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UNITED STATES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549 
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedSeptember 30, 2020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto

Commission File No.Exact Name of Registrant as Specified in its Charter, Address of Principal Executive Office and Telephone NumberState of IncorporationI.R.S. Employer Identification No.Former name, former address and former fiscal year, if changed since last report
1-14201SEMPRA ENERGY
sempraenergya02.jpgsre-20200930_g1.jpg
California33-0732627California33-0732627No change
488 8th Avenue
San Diego,California92101
(619)696-2000
1-03779SAN DIEGO GAS & ELECTRIC COMPANY
sdgea01.jpgsre-20200930_g2.jpg
California95-1184800California95-1184800No change
8326 Century Park Court
San Diego,California92123
(619)696-2000
1-01402SOUTHERN CALIFORNIA GAS COMPANY
scga01.jpgsre-20200930_g3.jpg
California95-1240705California95-1240705No change
555 West Fifth Street
Los Angeles,California90013
(213)244-1200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
SEMPRA ENERGY:
Sempra Energy Common Stock, without par valueSRENew York Stock Exchange
Sempra Energy 6% Mandatory Convertible Preferred Stock, Series A,
$100 liquidation preference		SREPRANew York Stock Exchange
Sempra Energy 6.75% Mandatory Convertible Preferred Stock, Series B,
$100 liquidation preference		SREPRBNew York Stock Exchange
Sempra Energy 5.75% Junior Subordinated Notes Due 2079, $25 par valueSREANew York Stock Exchange
SAN DIEGO GAS & ELECTRIC COMPANY:
None
SOUTHERN CALIFORNIA GAS COMPANY:
None
1

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
SEMPRA ENERGY:
Sempra Energy Common Stock, without par valueSRENYSE
Sempra Energy 6% Mandatory Convertible Preferred Stock, Series A, $100 liquidation preferenceSREPRANYSE
Sempra Energy 6.75% Mandatory Convertible Preferred Stock, Series B, $100 liquidation preferenceSREPRBNYSE
Sempra Energy 5.75% Junior Subordinated Notes Due 2079, $25 par valueSREANYSE
SAN DIEGO GAS & ELECTRIC COMPANY:
None
SOUTHERN CALIFORNIA GAS COMPANY:
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Sempra EnergyYes☒No☐
San Diego Gas & Electric CompanyYes☒No☐
Southern California Gas CompanyYes☒No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Sempra EnergyYes☒No☐
San Diego Gas & Electric CompanyYes☒No☐
Southern California Gas CompanyYes☒No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Sempra Energy:
☒Sempra Energy:
☒ Large Accelerated Filer
☐
Accelerated Filer
☐
Non-accelerated Filer
☐
Smaller Reporting Company
☐
Emerging Growth Company
San Diego Gas & Electric Company:
☐Large Accelerated Filer☐Accelerated Filer☒Non-accelerated Filer☐Smaller Reporting Company☐Emerging Growth Company
��
Southern California Gas Company:
☐Large Accelerated Filer☐Accelerated Filer☒Non-accelerated Filer☐Smaller Reporting Company☐Emerging Growth Company
San Diego Gas & Electric Company:
☐ Large Accelerated Filer
☐ Accelerated Filer
☒ Non-accelerated Filer
☐Smaller Reporting Company
☐Emerging Growth Company
Southern California Gas Company
☐ Large Accelerated Filer
☐ Accelerated Filer
☒ Non-accelerated Filer
☐Smaller Reporting Company
☐Emerging Growth Company
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 EnergyYes☐No☐
San Diego Gas & Electric CompanyYes☐No☐
Southern California Gas CompanyYes☐No☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Sempra EnergyYes☐No☒
San Diego Gas & Electric CompanyYes☐No☒
Southern California Gas CompanyYes☐No☒
Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date.
Common stock outstanding on April 29,November 2, 2020:
Sempra Energy292,533,413
288,470,244 shares
San Diego Gas & Electric CompanyWholly owned by Enova Corporation, which is wholly owned by Sempra Energy
Southern California Gas CompanyWholly owned by Pacific Enterprises, which is wholly owned by Sempra Energy
2


SEMPRA ENERGY FORM 10-Q
SAN DIEGO GAS & ELECTRIC COMPANY FORM 10-Q
SOUTHERN CALIFORNIA GAS COMPANY FORM 10-Q
TABLE OF CONTENTS
Page
4
67
PART I – FINANCIAL INFORMATION
Item 1.
89
Notes to Condensed Consolidated Financial Statements
Note 1. General Information and Other Financial Data
2729
Note 2. New Accounting Standards
4353
Note 3. Revenues
4454
Note 4. Regulatory Matters
4758
Note 5. Acquisitions, Divestitures and Discontinued Operations
4961
Note 6. Investments in Unconsolidated Entities
5163
Note 7. Debt and Credit Facilities
5465
Note 8. Derivative Financial Instruments
5667
Note 9. Fair Value Measurements
6273
Note 10. San Onofre Nuclear Generating Station
6780
Note 11. Commitments and Contingencies
7082
Note 12. Segment Information
7791
Item 2.
7993
Overview
7994
Results of Operations
8094
Capital Resources and Liquidity
89107
Critical Accounting Policies and Estimates
102121
New Accounting Standards
102122
Item 3.
102122
Item 4.
103123
PART II – OTHER INFORMATION
Item 1.
104123
Item 1A.
105123
Item 6.2.
106125
Item 6.
126
109129

This combined report is separately filed by Sempra Energy, San Diego Gas & Electric Company and Southern California Gas Company. Information contained herein relating to any one of these individual companyreporting entities is filed by such companyentity on its own behalf. Each companyentity makes statements herein only as to itself and its consolidated subsidiaries and makes no statement whatsoever as to any other company.entity.
You should read this report in its entirety as it pertains to each respective reporting company.entity. No one section of the report deals with all aspects of the subject matter. Separate Part I – Item 1 sections are provided for each reporting company,entity, except for the Notes to Condensed Consolidated Financial Statements. The Notes to Condensed Consolidated Financial Statements for all of the reporting companiesentities are combined. All Items other than Part I – Item 1 are combined for the three reporting companies.entities.
3

The following terms and abbreviations appearing in the text of this report have the meanings indicated below.
GLOSSARY
GLOSSARY
2019 GRC FDfinal decision in the California Utilities’ 2019 General Rate Case
ABCalifornia Assembly Bill
AFUDCAEPAmerican Electric Power Company, Inc.
AFUDCallowance for funds used during construction
AMPArrearage Management Payment Plan
Annual ReportAnnual Report on Form 10-K for the year ended December 31, 2019
AOCIaccumulated other comprehensive income (loss)
AROasset retirement obligation
ASCAccounting Standards Codification
ASUASRaccelerated share repurchase
ASUAccounting Standards Update
Bay GasBay Gas Storage Company, Ltd.
BechtelBechtel Oil, Gas and Chemicals, Inc.
BladeBlade Energy Partners
bpsbasis points
CalGEMCalifornia Geologic Energy Management Division (formerly known as Division of Oil, Gas, and Geothermal Resources or DOGGR)
California UtilitiesSan Diego Gas & Electric Company and Southern California Gas Company, collectively
Cameron LNG JVCameron LNG Holdings, LLC
CARBCalifornia Air Resources Board
CCMcost of capital adjustment mechanism
CFECENACECentro Nacional de Control de Energía (Mexico’s National Energy Control Center)
CFEComisión Federal de Electricidad (Federal(Mexico’s Federal Electricity Commission of Mexico)Commission)
CFINCameron LNG FINCO, LLC, a wholly owned and unconsolidated affiliate of Cameron LNG JV
Chilquinta EnergíaChilquinta Energía S.A. and its subsidiaries
COVID-19COFECECoronavirusComisión Federal de Competencia Económica (Mexico’s Competition Commission)
COVID-19coronavirus disease 2019
CPPMACOVID-19 Pandemic Protections Memorandum Account
CPUCCalifornia Public Utilities Commission
CRRCREComisión Reguladora de Energía (Mexico’s Energy Regulatory Commission)
CRRcongestion revenue right
DOEU.S. Department of Energy
ECA LNG JVECA LNG Holdings B.V.
ECA LNG RegasificationEnergía Costa Azul, S. de R.L. de C.V. regasification
EcogasEcogas México, S. de R.L. de C.V.
EdisonSouthern California Edison Company, a subsidiary of Edison International
EFHEnergy Future Holdings Corp. (renamed Sempra Texas Holdings Corp.)
EletransEletrans S.A., Eletrans II S.A. and Eletrans III S.A., collectively
EPCengineering, procurement and construction
EPSearnings per common share
ESJEnergía Sierra Juarez,Juárez, S. de R.L. de C.V.
ETReffective income tax rate
FERCFederal Energy Regulatory Commission
FitchFitch Ratings
FTAFree Trade Agreement
GCIMGazpromGas Cost Incentive MechanismGazprom Marketing & Trading México S. de R.L. de C.V.
GHGGRCgreenhouse gas
GRCGeneral Rate Case
HMRCUnited Kingdom’s Revenue and Customs Department
IEnovaInfraestructura Energética Nova, S.A.B. de C.V.
IMG JVInfraestructura Marina del Golfo
IOUInfraREITinvestor-owned utilityInfraREIT, Inc.
IRSIOUinvestor-owned utility
IRSInternal Revenue Service
ISFSIindependent spent fuel storage installation
ISOIndependent System Operator
JVjoint venture
LA Superior CourtLos Angeles County Superior Court
Leakthe leak at the SoCalGas Aliso Canyon natural gas storage facility injection-and-withdrawal well, SS25, discovered by SoCalGas on October 23, 2015
4

LIBORGLOSSARY (CONTINUED)
LIBORLondon Interbank Offered Rate
LIFOLNGlast in first out
LNGliquefied natural gas
LPGliquid petroleum gas
Luz del SurLuz del Sur S.A.A. and its subsidiaries

MD&A
GLOSSARY (CONTINUED)
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
Mississippi HubMississippi Hub, LLC
MMBtumillion British thermal units (of natural gas)
Moody’sMoody’s Investors Service
MOUMemorandum of Understanding
Mtpamillion tonnes per annum
MWhmegawatt hour
NCInoncontrolling interest(s)
NDTnuclear decommissioning trusts
NEILNuclear Electric Insurance Limited
NOLnet operating loss
OCIother comprehensive income (loss)
OIIOrder Instituting Investigation
O&Moperation and maintenance expense
OncorOncor Electric Delivery Company LLC
Oncor HoldingsOncor Electric Delivery Holdings Company LLC
Otay Mesa VIEOtay Mesa Energy Center LLC VIE
PPAPG&EPacific Gas and Electric Company
PPApower purchase agreement
PP&Eproperty, plant and equipment
PUCTPublic Utility Commission of Texas
RBSThe Royal Bank of Scotland plc
RBS SEERBS Sempra Energy Europe
RBS Sempra CommoditiesRBS Sempra Commodities LLP
ROEreturn on equity
ROUright-of-use
RSUrestricted stock unit
SBS&PStandard & Poor’s
SBCalifornia Senate Bill
SDG&ESan Diego Gas & Electric Company
SECU.S. Securities and Exchange Commission
SEDATUSecurities Purchase Agreementsecurities purchase agreement among Sharyland Utilities, LP, SU Investment Partners, L.P., Sempra Texas Utilities Holdings I, LLC (a wholly owned subsidiary of Sempra Energy) and Sempra Energy
SEDATUSecretaría de Desarrollo Agrario, Territorial y Urbano (Mexican agency in charge of agriculture, land and urban development)
Sempra Globalholding company for most of Sempra Energy’s subsidiaries not subject to California or Texas utility regulation
SENERSecretaría de Energía de México (Mexico’s Ministry of Energy)
series A preferred stockSempra Energy’s 6% mandatory convertible preferred stock, series A
series B preferred stockSempra Energy’s 6.75% mandatory convertible preferred stock, series B
series C preferred stockSempra Energy’s 4.875% fixed-rate reset cumulative redeemable perpetual preferred stock, series C
Sharyland HoldingsSharyland Holdings, L.P.
Sharyland UtilitiesShell MexicoSharyland Utilities, L.L.C.Shell México Gas Natural, S. de R.L. de C.V.
SoCalGasSouthern California Gas Company
SONGSSan Onofre Nuclear Generating Station
S&PSTIHStandard & Poor’sSempra Texas Intermediate Holding Company LLC
Support Agreementsupport agreement, dated July 28, 2020, between Sempra Energy and Sumitomo Mitsui Banking Corporation
TAG JVTAG Norte Holding, S. de R.L. de C.V.
TCJATdMTax Cuts and Jobs Act of 2017
TdMTermoeléctrica de Mexicali
TechnipFMCTP Oil & Gas Mexico, S. De R.L. De C.V., an affiliate of TechnipFMC plc
TecnoredTecnored S.A.
TecsurTecsur S.A.
TO4Electric Transmission Owner Formula Rate, effective through May 31, 2019
TO5Electric Transmission Owner Formula Rate, effective June 1, 2019
TTHCTexas Transmission Holdings Corporation
TTITexas Transmission Investment LLC
5

GLOSSARY (CONTINUED)
U.S. GAAPaccounting principles generally accepted in the United States of America
VATvalue-added tax
VentikaVentika, S.A.P.I. de C.V. and Ventika II, S.A.P.I. de C.V., collectively
VIEvariable interest entity
Wildfire Fundthe fund established pursuant to AB 1054
Wildfire LegislationAB 1054 and AB 111

6



INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
We make statements in this report that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions with respect to the future, involve risks and uncertainties, and are not guarantees of performance.guarantees. Future results may differ materially from those expressed in the forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the filing date of this report. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or other factors.
In this report, forward-looking statements can be identified by words such as “believes,” “expects,” “anticipates,” “plans,” “estimates,” “projects,” “forecasts,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “target,” “pursue,” “outlook,” “maintain,” or similar expressions, or when we discuss our guidance, strategy, goals, vision, mission, opportunities, projections or intentions.
Factors, among others, that could cause our actual results and future actions to differ materially from those described in any forward-looking statements include risks and uncertainties relating to:
▪California wildfires and the risk that we may be found liable for damages regardless of fault and the risk that we may not be able to recover any such costs from insurance, the Wildfire Fund or in rates from customers;
▪decisions, investigations, regulations, issuances of permits and other authorizations, renewal of franchises, and other actions by the CFE, CPUC, DOE, PUCT, regulatory and governmental bodies and jurisdictions in the U.S. and other countries in which we operate;
▪the success of business development efforts, construction projects and major acquisitions and divestitures, including risks in (i) the ability to make a final investment decision and completing construction projects on schedule and budget; (ii) obtaining the consent of partners; (iii) counterparties’ financial or other ability to fulfill contractual commitments; (iv) the ability to complete contemplated acquisitions and/or divestitures; and (v) the ability to realize anticipated benefits from any of these efforts once completed;
▪the impact of the COVID-19 pandemic on our (i) ability to commence and complete capital and other projects and obtain regulatory approvals, (ii) supply chain and current and prospective counterparties, contractors, customers, employees and partners, (iii) liquidity, resulting from bill payment challenges experienced by our customers, decreased stability and accessibility of the capital markets and other factors, and (iv) ability to sustain operations and satisfy compliance requirements due to social distancing measures or if employee absenteeism were to increase significantly;
▪the resolution of civil and criminal litigation, regulatory investigations and proceedings, and arbitrations;
▪actions by credit rating agencies to downgrade our credit ratings or to place those ratings on negative outlook and our ability to borrow at favorable interest rates;
▪moves to reduce or eliminate reliance on natural gas and the impact of the extreme volatility and unprecedented decline of oil prices on our businesses and development projects;
▪weather, natural disasters, accidents, equipment failures, computer system outages and other events that disrupt our operations, damage our facilities and systems, cause the release of harmful materials, cause fires and subject us to liability for property damage or personal injuries, fines and penalties, some of which may not be covered by insurance (including costs in excess of applicable policy limits), may be disputed by insurers or may otherwise not be recoverable through regulatory mechanisms or may impact our ability to obtain satisfactory levels of affordable insurance;
▪the availability of electric power and natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid, limitations on the withdrawal or injection of natural gas from or into storage facilities, and equipment failures;
▪cybersecurity threats to the energy grid, storage and pipeline infrastructure, the information and systems used to operate our businesses, and the confidentiality of our proprietary information and the personal information of our customers and employees;
▪expropriation of assets, the failure of foreign governments and state-owned entities to honor the terms of contracts, and property disputes;
▪the impact at SDG&E on competitive customer rates and reliability due to the growth in distributed power generation and from departing retail load resulting from customers transferring to Direct Access, Community Choice Aggregation or other forms of distributed power generation and the risk of nonrecovery for stranded assets and contractual obligations;

▪California wildfires, including the risk that we may be found liable for damages regardless of fault and the risk that we may not be able to recover any such costs from insurance, the Wildfire Fund or in rates from customers;
▪Oncor’s ability to eliminate or reduce its quarterly dividends due to regulatory and governance requirements and commitments, including by actions of Oncor’s independent directors or a minority member director;
▪volatility in foreign currency exchange, interest and inflation rates and commodity prices and our ability to effectively hedge the risk of such volatility;
▪changes in trade policies, laws and regulations, including tariffs and revisions to or replacement of international trade agreements, such as the North American Free Trade Agreement, that may increase our costs or impair our ability to resolve trade disputes;
▪the impact of changes to federal and state tax laws and our ability to mitigate adverse impacts; and
▪other uncertainties, some of which may be difficult to predict and are beyond our control.
▪decisions, investigations, regulations, issuances of permits and other authorizations, renewals of franchises, and other actions by (i) the CFE, CPUC, DOE, PUCT, and other regulatory and governmental bodies and (ii) states, counties, cities and other jurisdictions in the U.S., Mexico and other countries in which we operate or do business;
▪the success of business development efforts, construction projects and major acquisitions and divestitures, including risks in (i) the ability to make a final investment decision, (ii) completing construction projects on schedule and budget, (iii) the ability to realize anticipated benefits from any of these efforts once completed, and (iv) obtaining the consent of partners;
▪the impact of the COVID-19 pandemic on our (i) ability to commence and complete capital and other projects and obtain regulatory approvals, (ii) supply chain and current and prospective counterparties, contractors, customers, employees and partners, (iii) liquidity, resulting from bill payment challenges experienced by our customers, including in connection with a CPUC-ordered suspension of service disconnections, decreased stability and accessibility of the capital markets and other factors, and (iv) ability to sustain operations and satisfy compliance requirements due to social distancing measures or if employee absenteeism were to increase significantly;
▪the resolution of civil and criminal litigation, regulatory inquiries, investigations and proceedings, and arbitrations;
▪actions by credit rating agencies to downgrade our credit ratings or to place those ratings on negative outlook and our ability to borrow at favorable interest rates;
▪moves to reduce or eliminate reliance on natural gas and the impact of the extreme volatility of oil prices on our businesses and development projects;
▪weather, natural disasters, accidents, equipment failures, computer system outages and other events that disrupt our operations, damage our facilities and systems, cause the release of harmful materials, cause fires and subject us to liability for property damage or personal injuries, fines and penalties, some of which may not be covered by insurance (including costs in excess of applicable policy limits), may be disputed by insurers or may otherwise not be recoverable through regulatory mechanisms or may impact our ability to obtain satisfactory levels of affordable insurance;
▪the availability of electric power and natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid, limitations on the withdrawal of natural gas from storage facilities, and equipment failures;
▪cybersecurity threats to the energy grid, storage and pipeline infrastructure, the information and systems used to operate our businesses, and the confidentiality of our proprietary information and the personal information of our customers and employees;
▪expropriation of assets, the failure of foreign governments and state-owned entities to honor the terms of contracts, and property disputes;
▪the impact at SDG&E on competitive customer rates and reliability due to the growth in distributed and local power generation, including from departing retail load resulting from customers transferring to Direct Access, Community Choice Aggregation or other forms of distributed or local power generation, and the risk of nonrecovery for stranded assets and contractual obligations;
▪Oncor’s ability to eliminate or reduce its quarterly dividends due to regulatory and governance requirements and commitments, including by actions of Oncor’s independent directors or a minority member director;
▪volatility in foreign currency exchange, interest and inflation rates and commodity prices and our ability to effectively hedge the risk of such volatility;
▪changes in tax and trade policies, laws and regulations, including tariffs and revisions to or replacement of international trade agreements, such as the United States-Mexico-Canada Agreement, that may increase our costs or impair our ability to resolve trade disputes; and
7

▪other uncertainties, some of which may be difficult to predict and are beyond our control.
We caution you not to rely unduly on any forward-looking statements. You should review and consider carefully the risks, uncertainties and other factors that affect our business as described herein, in our Annual Report and in other reports that we file with the SEC.
8

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SEMPRA ENERGY    
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share amounts; shares in thousands)    
 Three months ended
September 30,		Nine months ended
September 30,
 2020201920202019
 (unaudited)
REVENUES    
Utilities$2,301 $2,398 $7,199 $6,808 
Energy-related businesses343 360 1,000 1,078 
Total revenues2,644 2,758 8,199 7,886 
EXPENSES AND OTHER INCOME    
Utilities:    
Cost of natural gas(114)(122)(582)(789)
Cost of electric fuel and purchased power(429)(410)(918)(929)
Energy-related businesses cost of sales(90)(94)(200)(265)
Operation and maintenance(1,044)(845)(2,893)(2,515)
Depreciation and amortization(418)(402)(1,242)(1,174)
Franchise fees and other taxes(139)(127)(397)(369)
Impairment losses(1)(43)(1)(43)
(Loss) gain on sale of assets0 (3)0 63 
Other income (expense), net29 (7)(163)103 
Interest income27 22 76 64 
Interest expense(264)(279)(818)(797)
Income from continuing operations before income taxes and equity earnings201 448 1,061 1,235 
Income tax expense(99)(61)(60)(150)
Equity earnings326 266 822 485 
Income from continuing operations, net of income tax428 653 1,823 1,570 
(Loss) income from discontinued operations, net of income tax(7)256 1,850 292 
Net income421 909 3,673 1,862 
Earnings attributable to noncontrolling interests(22)(60)(201)(146)
Preferred dividends(48)(36)(121)(107)
Preferred dividends of subsidiary0 0 (1)(1)
Earnings attributable to common shares$351 $813 $3,350 $1,608 
Basic EPS:
Earnings from continuing operations$1.23 $2.04 $5.17 $4.86 
(Losses) earnings from discontinued operations$(0.02)$0.89 $6.31 $0.97 
Earnings$1.21 $2.93 $11.48 $5.83 
Weighted-average common shares outstanding289,490 277,360 291,771 275,684 
Diluted EPS:
Earnings from continuing operations$1.23 $2.00 $5.15 $4.79 
(Losses) earnings from discontinued operations$(0.02)$0.84 $6.28 $0.95 
Earnings$1.21 $2.84 $11.43 $5.74 
Weighted-average common shares outstanding290,582 295,789 292,935 279,809 
See Notes to Condensed Consolidated Financial Statements.
SEMPRA ENERGY   
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share amounts; shares in thousands)   
 Three months ended March 31,
 2020 2019
 (unaudited)
REVENUES   
Utilities$2,665
 $2,515
Energy-related businesses364
 383
Total revenues3,029
 2,898
    
EXPENSES AND OTHER INCOME   
Utilities:   
Cost of natural gas(337) (531)
Cost of electric fuel and purchased power(229) (256)
Energy-related businesses cost of sales(59) (108)
Operation and maintenance(951) (832)
Depreciation and amortization(412) (383)
Franchise fees and other taxes(137) (130)
Other (expense) income, net(254) 82
Interest income27
 21
Interest expense(280) (260)
Income from continuing operations before income taxes and equity earnings397
 501
Income tax benefit (expense)207
 (42)
Equity earnings263
 101
Income from continuing operations, net of income tax867
 560
Income (loss) from discontinued operations, net of income tax80
 (42)
Net income947
 518
Earnings attributable to noncontrolling interests(151) (41)
Mandatory convertible preferred stock dividends(36) (36)
Earnings attributable to common shares$760
 $441
    
Basic EPS:   
Earnings from continuing operations$2.35
 $1.79
Earnings (losses) from discontinued operations$0.25
 $(0.19)
Earnings$2.60
 $1.60
Weighted-average common shares outstanding292,790
 274,674
    
Diluted EPS:   
Earnings from continuing operations$2.30
 $1.78
Earnings (losses) from discontinued operations$0.23
 $(0.19)
Earnings$2.53
 $1.59
Weighted-average common shares outstanding313,925
 277,228
9

SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
 Sempra Energy shareholders’ equity  
 Pretax
amount		Income tax
(expense) benefit		Net-of-tax
amount		Noncontrolling
interests
(after-tax)		Total
 (unaudited)
 Three months ended September 30, 2020 and 2019
2020:     
Net income$489 $(90)$399 $22 $421 
Other comprehensive income (loss):     
Foreign currency translation adjustments9 0 9 (1)8 
Financial instruments36 (16)20 5 25 
Pension and other postretirement benefits6 (1)5 0 5 
Total other comprehensive income51 (17)34 4 38 
Comprehensive income$540 $(107)$433 $26 $459 
2019:     
Net income$762 $87 $849 $60 $909 
Other comprehensive income (loss):    
Foreign currency translation adjustments(91)0 (91)(8)(99)
Financial instruments(55)18 (37)(4)(41)
Pension and other postretirement benefits(3)1 (2)0 (2)
Total other comprehensive loss(149)19 (130)(12)(142)
Comprehensive income$613 $106 $719 $48 $767 
 Nine months ended September 30, 2020 and 2019
2020:     
Net income$4,718 $(1,246)$3,472 $201 $3,673 
Other comprehensive income (loss):     
Foreign currency translation adjustments533 0 533 (16)517 
Financial instruments(167)41 (126)(9)(135)
Pension and other postretirement benefits27 (3)24 0 24 
Total other comprehensive income (loss)393 38 431 (25)406 
Comprehensive income5,111 (1,208)3,903 176 4,079 
Preferred dividends of subsidiary(1)0 (1)0 (1)
Comprehensive income, after preferred
dividends of subsidiary
$5,110 $(1,208)$3,902 $176 $4,078 
2019:    
Net income$1,898 $(182)$1,716 $146 $1,862 
Other comprehensive income (loss):     
Foreign currency translation adjustments(45)0 (45)(2)(47)
Financial instruments(213)70 (143)(16)(159)
Pension and other postretirement benefits22 (6)16 0 16 
Total other comprehensive loss(236)64 (172)(18)(190)
Comprehensive income1,662 (118)1,544 128 1,672 
Preferred dividends of subsidiary(1)0 (1)0 (1)
Comprehensive income, after preferred
dividends of subsidiary
$1,661 $(118)$1,543 $128 $1,671 
See Notes to Condensed Consolidated Financial Statements.    

10

SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
September 30,December 31,
 2020
2019(1)
 (unaudited) 
ASSETS  
Current assets:  
Cash and cash equivalents$3,515 $108 
Restricted cash28 31 
Accounts receivable – trade, net1,067 1,261 
Accounts receivable – other, net418 455 
Due from unconsolidated affiliates46 32 
Income taxes receivable152 112 
Inventories309 277 
Regulatory assets386 222 
Greenhouse gas allowances66 72 
Assets held for sale in discontinued operations0 445 
Other current assets407 324 
Total current assets6,394 3,339 
Other assets:  
Restricted cash3 3 
Due from unconsolidated affiliates617 742 
Regulatory assets1,740 1,930 
Nuclear decommissioning trusts1,057 1,082 
Investment in Oncor Holdings11,962 11,519 
Other investments1,455 2,103 
Goodwill1,602 1,602 
Other intangible assets205 213 
Dedicated assets in support of certain benefit plans469 488 
Insurance receivable for Aliso Canyon costs504 339 
Deferred income taxes199 155 
Greenhouse gas allowances598 470 
Right-of-use assets – operating leases563 591 
Wildfire fund371 392 
Assets held for sale in discontinued operations0 3,513 
Other long-term assets699 732 
Total other assets22,044 25,874 
Property, plant and equipment:  
Property, plant and equipment52,429 49,329 
Less accumulated depreciation and amortization(13,645)(12,877)
Property, plant and equipment, net38,784 36,452 
Total assets$67,222 $65,665 
(1)Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.
11


SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in millions)
September 30,December 31,
 2020
2019(1)
 (unaudited) 
LIABILITIES AND EQUITY  
Current liabilities:  
Short-term debt$772 $3,505 
Accounts payable – trade1,129 1,234 
Accounts payable – other163 179 
Due to unconsolidated affiliates6 5 
Dividends and interest payable563 515 
Accrued compensation and benefits412 476 
Regulatory liabilities373 319 
Current portion of long-term debt and finance leases2,890 1,526 
Reserve for Aliso Canyon costs268 9 
Greenhouse gas obligations66 72 
Liabilities held for sale in discontinued operations0 444 
Other current liabilities993 866 
Total current liabilities7,635 9,150 
Long-term debt and finance leases21,770 20,785 
Deferred credits and other liabilities:  
Due to unconsolidated affiliates271 195 
Pension and other postretirement benefit plan obligations, net of plan assets999 1,067 
Deferred income taxes2,696 2,577 
Deferred investment tax credits22 21 
Regulatory liabilities3,410 3,741 
Asset retirement obligations2,961 2,923 
Greenhouse gas obligations456 301 
Liabilities held for sale in discontinued operations0 1,052 
Deferred credits and other2,146 2,048 
Total deferred credits and other liabilities12,961 13,925 
Commitments and contingencies (Note 11)
Equity:  
Preferred stock (50 million shares authorized):
Mandatory convertible preferred stock, series A
(17.25 million shares outstanding)
1,693 1,693 
Mandatory convertible preferred stock, series B
(5.75 million shares outstanding)
565 565 
Preferred stock, series C
(0.9 million shares outstanding)
889 0 
Common stock (750 million shares authorized; 288 million and 292 million shares
outstanding at September 30, 2020 and December 31, 2019, respectively; no par value)
7,034 7,480 
Retained earnings13,560 11,130 
Accumulated other comprehensive income (loss)(513)(939)
Total Sempra Energy shareholders’ equity23,228 19,929 
Preferred stock of subsidiary20 20 
Other noncontrolling interests1,608 1,856 
Total equity24,856 21,805 
Total liabilities and equity$67,222 $65,665 
SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
 Sempra Energy shareholders’ equity    
 Pretax
amount		 
Income tax
benefit
(expense)
 Net-of-tax
amount		 
Noncontrolling
interests
(after-tax)
 Total
 (unaudited)
 Three months ended March 31, 2020 and 2019
2020:         
Net income$610
 $186
 $796
 $151
 $947
Other comprehensive income (loss):         
Foreign currency translation adjustments(138) —
 (138) (20) (158)
Financial instruments(188) 53
 (135) (12) (147)
Pension and other postretirement benefits24
 (2) 22
 —
 22
Total other comprehensive loss(302) 51
 (251) (32) (283)
Comprehensive income$308
 $237
 $545
 $119
 $664
2019:         
Net income$670
 $(193) $477
 $41
 $518
Other comprehensive income (loss):         
Foreign currency translation adjustments32
 —
 32
 4
 36
Financial instruments(68) 22
 (46) (4) (50)
Pension and other postretirement benefits4
 (1) 3
 —
 3
Total other comprehensive loss(32) 21
 (11) —
 (11)
Comprehensive income$638
 $(172) $466
 $41
 $507

(1)    Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.

12

SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 March 31,
2020		 
December 31,
2019(1)
 (unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$2,247
 $108
Restricted cash23
 31
Accounts receivable – trade, net1,222
 1,261
Accounts receivable – other, net369
 455
Due from unconsolidated affiliates64
 32
Income taxes receivable120
 112
Inventories217
 277
Regulatory assets210
 222
Greenhouse gas allowances79
 72
Assets held for sale in discontinued operations566
 445
Other current assets307
 324
Total current assets5,424
 3,339
    
Other assets:   
Restricted cash3
 3
Due from unconsolidated affiliates592
 742
Regulatory assets1,837
 1,930
Nuclear decommissioning trusts987
 1,082
Investment in Oncor Holdings11,619
 11,519
Other investments2,215
 2,103
Goodwill1,602
 1,602
Other intangible assets211
 213
Dedicated assets in support of certain benefit plans413
 488
Insurance receivable for Aliso Canyon costs511
 339
Deferred income taxes265
 155
Greenhouse gas allowances515
 470
Right-of-use assets – operating leases592
 591
Wildfire fund385
 392
Assets held for sale in discontinued operations3,364
 3,513
Other long-term assets691
 732
Total other assets25,802
 25,874
    
Property, plant and equipment:   
Property, plant and equipment50,185
 49,329
Less accumulated depreciation and amortization(13,118) (12,877)
Property, plant and equipment, net37,067
 36,452
Total assets$68,293
 $65,665

(1)
Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.

SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in millions)
 March 31,
2020		 
December 31,
2019(1)
 (unaudited)  
LIABILITIES AND EQUITY   
Current liabilities:   
Short-term debt$5,742
 $3,505
Accounts payable – trade1,038
 1,234
Accounts payable – other163
 179
Due to unconsolidated affiliates8
 5
Dividends and interest payable548
 515
Accrued compensation and benefits264
 476
Regulatory liabilities444
 319
Current portion of long-term debt and finance leases2,079
 1,526
Reserve for Aliso Canyon costs284
 9
Greenhouse gas obligations79
 72
Liabilities held for sale in discontinued operations538
 444
Other current liabilities990
 866
Total current liabilities12,177
 9,150
    
Long-term debt and finance leases20,198
 20,785
    
Deferred credits and other liabilities:   
Due to unconsolidated affiliates263
 195
Pension and other postretirement benefit plan obligations, net of plan assets1,085
 1,067
Deferred income taxes2,466
 2,577
Deferred investment tax credits21
 21
Regulatory liabilities3,533
 3,741
Asset retirement obligations2,945
 2,923
Greenhouse gas obligations348
 301
Liabilities held for sale in discontinued operations1,006
 1,052
Deferred credits and other2,136
 2,048
Total deferred credits and other liabilities13,803
 13,925
    
Commitments and contingencies (Note 11)


 


    
Equity:   
Preferred stock (50 million shares authorized):   
6% mandatory convertible preferred stock, series A
(17.25 million shares issued and outstanding)
1,693
 1,693
6.75% mandatory convertible preferred stock, series B
(5.75 million shares issued and outstanding)
565
 565
Common stock (750 million shares authorized; 292 million shares outstanding;
     no par value)
7,472
 7,480
Retained earnings11,577
 11,130
Accumulated other comprehensive income (loss)(1,190) (939)
Total Sempra Energy shareholders’ equity20,117
 19,929
Preferred stock of subsidiary20
 20
Other noncontrolling interests1,978
 1,856
Total equity22,115
 21,805
Total liabilities and equity$68,293
 $65,665
(1)
Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.

SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 Three months ended March 31,
 2020 2019
 (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$947

$518
Less: (Income) loss from discontinued operations, net of income tax(80) 42
Income from continuing operations, net of income tax867
 560
Adjustments to reconcile net income to net cash provided by operating activities: 
 
Depreciation and amortization412

383
Deferred income taxes and investment tax credits(243)
24
Equity earnings(263)
(101)
Foreign currency transaction losses (gains), net123
 (7)
Share-based compensation expense22

21
Other124

(7)
Intercompany activities with discontinued operations, net—
 31
Net change in other working capital components217

169
Insurance receivable for Aliso Canyon costs(172) (16)
Changes in other noncurrent assets and liabilities, net163
 (199)
Net cash provided by continuing operations1,250

858
Net cash provided by discontinued operations68

93
Net cash provided by operating activities1,318

951
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Expenditures for property, plant and equipment(1,010) (783)
Expenditures for investments and acquisitions(86) (94)
Proceeds from sale of assets5
 327
Purchases of nuclear decommissioning trust assets(552) (225)
Proceeds from sales of nuclear decommissioning trust assets552
 225
Advances to unconsolidated affiliates(30) —
Repayments of advances to unconsolidated affiliates—
 3
Intercompany activities with discontinued operations, net(3) —
Other8
 7
Net cash used in continuing operations(1,116) (540)
Net cash used in discontinued operations(65) (70)
Net cash used in investing activities(1,181) (610)
See Notes to Condensed Consolidated Financial Statements.

SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in millions)
 Three months ended March 31,
 2020 2019
 (unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES   
Common dividends paid(269) (232)
Preferred dividends paid(36) (36)
Issuances of common stock11
 11
Repurchases of common stock(57) (14)
Issuances of debt (maturities greater than 90 days)1,619
 304
Payments on debt (maturities greater than 90 days) and finance leases(1,433) (837)
Increase in short-term debt, net2,127
 497
Advances from unconsolidated affiliates64
 —
Purchases of noncontrolling interests(16) (26)
Intercompany activities with discontinued operations, net(2) (2)
Other(5) (1)
Net cash provided by (used in) continuing operations2,003
 (336)
Net cash provided by (used in) discontinued operations111
 (45)
Net cash provided by (used in) financing activities2,114
 (381)
    
Effect of exchange rate changes in continuing operations(6) —
Effect of exchange rate changes in discontinued operations(8) 1
Effect of exchange rate changes on cash, cash equivalents and restricted cash(14) 1
    
Increase (decrease) in cash, cash equivalents and restricted cash, including discontinued operations2,237
 (39)
Cash, cash equivalents and restricted cash, including discontinued operations, January 1217
 246
Cash, cash equivalents and restricted cash, including discontinued operations, March 31$2,454
 $207
    
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION   
Interest payments, net of amounts capitalized$263
 $257
Income tax payments, net of refunds68
 16
    
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES   
Accrued capital expenditures$437
 $388
Increase in finance lease obligations for investment in property, plant and equipment20
 7
Equitization of long-term debt for deficit held by NCI22
 —
Preferred dividends declared but not paid36
 36
Common dividends issued in stock14
 13
Common dividends declared but not paid306
 265
SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 Nine months ended September 30,
 20202019
 (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES  
Net income$3,673 $1,862 
Less: Income from discontinued operations, net of income tax(1,850)(292)
Income from continuing operations, net of income tax1,823 1,570 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization1,242 1,174 
Deferred income taxes and investment tax credits(12)12 
Impairment losses1 43 
Gain on sale of assets0 (63)
Equity earnings(822)(485)
Foreign currency transaction losses, net95 2 
Share-based compensation expense57 56 
Other131 2 
Intercompany activities with discontinued operations, net0 184 
Net change in other working capital components(137)(200)
Distributions from investments429 163 
Insurance receivable for Aliso Canyon costs(165)107 
Wildfire fund, current and noncurrent0 (323)
Changes in other noncurrent assets and liabilities, net38 (413)
Net cash provided by continuing operations2,680 1,829 
Net cash (used in) provided by discontinued operations(1,051)289 
Net cash provided by operating activities1,629 2,118 
CASH FLOWS FROM INVESTING ACTIVITIES  
Expenditures for property, plant and equipment(3,313)(2,590)
Expenditures for investments and acquisitions(229)(1,449)
Proceeds from sale of assets22 899 
Distributions from investments761 9 
Purchases of nuclear decommissioning trust assets(1,091)(728)
Proceeds from sales of nuclear decommissioning trust assets1,091 728 
Advances to unconsolidated affiliates(32)(16)
Repayments of advances to unconsolidated affiliates7 12 
Intercompany activities with discontinued operations, net0 (257)
Other13 16 
Net cash used in continuing operations(2,771)(3,376)
Net cash provided by (used in) discontinued operations5,186 (63)
Net cash provided by (used in) investing activities2,415 (3,439)
See Notes to Condensed Consolidated Financial Statements.
13


SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Dollars in millions)
 Preferred stock Common
stock		 Retained
earnings		 Accumulated
other
comprehensive
income (loss)		 Sempra
Energy
shareholders'
equity		 Non-
controlling
interests		 Total
equity
 (unaudited)
 Three months ended March 31, 2020
Balance at December 31, 2019$2,258
 $7,480
 $11,130
 $(939) $19,929
 $1,876
 $21,805
Cumulative-effect adjustment from
change in accounting principle
    (7)   (7) (2) (9)
         

   

Net income    796
   796
 151
 947
Other comprehensive loss      (251) (251) (32) (283)
              
Share-based compensation expense  22
     22
   22
Dividends declared:        

   

Series A preferred stock ($1.50/share)    (26)   (26)   (26)
Series B preferred stock ($1.69/share)    (10)   (10)   (10)
Common stock ($1.05/share)    (306)   (306)   (306)
Issuances of common stock  25
     25
   25
Repurchases of common stock  (57)     (57)   (57)
Noncontrolling interest activities:        

   

Purchases  2
     2
 (18) (16)
Acquisition          1
 1
Equitization of long-term debt for
deficit held by NCI
          22
 22
Balance at March 31, 2020$2,258
 $7,472
 $11,577
 $(1,190) $20,117
 $1,998
 $22,115
              
 Three months ended March 31, 2019
Balance at December 31, 2018$2,258
 $5,540
 $10,104
 $(764) $17,138
 $2,110
 $19,248
Cumulative-effect adjustments from
change in accounting principles
    57
 (42) 15
   15
              
Net income    477
   477
 41
 518
Other comprehensive loss      (11) (11)   (11)
              
Share-based compensation expense  21
     21
   21
Dividends declared:             
Series A preferred stock ($1.50/share)    (26)   (26)   (26)
Series B preferred stock ($1.69/share)    (10)   (10)   (10)
Common stock ($0.97/share)    (265)   (265)   (265)
Issuances of common stock  24
     24
   24
Repurchases of common stock  (14)     (14)   (14)
Noncontrolling interest activities:             
Distributions          (4) (4)
Purchases  (3)     (3) (23) (26)
Balance at March 31, 2019$2,258
 $5,568
 $10,337
 $(817) $17,346
 $2,124
 $19,470
See Notes to Condensed Consolidated Financial Statements.


SAN DIEGO GAS & ELECTRIC COMPANY   
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(Dollars in millions) 
 Three months ended March 31,
 2020 2019
 (unaudited)
Operating revenues   
Electric$1,050
 $940
Natural gas219
 205
Total operating revenues1,269
 1,145
Operating expenses   
Cost of electric fuel and purchased power231
 258
Cost of natural gas60
 79
Operation and maintenance310
 286
Depreciation and amortization201
 186
Franchise fees and other taxes78
 74
Total operating expenses880
 883
Operating income389
 262
Other income, net31
 22
Interest income1
 1
Interest expense(101) (103)
Income before income taxes320
 182
Income tax expense(58) (5)
Net income262
 177
Earnings attributable to noncontrolling interest—
 (1)
Earnings attributable to common shares$262
 $176
SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in millions)
 Nine months ended September 30,
 20202019
 (unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid(872)(734)
Preferred dividends paid(107)(107)
Issuances of preferred stock890 0 
Issuances of common stock10 757 
Repurchases of common stock(565)(23)
Issuances of debt (maturities greater than 90 days)5,934 3,269 
Payments on debt (maturities greater than 90 days) and finance leases(4,387)(2,500)
(Decrease) increase in short-term debt, net(1,871)888 
Advances from unconsolidated affiliates64 0 
Purchases of noncontrolling interests(178)(30)
Contributions from noncontrolling interests, net of distributions0 171 
Intercompany activities with discontinued operations, net0 (128)
Other(29)(37)
Net cash (used in) provided by continuing operations(1,111)1,526 
Net cash provided by discontinued operations401 49 
Net cash (used in) provided by financing activities(710)1,575 
Effect of exchange rate changes in continuing operations(2)0 
Effect of exchange rate changes in discontinued operations(3)(3)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(5)(3)
Increase in cash, cash equivalents and restricted cash, including discontinued operations3,329 251 
Cash, cash equivalents and restricted cash, including discontinued operations, January 1217 246 
Cash, cash equivalents and restricted cash, including discontinued operations, September 30$3,546 $497 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  
Interest payments, net of amounts capitalized$781 $766 
Income tax payments, including discontinued operations, net of refunds1,376 372 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES  
Accrued interest receivable from unconsolidated affiliate$0 $55 
Accrued capital expenditures460 390 
Increase in finance lease obligations for investment in property, plant and equipment72 27 
Equitization of long-term debt for deficit held by NCI22 0 
Contribution to Cameron LNG JV50 0 
Distribution from Cameron LNG JV50 0 
Preferred dividends declared but not paid50 36 
Common dividends receivable from discontinued operation0 422 
Common dividends issued in stock23 41 
Common dividends declared but not paid301 272 
See Notes to Condensed Consolidated Financial Statements.

14

SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Dollars in millions)
 Preferred stockCommon
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		Sempra
Energy
shareholders'
equity		Non-
controlling
interests		Total
equity
(unaudited)
Three months ended September 30, 2020
Balance at June 30, 2020$3,147 $7,490 $13,511 $(542)$23,606 $1,780 $25,386 
Net income399 399 22 421 
Other comprehensive income34 34 4 38 
Share-based compensation expense19 19 19 
Dividends declared:
Series A preferred stock ($1.50/share)(26)(26)(26)
Series B preferred stock ($1.68/share)(10)(10)(10)
Series C preferred stock ($14.08/share)(12)(12)(12)
Common stock ($1.05/share)(302)(302)(302)
Repurchases of common stock(501)(501)(501)
Noncontrolling interest activities:
Purchases26 (5)21 (178)(157)
Balance at September 30, 2020$3,147 $7,034 $13,560 $(513)$23,228 $1,628 $24,856 
 Three months ended September 30, 2019
Balance at June 30, 2019$2,258 $5,605 $10,425 $(848)$17,440 $1,994 $19,434 
Net income849 849 60 909 
Other comprehensive loss(130)(130)(12)(142)
Share-based compensation expense17 17 17 
Dividends declared:
Series A preferred stock ($1.50/share)(26)(26)(26)
Series B preferred stock ($1.68/share)(10)(10)(10)
Common stock ($0.96/share)(272)(272)(272)
Issuances of common stock751 751 751 
Repurchases of common stock(5)(5)(5)
Noncontrolling interest activities:
Contributions175 175 
Distributions2 2 (7)(5)
Purchases(2)(2)
Sale4 4 1 5 
Acquisition3 3 
Deconsolidation(281)(281)
Balance at September 30, 2019$2,258 $6,374 $10,966 $(978)$18,620 $1,931 $20,551 
See Notes to Condensed Consolidated Financial Statements.

15
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
 (unaudited)
 Three months ended March 31, 2020 and 2019
2020:         
Net income/Comprehensive income$320
 $(58) $262
 $—
 $262
2019:         
Net income$181
 $(5) $176
 $1
 $177
Other comprehensive income (loss):         
Financial instruments—
 —
 —
 1
 1
Total other comprehensive income—
 —
 —
 1
 1
Comprehensive income$181
 $(5) $176
 $2
 $178

SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
(Dollars in millions)
 Preferred stockCommon
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		Sempra
Energy
shareholders'
equity		Non-
controlling
interests		Total
equity
(unaudited)
Nine months ended September 30, 2020
Balance at December 31, 2019$2,258 $7,480 $11,130 $(939)$19,929 $1,876 $21,805 
Adoption of ASU 2016-13(7)(7)(2)(9)
Adjusted balance at December 31, 20192,258 7,480 11,123 (939)19,922 1,874 21,796 
Net income3,472 3,472 201 3,673 
Other comprehensive income (loss)431 431 (25)406 
Share-based compensation expense57 57 57 
Dividends declared:
Series A preferred stock ($4.50/share)(78)(78)(78)
Series B preferred stock ($5.06/share)(29)(29)(29)
Series C preferred stock ($15.71/share)(14)(14)(14)
Common stock ($3.14/share)(913)(913)(913)
Preferred dividends of subsidiary(1)(1)(1)
Issuance of series C preferred stock889 889 889 
Issuances of common stock33 33 33 
Repurchases of common stock(565)(565)(565)
Noncontrolling interest activities:
Distributions(1)(1)
Purchases29 (5)24 (208)(184)
Acquisition1 1 
Equitization of long-term debt for
deficit held by NCI
22 22 
Deconsolidation(236)(236)
Balance at September 30, 2020$3,147 $7,034 $13,560 $(513)$23,228 $1,628 $24,856 
 Nine months ended September 30, 2019
Balance at December 31, 2018$2,258 $5,540 $10,104 $(764)$17,138 $2,110 $19,248 
Adoption of ASU 2016-0217 17 17 
Adoption of ASU 2018-0240 (42)(2)(2)
Adjusted balance at December 31, 20182,258 5,540 10,161 (806)17,153 2,110 19,263 
Net income1,716 1,716 146 1,862 
Other comprehensive loss(172)(172)(18)(190)
Share-based compensation expense56 56 56 
Dividends declared:
Series A preferred stock ($4.50/share)(78)(78)(78)
Series B preferred stock ($5.06/share)(29)(29)(29)
Common stock ($2.90/share)(803)(803)(803)
Preferred dividends of subsidiary(1)(1)(1)
Issuances of common stock798 798 798 
Repurchases of common stock(23)(23)(23)
Noncontrolling interest activities:
Contributions175 175 
Distributions2 2 (19)(17)
Purchases(3)(3)(27)(30)
Sale4 4 1 5 
Acquisition3 3 
Deconsolidations(440)(440)
Balance at September 30, 2019$2,258 $6,374 $10,966 $(978)$18,620 $1,931 $20,551 
See Notes to Condensed Consolidated Financial Statements.
16

SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions) 
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
 (unaudited)
Operating revenues    
Electric$1,338 $1,271 $3,478 $3,184 
Natural gas134 156 498 482 
Total operating revenues1,472 1,427 3,976 3,666 
Operating expenses    
Cost of electric fuel and purchased power430 411 921 934 
Cost of natural gas27 23 118 136 
Operation and maintenance414 295 1,050 857 
Depreciation and amortization200 196 598 571 
Franchise fees and other taxes86 79 237 220 
Total operating expenses1,157 1,004 2,924 2,718 
Operating income315 423 1,052 948 
Other (expense) income, net(2)19 47 60 
Interest income1 1 2 3 
Interest expense(103)(106)(307)(311)
Income before income taxes211 337 794 700 
Income tax expense(33)(71)(161)(111)
Net income178 266 633 589 
Earnings attributable to noncontrolling interest0 (3)0 (7)
Earnings attributable to common shares$178 $263 $633 $582 
See Notes to Condensed Consolidated Financial Statements.


17
SAN DIEGO GAS & ELECTRIC COMPANY   
CONDENSED CONSOLIDATED BALANCE SHEETS   
(Dollars in millions)   
 March 31,
2020		 
December 31,
2019(1)
 (unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$203
 $10
Accounts receivable – trade, net411
 398
Accounts receivable – other, net111
 119
Income taxes receivable, net61
 128
Inventories93
 94
Prepaid expenses105
 120
Regulatory assets198
 209
Fixed-price contracts and other derivatives33
 43
Greenhouse gas allowances13
 13
Other current assets27
 24
Total current assets1,255
 1,158
    
Other assets:   
Regulatory assets457
 440
Nuclear decommissioning trusts987
 1,082
Greenhouse gas allowances189
 189
Right-of-use assets – operating leases123
 130
Wildfire fund385
 392
Other long-term assets194
 202
Total other assets2,335
 2,435
    
Property, plant and equipment:   
Property, plant and equipment22,850
 22,504
Less accumulated depreciation and amortization(5,656) (5,537)
Property, plant and equipment, net17,194
 16,967
Total assets$20,784
 $20,560
(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)   
 March 31,
2020		 
December 31,
2019(1)
 (unaudited)  
LIABILITIES AND EQUITY   
Current liabilities:   
Short-term debt$—
 $80
Accounts payable462
 496
Due to unconsolidated affiliates59
 53
Interest payable63
 43
Accrued compensation and benefits59
 138
Accrued franchise fees37
 53
Regulatory liabilities69
 76
Current portion of long-term debt and finance leases57
 56
Customer deposits74
 74
Greenhouse gas obligations13
 13
Asset retirement obligations105
 95
Other current liabilities186
 133
Total current liabilities1,184
 1,310
    
Long-term debt and finance leases6,687
 6,306
    
Deferred credits and other liabilities:   
Pension obligation, net of plan assets156
 153
Deferred income taxes1,880
 1,848
Deferred investment tax credits14
 14
Regulatory liabilities2,200
 2,319
Asset retirement obligations760
 771
Greenhouse gas obligations72
 62
Deferred credits and other669
 677
Total deferred credits and other liabilities5,751
 5,844
    
Commitments and contingencies (Note 11)

 

    
Shareholder's equity:   
Preferred stock (45 million shares authorized; none issued)—
 —
Common stock (255 million shares authorized; 117 million shares outstanding;
no par value)		1,660
 1,660
Retained earnings5,518
 5,456
Accumulated other comprehensive income (loss)(16) (16)
Total shareholder’s equity7,162
 7,100
Total liabilities and shareholder's equity$20,784
 $20,560
(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)
 Three months ended March 31,
 2020 2019
 (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$262
 $177
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization201
 186
Deferred income taxes and investment tax credits(8) (28)
Other(10) 1
Net change in working capital components73
 96
Changes in other noncurrent assets and liabilities, net(20) 11
Net cash provided by operating activities498
 443
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Expenditures for property, plant and equipment(402) (356)
Purchases of nuclear decommissioning trust assets(552) (225)
Proceeds from sales of nuclear decommissioning trust assets552
 225
Net cash used in investing activities(402) (356)
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Common dividends paid(200) —
Issuances of debt (maturities greater than 90 days)400
 —
Payments on debt (maturities greater than 90 days) and finance leases(23) (22)
Decrease in short-term debt, net(80) (53)
Net cash provided by (used in) financing activities97
 (75)
    
Increase in cash, cash equivalents and restricted cash193
 12
Cash, cash equivalents and restricted cash, January 110
 37
Cash, cash equivalents and restricted cash, March 31$203
 $49
    
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION   
Interest payments, net of amounts capitalized$79
 $86
    
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES 
  
Accrued capital expenditures$128
 $100
Increase in finance lease obligations for investment in property, plant and equipment4
 4
SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
 SDG&E shareholder’s equity  
 Pretax
amount		Income tax expenseNet-of-tax
amount		Noncontrolling
interest
(after-tax)		Total
 (unaudited)
 Three months ended September 30, 2020 and 2019
2020:     
Net income/Comprehensive income$211 $(33)$178 $0 $178 
2019:     
Net income$334 $(71)$263 $3 $266 
Other comprehensive income (loss):     
Financial instruments0 0 0 1 1 
Total other comprehensive income0 0 0 1 1 
Comprehensive income$334 $(71)$263 $4 $267 
 Nine months ended September 30, 2020 and 2019
2020:     
Net income$794 $(161)$633 $0 $633 
Other comprehensive income (loss):     
Pension and other postretirement benefits5 (1)4 0 4 
Total other comprehensive income5 (1)4 0 4 
Comprehensive income$799 $(162)$637 $0 $637 
2019:     
Net income$693 $(111)$582 $7 $589 
Other comprehensive income (loss):     
Financial instruments0 0 0 2 2 
Pension and other postretirement benefits1 0 1 0 1 
Total other comprehensive income1 0 1 2 3 
Comprehensive income$694 $(111)$583 $9 $592 
See Notes to Condensed Consolidated Financial Statements.


18


SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Dollars in millions)
 Common
stock		 Retained
earnings		 Accumulated
other
comprehensive
income (loss)		 SDG&E
shareholder's
equity		 Noncontrolling
interest		 Total
equity
 (unaudited)
 Three months ended March 31, 2020
Balance at December 31, 2019$1,660
 $5,456
 $(16) $7,100
 $—
 $7,100
            
Net income  262
   262
 —
 262
            
Common stock dividends declared ($1.72/share)  (200)   (200)   (200)
Balance at March 31, 2020$1,660
 $5,518
 $(16) $7,162
 $—
 $7,162
            
 Three months ended March 31, 2019
Balance at December 31, 2018$1,338
 $4,687
 $(10) $6,015
 $100
 $6,115
Cumulative-effect adjustment from
change in accounting principle
  2
 (2) —
   —
            
Net income  176
   176
 1
 177
Other comprehensive income    —
 —
 1
 1
            
Balance at March 31, 2019$1,338
 $4,865
 $(12) $6,191
 $102
 $6,293
SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
September 30,December 31,
 2020
2019(1)
 (unaudited) 
ASSETS  
Current assets:  
Cash and cash equivalents$733 $10 
Accounts receivable – trade, net462 398 
Accounts receivable – other, net150 119 
Due from unconsolidated affiliates3 0 
Income taxes receivable, net23 128 
Inventories105 94 
Prepaid expenses202 120 
Regulatory assets367 209 
Fixed-price contracts and other derivatives35 43 
Greenhouse gas allowances13 13 
Other current assets21 24 
Total current assets2,114 1,158 
Other assets:  
Regulatory assets470 440 
Nuclear decommissioning trusts1,057 1,082 
Greenhouse gas allowances191 189 
Right-of-use assets – operating leases109 130 
Wildfire fund371 392 
Other long-term assets186 202 
Total other assets2,384 2,435 
Property, plant and equipment:  
Property, plant and equipment23,813 22,504 
Less accumulated depreciation and amortization(5,890)(5,537)
Property, plant and equipment, net17,923 16,967 
Total assets$22,421 $20,560 
(1)    Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.

