energy markets; |
▪ | risks posed by |
▪ | weather conditions, natural disasters, |
▪ | cybersecurity threats to the energy grid, |
▪ | capital markets and economic conditions, including the availability of credit and the liquidity of our investments; and fluctuations in inflation, interest and currency exchange rates and our ability to |
▪ | changes in the tax code as a result of potential federal tax reform, such as the elimination of the deduction for interest and non-deductibility of all, or a portion of, the cost of imported materials, equipment and commodities; |
▪ | changes in foreign and domestic trade policies and laws, including border tariffs, revisions to favorable international trade agreements, and changes that make our exports less competitive or otherwise restrict our ability to export; |
▪ | the ability to win competitively bid infrastructure projects against a number of strong and aggressive competitors |
expropriation of assets by foreign governments and title and other property |
▪ | the impact on reliability of |
▪ | the impact on competitive customer rates |
other uncertainties, |
SEMPRA ENERGY | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Dollars in millions, except per share amounts) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016(1) | 2017 | 2016(1) | ||||||||||||
(unaudited) | |||||||||||||||
REVENUES | |||||||||||||||
Utilities | $ | 2,197 | $ | 1,994 | $ | 4,895 | $ | 4,436 | |||||||
Energy-related businesses | 336 | 162 | 669 | 342 | |||||||||||
Total revenues | 2,533 | 2,156 | 5,564 | 4,778 | |||||||||||
EXPENSES AND OTHER INCOME | |||||||||||||||
Utilities: | |||||||||||||||
Cost of electric fuel and purchased power | (553 | ) | (561 | ) | (1,080 | ) | (1,076 | ) | |||||||
Cost of natural gas | (228 | ) | (183 | ) | (713 | ) | (494 | ) | |||||||
Energy-related businesses: | |||||||||||||||
Cost of natural gas, electric fuel and purchased power | (62 | ) | (62 | ) | (129 | ) | (118 | ) | |||||||
Other cost of sales | 38 | (226 | ) | 16 | (261 | ) | |||||||||
Operation and maintenance | (731 | ) | (706 | ) | (1,445 | ) | (1,406 | ) | |||||||
Depreciation and amortization | (368 | ) | (314 | ) | (728 | ) | (642 | ) | |||||||
Franchise fees and other taxes | (101 | ) | (96 | ) | (211 | ) | (207 | ) | |||||||
Impairment losses | (71 | ) | (21 | ) | (71 | ) | (22 | ) | |||||||
Equity earnings (losses), before income tax | 18 | 14 | 21 | (8 | ) | ||||||||||
Other income, net | 91 | 23 | 260 | 72 | |||||||||||
Interest income | 8 | 6 | 14 | 12 | |||||||||||
Interest expense | (159 | ) | (142 | ) | (328 | ) | (285 | ) | |||||||
Income (loss) before income taxes and equity earnings (losses) of certain unconsolidated subsidiaries | 415 | (112 | ) | 1,170 | 343 | ||||||||||
Income tax (expense) benefit | (167 | ) | 106 | (462 | ) | (2 | ) | ||||||||
Equity earnings (losses), net of income tax | — | 33 | (8 | ) | 50 | ||||||||||
Net income | 248 | 27 | 700 | 391 | |||||||||||
Losses (earnings) attributable to noncontrolling interests | 12 | (10 | ) | 1 | (21 | ) | |||||||||
Preferred dividends of subsidiary | (1 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
Earnings | $ | 259 | $ | 16 | $ | 700 | $ | 369 | |||||||
Basic earnings per common share | $ | 1.03 | $ | 0.06 | $ | 2.79 | $ | 1.48 | |||||||
Weighted-average number of shares outstanding, basic (thousands) | 251,447 | 250,096 | 251,290 | 249,915 | |||||||||||
Diluted earnings per common share | $ | 1.03 | $ | 0.06 | $ | 2.77 | $ | 1.47 | |||||||
Weighted-average number of shares outstanding, diluted (thousands) | 252,822 | 252,036 | 252,609 | 251,775 | |||||||||||
Dividends declared per share of common stock | $ | 0.83 | $ | 0.75 | $ | 1.65 | $ | 1.51 |
SEMPRA ENERGY | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
(Dollars in millions, except per share amounts) | |||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | ||||||
(unaudited) | |||||||||
REVENUES | |||||||||
Utilities | $ | 1,994 | $ | 2,133 | $ | 4,436 | $ | 4,555 | |
Energy-related businesses | 162 | 234 | 342 | 494 | |||||
Total revenues | 2,156 | 2,367 | 4,778 | 5,049 | |||||
EXPENSES AND OTHER INCOME | |||||||||
Utilities: | |||||||||
Cost of natural gas | (183) | (239) | (494) | (585) | |||||
Cost of electric fuel and purchased power | (561) | (498) | (1,076) | (979) | |||||
Energy-related businesses: | |||||||||
Cost of natural gas, electric fuel and purchased power | (62) | (73) | (118) | (171) | |||||
Other cost of sales | (226) | (42) | (261) | (77) | |||||
Operation and maintenance | (727) | (713) | (1,428) | (1,371) | |||||
Depreciation and amortization | (314) | (307) | (642) | (610) | |||||
Franchise fees and other taxes | (96) | (96) | (207) | (203) | |||||
Plant closure adjustment | ― | ― | ― | 21 | |||||
Gain on sale of assets | ― | 62 | ― | 62 | |||||
Equity earnings (losses), before income tax | 14 | 27 | (8) | 46 | |||||
Other income, net | 23 | 37 | 72 | 76 | |||||
Interest income | 6 | 10 | 12 | 17 | |||||
Interest expense | (142) | (139) | (285) | (273) | |||||
(Loss) income before income taxes and equity earnings | |||||||||
of certain unconsolidated subsidiaries | (112) | 396 | 343 | 1,002 | |||||
Income tax benefit (expense) | 106 | (98) | (36) | (261) | |||||
Equity earnings, net of income tax | 33 | 22 | 50 | 37 | |||||
Net income | 27 | 320 | 357 | 778 | |||||
Earnings attributable to noncontrolling interests | (10) | (24) | (21) | (45) | |||||
Preferred dividends of subsidiary | (1) | (1) | (1) | (1) | |||||
Earnings | $ | 16 | $ | 295 | $ | 335 | $ | 732 | |
Basic earnings per common share | $ | 0.06 | $ | 1.19 | $ | 1.34 | $ | 2.95 | |
Weighted-average number of shares outstanding, | |||||||||
basic (thousands) | 250,096 | 248,108 | 249,915 | 247,916 | |||||
Diluted earnings per common share | $ | 0.06 | $ | 1.17 | $ | 1.33 | $ | 2.91 | |
Weighted-average number of shares outstanding, | |||||||||
diluted (thousands) | 251,938 | 251,491 | 251,686 | 251,264 | |||||
Dividends declared per share of common stock | $ | 0.75 | $ | 0.70 | $ | 1.51 | $ | 1.40 | |
See Notes to Condensed Consolidated Financial Statements. |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
SEMPRA ENERGY | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||
(Dollars in millions) | |||||||||||
Sempra Energy shareholders' equity | |||||||||||
Pretax | Income tax | Net-of-tax | Noncontrolling | ||||||||
amount | benefit (expense) | amount | interests (after-tax) | Total | |||||||
Three months ended June 30, 2016 and 2015 | |||||||||||
(unaudited) | |||||||||||
2016: | |||||||||||
Net (loss) income | $ | (89) | $ | 106 | $ | 17 | $ | 10 | $ | 27 | |
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments | 11 | ― | 11 | ― | 11 | ||||||
Financial instruments | (78) | 35 | (43) | 1 | (42) | ||||||
Pension and other postretirement benefits | 2 | (1) | 1 | ― | 1 | ||||||
Total other comprehensive (loss) income | (65) | 34 | (31) | 1 | (30) | ||||||
Comprehensive (loss) income | (154) | 140 | (14) | 11 | (3) | ||||||
Preferred dividends of subsidiary | (1) | ― | (1) | ― | (1) | ||||||
Comprehensive (loss) income, after preferred | |||||||||||
dividends of subsidiary | $ | (155) | $ | 140 | $ | (15) | $ | 11 | $ | (4) | |
2015: | |||||||||||
Net income | $ | 394 | $ | (98) | $ | 296 | $ | 24 | $ | 320 | |
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments | (43) | ― | (43) | (5) | (48) | ||||||
Financial instruments | 95 | (36) | 59 | 6 | 65 | ||||||
Pension and other postretirement benefits | 2 | (1) | 1 | ― | 1 | ||||||
Total other comprehensive income | 54 | (37) | 17 | 1 | 18 | ||||||
Comprehensive income | 448 | (135) | 313 | 25 | 338 | ||||||
Preferred dividends of subsidiary | (1) | ― | (1) | ― | (1) | ||||||
Comprehensive income, after preferred | |||||||||||
dividends of subsidiary | $ | 447 | $ | (135) | $ | 312 | $ | 25 | $ | 337 | |
Six months ended June 30, 2016 and 2015 | ||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||
SEMPRA ENERGY | SEMPRA ENERGY | |||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||||||||||||
(Dollars in millions) | (Dollars in millions) | |||||||||||||||||||||||||||||
Sempra Energy shareholders’ equity | ||||||||||||||||||||||||||||||
Pretax amount | Income tax (expense) benefit | Net-of-tax amount | Noncontrolling interests (after-tax) | Total | ||||||||||||||||||||||||||
Three months ended June 30, 2017 and 2016 | ||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||
2017: | ||||||||||||||||||||||||||||||
Net income (loss) | $ | 427 | $ | (167 | ) | $ | 260 | $ | (12 | ) | $ | 248 | ||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments | 3 | — | 3 | 2 | 5 | |||||||||||||||||||||||||
Financial instruments | (43 | ) | 17 | (26 | ) | (4 | ) | (30 | ) | |||||||||||||||||||||
Pension and other postretirement benefits | 2 | (1 | ) | 1 | — | 1 | ||||||||||||||||||||||||
Total other comprehensive loss | (38 | ) | 16 | (22 | ) | (2 | ) | (24 | ) | |||||||||||||||||||||
Comprehensive income (loss) | 389 | (151 | ) | 238 | (14 | ) | 224 | |||||||||||||||||||||||
Preferred dividends of subsidiary | (1 | ) | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||||
Comprehensive income (loss), after preferred | ||||||||||||||||||||||||||||||
dividends of subsidiary | $ | 388 | $ | (151 | ) | $ | 237 | $ | (14 | ) | $ | 223 | ||||||||||||||||||
2016: | 2016: | |||||||||||||||||||||||||||||
Net income | $ | 372 | $ | (36) | $ | 336 | $ | 21 | $ | 357 | ||||||||||||||||||||
Net (loss) income | $ | (89 | ) | $ | 106 | $ | 17 | $ | 10 | $ | 27 | |||||||||||||||||||
Other comprehensive income (loss): | Other comprehensive income (loss): | |||||||||||||||||||||||||||||
Foreign currency translation adjustments | Foreign currency translation adjustments | 79 | ― | 79 | 5 | 84 | 11 | — | 11 | — | 11 | |||||||||||||||||||
Financial instruments | Financial instruments | (237) | 110 | (127) | (4) | (131) | (78 | ) | 35 | (43 | ) | 1 | (42 | ) | ||||||||||||||||
Pension and other postretirement benefits | Pension and other postretirement benefits | 4 | (2) | 2 | ― | 2 | 2 | (1 | ) | 1 | — | 1 | ||||||||||||||||||
Total other comprehensive (loss) income | Total other comprehensive (loss) income | (154) | 108 | (46) | 1 | (45) | (65 | ) | 34 | (31 | ) | 1 | (30 | ) | ||||||||||||||||
Comprehensive income | 218 | 72 | 290 | 22 | 312 | |||||||||||||||||||||||||
Comprehensive (loss) income | (154 | ) | 140 | (14 | ) | 11 | (3 | ) | ||||||||||||||||||||||
Preferred dividends of subsidiary | Preferred dividends of subsidiary | (1) | ― | (1) | ― | (1) | (1 | ) | — | (1 | ) | — | (1 | ) | ||||||||||||||||
Comprehensive income, after preferred | ||||||||||||||||||||||||||||||
Comprehensive (loss) income, after preferred | ||||||||||||||||||||||||||||||
dividends of subsidiary | dividends of subsidiary | $ | 217 | $ | 72 | $ | 289 | $ | 22 | $ | 311 | $ | (155 | ) | $ | 140 | $ | (15 | ) | $ | 11 | $ | (4 | ) | ||||||
2015: | ||||||||||||||||||||||||||||||
Net income | $ | 994 | $ | (261) | $ | 733 | $ | 45 | $ | 778 | ||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments | (105) | ― | (105) | (13) | (118) | |||||||||||||||||||||||||
Financial instruments | 6 | (2) | 4 | 1 | 5 | |||||||||||||||||||||||||
Pension and other postretirement benefits | 4 | (2) | 2 | ― | 2 | |||||||||||||||||||||||||
Total other comprehensive loss | (95) | (4) | (99) | (12) | (111) | |||||||||||||||||||||||||
Comprehensive income | 899 | (265) | 634 | 33 | 667 | |||||||||||||||||||||||||
Preferred dividends of subsidiary | (1) | ― | (1) | ― | (1) | |||||||||||||||||||||||||
Comprehensive income, after preferred | ||||||||||||||||||||||||||||||
dividends of subsidiary | $ | 898 | $ | (265) | $ | 633 | $ | 33 | $ | 666 | ||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements. | ||||||||||||||||||||||||||||||
Six months ended June 30, 2017 and 2016 | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
2017: | |||||||||||||||||||
Net income (loss) | $ | 1,163 | $ | (462 | ) | $ | 701 | $ | (1 | ) | $ | 700 | |||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustments | 49 | — | 49 | 11 | 60 | ||||||||||||||
Financial instruments | (36 | ) | 14 | (22 | ) | (2 | ) | (24 | ) | ||||||||||
Pension and other postretirement benefits | 5 | (2 | ) | 3 | — | 3 | |||||||||||||
Total other comprehensive income | 18 | 12 | 30 | 9 | 39 | ||||||||||||||
Comprehensive income | 1,181 | (450 | ) | 731 | 8 | 739 | |||||||||||||
Preferred dividends of subsidiary | (1 | ) | — | (1 | ) | — | (1 | ) | |||||||||||
Comprehensive income, after preferred | |||||||||||||||||||
dividends of subsidiary | $ | 1,180 | $ | (450 | ) | $ | 730 | $ | 8 | $ | 738 | ||||||||
2016(1): | |||||||||||||||||||
Net income | $ | 372 | $ | (2 | ) | $ | 370 | $ | 21 | $ | 391 | ||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustments | 79 | — | 79 | 5 | 84 | ||||||||||||||
Financial instruments | (237 | ) | 110 | (127 | ) | (4 | ) | (131 | ) | ||||||||||
Pension and other postretirement benefits | 4 | (2 | ) | 2 | — | 2 | |||||||||||||
Total other comprehensive (loss) income | (154 | ) | 108 | (46 | ) | 1 | (45 | ) | |||||||||||
Comprehensive income | 218 | 106 | 324 | 22 | 346 | ||||||||||||||
Preferred dividends of subsidiary | (1 | ) | — | (1 | ) | — | (1 | ) | |||||||||||
Comprehensive income, after preferred | |||||||||||||||||||
dividends of subsidiary | $ | 217 | $ | 106 | $ | 323 | $ | 22 | $ | 345 |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
SEMPRA ENERGY | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(Dollars in millions) | |||||
June 30, | December 31, | ||||
2016 | 2015(1) | ||||
(unaudited) | |||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 616 | $ | 403 | |
Restricted cash | 17 | 27 | |||
Accounts receivable – trade, net | 994 | 1,283 | |||
Accounts receivable – other | 140 | 190 | |||
Due from unconsolidated affiliates | 6 | 6 | |||
Income taxes receivable | 36 | 30 | |||
Inventories | 270 | 298 | |||
Regulatory balancing accounts – undercollected | 336 | 307 | |||
Fixed-price contracts and other derivatives | 65 | 80 | |||
Assets held for sale | 654 | ― | |||
Other | 207 | 267 | |||
Total current assets | 3,341 | 2,891 | |||
Other assets: | |||||
Restricted cash | 18 | 20 | |||
Due from unconsolidated affiliates | 192 | 186 | |||
Regulatory assets | 3,353 | 3,273 | |||
Nuclear decommissioning trusts | 1,103 | 1,063 | |||
Investments | 2,267 | 2,905 | |||
Goodwill | 786 | 819 | |||
Other intangible assets | 399 | 404 | |||
Dedicated assets in support of certain benefit plans | 436 | 464 | |||
Insurance receivable for Aliso Canyon costs | 679 | 325 | |||
Sundry | 806 | 761 | |||
Total other assets | 10,039 | 10,220 | |||
Property, plant and equipment: | |||||
Property, plant and equipment | 39,756 | 38,200 | |||
Less accumulated depreciation and amortization | (10,261) | (10,161) | |||
Property, plant and equipment, net ($372 and $383 at June 30, 2016 and December 31, 2015, respectively, related to VIE) | 29,495 | 28,039 | |||
Total assets | $ | 42,875 | $ | 41,150 | |
(1) | Derived from audited financial statements. | ||||
See Notes to Condensed Consolidated Financial Statements. |
SEMPRA ENERGY | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||
(Dollars in millions) | |||||
June 30, | December 31, | ||||
2016 | 2015(1) | ||||
(unaudited) | |||||
LIABILITIES AND EQUITY | |||||
Current liabilities: | |||||
Short-term debt | $ | 1,777 | $ | 622 | |
Accounts payable – trade | 1,140 | 1,133 | |||
Accounts payable – other | 101 | 142 | |||
Due to unconsolidated affiliates | 8 | 14 | |||
Dividends and interest payable | 314 | 303 | |||
Accrued compensation and benefits | 289 | 423 | |||
Regulatory balancing accounts – overcollected | 120 | 34 | |||
Current portion of long-term debt | 907 | 907 | |||
Fixed-price contracts and other derivatives | 54 | 56 | |||
Customer deposits | 150 | 153 | |||
Reserve for Aliso Canyon costs | 117 | 274 | |||
Liabilities held for sale | 222 | ― | |||
Other | 481 | 551 | |||
Total current liabilities | 5,680 | 4,612 | |||
Long-term debt ($298 and $303 at June 30, 2016 and December 31, 2015, respectively, related to VIE) | 13,178 | 13,134 | |||
Deferred credits and other liabilities: | |||||
Customer advances for construction | 152 | 149 | |||
Pension and other postretirement benefit plan obligations, net of plan assets | 1,171 | 1,152 | |||
Deferred income taxes | 3,071 | 3,157 | |||
Deferred investment tax credits | 32 | 32 | |||
Regulatory liabilities arising from removal obligations | 2,891 | 2,793 | |||
Asset retirement obligations | 2,491 | 2,126 | |||
Fixed-price contracts and other derivatives | 262 | 240 | |||
Deferred credits and other | 1,384 | 1,176 | |||
Total deferred credits and other liabilities | 11,454 | 10,825 | |||
Commitments and contingencies (Note 11) | |||||
Equity: | |||||
Preferred stock (50 million shares authorized; none issued) | ― | ― | |||
Common stock (750 million shares authorized; 250 million and 248 million shares | |||||
outstanding at June 30, 2016 and December 31, 2015, respectively; no par value) | 2,681 | 2,621 | |||
Retained earnings | 9,952 | 9,994 | |||
Accumulated other comprehensive income (loss) | (852) | (806) | |||
Total Sempra Energy shareholders' equity | 11,781 | 11,809 | |||
Preferred stock of subsidiary | 20 | 20 | |||
Other noncontrolling interests | 762 | 750 | |||
Total equity | 12,563 | 12,579 | |||
Total liabilities and equity | $ | 42,875 | $ | 41,150 | |
(1) | Derived from audited financial statements. | ||||
See Notes to Condensed Consolidated Financial Statements. |
SEMPRA ENERGY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in millions) | |||||||
June 30, 2017 | December 31, 2016(1) | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 223 | $ | 349 | |||
Restricted cash | 70 | 66 | |||||
Accounts receivable – trade, net | 1,139 | 1,390 | |||||
Accounts receivable – other, net | 165 | 164 | |||||
Due from unconsolidated affiliates | 26 | 26 | |||||
Income taxes receivable | 110 | 43 | |||||
Inventories | 239 | 258 | |||||
Regulatory balancing accounts – undercollected | 261 | 259 | |||||
Fixed-price contracts and other derivatives | 186 | 83 | |||||
Assets held for sale | 109 | 201 | |||||
Other | 239 | 271 | |||||
Total current assets | 2,767 | 3,110 | |||||
Other assets: | |||||||
Restricted cash | 17 | 10 | |||||
Due from unconsolidated affiliates | 373 | 201 | |||||
Regulatory assets | 3,569 | 3,414 | |||||
Nuclear decommissioning trusts | 1,029 | 1,026 | |||||
Investments | 2,134 | 2,097 | |||||
Goodwill | 2,379 | 2,364 | |||||
Other intangible assets | 541 | 548 | |||||
Dedicated assets in support of certain benefit plans | 427 | 430 | |||||
Insurance receivable for Aliso Canyon costs | 554 | 606 | |||||
Deferred income taxes | 166 | 234 | |||||
Sundry | 859 | 815 | |||||
Total other assets | 12,048 | 11,745 | |||||
Property, plant and equipment: | |||||||
Property, plant and equipment | 45,704 | 43,624 | |||||
Less accumulated depreciation and amortization | (11,143 | ) | (10,693 | ) | |||
Property, plant and equipment, net ($335 and $354 at June 30, 2017 and December 31, 2016, respectively, related to VIE) | 34,561 | 32,931 | |||||
Total assets | $ | 49,376 | $ | 47,786 |
SEMPRA ENERGY | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
(Dollars in millions) | |||||
Six months ended June 30, | |||||
2016 | 2015 | ||||
(unaudited) | |||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income | $ | 357 | $ | 778 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | 642 | 610 | |||
Deferred income taxes and investment tax credits | (42) | 203 | |||
Gain on sale of assets | ― | (62) | |||
Plant closure adjustment | ― | (21) | |||
Equity earnings | (42) | (83) | |||
Fixed-price contracts and other derivatives | 41 | ― | |||
Other | 33 | (8) | |||
Net change in other working capital components | 167 | (116) | |||
Insurance receivable for Aliso Canyon costs | (354) | ― | |||
Changes in other assets | (67) | (89) | |||
Changes in other liabilities | 147 | 7 | |||
Net cash provided by operating activities | 882 | 1,219 | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Expenditures for property, plant and equipment | (2,006) | (1,466) | |||
Expenditures for investments and acquisition of business | (46) | (161) | |||
Proceeds from sale of assets | 443 | 347 | |||
Distributions from investments | 12 | 9 | |||
Purchases of nuclear decommissioning and other trust assets | (206) | (229) | |||
Proceeds from sales by nuclear decommissioning and other trusts | 204 | 221 | |||
Increases in restricted cash | (32) | (34) | |||
Decreases in restricted cash | 44 | 49 | |||
Advances to unconsolidated affiliates | (9) | (20) | |||
Repayments of advances to unconsolidated affiliates | 9 | 74 | |||
Other | (6) | 9 | |||
Net cash used in investing activities | (1,593) | (1,201) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Common dividends paid | (335) | (308) | |||
Preferred dividends paid by subsidiary | (1) | (1) | |||
Issuances of common stock | 29 | 31 | |||
Repurchases of common stock | (54) | (66) | |||
Issuances of debt (maturities greater than 90 days) | 1,384 | 1,547 | |||
Payments on debt (maturities greater than 90 days) | (986) | (846) | |||
Increase (decrease) in short-term debt, net | 865 | (339) | |||
Net distributions to noncontrolling interests | (10) | (14) | |||
Tax benefit related to share-based compensation | 34 | 52 | |||
Other | (10) | (6) | |||
Net cash provided by financing activities | 916 | 50 | |||
Effect of exchange rate changes on cash and cash equivalents | 8 | (2) | |||
Increase in cash and cash equivalents | 213 | 66 | |||
Cash and cash equivalents, January 1 | 403 | 570 | |||
Cash and cash equivalents, June 30 | $ | 616 | $ | 636 | |
See Notes to Condensed Consolidated Financial Statements. |
(1) | Derived from audited financial statements. |
SEMPRA ENERGY | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) | |||||
(Dollars in millions) | |||||
Six months ended June 30, | |||||
2016 | 2015 | ||||
(unaudited) | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||
Interest payments, net of amounts capitalized | $ | 279 | $ | 260 | |
Income tax payments, net of refunds | 73 | 72 | |||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | |||||
Acquisition of business: | |||||
Assets acquired | $ | ― | $ | 10 | |
Liabilities assumed | ― | (2) | |||
Accrued purchase price | ― | (6) | |||
Cash paid | $ | ― | $ | 2 | |
Accrued capital expenditures | $ | 541 | $ | 302 | |
Financing of build-to-suit property | ― | 39 | |||
Redemption of industrial development bonds | ― | 79 | |||
Common dividends issued in stock | 27 | 27 | |||
Dividends declared but not paid | 195 | 178 | |||
See Notes to Condensed Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Dollars in millions) | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||
2016 | 2015 | 2016 | 2015 | |||||
(unaudited) | ||||||||
Operating revenues | ||||||||
Electric | $ | 897 | $ | 874 | $ | 1,740 | $ | 1,679 |
Natural gas | 95 | 98 | 243 | 259 | ||||
Total operating revenues | 992 | 972 | 1,983 | 1,938 | ||||
Operating expenses | ||||||||
Cost of electric fuel and purchased power | 314 | 251 | 562 | 479 | ||||
Cost of natural gas | 25 | 31 | 64 | 85 | ||||
Operation and maintenance | 266 | 255 | 512 | 472 | ||||
Depreciation and amortization | 158 | 149 | 317 | 294 | ||||
Franchise fees and other taxes | 59 | 59 | 122 | 120 | ||||
Plant closure adjustment | ― | ― | ― | (21) | ||||
Total operating expenses | 822 | 745 | 1,577 | 1,429 | ||||
Operating income | 170 | 227 | 406 | 509 | ||||
Other income, net | 13 | 9 | 27 | 18 | ||||
Interest expense | (48) | (52) | (96) | (104) | ||||
Income before income taxes | 135 | 184 | 337 | 423 | ||||
Income tax expense | (48) | (54) | (120) | (142) | ||||
Net income | 87 | 130 | 217 | 281 | ||||
Losses (earnings) attributable to noncontrolling interest | 13 | (4) | 12 | (8) | ||||
Earnings attributable to common shares | $ | 100 | $ | 126 | $ | 229 | $ | 273 |
See Notes to Condensed Consolidated Financial Statements. | ||||||||
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||||||
(Dollars in millions) | ||||||||||
SDG&E shareholder's equity | ||||||||||
Pretax | Income tax | Net-of-tax | Noncontrolling | |||||||
amount | expense | amount | interest (after-tax) | Total | ||||||
Three months ended June 30, 2016 and 2015 | ||||||||||
(unaudited) | ||||||||||
2016: | ||||||||||
Net income (loss) | $ | 148 | $ | (48) | $ | 100 | $ | (13) | $ | 87 |
Other comprehensive income (loss): | ||||||||||
Financial instruments | ― | ― | ― | 1 | 1 | |||||
Total other comprehensive income | ― | ― | ― | 1 | 1 | |||||
Comprehensive income (loss) | $ | 148 | $ | (48) | $ | 100 | $ | (12) | $ | 88 |
2015: | ||||||||||
Net income | $ | 180 | $ | (54) | $ | 126 | $ | 4 | $ | 130 |
Other comprehensive income (loss): | ||||||||||
Financial instruments | ― | ― | ― | 3 | 3 | |||||
Total other comprehensive income | ― | ― | ― | 3 | 3 | |||||
Comprehensive income | $ | 180 | $ | (54) | $ | 126 | $ | 7 | $ | 133 |
Six months ended June 30, 2016 and 2015 | ||||||||||
(unaudited) | ||||||||||
2016: | ||||||||||
Net income (loss) | $ | 349 | $ | (120) | $ | 229 | $ | (12) | $ | 217 |
Other comprehensive income (loss): | ||||||||||
Financial instruments | ― | ― | ― | (1) | (1) | |||||
Total other comprehensive loss | ― | ― | ― | (1) | (1) | |||||
Comprehensive income (loss) | $ | 349 | $ | (120) | $ | 229 | $ | (13) | $ | 216 |
2015: | ||||||||||
Net income | $ | 415 | $ | (142) | $ | 273 | $ | 8 | $ | 281 |
Other comprehensive income (loss): | ||||||||||
Financial instruments | ― | ― | ― | 1 | 1 | |||||
Total other comprehensive income | ― | ― | ― | 1 | 1 | |||||
Comprehensive income | $ | 415 | $ | (142) | $ | 273 | $ | 9 | $ | 282 |
See Notes to Condensed Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(Dollars in millions) | |||||
June 30, | December 31, | ||||
2016 | 2015(1) | ||||
(unaudited) | |||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 8 | $ | 20 | |
Restricted cash | 17 | 23 | |||
Accounts receivable – trade, net | 310 | 331 | |||
Accounts receivable – other | 14 | 17 | |||
Due from unconsolidated affiliates | 163 | 1 | |||
Income taxes receivable | 33 | 1 | |||
Inventories | 71 | 75 | |||
Regulatory balancing accounts – net undercollected | 336 | 307 | |||
Regulatory assets | 93 | 107 | |||
Fixed-price contracts and other derivatives | 39 | 53 | |||
Other | 42 | 69 | |||
Total current assets | 1,126 | 1,004 | |||
Other assets: | |||||
Restricted cash | 3 | ― | |||
Deferred taxes recoverable in rates | 938 | 914 | |||
Other regulatory assets | 933 | 977 | |||
Nuclear decommissioning trusts | 1,103 | 1,063 | |||
Sundry | 335 | 301 | |||
Total other assets | 3,312 | 3,255 | |||
Property, plant and equipment: | |||||
Property, plant and equipment | 17,000 | 16,458 | |||
Less accumulated depreciation and amortization | (4,399) | (4,202) | |||
Property, plant and equipment, net ($372 and $383 at June 30, 2016 and December 31, 2015, respectively, related to VIE) | 12,601 | 12,256 | |||
Total assets | $ | 17,039 | $ | 16,515 | |
(1) | Derived from audited financial statements. | ||||
See Notes to Condensed Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||
(Dollars in millions) | |||||
June 30, | December 31, | ||||
2016 | 2015(1) | ||||
(unaudited) | |||||
LIABILITIES AND EQUITY | |||||
Current liabilities: | |||||
Short-term debt | $ | 54 | $ | 168 | |
Accounts payable | 375 | 377 | |||
Due to unconsolidated affiliates | 190 | 55 | |||
Interest payable | 40 | 39 | |||
Accrued compensation and benefits | 77 | 129 | |||
Accrued franchise fees | 31 | 66 | |||
Current portion of long-term debt | 191 | 50 | |||
Asset retirement obligations | 63 | 99 | |||
Fixed-price contracts and other derivatives | 37 | 51 | |||
Customer deposits | 72 | 72 | |||
Other | 88 | 101 | |||
Total current liabilities | 1,218 | 1,207 | |||
Long-term debt ($298 and $303 at June 30, 2016 and December 31, 2015, respectively, related to VIE) | 4,681 | 4,455 | |||
Deferred credits and other liabilities: | |||||
Customer advances for construction | 50 | 46 | |||
Pension and other postretirement benefit plan obligations, net of plan assets | 221 | 212 | |||
Deferred income taxes | 2,523 | 2,472 | |||
Deferred investment tax credits | 20 | 19 | |||
Regulatory liabilities arising from removal obligations | 1,743 | 1,629 | |||
Asset retirement obligations | 765 | 729 | |||
Fixed-price contracts and other derivatives | 98 | 106 | |||
Deferred credits and other | 406 | 364 | |||
Total deferred credits and other liabilities | 5,826 | 5,577 | |||
Commitments and contingencies (Note 11) | |||||
Equity: | |||||
Common stock (255 million shares authorized; 117 million shares outstanding; | |||||
no par value) | 1,338 | 1,338 | |||
Retained earnings | 3,947 | 3,893 | |||
