SRE » Topics » Sempra Utilities

These excerpts taken from the SRE 10-Q filed May 5, 2009.

Sempra Utilities

SDG&E and SoCalGas have a combined $800 million, three-year syndicated revolving credit agreement expiring in 2011. The agreement permits each utility to individually borrow up to $600 million, subject to a combined limit of $800 million for both utilities. At March 31, 2009, SDG&E and SoCalGas had no outstanding borrowings under this facility. SDG&E had $98 million of commercial paper, $110 million of outstanding letters of credit and $237 million of variable-rate demand notes outstanding supported by this facility at March 31, 2009.

Sempra Utilities

The Sempra Utilities expect that cash flows from operations and security issuances will continue to be adequate to meet utility capital expenditure requirements.  Due to the extended review period associated with the Sunrise Powerlink project and the resultant delay in initiating construction activities, SDG&E declared and paid a $150 million common dividend to Sempra Energy in the first quarter of 2009.  However, the level of future common dividends from SDG&E and SoCalGas may be affected during periods of increased capital expenditures.  The level of future common dividends from PE is dependent upon common dividends paid by SoCalGas.  Sempra Energy may make additional equity contributions to SDG&E or SoCalGas to support the Sempra Utilities' capital expenditure programs.   

These excerpts taken from the SRE 10-K filed Feb 24, 2009.

Sempra Utilities

The Sempra Utilities expect that cash flows from operations and security issuances will continue to be adequate to meet utility capital expenditure requirements.  As a result of SDG&E's projected capital expenditure program, SDG&E has elected to limit the payment of dividends on its common stock to Sempra Energy, and the level of future common dividends from SDG&E and SoCalGas may be affected during periods of increased capital expenditures.  The level of future common dividends from PE is dependent upon common dividends paid by SoCalGas.  In 2006, Sempra Energy made a capital contribution of $200 million to SDG&E to assist in the purchase of the Palomar generating facility.  Sempra Energy may make additional equity contributions to SDG&E or SoCalGas to support the Sempra Utilities' capital expenditure programs.   

Sempra Utilities

Key noncash performance indicators include number of customers, and natural gas volumes and electricity sold. Additional noncash performance indicators include goals related to safety, customer service, customer reputation, environmental considerations, on-time and on-budget completion of major projects and initiatives, and in the case of SDG&E, electric reliability. We discuss natural gas volumes and electricity sold in "Results of Operations – Changes in Revenues, Costs and Earnings" above.

Sempra Utilities

The Sempra Utilities generate revenues primarily from deliveries to their customers of electricity by SDG&E and natural gas by both SoCalGas and SDG&E, and from related services. They record these revenues under the accrual method and recognize them upon delivery and performance. They also record revenue from incentive awards, which is recognized upon approval of the award by the CPUC. We provide additional discussion on utility incentive awards in Note 14.

Under an operating agreement with the California Department of Water Resources (DWR), SDG&E acts as a limited agent on behalf of the DWR in the administration of energy contracts, including natural gas procurement functions under the DWR contracts allocated to SDG&E's customers. The legal and financial responsibilities associated with these activities continue to reside with the DWR. Therefore, the commodity costs associated with long-term contracts allocated to SDG&E from the DWR (and the revenues to recover those costs) are not included in our Statements of Consolidated Income. We provide discussion on electric industry restructuring related to the DWR in Note 14.

On a monthly basis, SoCalGas accrues natural gas storage contract revenues, which consist of reservation, storage and injection charges based on negotiated agreements with terms of up to 15 years.



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The table below shows the total revenues from the Sempra Utilities in Sempra Energy's Statements of Consolidated Income, which are net of sales taxes, for each of the last three years. The revenues include amounts for services rendered but unbilled (approximately one-half month's deliveries) at the end of each year.