19

SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in millions)
 Three months ended March 31,
 2020 2019
 (unaudited)
    
Operating revenues$1,395
 $1,361
Operating expenses   
Cost of natural gas278
 455
Operation and maintenance543
 410
Depreciation and amortization159
 147
Franchise fees and other taxes51
 48
Total operating expenses1,031
 1,060
Operating income364
 301
Other income, net30
 16
Interest income1
 —
Interest expense(40) (34)
Income before income taxes355
 283
Income tax expense(52) (19)
Net income/Earnings attributable to common shares$303
 $264
SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in millions)
 September 30,December 31,
2020
2019(1)
 (unaudited) 
LIABILITIES AND EQUITY  
Current liabilities:  
Short-term debt$0 $80 
Accounts payable569 496 
Due to unconsolidated affiliates61 53 
Interest payable70 43 
Accrued compensation and benefits123 138 
Accrued franchise fees46 53 
Regulatory liabilities69 76 
Current portion of long-term debt and finance leases861 56 
Customer deposits65 74 
Greenhouse gas obligations13 13 
Asset retirement obligations117 95 
Other current liabilities232 133 
Total current liabilities2,226 1,310 
Long-term debt and finance leases6,863 6,306 
Deferred credits and other liabilities:  
Pension obligation, net of plan assets119 153 
Deferred income taxes1,976 1,848 
Deferred investment tax credits14 14 
Regulatory liabilities2,210 2,319 
Asset retirement obligations739 771 
Greenhouse gas obligations96 62 
Deferred credits and other641 677 
Total deferred credits and other liabilities5,795 5,844 
Commitments and contingencies (Note 11)
Shareholder's equity:  
Preferred stock (45 million shares authorized; NaN issued)0 0 
Common stock (255 million shares authorized; 117 million shares outstanding;
no par value)
1,660 1,660 
Retained earnings5,889 5,456 
Accumulated other comprehensive income (loss)(12)(16)
Total shareholder’s equity7,537 7,100 
Total liabilities and shareholder's equity$22,421 $20,560 
(1)    Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.
20

SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 Nine months ended September 30,
 20202019
 (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES  
Net income$633 $589 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization598 571 
Deferred income taxes and investment tax credits36 (20)
Other13 7 
Net change in other working capital components(184)(60)
Wildfire fund, current and noncurrent0 (323)
Changes in other noncurrent assets and liabilities, net(113)(10)
Net cash provided by operating activities983 754 
CASH FLOWS FROM INVESTING ACTIVITIES  
Expenditures for property, plant and equipment(1,323)(1,071)
Decrease in cash from deconsolidation of Otay Mesa VIE0 (8)
Purchases of nuclear decommissioning trust assets(1,091)(728)
Proceeds from sales of nuclear decommissioning trust assets1,091 728 
Increase in loans to affiliate, net0 (25)
Other8 7 
Net cash used in investing activities(1,315)(1,097)
CASH FLOWS FROM FINANCING ACTIVITIES  
Common dividends paid(200)0 
Equity contribution from Sempra Energy0 322 
Issuances of debt (maturities greater than 90 days)1,598 400 
Payments on debt (maturities greater than 90 days) and finance leases(252)(269)
Decrease in short-term debt, net(80)(291)
Contributions from noncontrolling interest, net0 172 
Debt issuance costs(11)(4)
Net cash provided by financing activities1,055 330 
Increase (decrease) in cash, cash equivalents and restricted cash723 (13)
Cash, cash equivalents and restricted cash, January 110 37 
Cash and cash equivalents, September 30$733 $24 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  
Interest payments, net of amounts capitalized$276 $285 
Income tax payments, net of refunds20 131 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES  
Accrued capital expenditures$184 $117 
Increase in finance lease obligations for investment in property, plant and equipment26 12 
See Notes to Condensed Consolidated Financial Statements.
21

SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Dollars in millions)
 Common
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		SDG&E
shareholder's
equity		Noncontrolling
interest		Total
equity
(unaudited)
Three months ended September 30, 2020
Balance at June 30, 2020$1,660 $5,711 $(12)$7,359 $0 $7,359 
Net income178 178 0 178 
Balance at September 30, 2020$1,660 $5,889 $(12)$7,537 $0 $7,537 
Three months ended September 30, 2019
Balance at June 30, 2019$1,338 $5,008 $(11)$6,335 $103 $6,438 
Net income263 263 3 266 
Other comprehensive income1 1 
Equity contribution from Sempra Energy322 322 322 
Noncontrolling interest activities:
Contributions175 175 
Distributions   (1)(1)
Deconsolidation(281)(281)
Balance at September 30, 2019$1,660 $5,271 $(11)$6,920 $0 $6,920 
 Nine months ended September 30, 2020
Balance at December 31, 2019$1,660 $5,456 $(16)$7,100 $0 $7,100 
Net income633 633 0 633 
Other comprehensive income4 4 0 4 
Common stock dividends declared ($1.72/share)(200)(200)(200)
Balance at September 30, 2020$1,660 $5,889 $(12)$7,537 $0 $7,537 
Nine months ended September 30, 2019
Balance at December 31, 2018$1,338 $4,687 $(10)$6,015 $100 $6,115 
Adoption of ASU 2018-022 (2)— 0 
Adjusted balance at December 31, 20181,338 4,689 (12)6,015 100 6,115 
Net income582 582 7 589 
Other comprehensive income1 1 2 3 
Equity contribution from Sempra Energy322 322 322 
Noncontrolling interest activities:
Contributions   175 175 
Distributions(3)(3)
Deconsolidation(281)(281)
Balance at September 30, 2019$1,660 $5,271 $(11)$6,920 $0 $6,920 
See Notes to Condensed Consolidated Financial Statements.
22

SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in millions)
 Three months ended September 30,Nine months ended September 30,
2020201920202019
 (unaudited)
Operating revenues$842 $975 $3,247 $3,142 
Operating expenses 
Cost of natural gas92 101 476 660 
Operation and maintenance521 427 1,526 1,291 
Depreciation and amortization165 154 486 449 
Franchise fees and other taxes48 43 142 132 
Impairment losses0 37 0 37 
Total operating expenses826 762 2,630 2,569 
Operating income16 213 617 573 
Other (expense) income, net(7)1 21 18 
Interest income0 0 2 1 
Interest expense(39)(36)(119)(104)
(Loss) income before income taxes(30)178 521 488 
Income tax benefit (expense)6 (35)(95)(50)
Net (loss) income(24)143 426 438 
Preferred dividends0 0 (1)(1)
(Losses) earnings attributable to common shares$(24)$143 $425 $437 
See Notes to Condensed Financial Statements.


23
SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
 Pretax
amount		 Income tax expense Net-of-tax
amount
 (unaudited)
 Three months ended March 31, 2020 and 2019
2020:     
Net income/Comprehensive income$355
 $(52) $303
2019:     
Net income/Comprehensive income$283
 $(19) $264

SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
 Pretax
amount		Income tax benefit (expense)Net-of-tax
amount
 (unaudited)
 Three months ended September 30, 2020 and 2019
2020:   
Net loss/Comprehensive loss$(30)$6 $(24)
2019:   
Net income$178 $(35)$143 
Other comprehensive income (loss):
Financial instruments1 0 1 
Total other comprehensive income1 0 1 
Comprehensive income$179 $(35)$144 
 Nine months ended September 30, 2020 and 2019
2020:   
Net income$521 $(95)$426 
Other comprehensive income (loss):
Pension and other postretirement benefits1 0 1 
Total other comprehensive income1 0 1 
Comprehensive income$522 $(95)$427 
2019:   
Net income$488 $(50)$438 
Other comprehensive income (loss):
Financial instruments1 0 1 
Pension and other postretirement benefits6 (2)4 
Total other comprehensive income7 (2)5 
Comprehensive income$495 $(52)$443 
See Notes to Condensed Financial Statements.



SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED BALANCE SHEETS
(Dollars in millions)
 March 31,
2020		 
December 31,
2019(1)
 (unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$389
 $10
Accounts receivable – trade, net669
 710
Accounts receivable – other, net74
 87
Due from unconsolidated affiliates7
 11
Income taxes receivable, net116
 161
Inventories79
 136
Regulatory assets9
 7
Greenhouse gas allowances60
 52
Other current assets48
 44
Total current assets1,451
 1,218
    
Other assets:   
Regulatory assets1,297
 1,407
Insurance receivable for Aliso Canyon costs511
 339
Greenhouse gas allowances291
 248
Right-of-use assets – operating leases90
 94
Other long-term assets449
 447
Total other assets2,638
 2,535
    
Property, plant and equipment:   
Property, plant and equipment19,661
 19,362
Less accumulated depreciation and amortization(6,140) (6,038)
Property, plant and equipment, net13,521
 13,324
Total assets$17,610
 $17,077

(1)

Derived from audited financial statements.
See Notes to Condensed Financial Statements.

24
SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED BALANCE SHEETS (CONTINUED)
(Dollars in millions)
 March 31,
2020		 
December 31,
2019(1)
 (unaudited)  
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities:   
Short-term debt$—
 $630
Accounts payable – trade331
 545
Accounts payable – other105
 110
Due to unconsolidated affiliates49
 47
Accrued compensation and benefits111
 182
Regulatory liabilities375
 243
Current portion of long-term debt and finance leases9
 6
Customer deposits73
 71
Reserve for Aliso Canyon costs284
 9
Greenhouse gas obligations60
 52
Asset retirement obligations64
 65
Other current liabilities236
 222
Total current liabilities1,697
 2,182
    
Long-term debt and finance leases4,442
 3,788
    
Deferred credits and other liabilities:   
Pension obligation, net of plan assets802
 785
Deferred income taxes1,477
 1,403
Deferred investment tax credits6
 7
Regulatory liabilities1,333
 1,422
Asset retirement obligations2,144
 2,112
Greenhouse gas obligations242
 208
Deferred credits and other416
 422
Total deferred credits and other liabilities6,420
 6,359
    
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 earnings4,186
 3,883
Accumulated other comprehensive income (loss)(23) (23)
Total shareholders’ equity5,051
 4,748
Total liabilities and shareholders’ equity$17,610
 $17,077
(1)
Derived from audited financial statements.
See Notes to Condensed Financial Statements.



SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED BALANCE SHEETS
(Dollars in millions)
 September 30,December 31,
2020
2019(1)
 (unaudited) 
ASSETS  
Current assets:  
Cash and cash equivalents$304 $10 
Accounts receivable – trade, net422 710 
Accounts receivable – other, net82 87 
Due from unconsolidated affiliates1 11 
Income taxes receivable, net31 161 
Inventories160 136 
Regulatory assets18 7 
Greenhouse gas allowances53 52 
Other current assets51 44 
Total current assets1,122 1,218 
Other assets:  
Regulatory assets1,187 1,407 
Insurance receivable for Aliso Canyon costs504 339 
Greenhouse gas allowances361 248 
Right-of-use assets – operating leases82 94 
Other long-term assets460 447 
Total other assets2,594 2,535 
Property, plant and equipment:  
Property, plant and equipment20,558 19,362 
Less accumulated depreciation and amortization(6,331)(6,038)
Property, plant and equipment, net14,227 13,324 
Total assets$17,943 $17,077 
SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 Three months ended March 31,
 2020 2019
 (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$303
 $264
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization159
 147
Deferred income taxes and investment tax credits4
 (65)
Other6
 5
Net change in working capital components343
 287
Insurance receivable for Aliso Canyon costs(172) (16)
Changes in other noncurrent assets and liabilities, net114
 (246)
Net cash provided by operating activities757
 376
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Expenditures for property, plant and equipment(388) (324)
Net cash used in investing activities(388) (324)
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Issuances of debt (maturities greater than 90 days)649
 —
Decrease in short-term debt, net(630) (66)
Other(9) (1)
Net cash provided by (used in) financing activities10
 (67)
    
Increase (decrease) in cash and cash equivalents379
 (15)
Cash and cash equivalents, January 110
 18
Cash and cash equivalents, March 31$389
 $3
    
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION   
Interest payments, net of amounts capitalized$37
 $26
    
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES   
Accrued capital expenditures$126
 $163
Increase in finance lease obligations for investment in property, plant and equipment16
 3
(1)    Derived from audited financial statements.
See Notes to Condensed Financial Statements.

25


SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED BALANCE SHEETS (CONTINUED)
(Dollars in millions)
 September 30,December 31,
2020
2019(1)
 (unaudited) 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:  
Short-term debt$0 $630 
Accounts payable – trade359 545 
Accounts payable – other117 110 
Due to unconsolidated affiliates101 47 
Accrued compensation and benefits174 182 
Regulatory liabilities304 243 
Current portion of long-term debt and finance leases11 6 
Customer deposits58 71 
Reserve for Aliso Canyon costs268 9 
Greenhouse gas obligations53 52 
Asset retirement obligations63 65 
Other current liabilities254 222 
Total current liabilities1,762 2,182 
Long-term debt and finance leases4,764 3,788 
Deferred credits and other liabilities:  
Pension obligation, net of plan assets757 785 
Deferred income taxes1,443 1,403 
Deferred investment tax credits8 7 
Regulatory liabilities1,200 1,422 
Asset retirement obligations2,181 2,112 
Greenhouse gas obligations316 208 
Deferred credits and other438 422 
Total deferred credits and other liabilities6,343 6,359 
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 earnings4,208 3,883 
Accumulated other comprehensive income (loss)(22)(23)
Total shareholders’ equity5,074 4,748 
Total liabilities and shareholders’ equity$17,943 $17,077 
SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in millions)
 Preferred
stock		 Common
stock		 Retained
earnings		 Accumulated
other
comprehensive
income (loss)		 Total
shareholders’
equity
 (unaudited)
 Three months ended March 31, 2020
Balance at December 31, 2019$22
 $866
 $3,883
 $(23) $4,748
          
Net income    303
 

 303
          
Dividends declared:         
Preferred stock ($0.38/share)    —
 

 —
Balance at March 31, 2020$22
 $866
 $4,186
 $(23) $5,051
          
 Three months ended March 31, 2019
Balance at December 31, 2018$22
 $866
 $3,390
 $(20) $4,258
Cumulative-effect adjustment from
change in accounting principle
    2
 (4) (2)
          
Net income    264
   264
          
Dividends declared:         
Preferred stock ($0.38/share)    —
 

 —
Balance at March 31, 2019$22
 $866
 $3,656
 $(24) $4,520
(1)Derived from audited financial statements.
See Notes to Condensed Financial Statements.



26

SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 Nine months ended September 30,
 20202019
 (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES  
Net income$426 $438 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization486 449 
Deferred income taxes and investment tax credits(38)(79)
Impairment losses0 37 
Other42 (5)
Net change in working capital components513 194 
Insurance receivable for Aliso Canyon costs(165)107 
Changes in other noncurrent assets and liabilities, net124 (328)
Net cash provided by operating activities1,388 813 
CASH FLOWS FROM INVESTING ACTIVITIES  
Expenditures for property, plant and equipment(1,345)(1,019)
Other0 1 
Net cash used in investing activities(1,345)(1,018)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid(50)0 
Preferred dividends paid(1)(1)
Issuances of debt (maturities greater than 90 days)949 349 
Decrease in short-term debt, net(630)(148)
Payments on finance leases(9)(4)
Debt issuance costs(8)(4)
Net cash provided by financing activities251 192 
Increase (decrease) in cash and cash equivalents294 (13)
Cash and cash equivalents, January 110 18 
Cash and cash equivalents, September 30$304 $5 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  
Interest payments, net of amounts capitalized$114 $92 
Income tax payments, net of refunds1 115 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES  
Accrued capital expenditures$146 $167 
Increase in finance lease obligations for investment in property, plant and equipment46 15 
Common dividends declared but not paid50 150 
See Notes to Condensed Financial Statements.

27

SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in millions)
 Preferred
stock		Common
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		Total
shareholders’
equity
(unaudited)
Three months ended September 30, 2020
Balance at June 30, 2020$22 $866 $4,282 $(22)$5,148 
Net loss(24)(24)
Dividends declared:
Preferred stock ($0.38/share)0 0 
Common stock ($0.55/share)(50)(50)
Balance at September 30, 2020$22 $866 $4,208 $(22)$5,074 
Three months ended September 30, 2019
Balance at June 30, 2019$22 $866 $3,686 $(20)$4,554 
Net income143 143 
Other comprehensive income1 1 
Dividends declared:
Preferred stock ($0.38/share)0 0 
Common stock ($1.64/share)(150)(150)
Balance at September 30, 2019$22 $866 $3,679 $(19)$4,548 
 Nine months ended September 30, 2020
Balance at December 31, 2019$22 $866 $3,883 $(23)$4,748 
Net income426 426 
Other comprehensive income1 1 
Dividends declared:
Preferred stock ($1.13/share)(1)(1)
Common stock ($1.10/share)(100)(100)
Balance at September 30, 2020$22 $866 $4,208 $(22)$5,074 
Nine months ended September 30, 2019
Balance at December 31, 2018$22 $866 $3,390 $(20)$4,258 
Adoption of ASU 2018-022 (4)(2)
Adjusted balance at December 31, 201822 866 3,392 (24)4,256 
Net income438 438 
Other comprehensive income5 5 
Dividends declared:
Preferred stock ($1.13/share)(1)(1)
Common stock ($1.64/share)(150)(150)
Balance at September 30, 2019$22 $866 $3,679 $(19)$4,548 
See Notes to Condensed Financial Statements.


28

SEMPRA ENERGY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. GENERAL INFORMATION AND OTHER FINANCIAL DATA
PRINCIPLES OF CONSOLIDATION
Sempra Energy
Sempra Energy’s Condensed Consolidated Financial Statements include the accounts of Sempra Energy, a California-based energy-services holding company, and its consolidated subsidiaries and VIEs. Sempra Global is the holding company for most of our subsidiaries that are not subject to California or Texas utility regulation. Sempra Energy’s businesses were managed within 6 separate reportable segments until April 2019 and 5 separate reportable segments thereafter, which we discuss in Note 12. All references in these Notes to our reportable segments are not intended to refer to any legal entity with the same or similar name.
SDG&E
SDG&E’s Condensed Consolidated Financial Statements include its accounts and the accounts of a VIE of which SDG&E was the primary beneficiary until August 23, 2019, at which time SDG&E deconsolidated the VIE. SDG&E’s common stock is wholly owned by Enova Corporation, which is a wholly owned subsidiary of Sempra Energy.
SoCalGas
SoCalGas’ common stock is wholly owned by Pacific Enterprises, which is a wholly owned subsidiary of Sempra Energy.
In this report, we refer to SDG&E and SoCalGas collectively as the California Utilities.
BASIS OF PRESENTATION
This is a combined report of Sempra Energy, SDG&E and SoCalGas. We provide separate information for SDG&E and SoCalGas as required. References in this report to “we,” “us,” “our” and “Sempra Energy Consolidated” are to Sempra Energy and its consolidated entities, unless otherwise indicated by the context. We have eliminated intercompany accounts and transactions within the consolidated financial statements of each reporting entity.
Throughout this report, we refer to the following as Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements when discussed together or collectively:
▪the Condensed Consolidated Financial Statements and related Notes of Sempra Energy and its subsidiaries and VIEs;
▪the Condensed Consolidated Financial Statements and related Notes of SDG&E and its VIE (until deconsolidation of Otay Mesa VIE in August 2019); and
▪the Condensed Financial Statements and related Notes of SoCalGas.
▪the Condensed Consolidated Financial Statements and related Notes of Sempra Energy and its subsidiaries and VIEs;
▪the Condensed Consolidated Financial Statements and related Notes of SDG&E and its VIE (until deconsolidation of Otay Mesa VIE in August 2019); and
▪the Condensed Financial Statements and related Notes of SoCalGas.
We have prepared the Condensed Consolidated Financial Statements in conformity with U.S. GAAP and in accordance with the interim-period-reporting requirements of Form 10-Q.10-Q and applicable rules of the SEC. Results of operations for interim periods are not necessarily indicative of results for the entire year or for any other period. We evaluated events and transactions that occurred after March 31,September 30, 2020 through the date the financial statements were issued and, in the opinion of management, the accompanying statements reflect all adjustments necessary for a fair presentation. These adjustments are only of a normal, recurring nature.
All December 31, 2019 balance sheet information in the Condensed Consolidated Financial Statements has been derived from our audited 2019 Consolidated Financial Statements in the Annual Report. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the interim-period-reporting provisions of U.S. GAAP and the SEC.
29

We describe our significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report and the impact of the adoption of new accounting standards on those policies in Note 2 below. We follow the same accounting policies for interim period reporting purposes.


You should read the information in this report in conjunction with the Annual Report.
Discontinued Operations
In January 2019, our board of directors approved a plan to sell our South American businesses based on our strategic focus on North America. We determined that these businesses, which previously constituted the Sempra South American Utilities segment, and certain activities associated with these businesses, met the held-for-sale criteria. These businesses are presented as discontinued operations, which we discuss further in Note 5, as the planned sales represent a strategic shift that will have a major effect on our operations and financial results. We completed the sales in the second quarter of 2020. Our discussions in the Notes below relate only to our continuing operations unless otherwise noted.
Regulated Operations
The California Utilities and Sempra Mexico’s natural gas distribution utility, Ecogas, prepare their financial statements in accordance with the provisions of U.S. GAAP governing rate-regulated operations. We discuss revenue recognition and the effects of regulation and revenue recognition at our utilities in Notes 13 and 4 below and in Notes 1, 3 and 4 of the Notes to Consolidated Financial Statements in the Annual Report.
Our Sempra Texas Utilities segment is comprised of our equity method investments in holding companies that own interests in regulated electric transmission and distribution utilities in Texas and prepare their financial statements in accordance with the provisions of U.S. GAAP governing rate-regulated operations.Texas.
Our Sempra Mexico segment includes the operating companies of our subsidiary, IEnova, as well as certain holding companies and risk management activity. Certain business activities at IEnova are regulated by the Comisión Reguladora de Energía (Energy Regulatory Commission of Mexico)CRE and meet the regulatory accounting requirements of U.S. GAAP. Pipeline projects under construction at IEnova that meet the regulatory accounting requirements of U.S. GAAP record the impact of AFUDC related to equity. We discuss AFUDC below and in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

CASH, CASH EQUIVALENTS AND RESTRICTED CASH
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on theSempra Energy’s Condensed Consolidated Balance Sheets to the sum of such amounts reported on theSempra Energy’s Condensed Consolidated Statements of Cash Flows. We provide information about the nature of restricted cash in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(Dollars in millions)
September 30,December 31,
 20202019
Sempra Energy Consolidated:
Cash and cash equivalents$3,515 $108 
Restricted cash, current28 31 
Restricted cash, noncurrent3 3 
Cash, cash equivalents and restricted cash in discontinued operations0 75 
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows$3,546 $217 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(Dollars in millions)
 March 31,December 31,
 20202019
Sempra Energy Consolidated:  
Cash and cash equivalents$2,247
$108
Restricted cash, current23
31
Restricted cash, noncurrent3
3
Cash, cash equivalents and restricted cash in discontinued operations181
75
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows$2,454
$217

In the Sempra Energy Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2020, the ending cash, cash equivalents and restricted cash balance in discontinued operations of $4.6 billion is considered to be cash, cash equivalents and restricted cash for continuing operations following the sales of the South American businesses.


30

CREDIT LOSSES
We are exposed to credit losses from financial assets measured at amortized cost, including trade and other accounts receivable and amounts due from unconsolidated affiliates. We are also exposed to credit losses from off-balance sheet arrangements through our guarantees of Cameron LNG JV’s debt.
We regularly monitor and evaluate credit losses and record allowances for expected credit losses, if necessary, for trade and other accounts receivable using a combination of factors, including past-due status based on contractual terms, trends in write-offs, the age of the receivable, historical and industry trends, counterparty creditworthiness, economic conditions and specific events, such as bankruptcies. We write off financial assets measured at amortized cost in the period in which we deemdetermine they are not recoverable. We record recoveries of amounts previously written off when it is known that they will be recovered.
In connection with the COVID-19 pandemic, the California Utilities have implemented certain measures to assist customers, including suspending service disconnections due to nonpayment for residential and small business customers, waiving late payment fees for business customers, and offering


flexible payment plans for customers experiencing difficulty paying their electric or gas bills. On April 16, 2020,As we discuss in Note 4, the CPUC approved a resolution authorizingauthorized each of the California Utilities to establish a CPPMA to track and request recovery which is not assured, of incremental costs, including uncollectible expenses, associated with complying with residential and small business customer reliefprotection measures implemented by the CPUC related to the COVID-19 pandemic. As
In June 2020, the CPUC issued a decision in a separate proceeding addressing service disconnections that, among other things, allows each of March 31, 2020, the California Utilities have evaluatedto establish a two-way balancing account to record the impact of the COVID-19 pandemic, including the measures described above, onuncollectible expenses associated with residential customers’ inability to pay their respective allowances for credit losses for customer receivables, with nominal impacts. The unique nature of the COVID-19 pandemic and the relatively short amount of time in whichelectric or gas bills. This decision also directs the California Utilities had been impactedto establish an AMP that provides successfully participating, income-qualified residential customers with relief from outstanding utility bill amounts. Refer to Note 4 for further discussion.
The California Utilities have recorded increases in their allowances for expected credit losses as of March 31,September 30, 2020 result in limited supportprimarily related to expected forgiveness of outstanding utility bill amounts for modifying our evaluation of historical experience or forecasting future economic impacts that may or may not be experienced when calculatingresidential customers eligible under the allowances.AMP. Our businesses will continue to monitor economic impactsmacroeconomic factors and customer payment patterns when evaluating their allowances for credit losses in future reporting periods, which may increase materiallysignificantly due to the effects of the COVID-19 pandemic or other factors.
We provide below allowances and changes in allowances for credit losses for trade and other accounts receivable, excluding allowances related to amounts due from unconsolidated affiliates and off-balance sheet arrangements, which we discuss separately below the table.
TRADE AND OTHER ACCOUNTS RECEIVABLE – ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
Sempra
Energy
Consolidated(1)
SDG&E(2)
SoCalGas(3)
Allowances for credit losses at December 31, 2019$29 $14 $15 
Incremental allowance upon adoption of ASU 2016-131 0 — 
Provisions for expected credit losses84 44 40 
Write-offs(11)(6)(5)
Allowances for credit losses at September 30, 2020$103 $52 $50 
TRADE AND OTHER ACCOUNTS RECEIVABLE – ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)  
 
Sempra Energy Consolidated(1)
SDG&E(2)
SoCalGas(3)
Allowances for credit losses at December 31, 2019$29
$14
$15
Incremental allowance upon adoption of ASU 2016-131
—
—
Provisions for expected credit losses6
3
3
Write-offs(4)(3)(1)
Recoveries1
1
—
Allowances for credit losses at March 31, 2020$33
$15
$17
(1)Balance at September 30, 2020 includes $75 million and $28 million in Accounts Receivable – Trade, Net and Accounts Receivable – Other, Net, respectively.
(1)
(2)    Balance at September 30, 2020 includes $37 million and $15 million in Accounts Receivable – Trade, Net and Accounts Receivable – Other, Net, respectively.
(3)    Balance at September 30, 2020 includes $37 million and $13 million in Accounts Receivable – Trade, Net and Accounts Receivable – Other, Net, respectively.

Balance at March 31, 2020 includes $9 million and $24 million in Accounts Receivable – Trade, Net and Accounts Receivable – Other, Net, respectively.
(2)
Balance at March 31, 2020 includes $4 million and $11 million in Accounts Receivable – Trade, Net and Accounts Receivable – Other, Net, respectively.
(3)
Balance at March 31, 2020 includes $4 million and $13 million in Accounts Receivable – Trade, Net and Accounts Receivable – Other, Net, respectively.

For amounts due from unconsolidated affiliates and off-balance sheet arrangements, on a quarterly basis, we evaluate credit losses and record allowances for expected credit losses, if necessary, based on credit quality indicators such as external credit ratings, published default rate studies, the maturity date of the instrument and past delinquencies. However, we do not record allowances for expected credit losses related to accrued interest receivable on loans due from unconsolidated affiliates because we write off such amounts, if any, through a reversal of interest income in the period we determine such amounts are uncollectible. In the absence of external credit ratings, we may utilize an internally developed credit rating based on our analysis of a counterparty’s financial statements to determine our expected credit losses.
31

As we discuss below in “Transactions with Affiliates,” we have loans due from unconsolidated affiliates with varying tenors, interest rates and currencies. We provide below the changes in allowances for credit losses for loans and other amounts due from unconsolidated affiliates.
AMOUNTS DUE FROM UNCONSOLIDATED AFFILIATES – ALLOWANCES FOR CREDIT LOSSES
 
(Dollars in millions)
 
Sempra Energy Consolidated(1)
Allowances for credit losses at December 31, 2019$—
Allowance established upon adoption of ASU 2016-136
Provisions for expected credit losses1
Allowances for credit losses at March 31, 2020$7
AMOUNTS DUE FROM UNCONSOLIDATED AFFILIATES – ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
Sempra
Energy
Consolidated(1)
BalanceAllowances for credit losses at MarchDecember 31, 2019$0 
Allowance established upon adoption of ASU 2016-136 
Reduction to expected credit losses(3)
Allowances for credit losses at September 30, 2020 includes negligible amounts and $7 million in Due from Unconsolidated Affiliates – Current and Due from Unconsolidated Affiliates – Noncurrent, respectively.$3 


(1)    Balance at September 30, 2020 includes negligible amounts and $3 million in Due from Unconsolidated Affiliates – Current and Due from Unconsolidated Affiliates – Noncurrent, respectively.

As we discuss in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report, Sempra LNGEnergy has provided guarantees for a maximum aggregate amount of $4.0 billion associated with Cameron LNG JV’s debt obligations. We established a liability for credit losses of $6 million for this off-balance sheet arrangement upon adoption of ASU 2016-13 on January 1, 2020 and we subsequently reduced this liability by $1$3 million in the threenine months ended March 31,September 30, 2020 through a reduction to credit loss expense, which is included in O&M on the Sempra Energy Condensed Consolidated Statement of Operations. At March 31,September 30, 2020, expected credit losses of $4$3 million are included in Other Current Liabilities and $1 million are included in Deferred Credits and Other on the Sempra Energy Condensed Consolidated Balance Sheet.
CONCENTRATION OF CREDIT RISK
Credit risk is the risk of loss that would be incurred as a result of nonperformance by our counterparties on their contractual obligations. We have policies governing the management of credit risk that are administered by the respective credit departments at each of our segments and overseen by their separate risk management committees.
This oversight includes calculating current and potential credit risk on a regular basis and monitoring actual balances in comparison to approved limits. We establish credit limits based on risk and return considerations under terms customarily available in the industry. We avoid concentration of counterparties whenever possible, and we believe our credit policies significantly reduce overall credit risk. These policies include an evaluation of:
▪prospective counterparties’ financial condition (including credit ratings)
▪collateral requirements
▪the use of standardized agreements that allow for the netting of positive and negative exposures associated with a single counterparty
▪downgrade triggers
▪prospective counterparties’ financial condition (including credit ratings)
▪collateral requirements
▪the use of standardized agreements that allow for the netting of positive and negative exposures associated with a single counterparty
▪downgrade triggers
We believe that we have provided adequate reserves for counterparty nonperformance.nonperformance in our allowances for credit losses.
In the threenine months ended March 31,September 30, 2020, four customers each represented 10% or more of Sempra Mexico’s revenues (including intercompany transactions with affiliates consolidated by Sempra Energy). Additionally, for the same period, certain of our unconsolidated equity method investees (Oncor Holdings, Cameron LNG JV and IMG JV) had customers that each represented 10% or more of their respective revenues.
When our development projects become operational, we rely significantly on the ability of suppliers to perform under long-term agreements and on our ability to enforce contract terms in the event of nonperformance. Also, the factors that we consider in evaluating a development project include negotiating customer and supplier agreements and, therefore, we rely on these agreements for future performance. We also may condition our decision to go forward on development projects on first obtaining these customer and supplier agreements.


32

INVENTORIES
The components of inventories are as follows:
INVENTORY BALANCES
(Dollars in millions)
 Natural gasLNGMaterials and suppliesTotal
 September 30, 2020 December 31, 2019September 30, 2020 December 31, 2019September 30, 2020 December 31, 2019September 30, 2020 December 31, 2019
Sempra Energy Consolidated$127 $110 $2 $9 $180 $158 $309 $277 
SDG&E0 1 0 0 105 93 105 94 
SoCalGas104 90 0 0 56 46 160 136 
INVENTORY BALANCES
(Dollars in millions)
 Natural gas LNG Materials and supplies Total
 March December March December March December March December
 31, 2020 31, 2019 31, 2020 31, 2019 31, 2020 31, 2019 31, 2020 31, 2019
Sempra Energy Consolidated$55
 $110
 $5
 $9
 $157
 $158
 $217
 $277
SDG&E1
 1
 —
 —
 92
 93
 93
 94
SoCalGas32
 90
 —
 —
 47
 46
 79
 136



WILDFIRE FUND
On July 12, 2019, the Wildfire Legislation was signed into law to address certain issues related to catastrophic wildfires in the State of California and their impact on electric IOUs. We discuss the Wildfire Legislation further in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
In a complaint filed in U.S. District Court for the Northern District of California in July 2019, plaintiffs seek to invalidate AB 1054, which established the Wildfire Fund, based on allegations that the legislation violates federal law. That court dismissed the complaint and the plaintiffs have petitioned the U.S. Court of Appeals for the Ninth Circuit to review the dismissal.
In June 2020, the CPUC approved SDG&E’s 2020 wildfire mitigation plan, which will be effective until the CPUC approves a new plan. In addition, on September 14, 2020, SDG&E received its 2020 safety certification from the Wildfire Safety Division of the CPUC. The California Attorney Generalcertificate is valid for 12 months from the issue date.
In July 2020, PG&E received bankruptcy court approval to participate in the Wildfire Fund and has movedmade its required contributions to dismiss the complaint.Wildfire Fund. As a result of PG&E’s participation, the Wildfire Fund will be funded up to $21 billion.
Wildfire Fund Asset and Obligation
In the third quarter of 2019, SDG&E recorded both a Wildfire Fund asset and a related obligation of $451.5 million for its commitment to make shareholder contributions totaling $451.5 million,to the Wildfire Fund, measured at present value as of July 25, 2019 (the date by which both Edison and SDG&E opted to contribute to the Wildfire Fund). SDG&E is amortizing the Wildfire Fund asset to O&M on a straight-line basis over the estimated period of benefit, as adjusted for utilization by the participating IOUs. The estimated period of benefit of the Wildfire Fund asset is 15 years asyears. SDG&E expects to make annual shareholder contributions of March$12.9 million through December 31, 2020.2028. SDG&E accretes the present value of the Wildfire Fund obligation until the liability is settled.
We willSDG&E periodically reevaluateevaluates the estimated period of benefit of the Wildfire Fund asset based on actual experience and changes in assumptions. SDG&E may recognize a reduction of its Wildfire Fund asset and record a charge against earnings in the period when there is a reduction of the available coverage due to recoverable claims from any of the participating IOUs. The reduction to the Wildfire Fund asset may be proportionate to the Wildfire Fund’s consumption (i.e., recoveries for outstanding wildfire claims that are recoverable from the Wildfire Fund, net of anticipated or actual reimbursement to the Wildfire Fund by the responsible IOU, would decrease the Wildfire Fund asset and remaining available coverage). Incoverage. Although California has experienced some of the three months ended March 31,largest wildfires in its history in 2020 there were no such known(measured by acres burned), including fires in each participating IOU’s service territory, SDG&E is not aware of any claims from the IOUsmade by any participating IOU requiring a reduction of the Wildfire Fund asset.
At March 31, 2020 and December 31, 2019,
33

The following table summarizes the current portionlocation of balances related to the Wildfire Fund asset of $29 million is included in Other Current Assets on Sempra Energy’s Condensed Consolidated Balance Sheets and in Prepaid Expenses on SDG&E’s Condensed Consolidated Balance Sheets, and the noncurrent portion of $385 million and $392 million, respectively, is included in Wildfire Fund on Sempra Energy’s and SDG&E’s Condensed Consolidated Balance Sheets. In the three months ended March 31, 2020, SDG&E recognized $7 million of amortization of the Wildfire Fund asset.
Wildfire Fund Obligation
In the third quarter of 2019, SDG&E recorded a Wildfire Fund obligation for its commitment to make shareholder contributions totaling $451.5 million, measured at present value as of July 25, 2019 (the date by which both EdisonSheets and SDG&E opted to contribute to the Wildfire Fund). SDG&E accretes the present value of the Wildfire Fund obligation to O&M until the liability is settled. At both March 31, 2020 and December 31, 2019, the Wildfire Fund obligation of $12.9 million is included in Other Current Liabilities and $86 million is included in Deferred Credits and Other on Sempra Energy’s and SDG&E’s Condensed Consolidated Balance Sheets. In the three months ended March 31, 2020,Statements of Operations.
WILDFIRE FUND
(Dollars in millions)
LocationSeptember 30,
2020		December 31,
2019
Wildfire Fund asset:
Current
Other Current Assets(1)
$29 $29 
NoncurrentWildfire Fund371 392 
Wildfire Fund obligation:
CurrentOther Current Liabilities$13 $13 
NoncurrentDeferred Credits and Other87 86 
Three months ended September 30,Nine months ended September 30,
2020201920202019
Amortization of Wildfire Fund assetOperation and Maintenance$7 $8 $21 $8 
Accretion of Wildfire Fund obligationOperation and Maintenance0 0 1 0 
(1)    Included in Prepaid Expenses for SDG&E recognized negligible accretion of the Wildfire Fund obligation.&E.

CAPITALIZED FINANCING COSTS
Capitalized financing costs include capitalized interest costs and AFUDC related to both debt and equity financing of construction projects. We capitalize interest costs incurred to finance capital projects and interest at equity method investments that have not commenced planned principal operations.
The table below summarizes capitalized interest and AFUDC.
CAPITALIZED FINANCING COSTSCAPITALIZED FINANCING COSTSCAPITALIZED FINANCING COSTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended March 31,Three months ended September 30,Nine months ended September 30,
2020 2019 2020201920202019
Sempra Energy Consolidated$48
 $47
Sempra Energy Consolidated$51 $46 $149 $144 
SDG&E27
 17
SDG&E26 19��79 56 
SoCalGas11
 11
SoCalGas14 13 39 35 



VARIABLE INTEREST ENTITIES
We consolidate a VIE if we are the primary beneficiary of the VIE. Our determination of whether we are the primary beneficiary is based on qualitative and quantitative analyses, which assess:
▪the purpose and design of the VIE;
▪the nature of the VIE’s risks and the risks we absorb;
▪the power to direct activities that most significantly impact the economic performance of the VIE; and
▪the obligation to absorb losses or the right to receive benefits that could be significant to the VIE.
▪the purpose and design of the VIE;
▪the nature of the VIE’s risks and the risks we absorb;
▪the power to direct activities that most significantly impact the economic performance of the VIE; and
▪the obligation to absorb losses or the right to receive benefits that could be significant to the VIE.
We will continue to evaluate our VIEs for any changes that may impact our determination of whether an entity is a VIE and if we are the primary beneficiary.
SDG&E
SDG&E’s power procurement is subject to reliability requirements that may require SDG&E to enter into various PPAs that include variable interests. SDG&E evaluates the respective entities to determine if variable interests exist and, based on the qualitative and quantitative analyses described above, if SDG&E, and thereby Sempra Energy, is the primary beneficiary.
SDG&E has agreements under which it purchases power generated by facilities for which it supplies all of the natural gas to fuel the power plant (i.e., tolling agreements). SDG&E’s obligation to absorb natural gas costs may be a significant variable interest. In addition, SDG&E has the power to direct the dispatch of electricity generated by these facilities. Based on our analysis, the ability to direct the dispatch of electricity may have the most significant impact on the economic performance of the entity owning the generating facility because of the associated exposure to the cost of natural gas, which fuels the plants, and the value of electricity produced. To the extent that SDG&E (1) is obligated to purchase and provide fuel to operate the facility, (2) has the power to direct the dispatch, and (3) purchases all of the output from the facility for a substantial portion of the facility’s useful
34

life, SDG&E may be the primary beneficiary of the entity owning the generating facility. SDG&E determines if it is the primary beneficiary in these cases based on a qualitative approach in which we considerit considers the operational characteristics of the facility, including its expected power generation output relative to its capacity to generate and the financial structure of the entity, among other factors. If we determineSDG&E determines that SDG&Eit is the primary beneficiary, SDG&E and Sempra Energy consolidate the entity that owns the facility as a VIE.
SDG&E determined that none of its contracts resulted in SDG&E being the primary beneficiary of a VIE at March 31, 2020. In addition to tolling agreements, other variable interests involve various elements of fuel and power costs, and other components of cash flows expected to be paid to or received by our counterparties. In most of these cases, the expectation of variability is not substantial, and SDG&E generally does not have the power to direct activities, including the operation and maintenance activities of the generating facility, that most significantly impact the economic performance of the other VIEs. If our ongoing evaluation of these VIEs were to conclude that SDG&E becomes the primary beneficiary and consolidation by SDG&E becomes necessary, the effects could be significant to the financial position and liquidity of SDG&E and Sempra Energy.
SDG&E determined that none of its contracts resulted in SDG&E being the primary beneficiary of a VIE at September 30, 2020 and December 31, 2019. The carrying amounts of the assets and liabilities that relate to SDG&E’s involvement with VIEs where SDG&E is not the primary beneficiary are included in PP&E and finance lease liabilities with balances of $1,242 million and $1,255 million at September 30, 2020 and December 31, 2019, respectively. SDG&E recovers costs incurred on PPAs, tolling agreements and other variable interests through CPUC-approved long-term power procurement plans. SDG&E has no residual interest in the respective entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees or other commitments associated with these contracts other than the purchase commitments described in Note 16 of the Notes to Consolidated Financial Statements in the Annual Report. As a result, SDG&E’s potential exposure to loss from its variable interest in these VIEs is not significant.
Sempra Texas Utilities
Our 100% interest in Oncor Holdings is a VIE that owns an 80.25% interest in Oncor. Sempra Energy is not the primary beneficiary of the VIE because of the structural and operational ring-fencing and governance measures in place that prevent us from having the power to direct the significant activities of Oncor Holdings. As a result, we do not consolidate Oncor Holdings and instead account for our ownership interest as an equity method investment. See Note 6 for additional information about our equity method investment in Oncor Holdings and restrictions on our ability to influence its activities. Our maximum exposure to loss, which fluctuates over time, from our interest in Oncor Holdings does not exceed the carrying value of our investment, which was $11,619$11,962 million at March 31,September 30, 2020 and $11,519 million at December 31, 2019.
Sempra Mexico
Sempra Mexico’s businesses also enter into arrangements that could include variable interests. We evaluate these arrangements and applicable entities based on the qualitative and quantitative analyses described above. Certain of these entities are service or project companies that are VIEs because the total equity at risk is not sufficient for the entities to finance their activities without additional subordinated financial support. AsIf we are the primary beneficiary of these companies, we consolidate them. The assets of these VIEs totaled approximately $131 million at March 31, 2020 and $126 million atAt December 31, 2019, andSempra Mexico consolidated a VIE with assets totaling approximately $126 million, which consisted primarily of PP&E and other long-term assets. Our maximum exposure to loss is equal to the carrying value of these assets.


Sempra LNG
Cameron LNG JV is a VIE principally due to contractual provisions that transfer certain risks to customers. Sempra Energy is not the primary beneficiary of the VIE because we do not have the power to direct the most significant activities of Cameron LNG JV, and therefore, we account for our investment in Cameron LNG JV under the equity method. The carrying value of our investment, including amounts recognized in AOCI related to interest-rate cash flow hedges at Cameron LNG JV, was $1,184$433 million at March 31,September 30, 2020 and $1,256 million at December 31, 2019. Our maximum exposure to loss, which fluctuates over time, includes the carrying value of our investment and guarantees that we discuss in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.
As we discuss in Note 6, in July 2020, Sempra Energy entered into a Support Agreement for the benefit of CFIN that is a VIE. Since we do not have the power to direct the most significant activities of the VIE, we are not the primary beneficiary. The conditional obligations of the Support Agreement represent a variable interest that we measure at fair value on a recurring basis (see Note 9). Sempra Energy’s maximum exposure to loss under the terms of the Support Agreement is $979 million.


35

PENSION AND OTHER POSTRETIREMENT BENEFITS
Settlement Accounting for Lump Sum Payments
In the three months ended March 31, 2020, Sempra Energy recorded settlement charges of $5$13 million and $22 million in the three months and nine months ended September 30, 2020, respectively, in net periodic benefit cost for lump sum payments from its nonqualified pension plan that were in excess of the plan’s service cost plus interest cost.
In the nine months ended September 30, 2019, Sempra Energy recorded settlement charges of $22 million in net periodic benefit cost for lump sum payments from its nonqualified pension plan that were in excess of the plan’s service cost plus interest cost.
Net Periodic Benefit Cost
The following three tables provide the components of net periodic benefit cost.
NET PERIODIC BENEFIT COST – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
 Pension benefitsOther postretirement benefits
 Three months ended September 30,
 2020201920202019
Service cost$31 $27 $5 $4 
Interest cost32 34 8 9 
Expected return on assets(41)(36)(14)(17)
Amortization of:  
Prior service cost (credit)3 3 (1)0 
Actuarial loss (gain)9 8 (2)(3)
Settlement charges13 4 0 0 
Net periodic benefit cost (credit)47 40 (4)(7)
Regulatory adjustments37 3 4 8 
Total expense recognized$84 $43 $0 $1 
 Nine months ended September 30,
 2020201920202019
Service cost$97 $82 $14 $12 
Interest cost97 104 24 27 
Expected return on assets(126)(108)(41)(52)
Amortization of:    
Prior service cost (credit)9 9 (2)0 
Actuarial loss (gain)26 29 (7)(8)
Settlement charges22 26 0 0 
Net periodic benefit cost (credit)125 142 (12)(21)
Regulatory adjustments31 (30)12 22 
Total expense recognized$156 $112 $0 $1 

36

NET PERIODIC BENEFIT COST – SEMPRA ENERGY CONSOLIDATED
NET PERIODIC BENEFIT COST – SDG&ENET PERIODIC BENEFIT COST – SDG&E
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Pension benefits Other postretirement benefits Pension benefitsOther postretirement benefits
Three months ended March 31, Three months ended September 30,
2020 2019 2020 2019 2020201920202019
Service cost$33
 $27
 $5
 $4
Service cost$7 $7 $1 $1 
Interest cost32
 35
 8
 9
Interest cost7 9 2 1 
Expected return on assets(42) (36) (13) (18)Expected return on assets(12)(9)(3)(3)
Amortization of:       Amortization of:  
Prior service cost (credit)3
 3
 (1) —
Prior service costPrior service cost1 0 0 1 
Actuarial loss (gain)9
 14
 (3) (2)Actuarial loss (gain)1 2 (1)0 
Settlement charges5
 —
 —
 —
Net periodic benefit cost (credit)40
 43
 (4) (7)Net periodic benefit cost (credit)4 9 (1)0 
Regulatory adjustments(28) (36) 4
 7
Regulatory adjustments22 (1)1 0 
Total expense recognized$12
 $7
 $—
 $—
Total expense recognized$26 $8 $0 $0 
Nine months ended September 30,
2020201920202019
Service costService cost$23 $22 $3 $3 
Interest costInterest cost22 26 5 5 
Expected return on assetsExpected return on assets(37)(29)(8)(9)
Amortization of:Amortization of:  
Prior service costPrior service cost2 2 0 2 
Actuarial loss (gain)Actuarial loss (gain)3 9 (2)(1)
Net periodic benefit cost (credit)Net periodic benefit cost (credit)13 30 (2)0 
Regulatory adjustmentsRegulatory adjustments28 (13)2 0 
Total expense recognizedTotal expense recognized$41 $17 $0 $0 

NET PERIODIC BENEFIT COST – SOCALGAS
(Dollars in millions)
 Pension benefitsOther postretirement benefits
 Three months ended September 30,
 2020201920202019
Service cost$20 $17 $3 $3 
Interest cost22 23 7 6 
Expected return on assets(27)(24)(11)(14)
Amortization of:  
Prior service cost (credit)2 2 (1)(1)
Actuarial loss (gain)6 3 (1)(2)
Net periodic benefit cost (credit)23 21 (3)(8)
Regulatory adjustments15 4 3 8 
Total expense recognized$38 $25 $0 $0 
 Nine months ended September 30,
 2020201920202019
Service cost$64 $51 $10 $9 
Interest cost66 68 19 20 
Expected return on assets(81)(71)(32)(43)
Amortization of:   
Prior service cost (credit)6 6 (2)(2)
Actuarial loss (gain)19 14 (5)(6)
Net periodic benefit cost (credit)74 68 (10)(22)
Regulatory adjustments3 (17)10 22 
Total expense recognized$77 $51 $0 $0 
37
NET PERIODIC BENEFIT COST – SDG&E
(Dollars in millions)
 Pension benefits Other postretirement benefits
 Three months ended March 31,
 2020 2019 2020 2019
Service cost$8
 $8
 $1
 $1
Interest cost7
 9
 2
 2
Expected return on assets(13) (11) (3) (3)
Amortization of:
   
  
Prior service cost1
 1
 —
 1
Actuarial loss (gain)1
 4
 (1) (1)
Net periodic benefit cost (credit)4
 11
 (1) —
Regulatory adjustments(3) (11) 1
 —
Total expense recognized$1
 $—
 $—
 $—


NET PERIODIC BENEFIT COST – SOCALGAS
(Dollars in millions)
 Pension benefits Other postretirement benefits
 Three months ended March 31,
 2020 2019 2020 2019
Service cost$22
 $16
 $3
 $3
Interest cost22
 23
 6
 7
Expected return on assets(27) (24) (10) (14)
Amortization of:    
  
Prior service cost (credit)2
 2
 —
 (1)
Actuarial loss (gain)6
 9
 (2) (2)
Net periodic benefit cost (credit)25
 26
 (3) (7)
Regulatory adjustments(25) (25) 3
 7
Total expense recognized$—
 $1
 $—
 $—

Benefit Plan Contributions
The following table shows our year-to-date contributions to pension and other postretirement benefit plans and the amounts we expect to contribute in 2020.
BENEFIT PLAN CONTRIBUTIONS
(Dollars in millions)
 Sempra Energy
Consolidated		SDG&ESoCalGas
Contributions through September 30, 2020:   
Pension plans$202 $39 $76 
Other postretirement benefit plans6 1 1 
Total expected contributions in 2020:  
Pension plans$298 $54 $155 
Other postretirement benefit plans8 1 1 
BENEFIT PLAN CONTRIBUTIONS
(Dollars in millions)
  
Sempra Energy
Consolidated
 SDG&E SoCalGas
Contributions through March 31, 2020:      
Pension plans $20
 $—
 $1
Other postretirement benefit plans 1
 —
 —
Total expected contributions in 2020:      
Pension plans $268
 $53
 $154
Other postretirement benefit plans 7
 —
 1

RABBI TRUST
In support of its Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans, Sempra Energy maintains dedicated assets, including a Rabbi Trust and investments in life insurance contracts, which totaled $413$469 million and $488 million at March 31,September 30, 2020 and December 31, 2019, respectively.



SEMPRA ENERGY EARNINGS PER COMMON SHARE
Basic EPS is calculated by dividing earnings attributable to common shares (from both continuing and discontinued operations) by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
38

EARNINGS (LOSSES) PER COMMON SHARE COMPUTATIONS   
(Dollars in millions, except per share amounts; shares in thousands)   
 Three months ended March 31,
 2020 2019
Numerator for continuing operations:   
Income from continuing operations, net of income tax$867
 $560
Earnings attributable to noncontrolling interests(143) (32)
Mandatory convertible preferred stock dividends(36) (36)
Earnings from continuing operations attributable to common shares for basic EPS688
 492
Add back dividends for dilutive mandatory convertible preferred stock(1)
36
 —
Earnings from continuing operations attributable to common shares for diluted EPS$724
 $492
    
Numerator for discontinued operations:   
Income (loss) from discontinued operations, net of income tax$80
 $(42)
Earnings attributable to noncontrolling interests(8) (9)
Earnings (losses) from discontinued operations attributable to common shares$72
 $(51)
    
Numerator for earnings:   
Earnings attributable to common shares for basic EPS$760
 $441
Add back dividends for dilutive mandatory convertible preferred stock(1)
36
 —
Earnings attributable to common shares for diluted EPS$796
 $441
    
Denominator:   
Weighted-average common shares outstanding for basic EPS(2)
292,790
 274,674
Dilutive effect of stock options and RSUs(3)
1,304
 969
Dilutive effect of common shares sold forward—
 1,585
Dilutive effect of mandatory convertible preferred stock19,831
 —
Weighted-average common shares outstanding for diluted EPS313,925
 277,228
    
Basic EPS:   
Earnings from continuing operations$2.35
 $1.79
Earnings (losses) from discontinued operations$0.25
 $(0.19)
Earnings$2.60
 $1.60
    
Diluted EPS:   
Earnings from continuing operations$2.30
 $1.78
Earnings (losses) from discontinued operations$0.23
 $(0.19)
Earnings$2.53
 $1.59
(1)
In the three months ended March 31, 2020, due to the dilutive effect of mandatory convertible preferred stock, the numerator used to calculate diluted EPS includes an add-back of mandatory convertible preferred stock dividends declared in that quarter.
(2)
Includes 542 and 613 average fully vested RSUs held in our Deferred Compensation Plan for the three months ended March 31, 2020 and 2019, 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 common stock and the comparative indices used to determine the vesting percentage of our total shareholder return performance-based RSUs, which we discuss in Note 10 of the Notes to Consolidated Financial Statements in the Annual Report, dilutive RSUs may vary widely from period-to-period.



EARNINGS PER COMMON SHARE COMPUTATIONS
(Dollars in millions, except per share amounts; shares in thousands)
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
Numerator for continuing operations:    
Income from continuing operations, net of income tax$428 $653 $1,823 $1,570 
Earnings attributable to noncontrolling interests(22)(52)(191)(121)
Preferred dividends(48)(36)(121)(107)
Preferred dividends of subsidiary0 0 (1)(1)
Earnings from continuing operations attributable to common shares for basic EPS358 565 1,510 1,341 
Add back dividends for dilutive mandatory convertible preferred stock(1)
0 26 0 0 
Earnings from continuing operations attributable to common shares for diluted EPS$358 $591 $1,510 $1,341 
Numerator for discontinued operations:
(Loss) income from discontinued operations, net of income tax$(7)$256 $1,850 $292 
Earnings attributable to noncontrolling interests0 (8)(10)(25)
(Losses) earnings from discontinued operations attributable to common shares$(7)$248 $1,840 $267 
Numerator for earnings:
Earnings attributable to common shares for basic EPS$351 $813 $3,350 $1,608 
Add back dividends for dilutive mandatory convertible preferred stock(1)
0 26 0 0 
Earnings attributable to common shares for diluted EPS$351 $839 $3,350 $1,608 
Denominator:    
Weighted-average common shares outstanding for basic EPS(2)
289,490 277,360 291,771 275,684 
Dilutive effect of stock options and RSUs(3)
1,092 1,636 1,164 1,381 
Dilutive effect of common shares sold forward0 3,555 0 2,744 
Dilutive effect of mandatory convertible preferred stock0 13,238 0 0 
Weighted-average common shares outstanding for diluted EPS290,582 295,789 292,935 279,809 
Basic EPS:
Earnings from continuing operations$1.23 $2.04 $5.17 $4.86 
(Losses) earnings from discontinued operations$(0.02)$0.89 $6.31 $0.97 
Earnings$1.21 $2.93 $11.48 $5.83 
Diluted EPS:    
Earnings from continuing operations$1.23 $2.00 $5.15 $4.79 
(Losses) earnings from discontinued operations$(0.02)$0.84 $6.28 $0.95 
Earnings$1.21 $2.84 $11.43 $5.74 
(1)    In the three months ended September 30, 2019, due to the dilutive effect of our series A preferred stock, the numerator used to calculate diluted EPS includes an add-back of dividends declared on our series A preferred stock.
(2)    Includes 535 and 618 average fully vested RSUs held in our Deferred Compensation Plan for the three months ended September 30, 2020 and 2019, respectively, and 536 and 615 of such RSUs for the nine months ended September 30, 2020 and 2019, 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 common stock and the comparative indices used to determine the vesting percentage of our total shareholder return performance-based RSUs, which we discuss in Note 10 of the Notes to Consolidated Financial Statements in the Annual Report, dilutive RSUs may vary widely from period-to-period.

39


The potentially dilutive impact from stock options and RSUs is calculated under the treasury stock method. Under this method, proceeds based on the exercise price and unearned compensation are assumed to be used to repurchase shares on the open market at the average market price for the period, reducing the number of potential new shares to be issued and sometimes causing an antidilutive effect. The computation of diluted EPS for the three months and nine months ended March 31,September 30, 2020 excludes 142,100 and 2019 excludes 254,257 and 316,385204,426 potentially dilutive shares, respectively, because to include them would be antidilutive for the period. The computation of diluted EPS for the three months and nine months ended September 30, 2019 excludes 0 and 107,042, respectively, of such potentially dilutive shares. However, these shares could potentially dilute basic EPS in the future.
The potentially dilutive impact from the forward sale of our common stock pursuant to forward sale agreements that we entered into in 2018 and fully settled by the end of 2019 is reflected in our diluted EPS calculation using the treasury stock method until settlement. After settlement, those shares are included in weighted-average common shares outstanding for basic EPS.
The potentially dilutive impact from mandatory convertible preferred stock is calculated under the if-converted method. The computation of diluted EPS for the three months and nine months ended March 31,September 30, 2020 excludes 19,292,641 potentially dilutive shares and for the three months and nine months ended September 30, 2019 excludes 04,219,350 and 18,601,08517,457,000 potentially dilutive shares, respectively, because to include them would be antidilutive for the period.those periods. However, these shares could potentially dilute basic EPS in the future.
In January 2020, pursuantPursuant to our Sempra Energy share-based compensation plans, the Compensation Committeecompensation committee of Sempra Energy’s Boardboard of Directorsdirectors granted 154,860 nonqualified stock options that vest over a three-year period, 258,470265,236 performance-based RSUs and 100,972163,475 service-based RSUs.RSUs in the nine months ended September 30, 2020, primarily in January.
We discuss share-based compensation plans and related awards and the terms and conditions of Sempra Energy’s equity securities further in Notes 10, 13 and 14 of the Notes to Consolidated Financial Statements in the Annual Report.


40

COMPREHENSIVE INCOME
The following tables present the changes in AOCI by component and amounts reclassified out of AOCI to net income, excluding amounts attributable to NCI.