Accumulated other comprehensive income (loss) | (8) | (8) | |||
Total SDG&E shareholder's equity | 5,277 | 5,223 | |||
Noncontrolling interest | 37 | 53 | |||
Total equity | 5,314 | 5,276 | |||
Total liabilities and equity | $ | 17,039 | $ | 16,515 | |
(1) | Derived from audited financial statements. | ||||
See Notes to Condensed Consolidated Financial Statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(Dollars in millions) | ||||
Six months ended June 30, | ||||
2016 | 2015 | |||
(unaudited) | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | $ | 217 | $ | 281 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 317 | 294 | ||
Deferred income taxes and investment tax credits | 26 | 103 | ||
Plant closure adjustment | ― | (21) | ||
Fixed-price contracts and other derivatives | (1) | (2) | ||
Other | (21) | (9) | ||
Net change in other working capital components | ― | (40) | ||
Changes in other assets | (39) | (59) | ||
Changes in other liabilities | 9 | 3 | ||
Net cash provided by operating activities | 508 | 550 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Expenditures for property, plant and equipment | (602) | (600) | ||
Purchases of nuclear decommissioning trust assets | (203) | (227) | ||
Proceeds from sales by nuclear decommissioning trusts | 204 | 221 | ||
Increases in restricted cash | (21) | (19) | ||
Decreases in restricted cash | 24 | 19 | ||
Increase in loans to affiliate | (172) | ― | ||
Net cash used in investing activities | (770) | (606) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Issuances of debt (maturities greater than 90 days) | 498 | 388 | ||
Payments on debt (maturities greater than 90 days) | (128) | (105) | ||
Decrease in short-term debt, net | (114) | (206) | ||
Capital distributions made by VIE | (3) | (6) | ||
Other | (3) | ― | ||
Net cash provided by financing activities | 250 | 71 | ||
(Decrease) increase in cash and cash equivalents | (12) | 15 | ||
Cash and cash equivalents, January 1 | 20 | 8 | ||
Cash and cash equivalents, June 30 | $ | 8 | $ | 23 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||
Interest payments, net of amounts capitalized | $ | 92 | $ | 99 |
Income tax payments, net | 125 | 99 | ||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||||
Dividends declared but not paid | $ | 175 | $ | ― |
Accrued capital expenditures | 124 | 118 | ||
See Notes to Condensed Consolidated Financial Statements. | ||||
SOUTHERN CALIFORNIA GAS COMPANY | ||||||||
CONDENSED STATEMENTS OF OPERATIONS | ||||||||
(Dollars in millions) | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||
2016 | 2015 | 2016 | 2015 | |||||
(unaudited) | ||||||||
Operating revenues | $ | 617 | $ | 780 | $ | 1,650 | $ | 1,828 |
Operating expenses | ||||||||
Cost of natural gas | 147 | 196 | 400 | 463 | ||||
Operation and maintenance | 339 | 346 | 666 | 660 | ||||
Depreciation and amortization | 112 | 113 | 234 | 226 | ||||
Franchise fees and other taxes | 30 | 31 | 67 | 65 | ||||
Total operating expenses | 628 | 686 | 1,367 | 1,414 | ||||
Operating (loss) income | (11) | 94 | 283 | 414 | ||||
Other income, net | 6 | 9 | 16 | 17 | ||||
Interest income | ― | 3 | ― | 3 | ||||
Interest expense | (24) | (19) | (46) | (38) | ||||
(Loss) income before income taxes | (29) | 87 | 253 | 396 | ||||
Income tax benefit (expense) | 29 | (16) | (58) | (111) | ||||
Net income | ― | 71 | 195 | 285 | ||||
Preferred dividend requirements | (1) | (1) | (1) | (1) | ||||
(Losses) earnings attributable to common shares | $ | (1) | $ | 70 | $ | 194 | $ | 284 |
See Notes to Condensed Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | ||||||
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||
(Dollars in millions) | ||||||
Pretax | Income tax | Net-of-tax | ||||
amount | benefit (expense) | amount | ||||
Three months ended June 30, 2016 and 2015 | ||||||
(unaudited) | ||||||
2016: | ||||||
Net loss/Comprehensive loss | $ | (29) | $ | 29 | $ | ― |
2015: | ||||||
Net income/Comprehensive income | $ | 87 | $ | (16) | $ | 71 |
Six months ended June 30, 2016 and 2015 | ||||||
(unaudited) | ||||||
2016: | ||||||
Net income/Comprehensive income | $ | 253 | $ | (58) | $ | 195 |
2015: | ||||||
Net income/Comprehensive income | $ | 396 | $ | (111) | $ | 285 |
See Notes to Condensed Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||
CONDENSED BALANCE SHEETS | |||||
(Dollars in millions) | |||||
June 30, | December 31, | ||||
2016 | 2015(1) | ||||
(unaudited) | |||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 211 | $ | 58 | |
Accounts receivable – trade, net | 337 | 635 | |||
Accounts receivable – other | 82 | 99 | |||
Due from unconsolidated affiliates | 7 | 48 | |||
Income taxes receivable | 6 | ― | |||
Inventories | 44 | 79 | |||
Regulatory assets | 8 | 7 | |||
Other | 35 | 40 | |||
Total current assets | 730 | 966 | |||
Other assets: | |||||
Regulatory assets arising from pension obligations | 732 | 699 | |||
Other regulatory assets | 717 | 636 | |||
Insurance receivable for Aliso Canyon costs | 679 | 325 | |||
Sundry | 252 | 207 | |||
Total other assets | 2,380 | 1,867 | |||
Property, plant and equipment: | |||||
Property, plant and equipment | 14,910 | 14,171 | |||
Less accumulated depreciation and amortization | (4,934) | (4,900) | |||
Property, plant and equipment, net | 9,976 | 9,271 | |||
Total assets | $ | 13,086 | $ | 12,104 | |
(1) | Derived from audited financial statements. | ||||
See Notes to Condensed Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||
CONDENSED BALANCE SHEETS (CONTINUED) | |||||
(Dollars in millions) | |||||
June 30, | December 31, | ||||
2016 | 2015(1) | ||||
(unaudited) | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Accounts payable – trade | $ | 277 | $ | 422 | |
Accounts payable – other | 63 | 76 | |||
Due to unconsolidated affiliate | 25 | ― | |||
Income taxes payable | ― | 3 | |||
Accrued compensation and benefits | 123 | 160 | |||
Regulatory balancing accounts – net overcollected | 120 | 34 | |||
Current portion of long-term debt | 1 | 9 | |||
Customer deposits | 72 | 76 | |||
Reserve for Aliso Canyon costs | 117 | 274 | |||
Other | 181 | 184 | |||
Total current liabilities | 979 | 1,238 | |||
Long-term debt | 2,981 | 2,481 | |||
Deferred credits and other liabilities: | |||||
Customer advances for construction | 102 | 103 | |||
Pension obligation, net of plan assets | 749 | 716 | |||
Deferred income taxes | 1,637 | 1,532 | |||
Deferred investment tax credits | 12 | 14 | |||
Regulatory liabilities arising from removal obligations | 1,149 | 1,145 | |||
Asset retirement obligations | 1,697 | 1,354 | |||
Deferred credits and other | 437 | 372 | |||
Total deferred credits and other liabilities | 5,783 | 5,236 | |||
Commitments and contingencies (Note 11) | |||||
Shareholders' equity: | |||||
Preferred stock | 22 | 22 | |||
Common stock (100 million shares authorized; 91 million shares outstanding; | |||||
no par value) | 866 | 866 | |||
Retained earnings | 2,474 | 2,280 | |||
Accumulated other comprehensive income (loss) | (19) | (19) | |||
Total shareholders' equity | 3,343 | 3,149 | |||
Total liabilities and shareholders' equity | $ | 13,086 | $ | 12,104 | |
(1) | Derived from audited financial statements. | ||||
See Notes to Condensed Financial Statements. |
SOUTHERN CALIFORNIA GAS COMPANY | ||||
CONDENSED STATEMENTS OF CASH FLOWS | ||||
(Dollars in millions) | ||||
Six months ended June 30, | ||||
2016 | 2015 | |||
(unaudited) | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | $ | 195 | $ | 285 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 234 | 226 | ||
Deferred income taxes and investment tax credits | 32 | 76 | ||
Other | 7 | (15) | ||
Net change in other working capital components | 190 | (58) | ||
Insurance receivable for Aliso Canyon costs | (354) | ― | ||
Changes in other assets | (54) | (30) | ||
Changes in other liabilities | 12 | (1) | ||
Net cash provided by operating activities | 262 | 483 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Expenditures for property, plant and equipment | (650) | (603) | ||
Decrease (increase) in loans to affiliate, net | 50 | (279) | ||
Net cash used in investing activities | (600) | (882) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Preferred dividends paid | (1) | (1) | ||
Issuances of long-term debt | 499 | 599 | ||
Payments on long-term debt | (3) | ― | ||
Decrease in short-term debt, net | ― | (50) | ||
Other | (4) | (3) | ||
Net cash provided by financing activities | 491 | 545 | ||
Increase in cash and cash equivalents | 153 | 146 | ||
Cash and cash equivalents, January 1 | 58 | 85 | ||
Cash and cash equivalents, June 30 | $ | 211 | $ | 231 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||
Interest payments, net of amounts capitalized | $ | 43 | $ | 36 |
Income tax payments, net | 35 | 14 | ||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITY | ||||
Accrued capital expenditures | $ | 140 | $ | 143 |
See Notes to Condensed Financial Statements. | ||||
SEMPRA ENERGY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||
(Dollars in millions) | |||||||
June 30, 2017 | December 31, 2016(1) | ||||||
(unaudited) | |||||||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 1,826 | $ | 1,779 | |||
Accounts payable – trade | 1,054 | 1,346 | |||||
Accounts payable – other | 113 | 130 | |||||
Due to unconsolidated affiliates | 11 | 11 | |||||
Dividends and interest payable | 339 | 319 | |||||
Accrued compensation and benefits | 314 | 409 | |||||
Regulatory balancing accounts – overcollected | 204 | 122 | |||||
Current portion of long-term debt | 1,287 | 913 | |||||
Fixed-price contracts and other derivatives | 109 | 83 | |||||
Customer deposits | 158 | 158 | |||||
Reserve for Aliso Canyon costs | 63 | 53 | |||||
Liabilities held for sale | 47 | 47 | |||||
Other | 538 | 557 | |||||
Total current liabilities | 6,063 | 5,927 | |||||
Long-term debt ($289 and $293 at June 30, 2017 and December 31, 2016, respectively, related to VIE) | 15,000 | 14,429 | |||||
Deferred credits and other liabilities: | |||||||
Customer advances for construction | 146 | 152 | |||||
Pension and other postretirement benefit plan obligations, net of plan assets | 1,240 | 1,208 | |||||
Deferred income taxes | 4,191 | 3,745 | |||||
Deferred investment tax credits | 27 | 28 | |||||
Regulatory liabilities arising from removal obligations | 2,746 | 2,697 | |||||
Asset retirement obligations | 2,469 | 2,431 | |||||
Fixed-price contracts and other derivatives | 330 | 405 | |||||
Deferred credits and other | 1,559 | 1,523 | |||||
Total deferred credits and other liabilities | 12,708 | 12,189 | |||||
Commitments and contingencies (Note 11) | |||||||
Equity: | |||||||
Preferred stock (50 million shares authorized; none issued) | — | — | |||||
Common stock (750 million shares authorized; 251 million and 250 million shares outstanding at June 30, 2017 and December 31, 2016, respectively; no par value) | 3,046 | 2,982 | |||||
Retained earnings | 11,004 | 10,717 | |||||
Accumulated other comprehensive income (loss) | (718 | ) | (748 | ) | |||
Total Sempra Energy shareholders’ equity | 13,332 | 12,951 | |||||
Preferred stock of subsidiary | 20 | 20 | |||||
Other noncontrolling interests | 2,253 | 2,270 | |||||
Total equity | 15,605 | 15,241 | |||||
Total liabilities and equity | $ | 49,376 | $ | 47,786 |
(1) | Derived from audited financial statements. |
SEMPRA ENERGY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in millions) | |||||||
Six months ended June 30, | |||||||
2017 | 2016(1) | ||||||
(unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 700 | $ | 391 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 728 | 642 | |||||
Deferred income taxes and investment tax credits | 411 | (76 | ) | ||||
Impairment losses | 71 | 22 | |||||
Equity earnings, net | (13 | ) | (42 | ) | |||
Fixed-price contracts and other derivatives | (142 | ) | 41 | ||||
Other | (19 | ) | 45 | ||||
Net change in other working capital components | 138 | 167 | |||||
Insurance receivable for Aliso Canyon costs | 52 | (354 | ) | ||||
Changes in other assets | (88 | ) | (67 | ) | |||
Changes in other liabilities | 51 | 147 | |||||
Net cash provided by operating activities | 1,889 | 916 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Expenditures for property, plant and equipment | (1,802 | ) | (2,006 | ) | |||
Expenditures for investments | (97 | ) | (46 | ) | |||
Proceeds from sale of assets | 4 | 443 | |||||
Distributions from investments | 18 | 12 | |||||
Purchases of nuclear decommissioning and other trust assets | (823 | ) | (206 | ) | |||
Proceeds from sales by nuclear decommissioning and other trusts | 823 | 204 | |||||
Increases in restricted cash | (194 | ) | (32 | ) | |||
Decreases in restricted cash | 185 | 44 | |||||
Advances to unconsolidated affiliates | (183 | ) | (9 | ) | |||
Repayments of advances to unconsolidated affiliates | 2 | 9 | |||||
Other | — | (6 | ) | ||||
Net cash used in investing activities | (2,067 | ) | (1,593 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Common dividends paid | (368 | ) | (335 | ) | |||
Preferred dividends paid by subsidiary | (1 | ) | (1 | ) | |||
Issuances of common stock | 28 | 29 | |||||
Repurchases of common stock | (14 | ) | (54 | ) | |||
Issuances of debt (maturities greater than 90 days) | 1,932 | 1,384 | |||||
Payments on debt (maturities greater than 90 days) | (1,006 | ) | (986 | ) | |||
(Decrease) increase in short-term debt, net | (493 | ) | 865 | ||||
Net distributions to noncontrolling interests | (25 | ) | (10 | ) | |||
Other | (9 | ) | (10 | ) | |||
Net cash provided by financing activities | 44 | 882 | |||||
Effect of exchange rate changes on cash and cash equivalents | 8 | 8 | |||||
(Decrease) increase in cash and cash equivalents | (126 | ) | 213 | ||||
Cash and cash equivalents, January 1 | 349 | 403 | |||||
Cash and cash equivalents, June 30 | $ | 223 | $ | 616 |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
SEMPRA ENERGY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) | |||||||
(Dollars in millions) | |||||||
Six months ended June 30, | |||||||
2017 | 2016(1) | ||||||
(unaudited) | |||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||
Interest payments, net of amounts capitalized | $ | 301 | $ | 279 | |||
Income tax payments, net of refunds | 109 | 73 | |||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | |||||||
Accrued capital expenditures | $ | 428 | $ | 541 | |||
Increase in capital lease obligations for investment in property, plant and equipment | 502 | — | |||||
Equitization of note receivable due from unconsolidated affiliate | 19 | — | |||||
Common dividends issued in stock | 27 | 27 | |||||
Dividends declared but not paid | 214 | 195 |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016(1) | ||||||||||||
(unaudited) | |||||||||||||||
Operating revenues | |||||||||||||||
Electric | $ | 946 | $ | 897 | $ | 1,821 | $ | 1,740 | |||||||
Natural gas | 112 | 95 | 294 | 243 | |||||||||||
Total operating revenues | 1,058 | 992 | 2,115 | 1,983 | |||||||||||
Operating expenses | |||||||||||||||
Cost of electric fuel and purchased power | 316 | 314 | 577 | 562 | |||||||||||
Cost of natural gas | 38 | 25 | 103 | 64 | |||||||||||
Operation and maintenance | 237 | 266 | 464 | 512 | |||||||||||
Depreciation and amortization | 166 | 158 | 329 | 317 | |||||||||||
Franchise fees and other taxes | 60 | 59 | 123 | 122 | |||||||||||
Total operating expenses | 817 | 822 | 1,596 | 1,577 | |||||||||||
Operating income | 241 | 170 | 519 | 406 | |||||||||||
Other income, net | 15 | 13 | 33 | 27 | |||||||||||
Interest expense | (49 | ) | (48 | ) | (98 | ) | (96 | ) | |||||||
Income before income taxes | 207 | 135 | 454 | 337 | |||||||||||
Income tax expense | (54 | ) | (48 | ) | (144 | ) | (113 | ) | |||||||
Net income | 153 | 87 | 310 | 224 | |||||||||||
(Earnings) losses attributable to noncontrolling interest | (4 | ) | 13 | (6 | ) | 12 | |||||||||
Earnings attributable to common shares | $ | 149 | $ | 100 | $ | 304 | $ | 236 |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
SDG&E shareholder’s equity | |||||||||||||||||||
Pretax amount | Income tax expense | Net-of-tax amount | Noncontrolling interest (after-tax) | Total | |||||||||||||||
Three months ended June 30, 2017 and 2016 | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
2017: | |||||||||||||||||||
Net income | $ | 203 | $ | (54 | ) | $ | 149 | $ | 4 | $ | 153 | ||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Financial instruments | — | — | — | 1 | 1 | ||||||||||||||
Total other comprehensive income | — | — | — | 1 | 1 | ||||||||||||||
Comprehensive income | $ | 203 | $ | (54 | ) | $ | 149 | $ | 5 | $ | 154 | ||||||||
2016: | |||||||||||||||||||
Net income (loss) | $ | 148 | $ | (48 | ) | $ | 100 | $ | (13 | ) | $ | 87 | |||||||
Other comprehensive income (loss): | |||||||||||||||||||
Financial instruments | — | — | — | 1 | 1 | ||||||||||||||
Total other comprehensive income | — | — | — | 1 | 1 | ||||||||||||||
Comprehensive income (loss) | $ | 148 | $ | (48 | ) | $ | 100 | $ | (12 | ) | $ | 88 |
Six months ended June 30, 2017 and 2016 | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
2017: | |||||||||||||||||||
Net income | $ | 448 | $ | (144 | ) | $ | 304 | $ | 6 | $ | 310 | ||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Financial instruments | — | — | — | 4 | 4 | ||||||||||||||
Total other comprehensive income | — | — | — | 4 | 4 | ||||||||||||||
Comprehensive income | $ | 448 | $ | (144 | ) | $ | 304 | $ | 10 | $ | 314 | ||||||||
2016(1): | |||||||||||||||||||
Net income (loss) | $ | 349 | $ | (113 | ) | $ | 236 | $ | (12 | ) | $ | 224 | |||||||
Other comprehensive income (loss): | |||||||||||||||||||
Financial instruments | — | — | — | (1 | ) | (1 | ) | ||||||||||||
Total other comprehensive loss | — | — | — | (1 | ) | (1 | ) | ||||||||||||
Comprehensive income (loss) | $ | 349 | $ | (113 | ) | $ | 236 | $ | (13 | ) | $ | 223 |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in millions) | |||||||
June 30, 2017 | December 31, 2016(1) | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 12 | $ | 8 | |||
Restricted cash | 1 | 11 | |||||
Accounts receivable – trade, net | 368 | 354 | |||||
Accounts receivable – other, net | 20 | 17 | |||||
Due from unconsolidated affiliates | 2 | 4 | |||||
Income taxes receivable | 98 | 122 | |||||
Inventories | 89 | 80 | |||||
Prepaid expenses | 23 | 59 | |||||
Regulatory balancing accounts – net undercollected | 261 | 259 | |||||
Regulatory assets | 104 | 81 | |||||
Fixed-price contracts and other derivatives | 29 | 58 | |||||
Other | 19 | 19 | |||||
Total current assets | 1,026 | 1,072 | |||||
Other assets: | |||||||
Restricted cash | 13 | 1 | |||||
Deferred income taxes recoverable in rates | 1,059 | 1,014 | |||||
Other regulatory assets | 1,004 | 998 | |||||
Nuclear decommissioning trusts | 1,029 | 1,026 | |||||
Sundry | 362 | 358 | |||||
Total other assets | 3,467 | 3,397 | |||||
Property, plant and equipment: | |||||||
Property, plant and equipment | 18,996 | 17,844 | |||||
Less accumulated depreciation and amortization | (4,781 | ) | (4,594 | ) | |||
Property, plant and equipment, net ($335 and $354 at June 30, 2017 and December 31, 2016, respectively, related to VIE) | 14,215 | 13,250 | |||||
Total assets | $ | 18,708 | $ | 17,719 |
(1) | Derived from audited financial statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||
(Dollars in millions) | |||||||
June 30, 2017 | December 31, 2016(1) | ||||||
(unaudited) | |||||||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 5 | $ | — | |||
Accounts payable | 433 | 460 | |||||
Due to unconsolidated affiliates | 26 | 15 | |||||
Interest payable | 41 | 40 | |||||
Accrued compensation and benefits | 77 | 121 | |||||
Accrued franchise fees | 37 | 43 | |||||
Current portion of long-term debt | 57 | 191 | |||||
Asset retirement obligations | 83 | 79 | |||||
Fixed-price contracts and other derivatives | 61 | 61 | |||||
Customer deposits | 77 | 76 | |||||
Other | 54 | 82 | |||||
Total current liabilities | 951 | 1,168 | |||||
Long-term debt ($289 and $293 at June 30, 2017 and December 31, 2016, respectively, related to VIE) | 5,523 | 4,658 | |||||
Deferred credits and other liabilities: | |||||||
Customer advances for construction | 52 | 52 | |||||
Pension and other postretirement benefit plan obligations, net of plan assets | 244 | 232 | |||||
Deferred income taxes | 2,980 | 2,829 | |||||
Deferred investment tax credits | 17 | 16 | |||||
Regulatory liabilities arising from removal obligations | 1,782 | 1,725 | |||||
Asset retirement obligations | 758 | 751 | |||||
Fixed-price contracts and other derivatives | 182 | 189 | |||||
Deferred credits and other | 415 | 421 | |||||
Total deferred credits and other liabilities | 6,430 | 6,215 | |||||
Commitments and contingencies (Note 11) | |||||||
Equity: | |||||||
Preferred stock (45 million shares authorized; none issued) | — | — | |||||
Common stock (255 million shares authorized; 117 million shares outstanding; no par value) | 1,338 | 1,338 | |||||
Retained earnings | 4,440 | 4,311 | |||||
Accumulated other comprehensive income (loss) | (8 | ) | (8 | ) | |||
Total SDG&E shareholder’s equity | 5,770 | 5,641 | |||||
Noncontrolling interest | 34 | 37 | |||||
Total equity | 5,804 | 5,678 | |||||
Total liabilities and equity | $ | 18,708 | $ | 17,719 |
(1) | Derived from audited financial statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in millions) | |||||||
Six months ended June 30, | |||||||
2017 | 2016(1) | ||||||
(unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 310 | $ | 224 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 329 | 317 | |||||
Deferred income taxes and investment tax credits | 98 | 19 | |||||
Fixed-price contracts and other derivatives | (1 | ) | (1 | ) | |||
Other | (20 | ) | (21 | ) | |||
Net change in other working capital components | 6 | — | |||||
Changes in other assets | (49 | ) | (39 | ) | |||
Changes in other liabilities | 17 | 9 | |||||
Net cash provided by operating activities | 690 | 508 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Expenditures for property, plant and equipment | (763 | ) | (602 | ) | |||
Purchases of nuclear decommissioning trust assets | (823 | ) | (203 | ) | |||
Proceeds from sales by nuclear decommissioning trusts | 823 | 204 | |||||
Increases in restricted cash | (20 | ) | (21 | ) | |||
Decreases in restricted cash | 18 | 24 | |||||
Decrease (increase) in loans to affiliate, net | 31 | (172 | ) | ||||
Net cash used in investing activities | (734 | ) | (770 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Common dividends paid | (175 | ) | — | ||||
Issuances of debt (maturities greater than 90 days) | 398 | 498 | |||||
Payments on debt (maturities greater than 90 days) | (163 | ) | (128 | ) | |||
Increase (decrease) in short-term debt, net | 5 | (114 | ) | ||||
Capital distributions made by VIE, net | (13 | ) | (3 | ) | |||
Debt issuance costs | (4 | ) | (3 | ) | |||
Net cash provided by financing activities | 48 | 250 | |||||
Increase (decrease) in cash and cash equivalents | 4 | (12 | ) | ||||
Cash and cash equivalents, January 1 | 8 | 20 | |||||
Cash and cash equivalents, June 30 | $ | 12 | $ | 8 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||
Interest payments, net of amounts capitalized | $ | 94 | $ | 92 | |||
Income tax payments, net | 13 | 125 | |||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | |||||||
Accrued capital expenditures | $ | 152 | $ | 124 | |||
Increase in capital lease obligations for investment in property, plant and equipment | 500 | — | |||||
Dividends declared but not paid | — | 175 |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||||||||||
CONDENSED STATEMENTS OF OPERATIONS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016(1) | ||||||||||||
(unaudited) | |||||||||||||||
Operating revenues | $ | 770 | $ | 617 | $ | 2,011 | $ | 1,650 | |||||||
Operating expenses | |||||||||||||||
Cost of natural gas | 179 | 147 | 587 | 400 | |||||||||||
Operation and maintenance | 336 | 318 | 689 | 644 | |||||||||||
Depreciation and amortization | 126 | 112 | 252 | 234 | |||||||||||
Franchise fees and other taxes | 34 | 30 | 73 | 67 | |||||||||||
Impairment losses | — | 21 | — | 22 | |||||||||||
Total operating expenses | 675 | 628 | 1,601 | 1,367 | |||||||||||
Operating income (loss) | 95 | (11 | ) | 410 | 283 | ||||||||||
Other income, net | 9 | 6 | 20 | 16 | |||||||||||
Interest expense | (26 | ) | (24 | ) | (51 | ) | (46 | ) | |||||||
Income (loss) before income taxes | 78 | (29 | ) | 379 | 253 | ||||||||||
Income tax (expense) benefit | (19 | ) | 29 | (117 | ) | (54 | ) | ||||||||
Net income | 59 | — | 262 | 199 | |||||||||||
Preferred dividend requirements | (1 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
Earnings (losses) attributable to common shares | $ | 58 | $ | (1 | ) | $ | 261 | $ | 198 |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||||||
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||
(Dollars in millions) | |||||||||||
Pretax amount | Income tax (expense) benefit | Net-of-tax amount | |||||||||
Three months ended June 30, 2017 and 2016 | |||||||||||
(unaudited) | |||||||||||
2017: | |||||||||||
Net income | $ | 78 | $ | (19 | ) | $ | 59 | ||||
Other comprehensive income (loss): | |||||||||||
Pension and other postretirement benefits | 1 | — | 1 | ||||||||
Total other comprehensive income | 1 | — | 1 | ||||||||
Comprehensive income | $ | 79 | $ | (19 | ) | $ | 60 | ||||
2016: | |||||||||||
Net loss/Comprehensive loss | $ | (29 | ) | $ | 29 | $ | — |
Six months ended June 30, 2017 and 2016 | |||||||||||
(unaudited) | |||||||||||
2017: | |||||||||||
Net income | $ | 379 | $ | (117 | ) | $ | 262 | ||||
Other comprehensive income (loss): | |||||||||||
Pension and other postretirement benefits | 1 | — | 1 | ||||||||
Total other comprehensive income | 1 | — | 1 | ||||||||
Comprehensive income | $ | 380 | $ | (117 | ) | $ | 263 | ||||
2016(1): | |||||||||||
Net income/Comprehensive income | $ | 253 | $ | (54 | ) | $ | 199 |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||
CONDENSED BALANCE SHEETS | |||||||
(Dollars in millions) | |||||||
June 30, 2017 | December 31, 2016(1) | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 38 | $ | 12 | |||
Accounts receivable – trade, net | 377 | 608 | |||||
Accounts receivable – other, net | 67 | 77 | |||||
Due from unconsolidated affiliates | 56 | 8 | |||||
Income taxes receivable | 6 | 2 | |||||
Inventories | 45 | 58 | |||||
Regulatory assets | 8 | 8 | |||||
Other | 48 | 63 | |||||
Total current assets | 645 | 836 | |||||
Other assets: | |||||||
Regulatory assets arising from pension obligations | 757 | 742 | |||||
Other regulatory assets | 679 | 589 | |||||
Insurance receivable for Aliso Canyon costs | 554 | 606 | |||||
Sundry | 439 | 399 | |||||
Total other assets | 2,429 | 2,336 | |||||
Property, plant and equipment: | |||||||
Property, plant and equipment | 15,889 | 15,344 | |||||
Less accumulated depreciation and amortization | (5,220 | ) | (5,092 | ) | |||
Property, plant and equipment, net | 10,669 | 10,252 | |||||
Total assets | $ | 13,743 | $ | 13,424 |
(1) | Derived from audited financial statements. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||
CONDENSED BALANCE SHEETS (CONTINUED) | |||||||
(Dollars in millions) | |||||||
June 30, 2017 | December 31, 2016(1) | ||||||
(unaudited) | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | — | $ | 62 | |||
Accounts payable – trade | 330 | 481 | |||||
Accounts payable – other | 69 | 74 | |||||
Due to unconsolidated affiliates | 1 | 28 | |||||
Accrued compensation and benefits | 124 | 150 | |||||
Regulatory balancing accounts – net overcollected | 204 | 122 | |||||
Current portion of long-term debt | 501 | — | |||||
Customer deposits | 74 | 76 | |||||
Reserve for Aliso Canyon costs | 63 | 53 | |||||
Other | 205 | 195 | |||||
Total current liabilities | 1,571 | 1,241 | |||||
Long-term debt | 2,484 | 2,982 | |||||
Deferred credits and other liabilities: | |||||||
Customer advances for construction | 94 | 99 | |||||
Pension obligation, net of plan assets | 777 | 762 | |||||
Deferred income taxes | 1,875 | 1,709 | |||||
Deferred investment tax credits | 11 | 12 | |||||
Regulatory liabilities arising from removal obligations | 964 | 972 | |||||
Asset retirement obligations | 1,643 | 1,616 | |||||
Deferred credits and other | 552 | 521 | |||||
Total deferred credits and other liabilities | 5,916 | 5,691 | |||||
Commitments and contingencies (Note 11) | |||||||
Shareholders’ equity: | |||||||
Preferred stock (11 million shares authorized; 1 million shares outstanding) | 22 | 22 | |||||
Common stock (100 million shares authorized; 91 million shares outstanding; | |||||||
no par value) | 866 | 866 | |||||
Retained earnings | 2,905 | 2,644 | |||||
Accumulated other comprehensive income (loss) | (21 | ) | (22 | ) | |||
Total shareholders’ equity | 3,772 | 3,510 | |||||
Total liabilities and shareholders’ equity | $ | 13,743 | $ | 13,424 |
(1) | Derived from audited financial statements. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||
CONDENSED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in millions) | |||||||
Six months ended June 30, | |||||||
2017 | 2016(1) | ||||||
(unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 262 | $ | 199 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 252 | 234 | |||||
Deferred income taxes and investment tax credits | 96 | 28 | |||||
Impairment losses | — | 22 | |||||
Other | (13 | ) | (15 | ) | |||
Net change in other working capital components | 253 | 190 | |||||
Insurance receivable for Aliso Canyon costs | 52 | (354 | ) | ||||
Changes in other assets | (40 | ) | (54 | ) | |||
Changes in other liabilities | (7 | ) | 12 | ||||
Net cash provided by operating activities | 855 | 262 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Expenditures for property, plant and equipment | (682 | ) | (650 | ) | |||
(Increase) decrease in loans to affiliate, net | (84 | ) | 50 | ||||
Net cash used in investing activities | (766 | ) | (600 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Preferred dividends paid | (1 | ) | (1 | ) | |||
Issuances of long-term debt | — | 499 | |||||
Payments on long-term debt | — | (3 | ) | ||||
Decrease in short-term debt, net | (62 | ) | — | ||||
Debt issuance costs | — | (4 | ) | ||||
Net cash (used in) provided by financing activities | (63 | ) | 491 | ||||
Increase in cash and cash equivalents | 26 | 153 | |||||
Cash and cash equivalents, January 1 | 12 | 58 | |||||
Cash and cash equivalents, June 30 | $ | 38 | $ | 211 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||
Interest payments, net of amounts capitalized | $ | 49 | $ | 43 | |||
Income tax payments, net | 22 | 35 | |||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITY | |||||||
Accrued capital expenditures | $ | 155 | $ | 140 |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016. |
Sempra |
▪ | Sempra Infrastructure, which includes our Sempra |
▪ | the Condensed Consolidated Financial Statements and related Notes of Sempra Energy and its subsidiaries and |
▪ | the Condensed Consolidated Financial Statements and related Notes of SDG&E and its |
▪ | the Condensed Financial Statements and related Notes of SoCalGas. |
IMPACT FROM ADOPTION OF ASU 2016-09 | |||||||||||
(Dollars in millions, except per share amounts) | |||||||||||
Six months ended June 30, 2016 | |||||||||||
As previously reported | Effect of adoption | As adjusted | |||||||||
Sempra Energy Consolidated: | |||||||||||
Condensed Consolidated Statement of Operations: | |||||||||||
Income tax expense | $ | (36 | ) | $ | 34 | $ | (2 | ) | |||
Net income | 357 | 34 | 391 | ||||||||
Earnings | 335 | 34 | 369 | ||||||||
Basic earnings per common share | $ | 1.34 | $ | 0.14 | $ | 1.48 | |||||
Diluted earnings per common share | $ | 1.33 | $ | 0.14 | $ | 1.47 | |||||
Weighted-average number of shares outstanding, diluted (thousands)(1) | 251,686 | 89 | 251,775 | ||||||||
Condensed Consolidated Statement of Comprehensive Income (Loss): | |||||||||||
Net income | $ | 357 | $ | 34 | $ | 391 | |||||
Comprehensive income | 312 | 34 | 346 | ||||||||
Comprehensive income, after preferred dividends of subsidiary | 311 | 34 | 345 |
Condensed Consolidated Statement of Cash Flows: | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 357 | $ | 34 | $ | 391 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Deferred income taxes and investment tax credits | (42 | ) | (34 | ) | (76 | ) | |||||
Other(2) | 11 | 34 | 45 | ||||||||
Net cash provided by operating activities | 882 | 34 | 916 | ||||||||
Cash flows from financing activities: | |||||||||||
Tax benefit related to share-based compensation | 34 | (34 | ) | — | |||||||
Net cash provided by financing activities | 916 | (34 | ) | 882 | |||||||
SDG&E: | |||||||||||
Condensed Consolidated Statement of Operations: | |||||||||||
Income tax expense | $ | (120 | ) | $ | 7 | $ | (113 | ) | |||
Net income | 217 | 7 | 224 | ||||||||
Earnings attributable to common shares | 229 | 7 | 236 | ||||||||
Condensed Consolidated Statement of Comprehensive Income (Loss): | |||||||||||
Net income | $ | 217 | $ | 7 | $ | 224 | |||||
Comprehensive income | 216 | 7 | 223 | ||||||||
Condensed Consolidated Statement of Cash Flows: | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 217 | $ | 7 | $ | 224 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Deferred income taxes and investment tax credits | 26 | (7 | ) | 19 | |||||||
SoCalGas: | |||||||||||
Condensed Statement of Operations: | |||||||||||
Income tax expense | $ | (58 | ) | $ | 4 | $ | (54 | ) | |||
Net income | 195 | 4 | 199 | ||||||||
Earnings attributable to common shares | 194 | 4 | 198 | ||||||||
Condensed Statement of Comprehensive Income (Loss): | |||||||||||
Net income/Comprehensive income | $ | 195 | $ | 4 | $ | 199 | |||||
Condensed Statement of Cash Flows: | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 195 | $ | 4 | $ | 199 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Deferred income taxes and investment tax credits | 32 | (4 | ) | 28 |
(1) | For the three months ended June 30, 2016, we previously reported 251,938 shares; the effect of adoption of the ASU resulted in an “as adjusted” 252,036 shares. |
(2) | For the six months ended June 30, 2016, we previously reported $33 million in Other, which was reduced to $11 million, as $22 million was reclassified to Impairment Losses to conform to current year presentation. |
ASSETS HELD FOR SALE AT JUNE 30, 2016 | |||||
(Dollars in millions) | |||||
Termoeléctrica de Mexicali | EnergySouth Inc. | ||||
Cash and cash equivalents | $ | 1 | $ | 1 | |
Inventories | 8 | 3 | |||
Other current assets | 21 | 13 | |||
Regulatory assets | ― | 12 | |||
Goodwill | ― | 72 | |||
Other assets | 17 | 53 | |||
Property, plant and equipment, net | 250 | 203 | |||
Total assets held for sale | $ | 297 | $ | 357 | |
Accounts payable | $ | 1 | $ | 9 | |
Other current liabilities | 6 | 12 | |||
Long-term debt | ― | 67 | |||
Deferred income taxes | 13 | 38 | |||
Regulatory liabilities | ― | 22 | |||
Asset retirement obligations | 4 | 12 | |||
Other liabilities | 19 | 19 | |||
Total liabilities held for sale | $ | 43 | $ | 179 | |
ASSETS HELD FOR SALE AT JUNE 30, 2017 | |||||
(Dollars in millions) | |||||
Termoeléctrica de Mexicali | |||||
Inventories | $ | 10 | |||
Other current assets | 19 | ||||
Property, plant and equipment, net | 55 | ||||
Other noncurrent assets | 25 | ||||
Total assets held for sale | $ | 109 | |||
Accounts payable | $ | 11 | |||
Other current liabilities | 4 | ||||
Asset retirement obligations | 5 | ||||
Other noncurrent liabilities | 27 | ||||
Total liabilities held for sale | $ | 47 |
INVENTORY BALANCES | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||
Natural gas | Liquefied natural gas | Materials and supplies | Total | |||||||||||||||||||||||||||||||
June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | |||||||||||||||||||||||||||
SDG&E | $ | 1 | $ | 2 | $ | — | $ | — | $ | 88 | $ | 78 | $ | 89 | $ | 80 | ||||||||||||||||||
SoCalGas(1) | — | 11 | — | — | 45 | 47 | 45 | 58 | ||||||||||||||||||||||||||
Sempra South American Utilities | — | — | — | — | 33 | 27 | 33 | 27 | ||||||||||||||||||||||||||
Sempra Mexico | — | — | 12 | 6 | 2 | 1 | 14 | 7 | ||||||||||||||||||||||||||
Sempra Renewables | — | — | — | — | 4 | 4 | 4 | 4 | ||||||||||||||||||||||||||
Sempra LNG & Midstream | 51 | 79 | 3 | 3 | — | — | 54 | 82 | ||||||||||||||||||||||||||
Sempra Energy Consolidated | $ | 52 | $ | 92 | $ | 15 | $ | 9 | $ | 172 | $ | 157 | $ | 239 | $ | 258 |
INVENTORY BALANCES | ||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||
Natural gas | Liquefied natural gas | Materials and supplies | Total | |||||||||||||||
June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | |||||||||||
SDG&E | $ | 1 | $ | 6 | $ | ― | $ | ― | $ | 70 | $ | 69 | $ | 71 | $ | 75 | ||
SoCalGas(1) | ― | 49 | ― | ― | 44 | 30 | 44 | 79 | ||||||||||
Sempra South American | ||||||||||||||||||
Utilities | ― | ― | ― | ― | 43 | 30 | 43 | 30 | ||||||||||
Sempra Mexico | ― | ― | 7 | 3 | 2 | 10 | 9 | 13 | ||||||||||
Sempra Renewables | ― | ― | ― | ― | 3 | 3 | 3 | 3 | ||||||||||
Sempra Natural Gas | 96 | 94 | 4 | 3 | ― | 1 | 100 | 98 | ||||||||||
Sempra Energy | ||||||||||||||||||
Consolidated | $ | 97 | $ | 149 | $ | 11 | $ | 6 | $ | 162 | $ | 143 | $ | 270 | $ | 298 | ||
(1) | At both June 30, 2016 and December 31, 2015, SoCalGas' natural gas inventory for core customers is net of an inventory loss related to the Aliso Canyon natural gas leak, which we discuss in Note 11. |
(1) | At June 30, 2017 and December 31, 2016, SoCalGas’ natural gas inventory for core customers is net of an inventory loss related to the Aliso Canyon natural gas leak, which we discuss in Note 11. |
GHG ALLOWANCES AND OBLIGATIONS | |||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||
Sempra Energy Consolidated | SDG&E | SoCalGas | |||||||||||||||||||||
June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | ||||||||||||||||||
Assets: | |||||||||||||||||||||||
Other current assets | $ | 40 | $ | 40 | $ | 16 | $ | 16 | $ | 24 | $ | 24 | |||||||||||
Sundry | 334 | 295 | 190 | 182 | 140 | 109 | |||||||||||||||||
Total assets | $ | 374 | $ | 335 | $ | 206 | $ | 198 | $ | 164 | $ | 133 | |||||||||||
Liabilities: | |||||||||||||||||||||||
Other current liabilities | $ | 40 | $ | 40 | $ | 16 | $ | 16 | $ | 24 | $ | 24 | |||||||||||
Deferred credits and other | 202 | 171 | 88 | 72 | 111 | 96 | |||||||||||||||||
Total liabilities | $ | 242 | $ | 211 | $ | 104 | $ | 88 | $ | 135 | $ | 120 |
▪ | the purpose and design of the VIE; |
▪ | the nature of the |
▪ | the power to direct activities that most significantly impact the economic performance of the VIE; and |
▪ | the obligation to absorb losses or right to receive benefits that could be significant to the VIE. |
AMOUNTS ASSOCIATED WITH OTAY MESA VIE | ||||||||
(Dollars in millions) | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||
2016 | 2015 | 2016 | 2015 | |||||
Operating expenses | ||||||||
Cost of electric fuel and purchased power | $ | (17) | $ | (21) | $ | (34) | $ | (39) |
Operation and maintenance | 15 | 6 | 19 | 10 | ||||
Depreciation and amortization | 10 | 6 | 17 | 12 | ||||
Total operating expenses | 8 | (9) | 2 | (17) | ||||
Operating (loss) income | (8) | 9 | (2) | 17 | ||||
Interest expense | (5) | (5) | (10) | (9) | ||||
(Loss) income before income taxes/Net (loss) income | (13) | 4 | (12) | 8 | ||||
Losses (earnings) attributable to noncontrolling interest | 13 | (4) | 12 | (8) | ||||
Earnings attributable to common shares | $ | ― | $ | ― | $ | ― | $ | ― |
AMOUNTS ASSOCIATED WITH OTAY MESA VIE | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating expenses | |||||||||||||||
Cost of electric fuel and purchased power | $ | (21 | ) | $ | (17 | ) | $ | (39 | ) | $ | (34 | ) | |||
Operation and maintenance | 5 | 15 | 9 | 19 | |||||||||||
Depreciation and amortization | 7 | 10 | 14 | 17 | |||||||||||
Total operating expenses | (9 | ) | 8 | (16 | ) | 2 | |||||||||
Operating income (loss) | 9 | (8 | ) | 16 | (2 | ) | |||||||||
Interest expense | (5 | ) | (5 | ) | (10 | ) | (10 | ) | |||||||
Income (loss) before income taxes/Net income (loss) | 4 | (13 | ) | 6 | (12 | ) | |||||||||
(Earnings) losses attributable to noncontrolling interest | (4 | ) | 13 | (6 | ) | 12 | |||||||||
Earnings attributable to common shares | $ | — | $ | — | $ | — | $ | — |
AMOUNTS ASSOCIATED WITH TAX EQUITY ARRANGEMENTS | ||||||||
(Dollars in millions) | ||||||||
Three months ended June 30, 2017 | Six months ended June 30, 2017 | |||||||
REVENUES | ||||||||
Energy-related businesses | $ | 18 | $ | 31 | ||||
EXPENSES | ||||||||
Operation and maintenance | (7 | ) | (9 | ) | ||||
Depreciation and amortization | (8 | ) | (16 | ) | ||||
Income before income taxes | 3 | 6 | ||||||
Income tax expense | (4 | ) | (6 | ) | ||||
Net loss | (1 | ) | — | |||||
Losses attributable to noncontrolling interests(1) | 7 | 10 | ||||||
Earnings | $ | 6 | $ | 10 | ||||
(1) | Net income or loss attributable to the noncontrolling interests is computed using the HLBV method and is not based on ownership percentages. |
NET PERIODIC BENEFIT COST – SEMPRA ENERGY CONSOLIDATED | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Pension benefits | Other postretirement benefits | ||||||||||||||
Three months ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 29 | $ | 27 | $ | 5 | $ | 6 | |||||||
Interest cost | 37 | 40 | 11 | 11 | |||||||||||
Expected return on assets | (40 | ) | (41 | ) | (17 | ) | (18 | ) | |||||||
Amortization of: | |||||||||||||||
Prior service cost | 2 | 3 | — | — | |||||||||||
Actuarial loss | 8 | 7 | — | — | |||||||||||
Regulatory adjustment | (29 | ) | (28 | ) | 2 | 2 | |||||||||
Total net periodic benefit cost | $ | 7 | $ | 8 | $ | 1 | $ | 1 | |||||||
Six months ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 57 | $ | 55 | $ | 11 | $ | 11 | |||||||
Interest cost | 74 | 80 | 20 | 22 | |||||||||||
Expected return on assets | (80 | ) | (83 | ) | (33 | ) | (35 | ) | |||||||
Amortization of: | |||||||||||||||
Prior service cost | 5 | 6 | — | — | |||||||||||
Actuarial loss (gain) | 16 | 13 | (1 | ) | — | ||||||||||
Regulatory adjustment | (41 | ) | (56 | ) | 4 | 4 | |||||||||
Total net periodic benefit cost | $ | 31 | $ | 15 | $ | 1 | $ | 2 |
NET PERIODIC BENEFIT COST – SEMPRA ENERGY CONSOLIDATED | ||||||||
(Dollars in millions) | ||||||||
Pension benefits | Other postretirement benefits | |||||||
Three months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | |||||
Service cost | $ | 27 | $ | 29 | $ | 6 | $ | 7 |
Interest cost | 40 | 39 | 11 | 11 | ||||
Expected return on assets | (41) | (44) | (18) | (17) | ||||
Amortization of: | ||||||||
Prior service cost | 3 | 2 | ― | ― | ||||
Actuarial loss | 7 | 11 | ― | ― | ||||
Regulatory adjustment | (28) | (30) | 2 | ― | ||||
Total net periodic benefit cost | $ | 8 | $ | 7 | $ | 1 | $ | 1 |
Six months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | |||||
Service cost | $ | 55 | $ | 59 | $ | 11 | $ | 14 |
Interest cost | 80 | 78 | 22 | 23 | ||||
Expected return on assets | (83) | (88) | (35) | (34) | ||||
Amortization of: | ||||||||
Prior service cost (credit) | 6 | 5 | ― | (1) | ||||
Actuarial loss | 13 | 19 | ― | ― | ||||
Regulatory adjustment | (56) | (59) | 4 | ― | ||||
Total net periodic benefit cost | $ | 15 | $ | 14 | $ | 2 | $ | 2 |
NET PERIODIC BENEFIT COST – SDG&E | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Pension benefits | Other postretirement benefits | ||||||||||||||
Three months ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 7 | $ | 8 | $ | 2 | $ | 1 | |||||||
Interest cost | 10 | 11 | 2 | 2 | |||||||||||
Expected return on assets | (13 | ) | (13 | ) | (4 | ) | (2 | ) | |||||||
Amortization of: | |||||||||||||||
Prior service cost | 1 | 1 | 1 | 1 | |||||||||||
Actuarial loss (gain) | 2 | 2 | — | (1 | ) | ||||||||||
Regulatory adjustment | (7 | ) | (8 | ) | (1 | ) | (1 | ) | |||||||
Total net periodic benefit cost | $ | — | $ | 1 | $ | — | $ | — | |||||||
Six months ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 15 | $ | 15 | $ | 3 | $ | 2 | |||||||
Interest cost | 19 | 21 | 4 | 4 | |||||||||||
Expected return on assets | (24 | ) | (25 | ) | (7 | ) | (5 | ) | |||||||
Amortization of: | |||||||||||||||
Prior service cost | 1 | 1 | 2 | 2 | |||||||||||
Actuarial loss (gain) | 4 | 5 | — | (1 | ) | ||||||||||
Regulatory adjustment | (14 | ) | (15 | ) | (2 | ) | (2 | ) | |||||||
Total net periodic benefit cost | $ | 1 | $ | 2 | $ | — | $ | — |
NET PERIODIC BENEFIT COST – SOCALGAS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Pension benefits | Other postretirement benefits | ||||||||||||||
Three months ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 18 | $ | 18 | $ | 3 | $ | 3 | |||||||
Interest cost | 24 | 25 | 8 | 9 | |||||||||||
Expected return on assets | (25 | ) | (27 | ) | (13 | ) | (14 | ) | |||||||
Amortization of: | |||||||||||||||
Prior service cost (credit) | 2 | 2 | — | (1 | ) | ||||||||||
Actuarial loss (gain) | 4 | 2 | (1 | ) | — | ||||||||||
Regulatory adjustment | (22 | ) | (20 | ) | 3 | 3 | |||||||||
Total net periodic benefit cost | $ | 1 | $ | — | $ | — | $ | — | |||||||
Six months ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 36 | $ | 35 | $ | 7 | $ | 7 | |||||||
Interest cost | 48 | 50 | 15 | 17 | |||||||||||
Expected return on assets | (51 | ) | (52 | ) | (26 | ) | (28 | ) | |||||||
Amortization of: | |||||||||||||||
Prior service cost (credit) | 4 | 4 | (1 | ) | (2 | ) | |||||||||
Actuarial loss (gain) | 8 | 5 | (1 | ) | — | ||||||||||
Regulatory adjustment | (27 | ) | (41 | ) | 6 | 6 | |||||||||
Total net periodic benefit cost | $ | 18 | $ | 1 | $ | — | $ | — |
NET PERIODIC BENEFIT COST – SDG&E | ||||||||
(Dollars in millions) | ||||||||
Pension benefits | Other postretirement benefits | |||||||
Three months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | |||||
Service cost | $ | 8 | $ | 8 | $ | 1 | $ | 2 |
Interest cost | 11 | 10 | 2 | 2 | ||||
Expected return on assets | (13) | (13) | (2) | (3) | ||||
Amortization of: | ||||||||
Prior service cost | 1 | 1 | 1 | 1 | ||||
Actuarial loss (gain) | 2 | 2 | (1) | ― | ||||
Regulatory adjustment | (8) | (7) | (1) | (2) | ||||
Total net periodic benefit cost | $ | 1 | $ | 1 | $ | ― | $ | ― |
Six months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | |||||
Service cost | $ | 15 | $ | 16 | $ | 2 | $ | 4 |
Interest cost | 21 | 20 | 4 | 4 | ||||
Expected return on assets | (25) | (27) | (5) | (6) | ||||
Amortization of: | ||||||||
Prior service cost | 1 | 1 | 2 | 2 | ||||
Actuarial loss (gain) | 5 | 4 | (1) | ― | ||||
Regulatory adjustment | (15) | (12) | (2) | (4) | ||||
Total net periodic benefit cost | $ | 2 | $ | 2 | $ | ― | $ | ― |
NET PERIODIC BENEFIT COST – SOCALGAS | ||||||||
(Dollars in millions) | ||||||||
Pension benefits | Other postretirement benefits | |||||||
Three months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | |||||
Service cost | $ | 18 | $ | 19 | $ | 3 | $ | 5 |
Interest cost | 25 | 24 | 9 | 9 | ||||
Expected return on assets | (27) | (27) | (14) | (14) | ||||
Amortization of: | ||||||||
Prior service cost (credit) | 2 | 2 | (1) | (2) | ||||
Actuarial loss | 2 | 6 | ― | ― | ||||
Regulatory adjustment | (20) | (23) | 3 | 2 | ||||
Total net periodic benefit cost | $ | ― | $ | 1 | $ | ― | $ | ― |
Six months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | |||||
Service cost | $ | 35 | $ | 38 | $ | 7 | $ | 10 |
Interest cost | 50 | 49 | 17 | 18 | ||||
Expected return on assets | (52) | (54) | (28) | (28) | ||||
Amortization of: | ||||||||
Prior service cost (credit) | 4 | 4 | (2) | (4) | ||||
Actuarial loss | 5 | 11 | ― | ― | ||||
Regulatory adjustment | (41) | (47) | 6 | 4 | ||||
Total net periodic benefit cost | $ | 1 | $ | 1 | $ | ― | $ | ― |
BENEFIT PLAN CONTRIBUTIONS | ||||||||||||
(Dollars in millions) | ||||||||||||
Sempra Energy Consolidated | SDG&E | SoCalGas | ||||||||||
Contributions through June 30, 2017: | ||||||||||||
Pension plans | $ | 28 | $ | 2 | $ | 17 | ||||||
Other postretirement benefit plans | 1 | — | — | |||||||||
Total expected contributions in 2017: | ||||||||||||
Pension plans | $ | 174 | $ | 32 | $ | 90 | ||||||
Other postretirement benefit plans | 8 | 4 | 1 |
BENEFIT PLAN CONTRIBUTIONS | ||||||
(Dollars in millions) | ||||||
Sempra Energy | ||||||
Consolidated | SDG&E | SoCalGas | ||||
Contributions through June 30, 2016: | ||||||
Pension plans | $ | 23 | $ | 2 | $ | ― |
Other postretirement benefit plans | 2 | ― | 1 | |||
Total expected contributions in 2016: | ||||||
Pension plans | $ | 123 | $ | 4 | $ | 77 |
Other postretirement benefit plans | 6 | 2 | 1 |
EARNINGS PER SHARE COMPUTATIONS | |||||||||||||||
(Dollars in millions, except per share amounts; shares in thousands) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016(1) | 2017 | 2016(1) | ||||||||||||
Numerator: | |||||||||||||||
Earnings/Income attributable to common shares | $ | 259 | $ | 16 | $ | 700 | $ | 369 | |||||||
Denominator: | |||||||||||||||
Weighted-average common shares outstanding for basic EPS(2) | 251,447 | 250,096 | 251,290 | 249,915 | |||||||||||
Dilutive effect of stock options, RSAs and RSUs(3) | 1,375 | 1,940 | 1,319 | 1,860 | |||||||||||
Weighted-average common shares outstanding for diluted EPS | 252,822 | 252,036 | 252,609 | 251,775 | |||||||||||
EPS: | |||||||||||||||
Basic | $ | 1.03 | $ | 0.06 | $ | 2.79 | $ | 1.48 | |||||||
Diluted | 1.03 | 0.06 | 2.77 | 1.47 |
EARNINGS PER SHARE COMPUTATIONS | ||||||||||
(Dollars in millions, except per share amounts; shares in thousands) | ||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||
2016 | 2015 | 2016 | 2015 | |||||||
Numerator: | ||||||||||
Earnings/Income attributable to common shares | $ | 16 | $ | 295 | $ | 335 | $ | 732 | ||
Denominator: | ||||||||||
Weighted-average common shares | ||||||||||
outstanding for basic EPS(1) | 250,096 | 248,108 | 249,915 | 247,916 | ||||||
Dilutive effect of stock options, restricted | ||||||||||
stock awards and restricted stock units | 1,842 | 3,383 | 1,771 | 3,348 | ||||||
Weighted-average common shares | ||||||||||
outstanding for diluted EPS | 251,938 | 251,491 | 251,686 | 251,264 | ||||||
Earnings per share: | ||||||||||
Basic | $ | 0.06 | $ | 1.19 | $ | 1.34 | $ | 2.95 | ||
Diluted | 0.06 | 1.17 | 1.33 | 2.91 | ||||||
(1) | Includes 568 and 501 average fully vested restricted stock units held in our Deferred Compensation Plan for the three months ended June 30, 2016 and 2015, respectively, and 562 and 476 of such units for the six months ended June 30, 2016 and 2015, respectively. These fully vested restricted stock units are included in weighted-average common shares outstanding for basic EPS because there are no conditions under which the corresponding shares will not be issued. |
(1) | As adjusted for the adoption of ASU 2016-09 as of January 1, 2016, as we discuss in Note 2. |
(2) | Includes 608 and 568 average fully vested RSUs held in our Deferred Compensation Plan for the three months ended June 30, 2017 and 2016, respectively, and 604 and 562 for the six months ended June 30, 2017 and 2016, respectively. These fully vested RSUs are included in weighted-average common shares outstanding for basic EPS because there are no conditions under which the corresponding shares will not be issued. |
(3) | Due to market fluctuations of both Sempra Energy stock and the comparative indices used to determine the vesting percentage of our total shareholder return performance-based RSUs, which we discuss in Note 8 of the Notes to Consolidated Financial Statements in the Annual Report, dilutive RSUs may vary widely from period-to-period. |
CAPITALIZED FINANCING COSTS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Sempra Energy Consolidated | $ | 62 | $ | 58 | $ | 144 | $ | 110 | |||||||
SDG&E | 21 | 17 | 41 | 32 | |||||||||||
SoCalGas | 15 | 14 | 30 | 27 |
CAPITALIZED FINANCING COSTS | |||||||||
(Dollars in millions) | |||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | ||||||
Sempra Energy Consolidated: | |||||||||
AFUDC related to debt | $ | 8 | $ | 7 | $ | 15 | $ | 13 | |
AFUDC related to equity | 30 | 31 | 57 | 58 | |||||
Other capitalized interest | 20 | 17 | 38 | 34 | |||||
Total Sempra Energy Consolidated | $ | 58 | $ | 55 | $ | 110 | $ | 105 | |
SDG&E: | |||||||||
AFUDC related to debt | $ | 4 | $ | 4 | $ | 8 | $ | 7 | |
AFUDC related to equity | 13 | 10 | 24 | 18 | |||||
Total SDG&E | $ | 17 | $ | 14 | $ | 32 | $ | 25 | |
SoCalGas: | |||||||||
AFUDC related to debt | $ | 4 | $ | 3 | $ | 7 | $ | 6 | |
AFUDC related to equity | 10 | 10 | 20 | 19 | |||||
Total SoCalGas | $ | 14 | $ | 13 | $ | 27 | $ | 25 |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Foreign currency translation adjustments | Financial instruments | Pension and other postretirement benefits | Total accumulated other comprehensive income (loss) | ||||||||||||
Three months ended June 30, 2017 and 2016 | |||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||
Balance as of March 31, 2017 | $ | (481 | ) | $ | (121 | ) | $ | (94 | ) | $ | (696 | ) | |||
OCI before reclassifications | 3 | (26 | ) | — | (23 | ) | |||||||||
Amounts reclassified from AOCI | — | — | 1 | 1 | |||||||||||
Net OCI | 3 | (26 | ) | 1 | (22 | ) | |||||||||
Balance as of June 30, 2017 | $ | (478 | ) | $ | (147 | ) | $ | (93 | ) | $ | (718 | ) | |||
. | |||||||||||||||
Balance as of March 31, 2016 | $ | (514 | ) | $ | (221 | ) | $ | (86 | ) | $ | (821 | ) | |||
OCI before reclassifications | 11 | (48 | ) | — | (37 | ) | |||||||||
Amounts reclassified from AOCI | — | 5 | 1 | 6 | |||||||||||
Net OCI | 11 | (43 | ) | 1 | (31 | ) | |||||||||
Balance as of June 30, 2016 | $ | (503 | ) | $ | (264 | ) | $ | (85 | ) | $ | (852 | ) | |||
SDG&E: | |||||||||||||||
Balance as of March 31, 2017 and June 30, 2017 | $ | (8 | ) | $ | (8 | ) | |||||||||
Balance as of March 31, 2016 and June 30, 2016 | $ | (8 | ) | $ | (8 | ) | |||||||||
SoCalGas: | |||||||||||||||
Balance as of March 31, 2017 | $ | (13 | ) | $ | (9 | ) | $ | (22 | ) | ||||||
Amounts reclassified from AOCI | — | 1 | 1 | ||||||||||||
Net OCI | — | 1 | 1 | ||||||||||||
Balance as of June 30, 2017 | $ | (13 | ) | $ | (8 | ) | $ | (21 | ) | ||||||
Balance as of March 31, 2016 and June 30, 2016 | $ | (14 | ) | $ | (5 | ) | $ | (19 | ) |
(1) | All amounts are net of income tax, if subject to tax, and exclude noncontrolling interests. |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) | |||||||||
SEMPRA ENERGY CONSOLIDATED | |||||||||
(Dollars in millions) | |||||||||
Foreign | Total | ||||||||
currency | Pension and other | accumulated other | |||||||
translation | Financial | postretirement | comprehensive | ||||||
adjustments | instruments | benefits | income (loss) | ||||||
Three months ended June 30, 2016 and 2015 | |||||||||
2016: | |||||||||
Balance as of March 31, 2016 | $ | (514) | $ | (221) | $ | (86) | $ | (821) | |
Other comprehensive income (loss) before | |||||||||
reclassifications | 11 | (48) | ― | (37) | |||||
Amounts reclassified from accumulated other | |||||||||
comprehensive income | ― | 5 | 1 | 6 | |||||
Net other comprehensive income (loss) | 11 | (43) | 1 | (31) | |||||
Balance as of June 30, 2016 | $ | (503) | $ | (264) | $ | (85) | $ | (852) | |
2015: | |||||||||
Balance as of March 31, 2015 | $ | (384) | $ | (145) | $ | (84) | $ | (613) | |
Other comprehensive (loss) income before | |||||||||
reclassifications | (43) | 57 | ― | 14 | |||||
Amounts reclassified from accumulated other | |||||||||
comprehensive income | ― | 2 | 1 | 3 | |||||
Net other comprehensive (loss) income | (43) | 59 | 1 | 17 | |||||
Balance as of June 30, 2015 | $ | (427) | $ | (86) | $ | (83) | $ | (596) | |
Six months ended June 30, 2016 and 2015 | |||||||||
2016: | |||||||||
Balance as of December 31, 2015 | $ | (582) | $ | (137) | $ | (87) | $ | (806) | |
Other comprehensive income (loss) before | |||||||||
reclassifications | 79 | (130) | ― | (51) | |||||
Amounts reclassified from accumulated other | |||||||||
comprehensive income | ― | 3 | 2 | 5 | |||||
Net other comprehensive income (loss) | 79 | (127) | 2 | (46) | |||||
Balance as of June 30, 2016 | $ | (503) | $ | (264) | $ | (85) | $ | (852) | |
2015: | . | ||||||||
Balance as of December 31, 2014 | $ | (322) | $ | (90) | $ | (85) | $ | (497) | |
Other comprehensive (loss) income before | |||||||||
reclassifications | (105) | 3 | ― | (102) | |||||
Amounts reclassified from accumulated other | |||||||||
comprehensive income | ― | 1 | 2 | 3 | |||||
Net other comprehensive (loss) income | (105) | 4 | 2 | (99) | |||||
Balance as of June 30, 2015 | $ | (427) | $ | (86) | $ | (83) | $ | (596) | |
(1) | All amounts are net of income tax, if subject to tax, and exclude noncontrolling interests. |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Foreign currency translation adjustments | Financial instruments | Pension and other postretirement benefits | Total accumulated other comprehensive income (loss) | ||||||||||||
Six months ended June 30, 2017 and 2016 | |||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||
Balance as of December 31, 2016 | $ | (527 | ) | $ | (125 | ) | $ | (96 | ) | $ | (748 | ) | |||
OCI before reclassifications | 49 | (28 | ) | — | 21 | ||||||||||
Amounts reclassified from AOCI | — | 6 | 3 | 9 | |||||||||||
Net OCI | 49 | (22 | ) | 3 | 30 | ||||||||||
Balance as of June 30, 2017 | $ | (478 | ) | $ | (147 | ) | $ | (93 | ) | $ | (718 | ) | |||
. | |||||||||||||||
Balance as of December 31, 2015 | $ | (582 | ) | $ | (137 | ) | $ | (87 | ) | $ | (806 | ) | |||
OCI before reclassifications | 79 | (130 | ) | — | (51 | ) | |||||||||