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 September 30, 2020 and 2019
Sempra Energy Consolidated(2):
Balance as of June 30, 2020$(83)$(361)$(98)$(542)
OCI before reclassifications6 14 (7)13 
Amounts reclassified from AOCI0 4 12 16 
Net OCI(3)
6 18 5 29 
Balance as of September 30, 2020$(77)$(343)$(93)$(513)
   
Balance as of June 30, 2019$(518)$(213)$(117)$(848)
OCI before reclassifications(91)(41)(7)(139)
Amounts reclassified from AOCI0 4 5 9 
Net OCI(91)(37)(2)(130)
Balance as of September 30, 2019$(609)$(250)$(119)$(978)
SDG&E:
Balance as of June 30, 2020 and September 30, 2020$(12)$(12)
Balance as of June 30, 2019 and September 30, 2019$(11)$(11)
SoCalGas:
Balance as of June 30, 2020 and September 30, 2020$(13)$(9)$(22)
Balance as of June 30, 2019$(14)$(6)$(20)
Amounts reclassified from AOCI1 0 1 
Net OCI1 0 1 
Balance as of September 30, 2019$(13)$(6)$(19)

(1)    All amounts are net of income tax, if subject to tax, and exclude NCI.
(2)    Includes discontinued operations in 2019.
(3)    Total AOCI includes $5 million associated with purchases of NCI, which we discuss below in “Other Noncontrolling Interests – Sempra Mexico,” and which does not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).
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 March 31, 2020 and 2019
Sempra Energy Consolidated(2):
       
Balance as of December 31, 2019$(607) $(215) $(117) $(939)
OCI before reclassifications(138) (154) 16
 (276)
Amounts reclassified from AOCI—
 19
 6
 25
Net OCI(138) (135) 22
 (251)
Balance as of March 31, 2020$(745) $(350) $(95) $(1,190)
        
Balance as of December 31, 2018$(564) $(82) $(118) $(764)
Cumulative-effect adjustment from change in accounting principle—
 (25) (17) (42)
OCI before reclassifications32
 (45) 1
 (12)
Amounts reclassified from AOCI—
 (1) 2
 1
Net OCI32
 (46) 3
 (11)
Balance as of March 31, 2019$(532) $(153) $(132) $(817)
SDG&E:       
Balance as of December 31, 2019 and March 31, 2020    $(16) $(16)
        
Balance as of December 31, 2018    $(10) $(10)
Cumulative-effect adjustment from change in accounting principle    (2) (2)
Balance as of March 31, 2019    $(12) $(12)
SoCalGas:       
Balance as of December 31, 2019 and March 31, 2020  $(13) $(10) $(23)
        
Balance as of December 31, 2018  $(12) $(8) $(20)
Cumulative-effect adjustment from change in accounting principle  (2) (2) (4)
Balance as of March 31, 2019  $(14) $(10) $(24)
41

(1)
All amounts are net of income tax, if subject to tax, and exclude NCI.
(2)
Includes discontinued operations.


CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) (CONTINUED)
(Dollars in millions)
 Foreign
currency
translation
adjustments		Financial
instruments		Pension
and other
postretirement
benefits		Total
accumulated other
comprehensive
income (loss)
 Nine months ended September 30, 2020 and 2019
Sempra Energy Consolidated(2):
Balance as of December 31, 2019$(607)$(215)$(117)$(939)
OCI before reclassifications(3)
(115)(153)(5)(273)
Amounts reclassified from AOCI(3)
645 25 29 699 
Net OCI(4)
530 (128)24 426 
Balance as of September 30, 2020$(77)$(343)$(93)$(513)
   
Balance as of December 31, 2018$(564)$(82)$(118)$(764)
Adoption of ASU 2018-020 (25)(17)(42)
OCI before reclassifications(3)
(45)(153)(13)(211)
Amounts reclassified from AOCI(3)
0 10 29 39 
Net OCI(45)(143)16 (172)
Balance as of September 30, 2019$(609)$(250)$(119)$(978)
SDG&E:
Balance as of December 31, 2019$(16)$(16)
Amounts reclassified from AOCI(3)
4 4 
Net OCI4 4 
Balance as of September 30, 2020$(12)$(12)
Balance as of December 31, 2018$(10)$(10)
Adoption of ASU 2018-02(2)(2)
Amounts reclassified from AOCI1 1 
Net OCI1 1 
Balance as of September 30, 2019$(11)$(11)
SoCalGas:
Balance as of December 31, 2019$(13)$(10)$(23)
Amounts reclassified from AOCI0 1 1 
Net OCI0 1 1 
Balance as of September 30, 2020$(13)$(9)$(22)
Balance as of December 31, 2018$(12)$(8)$(20)
Adoption of ASU 2018-02(2)(2)(4)
Amounts reclassified from AOCI(3)
1 4 5 
Net OCI1 4 5 
Balance as of September 30, 2019$(13)$(6)$(19)

(1)    All amounts are net of income tax, if subject to tax, and exclude NCI.
(2)    Includes discontinued operations.
(3)    Pension and Other Postretirement Benefits and Total AOCI include $3 million in transfers of liabilities from SDG&E to Sempra Energy in 2020 and $4 million in transfers of liabilities from SoCalGas to Sempra Energy in 2019 related to the nonqualified pension plans.
(4)    Total AOCI includes $5 million associated with purchases of NCI, which we discuss below in “Other Noncontrolling Interests – Sempra Mexico,” and which does not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).
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 March 31,  
 2020 2019  
Sempra Energy Consolidated:     
Financial instruments:     
Interest rate and foreign exchange instruments(1)
$2
 $1
 Interest Expense
 41
 (3) Other (Expense) Income, Net
Interest rate and foreign exchange instruments—
 1
 Equity Earnings
Foreign exchange instruments(2) 1
 Revenues: Energy-Related Businesses
 (2) —
 Other (Expense) Income, Net
Total before income tax39
 —
  
 (12) —
 Income Tax Benefit (Expense)
Net of income tax27
 —
  
 (8) (1) Earnings Attributable to Noncontrolling Interests
 $19
 $(1)  
Pension and other postretirement benefits(2):
     
Amortization of actuarial loss$2
 $2
 Other (Expense) Income, Net
Amortization of prior service cost1
 1
 Other (Expense) Income, Net
Settlement charges5
 —
 Other (Expense) Income, Net
Total before income tax8
 3
  
 (2) (1) Income Tax Benefit (Expense)
Net of income tax$6
 $2
  
      
Total reclassifications for the period, net of tax$25
 $1
  
SDG&E:     
Financial instruments:     
Interest rate instruments(1)
$—
 $1
 Interest Expense
 —
 (1) Earnings Attributable to Noncontrolling Interest
Total reclassifications for the period, net of tax$—
 $—
  
42

(1)
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 September 30,  
 20202019 
Sempra Energy Consolidated:   
Financial instruments:   
Interest rate and foreign exchange instruments(1)
$3 $1 Interest Expense
(4)5 Other Income (Expense), Net
Interest rate and foreign exchange instruments5 2 Equity Earnings
Total before income tax4 8  
 0 (2)Income Tax Expense
Net of income tax4 6  
 0 (2)Earnings Attributable to Noncontrolling Interests
 $4 $4  
Pension and other postretirement benefits(2):
   
Amortization of actuarial loss$3 $3 Other Income (Expense), Net
Amortization of prior service cost1 1 Other Income (Expense), Net
Settlement charges13 4 Other Income (Expense), Net
Total before income tax17 8 
 (5)(3)Income Tax Expense
Net of income tax$12 $5  
Total reclassifications for the period, net of tax$16 $9  
SDG&E:   
Financial instruments:   
Interest rate instruments(1)
$0 $1 Interest Expense
 0 (1)Earnings Attributable to Noncontrolling Interest
Total reclassifications for the period, net of tax$0 $0  
SoCalGas:   
Financial instruments:
Interest rate instruments$0 $1 Interest Expense
Total reclassifications for the period, net of tax$0 $1 
(1)    Amounts in 2019 include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE.
(2)    Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits” above).
43

RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (CONTINUED)
(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
Nine months ended September 30,
20202019
Sempra Energy Consolidated:
Foreign currency translation adjustments$645 $0 
(Loss) Income from Discontinued Operations,
Net of Income Tax
Financial instruments:
Interest rate and foreign exchange instruments(1)
$7 $2 Interest Expense
33 0 Other Income (Expense), Net
Interest rate instruments0 10 (Loss) Gain on Sale of Assets
Interest rate and foreign exchange instruments6 3 Equity Earnings
Foreign exchange instruments(2)1 Revenues: Energy-Related Businesses
(1)0 Other Income (Expense), Net
Total before income tax43 16 
(12)(3)Income Tax Expense
Net of income tax31 13 
(6)(3)Earnings Attributable to Noncontrolling Interests
$25 $10 
Pension and other postretirement benefits(2):
  
Amortization of actuarial loss$6 $7 Other Income (Expense), Net
Amortization of actuarial loss6 0 
(Loss) Income from Discontinued Operations,
Net of Income Tax
Amortization of prior service cost3 2 Other Income (Expense), Net
Settlement charges22 26 Other Income (Expense), Net
Total before income tax37 35 
(2)0 
(Loss) Income from Discontinued Operations,
Net of Income Tax
(9)(10)Income Tax Expense
Net of income tax$26 $25 
Total reclassifications for the period, net of tax$696 $35 
SDG&E:  
Financial instruments:  
Interest rate instruments(1)
$0 $3 Interest Expense
0 (3)Earnings Attributable to Noncontrolling Interest
$0 $0 
Pension and other postretirement benefits(2):
Amortization of prior service cost$1 $1 Other Income, Net
Total reclassifications for the period, net of tax$1 $1  
SoCalGas:   
Financial instruments:
Interest rate instruments$0 $1 Interest Expense
Pension and other postretirement benefits(2):
   
Amortization of prior service cost$1 $0 Other Income, Net
Total reclassifications for the period, net of tax$1 $1 
(1)    Amounts in 2019 include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE.
(2)    Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits” above).

44

Amounts in 2019 include Otay Mesa VIE.All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE.
(2)
Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits” above).

For the three months ended March 31, 2020 and 2019, reclassifications out of AOCI to net income were negligible for SoCalGas.
SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS
Ownership interestsSempra Energy Series A Preferred Stock
The terms of our series A preferred stock require a notice to holders when the aggregate adjustment to the conversion rates at which shares of series A preferred stock are convertible into shares of Sempra Energy common stock is more than 1%. On July 6, 2020, we notified the holders of the series A preferred stock of such an adjustment. These adjustments, which resulted from the incremental impact of our second quarter dividend declared on our common stock and which became effective as of June 25, 2020, the ex-dividend date for such dividend, include adjustments to the minimum and maximum conversion rates and the related initial and threshold appreciation prices as shown in the following table:
CONVERSION RATES
Applicable market value per share of
our common stock		Conversion rate (number of shares of our common stock to be received upon
conversion of each share of series A preferred stock)
Greater than $129.668 (which is the adjusted threshold appreciation price)0.7712 shares (equal to $100.00 divided by the adjusted threshold appreciation price)
Equal to or less than $129.668 but greater than or equal to $105.8425Between 0.7712 and 0.9448 shares, determined by dividing $100.00 by the applicable market value of our common stock
Less than $105.8425 (which is the adjusted initial price)0.9448 shares (equal to $100.00 divided by the adjusted initial price)
Sempra Energy Series C Preferred Stock
On June 19, 2020, we issued 900,000 shares of our 4.875% fixed-rate reset cumulative redeemable perpetual preferred stock, series C (series C preferred stock) in a registered public offering at a price to the public of $1,000 per share and received net proceeds of $889 million after deducting the underwriting discount and equity issuance costs of $11 million. We used the net proceeds for working capital and other general corporate purposes, including the repayment of indebtedness.
Liquidation Preference
Each share of series C preferred stock has a liquidation preference of $1,000 plus any accumulated and unpaid dividends (whether or not declared) on such share.
Redemption at the Option of Sempra Energy
The shares of series C preferred stock are perpetual and have no maturity date. However, we may, at our option, redeem the series C preferred stock in whole or in part, from time to time, on any day during the period from and including the July 15 immediately preceding October 15, 2025 and October 15 of every fifth year after 2025 through and including such October 15 at a redemption price in cash equal to $1,000 per share. Additionally, in the event that a credit rating agency then publishing a rating for us makes certain amendments, clarifications or changes to the criteria it uses to assign equity credit to securities such as the series C preferred stock (Ratings Event), we may redeem the series C preferred stock, in whole but not in part, at any time within 120 days after the conclusion of any review or appeal process instituted by us following the occurrence of the Ratings Event or, if no such review or appeal process is available or sought, the occurrence of such Ratings Event, at a redemption price in cash equal to $1,020 per share (102% of the liquidation preference per share).
Dividends
Dividends on the series C preferred stock, when, as and if declared by our board of directors or an authorized committee thereof, are payable in cash, on a cumulative basis, semi-annually in arrears beginning on October 15, 2020. Dividends on the series C preferred stock will be cumulative:
▪whether or not we have earnings;
▪whether or not the payment of such dividends is then permitted under California law;
▪whether or not such dividends are authorized or declared; and
▪whether or not any agreements to which we are a party prohibit the current payment of dividends, including any agreement relating to our indebtedness.

45

We accrue dividends on the series C preferred stock on a monthly basis. The dividend rate from and including June 19, 2020 to, but excluding, October 15, 2025 is 4.875% per annum of the $1,000 liquidation preference per share. The dividend rate will reset on October 15, 2025 and on October 15 of every fifth year after 2025 and, for each five-year period following such reset dates, will be a per annum rate equal to the Five-year U.S. Treasury Rate as of the second business day prior to such reset date, plus a spread of 4.550%, of the $1,000 liquidation preference per share.
Voting Rights
The holders of series C preferred stock do not have any voting rights, except with respect to any authorization, creation or increase in the authorized amount of any class or series of capital stock ranking senior to the series C preferred stock, certain amendments to the terms of the series C preferred stock, in certain other limited circumstances and as otherwise specifically required by California law. In addition, whenever dividends on any shares of series C preferred stock have not been declared and paid or have been declared but not paid for three or more dividend periods, whether or not consecutive, the authorized number of directors on our board of directors will automatically be increased by two and the holders of the series C preferred stock, voting together as a single class with holders of any and all other outstanding series of preferred stock of equal rank having similar voting rights, will be entitled to elect two directors to fill such two newly created directorships. This voting right will terminate when all accumulated and unpaid dividends on the series C preferred stock have been paid in full and, upon such termination and the termination of the same voting rights of all other holders of outstanding series of preferred stock that have such voting rights, the term of office of each director elected pursuant to such rights will terminate and the authorized number of directors will automatically decrease by two, subject to the revesting of such rights in the event of each subsequent nonpayment.
Ranking
The series C preferred stock ranks, with respect to dividend rights and distribution rights upon our liquidation, winding-up or dissolution:
▪senior to our common stock and each other class or series of our capital stock established in the future, unless the terms of such capital stock expressly provide otherwise;
▪on parity with our outstanding series A preferred stock and series B preferred stock and each class or series of our capital stock established in the future if the terms of such capital stock provide that it ranks on parity with the series C preferred stock;
•junior to each class or series of our capital stock established in the future, if the terms of such capital stock provide that it ranks senior to the series C preferred stock;
▪junior to our existing and future indebtedness and other liabilities; and
•structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries and capital stock of our subsidiaries held by owners other thanthird parties.
Settlement of Sempra Energy Common Stock Forward Sale Agreements
In the third quarter of 2019, we received $728 million (net of underwriting discounts of $13 million) from the settlement of 7,156,185 shares of our common stock at a forward sale price of $101.74 related to our January 2018 offering. We provide additional information regarding the common stock offering in subsidiariesNote 14 of the Notes to Consolidated Financial Statements in the Annual Report.

46

Sempra Energy Common Stock Repurchases
On September 11, 2007, our board of directors authorized the repurchase of shares of our common stock, provided that the amounts spent for such purpose do not exceed the greater of $2 billion or entities consolidatedamounts spent to purchase no more than 40 million shares. On July 1, 2020, we entered into an ASR program under which we prepaid $500 million to repurchase shares of our common stock in a share forward transaction. The total number of shares purchased was determined by us are accounted fordividing the $500 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of July 2, 2020 through August 4, 2020, minus a fixed discount. The program was completed on August 4, 2020 with an aggregate of 4,089,375 shares of Sempra Energy common stock repurchased at an average price of $122.27 per share. Following the completion of the ASR program, the aggregate dollar amount authorized by the September 11, 2007 share repurchase authorization was exhausted.
On July 6, 2020, our board of directors authorized the repurchase of shares of our common stock at any time and reported as NCI.from time to time in an aggregate amount not to exceed the lesser of $2 billion or amounts spent to purchase no more than 25 million shares. No shares have been repurchased under this authorization.
SoCalGas Preferred Stock
The preferred stock at SoCalGas is presented at Sempra Energy as a noncontrolling interest.NCI. Sempra Energy records charges against income related to NCI for preferred stock dividends declared by SoCalGas. We provide additional information regarding preferred stock in Note 13 of the Notes to Consolidated Financial Statements in the Annual Report.


Other Noncontrolling Interests
SDG&E
As we discuss in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report, on August 23, 2019, SDG&E and Sempra Energy deconsolidated Otay Mesa VIE after SDG&E determined that it was no longer the primary beneficiary of the VIE.
Sempra Mexico
In the nine months ended September 30, 2020, IEnova repurchased 57,547,381 shares of its outstanding common stock held by NCI for $167 million, resulting in an increase in Sempra Energy’s ownership interest in IEnova from 66.6% at December 31, 2019 to 69.2% at September 30, 2020. Since October 1, 2020, IEnova repurchased a total of 19,575,399 shares for $64 million.
In the nine months ended September 30, 2019, IEnova repurchased 2,620,000 shares of its outstanding common stock held by NCI for $10 million resulting in an increase in Sempra Energy’s ownership interest in IEnova from 66.5% at December 31, 2018 to 66.6% at September 30, 2019.
In the first quarter of 2020, IEnova purchased additional shares in ICM Ventures Holdings B.V. for $9 million, increasing its ownership from 53.7% to 82.5%. ICM Ventures Holdings B.V. owns certain permits and land where IEnova is building terminals for the receipt, storage and delivery of liquid fuels.
In the first quarter ofSempra Renewables
As we discuss in Note 5, in April 2019, IEnova repurchased 1,600,000 shares ofSempra Renewables sold its outstanding common stock held by NCI for approximately $6 million, resulting in an increase in Sempra Energy’sremaining wind assets and investments, which included its wind tax equity arrangements. The remaining ownership interest in IEnova from 66.5% to 66.6%.PXiSE Energy Solutions, LLC was subsumed into Parent and other.
Sempra LNG
OnIn March 30, 2020, Sempra LNG purchased for $7 million the 24.6% minority interest in Liberty Gas Storage LLC, which owns 100% of LA Storage, LLC, increasing Sempra LNG’s ownership in Liberty Gas Storage LLC to 100%. Prior to the purchase, the minority partner converted $22 million in notes payable due from Sempra LNG to equity. As a result of the purchase, we recorded an increase in Sempra Energy’s shareholders’ equity of $2 million for the difference between the carrying value and fair value related to the change in ownership.
In February 2019, Sempra LNG purchased for $20 million the 9.1% minority interest in Bay Gas immediately prior to the sale of 100% of Bay Gas.
Sempra LNG and IEnova are jointly developing a proposed natural gas liquefaction project at the site of IEnova’s existing ECA LNG Regasification terminal. Sempra LNG consolidates the proposed ECA LNG JV proposed liquefaction project. Thus, Sempra Energy’s NCI in IEnova’s 50% interest in the proposed project is reported at Sempra LNG.
47

Discontinued Operations
As we discuss in Note 5, we completed the sales of our equity interests in our Peruvian and Chilean businesses in the second quarter of 2020. The minority interests in Luz del Sur and Tecsur were deconsolidated upon sale of our Peruvian businesses in April 2020, and the minority interests in the Chilquinta Energía subsidiaries were deconsolidated upon sale of our Chilean businesses in June 2020.
The following table provides information about noncontrolling ownership interestsNCI held by others (not including preferred shareholders)in subsidiaries or entities consolidated by us and recorded in Other Noncontrolling Interests in Total Equity on Sempra Energy’s Condensed Consolidated Balance Sheets.
OTHER NONCONTROLLING INTERESTS
(Dollars in millions) 
 Percent ownership held by noncontrolling interests Equity (deficit) held by
noncontrolling interests
 September 30,
2020		December 31,
2019		September 30,
2020		December 31,
2019
Sempra Mexico:    
IEnova30.8 %33.4 %$1,586 $1,608 
IEnova subsidiaries(1)
17.5 10.0 – 46.37 15 
Sempra LNG:
Liberty Gas Storage LLC0 24.6 0 (13)
ECA LNG JV15.4 16.7 15 12 
Parent and other:
PXiSE Energy Solutions, LLC20.0 20.0 0 1 
Discontinued Operations:   
Chilquinta Energía subsidiaries(1)
0 19.7 – 43.40 23 
Luz del Sur0 16.4 0 205 
Tecsur0 9.8 0 5 
Total Sempra Energy  $1,608 $1,856 
OTHER NONCONTROLLING INTERESTS
(Dollars in millions)  
 Percent ownership held by noncontrolling interests 
 Equity (deficit) held by
noncontrolling interests
 March 31,
2020		 December 31,
2019		 March 31,
2020		 December 31,
2019
Sempra Mexico:       
IEnova33.4%33.4%$1,726
 $1,608
IEnova subsidiaries(1)
10.0 – 17.5 10.0 – 46.3 6
 15
Sempra LNG:       
Liberty Gas Storage LLC— 24.6 —
 (13)
ECA LNG JV16.7 16.7 14
 12
Parent and other:       
PXiSE Energy Solutions, LLC20.0 20.0 1
 1
Discontinued Operations:       
Chilquinta Energía subsidiaries(1)
19.7 – 43.4 19.7 – 43.4 21
 23
Luz del Sur16.4 16.4 205
 205
Tecsur9.8 9.8 5
 5
Total Sempra Energy    $1,978
 $1,856
(1)(1)    IEnova and Chilquinta Energía have subsidiaries with NCI held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries.
IEnova and Chilquinta Energía have subsidiaries with NCI held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries.


TRANSACTIONS WITH AFFILIATES
We summarize amounts due from and to unconsolidated affiliates at Sempra Energy Consolidated, SDG&E and SoCalGas in the following table.
48

AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES
(Dollars in millions)
 March 31,
2020		 December 31,
2019
Sempra Energy Consolidated:   
Total due from various unconsolidated affiliates – current, net of negligible allowance for credit losses at March 31, 2020(1)(2)
$64
 $32
    
Sempra Texas Utilities – TTHC, net of allowance for credit losses of $1 at March 31, 2020(2)(3)
$6
 $—
Sempra Mexico – IMG JV – Note due March 15, 2022, net of allowance for credit losses of $6 at March 31, 2020(2)(4)
586
 742
Total due from unconsolidated affiliates – noncurrent$592
 $742
    
Total due to various unconsolidated affiliates – current$(8) $(5)
    
Sempra Mexico(2):
   
TAG Pipelines Norte, S. de. R.L. de C.V.:   
Note due December 20, 2021(5)
$(40) $(39)
5.5% Note due January 9, 2024(6)
(65) —
TAG JV – 5.74% Note due December 17, 2029(6)
(158) (156)
Total due to unconsolidated affiliates – noncurrent$(263) $(195)
SDG&E:   
Sempra Energy$(45) $(37)
SoCalGas(6) (10)
Various affiliates(8) (6)
Total due to unconsolidated affiliates – current$(59) $(53)
    
Income taxes due from Sempra Energy(7)
$64
 $130
SoCalGas:   
SDG&E$6
 $10
Various affiliates1
 1
Total due from unconsolidated affiliates – current$7
 $11
    
Sempra Energy$(49) $(45)
Various affiliates—
 (2)
Total due to unconsolidated affiliates – current$(49) $(47)
    
Income taxes due from Sempra Energy(7)
$104
 $152
(1)
Amount at March 31, 2020 includes $23 million of outstanding principal and a negligible amount of accrued interest receivable from a U.S. dollar-denominated loan from IEnova to ESJ at a variable interest rate based on 1-month LIBOR plus 196 bps (3.54% at March 31, 2020) with a maturity date of June 30, 2020. Pursuant to the agreement, if ESJ is unable to meet certain conditions for an expansion project by May 13, 2020, IEnova and ESJ have the option to convert the loan to a 10-year note.
(2)
Amounts include principal balances plus accumulated interest outstanding.
(3)
U.S. dollar-denominated loans at fixed interest rates of 6.25% and 6.45% with maturity dates of November 5, 2028 and November 5, 2030, respectively.
(4)
Mexican peso-denominated revolving line of credit for up to 14.2 billion Mexican pesos or approximately $604 million U.S. dollar-equivalent, at a variable interest rate based on the 91-day Interbank Equilibrium Interest Rate plus 220 bps (8.79% at March 31, 2020), to finance construction of the natural gas marine pipeline. At March 31, 2020, $2 million of accrued interest receivable is included in Due From Unconsolidated Affiliates – Current.
(5)
U.S. dollar-denominated loan at a variable interest rate based on 6-month LIBOR plus 290 bps (4.08% at March 31, 2020).
(6)
U.S. dollar-denominated loan at a fixed interest rate.
(7)
SDG&E and SoCalGas are included in the consolidated income tax return of Sempra Energy and their respective income tax expense is computed as an amount equal to that which would result from each company having always filed a separate return.



AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES
(Dollars in millions)
 September 30,
2020		December 31,
2019
Sempra Energy Consolidated:  
Total due from various unconsolidated affiliates – current, net of negligible allowance for credit
losses at September 30, 2020(1)(2)
$46 $32 
Total due from unconsolidated affiliates – noncurrent – Sempra Mexico – IMG JV – Note due
March 15, 2022, net of allowance for credit losses of $3 at September 30, 2020(2)(3)
$617 $742 
Total due to various unconsolidated affiliates – current$(6)$(5)
Sempra Mexico(2):
TAG Pipelines Norte, S. de. R.L. de C.V.:
Note due December 20, 2021(4)
$(41)$(39)
5.5% Note due January 9, 2024(5)
(67)0 
TAG JV – 5.74% Note due December 17, 2029(5)
(163)(156)
Total due to unconsolidated affiliates – noncurrent$(271)$(195)
SDG&E:  
SoCalGas$2 $0 
Various affiliates1 0 
Total due from unconsolidated affiliates – current$3 $0 
Sempra Energy$(56)$(37)
SoCalGas0 (10)
Various affiliates(5)(6)
Total due to unconsolidated affiliates – current$(61)$(53)
Income taxes due from Sempra Energy(6)
$25 $130 
SoCalGas:  
SDG&E$0 $10 
Various affiliates1 1 
Total due from unconsolidated affiliates – current$1 $11 
Sempra Energy$(49)$(45)
SDG&E(2)0 
Pacific Enterprises(50)0 
Various affiliates0 (2)
Total due to unconsolidated affiliates – current$(101)$(47)
Income taxes due from Sempra Energy(6)
$20 $152 
(1)    Amount at September 30, 2020 includes $25 million of outstanding principal and a negligible amount of accrued interest receivable from a U.S. dollar-denominated loan from IEnova to ESJ at a variable interest rate based on 1-month LIBOR plus 196 bps (2.12% at September 30, 2020) with a maturity date of December 31, 2020. Pursuant to the agreement, if ESJ is unable to meet certain conditions for an expansion project by December 31, 2020, IEnova and ESJ have the option to convert the loan to a 10-year note.
(2)    Amounts include principal balances plus accumulated interest outstanding.
(3)    Mexican peso-denominated revolving line of credit for up to 14.2 billion Mexican pesos or approximately $641 million U.S. dollar-equivalent, at a variable interest rate based on the 91-day Interbank Equilibrium Interest Rate plus 220 bps (6.75% at September 30, 2020), to finance construction of a natural gas marine pipeline. At September 30, 2020, $2 million of accrued interest receivable is included in Due from Unconsolidated Affiliates – Current.
(4)    U.S. dollar-denominated loan at a variable interest rate based on 6-month LIBOR plus 290 bps (3.16% at September 30, 2020).
(5)     U.S. dollar-denominated loan at a fixed interest rate.
(6)    SDG&E and SoCalGas are included in the consolidated income tax return of Sempra Energy and their respective income tax expense is computed as an amount equal to that which would result from each company having always filed a separate return.

49

The following table summarizes revenues and cost of sales from unconsolidated affiliates.
REVENUES AND COST OF SALES FROM UNCONSOLIDATED AFFILIATES   
(Dollars in millions)   
 Three months ended March 31,
 2020 2019
Revenues:   
Sempra Energy Consolidated$12
 $14
SDG&E1
 1
SoCalGas18
 17
Cost of Sales:   
Sempra Energy Consolidated$11
 $14
SDG&E17
 20
SoCalGas—
 4

REVENUES AND COST OF SALES FROM UNCONSOLIDATED AFFILIATES  
(Dollars in millions)  
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
Revenues:    
Sempra Energy Consolidated$9 $13 $31 $40 
SDG&E1 2 4 5 
SoCalGas23 16 61 50 
Cost of Sales:    
Sempra Energy Consolidated$9 $12 $35 $40 
SDG&E17 16 56 56 
SoCalGas2 2 2 6 
Guarantees
Sempra Energy has provided guarantees related to the financing of the Cameron LNG JV, project, as we discuss in Note 6 below and in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

50

OTHER INCOME (EXPENSE) INCOME,, NET
Other Income (Expense) Income,, Net, on the Condensed Consolidated Statements of Operations consists of the following:
OTHER INCOME (EXPENSE), NET   
(Dollars in millions)   
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
Sempra Energy Consolidated:    
Allowance for equity funds used during construction$34 $25 $96 $69 
Investment gains(1)
16 9 9 46 
Gains (losses) on interest rate and foreign exchange instruments, net19 (17)(129)7 
Foreign currency transaction gains (losses), net(2)
15 (13)(95)(2)
Non-service component of net periodic benefit cost(48)(13)(45)(19)
Fine related to Energy Efficiency Program inquiry(6)0 (6)0 
Penalties related to billing practices OII0 0 0 (8)
Interest on regulatory balancing accounts, net0 4 13 9 
Sundry, net(1)(2)(6)1 
Total$29 $(7)$(163)$103 
SDG&E:    
Allowance for equity funds used during construction$21 $15 $61 $42 
Non-service component of net periodic benefit (cost) credit(18)— (15)8 
Fine related to Energy Efficiency Program inquiry(6)0 (6)0 
Interest on regulatory balancing accounts, net0 4 8 10 
Sundry, net1 0 (1)0 
Total$(2)$19 $47 $60 
SoCalGas:   
Allowance for equity funds used during construction$11 $9 $29 $25 
Non-service component of net periodic benefit (cost) credit(15)(5)(3)9 
Penalties related to billing practices OII0 0 0 (8)
Interest on regulatory balancing accounts, net0 0 5 (1)
Sundry, net(3)(3)(10)(7)
Total$(7)$1 $21 $18 
(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 O&M on the Condensed Consolidated Statements of Operations.
(2)    Includes gains of $15 million and losses of $120 million in the three months and nine months ended September 30, 2020, respectively, and losses of $17 million and a negligible amount in the three months and nine months ended September 30, 2019, respectively, from translation to U.S. dollars of a Mexican peso-denominated loan to IMG JV, which are offset by corresponding amounts included in Equity Earnings on the Condensed Consolidated Statements of Operations.

OTHER (EXPENSE) INCOME, NET   
(Dollars in millions)   
 Three months ended March 31,
 2020 2019
Sempra Energy Consolidated:   
Allowance for equity funds used during construction$31
 $21
Investment (losses) gains(1)
(37) 26
(Losses) gains on interest rate and foreign exchange instruments, net(153) 13
Foreign currency transaction (losses) gains, net(2)
(123) 7
Non-service component of net periodic benefit credit26
 24
Penalties related to billing practices OII—
 (8)
Interest on regulatory balancing accounts, net2
 (1)
Total$(254) $82
SDG&E:   
Allowance for equity funds used during construction$21
 $12
Non-service component of net periodic benefit credit8
 9
Interest on regulatory balancing accounts, net2
 —
Sundry, net—
 1
Total$31
 $22
SoCalGas:   
Allowance for equity funds used during construction$8
 $8
Non-service component of net periodic benefit credit25
 18
Penalties related to billing practices OII—
 (8)
Interest on regulatory balancing accounts, net—
 (1)
Sundry, net(3) (1)
Total$30
 $16
(1)
Represents investment (losses) 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 O&M on the Condensed Consolidated Statements of Operations.
(2)
Includes losses of $149 million and gains of $10 million in the three months ended March 31, 2020 and 2019, respectively, from translation to U.S. dollars of a Mexican peso-denominated loan to IMG JV, which are offset by corresponding amounts included in Equity Earnings on the Condensed Consolidated Statements of Operations.


51

INCOME TAXES
We provide our calculations of ETRs in the following table.
INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
Three months ended September 30,Nine months ended September 30,
2020201920202019
Sempra Energy Consolidated:
Income tax expense from continuing operations$99 $61 $60 $150 
Income from continuing operations before income taxes
and equity earnings
$201 $448 $1,061 $1,235 
Equity earnings, before income tax(1)
117 17 158 24 
Pretax income$318 $465 $1,219 $1,259 
Effective income tax rate31 %13 %5 %12 %
SDG&E:
Income tax expense$33 $71 $161 $111 
Income before income taxes$211 $337 $794 $700 
Effective income tax rate16 %21 %20 %16 %
SoCalGas:
Income tax (benefit) expense$(6)$35 $95 $50 
(Loss) income before income taxes$(30)$178 $521 $488 
Effective income tax rate20 %20 %18 %10 %
INCOME TAX (BENEFIT) EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
 Three months ended March 31,
 2020 2019
Sempra Energy Consolidated:   
Income tax (benefit) expense from continuing operations$(207) $42
    
Income from continuing operations before income taxes and equity earnings$397
 $501
Equity (losses) earnings, before income tax(1)
(43) 5
Pretax income$354
 $506
    
Effective income tax rate(58)% 8%
SDG&E:   
Income tax expense$58
 $5
Income before income taxes$320
 $182
Effective income tax rate18 % 3%
SoCalGas:   
Income tax expense$52
 $19
Income before income taxes$355
 $283
Effective income tax rate15 % 7%
(1)    We discuss how we recognize equity earnings in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

(1)
We discuss how we recognize equity earnings in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

Sempra Energy, SDG&E and SoCalGas record income taxes for interim periods utilizing a forecasted ETR anticipated for the full year. Unusual and infrequent items and items that cannot be reliably estimated are recorded in the interim period in which they occur, which can result in variability in the ETR.
For SDG&E and SoCalGas, the CPUC requires flow-through rate-making treatment for the current income tax benefit or expense arising from certain property-related and other temporary differences between the treatment for financial reporting and income tax, which will reverse over time. Under the regulatory accounting treatment required for these flow-through temporary differences, deferred income tax assets and liabilities are not recorded to deferred income tax expense, but rather to a regulatory asset or liability, which impacts the ETR. As a result, changes in the relative size of these items compared to pretax income, from period to period, can cause variations in the ETR. The following items are subject to flow-through treatment:
▪repairs expenditures related to a certain portion of utility plant fixed assets
▪the equity portion of AFUDC, which is non-taxable
▪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
▪repairs expenditures related to a certain portion of utility plant fixed assets
▪the equity portion of AFUDC, which is non-taxable
▪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
The AFUDC related to equity recorded for regulated construction projects at Sempra Mexico has similar flow-through treatment.
We record income tax (expense) benefit from the transactional effects of foreign currency and inflation. Such effects are partially mitigatedoffset by net gains (losses) from foreign currency derivatives that are hedging Sempra Mexico parent’s exposure to movements in the Mexico peso from its controlling interest in IEnova.
In the threenine months ended March 31,September 30, 2019, SDG&E and SoCalGas recorded income tax benefits of $31 million and $35$38 million, respectively, from the release of a regulatory liability established in connection with 2017 tax reform for excess deferred income tax balances that the CPUC directed be allocated to shareholders in a January 2019 decision.

52

Discontinued Operations
In January 2019, our board of directors approved a plan to sell our South American businesses and we completed the sales in the second quarter of 2020, as we discuss in Note 5. Prior to this decision, our repatriation estimate excluded post-2017 earnings and other basis differences related to our South American businesses. Because of our decision to sell our South American businesses, we no longer assert indefinite reinvestment of these basis differences. Accordingly, in the nine months ended September 30, we recorded the following income tax impacts from changes in outside basis differences in our discontinued operations in South America:
▪$103 million income tax expense
▪$89 million income tax benefit in 2019 primarily related to outside basis differences existing as of the January 25, 2019 approval of our plan to sell our South American businesses; and
▪$7 million income tax benefit in 2020 compared to $13 million income tax expense in 2019 related to changes in outside basis differences from earnings and foreign currency effects since January 25, 2019.
As of March 31,the January 25, 2019 approval of our plan to sell our South American businesses. The amount is comprised of $103 million of income tax expense recorded in the first quarter of 2019, which was then reduced by $192 million in the third quarter of 2019 as a result of a change in the anticipated structure of the sale; and
▪$7 million income tax benefit in 2020 wecompared to $32 million income tax expense in 2019 related to changes in outside basis differences from earnings and foreign currency effects since January 25, 2019.
We have not changed our indefinite reinvestment assertion or repatriation plan.plan for our continuing international operations during 2020.
NOTE 2. NEW ACCOUNTING STANDARDS
We describe below recent accounting pronouncements that have had or may have a significant effect on our financial condition, results of operations, cash flows or disclosures.
ASU 2016-13, “Measurement of Credit Losses on Financial Instruments”: ASU 2016-13, as amended by subsequently issued ASUs, changes how entities measure credit losses for most financial assets and certain other instruments. The standard introduces an “expected credit loss” impairment model that requires immediate recognition of estimated credit losses expected to occur over the remaining life of most financial assets measured at amortized cost, including trade and other receivables, loan receivables and commitments and financial guarantees. ASU 2016-13 also requires use of an allowance to record estimated credit losses on available-for-sale debt securities and expands disclosure requirements regarding an entity’s assumptions, models and methods for estimating the credit losses. We adopted the standard on January 1, 2020 using a modified retrospective approach through a cumulative-effect adjustment to retained earnings. The adoption primarily impacted the expected credit losses associated with accounts receivable balances, amounts due from unconsolidated affiliates and off-balance sheet financial guarantees. There was an insignificant impact to SDG&E’s or SoCalGas’ balance sheets from adoption. The following table shows the initial (decreases) increases on Sempra Energy’s balance sheet at January 1, 2020 from adoption of ASU 2016-13.
IMPACT FROM ADOPTION OF ASU 2016-13
(Dollars in millions)
Sempra Energy
Accounts receivable – trade, net$(1)
Due from unconsolidated affiliates – noncurrent(6)
Deferred income tax assets4 
Other current liabilities4 
Deferred credits and other2 
Retained earnings(7)
Other noncontrolling interests(2)
IMPACT FROM ADOPTION OF ASU 2016-13
(Dollars in millions)
 Sempra Energy Consolidated
Accounts receivable – trade, net$(1)
Due from unconsolidated affiliates – noncurrent(6)
Deferred income tax assets4
Other current liabilities4
Deferred credits and other2
Retained earnings(7)
Other noncontrolling interests(2)


ASU 2017-04, “Simplifying the Test for Goodwill Impairment”: ASU 2017-04 removes the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. An entity will be required to apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill. We adopted ASU 2017-04 on January 1, 2020 and will apply the standard on a prospective basis to our goodwill impairment tests.
ASU 2019-12, “Simplifying the Accounting for Income Taxes”: ASU 2019-12 simplifies certain areas of accounting for income taxes. In addition to other changes, this standard amends ASC 740, “Income Taxes,” as follows:
▪removes the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, including discontinued operations or other comprehensive income;
▪simplifies the recognition of deferred taxes related to basis differences as a result of ownership changes in investments;

▪removes the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, including discontinued operations or other comprehensive income;
53

▪specifies an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and
▪requires an entity to reflect the effect of an enacted change in tax laws or rates in the annual ETR computation in the interim period that includes the enactment date.
▪simplifies the recognition of deferred taxes related to basis differences as a result of ownership changes in investments;
▪specifies an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and
▪requires an entity to reflect the effect of an enacted change in tax laws or rates in the annual ETR computation in the interim period that includes the enactment date.
For public entities, ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods therein, with early adoption permitted. The transition method related to the amendments made by ASU 2019-12 varies based on the nature of the change. We will adopt the standard on January 1, 2021 and do not expect it will have a material impact on our financial statements.
ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting”: ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contract modifications that replace LIBOR or another reference rate affected by reference rate reform and to hedging relationships that reference LIBOR or another reference rate that is affected or expected to be affected by reference rate reform. ASU 2020-04 is effective March 12, 2020 and can be applied through December 31, 2022, with certain exceptions for hedging relationships that continue to exist after this date, and may be applied from January 1, 2020. For contract modifications, the standard allows entities to account for modifications as an event that does not require reassessment or remeasurement (i.e., as a continuation of the existing contract). The standard also allows entities to amend their formal designation and documentation of hedging relationships affected or expected to be affected by reference rate reform, without having to de-designate the hedging relationship. Entities may elect the optional expedients and exceptions on an individual hedging relationship basis and independently from one another. We elected the optional expedients for contract modifications andmodifications. We elected the cash flow hedging expedientexpedients to disregard the potential discontinuation of a reference rate when assessing whether a hedged forecasted interest payment is probable.probable and to disregard certain mismatches between the designated hedging instrument and the hedged item when assessing the hedge effectiveness. We are applying these expedients prospectively from January 1, 2020. Application of these expedients preserves the presentation of derivatives consistent with the past presentation.
ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”: ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. In addition to other changes, this standard amends ASC 470-20, “Debt with Conversion and Other Options,” by removing the accounting models for instruments with beneficial conversion features and cash conversion features. The standard also amends ASC 260, “Earnings Per Share,” as follows:
▪requires an entity to apply the if-converted method when calculating diluted EPS for convertible instruments and no longer use the treasury stock method, which was previously allowed for certain convertible instruments;
▪requires an entity to include the effect of potential share settlement in the diluted EPS calculation when an instrument may be settled in cash or shares, and no longer allows an entity to rebut the presumption of share settlement if it has a history or policy of cash settlement;
▪requires an entity to include equity-classified convertible preferred stock that contains down-round features whereby, if the down-round feature is triggered, its effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS;
▪clarifies that the average market price should be used to calculate the diluted EPS denominator when the exercise price or the number of shares that may be issued is variable, except for certain contingently issuable shares; and
▪clarifies that the weighted-average share count from each quarter should be used when calculating the year-to-date weighted-average share count.
For public entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods therein, with early adoption permitted for fiscal years beginning after December 15, 2020. An entity can use either a full or modified retrospective approach to adopt ASU 2020-06 and must disclose, in the period of adoption, EPS transition information about the effect of the change on affected per-share amounts. We are stillcurrently evaluating the remaining optional expedientseffect of the standard on our ongoing financial reporting and exceptions for hedging relationships.have not yet selected the year in which we will adopt the standard.
NOTE 3. REVENUES
We discuss revenue recognition for revenues from contracts with customers and from sources other than contracts with customers in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report.
54

In connection with the COVID-19 pandemic, the California Utilities and the CPUC have implemented certain measures to assist customers, including suspending service disconnections due to nonpayment for residential and small business customers, waiving late payment fees for business customers, and offering flexible payment plans for customers experiencing difficulty paying their electric or gas bills. Additional measures could be mandated or voluntarily implemented in the future. Under the regulatory compact applicable to the California Utilities, including decoupling of rates, recovery of uncollectible expenses, and other recovery mechanisms potentially available, (including the CPPMA, which we discuss in Note 4),4, the California Utilities have continued to recognize revenues under ASC 606, “Revenue from Contracts with Customers,” in the three months and nine months ended March 31,September 30, 2020.
The following table disaggregates our revenues from contracts with customers by major service line and market and provides a reconciliation to total revenues by segment. The majority of our revenue is recognized over time.


DISAGGREGATED REVENUES
(Dollars in millions)
SDG&ESoCalGasSempra MexicoSempra LNGConsolidating adjustments and Parent and OtherSempra Energy Consolidated
Three months ended September 30, 2020
By major service line:
Utilities$1,301 $813 $12 $0 $(25)$2,101 
Energy-related businesses0 0 244 35 (32)247 
Revenues from contracts with customers$1,301 $813 $256 $35 $(57)$2,348 
By market:
Gas$126 $813 $159 $33 $(54)$1,077 
Electric1,175 0 97 2 (3)1,271 
Revenues from contracts with customers$1,301 $813 $256 $35 $(57)$2,348 
Revenues from contracts with customers$1,301 $813 $256 $35 $(57)$2,348 
Utilities regulatory revenues171 29 0 0 0 200 
Other revenues0 0 95 28 (27)96 
Total revenues$1,472 $842 $351 $63 $(84)$2,644 
 Nine months ended September 30, 2020
By major service line:
Utilities$3,610 $3,261 $42 $0 $(66)$6,847 
Energy-related businesses0 0 616 56 (40)632 
Revenues from contracts with customers$3,610 $3,261 $658 $56 $(106)$7,479 
By market:
Gas$518 $3,261 $439 $51 $(98)$4,171 
Electric3,092 0 219 5 (8)3,308 
Revenues from contracts with customers$3,610 $3,261 $658 $56 $(106)$7,479 
Revenues from contracts with customers$3,610 $3,261 $658 $56 $(106)$7,479 
Utilities regulatory revenues366 (14)0 0 0 352 
Other revenues0 0 277 199 (108)368 
Total revenues$3,976 $3,247 $935 $255 $(214)$8,199 
DISAGGREGATED REVENUES
(Dollars in millions)
 SDG&E SoCalGas Sempra Mexico Sempra Renewables Sempra LNG Consolidating adjustments and Parent and other Sempra Energy Consolidated
 Three months ended March 31, 2020
By major service line:             
Utilities$1,259
 $1,544
 $20
 $—
 $—
 $(19) $2,804
Energy-related businesses—
 —
 198
 —
 12
 (7) 203
Revenues from contracts with customers$1,259
 $1,544
 $218
 $—
 $12
 $(26) $3,007
              
By market:             
Gas$254
 $1,544
 $147
 $—
 $11
 $(23) $1,933
Electric1,005
 —
 71
 —
 1
 (3) 1,074
Revenues from contracts with customers$1,259
 $1,544
 $218
 $—
 $12
 $(26) $3,007
              
Revenues from contracts with customers$1,259
 $1,544
 $218
 $—
 $12
 $(26) $3,007
Utilities regulatory revenues10
 (149) —
 —
 —
 —
 (139)
Other revenues—
 —
 91
 —
 111
 (41) 161
Total revenues$1,269
 $1,395
 $309
 $—
 $123
 $(67) $3,029
              
 Three months ended March 31, 2019
By major service line:             
Utilities$1,236
 $1,528
 $27
 $—
 $—
 $(18) $2,773
Energy-related businesses—
 —
 257
 4
 68
 (59) 270
Revenues from contracts with customers$1,236
 $1,528
 $284
 $4
 $68
 $(77) $3,043
              
By market:             
Gas$239
 $1,528
 $198
 $—
 $67
 $(76) $1,956
Electric997
 —
 86
 4
 1
 (1) 1,087
Revenues from contracts with customers$1,236
 $1,528
 $284
 $4
 $68
 $(77) $3,043
              
Revenues from contracts with customers$1,236
 $1,528
 $284
 $4
 $68
 $(77) $3,043
Utilities regulatory revenues(91) (167) —
 —
 —
 —
 (258)
Other revenues—
 —
 99
 3
 73
 (62) 113
Total revenues$1,145
 $1,361
 $383
 $7
 $141
 $(139) $2,898
55

DISAGGREGATED REVENUES (CONTINUED)
(Dollars in millions)
SDG&ESoCalGasSempra MexicoSempra RenewablesSempra LNGConsolidating adjustments and Parent and otherSempra Energy Consolidated
Three months ended September 30, 2019
By major service line:
Utilities$1,370 $765 $14 $0 $0 $(18)$2,131 
Energy-related businesses0 0 242 0 50 (40)252 
Revenues from contracts with customers$1,370 $765 $256 $0 $50 $(58)$2,383 
By market:
Gas$100 $765 $171 $0 $48 $(55)$1,029 
Electric1,270 0 85 0 2 (3)1,354 
Revenues from contracts with customers$1,370 $765 $256 $0 $50 $(58)$2,383 
Revenues from contracts with customers$1,370 $765 $256 $0 $50 $(58)$2,383 
Utilities regulatory revenues57 210 0 0 0 0 267 
Other revenues0 0 101 0 50 (43)108 
Total revenues$1,427 $975 $357 $0 $100 $(101)$2,758 
 Nine months ended September 30, 2019
By major service line:
Utilities$3,604 $3,170 $56 $0 $0 $(56)$6,774 
Energy-related businesses0 0 701 5 139 (113)732 
Revenues from contracts with customers$3,604 $3,170 $757 $5 $139 $(169)$7,506 
By market:
Gas$441 $3,170 $527 $0 $134 $(160)$4,112 
Electric3,163 0 230 5 5 (9)3,394 
Revenues from contracts with customers$3,604 $3,170 $757 $5 $139 $(169)$7,506 
Revenues from contracts with customers$3,604 $3,170 $757 $5 $139 $(169)$7,506 
Utilities regulatory revenues62 (28)0 0 0 0 34 
Other revenues0 0 301 5 188 (148)346 
Total revenues$3,666 $3,142 $1,058 $10 $327 $(317)$7,886 
56

Remaining Performance Obligations
For contracts greater than one year, at March 31,September 30, 2020, we expect to recognize revenue related to the fixed fee component of the consideration as shown below. SoCalGas did not have any such remaining performance obligations at March 31,September 30, 2020.
REMAINING PERFORMANCE OBLIGATIONS(1)
(Dollars in millions)
Sempra Energy ConsolidatedSDG&E
2020 (excluding first nine months of 2020)$88 $1 
2021388 4 
2022406 4 
2023407 4 
2024348 4 
Thereafter4,712 71 
Total revenues to be recognized$6,349 $88 
REMAINING PERFORMANCE OBLIGATIONS(1)
   
(Dollars in millions)   
 Sempra Energy Consolidated SDG&E
2020 (excluding first three months of 2020)$306
 $3
2021402
 4
2022403
 4
2023400
 4
2024348
 4
Thereafter4,640
 71
Total revenues to be recognized$6,499
 $90
(1)(1)
Excludes intercompany transactions.


Contract Balances from Revenues from Contracts with Customers
Activities within Sempra Energy’s and SDG&E’s contract liabilities are presented below. There were no contract liabilities at SDG&E in the three months ended March 31, 2019 or SoCalGas in the threenine months ended March 31,September 30, 2020 and 2019.
CONTRACT LIABILITIES
(Dollars in millions)
Sempra Energy ConsolidatedSDG&E
Balance at January 1, 2020$(163)$(91)
Revenue from performance obligations satisfied during reporting period3 3 
Balance at September 30, 2020(1)
$(160)$(88)
Balance at January 1, 2019$(70)$0 
Revenue from performance obligations satisfied during reporting period1 0 
Payments received in advance(95)(92)
Balance at September 30, 2019$(164)$(92)
(1)     Includes $4 million and 2019.$4 million in Other Current Liabilities and $156 million and $84 million in Deferred Credits and Other on the Sempra Energy and SDG&E Condensed Consolidated Balance Sheets, respectively.
CONTRACT LIABILITIES   
(Dollars in millions)   
 Sempra Energy Consolidated SDG&E
Balance at January 1, 2020$(163) $(91)
Revenue from performance obligations satisfied during reporting period1
 1
Balance at March 31, 2020(1)
$(162) $(90)
Balance at January 1, 2019$(70)  
Revenue from performance obligations satisfied during reporting period1
  
Payments received in advance(2)  
Balance at March 31, 2019$(71)  
(1)
Includes $4 million and $4 million in Other Current Liabilities and $158 million and $86 million in Deferred Credits and Other on the Sempra Energy and SDG&E Condensed Consolidated Balance Sheets, respectively.
Receivables from Revenues from Contracts with Customers
The table below shows receivable balances associated with revenues from contracts with customers on ourthe Condensed Consolidated Balance Sheets.
RECEIVABLES FROM REVENUES FROM CONTRACTS WITH CUSTOMERS
(Dollars in millions)
September 30, 2020December 31, 2019
Sempra Energy Consolidated:
Accounts receivable – trade, net$962 $1,163 
Accounts receivable – other, net13 16 
Due from unconsolidated affiliates – current(1)
3 5 
Total$978 $1,184 
SDG&E:
Accounts receivable – trade, net$462 $398 
Accounts receivable – other, net9 5 
Due from unconsolidated affiliates – current(1)
3 2 
Total$474 $405 
SoCalGas:
Accounts receivable – trade, net$422 $710 
Accounts receivable – other, net4 11 
Total$426 $721 
(1)Amount is presented net of amounts due to unconsolidated affiliates on the Condensed Consolidated Balance Sheets, when right of offset exists.
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RECEIVABLES FROM REVENUES FROM CONTRACTS WITH CUSTOMERS  
(Dollars in millions)   
 March 31, 2020 December 31, 2019
Sempra Energy Consolidated:   
Accounts receivable – trade, net$1,142
 $1,163
Accounts receivable – other, net8
 16
Due from unconsolidated affiliates – current(1)
4
 5
Total$1,154
 $1,184
SDG&E:   
Accounts receivable – trade, net$411
 $398
Accounts receivable – other, net7
 5
Due from unconsolidated affiliates – current(1)
3
 2
Total$421
 $405
SoCalGas:   
Accounts receivable – trade, net$669
 $710
Accounts receivable – other, net1
 11
Total$670
 $721

(1)
Amount is presented net of amounts due to unconsolidated affiliates on the Condensed Consolidated Balance Sheets, when right of offset exists.


NOTE 4. REGULATORY MATTERS
We discuss regulatory matters in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report and provide updates to those discussions and information about new regulatory matters below.
REGULATORY ASSETS AND LIABILITIES
We show the details of regulatory assets and liabilities in the following table.
REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
September 30,
2020		December 31,
2019
 
SDG&E:  
Fixed-price contracts and other derivatives$(21)$8 
Deferred income taxes refundable in rates(20)(108)
Pension and other postretirement benefit plan obligations72 103 
Removal obligations(2,131)(2,056)
Environmental costs43 45 
Sunrise Powerlink fire mitigation120 121 
Regulatory balancing accounts(1)(2)
Commodity – electric173 102 
Gas transportation15 22 
Safety and reliability74 77 
Public purpose programs(146)(124)
2019 GRC retroactive impacts70 111 
Other balancing accounts284 106 
Other regulatory assets (liabilities), net(2)
25 (153)
Total SDG&E(1,442)(1,746)
SoCalGas:  
Deferred income taxes refundable in rates(125)(203)
Pension and other postretirement benefit plan obligations370 400 
Employee benefit costs44 44 
Removal obligations(698)(728)
Environmental costs37 40 
Regulatory balancing accounts(1)(2)
Commodity – gas, including transportation(118)(118)
Safety and reliability358 295 
Public purpose programs(349)(273)
2019 GRC retroactive impacts252 400 
Other balancing accounts(116)(7)
Other regulatory assets (liabilities), net(2)
46 (101)
Total SoCalGas(299)(251)
Sempra Mexico:
Deferred income taxes recoverable in rates83 83 
Other regulatory assets1 6 
Total Sempra Energy Consolidated$(1,657)$(1,908)
(1)    At September 30, 2020 and December 31, 2019, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $127 million and $108 million, respectively, and for SoCalGas was $291 million and $500 million, respectively.
(2)    Includes regulatory assets earning a return.
58
REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
 March 31,
2020		 December 31,
2019
  
SDG&E:   
Fixed-price contracts and other derivatives$23
 $8
Deferred income taxes refundable in rates(68) (108)
Pension and other postretirement benefit plan obligations105
 103
Removal obligations(1,999) (2,056)
Environmental costs45
 45
Sunrise Powerlink fire mitigation122
 121
Regulatory balancing accounts(1)(2)
   
Commodity – electric116
 102
Gas transportation9
 22
Safety and reliability75
 77
Public purpose programs(138) (124)
2019 GRC retroactive impacts98
 111
Other balancing accounts124
 106
Other regulatory liabilities, net(2)
(126) (153)
Total SDG&E(1,614) (1,746)
SoCalGas: 
  
Deferred income taxes refundable in rates(133) (203)
Pension and other postretirement benefit plan obligations416
 400
Employee benefit costs44
 44
Removal obligations(719) (728)
Environmental costs38
 40
Regulatory balancing accounts(1)(2)
   
Commodity – gas, including transportation(202) (118)
Safety and reliability315
 295
Public purpose programs(269) (273)
2019 GRC retroactive impacts351
 400
Other balancing accounts(155) (7)
Other regulatory liabilities, net(2)
(88) (101)
Total SoCalGas(402) (251)
Sempra Mexico:   
Deferred income taxes recoverable in rates83
 83
Other regulatory assets3
 6
Total Sempra Energy Consolidated$(1,930) $(1,908)
(1)

At March 31, 2020 and December 31, 2019, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $123 million and $108 million, respectively, and for SoCalGas was $375 million and $500 million, respectively. 
(2)
Includes regulatory assets earning a return.