Amounts reclassified from AOCI | — | 3 | 2 | 5 | |||||||||||
Net OCI | 79 | (127 | ) | 2 | (46 | ) | |||||||||
Balance as of June 30, 2016 | $ | (503 | ) | $ | (264 | ) | $ | (85 | ) | $ | (852 | ) | |||
SDG&E: | |||||||||||||||
Balance as of December 31, 2016 and June 30, 2017 | $ | (8 | ) | $ | (8 | ) | |||||||||
Balance as of December 31, 2015 and June 30, 2016 | $ | (8 | ) | $ | (8 | ) | |||||||||
SoCalGas: | |||||||||||||||
Balance as of December 31, 2016 | $ | (13 | ) | $ | (9 | ) | $ | (22 | ) | ||||||
Amounts reclassified from AOCI | — | 1 | 1 | ||||||||||||
Net OCI | — | 1 | 1 | ||||||||||||
Balance as of June 30, 2017 | $ | (13 | ) | $ | (8 | ) | $ | (21 | ) | ||||||
Balance as of December 31, 2015 and June 30, 2016 | $ | (14 | ) | $ | (5 | ) | $ | (19 | ) |
(1) | All amounts are net of income tax, if subject to tax, and exclude noncontrolling interests. |
RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||
(Dollars in millions) | |||||||||
Details about accumulated other comprehensive income (loss) components | Amounts reclassified from accumulated other comprehensive income (loss) | Affected line item on Condensed Consolidated Statements of Operations | |||||||
Three months ended June 30, | |||||||||
2017 | 2016 | ||||||||
Sempra Energy Consolidated: | |||||||||
Financial instruments: | |||||||||
Interest rate and foreign exchange instruments | $ | (1 | ) | $ | 3 | Interest Expense | |||
Interest rate instruments | 2 | 2 | Equity Earnings (Losses), Before Income Tax | ||||||
Interest rate and foreign exchange instruments | 3 | 5 | Equity Earnings (Losses), Net of Income Tax | ||||||
Foreign exchange instruments | (1 | ) | — | Revenues: Energy-Related Businesses | |||||
Total before income tax | 3 | 10 | |||||||
(1 | ) | (1 | ) | Income Tax (Expense) Benefit | |||||
Net of income tax | 2 | 9 | |||||||
(2 | ) | (4 | ) | Losses (Earnings) Attributable to Noncontrolling Interests | |||||
$ | — | $ | 5 | ||||||
Pension and other postretirement benefits: | |||||||||
Amortization of actuarial loss | $ | 2 | $ | 2 | See note (1) below | ||||
(1 | ) | (1 | ) | Income Tax (Expense) Benefit | |||||
Net of income tax | $ | 1 | $ | 1 | |||||
Total reclassifications for the period, net of tax | $ | 1 | $ | 6 | |||||
SDG&E: | |||||||||
Financial instruments: | |||||||||
Interest rate instruments | $ | 3 | $ | 3 | Interest Expense | ||||
(3 | ) | (3 | ) | (Earnings) Losses Attributable to Noncontrolling Interest | |||||
Total reclassifications for the period | $ | — | $ | — | |||||
SoCalGas: | |||||||||
Pension and other postretirement benefits: | |||||||||
Amortization of actuarial loss | $ | 1 | $ | — | See note (1) below | ||||
Total reclassifications for the period, net of tax | $ | 1 | $ | — |
(1) | Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits” above). |
RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
(Dollars in millions) | ||||||||||||
Amounts reclassified | ||||||||||||
Details about accumulated | from accumulated other | Affected line item on Condensed | ||||||||||
other comprehensive income (loss) components | comprehensive income (loss) | Consolidated Statements of Operations | ||||||||||
Three months ended June 30, | ||||||||||||
2016 | 2015 | |||||||||||
Sempra Energy Consolidated: | ||||||||||||
Financial instruments: | ||||||||||||
Interest rate and foreign exchange instruments | $ | 3 | $ | 3 | Interest Expense | |||||||
Interest rate instruments | 2 | 3 | Equity Earnings (Losses), Before Income Tax | |||||||||
Interest rate and foreign exchange instruments | 5 | ― | Equity Earnings, Net of Income Tax | |||||||||
Total before income tax | 10 | 6 | ||||||||||
(1) | (1) | Income Tax Expense | ||||||||||
Net of income tax | 9 | 5 | ||||||||||
(4) | (3) | Earnings Attributable to Noncontrolling Interests | ||||||||||
$ | 5 | $ | 2 | |||||||||
Pension and other postretirement benefits: | ||||||||||||
Amortization of actuarial loss | $ | 2 | $ | 2 | See note (1) below | |||||||
(1) | (1) | Income Tax Expense | ||||||||||
Net of income tax | $ | 1 | $ | 1 | ||||||||
Total reclassifications for the period, net of tax | $ | 6 | $ | 3 | ||||||||
SDG&E: | ||||||||||||
Financial instruments: | ||||||||||||
Interest rate instruments | $ | 3 | $ | 3 | Interest Expense | |||||||
(3) | (3) | Losses (Earnings) Attributable to Noncontrolling Interest | ||||||||||
Total reclassifications for the period, net of tax | $ | ― | $ | ― | ||||||||
(1) | Amounts are included in the computation of net periodic benefit cost (see "Pension and Other Postretirement Benefits" above). |
RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||
(Dollars in millions) | |||||||||||
Amount reclassified | |||||||||||
Details about accumulated | from accumulated other | Affected line item on Condensed | |||||||||
other comprehensive income (loss) components | comprehensive income (loss) | Consolidated Statements of Operations | |||||||||
Six months ended June 30, | |||||||||||
2016 | 2015 | ||||||||||
Sempra Energy Consolidated: | |||||||||||
Financial instruments: | |||||||||||
Interest rate and foreign exchange instruments | $ | 7 | $ | 9 | Interest Expense | ||||||
Interest rate instruments | 5 | 6 | Equity Earnings (Losses), Before Income Tax | ||||||||
Interest rate and foreign exchange instruments | 6 | ― | Equity Earnings, Net of Income Tax | ||||||||
Commodity contracts not subject to | |||||||||||
rate recovery | (7) | (7) | Revenues: Energy-Related Businesses | ||||||||
Total before income tax | 11 | 8 | |||||||||
(1) | ― | Income Tax Expense | |||||||||
Net of income tax | 10 | 8 | |||||||||
(7) | (7) | Earnings Attributable to Noncontrolling Interests | |||||||||
$ | 3 | $ | 1 | ||||||||
Pension and other postretirement benefits: | |||||||||||
Amortization of actuarial loss | $ | 4 | $ | 4 | See note (1) below | ||||||
(2) | (2) | Income Tax Expense | |||||||||
Net of income tax | $ | 2 | $ | 2 | |||||||
Total reclassifications for the period, net of tax | $ | 5 | $ | 3 | |||||||
SDG&E: | |||||||||||
Financial instruments: | |||||||||||
Interest rate instruments | $ | 6 | $ | 6 | Interest Expense | ||||||
(6) | (6) | Losses (Earnings) Attributable to Noncontrolling Interest | |||||||||
Total reclassifications for the period, net of tax | $ | ― | $ | ― | |||||||
(1) | Amounts are included in the computation of net periodic benefit cost (see "Pension and Other Postretirement Benefits" above). |
RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||
(Dollars in millions) | |||||||||
Details about accumulated other comprehensive income (loss) components | Amounts reclassified from accumulated other comprehensive income (loss) | Affected line item on Condensed Consolidated Statements of Operations | |||||||
Six months ended June 30, | |||||||||
2017 | 2016 | ||||||||
Sempra Energy Consolidated: | |||||||||
Financial instruments: | |||||||||
Interest rate and foreign exchange instruments | $ | (4 | ) | $ | 7 | Interest Expense | |||
Interest rate instruments | 4 | 5 | Equity Earnings (Losses), Before Income Tax | ||||||
Interest rate and foreign exchange instruments | 5 | 6 | Equity Earnings (Losses), Net of Income Tax | ||||||
Foreign exchange instruments | 1 | — | Revenues: Energy-Related Businesses | ||||||
Commodity contracts not subject to rate recovery | 9 | (7 | ) | Revenues: Energy-Related Businesses | |||||
Total before income tax | 15 | 11 | |||||||
(5 | ) | (1 | ) | Income Tax (Expense) Benefit | |||||
Net of income tax | 10 | 10 | |||||||
(4 | ) | (7 | ) | Losses (Earnings) Attributable to Noncontrolling Interests | |||||
$ | 6 | $ | 3 | ||||||
Pension and other postretirement benefits: | |||||||||
Amortization of actuarial loss | $ | 5 | $ | 4 | See note (1) below | ||||
(2 | ) | (2 | ) | Income Tax (Expense) Benefit | |||||
Net of income tax | $ | 3 | $ | 2 | |||||
Total reclassifications for the period, net of tax | $ | 9 | $ | 5 | |||||
SDG&E: | |||||||||
Financial instruments: | |||||||||
Interest rate instruments | $ | 6 | $ | 6 | Interest Expense | ||||
(6 | ) | (6 | ) | (Earnings) Losses Attributable to Noncontrolling Interest | |||||
Total reclassifications for the period | $ | — | $ | — | |||||
SoCalGas: | |||||||||
Pension and other postretirement benefits: | |||||||||
Amortization of actuarial loss | $ | 1 | $ | — | See note (1) below | ||||
Total reclassifications for the period, net of tax | $ | 1 | $ | — |
(1) | Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits” above). |
SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS – SEMPRA ENERGY CONSOLIDATED | |||||||||||
(Dollars in millions) | |||||||||||
Sempra Energy shareholders’ equity(1) | Non- controlling interests(2) | Total equity(1) | |||||||||
Balance at December 31, 2016 | $ | 12,951 | $ | 2,290 | $ | 15,241 | |||||
Comprehensive income | 731 | 8 | 739 | ||||||||
Preferred dividends of subsidiary | (1 | ) | — | (1 | ) | ||||||
Share-based compensation expense | 23 | — | 23 | ||||||||
Common stock dividends declared | (413 | ) | — | (413 | ) | ||||||
Issuances of common stock | 55 | — | 55 | ||||||||
Repurchases of common stock | (14 | ) | — | (14 | ) | ||||||
Equity contributed by noncontrolling interest | — | 1 | 1 | ||||||||
Distributions to noncontrolling interests | — | (26 | ) | (26 | ) | ||||||
Balance at June 30, 2017 | $ | 13,332 | $ | 2,273 | $ | 15,605 | |||||
Balance at December 31, 2015 | $ | 11,809 | $ | 770 | $ | 12,579 | |||||
Cumulative-effect adjustment from change in accounting principle | 107 | — | 107 | ||||||||
Comprehensive income | 324 | 22 | 346 | ||||||||
Preferred dividends of subsidiary | (1 | ) | — | (1 | ) | ||||||
Share-based compensation expense | 24 | — | 24 | ||||||||
Common stock dividends declared | (377 | ) | — | (377 | ) | ||||||
Issuances of common stock | 56 | — | 56 | ||||||||
Repurchases of common stock | (54 | ) | — | (54 | ) | ||||||
Equity contributed by noncontrolling interest | — | 1 | 1 | ||||||||
Distributions to noncontrolling interests | — | (11 | ) | (11 | ) | ||||||
Balance at June 30, 2016 | $ | 11,888 | $ | 782 | $ | 12,670 |
SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS – SEMPRA ENERGY CONSOLIDATED | |||||||
(Dollars in millions) | |||||||
Sempra Energy | Non- | ||||||
shareholders' | controlling | Total | |||||
equity | interests(1) | equity | |||||
Balance at December 31, 2015 | $ | 11,809 | $ | 770 | $ | 12,579 | |
Comprehensive income | 290 | 22 | 312 | ||||
Preferred dividends of subsidiary | (1) | ― | (1) | ||||
Share-based compensation expense | 24 | ― | 24 | ||||
Common stock dividends declared | (377) | ― | (377) | ||||
Issuances of common stock | 56 | ― | 56 | ||||
Repurchases of common stock | (54) | ― | (54) | ||||
Tax benefit related to share-based compensation | 34 | ― | 34 | ||||
Equity contributed by noncontrolling interest | ― | 1 | 1 | ||||
Distributions to noncontrolling interests | ― | (11) | (11) | ||||
Balance at June 30, 2016 | $ | 11,781 | $ | 782 | $ | 12,563 | |
Balance at December 31, 2014 | $ | 11,326 | $ | 774 | $ | 12,100 | |
Comprehensive income | 634 | 33 | 667 | ||||
Preferred dividends of subsidiary | (1) | ― | (1) | ||||
Share-based compensation expense | 26 | ― | 26 | ||||
Common stock dividends declared | (347) | ― | (347) | ||||
Issuances of common stock | 59 | ― | 59 | ||||
Repurchases of common stock | (66) | ― | (66) | ||||
Tax benefit related to share-based compensation | 52 | ― | 52 | ||||
Equity contributed by noncontrolling interest | ― | 1 | 1 | ||||
Distributions to noncontrolling interests | ― | (16) | (16) | ||||
Balance at June 30, 2015 | $ | 11,683 | $ | 792 | $ | 12,475 | |
(1) | Noncontrolling interests include the preferred stock of SoCalGas and other noncontrolling interests as listed in the table below under "Other Noncontrolling Interests." |
(1) | Amounts for the six months ended June 30, 2016 reflect the adoption of ASU 2016-09 as of January 1, 2016, as we discuss in Note 2. |
(2) | Noncontrolling interests include the preferred stock of SoCalGas and other noncontrolling interests as listed in the table below under “Other Noncontrolling Interests.” |
SHAREHOLDER’S EQUITY AND NONCONTROLLING INTEREST – SDG&E | |||||||||||
(Dollars in millions) | |||||||||||
SDG&E shareholder’s equity(1) | Non- controlling interest | Total equity(1) | |||||||||
Balance at December 31, 2016 | $ | 5,641 | $ | 37 | $ | 5,678 | |||||
Comprehensive income | 304 | 10 | 314 | ||||||||
Common stock dividends declared | (175 | ) | — | (175 | ) | ||||||
Equity contributed by noncontrolling interest | — | 1 | 1 | ||||||||
Distributions to noncontrolling interest | — | (14 | ) | (14 | ) | ||||||
Balance at June 30, 2017 | $ | 5,770 | $ | 34 | $ | 5,804 | |||||
Balance at December 31, 2015 | $ | 5,223 | $ | 53 | $ | 5,276 | |||||
Cumulative-effect adjustment from change in accounting principle | 23 | — | 23 | ||||||||
Comprehensive income (loss) | 236 | (13 | ) | 223 | |||||||
Common stock dividends declared | (175 | ) | — | (175 | ) | ||||||
Distributions to noncontrolling interest | — | (3 | ) | (3 | ) | ||||||
Balance at June 30, 2016 | $ | 5,307 | $ | 37 | $ | 5,344 |
SHAREHOLDER'S EQUITY AND NONCONTROLLING INTEREST – SDG&E | ||||||
(Dollars in millions) | ||||||
SDG&E | Non- | |||||
shareholder's | controlling | Total | ||||
equity | interest | equity | ||||
Balance at December 31, 2015 | $ | 5,223 | $ | 53 | $ | 5,276 |
Comprehensive income (loss) | 229 | (13) | 216 | |||
Common stock dividends declared | (175) | ― | (175) | |||
Distributions to noncontrolling interest | ― | (3) | (3) | |||
Balance at June 30, 2016 | $ | 5,277 | $ | 37 | $ | 5,314 |
Balance at December 31, 2014 | $ | 4,932 | $ | 60 | $ | 4,992 |
Comprehensive income | 273 | 9 | 282 | |||
Distributions to noncontrolling interest | ― | (8) | (8) | |||
Balance at June 30, 2015 | $ | 5,205 | $ | 61 | $ | 5,266 |
(1) | Amounts for the six months ended June 30, 2016 reflect the adoption of ASU 2016-09 as of January 1, 2016, as we discuss in Note 2. |
SHAREHOLDERS' EQUITY ― SOCALGAS | ||
(Dollars in millions) | ||
SoCalGas | ||
shareholders' | ||
equity | ||
Balance at December 31, 2015 | $ | 3,149 |
Comprehensive income | 195 | |
Preferred stock dividends declared | (1) | |
Balance at June 30, 2016 | $ | 3,343 |
Balance at December 31, 2014 | $ | 2,781 |
Comprehensive income | 285 | |
Preferred stock dividends declared | (1) | |
Balance at June 30, 2015 | $ | 3,065 |
SHAREHOLDERS’ EQUITY – SOCALGAS | |||
(Dollars in millions) | |||
Total equity(1) | |||
Balance at December 31, 2016 | $ | 3,510 | |
Comprehensive income | 263 | ||
Preferred stock dividends declared | (1 | ) | |
Balance at June 30, 2017 | $ | 3,772 | |
Balance at December 31, 2015 | $ | 3,149 | |
Cumulative-effect adjustment from change in accounting principle | 15 | ||
Comprehensive income | 199 | ||
Preferred stock dividends declared | (1 | ) | |
Balance at June 30, 2016 | $ | 3,362 |
(1) | Amounts for the six months ended June 30, 2016 reflect the adoption of ASU 2016-09 as of January 1, 2016, as we discuss in Note 2. |
OTHER NONCONTROLLING INTERESTS | |||||||||||
(Dollars in millions) | |||||||||||
Percent ownership held by noncontrolling interests | Equity held by noncontrolling interests | ||||||||||
June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | ||||||||
SDG&E: | |||||||||||
Otay Mesa VIE | 100 | % | 100 | % | $ | 34 | $ | 37 | |||
Sempra South American Utilities: | |||||||||||
Chilquinta Energía subsidiaries(1) | 22.9 – 43.4 | 23.1 – 43.4 | 22 | 22 | |||||||
Luz del Sur | 16.4 | 16.4 | 184 | 173 | |||||||
Tecsur S.A. | 9.8 | 9.8 | 3 | 4 | |||||||
Sempra Mexico: | |||||||||||
IEnova | 33.6 | 33.6 | 1,514 | 1,524 | |||||||
Sempra Renewables: | |||||||||||
Tax equity arrangement – wind(2) | NA | NA | 91 | 92 | |||||||
Tax equity arrangement – solar(2) | NA | NA | 363 | 376 | |||||||
Sempra LNG & Midstream: | |||||||||||
Bay Gas | 9.1 | 9.1 | 28 | 27 | |||||||
Liberty Gas Storage, LLC | 23.3 | 23.3 | 13 | 14 | |||||||
Southern Gas Transmission Company | 49.0 | 49.0 | 1 | 1 | |||||||
Total Sempra Energy | $ | 2,253 | $ | 2,270 |
OTHER NONCONTROLLING INTERESTS | |||||||||
(Dollars in millions) | |||||||||
Percent ownership held by others | |||||||||
June 30, | December 31, | June 30, | December 31, | ||||||
2016 | 2015 | 2016 | 2015 | ||||||
SDG&E: | |||||||||
Otay Mesa VIE | 100 | % | 100 | % | $ | 37 | $ | 53 | |
Sempra South American Utilities: | |||||||||
Chilquinta Energía subsidiaries(1) | 23.2 – 43.4 | 23.5 – 43.4 | 21 | 21 | |||||
Luz del Sur | 16.4 | 16.4 | 175 | 164 | |||||
Tecsur | 9.8 | 9.8 | 4 | 4 | |||||
Sempra Mexico: | |||||||||
IEnova | 18.9 | 18.9 | 484 | 468 | |||||
Sempra Natural Gas: | |||||||||
Bay Gas Storage Company, Ltd. | 9.1 | 9.1 | 26 | 25 | |||||
Liberty Gas Storage, LLC | 23.3 | 23.2 | 14 | 14 | |||||
Southern Gas Transmission Company | 49.0 | 49.0 | 1 | 1 | |||||
Total Sempra Energy | $ | 762 | $ | 750 | |||||
(1) | Chilquinta Energía has four subsidiaries with noncontrolling interests held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries. |
(1) | Chilquinta Energía has four subsidiaries with noncontrolling interests held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries. |
(2) | Net income or loss attributable to the noncontrolling interests is computed using the HLBV method and is not based on ownership percentages, as we discuss in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. |
AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES | |||||
(Dollars in millions) | |||||
June 30, 2016 | December 31, 2015 | ||||
Sempra Energy Consolidated: | |||||
Total due from various unconsolidated affiliates - current | $ | 6 | $ | 6 | |
Sempra South American Utilities(1): | |||||
Eletrans S.A. and Eletrans II S.A.: | |||||
4% Note(2) | $ | 79 | $ | 72 | |
Other related party receivables | 2 | ― | |||
Sempra Mexico(1): | |||||
Affiliate of joint venture with PEMEX: | |||||
Note due November 13, 2017(3) | 2 | 3 | |||
Note due November 14, 2018(3) | 43 | 42 | |||
Note due November 14, 2018(3) | 35 | 34 | |||
Note due November 14, 2018(3) | 8 | 8 | |||
Energía Sierra Juárez: | |||||
Note due June 15, 2018(4) | 17 | 24 | |||
Sempra Natural Gas: | |||||
Cameron LNG JV | 6 | 3 | |||
Total due from unconsolidated affiliates - noncurrent | $ | 192 | $ | 186 | |
Total due to various unconsolidated affiliates - current | $ | (8) | $ | (14) | |
SDG&E: | |||||
Sempra Energy(5) | $ | 163 | $ | ― | |
Other affiliates | ― | 1 | |||
Total due from unconsolidated affiliates - current | $ | 163 | $ | 1 | |
Sempra Energy | $ | ― | $ | (34) | |
SoCalGas | (7) | (13) | |||
Other affiliates | (183) | (8) | |||
Total due to unconsolidated affiliates - current | $ | (190) | $ | (55) | |
Income taxes due from Sempra Energy(6) | $ | 59 | $ | 28 | |
SoCalGas: | |||||
Sempra Energy(7) | $ | ― | $ | 35 | |
SDG&E | 7 | 13 | |||
Total due from unconsolidated affiliates - current | $ | 7 | $ | 48 | |
Sempra Energy | $ | (25) | $ | ― | |
Total due to unconsolidated affiliate - current | $ | (25) | $ | ― | |
Income taxes due from Sempra Energy(6) | $ | 9 | $ | 1 | |
(1) | Amounts include principal balances plus accumulated interest outstanding. | ||||
(2) | U.S. dollar-denominated loan, at a fixed interest rate with no stated maturity date, to provide project financing for the construction of transmission lines at Eletrans S.A. and Eletrans II S.A., both of which are joint ventures at Chilquinta Energía. | ||||
(3) | U.S. dollar-denominated loan, at a variable interest rate based on a 30-day LIBOR plus 450 basis points (4.97 percent at June 30, 2016), to finance the Los Ramones Norte pipeline project. | ||||
(4) | U.S. dollar-denominated loan, at a variable interest rate based on a 30-day LIBOR plus 637.5 basis points (6.84 percent at June 30, 2016), to finance the first phase of the Energía Sierra Juárez wind project, which is a joint venture of IEnova. | ||||
(5) | At June 30, 2016, net receivable included outstanding advances to Sempra Energy of $172 million at an interest rate of 0.35 percent. | ||||
(6) | SDG&E and SoCalGas are included in the consolidated income tax return of Sempra Energy and are allocated income tax expense from Sempra Energy in an amount equal to that which would result from each company having always filed a separate return. | ||||
(7) | At December 31, 2015, net receivable included outstanding advances to Sempra Energy of $50 million at an interest rate of 0.11 percent. |
AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES | |||||||
(Dollars in millions) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Sempra Energy Consolidated: | |||||||
Total due from various unconsolidated affiliates – current | $ | 26 | $ | 26 | |||
Sempra South American Utilities(1): | |||||||
Eletrans – 4% Note(2) | $ | 90 | $ | 96 | |||
Other related party receivables | 1 | 1 | |||||
Sempra Mexico(1): | |||||||
IMG – Note due March 15, 2022(3) | 177 | — | |||||
Affiliate of joint venture with Ductos y Energéticos del Norte – Notes due November 14, 2018(4) | 92 | 90 | |||||
Energía Sierra Juárez – Note(5) | 13 | 14 | |||||
Total due from unconsolidated affiliates – noncurrent | $ | 373 | $ | 201 | |||
Total due to various unconsolidated affiliates – current | $ | (11 | ) | $ | (11 | ) | |
SDG&E: | |||||||
Sempra Energy(6) | $ | — | $ | 3 | |||
SoCalGas | 1 | — | |||||
Various affiliates | 1 | 1 | |||||
Total due from various unconsolidated affiliates – current | $ | 2 | $ | 4 | |||
Sempra Energy | $ | (18 | ) | $ | — | ||
SoCalGas | — | (8 | ) | ||||
Various affiliates | (8 | ) | (7 | ) | |||
Total due to various unconsolidated affiliates – current | $ | (26 | ) | $ | (15 | ) | |
Income taxes due from Sempra Energy(7) | $ | 132 | $ | 159 | |||
SoCalGas: | |||||||
Sempra Energy(8) | $ | 55 | $ | — | |||
SDG&E | — | 8 | |||||
Various affiliates | 1 | — | |||||
Total due from unconsolidated affiliates – current | $ | 56 | $ | 8 | |||
Sempra Energy | $ | — | $ | (28 | ) | ||
SDG&E | (1 | ) | — | ||||
Total due to unconsolidated affiliates – current | $ | (1 | ) | $ | (28 | ) | |
Income taxes due from Sempra Energy(7) | $ | 6 | $ | 5 |
(1) | Amounts include principal balances plus accumulated interest outstanding. |
(2) | U.S. dollar-denominated loan, at a fixed interest rate with no stated maturity date, to provide project financing for the construction of transmission lines at Eletrans, which includes, collectively, joint ventures of Chilquinta Energía. |
(3) | Mexican peso-denominated revolving line of credit for up to $9.0 billion Mexican pesos or approximately $500 million U.S. dollar-equivalent, at a variable interest rate based on the 91-day Interbank Equilibrium Interest Rate plus 220 basis points (9.60 percent at June 30, 2017), to finance construction of the natural gas marine pipeline. |
(4) | Four U.S. dollar-denominated loans, at variable interest rates based on the 30-day LIBOR plus 450 basis points (5.72 percent at June 30, 2017), to finance the Los Ramones Norte pipeline. |
(5) | U.S. dollar-denominated loan, at a variable interest rate based on the 30-day LIBOR plus 637.5 basis points (7.60 percent at June 30, 2017) with no stated maturity date, to finance the first phase of the Energía Sierra Juárez wind project, which is a joint venture of IEnova. |
(6) | At December 31, 2016, net receivable included outstanding advances to Sempra Energy of $31 million at an interest rate of 0.68 percent. |
(7) | SDG&E and SoCalGas are included in the consolidated income tax return of Sempra Energy and are allocated income tax expense from Sempra Energy in an amount equal to that which would result from each company having always filed a separate return. |
(8) | At June 30, 2017, net receivable included outstanding advances to Sempra Energy of $84 million at an interest rate of 1.23 percent. |
REVENUES AND COST OF SALES FROM UNCONSOLIDATED AFFILIATES | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Sempra Energy Consolidated | $ | 8 | $ | 5 | $ | 15 | $ | 10 | |||||||
SDG&E | 2 | — | 4 | 3 | |||||||||||
SoCalGas | 17 | 18 | 35 | 35 | |||||||||||
Cost of Sales: | |||||||||||||||
Sempra Energy Consolidated | $ | 14 | $ | 20 | $ | 28 | $ | 50 | |||||||
SDG&E | 19 | 16 | 39 | 30 |
REVENUES AND COST OF SALES FROM UNCONSOLIDATED AFFILIATES | |||||||||
(Dollars in millions) | |||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | ||||||
REVENUES | |||||||||
Sempra Energy Consolidated | $ | 5 | $ | 8 | $ | 10 | $ | 16 | |
SDG&E | ― | 2 | 3 | 5 | |||||
SoCalGas | 18 | 17 | 35 | 36 | |||||
COST OF SALES | |||||||||
Sempra Energy Consolidated | $ | 20 | $ | 30 | $ | 50 | $ | 49 | |
SDG&E | 16 | 13 | 30 | 18 |
OTHER INCOME, NET | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Sempra Energy Consolidated: | |||||||||||||||
Allowance for equity funds used during construction | $ | 40 | $ | 30 | $ | 112 | $ | 57 | |||||||
Investment gains(1) | 14 | 10 | 30 | 20 | |||||||||||
Gains (losses) on interest rate and foreign exchange instruments, net | 31 | (15 | ) | 94 | (12 | ) | |||||||||
Foreign currency transaction gains (losses) | 7 | (5 | ) | 17 | (7 | ) | |||||||||
Electrical infrastructure relocation income(2) | — | 2 | — | 3 | |||||||||||
Regulatory interest, net(3) | — | 1 | 2 | 3 | |||||||||||
Sundry, net | (1 | ) | — | 5 | 8 | ||||||||||
Total | $ | 91 | $ | 23 | $ | 260 | $ | 72 | |||||||
SDG&E: | |||||||||||||||
Allowance for equity funds used during construction | $ | 16 | $ | 13 | $ | 31 | $ | 24 | |||||||
Regulatory interest, net(3) | — | 1 | 2 | 3 | |||||||||||
Sundry, net | (1 | ) | (1 | ) | — | — | |||||||||
Total | $ | 15 | $ | 13 | $ | 33 | $ | 27 | |||||||
SoCalGas: | |||||||||||||||
Allowance for equity funds used during construction | $ | 11 | $ | 10 | $ | 22 | $ | 20 | |||||||
Sundry, net | (2 | ) | (4 | ) | (2 | ) | (4 | ) | |||||||
Total | $ | 9 | $ | 6 | $ | 20 | $ | 16 |
OTHER INCOME, NET | |||||||||
(Dollars in millions) | |||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | ||||||
Sempra Energy Consolidated: | |||||||||
Allowance for equity funds used during construction | $ | 30 | $ | 31 | $ | 57 | $ | 58 | |
Investment gains (losses)(1) | 10 | (2) | 20 | 7 | |||||
Losses on interest rate and foreign exchange instruments, net | (15) | (3) | (12) | (3) | |||||
Foreign currency transaction losses | (5) | (2) | (7) | (3) | |||||
Sale of other investments | 1 | 6 | 2 | 6 | |||||
Electrical infrastructure relocation income(2) | 2 | 4 | 3 | 4 | |||||
Regulatory interest, net(3) | 1 | 1 | 3 | 2 | |||||
Sundry, net | (1) | 2 | 6 | 5 | |||||
Total | $ | 23 | $ | 37 | $ | 72 | $ | 76 | |
SDG&E: | |||||||||
Allowance for equity funds used during construction | $ | 13 | $ | 10 | $ | 24 | $ | 18 | |
Regulatory interest, net(3) | 1 | 1 | 3 | 2 | |||||
Sundry, net | (1) | (2) | ― | (2) | |||||
Total | $ | 13 | $ | 9 | $ | 27 | $ | 18 | |
SoCalGas: | |||||||||
Allowance for equity funds used during construction | $ | 10 | $ | 10 | $ | 20 | $ | 19 | |
Sundry, net | (4) | (1) | (4) | (2) | |||||
Total | $ | 6 | $ | 9 | $ | 16 | $ | 17 | |
(1) | Represents investment gains (losses) on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are partially offset by corresponding changes in compensation expense related to the plans. | ||||||||
(2) | Income at Luz del Sur associated with the relocation of electrical infrastructure. | ||||||||
(3) | Interest on regulatory balancing accounts. |
(1) | Represents investment gains on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are partially offset by corresponding changes in compensation expense related to the plans, recorded in Operation and Maintenance on the Condensed Consolidated Statements of Operations. |
(2) | Income at Luz del Sur associated with the relocation of electrical infrastructure. |
(3) | Interest on regulatory balancing accounts. |
INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES | |||||||||||||
(Dollars in millions) | |||||||||||||
Income tax expense | Effective income tax rate | Income tax (benefit) expense | Effective income tax rate | ||||||||||
Three months ended June 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Sempra Energy Consolidated | $ | 167 | 40 | % | $ | (106 | ) | 95 | % | ||||
SDG&E | 54 | 26 | 48 | 36 | |||||||||
SoCalGas | 19 | 24 | (29 | ) | 100 | ||||||||
Six months ended June 30, | |||||||||||||
2017 | 2016(1) | ||||||||||||
Sempra Energy Consolidated | $ | 462 | 39 | % | $ | 2 | 1 | % | |||||
SDG&E | 144 | 32 | 113 | 34 | |||||||||
SoCalGas | 117 | 31 | 54 | 21 |
(1) | Reflects the adoption of ASU 2016-09 as of January 1, 2016, as we discuss in Note 2. |
INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES | |||||||||||
(Dollars in millions) | |||||||||||
Income tax | Effective | Effective | |||||||||
(benefit) | income | Income tax | income | ||||||||
expense | tax rate | expense | tax rate | ||||||||
Three months ended June 30, | |||||||||||
2016 | 2015 | ||||||||||