CALIFORNIA UTILITIES
COVID-19 Pandemic Protections Memorandum Account
The COVID-19 pandemic is causing a significant impact on the economy and people’s livelihoods in California. OnIn March 4, 2020, Governor Gavin Newsom proclaimed a State of Emergency in California as a result of the threat of COVID-19. In response, on March 17, 2020, the CPUC announcedrequired that retroactive to March 4, 2020, all energy companies under its jurisdiction, including the California Utilities, should take action to implement several emergency customer protection measures to support California customers. On April 16,customers in light of the COVID-19 pandemic. The customer protection measures, which are mandatory for all residential and small business customers, are effective from March 2020, will continue for up to one year, and may be extended by the CPUC. In June 2020, the CPUC approved a resolution establishing a disaster relief plan forplans covering residential and small business customers affected by the COVID-19 pandemic. The resolution also authorizespandemic that were submitted by each of the California Utilities. Each of the California Utilities also was authorized to establish a CPPMA to track and request recovery of incremental costs associated with complying with residential and small business customer protection measures implemented by the resolution,CPUC related to the COVID-19 pandemic, including but not limited to, costs associated with suspending service disconnections (such as costsand uncollectible expenses that arise from these customers’ failure to pay). The customer relief measures are effective March 4, 2020 and shall continue for up to one year. SDG&E extended these accommodations to all of its customers and may continue to do so, while SoCalGas provides these benefits to its core gas customers.pay. The California Utilities expect to pursue recovery in rates of the costs associated withrecorded to the consumer protections that are offeredCPPMA in a future CPUC proceeding, subject to CPUC approval, which recovery is not assured.
Arrearage Management Payment Plan
In June 2020, the CPUC issued a decision to adopt certain customer protections to reduce residential customer disconnections and improve reconnection processes, including, among other things, imposing limitations on service disconnections, elimination of deposit requirements and reconnection fees, establishment of the AMP that provides successfully participating, income-qualified residential customers with relief from outstanding utility bill amounts, and increased outreach and marketing efforts. The decision allows each of the California Utilities to establish a two-way balancing account to record the uncollectible expenses associated with residential customers’ inability to pay their electric or gas bills, including as a result of the relief from outstanding utility bill amounts provided under the AMP. The California Utilities may also request, at a future date, to transfer any such costs from the CPPMA to this new balancing account.
CPUC General Rate Case
The CPUC uses GRC proceedings to set rates designed to allow the California Utilities to recover their reasonable operating costs and to provide the opportunity to realize their authorized rates of return on their investments.
2019 General Rate Case
As we discuss in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report, in September 2019, the CPUC issued a final decision in the 2019 GRC. The 2019 GRC FD, which was effective retroactiveretroactively to January 1, 2019. In the third quarter of 2019, SDG&E and SoCalGas recorded the retroactive after-tax earnings impact of $36 million and $84 million, respectively, for the first quarter of 2019 and $30 million and $46 million, respectively, for the second quarter of 2019.
The 2019 GRC FD approved SDG&E’s and SoCalGas’ test year revenues for 2019 and attrition year adjustments for 2020 and 2021. In January 2020, the CPUC issued a final decision implementing a four-year GRC cycle for California IOUs. The California Utilities were directed to file a petition for modification to revise their 2019 GRC to add two additional attrition years, resulting in a transitional five-year GRC period (2019-2023). The California Utilities filed the petition in April 2020 and requested authorization of their post-test year ratemaking mechanism for two additional years. If adopted, the estimated incrementalWe have requested an increase in the revenue requirement for SDG&E and SoCalGas would beof approximately $106$95 million and $155 million, respectively, for 2022, and $108$96 million and $137 million, respectively, for 2023.2023, reflecting certain adjustments. These amounts include revenues for both O&M and capital cost attrition. In June 2020, the CPUC issued a ruling to further clarify the issues for review in the California Utilities’ petition, which are mainly whether the proposed revenue requirements and mechanisms for the two proposed additional attrition years are just and reasonable. In September 2020, the California Utilities filed a status report to summarize positions on how impacts of the COVID-19 pandemic should be incorporated into the proposed attrition rates. The California Utilities requestedproposed to continue with the adopted attrition mechanism using the second quarter 2020 Global Insight utility cost forecast, which incorporates impacts of the COVID-19 pandemic. Intervenors have proposed other alternatives, including using escalation factors based on the Consumer Price Index. The procedural schedule provides for a proposed decision byin the endfourth quarter of 2020.
The 2019 GRC FD clarified that differences between incurred and forecasted income tax expense due to forecasting differences are not subject to tracking in the income tax expense memorandum account beginning in 2019. SDG&E and SoCalGas previously recorded regulatory liabilities, inclusive of interest, associated with the 2016 through 2018 tracked forecasting differences of $86 million and $89 million, respectively. In April 2020, the CPUC confirmed treatment of the two-way income tax expense memorandum account for these 2016 through 2018 balances, at which time the California Utilities released these regulatory liability balances to revenues.revenues and regulatory interest.
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CPUC Cost of Capital
In December 2019, the CPUC approved the cost of capital and rate structures (shown in the table below) for SDG&E and SoCalGas that are effective January 1, 2020 and will remain in effect through December 31, 2022. SDG&E did not propose a 2020 cost of preferred equity in this proceeding. In January 2020, SDG&E filed an advice letter to continue the cost of preferred equity for test year 2020 at 6.22%, which the CPUC approved in March 2020.
CPUC AUTHORIZED COST OF CAPITAL AND RATE STRUCTURE
SDG&ESoCalGas
Authorized weightingReturn on
rate base		Weighted
return on
rate base		Authorized weightingReturn on
rate base		Weighted
return on
rate base
45.25 %4.59 %2.08 %Long-Term Debt45.60 %4.23 %1.93 %
2.75 6.22 0.17 Preferred Equity2.40 6.00 0.14 
52.00 10.20 5.30 Common Equity52.00 10.05 5.23 
100.00 %7.55 %100.00 %7.30 %



The CCM was reauthorized in the 2020 cost of capital proceeding to continue through 2022. The CCM benchmark rate for the 2020 cost of capital is the average monthly utility bond index, as published by Moody’s, for the 12-month period from October 2018 through September 2019. SDG&E’s CCM benchmark rate based on its filing pending approval with the CPUC, is 4.498%, based on Moody’s Baa- utility bond index. SoCalGas’ CCM benchmark rate based on its filing pending approval with the CPUC, is 4.029%, based on Moody’s A- utility bond index. The index applicable to each utility is based on such utility’s credit rating.
The CCM benchmark rates for SDG&E and SoCalGas are the basis of comparison to determine if future measurement periods “trigger” the CCM. TheFor the 12 months endingended September 2020, will be the first “CCM Period” to determine if there has been aPeriod,” the trigger atdid not occur for SDG&E or SoCalGas. The trigger occurs if the change in the applicable average Moody’s utility bond index relative to the CCM benchmark is larger than plus or minus 1.000%. Accordingly, if a change of more than plus or minus 1.000% occurs, SDG&E’s, SoCalGas’, or both utilities’ authorized ROE would be adjusted, upward or downward, by one half of the difference between the CCM benchmark and the 12-month average determined during the CCM Period. In addition, the authorized recovery rate for the utilities’California Utilities’ cost of debt and preferred equity would be adjusted to their respective actual weighted-average cost, with no change to the authorized capital structure. In the event of a CCM trigger, the CCM benchmark is also re-established. These adjustments would become effective in authorized rates on January 1 of the year following the CCM trigger. The next CCM Period is from October 2020 to September 2021.
SDG&E
FERC Formulaic Rate Filing
In October 2018, SDG&E submitted its TO5 filing to the FERC to establish its transmission revenue requirement, including rate of return, for SDG&E’s FERC-regulated electric transmission operations and assets. In December 2018, the FERC issued its order accepting and suspending SDG&E’s TO5 filing for five months, during which the existing TO4 rates remained in effect, and established hearing and settlement procedures. The suspension period ended on June 1, 2019, when the proposed TO5 rates took effect, subject to refund and the outcome of the rate filing. As a result, the TO4 ROE of 10.05% was the basis of SDG&E’s FERC-related revenue recognition until March 2020, when the FERC approved the settlement terms that SDG&E and all settling parties reached in October 2019.
The settlement agreement provides for a ROE of 10.60%, consisting of a base ROE of 10.10% plus an additional 50 bps for participation in the California ISO. If the FERC issues an order ruling that California IOUs are no longer eligible for the additional California ISO ROE, SDG&E would refund the additional 50 bps of ROE associated with the California ISO as of the refund effective date (June 1, 2019) in this proceeding. The TO5 term is effective June 1, 2019 and shall remain in effect indefinitely, with parties having the annual right to terminate the agreement beginning in 2022.
In the first quarter of 2020, SDG&E recorded retroactive revenues of $12 million related to 2019, and additional FERC revenues of $17 million to conclude a rate base matter, net of certain refunds to be paid to CPUC-jurisdictional customers.
Energy Efficiency Program Inquiry
In January 2020, the CPUC issued a ruling seeking comments on a report prepared by its consultant regarding SDG&E’s Upstream Lighting Program for the program year 2017. The CPUC subsequently expanded the scope of the comments to cover
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the program year 2018. The Upstream Lighting Program was one of SDG&E’s Energy Efficiency programs designed to produce energy efficiency savings for which SDG&E could earn a performance-based incentive.
Pursuant to the CPUC ruling, intervenors representing ratepayers have questioned SDG&E’s management of the program and alleged that certain program expenditures did not benefit the purpose of the program. As a result of the inquiry, SDG&E voluntarily expanded its review to include the program year 2019. Based on this review and discussions with intervenors, SDG&E concluded that some concessions were appropriate, which include refunding certain costs and certain performance-based incentives to customers and incurring a fine. Accordingly, in the three months and nine months ended September 30, 2020, SDG&E reduced revenues by $36 million and $51 million, respectively, and recorded a fine of $6 million in Other (Expense) Income, Net, on the SDG&E and Sempra Energy Condensed Consolidated Statements of Operations. The after-tax impact for the three months and nine months ended September 30, 2020 was $29 million and $44 million, respectively. In October 2020, SDG&E executed a settlement agreement with intervenors consistent with these concessions. CPUC approval of the settlement agreement is required.
NOTE 5. ACQUISITIONS, DIVESTITURES AND DISCONTINUED OPERATIONS
We consolidate assets acquired and liabilities assumed as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.
ACQUISITION
Sempra Texas Utilities
TTHC
In February 2020, Sempra Texas Intermediate Holding Company LLCSTIH acquired an additional indirect 0.1975% interest in Oncor through its acquisition of a 1% interest in TTHC from Hunt Strategic Utility Investment, L.L.C. (Hunt), including notes receivable due from TTHC with an aggregate outstanding balance of approximately $6 million, for a total purchase price of approximately $23 million in cash, bringing Sempra Energy’s indirect ownership in Oncor to approximately 80.45%. TTHC indirectly owns 100% of TTI, which owns 19.75% of Oncor’s outstanding membership interests. At the acquisition date, we determined the fair value of the notes receivable was $7 million based on a discounted cash flow model, and attributed $16 million to the investment in TTHC, which we recorded as an equity method investment.
STIH’s acquisition of the 1% interest was the subject of a lawsuit filed in the Delaware Court of Chancery by the owners of the remaining 99% ownership interest in TTHC. STIH purchased its 1% interest in TTHC in February 2020 after the Delaware Court of Chancery decided, among other things, that STIH’s right to purchase the 1% interest was superior to that of the remaining owners of TTHC. The remaining owners appealed that decision and, in May 2020, the Delaware Supreme Court reversed the Delaware Court of Chancery’s ruling and remanded the case back to the Delaware Court of Chancery. In September 2020, the Delaware Court of Chancery ordered, among other things, the rescission of STIH’s purchase of the 1% interest in TTHC. The parties have complied with the court’s order and Sempra Energy’s indirect ownership in Oncor has returned to 80.25%. We received a full refund of the purchase price from Hunt in September 2020 and have fully unwound the acquisition.
Sharyland Holdings
In May 2019, Sempra Energy acquired an indirect, 50% interest in Sharyland Holdings for $95 million (net of $7 million post-closing adjustments) pursuant to the Securities Purchase Agreement. In connection with and prior to the consummation of the Securities Purchase Agreement, Sharyland Holdings owned 100% of the membership interests in Sharyland Utilities, LP and Sharyland Utilities, LP converted into a limited liability company, named Sharyland Utilities, L.L.C. We account for our investmentindirect, 50% interest in TTHCSharyland Holdings as an equity method investment,investment.
DIVESTITURES
Sempra Renewables
In April 2019, Sempra Renewables completed the sale of its remaining wind assets and investments to AEP for $569 million, net of transaction costs, and recorded a $61 million ($45 million after tax and NCI) gain, which we discuss furtheris included in Note 6.(Loss) Gain on Sale of Assets on Sempra Energy’s Condensed Consolidated Statement of Operations for the nine months ended September 30, 2019.

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DIVESTITUREUpon completion of the sale, remaining nominal business activities at Sempra Renewables were subsumed into Parent and other and the Sempra Renewables segment ceased to exist.
Sempra LNG
In February 2019, Sempra LNG completed the sale of its non-utility natural gas storage assets in the southeast U.S. (comprised of Mississippi Hub and Bay Gas), which we classified as held for sale at December 31, 2018, to an affiliate of ArcLight Capital Partners and received cash proceeds of $322 million, net of transaction costs. In January 2019, Sempra LNG completed the sale of other non-utility assets for $5 million.

DISCONTINUED OPERATIONS
In January 2019, our board of directors approved a plan to sell our South American businesses. We determined that these businesses, which previously constituted the Sempra South American Utilities segment, and certain activities associated with those businesses, met the held-for-sale criteria. These businesses are presented as discontinued operations, as the planned sales represent a strategic shift that will have a major effect on our operations and financial results. We do not plan toUpon completion of these sales, we no longer have significant continuing involvement in or be ablethe ability to exercise significant influence on the operating or financial policies of these operations after they are sold.operations. Accordingly, the results of operations, financial position and cash flows for these businesses have been presented as discontinued operations for all periods presented.
Discontinued operations that were previously in the Sempra South American Utilities segment include our former 100% interest in Chilquinta Energía in Chile, our former 83.6% interest in Luz del Sur in Peru and our former interests in 2 energy-services companies, Tecnored and Tecsur, which provide electric construction and infrastructure services to Chilquinta Energía and Luz del Sur, respectively, as well as third parties. 
On April 24, 2020, we completed the sale of our equity interests in our Peruvian businesses, including our 83.6% interest in Luz del Sur and itsour interest in Tecsur, to an affiliate of China Yangtze Power International (Hongkong) Co., Limited for an aggregate base purchase pricecash proceeds of $3.59 billion, subject to$3,549 million, net of transaction costs and as adjusted for post-closing adjustments.adjustments, and recorded a pretax gain of $2,271 million ($1,499 million after tax).
On October 12, 2019,June 24, 2020, we entered into a Purchase and Sale Agreement with State Grid International Development Limited to sellcompleted the sale of our equity interests in our Chilean businesses, including our 100% interest in Chilquinta Energía and Tecnored and our 50% interest in Eletrans, for an aggregate base purchase price of $2.23 billion, subject to customary adjustments for working capital and changes in net indebtedness and other adjustments. Chilquinta Energía also agreed to purchase the remaining 50% interest in Eletrans from Sociedad Austral de Electricidad S.A., contingent on the sale of our Chilean businesses to State Grid International Development Limited. This acquisition by Chilquinta EnergíLimited for cash proceeds of $2,216 million, net of transaction costs and as adjusted for post-closing adjustments, and recorded a which we do not expect would have a significant economic impactpretax gain of $628 million ($248 million after tax).
In the three months and nine months ended September 30, 2020, the pretax gains from the sales of our South American businesses are included in (Loss) Gain on Sale of Discontinued Operations in the table below and the after-tax gains are included in (Loss) Income from Discontinued Operations, Net of Income Tax, on the saleSempra Energy Condensed Consolidated Statements of our Chilean businesses (including the net proceeds we receive from the sale), would result in State Grid International Development Limited acquiring 100% of Eletrans. The sale of our Chilean businesses is subject to various conditions to closing, including certain Chinese regulatory approvals, but is not subject to Chilquinta Energía purchasing the remaining 50% interest in Eletrans. We expect the sale to close in the second quarter of 2020.Operations.
Summarized results from discontinued operations were as follows:
DISCONTINUED OPERATIONS
(Dollars in millions)  
 Three months ended September 30,Nine months ended September 30,
 
2020(1)
2019
2020(2)
2019
Revenues$0 $398 $570 $1,222 
Cost of sales0 (249)(364)(765)
(Loss) gain on sale of discontinued operations(16)0 2,899 0 
Operating expenses0 (38)(66)(123)
Interest and other0 (3)(3)(12)
Income before income taxes and equity earnings(16)108 3,036 322 
Income tax benefit (expense)9 148 (1,186)(32)
Equity earnings0 0 0 2 
(Loss) income from discontinued operations, net of income tax(7)256 1,850 292 
Earnings attributable to noncontrolling interests0 (8)(10)(25)
(Losses) earnings from discontinued operations attributable
to common shares
$(7)$248 $1,840 $267 
(1)    Represents post-closing adjustments related to the sale of our equity interests in our Chilean businesses.
(2)    Results include activity until deconsolidation of our Peruvian businesses on April 24, 2020 and Chilean businesses on June 24, 2020.
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DISCONTINUED OPERATIONS   
(Dollars in millions)   
 Three months ended March 31,
 2020 2019
Revenues$400
 $421
Cost of sales(253) (265)
Operating expenses(46) (45)
Interest and other—
 (3)
Income before income taxes and equity earnings101
 108
Income tax expense(21) (151)
Equity earnings—
 1
Income (loss) from discontinued operations, net of income tax80
 (42)
Earnings attributable to noncontrolling interests(8) (9)
Earnings (losses) from discontinued operations attributable to common shares$72
 $(51)



The following table summarizes the carrying amounts of the major classes of assets and related liabilities classified as held for sale in discontinued operations.
ASSETS HELD FOR SALE IN DISCONTINUED OPERATIONS
(Dollars in millions)   
 March 31,
2020		 December 31, 2019
Cash and cash equivalents$180
 $74
Restricted cash(1)
1
 1
Accounts receivable, net316
 303
Due from unconsolidated affiliates2
 2
Inventories36
 36
Other current assets31
 29
Current assets$566
 $445
    
Due from unconsolidated affiliates$60
 $54
Goodwill and other intangible assets748
 801
Property, plant and equipment, net2,517
 2,618
Other noncurrent assets39
 40
Noncurrent assets$3,364
 $3,513
    
Short-term debt$158
 $52
Accounts payable192
 201
Current portion of long-term debt and finance leases82
 85
Other current liabilities106
 106
Current liabilities$538
 $444
    
Long-term debt and finance leases$663
 $702
Deferred income taxes282
 284
Other noncurrent liabilities61
 66
Noncurrent liabilities$1,006
 $1,052

ASSETS HELD FOR SALE IN DISCONTINUED OPERATIONS
(Dollars in millions)
December 31, 2019
Cash and cash equivalents$74 
Restricted cash(1)
Primarily represents funds held in accordance with Peruvian tax law.1 
Accounts receivable, net303 
Due from unconsolidated affiliates2 
Inventories36 
Other current assets29 
Current assets$445 
Due from unconsolidated affiliates$54 
Goodwill and other intangible assets801 
Property, plant and equipment, net2,618 
Other noncurrent assets40 
Noncurrent assets$3,513 
Short-term debt$52 
Accounts payable201 
Current portion of long-term debt and finance leases85 
Other current liabilities106 
Current liabilities$444 
Long-term debt and finance leases$702 
Deferred income taxes284 
Other noncurrent liabilities66 
Noncurrent liabilities$1,052 

At March 31,(1)Primarily represents funds held in accordance with Peruvian tax law.

As a result of the sales of our South American businesses, in the second quarter of 2020, and December 31, 2019, $693we reclassified $645 million and $551 million, respectively, of cumulative foreign currency translation losses relatedfrom AOCI to our South American businesses are(Loss) Gain on Sale of Discontinued Operations, which is included in AOCI.(Loss) Income from Discontinued Operations, Net of Income Tax, on the Sempra Energy Condensed Consolidated Statements of Operations.
NOTE 6. INVESTMENTS IN UNCONSOLIDATED ENTITIES
We generally account for investments under the equity method when we have significant influence over, but do not have control of, these entities. Equity earnings and losses, both before and net of income tax, are combined and presented as Equity Earnings on the Condensed Consolidated Statements of Operations. See Note 12 for information on equity earnings and losses, both before and net of income tax, by segment. See Note 1 for information on how equity earnings and losses before income taxes are factored into the calculations of our pretax income or loss and ETR.
We provide additional information concerning our equity method investments in Notes 5 and 6 of the Notes to Consolidated Financial Statements in the Annual Report.
SEMPRA TEXAS UTILITIES
Oncor Holdings
We account for our 100% ownership interest in Oncor Holdings, which owns an 80.25% interest in Oncor, as an equity method investment. Due to the ring-fencing measures, governance mechanisms, and commitments in effect, we do not have the power to
63

direct the significant activities of Oncor Holdings and Oncor. See Note 6 of the Notes to Consolidated Financial Statements in the


Annual Report for additional information related to the restrictions on our ability to direct the significant activities of Oncor Holdings and Oncor.
In the threenine months ended March 31,September 30, 2020,, Sempra Energy contributed $70$209 million to Oncor Holdings, and Oncor Holdings distributed to Sempra Energy $73$220 million in dividends.
In the threenine months ended March 31,September 30, 2019,, Sempra Energy contributed $56$1,236 million to Oncor Holdings, which includes $1,067 million to fund Oncor’s May 2019 acquisition of interests in InfraREIT and certain acquisition-related expenses, which we discuss in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report. In the nine months ended September 30, 2019, Oncor Holdings distributed to Sempra Energy $54$162 million in dividends and $3 million in tax sharing payments.dividends.
We provide summarized income statement information for Oncor Holdings in the following table.
SUMMARIZED FINANCIAL INFORMATION – ONCOR HOLDINGS  
(Dollars in millions)  
 Three months ended March 31,
 2020 2019
Operating revenues$1,072
 $1,016
Operating expense(801) (775)
Income from operations271
 241
Interest expense(101) (86)
Income tax expense(28) (23)
Net income129
 114
Noncontrolling interest held by TTI(26) (23)
Earnings attributable to Sempra Energy103
 91

TTHC
As we discuss in Note 5, in February 2020, Sempra Texas Intermediate Holding Company LLC, acquired a 1% interest in TTHC from Hunt Strategic Utility Investment, L.L.C. for $23 million in cash, of which $16 million of the fair value was attributed to our investment in TTHC. TTHC indirectly owns 100% of TTI, which owns 19.75% of Oncor’s outstanding membership interests, resulting in Sempra Energy acquiring an additional indirect 0.1975% interest in Oncor and bringing Sempra Energy’s indirect ownership in Oncor to approximately 80.45%.
SEMPRA MEXICO
IMG JV
IEnova has a 40% interest in IMG JV, a JV with a subsidiary of TC Energy Corporation, and accounts for its interest as an equity method investment. IMG JV owns and operates the Sur de Texas-Tuxpan natural gas marine pipeline, which is fully contracted under a 35-year natural gas transportation service contract with the CFE and commenced commercial operations in September 2019.
As we discuss in “Transactions with Affiliates” in Note 1, IEnova has provided IMG JV with a Mexican peso-denominated revolving line of credit to finance construction of the natural gas marine pipeline. Due to significant fluctuation of the Mexican peso and the impact of this fluctuation on the peso-denominated loan, equity earnings from IEnova’s investment in IMG JV were higher in the three months ended March 31, 2020 compared to the same period in 2019, primarily due to $149 million of foreign currency gains in 2020 compared to $10 million of foreign currency losses in 2019, which are offset by corresponding amounts included in Other (Expense) Income, Net on the Condensed Consolidated Statements of Operations.


We provide summarized income statement information for IMG JV in the following table.
SUMMARIZED FINANCIAL INFORMATION – IMG JV
   
(Dollars in millions)   
 Three months ended March 31,
 2020 2019
Operating revenues$122
 $—
Operating expenses(33) —
Income from operations89
 —
Other income, net364
 41
Interest expense(43) (46)
Income tax benefit (expense)10
 (4)
Net income (loss)/Earnings (losses)420
 (8)

SUMMARIZED FINANCIAL INFORMATION – ONCOR HOLDINGS
(Dollars in millions)
 Three months ended
September 30,		Nine months ended
September 30,
2020201920202019
Operating revenues$1,232 $1,211 $3,394 $3,268 
Operating expenses(819)(787)(2,387)(2,319)
Income from operations413 424 1,007 949 
Interest expense(102)(97)(305)(276)
Income tax expense(50)(53)(115)(106)
Net income255 261 557 511 
Noncontrolling interest held by TTI(50)(52)(111)(102)
Earnings attributable to Sempra Energy205 209 446 409 
SEMPRA LNG
Cameron LNG JV
In the threenine months ended March 31,September 30, 2020, Sempra LNG contributed $54 million to Cameron LNG JV, and Cameron LNG JV distributed to Sempra LNG dividends of $209 million and a distribution in the form of a return of investment of $803 million.
In the nine months ended September 30, 2019, Sempra LNG invested cash of $25$77 million in Cameron LNG JV. PriorJV and, prior to commencing commercial operations in August 2019, Sempra LNG capitalized $13$32 million of interest in the three months ended March 31, 2019 related to its investment in Cameron LNG JV.
As of September 30, 2020, Sempra Energy has provided guarantees aggregating a maximum of $4.0 billion with an aggregate carrying value of $1 million, which is included in Other Current Liabilities on the Sempra Energy Condensed Consolidated Balance Sheet associated with Cameron LNG JV’s debt obligations. We discuss these guarantees in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.
Sempra Energy Support Agreement for CFIN
In July 2020, CFIN entered into a financing arrangement with Cameron LNG JV’s four project owners and received aggregate proceeds of $1.5 billion from two project owners and from external lenders on behalf of the other two project owners (collectively, the affiliate loans), based on their proportionate ownership interest in Cameron LNG JV. CFIN used the proceeds from the affiliate loans to provide a loan to Cameron LNG JV. The affiliate loans mature in 2039. Principal and interest will be paid from Cameron LNG JV’s project cash flows from its three-train natural gas liquefaction facility. Cameron LNG JV used the proceeds from its loan to return equity to its project owners. Sempra Energy used its $753 million share of the proceeds for working capital and other general corporate purposes, including the repayment of indebtedness.
Sempra Energy’s $753 million proportionate share of the affiliate loans, based on its 50.2% ownership interest in Cameron LNG JV, was funded by external lenders comprised of a syndicate of eight banks (the bank debt) to whom Sempra Energy has provided a guarantee pursuant to a Support Agreement. Under the terms of the Support Agreement, Sempra Energy has severally guaranteed repayment of the bank debt plus accrued and unpaid interest if CFIN fails to pay the external lenders. Additionally, the external lenders may exercise an option to put the bank debt to Sempra Energy on every one-year anniversary of the closing of the affiliate loans, as well as upon the occurrence of certain events, including a failure by CFIN to meet its payment obligations under the bank debt. In addition, some or all of the bank debt will be transferred by each external lender back to Sempra Energy on the
64

five-year anniversary of the affiliate loans, unless the external lenders elect to waive their transfer rights six months prior to the five-year anniversary of the affiliate loans. Sempra Energy also has a right to call the bank debt back from, or to refinance the bank debt with, the external lenders at any time. The Support Agreement will terminate upon full repayment of the bank debt, including repayment following an event in which the bank debt is put to Sempra Energy. In exchange for this guarantee, the external lenders will pay a guarantee fee that is based on the credit rating of Sempra Energy’s long-term senior unsecured non-credit enhanced debt rating, which guarantee fee Sempra LNG will recognize as interest income as earned. Sempra Energy’s maximum exposure to loss is the bank debt plus any accrued and unpaid interest and related fees, subject to a liability cap of 130% of the bank debt, or $979 million. We measure the Support Agreement at fair value, net of related guarantee fees, on a recurring basis (see Note 9). At September 30, 2020, the fair value of the Support Agreement was $6 million, which is included in Other Current Assets on the Sempra Energy Condensed Consolidated Balance Sheet.
RBS SEMPRA COMMODITIES
As we discuss in Note 11, in Marchthe first quarter of 2020, we recorded a charge of $100 million in Equity Earnings on Sempra Energy’s Condensed Consolidated Statement of Operations for losses from our investment in RBS Sempra Commodities. We recognized a corresponding liability of $25 million in Other Current Liabilities and $75 million in Deferred Credits and Other for our share of estimated losses in excess of the carrying value of our equity method investment.
GUARANTEES
At March 31, 2020, Sempra LNG has provided guarantees aggregating a maximum of $4.0 billion with an aggregate carrying value of $2 million associated with Cameron LNG JV’s debt obligations. We discuss these guarantees in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.


NOTE 7. DEBT AND CREDIT FACILITIES
LINES OF CREDIT
Primary U.S. Committed Lines of Credit
At March 31,September 30, 2020, Sempra Energy Consolidated had an aggregate capacity of $6.7 billion in four primary U.S. committed lines of credit, which provide liquidity and support commercial paper. The principal terms of these committed lines of credit, which expire in May 2024, are described below and in Note 7 of the Notes to Consolidated Financial Statements in the Annual Report.
PRIMARY U.S. COMMITTED LINES OF CREDIT      
(Dollars in millions)      
   March 31, 2020
   Total facility 
Commercial paper outstanding(1)
 Lines of credit outstanding Available unused credit
Sempra Energy(2)
 $1,250
 $—
 $(1,250) $—
Sempra Global(3)
 3,185
 (1,225) —
 1,960
SDG&E(4)
 1,500
 —
 (200) 1,300
SoCalGas(4)
 750
 —
 —
 750
Total $6,685
 $(1,225) $(1,450) $4,010
PRIMARY U.S. COMMITTED LINES OF CREDIT
(Dollars in millions)
September 30, 2020
Total facility(1)
(1)Sempra Energy(2)
Because the commercial paper programs are supported by these lines, we reflect the amount of commercial paper outstanding as a reduction to the available unused credit.$1,250 
Sempra Global3,185 
(2)SDG&E(3)
The facility also provides for issuance of $200 million of letters of credit on behalf of Sempra Energy with the amount of borrowings otherwise available under the facility reduced by the amount of outstanding letters of credit. Subject to obtaining commitments from existing or new lenders and satisfaction of other specified conditions, Sempra Energy has the right to increase the letter of credit commitment up to $500 million. No letters of credit were outstanding at March 31, 2020.
1,500 
SoCalGas(3)
Commercial paper outstanding is before reductions of unamortized discount of $1 million at Sempra Global.
750 
(4)Total
The facility also provides for issuance of $100 million of letters of credit on behalf of the borrowing utility with the amount of borrowings otherwise available under the facility reduced by the amount of outstanding letters of credit. Subject to obtaining commitments from existing or new lenders and satisfaction of other specified conditions, the borrowing utility has the right to increase the letter of credit commitment up to $250 million. No letters of credit were outstanding at March 31, 2020.$6,685 
(1)    All amounts are unused and available as of September 30, 2020.
(2)    The facility also provides for issuance of $200 million of letters of credit on behalf of Sempra Energy with the amount of borrowings otherwise available under the facility reduced by the amount of outstanding letters of credit. Subject to obtaining commitments from existing or new lenders and satisfaction of other specified conditions, Sempra Energy has the right to increase the letter of credit commitment up to $500 million. No letters of credit were outstanding at September 30, 2020.
(3)    The facility also provides for issuance of $100 million of letters of credit on behalf of the borrowing utility with the amount of borrowings otherwise available under the facility reduced by the amount of outstanding letters of credit. Subject to obtaining commitments from existing or new lenders and satisfaction of other specified conditions, the borrowing utility has the right to increase the letter of credit commitment up to $250 million. No letters of credit were outstanding at September 30, 2020.

Sempra Energy, SDG&E and SoCalGas each must maintain a ratio of indebtedness to total capitalization (as defined in each of the applicable credit facilities) of no more than 65% at the end of each quarter. At March 31,September 30, 2020, each entity was in compliance with this ratio and all other financial covenants under its respective credit facility.
At March 31, 2020, the $200 million outstanding under SDG&E’s line of credit was classified as long-term debt based on management’s intent and ability to maintain this level of borrowing on a long-term basis either supported by this credit facility or by issuing long-term debt. This classification had no impact on SDG&E’s cash flows.
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Foreign Committed Lines of Credit
Our foreign operations in Mexico haveIEnova has additional general-purpose credit facilities aggregating $1.9$1.8 billion at March 31,September 30, 2020. The principal terms of these credit facilities are described belowbelow.
FOREIGN COMMITTED LINES OF CREDIT
(U.S. dollar equivalent in millions)
September 30, 2020
Expiration date of facilityTotal facilityAmounts outstandingAvailable unused credit
February 2024(1)
$1,500 $(492)$1,008 
September 2021(2)
280 (280)0 
Total$1,780 $(772)$1,008 
(1)    .Five-year revolving credit facility with a syndicate of 10 lenders. Borrowings bear interest at a per annum rate equal to 3-month LIBOR plus 80 bps.
(2)    Two-year revolving credit facility with The Bank of Nova Scotia. Borrowings may be made for up to two years from September 23, 2019 in U.S. dollars. Borrowings bear interest at a per annum rate equal to 3-month LIBOR plus 54 bps.
FOREIGN COMMITTED LINES OF CREDIT
(U.S. dollar equivalent in millions)
   March 31, 2020
Expiration date of facility Total facility Amounts outstanding Available unused credit
February 2024(1)
 $1,500
 $(1,364) $136
April 2022(2)
 100
 (100) —
September 2021(3)
 280
 (280) —
Total $1,880
 $(1,744) $136

(1)
In addition to its committed lines of credit, IEnova had a three-year $100 million uncommitted revolving credit facility with Scotiabank Inverlat S.A. that was canceled in October 2020. At September 30, 2020, available unused credit on this line was $100 million. In October 2020, IEnova entered into a three-year $20 million uncommitted revolving credit facility with Scotiabank Inverlat S.A. (borrowings may be made in either U.S. dollars or Mexican pesos) and a three-year $100 million uncommitted revolving credit facility with The Bank of Nova Scotia (borrowings can only be made in U.S. dollars).
Five-year revolving credit facility with a syndicate of 10 lenders.
(2)
Three-year revolving credit facility with Scotiabank Inverlat, S.A. Withdrawals may be made for up to one year from April 11, 2019 in either U.S. dollars or Mexican pesos.
(3)
Two-year revolving credit facility with The Bank of Nova Scotia. Withdrawals may be made for up to two years from September 23, 2019 in U.S. dollars.
Letters of Credit
Outside of our domestic and foreign committed credit facilities, we have bilateral unsecured standby letter of credit capacity with select lenders that is uncommitted and supported by reimbursement agreements. At March 31,September 30, 2020, we had approximately $615$560 million in standby letters of credit outstanding under these agreements.agreements.
TERM LOANS
In March 2020 and April 2020, Sempra Energy borrowed $1,524a total of $1,599 million, net of $1 million of debt discounts and issuance costs, under a 364-day term loan, which hashad a maturity date of March 16, 2021 with an option to extend the maturity date to September 16, 2021, subject to receiving the consent of the lenders. Borrowings bear interest at benchmark rates plus 80 bps (1.72% at March 31, 2020). On April 1, 2020, Sempra Energy borrowed an additional $75 million underused the proceeds from the term loan.loan to repay borrowings on its committed lines of credit and for other general corporate purposes. This term loan was repaid in full in September 2020.
In March 2020, SDG&E borrowed $200 million under a 364-day term loan, which has a maturity date of March 18, 2021 with an option to extend the maturity date to September 17, 2021, subject to receiving the consent of the lenders. Borrowings bear interest at benchmark rates plus 80 bps (1.73%(0.95% at March 31,September 30, 2020). The term loan provides SDG&E with additional liquidity outside of its committed line of credit. SDG&E classified this term loan as long-term debt based on management’s intent and ability to maintain this level of borrowing on a long-term basis by issuing long-term debt. This classification had no impactAt September 30, 2020, this term loan was included in Current Portion of Long-Term Debt and Finance Leases on SDG&E’s cash flows.
The term loans provide Sempra Energy and SDG&E with additional liquidity outside of their respective committed lines of credit.Condensed Consolidated Balance Sheet.
WEIGHTED-AVERAGE INTEREST RATES
The weighted-average interest rates on the total short-term debt at March 31,September 30, 2020 and December 31, 2019 were as follows:
WEIGHTED-AVERAGE INTEREST RATES
September 30, 2020December 31, 2019
Sempra Energy Consolidated0.93 %2.31 %
SDG&EN/A1.97 
SoCalGasN/A1.86 
66
WEIGHTED-AVERAGE INTEREST RATES     
       
    March 31, 2020 December 31, 2019
     
Sempra Energy Consolidated  2.41% 2.31%
SDG&E  N/A
 1.97
SoCalGas  N/A
 1.86



LONG-TERM DEBT
SDG&E
In September 2020, SDG&E issued $800 million of 1.70% first mortgage bonds maturing in 2030 and received proceeds of $792 million (net of debt discount, underwriting discounts and debt issuance costs of $8 million). SDG&E intends to use a portion of the proceeds from the offering to repay approximately $250 million of debt, prior to its scheduled maturity. As a result, this amount was classified as Current Portion of Long-Term Debt and Finance Leases on the SDG&E and Sempra Energy Condensed Consolidated Balance Sheets at September 30, 2020. SDG&E intends to use the remaining proceeds for general corporate purposes, including repayment of commercial paper.
In April 2020, SDG&E issued $400 million of 3.32% first mortgage bonds maturing in 2050 and received proceeds of $395 million (net of debt discount, underwriting discounts and debt issuance costs of $5 million). SDG&E used $200 million of the proceeds from the offering to repay borrowings on its line of credit borrowings, and expects to use the remaining proceeds for working capital and other general corporate purposes.
SoCalGas
In September 2020, SoCalGas issued $300 million of senior unsecured floating rate notes maturing in 2023 and received proceeds of $298 million (net of underwriting discounts and debt issuance costs of $2 million). The notes bear interest at a per annum rate equal to the 3-month LIBOR rate (or, under certain circumstances, a benchmark replacement rate), reset quarterly, plus 35 bps. SoCalGas may, at its option, redeem some or all of the floating rate notes at any time on or after March 14, 2021 at a redemption price equal to 100% of the principal amount of, plus accrued and unpaid interest on, the notes being redeemed. SoCalGas intends to use the proceeds from the offering for general corporate purposes, which may include theincluding repayment of indebtedness.commercial paper.
SoCalGas
In January 2020, SoCalGas issued $650 million of 2.55% first mortgage bonds maturing in 2030. We2030 and received proceeds of$643 $643 million (net of debt discount, underwriting discounts and debt issuance costs of $7 million)$7 million). SoCalGas used the proceeds from the offering to repay outstanding commercial paper and for other general corporate purposes.
Sempra Mexico
In September 2020, IEnova offered and sold in a private placement $800 million of 4.75% senior unsecured notes maturing in 2051 and received proceeds of $770 million (net of debt discount, underwriting discounts and debt issuance costs of $30 million). IEnova used the proceeds from the offering to repay line of credit borrowings and for other general corporate purposes.
In November 2019, IEnova entered into a financing agreement with International Finance Corporation and North American Development Bank to finance and/or refinance the construction of solar generation projects in Mexico. Under this agreement, in April 2020, IEnova borrowed $100 million from Japan International Cooperation Agency, with loan proceeds of $98 million (net of debt issuance costs of $2 million). The loan matures in November 2034 and bears interest based on 6-month LIBOR plus 150 bps. In April 2020, IEnova entered into a floating-to-fixed interest rate swap, resulting in a fixed rate of 2.38%. Also under the financing agreement, in June 2020, IEnova borrowed $241 million from U.S. International Development Finance Corporation, with loan proceeds of $236 million (net of debt issuance costs of $5 million). The loan matures in November 2034 and bears interest at a fixed rate of 2.90%.
Sempra LNG
As we discuss in “Shareholders’ Equity and Noncontrolling Interests – Other Noncontrolling Interests – Sempra LNG” in Note 1, notes payable totaling $22 million due October 1, 2026 were converted to equity by the minority partner in Liberty Gas Storage LLC and are no longer outstanding.
NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS
We use derivative instruments primarily to manage exposures arising in the normal course of business. Our principal exposures are commodity market risk, benchmark interest rate risk and foreign exchange rate exposures. Our use of derivatives for these risks is integrated into the economic management of our anticipated revenues, anticipated expenses, assets and liabilities. Derivatives may be effective in mitigating these risks (1) that could lead to declines in anticipated revenues or increases in anticipated expenses, or (2) that could cause our asset values mayto fall or our liabilities mayto increase. Accordingly, our derivative activity summarized below generally represents an impact that is intended to offset associated revenues, expenses, assets or liabilities that are not included in the tables below.
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In certain cases, we apply the normal purchase or sale exception to derivative instruments and have other commodity contracts that are not derivatives. These contracts are not recorded at fair value and are therefore excluded from the disclosures below.
In all other cases, we record derivatives at fair value on the Condensed Consolidated Balance Sheets. We have derivatives that are (1) cash flow hedges, (2) fair value hedges, or (3) undesignated. Depending on the applicability of hedge accounting and, for the California Utilities and other operations subject to regulatory accounting, the requirement to pass impacts through to customers, the impact of derivative instruments may be offset in OCI (cash flow hedges), on the balance sheet (regulatory offsets), or recognized in earnings (fair value hedges)hedges and undesignated derivatives not subject to rate recovery). We classify cash flows from the principal settlements of cross-currency swaps that hedge exposure related to Mexican peso-denominated debt as financing activities and settlements of other derivative instruments as operating activities on the Condensed Consolidated Statements of Cash Flows.
HEDGE ACCOUNTING
We may designate a derivative as a cash flow hedging instrument if it effectively converts anticipated cash flows associated with revenues or expenses to a fixed dollar amount. We may utilize cash flow hedge accounting for derivative commodity instruments, foreign currency instruments and interest rate instruments. Designating cash flow hedges is dependent on the business context in which the instrument is being used, the effectiveness of the instrument in offsetting the risk that the future cash flows of a given revenue or expense item may vary, and other criteria.


ENERGY DERIVATIVES
Our market risk is primarily related to natural gas and electricity price volatility and the specific physical locations where we transact. We use energy derivatives to manage these risks. The use of energy derivatives in our various businesses depends on the particular energy market, and the operating and regulatory environments applicable to the business, as follows:
▪The California Utilities use natural gas and electricity derivatives, for the benefit of customers, with the objective of managing price risk and basis risks, and stabilizing and lowering natural gas and electricity costs. These derivatives include fixed price natural gas and electricity positions, options, and basis risk instruments, which are either exchange-traded or over-the-counter financial instruments, or bilateral physical transactions. This activity is governed by risk management and transacting activity plans that have been filed with and approved by the CPUC. Natural gas and electricity derivative activities are recorded as commodity costs that are offset by regulatory account balances and are recovered in rates. Net commodity cost impacts on the Condensed Consolidated Statements of Operations are reflected in Cost of Electric Fuel and Purchased Power or in Cost of Natural Gas.
▪SDG&E is allocated and may purchase CRRs, which serve to reduce the regional electricity price volatility risk that may result from local transmission capacity constraints. Unrealized gains and losses do not impact earnings, as they are offset by regulatory account balances. Realized gains and losses associated with CRRs, which are recoverable in rates, are recorded in Cost of Electric Fuel and Purchased Power on the Condensed Consolidated Statements of Operations.
▪Sempra Mexico and Sempra LNG may use natural gas and electricity derivatives, as appropriate, to optimize the earnings of their assets which support the following businesses: LNG, natural gas transportation and storage, and power generation. Gains and losses associated with undesignated derivatives are recognized in Energy-Related Businesses Revenues or in Energy-Related Businesses Cost of Sales on the Condensed Consolidated Statements of Operations. Certain of these derivatives may also be designated as cash flow hedges. Sempra Mexico may also use natural gas energy derivatives with the objective of managing price risk and lowering natural gas prices at its distribution operations. These derivatives, which are recorded as commodity costs that are offset by regulatory account balances and recovered in rates, are recognized in Cost of Natural Gas on the Condensed Consolidated Statements of Operations.
▪From time to time, our various businesses, including the California Utilities, may use other energy derivatives to hedge exposures such as the price of vehicle fuel and GHG allowances.
▪The California Utilities use natural gas and electricity derivatives, for the benefit of customers, with the objective of managing price risk and basis risks, and stabilizing and lowering natural gas and electricity costs. These derivatives include fixed-price natural gas and electricity positions, options, and basis risk instruments, which are either exchange-traded or over-the-counter financial instruments, or bilateral physical transactions. This activity is governed by risk management and transacting activity plans that have been filed with and approved by the CPUC. Natural gas and electricity derivative activities are recorded as commodity costs that are offset by regulatory account balances and are recovered in rates. Net commodity cost impacts on the Condensed Consolidated Statements of Operations are reflected in Cost of Electric Fuel and Purchased Power or in Cost of Natural Gas.
▪SDG&E is allocated and may purchase CRRs, which serve to reduce the regional electricity price volatility risk that may result from local transmission capacity constraints. Unrealized gains and losses do not impact earnings, as they are offset by regulatory account balances. Realized gains and losses associated with CRRs, which are recoverable in rates, are recorded in Cost of Electric Fuel and Purchased Power on the Condensed Consolidated Statements of Operations.
▪Sempra Mexico and Sempra LNG may use natural gas and electricity derivatives, as appropriate, to optimize the earnings of their assets which support the following businesses: LNG, natural gas transportation and storage, and power generation. Gains and losses associated with undesignated derivatives are recognized in Energy-Related Businesses Revenues or in Energy-Related Businesses Cost of Sales on the Condensed Consolidated Statements of Operations. Certain of these derivatives may also be designated as cash flow hedges. Sempra Mexico may also use natural gas energy derivatives with the objective of managing price risk and lowering natural gas prices at its distribution operations. These derivatives, which are recorded as commodity costs that are offset by regulatory account balances and recovered in rates, are recognized in Cost of Natural Gas on the Condensed Consolidated Statements of Operations.
▪From time to time, our various businesses, including the California Utilities, may use other energy derivatives to hedge exposures such as the price of vehicle fuel and greenhouse gas allowances.
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The following table summarizes net energy derivative volumes.
NET ENERGY DERIVATIVE VOLUMES
(Quantities in millions)
CommodityUnit of measure March 31, 2020 December 31, 2019
Sempra Energy Consolidated:     
Natural gasMMBtu 20
 32
ElectricityMWh 1
 2
Congestion revenue rightsMWh 45
 48
SDG&E:     
Natural gasMMBtu 29
 37
ElectricityMWh 2
 2
Congestion revenue rightsMWh 45
 48
SoCalGas:     
Natural gasMMBtu —
 2


NET ENERGY DERIVATIVE VOLUMES
(Quantities in millions)
CommodityUnit of measureSeptember 30, 2020December 31, 2019
Sempra Energy Consolidated:
Natural gasMMBtu19 32 
ElectricityMWh2 2 
Congestion revenue rightsMWh43 48 
SDG&E:
Natural gasMMBtu23 37 
ElectricityMWh1 2 
Congestion revenue rightsMWh43 48 
SoCalGas:
Natural gasMMBtu0 2 
In addition to the amounts noted above, we use commodity derivatives to manage risks associated with the physical locations of contractual obligations and assets, such as natural gas purchases and sales.
INTEREST RATE DERIVATIVES
We are exposed to interest rates primarily as a result of our current and expected use of financing. The California Utilities, as well as Sempra Energy and its other subsidiaries and JVs, periodically enter into interest rate derivative agreements intended to moderate our exposure to interest rates and to lower our overall costs of borrowing. In addition, we may utilize interest rate swaps, typically designated as cash flow hedges, to lock in interest rates on outstanding debt or in anticipation of future financings.
The following table presents the net notional amounts of our interest rate derivatives, excluding JVs.


INTEREST RATE DERIVATIVES
(Dollars in millions)
 March 31, 2020 December 31, 2019
 Notional debt Maturities Notional debt Maturities
Sempra Energy Consolidated:       
Cash flow hedges$1,531
 2020-2034 $1,445
 2020-2034
INTEREST RATE DERIVATIVES
(Dollars in millions)
 September 30, 2020December 31, 2019
 Notional debtMaturitiesNotional debtMaturities
Sempra Energy Consolidated:    
Cash flow hedges$1,500 2020-2034$1,445 2020-2034
FOREIGN CURRENCY DERIVATIVES
We utilize cross-currency swaps to hedge exposure related to Mexican peso-denominated debt at our Mexican subsidiaries and JVs. These cash flow hedges exchange our Mexican peso-denominated principal and interest payments into the U.S. dollar and swap Mexican variable interest rates for U.S. fixed interest rates. From time to time, Sempra Mexico and its JVs may use other foreign currency derivatives to hedge exposures related to cash flows associated with revenues from contracts denominated in Mexican pesos that are indexed to the U.S. dollar.
We are also exposed to exchange rate movements at our Mexican subsidiaries and JVs, which have U.S. dollar-denominated cash balances, receivables, payables and debt (monetary assets and liabilities) that give rise to Mexican currency exchange rate movements for Mexican income tax purposes. They also have deferred income tax assets and liabilities denominated in the Mexican peso, which must be translated to U.S. dollars for financial reporting purposes. In addition, monetary assets and liabilities and certain nonmonetary assets and liabilities are adjusted for Mexican inflation for Mexican income tax purposes. We utilize foreign currency derivatives as a means to manage the risk of exposure to significant fluctuations in our income tax expense and equity earnings from these impacts; however, we generally do not hedge our deferred income tax assets and liabilities or for inflation.
We also utilizeutilized foreign currency derivatives to hedge exposure to fluctuations in the Peruvian sol and Chilean peso related to the salesales of our operations in Peru and Chile, respectively.
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The following table presents the net notional amounts of our foreign currency derivatives, excluding JVs.
FOREIGN CURRENCY DERIVATIVESFOREIGN CURRENCY DERIVATIVESFOREIGN CURRENCY DERIVATIVES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
March 31, 2020 December 31, 2019 September 30, 2020December 31, 2019
Notional amount Maturities Notional amount Maturities Notional amountMaturitiesNotional amountMaturities
Sempra Energy Consolidated:       Sempra Energy Consolidated:    
Cross-currency swaps$306
 2020-2023 $306
 2020-2023Cross-currency swaps$306 2020-2023$306 2020-2023
Other foreign currency derivatives1,939
 2020-2021 1,796
 2020-2021Other foreign currency derivatives1,341 2020-20221,796 2020-2021
FINANCIAL STATEMENT PRESENTATION
The Condensed Consolidated Balance Sheets reflect the offsetting of net derivative positions and cash collateral with the same counterparty when a legal right of offset exists. The following tables provide the fair values of derivative instruments on the Condensed Consolidated Balance Sheets, including the amount of cash collateral receivables that were not offset asbecause the cash collateral was in excess of liability positions.


DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 March 31, 2020
 
Other current assets(1)
 Other long-term assets Other current liabilities Deferred credits and other
Sempra Energy Consolidated:       
Derivatives designated as hedging instruments:       
Interest rate and foreign exchange instruments$15
 $—
 $(29) $(210)
Derivatives not designated as hedging instruments:       
Foreign exchange instruments23
 —
 (82) —
Associated offsetting foreign exchange instruments(23) —
 23
 —
Commodity contracts not subject to rate recovery69
 9
 (69) (11)
Associated offsetting commodity contracts(65) (3) 65
 3
Commodity contracts subject to rate recovery23
 77
 (47) (50)
Associated offsetting commodity contracts(2) (2) 2
 2
Associated offsetting cash collateral—
 —
 13
 —
Net amounts presented on the balance sheet40
 81
 (124) (266)
Additional cash collateral for commodity contracts
not subject to rate recovery
37
 —
 —
 —
Additional cash collateral for commodity contracts
subject to rate recovery
19
 —
 —
 —
Total(2)
$96
 $81
 $(124) $(266)
SDG&E:       
Derivatives not designated as hedging instruments:       
Commodity contracts subject to rate recovery$20
 $77
 $(43) $(50)
Associated offsetting commodity contracts(2) (2) 2
 2
Associated offsetting cash collateral—
 —
 13
 —
Net amounts presented on the balance sheet18
 75
 (28) (48)
Additional cash collateral for commodity contracts
subject to rate recovery
15
 —
 —
 —
Total(2)
$33
 $75

$(28)
$(48)
SoCalGas:       
Derivatives not designated as hedging instruments:       
Commodity contracts subject to rate recovery$3
 $—
 $(4) $—
Net amounts presented on the balance sheet3
 —
 (4) —
Additional cash collateral for commodity contracts
subject to rate recovery
4
 —
 —
 —
Total$7
 $—
 $(4) $—
DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 September 30, 2020
 
Other current assets(1)
Other long-term assetsOther current liabilitiesDeferred credits and other
Sempra Energy Consolidated:    
Derivatives designated as hedging instruments:    
Interest rate and foreign exchange instruments$6 $2 $(22)$(188)
Derivatives not designated as hedging instruments:    
Foreign exchange instruments13 0 (22)0 
Associated offsetting foreign exchange instruments(13)0 13 0 
Commodity contracts not subject to rate recovery102 7 (114)(7)
Associated offsetting commodity contracts(100)(4)100 4 
Commodity contracts subject to rate recovery17 84 (32)(29)
Associated offsetting commodity contracts(2)0 2 0 
Net amounts presented on the balance sheet23 89 (75)(220)
Additional cash collateral for commodity contracts
not subject to rate recovery
41 0 0 0 
Additional cash collateral for commodity contracts
subject to rate recovery
24 0 0 0 
Total(2)
$88 $89 $(75)$(220)
SDG&E:    
Derivatives not designated as hedging instruments:    
Commodity contracts subject to rate recovery$14 $84 $(26)$(29)
Associated offsetting commodity contracts(2)0 2 0 
Net amounts presented on the balance sheet12 84 (24)(29)
Additional cash collateral for commodity contracts
subject to rate recovery
22 0 0 0 
Total(2)
$34 $84 $(24)$(29)
SoCalGas:    
Derivatives not designated as hedging instruments:    
Commodity contracts subject to rate recovery$3 $0 $(6)$0 
Net amounts presented on the balance sheet3 0 (6)0 
Additional cash collateral for commodity contracts
subject to rate recovery
2 0 0 0 
Total$5 $0 $(6)$0 
(1)Included in Current Assets: Fixed-Price Contracts and Other Derivatives for SDG&E.
(2)Normal purchase contracts previously measured at fair value are excluded.


70

DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETSDERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETSDERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
December 31, 2019 December 31, 2019
Other current assets(1)
 Other long-term assets Other current liabilities Deferred credits and other
Other current assets(1)
Other long-term assetsOther current liabilitiesDeferred credits and other
Sempra Energy Consolidated:       Sempra Energy Consolidated:    
Derivatives designated as hedging instruments:       Derivatives designated as hedging instruments:    
Interest rate and foreign exchange instruments$—
 $3
 $(17) $(140)Interest rate and foreign exchange instruments$0 $3 $(17)$(140)
Derivatives not designated as hedging instruments:       Derivatives not designated as hedging instruments:    
Foreign exchange instruments41
 —
 (20) —
Foreign exchange instruments41 0 (20)0 
Associated offsetting foreign exchange instruments(20) —
 20
 —
Associated offsetting foreign exchange instruments(20)0 20 0 
Commodity contracts not subject to rate recovery34
 11
 (41) (10)Commodity contracts not subject to rate recovery34 11 (41)(10)
Associated offsetting commodity contracts(32) (2) 32
 2
Associated offsetting commodity contracts(32)(2)32 2 
Commodity contracts subject to rate recovery41
 76
 (47) (47)Commodity contracts subject to rate recovery41 76 (47)(47)
Associated offsetting commodity contracts(6) (3) 6
 3
Associated offsetting commodity contracts(6)(3)6 3 
Associated offsetting cash collateral—
 —
 14
 —
Associated offsetting cash collateral0 0 14 0 
Net amounts presented on the balance sheet58
 85
 (53) (192)Net amounts presented on the balance sheet58 85 (53)(192)
Additional cash collateral for commodity contracts
not subject to rate recovery
43
 —
 —
 —
Additional cash collateral for commodity contracts
not subject to rate recovery
43 0 0 0 
Additional cash collateral for commodity contracts
subject to rate recovery
25
 —
 —
 —
Additional cash collateral for commodity contracts
subject to rate recovery
25 0 0 0 
Total(2)
$126
 $85
 $(53) $(192)
Total(2)
$126 $85 $(53)$(192)
SDG&E:       SDG&E:    
Derivatives not designated as hedging instruments:       Derivatives not designated as hedging instruments:    
Commodity contracts subject to rate recovery$30
 $76
 $(41) $(47)Commodity contracts subject to rate recovery$30 $76 $(41)$(47)
Associated offsetting commodity contracts(4) (3) 4
 3
Associated offsetting commodity contracts(4)(3)4 3 
Associated offsetting cash collateral—
 —
 14
 —
Associated offsetting cash collateral0 0 14 0 
Net amounts presented on the balance sheet26
 73
 (23) (44)Net amounts presented on the balance sheet26 73 (23)(44)
Additional cash collateral for commodity contracts
subject to rate recovery
16
 —
 —
 —
Additional cash collateral for commodity contracts
subject to rate recovery
16 0 0 0 
Total(2)
$42
 $73
 $(23) $(44)
Total(2)
$42 $73 $(23)$(44)
SoCalGas:       SoCalGas:    
Derivatives not designated as hedging instruments:       Derivatives not designated as hedging instruments:    
Commodity contracts subject to rate recovery$11
 $—
 $(6) $—
Commodity contracts subject to rate recovery$11 $0 $(6)$0 
Associated offsetting commodity contracts(2) —
 2
 —
Associated offsetting commodity contracts(2)0 2 0 
Net amounts presented on the balance sheet9
 —
 (4) —
Net amounts presented on the balance sheet9 0 (4)0 
Additional cash collateral for commodity contracts
subject to rate recovery
9
 —
 —
 —
Additional cash collateral for commodity contracts
subject to rate recovery
9 0 0 0 
Total$18
 $—
 $(4) $—
Total$18 $0 $(4)$0 
(1)Included in Current Assets: Fixed-Price Contracts and Other Derivatives for SDG&E.
(2)Normal purchase contracts previously measured at fair value are excluded.


71

The table below includes the effects of derivative instruments designated as cash flow hedges on the Condensed Consolidated Statements of Operations and in OCI and AOCI:
CASH FLOW HEDGE IMPACTS
(Dollars in millions)
Pretax gain (loss)
recognized in OCI		Pretax (loss) gain reclassified
from AOCI into earnings
Three months ended September 30, Three months ended September 30,
 20202019Location20202019
Sempra Energy Consolidated:     
Interest rate and foreign
exchange instruments(1)
$14 $(7)
Interest Expense(1)
$(3)$(1)
Other Income (Expense), Net4 (5)
Interest rate and foreign
exchange instruments
24 (62)Equity Earnings(5)(2)
Foreign exchange instruments(2)1 
Total$36 $(68) $(4)$(8)
SDG&E:     
Interest rate instruments(1)
$0 $0 
Interest Expense(1)
$0 $(1)
SoCalGas:
Interest rate instruments$0 $0 Interest Expense$0 $(1)
 Nine months ended September 30, Nine months ended September 30,
 20202019Location20202019
Sempra Energy Consolidated:     
Interest rate and foreign
exchange instruments(1)
$(73)$(25)
Interest Expense(1)
$(7)$(2)
Other Income (Expense), Net(33)0 
Interest rate instruments0 0 (Loss) Gain on Sale of Assets0 (10)
Interest rate and foreign
exchange instruments		(166)(222)Equity Earnings(6)(3)
Foreign exchange instruments14 (3)Revenues: Energy-
Related Businesses		2 (1)
Other Income (Expense), Net1 0 
Total$(225)$(250) $(43)$(16)
SDG&E:     
Interest rate instruments(1)
$0 $(1)
Interest Expense(1)
$0 $(3)
SoCalGas:
Interest rate instruments$0 $0 Interest Expense$0 $(1)
CASH FLOW HEDGE IMPACTS
(Dollars in millions)
 
Pretax (loss) gain
recognized in OCI
   
Pretax (loss) gain reclassified
from AOCI into earnings
 Three months ended March 31,   Three months ended March 31,
 2020 2019 Location 2020 2019
Sempra Energy Consolidated:         
Interest rate and foreign
exchange instruments(1)
$(92) $(3) 
Interest Expense(1)
 $(2) $(1)
     Other (Expense) Income, Net (41) 3
Interest rate and foreign
exchange instruments		(172) (68) Equity Earnings —
 (1)
Foreign exchange instruments21
 (3) Revenues: Energy-
Related Businesses		 2
 (1)
     Other (Expense) Income, Net 2
 —
Total$(243) $(74)   $(39) $—
SDG&E:         
Interest rate instruments(1)
$—
 $—
 
Interest Expense(1)
 $—
 $(1)
(1)    Amounts in 2019 include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE. On August 14, 2019, Otay Mesa Energy Center LLC paid in full its variable-rate loan and terminated its interest rate swaps.
(1)

Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE. On August 14, 2019, Otay Mesa Energy Center LLC paid in full its variable-rate loan and terminated its interest rate swaps.

For Sempra Energy Consolidated, we expect that net losses of $69$72 million, which are net of income tax benefit, that are currently recorded in AOCI related to cash flow hedges will be reclassified into earnings during the next 12 months as the hedged items affect earnings. SoCalGas expects that $1 million of losses, net of income tax benefit, that are currently recorded in AOCI related to cash flow hedges will be reclassified into earnings during the next 12 months as the hedged items affect earnings. Actual amounts ultimately reclassified into earnings depend on the interest rates in effect when derivative contracts mature.
For all forecasted transactions, the maximum remaining term over which we are hedging exposure to the variability of cash flows at March 31,September 30, 2020 is approximately 1514 years for Sempra Energy Consolidated. The maximum remaining term for which we are hedging exposure to the variability of cash flows at our equity method investees is 2019 years.
72

The following table summarizes the effects of derivative instruments not designated as hedging instruments on the Condensed Consolidated Statements of Operations.
UNDESIGNATED DERIVATIVE IMPACTS   
(Dollars in millions)   
  Pretax (loss) gain on derivatives recognized in earnings
  Three months ended March 31,
 Location2020 2019
Sempra Energy Consolidated:    
Foreign exchange instrumentsOther (Expense) Income, Net$(114) $10
Commodity contracts not subject
to rate recovery
Revenues: Energy-Related
Businesses
51
 —
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
(9) 2
Commodity contracts subject
to rate recovery
Cost of Natural Gas(3) 2
Total $(75) $14
SDG&E:    
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
$(9) $2
SoCalGas:    
Commodity contracts subject
to rate recovery
Cost of Natural Gas$(3) $2



UNDESIGNATED DERIVATIVE IMPACTS
(Dollars in millions)
  Pretax gain (loss) on derivatives recognized in earnings
  Three months ended
September 30,		Nine months ended
September 30,
 Location2020201920202019
Sempra Energy Consolidated:     
Foreign exchange instrumentsOther Income (Expense), Net$15 $(12)$(97)$7 
Commodity contracts not subject
to rate recovery
Revenues: Energy-Related
Businesses
(39)(8)25 9 
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
41 18 41 (7)
Commodity contracts subject
to rate recovery
Cost of Natural Gas0 (3)(6)(1)
Total $17 $(5)$(37)$8 
SDG&E:     
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
$41 $18 $41 $(7)
SoCalGas:     
Commodity contracts subject
to rate recovery
Cost of Natural Gas$0 $(3)$(6)$(1)
CONTINGENT FEATURES
For Sempra Energy Consolidated, SDG&E and SoCalGas, certain of our derivative instruments contain credit limits which vary depending on our credit ratings. Generally, these provisions, if applicable, may reduce our credit limit if a specified credit rating agency reduces our ratings. In certain cases, if our credit ratings were to fall below investment grade, the counterparty to these derivative liability instruments could request immediate payment or demand immediate and ongoing full collateralization. 
For Sempra Energy Consolidated, the total fair value of this group of derivative instruments in a net liability position at March 31,September 30, 2020 and December 31, 2019 was $5$8 million and $21 million, respectively. For SoCalGas, the total fair value of this group of derivative instruments in a net liability position at both March 31,September 30, 2020 and December 31, 2019 was $7 million and $4 million.million, respectively. At March 31,September 30, 2020, if the credit ratings of Sempra Energy or SoCalGas were reduced below investment grade, $5$8 million and $4$7 million, respectively, of additional assets could be required to be posted as collateral for these derivative contracts.
For Sempra Energy Consolidated, SDG&E and SoCalGas, some of our derivative contracts contain a provision that would permit the counterparty, in certain circumstances, to request adequate assurance of our performance under the contracts. Such additional assurance, if needed, is not material and is not included in the amounts above.
NOTE 9. FAIR VALUE MEASUREMENTS
We discuss the valuation techniques and inputs we use to measure fair value and the definition of the three levels of the fair value hierarchy in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
73

RECURRING FAIR VALUE MEASURES
The three tables below, by level within the fair value hierarchy, set forth our financial assets and liabilities that were accounted for at fair value on a recurring basis at March 31,September 30, 2020 and December 31, 2019. We classify financial assets and liabilities in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair valued assets and liabilities, and their placement within the fair value hierarchy. We have not changed the valuation techniques or types of inputs we use to measure recurring fair value since December 31, 2019.2019.
The fair value of commodity derivative assets and liabilities is presented in accordance with our netting policy, as we discuss in Note 8 under “Financial Statement Presentation.”
The determination of fair values, shown in the tables below, incorporates various factors, including but not limited to, the credit standing of the counterparties involved and the impact of credit enhancements (such as cash deposits, letters of credit and priority interests).
Our financial assets and liabilities that were accounted for at fair value on a recurring basis in the tables below include the following (other than a $5 million investment at December 31, 2019, measured at net asset value):
▪Nuclear decommissioning trusts reflect the assets of SDG&E’s NDT, excluding cash balances. A third-party trustee values the trust assets using prices from a pricing service based on a market approach. We validate these prices by comparison to prices from other independent data sources. Securities are valued using quoted prices listed on nationally recognized securities exchanges or based on closing prices reported in the active market in which the identical security is traded (Level 1). Other securities are valued based on yields that are currently available for comparable securities of issuers with similar credit ratings (Level 2).
▪For commodity contracts, interest rate derivatives and foreign exchange instruments, we primarily use a market or income 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 in “Level 3 Information.”
▪Rabbi Trust investments include marketable securities that we value using a market approach based on closing prices reported in the active market in which the identical security is traded (Level 1). These investments in marketable securities were negligible at both March 31, 2020 and December 31, 2019.

▪Nuclear decommissioning trusts reflect the assets of SDG&E’s NDT, excluding cash balances. A third-party trustee values the trust assets using prices from a pricing service based on a market approach. We validate these prices by comparison to prices from other independent data sources. Securities are valued using quoted prices listed on nationally recognized securities exchanges or based on closing prices reported in the active market in which the identical security is traded (Level 1). Other securities are valued based on yields that are currently available for comparable securities of issuers with similar credit ratings (Level 2).

▪For commodity contracts, interest rate derivatives and foreign exchange instruments, we primarily use a market or income 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 in “Level 3 Information – SDG&E.”
▪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 September 30, 2020 and December 31, 2019.
▪As we discuss in Note 6, in July 2020, Sempra Energy entered into a Support Agreement for the benefit of CFIN. We measure the Support Agreement, which includes a guarantee obligation, a put option and a call option, net of related guarantee fees, at fair value on a recurring basis. We use a discounted cash flow model to value the Support Agreement, net of related guarantee fees. Because some of the inputs that are significant to the valuation are less observable, the Support Agreement is classified as Level 3, as we describe below in “Level 3 Information – Sempra LNG.”
74

RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
 Fair value at March 31, 2020
 Level 1 Level 2 Level 3 Total
Assets:       
Nuclear decommissioning trusts:       
Equity securities$299
 $5
 $—
 $304
Debt securities:       
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
46
 24
 —
 70
Municipal bonds—
 330
 —
 330
Other securities—
 269
 —
 269
Total debt securities46
 623
 —
 669
Total nuclear decommissioning trusts(1)
345
 628
 —
 973
Interest rate and foreign exchange instruments—
 15
 —
 15
Commodity contracts not subject to rate recovery—
 10
 —
 10
Effect of netting and allocation of collateral(2)
37
 —
 —
 37
Commodity contracts subject to rate recovery—
 4
 92
 96
Effect of netting and allocation of collateral(2)
14
 —
 5
 19
Total$396
 $657
 $97
 $1,150
        
Liabilities:       
Interest rate and foreign exchange instruments$—
 $298
 $—
 $298
Commodity contracts not subject to rate recovery—
 12
 —
 12
Commodity contracts subject to rate recovery13
 4
 76
 93
Effect of netting and allocation of collateral(2)
(13) —
 —
 (13)
Total$—
 $314
 $76
 $390
        
 Fair value at December 31, 2019
 Level 1 Level 2 Level 3 Total
Assets:       
Nuclear decommissioning trusts:       
Equity securities$503
 $6
 $—
 $509
Debt securities:       
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
46
 11
 —
 57
Municipal bonds—
 282
 —
 282
Other securities—
 226
 —
 226
Total debt securities46
 519
 —
 565
Total nuclear decommissioning trusts(1)
549
 525
 —
 1,074
Interest rate and foreign exchange instruments—
 24
 —
 24
Commodity contracts not subject to rate recovery—
 11
 —
 11
Effect of netting and allocation of collateral(2)
43
 —
 —
 43
Commodity contracts subject to rate recovery5
 8
 95
 108
Effect of netting and allocation of collateral(2)
11
 8
 6
 25
Total$608
 $576
 $101
 $1,285
        
Liabilities:       
Interest rate and foreign exchange instruments$—
 $157
 $—
 $157
Commodity contracts not subject to rate recovery—
 17
 —
 17
Commodity contracts subject to rate recovery14
 4
 67
 85
Effect of netting and allocation of collateral(2)
(14) —
 —
 (14)
Total$—
 $178
 $67
 $245
RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
 Fair value at September 30, 2020
 Level 1Level 2Level 3Total
Assets:    
Nuclear decommissioning trusts:    
Equity securities$382 $7 $0 $389 
Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
26 23 0 49 
Municipal bonds0 335 0 335 
Other securities0 271 0 271 
Total debt securities26 629 0 655 
Total nuclear decommissioning trusts(1)
408 636 0 1,044 
Interest rate and foreign exchange instruments0 8 0 8 
Commodity contracts not subject to rate recovery0 5 0 5 
Effect of netting and allocation of collateral(2)
41 0 0 41 
Commodity contracts subject to rate recovery9 4 86 99 
Effect of netting and allocation of collateral(2)
18 0 6 24 
Support Agreement, net of related guarantee fees0 0 6 6 
Total$476 $653 $98 $1,227 
Liabilities:    
Interest rate and foreign exchange instruments$0 $219 $0 $219 
Commodity contracts not subject to rate recovery0 17 0 17 
Commodity contracts subject to rate recovery0 6 53 59 
Total$0 $242 $53 $295 
 Fair value at December 31, 2019
 Level 1Level 2Level 3Total
Assets:    
Nuclear decommissioning trusts:    
Equity securities$503 $6 $0 $509 
Debt securities:   
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
46 11 0 57 
Municipal bonds0 282 0 282 
Other securities0 226 0 226 
Total debt securities46 519 0 565 
Total nuclear decommissioning trusts(1)
549 525 0 1,074 
Interest rate and foreign exchange instruments0 24 0 24 
Commodity contracts not subject to rate recovery0 11 0 11 
Effect of netting and allocation of collateral(2)
43 0 0 43 
Commodity contracts subject to rate recovery5 8 95 108 
Effect of netting and allocation of collateral(2)
11 8 6 25 
Total$608 $576 $101 $1,285 
Liabilities:    
Interest rate and foreign exchange instruments$0 $157 $0 $157 
Commodity contracts not subject to rate recovery0 17 0 17 
Commodity contracts subject to rate recovery14 4 67 85 
Effect of netting and allocation of collateral(2)
(14)0 0 (14)
Total$0 $178 $67 $245 
(1)    Excludes cash and cash equivalents.(1)
Excludes cash and cash equivalents.
(2)
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)    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.
75

RECURRING FAIR VALUE MEASURES – SDG&E
(Dollars in millions)
 Fair value at March 31, 2020
 Level 1 Level 2 Level 3 Total
Assets:       
Nuclear decommissioning trusts:       
Equity securities$299
 $5
 $—
 $304
Debt securities:       
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
46
 24
 —
 70
Municipal bonds—
 330
 —
 330
Other securities—
 269
 —
 269
Total debt securities46
 623
 —
 669
Total nuclear decommissioning trusts(1)
345
 628
 —
 973
Commodity contracts subject to rate recovery—
 1
 92
 93
Effect of netting and allocation of collateral(2)
10
 —
 5
 15
Total$355
 $629
 $97
 $1,081
        
Liabilities:       
Commodity contracts subject to rate recovery$13
 $—
 $76
 $89
Effect of netting and allocation of collateral(2)
(13) —
 —
 (13)
Total$—
 $—
 $76
 $76
        
 Fair value at December 31, 2019
 Level 1 Level 2 Level 3 Total
Assets:       
Nuclear decommissioning trusts:       
Equity securities$503
 $6
 $—
 $509
Debt securities:       
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
46
 11
 —
 57
Municipal bonds—
 282
 —
 282
Other securities—
 226
 —
 226
Total debt securities46
 519
 —
 565
Total nuclear decommissioning trusts(1)
549
 525
 —
 1,074
Commodity contracts subject to rate recovery1
 3
 95
 99
Effect of netting and allocation of collateral(2)
10
 —
 6
 16
Total$560
 $528
 $101
 $1,189
        
Liabilities:       
Commodity contracts subject to rate recovery$14
 $—
 $67
 $81
Effect of netting and allocation of collateral(2)
(14) —
 —
 (14)
Total$—
 $—
 $67
 $67
(1)
Excludes cash and cash equivalents.
(2)
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 September 30, 2020
 Level 1Level 2Level 3Total
Assets:    
Nuclear decommissioning trusts:    
Equity securities$382 $7 $0 $389 
Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
26 23 0 49 
Municipal bonds0 335 0 335 
Other securities0 271 0 271 
Total debt securities26 629 0 655 
Total nuclear decommissioning trusts(1)
408 636 0 1,044 
Commodity contracts subject to rate recovery9 1 86 96 
Effect of netting and allocation of collateral(2)
16 0 6 22 
Total$433 $637 $92 $1,162 
Liabilities:    
Commodity contracts subject to rate recovery$0 $0 $53 $53 
Total$0 $0 $53 $53 
 Fair value at December 31, 2019
 Level 1Level 2Level 3Total
Assets:    
Nuclear decommissioning trusts:    
Equity securities$503 $6 $0 $509 
Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
46 11 0 57 
Municipal bonds0 282 0 282 
Other securities0 226 0 226 
Total debt securities46 519 0 565 
Total nuclear decommissioning trusts(1)
549 525 0 1,074 
Commodity contracts subject to rate recovery1 3 95 99 
Effect of netting and allocation of collateral(2)
10 0 6 16 
Total$560 $528 $101 $1,189 
Liabilities:    
Commodity contracts subject to rate recovery$14 $0 $67 $81 
Effect of netting and allocation of collateral(2)
(14)0 0 (14)
Total$0 $0 $67 $67 

(1)    Excludes cash and cash equivalents.
(2)    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.

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RECURRING FAIR VALUE MEASURES – SOCALGASRECURRING FAIR VALUE MEASURES – SOCALGASRECURRING FAIR VALUE MEASURES – SOCALGAS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Fair value at March 31, 2020 Fair value at September 30, 2020
Level 1 Level 2 Level 3 Total Level 1Level 2Level 3Total
Assets:       Assets:    
Commodity contracts subject to rate recovery$—
 $3
 $—
 $3
Commodity contracts subject to rate recovery$0 $3 $0 $3 
Effect of netting and allocation of collateral(1)
4
 —
 —
 4
Effect of netting and allocation of collateral(1)
2 0 0 2 
Total$4
 $3
 $—
 $7
Total$2 $3 $0 $5 
       
Liabilities:       Liabilities:    
Commodity contracts subject to rate recovery$—
 $4
 $—
 $4
Commodity contracts subject to rate recovery$0 $6 $0 $6 
Total$—
 $4
 $—
 $4
Total$0 $6 $0 $6 
       
Fair value at December 31, 2019 Fair value at December 31, 2019
Level 1 Level 2 Level 3 Total Level 1Level 2Level 3Total
Assets:       Assets:    
Commodity contracts subject to rate recovery$4
 $5
 $—
 $9
Commodity contracts subject to rate recovery$4 $5 $0 $9 
Effect of netting and allocation of collateral(1)
1
 8
 —
 9
Effect of netting and allocation of collateral(1)
1 8 0 9 
Total$5
 $13
 $—
 $18
Total$5 $13 $0 $18 
       
Liabilities:       Liabilities:    
Commodity contracts subject to rate recovery$—
 $4
 $—
 $4
Commodity contracts subject to rate recovery$0 $4 $0 $4 
Total$—
 $4
 $—
 $4
Total$0 $4 $0 $4 
(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.(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 Information
SDG&E
The table below sets forth reconciliations of changes in the fair value of CRRs and long-term, fixed-price electricity positions classified as Level 3 in the fair value hierarchy for Sempra Energy Consolidated and SDG&E.
LEVEL 3 RECONCILIATIONS(1)
(Dollars in millions)
 Three months ended September 30,
 20202019
Balance at July 1$17 $176 
Realized and unrealized losses(4)(24)
Allocated transmission instruments1 0 
Settlements19 27 
Balance at September 30$33 $179 
Change in unrealized gains (losses) relating to instruments still held at September 30$7 $1 
Nine months ended September 30,
20202019
Balance at January 1$28 $179 
Realized and unrealized losses(18)(32)
Allocated transmission instruments2 0 
Settlements21 32 
Balance at September 30$33 $179 
Change in unrealized gains (losses) relating to instruments still held at September 30$(1)$12 
LEVEL 3 RECONCILIATIONS(1)
(Dollars in millions)
 Three months ended March 31,
 2020 2019
Balance at January 1$28
 $179
Realized and unrealized (losses) gains(5) 5
Settlements(7) (2)
Balance at March 31$16
 $182
Change in unrealized gains (losses) relating to instruments still held at March 31$(6) $13
(1)    Excludes the effect of the contractual ability to settle contracts under master netting agreements.
(1)

Excludes the effect of the contractual ability to settle contracts under master netting agreements.

Inputs used to determine the fair value of CRRs and fixed-price electricity positions are reviewed and compared with market conditions to determine reasonableness. SDG&E expects all costs related to these instruments to be recoverable through customer rates. As such, there is no impact to earnings from changes in the fair value of these instruments.
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CRRs are recorded at fair value based almost entirely on the most current auction prices published by the California ISO, an objective source. Annual auction prices are published once a year, typically in the middle of November, and are the basis for valuing CRRs settling in the following year. For the CRRs settling from January 1 to December 31, the auction price inputs, at a given location, were in the following ranges for the years indicated below:
CONGESTION REVENUE RIGHTS AUCTION PRICE INPUTS
  
Settlement yearPrice per MWhMedian price per MWh
2020$(3.77)to$6.03
$(1.58)
2019(8.57)to35.21
(2.94)



CONGESTION REVENUE RIGHTS AUCTION PRICE INPUTS
Settlement yearPrice per MWhMedian price per MWh
2020$(3.77)to$6.03 $(1.58)
2019(8.57)to35.21 (2.94)
The impact associated with discounting is negligible. Because these auction prices are a less observable input, these instruments are classified as Level 3. The fair value of these instruments is derived from auction price differences between two locations. Positive values between two locations represent expected future reductions in congestion costs, whereas negative values between two locations represent expected future charges. Valuation of our CRRs is sensitive to a change in auction price. If auction prices at one location increase (decrease) relative to another location, this could result in a higher (lower) fair value measurement. We summarize CRR volumes in Note 8.
Long-term, fixed-price electricity positions that are valued using significant unobservable data are classified as Level 3 because the contract terms relate to a delivery location or tenor for which observable market rate information is not available. The fair value of the net electricity positions classified as Level 3 is derived from a discounted cash flow model using market electricity forward price inputs. The range and weighted-average price of these inputs at March 31September 30 were as follows:
LONG-TERM, FIXED-PRICE ELECTRICITY POSITIONS PRICE INPUTS  
   
Settlement yearPrice per MWhWeighted-average price per MWh
2020$16.51
to$52.45
$35.41
2019 23.25
to 81.75
 42.49

LONG-TERM, FIXED-PRICE ELECTRICITY POSITIONS PRICE INPUTS
Settlement yearPrice per MWhWeighted-average price per MWh
2020$19.45 to$71.25 $38.14 
201921.60 to57.20 38.29 
A significant increase (decrease) in market electricity forward prices would result in a significantly higher (lower) fair value. We summarize long-term, fixed-price electricity position volumes in Note 8.
Realized gains and losses associated with CRRs and long-term, fixed-price electricity positions, which are recoverable in rates, are recorded in Cost of Electric Fuel and Purchased Power on the Condensed Consolidated Statements of Operations. Because unrealized gains and losses are recorded as regulatory assets and liabilities, they do not affect earnings.

Sempra LNG
The table below sets forth a reconciliation of changes in the fair value of Sempra Energy’s Support Agreement for the benefit of CFIN classified as Level 3 in the fair value hierarchy for Sempra Energy Consolidated.
LEVEL 3 RECONCILIATION
(Dollars in millions)
Three months ended September 30, 2020
Balance at July 1$0 
Realized and unrealized gains(1)
7 
Settlements(1)
Balance at September 30(2)
$6 
Change in unrealized gains (losses) relating to instruments still held at September 30$6 
(1)    Net gains are included in Interest Income and net losses are included in Interest Expense on the Sempra Energy Condensed Consolidated Statements of Operations.
(2)    Included in Other Current Assets on the Sempra Energy Condensed Consolidated Balance Sheets.

The fair value of the Support Agreement, net of related guarantee fees, is based on a discounted cash flow model using a probability of default and survival methodology. Our estimate of fair value considers inputs such as third-party default rates, credit ratings, recovery rates, and risk-adjusted discount rates, which may be readily observable, market corroborated or generally unobservable inputs. Because CFIN’s credit rating and related default and survival rates are unobservable inputs that are
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significant to the valuation, the Support Agreement, net of related guarantee fees, is classified as Level 3. We assigned CFIN an internally developed credit rating of A3 and relied on default rate data published by Moody’s to assign a probability of default. A hypothetical change in the credit rating up or down one notch would not result in a significant change in the fair value of the Support Agreement.
Fair Value of Financial Instruments
The fair values of certain of our financial instruments (cash, accounts and notes receivable, short-term amounts due to/from unconsolidated affiliates, dividends and accounts payable, short-term debt and customer deposits) approximate their carrying amounts because of the short-term nature of these instruments. Investments in life insurance contracts that we hold in support of our Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans are carried at cash surrender values, which represent the amount of cash that could be realized under the contracts. The following table provides the carrying amounts and fair values of certain other financial instruments that are not recorded at fair value on the Condensed Consolidated Balance Sheets.
FAIR VALUE OF FINANCIAL INSTRUMENTS
(Dollars in millions)
 September 30, 2020
 Carrying
amount		Fair value
 Level 1Level 2Level 3Total
Sempra Energy Consolidated:     
Long-term amounts due from unconsolidated affiliates(1)
$620 $0 $649 $0 $649 
Long-term amounts due to unconsolidated affiliates271 0 280 0 280 
Total long-term debt(2)
23,588 0 26,105 0 26,105 
SDG&E:     
Total long-term debt(3)
$6,505 $0 $7,481 $0 $7,481 
SoCalGas:     
Total long-term debt(4)
$4,759 $0 $5,573 $0 $5,573 
 December 31, 2019
 Carrying
amount		Fair value
 Level 1Level 2Level 3Total
Sempra Energy Consolidated:     
Long-term amounts due from unconsolidated affiliates$742 $0 $759 $— $759 
Long-term amounts due to unconsolidated affiliates195 0 184 0 184 
Total long-term debt(2)
21,247 0 22,638 26 22,664 
SDG&E:     
Total long-term debt(3)
$5,140 $0 $5,662 $0 $5,662 
SoCalGas:     
Total long-term debt(4)
$3,809 $0 $4,189 $0 $4,189 
FAIR VALUE OF FINANCIAL INSTRUMENTS
(Dollars in millions)
 March 31, 2020
 Carrying
amount		 Fair value
  Level 1 Level 2 Level 3 Total
Sempra Energy Consolidated:         
Long-term amounts due from unconsolidated affiliates(1)
$599
 $—
 $627
 $6
 $633
Long-term amounts due to unconsolidated affiliates263
 —
 238
 —
 238
Total long-term debt(2)
21,204
 —
 22,049
 —
 22,049
SDG&E:         
Total long-term debt(3)
$5,523
 $—
 $6,281
 $—
 $6,281
SoCalGas:         
Total long-term debt(4)
$4,459
 $—
 $4,894
 $—
 $4,894
          
 December 31, 2019
 Carrying
amount		 Fair value
  Level 1 Level 2 Level 3 Total
Sempra Energy Consolidated:         
Long-term amounts due from unconsolidated affiliates$742
 $—
 $759
 $—
 $759
Long-term amounts due to unconsolidated affiliates195
 —
 184
 —
 184
Total long-term debt(2)
21,247
 —
 22,638
 26
 22,664
SDG&E:         
Total long-term debt(3)
$5,140
 $—
 $5,662
 $—
 $5,662
SoCalGas:         
Total long-term debt(4)
$3,809
 $—
 $4,189
 $—
 $4,189
(1)    Before allowances for credit losses of $3 million at September 30, 2020.
(1)
(2)    Before reductions of unamortized discount and debt issuance costs of $263 million and $225 million at September 30, 2020 and December 31, 2019, respectively, and excluding finance lease obligations of $1,335 million and $1,289 million at September 30, 2020 and December 31, 2019, respectively.
(3)    Before reductions of unamortized discount and debt issuance costs of $59 million and $48 million at September 30, 2020 and December 31, 2019, respectively, and excluding finance lease obligations of $1,278 million and $1,270 million at September 30, 2020 and December 31, 2019, respectively.
(4)    Before reductions of unamortized discount and debt issuance costs of $41 million and $34 million at September 30, 2020 and December 31, 2019, respectively, and excluding finance lease obligations of $57 million and $19 million at September 30, 2020 and December 31, 2019, respectively.

Before allowances for credit losses of $7 million at March 31, 2020.
(2)
Before reductions of unamortized discount and debt issuance costs of $228 million and $225 million at March 31, 2020 and December 31, 2019, respectively, and excluding finance lease obligations of $1,301 million and $1,289 million at March 31, 2020 and December 31, 2019, respectively.
(3)
Before reductions of unamortized discount and debt issuance costs of $47 million and $48 million at March 31, 2020 and December 31, 2019, respectively, and excluding finance lease obligations of $1,268 million and $1,270 million at March 31, 2020 and December 31, 2019, respectively.
(4)
Before reductions of unamortized discount and debt issuance costs of $41 million and $34 million at March 31, 2020 and December 31, 2019, respectively, and excluding finance lease obligations of $33 million and $19 million at March 31, 2020 and December 31, 2019, respectively.

We provide the fair values for the securities held in the NDT related to SONGS in Note 10.
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NOTE 10. SAN ONOFRE NUCLEAR GENERATING STATION
We provide below updates to ongoing matters related to SONGS, a nuclear generating facility near San Clemente, California that ceased operations in June 2013, and in which SDG&E has a 20% ownership interest. We discuss SONGS further in Note 15 of the Notes to Consolidated Financial Statements in the Annual Report.
NUCLEAR DECOMMISSIONING AND FUNDING


As a result of Edison’s decision to permanently retire SONGS Units 2 and 3, Edison began the decommissioning phase of the plant. We expect the majority of the decommissioning work to take 10 years after receipt of all the required permits. The coastal development permit, the last permit required to be obtained, was issued in October 2019. The Samuel Lawrence Foundation filed a writ petition under the California Coastal Act in LA Superior Court in December 2019 seeking to invalidate this permit and to obtain injunctive relief to stop decommissioning work. In September 2020, the permitSamuel Lawrence Foundation filed another writ petition under the California Coastal Act in LA Superior Court seeking to set aside the California Coastal Commission’s July 2020 approval of the inspection and maintenance plan for the SONGS’ canisters and to obtain injunctive relief to stop decommissioning work. Major decommissioning work began in 2020.2020 and has not been interrupted by the writ petitions filed by the Samuel Lawrence Foundation. Decommissioning of Unit 1, removed from service in 1992, is largely complete. The remaining work for Unit 1 will be completed once Units 2 and 3 are dismantled and the spent fuel is removed from the site. The spent fuel is currently being stored on-site, until the DOE identifies a spent fuel storage facility and puts in place a program for the fuel’s disposal, as we discuss below. SDG&E is responsible for approximately 20% of the total contract price.
In accordance with state and federal requirements and regulations, SDG&E has assets held in the NDT to fund its share of decommissioning costs for SONGS Units 1, 2 and 3. The amounts collected in rates for SONGS’ decommissioning are invested in the NDT, which is comprised of externally managed trust funds. Amounts held by the NDT are invested in accordance with CPUC regulations. SDG&E classifies debt and equity securities held in the NDT as available-for-sale. The NDT assets are presented on the Sempra Energy and SDG&E Condensed Consolidated Balance Sheets at fair value with the offsetting credits recorded in noncurrent Regulatory Liabilities.
Except for the use of funds for the planning of decommissioning activities or NDT administrative costs, CPUC approval is required for SDG&E to access the NDT assets to fund SONGS decommissioning costs for Units 2 and 3. In March 2020, SDG&E received authorization from the CPUC to access NDT funds of up to $109 million for forecasted 2020 costs.
In December 2016,September 2020, the IRS and the U.S. Department of the Treasury issued proposedpublished final regulations that clarify the definition of “nuclear decommissioning costs,” which are costs that may be paid for or reimbursed from a qualified trust fund. The final regulations adopted most of the provisions of the proposed regulations stateissued in December 2016. The final regulations apply to taxable years ending on or after September 4, 2020 and confirm that costs related to the construction and maintenance of independent spent fuel management installations are included in the definition of “nuclear decommissioning costs.” The proposed regulations will be effective prospectively once they are finalized. SDG&E is awaiting the adoption of, or additional refinementcosts” includes amounts related to the proposedstorage of spent nuclear fuel at both on-site and off-site ISFSIs.
The final regulations before determining whetheralso clarify that costs incurred for ISFSIs that may be or are expected to be reimbursed by the proposedDOE may be paid or reimbursed from a qualified trust fund. Accordingly, the final regulations will allow SDG&E the option to access the NDTqualified trust funds for reimbursement or payment of the spent fuel management costs incurred in 2017 and subsequent years. Further clarification of the proposed regulations could enable SDG&E to access the NDT to recover spent fuel managementstorage costs before Edison reaches final settlement with the DOE regarding the DOE’s reimbursement of these costs. Historically, the DOE’s reimbursements of spent fuel storage costs have not resulted in timely or complete recovery of these costs. We discuss the DOE’s responsibility for spent nuclear fuel below. The IRS held public hearings on the proposed regulations in October 2017. It is unclear when clarification of the proposed regulations might be provided or when the proposed regulations will be finalized.

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The following table shows the fair values and gross unrealized gains and losses for the securities held in the NDT. We provide additional fair value disclosures for the NDT in Note 9.
NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
 CostGross
unrealized
gains		Gross
unrealized
losses		Estimated
fair
value
At September 30, 2020:    
Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)
$48 $1 $0 $49 
Municipal bonds(2)
318 18 (1)335 
Other securities(3)
258 14 (1)271 
Total debt securities624 33 (2)655 
Equity securities147 254 (12)389 
Cash and cash equivalents13 0 0 13 
Total$784 $287 $(14)$1,057 
At December 31, 2019:    
Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies$57 $0 $0 $57 
Municipal bonds270 12 0 282 
Other securities218 9 (1)226 
Total debt securities545 21 (1)565 
Equity securities176 339 (6)509 
Cash and cash equivalents8 0 0 8 
Total$729 $360 $(7)$1,082 
(1)Note 9.    Maturity dates are 2022-2050.
(2)Maturity dates are 2020-2056.
NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
 Cost 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair
value
At March 31, 2020:       
Debt securities:       
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)
$68
 $2
 $—
 $70
Municipal bonds(2)
320
 12
 (2) 330
Other securities(3)
276
 4
 (11) 269
Total debt securities664
 18
 (13) 669
Equity securities141
 185
 (22) 304
Cash and cash equivalents14
 —
 —
 14
Total$819
 $203
 $(35) $987
At December 31, 2019:       
Debt securities:       
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies$57
 $—
 $—
 $57
Municipal bonds270
 12
 —
 282
Other securities218
 9
 (1) 226
Total debt securities545
 21
 (1) 565
Equity securities176
 339
 (6) 509
Cash and cash equivalents8
 —
 —
 8
Total$729
 $360
 $(7) $1,082
(3)    Maturity dates are 2020-2072.
(1)

Maturity dates are 2021-2050.
(2)
Maturity dates are 2020-2056.
(3)
Maturity dates are 2020-2072.
The following table shows the proceeds from sales of securities in the NDT and gross realized gains and losses on those sales.
SALES OF SECURITIES IN THE NDT
(Dollars in millions)
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
Proceeds from sales$294 $231 $1,091 $728 
Gross realized gains9 5 108 18 
Gross realized losses(2)(1)(13)(4)
SALES OF SECURITIES IN THE NDT    
(Dollars in millions)    
  Three months ended March 31,
  2020 2019
Proceeds from sales $552
 $225
Gross realized gains 92
 5
Gross realized losses (5) (2)


Net unrealized gains and losses, as well as realized gains and losses that are reinvested in the NDT, are included in noncurrent Regulatory Liabilities on Sempra Energy’s and SDG&E’s Condensed Consolidated Balance Sheets. We determine the cost of securities in the trusts on the basis of specific identification.
ASSET RETIREMENT OBLIGATION AND SPENT NUCLEAR FUEL
The present value of SDG&E’s ARO related to decommissioning costs for the SONGS units was $608$593 million at March 31,September 30, 2020. That amount includes the cost to decommission Units 2 and 3, and the remaining cost to complete the decommissioning of Unit 1, which is substantially complete. The ARO for all three units is based on a cost study prepared in 2017 that is pending CPUC approval. The ARO for Units 2 and 3 reflects the acceleration of the start of decommissioning of these units as a result of the early closure of the plant. SDG&E’s share of total decommissioning costs in 2020 dollars is approximately $860 million.

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U.S. DEPARTMENT OF ENERGY NUCLEAR FUEL DISPOSAL


Spent nuclear fuel from SONGS is currently stored on-site in an ISFSI licensed by the Nuclear Regulatory Commission or temporarily in spent fuel pools.Commission. In October 2015, the California Coastal Commission approved Edison’s application to expand the ISFSI. The ISFSI expansion began construction in 2016 and the transfer of the spent nuclear fuel from Units 2 and 3 to the ISFSI began in 2018.2018 and was completed in August 2020. The ISFSI will operate until 2049, when it is assumed that the DOE will have taken custody of all the SONGS spent fuel. The ISFSI would then be decommissioned, and the site restored to its original environmental state. Until then, SONGS owners are responsible for interim storage of spent nuclear fuel at SONGS.
The Nuclear Waste Policy Act of 1982 made the DOE responsible for accepting, transporting, and disposing of spent nuclear fuel. However, it is uncertain when the DOE will begin accepting spent nuclear fuel from SONGS. This delay will lead to increased costs for spent fuel storage. In November 2019, Edison filed a claim for spent fuel management costs in the U.S. Court of Federal Claims for the time period from January 2017 through July 2018. It is unclear when Edison will pursue litigation claims for spent fuel management costs incurred on or after August 1, 2018. SDG&E will continue to support Edison in its pursuit of claims on behalf of the SONGS co-owners against the DOE for its failure to timely accept the spent nuclear fuel.
NUCLEAR INSURANCE
SDG&E and the other owners of SONGS have insurance to cover claims from nuclear liability incidents arising at SONGS. Currently, this insurance provides $450 million in coverage limits, the maximum amount available, including coverage for acts of terrorism. In addition, the Price-Anderson Act provides an additional $110 million of coverage. If a nuclear liability loss occurs at SONGS and exceeds the $450 million insurance limit, this additional coverage would be available to provide a total of $560 million in coverage limits per incident.
As a result of updated coverage assessments, the SONGS owners have nuclear property damage insurance of $130 million, which exceeds the minimum federal requirements of $50 million. This insurance coverage is provided through NEIL. The NEIL policies have specific exclusions and limitations that can result in reduced or eliminated coverage. Insured members as a group are subject to retrospective premium assessments to cover losses sustained by NEIL under all issued policies. SDG&E could be assessed up to $3.5 million of retrospective premiums based on overall member claims.
The nuclear property insurance program includes an industry aggregate loss limit for non-certified acts of terrorism (as defined by the Terrorism Risk Insurance Act) of $3.24 billion. This is the maximum amount that will be paid to insured members who suffer losses or damages from these non-certified terrorist acts.
NOTE 11. COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS
We accrue losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued, may exceed applicable insurance coverage and could materially adversely affect our business, cash flows, results of operations, financial condition and prospects. Unless otherwise indicated, we are unable to estimate reasonably possible losses in excess of any amounts accrued.
At March 31,September 30, 2020, loss contingency accruals for legal matters, including associated legal fees, that are probable and estimable were $442$444 million for Sempra Energy Consolidated, including $297$299 million for SoCalGas. Amounts for Sempra Energy Consolidated and SoCalGas include $286$273 million for matters related to the Aliso Canyon natural gas storage facility gas leak, which we discuss below.
SoCalGas
Aliso Canyon Natural Gas Storage Facility Gas Leak
From October 23, 2015 through February 11, 2016, SoCalGas experienced a natural gas leak from one of the injection-and-withdrawal wells, SS25, at its Aliso Canyon natural gas storage facility in Los Angeles County. As described below in “Civil and Criminal Litigation” and “Regulatory Proceedings,” numerous lawsuits, investigations and regulatory proceedings have been

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initiated in response to the Leak, resulting in significant costs, which together with other Leak-related costs are discussed below in “Cost Estimates, Accounting Impact and Insurance.”
Civil and Criminal Litigation. As of April 29,November 2, 2020, 393394 lawsuits, including approximately 36,000 plaintiffs, are pending against SoCalGas related to the Leak, some of which have also named Sempra Energy. All these cases, other than a matter brought by the Los Angeles County District Attorney and the federal securities class action discussed below, are coordinated before a single court in the LA Superior Court for pretrial management.
In November 2017, in the coordinated proceeding, individuals and business entities filed a Third Amended Consolidated Master Case Complaint for Individual Actions, through which their separate lawsuits will be managed for pretrial purposes. The consolidated complaint asserts causes of action for negligence, negligence per se, private and public nuisance (continuing and permanent), trespass, inverse condemnation, strict liability, negligent and intentional infliction of emotional distress, fraudulent concealment, loss of consortium, wrongful death and violations of Proposition 65 against SoCalGas, with certain causes of action also naming Sempra Energy. The consolidated complaint seeks compensatory and punitive damages for personal injuries, lost wages and/or lost profits, property damage and diminution in property value, injunctive relief, costs of future medical monitoring, civil penalties (including penalties associated with Proposition 65 claims alleging violation of requirements for warning about certain chemical exposures), and attorneys’ fees. SoCalGas is engaged in settlement discussions in connection with these actions and has recorded a related accrual of $277 million, inclusive of estimated legal costs, in Reserve for Aliso Canyon Costs on SoCalGas’ and Sempra Energy’s Condensed Consolidated Balance Sheets. The initial trial previously scheduled for June 2020 for a small number of randomly selected individual plaintiffs has beenwas postponed, with a new trial date to be determined by the court.
In January 2017, 2 consolidated class action complaints were filed against SoCalGas and Sempra Energy, 1 on behalf of a putative class of persons and businesses who own or lease real property within a five-mile radius of the well (the Property Class Action), and a second on behalf of a putative class of all persons and entities conducting business within five miles of the facility (the Business Class Action). The Property Class Action asserts claims for strict liability for ultra-hazardous activities, negligence, negligence per se, violation of the California Unfair Competition Law, trespass, permanent and continuing public and private nuisance, and inverse condemnation. The Business Class Action asserts a claim for violation of the California Unfair Competition Law. Both complaints seek compensatory, statutory and punitive damages, injunctive relief and attorneys’ fees.
Three property developers filed complaints in July and October of 2018 against SoCalGas and Sempra Energy alleging causes of action for strict liability, negligence per se, negligence, continuing nuisance, permanent nuisance and violation of the California Unfair Competition Law, as well as claims for negligence against certain directors of SoCalGas. The complaints seek compensatory, statutory and punitive damages, injunctive relief and attorneys’ fees.
In October 2018 and January 2019, complaints were filed on behalf of 51 firefighters stationed near the Aliso Canyon natural gas storage facility who allege they were injured by exposure to chemicals released during the Leak. The complaints against SoCalGas and Sempra Energy assert causes of actions for negligence, negligence per se, private and public nuisance (continuing and permanent), trespass, inverse condemnation, strict liability, negligent and intentional infliction of emotional distress, fraudulent concealment and loss of consortium. The complaints seek compensatory and punitive damages for personal injuries, lost wages and/or lost profits, property damage and diminution in property value, and attorney’s fees.
NaN shareholder derivative actions are also pending alleging breach of fiduciary duties against certain officers and certain directors of Sempra Energy and/or SoCalGas, allthree of which were joined in an Amended Consolidated Shareholder Derivative Complaint filed in February 2020. A fifth shareholder derivative action filed in March 2017 was dismissed in November 2019 on the grounds that the plaintiff failed to adequately plead his claims, but the court gave leave for him to amend the complaint to cure the defects.
In addition, a federal securities class action alleging violation of the federal securities laws was filed against Sempra Energy and certain of its officers in July 2017 in the U.S. District Court for the Southern District of California. In March 2018, the court dismissed the action with prejudice. The plaintiffs have appealed the dismissal.
In February 2019, the LA Superior Court approved a settlement between SoCalGas and the Los Angeles City Attorney’s Office, the County of Los Angeles, the California Office of the Attorney General and CARB of 3 actions filed by these entities under which SoCalGas made payments and agreed to provide funding for environmental projects totaling $120 million, including $21 million in civil penalties, as well as other safety-related commitments.
In September 2016, SoCalGas settled a misdemeanor criminal complaint filed in February 2016 by the Los Angeles County District Attorney’s Office against SoCalGas, pleading no contest to a charge that it failed to provide timely notice of the Leak pursuant to California Health and Safety Code section 25510(a), Los Angeles County Code section 12.56.030, and Title 19 California Code of Regulations section 2703(a). In November 2016, the LA Superior Court approved the settlement and entered judgment on the notice charge. Under the settlement, SoCalGas paid a $75,000 fine, $233,500 in penalties, and $246,673 to


reimburse costs incurred by Los Angeles County Fire Department’s Health and Hazardous Materials Division, as well as completed operational commitments estimated to cost approximately $6 million. Certain individuals who objected to the settlement petitioned the Court of Appeal to vacate the judgment, contending they should be granted restitution. In July 2019, the Court of Appeal denied the petition in part, but remanded the matter to the trial court to give the petitioners an opportunity to
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prove damages stemming from only the three-day delay in reporting the Leak. Following the hearing, the trial court denied restitution. The alleged victims have asked the trial court to reconsider its order.
Regulatory Proceedings. In January 2016, CalGEM and the CPUC directed an independent analysis of the technical root cause of the Leak to be conducted by Blade. In May 2019, Blade released its report, which concluded that the Leak was caused by a failure of the production casing of the well due to corrosion and that attempts to stop the Leak were not effectively conducted, but did not identify any instances of non-compliance by SoCalGas. Blade concluded that SoCalGas’ compliance activities conducted prior to the Leak did not find indications of a casing integrity issue. Blade opined, however, that there were measures, none of which were required by gas storage regulations at the time, that could have been taken to aid in the early identification of corrosion and that, in Blade’s opinion, would have prevented or mitigated the Leak. The report also identified well safety practices and regulations that have since been adopted by CalGEM and implemented by SoCalGas, which address most of the root cause of the Leak identified during Blade’s investigation.
In June 2019, the CPUC opened an OII to consider penalties against SoCalGas for the Leak, which it later bifurcated into two phases. The first phase will consider whether SoCalGas violated California Public Utilities Code Section 451 or other laws, CPUC orders or decisions, rules or requirements, whether SoCalGas engaged in unreasonable and/or imprudent practices with respect to its operation and maintenance of the Aliso Canyon natural gas storage facility or its related record-keeping practices, whether SoCalGas cooperated sufficiently with the Safety Enforcement Division (SED) and Blade during the pre-formal investigation, and whether any of the mitigation proposed by Blade should be implemented to the extent not already done. In November 2019, SED, based largely on the Blade report, alleged a total of 330 violations, asserting that SoCalGas violated California Public Utilities Code Section 451 and failed to cooperate in the investigation and to keep proper records. HearingsWe expect hearings in the first phase of the OII have been postponed until further notice.to begin in the first quarter of 2021. The second phase will consider whether SoCalGas should be sanctioned for the Leak and what damages, fines or other penalties or sanctions, if any, should be imposed for any violations, provenunreasonable or imprudent practices, or failure to sufficiently cooperate with the SED as determined by the CPUC in the first phase. In addition, the second phase as well aswill determine the amounts of various costs incurred by SoCalGas and other parties in connection with the Leak and the ratemaking treatment or other disposition of such costs. In a January 2016 emergency proclamation, the Governor ordered the CPUC to ensure thatcosts, which could result in little or no recovery of such costs by SoCalGas. SoCalGas covers costs related to the Leak and its response, while protecting ratepayers. In addition, CalGEM is investigating the Leak.engaged in settlement discussions in connection with this proceeding.
In February 2017, the CPUC opened a proceeding pursuant to SB 380 to determine the feasibility of minimizing or eliminating the use of the Aliso Canyon natural gas storage facility while still maintaining energy and electric reliability for the region, but excluding issues with respect to air quality, public health, causation, culpability or cost responsibility regarding the Leak. The first phase of the proceeding established a framework for the hydraulic, production cost and economic modeling assumptions for the potential reduction in usage or elimination of the Aliso Canyon natural gas storage facility. Phase 2 of the proceeding, which will evaluate the impacts of reducing or eliminating the Aliso Canyon natural gas storage facility using the established framework and models, began in the first quarter of 2019. The CPUC has indicated that it expectsis scheduled to issue its report for Phase 2 in 2020.by March 31, 2021. In December 2019, the CPUC added a third phase of the proceeding to consider alternative means for meeting or avoiding the demand for the facility’s services if it were eliminated in either 2027 or 2045.
If the Aliso Canyon natural gas storage facility were to be permanently closed, or if future cash flows from its operation were otherwise insufficient to recover its carrying 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 March 31,September 30, 2020, the Aliso Canyon natural gas storage facility had a net book value of $771$788 million. Any significant impairment of this asset, or higher operating costs and additional capital expenditures incurred by SoCalGas that may not be recoverable in customer rates, could have a material adverse effect on SoCalGas’ and Sempra Energy’s results of operations, financial condition and cash flows.
Cost Estimates, Accounting Impact and Insurance. SoCalGas has incurred significant costs for temporary relocation of community residents; to control the well and stop the Leak; to mitigate the natural gas released; to purchase natural gas to replace what was lost through the Leak; to defend against and, in certain cases, settle, civil and criminal litigation arising from the Leak; to pay the costs of the government-ordered response to the Leak, including the costs for Blade to conduct the root cause analysis described above; to respond to various government and agency investigations regarding the Leak; and to comply with increased regulation imposed as a result of the Leak. At March 31,September 30, 2020, SoCalGas estimates thethese costs related to the Leak are $1,408$1,440 million (the cost estimate), which includes the $1,277$1,279 million of costs recovered or probable of recovery from insurance. This cost estimate may increase significantly as more information becomes available. A substantial portion of the cost estimate has been


paid, and $284$268 million is accrued as Reserve for Aliso Canyon Costs and $6$7 million is accrued in Deferred Credits and Other as of March 31,September 30, 2020 on SoCalGas’ and Sempra Energy’s Condensed Consolidated Balance Sheets.
In the first quarter of 2020, SoCalGas recorded an accrual of $277 million, inclusive of estimated legal costs, of which $177 million was recorded in Insurance Receivable for Aliso Canyon Costs on the SoCalGas and Sempra Energy Condensed
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Consolidated Balance Sheets and $100 million ($72 million after tax) was recorded in O&M on the SoCalGas and Sempra Energy Condensed Consolidated Statements of Operations related to settlement discussions in connection with the private plaintiffs’ actions described in “Civil and Criminal Litigation” above. SoCalGas continues to monitor and evaluate the status of the private plaintiffs’ actions and the OII described in “Regulatory Proceedings” above and, in the third quarter of 2020, recorded an additional accrual of $27 million ($22 million after tax) in O&M on SoCalGas’ and Sempra Energy’s Condensed Consolidated Statement of Operations. These accruals are included in the cost estimate that we describe above.
Except for the amounts paid or estimated to settle certain actions, as described in “Civil and Criminal Litigation” above, the cost estimate does not include all litigation, regulatory proceedings or regulatory costs to the extent it is not possible to predict at this time the outcome of these actions or reasonably estimate the costs to defend or resolve the actions or the amount of damages, restitution, or civil, administrative or criminal fines, sanctions, penalties or other costs or remedies that may be imposed or incurred. The cost estimate also does not include certain other costs incurred by Sempra Energy associated with defending against shareholder derivative lawsuits and other potential costs that we currently do not anticipate incurring or that we cannot reasonably estimate. These costs not included in the cost estimate could be significant and could have a material adverse effect on SoCalGas’ and Sempra Energy’s cash flows, financial condition and results of operations.
We have received insurance payments for many of the costs included in the cost estimate, including temporary relocation and associated processing costs, control-of-well expenses, costs of the government-ordered response to the Leak, certain legal costs and lost gas. We intend to pursue the full extent of our insurance coverage for the costs we have incurred. Other than directors’ and officers’ liability insurance, after taking into consideration the additional accrual related to litigation matters described above, we have effectively exhausted all of our insurance in this matter, except as to certain defense costs we may incur in the future, including those related to the shareholder derivative lawsuits described above. We continue to pursue other sources of insurance coverage for costs related to this matter, but we may not be successful in obtaining additional insurance recovery for any of these costs. If we are not able to secure additional insurance recovery for all or a substantial portion of these costs, if any costs we have recorded as an insurance receivable are not collected, if there are delays in receiving insurance recoveries, or if the insurance recoveries are subject to income taxes while the associated costs are not tax deductible, such amounts, which could be significant, could have a material adverse effect on SoCalGas’ and Sempra Energy’s cash flows, financial condition and results of operations.
As of March 31,September 30, 2020, we recorded the expected recovery of the cost estimate related to the Leak of $511$504 million as Insurance Receivable for Aliso Canyon Costs on SoCalGas’ and Sempra Energy’s Condensed Consolidated Balance Sheets. This amount is exclusive of insurance retentions and $766$775 million of insurance proceeds we received through March 31,September 30, 2020. If we were to conclude that this receivable or a portion of it is no longer probable of recovery from insurers, some or all of this receivable would be charged against earnings, which could have a material adverse effect on SoCalGas’ and Sempra Energy’s cash flows, financial condition and results of operations.
Sempra Mexico
Energía Costa Azul
IEnova has been engaged in a long-running land dispute relating to property adjacent to its ECA LNG Regasification facility near Ensenada, Mexico.that allegedly overlaps with land owned by the ECA LNG Regasification facility (the facility, however, is not situated on the land that is the subject of this dispute). A claimant to the adjacent property filed complaints in the federal Agrarian Court challenging the refusal of SEDATU in 2006 to issue a title to him for the disputed property. In November 2013, the federal Agrarian Court ordered that SEDATU issue the requested title and cause it to be registered. Both SEDATU and IEnova challenged the ruling due to lack of notification of the underlying process. In May 2019, a federal court in Mexico reversed the ruling and ordered a retrial. IEnova expects additional
NaN other cases involving two adjacent areas of real property on which part of the ECA LNG Regasification facility is situated, each brought by a single plaintiff or her descendants, remain pending against the facility. The first disputed area is subject to a claim in the federal Agrarian Court that has been ongoing since 2006, in which the plaintiffs seek to annul the property title for a portion of the land on which the ECA LNG Regasification facility is situated and to obtain possession of a different parcel that allegedly overlaps with the site of the ECA LNG Regasification facility. The second disputed area is one parcel adjacent to the ECA LNG Regasification facility that allegedly overlaps with land on which the ECA LNG Regasification facility is situated, which is subject to a claim in the Agrarian Court and two claims in civil courts. The Agrarian Court proceeding, which seeks an order that SEDATU issue title to the plaintiff, was initiated in 2013 and the parties are awaiting a final decision. The two civil court proceedings, regardingwhich seek to invalidate the claims.contract by which the ECA LNG Regasification facility purchased the applicable parcel of land on which the ECA LNG Regasification facility is situated on the grounds that the purchase price was allegedly unfair, are progressing at different stages. In the first, initiated in 2013, a lower court ruled in favor of the ECA LNG Regasification facility and the ruling has been appealed by the plaintiff. The same plaintiff filed the second civil case in 2019, which is in its initial stages.
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Certain of these land disputes involve land on which portions of the proposed ECA LNG liquefaction facility are anticipated to be situated or on which portions of the ECA LNG Regasification facility that would be necessary for the operation of the proposed ECA LNG liquefaction facility are situated.
Several administrative challenges are pending in Mexico before theMexico’s Secretariat of Environment and Natural Resources (the Mexican environmental protection agencyagency) and the Federal Tax and Administrative Courts, seeking revocation of the environmental impact authorization issued to the ECA LNG Regasification facility in 2003. These cases generally allege that the conditions and mitigation measures in the environmental impact authorization are inadequate and challenge findings that the activities of the terminal are consistent with regional development guidelines.
Additionally, in AugustIn 2018, a claimant2 related claimants filed a challengeseparate challenges in the federal district court in Ensenada, Baja California in relation to the environmental and social impact permits issued by each of Agencia de Seguridad, Energía y Ambiente (ASEA) and SENER to ECA LNG JV for the potential liquefaction-export project in September 2017 and December 2017, respectively, to allowauthorizing natural gas liquefaction activities at the ECA LNG Regasification facility. TheIn the first case, the court issued a provisional injunction in September 2018 and maintained that provisional injunction at an April 2019 hearing.2018. In December 2018, the relevant Mexican regulatorsASEA approved modifications to the environmental permit that facilitate the development of the proposed natural gas liquefaction facility by ECA LNG JV in two phases. In May 2019, the court canceled the provisional injunction. The claimant appealed the court’s decision canceling the injunction, but was not successful. The claimant’s underlying challenge to the permits remainremains pending.
Cases involving two parcels In the second case, the initial request for a provisional injunction was denied. That decision was reversed on appeal in January 2020, resulting in the issuance of real property have been fileda new injunction against the ECA LNG Regasification facility. In one case, filedsame environmental and social impact permits that were already issued by ASEA and SENER. This injunction has uncertain application absent clarification by the court. The reversal and issuance of the injunction in the federal Agrarian Courtsecond case is under further appeal.
In September 2020, parties claiming a property interest in 2006, the plaintiffs seek to annul the recorded property title for a parcelland on which the ECA LNG Regasification facility is situated and the proposed ECA LNG liquefaction facility is anticipated to obtain possessionbe situated filed an administrative proceeding with the Municipality of a different parcel that allegedly sits inEnsenada against the same place. Another civil