Sempra Energy Consolidated | $ | (106) | 95 | % | $ | 98 | 25 | % | |||
SDG&E | 48 | 36 | 54 | 29 | |||||||
SoCalGas | (29) | 100 | 16 | 18 | |||||||
Six months ended June 30, | |||||||||||
2016 | 2015 | ||||||||||
Sempra Energy Consolidated | $ | 36 | 10 | % | $ | 261 | 26 | % | |||
SDG&E | 120 | 36 | 142 | 34 | |||||||
SoCalGas | 58 | 23 | 111 | 28 |
▪ | repairs expenditures related to a certain portion of utility plant assets |
▪ | the equity portion of AFUDC |
▪ | a portion of the cost of removal of utility plant assets |
▪ | utility self-developed software expenditures |
▪ | depreciation on a certain portion of utility plant assets |
▪ | state income taxes |
PRIMARY U.S. COMMITTED LINES OF CREDIT | |||||||||||||
(Dollars in millions) | |||||||||||||
At June 30, 2017 | |||||||||||||
Total facility | Commercial paper outstanding(4) | Available unused credit | |||||||||||
Sempra Energy(1) | $ | 1,000 | $ | — | $ | 1,000 | |||||||
Sempra Global(2) | 2,335 | (1,236 | ) | 1,099 | |||||||||
California Utilities(3): | |||||||||||||
SDG&E | 750 | (5 | ) | 745 | |||||||||
SoCalGas | 750 | — | 750 | ||||||||||
Less: combined limit of $1 billion for both utilities | (500 | ) | — | (500 | ) | ||||||||
1,000 | (5 | ) | 995 | ||||||||||
Total | $ | 4,335 | $ | (1,241 | ) | $ | 3,094 |
CREDIT FACILITIES IN SOUTH AMERICA AND MEXICO | |||||||||||||||
(U.S. dollar-equivalent in millions) | |||||||||||||||
At June 30, 2017 | |||||||||||||||
Denominated in | Total facility | Amount outstanding | Available unused credit | ||||||||||||
Sempra South American Utilities(1): | |||||||||||||||
Peru(2) | Peruvian sol | $ | 379 | $ | (147 | ) | (3) | $ | 232 | ||||||
Chile | Chilean peso | 115 | — | 115 | |||||||||||
Sempra Mexico: | |||||||||||||||
IEnova(4) | U.S. dollar | 1,170 | (516 | ) | 654 | ||||||||||
Total | $ | 1,664 | $ | (663 | ) | $ | 1,001 |
▪ | The California Utilities use |
▪ | SDG&E is allocated and may purchase |
▪ | Sempra Mexico, Sempra |
▪ | From time to time, our various businesses, including the California Utilities, may use other energy derivatives to hedge exposures such as the price of vehicle fuel. |
NET ENERGY DERIVATIVE VOLUMES | |||||||
(Quantities in millions) | |||||||
Commodity | Unit of measure | June 30, 2017 | December 31, 2016 | ||||
California Utilities: | |||||||
SDG&E: | |||||||
Natural gas | MMBtu | 44 | 48 | ||||
Electricity | MWh | 4 | 4 | ||||
Congestion revenue rights | MWh | 42 | 48 | ||||
SoCalGas – natural gas | MMBtu | — | 1 | ||||
Energy-Related Businesses: | |||||||
Sempra LNG & Midstream – natural gas | MMBtu | 14 | 31 | ||||
Sempra Mexico – natural gas | MMBtu | 3 | — |
NET ENERGY DERIVATIVE VOLUMES | |||||
(Quantities in millions) | |||||
June 30, | December 31, | ||||
Segment and Commodity | Unit of measure | 2016 | 2015 | ||
California Utilities: | |||||
SDG&E: | |||||
Natural gas | MMBtu(1) | 72 | 70 | ||
Electricity | MWh(2) | 1 | 1 | ||
Congestion revenue rights | MWh | 30 | 36 | ||
SoCalGas – natural gas | MMBtu | ― | 1 | ||
Energy-Related Businesses: | |||||
Sempra Natural Gas – natural gas | MMBtu | 30 | 43 | ||
(1) | Million British thermal units | ||||
(2) | Megawatt hours |
INTEREST RATE DERIVATIVES | |||||||||||
(Dollars in millions) | |||||||||||
June 30, 2017 | December 31, 2016 | ||||||||||
Notional debt | Maturities | Notional debt | Maturities | ||||||||
Sempra Energy Consolidated: | |||||||||||
Cash flow hedges(1) | $ | 897 | 2017-2032 | $ | 924 | 2017-2032 | |||||
SDG&E: | |||||||||||
Cash flow hedges(1) | 300 | 2017-2019 | 305 | 2017-2019 |
INTEREST RATE DERIVATIVES | |||||||
(Dollars in millions) | |||||||
June 30, 2016 | December 31, 2015 | ||||||
Notional debt | Maturities | Notional debt | Maturities | ||||
Sempra Energy Consolidated: | |||||||
Cash flow hedges(1) | $ | 377 | 2016-2028 | $ | 384 | 2016-2028 | |
Fair value hedges | ― | ― | 300 | 2016 | |||
SDG&E: | |||||||
Cash flow hedge(1) | 310 | 2016-2019 | 315 | 2016-2019 | |||
(1) | Includes Otay Mesa VIE. All of SDG&E's interest rate derivatives relate to Otay Mesa VIE. |
(1) | Includes Otay Mesa VIE. All of SDG&E’s interest rate derivatives relate to Otay Mesa VIE. |
FOREIGN CURRENCY DERIVATIVES | |||||||
(Dollars in millions) | |||||||
June 30, 2016 | December 31, 2015 | ||||||
Notional debt | Maturities | Notional debt | Maturities | ||||
Sempra Mexico: | |||||||
Cross-currency swaps | $ | 408 | 2018-2023 | $ | 408 | 2018-2023 | |
Other foreign currency derivatives | 550 | 2016 | ― | ― |
FOREIGN CURRENCY DERIVATIVES | |||||||||||
(Dollars in millions) | |||||||||||
June 30, 2017 | December 31, 2016 | ||||||||||
Notional amount | Maturities | Notional amount | Maturities | ||||||||
Sempra Energy Consolidated: | |||||||||||
Cross-currency swaps | $ | 408 | 2017-2023 | $ | 408 | 2017-2023 | |||||
Other foreign currency derivatives(1) | 903 | 2017-2018 | 86 | 2017-2018 |
(1) | In the first quarter of 2017, we entered into foreign currency derivatives with notional amounts totaling $850 million that expire in December 2017. |
DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
June 30, 2017 | |||||||||||||||
Current assets: Fixed-price contracts and other derivatives(1) | Other assets: Sundry | Current liabilities: Fixed-price contracts and other derivatives(2) | Deferred credits and other liabilities: Fixed-price contracts and other derivatives | ||||||||||||
Sempra Energy Consolidated: | |||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Interest rate and foreign exchange instruments(3) | $ | 1 | $ | — | $ | (56 | ) | $ | (153 | ) | |||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Foreign exchange instruments | 130 | — | — | — | |||||||||||
Commodity contracts not subject to rate recovery | 43 | 8 | (33 | ) | (5 | ) | |||||||||
Associated offsetting commodity contracts | (29 | ) | (3 | ) | 29 | 3 | |||||||||
Commodity contracts subject to rate recovery | 15 | 71 | (59 | ) | (147 | ) | |||||||||
Associated offsetting commodity contracts | (1 | ) | — | 1 | — | ||||||||||
Associated offsetting cash collateral | — | — | 15 | 10 | |||||||||||
Net amounts presented on the balance sheet | 159 | 76 | (103 | ) | (292 | ) | |||||||||
Additional cash collateral for commodity contracts not subject to rate recovery | 10 | — | — | — | |||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | 17 | — | — | — | |||||||||||
Total(4) | $ | 186 | $ | 76 | $ | (103 | ) | $ | (292 | ) | |||||
SDG&E: | |||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Interest rate instruments(3) | $ | — | $ | — | $ | (13 | ) | $ | (7 | ) | |||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity contracts subject to rate recovery | 14 | 71 | (58 | ) | (147 | ) | |||||||||
Associated offsetting commodity contracts | (1 | ) | — | 1 | — | ||||||||||
Associated offsetting cash collateral | — | — | 15 | 10 | |||||||||||
Net amounts presented on the balance sheet | 13 | 71 | (55 | ) | (144 | ) | |||||||||
Additional cash collateral for commodity contracts subject to rate recovery | 16 | — | — | — | |||||||||||
Total(4) | $ | 29 | $ | 71 | $ | (55 | ) | $ | (144 | ) | |||||
SoCalGas: | |||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity contracts subject to rate recovery | $ | 1 | $ | — | $ | (1 | ) | $ | — | ||||||
Net amounts presented on the balance sheet | 1 | — | (1 | ) | — | ||||||||||
Additional cash collateral for commodity contracts not subject to rate recovery | 1 | — | — | — | |||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | 1 | — | — | — | |||||||||||
Total | $ | 3 | $ | — | $ | (1 | ) | $ | — |
(1) | Included in Current Assets: Other for SoCalGas. |
(2) | Included in Current Liabilities: Other for SoCalGas. |
(3) | Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE. |
(4) | Normal purchase contracts previously measured at fair value are excluded. |
DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(Dollars in millions) | |||||||||
June 30, 2016 | |||||||||
Deferred | |||||||||
credits | |||||||||
Current | Current | and other | |||||||
assets: | liabilities: | liabilities: | |||||||
Fixed-price | Fixed-price | Fixed-price | |||||||
contracts | Other | contracts | contracts | ||||||
and other | assets: | and other | and other | ||||||
derivatives(1) | Sundry | derivatives(2) | derivatives | ||||||
Sempra Energy Consolidated: | |||||||||
Derivatives designated as hedging instruments: | |||||||||
Interest rate and foreign exchange instruments(3) | $ | 1 | $ | ― | $ | (15) | $ | (184) | |
Commodity contracts not subject to rate recovery | ― | ― | (5) | ― | |||||
Derivatives not designated as hedging instruments: | |||||||||
Interest rate and foreign exchange instruments | ― | ― | (12) | ― | |||||
Commodity contracts not subject to rate recovery | 208 | 22 | (227) | (17) | |||||
Associated offsetting commodity contracts | (199) | (13) | 199 | 13 | |||||
Associated offsetting cash collateral | ― | ― | 30 | 1 | |||||
Commodity contracts subject to rate recovery | 18 | 52 | (35) | (48) | |||||
Associated offsetting commodity contracts | (4) | (2) | 4 | 2 | |||||
Associated offsetting cash collateral | ― | ― | 13 | 15 | |||||
Net amounts presented on the balance sheet | 24 | 59 | (48) | (218) | |||||
Additional cash collateral for commodity contracts | |||||||||
not subject to rate recovery | 14 | ― | ― | ― | |||||
Additional cash collateral for commodity contracts | |||||||||
subject to rate recovery | 27 | ― | ― | ― | |||||
Total(4) | $ | 65 | $ | 59 | $ | (48) | $ | (218) | |
SDG&E: | |||||||||
Derivatives designated as hedging instruments: | |||||||||
Interest rate instruments(3) | $ | ― | $ | ― | $ | (14) | $ | (23) | |
Derivatives not designated as hedging instruments: | |||||||||
Commodity contracts subject to rate recovery | 16 | 52 | (32) | (48) | |||||
Associated offsetting commodity contracts | (3) | (2) | 3 | 2 | |||||
Associated offsetting cash collateral | ― | ― | 12 | 15 | |||||
Net amounts presented on the balance sheet | 13 | 50 | (31) | (54) | |||||
Additional cash collateral for commodity contracts | |||||||||
subject to rate recovery | 26 | ― | ― | ― | |||||
Total(4) | $ | 39 | $ | 50 | $ | (31) | $ | (54) | |
SoCalGas: | |||||||||
Derivatives not designated as hedging instruments: | |||||||||
Commodity contracts not subject to rate recovery | $ | ― | $ | ― | $ | (1) | $ | ― | |
Associated offsetting cash collateral | ― | ― | 1 | ― | |||||
Commodity contracts subject to rate recovery | 2 | ― | (3) | ― | |||||
Associated offsetting commodity contracts | (1) | ― | 1 | ― | |||||
Associated offsetting cash collateral | ― | ― | 1 | ― | |||||
Net amounts presented on the balance sheet | 1 | ― | (1) | ― | |||||
Additional cash collateral for commodity contracts | |||||||||
not subject to rate recovery | 1 | ― | ― | ― | |||||
Additional cash collateral for commodity contracts | |||||||||
subject to rate recovery | 1 | ― | ― | ― | |||||
Total | $ | 3 | $ | ― | $ | (1) | $ | ― | |
(1) | Included in Current Assets: Other for SoCalGas. | ||||||||
(2) | Included in Current Liabilities: Other for SoCalGas. | ||||||||
(3) | Includes Otay Mesa VIE. All of SDG&E's amounts relate to Otay Mesa VIE. | ||||||||
(4) | Normal purchase contracts previously measured at fair value are excluded. |
DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(Dollars in millions) | |||||||||
December 31, 2015 | |||||||||
Deferred | |||||||||
credits | |||||||||
Current | Current | and other | |||||||
assets: | liabilities: | liabilities: | |||||||
Fixed-price | Fixed-price | Fixed-price | |||||||
contracts | Other | contracts | contracts | ||||||
and other | assets: | and other | and other | ||||||
derivatives(1) | Sundry | derivatives(2) | derivatives | ||||||
Sempra Energy Consolidated: | |||||||||
Derivatives designated as hedging instruments: | |||||||||
Interest rate and foreign exchange instruments(3) | $ | 4 | $ | 1 | $ | (15) | $ | (156) | |
Commodity contracts not subject to rate recovery | 13 | ― | ― | ― | |||||
Derivatives not designated as hedging instruments: | |||||||||
Commodity contracts not subject to rate recovery | 245 | 32 | (239) | (21) | |||||
Associated offsetting commodity contracts | (232) | (20) | 232 | 20 | |||||
Associated offsetting cash collateral | (6) | ― | 4 | ― | |||||
Commodity contracts subject to rate recovery | 28 | 49 | (61) | (64) | |||||
Associated offsetting commodity contracts | (2) | (2) | 2 | 2 | |||||
Associated offsetting cash collateral | ― | ― | 28 | 26 | |||||
Net amounts presented on the balance sheet | 50 | 60 | (49) | (193) | |||||
Additional cash collateral for commodity contracts | |||||||||
not subject to rate recovery | 2 | ― | ― | ― | |||||
Additional cash collateral for commodity contracts | |||||||||
subject to rate recovery | 28 | ― | ― | ― | |||||
Total(4) | $ | 80 | $ | 60 | $ | (49) | $ | (193) | |
SDG&E: | |||||||||
Derivatives designated as hedging instruments: | |||||||||
Interest rate instruments(3) | $ | ― | $ | ― | $ | (14) | $ | (23) | |
Derivatives not designated as hedging instruments: | |||||||||
Commodity contracts not subject to rate recovery | ― | ― | (1) | ― | |||||
Associated offsetting cash collateral | ― | ― | 1 | ― | |||||
Commodity contracts subject to rate recovery | 27 | 49 | (60) | (64) | |||||
Associated offsetting commodity contracts | (2) | (2) | 2 | 2 | |||||
Associated offsetting cash collateral | ― | ― | 28 | 26 | |||||
Net amounts presented on the balance sheet | 25 | 47 | (44) | (59) | |||||
Additional cash collateral for commodity contracts | |||||||||
not subject to rate recovery | 1 | ― | ― | ― | |||||
Additional cash collateral for commodity contracts | |||||||||
subject to rate recovery | 27 | ― | ― | ― | |||||
Total(4) | $ | 53 | $ | 47 | $ | (44) | $ | (59) | |
SoCalGas: | |||||||||
Derivatives not designated as hedging instruments: | |||||||||
Commodity contracts not subject to rate recovery | $ | ― | $ | ― | $ | (1) | $ | ― | |
Associated offsetting cash collateral | ― | ― | 1 | ― | |||||
Commodity contracts subject to rate recovery | 1 | ― | (1) | ― | |||||
Net amounts presented on the balance sheet | 1 | ― | (1) | ― | |||||
Additional cash collateral for commodity contracts | |||||||||
subject to rate recovery | 1 | ― | ― | ― | |||||
Total | $ | 2 | $ | ― | $ | (1) | $ | ― | |
(1) | Included in Current Assets: Other for SoCalGas. | ||||||||
(2) | Included in Current Liabilities: Other for SoCalGas. | ||||||||
(3) | Includes Otay Mesa VIE. All of SDG&E's amounts relate to Otay Mesa VIE. | ||||||||
(4) | Normal purchase contracts previously measured at fair value are excluded. |
DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
December 31, 2016 | |||||||||||||||
Current assets: Fixed-price contracts and other derivatives(1) | Other assets: Sundry | Current liabilities: Fixed-price contracts and other derivatives(2) | Deferred credits and other liabilities: Fixed-price contracts and other derivatives | ||||||||||||
Sempra Energy Consolidated: | |||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Interest rate and foreign exchange instruments(3) | $ | 7 | $ | 2 | $ | (24 | ) | $ | (228 | ) | |||||
Commodity contracts not subject to rate recovery | — | — | (14 | ) | — | ||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity contracts not subject to rate recovery | 248 | 36 | (254 | ) | (28 | ) | |||||||||
Associated offsetting commodity contracts | (242 | ) | (27 | ) | 242 | 27 | |||||||||
Associated offsetting cash collateral | — | (1 | ) | 16 | 1 | ||||||||||
Commodity contracts subject to rate recovery | 37 | 73 | (57 | ) | (150 | ) | |||||||||
Associated offsetting commodity contracts | (9 | ) | (1 | ) | 9 | 1 | |||||||||
Associated offsetting cash collateral | — | — | 5 | 13 | |||||||||||
Net amounts presented on the balance sheet | 41 | 82 | (77 | ) | (364 | ) | |||||||||
Additional cash collateral for commodity contracts not subject to rate recovery | 10 | — | — | — | |||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | 32 | — | — | — | |||||||||||
Total(4) | $ | 83 | $ | 82 | $ | (77 | ) | $ | (364 | ) | |||||
SDG&E: | |||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Interest rate instruments(3) | $ | — | $ | — | $ | (13 | ) | $ | (12 | ) | |||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity contracts subject to rate recovery | 33 | 73 | (51 | ) | (150 | ) | |||||||||
Associated offsetting commodity contracts | (6 | ) | (1 | ) | 6 | 1 | |||||||||
Associated offsetting cash collateral | — | — | 3 | 13 | |||||||||||
Net amounts presented on the balance sheet | 27 | 72 | (55 | ) | (148 | ) | |||||||||
Additional cash collateral for commodity contracts not subject to rate recovery | 1 | — | — | — | |||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | 30 | — | — | — | |||||||||||
Total(4) | $ | 58 | $ | 72 | $ | (55 | ) | $ | (148 | ) | |||||
SoCalGas: | |||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity contracts subject to rate recovery | $ | 4 | $ | — | $ | (6 | ) | $ | — | ||||||
Associated offsetting commodity contracts | (3 | ) | — | 3 | — | ||||||||||
Associated offsetting cash collateral | — | — | 2 | — | |||||||||||
Net amounts presented on the balance sheet | 1 | — | (1 | ) | — | ||||||||||
Additional cash collateral for commodity contracts not subject to rate recovery | 1 | — | — | — | |||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | 2 | — | — | — | |||||||||||
Total | $ | 4 | $ | — | $ | (1 | ) | $ | — |
FAIR VALUE HEDGE IMPACTS | ||||||||
(Dollars in millions) | ||||||||
Pretax gain (loss) on derivatives recognized in earnings | ||||||||
Three months ended | Six months ended | |||||||
Location | June 30, 2016 | June 30, 2016 | ||||||
Sempra Energy Consolidated: | ||||||||
Interest rate instruments | Interest Expense | $ | 1 | $ | 3 | |||
Interest rate instruments | Other Income, Net | (2 | ) | (2 | ) | |||
Total(1) | $ | (1 | ) | $ | 1 | |||
(1) | There was no hedge ineffectiveness in either the three months or six months ended June 30, 2016. All other changes in the fair value of the interest rate swap agreements are exactly offset by changes in the fair value of the underlying long-term debt and recorded in Other Income, Net. |
FAIR VALUE HEDGE IMPACTS | ||||||||||
(Dollars in millions) | ||||||||||
Pretax gain (loss) on derivatives recognized in earnings | ||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||
Location | 2016 | 2015 | 2016 | 2015 | ||||||
Sempra Energy Consolidated: | ||||||||||
Interest rate instruments | Interest Expense | $ | 1 | $ | 2 | $ | 3 | $ | 4 | |
Interest rate instruments | Other Income, Net | (2) | (3) | (2) | (2) | |||||
Total(1) | $ | (1) | $ | (1) | $ | 1 | $ | 2 | ||
(1) | There was no hedge ineffectiveness in either the three months or six months ended June 30, 2016 or 2015. All other changes in the fair value of the interest rate swap agreements are exactly offset by changes in the fair value of the underlying long-term debt and are recorded in Other Income, Net. |
CASH FLOW HEDGE IMPACTS | |||||||||||
(Dollars in millions) | |||||||||||
Pretax gain (loss) | Pretax (loss) gain reclassified | ||||||||||
recognized in OCI | from AOCI into earnings | ||||||||||
(effective portion) | (effective portion) | ||||||||||
Three months ended June 30, | Three months ended June 30, | ||||||||||
2016 | 2015 | Location | 2016 | 2015 | |||||||
Sempra Energy Consolidated: | |||||||||||
Interest rate and foreign | |||||||||||
exchange instruments(1) | $ | 1 | $ | 6 | Interest Expense | $ | (3) | $ | (3) | ||
Equity Earnings (Losses), | |||||||||||
Interest rate instruments | (70) | 89 | Before Income Tax | (2) | (3) | ||||||
Interest rate and foreign | Equity Earnings, | ||||||||||
exchange instruments | (15) | ― | Net of Income Tax | (5) | ― | ||||||
Commodity contracts not subject | Revenues: Energy-Related | ||||||||||
to rate recovery | (5) | 1 | Businesses | ― | ― | ||||||
Total(2) | $ | (89) | $ | 96 | $ | (10) | $ | (6) | |||
SDG&E: | |||||||||||
Interest rate instruments(1)(2) | $ | (2) | $ | ― | Interest Expense | $ | (3) | $ | (3) | ||
Six months ended June 30, | Six months ended June 30, | ||||||||||
2016 | 2015 | Location | 2016 | 2015 | |||||||
Sempra Energy Consolidated: | |||||||||||
Interest rate and foreign | |||||||||||
exchange instruments(1) | $ | (10) | $ | (12) | Interest Expense | $ | (7) | $ | (9) | ||
Equity Earnings (Losses), | |||||||||||
Interest rate instruments | (207) | 11 | Before Income Tax | (5) | (6) | ||||||
Interest rate and foreign | Equity Earnings, | ||||||||||
exchange instruments | (33) | ― | Net of Income Tax | (6) | ― | ||||||
Commodity contracts not subject | Revenues: Energy-Related | ||||||||||
to rate recovery | (4) | ― | Businesses | 7 | 7 | ||||||
Total(2) | $ | (254) | $ | (1) | $ | (11) | $ | (8) | |||
SDG&E: | |||||||||||
Interest rate instruments(1)(2) | $ | (7) | $ | (5) | Interest Expense | $ | (6) | $ | (6) | ||
(1) | Amounts include Otay Mesa VIE. All of SDG&E's interest rate derivative activity relates to Otay Mesa VIE. | ||||||||||
(2) | Amounts include negligible hedge ineffectiveness in the three months and six months ended June 30, 2016 and 2015. |
CASH FLOW HEDGE IMPACTS | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
Pretax (loss) gain recognized in OCI | Pretax gain (loss) reclassified from AOCI into earnings | ||||||||||||||||
Three months ended June 30, | Three months ended June 30, | ||||||||||||||||
2017 | 2016 | Location | 2017 | 2016 | |||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||
Interest rate and foreign exchange instruments(1) | $ | (8 | ) | $ | 1 | Interest Expense | $ | 1 | $ | (3 | ) | ||||||
Interest rate instruments | (32 | ) | (70 | ) | Equity Earnings (Losses), Before Income Tax | (2 | ) | (2 | ) | ||||||||
Interest rate and foreign exchange instruments | (9 | ) | (15 | ) | Equity Earnings (Losses), Net of Income Tax | (3 | ) | (5 | ) | ||||||||
Foreign exchange instruments | (1 | ) | — | Revenues: Energy- Related Businesses | 1 | — | |||||||||||
Commodity contracts not subject to rate recovery | — | (5 | ) | Revenues: Energy- Related Businesses | — | — | |||||||||||
Total(2) | $ | (50 | ) | $ | (89 | ) | $ | (3 | ) | $ | (10 | ) | |||||
SDG&E: | |||||||||||||||||
Interest rate instruments(1)(3) | $ | (2 | ) | $ | (2 | ) | Interest Expense | $ | (3 | ) | $ | (3 | ) | ||||
Six months ended June 30, | Six months ended June 30, | ||||||||||||||||
2017 | 2016 | Location | 2017 | 2016 | |||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||
Interest rate and foreign exchange instruments(1) | $ | 8 | $ | (10 | ) | Interest Expense | $ | 4 | $ | (7 | ) | ||||||
Interest rate instruments | (37 | ) | (207 | ) | Equity Earnings (Losses), Before Income Tax | (4 | ) | (5 | ) | ||||||||
Interest rate and foreign exchange instruments | (18 | ) | (33 | ) | Equity Earnings (Losses), Net of Income Tax | (5 | ) | (6 | ) | ||||||||
Foreign exchange instruments | (10 | ) | — | Revenues: Energy- Related Businesses | (1 | ) | — | ||||||||||
Commodity contracts not subject to rate recovery | 3 | (4 | ) | Revenues: Energy- Related Businesses | (9 | ) | 7 | ||||||||||
Total(2) | $ | (54 | ) | $ | (254 | ) | $ | (15 | ) | $ | (11 | ) | |||||
SDG&E: | |||||||||||||||||
Interest rate instruments(1)(3) | $ | (2 | ) | $ | (7 | ) | Interest Expense | $ | (6 | ) | $ | (6 | ) |
(1) | Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE. |
(2) | There was $2 million of losses from hedge ineffectiveness related to these cash flow hedges in each of the three months and six months ended June 30, 2017 and negligible amounts for the same periods in 2016. |
(3) | There was negligible hedge ineffectiveness related to these cash flow hedges in the three months and six months ended June 30, 2017 and 2016. |
UNDESIGNATED DERIVATIVE IMPACTS | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Pretax gain (loss) on derivatives recognized in earnings | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Location | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Sempra Energy Consolidated: | ||||||||||||||||
Foreign exchange instruments | Other Income, Net | $ | 32 | $ | (15 | ) | $ | 97 | $ | (12 | ) | |||||
Foreign exchange instruments | Equity Earnings (Losses), Net of Income Tax | — | — | — | 2 | |||||||||||
Commodity contracts not subject to rate recovery | Revenues: Energy-Related Businesses | 16 | (24 | ) | 30 | (29 | ) | |||||||||
Commodity contracts not subject to rate recovery | Operation and Maintenance | — | 1 | (1 | ) | 1 | ||||||||||
Commodity contracts subject to rate recovery | Cost of Electric Fuel and Purchased Power | 6 | 40 | (23 | ) | 28 | ||||||||||
Commodity contracts subject to rate recovery | Cost of Natural Gas | — | (1 | ) | — | (2 | ) | |||||||||
Total | $ | 54 | $ | 1 | $ | 103 | $ | (12 | ) | |||||||
SDG&E: | ||||||||||||||||
Commodity contracts subject to rate recovery | Cost of Electric Fuel and Purchased Power | $ | 6 | $ | 40 | $ | (23 | ) | $ | 28 | ||||||
SoCalGas: | ||||||||||||||||
Commodity contracts not subject to rate recovery | Operation and Maintenance | $ | — | $ | — | $ | (1 | ) | $ | — | ||||||
Commodity contracts subject to rate recovery | Cost of Natural Gas | — | (1 | ) | — | (2 | ) | |||||||||
Total | $ | — | $ | (1 | ) | $ | (1 | ) | $ | (2 | ) |
UNDESIGNATED DERIVATIVE IMPACTS | ||||||||||
(Dollars in millions) | ||||||||||
Pretax (loss) gain on derivatives recognized in earnings | ||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||
Location | 2016 | 2015 | 2016 | 2015 | ||||||
Sempra Energy Consolidated: | ||||||||||
Foreign exchange instruments | Other Income, Net | $ | (15) | $ | (3) | $ | (12) | $ | (3) | |
Foreign exchange instruments | Equity Earnings, | |||||||||
Net of Income Tax | ― | ― | 2 | (1) | ||||||
Commodity contracts not subject | Revenues: Energy-Related | |||||||||
to rate recovery | Businesses | (24) | 9 | (29) | 12 | |||||
Commodity contracts not subject | ||||||||||
to rate recovery | Operation and Maintenance | 1 | 1 | 1 | 1 | |||||
Commodity contracts subject | Cost of Electric Fuel | |||||||||
to rate recovery | and Purchased Power | 40 | (53) | 28 | (73) | |||||
Commodity contracts subject | ||||||||||
to rate recovery | Cost of Natural Gas | (1) | ― | (2) | 1 | |||||
Total | $ | 1 | $ | (46) | $ | (12) | $ | (63) | ||
SDG&E: | ||||||||||
Commodity contracts subject | Cost of Electric Fuel | |||||||||
to rate recovery | and Purchased Power | $ | 40 | $ | (53) | $ | 28 | $ | (73) | |
SoCalGas: | ||||||||||
Commodity contracts not subject | �� | |||||||||
to rate recovery | Operation and Maintenance | $ | ― | $ | 1 | $ | ― | $ | 1 | |
Commodity contracts subject | ||||||||||
to rate recovery | Cost of Natural Gas | (1) | ― | (2) | 1 | |||||
Total | $ | (1) | $ | 1 | $ | (2) | $ | 2 |
▪ | Nuclear decommissioning trusts reflect the assets of SDG |
▪ | For commodity contracts, interest rate derivatives and foreign exchange instruments, we primarily use a market approach with market participant assumptions to value these derivatives. Market participant assumptions include those about risk, and the risk inherent in the inputs to the valuation techniques. These inputs can be readily observable, market corroborated, or generally unobservable. We have exchange-traded derivatives that are valued based on quoted prices in active markets for the identical instruments (Level 1). We also may have other commodity derivatives that are valued using industry standard models that consider quoted forward prices for commodities, time value, current market and contractual prices for the underlying instruments, volatility factors, and other relevant economic measures (Level 2). Level 3 recurring items relate to CRRs and long-term, fixed-price electricity positions at SDG&E, as we discuss below |
▪ | Rabbi Trust investments include marketable securities that we value using a market approach based on closing prices reported in the active market in which the identical security is traded (Level 1). These investments in marketable securities were negligible at both June 30, |
RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED | |||||||||||
(Dollars in millions) | |||||||||||
Fair value at June 30, 2016 | |||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||
Assets: | |||||||||||
Nuclear decommissioning trusts: | |||||||||||
Equity securities | $ | 632 | $ | ― | $ | ― | $ | ― | $ | 632 | |
Debt securities: | |||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||
U.S. government corporations and agencies | 52 | 52 | ― | ― | 104 | ||||||
Municipal bonds | ― | 163 | ― | ― | 163 | ||||||
Other securities | ― | 192 | ― | ― | 192 | ||||||
Total debt securities | 52 | 407 | ― | ― | 459 | ||||||
Total nuclear decommissioning trusts(2) | 684 | 407 | ― | ― | 1,091 | ||||||
Interest rate and foreign exchange instruments | ― | 1 | ― | ― | 1 | ||||||
Commodity contracts not subject to rate recovery | 1 | 17 | ― | 14 | 32 | ||||||