complaint filed inconstruction permit for the state court was served in April 2012 seeking to invalidateconstruction of the contract by whichproposed liquefaction export projects at the ECA LNG Regasification facility. The construction permit has been suspended pending resolution of the claim and the ECA LNG Regasification facility purchased anotherand ECA LNG JV are contesting the validity of the parcels,claim.
In May 2020, the two third-party capacity customers at the ECA LNG Regasification facility, Shell Mexico and Gazprom, asserted that a 2019 update of the general terms and conditions for service at the facility, as approved by the CRE, resulted in a breach of contract by IEnova and a force majeure event. Citing these circumstances, the customers subsequently stopped making payments of amounts due under their respective LNG storage and regasification agreements. IEnova has rejected the customers’ assertions and has drawn (and expects to continue to draw) on the groundscustomers’ letters of credit provided as payment security. The parties engaged in discussions under the purchase priceapplicable contractual dispute resolution procedures without coming to a mutually acceptable resolution. In July 2020, Shell Mexico submitted a request for arbitration of the dispute. IEnova will avail itself of its available claims, defenses and remedies in the arbitration proceeding. Gazprom has since replenished the amounts drawn on its letter of credit and has resumed making regular monthly payments under its LNG storage and regasification agreement. In October 2020, IEnova was unfair;informed by Gazprom of its consent to join the plaintiffarbitration proceeding initiated by Shell Mexico against the ECA LNG Regasification facility and is awaiting the formalization of Gazprom’s recognition as a claimant party in such arbitration. IEnova intends to enforce its rights in the arbitration process, seeking to dismiss the customers’ claims. Shell Mexico also filed a second complaint in 2013 inconstitutional challenge to the federal Agrarian Court seekingCRE’s approval of the update to the general terms and conditions. In October 2020, Shell Mexico’s request to stay CRE’s approval was denied and, subsequently, Shell Mexico filed an orderappeal of that SEDATU issue title to her. In January 2016, the federal Agrarian Court ruled against the plaintiff. The plaintiff appealed the ruling and a partial retrial was ordered. We are awaiting a new decision from the Agrarian Court. In May 2018, the state court dismissed the civil complaint, and the plaintiff appealed but was not successful; however, the plaintiff can file adecision.
One or more unfavorable final federal appeal. IEnova expects further proceedingsdecisions on these two matters.
An unfavorable final decision on these property disputes or permit challenges, could materially and adversely affect our existing natural gas gasificationregasification operations and our planned natural gasproposed LNG liquefaction projects currently in development at the site of the ECA LNG Regasification facility and potential ECA LNG JV liquefaction-export project.facility.
Guaymas-El Oro Segment of the Sonora Pipeline
IEnova’s Sonora natural gas pipeline consists of two segments, the Sasabe-Puerto Libertad-Guaymas segment, and the Guaymas-El Oro segment. Each segment has its own service agreement with the CFE. In 2015, the Yaqui tribe, with the exception of some members living in the Bácum community, granted its consent and a right-of-way easement agreement for the construction of the Guaymas-El Oro segment of the Sonora natural gas pipeline that crosses its territory. Representatives of the Bácum community filed a legal challenge in Mexican federal court demanding the right to withhold consent for the project, the stoppage of work in the Yaqui territory and damages. In 2016, the judge granted a suspension order that prohibited the construction of such segment through the Bácum community territory. Because the pipeline does not pass through the Bácum community, IEnova did not believe the 2016 suspension order prohibited construction in the remainder of the Yaqui territory. Construction of the Guaymas-El Oro segment was completed, and commercial operations began in May 2017.
Following the start of commercial operations of the Guaymas-El Oro segment, IEnova reported damage to the Guaymas-El Oro segment of the Sonora pipeline in the Yaqui territory that has made that section inoperable since August 23, 2017 and, as a result, IEnova declared a force majeure event. In 2017, an appellate court ruled that the scope of the 2016 suspension order encompassed
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the wider Yaqui territory, which has prevented IEnova from making repairs to put the pipeline back in service. In July 2019, a federal district court ruled in favor of IEnova and held that the Yaqui tribe was properly consulted and that consent from the Yaqui tribe was properly received. Representatives of the Bácum community appealed this decision, causing the suspension order preventing IEnova from repairing the damage to the Guaymas-El Oro segment of the Sonora pipeline in the Yaqui territory to remain in place until the appeals process is exhausted.
IEnova exercised its rights under the contract, which included seeking force majeure payments for the two-year period such force majeure payments were required to be made, which ended onin August 22, 2019.
In July 2019, the CFE filed a request for arbitration generally to nullify certain contract terms that provide for fixed capacity payments in instances of force majeure and made a demand for substantial damages in connection with the force majeure event. In September 2019, the arbitration process ended when IEnova and the CFE reached an agreement to restart natural gas transportation service on the earlier of completion of repair of the damaged pipeline or January 15, 2020, and to modify the tariff structure and extend the term of the contract by 10 years. In January 2020,Subsequently, IEnova and the CFE agreed to extend the January 15, 2020 new service start date to May 15, 2020 and then again to September 15, 2020. In the third quarter of 2020, the parties agreed to further extend the service start date to March 14, 2021. Under the revised agreement, the CFE will resume making payments only when the damaged section of the Guaymas-El Oro segment of the Sonora pipeline is repaired. If the pipeline is not repaired by May 15, 2020March 14, 2021 and the parties do not agree on a new service start date, IEnova retains the right to terminate the contract and seek to recover its reasonable and documented costs and lost profits. The parties are currently discussing a new service start date in the event the pipeline is not repaired by May 15, 2020, but there can be no assurance that the parties will have agreed on a new service start date if the pipeline is not repaired by that date.
If IEnova is unable to make such repairs and resume operations in the Guaymas-El Oro segment of the Sonora pipeline within this time frame or if IEnova terminates the contract and is unable to obtain recovery, there may be a material adverse impact on Sempra Energy’s results of operations and cash flows and our ability to recover the carrying value of our investment. At September 30, 2020, the Guaymas-El Oro segment of the Sonora pipeline had a net book value of $446 million. The Sasabe-Puerto Libertad-Guaymas segment of the Sonora pipeline remains in full operation and is not impacted by these developments.
Regulatory Actions by the Mexican Government that Impact Renewable Energy Facilities
In April 2020, Mexico’s CENACE issued an order that it claims would safeguard Mexico’s national power grid from interruptions that may be caused by renewable energy projects. The main provision of the order suspends all legally mandated pre-operative testing that would be needed for new renewable energy projects to commence operations and prevents such projects from connecting to the national power grid until further notice. IEnova’s renewable energy projects affected by the order filed for legal protection through amparo claims (constitutional protection lawsuits) and, in June 2020, received injunctive relief until the claims are resolved by the courts.
In May 2020, Mexico’s SENER published a resolution to establish guidelines intended to guarantee the security and reliability of the national grid’s electricity supply by reducing the threat that it claims is caused by clean, intermittent energy. The resolution includes the following key elements:
▪provides non-renewable electricity generation facilities, primarily non-renewable power plants, preferential access or easier access to Mexico’s national power grid, while increasing restrictions on access to the grid by renewable energy facilities;
▪grants the CRE and CENACE broad authority to approve or deny permits and interconnection requests by producers of renewable energy; and
▪imposes restrictive measures on the renewable energy sector, including requiring all permits and interconnection agreements to include an early termination clause in the event the renewable energy project fails to make certain additional improvements, at the request of the CRE or CENACE, in accordance with a specific schedule.
IEnova’s renewable energy projects, including those in construction and in service, filed amparo claims against the SENER resolution in June 2020 and received injunctive relief in July 2020. In addition, in June 2020, COFECE, Mexico’s antitrust regulator, filed a complaint with Mexico’s Supreme Court against the SENER resolution. COFECE’s complaint was upheld by the court and, pending the court’s final ruling, the decision suspends indefinitely the resolution.
In May 2020, the CRE approved an update to the transmission rates included in legacy renewables and cogeneration energy contracts, based on the claim that the legacy transmission rates did not reflect fair and proportional costs for providing the applicable services and, therefore, created inequitable competitive conditions. Three of IEnova’s renewables’ facilities are currently holders of contracts with such legacy rates, and any increases in the transmission rates would be passed through directly to their customers. IEnova filed amparo claims for its affected facilities and, in August 2020, was granted injunctive relief.
IEnova and other companies affected by these new orders and regulations have challenged the orders and regulations by filing amparo claims, some of which have been granted injunctive relief. The court-ordered injunctions provide relief until Mexico’s Federal District Court ultimately resolves the amparo claims or, with respect to the SENER resolution, until Mexico’s Supreme
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Court issues its final ruling on COFECE’s complaint, the timing of which is uncertain. An unfavorable final decision on these amparo challenges, or the potential for an extended dispute, could impact our ability to successfully complete construction of our solar facilities, or to complete them in a timely manner and within expected budgets, may impact our ability to operate our wind and solar facilities already in service at existing levels or at all, and may adversely affect our ability to develop new projects, any of which may have a material adverse impact on our results of operations and cash flows and our ability to recover the carrying values of our renewable energy investments in Mexico.
In October 2020, the CRE approved a resolution to amend the rules for the inclusion of new offtakers of legacy generation and self-supply permits (the Offtaker Resolution), which became effective immediately. The Offtaker Resolution prohibits self-supply permit holders from adding new offtakers that were not included in the original development or expansion plans, making modifications to the amount of energy allocated to the named offtakers, and including load centers that have entered into a supply arrangement under Mexico’s Electricity Industry Law. Don Diego Solar and Border Solar (two of IEnova’s projects currently in construction) and the Ventika wind power generation facilities are holders of legacy self-supply permits and are impacted by the Offtaker Resolution. If IEnova is not able to obtain legal protection for these impacted facilities, IEnova expects it will sell capacity affected by the Offtaker Resolution into the spot market. Currently, prices in the spot market are significantly lower than the fixed prices in the PPAs that were entered into through self-supply permits. IEnova is evaluating the legal procedures to challenge the Offtaker Resolution.
Other Litigation
RBS Sempra Commodities
Sempra Energy holds an equity method investment in RBS Sempra Commodities, a limited liability partnership in the process of being liquidated. RBS, now NatWest Markets plc, our partner in the JV, paid an assessment of £86 million (approximately $138 million in U.S. dollars) in October 2014 to HMRC for denied VAT refund claims filed in connection with the purchase of carbon credit allowances by RBS SEE, a subsidiary of RBS Sempra Commodities. RBS SEE has since been sold to J.P. Morgan Chase & Co. and later to Mercuria Energy Group, Ltd. HMRC asserted that RBS was not entitled to reduce its VAT liability by VAT paid on certain carbon credit purchases during 2009 because RBS knew or should have known that certain vendors in the trading chain


did not remit their own VAT to HMRC. After paying the assessment, RBS filed a Notice of Appeal of the assessment with the First-Tier Tribunal. Trial on the matter, which could include the assessment of a penalty of up to 100% of the claimed amount, has beenis scheduled between November 2, 2020 and December 11, 2020.to begin in June 2021.
In 2015, liquidators filed a claim in the High Court of Justice against RBS and Mercuria Energy Europe Trading Limited (the Defendants) on behalf of 10 companies (the Liquidating Companies) that engaged in carbon credit trading via chains that included a company that traded directly with RBS SEE. The claim alleges that the Defendants’ participation in the purchase and sale of carbon credits resulted in the Liquidating Companies’ carbon credit trading transactions creating a VAT liability they were unable to pay, and that the Defendants are liable to provide for equitable compensation due to dishonest assistance and for compensation under the U.K. Insolvency Act of 1986. Trial on the matter was held in June and July of 2018. OnIn March 10, 2020, the High Court of Justice rendered its judgment mostly in favor of the Liquidating Companies and awarded damages of approximately £45 million (approximately $56$58 million in U.S. dollars at March 31,September 30, 2020), plus costs and interest, which will be determined after further proceedings.interest. In October 2020, the High Court of Justice issued an order granting the Defendants permission to appeal its March 2020 judgment to the Court of Appeal, and the Defendants have filed an application for such appeal.
Although the final outcome of both the High Court of Justice case and First-Tier Tribunal case remains uncertain, we recorded $100 million in equity losses from our investment in RBS Sempra Commodities in Equity Earnings on the Sempra Energy Condensed Consolidated Statement of Operations in the threenine months ended March 31,September 30, 2020, which represents an estimate of our obligations to settle pending tax matters and related legal costs.
Asbestos Claims Against EFH Subsidiaries
Certain EFH subsidiaries that we acquired as part of the merger of EFH with an indirect subsidiary of Sempra Energy are defendants in personal injury lawsuits brought in state courts throughout the U.S. As of April 29,November 2, 2020, 275 such lawsuits are pending with 182 such lawsuits having been served. These cases allege illness or death as a result of exposure to asbestos in power plants designed and/or built by companies whose assets were purchased by predecessor entities to the EFH subsidiaries, and generally assert claims for product defects, negligence, strict liability and wrongful death. They seek compensatory and punitive damages. Additionally, in connection with the EFH bankruptcy proceeding, approximately 28,000 proofs of claim were filed on behalf of persons who allege exposure to asbestos under similar circumstances and assert the right to file such lawsuits in the future. We anticipate additional lawsuits will be filed. None of these claims or lawsuits were discharged in the EFH bankruptcy proceeding. The costs to defend or resolve these lawsuits and the amount of damages that may be imposed or incurred could have a material adverse effect on Sempra Energy’s cash flows, financial condition and results of operations.
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We are also defendants in ordinary routine litigation incidental to our businesses, including personal injury, employment litigation, product liability, property damage and other claims. Juries have demonstrated an increasing willingness to grant large awards, including punitive damages, in these types of casescases.
.
LEASES
We discuss leases further in Note 16 of the Notes to Consolidated Financial Statements in the Annual Report.
A lease exists when a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. We determine if an arrangement is or contains a lease at inception of the contract.
Some of our lease agreements contain nonlease components, which represent activities that transfer a separate good or service to the lessee. As the lessee for both operating and finance leases, we have elected to combine lease and nonlease components as a single lease component for real estate, fleet vehicles, power generating facilities, and pipelines, whereby fixed or in-substance fixed payments allocable to the nonlease component are accounted for as part of the related lease liability and ROU asset. As the lessor, we have elected to combine lease and nonlease components as a single lease component for real estate and power generating facilities if the timing and pattern of transfer of the lease and nonlease components are the same and the lease component would be classified as an operating lease if accounted for separately.
Lessee Accounting
We have operating and finance leases for real and personal property (including office space, land, fleet vehicles, machinery and equipment, warehouses and other operational facilities) and finance leases for PPAs with renewable energy and peaker plant facilities.


We provide supplemental noncash information for operating and finance leases below.
SUPPLEMENTAL NONCASH INFORMATION
(Dollars in millions)
 Three months ended March 31, 2020
 Sempra Energy Consolidated SDG&E SoCalGas
Increase in operating lease obligations for right-of-use assets$19
 $—
 $—
Increase in finance lease obligations for investment in PP&E20
 4
 16
 Three months ended March 31, 2019
 Sempra Energy Consolidated SDG&E SoCalGas
Increase in operating lease obligations for right-of-use assets$552
 $142
 $117
Increase in finance lease obligations for investment in PP&E7
 4
 3

Leases that Have Not Yet Commenced
SDG&E and SoCalGas have lease agreements for future acquisitions of fleet vehicles with an aggregate maximum lease limit of $167 million. SDG&E and SoCalGas have utilized $62 million and $80 million, respectively, of these maximum lease limits as of March 31, 2020.
SUPPLEMENTAL NONCASH INFORMATION
(Dollars in millions)
Nine months ended September 30, 2020
Sempra Energy ConsolidatedSDG&ESoCalGas
Increase in operating lease obligations for right-of-use assets$24 $0 $4 
Increase in finance lease obligations for investment in PP&E72 26 46 
Nine months ended September 30, 2019
Sempra Energy ConsolidatedSDG&ESoCalGas
Increase in operating lease obligations for right-of-use assets$571 $147 $117 
Increase in finance lease obligations for investment in PP&E27 12 15 
Lessor Accounting
Sempra Mexico is a lessor for certain of its natural gas and ethane pipelines, compressor stations and LPG storage facilities.
Generally, we recognize operating lease income on a straight-line basis over the lease term and evaluate the underlying asset for impairment. Certain of our leases contain rate adjustments or are based on foreign currency exchange rates that may result in lease payments received that vary in amount from one period to the next.
We provide information below for leases for which we are the lessor.
LESSOR INFORMATION ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – SEMPRA ENERGY
(Dollars in millions)
Three months ended September 30,Nine months ended September 30,
2020201920202019
Fixed lease payments$48 $51 $145 $150 
Variable lease payments1 0 1 6 
Total revenues from operating leases(1)
$49 $51 $146 $156 
Depreciation expense$10 $10 $29 $29 
(1)     Included in Revenues: Energy-Related Businesses on the Condensed Consolidated Statements of Operations.

89
LESSOR INFORMATION ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – SEMPRA ENERGY
(Dollars in millions)
 Three months ended March 31,
 2020 2019
Fixed lease payments$50
 $50
Variable lease payments—
 4
Total revenues from operating leases(1)
$50
 $54
    
Depreciation expense$10
 $9
(1)

Included in Revenues: Energy-Related Businesses on the Condensed Consolidated Statements of Operations.
OTHER CONTRACTUAL COMMITMENTS
We discuss below significant changes in the first threenine months of 2020 to contractual commitments discussed in Notes 1 and 16 of the Notes to Consolidated Financial Statements in the Annual Report.
Natural Gas Contracts
SoCalGas’ minimum purchase obligations for natural gas have increased by $54 million since December 31, 2019 primarily due to new purchase obligations entered into in the first nine months of 2020. Net future payments are expected to increase by $11 million in 2020, $43 million in 2021 and decrease by negligible amounts thereafter compared to December 31, 2019.
SoCalGas’ interstate pipeline capacity agreement commitments have increased by $597 million since December 31, 2019 primarily due to new capacity agreements entered into in the first nine months of 2020, which replace existing or expiring agreements. Net future payments are expected to decrease by $90 million in 2020, and increase by $17 million in 2021, $88 million in 2022, $100 million in 2023, $90 million in 2024 and $392 million thereafter compared to December 31, 2019.
Sempra LNG’s natural gas contracts and natural gas storage and transportation commitments have increased by $136$567 million since December 31, 2019, primarily from entering into new storage and transportation contracts in the first threenine months of 2020. We expect future payments to decrease by $24$44 million in 2020, and increase by $23$73 million in 2021, $21$38 million in 2022, $19$34 million in 2023, $19$30 million in 2024 and $78$436 million thereafter compared to December 31, 2019.
LNG Purchase Agreement
Sempra LNG has a sale and purchase agreement for the supply of LNG to the ECA LNG Regasification facility. The commitment amount is calculated using a predetermined formula based on estimated forward prices of the index applicable from 2020 to 2029. Although this agreement specifies a number of cargoes to be delivered, under its terms, the customer may divert certain cargoes,


which would reduce amounts paid under the agreement by Sempra LNG. At March 31,September 30, 2020, we expect the commitment amount to decrease by $135$238 million in 2020, $26increase by $94 million in 2021, $35increase by $40 million in 2022, $36increase by $7 million in 2023, $43decrease by $12 million in 2024 and $174decrease by $56 million thereafter (through contract termination in 2029) compared to December 31, 2019, reflecting changes in estimated forward prices since December 31, 2019 and actual transactions for the first threenine months of 2020. These LNG commitment amounts are based on the assumption that all LNG cargoes, less those already confirmed to be diverted, under the agreement are delivered. Actual LNG purchases in the current and prior years have been significantly lower than the maximum amount provided under the agreement due to the customer electing to divert cargoes as allowed by the agreement.
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NOTE 12. SEGMENT INFORMATION
We have 5 separately managed reportable segments, as follows:
▪
▪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 Texas Utilities holds our investment in Oncor Holdings, which owns an 80.25% interest in Oncor, a regulated electric transmission and distribution utility serving customers in the north-central, eastern, and western and panhandle regions of Texas; and our indirect, 50% interest in Sharyland Holdings, which owns Sharyland Utilities L.L.C., a regulated electric transmission and distribution utility serving customers near the Texas-Mexico border. As we discuss in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report, we acquired our investment in Sharyland Holdings in May 2019.
▪Sempra Mexico develops, owns and operates, or holds interests in, natural gas, electric, LNG, LPG, ethane and liquid fuels infrastructure, and has marketing operations for the purchase of LNG and the purchase and sale of natural gas in Mexico.
▪ 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 Texas Utilities holds our investment in Oncor Holdings, which owns an 80.25% interest in Oncor, a regulated electric transmission and distribution utility serving customers in the north-central, eastern, and western and panhandle regions of Texas; our indirect, 50% interest in Sharyland Holdings, which owns Sharyland Utilities, a regulated electric transmission and distribution utility serving customers near the Texas-Mexico border; and our indirect, 1% interest in TTHC, which owns an indirect 19.75% interest in Oncor. As we discuss in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report, we acquired our investment in Oncor Holdings in March 2018, Sharyland Holdings in May 2019, and TTHC in February 2020.
▪
Sempra Mexicodevelops, owns and operates, or holds interests in, natural gas, electric, LNG, LPG, ethane and liquid fuels infrastructure, and has marketing operations for the purchase of LNG and the purchase and sale of natural gas in Mexico.
▪
Sempra LNG develops projects for the export of LNG, holds an interest in a facility for the export of LNG, owns and operates natural gas pipelines, and buys, sells and transports natural gas through its marketing operations, all within the U.S. and Mexico. In February 2019, we completed the sale of our natural gas storage assets at Mississippi Hub and Bay Gas.
In April 2019, Sempra Renewables completed the sale of its remaining wind assets and investments. Upon completion of this sale, remaining nominal business activities at Sempra Renewables were subsumed into Parent and other and the Sempra Renewables segment ceased to exist. The tables below include amounts from Sempra Renewables up until cessation of the segment.
As we discuss in Note 5, the financial information related to our businesses that constituted the Sempra South American Utilities segment has been classifiedis presented as discontinued operations for all periods presented. The information in the tables below excludes amounts from discontinued operations unless otherwise noted. We completed the sales of our discontinued operations in the second quarter of 2020.
We evaluate each segment’s performance based on its contribution to Sempra Energy’s reported earnings and cash flows. The California Utilities operate in essentially separate service territories, under separate regulatory frameworks and rate structures set by the CPUC and the FERC. We describe the accounting policies of all of our segments in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
The cost of common services shared by the business segments is assigned directly or allocated based on various cost factors, depending on the nature of the service provided. Interest income and expense is recorded on intercompany loans. The loan balances and related interest are eliminated in consolidation.
The following tables show selected information by segment from our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets. Amounts labeled as “All other” in the following tables consist primarily of activities of parent organizations and include certain nominal amounts from our South American businesses that did not qualify for treatment as discontinued operations.

91


SEGMENT INFORMATION   
(Dollars in millions)   
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
REVENUES    
SDG&E$1,472 $1,427 $3,976 $3,666 
SoCalGas842 975 3,247 3,142 
Sempra Mexico351 357 935 1,058 
Sempra Renewables0 0 0 10 
Sempra LNG63 100 255 327 
All other0 1 1 1 
Adjustments and eliminations2 (2)0 (3)
Intersegment revenues(1)
(86)(100)(215)(315)
Total$2,644 $2,758 $8,199 $7,886 
INTEREST EXPENSE    
SDG&E$103 $106 $307 $311 
SoCalGas39 36 119 104 
Sempra Mexico31 30 95 89 
Sempra Renewables0 0 0 3 
Sempra LNG8 11 39 18 
All other93 117 304 336 
Intercompany eliminations(10)(21)(46)(64)
Total$264 $279 $818 $797 
INTEREST INCOME    
SDG&E$1 $1 $2 $3 
SoCalGas0 0 2 1 
Sempra Mexico14 20 47 58 
Sempra Renewables0 0 0 11 
Sempra LNG25 15 65 45 
All other0 1 3 2 
Intercompany eliminations(13)(15)(43)(56)
Total$27 $22 $76 $64 
DEPRECIATION AND AMORTIZATION  
SDG&E$200 $196 $598 $571 
SoCalGas165 154 486 449 
Sempra Mexico47 46 141 136 
Sempra LNG2 2 7 7 
All other4 4 10 11 
Total$418 $402 $1,242 $1,174 
INCOME TAX EXPENSE (BENEFIT)  
SDG&E$33 $71 $161 $111 
SoCalGas(6)35 95 50 
Sempra Mexico92 0 (161)116 
Sempra Renewables0 0 0 4 
Sempra LNG18 (2)59 4 
All other(38)(43)(94)(135)
Total$99 $61 $60 $150 
EQUITY EARNINGS (LOSSES)    
Equity earnings (losses), before income tax:    
Sempra Texas Utilities$1 $0 $1 $1 
Sempra Renewables0 0 0 5 
Sempra LNG116 17 257 19 
All other0 0 (100)(1)
117 17 158 24 
Equity earnings, net of income tax:   
Sempra Texas Utilities208 212 457 418 
Sempra Mexico1 37 207 43 
209 249 664 461 
Total$326 $266 $822 $485 
92

SEGMENT INFORMATION   
SEGMENT INFORMATION (CONTINUED)SEGMENT INFORMATION (CONTINUED)
(Dollars in millions)   (Dollars in millions)
Three months ended March 31,Three months ended September 30,Nine months ended
September 30,
2020 20192020201920202019
REVENUES   
EARNINGS (LOSSES) ATTRIBUTABLE TO COMMON SHARESEARNINGS (LOSSES) ATTRIBUTABLE TO COMMON SHARES   
SDG&E$1,269
 $1,145
SDG&E$178 $263 $633 $582 
SoCalGas1,395
 1,361
SoCalGas(24)143 425 437 
Sempra Texas UtilitiesSempra Texas Utilities209 212 458 419 
Sempra Mexico309
 383
Sempra Mexico50 84 302 214 
Sempra Renewables—
 7
Sempra Renewables0 0 0 59 
Sempra LNG123
 141
Sempra LNG71 2 207 13 
All other1
 —
Adjustments and eliminations(1) —
Intersegment revenues(1)
(67) (139)
Total$3,029
 $2,898
INTEREST EXPENSE   
SDG&E$101
 $103
SoCalGas40
 34
Sempra Mexico32
 30
Sempra Renewables—
 3
Sempra LNG16
 4
All other109
 109
Intercompany eliminations(18) (23)
Total$280
 $260
INTEREST INCOME   
SDG&E$1
 $1
SoCalGas1
 —
Sempra Mexico18
 19
Sempra Renewables—
 10
Sempra LNG22
 14
All other—
 1
Intercompany eliminations(15) (24)
Total$27
 $21
DEPRECIATION AND AMORTIZATION   
SDG&E$201
 $186
SoCalGas159
 147
Sempra Mexico47
 44
Sempra LNG2
 2
Discontinued operationsDiscontinued operations(7)248 1,840 267 
All other3
 4
All other(126)(139)(515)(383)
Total$412
 $383
Total$351 $813 $3,350 $1,608 
INCOME TAX EXPENSE (BENEFIT)   
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENTEXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT  
SDG&E$58
 $5
SDG&E$1,323 $1,071 
SoCalGas52
 19
SoCalGas1,345 1,019 
Sempra Mexico(307) 72
Sempra Mexico443 420 
Sempra Renewables—
 (10)Sempra Renewables0 2 
Sempra LNG23
 4
Sempra LNG196 74 
All other(33) (48)All other6 4 
Total$(207) $42
Total$3,313 $2,590 
EQUITY EARNINGS (LOSSES)   
Equity earnings (losses), before income tax:   
Sempra Renewables$—
 $3
September 30,
2020		December 31,
2019
ASSETSASSETS
SDG&ESDG&E$22,421 $20,560 
SoCalGasSoCalGas17,943 17,077 
Sempra Texas UtilitiesSempra Texas Utilities12,063 11,619 
Sempra MexicoSempra Mexico10,730 9,938 
Sempra LNGSempra LNG3,643 3,901 
Discontinued operationsDiscontinued operations0 3,958 
All otherAll other2,398 749 
Intersegment receivablesIntersegment receivables(1,976)(2,137)
TotalTotal$67,222 $65,665 
EQUITY METHOD AND OTHER INVESTMENTSEQUITY METHOD AND OTHER INVESTMENTS
Sempra Texas UtilitiesSempra Texas Utilities$12,063 $11,619 
Sempra MexicoSempra Mexico920 741 
Sempra LNG57
 2
Sempra LNG433 1,256 
All other(100) —
All other1 6 
(43) 5
Equity earnings, net of income tax:   
Sempra Texas Utilities106
 94
Sempra Mexico200
 2
306
 96
Total$263
 $101
Total$13,417 $13,622 

(1)    Revenues for reportable segments include intersegment revenues of $1 million, $23 million, $12 million and $50 million for the three months ended September 30, 2020; $4 million, $61 million, $69 million and $81 million for the nine months ended September 30, 2020; $1 million, $16 million, $29 million and $54 million for the three months ended September 30, 2019; and $4 million, $50 million, $89 million and $172 million for the nine months ended September 30, 2019 for SDG&E, SoCalGas, Sempra Mexico and Sempra LNG, respectively.

SEGMENT INFORMATION (CONTINUED)   
(Dollars in millions)   
 Three months ended March 31,
 2020
2019
EARNINGS (LOSSES) ATTRIBUTABLE TO COMMON SHARES   
SDG&E$262
 $176
SoCalGas303
 264
Sempra Texas Utilities105
 94
Sempra Mexico191
 57
Sempra Renewables—
 13
Sempra LNG75
 5
Discontinued operations72
 (51)
All other(248) (117)
Total$760
 $441
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT   
SDG&E$402
 $356
SoCalGas388
 324
Sempra Mexico170
 85
Sempra LNG47
 18
All other3
 —
Total$1,010
 $783
    
 
March 31,
2020
 December 31, 2019
ASSETS   
SDG&E$20,784
 $20,560
SoCalGas17,610
 17,077
Sempra Texas Utilities11,741
 11,619
Sempra Mexico10,627
 9,938
Sempra LNG3,919
 3,901
Discontinued operations3,930
 3,958
All other1,826
 749
Intersegment receivables(2,144) (2,137)
Total$68,293
 $65,665
EQUITY METHOD AND OTHER INVESTMENTS   
Sempra Texas Utilities$11,735
 $11,619
Sempra Mexico914
 741
Sempra LNG1,184
 1,256
All other1
 6
Total$13,834
 $13,622
(1)
Revenues for reportable segments include intersegment revenues of $1 million, $18 million, $29 million and $19 million for the three months ended March 31, 2020 and $1 million, $17 million, $28 million and $93 million for the three months ended March 31, 2019 for SDG&E, SoCalGas, Sempra Mexico and Sempra LNG, respectively.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with the Condensed Consolidated Financial Statements and the Notes thereto and “Item“Part II – Item 1A. Risk Factors” contained in this report, and the Consolidated Financial Statements and the Notes thereto, “Item“Part I – Item 1A. Risk Factors” and “Part II – Item 7. MD&A” and “Item 1A. Risk Factors” contained in the Annual Report.
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OVERVIEW
Sempra Energy is a California-based energy-services holding company whose businesses invest in, develop and operate energy infrastructure, and provide electric and gas services to customers in North America. As we discuss in Note 12 of the Notes to Condensed Consolidated Financial Statements, our businesses consist of five separately managed reportable segments.


In January 2019, our board of directors approved a plan to sell our South American businesses, which were previously included in our Sempra South American Utilities segment. We completed the sales in the second quarter of 2020. Our South American businesses and certain activities associated with those businesses have beenare presented as discontinued operations for all periods presented. Nominal activities that are not classified as discontinued operations have been subsumed into Parent and other. Our discussions below exclude discontinued operations, unless otherwise noted.
We provide additional information about discontinued operations in Note 5 of the Notes to Condensed Consolidated Financial Statements and about our reportable segments in Note 12 of the Notes to Condensed Consolidated Financial Statements in this report and in “Item“Part I – Item 1. Business” in the Annual Report.
This report includes information for the following separate registrants:
▪Sempra Energy and its consolidated entities
▪SDG&E and its consolidated VIE (until deconsolidation of Otay Mesa VIE in August 2019)
▪SoCalGas
▪Sempra Energy and its consolidated entities;
▪SDG&E and its consolidated VIE (until deconsolidation of Otay Mesa VIE in August 2019); and
▪SoCalGas.
References to “we,” “us,” “our” and “Sempra Energy Consolidated” are to Sempra Energy and its consolidated entities, collectively, unless otherwise indicated by the context. We refer to SDG&E and SoCalGas collectively as the California Utilities, which do not include our Texas utilities or the utility in our Sempra Mexico segment. It also does not include utilities within our South American businesses that have been presented as discontinued operations. All references in this MD&A to our reportable segments are not intended to refer to any legal entity with the same or similar name.
Throughout this report, we refer to the following as Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements when discussed together or collectively:
▪the Condensed Consolidated Financial Statements and related Notes of Sempra Energy and its subsidiaries and VIEs;
▪the Condensed Consolidated Financial Statements and related Notes of SDG&E and its VIE (until deconsolidation of Otay Mesa VIE in August 2019); and
▪the Condensed Financial Statements and related Notes of SoCalGas.
▪the Condensed Consolidated Financial Statements and related Notes of Sempra Energy and its subsidiaries and VIEs;
▪the Condensed Consolidated Financial Statements and related Notes of SDG&E and its VIE (until deconsolidation of Otay Mesa VIE in August 2019); and
▪the Condensed Financial Statements and related Notes of SoCalGas.
RESULTS OF OPERATIONS
We discuss the following in Results of Operations:
▪Overall results of operations of Sempra Energy
▪Segment results
▪Significant changes in revenues, costs and earnings
▪Impact of foreign currency and inflation rates on our results of operations
▪Overall results of operations of Sempra Energy;
▪Segment results;
▪Significant changes in revenues, costs and earnings; and
▪Impact of foreign currency and inflation rates on our results of operations.

OVERALL RESULTS OF OPERATIONS OF SEMPRA ENERGY
In the three months ended March 31,September 30, 2020,, we reported earnings of $760$351 million and diluted EPS of $2.53$1.21 compared to earnings of $441$813 million and diluted EPS of $1.59$2.84 for the same period in 2019.2019. In the nine months ended September 30, 2020, we reported earnings of $3.35 billion and diluted EPS of $11.43 compared to earnings of $1.61 billion and diluted EPS of $5.74 for the same period in 2019. The change in diluted EPS in the three months ended March 31,September 30, 2020 compared to the same period in 2019 included an increase of $0.02 due to a decrease in weighted-average common shares outstanding. The change in diluted EPS in the nine months ended September 30, 2020 compared to the same period in 2019 included a decrease of $(0.34)$0.53 due to an increase in weighted-average common shares outstanding. Our results and diluted EPS were impacted by variances discussed in “Segment Results” below.

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SEGMENT RESULTS
This section presents earnings (losses) by Sempra Energy segment, as well as Parent and other in the three months ended March 31, 2020 and 2019,discontinued operations, and thea related discussion of the changes in segment earnings (losses) between these periods.. Throughout the MD&A, our reference to earnings represents earnings attributable to Sempra Energy common shares. Variance amounts presented are the after-tax earnings impact (based on applicable statutory tax rates), unless otherwise noted, and before NCI, where applicable.
SEMPRA ENERGY EARNINGS (LOSSES) BY SEGMENT 
(Dollars in millions) 
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
SDG&E$178 $263 $633 $582 
SoCalGas(24)143 425 437 
Sempra Texas Utilities209 212 458 419 
Sempra Mexico50 84 302 214 
Sempra Renewables— — — 59 
Sempra LNG71 2 207 13 
Parent and other(1)
(126)(139)(515)(383)
Discontinued operations(7)248 1,840 267 
Earnings attributable to common shares$351 $813 $3,350 $1,608 
(1)    Includes intercompany eliminations recorded in consolidation and certain corporate costs.


SEMPRA ENERGY EARNINGS (LOSSES) BY SEGMENT 
(Dollars in millions) 
 Three months ended March 31,
 2020 2019
SDG&E$262
 $176
SoCalGas303
 264
Sempra Texas Utilities105
 94
Sempra Mexico191
 57
Sempra Renewables—
 13
Sempra LNG75
 5
Parent and other(1)
(248) (117)
Discontinued operations72
 (51)
Earnings attributable to common shares$760
 $441
(1)
Includes intercompany eliminations recorded in consolidation and certain corporate costs.

Due to the delay in the issuance of the CPUC’s final decision in the California Utilities’ 2019 GRC FD, the California Utilities recorded revenues in the first quarterhalf of 2019 based on levels authorized for 2018 under the 2016 GRC. The 2019 GRC FD, which was issued by the CPUC in September 2019, was effective retroactively to January 1, 2019. The California Utilities’ CPUC-authorized base revenues forUtilities recorded the first quarterretroactive impacts of 2020 are based on the revenues authorized for the 2019 test year plus the amount authorized for attrition for 2020. Had the 2019 GRC FD been in effect in the first quarter of 2019, SDG&E’s and SoCalGas’ earnings for the first quarter of 2019 would have been higher by $36 million and $84 million, respectively. These amounts were recorded in earnings in the third quarter of 2019. We provide additional information on the 2019 GRC FD in Note 4 of the Notes to Condensed Consolidated Financial Statements in this report and in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.

SDG&E
The decrease in earnings of $85 million (32%) in the three months ended September 30, 2020 was primarily due to:
▪$66 million favorable impact in 2019 from the retroactive application of the 2019 GRC FD for the first six months of 2019;
▪$29 million expected to be refunded to customers and a fine related to the Energy Efficiency Program inquiry, which we discuss in Note 4 of the Notes to Condensed Consolidated Financial Statements; and
▪$10 million lower CPUC base operating margin, including higher non-refundable operating costs in 2020, due to the timing impact of the delayed 2019 GRC FD; offset by
▪$13 million higher electric transmission margin; and
▪$6 million higher AFUDC equity.
The increase in earnings of $86$51 million (49%(9%) in the first nine months of 2020 was primarily due to:
▪$62 million due to the release of a regulatory liability in 2020 related to 2016-2018 forecasting differences that are not subject to tracking in the income tax expense memorandum account, which we discuss in Note 4 of the Notes to Condensed Consolidated Financial Statements;
▪$57 million higher electric transmission margin, including an increase in authorized ROE and the following impacts from the March 2020 FERC-approved TO5 settlement:
◦$18 million to conclude a rate base matter, and
◦$9 million favorable impact from the retroactive application of the final TO5 settlement for 2019;
▪$19 million higher AFUDC equity; and
▪$5 million higher CPUC base operating margin authorized for 2020, net of higher non-refundable operating costs; offset by
▪$44 million expected to be refunded to customers and a fine related to the Energy Efficiency Program inquiry;
▪$31 million income tax benefit in 2019 from the release of a regulatory liability established in connection with 2017 tax reform for excess deferred income tax balances that the CPUC directed to be allocated to shareholders in a January 2019 decision; and
▪$11 million higher amortization and accretion of the Wildfire Fund asset and liability, respectively.
95

SoCalGas
Losses of $24 million in the three months ended September 30, 2020 compared to earnings of $143 million for the same period in 2019 was primarily due to:
▪$130 million favorable impact in 2019 from the retroactive application of the 2019 GRC FD for the first six months of 2019;
▪$32 million lower income tax benefits primarily from flow-through items due to higher pretax income in 2019 resulting from the implementation of the 2019 GRC FD; and
▪$22 million from impacts associated with Aliso Canyon natural gas storage facility litigation and regulatory matters; offset by
▪$21 million impairment of non-utility native gas assets in 2019.
The decrease in earnings of $12 million (3%) in the first nine months of 2020 was primarily due to:
▪$94 million from impacts associated with Aliso Canyon natural gas storage facility litigation and regulatory matters; and
▪$38 million income tax benefit in 2019 from the impact of the January 2019 CPUC decision allocating certain excess deferred income tax balances to shareholders; offset by
▪$64 million due to the release of a regulatory liability in 2020 related to 2016-2018 income tax expense forecasting differences;
▪$30 million higher CPUC base operating margin authorized for 2020, net of operating expenses;
▪$21 million impairment of non-utility native gas assets in 2019; and
▪$8 million in penalties in 2019 related to the SoCalGas billing practices OII.
Sempra Texas Utilities
The decrease in earnings of $3 million (1%) in the three months ended March 31,September 30, 2020 was primarily due to:to lower equity earnings from Oncor Holdings in 2020, driven mainly by:
▪$65 million higher CPUC base operating margin, net of operating expenses, including $36 million lower CPUC base operating margin in 2019 due to the delay in the issuance of the 2019 GRC FD;
▪$38 million higher electric transmission margin, including the following impacts from the March 2020 FERC-approved TO5 settlement proceeding:
◦$18 million to conclude a rate base matter, and
◦$9 million favorable impact from the retroactive application of the final TO5 settlement for 2019. The settlement proceeding increased SDG&E’s authorized ROE from 10.05% to 10.60%, effective June 1, 2019; and
▪
$9 million higher AFUDC equity;
▪unfavorable weather and increased operating costs and expenses attributable to invested capital, including depreciation and amortization expense, interest expense and taxes other than income; offset by
▪increased revenues from rate updates to reflect invested capital.offset by
▪$31 million income tax benefit in 2019 from the release of a regulatory liability established in connection with 2017 tax reform for excess deferred income tax balances that the CPUC directed to be allocated to shareholders in a January 2019 decision; and
▪$6 million amortization of Wildfire Fund asset.
SoCalGas
The increase in earnings of $39 million (15%(9%) in the threefirst nine months ended March 31, 2020 was primarily due to:
▪$109 million higher CPUC base operating margin, net of operating expenses, including $84 million lower CPUC base operating margin in 2019 due to the delay in the issuance of the 2019 GRC FD;
▪$21 million higher income tax benefits from flow-through items; and
▪
$8 million penalties in 2019 related to the SoCalGas billing practices OII; offset by
▪$72 million from impacts associated with Aliso Canyon natural gas storage facility litigation; and
▪$35 million income tax benefit in 2019 from the impact of the January 2019 CPUC decision allocating certain excess deferred income tax balances to shareholders.
Sempra Texas Utilities
The increase in earnings of $11 million (12%) in the three months ended March 31, 2020 was primarily due to higher equity earnings from Oncor Holdings in 2020, driven mainly by by:
▪increased revenues from rate updates to reflect invested capital;
▪the impact of Oncor’s acquisition of InfraREIT Inc. in May 20192019; and
▪higher revenues due to rate updates to reflect increases in invested transmission capital, partially AFUDC equity; offset by higher
▪unfavorable weather and increased operating costs and lower consumptionexpenses attributable to invested capital.
Sempra Mexico
Because Ecogas, our natural gas distribution utility in Mexico, uses the local currency as its functional currency, its revenues and expenses are translated into U.S. dollars at average exchange rates for the period for consolidation in Sempra Energy’s results of operations. Prior year amounts used in the variances discussed below are as adjusted for the difference in foreign currency translation rates between years. We discuss these and other foreign currency effects below in “Impact of Foreign Currency and Inflation Rates on Results of Operations.”
The decrease in earnings of $34 million (40%) in the three months ended September 30, 2020 was primarily due to:
▪$57 million unfavorable impact from foreign currency and inflation effects net of foreign currency derivatives effects, comprised of:
◦in 2020, $44 million unfavorable foreign currency and inflation effects, offset by an $11 million gain from foreign currency derivatives, and
◦in 2019, $33 million favorable foreign currency and inflation effects, offset by a $9 million loss from foreign currency derivatives;
▪$12 million higher income tax expense in 2020 primarily from the outside basis differences in JV investments and a valuation allowance; and
▪$6 million higher interest expense; offset by
▪$22 million earnings attributable to NCI at IEnova in 2020 compared to $50 million earnings in 2019; and
▪$7 million higher earnings primarily due to weather.the start of commercial operations of the Sur de Texas-Tuxpan marine pipeline at IMG JV in September 2019.


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Sempra Mexico
The increase in earnings of $134$88 million (41%) in the threefirst nine months ended March 31,of 2020 was primarily due to:
▪$253
▪$191 million favorable impact from foreign currency and inflation effects net of foreign currency derivatives effects, comprised of:
◦in 2020, $326 million favorable foreign currency and inflation effects, offset by a $91 million loss from foreign currency derivatives, and
◦in 2019, $25 million unfavorable foreign currency and inflation effects, offset by a $7 million gain from foreign currency derivatives; and
▪
$8 million primarily due to the start of commercial operations of the Sur de Texas-Tuxpan marine pipeline at IMG JV in the third quarter of foreign currency derivatives effects, comprised of:
◦in 2020, $251 million favorable foreign currency and inflation effects, offset by a $68 million loss from foreign currency derivatives, and
◦in 2019, $13 million unfavorable foreign currency and inflation effects, offset by a $5 million gain from foreign currency derivatives; and
▪$28 million higher earnings primarily due to the start of commercial operations of the Sur de Texas-Tuxpan marine pipeline at IMG JV in September 2019; offset by
▪$193 million earnings attributable to NCI at IEnova in 2020 compared to $114 million earnings in 2019;
▪$21 million lower earnings at the Guaymas-El Oro segment of the Sonora pipeline primarily from force majeure payments that ended in August 2019;
▪$13 million higher interest expense;
▪$11 million higher income tax expense in 2020 primarily from lower income tax credits associated with a two-year tax abatement that expires in 2020, and from a valuation allowance and outside basis differences in JV investments; and
▪$5 million lower earnings at TdM primarily due to lower volumes.
▪$144 million earnings attributable to NCI at IEnova in 2020 compared to $28 million earnings in 2019; and
▪$9 million lower earnings at the Guaymas-El Oro segment of the Sonora pipeline primarily from force majeure payments that ended in August 2019.
Sempra Renewables
As we discuss in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report, Sempra Renewables sold its remaining wind assets and investments in April 2019, upon which date the segment ceased to exist.
Sempra LNG
The increase in earnings of $70$69 million in the three months ended March 31,September 30, 2020 was primarily due to:
▪$43 million higher equity earnings from Cameron LNG JV primarily due to Train 1 and Train 2 commencing commercial operations under their tolling agreements in August 2019 and February 2020, respectively; and
▪
$42 million higher earnings from Sempra LNG’s marketing operations primarily driven by changes in natural gas prices;
▪$79 million higher equity earnings from Cameron LNG JV primarily due to commencement of Phase 1 commercial operations; offset by
▪$17 million lower earnings from Sempra LNG’s marketing operations primarily driven by changes in natural gas prices.
The increase in earnings of $194 million in the first nine months of 2020 was primarily due to:
▪$185 million higher equity earnings from Cameron LNG JV primarily due to commencement of Phase 1 commercial operations; and
▪$20 million higher earnings from Sempra LNG’s marketing operations primarily driven by changes in natural gas prices.
▪$5 million higher liquefaction project development costs.
Parent and Other
The decrease in losses of $13 million (9%) in the three months ended September 30, 2020 was primarily due to:
▪$14 million lower operating costs retained at Parent; and
▪$13 million lower net interest expense; offset by
▪$12 million higher preferred stock dividends due to the issuance of series C preferred stock in June 2020.
The increase in losses of $131$132 million (34%) in the threefirst nine months ended March 31,of 2020 was primarily due to:
▪$100 million equity losses from our investment in RBS Sempra Commodities to settle pending tax matters and related legal costs, which we discuss in Note 11 of the Notes to Condensed Consolidated Financial Statements; and
▪$19 million net investment losses in 2020 compared to $15 million net investment gains in 2019 on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation obligations.
▪$100 million equity losses from our investment in RBS Sempra Commodities to settle pending tax matters and related legal costs, which we discuss in Note 11 of the Notes to Condensed Consolidated Financial Statements;
▪$20 million lower net investment gains on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation obligations;
▪$14 million income tax expense in 2020 compared to a $6 million income tax benefit in 2019 primarily due to:
◦$19 million consolidated California state income tax expense in 2020 associated with income from our investments in Sempra LNG entities, and
◦$10 million income tax benefit in 2019 from a reduction in a valuation allowance against certain NOL carryforwards as a result of our decision to sell our South American businesses, offset by
◦$10 million income tax benefit in 2020 compared to a $3 million income tax expense in 2019 related to share-based compensation; and
▪$14 million higher preferred stock dividends due to the issuance of series C preferred stock in June 2020; offset by
▪$21 million lower net interest expense.
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Discontinued Operations
Discontinued operations that were previously in our Sempra South American Utilities segment include our former 100% interest in Chilquinta Energía in Chile, our former 83.6% interest in Luz del Sur in Peru and our former interests in two energy-services companies, Tecnored and Tecsur, which provide electric construction and infrastructure services to Chilquinta Energía and Luz del Sur, respectively, as well as third parties. Discontinued operations also include activities, mainly income taxes related to the South American businesses, that were previously included in the holding company of the South American businesses at Parent and other.
EarningsAs we discuss in Note 5 of $72the Notes to Condensed Consolidated Financial Statements, we completed the sales of our South American businesses in the second quarter of 2020. On April 24, 2020, we sold our equity interests in our Peruvian businesses, including our 83.6% interest in Luz del Sur and its interest in Tecsur, for cash proceeds of $3,549 million, net of transaction costs and as adjusted for post-closing adjustments, and on June 24, 2020, we sold our equity interests in our Chilean businesses, including our 100% interest in Chilquinta Energía and Tecnored and our 50% interest in Eletrans, for cash proceeds of $2,216 million, net of transaction costs and as adjusted for post-closing adjustments.
Losses of $7 million in the three months ended March 31,September 30, 2020 compared to lossesearnings of $51$248 million for the same period in 2019 from our discontinued operations was primarily due to:
▪$192 million income tax benefit in 2019 associated with outside basis in our South American businesses primarily related to a change in the anticipated structure of the sale of those businesses;
▪$80 million lower operational earnings mainly as a result of the sales of our Peruvian businesses in April 2020 and Chilean businesses in June 2020;and
▪$7 million reduction to the followinggain on sale of our Chilean businesses as a result of post-closing adjustments; offset by
▪$12 million income tax impacts resulting fromexpense in 2019 related to changes in outside basis differences from earnings since January 25, 2019.
The increase in earnings from our discontinued operations of $1,573 million in the first nine months of 2020 was primarily due to:
▪$1,499 million gain on the sale of our Peruvian businesses;
▪$248 million gain on the sale of our Chilean businesses; and
▪$7 million income tax benefit in 2020 compared to $32 million income tax expense in 2019 related to changes in outside basis differences from earnings and foreign currency effects since January 25, 2019; offset by
▪$134 million lower operational earnings mainly as a result of the sales of our Peruvian and Chilean businesses; and
▪$89 million income tax benefit in 2019 related to outside basis differences existing as of the January 25, 2019 approval of our plan to sell our South American businesses:
▪$103 million income tax expense in 2019 related to outside basis differences existing as of the January 25, 2019 approval of our plan to sell our South American businesses; and
▪$7 million income tax benefit in 2020 compared to $13 million income tax expense in 2019 related to changes in outside basis differences from earnings and foreign currency effects since January 25, 2019.
businesses.


SIGNIFICANT CHANGES IN REVENUES, COSTS AND EARNINGS
This section contains a discussion of the differences between periods in the specific line items of the Condensed Consolidated Statements of Operations for Sempra Energy, SDG&E and SoCalGas.
Utilities Revenues and Cost of Sales
Our utilities revenues include natural gas revenues at our California Utilities and Sempra Mexico’s Ecogas and electric revenues at SDG&E. Intercompany revenues included in the separate revenues of each utility are eliminated in the Sempra Energy Condensed Consolidated Statements of Operations.
SoCalGas and SDG&E currently operate under a regulatory framework that permits:
▪The cost of natural gas purchased for core customers (primarily residential and small commercial and industrial customers) to be passed through to customers in rates substantially as incurred. However, SoCalGas’ GCIM provides SoCalGas the opportunity to share in the savings and/or costs from buying natural gas for its core customers at prices below or above monthly market-based benchmarks. This mechanism permits full recovery of costs incurred when average purchase costs are within a price range around the benchmark price. Any higher costs incurred or savings realized outside this range are shared between the core customers and SoCalGas. We provide further discussion in Note 3 of the Notes to Consolidated Financial Statements and in “Item 1. Business – Ratemaking Mechanisms” in the Annual Report.
▪SDG&E to recover the actual cost incurred to generate or procure electricity based on annual estimates of the cost of electricity supplied to customers. The differences in cost between estimates and actual are recovered or refunded in subsequent periods through rates.
▪The California Utilities to recover certain expenses for programs authorized by the CPUC, or “refundable programs.”
▪The cost of natural gas purchased for core customers (primarily residential and small commercial and industrial customers) to be passed through to customers in rates substantially as incurred. However, SoCalGas’ Gas Cost Incentive Mechanism provides SoCalGas the opportunity to share in the savings and/or costs from buying natural gas for its core customers at prices below or above monthly market-based benchmarks. This mechanism permits full recovery of costs incurred when average purchase costs are within a price range around the benchmark price. Any higher costs incurred or savings realized outside this range are shared between the core customers and SoCalGas. We provide further discussion in Note 3 of the Notes to Consolidated Financial Statements and in “Part I – Item 1. Business – Ratemaking Mechanisms” in the Annual Report.
▪SDG&E to recover the actual cost incurred to generate or procure electricity based on annual estimates of the cost of electricity supplied to customers. The differences in cost between estimates and actual are recovered or refunded in subsequent periods through rates.
▪The California Utilities to recover certain program expenditures and other costs authorized by the CPUC, or “refundable programs.”
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Because changes in SoCalGas’ and SDG&E’s cost of natural gas and/or electricity are recovered in rates, changes in these costs are offset in the changes in revenues, and therefore do not impact earnings. In addition to the changes in cost or market prices, natural gas or electric revenues recorded during a period are impacted by customer billing cycles causing a difference between customer billings and recorded or authorized costs. These differences are required to be balanced over time, resulting in over- and undercollected regulatory balancing accounts. We discuss balancing accounts and their effects further in Note 4 of the Notes to Condensed Consolidated Financial Statements in this report and in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.
The California Utilities’ revenues are decoupled from, or not tied to, actual sales volumes. SoCalGas recognizes annual authorized revenue for core natural gas customers using seasonal factors established in the Triennial Cost Allocation Proceeding. Accordingly, a significant portion of SoCalGas’ annual earnings are recognized in the first and fourth quarters of each year. SDG&E’s authorized revenue recognition is also impacted by seasonal factors, resulting in higher earnings in the third quarter when electric loads are typically higher than in the other three quarters of the year. We discuss this decoupling mechanism and its effects further in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report.


The table below summarizes revenues and cost of sales for our consolidated utilities.
UTILITIES REVENUES AND COST OF SALES 
(Dollars in millions)  
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
Natural gas revenues:  
SoCalGas$842 $975 $3,247 $3,142 
SDG&E134 156 498 482 
Sempra Mexico12 14 42 56 
Eliminations and adjustments(23)(16)(62)(52)
Total965 1,129 3,725 3,628 
Electric revenues:
SDG&E1,338 1,271 3,478 3,184 
Eliminations and adjustments(2)(2)(4)(4)
Total1,336 1,269 3,474 3,180 
Total utilities revenues$2,301 $2,398 $7,199 $6,808 
Cost of natural gas(1):
SoCalGas$92 $101 $476 $660 
SDG&E27 23 118 136 
Sempra Mexico2 2 8 10 
Eliminations and adjustments(7)(4)(20)(17)
Total$114 $122 $582 $789 
Cost of electric fuel and purchased power(1):
SDG&E$430 $411 $921 $934 
Eliminations and adjustments(1)(1)(3)(5)
Total$429 $410 $918 $929 
(1)     Excludes depreciation and amortization, which are presented separately on the Sempra Energy, SDG&E and SoCalGas Condensed Consolidated Statements of Operations.

99
UTILITIES REVENUES AND COST OF SALES   
(Dollars in millions)   
 Three months ended March 31,
 2020 2019
Natural gas revenues:   
SoCalGas$1,395
 $1,361
SDG&E219
 205
Sempra Mexico20
 27
Eliminations and adjustments(17) (17)
Total1,617
 1,576
Electric revenues:   
SDG&E1,050
 940
Eliminations and adjustments(2) (1)
Total1,048
 939
Total utilities revenues$2,665
 $2,515
Cost of natural gas:   
SoCalGas$278
 $455
SDG&E60
 79
Sempra Mexico3
 5
Eliminations and adjustments(4) (8)
Total$337
 $531
Cost of electric fuel and purchased power:   
SDG&E$231
 $258
Eliminations and adjustments(2) (2)
Total$229
 $256

Natural Gas Revenues and Cost of Natural Gas
The table below summarizes the average cost of natural gas sold by the California Utilities and included in Cost of Natural Gas.Gas on the Condensed Consolidated Statements of Operations. The average cost of natural gas sold at each utility is impacted by market prices, as well as transportation, tariff and other charges.
CALIFORNIA UTILITIES AVERAGE COST OF NATURAL GAS   
(Dollars per thousand cubic feet)   
 Three months ended March 31,
 2020 2019
SoCalGas$2.54
 $3.85
SDG&E3.75
 4.60

CALIFORNIA UTILITIES AVERAGE COST OF NATURAL GAS
(Dollars per thousand cubic feet)
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
SoCalGas$1.95 $2.12 $2.21 $2.89 
SDG&E3.79 3.29 3.56 3.96 
In the three months ended March 31,September 30, 2020, Sempra Energy’sour natural gas revenues increaseddecreased by $41$164 million (3%(15%) remaining at $1.6 billionto $965 million primarily due to:
▪$34 million increase
▪$133 million decrease at SoCalGas, which included:
◦
$181 million higher CPUC-authorized revenues, including $116 million lower revenues in 2019 due to the delay in the issuance of the 2019 GRC FD, and
◦
$36 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are offset in O&M, offset by
◦$177 million decrease in cost of natural gas sold, which we discuss below; and
▪$14 million increase at SDG&E, which included:
◦
$29 million higher CPUC-authorized revenues, including $23 million lower revenues in 2019 due to the delay in the issuance of the 2019 GRC FD, offset by
◦$19 million decrease in the cost of natural gas sold, which we discuss below.


◦$181 million favorable impact in 2019 from the retroactive application of the 2019 GRC FD for the first six months of 2019, and
◦$9 million decrease in cost of natural gas sold, which we discuss below, offset by
◦$59 million lower authorized revenues from incremental capital projects in 2019 due to implementation of the 2019 GRC FD, and
◦$18 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are offset in O&M; and
▪$22 million decrease at SDG&E, which included:
◦$38 million favorable impact in 2019 from the retroactive application of the 2019 GRC FD for the first six months of 2019, offset by
◦$8 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are offset in O&M, and
◦$5 million higher non-service component of net periodic benefit cost in 2020, which fully offsets in Other Income (Expense), Net.
In the three months ended March 31,September 30, 2020 our cost of natural gas decreased by $194$8 million (37%(7%) to $337$114 million primarily due to:
▪$9 million decrease at SoCalGas primarily due to lower average natural gas prices; offset by
▪
$177 million decrease at SoCalGas due to $143 million from lower average natural gas prices and $34 million from lower volumes driven by weather;
▪$4 million increase at SDG&E primarily due to higher average natural gas prices.
In the first nine months of 2020, our natural gas revenues increased by $97 million (3%) to $3.7 billion primarily due to:
▪$105 million increase at SoCalGas, which included:
◦$132 million higher CPUC-authorized revenues,
◦$84 million due to the release of a regulatory liability in 2020 related to 2016-2018 income tax expense forecasting differences,
◦$54 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are offset in O&M, and
◦$34 million higher net revenues from incremental capital projects, offset by
◦$184 million decrease in cost of natural gas sold, which we discuss below; and
▪$16 million increase at SDG&E, which included:
◦$11 million higher CPUC-authorized revenues,
◦$9 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are offset in O&M,
◦$6 million due to the release of a regulatory liability in 2020 related to 2016-2018 income tax expense forecasting differences, and
◦$3 million non-service component of net periodic benefit cost in 2020 compared to a $3 million credit in 2019, which fully offsets in Other Income (Expense), Net, offset by
◦$18 million decrease in cost of natural gas sold, which we discuss below; offset by
▪$14 million decrease at Sempra Mexico primarily due to a regulatory rate adjustment and foreign currency effects.
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In the first nine months of 2020, our cost of natural gas decreased by $207 million (26%) to $582 million primarily due to:
▪$184 million decrease at SoCalGas due to $145 million from lower average natural gas prices and $39 million from lower volumes driven primarily by weather; and
▪$18 million decrease at SDG&E due to lower average natural gas prices and lower volumes driven primarily by weather.
▪$19 million decrease at SDG&E due to lower average natural gas prices and lower volumes driven by weather.
Electric Revenues and Cost of Electric Fuel and Purchased Power
In the three months ended March 31,September 30, 2020, our electric revenues, substantially all of which are at SDG&E, increased by $109$67 million (12%(5%) remaining at $1.3 billion, including:
▪$96 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are offset in O&M;
▪$27 million higher revenues from transmission operations;
▪$13 million higher non-service component of net periodic benefit cost in 2020, which fully offsets in Other Income (Expense), Net; and
▪$12 million higher CPUC-authorized revenues; offset by
▪$54 million favorable impact in 2019 from the retroactive application of the 2019 GRC FD for the first six months of 2019, including $50 million of liability insurance premium that are now balanced; and
▪$36 million expected to be refunded to customers related to the Energy Efficiency Program inquiry.
In the three months ended September 30, 2020, our utility cost of electric fuel and purchased power, substantially all of which is at SDG&E, increased by $19 million (5%) to $1.0$429 million primarily due to $17 million associated with Otay Mesa VIE, which we deconsolidated in August 2019.
In the first nine months of 2020, our electric revenues, substantially all of which are at SDG&E, increased by $294 million (9%) to $3.5 billion, including:
▪$67 million increase in transmission operations, including the following impacts related to the March 2020 FERC-approved TO5 settlement proceeding:
◦$26 million to settle a rate base matter, and
◦$12 million favorable impact from the retroactive application of the final TO5 settlement for 2019; and
▪
$55 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are offset in O&M; offset by
▪$27 million lower cost of electric fuel and purchased power, which we discuss below.
Our▪$157 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are offset in O&M;
▪$110 million higher revenues from transmission operations, including an increase in authorized ROE and the following impacts related to the March 2020 FERC-approved TO5 settlement:
◦$26 million to settle a rate base matter, and
◦$12 million favorable impact from the retroactive application of the final TO5 settlement for 2019;
▪$77 million due to the release of a regulatory liability in 2020 related to 2016-2018 income tax expense forecasting differences;
▪$26 million higher CPUC-authorized revenues;
▪$19 million higher revenues associated with SDG&E’s wildfire mitigation plan; and
▪$9 million non-service component of net periodic benefit cost in 2020 compared to a $7 million credit in 2019, which fully offsets in Other Income (Expense), Net; offset by
▪$65 million lower cost of electric fuel and purchased power, which we discuss below; and
▪$51 million expected to be refunded to customers related to the Energy Efficiency Program inquiry.
In the first nine months of 2020, our utility cost of electric fuel and purchased power, substantially all of which is at SDG&E, decreased by $27$11 million (11%(1%) to $229$918 million in the three months ended March 31, 2020,primarily due to:
▪$65 million lower recoverable cost of electric fuel and purchased power primarily due to a decrease in residential demand primarilymainly from an increase in rooftop solar adoption.adoption; offset by
▪$52 million associated with Otay Mesa VIE, which we deconsolidated in August 2019.
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Energy-Related Businesses: Revenues and Cost of Sales
The table below shows revenues and cost of sales for our energy-related businesses.
ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES
(Dollars in millions)
 Three months ended March 31,
 2020 2019
REVENUES   
Sempra Mexico$289
 $356
Sempra Renewables—

7
Sempra LNG123
 141
Parent and other(1)
(48) (121)
Total revenues$364
 $383
COST OF SALES(2)
   
Sempra Mexico$69
 $121
Sempra LNG39
 103
Parent and other(1)
(49) (116)
Total cost of sales$59
 $108
(1)
Includes eliminations of intercompany activity.
(2)
Excludes depreciation and amortization, which are presented separately on the Sempra Energy Condensed Consolidated Statements of Operations.

ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES
(Dollars in millions)
 Three months ended September 30,Nine months ended September 30,
 2020201920202019
REVENUES  
Sempra Mexico$339 $343 $893 $1,002 
Sempra Renewables— — — 10 
Sempra LNG63 100 255 327 
Parent and other(1)
(59)(83)(148)(261)
Total revenues$343 $360 $1,000 $1,078 
COST OF SALES(2)
  
Sempra Mexico$89 $99 $202 $284 
Sempra LNG62 78 145 235 
Parent and other(1)
(61)(83)(147)(254)
Total cost of sales$90 $94 $200 $265 
(1)    Includes eliminations of intercompany activity.
(2)    Excludes depreciation and amortization, which are presented separately on the Sempra Energy Condensed Consolidated Statements of Operations.

In the three months ended March 31,September 30, 2020, revenues from our energy-related businesses decreased by $19$17 million (5% (5%) to $364$343 million primarily due to:
▪$37 million decrease at Sempra LNG primarily due to:
▪$67 million decrease at Sempra Mexico primarily due to:
◦$49 million from the marketing business primarily from lower natural gas prices and volumes,
◦$26 million lower revenues at TdM primarily due to lower natural gas prices and volumes, and
◦
$10 million lower revenues primarily from force majeure payments that ended in August 2019 with respect to the Guaymas-El Oro segment of the Sonora pipeline,
◦$19 million decrease in revenues from LNG marketing operations primarily from lower natural gas sales to Sempra Mexico mainly as a result of lower volumes and natural gas prices,
◦$11 million decrease from natural gas marketing operations primarily due to changes in natural gas prices, and
◦$6 million lower revenues from the expiration of capacity release contracts in the fourth quarter of 2019; offset by
▪$24 million increase primarily from lower intercompany eliminations associated with sales between Sempra LNG and Sempra Mexico.
◦$14 million increase primarily due to higher volumes at the Ventika wind power generation facilities and from renewable assets placed in service in 2019; and
▪$18 million decrease at Sempra LNG primarily due to:


◦
$55 million lower natural gas sales to Sempra Mexico due to lower natural gas prices and volumes and from fewer LNG cargoes sold, offset by
◦
$44 million increase from natural gas marketing operations primarily due to changes in natural gas prices; offset by
▪$73 million increase primarily from lower intercompany eliminations associated with sales between Sempra LNG and Sempra Mexico.
In the three months ended March 31,September 30, 2020, the cost of sales for our energy-related businesses decreased by $49$4 million (45%(4%) to $59$90 million primarily due to:
▪$64 million decrease at Sempra LNG mainly from natural gas marketing activities primarily from lower natural gas purchases; and
▪
▪$16 million decrease at Sempra LNG mainly from natural gas marketing activities primarily from lower natural gas purchases; and
▪$10 million decrease at Sempra Mexico primarily due to lower natural gas prices offset by higher volumes at the marketing business and lower volumes at TdM; offset by
▪$22 million increase primarily from lower intercompany eliminations associated with sales between Sempra LNG and Sempra Mexico.
In the first nine months of 2020, revenues from our energy-related businesses decreased by $78 million (7%) to $1 billion primarily due to:
▪$109 million decrease at Sempra Mexico primarily due to:
◦$63 million from the marketing business primarily due to lower natural gas prices and volumes,
◦$26 million lower revenues primarily from force majeure payments that ended in August 2019 with respect to the Guaymas-El Oro segment of the Sonora pipeline, and
◦$25 million lower revenues from TdM primarily due to lower volumes, offset by higher natural gas prices; and
▪$72 million decrease at Sempra LNG primarily due to:
◦$89 million decrease in revenues from LNG marketing operations primarily from lower natural gas sales to Sempra Mexico mainly as a result of lower volumes and natural gas prices, and from lower diversion fees mainly due to lower natural gas prices, and
◦$16 million lower revenues from the expiration of capacity release contracts in the fourth quarter of 2019, offset by
◦$34 million increase from natural gas marketing operations primarily due to changes in natural gas prices; offset by
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▪$113 million increase primarily from lower intercompany eliminations associated with sales between Sempra LNG and Sempra Mexico.
In the first nine months of 2020, the cost of sales for our energy-related businesses decreased by $65 million (25%) to $200 million primarily due to:
▪$90 million decrease at Sempra LNG mainly from natural gas marketing activities primarily due to lower natural gas purchases; and
▪$82 million decrease at Sempra Mexico mainly associated with lower revenues from the marketing business and from TdM as a result of lower natural gas prices and volumes; offset by
▪$107 million increase primarily from lower intercompany eliminations associated with sales between Sempra LNG and Sempra Mexico.
$52 million decrease at Sempra Mexico mainly associated with lower revenues from the marketing business and TdM as a result of lower natural gas prices and volumes; offset by
▪$67 million increase primarily from lower intercompany eliminations associated with sales between Sempra LNG and Sempra Mexico.
Operation and Maintenance
Our O&M increased by $119$199 million (14%(24%) to $951 million$1.0 billion in the three months ended March 31,September 30, 2020 primarily due to:
▪$133
▪$124 million increase at SDG&E, excluding impairment losses discussed below, but including:
◦$104 million higher expenses associated with CPUC-authorized refundable programs for which costs incurred are recovered in revenue, and
◦$20 million higher non-refundable operating costs; and
▪$94 million increase at SoCalGas primarily due to:
◦$100 million from impacts associated with Aliso Canyon natural gas storage facility litigation, and
◦$36 million higher expenses associated with CPUC-authorized refundable programs for which costs incurred are recovered in revenue; and
▪
$24 million increase at SDG&E primarily due to:
◦$49 million higher non-refundable operating costs,
◦$27 million from impacts associated with Aliso Canyon natural gas storage facility litigation and regulatory matters, and
◦$18 million higher expenses associated with CPUC-authorized refundable programs; offset by
▪$19 million decrease at Parent and other primarily from lower retained operating costs.
In the first nine months of 2020, O&M increased by $378 million (15%) to $2.9 billion primarily due to:
▪$235 million increase at SoCalGas primarily due to:
◦$127 million from impacts associated with Aliso Canyon natural gas storage facility litigation and regulatory matters,
◦$54 million higher expenses associated with CPUC-authorized refundable programs, and
◦$54 million higher non-refundable operating costs; and
▪$198 million increase at SDG&E, excluding impairment losses discussed below, but including:
◦$166 million higher expenses associated with CPUC-authorized refundable programs, and
◦$32 million higher non-refundable operating costs, including $14 million from amortization of the Wildfire Fund asset and accretion of the Wildfire Fund obligation; offset by
▪$41 million decrease at Parent and other primarily from lower deferred compensation expense; and
▪$18 million decrease at Sempra Renewables primarily due to lower general and administrative and other costs due to the wind-down of the business in 2019.
Impairment Losses
In September 2019, SoCalGas recognized a $29 million impairment loss related to non-utility native gas assets. In September 2019, SDG&E and SoCalGas recognized impairment losses of $6 million and $8 million, respectively, for certain disallowed capital costs in the 2019 GRC FD.
Gain on Sale of Assets
In April 2019, Sempra Renewables recognized a $61 million gain on the sale of its remaining wind assets and investments to AEP, as we discuss in Note 5 of the Notes to Condensed Consolidated Financial Statements.
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◦
$57 million higher expenses associated with CPUC-authorized refundable programs, offset by
◦
$31 million lower non-refundable operating costs, including liability insurance premium costs for 2019 that were not balanced due to the delay in the 2019 GRC FD; offset by
▪$36 million decrease at Parent and other primarily from lower deferred compensation expense.
Other Income (Expense) Income,, Net
As part of our central risk management function, we enter into foreign currency derivatives to hedge Sempra Mexico parent’s exposure to movements in the Mexican peso from its controlling interest in IEnova. The gains/losses associated with these derivatives are included in Other Income (Expense) Income,, Net, as described below, and partially mitigate the transactional effects of foreign currency and inflation included in Income Tax Benefit (Expense) Expense for Sempra Mexico’s consolidated entities and in Equity Earnings for Sempra Mexico’s equity method investments. We also utilizeutilized foreign currency derivatives to hedge exposure to fluctuations in the Peruvian sol and Chilean peso related to the salesales of our operations in Peru and Chile, respectively. We discuss policies governing our risk management in “Item“Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report.
Other expense,income, net, in the three months ended March 31,September 30, 2020 was $254$29 million compared to other income,expense, net, of $82$7 million in the same period in 2019. The change was primarily due to:
▪$276 million net losses in 2020 from interest rate and foreign exchange instruments and foreign currency transactions compared to net gains of $20 million for the same period in 2019 primarily due to:
◦$149 million foreign currency losses in 2020 compared to $10 million foreign currency gains in 2019 on a Mexican peso-denominated loan to IMG JV, which is offset in Equity Earnings, and
◦
$125 million losses in 2020 compared to $10 million gains in 2019 on foreign currency derivatives as a result of fluctuation of the Mexican peso,
▪$34 million net gains in 2020 from interest rate and foreign exchange instruments and foreign currency transactions compared to net losses of $30 million for the same period in 2019 primarily due to:
◦$15 million gains in 2020 compared to $17 million losses in 2019 on a Mexican peso-denominated loan to IMG JV, which is offset in Equity Earnings, and
◦$15 million gains in 2020 compared to $12 million losses in 2019 on foreign currency derivatives as a result of fluctuation of the Mexican peso;
▪$9 million higher AFUDC equity, including $6 million at SDG&E; and
▪$7 million higher investment gains in 2020 on dedicated assets in support of our executive retirement and deferred compensation plans; offset by
▪$35 million higher non-service component of net periodic benefit cost in 2020, including $13 million settlement charges in 2020 for lump sum payments from one of our nonqualified pension plans; and
▪$6 million fine at SDG&E related to the Energy Efficiency Program inquiry.
Other expense, net, in the first nine months of 2020 was $163 million compared to other income, net, of $103 million in the same period in 2019. The change was primarily due to:
▪$224 million net losses in 2020 from interest rate and foreign exchange instruments and foreign currency transactions compared to net gains of $5 million for the same period in 2019 primarily due to:
◦$120 million higher foreign currency losses on a Mexican peso-denominated loan to IMG JV, which is offset in Equity Earnings, and
◦$94 million losses in 2020 compared to $7 million gains in 2019 on foreign currency derivatives as a result of fluctuation of the Mexican peso;
▪$37 million lower investment gains in 2020 on dedicated assets in support of our executive retirement and deferred compensation plans;
▪$26 million higher non-service component of net periodic benefit cost in 2020; and
▪$6 million fine at SDG&E related to the Energy Efficiency Program inquiry; offset by
▪$27 million higher AFUDC equity, including $19 million at SDG&E and $4 million at SoCalGas;
▪$8 million increase in regulatory interest at the California Utilities due to the release of a regulatory liability in 2020 related to 2016-2018 income tax expense forecasting differences; and
▪$8 million in penalties in 2019 related to the SoCalGas billing practices OII.offset by
◦$11 million net gains in 2020 of foreign currency derivatives used to hedge exposure to fluctuations in the Peruvian sol and Chilean peso related to the sale of our operations in Peru and Chile; and
▪
$37 million investment losses in 2020 compared to $26 million investment gains in 2019 on dedicated assets in support of our executive retirement and deferred compensation plans; offset by
▪$8 million in penalties in 2019 related to the SoCalGas billing practices OII.

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Income Taxes
The table below shows the income tax expense (benefit) and ETRs for Sempra Energy Consolidated, SDG&E and SoCalGas.
INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
Three months ended September 30,Nine months ended September 30,
2020201920202019
Sempra Energy Consolidated:
Income tax expense from continuing operations$99 $61 $60 $150 
Income from continuing operations before income taxes
and equity earnings
$201 $448 $1,061 $1,235 
Equity earnings, before income tax(1)
117 17 158 24 
Pretax income$318 $465 $1,219 $1,259 
Effective income tax rate31 %13 %5 %12 %
SDG&E:
Income tax expense$33 $71 $161 $111 
Income before income taxes$211 $337 $794 $700 
Effective income tax rate16 %21 %20 %16 %
SoCalGas:
Income tax (benefit) expense$(6)$35 $95 $50 
(Loss) income before income taxes$(30)$178 $521 $488 
Effective income tax rate20 %20 %18 %10 %
INCOME TAX (BENEFIT) EXPENSE AND EFFECTIVE INCOME TAX RATES   
(Dollars in millions)
 Three months ended March 31,
 2020 2019
Sempra Energy Consolidated:   
Income tax (benefit) expense from continuing operations$(207) $42
    
Income from continuing operations before income taxes and equity earnings$397
 $501
Equity (losses) earnings, before income tax(1)
(43) 5
Pretax income$354
 $506
    
Effective income tax rate(58)% 8%
SDG&E:   
Income tax expense$58
 $5
Income before income taxes$320
 $182
Effective income tax rate18 % 3%
SoCalGas:   
Income tax expense$52
 $19
Income before income taxes$355
 $283
Effective income tax rate15 % 7%
(1)(1)    We discuss how we recognize equity earnings in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.
We discuss how we recognize equity earnings in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.
Sempra Energy Consolidated
IncomeThe increase in income tax benefitexpense in the three months ended March 31,September 30, 2020 compared to an income tax expense in the same period in 2019 was due to a lowerhigher ETR andoffset by lower pretax income. The change in ETR was primarily due to $41 million income tax expense in 2020 compared to $32 million income tax benefit in 2019 from foreign currency and inflation effects primarily as a result of fluctuation of the Mexican peso.
The decrease in income tax expense in the first nine months of 2020 was due to lower pretax income and a lower ETR. The change in ETR was primarily due to:
▪$308 million income tax benefit in 2020 compared to $23 million income tax expense in 2019 from foreign currency and inflation effects primarily as a result of fluctuation of the Mexican peso; and
▪
$19 million income tax benefit in 2020 compared to $8
▪$237 million income tax benefit in 2020 compared to $7 million income tax expense in 2019 from foreign currency and inflation effects primarily as a result of fluctuation of the Mexican peso; and
▪$19 million income tax benefit in 2020 compared to $5 million income tax expense in 2019 related to share-based compensation; offset by
▪$69 million total income tax benefits in 2019 from the release of regulatory liabilities at SDG&E and SoCalGas established in connection with 2017 tax reform for excess deferred income tax balances that the CPUC directed be allocated to shareholders in a January 2019 decision; and
▪$10 million income tax benefit in 2019 from a reduction in a valuation allowance against certain NOL carryforwards as a result of our decision to sell our South American businesses.
▪$66 million total income tax benefits in 2019 from the release of regulatory liabilities at SDG&E and SoCalGas established in connection with 2017 tax reform for excess deferred income tax balances that the CPUC directed be allocated to shareholders in a January 2019 decision; and
▪$10 million income tax benefit in 2019 from a reduction in a valuation allowance against certain NOL carryforwards as a result of our decision to sell our South American businesses.
We discuss the impact of foreign currency exchange rates and inflation on income taxes below in “Impact of Foreign Currency and Inflation Rates on Results of Operations.” See Note 1 of the Notes to Condensed Consolidated Financial Statements in this report and Notes 1 and 8 of the Notes to Consolidated Financial Statements in the Annual Report for further details about our accounting for income taxes and items subject to flow-through treatment.
SDG&E
The increasedecrease in SDG&E’s income tax expense in the three months ended March 31,September 30, 2020 was due to lower pretax income and a lower ETR. The change in ETR was primarily due to higher forecasted flow-through items as a percentage of pretax income.
The increase in SDG&E’s income tax expense in the first nine months of 2020 was due to higher pretax income and a higher ETR and higher pretax income.ETR. The change in ETR was primarily due to $31 million income tax benefit in 2019 from the release of a regulatory liability established in connection with 2017 tax reform for excess deferred income tax balances that the CPUC directed be allocated to shareholders in a January 2019 decision.
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SoCalGas
SoCalGas’ income tax benefit in the three months ended September 30, 2020 compared to an income tax expense in the same period in 2019 was due to a pretax loss in the three months ended September 30, 2020 compared to pretax income in the same period in 2019.
The increase in SoCalGas’ income tax expense in the threefirst nine months ended March 31,of 2020 was due to higher pretax income and a higher ETR and higher pretax income.ETR. The change in ETR was primarily due to $35$38 million income tax benefit in 2019 from the release of a regulatory liability established in connection with 2017 tax reform for excess deferred income tax balances that the CPUC directed be allocated to shareholders in a January 2019 decision.


Equity Earnings
In the three months ended March 31,September 30, 2020, equity earnings increased by $162$60 million (23%) to $263$326 million primarily due to:
▪$171 million higher equity earnings at IMG JV, primarily due to foreign currency effects, including $149 million foreign currency gains in 2020 compared to $10 million foreign currency losses in 2019 on IMG JV’s Mexican peso-denominated loans from its JV owners, which is fully offset in Other (Expense) Income, Net, and the start of commercial operations of the Sur de Texas-Tuxpan marine pipeline;
▪$55 million higher equity earnings at Cameron LNG JV primarily due to Train 1 and Train 2 commencing commercial operations under their tolling agreements in August 2019 and February 2020, respectively; and
▪
$21 million higher equity earnings at TAG JV primarily due to higher income tax benefits in 2020;
▪$99 million higher equity earnings at Cameron LNG JV primarily due to commencement of Phase 1 commercial operations; offset by
▪$29 million lower equity earnings at IMG JV, primarily due to foreign currency effects, including $15 million foreign currency losses in 2020 compared to $17 million foreign currency gains in 2019 on IMG JV’s Mexican peso-denominated loans from its JV owners, which is fully offset in Other Income (Expense), Net, and lower AFUDC equity, offset by higher revenues from the start of commercial operations of the Sur de Texas-Tuxpan marine pipeline.
In the first nine months of 2020, equity earnings increased by $337 million to $822 million primarily due to:
▪$238 million higher equity earnings at Cameron LNG JV primarily due to commencement of Phase 1 commercial operations;
▪$144 million higher equity earnings at IMG JV, primarily due to foreign currency effects, including $120 million higher foreign currency gains in 2020 on IMG JV’s Mexican peso-denominated loans from its JV owners, which is fully offset in Other Income (Expense), Net, and higher revenues from the start of commercial operations of the Sur de Texas-Tuxpan marine pipeline, offset by lower AFUDC equity;
▪$39 million higher equity earnings at Oncor Holdings primarily due to increased revenues, the acquisition of InfraREIT in May 2019 and higher AFUDC equity, offset by unfavorable weather and increased operating costs; and
▪$18 million higher equity earnings at TAG JV primarily due to income tax benefit in 2020 compared to income tax expense in 2019; offset by
▪$100 million equity losses at RBS Sempra Commodities in 2020, which represents an estimate of our obligations to settle pending tax matters and related legal costs at our equity method investment.
▪$100 million equity losses at RBS Sempra Commodities in 2020, which represents an estimate of our obligations to settle pending tax matters and related legal costs at our equity method investment.
Earnings Attributable to Noncontrolling Interests
EarningsIn the three months ended September 30, 2020, earnings attributable to NCI decreased by $38 million to $22 million, primarily due to a decrease in earnings attributable to NCI at Sempra Mexico mainly from foreign currency effects as a result of fluctuation of the Mexico peso, and from the sales of our Peruvian businesses in April 2020 and Chilean businesses in June 2020.
In the first nine months of 2020, earnings attributable to NCI increased by $110$55 million (38%) to $151$201 million, in the three months ended March 31, 2020 primarily due to an increase in earnings attributable to NCI at Sempra Mexico primarilymainly from foreign currency effects as a result of fluctuation of the Mexico peso.peso, offset by a decrease due to the sales of our Peruvian businesses in April 2020 and Chilean businesses in June 2020.

IMPACT OF FOREIGN CURRENCY AND INFLATION RATES ON RESULTS OF OPERATIONS
Because operations in South America and our natural gas distribution utility in Mexico use their local currency as their functional currency, revenues and expenses are translated into U.S. dollars at average exchange rates for the period for consolidation in Sempra Energy Consolidated’sEnergy’s results of operations. We discuss further the impact of foreign currency and inflation rates on results of operations, including impacts on income taxes and related hedging activity, in “Item“Part II – Item 7. MD&A – Impact of Foreign Currency and Inflation Rates on Results of Operations” in the Annual Report.
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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 Energy Consolidated’sEnergy’s comparative results of operations. Changes in foreign currency translation rates between periods resulted in $4 million lower earnings within discontinued operations inIn the first three months ofand nine months ended September 30, 2020 compared to the same periodprior-year periods, the change in 2019.our earnings as a result of foreign currency translation was not material.
Transactional Impacts
Income statement activities at our foreign operations and their JVs are also impacted by transactional gains and losses, a summary of which is shown in the table below:
TRANSACTIONAL GAINS (LOSSES) FROM FOREIGN CURRENCY AND INFLATION
(Dollars in millions)
 Total reported amountsTransactional gains (losses) included in reported amounts
 Three months ended September 30,
 2020201920202019
Other income (expense), net$29 $(7)$34 $(30)
Income tax expense(99)(61)(41)32 
Equity earnings326 266 (23)17 
Income from continuing operations, net of income tax428 653 (33)21 
(Loss) income from discontinued operations, net of income tax(7)256 — — 
Earnings attributable to common shares351 813 (18)11 
 Nine months ended September 30,
 2020201920202019
Other income (expense), net$(163)$103 $(224)$5 
Income tax expense(60)(150)237 (7)
Equity earnings822 485 141 (5)
Income from continuing operations, net of income tax1,823 1,570 179 (10)
(Loss) income from discontinued operations, net of income tax1,850 292 15 1 
Earnings attributable to common shares3,350 1,608 111 (4)
TRANSACTIONAL (LOSSES) GAINS FROM FOREIGN CURRENCY AND INFLATION
(Dollars in millions)
 Total reported amounts  
Transactional (losses) gains included
in reported amounts
 Three months ended March 31,
 2020 2019  2020 2019
Other (expense) income, net$(254) $82
  $(276) $20
Income tax benefit (expense)207
 (42)  308
 (23)
Equity earnings263
 101
  181
 (12)
Income from continuing operations, net of income tax867
 560
  242
 (18)
Income (loss) from discontinued operations, net of income tax80
 (42)  16
 —
Earnings attributable to common shares760
 441
  150
 (10)


CAPITAL RESOURCES AND LIQUIDITY
OVERVIEW
TheSempra Energy Consolidated
Impact of the COVID-19 Pandemic
On March 11, 2020, the World Health Organization declared the COVID-19 outbreak to be a pandemic. President Donald Trump officially declared a national emergency on March 13, 2020, and the Mexican government announced a national state of sanitary emergency on March 30, 2020. The COVID-19 pandemic is causinghaving a significant impact on the economy and people’s livelihoods, including substantial volatility and erosion of value in financial markets and a historic surge in unemployment claims, while individuals adhere to shelter-in-place mandates and practice social distancing, and has resulted in sweeping action by governments and other authorities to help address these effects. For example:
▪The following describes someCPUC required that all energy companies under its jurisdiction, including the California Utilities, take action to implement several emergency customer protection measures to support California customers. The measures apply to all residential and small business customers affected by the COVID-19 pandemic and include suspending service disconnections due to nonpayment, waiving late payment fees, and offering flexible payment plans for all customers experiencing difficulty paying their electric or gas bills. The CPUC approved a resolution authorizing each of the California Utilities to establish a CPPMA to track and request recovery of incremental costs associated with complying with residential and small business customer protection measures implemented by the CPUC related to the COVID-19 pandemic, including costs associated with suspending service disconnections and uncollectible expenses that arise from these customers’ failure to pay. Although we are tracking these costs in various regulatory mechanisms, recovery is not assured. The continuation of these government actionscircumstances could result in a further reduction in payments received from the California Utilities’ customers and their currenta further increase in uncollectible accounts, which could become material, and anticipated impactany inability to recover these costs could have a material adverse effect on the cash flows,
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financial condition and results of operations of Sempra Energy, SDG&E and SoCalGas. We discuss regulatory mechanisms in Note 4 of the Notes to Condensed Consolidated Financial Statements.
▪In Texas, the PUCT issued orders creating the COVID-19 Electricity Relief Program and suspending service disconnections due to nonpayment for customers enrolled in the program through September 30, 2020. The COVID-19 Electricity Relief Program created a fund through which transmission and distribution utilities and retail electric providers in Texas may seek to recover certain costs (including transmission and distribution utility electricity delivery charges) of providing uninterrupted services to customers facing financial hardship due to the effects of the COVID-19 pandemic. Financial assistance under the program was available to enrolled residential customers for electricity bills issued on or after March 26, 2020 through September 30, 2020. The PUCT has also authorized the use of a regulatory asset accounting mechanism and a subsequent process through which regulated utility companies may seek future recovery of other expenses resulting from the effects of the COVID-19 pandemic. Rate regulation is premised on the full recovery of prudently incurred costs. The regulatory assets established with respect to COVID-19 pandemic costs are subject to PUCT review for reasonableness and possible disallowance. Any inability to recover these costs could have an adverse effect on the cash flows, financial condition and results of operations of Sempra Energy.
▪On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted and signed into law in response to the COVID-19 pandemic. Among other things, the CARES Act contains significant business tax provisions, including a delay of payment of employer payroll taxes and an acceleration of refunds of corporate alternative minimum tax (AMT) credits. Sempra Energy, SDG&E and SoCalGas expect to benefit from deferring payment of the employer’s share of payroll taxes through the end of 2020, with half of such taxes to be paid by the end of 2021 and the other half to be paid by the end of 2022. Sempra Energy has filed a refund claim for its corporate AMT credits and expects to receive approximately $56 million in 2020 rather than in installments through 2021.
Our businesses that invest in, develop and operate energy infrastructure and provide electric and gas services to customers have been identified as critical or essential services in the U.S. and Mexico and have continued to operate throughout the COVID-19 pandemic. As our businesses:
▪On March 4, 2020, Governor Gavin Newsom proclaimed a State of Emergency in California as a result of the threat of COVID-19, and on March 19, 2020, the Governor imposed a California-wide shelter-in-place directive via an Executive Order that will remain in place indefinitely. The Governor’s Executive Order requires all individuals living in California to stay home or at their place of residence except as needed to maintain the continuity of 16 critical infrastructure sectors. Our businesses that invest in, develop and operate energy infrastructure and provide electric and gas services to customers in California have been identified as critical infrastructure under the Executive Order.
▪On March 13, 2020, the California Utilities announced that they were voluntarily instituting a suspension of all customer disconnections for nonpayment of customer bills until further notice.
▪On March 17, 2020, the CPUC announced that, retroactive to March 4, 2020, all energy companies under its jurisdiction, including the California Utilities, should take action to implement several emergency customer protection measures to support California customers. The measures apply to all residential and small business customers affected by the COVID-19 pandemic and include suspending service disconnections due to nonpayment, waiving late payment fees, and offering flexible payment plans for all customers experiencing difficulty paying their electric or gas bills. Similarly, on March 26, 2020, the PUCT issued orders that require retail electric providers to offer a deferred payment plan to customers, upon request, and authorized customer assistance programs for certain residential customers of electric service. The continuation of these circumstances could result in a material reduction in payments received from our customers and a material increase in uncollectible accounts that we may not be able to recover in rates, which could have a material adverse effect on the cash flows, financial condition and results of operations for Sempra Energy, SDG&E and SoCalGas.
▪On March 30, 2020, the Mexican government announced a national state of sanitary emergency, suspending all non-essential activities and urging people in Mexico to stay at home until April 30, 2020, which was subsequently extended to May 30, 2020 and may be extended further. Essential business activities that may continue to operate during the health emergency include the conservation, maintenance and repair of critical infrastructure that ensures the production and distribution of electric and gas services.
▪On April 16, 2020, the CPUC approved a resolution authorizing each of the California Utilities to establish a CPPMA to track and request recovery of incremental costs associated with complying with measures implemented by the CPUC related to the COVID-19 pandemic. Although we are tracking these costs, which will include incremental amounts associated with customer nonpayments, CPUC approval is required to collect all or any portion of the balance of the CPPMA, which is not assured. Similarly, the PUCT has provided for the use of a regulatory asset accounting mechanism and a subsequent process through which regulated utility companies may seek future recovery of expenses resulting from the effects of the COVID-19 pandemic, as well as the creation of a COVID-19 Electricity Relief Program fund through which transmission and distribution utilities and retail electric providers may seek to recover a reasonable portion of the cost of providing uninterrupted services to customers facing financial hardship due to the effects of the COVID-19 pandemic. There can be no assurance, however, that our Texas utilities will be able to recover any of the costs they incur from their response to the COVID-19 pandemic through these programs or otherwise.
▪On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act contains significant business tax provisions, including a delay of payment of employer payroll taxes and an acceleration of refunds of corporate alternative minimum tax (AMT) credits. Sempra Energy, SDG&E and SoCalGas expect to benefit from deferring payment of the employer’s share of payroll taxes through the end of 2020, with half of such taxes to be paid by the end of 2021 and the other half to be paid by the end of 2022. Sempra Energy has filed a refund claim for its corporate AMT credits and expects to receive approximately $56 million in 2020 rather than in installments through 2021.


In addition,businesses continue to operate, our priority is the safety of our employees, customers, partners and the communities we serve. We and other companies, including our partners, are taking steps to try to protect the health and well-being of our employees and other stakeholders. As our businesses continue to operate, our priority is the safety of our employees, customers, partners and the communities we serve. For example, we have activated our business continuity plans and continue to work closely with local, state and federal authorities to provide essential services with minimum interruption to customers and in accordance with applicable shelter-in-place and other orders. We have implemented precautionary measures across our businesses, including requiring employees to work remotely when possible, restricting non-essential business travel, increasing facility sanitization and communicating proper health and safety protocols to employees. Additionally, SDG&E announced that it is postponing all noncritical planned outages, while continuing with those related to public safety, emergencies and wildfire mitigation, to try to protect employees and maintain service to customers as seamlessly as possible. We also have engaged an infectious disease expert to advise us during this public health crisis. Through the end of the firstthird quarter of 2020, these actions have not required significant outlays of capital and have not had a material impact on our results of operations, but these or other measures that we may implement in the future could have a substantialmaterial adverse effect on our liquidity, cash flows, financial position and results of operations if circumstances related to the COVID-19 pandemic worsen or continue for an extended period of time.
The COVID-19 pandemic and its widespread effects may also impacthave impacted our capital plans, including a slowdown of certain of our capital spending, liquidity and asset values. For example:values, as we discuss with respect to each of our segments below. We perform recovery testing of our recorded asset values when market conditions indicate that such values may not be recoverable. Given the current environment (including the decline in the price of our common stock, financial market volatility, record-high unemployment rates, potential reduction in customer collections, inability to secure permits and other authorizations due to government closures, and governments pursuing new laws or policies that modify pre-existing contract terms or alter operations), we considered whether these events or changes in circumstances triggered the need for an interim impairment analysis for our long-lived assets, intangible assets and goodwill. We determined that, given the nominal impact on our cash flows, assessment of the impact of these conditions on our businesses and existing headroom in our prior quantitative tests for goodwill, there was no triggering event in the nine months ended September 30, 2020. However, as the effects of the COVID-19 pandemic continue to evolve, we will continue to periodically assess the need to perform an interim impairment test and, consistent with prior years, plan to perform our annual goodwill impairment test on October 1, 2020. To the extent the results of any such impairment test reveal that the recorded (carrying) value is in excess of the fair value, we would record an impairment charge in the period of such test. A significant impairment charge related to our long-lived assets, intangible assets or goodwill would have a material adverse effect on our results of operations in the period in which it is recorded.
▪Our capital projects and planned expenditures could experience delays due to the COVID-19 pandemic, either because we decide to postpone certain activities in an effort to preserve cash or other resources or for other reasons related to the pandemic that are beyond our control, including supply chain and contractor performance delays or delays in the issuance of required permits. Any such delay could have a material effect on our capital plans and results of operations. We discuss the potential for these delays in further detail with respect to each of our segments below.
▪The decline and volatility in the financial markets has had a significant impact on certain of the markets that we typically access for working capital and other liquidity requirements. See the discussion in “Liquidity” below for more information.
▪We have significant investments in several trusts to provide for future payments of pensions and other postretirement benefits and nuclear decommissioning. Although all of our trust funds’ investments are diversified and managed in compliance with applicable laws and regulations, the value of the investments in these trusts declined significantly in the second half of the first quarter of 2020 due to a decline in the equity markets and volatility in the fixed income market triggered by the COVID-19 pandemic. These markets continue to be volatile. The decrease in asset values has not affected the funds’ ability to make their required payments; however, this could change if conditions worsen or continue for an extended period. Moreover, if asset values do not recover, our funding requirements for pension and other postretirement benefit plans in 2021 may increase. Other factors may also impact funding requirements for pension and other postretirement benefit plans, including changes to discount rates, assumed rates of return, mortality tables and regulations. Funding requirements for SDG&E’s NDT could be impacted by the value of the assets as well as the timing and amount of SONGS decommissioning costs. At the California Utilities, funding requirements are generally recoverable in rates. We discuss our employee benefit plans and SDG&E’s NDT, including our investment allocation strategies for assets in these trusts, in Notes 9 and 15, respectively, of the Notes to Consolidated Financial Statements in the Annual Report.
▪We perform recovery testing of our recorded asset values when market conditions indicate that such values may not be recoverable. Given the current economic environment, including the significant decline in the price of our common stock, market volatility and potential reduction in customer collections, we considered whether these events or changes in circumstances triggered the need for an interim impairment analysis for our long-lived assets, intangible assets and goodwill. We determined that, given the existing headroom in our prior quantitative tests and assessment of the impact of these conditions on our businesses, there was no triggering event as of March 31, 2020. However, as the effects of the COVID-19 pandemic continue to evolve, we will continue to assess the need to perform an interim impairment test. To the extent the recorded (carrying) value is in excess of the fair value, we would record a noncash impairment charge. A significant impairment charge related to our long-lived assets, intangible assets or goodwill would have a material adverse effect on our results of operations in the period in which it is recorded.
For a further discussion of risks and uncertainties related to the COVID-19 pandemic, see below in “Item“Part II – Item 1A. Risk Factors.”

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Liquidity
We expect to meet our cash requirements through cash flows from operations, unrestricted cash and cash equivalents, proceeds from recent and planned asset sales, borrowings under our credit facilities, distributions from our equity method investments, issuances of debt, project financing and partnering in JVs. We believe that these cash flow sources, combined with available funds, will be adequate to fund our current operations, including to:
▪finance capital expenditures
▪meet liquidity requirements
▪fund dividends
▪fund new business or asset acquisitions or start-ups

▪finance capital expenditures

▪meet liquidity requirements
▪fund capital contribution requirements
▪repay maturing long-term debt
▪fund expenditures related to the natural gas leak at SoCalGas’ Aliso Canyon natural gas storage facility
▪fund dividends
▪fund new business or asset acquisitions or start-ups
▪fund capital contribution requirements
▪repay maturing long-term debt
▪fund expenditures related to the natural gas leak at SoCalGas’ Aliso Canyon natural gas storage facility
Sempra Energy and the California Utilities currently have reasonable access to the long-term debt markets and are not currently constrained in any significant way in their ability to borrow money at reasonable rates from commercial banks, under existing revolving credit facilities or through public offerings registered with the SEC. There have been, however, substantial disruptions caused by the COVID-19 pandemic in the commercial paper markets during the second half of the first quarter of 2020, which have historically been a primary source of working capital for Sempra Energy and the California Utilities. In addition,However, the capital markets in general, including particularly the commercial paper markets, and the availability of financing from commercial banks also have shown periods of significantexperienced distress in the second half of the first quarter of 2020 due to the COVID-19 pandemic, and our ability to access the capital markets or obtain credit from commercial banks outside of our committed revolving credit facilities could become materially constrained especially if thesechanging economic conditions and disruptions to the capital markets, due to the COVID-19 pandemic or otherwise, worsen or continue for an extended period. In addition, our financing activities and actions by credit rating agencies, as well as many other factors, could negatively affect the availability and cost of both short-term and long-term financing. Also, cash flows from operations may be impacted by the timing of commencement and completion, and potentially cost overruns, of large projects. If cash flows from operations were to be significantly reduced or we were unable to borrow under acceptable terms, we would likely first reduce or postpone discretionary capital expenditures (not related to safety) and investments in new businesses. We monitor our ability to finance the needs of our operating, investing and financing activities in a manner consistent with our intention to maintain our investment-grade credit ratings and capital structure.structure.
We have significant investments in several trusts to provide for future payments of pensions and other postretirement benefits and nuclear decommissioning. Changes in asset values, which are dependent on activity in the equity and fixed income markets, have not affected the trust funds’ abilities to make required payments. However, changes in other factors, such as changes to discount rates, assumed rates of return, mortality tables and regulations, may impact funding requirements for pension and other postretirement benefits plans. Funding requirements for SDG&E’s NDT could also be impacted by the timing and amount of SONGS decommissioning costs. At the California Utilities, funding requirements are generally recoverable in rates. We discuss our employee benefit plans and SDG&E’s NDT, including our investment allocation strategies for assets in these trusts, in Notes 9 and 15, respectively, of the Notes to Consolidated Financial Statements in the Annual Report.
Available Funds
Our committed lines of credit provide liquidity and support commercial paper. As we discuss in Note 7 of the Notes to Condensed Consolidated Financial Statements, Sempra Energy, Sempra Global, SDG&E and SoCalGas each have five-year credit agreements expiring in 2024. In addition, Sempra Mexico has general-purpose credit facilities that expire in 2021 and 2024. The table below shows the amount of available funds at March 31,September 30, 2020, including available unused credit on these primary U.S. credit facilities. In addition, IEnova has $1.9 billion inand foreign lines of credit, with approximately $136credit.
AVAILABLE FUNDS AT SEPTEMBER 30, 2020
(Dollars in millions)
 Sempra Energy
Consolidated		SDG&ESoCalGas
Unrestricted cash and cash equivalents(1)
$3,515 $733 $304 
Available unused credit(2)
7,793 1,500 750 
(1)    Amounts at Sempra Energy Consolidated include $439 million availableheld in non-U.S. jurisdictions. We discuss repatriation in Note 1 of the Notes to Condensed Consolidated Financial Statements.
(2)    Available unused credit at March 31, 2020.is the total available on Sempra Energy’s, Sempra Global’s, SDG&E’s, SoCalGas’ and Sempra Mexico’s credit facilities that we discuss in Note 7 of the Notes to Condensed Consolidated Financial Statements.

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AVAILABLE FUNDS AT MARCH 31, 2020
(Dollars in millions)
 
Sempra Energy
Consolidated
 SDG&E SoCalGas
Unrestricted cash and cash equivalents(1)
$2,247
 $203
 $389
Available unused credit(2)(3)
4,010
 1,300
 750

(1)
Amounts at Sempra Energy Consolidated include $542 million held in non-U.S. jurisdictions. We discuss repatriation in Note 1 of the Notes to Condensed Consolidated Financial Statements.
(2)
Available unused credit is the total available on Sempra Energy’s, Sempra Global’s, SDG&E’s and SoCalGas’ credit facilities that we discuss in Note 7 of the Notes to Condensed Consolidated Financial Statements.
(3)
Because the commercial paper programs are supported by these lines, we reflect the amount of commercial paper outstanding as a reduction to the available unused credit.
Short-Term Borrowings
We use short-term debt primarily to meet liquidity requirements, fund shareholder dividends, and temporarily finance capital expenditures, acquisitions or start-ups. Our California Utilities use short-term debt primarily to meet working capital needs. CommercialDue to volatility in commercial paper revolving lines of credit and term loans were our primary sources of short-term debt funding inmarkets shortly following the first quarter of 2020. In an effort to protect our liquidity in lightstart of the COVID-19 pandemic, commercial paper borrowing became less desirable and, in some cases, not competitive or unavailable. To secure sufficient sources of liquidity during this period, Sempra Energy, Sempra Global, SDG&E, SoCalGas and IEnova each drew amounts under their respective credit facilities in the first quarter of 2020, a substantial portion of which were repaid through terms loans obtained in the first quarter of 2020 byand Sempra Energy and SDG&E. As we&E each also obtained short-term term loans, much of which has been subsequently repaid. Revolving lines of credit, term loans and commercial paper were our primary sources of short-term debt funding in the first nine months of 2020.
We discuss our short-term debt activities in Note 7 of the Notes to Condensed Consolidated Financial Statements, Sempra EnergyStatements.
Long-Term Debt Activities
Major issuances of and payments on long-term debt in the first nine months of 2020 included the following:
LONG-TERM DEBT ISSUANCES AND PAYMENTS
(Dollars in millions)
Issuances:Amount at issuanceMaturity
SDG&E variable rate 364-day term loan$200 2021
SDG&E variable rate revolving line of credit200 2024
SDG&E 1.70% first mortgage bonds800 2030
SDG&E 3.32% first mortgage bonds400 2050
SoCalGas senior unsecured variable rate notes300 2023
SoCalGas 2.55% first mortgage bonds650 2030
Sempra Mexico 2.38% notes100 2034
Sempra Mexico 2.90% notes241 2034
Sempra Mexico 4.75% senior unsecured notes800 2051
Payments:PaymentsMaturity
Sempra Energy 2.4% notes$500 2020
Sempra Energy 2.4% notes500 2020
SDG&E 1.914% amortizing first mortgage bonds36 2020-2022
SDG&E variable rate revolving line of credit200 2024
Sempra Mexico variable rate notes46 2024-2032

SDG&E obtained 364-day term loans with aggregate principal amounts outstanding at March 31, 2020, of $1,525 millionintends to use the proceeds from its long-term debt offerings to repay commercial paper and $200 million, respectively. At March 31, 2020, SDG&E classified a total of $400 million of its then outstanding revolving line of credit borrowings, for working capital and term loan as long-term debt based on management’s intent and ability to maintain this level of borrowing on a long-term basis. In April 2020,other general corporate purposes. Additionally, SDG&E completedintends to use a $400portion of the proceeds from its $800 million public offering of1.70% first mortgage bonds maturing in 2050offering to repay approximately $250 million of debt, prior to its scheduled maturity.
SoCalGas intends to use the proceeds from its long-term debt offerings to repay commercial paper and repaidfor general corporate purposes.
Sempra Mexico used the amounts borrowed underproceeds from its revolvingissuances of long-term debt to finance the construction of solar generation projects, repay line of credit. credit borrowings and for other general corporate purposes.
We discuss our long-term debt activities in Note 7 of the Notes to Condensed Consolidated Financial Statements.

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Sempra Energy Series C Preferred Stock Offering
On AprilJune 19, 2020, we issued 900,000 shares of our series C preferred stock in a registered public offering at a price to the public of $1,000 per share and received net proceeds of $889 million after deducting the underwriting discount and equity issuance costs of $11 million. We used the net proceeds for working capital and other general corporate purposes, including the repayment of indebtedness. We provide additional discussion about this equity offering in Note 1 of the Notes to Condensed Consolidated Financial Statements.
Sempra Energy Common Stock Repurchase Programs
As we discuss in Note 1 of the Notes to Condensed Consolidated Financial Statements and below in “Part II – Item 2. Unregistered Sales of Equity Securities and Use of Proceeds,” on July 1, 2020, we entered into an ASR program under which we prepaid $500 million to repurchase shares of our common stock in a share forward transaction. The program was completed on August 4, 2020 with an aggregate of 4,089,375 shares of Sempra Energy borrowedcommon stock repurchased at an additional $75average price of $122.27 per share. We funded the $500 million under its term loan.


share repurchase with a portion of the proceeds received from the sale of our South American businesses.
Credit Ratings
We provide additional information about the credit ratings of Sempra Energy, SDG&E and SoCalGas in “Item“Part I – Item 1A. Risk Factors” and “Item“Part II – Item 2. MD&A – Capital Resources and Liquidity” in the Annual Report.
The credit ratings of Sempra Energy, SDG&E and SoCalGas remained at investment grade levels induring the first threenine months of 2020.
On May 29, 2020, Moody’s downgraded SoCalGas’ senior unsecured credit rating to A2 with a stable outlook. On June 9, 2020, Moody’s downgraded Sempra Energy’s senior unsecured and issuer credit ratings to Baa2 with a stable outlook. On September 16, 2020, S&P revised its outlook on SDG&E from stable to negative and affirmed its BBB+ issuer credit rating.
CREDIT RATINGS AT SEPTEMBER 30, 2020
CREDIT RATINGS AT MARCH 31, 2020Sempra EnergySDG&ESoCalGas
Moody’s
Sempra EnergySDG&ESoCalGas
Moody’sBaa1Baa2 with a negativestable outlookBaa1 with a positive outlookA1A2 with a negativestable outlook
S&PBBB+ with a negative outlookBBB+ with a negative outlookA with a negative outlook
FitchBBB+ with a stable outlookA with a negative outlook
FitchBBB+ with a stable outlookBBB+ with a stable outlookA with a stable outlook
Our credit ratings may affect the rates at which borrowings bear interest and the commitment fees on available unused credit. A downgrade of Sempra Energy’s or any of its subsidiaries’ credit ratings or rating outlooks may result in a requirement for collateral to be posted in the case of certain financing arrangements and may materially and adversely affect the market prices of their equity and debt securities, the rates at which borrowings are made and commercial paper is issued, and the various fees on their outstanding credit facilities. This could make it more costly for Sempra Energy, SDG&E, SoCalGas and Sempra Energy’s other subsidiaries to issue debt securities, to borrow under credit facilities and to raise certain other types of financing.
Sempra Energy has agreed that, if the credit rating of Oncor’s senior secured debt by any of the three major rating agencies falls below BBB (or the equivalent), Oncor will suspend dividends and other distributions (except for contractual tax payments), unless otherwise allowed by the PUCT. Oncor’s senior secured debt was rated A2, A+ and A at Moody’s, S&P and Fitch, respectively, at March 31,September 30, 2020.
On April 15, 2020, Moody’s placed Sempra Energy on review for downgrade.
Loans to/from Affiliates
At March 31,September 30, 2020, Sempra Energy had $615$642 million in loans todue from unconsolidated affiliates and $263$271 million in loans fromdue to unconsolidated affiliates.
California Utilities
SDG&E’s and SoCalGas’ operations have historically provided relatively stable earnings and liquidity. Their future performance and liquidity will depend primarily on the ratemaking and regulatory process, environmental regulations, economic conditions, actions by the California legislature and the changing energy marketplace, as well as the other matters described in this report.report and the Annual Report.
SDG&E and SoCalGas expect that the available unused credit from their credit facilities described above, cash flows from operations, and debt issuances will continue to be adequate to fund their respective current operations and planned capital expenditures. TheThe California Utilities are continuing to monitor the impacts of the COVID-19 pandemic on cash flows and results of operations. Some of our customers will likely experienceare experiencing a diminished ability to pay their electric or gas bills, leading to slower payments and higher levels of nonpayment than has been the case historically. These impacts could bebecome significant and could require
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modifications to our financing plans. The California Utilities manage their capital structure and pay dividends when appropriate and as approved by their respective boards of directors.
As we discuss in Note 4 of the Notes to Condensed Consolidated Financial Statements in this report and in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report, changes in balancing accounts for significant costs at SDG&E and SoCalGas, particularly a change between over- and undercollected status, including commodity and transportation balancing accounts, may have a significant impact on cash flows. These changes generally represent the difference between when costs are incurred and when they are ultimately recovered in rates through billings to customers.
Arrearage Management Payment Plan

In June 2020, the CPUC issued a decision addressing service disconnections that, among other things, allows each of the California Utilities to establish a two-way balancing account to record the uncollectible expenses associated with residential customers’ inability to pay their electric or gas bills. This decision also directs the California Utilities to establish an AMP that provides successfully participating, income-qualified residential customers with relief from outstanding utility bill amounts. The California Utilities have recorded increases in their allowances for uncollectible accounts as of September 30, 2020 primarily related to expected forgiveness of outstanding bill amounts for customers eligible under the AMP. The AMP could result in a reduction in payments received from the California Utilities’ customers and further increase uncollectible accounts, which could become material, and any inability to recover these costs could have a material adverse effect on the cash flows, financial condition and results of operations of Sempra Energy, SDG&E and SoCalGas.

Pipeline Safety Enhancement Plan (PSEP)
In November 2018, SoCalGas and SDG&E filed a joint application with the CPUC for a reasonableness review of PSEP project costs totaling $941 million for 83 pipeline safety enhancement projects. SoCalGas and SDG&E subsequently entered into a settlement agreement for cost recovery of $935 million ($806 million for SoCalGas and $129 million for SDG&E). A final decision was approved in August 2020, granting the proposed settlement agreement as well as the amortization schedule for recovery of costs. The final decision was implemented in rates on October 1, 2020.
SDG&E
Wildfire Fund
In 2019, SDG&E recorded a Wildfire Fund asset for committed shareholder contributions to the Wildfire Fund. We describe the Wildfire Legislation and related accounting treatment in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
SDG&E is exposed to the risk that the participating California electric IOUs may incur third-party wildfire claims for which they will seek recovery from the Wildfire Fund. In such a situation, SDG&E may recognize a reduction of its Wildfire Fund asset and record a charge against earnings in the period when there is a reduction of the available coverage due to recoverable claims from any of the participating IOUs. As a result, if any California electric IOU’s equipment is determined to be a cause of a fire, it could have a material adverse effect on SDG&E’s and Sempra Energy’s financial condition and results of operations up to the carrying value of our Wildfire Fund asset.asset, with additional potential material exposure if SDG&E’s equipment is determined to be a cause of a fire. In addition, the Wildfire Fund could be completely exhausted due to fires in the other California electric IOUs’ service territories, by fires in SDG&E’s service territory or by a combination thereof. In 2020, California has experienced some of the largest wildfires in its history (measured by acres burned), including fires in SDG&E’s service territory, and there can be no assurance that the equipment of a California electric IOU will not be determined to be a cause of one or more of these fires. In the event that the Wildfire Fund is materially diminished, exhausted or terminated, SDG&E will lose the protection afforded by the Wildfire Fund, and as a consequence, a fire in SDG&E’s service territory could cause a material adverse effect on SDG&E’s and Sempra Energy’s cash flows, results of operations and financial condition.
SoCalGas
SoCalGas’ future performance will also depend on the resolution of legal, regulatory and other matters concerning the Leak at the Aliso Canyon natural gas storage facility, which we discuss further in Note 11 of the Notes to Condensed Consolidated Financial Statements in this report and in “Item“Part 1 – Item 1A. Risk Factors” in the Annual Report.

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Aliso Canyon Natural Gas Storage Facility Gas Leak
From October 23, 2015 through February 11, 2016, SoCalGas experienced a natural gas leak from one of the injection-and-withdrawal wells, SS25, at its Aliso Canyon natural gas storage facility located in Los Angeles County. In February 2016, CalGEM confirmed that the well was permanently sealed.
Cost Estimates, Accounting Impact and Insurance. At March 31,September 30, 2020, SoCalGas estimates thecertain costs related to the Leak are $1,408$1,440 million (the cost estimate). This cost estimate may increase significantly as more information becomes available. A substantial portion of the cost estimate has been paid, and $284$268 million is accrued as Reserve for Aliso Canyon Costs and $6$7 million is accrued in Deferred Credits and Other as of March 31,September 30, 2020 on SoCalGas’ and Sempra Energy’s Condensed Consolidated Balance Sheets.
Except for the amounts paid or estimated to settle certain actions, the cost estimate does not include all litigation or regulatory costs to the extent it is not possible to predict at this time the outcome of these actions or reasonably estimate the costs to defend or resolve the actions or the amount of damages, restitution, or civil, administrative or criminal fines, sanctions, penalties or other costs or remedies that may be imposed or incurred. The cost estimate also does not include certain other costs incurred by Sempra Energy associated with defending against shareholder derivative lawsuits and other potential costs that we currently do not anticipate incurring or that we cannot reasonably estimate. These costs not included in the cost estimate could be significant and could have a material adverse effect on SoCalGas’ and Sempra Energy’s cash flows, financial condition and results of operations.
We have received insurance payments for many of the costs included in the cost estimate, including temporary relocation and associated processing costs, control-of-well expenses, costs of the government-ordered response to the Leak, certain legal costs and lost gas. We intend to pursue the full extent of our insurance coverage for the costs we have incurred. Other than directors’ and officers’ liability insurance, after taking into consideration the additional accrual related to litigation matters described in Note 11 of the Notes to Condensed Consolidated Financial Statements, we have effectively exhausted all of our insurance in this matter, except as to certain defense costs we may incur in the future, including those related to the shareholder derivative lawsuits. We continue to pursue other sources of insurance coverage for costs related to this matter, but we may not be successful in obtaining additional insurance recovery for any of these costs. If we are not able to secure additional insurance recovery for all or a substantial portion of these costs, if any costs we have recorded as an insurance receivable are not collected, if there are delays in receiving insurance recoveries, or if the insurance recoveries are subject to income taxes while the associated costs are not tax deductible, such amounts, which could be significant, could have a material adverse effect on SoCalGas’ and Sempra Energy’s cash flows, financial condition and results of operations.