Commodity contracts subject to rate recovery | ― | 1 | 63 | 27 | 91 | ||||||
Total | $ | 685 | $ | 426 | $ | 63 | $ | 41 | $ | 1,215 | |
Liabilities: | |||||||||||
Interest rate and foreign exchange instruments | $ | ― | $ | 211 | $ | ― | $ | ― | $ | 211 | |
Commodity contracts not subject to rate recovery | 32 | 5 | ― | (31) | 6 | ||||||
Commodity contracts subject to rate recovery | 1 | 37 | 39 | (28) | 49 | ||||||
Total | $ | 33 | $ | 253 | $ | 39 | $ | (59) | $ | 266 | |
Fair value at December 31, 2015 | |||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||
Assets: | |||||||||||
Nuclear decommissioning trusts: | |||||||||||
Equity securities | $ | 619 | $ | ― | $ | ― | $ | ― | $ | 619 | |
Debt securities: | |||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||
U.S. government corporations and agencies | 47 | 44 | ― | ― | 91 | ||||||
Municipal bonds | ― | 156 | ― | ― | 156 | ||||||
Other securities | ― | 182 | ― | ― | 182 | ||||||
Total debt securities | 47 | 382 | ― | ― | 429 | ||||||
Total nuclear decommissioning trusts(2) | 666 | 382 | ― | ― | 1,048 | ||||||
Interest rate and foreign exchange instruments | ― | 5 | ― | ― | 5 | ||||||
Commodity contracts not subject to rate recovery | 22 | 16 | ― | (4) | 34 | ||||||
Commodity contracts subject to rate recovery | ― | 1 | 72 | 28 | 101 | ||||||
Total | $ | 688 | $ | 404 | $ | 72 | $ | 24 | $ | 1,188 | |
Liabilities: | |||||||||||
Interest rate and foreign exchange instruments | $ | ― | $ | 171 | $ | ― | $ | ― | $ | 171 | |
Commodity contracts not subject to rate recovery | 5 | 3 | ― | (4) | 4 | ||||||
Commodity contracts subject to rate recovery | ― | 68 | 53 | (54) | 67 | ||||||
Total | $ | 5 | $ | 242 | $ | 53 | $ | (58) | $ | 242 | |
(1) | Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset. | ||||||||||
(2) | Excludes cash balances and cash equivalents. |
RECURRING FAIR VALUE MEASURES – SDG&E | |||||||||||
(Dollars in millions) | |||||||||||
Fair value at June 30, 2016 | |||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||
Assets: | |||||||||||
Nuclear decommissioning trusts: | |||||||||||
Equity securities | $ | 632 | $ | ― | $ | ― | $ | ― | $ | 632 | |
Debt securities: | |||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||
U.S. government corporations and agencies | 52 | 52 | ― | ― | 104 | ||||||
Municipal bonds | ― | 163 | ― | ― | 163 | ||||||
Other securities | ― | 192 | ― | ― | 192 | ||||||
Total debt securities | 52 | 407 | ― | ― | 459 | ||||||
Total nuclear decommissioning trusts(2) | 684 | 407 | ― | ― | 1,091 | ||||||
Commodity contracts subject to rate recovery | ― | ― | 63 | 26 | 89 | ||||||
Total | $ | 684 | $ | 407 | $ | 63 | $ | 26 | $ | 1,180 | |
Liabilities: | |||||||||||
Interest rate instruments | $ | ― | $ | 37 | $ | ― | $ | ― | $ | 37 | |
Commodity contracts subject to rate recovery | ― | 36 | 39 | (27) | 48 | ||||||
Total | $ | ― | $ | 73 | $ | 39 | $ | (27) | $ | 85 | |
Fair value at December 31, 2015 | |||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||
Assets: | |||||||||||
Nuclear decommissioning trusts: | |||||||||||
Equity securities | $ | 619 | $ | ― | $ | ― | $ | ― | $ | 619 | |
Debt securities: | |||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||
U.S. government corporations and agencies | 47 | 44 | ― | ― | 91 | ||||||
Municipal bonds | ― | 156 | ― | ― | 156 | ||||||
Other securities | ― | 182 | ― | ― | 182 | ||||||
Total debt securities | 47 | 382 | ― | ― | 429 | ||||||
Total nuclear decommissioning trusts(2) | 666 | 382 | ― | ― | 1,048 | ||||||
Commodity contracts not subject to rate recovery | ― | ― | ― | 1 | 1 | ||||||
Commodity contracts subject to rate recovery | ― | ― | 72 | 27 | 99 | ||||||
Total | $ | 666 | $ | 382 | $ | 72 | $ | 28 | $ | 1,148 | |
Liabilities: | |||||||||||
Interest rate instruments | $ | ― | $ | 37 | $ | ― | $ | ― | $ | 37 | |
Commodity contracts not subject to rate recovery | 1 | ― | ― | (1) | ― | ||||||
Commodity contracts subject to rate recovery | ― | 67 | 53 | (54) | 66 | ||||||
Total | $ | 1 | $ | 104 | $ | 53 | $ | (55) | $ | 103 | |
(1) | Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset. | ||||||||||
(2) | Excludes cash balances and cash equivalents. |
RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Fair value at June 30, 2017 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||
Assets: | |||||||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||||||
Equity securities | $ | 494 | $ | 5 | $ | — | $ | — | $ | 499 | |||||||||
Debt securities: | |||||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||||
U.S. government corporations and agencies | 49 | 8 | — | — | 57 | ||||||||||||||
Municipal bonds | — | 263 | — | — | 263 | ||||||||||||||
Other securities | — | 199 | — | — | 199 | ||||||||||||||
Total debt securities | 49 | 470 | — | — | 519 | ||||||||||||||
Total nuclear decommissioning trusts(2) | 543 | 475 | — | — | 1,018 | ||||||||||||||
Interest rate and foreign exchange instruments | — | 131 | — | — | 131 | ||||||||||||||
Commodity contracts not subject to rate recovery | 7 | 12 | — | 10 | 29 | ||||||||||||||
Commodity contracts subject to rate recovery | — | 1 | 84 | 17 | 102 | ||||||||||||||
Total | $ | 550 | $ | 619 | $ | 84 | $ | 27 | $ | 1,280 | |||||||||
Liabilities: | |||||||||||||||||||
Interest rate and foreign exchange instruments | $ | — | $ | 209 | $ | — | $ | — | $ | 209 | |||||||||
Commodity contracts not subject to rate recovery | 3 | 3 | — | — | 6 | ||||||||||||||
Commodity contracts subject to rate recovery | 25 | 6 | 174 | (25 | ) | 180 | |||||||||||||
Total | $ | 28 | $ | 218 | $ | 174 | $ | (25 | ) | $ | 395 | ||||||||
Fair value at December 31, 2016 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||
Assets: | |||||||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||||||
Equity securities | $ | 508 | $ | — | $ | — | $ | — | $ | 508 | |||||||||
Debt securities: | |||||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||||
U.S. government corporations and agencies | 36 | 16 | — | — | 52 | ||||||||||||||
Municipal bonds | — | 206 | — | — | 206 | ||||||||||||||
Other securities | — | 141 | — | — | 141 | ||||||||||||||
Total debt securities | 36 | 363 | — | — | 399 | ||||||||||||||
Total nuclear decommissioning trusts(2) | 544 | 363 | — | — | 907 | ||||||||||||||
Interest rate and foreign exchange instruments | — | 9 | — | — | 9 | ||||||||||||||
Commodity contracts not subject to rate recovery | — | 15 | — | 9 | 24 | ||||||||||||||
Commodity contracts subject to rate recovery | 1 | 3 | 96 | 32 | 132 | ||||||||||||||
Total | $ | 545 | $ | 390 | $ | 96 | $ | 41 | $ | 1,072 | |||||||||
Liabilities: | |||||||||||||||||||
Interest rate and foreign exchange instruments | $ | — | $ | 252 | $ | — | $ | — | $ | 252 | |||||||||
Commodity contracts not subject to rate recovery | 16 | 11 | — | (17 | ) | 10 | |||||||||||||
Commodity contracts subject to rate recovery | 19 | 8 | 170 | (18 | ) | 179 | |||||||||||||
Total | $ | 35 | $ | 271 | $ | 170 | $ | (35 | ) | $ | 441 |
(1) | Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset. |
(2) | Excludes cash balances and cash equivalents. |
RECURRING FAIR VALUE MEASURES – SOCALGAS | |||||||||||
(Dollars in millions) | |||||||||||
Fair value at June 30, 2016 | |||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||
Assets: | |||||||||||
Commodity contracts not subject to rate recovery | $ | ― | $ | ― | $ | ― | $ | 1 | $ | 1 | |
Commodity contracts subject to rate recovery | ― | 1 | ― | 1 | 2 | ||||||
Total | $ | ― | $ | 1 | $ | ― | $ | 2 | $ | 3 | |
Liabilities: | |||||||||||
Commodity contracts not subject to rate recovery | $ | 1 | $ | ― | $ | ― | $ | (1) | $ | ― | |
Commodity contracts subject to rate recovery | 1 | 1 | ― | (1) | 1 | ||||||
Total | $ | 2 | $ | 1 | $ | ― | $ | (2) | $ | 1 | |
Fair value at December 31, 2015 | |||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||
Assets: | |||||||||||
Commodity contracts subject to rate recovery | $ | ― | $ | 1 | $ | ― | $ | 1 | $ | 2 | |
Total | $ | ― | $ | 1 | $ | ― | $ | 1 | $ | 2 | |
Liabilities: | |||||||||||
Commodity contracts not subject to rate recovery | $ | 1 | $ | ― | $ | ― | $ | (1) | $ | ― | |
Commodity contracts subject to rate recovery | ― | 1 | ― | ― | 1 | ||||||
Total | $ | 1 | $ | 1 | $ | ― | $ | (1) | $ | 1 | |
(1) | Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset. |
RECURRING FAIR VALUE MEASURES – SDG&E | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Fair value at June 30, 2017 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||
Assets: | |||||||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||||||
Equity securities | $ | 494 | $ | 5 | $ | — | $ | — | $ | 499 | |||||||||
Debt securities: | |||||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||||
U.S. government corporations and agencies | 49 | 8 | — | — | 57 | ||||||||||||||
Municipal bonds | — | 263 | — | — | 263 | ||||||||||||||
Other securities | — | 199 | — | — | 199 | ||||||||||||||
Total debt securities | 49 | 470 | — | — | 519 | ||||||||||||||
Total nuclear decommissioning trusts(2) | 543 | 475 | — | — | 1,018 | ||||||||||||||
Commodity contracts subject to rate recovery | — | — | 84 | 16 | 100 | ||||||||||||||
Total | $ | 543 | $ | 475 | $ | 84 | $ | 16 | $ | 1,118 | |||||||||
Liabilities: | |||||||||||||||||||
Interest rate instruments | $ | — | $ | 20 | $ | — | $ | — | $ | 20 | |||||||||
Commodity contracts subject to rate recovery | 25 | 5 | 174 | (25 | ) | 179 | |||||||||||||
Total | $ | 25 | $ | 25 | $ | 174 | $ | (25 | ) | $ | 199 | ||||||||
Fair value at December 31, 2016 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||
Assets: | |||||||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||||||
Equity securities | $ | 508 | $ | — | $ | — | $ | — | $ | 508 | |||||||||
Debt securities: | |||||||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||||||
U.S. government corporations and agencies | 36 | 16 | — | — | 52 | ||||||||||||||
Municipal bonds | — | 206 | — | — | 206 | ||||||||||||||
Other securities | — | 141 | — | — | 141 | ||||||||||||||
Total debt securities | 36 | 363 | — | — | 399 | ||||||||||||||
Total nuclear decommissioning trusts(2) | 544 | 363 | — | — | 907 | ||||||||||||||
Commodity contracts not subject to rate recovery | — | — | — | 1 | 1 | ||||||||||||||
Commodity contracts subject to rate recovery | 1 | 2 | 96 | 30 | 129 | ||||||||||||||
Total | $ | 545 | $ | 365 | $ | 96 | $ | 31 | $ | 1,037 | |||||||||
Liabilities: | |||||||||||||||||||
Interest rate instruments | $ | — | $ | 25 | $ | — | $ | — | $ | 25 | |||||||||
Commodity contracts subject to rate recovery | 17 | 7 | 170 | (16 | ) | 178 | |||||||||||||
Total | $ | 17 | $ | 32 | $ | 170 | $ | (16 | ) | $ | 203 |
(1) | Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset. |
(2) | Excludes cash balances and cash equivalents. |
RECURRING FAIR VALUE MEASURES – SOCALGAS | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Fair value at June 30, 2017 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||
Assets: | |||||||||||||||||||
Commodity contracts not subject to rate recovery | $ | — | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||
Commodity contracts subject to rate recovery | — | 1 | — | 1 | 2 | ||||||||||||||
Total | $ | — | $ | 1 | $ | — | $ | 2 | $ | 3 | |||||||||
Liabilities: | |||||||||||||||||||
Commodity contracts subject to rate recovery | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | |||||||||
Total | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | |||||||||
Fair value at December 31, 2016 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting(1) | Total | |||||||||||||||
Assets: | |||||||||||||||||||
Commodity contracts not subject to rate recovery | $ | — | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||
Commodity contracts subject to rate recovery | — | 1 | — | 2 | 3 | ||||||||||||||
Total | $ | — | $ | 1 | $ | — | $ | 3 | $ | 4 | |||||||||
Liabilities: | |||||||||||||||||||
Commodity contracts subject to rate recovery | $ | 2 | $ | 1 | $ | — | $ | (2 | ) | $ | 1 | ||||||||
Total | $ | 2 | $ | 1 | $ | — | $ | (2 | ) | $ | 1 |
(1) | Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset. |
LEVEL 3 RECONCILIATIONS | |||||||
(Dollars in millions) | |||||||
Three months ended June 30, | |||||||
2017 | 2016 | ||||||
Balance at April 1 | $ | (96 | ) | $ | 11 | ||
Realized and unrealized (losses) gains | (3 | ) | 8 | ||||
Settlements | 9 | 5 | |||||
Balance at June 30 | $ | (90 | ) | $ | 24 | ||
Change in unrealized gains relating to | |||||||
instruments still held at June 30 | $ | 2 | $ | 9 |
Six months ended June 30, | |||||||
2017 | 2016 | ||||||
Balance at January 1 | $ | (74 | ) | $ | 19 | ||
Realized and unrealized (losses) gains | (16 | ) | 7 | ||||
Settlements | — | (2 | ) | ||||
Balance at June 30 | $ | (90 | ) | $ | 24 | ||
Change in unrealized (losses) gains relating to | |||||||
instruments still held at June 30 | $ | (14 | ) | $ | 9 |
LEVEL 3 RECONCILIATIONS | ||||
(Dollars in millions) | ||||
Three months ended June 30, | ||||
2016 | 2015 | |||
Balance as of April 1 | $ | 11 | $ | 102 |
Realized and unrealized gains (losses) | 8 | (60) | ||
Allocated transmission instruments | ― | 1 | ||
Settlements | 5 | (1) | ||
Balance as of June 30 | $ | 24 | $ | 42 |
Change in unrealized gains relating to | ||||
instruments still held at June 30 | $ | 9 | $ | 45 |
Six months ended June 30, | ||||
2016 | 2015 | |||
Balance as of January 1 | $ | 19 | $ | 107 |
Realized and unrealized gains (losses) | 7 | (54) | ||
Allocated transmission instruments | ― | 1 | ||
Settlements | (2) | (12) | ||
Balance as of June 30 | $ | 24 | $ | 42 |
Change in unrealized gains relating to | ||||
instruments still held at June 30 | $ | 9 | $ | 46 |
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||
(Dollars in millions) | ||||||||||||
June 30, 2016 | ||||||||||||
Carrying | Fair value | |||||||||||
amount | Level 1 | Level 2 | Level 3 | Total | ||||||||
Sempra Energy Consolidated: | ||||||||||||
Noncurrent due from unconsolidated affiliates(1) | $ | 179 | $ | ― | $ | 94 | $ | 77 | $ | 171 | ||
Total long-term debt(2)(3) | 13,811 | ― | 14,933 | 572 | 15,505 | |||||||
Preferred stock of subsidiary | 20 | ― | 25 | ― | 25 | |||||||
SDG&E: | ||||||||||||
Total long-term debt(3)(4) | $ | 4,677 | $ | ― | $ | 5,055 | $ | 310 | $ | 5,365 | ||
SoCalGas: | ||||||||||||
Total long-term debt(5) | $ | 3,009 | $ | ― | $ | 3,335 | $ | ― | $ | 3,335 | ||
Preferred stock | 22 | ― | 27 | ― | 27 | |||||||
December 31, 2015 | ||||||||||||
Carrying | Fair value | |||||||||||
amount | Level 1 | Level 2 | Level 3 | Total | ||||||||
Sempra Energy Consolidated: | ||||||||||||
Noncurrent due from unconsolidated affiliates(1) | $ | 175 | $ | ― | $ | 97 | $ | 69 | $ | 166 | ||
Total long-term debt(2)(3) | 13,761 | ― | 13,985 | 648 | 14,633 | |||||||
Preferred stock of subsidiary | 20 | ― | 23 | ― | 23 | |||||||
SDG&E: | ||||||||||||
Total long-term debt(3)(4) | $ | 4,304 | $ | ― | $ | 4,355 | $ | 315 | $ | 4,670 | ||
SoCalGas: | ||||||||||||
Total long-term debt(5) | $ | 2,513 | $ | ― | $ | 2,621 | $ | ― | $ | 2,621 | ||
Preferred stock | 22 | ― | 25 | ― | 25 | |||||||
(1) | Excluding accumulated interest outstanding of $13 million and $11 million at June 30, 2016 and December 31, 2015, respectively. | |||||||||||
(2) | Before reductions for unamortized discount (net of premium) and debt issuance costs of $111 million and $107 million at June 30, 2016 and December 31, 2015, respectively, and excluding build-to-suit and capital lease obligations of $385 million and $387 million at June 30, 2016 and December 31, 2015, respectively. We discuss our long-term debt in Note 6 above and in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report. | |||||||||||
(3) | Level 3 instruments include $310 million and $315 million at June 30, 2016 and December 31, 2015, respectively, related to Otay Mesa VIE. | |||||||||||
(4) | Before reductions for unamortized discount and debt issuance costs of $47 million and $43 million at June 30, 2016 and December 31, 2015, respectively, and excluding capital lease obligations of $242 million and $244 million at June 30, 2016 and December 31, 2015, respectively. | |||||||||||
(5) | Before reductions for unamortized discount and debt issuance costs of $28 million and $24 million at June 30, 2016 and December 31, 2015, respectively, and excluding capital lease obligations of $1 million both at June 30, 2016 and December 31, 2015. |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
June 30, 2017 | |||||||||||||||||||
Carrying amount | Fair value | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||||
Long-term amounts due from unconsolidated affiliates(1) | $ | 345 | $ | — | $ | 228 | $ | 92 | $ | 320 | |||||||||
Total long-term debt(2)(3) | 15,519 | — | 15,900 | 494 | 16,394 | ||||||||||||||
SDG&E: | |||||||||||||||||||
Total long-term debt(3)(4) | $ | 4,891 | $ | — | $ | 5,032 | $ | 300 | $ | 5,332 | |||||||||
SoCalGas: | |||||||||||||||||||
Total long-term debt(5) | $ | 3,009 | $ | — | $ | 3,169 | $ | — | $ | 3,169 | |||||||||
December 31, 2016 | |||||||||||||||||||
Carrying amount | Fair value | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||||
Long-term amounts due from unconsolidated affiliates(1) | $ | 184 | $ | — | $ | 91 | $ | 84 | $ | 175 | |||||||||
Total long-term debt(2)(3) | 15,068 | — | 15,455 | 492 | 15,947 | ||||||||||||||
SDG&E: | |||||||||||||||||||
Total long-term debt(3)(4) | $ | 4,654 | $ | — | $ | 4,727 | $ | 305 | $ | 5,032 | |||||||||
SoCalGas: | |||||||||||||||||||
Total long-term debt(5) | $ | 3,009 | $ | — | $ | 3,131 | $ | — | $ | 3,131 |
(1) | Excluding accumulated interest outstanding of $22 million and $17 million at June 30, 2017 and December 31, 2016, respectively, and excluding foreign currency translation of $6 million on a Mexican peso-denominated loan at June 30, 2017. |
(2) | Before reductions for unamortized discount (net of premium) and debt issuance costs of $114 million and $109 million at June 30, 2017 and December 31, 2016, respectively, and excluding build-to-suit and capital lease obligations of $882 million and $383 million at June 30, 2017 and December 31, 2016, respectively. We discuss our long-term debt in Note 6 above and in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report. |
(3) | Level 3 instruments include $300 million and $305 million at June 30, 2017 and December 31, 2016, respectively, related to Otay Mesa VIE. |
(4) | Before reductions for unamortized discount and debt issuance costs of $48 million and $45 million at June 30, 2017 and December 31, 2016, respectively, and excluding capital lease obligations of $737 million and $240 million at June 30, 2017 and December 31, 2016, respectively. |
(5) | Before reductions for unamortized discount and debt issuance costs of $25 million and $27 million at June 30, 2017 and December 31, 2016, respectively, and excluding capital lease obligations of $1 million at June 30, 2017. |
NON-RECURRING FAIR VALUE MEASURE – SEMPRA ENERGY CONSOLIDATED | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Estimated fair value | Valuation technique | Fair value hierarchy | % of fair value measurement | Inputs used to develop measurement | Range of inputs | ||||||||||
TdM | $ | 62 | (1) | Market approach | Level 2 | 100% | Purchase price offer | 100% |
NON-RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED | |||||||||
(Dollars in millions) | |||||||||
Estimated | Fair | % of | Inputs used to | ||||||
fair | value | fair value | develop | Range of | |||||
value | Valuation technique | hierarchy | measurement | measurement | inputs | ||||
Investment in | |||||||||
Rockies Express | $ | 440 | (1) | Market approach | Level 2 | 100% | Equity sale price | 100% | |
(1) | At measurement date of March 29, 2016. |
(1) | At measurement date of June 30, 2017. |
NUCLEAR DECOMMISSIONING TRUSTS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | ||||||||||||
At June 30, 2017: | |||||||||||||||
Debt securities: | |||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||
U.S. government corporations and agencies(1) | $ | 57 | $ | — | $ | — | $ | 57 | |||||||
Municipal bonds(2) | 256 | 8 | (1 | ) | 263 | ||||||||||
Other securities(3) | 197 | 3 | (1 | ) | 199 | ||||||||||
Total debt securities | 510 | 11 | (2 | ) | 519 | ||||||||||
Equity securities | 196 | 305 | (2 | ) | 499 | ||||||||||
Cash and cash equivalents | 11 | — | — | 11 | |||||||||||
Total | $ | 717 | $ | 316 | $ | (4 | ) | $ | 1,029 | ||||||
At December 31, 2016: | |||||||||||||||
Debt securities: | |||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||
U.S. government corporations and agencies | $ | 52 | $ | — | $ | — | $ | 52 | |||||||
Municipal bonds | 203 | 4 | (1 | ) | 206 | ||||||||||
Other securities | 141 | 2 | (2 | ) | 141 | ||||||||||
Total debt securities | 396 | 6 | (3 | ) | 399 | ||||||||||
Equity securities | 143 | 366 | (1 | ) | 508 | ||||||||||
Cash and cash equivalents | 119 | — | — | 119 | |||||||||||
Total | $ | 658 | $ | 372 | $ | (4 | ) | $ | 1,026 |
NUCLEAR DECOMMISSIONING TRUSTS | |||||||||
(Dollars in millions) | |||||||||
Gross | Gross | Estimated | |||||||
unrealized | unrealized | fair | |||||||
Cost | gains | losses | value | ||||||
At June 30, 2016: | |||||||||
Debt securities: | |||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||
U.S. government corporations and agencies(1) | $ | 99 | $ | 5 | $ | ― | $ | 104 | |
Municipal bonds(2) | 150 | 13 | ― | 163 | |||||
Other securities(2) | 189 | 9 | (6) | 192 | |||||
Total debt securities | 438 | 27 | (6) | 459 | |||||
Equity securities | 221 | 416 | (5) | 632 | |||||
Cash and cash equivalents | 12 | ― | ― | 12 | |||||
Total | $ | 671 | $ | 443 | $ | (11) | $ | 1,103 | |
At December 31, 2015: | |||||||||
Debt securities: | |||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||
U.S. government corporations and agencies | $ | 89 | $ | 2 | $ | ― | $ | 91 | |
Municipal bonds | 148 | 8 | ― | 156 | |||||
Other securities | 194 | 1 | (13) | 182 | |||||
Total debt securities | 431 | 11 | (13) | 429 | |||||
Equity securities | 214 | 412 | (7) | 619 | |||||
Cash and cash equivalents | 15 | ― | ― | 15 | |||||
Total | $ | 660 | $ | 423 | $ | (20) | $ | 1,063 | |
(1) | Maturity dates are 2017-2065. | ||||||||
(2) | Maturity dates are 2016-2115. |
(1) | Maturity dates are 2018-2047. |
(2) | Maturity dates are 2017-2047. |
(3) | Maturity dates are 2017-2066. |
SALES OF SECURITIES | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Proceeds from sales(1) | $ | 466 | $ | 111 | $ | 823 | $ | 204 | |||||||
Gross realized gains | 79 | 5 | 124 | 8 | |||||||||||
Gross realized losses | (3 | ) | (3 | ) | (8 | ) | (11 | ) |
SALES OF SECURITIES | |||||||||
(Dollars in millions) | |||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | ||||||
Proceeds from sales(1) | $ | 111 | $ | 127 | $ | 204 | $ | 221 | |
Gross realized gains | 5 | 4 | 8 | 6 | |||||
Gross realized losses | (3) | (3) | (11) | (7) | |||||
(1) | Excludes securities that are held to maturity. |
(1) | Excludes securities that are held to maturity. |
EARNINGS IMPACTS FROM THE 2016 GRC FD RECORDED IN THE SECOND QUARTER OF 2016 | ||||||||||
(Dollars in millions) | ||||||||||
SoCalGas | SDG&E | |||||||||
Pretax | After-tax | Pretax | After-tax | |||||||
earnings | earnings | earnings | earnings | |||||||
(charge) | (charge) | (charge) | (charge) | |||||||
Retroactive revenue requirement increase | ||||||||||
for the first quarter of 2016 | $ | 20 | $ | 12 | $ | 15 | $ | 9 | ||
Adjustments to revenue related to | ||||||||||
tax repairs deductions: | ||||||||||
Refund of 2015 memorandum account | $ | (72) | $ | (43) | $ | (37) | $ | (22) | ||
True-up of 2012-2014 estimates to actuals | (11) | (6) | (15) | (9) | ||||||
Total | $ | (83) | $ | (49) | $ | (52) | $ | (31) | ||
▪ | net revenue changes; |
▪ | mandatory tax law, tax accounting, tax procedural, or tax policy changes; and |
▪ | elective tax law, tax accounting, tax procedural, or tax policy changes. |
FUTURE MINIMUM PAYMENTS – POWER PURCHASE AGREEMENT | |||
(Dollars in millions) | |||
2017 | $ | — | |
2018 | 88 | ||
2019 | 105 | ||
2020 | 105 | ||
2021 | 105 | ||
Thereafter | 1,706 | ||
Total minimum lease payments(1) | 2,109 | ||
Less: interest(2) | (1,559 | ) | |
Present value of net minimum lease payments | $ | 550 |
(1) | This amount will be recorded over the life of the lease as Cost of Electric Fuel and Purchased Power on Sempra Energy’s and SDG&E’s Condensed Consolidated Statements of Operations. This expense will receive ratemaking treatment consistent with purchased-power costs, which are recovered in rates. |
(2) | Amount necessary to reduce net minimum lease payments to estimated present value at the inception of the lease. |
▪ | SDG&E 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 South American Utilities develops, owns and operates, or holds interests in, electric transmission, distribution and generation infrastructure in Chile and Peru. |
▪ | Sempra Mexico develops, owns and operates, or holds interests in, natural gas, |
▪ | Sempra Renewables develops, owns and operates, or holds interests in, wind and solar energy |
▪ | Sempra |
SEGMENT INFORMATION | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
REVENUES | |||||||||||||||||
SDG&E | $ | 992 | 46 | % | $ | 972 | 41 | % | $ | 1,983 | 41 | % | $ | 1,938 | 38 | % | |
SoCalGas | 617 | 29 | 780 | 33 | 1,650 | 35 | 1,828 | 36 | |||||||||
Sempra South American Utilities | 385 | 18 | 389 | 16 | 785 | 16 | 778 | 15 | |||||||||
Sempra Mexico | 147 | 7 | 152 | 6 | 285 | 6 | 315 | 6 | |||||||||
Sempra Renewables | 6 | ― | 10 | 1 | 13 | ― | 18 | 1 | |||||||||
Sempra Natural Gas | 90 | 4 | 155 | 7 | 220 | 5 | 352 | 7 | |||||||||
Adjustments and eliminations | ― | ― | (1) | ― | ― | ― | (1) | ― | |||||||||
Intersegment revenues(1) | (81) | (4) | (90) | (4) | (158) | (3) | (179) | (3) | |||||||||
Total | $ | 2,156 | 100 | % | $ | 2,367 | 100 | % | $ | 4,778 | 100 | % | $ | 5,049 | 100 | % | |
INTEREST EXPENSE | |||||||||||||||||
SDG&E | $ | 48 | $ | 52 | $ | 96 | $ | 104 | |||||||||
SoCalGas | 24 | 19 | 46 | 38 | |||||||||||||
Sempra South American Utilities | 11 | 8 | 20 | 13 | |||||||||||||
Sempra Mexico | 4 | 6 | 8 | 11 | |||||||||||||
Sempra Renewables | ― | 1 | ― | 2 | |||||||||||||
Sempra Natural Gas | 10 | 23 | 22 | 44 | |||||||||||||
All other | 74 | 65 | 146 | 128 | |||||||||||||
Intercompany eliminations | (29) | (35) | (53) | (67) | |||||||||||||
Total | $ | 142 | $ | 139 | $ | 285 | $ | 273 | |||||||||
INTEREST INCOME | |||||||||||||||||
SoCalGas | $ | ― | $ | 3 | $ | ― | $ | 3 | |||||||||
Sempra South American Utilities | 5 | 5 | 10 | 9 | |||||||||||||
Sempra Mexico | 1 | 2 | 3 | 4 | |||||||||||||
Sempra Renewables | ― | 1 | 1 | 1 | |||||||||||||
Sempra Natural Gas | 17 | 25 | 33 | 44 | |||||||||||||
Intercompany eliminations | (17) | (26) | (35) | (44) | |||||||||||||
Total | $ | 6 | $ | 10 | $ | 12 | $ | 17 | |||||||||
DEPRECIATION AND AMORTIZATION | |||||||||||||||||
SDG&E | $ | 158 | 50 | % | $ | 149 | 48 | % | $ | 317 | 49 | % | $ | 294 | 48 | % | |
SoCalGas | 112 | 36 | 113 | 37 | 234 | 36 | 226 | 37 | |||||||||
Sempra South American Utilities | 14 | 4 | 12 | 4 | 27 | 4 | 25 | 4 | |||||||||
Sempra Mexico | 15 | 5 | 17 | 6 | 32 | 5 | 34 | 6 | |||||||||
Sempra Renewables | 2 | 1 | 1 | ― | 3 | 1 | 3 | ― | |||||||||
Sempra Natural Gas | 12 | 4 | 12 | 4 | 25 | 4 | 24 | 4 | |||||||||
All other | 1 | ― | 3 | 1 | 4 | 1 | 4 | 1 | |||||||||
Total | $ | 314 | 100 | % | $ | 307 | 100 | % | $ | 642 | 100 | % | $ | 610 | 100 | % | |
INCOME TAX EXPENSE (BENEFIT) | |||||||||||||||||
SDG&E | $ | 48 | $ | 54 | $ | 120 | $ | 142 | |||||||||
SoCalGas | (29) | 16 | 58 | 111 | |||||||||||||
Sempra South American Utilities | 15 | 18 | 29 | 34 | |||||||||||||
Sempra Mexico | (12) | 5 | 29 | 13 | |||||||||||||
Sempra Renewables | (9) | (11) | (21) | (28) | |||||||||||||
Sempra Natural Gas | (99) | 27 | (124) | 29 | |||||||||||||
All other | (20) | (11) | (55) | (40) | |||||||||||||
Total | $ | (106) | $ | 98 | $ | 36 | $ | 261 |
SEGMENT INFORMATION | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
REVENUES | |||||||||||||||
SDG&E | $ | 1,058 | $ | 992 | $ | 2,115 | $ | 1,983 | |||||||
SoCalGas | 770 | 617 | 2,011 | 1,650 | |||||||||||
Sempra South American Utilities | 381 | 385 | 793 | 785 | |||||||||||
Sempra Mexico | 273 | 147 | 537 | 285 | |||||||||||
Sempra Renewables | 26 | 6 | 48 | 13 | |||||||||||
Sempra LNG & Midstream | 122 | 90 | 254 | 220 | |||||||||||
Intersegment revenues(1) | (97 | ) | (81 | ) | (194 | ) | (158 | ) | |||||||
Total | $ | 2,533 | $ | 2,156 | $ | 5,564 | $ | 4,778 | |||||||
INTEREST EXPENSE | |||||||||||||||
SDG&E | $ | 49 | $ | 48 | $ | 98 | $ | 96 | |||||||
SoCalGas | 26 | 24 | 51 | 46 | |||||||||||
Sempra South American Utilities | 11 | 11 | 20 | 20 | |||||||||||
Sempra Mexico | 20 | 4 | 52 | 8 | |||||||||||