As of March 31,September 30, 2020, we recorded the expected recovery of the cost estimate related to the Leak of $511$504 million as Insurance Receivable for Aliso Canyon Costs on SoCalGas’ and Sempra Energy’s Condensed Consolidated Balance Sheets. This amount is exclusive of insurance retentions and $766$775 million of insurance proceeds we received through March 31,September 30, 2020. If we were to conclude that this receivable or a portion of it is no longer probable of recovery from insurers, some or all of this receivable would be charged against earnings, which could have a material adverse effect on SoCalGas’ and Sempra Energy’s cash flows, financial condition and results of operations.
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 is the largest SoCalGas storage facility and an important element of SoCalGas’ delivery system. As a result of the Leak, SoCalGas suspended injection of natural gas into the Aliso Canyon natural gas storage facility beginning in October 2015 and, following a comprehensive safety review and authorization by CalGEM and the CPUC’s Executive Director, resumed limited injection operations in July 2017.
During the suspension period, SoCalGas advised the California ISO, California Energy Commission, CPUC and Pipeline and Hazardous Materials Safety Administration of its concerns that the inability to inject natural gas into the Aliso Canyon natural gas storage facility posed a risk to energy reliability in Southern California. The CPUC has issued a series of directives to SoCalGas specifying the range of working gas to be maintained in the Aliso Canyon natural gas storage facility as well as protocols for the withdrawal of gas, to help ensure safe and reliable natural gas service, while helping to maintain stable energy prices in Southern California. Limited withdrawals of natural gas from the facility were made in 2018, 2019 and 2020 to augment natural gas supplies during critical demand periods.
In February 2017, the CPUC opened a proceeding pursuant to SB 380 to determine the feasibility of minimizing or eliminating the use of the Aliso Canyon natural gas storage facility. If the Aliso Canyon natural gas storage facility were to be permanently closed, or if future cash flows from its operation were otherwise insufficient to recover its carrying 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 March 31,September 30, 2020, the Aliso Canyon natural gas storage
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facility had a net book value of $771$788 million. Any significant impairment of this asset, or higher operating costs and additional capital expenditures incurred by SoCalGas that may not be recoverable in customer rates, could have a material adverse effect on SoCalGas’ and Sempra Energy’s results of operations, financial condition and cash flows.
Sempra Texas Utilities
Oncor’s business is capital intensive, and it relies on external financing as a significant source of liquidity for its capital requirements. In the past, Oncor has financed a substantial portion of its cash needs from operations and with proceeds from indebtedness. In the event that Oncor fails to meet its capital requirements, we may be required to make additional capital contributions to Oncor, or if Oncor is unable to access sufficient capital to finance its ongoing needs, we may elect to make additional capital contributions to Oncor (as our commitments to the PUCT prohibit us from making loans to Oncor) which could be substantial and which would reduce the cash available to us for other purposes, could increase our indebtedness and could ultimately materially adversely affect our results of operations, liquidity, financial condition and prospects. In that regard, our commitments to the PUCT prohibit us from making loans to Oncor. As a result, if Oncor requires additional financing and cannot obtain it from other sources, we may elect to make a capital contribution to Oncor.
Oncor’s ability to pay dividends may be limited by factors such as its credit ratings, regulatory capital requirements, debt-to-equity ratio approved by the PUCT and other restrictions. In addition, Oncor will not pay dividends if a majority of Oncor’s independent directors or any minority member director determines it is in the best interests of Oncor to retain such amounts to meet expected future requirements.


Sempra Mexico
Construction Projects and Related Regulatory Matters
Sempra Mexico is currently building or developing terminals for the receipt, storage, and delivery of liquid fuels in the new port of Veracruz and vicinity of Mexico City, Puebla, Topolobampo, Manzanillo, and Ensenada. Sempra Mexico is also developingconstructing new solar facilities in Juárez, Chihuahua, and Benjamin Hill, Sonora, through which it willintends to supply renewable energy to several private companies. We expect the projects to commence commercial operations on various dates in 2020 and 2021, but these expected commencement dates could be delayed by worsening or extended disruptions of project construction or development caused by the COVID-19 pandemic. See “Item 1A. Risk Factors” below. We expect to fund these capital expenditures and investments, operations and dividends at IEnova with available funds, including credit facilities, and funds internally generated by the Sempra Mexico businesses, as well as funds from project financing, sales of securities, interim funding from the parent or affiliates, and partnering in JVs. We expect the projects to commence commercial operations on various dates in 2020 and 2021. However, expected commencement dates could be delayed by worsening or extended disruptions of project construction or development caused by the COVID-19 pandemic. Sempra Mexico is continuing to monitor the impacts of the COVID-19 pandemic on cash flows and results of operations. See “Part II – Item 1A. Risk Factors” below.
As we discuss in Note 11 of the Notes to Condensed Consolidated Financial Statements, in the second quarter of 2020, certain Mexican governmental agencies issued orders and regulations that would reduce or limit the renewable energy sector’s participation in the country’s energy market. Those orders would, among other things, create barriers for renewable energy facilities to enter the wholesale electricity market, prevent renewable energy projects currently in construction from reaching operations and increase grid fees for legacy renewables and cogeneration energy contract holders. IEnova and other companies affected by such measures, certain non-governmental environmental organizations or advocacy groups, and COFECE, Mexico’s antitrust regulator, have filed legal complaints with the respective Mexican courts to prevent such measures from going into effect. In most cases, the courts have sided with the complainants and such measures have been stayed temporarily. The court-ordered injunctions provide relief until Mexico’s Federal District Court ultimately resolves the amparo claims (constitutional protection lawsuits) or, with respect to the SENER resolution, until Mexico’s Supreme Court issues its final ruling on COFECE’s complaint, the timing of which is uncertain. An unfavorable final decision on these amparo challenges, or the potential for an extended dispute, could impact our ability to successfully complete construction of our solar facilities, or to complete them in a timely manner and within expected budgets, may impact our ability to operate our wind and solar facilities already in service at existing levels or at all, and may adversely affect our ability to develop new projects, any of which may have a material adverse impact on our results of operations and cash flows and our ability to recover the carrying values of our renewable energy investments in Mexico.
The ability to successfully complete major construction projects is subject to a number of risks and uncertainties. For a discussion of these risks and uncertainties, see “Part I – Item 1A. Risk Factors” in the Annual Report.
Other Legal and Regulatory Matters
As we discuss in Note 11 of the Notes to Condensed Consolidated Financial Statements, IEnova received force majeure payments for the Guaymas-El Oro segment of the Sonora pipeline from August 2017 to August 2019. Under an agreement between IEnova and the CFE, the CFE will resume making payments only when the damaged section of the Guaymas-El Oro segment of the Sonora pipeline is repaired. If the pipeline is not repaired by May 15, 2020March 14, 2021 and the parties do not agree on a new service start date, IEnova retains the right to terminate the contract and seek to recover its reasonable and documented costs and lost profits. The parties are currently discussing a new service start date in the event the pipeline is not repaired by May 15, 2020, but there can be no assurance that the parties will have agreed on a new service start date if the pipeline is not repaired by that date. If
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IEnova is unable to make such repairs (which have not commenced) and resume operations in the Guaymas-El Oro segment of the Sonora pipeline or if IEnova terminates the contract and is unable to obtain recovery, there may be a material adverse impact on Sempra Energy’s results of operations and cash flows and our ability to recover the carrying value of our investment. At September 30, 2020, the Guaymas-El Oro segment of the Sonora pipeline had a net book value of $446 million.
In May 2020, the two third-party capacity customers at the ECA LNG Regasification facility, Shell Mexico and Gazprom, asserted that a 2019 update of the general terms and conditions for service at the facility, as approved by the CRE, resulted in a breach of contract by IEnova and a force majeure event. Citing these circumstances, the customers subsequently stopped making payments of amounts due under their respective LNG storage and regasification agreements. IEnova has rejected the customers’ assertions and has drawn (and expects to continue to draw) on the customers’ letters of credit provided as payment security. The ability to successfully complete major construction projects is subjectparties engaged in discussions under the applicable contractual dispute resolution procedures without coming to a numbermutually acceptable resolution. In July 2020, Shell Mexico submitted a request for arbitration of risksthe dispute. IEnova will avail itself of its available claims, defenses and uncertainties. For a discussion of these risks and uncertainties, see “Item 1A. Risk Factors”remedies in the Annual Report.arbitration proceeding. Gazprom has since replenished the amounts drawn on its letter of credit and has resumed making regular monthly payments under its LNG storage and regasification agreement. In October 2020, IEnova was informed by Gazprom of its consent to join the arbitration proceeding initiated by Shell Mexico against the ECA LNG Regasification facility and is awaiting the formalization of Gazprom’s recognition as a claimant party in such arbitration. IEnova intends to enforce its rights in the arbitration process, seeking to dismiss the customers’ claims. Shell Mexico also filed a constitutional challenge to the CRE’s approval of the update to the general terms and conditions. In October 2020, Shell Mexico’s request to stay CRE’s approval was denied and, subsequently, Shell Mexico filed an appeal of that decision.
IEnova Common Stock Repurchase Fund
In April 2020, IEnova’s shareholders approved an increase to a previously approved fund for IEnova to repurchase shares of its common stock for a maximum amount of $500 million, increased from $250 million. As of November 5, 2020, IEnova has repurchased 81,742,780 shares of its outstanding common stock held by NCI for approximately $248 million since the inception of the fund in 2018.
Sempra LNG
Sempra LNG develops and builds natural gas liquefaction facilitiesowns a 50.2% interest in Cameron LNG JV and is pursuingcurrently developing additional LNG export facilities on the developmentGulf coast and Pacific coast of five strategically located LNG projects in North America with a long-term goal of enabling the delivery of natural gas to the largest world markets.through its proposed Cameron LNG JV liquefaction expansion project, ECA LNG JV liquefaction export project in Mexico, and Port Arthur LNG liquefaction export project in Texas. We expect Sempra LNG to require funding for the development and expansion of its portfolio of projects, which may be financed through a combination of operating cash flows, funding from the parent, project financing and participating in JVs,, including ECA LNG JV with IEnova.
North American natural gas prices, when in decline, negatively affect profitability at Sempra LNG. Also, a reduction in projected global demand for LNG could result in increased competition among those developing projects in an environment of declining LNG demand, such as the Sempra Energy-sponsored LNG export initiatives. Our LNG projects currently under development have been delayed and could be delayed byface additional delays due to, among other reasons, the worldwide economic slowdown as a result of the COVID-19 pandemic byand the current uncertainty in the global oil and gas markets, as a result of the unprecedented decline in oil prices or by a combination of these factors. For a discussion of these risks and other risks involving changing commodity prices and the risk of completing LNG development projects, see “Item“Part I – Item 1A. Risk Factors” in the Annual Report and in “Item“Part II – Item 1A. Risk Factors” below.
Cameron LNG JV Three-Train Liquefaction Project (Phase 1)
Sempra LNG, through its interest in Cameron LNG JV, is constructingoperates a three-train natural gas liquefaction export facility with an expected export capability of 12 Mtpa of LNG. Construction on the three-train liquefaction export project began in the second half of 2014 under an EPC contract with a JV between CB&I, LLC (as assignee of CB&I Shaw Constructors, Inc.), a wholly owned subsidiary of McDermott International, Inc., and Chiyoda International Corporation, a wholly owned subsidiary of Chiyoda Corporation.2014. The majority of the construction iswas project-financed at the JV, with most or all of the remainder of the capital requirements provided by the project partners, including Sempra Energy, through equity contributions under the project equity agreements. We expect that our remaining equity requirements to complete the project will be met by a combination of our share of cash generated from the first two liquefaction trains that have commenced operations and, if required, additional cash contributions. Sempra Energy signed guarantees for 50.2% of Cameron LNG JV’s financing obligations for a maximum amount of up to $4.0 billion. The guarantees will terminate upon satisfaction of certain conditions, including all three trains achieving financial completion by September 30, 2021 (with up to an additional 365-day extension beyond such date permitted in cases of force majeure). However, if Cameron LNG JV fails to satisfy the financial completion criteria, a demand could be made under the guarantee for Sempra Energy’s 50.2% share of Cameron LNG JV’s obligations under the financing arrangements then due and payable, which could have a material adverse impact on Sempra Energy’s liquidity.


Cameron LNG JV achieved commercial operations of Train 1, Train 2 and Train 23 under its tolling agreements in August 2019, and February 2020 respectively. We expect Train 3 will commence commercial operations in the third quarter of 2020. However, the expected commencement of Train 3’s commercial operations could be delayed by worsening or extended disruptions of project construction and commissioning caused by the COVID-19 pandemic.August 2020, respectively.
Large-scale construction projects such as the design, development andWhile construction of the Cameron LNG JV liquefactionPhase 1 facility involve numeroushas been completed, many of the risks and uncertainties,related to the construction of the facility continue to apply after completion, including among others, the potential for unforeseen design flaws, engineering challenges, equipment failures, severe weather events, global pandemics, substantial construction delays and increased costs. In addition, once completed, the facility may be subject to design flaws, equipment failures and other operational issues, which could cause the facility to suspend operations or operate at a reduced capacity.capacity or could materially increase the facility’s operating costs. The occurrence of any of these events could have a material adverse effect on Sempra Energy’s financial condition, results of operations, cash flows and prospects.
As we discuss below in “Off-Balance Sheet Arrangements” and in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report, Sempra Energy has guaranteed a maximum of up to $4.0 billion related to Cameron LNG JV’s project financing and financing-related agreements. These guarantees terminate upon Cameron LNG JV has a lump-sum, turnkey EPC contract, and if the contractor becomes unwilling or unable to perform according to the terms and timetable achieving “financial completion”
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of the EPC contract, the project could face substantial construction delays and potentially significantly increased costs. In January 2020, McDermott International, Inc. filed for bankruptcy protection under Chapter 11 of the U.S. bankruptcy code. McDermott International, Inc. has stated that it expects all of its projects, including theinitial three-train liquefaction project, atincluding all three trains achieving commercial operation and meeting certain operational performance tests. Cameron LNG JV’s financing agreements contain events of default customary for such financings, including a failure to achieve financial completion of the project by a financial completion deadline date of September 30, 2021 (with up to an additional 365 days extension beyond such date permitted in cases of force majeure). Pursuant to the financing agreements, Cameron LNG JV is restricted from making distributions to continueits project owners during the nine-month period ending September 30, 2021 until it has achieved financial completion. Given the impacts of weather-related events in August and September of 2020 on an uninterrupted basis. However, we cannotCameron LNG JV’s operations, including the ability to commence certain operational performance tests, there will be certain thedelays in Cameron LNG JV making distributions to its project owners, including Sempra LNG, until achieving financial completion, at which time any deferred distributions will not be interrupted. If the contractor defaults under the EPC contract duereleased. A delay that results in a failure to the bankruptcy of McDermott International, Inc. or for any other reason, such default couldachieve financial completion by September 30, 2021 would result in an event of default under Cameron LNG JV’s engagementfinancing agreements and a potential demand on Sempra Energy’s guarantees. We anticipate that the guarantees will be terminated approximately nine months after all three trains achieved commercial operation. If, due to Cameron LNG JV’s failure to satisfy the financial completion criteria by the applicable deadline, we are required to repay some or all of a substitute contractor. The inability to complete the project in a timely manner or within$4.0 billion under our current expectations, cost overruns, and the other risks described aboveguarantees, any such repayments could have a material adverse effect on our business, results of operations, cash flows, financial condition credit ratings and/or prospects.
For aadditional discussion ofabout our investment in Cameron LNG JV, JV financing, Sempra Energy guarantees, the risks discussed above and other risks relating to the development of the Cameron LNG JV liquefaction export project that could adversely affect our future performance, see Note 6 of the Notes to Consolidated Financial Statements and “Item“Part I – Item 1A. Risk Factors” in the Annual Report.


Proposed Cameron LNG JV Liquefaction Expansion Project (Phase 2)
Cameron LNG JV has received the major permits and FTA and non-FTA approvals necessary to expand the current configuration of the Cameron LNG JV liquefaction project beyond Phase 1. The permits obtained for Phase 2 include up to two additional liquefaction trains and up to two additional full containment LNG storage tanks (one of which was permitted with the original three-train project).
Expansion of the Cameron LNG JV liquefaction facility beyond the first three trains is subject to certain restrictions and conditions under the JV project financing agreements, including among others, timing restrictions on expansion of the project unless appropriate prior consent is obtained from the project 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. Discussions among all the Cameron LNG JV partners have been taking place regarding how an expansion may be structured and we expect that discussions will continue. There can be no assurance that the Cameron LNG JV members will unanimously agree on an expansion structure, which, if not accomplished, in a timely manner, could materially and adversely impact the development of the expansion project. In light of this and other considerations described below, we are unable to predict whether or when Cameron LNG JV might be able to move forward on expansion of the Cameron LNG JV liquefaction facility beyond the first three trains.
In November 2018, Sempra Energy and TOTAL S.A.SE entered into an MOU that provides a framework for cooperation for the development of the potential Cameron LNG JV expansion project and the potential ECA LNG JV liquefaction-exportliquefaction export project that we describe below in “ECA LNG JV Liquefaction Export Project.”below. The MOU contemplates TOTAL S.A.SE potentially contracting for up to approximately 9 Mtpa of LNG offtake across these two development projects and provides TOTAL S.A. the option to acquire an equity interest in the proposed ECA LNG JV project. projects. In addition, in October 2019, Sempra Energy and Mitsui & Co., Ltd. entered into an MOU that provides a framework for potential offtake by Mitsui & Co., Ltd. from the potential Cameron LNG JV expansion project and the second phase of the potential ECA LNG JV project, as well as Mitsui & Co., Ltd.’s potential acquisition of an equity interest in the second phase of the potential ECA LNG JVliquefaction project. In May 2020, Sempra Energy and Mitsubishi Corporation entered into an MOU that provides a framework for development of and potential offtake by Mitsubishi Corporation from the potential Cameron LNG JV expansion project. The ultimate participation of and offtake by TOTAL S.A.,SE, Mitsui & Co., Ltd. and Mitsubishi Corporation remains subject to negotiation and finalization of definitive agreements, among other factors, and TOTAL S.A.,SE, Mitsui & Co., Ltd. and Mitsubishi Corporation have no commitment to participate in andor offtake from the projects.
The development of the potential Cameron LNG JV expansion project is subject to numerous other risks and uncertainties, including securing binding customer commitments; reaching unanimous agreement with our partners to proceed; obtaining a number of permits and regulatory approvals; securing financing; negotiating and completing suitable commercial agreements, including a definitive EPC contract, equity acquisition and governance agreements; reaching a final investment decision; and other factors associated with this potential investment. For a discussion of these risks, see “Item“Part I – Item 1A. Risk Factors” in the Annual Report.

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ECA LNG JV Liquefaction Export ProjectProjects
Through a JV agreement, Sempra LNG and IEnova are developing atwo proposed natural gas liquefaction projectexport projects at IEnova’s existing ECA LNG Regasification facility. The proposed liquefaction facility project,export projects, which isare planned for development in two phases (a mid-scale project referred to as ECA LNG JV Phase 1 and a large-scale project referred to as ECA LNG JV Phase 2), isare being developed to provide buyers with direct access to west coastWest Coast LNG supplies. The ECA LNG Regasification facility currently has profitable long-term regasification contracts for 100% of the regasification facility’s capacity through 2028, which historically have been profitable (however, see the discussion under “Sempra Mexico” in Note 11 of the Notes to Condensed Consolidated Financial Statements regarding ongoing disputes with the two third-party capacity customers at the ECA LNG Regasification facility), making the decisions on whether and how to pursue the ECA LNG JV Phase 2 liquefaction project dependent in part on whether the investment in a large-scale liquefaction facility would, over the long term, be more beneficial financially than continuing to supply regasification services under our existing contracts. We do not believe that the development of ECA LNG JV Phase 1 will disrupt operations at the ECA LNG Regasification facility.
In March 2019, ECA LNG JV received two authorizations from the DOE to export U.S.-produced natural gas to Mexico and to re-export LNG to non-FTA countries from its proposed ECA LNG JV Phase 1 project, a one-train natural gas liquefaction export facility with a nameplate capacity of 3.25 Mtpa and initial offtake capacity of approximately 2.5 Mtpa, and its proposed ECA LNG JV Phase 2 project, each of which is in development.
On February 27, 2020, we entered into an EPC contract with TechnipFMC for the engineering, procurement and construction of ECA LNG JV Phase 1. We have no obligation to move forward on the EPC contract, and we may release TechnipFMC to perform portions of the work pursuant to limited notices to proceed. We plan to fully release TechnipFMC to perform all of the work to construct ECA LNG JV Phase 1 only after we reach a final investment decision with respect to the project and after certain other conditions are met. The total price of the EPC contract for ECA LNG JV Phase 1 is estimated at approximately $1.5 billion.billion, which TechnipFMC has agreed to uphold until November 13, 2020, at which time the EPC contract, including the price, may be subject to renegotiation. We estimate that capital expenditures for the proposed ECA LNG JV Phase 1 will approximate $1.9$2.0 billion, including capitalized interest and project contingency. The actual cost of the EPC contract and the actual amount of these capital expenditures may differ, perhaps substantially, from our estimates.
In November 2018, Sempra LNG and IEnova signed Heads of Agreements with affiliates of TOTAL S.A., Mitsui & Co., Ltd. and Tokyo Gas Co., Ltd. for ECA LNG JV Phase 1 in respect of LNG sales of approximately 2.5 Mtpa in the aggregate. In April 2020, ECA LNG JV executed definitive 20-year LNG sale and purchase agreements with Mitsui & Co., Ltd. and an affiliate of TOTAL S.A.SE for approximately 0.8 Mtpa of LNG and 1.7 Mtpa of LNG from ECA LNG JV Phase 1, respectively. Each agreement remains subject to certain customary conditions of effectiveness, including our final investment decision for the project. The MOU with TOTAL SE, provides a framework for it to acquire an equity interest in ECA LNG JV Phase 1. In addition, the MOU with Mitsui & Co., Ltd. provides a framework for Mitsui & Co., Ltd.’s potential offtake of LNG from, and potential acquisition of an equity interest in, ECA LNG JV Phase 2. We discuss these MOUs further under “Cameron LNG JV Liquefaction Expansion Project (Phase 2)” above.
We continue to work towards reaching aA final investment decision for ECA LNG JV Phase 1 in the second quarter of 2020. However, this project is contingent on the receipt of an export permit from the Mexican government. The closure of non-essential activitiesOperations at certain relevant regulatory agencies in Mexico in responseremain limited due to the COVID-19 pandemic, which has added to the uncertainty of the timing of the receipt of this permit and couldis contributing to a delay of our final investment decision beyond the second quarter of 2020.decision.
The development of both the ECA LNG JV Phase 1 and ECA LNG JV Phase 2 projects is subject to numerous risks and uncertainties, including obtaining binding customer commitments for Phase 2; the receipt of a number of permits and regulatory approvals; obtaining financing; negotiating and completing suitable commercial agreements, including a definitive EPC contract for Phase 2, equity acquisition and governance agreements, LNG sales agreements and gas supply and transportation agreements; reaching a final investment decision;decision for Phase 1 and Phase 2; and other factors associated with this potential investment. In addition, as we discuss in Note 11 of the Notes to Condensed Consolidated Financial Statements, an unfavorable decision on certain property disputes andor permit challenges, or an extended dispute with existing customers at the ECA LNG Regasification facility, could materially and adversely affect the development of these projects.projects and Sempra Energy’s financial condition, results of operations, cash flows and prospects, including the impairment of all or a substantial portion of the capital costs invested in the projects to date. For a discussion of these risks, see “Item“Part I – Item 1A. Risk Factors” in the Annual Report.


Port Arthur LNG Liquefaction Export Project
Sempra LNG is developing a proposed natural gas liquefaction export project on a greenfield site that it owns in the vicinity of Port Arthur, Texas, located along the Sabine-Neches waterway. Sempra LNG received authorizations from the DOE in August 2015 and May 2019 that collectively permit the LNG to be produced from the proposed Port Arthur LNG project to be exported to all current and future FTA and non-FTA countries.
In April 2019, the FERC approved the siting, construction and operation of the proposed Port Arthur LNG liquefaction facility,
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along with certain natural gas pipelines, including the Louisiana Connector Pipeline,and Texas Connector Pipelines, that could be used to supply feed gas to the liquefaction facility, assuming the project is completed.
On February 28, 2020, we entered into an EPC contract with Bechtel for the proposed Port Arthur LNG liquefaction project. The EPC contract contemplates the construction of two liquefaction trains with a nameplate capacity of approximately 13.5 Mtpa, two LNG storage tanks, a marine berth and associated loading facilities and related infrastructure necessary to provide liquefaction services. We have no obligation to move forward on the EPC contract, and we may release Bechtel to perform portions of the work pursuant to limited notices to proceed. We plan to fully release Bechtel to perform all of the work to construct the Port Arthur LNG liquefaction export project only after we reach a final investment decision with respect to the project and after certain other conditions are met, including obtaining project financing. IfWhen the EPC contract was executed, the price was estimated to be approximately $8.9 billion, depending on the timing of a full notice to proceed. Since we did not issue thea full notice to proceed by JulyOctober 15, 2020, the price under the fixed-price EPC contract is estimated to be approximately $8.9 billion. This does not include costs associatedwe are in discussions with Bechtel regarding changes to the project’s scope or the occurrence of certain events that would entitle Bechtel to relief under the contract, including customary events for similar agreements of this type such as force majeure events, certain changes in law, the discovery of certain differing site conditions,project schedule and certain delays to the work that we may cause. If we issue the full notice to proceed after July 15, 2020, the price will be subject to price escalations. If the full notice to proceed is not issued by October 15, 2020, thenrenegotiating the EPC contract including the price, will be subject to renegotiation.price. Any changes to the EPC contract will require the agreement of both parties, which cannot be assured.
In December 2018, Polish Oil & Gas Company (PGNiG) and Port Arthur LNG entered into a definitive 20-year agreement for the sale and purchase of 2 Mtpa of LNG per year from the Port Arthur LNG liquefaction export project. Under the agreement, LNG purchases by PGNiG from Port Arthur LNG will be made on a free-on-board basis, with PGNiG responsible for shipping the LNG from the Port Arthur facility to the final destination. Port Arthur LNG will manage the gas pipeline transportation, liquefaction processing and cargo loading. The agreement is subject to certain conditions precedent, including Port Arthur LNG making a positive final investment decision within certain agreed timelines. The failure of these conditions precedent to be satisfied or waived within the agreed timelines could result in the termination of the agreement.
In May 2019, Aramco Services Company and Sempra LNG signed a Heads of Agreement for the negotiation and finalization of a definitive 20-year LNG sale and purchase agreement for 5 Mtpa of LNG offtake.offtake from the Port Arthur LNG liquefaction export project. The Heads of Agreement also includes the negotiation and finalization of a 25% equity investment in the project. In January 2020, Aramco Services Company and Sempra LNG signed an Interim Project Participation Agreement, which sets forth certain mechanisms for the parties to work towards receipt of corporate approvals to enter into and proceed with the transaction, execution of the transaction agreements and the fulfillment or waiver of the conditions precedent contemplated by these agreements, making a final investment decision and other pre-final investment decision activities. The Heads of Agreement and Interim Project Participation Agreement do not obligate the parties to ultimately execute any agreements or participate in the project.
In November 2019, Port Arthur LNG commenced the relocation and upgrade of approximately three miles of highway where the Port Arthur LNG liquefaction export project would be located.
In February 2020, Sempra LNG filed a FERC application for the siting, construction and operation of a second phase at the proposed Port Arthur LNG facility, including the potential addition of two liquefaction trains.
In November 2019, Port Arthur LNG commenced the relocation and upgrade of approximately three miles of highway where the Port Arthur LNG liquefaction project would be located.
We continue to work on completing all necessary milestones so that we are prepared to make a final investment decision for the proposed Port Arthur LNG liquefaction export project when appropriate. The impact of the COVID-19 pandemic on the global economy and the current uncertainty in the financialenergy and energyfinancial markets has delayed the expected timing of our final investment decision from 2020 to 2021.
Development of the Port Arthur LNG liquefaction export project is subject to a number of risks and uncertainties, including obtaining additional customer commitments; completing the required commercial agreements, such as equity acquisitions and governance agreements, LNG sales agreements and gas supply and transportation 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. An unfavorable outcome with respect to any of these factors could have a material adverse effect on Sempra Energy’s financial condition, results of operations and prospects, including the impairment of all or a substantial portion of the capital costs invested in the project to date. For a discussion of these risks, see “Item“Part I – Item 1A. Risk Factors” in the Annual Report.


Discontinued Operations
As we discuss in Note 5 of the Notes to Condensed Consolidated Financial Statements, in January 2019, our board of directors approved a plan to sell our South American businesses. On April 24, 2020, we completed the sale of our equity interests in our Peruvian businesses for an aggregate base purchase pricecash proceeds of $3.59 billion, subject to$3,549 million, net of transaction costs and as adjusted for post-closing adjustments. In October 2019,On June 24, 2020, we entered into an agreement to sellcompleted the sale of our equity interests in our Chilean businesses for an aggregate base purchase pricecash proceeds of $2.23 billion, subject to customary adjustments$2,216 million, net of transaction costs and as adjusted for working capital and changes in net indebtedness and otherpost-closing adjustments. We expect the sale to close in the second quarter of 2020, subject to satisfaction of conditions to closing.
Our utilities in South America have historically provided relatively stable earnings and liquidity. We intend to useused a portion of the proceeds from the sales of these businesses to strengthen our balance sheet by repaying certain short-term borrowings and
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repurchasing shares of our common stock, and we intend to use the remaining proceeds to focus on capital investment in North America to support additional growth opportunities and strengthen our balance sheet by reducing debt.opportunities. We expect the cash provided by earnings from our capital investment will exceed the absence of cash flows from these discontinued operations. However, there can be no assurance that we will derive these anticipated benefits. Further, there can be no assurance that we will be able to redeploy the capital that we obtainobtained from such sales if completed, in a way that would resultresults in cash flows or earnings exceeding those historically generated by these businesses.

SOURCES AND USES OF CASH
The following tables include only significant changes in cash flow activities for each of our registrants.
CASH FLOWS FROM OPERATING ACTIVITIES
(Dollars in millions)
Nine months ended September 30,Sempra Energy ConsolidatedSDG&ESoCalGas
2020$1,629 $983 $1,388 
20192,118 754 813 
Change$(489)$229 $575 
Net increase in Insurance Receivable for Aliso Canyon primarily due to $149
higher accruals and $121 lower insurance proceeds received
$(272)$(272)
Change in intercompany activities with discontinued operations, net, primarily due
to $208 in common dividends received from our Peruvian businesses in 2019
(184)
Release of a regulatory liability related to 2016-2018 income tax expense
forecasting differences
(175)$(86)(89)
Change in accounts receivable(95)(53)
Increase in prepaid insurance premiums(44)
Change in income taxes receivable/payable, net105 117 
Higher net margin posted at Sempra LNG’s marketing operations46 
Higher distributions of earnings from Oncor Holdings58 
Change in accounts payable85 72 
Decrease in funding for Rabbi Trust112 
Change in net undercollected regulatory balancing accounts (including long-term
amounts in regulatory assets)
203 (118)321 
Higher net income, adjusted for noncash items included in earnings204 133 76 
Distributions of earnings from Cameron LNG JV in 2020209 
SDG&E’s initial shareholder contribution to the Wildfire Fund in September 2019323 323 
Net increase in Reserve for Aliso Canyon Costs primarily due to $280 higher
accruals and $85 lower payments
365 365 
Other(28)(31)(15)
Change in net cash flows from discontinued operations primarily due to $1,161
income taxes paid related to the sale of our South American businesses
(1,340)
$(489)$229 $575 

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CASH FLOWS FROM OPERATING ACTIVITIES
(Dollars in millions)
Three months ended March 31, Sempra Energy Consolidated SDG&E SoCalGas
2020 $1,318
 $498
 $757
2019 951
 443
 376
Change $367
 $55
 $381
       
Net increase in Reserve for Aliso Canyon Costs primarily due to $276 higher accruals and $98 lower payments $375
   $375
Higher net income, adjusted for noncash items included in earnings 169
 $109
 121
Change in long-term GHG obligations 49
   42
Higher distributions of earnings from Oncor Holdings 19
    
Net increase in Insurance Receivable for Aliso Canyon Costs primarily due to $176 higher accruals offset by $19 insurance proceeds received (156)   (156)
Deferred revenue due to the TCJA at the California Utilities in 2019 (43) (20) (23)
Change in intercompany activities with discontinued operations (31)    
Change in net undercollected regulatory balancing accounts (including long-term amounts in regulatory assets)   (46) 47
Other 10
 12
 (25)
Change in net cash flows from discontinued operations (25)    
  $367
 $55
 $381


CASH FLOWS FROM INVESTING ACTIVITIES
(Dollars in millions)
Nine months ended September 30,Sempra Energy ConsolidatedSDG&ESoCalGas
2020$2,415 $(1,315)$(1,345)
2019(3,439)(1,097)(1,018)
Change$5,854 $(218)$(327)
Contributions to Oncor Holdings to fund Oncor’s purchase of InfraREIT in May 2019$1,067 
Distribution from Cameron LNG JV in 2020753 
Contributions to Peruvian businesses in discontinued operations in 2019583 
Contributions to Chilean businesses in discontinued operations in 2019394 
Acquisition of investment in Sharyland Holdings in May 2019102 
Dividends received from Chilean businesses in discontinued operations in 2019(129)
Net proceeds from the February 2019 sale of Sempra LNG’s non-utility natural gas storage assets(322)
Net proceeds from the April 2019 sale of Sempra Renewables’ wind assets and investments(569)
Dividends received from Peruvian businesses in discontinued operations in 2019(583)
Increase in capital expenditures(723)$(252)$(326)
Increase in loans to affiliate, net in 201925 
Other32 9 (1)
Change in net cash flows from discontinued operations mainly due to $5,781 proceeds, net of transaction costs paid, offset by $502 cash sold from the sale of our South American businesses5,249 
$5,854 $(218)$(327)
CASH FLOWS FROM FINANCING ACTIVITIES
(Dollars in millions)
Nine months ended September 30,Sempra Energy ConsolidatedSDG&ESoCalGas
2020$(710)$1,055 $251 
20191,575 330 192 
Change$(2,285)$725 $59 
Change in short-term debt, net$(2,759)$211 $(482)
Higher payments for commercial paper and other short-term debt with maturities greater than 90 days(1,886)
Net proceeds from issuance of common stock from settlement of forward sale agreements in 2019(728)
Repurchase of common stock under ASR program in 2020(500)
Capital contribution from Otay Mesa Energy Center LLC in 2019 to repay Otay Mesa VIE’s loan(175)(175)
Equity contribution from Sempra Energy to fund initial shareholder contribution to the Wildfire Fund in September 2019(322)
Higher common dividends paid(138)(200)(50)
Higher issuances of short-term debt with maturities greater than 90 days514 
Net proceeds from issuance of series C preferred stock890 
Higher issuances of long-term debt2,151 1,198 600 
Other(6)13 (9)
Change in net cash flows from discontinued operations primarily from a $250 intercompany loan and $29 net increase in short-term debt in 2020 and $977 equity contribution from Sempra Energy, partially offset by $920 common dividends paid in 2019352 
$(2,285)$725 $59 

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CASH FLOWS FROM INVESTING ACTIVITIES
(Dollars in millions)
Three months ended March 31, Sempra Energy Consolidated SDG&E SoCalGas
2020 $(1,181) $(402) $(388)
2019 (610) (356) (324)
Change $(571) $(46) $(64)
       
Net proceeds from the February 2019 sale of Sempra LNG’s non-utility natural gas storage assets $(322)    
Increase in capital expenditures (227) $(46) $(64)
Other (27) 

 

Change in net cash flows from discontinued operations 5
    
  $(571) $(46) $(64)

CASH FLOWS FROM FINANCING ACTIVITIES
(Dollars in millions)
Three months ended March 31, Sempra Energy Consolidated SDG&E SoCalGas
2020 $2,114
 $97
 $10
2019 (381) (75) (67)
Change $2,495
 $172
 $77
       
Increase (decrease) in short-term debt, net $1,630
 $(27) $(564)
Higher issuances of long-term debt 1,048
 400
 649
Higher issuances of commercial paper and other short-term debt with maturities greater than 90 days 267
    
Higher payments on long-term debt and finance leases (503)    
Higher payments for commercial paper and other short-term debt with maturities greater than 90 days (93)    
Higher common dividends paid   (200)  
Other (10) (1) (8)
Change in net cash flows from discontinued operations mainly due to a net increase in short-term debt 156
    
  $2,495
 $172
 $77

Capital Expenditures, and Investments and Acquisitions
EXPENDITURES FOR PP&E AND INVESTMENTS AND ACQUISITIONS
(Dollars in millions)

Three months ended March 31,
 2020 2019
SDG&E$402
 $356
SoCalGas388
 324
Sempra Texas Utilities86
 56
Sempra Mexico170
 85
Sempra LNG47
 56
Parent and other3
 —
Total$1,096
 $877



EXPENDITURES FOR PP&E, INVESTMENTS AND ACQUISITIONS
(Dollars in millions)
Nine months ended September 30,
 20202019
SDG&E$1,323 $1,071 
SoCalGas1,345 1,019 
Sempra Texas Utilities225 1,338 
Sempra Mexico443 420 
Sempra Renewables— 2 
Sempra LNG200 183 
Parent and other6 6 
Total$3,542 $4,039 
The amounts and timing of capital expenditures and certain investments are generally subject to approvals by various regulatory and other governmental and environmental bodies, including the CPUC, the FERC and the PUCT. Excluding discontinued operations, in 2020, we expect to make capital expenditures and investments of approximately $5.7$5.6 billion, a decrease from the $5.9 billion summarizedprojected in “Item“Part II – Item 7. MD&A – Capital Resources and Liquidity” in the Annual Report. The decrease is primarily attributable to a deferral of capital expenditures to 2021 at Sempra Mexico and a delay in our final investment decision for Phase 1 of the ECA LNG JV liquefaction export project at Sempra LNG.LNG, partially offset by an increase in contributions to Oncor Holdings.
COMMITMENTS
We discuss significant changes to contractual commitments in the first nine months of 2020, none of which were outside the ordinary course of our business, in Notes 7 and 11 of the Notes to Condensed Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS
In August 2014 and December 2019, Sempra Energy provided guarantees for 50.2% of Cameron LNG JV’s financing obligations for a maximum amount of up to $4.0 billion. The guarantees will terminate upon satisfaction of certain conditions, including all three trains achieving financial completion by September 30, 2021 (with up to an additional 365-day extension beyond such date permitted in cases of force majeure). However, if Cameron LNG JV fails to satisfy the financial completion criteria, a demand could be made under the guarantee for Sempra Energy’s 50.2% share of Cameron LNG JV’s obligations under the financing arrangements then due and payable, which could have a material adverse impact on Sempra Energy’s liquidity. We discuss these guarantees above in “Overview – Sempra LNG – Cameron LNG JV Three-Train Liquefaction Project (Phase 1),” in Note 6 of the Notes to Consolidated Financial Statements and “Part I – Item 1A. Risk Factors” in the Annual Report.
In July 2020, Sempra Energy entered into a Support Agreement, which contains a guarantee and represents a variable interest, for the benefit of CFIN with a maximum exposure to loss of $979 million. The guarantee will terminate upon full repayment of the guaranteed debt by 2039, including repayment following an event in which the guaranteed debt is put to Sempra Energy. We discuss this guarantee in Notes 1, 6 and 9 of the Notes to Condensed Consolidated Financial Statements.
SDG&E has entered into PPAs and tolling agreements that are variable interests. Our investments in Oncor Holdings and Cameron LNG JV are variable interests. Sempra Energy’s other businesses may also enter into arrangements that could include variable interests. We discuss variable interests in Note 1 of the Notes to Condensed Consolidated Financial Statements.
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 “Item“Part II – Item 7. MD&A” in the Annual Report.
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.
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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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We provide disclosure regarding derivative activity in Note 8 of the Notes to Condensed Consolidated Financial Statements. We discuss our market risk and risk policies in detail in “Item“Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report.
COMMODITY PRICE RISK
In the first quarternine months of 2020, there were no significant changes in our exposure to commodity price risk.


INTEREST RATE RISK
The table below shows the nominal amount of our debt:
NOMINAL AMOUNT OF DEBT(1)
(Dollars in millions)
 September 30, 2020December 31, 2019
 Sempra Energy
Consolidated		SDG&ESoCalGasSempra Energy
Consolidated		SDG&ESoCalGas
Short-term:
California Utilities$— $— $— $710 $80 $630 
Other772 — — 2,798 — — 
Long-term:
California Utilities fixed-rate$10,764 $6,305 $4,459 $8,949 $5,140 $3,809 
California Utilities variable-rate500 200 300 — — — 
Other fixed-rate11,598 — — 11,561 — — 
Other variable-rate734 — — 746 — — 
NOMINAL AMOUNT OF DEBT(1)
(Dollars in millions)
 March 31, 2020 December 31, 2019
 
Sempra Energy
Consolidated
 SDG&E SoCalGas 
Sempra Energy
Consolidated
 SDG&E SoCalGas
Short-term:           
California Utilities$—
 $—
 $—
 $710
 $80
 $630
Other5,744
 —
 —
 2,798
 —
 —
Long-term:           
California Utilities fixed-rate$9,582
 $5,123
 $4,459
 $8,949
 $5,140
 $3,809
California Utilities variable-rate400
 400
 —
 —
 —
 —
Other fixed-rate10,485
 —
 —
 11,561
 —
 —
Other variable-rate746
 —
 —
 746
 —
 —
(1)After the effects of interest rate swaps. Before the effects of acquisition-related fair value adjustments and reductions for unamortized discount and debt issuance costs, and excluding finance lease obligations.
(1)

After the effects of interest rate swaps. Before the effects of acquisition-related fair value adjustments and reductions for unamortized discount and debt issuance costs, and excluding finance lease obligations.

An 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. Earnings are affected by changes in interest rates on short-term debt and variablevariable-rate long-term debt. If weighted-average interest rates on short-term debt outstanding at March 31,September 30, 2020 increased or decreased by 10%, the change in earnings over the next 12-month period ended March 31,September 30, 2021 would be approximately $14 million.negligible. If interest rates increased or decreased by 10% on all variable-rate long-term debt at March 31,September 30, 2020, after considering the effects of interest rate swaps, the change in earnings over the next 12-month period ended March 31,September 30, 2021 would be approximately $2$1 million.
FOREIGN CURRENCY AND INFLATION RATE RISK
We discuss our foreign currency and inflation exposure in “Item“Part I – Item 2. MD&A – Impact of Foreign Currency and Inflation Rates on Results of Operations” in this report and in “Item“Part II – Item 7. MD&A – Impact of Foreign Currency and Inflation Rates on Results of Operations” in the Annual Report. We completed the sales of our South American businesses in the second quarter of 2020 and are no longer exposed to changes in foreign currency and inflation rates in Peru and Chile. At March 31,September 30, 2020, there were no other significant changes to our exposure to foreign currency rate risk since December 31, 2019.
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ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Sempra Energy, SDG&E and SoCalGas maintain disclosure controls and procedures designed to ensure that information required to be disclosed in their respective reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to the management of each company, including each respective principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. In designing and evaluating these controls and procedures, the management of each company recognizes that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives; therefore, the management of each company applies judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision and with the participation of the principal executive officers and principal financial officers of Sempra Energy, SDG&E and SoCalGas, each such company’s management evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of March 31,September 30, 2020, the end of the period covered by this report. Based on these evaluations, the principal executive officers and principal financial officers of Sempra Energy, SDG&E and SoCalGas concluded that their respective company’s disclosure controls and procedures were effective at the reasonable assurance level as of such date.


INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in Sempra Energy’s, SDG&E’s or SoCalGas’ internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the companies’ 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 10 and 11 of the Notes to Condensed Consolidated Financial Statements in this report and in Notes 15 and 16 of the Notes to Consolidated Financial Statements in the Annual Report, or (2) referred to in “Item“Part II – Item 7. MD&A” in the Annual Report.


ITEM 1A. RISK FACTORS
When evaluating our company and its subsidiaries, you should consider carefully the risk factors and all other information contained in this report, including the factors discussed above in “Item“Part I – Item 2. MD&A” and in this section, and in the other documents we file with the SEC, including the factors disclosed in “Item“Part I – Item 1A. Risk Factors” in the Annual Report. Except as set forth below, there have been no material changes from the risk factors as previously disclosed in the Annual Report. Any of the risk factors and other information discussed in this report or any of the risk factors disclosed in “Item“Part I – Item 1A. Risk Factors” in the Annual Report, as well as additional risks and uncertainties not currently known to us or that we currently deem to be immaterial, could materially and adversely affect our businesses, cash flows, results of operations, financial condition, prospects and/or the trading prices of our securities or those of our subsidiaries.

123

Risks Related to All Sempra Energy Businesses
Our business faces risks related to the COVID-19 pandemic.
The COVID-19 pandemic is currently materially impacting countries, communities, supply chains and markets around the world. The U.S. economy is experiencing a significant slowdown and claims for unemployment are increasinghave increased to historic levels. To date, the COVID-19 pandemic has not had a material impact on our results of operations. However, we are conducting business with substantial modifications to employee travel, employee work locations, and virtualization or cancellation of certain business activities, among other modifications. If these or other similar measures were to increase or continue for an extended period, we could experience employee absenteeism, decreased efficiency and productivity by our workforce and other similar impacts that could jeopardize our ability to sustain operations and satisfy compliance requirements. We also have observed other companies, including our current and prospective counterparties, customers and partners, as well as many governments, including our regulators and other governing bodies that affect our businesses, taking precautionary, preemptive and responsive actions to address the effects of the COVID-19 pandemic, and they may take further actions that alter their normal operations. These actions by third parties could materially impact our operations, results, liquidity and ability to pursue capital projects and strategic initiatives. For example, the CPUC has requestedrequired that all energy companies under its jurisdiction take action to implement several emergency customer protection measures to support California customers. The measures apply to all residential and small business customers affected by the COVID-19 pandemic and include suspending service disconnections due to nonpayment, waiving late payment fees, and offering flexible payment plans for all customers experiencing difficulty paying their electric or gas bills. These actions could resulthave resulted in a material reduction in payments received from our customers and a materialan increase in uncollectible accounts, that we may not be ablewhich could become material, and any inability to recover in rates, whichthese costs could have a material adverse effect on the cash flows, financial condition and results of operations for Sempra Energy, SDG&E and SoCalGas. As another example, our final investment decision on Phase 1 of the proposed ECA LNG JV natural gas liquefaction project has been delayed due in part to the closure of non-essential activities in Mexico in response to the COVID-19 pandemic, which has further hindered our ability to obtain an export permit from the Mexican government that is necessary for the project to proceed. If this or other projects under development are further delayed due to continuing or worsening conditions caused by the COVID-19 pandemic or other related factors, the performance and prospects of our LNG export business could be materially adversely affected.
In addition, the economic slowdown caused by the COVID-19 pandemic together with the increase of the supply of oil in world markets, has caused a material and unprecedented decline in oil prices and the demand for energy.current uncertainty in the global oil and gas markets, or a combination of these factors, have contributed to the delay of our projected final investment decision on our proposed Port Arthur LNG liquefaction export project from 2020 to 2021. These conditions, as well as potential disruptions of construction and development activity if our project counterparties implement or are required to implement stay-at-home or limited workforce measures in response to the pandemic, could result in increased competition among LNG project developers and substantial further delays of some of our LNG and other projects currently under development. With respect to Phase 1 of the Cameron LNG JV liquefaction project currently under construction, although the project is considered a critical infrastructure project and is 99.5% complete, the impacts of the COVID-19 pandemic could cause unanticipated delays in completing the project.
Further, the COVID-19 pandemic has adversely affected conditions in the capital markets and may adversely affect our cost of and access to capital, including from the capital markets generally, from commercial paper markets and from commercial banks. Although Sempra Energy, SDG&E and SoCalGas are not currently constrained in any significant way in their ability to borrow money at reasonable rates, these circumstances could change if conditions worsen or continue for an extended period, which could have a material negative effect on our liquidity, results of operations, and on our strategic initiatives and prospects. To date, the COVID-19 pandemic has resulted in a slowdown of our capital spending, which could worsen if conditions deteriorate or fail to improve in the near term and which could have a material adverse effect on Sempra Energy’s, SDG&E’s and SoCalGas’ results of operations and prospects.
We will continue to actively monitor the effects of the COVID-19 pandemic and may take further actions that alter our business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees, customers, partners and suppliers. However, we cannot at this time predict the extent to which the COVID-19 pandemic will further impact our liquidity, financial condition, results of operations and prospects.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
The following table sets forth information about our common stock repurchase activity for the three months ended September 30, 2020:
PURCHASES OF EQUITY SECURITIES
(Dollars in millions, except per share amounts)
Total number of shares purchased(1)
Average price paid per share(1)
Total number of shares purchased as part of publicly announced plans or programs(1)
Maximum dollar value of shares that may yet be purchased under the plans or programs(2)
July 1, 2020 - July 31, 20203,296,251 $122.27 3,296,251 $2,097 
August 1, 2020 - August 31, 2020793,124 $122.27 793,124 $2,000 
Total4,089,375 $122.27 4,089,375 $2,000 
(1)    On September 11, 2007, our board of directors authorized the repurchase of shares of our common stock, provided that the amounts spent for such purpose do not exceed the greater of $2 billion or amounts spent to purchase no more than 40 million shares. This repurchase authorization had no expiration date. On July 1, 2020, we entered into an ASR program with Citibank, N.A. under which we prepaid $500 million to repurchase shares of our common stock in a share forward transaction. The total number of shares purchased was determined by dividing the $500 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of July 2, 2020 through August 4, 2020, minus a fixed discount. The ASR program was completed on August 4, 2020, upon which date the aggregate dollar amount authorized by the September 11, 2007 share repurchase authorization was exhausted.
(2)    On July 6, 2020, our board of directors authorized the repurchase of shares of our common stock at any time and from time to time in an aggregate amount not to exceed the lesser of $2 billion or amounts spent to purchase no more than 25 million shares. This repurchase authorization was publicly announced on August 5, 2020 and has no expiration date. No shares have been repurchased under this authorization.

We may also, from time to time, purchase shares of our common stock to which participants would otherwise be entitled from long-term incentive plan participants who elect to sell a sufficient number of shares in connection with the vesting of RSUs and stock options in order to satisfy minimum statutory tax withholding requirements.
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ITEM 6. EXHIBITS
The exhibits listed below relate to each registrant as indicated. Unless otherwise indicated, the exhibits that are incorporated by reference herein were filed under File Number 1-14201 (Sempra Energy), File Number 1-40 (Pacific Lighting Corporation), File Number 1-03779 (San Diego Gas & Electric Company) and/or File Number 1-01402 (Southern California Gas Company).


Incorporated by Reference
Exhibit NumberExhibit DescriptionFiled or Furnished HerewithFormExhibit or AppendixFiling Date
EXHIBIT 3 -- ARTICLES OF INCORPORATION AND BYLAWS
Sempra Energy
3.110-K3.102/27/20
3.28-K3.104/14/20
3.38-K3.101/09/18
3.48-K3.107/13/18
3.58-K3.106/15/20
San Diego Gas & Electric Company
3.610-K3.402/26/15
3.710-Q3.111/02/16
Southern California Gas Company
3.810-K3.0103/28/97
3.98-K3.101/31/17
EXHIBIT 4 -- INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
Certain instruments defining the rights of holders of long-term debt instruments are not required to be filed or incorporated by reference herein pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. Each registrant agrees to furnish a copy of such instruments to the SEC upon request.
San Diego Gas & Electric Company
4.18-K4.109/28/20
Southern California Gas Company
4.28-K4.109/21/20
4.38-K4.209/21/20
126
    Incorporated by Reference
Exhibit Number Exhibit DescriptionFiled or Furnished HerewithFormExhibit or AppendixFiling Date
       
EXHIBIT 3 -- ARTICLES OF INCORPORATION AND BYLAWS    
Sempra Energy   
3.1 
Amended and Restated Articles of Incorporation of Sempra Energy effective May 23, 2008.
 10-K3.102/27/20
       
3.2 
Bylaws of Sempra Energy (as amended through April 14, 2020).
 8-K3.104/14/20
       
3.3 
Certificate of Determination of the 6% Mandatory Convertible Preferred Stock, Series A, of Sempra Energy (including the form of certificate representing the 6% Mandatory Convertible Preferred Stock, Series A), filed the Secretary of State of the State of California and effective January 5, 2018.
 8-K3.101/09/18
       
3.4 
Certificate of Determination of the 6.75% Mandatory Convertible Preferred Stock, Series B, of Sempra Energy (including the form of certificate representing the 6.75% Mandatory Convertible Preferred Stock, Series B) filed with the Secretary of State of the State of California and effective July 11, 2018.
 8-K3.107/13/18
       
San Diego Gas & Electric Company   
3.5 
Amended and Restated Articles of Incorporation of San Diego Gas & Electric Company effective August 15, 2014.
 10-K3.402/26/15
       
3.6 
Bylaws of San Diego Gas & Electric Company (as amended through October 26, 2016).
 10-Q3.111/02/16
       
Southern California Gas Company   
3.7 
Restated Articles of Incorporation of Southern California Gas Company effective October 7, 1996.
 10-K3.0103/28/97
       
3.8 
Bylaws of Southern California Gas Company (as amended through January 30, 2017).
 8-K3.101/31/17
       
EXHIBIT 10 -- MATERIAL CONTRACTS    
       
Sempra Energy   
10.1* 
Engineering, Procurement and Construction Contract, dated as of February 28, 2020, between Port Arthur LNG, LLC, PALNG Common Facilities Company, LLC (but only for the limited purpose set forth therein), and Bechtel Oil, Gas and Chemicals, Inc.
X   
       
Management Contract or Compensatory Plan, Contract or Arrangement   
Sempra Energy/San Diego Gas & Electric/Southern California Gas Company    
10.2 
Severance Agreement and Mutual Release, dated March 30, 2020, between Sempra Energy and George Bilicic. 
X   
       
10.3 
Form of Sempra Energy 2019 Long-Term Incentive Plan 2020 Nonqualified Stock Option Award Agreement. 
 10-K10.502/27/20
       
10.4 
Form of Sempra Energy 2019 Long-Term Incentive Plan 2020 Time-Based Restricted Stock Unit Award - Three Year Ratable Vest. 
 10-K10.602/27/20
       
10.5 
Form of Sempra Energy 2019 Long-Term Incentive Plan 2020 Performance-Based Restricted Stock Unit Award - EPS Growth Performance Measure.
 10-K10.702/27/20
       
10.6 
Form of Sempra Energy 2019 Long-Term Incentive Plan 2020 Performance-Based Restricted Stock Unit Award - Relative to Shareholder Return Performance Measure - S&P 500 Index. 
 10-K10.802/27/20
       
10.7 
Form of Sempra Energy 2019 Long-Term Incentive Plan 2020 Performance-Based Restricted Stock Unit Award - Relative Total Shareholder Return Performance Measure - S&P 500 Utilities Index. 
 10-K10.902/27/20
       
* Portions of the exhibit have been omitted in accordance with applicable SEC rules.


Incorporated by Reference
Exhibit NumberExhibit DescriptionFiled or Furnished HerewithFormExhibit or AppendixFiling Date
EXHIBIT 10 -- MATERIAL CONTRACTS
Management Contract or Compensatory Plan, Contract or Arrangement
Sempra Energy / San Diego Gas & Electric Company / Southern California Gas Company
10.1X
Sempra Energy
10.2X
10.3X
Sempra Energy / San Diego Gas & Electric Company
10.4X
127

Exhibit NumberExhibit DescriptionFiled or Furnished Herewith
Exhibit NumberExhibit DescriptionFiled or Furnished Herewith
EXHIBIT 31 -- SECTION 302 CERTIFICATIONS
Sempra Energy
31.1X
31.2X
San Diego Gas & Electric Company
31.3X
31.4X
Southern California Gas Company
31.5X
31.6X
EXHIBIT 32 -- SECTION 906 CERTIFICATIONS
Sempra Energy
32.1X
32.2X
San Diego Gas & Electric Company
32.3X
32.4X
Southern California Gas Company
32.5X
32.6X
EXHIBIT 101 -- INTERACTIVE DATA FILE
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.X
101.SCHInline XBRL Taxonomy Extension Schema Document.X
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.X
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.X
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.X
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.X
EXHIBIT 104 -- COVER PAGE INTERACTIVE DATA FILE
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


128


SIGNATURES
Sempra Energy:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SEMPRA ENERGY,

(Registrant)
Date: May 4,November 5, 2020By: /s/ Peter R. Wall
Peter R. Wall
Senior Vice President, Controller and
Chief Accounting Officer (Duly Authorized Officer)

San Diego Gas & Electric Company:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SAN DIEGO GAS & ELECTRIC COMPANY,

(Registrant)
Date: May 4,November 5, 2020By: /s/ BruceValerie A. FolkmannBille
BruceValerie A. Folkmann
Senior Bille
Vice President, Controller Chief Financial Officer and Chief Accounting Officer (Duly
(Duly Authorized Officer)
Southern California Gas Company:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SOUTHERN CALIFORNIA GAS COMPANY,

(Registrant)
Date: May 4,November 5, 2020By: /s/ Mia L. DeMontigny
Mia L. DeMontigny
Vice President, Controller, Chief Financial Officer and
Chief Accounting Officer (Duly Authorized Officer)


109
129