Sempra Renewables | 4 | — | 8 | — | |||||||||||
Sempra LNG & Midstream | 9 | 10 | 20 | 22 | |||||||||||
All other | 67 | 74 | 135 | 146 | |||||||||||
Intercompany eliminations | (27 | ) | (29 | ) | (56 | ) | (53 | ) | |||||||
Total | $ | 159 | $ | 142 | $ | 328 | $ | 285 | |||||||
INTEREST INCOME | |||||||||||||||
Sempra South American Utilities | $ | 6 | $ | 5 | $ | 11 | $ | 10 | |||||||
Sempra Mexico | 3 | 1 | 5 | 3 | |||||||||||
Sempra Renewables | 2 | — | 3 | 1 | |||||||||||
Sempra LNG & Midstream | 12 | 17 | 29 | 33 | |||||||||||
Intercompany eliminations | (15 | ) | (17 | ) | (34 | ) | (35 | ) | |||||||
Total | $ | 8 | $ | 6 | $ | 14 | $ | 12 | |||||||
DEPRECIATION AND AMORTIZATION | |||||||||||||||
SDG&E | $ | 166 | $ | 158 | $ | 329 | $ | 317 | |||||||
SoCalGas | 126 | 112 | 252 | 234 | |||||||||||
Sempra South American Utilities | 13 | 14 | 26 | 27 | |||||||||||
Sempra Mexico | 37 | 15 | 73 | 32 | |||||||||||
Sempra Renewables | 10 | 2 | 19 | 3 | |||||||||||
Sempra LNG & Midstream | 11 | 12 | 21 | 25 | |||||||||||
All other | 5 | 1 | 8 | 4 | |||||||||||
Total | $ | 368 | $ | 314 | $ | 728 | $ | 642 | |||||||
INCOME TAX EXPENSE (BENEFIT)(2) | |||||||||||||||
SDG&E | $ | 54 | $ | 48 | $ | 144 | $ | 113 | |||||||
SoCalGas | 19 | (29 | ) | 117 | 54 | ||||||||||
Sempra South American Utilities | 20 | 15 | 39 | 29 | |||||||||||
Sempra Mexico | 102 | (12 | ) | 244 | 28 | ||||||||||
Sempra Renewables | (5 | ) | (9 | ) | (16 | ) | (22 | ) | |||||||
Sempra LNG & Midstream | 18 | (99 | ) | 19 | (128 | ) | |||||||||
All other | (41 | ) | (20 | ) | (85 | ) | (72 | ) | |||||||
Total | $ | 167 | $ | (106 | ) | $ | 462 | $ | 2 |
SEGMENT INFORMATION (CONTINUED) | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
EQUITY EARNINGS (LOSSES) | |||||||||||||||||
Earnings (losses) recorded before tax: | |||||||||||||||||
Sempra Renewables | $ | 11 | $ | 10 | $ | 18 | $ | 12 | |||||||||
Sempra Natural Gas | 3 | 17 | (26) | 34 | |||||||||||||
Total | $ | 14 | $ | 27 | $ | (8) | $ | 46 | |||||||||
Earnings (losses) recorded net of tax: | |||||||||||||||||
Sempra South American Utilities | $ | ― | $ | ― | $ | 2 | $ | (1) | |||||||||
Sempra Mexico | 33 | 22 | 48 | 38 | |||||||||||||
Total | $ | 33 | $ | 22 | $ | 50 | $ | 37 | |||||||||
EARNINGS (LOSSES) | |||||||||||||||||
SDG&E | $ | 100 | $ | 126 | $ | 229 | $ | 273 | |||||||||
SoCalGas(2) | (1) | 70 | 194 | 284 | |||||||||||||
Sempra South American Utilities | 43 | 45 | 81 | 86 | |||||||||||||
Sempra Mexico | 57 | 50 | 74 | 97 | |||||||||||||
Sempra Renewables | 12 | 19 | 25 | 32 | |||||||||||||
Sempra Natural Gas | (149) | 40 | (185) | 42 | |||||||||||||
All other | (46) | (55) | (83) | (82) | |||||||||||||
Total | $ | 16 | $ | 295 | $ | 335 | $ | 732 | |||||||||
Six months ended June 30, | |||||||||||||||||
2016 | 2015 | ||||||||||||||||
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT | |||||||||||||||||
SDG&E | $ | 602 | 30 | % | $ | 600 | 41 | % | |||||||||
SoCalGas | 650 | 32 | 603 | 41 | |||||||||||||
Sempra South American Utilities | 82 | 4 | 66 | 5 | |||||||||||||
Sempra Mexico | 140 | 7 | 120 | 8 | |||||||||||||
Sempra Renewables | 457 | 23 | 22 | 1 | |||||||||||||
Sempra Natural Gas | 68 | 3 | 28 | 2 | |||||||||||||
All other | 7 | 1 | 27 | 2 | |||||||||||||
Total | $ | 2,006 | 100 | % | $ | 1,466 | 100 | % | |||||||||
June 30, 2016 | December 31, 2015 | ||||||||||||||||
ASSETS | |||||||||||||||||
SDG&E | $ | 17,039 | 40 | % | $ | 16,515 | 40 | % | |||||||||
SoCalGas | 13,086 | 30 | 12,104 | 29 | |||||||||||||
Sempra South American Utilities | 3,486 | 8 | 3,235 | 8 | |||||||||||||
Sempra Mexico | 3,925 | 9 | 3,783 | 9 | |||||||||||||
Sempra Renewables | 1,838 | 4 | 1,441 | 4 | |||||||||||||
Sempra Natural Gas | 5,396 | 13 | 5,566 | 13 | |||||||||||||
All other | 803 | 2 | 734 | 2 | |||||||||||||
Intersegment receivables | (2,698) | (6) | (2,228) | (5) | |||||||||||||
Total | $ | 42,875 | 100 | % | $ | 41,150 | 100 | % | |||||||||
EQUITY METHOD AND OTHER INVESTMENTS | |||||||||||||||||
Sempra South American Utilities | $ | (1) | $ | (4) | |||||||||||||
Sempra Mexico | 548 | 519 | |||||||||||||||
Sempra Renewables | 827 | 855 | |||||||||||||||
Sempra Natural Gas | 818 | 1,460 | |||||||||||||||
All other | 75 | 75 | |||||||||||||||
Total | $ | 2,267 | $ | 2,905 | |||||||||||||
(1) | Revenues for reportable segments include intersegment revenues of a negligible amount, $18 million, $27 million and $36 million for the three months ended June 30, 2016; $3 million, $35 million, $54 million and $66 million for the six months ended June 30, 2016; $3 million, $17 million, $24 million and $46 million for the three months ended June 30, 2015; and $5 million, $36 million, $49 million and $89 million for the six months ended June 30, 2015 for SDG&E, SoCalGas, Sempra Mexico and Sempra Natural Gas, respectively. | ||||||||||||||||
(2) | After preferred dividends. | ||||||||||||||||
SEGMENT INFORMATION (CONTINUED) | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
EQUITY EARNINGS (LOSSES) | |||||||||||||||
Earnings (losses) recorded before tax: | |||||||||||||||
Sempra Renewables | $ | 16 | $ | 11 | $ | 18 | $ | 18 | |||||||
Sempra LNG & Midstream | 2 | 3 | 3 | (26 | ) | ||||||||||
Total | $ | 18 | $ | 14 | $ | 21 | $ | (8 | ) | ||||||
Earnings (losses) recorded net of tax: | |||||||||||||||
Sempra South American Utilities | $ | — | $ | — | $ | 1 | $ | 2 | |||||||
Sempra Mexico | — | 33 | (9 | ) | 48 | ||||||||||
Total | $ | — | $ | 33 | $ | (8 | ) | $ | 50 | ||||||
EARNINGS (LOSSES)(2) | |||||||||||||||
SDG&E | $ | 149 | $ | 100 | $ | 304 | $ | 236 | |||||||
SoCalGas(3) | 58 | (1 | ) | 261 | 198 | ||||||||||
Sempra South American Utilities | 45 | 43 | 92 | 81 | |||||||||||
Sempra Mexico | (9 | ) | 57 | 39 | 75 | ||||||||||
Sempra Renewables | 23 | 12 | 34 | 26 | |||||||||||
Sempra LNG & Midstream | 27 | (149 | ) | 28 | (181 | ) | |||||||||
All other | (34 | ) | (46 | ) | (58 | ) | (66 | ) | |||||||
Total | $ | 259 | $ | 16 | $ | 700 | $ | 369 | |||||||
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT | |||||||||||||||
SDG&E | $ | 763 | $ | 602 | |||||||||||
SoCalGas | 682 | 650 | |||||||||||||
Sempra South American Utilities | 77 | 82 | |||||||||||||
Sempra Mexico | 155 | 140 | |||||||||||||
Sempra Renewables | 100 | 457 | |||||||||||||
Sempra LNG & Midstream | 12 | 68 | |||||||||||||
All other | 13 | 7 | |||||||||||||
Total | $ | 1,802 | $ | 2,006 | |||||||||||
June 30, 2017 | December 31, 2016 | ||||||||||||||
ASSETS | |||||||||||||||
SDG&E | $ | 18,708 | $ | 17,719 | |||||||||||
SoCalGas | 13,743 | 13,424 | |||||||||||||
Sempra South American Utilities | 3,750 | 3,591 | |||||||||||||
Sempra Mexico | 7,835 | 7,542 | |||||||||||||
Sempra Renewables | 2,349 | 3,644 | |||||||||||||
Sempra LNG & Midstream | 4,861 | 5,564 | |||||||||||||
All other | 660 | 475 | |||||||||||||
Intersegment receivables | (2,530 | ) | (4,173 | ) | |||||||||||
Total | $ | 49,376 | $ | 47,786 | |||||||||||
EQUITY METHOD AND OTHER INVESTMENTS | |||||||||||||||
Sempra South American Utilities | $ | 20 | $ | — | |||||||||||
Sempra Mexico | 234 | 180 | |||||||||||||
Sempra Renewables | 825 | 844 | |||||||||||||
Sempra LNG & Midstream | 977 | 997 | |||||||||||||
All other | 78 | 76 | |||||||||||||
Total | $ | 2,134 | $ | 2,097 |
(1) | Revenues for reportable segments include intersegment revenues of $3 million, $17 million, $26 million and $51 million for the three months ended June 30, 2017; $4 million, $35 million, $51 million and $104 million for the six months ended June 30, 2017; a negligible amount, $18 million, $27 million and $36 million for the three months ended June 30, 2016; and $3 million, $35 million, $54 million and $66 million for the six months ended June 30, 2016 for SDG&E, SoCalGas, Sempra Mexico and Sempra LNG & Midstream, respectively. |
(2) | Amounts for the six months ended June 30, 2016 reflect the adoption of ASU 2016-09 as of January 1, 2016, as we discuss in Note 2. |
(3) | After preferred dividends. |
▪ | Sempra Energy and its consolidated entities |
▪ | SDG&E and its consolidated VIE |
▪ | SoCalGas |
▪ | the Condensed Consolidated Financial Statements and related Notes of Sempra Energy and its subsidiaries and |
▪ | the Condensed Consolidated Financial Statements and related Notes of SDG&E and its |
▪ | the Condensed Financial Statements and related Notes of SoCalGas. |
SEMPRA UTILITIES | ||
Business summary | Market | Service territory |
A regulated public utility; infrastructure supports electric generation, transmission and distribution, and natural gas distribution | ▪ Provides electricity to a population of 3.6 million (1.4 million meters)▪ Provides natural gas to a population of 3.3 million (0.9 million meters) | Serves the county of San Diego, California (electric and natural gas) and an adjacent portion of southern Orange County (electric only) covering 4,100 square miles |
A regulated public utility; infrastructure supports natural gas distribution, transmission and storage | ▪ Provides natural gas to a population of | Southern California and portions of central California (excluding San Diego County, the city of Long Beach and the desert area of San Bernardino County) covering 20,000 square miles |
SEMPRA SOUTH AMERICAN UTILITIES Develops, owns and operates, or holds interests in electric transmission, distribution and generation infrastructure | ▪ Provides electricity to a population of approximately 2 million (approximately | ▪ Region of Valparaiso in central Chile▪ Southern zone of metropolitan Lima, Peru |
SEMPRA INFRASTRUCTURE | |||
Business summary | Market | Geographic area | |
SEMPRA MEXICO Develops, owns and operates, or holds interests in: ▪ natural gas transmission pipelines▪ LPG and ethane systems▪ a natural gas distribution utility▪ electric generation facilities, including wind, solar and a natural gas-fired power plant (presently held for sale)▪ a terminal for the import of ▪ a terminal for the storage of LPG▪ a marine terminal for the receipt, storage and delivery of liquid fuels▪ marketing operations for the purchase of LNG and the purchase and sale of natural gas | ▪ Natural gas▪ Wholesale electricity▪ LNG▪ LPG▪ Liquid fuels | ▪ Mexico |
SEMPRA RENEWABLES Develops, owns and operates, or holds interests in renewable energy generation projects | ▪ Wholesale electricity | ▪ Arizona▪ California▪ Colorado▪ Hawaii▪ Indiana▪ Kansas | ▪ Michigan▪ Minnesota▪ Nebraska▪ Nevada▪ Pennsylvania |
SEMPRA Develops, owns and operates, or holds interests ▪ ▪ ▪ marketing operations | ▪ LNG▪ Natural gas | ▪ Alabama▪ Louisiana▪ Mississippi▪ Texas |
▪ | Overall results of our operations |
▪ | Segment results |
▪ | Adjusted earnings and adjusted earnings per share |
▪ | Significant changes in revenues, costs and earnings between periods |
▪ | Impact of foreign currency and inflation rates on our results of operations |
SEMPRA ENERGY ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE | |||||||||
(Dollars in millions, except per share amounts) | |||||||||
Pretax amount | Income tax (benefit) expense(1) | After-tax amount | Diluted EPS | ||||||
Three months ended June 30, 2016 | |||||||||
Sempra Energy GAAP Earnings | $ | 16 | $ | 0.06 | |||||
Excluded items: | |||||||||
Permanent release of pipeline capacity | $ | 206 | $ | (83) | 123 | 0.49 | |||
SDG&E tax repairs adjustments related to 2016 GRC FD | 52 | (21) | 31 | 0.12 | |||||
SoCalGas tax repairs adjustments related to 2016 GRC FD | 83 | (34) | 49 | 0.20 | |||||
SDG&E retroactive impact of 2016 GRC FD for first-quarter 2016 | (15) | 6 | (9) | (0.04) | |||||
SoCalGas retroactive impact of 2016 GRC FD for first-quarter 2016 | (20) | 8 | (12) | (0.05) | |||||
Deferred income tax expense associated with TdM | ― | 2 | 2 | 0.01 | |||||
Sempra Energy Adjusted Earnings | $ | 200 | $ | 0.79 | |||||
Weighted-average number of shares outstanding, diluted (thousands) | 251,938 | ||||||||
Three months ended June 30, 2015 | |||||||||
Sempra Energy GAAP Earnings | $ | 295 | $ | 1.17 | |||||
Excluded items: | |||||||||
Gain on sale of Mesquite Power block 2 | $ | (61) | $ | 25 | (36) | (0.14) | |||
Sempra Energy Adjusted Earnings | $ | 259 | $ | 1.03 | |||||
Weighted-average number of shares outstanding, diluted (thousands) | 251,491 | ||||||||
Six months ended June 30, 2016 | |||||||||
Sempra Energy GAAP Earnings | $ | 335 | $ | 1.33 | |||||
Excluded items: | |||||||||
Permanent release of pipeline capacity | $ | 206 | $ | (83) | 123 | 0.49 | |||
SDG&E tax repairs adjustments related to 2016 GRC FD | 52 | (21) | 31 | 0.12 | |||||
SoCalGas tax repairs adjustments related to 2016 GRC FD | 83 | (34) | 49 | 0.20 | |||||
Impairment of investment in Rockies Express | 44 | (17) | 27 | 0.11 | |||||
Deferred income tax expense associated with TdM | ― | 26 | 26 | 0.10 | |||||
Sempra Energy Adjusted Earnings | $ | 591 | $ | 2.35 | |||||
Weighted-average number of shares outstanding, diluted (thousands) | 251,686 | ||||||||
Six months ended June 30, 2015 | |||||||||
Sempra Energy GAAP Earnings | $ | 732 | $ | 2.91 | |||||
Excluded items: | |||||||||
Gain on sale of Mesquite Power block 2 | $ | (61) | $ | 25 | (36) | (0.14) | |||
SONGS plant closure adjustment | (21) | 8 | (13) | (0.05) | |||||
Sempra Energy Adjusted Earnings | $ | 683 | $ | 2.72 | |||||
Weighted-average number of shares outstanding, diluted (thousands) | 251,264 | ||||||||
(1) | Income taxes were calculated based on applicable statutory tax rates, except for adjustments that are solely income tax. | ||||||||
SEMPRA ENERGY EARNINGS (LOSSES) BY SEGMENT | |||||||||
(Dollars in millions) | |||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | ||||||
California Utilities: | |||||||||
SDG&E | $ | 100 | $ | 126 | $ | 229 | $ | 273 | |
SoCalGas(1) | (1) | 70 | 194 | 284 | |||||
Sempra International: | |||||||||
Sempra South American Utilities | 43 | 45 | 81 | 86 | |||||
Sempra Mexico | 57 | 50 | 74 | 97 | |||||
Sempra U.S. Gas & Power: | |||||||||
Sempra Renewables | 12 | 19 | 25 | 32 | |||||
Sempra Natural Gas | (149) | 40 | (185) | 42 | |||||
Parent and other(2) | (46) | (55) | (83) | (82) | |||||
Earnings | $ | 16 | $ | 295 | $ | 335 | $ | 732 | |
(1) | After preferred dividends. | ||||||||
(2) | Includes after-tax interest expense ($44 million and $39 million for the three months ended June 30, 2016 and 2015, respectively, and $87 million and $77 million for the six months ended June 30, 2016 and 2015, respectively), intercompany eliminations recorded in consolidation and certain corporate costs. |
SEMPRA ENERGY EARNINGS (LOSSES) BY SEGMENT | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016(1) | ||||||||||||
Sempra Utilities: | |||||||||||||||
SDG&E | $ | 149 | $ | 100 | $ | 304 | $ | 236 | |||||||
SoCalGas(2) | 58 | (1 | ) | 261 | 198 | ||||||||||
Sempra South American Utilities | 45 | 43 | 92 | 81 | |||||||||||
Sempra Infrastructure: | |||||||||||||||
Sempra Mexico | (9 | ) | 57 | 39 | 75 | ||||||||||
Sempra Renewables | 23 | 12 | 34 | 26 | |||||||||||
Sempra LNG & Midstream | 27 | (149 | ) | 28 | (181 | ) | |||||||||
Parent and other(3) | (34 | ) | (46 | ) | (58 | ) | (66 | ) | |||||||
Earnings | $ | 259 | $ | 16 | $ | 700 | $ | 369 |
Reflects the adoption of ASU 2016-09, as we discuss in |
(2) | After preferred dividends. |
(3) | Includes after-tax interest expense ($40 million |
▪ | $31 million |
▪ | $16 million |
▪ | $ |
▪ | $5 million higher earnings from electric transmission operations primarily due to higher rate base; and |
▪ | $3 million increase in AFUDC related to equity; offset by |
▪ | $9 million favorable impact in 2016 from the retroactive application of the 2016 GRC FD for the first quarter of |
▪ | $31 million |
▪ | $22 million |
▪ | $ |
▪ | $ |
▪ | $ |
▪ | $6 million reimbursement of litigation costs associated with the arbitration ruling over the SONGS replacement steam generators, as we discuss in Note 9 of the Notes to Condensed Consolidated Financial Statements herein; offset by |
▪ | $ |
▪ | $49 million of charges in 2016 associated with prior |
▪ | $13 million impairment of assets in 2016 related to the Southern Gas System Reliability |
▪ | $ |
$12 million favorable impact in 2016 from the retroactive application of the 2016 GRC FD for the first quarter of |
▪ | $49 million of charges in 2016 associated with prior |
▪ | $13 million impairment of assets in 2016 related to the Southern Gas System Reliability |
• |
$10 million higher earnings associated with the PSEP and advanced metering assets; |
▪ | $ |
$ |
◦ | $52 million from income tax expense ($34 million after noncontrolling interests), and |
◦ | $9 million in equity losses from our joint ventures, offset by |
◦ | $8 million favorable transactional effects. |
▪ | $22 million favorable impact in 2016 from foreign currency and inflation effects, net of related hedging activities, as follows: |
◦ | $22 million from income tax benefit ($18 million after noncontrolling interests), and |
◦ | $15 million in equity earnings from our joint |
$6 million unfavorable transactional effects. |
▪ | $ |
▪ | $7 million higher interest expense, including $4 million at Ventika and $2 million at IEnova Pipelines (formerly known as GdC) related to debt assumed in their acquisitions; and |
▪ | $7 million lower operating results at TdM, mainly due to higher operating expenses related to major maintenance; offset by |
▪ | $35 million higher pipeline operational earnings, primarily attributable to the increase in our ownership interest in IEnova Pipelines from 50 percent to 100 percent in September 2016 and from other pipeline assets placed in service; |
▪ | $15 million losses attributable to noncontrolling interests in 2017 compared to $16 million earnings attributable to noncontrolling interests in 2016 at IEnova, as we discuss below in “Changes in Revenues, Costs and Earnings – Losses (Earnings) Attributable to Noncontrolling Interests;” |
▪ | $8 million operational earnings in 2017 from the Ventika wind power generation facilities, which we acquired in December 2016; |
▪ | $3 million tax benefit in 2017 from a reduction to the outside basis deferred tax liability compared to $3 million tax expense in 2016 on our investment in TdM that is held for sale; and |
▪ | $4 million higher earnings from the recognition of AFUDC related to equity primarily associated with the Ojinaga pipeline project. |
▪ | $86 million unfavorable impact in 2017 from foreign currency and inflation effects, net of related hedging activities, as follows: |
◦ | $149 million from income tax expense ($99 million after noncontrolling interests), and |
◦ | $22 million in |
◦ | $ |
▪ | $25 million |
◦ | $22 million from income tax benefit ($18 million after noncontrolling interests), and |
◦ | $15 million in equity earnings from our joint ventures, offset by |
◦ | $5 million net unfavorable transactional and translation effects. |
▪ | $71 million impairment in 2017, net of a $12 million income tax benefit that has been fully reserved, of the TdM assets held for sale; |
▪ | $15 million higher interest expense, including $8 million at Ventika and $4 million at IEnova Pipelines; and |
▪ | $13 million valuation allowance against TdM’s deferred tax assets; offset by |
▪ | $57 million higher pipeline operational earnings, primarily attributable to the increase in ownership in IEnova Pipelines and from other pipeline assets placed in service; |
▪ | $8 million tax benefit in 2017 from a reduction to the outside basis deferred tax liability compared to $32 million tax expense in 2016 on our investment in TdM that is held for sale; |
▪ | $32 million |
▪ | $10 million losses attributable to noncontrolling interests in 2017 compared to $21 million earnings attributable to noncontrolling interests in 2016 at IEnova; and |
▪ | $18 million operational earnings in 2017 from Ventika. |
▪ | $123 million loss in 2016 on permanent release of certain pipeline |
▪ | $34 million settlement proceeds from a breach of contract claim against a counterparty in bankruptcy court, of which $28 million is related to the charge in 2016 from the permanent release of certain pipeline capacity, as we discuss in Note 11 of the |
▪ | $ |
▪ | $5 million |
▪ | $123 million loss in 2016 on permanent release of certain pipeline capacity; |
▪ | $39 million |
▪ | $ |
▪ | $27 million impairment charge in the first quarter of 2016 related to |
▪ | $9 million higher results from LNG marketing activities primarily driven by changes in natural gas prices; offset by |
▪ | $ |
▪ | $7 million lower earnings due to the sale of EnergySouth in September 2016, as we discuss in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report. |
▪ | $ |
◦ | $2 million income tax benefit in 2017 compared to $8 million income tax expense in 2016 due to the interim period application of an annual forecasted consolidated effective tax rate, and |
◦ | $4 million U.S. income tax expense in 2016 |
▪ | $ |
▪ | $5 million |
▪ | $6 million higher proportion of operating costs retained at Parent; and |
▪ | $5 million ($8 million pretax) of costs in |
▪ | $ |
▪ | $9 million lower net interest expense in 2017; and |
▪ | $6 million higher income tax benefits in 2017, including: |
◦ | $3 million income tax benefit in 2017 compared to $6 million income tax expense in 2016 |
◦ | $ |
◦ | $7 million income tax benefit in 2017 related to a deferred income tax liability on an outside basis difference in a subsidiary investment, offset by |
◦ | $1 million income tax expense in 2017 compared to $17 million income tax benefit in 2016 associated with excess tax deficiencies/benefits related to share-based compensation; offset by |
▪ | $10 million ($16 million pretax) of costs in 2017 associated with foreign currency derivatives; and |
▪ | $4 million higher proportion of operating costs retained at Parent. |
SEMPRA ENERGY ADJUSTED EARNINGS AND ADJUSTED EPS | |||||||||||||||||||
(Dollars in millions, except per share amounts) | |||||||||||||||||||
Pretax amount | Income tax (benefit) expense(1) | Non-controlling interests | Earnings | Diluted EPS | |||||||||||||||
Three months ended June 30, 2017 | |||||||||||||||||||
Sempra Energy GAAP Earnings | $ | 259 | $ | 1.03 | |||||||||||||||
Excluded items: | |||||||||||||||||||
Impairment of TdM assets held for sale | $ | 71 | $ | — | $ | (24 | ) | 47 | 0.19 | ||||||||||
Deferred income tax benefit associated with TdM | — | (3 | ) | 1 | (2 | ) | (0.01 | ) | |||||||||||
Recoveries related to 2016 permanent release of pipeline capacity | (47 | ) | 19 | — | (28 | ) | (0.11 | ) | |||||||||||
Sempra Energy Adjusted Earnings | $ | 276 | $ | 1.10 | |||||||||||||||
Weighted-average number of shares outstanding, diluted (thousands) | 252,822 | ||||||||||||||||||
Three months ended June 30, 2016(2) | |||||||||||||||||||
Sempra Energy GAAP Earnings | $ | 16 | $ | 0.06 | |||||||||||||||
Excluded items: | |||||||||||||||||||
Permanent release of pipeline capacity | $ | 206 | $ | (83 | ) | $ | — | 123 | 0.49 | ||||||||||
SDG&E tax repairs adjustments related to 2016 GRC FD | 52 | (21 | ) | — | 31 | 0.12 | |||||||||||||
SoCalGas tax repairs adjustments related to 2016 GRC FD | 83 | (34 | ) | — | 49 | 0.19 | |||||||||||||
SDG&E retroactive impact of 2016 GRC FD for first-quarter 2016 | (15 | ) | 6 | — | (9 | ) | (0.03 | ) | |||||||||||
SoCalGas retroactive impact of 2016 GRC FD for first-quarter 2016 | (20 | ) | 8 | — | (12 | ) | (0.05 | ) | |||||||||||
Deferred income tax expense associated with TdM | — | 3 | (1 | ) | 2 | 0.01 | |||||||||||||
Sempra Energy Adjusted Earnings | $ | 200 | $ | 0.79 | |||||||||||||||
Weighted-average number of shares outstanding, diluted (thousands) | 252,036 | ||||||||||||||||||
Six months ended June 30, 2017 | |||||||||||||||||||
Sempra Energy GAAP Earnings | $ | 700 | $ | 2.77 | |||||||||||||||
Excluded items: | |||||||||||||||||||
Impairment of TdM assets held for sale | $ | 71 | $ | — | $ | (24 | ) | 47 | 0.19 | ||||||||||
Deferred income tax benefit associated with TdM | — | (8 | ) | 3 | (5 | ) | (0.02 | ) | |||||||||||
Recoveries related to 2016 permanent release of pipeline capacity | (47 | ) | 19 | — | (28 | ) | (0.11 | ) | |||||||||||
Sempra Energy Adjusted Earnings | $ | 714 | $ | 2.83 | |||||||||||||||
Weighted-average number of shares outstanding, diluted (thousands) | 252,609 | ||||||||||||||||||
Six months ended June 30, 2016(2) | |||||||||||||||||||
Sempra Energy GAAP Earnings | $ | 369 | $ | 1.47 | |||||||||||||||
Excluded items: | |||||||||||||||||||
Permanent release of pipeline capacity | $ | 206 | $ | (83 | ) | $ | — | 123 | 0.49 | ||||||||||
SDG&E tax repairs adjustments related to 2016 GRC FD | 52 | (21 | ) | — | 31 | 0.12 | |||||||||||||
SoCalGas tax repairs adjustments related to 2016 GRC FD | 83 | (34 | ) | — | 49 | 0.19 | |||||||||||||
Impairment of investment in Rockies Express | 44 | (17 | ) | — | 27 | 0.11 | |||||||||||||
Deferred income tax expense associated with TdM | — | 32 | (6 | ) | 26 | 0.10 | |||||||||||||
Sempra Energy Adjusted Earnings | $ | 625 | $ | 2.48 | |||||||||||||||
Weighted-average number of shares outstanding, diluted (thousands) | 251,775 |
(1) | Income taxes were calculated based on applicable statutory tax rates, except for adjustments that are solely income tax. Income taxes associated with TdM were calculated based on the applicable statutory tax rate, including translation from historic to current exchange rates. An income tax benefit of $12 million associated with the 2017 TdM impairment has been fully reserved. |
(2) | Reflects the adoption of ASU 2016-09, as we discuss in Note 2 of the Notes to Condensed Consolidated Financial Statements herein. |
SDG&E ADJUSTED EARNINGS | |||||||||||
(Dollars in millions) | |||||||||||
Pretax amount | Income tax (benefit) expense(1) | Earnings | |||||||||
Three months ended June 30, 2016 | |||||||||||
SDG&E GAAP Earnings | $ | 100 | |||||||||
Excluded items: | |||||||||||
Tax repairs adjustments related to 2016 GRC FD | $ | 52 | $ | (21 | ) | 31 | |||||
Retroactive impact of 2016 GRC FD for first-quarter 2016 | (15 | ) | 6 | (9 | ) | ||||||
SDG&E Adjusted Earnings | $ | 122 | |||||||||
Six months ended June 30, 2016(2) | |||||||||||
SDG&E GAAP Earnings | $ | 236 | |||||||||
Excluded item: | |||||||||||
Tax repairs adjustments related to 2016 GRC FD | $ | 52 | $ | (21 | ) | 31 | |||||
SDG&E Adjusted Earnings | $ | 267 |
(1) | Income taxes were calculated based on applicable statutory tax rates. |
(2) | Reflects the adoption of ASU 2016-09, as we discuss in Note 2 of the Notes to Condensed Consolidated Financial Statements herein. |
SOCALGAS ADJUSTED EARNINGS | |||||||||||
(Dollars in millions) | |||||||||||
Pretax amount | Income tax (benefit) expense(1) | Earnings | |||||||||
Three months ended June 30, 2016 | |||||||||||
SoCalGas GAAP Losses | $ | (1 | ) | ||||||||
Excluded items: | |||||||||||
Tax repairs adjustments related to 2016 GRC FD | $ | 83 | $ | (34 | ) | 49 | |||||
Retroactive impact of 2016 GRC FD for first-quarter 2016 | (20 | ) | 8 | (12 | ) | ||||||
SoCalGas Adjusted Earnings | $ | 36 | |||||||||
Six months ended June 30, 2016(2) | |||||||||||
SoCalGas GAAP Earnings | $ | 198 | |||||||||
Excluded item: | |||||||||||
Tax repairs adjustments related to 2016 GRC FD | $ | 83 | $ | (34 | ) | 49 | |||||
SoCalGas Adjusted Earnings | $ | 247 |
(1) | Income taxes were calculated based on applicable statutory tax rates. |
(2) | Reflects the adoption of ASU 2016-09, as we discuss in Note 2 of the Notes to Condensed Consolidated Financial Statements herein. |
▪ | SDG&E |
▪ | Sempra South American Utilities’ Chilquinta Energía and Luz del Sur |
▪ | SDG&E |
▪ | SoCalGas |
▪ | Sempra |
▪ | Sempra |
▪ | permits SDG&E to recover the actual cost incurred to generate or procure electricity based on annual estimates of the
The table below summarizes revenues and cost of sales for our utilities, net of intercompany activity:
The table below summarizes electric and natural gas volumes billed by our utilities:
Electric Revenues and Cost of Electric Fuel and Purchased Power In the three months ended June 30,
Our utilities’ cost of electric fuel and purchased power decreased by $8 million (1%) to $553 million in the three months ended June 30, 2017 primarily due to a $10 million decrease at Sempra South American Utilities, which included
In the first six months of 2017, our electric revenues increased by $90 million (4%) to $2.6 billion primarily due to:
In the first six months of 2017, our utilities’ cost of electric fuel and purchased power increased by $4 million, remaining at $1.1 billion due to:
Natural Gas Revenues and Cost of Natural Gas The table below summarizes average cost of natural gas sold by the California Utilities and included in Cost of Natural Gas. The average cost of natural gas sold at each utility is impacted by market prices, as well as transportation, tariff and other charges.
In the three months ended June 30, 2017, Sempra Energy’s natural gas revenues increased by $157 million (21%) to $890 million, and the cost of natural gas increased by $45 million (25%) to $228 million. The increase in natural gas revenues was primarily due to:
In the three months ended June 30, 2017, natural gas revenues and cost of natural gas at Sempra LNG & Midstream decreased by $18 million and $4 million, respectively, due to the sale of EnergySouth in September 2016. In the first six months of 2017, Sempra Energy’s natural gas revenues increased by $369 million (19%) to $2.3 billion, and the cost of natural gas increased by $219 million (44%) to $713 million. The increase in natural gas revenues was primarily due to:
The table below shows revenues and cost of sales for our energy-related businesses:
In the three months ended June 30,
Operation and Maintenance Our
In the second quarter of Equity Earnings (Losses), Before Income Tax Equity earnings, before income tax, for the six months ended June 30, 2017 were $21 million compared to equity losses, before income tax, of $8 million for the same period in 2016. The change was primarily due to a $44 million impairment charge in the first quarter of 2016 related to Sempra LNG & Midstream’s investment in Rockies Express, offset by $19 million lower equity earnings in 2017 as a result of the sale of our 25-percent interest in Rockies Express in May 2016. We discuss the impairment charge and sale further in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report. Other Income, Net In 2017, as part of our central risk management function, we entered into foreign currency derivatives to hedge Sempra Mexico parent’s exposure to movements in the Mexican peso from its controlling interest in IEnova. These foreign currency derivatives have notional amounts totaling $850 million and expire in December 2017. The gains associated with these derivatives are included in Other Income, Net, as described below, and partially mitigate the transactional effects of foreign currency and inflation included in “Income Taxes” and in earnings from Sempra Mexico’s equity method investments. We discuss policies governing our risk management in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk” in the Annual Report. Other income, net, increased by $68 million to $91 million in the three months ended June 30, 2017 primarily due to: $31 million from net gains in 2017 on foreign currency derivatives compared to $15 million losses in 2016 primarily as a result of significant appreciation of the Mexican peso;
Other income, net, increased by $188 million to $260 million in the first six months of 2017 primarily due to: $94 million from net gains in 2017 on foreign currency derivatives compared to $12 million losses in 2016 primarily as a result of significant appreciation of the Mexican peso;
Interest Expense Interest expense increased by $43 million (15%) to $328 million in the first six months of 2017 primarily at Sempra Mexico mainly from the recognition of AFUDC for the Ojinaga and San Isidro pipeline projects and from interest on debt assumed in the IEnova Pipelines and Ventika acquisitions in the second half of 2016. Income Taxes The table below shows the income tax expense and effective income tax rates for Sempra Energy, SDG&E and SoCalGas.
Sempra Energy Consolidated The income tax
The increase in income tax expense in the first six months of 2017 was due to higher pretax income and a higher effective income tax rate. The higher effective income tax rate was primarily due to:
SDG&E The
SoCalGas SoCalGas’ income tax expense in the three months ended June 30, 2017 compared to income tax benefit in the same period in 2016 was due to pretax income in 2017 compared to pretax loss in 2016. The pretax loss in 2016 includes the charges associated with prior years’ tax repairs deductions as a result of the 2016 GRC FD. The increase in SoCalGas’ income tax expense in the first six months of 2017 was due to higher pretax income and a higher effective income tax rate. The higher effective income tax rate was primarily due to lower forecasted flow-through We discuss the forecasted effective tax rates anticipated for the full year, excluding the income tax effects that cannot be reliably forecasted, for Sempra Energy, SDG&E and SoCalGas in Equity Earnings (Losses), Net of Income Tax Equity earnings, net of income tax, were negligible for the three months ended June 30, 2017 compared to $33 million for the same period in 2016. The change was primarily due to $29 million of equity earnings in 2016 from IEnova Pipelines (formerly known as GdC), including $11 million from DEN, prior to IEnova’s acquisition of the remaining 50-percent interest in IEnova Pipelines in September 2016, as we discuss in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report. In the three months ended June 30, 2017, there was a $1 million equity loss at DEN, primarily from foreign currency and inflation effects. Equity losses, net of income tax, were $8 million for the six months ended June 30, 2017 compared to equity earnings, net of tax, of $50 million for the same period in 2016. The change was primarily due to:
Losses (Earnings) Attributable to Noncontrolling Interests
Losses attributable to noncontrolling
Foreign Currency Translation Any difference in average exchange rates used for the translation of income statement activity from year to year can cause a variance in Sempra
Foreign Currency Transactional Impacts
CAPITAL RESOURCES AND LIQUIDITY We expect Our lines of credit provide liquidity and support commercial paper. As we discuss in Note 6 of the Notes to Condensed Consolidated Financial Statements herein, Sempra Energy, Sempra Global (the holding company for our subsidiaries not subject to California utility regulation) and the California Utilities each have five-year revolving credit facilities expiring in 2020. The
(3) Because the commercial paper programs are supported by these lines,
Sempra Energy Consolidated We believe that these available funds, combined with cash flows from operations, distributions from our equity method investments,
Our short-term debt is primarily used to meet liquidity requirements, fund shareholder dividends, and temporarily finance capital expenditures and new business acquisitions or start-ups. Our corporate short-term, unsecured promissory notes, or commercial paper, were our primary sources of short-term debt funding in the first six months of We have significant investments in several trusts to provide for future payments of pensions and Loans to Affiliates California Utilities SDG&E and SoCalGas expect that the available funds described above, cash flows from operations, and debt issuances will continue to be adequate to As a result of Changes in balancing accounts for significant costs at SDG&E and SoCalGas, particularly a change in status between over- and under- collected, may have a significant impact on cash flows, as these changes generally represent the period beginning November 2017. In July 2017, the CPUC issued a proposed decision approving the request as filed. We expect the final decision in the SoCalGas Aliso Canyon Natural Gas Storage Facility Gas Leak We provide information on the natural gas leak at the Aliso Canyon “Risk Factors” in the Annual Report. The costs of defending against The total costs incurred to remediate and stop the leak and to mitigate local community impacts are significant and may increase, and to the extent not covered by insurance (including any costs in excess of applicable policy limits), or if there were to be significant delays in receiving insurance recoveries, such costs could have a material adverse effect on Sempra South American Utilities We expect Sempra Mexico We expect In other outstanding debt. At June 30, Sempra We expect Sempra Renewables to require funds for the development of and investment in electric renewable energy projects. Projects at Sempra Renewables may be financed through a combination of operating cash flow, project financing, funds from the parent, partnering in joint ventures, and other forms of equity sales, including tax equity. The Sempra We expect Sempra Sempra We discuss Cameron LNG JV and the joint venture financing further in Notes 3 and 4 of the Notes to Consolidated Financial Statements, in “Risk Factors,” and in “Factors Influencing Future Performance” in the Annual Report. We also discuss Cameron LNG JV in “Factors Influencing Future Performance” below. CASH FLOWS FROM OPERATING ACTIVITIES
(1) Reflects the adoption of ASU 2016-09, as we discuss in Note 2 of the Notes to Condensed Consolidated Financial Statements herein. Sempra Energy Consolidated Cash provided by operating activities at Sempra Energy
SDG&E Cash provided by operating activities at SDG&E
SoCalGas Cash provided by operating activities at SoCalGas
CASH FLOWS FROM INVESTING ACTIVITIES
Sempra Energy Consolidated Cash used in investing activities at Sempra Energy increased in
SDG&E Cash used in investing activities at SDG&E
SoCalGas Cash used in investing activities at SoCalGas
Capital Expenditures Sempra Energy Consolidated Expenditures for Property, Plant and Equipment The following table summarizes capital expenditures in 2017 compared to 2016.
The amounts and timing of capital expenditures are generally subject to approvals by various regulatory and other governmental and environmental bodies, including the CPUC and the CASH FLOWS FROM FINANCING ACTIVITIES
(1) Reflects the adoption of ASU 2016-09, as we discuss in Note 2 of the Notes to Condensed Consolidated Financial Statements herein. Sempra Energy Consolidated At Sempra Energy, cash provided by financing activities
SDG&E At SDG&E, cash provided by financing activities decreased in 2017, primarily due to:
SoCalGas
COMMITMENTS We discuss significant changes to contractual commitments since December 31, CREDIT RATINGS The credit ratings of Sempra Energy, SDG&E and SoCalGas remained at investment grade levels during the first six months of FACTORS INFLUENCING FUTURE PERFORMANCE SDG&E Capital Project Updates We summarize below updates regarding certain major capital projects at SDG&E.
Sunrise Powerlink Project Cost Cap In In June 2017, the CPUC dismissed SDG&E’s petition as moot since the Sunrise Powerlink transmission project has been fully constructed and found that, although the CPUC may establish a cost cap for electric transmission projects, the recovery of the associated costs is under FERC jurisdiction. The decision also finds that SDG&E complied with the CPUC’s quarterly reporting requirements, resolving the issue of whether the adequacy of such reporting should be further investigated. Potential Impacts of Community Choice Aggregation and Direct Access SDG&E provides electric services, including the commodity of electricity, to the majority of its customers (“bundled customers”). SDG&E procures electricity, typically on a long-term basis, on behalf of these bundled customers. However, SDG&E’s earnings are “decoupled” from electric sales volumes, one aspect of which is that commodity costs for electricity are directly passed through to bundled customers (see discussion in “Revenues – California Utilities” in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report). SDG&E’s bundled customers have the option to purchase the commodity of electricity from alternate suppliers under defined programs, including CCA and DA. In such cases, California law (SB 350) prohibits remaining bundled customers from experiencing any cost increase as a result of electric commodity no longer being consumed by the departing customers. Existing rate mechanisms may not be sufficient to ensure that remaining bundled customers do not experience any cost increase as a result of departing customers. SDG&E, PG&E and Edison filed a joint application with the CPUC in April 2017 to replace these existing mechanisms and ensure compliance with state law. In June 2017, the CPUC initiated a rulemaking proceeding to address this matter and dismissed the joint application without prejudice, since the issues it raised will be addressed in the rulemaking. Currently, DA in SDG&E’s service area is limited by state law and is approximately 17 percent of SDG&E’s annual demand, and there are no CCA providers in SDG&E’s service area. However, several local political jurisdictions, including the City of San Diego and a few other, smaller municipalities, are considering the formation of a CCA which, if implemented, could result in the departure of more than half of SDG&E’s bundled load. State law requires that customers opting to have a CCA procure their energy must also absorb the cost of energy procurement commitments already made by SDG&E on their behalf. If mechanisms to ensure compliance with state law were not in place at the time of these potentially significant reductions in SDG&E’s served load, remaining bundled customers of SDG&E could potentially experience large increases in rates for commodity costs under commitments made on behalf of the CCA customers. If legislative, regulatory or legal SONGS SDG&E has a 20-percent ownership interest in SONGS, formerly a 2,150-MW nuclear generating facility near San Clemente, California, that is in the
Wildfire Claims Cost Recovery In September 2015, SDG&E filed an application with the CPUC requesting rate recovery of In April 2016, the CPUC issued a ruling Recovery of these costs in rates will require future regulatory approval. SDG&E will continue to assess the likelihood, amount and timing of such recoveries in rates. Should SDG&E conclude that recovery of excess wildfire costs in rates is no longer probable, at that time SDG&E would record a charge against earnings. If SDG&E had concluded that the recovery of regulatory assets related to CPUC-regulated operations was no longer probable or was less than currently estimated, at June 30,
Aliso Canyon Natural Gas Storage Facility Gas Leak In October 2015, SoCalGas discovered a leak at one of its Local Community Mitigation Efforts Pursuant to a stipulation and Apart from the Los Angeles County Superior Court order, The total costs incurred to remediate and stop the leak and to mitigate local community impacts are significant and may increase, and we may be subject to potentially significant damages, restitution, and civil, administrative and criminal fines, costs and other penalties. To the extent any of these costs are not covered by insurance (including any costs in excess of applicable policy limits), or if there were to be significant delays in receiving insurance recoveries, such costs could have a material adverse effect on SoCalGas’ and Sempra Energy’s cash flows, financial condition and results of operations. Litigation In connection with the natural gas leak at the Aliso Canyon natural gas storage facility, as of August 3, 2017, 281 lawsuits, including over 25,500 plaintiffs, are pending against SoCalGas, some of which have also named Sempra Energy. Derivative and securities claims have also been filed on behalf of Sempra Energy and/or SoCalGas or their shareholders against certain officers and directors of Sempra Energy and/or SoCalGas. We provide further detail on these cases, as well as on complaints filed by the California Attorney General, acting in an independent capacity and on behalf of the people of the State of California and the CARB, together with the Los Angeles City Attorney; the SCAQMD; and the County of Los Angeles, on behalf of itself and the people of the State of California; and on a misdemeanor criminal complaint filed by the Los Angeles County District Attorney’s Office; in Note 11 of the Notes to Condensed Consolidated Financial Statements herein. Additional litigation may be filed against us in the future related to the Aliso Canyon natural gas storage facility incident or our responses thereto. The costs of defending against these civil and criminal lawsuits, cooperating with these investigations, and any damages, restitution, and civil, administrative and criminal fines, costs and other penalties, if awarded or imposed, as well as costs of mitigating the actual natural gas released, could be significant and to the extent not covered by insurance (including any costs in excess of applicable policy limits), or if there were to be significant delays in receiving insurance recoveries, such costs could have a material adverse effect on Governmental Investigations Various governmental agencies
Natural Gas Storage Operations and Reliability Natural gas withdrawn from storage is important for service reliability during peak demand periods, including peak electric generation needs in the summer and heating needs in the winter. The Aliso Canyon natural gas storage facility, with a storage capacity of On July 19, 2017, DOGGR issued its Order to: Test and If the Aliso Canyon natural gas storage facility were determined to be out of service for any meaningful period of time or permanently closed, or if future revenues were otherwise insufficient to recover its recorded value, it could result in an impairment of the facility and significantly higher than expected operating costs and/or additional capital expenditures, and natural gas reliability and electric generation could be jeopardized. At June 30, 2017, the Aliso Canyon natural gas storage facility has a net book value of $582 million, including $237 million of construction work in progress for the project to construct a new compression station. Any significant impairment of this asset could have a material adverse effect on SoCalGas’ and Sempra Energy’s results of operations for the period in which it is recorded. Higher operating costs and additional capital expenditures incurred by SoCalGas may not be recoverable in Regulatory Proceedings In February 2017, the Section 455.5 of the California Public Utilities Code, among other things, directs regulated utilities to notify the CPUC if all or any portion of a major facility has been out of service for nine consecutive months. Although SoCalGas does not believe the longer to complete than initially contemplated. In response, and as required by Section 455.5, the CPUC issued an OII to address whether the Aliso Canyon natural gas storage facility or any portion of that facility has been out of service for nine consecutive months pursuant to Section 455.5, and if it is determined to have been out of service, whether the CPUC should adjust SoCalGas’ rates to reflect the period the facility is deemed to have been out of service. As required under Section 455.5, if hearings on the investigation are necessary, they will be consolidated with SoCalGas’ next GRC proceeding. In the event that the CPUC determines that all or any portion of the facility has been out of service for nine consecutive months, the amount of any refund to ratepayers and the inability to earn a return on those assets could have a material adverse effect on SoCalGas’ and Sempra Energy’s cash flows, financial condition and results of operations. In March 2016, the CPUC ordered SoCalGas to establish a memorandum account to prospectively track its authorized revenue requirement and all revenues that it receives for its normal, business-as-usual costs to Insurance Excluding directors and officers liability insurance, we have four kinds of insurance policies that together provide between $1.2 billion to $1.4 billion in insurance coverage, depending on the nature of the claims. These policies are subject to various policy limits, exclusions and conditions. We have been communicating with our insurance carriers and intend to pursue the full extent of our insurance coverage. Through June 30, 2017, we have received $273 million of insurance proceeds for a portion of control-of-well expenses and a portion of temporary relocation costs. There can be no assurance that we will be successful in obtaining insurance coverage for costs related to the leak under the applicable policies, and to the extent we are not successful in obtaining coverage or these costs exceed the amount of our coverage, such costs could have a material adverse effect on SoCalGas’ and Sempra Energy’s cash flows, financial condition and results of operations. Our recorded estimate as facilities. Additional hearings in the We discuss these matters further in Note 11 of the Notes to Condensed Consolidated Financial Statements herein and in Note 15 of the Notes to Consolidated Financial Statements, “Factors Influencing Future Performance” and “Risk Factors” in the Annual Report. PIPES Act of 2016 In June 2016, the “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016” or the “PIPES Act of 2016” was enacted. Among other things, the PIPES Act of 2016:
In December 2016, PHMSA published an interim final rule pursuant to the PIPES Act of 2016 that revises the federal pipeline safety regulations relating to underground natural gas storage facilities. The interim final rule incorporates consensus safety measures for the construction, maintenance, risk-management, and integrity-management procedures for natural gas storage. SoCalGas began the process of implementing such safety measures prior to formal adoption by PHMSA and is developing the associated documents and procedures required to demonstrate compliance with the standards. SB 380 In May 2016, SB 380 became law and requires, among other things:
On July 19, 2017, DOGGR issued an order lifting the prohibition of the injection of natural gas into the Aliso Canyon natural gas storage facility and the CPUC’s Executive Director issued his concurrence with that determination, subject to certain conditions. On July 21, 2017, the County On July 28, 2017, the Superior Court denied the County’s application for a temporary restraining order to block DOGGR’s order on the ground that, pursuant to Public Utilities Code sections 714 and 1759(a), the CPUC has jurisdiction over regulating injections at the Aliso Canyon natural gas storage facility, and the Court therefore lacks jurisdiction to rule on the County’s application. On July 31, 2017, the County filed a petition for writ of mandate, prohibition, stay or other appropriate relief and a request for immediate stay in the Court of Appeal, seeking review of the Superior Court’s order denying the County’s application for a temporary restraining order. Later the same day, the Court of Appeal denied the County’s request for an immediate stay on injections. SoCalGas completed the steps outlined by state agencies in order to safely begin injections at the Aliso Canyon natural gas storage facility and, as of July 31, 2017, resumed limited injection. We provide further detail regarding DOGGR’s order and the petition filed by the County of Los Angeles above and in Note 11 of the Notes to Condensed Consolidated Financial Statements herein. SB 888 In September 2016, SB 888 became law, which requires that a penalty assessed against a gas corporation by the CPUC with regard to a natural gas storage facility leak must at least equal the amount necessary to fully offset the impact on the climate from the greenhouse gases emitted by the leak, as determined by the CARB. The CPUC also must consider the extent to which the gas corporation has mitigated or is in the process of mitigating the impact on the climate from greenhouse gas emissions resulting from the leak. Proposed Legislation – SB 57 Proposed SB 57 seeks to extend the moratorium on natural gas injections at the Aliso Canyon natural gas storage facility until the root cause analysis of the leak that started in October 2015 has been completed. It would also require the CPUC to “act in a manner that will maximize transparency” in the course of completing its analysis regarding the feasibility of minimizing or eliminating the use of the Aliso Canyon natural gas storage facility. In addition, the bill would enable the Governor to authorize reinjection, production and withdrawal at the Aliso Canyon natural gas storage facility as necessary to respond to or avoid emergencies. The bill did not pass a vote in the California Additional Safety Enhancements In February 2017, SoCalGas notified the CPUC that it is accelerating its well integrity assessments on the natural gas storage wells at its La Goleta, Honor Rancho and Higher operating costs and additional capital expenditures incurred by SoCalGas as a result of new laws, orders, rules and regulations arising out of SoCalGas Billing Practices In CALIFORNIA UTILITIES – JOINT MATTERS Capital Project Updates We summarize below updates regarding certain major joint capital projects at our California Utilities.
Incentive Mechanisms Energy Efficiency The CPUC has established incentive mechanisms that are based on the effectiveness of energy efficiency programs. In March 2017, the CPUC approved the settlement agreements reached with the ORA and TURN regarding the incentive awards for program years 2006 through 2008, wherein the parties agreed that SDG&E and SoCalGas would offset up to a total of approximately $4 million each against future incentive awards over the next three years beginning in 2017. If the total incentive awards ultimately authorized for 2017 through 2019 are less than approximately $4 million for either utility, the applicable utility is released from paying any remaining unapplied amount. Natural Gas Procurement In June 2017, SoCalGas filed an application for a GCIM award of $4 million for natural gas procured for its core customers during the 12-month period ended March 31, 2017. A CPUC decision is expected in the first half of 2018. In June 2016, SoCalGas filed an application for a GCIM award of $5 million for the 12-month period ended March 31, 2016. The CPUC approved the award in January 2017. Natural Gas Pipeline Operations Safety Assessments In 2011, the California Utilities filed implementation plans with the CPUC to implement the CPUC’s significant and urgent safety directive to test or replace natural gas transmission pipelines that have not been pressure tested and to reduce the time for valves to stop the flow of gas if a break in a pipeline occurs (referred to as PSEP). In 2014, the CPUC issued a final decision approving the utilities’ model for implementing PSEP, and established the criteria to determine the amounts related to PSEP that may be recovered from ratepayers and the processes for recovery of such amounts, including providing that such costs are subject to a reasonableness review. In 2016, the CPUC issued a final decision authorizing SoCalGas and SDG&E to recover, subject to refund pending reasonableness review, 50 percent of the revenue requirements associated with completed Phase 1 projects. The decision also incorporates a forward looking schedule to (1) file two reasonableness review applications for Phase 1 projects completed through 2017, (2) file one forecast application for Phase 2 project costs to be incurred in 2017 and 2018, and (3) include all other PSEP costs in future GRCs. In September 2016, SoCalGas and SDG&E filed a joint application with the CPUC for its second PSEP reasonableness review and rate recovery of costs of certain pipeline safety projects completed by June 30, 2015 and recorded in their authorized regulatory accounts. The total costs submitted for review are $195 million ($180 million for SoCalGas and $15 million for SDG&E). SoCalGas and SDG&E expect a decision from the CPUC in 2018. This proceeding has been challenged by consumer advocacy groups. However, we believe these costs were prudent, were incurred in accordance with the program, and should be substantially approved for recovery. In March 2017, SoCalGas and SDG&E filed an application with the CPUC requesting approval of the forecasted revenue requirement necessary to recover the costs associated with twelve Phase 1B and Phase 2A pipeline safety projects. The California Utilities expect to incur total costs for the twelve projects of approximately $255 million ($198 million in capital expenditures and $57 million in O&M) to be effective in rates on January 1, 2019. SoCalGas and SDG&E expect a CPUC decision in the second half of 2018. As shown in the table below, SoCalGas and SDG&E have made significant pipeline safety investments under this program, and SoCalGas expects to continue making significant investments as approved through various regulatory proceedings. SDG&E’s PSEP program is expected to be substantially complete in 2017, with the exception of the Pipeline Safety & Reliability Project that is currently under regulatory review.
(1) Excludes disallowed costs through June 30, 2017 of $6 million at SoCalGas and $1 million at SDG&E for pressure testing or replacing pipelines installed between January 1, 1956 and July 1, 1961. (2) Approved in December 2016; excludes $2 million of PSEP-specific insurance costs for which recovery may be requested in a future filing. (3) Reasonableness Review Application for completed projects totaling $195 million filed in September 2016. Also includes approximately $11 million of pre-engineering costs incurred to support projects under development and submitted as part of the Forecast Application filed in March 2017. Both decisions expected in 2018. (4) Reasonableness Review Application to be filed in late 2018 and expected to include substantially all of these costs. Remaining costs not included in the (5) Authorized to recover 50 percent of the revenue requirement annually, subject to refund. Regulatory Compliance and Safety Enforcement In October 2016, the CPUC’s CPED issued a citation to SoCalGas for alleged violations of certain environmental mitigation measures related to the Aliso Canyon Turbine Replacement Project, and imposed a fine in the amount of $699,500. SoCalGas subsequently appealed the citation and the resulting fine. In March 2017, SoCalGas and the CPED filed a joint settlement agreement with the CPUC to resolve all matters related to the October 2016 citation. As a part of the settlement agreement, SoCalGas agreed to pay $250,000 to the state’s general fund and to retain an independent firm to conduct compliance training seminars for the For a discussion about “Future Risk-Based GRC,” see “Factors Influencing Future Performance” in the Annual Report. SEMPRA SOUTH AMERICAN UTILITIES Chilquinta Energía’s most recent review process for distribution rates was completed in November 2016, covering the period from November 2016 through October 2020. We expect a final decree to be released during the second half of 2017 and to be retroactive from November 2016, which we do not expect to have a material impact on our results. Capital We
Other Sempra South American Utilities Matters For a discussion about other SEMPRA
We
Energía Costa Azul LNG Terminal In Development of this project is subject to Our TdM power plant is currently held for sale, as we discuss in Note 3 of the Notes to Condensed Consolidated Financial Statements herein. Other Sempra Mexico Matters For a discussion about other Sempra Mexico matters, see “Factors Influencing Future Performance” in the Annual Report. SEMPRA Sempra Sempra We summarize below a new solar project at Sempra Renewables.
SEMPRA LNG & MIDSTREAM Capital Project Updates We summarize below Sempra LNG & Midstream’s completion of the Cameron Interstate Pipeline expansion project.
We summarize below updates regarding the Cameron LNG JV three-train liquefaction joint venture project at Sempra LNG & Midstream.
Cameron LNG JV Three-Train Liquefaction Project Proposed Additional Cameron Liquefaction Expansion Cameron LNG JV has received the major permits necessary to expand the current configuration of the Cameron LNG JV liquefaction project from the current three liquefaction trains under construction. The proposed expansion project includes up to two additional liquefaction trains, capable of increasing LNG production capacity by approximately 9 Mtpa to 10 Mtpa, and up to two additional full containment LNG storage tanks (one of which was permitted with the original three-train project). Advancement of the project includes
Under the Cameron LNG JV financing agreements, expansion of the Cameron LNG JV facilities beyond the first three trains is subject to certain restrictions and conditions, including among others, timing restrictions on expansion of the project unless appropriate prior consent is obtained from lenders. Under the Cameron LNG JV equity agreements, the expansion of the project requires the unanimous consent of all the partners, including with respect to the equity investment obligation of each partner. One of the partners indicated to Sempra Energy and the other partners that it does not intend to invest additional capital in Cameron LNG JV with respect to the expansion. As a result, discussions among the partners are taking place, and we are considering a variety of options to attempt to move this project forward. These activities have contributed to delays in developing firm pricing information and securing customer commitments, and there can be no assurance that these issues will be resolved in a timely manner, which could materially and adversely impact the near-term marketing of this project and ability to secure customer commitments. In light of these developments, we are unable to predict when we and/or Cameron LNG JV might be able to move forward on this project. The expansion of the Cameron LNG JV facilities beyond the first three trains is subject to a number of risks and uncertainties, including amending the Cameron LNG JV agreement among the partners, obtaining customer commitments, completing the required commercial agreements, securing and maintaining all necessary permits, approvals and consents, obtaining financing, reaching a final investment decision among the Cameron LNG JV partners, and other factors associated with the potential investment. See “Risk Factors” in the Annual Report. Other LNG Liquefaction Development Design, regulatory and commercial activities are ongoing for potential LNG liquefaction developments at our Port Arthur, Texas site and at Sempra Mexico’s Energía Costa Azul facility. For these development projects, Port Arthur In November 2016, Sempra LNG & Midstream submitted a request to the FERC seeking authorization to site, construct and operate the proposed Port Arthur LNG natural gas liquefaction and export facility in Port Arthur, Texas.
Arthur LNG project. The memorandum of understanding does not commit any party to buy or sell LNG or otherwise participate in the Port Arthur liquefaction LNG project. Also, in November 2016, Sempra LNG & Midstream filed a permit application with the FERC for a pipeline project that will provide natural gas transportation service for the Port Arthur LNG liquefaction project. In February 2017, Sempra LNG & Midstream initiated the FERC pre-filing review process for a potential permit application for an additional pipeline project that would also provide natural gas transportation service for the Port Arthur LNG liquefaction project. Development of the Port Arthur LNG liquefaction project is subject to a number of risks and uncertainties, including completing the required commercial agreements, such as joint venture agreements, LNG sales agreements and gas supply agreements; completing construction contracts; securing all necessary permits and approvals; obtaining financing and incentives; reaching a final investment decision; and other factors associated with the potential investment. See “Risk Factors” in the Annual Report. Energía Costa Azul We further Natural Gas Storage Assets The future performance of our natural gas storage assets could be impacted by changes in the U.S. natural gas market, which could The recorded value of our long-lived natural gas storage assets at June 30, 2017 is $1.5 billion. Historically, the value of natural gas storage services has positively correlated with the difference between the seasonal prices of natural gas, among other factors. In general, over the past several years, seasonal differences in natural gas prices have declined, which have contributed to lower prices for storage services. As our legacy (higher rate) sales contracts mature at our Bay Gas and Mississippi Hub facilities, replacement sales contract rates have been and could continue to be lower than has historically been the case. Lower sales revenues may not be offset by cost reductions, which could lead to further depressed asset values. We perform recovery testing of our recorded asset values when market conditions indicate that such values may not be recoverable. In the event such values are not recoverable, we would consider the fair value of these assets relative to their recorded value. To the extent the recorded (carrying) value is in excess of the fair value, we would record a noncash impairment charge. RBS SEMPRA COMMODITIES For a discussion about RBS Sempra OTHER SEMPRA ENERGY MATTERS LITIGATION We describe legal proceedings CRITICAL ACCOUNTING POLICIES AND ESTIMATES We view certain accounting policies as critical because their application is the most relevant, judgmental, and/or material to our financial position and results of operations, and/or because they require the use of material judgments and estimates. We discuss these accounting policies in We describe our significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. We follow the same accounting policies for interim reporting purposes. NEW ACCOUNTING STANDARDS We discuss the relevant pronouncements that have recently been issued or become effective and have had or may have an impact on our financial statements and/or disclosures in Note 2 of the Notes to Condensed Consolidated Financial Statements herein. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We provide disclosure regarding derivative activity in Note 7 of the Notes to Condensed Consolidated Financial Statements herein. We discuss our market risk and risk policies in detail in INTEREST RATE RISK The table below shows the nominal amount of long-term debt at June 30,
Interest rate risk sensitivity analysis measures interest rate risk by calculating the estimated changes in earnings that would result from a hypothetical change in market interest rates. If interest rates changed by FOREIGN CURRENCY AND INFLATION RATE RISK We discuss our foreign currency and inflation exposure ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES Sempra Energy, SDG&E and SoCalGas have designed and maintain disclosure controls and procedures to ensure that information required to be disclosed in their respective reports is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Under the supervision and with the participation of management, including the INTERNAL CONTROL OVER FINANCIAL REPORTING PART II – OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are not party to, and our property is not the subject of, any material pending legal proceedings (other than ordinary routine litigation incidental to our businesses) except for the matters 1) described in Notes 9 ITEM 1A. RISK FACTORS When evaluating our company and its subsidiaries, we urge you to carefully consider the risks and other information in this Quarterly Report on Form 10-Q, including the factors discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Factors Influencing Future Performance,” as well as the risk factors disclosed in Item 1A. to Part I of our Annual Report. There have ITEM 6. EXHIBITS The following exhibits relate to each registrant as indicated.
SIGNATURES
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