TOTAL SEMPRA UTILITIES REVENUES AT SEMPRA ENERGY CONSOLIDATED*

(Dollars in billions)

 

 

Years ended December 31,

 

2008

2007

2006

Natural gas revenues

$

5.4

 

$

4.9

 

$

4.8

 

Electric revenues

 

2.6

 

 

2.2

 

 

2.1

 

Total

$

8.0

 

$

7.1

 

$

6.9

 

*

Excludes intercompany revenues.


As discussed in Note 15, beginning April 1, 2008, the SDG&E and SoCalGas core natural gas supply portfolios were combined and are managed by SoCalGas. Effective as of that date, SoCalGas procures natural gas for SDG&E’s core customers. Core customers are primarily residential and small commercial and industrial customers. This core gas procurement function is considered a shared service, therefore amounts related to SDG&E are not included in SoCalGas' income statement.

We provide additional information concerning utility revenue recognition in "Regulatory Matters" above.

Sempra Utilities

SDG&E and SoCalGas have a combined $800 million, three-year syndicated revolving credit agreement expiring in 2011. JPMorgan Chase Bank serves as administrative agent for the syndicate of 17 lenders. No single bank has greater than a 9.9 percent share. The agreement permits each utility to individually borrow up to $600 million, subject to a combined limit of $800 million for both utilities. It also provides for the issuance of letters of credit on behalf of each utility subject to a combined letter of credit commitment of $200 million for both utilities. The amount of borrowings otherwise available under the facility is reduced by the amount of outstanding letters of credit.



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Borrowings under the facility bear interest at benchmark rates plus a margin that varies with market index rates and the borrowing utility's credit rating. The agreement also requires each utility to maintain a ratio of total indebtedness to total capitalization (as defined in the agreement) of no more than 65% at the end of each quarter.

Each utility’s obligations under the agreement are individual obligations, and a default by one utility would not constitute a default by the other utility or preclude borrowings by, or the issuance of letters of credit on behalf of, the other utility.

At December 31, 2008, SDG&E and SoCalGas had no outstanding borrowings under this facility. SDG&E had $110 million of outstanding letters of credit and $237 million of variable-rate demand notes outstanding supported by this facility at December 31, 2008.

SEMPRA UTILITIES

At the Sempra Utilities, company policy and regulatory requirements impose limits on the use of derivative instruments. These instruments enable the companies to estimate with greater certainty the effective prices to be received by the companies and the prices to be charged to their customers. SDG&E records realized gains or losses on derivative instruments associated with transactions for electric energy contracts in Cost of Electric Fuel and Purchased Power on the Statements of Consolidated Income. SDG&E and SoCalGas record realized gains and losses on derivative instruments associated with transactions for natural gas contracts in Cost of Natural Gas on the Statements of Consolidated Income. On the Consolidated Balance Sheets, the Sempra Utilities record regulatory assets and liabilities related to unrealized gains and losses from these derivative instruments to the extent derivative gains and losses associated with these derivative instruments will be payable or recoverable in future rates.

This excerpt taken from the SRE 10-Q filed Nov 10, 2008.

Sempra Utilities


Note 7 of the Notes to Condensed Consolidated Financial Statements herein and Notes 14 and 15 of the Notes to Consolidated Financial Statements in the Annual Report describe electric and natural gas regulation and rates, and other pending proceedings and investigations.


This excerpt taken from the SRE 10-Q filed Aug 7, 2008.

Sempra Utilities


Note 7 of the Notes to Condensed Consolidated Financial Statements herein and Notes 14 and 15 of the Notes to Consolidated Financial Statements in the Annual Report describe electric and natural gas regulation and rates, and other pending proceedings and investigations.




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This excerpt taken from the SRE 8-K filed Aug 7, 2008.

Sempra Utilities

Net income for Sempra Utilities – San Diego Gas & Electric (SDG&E) and Southern California Gas Co. (SoCalGas) – increased 11 percent to $117 million in the second quarter 2008 from $105 million in last year’s second quarter.

SDG&E’s second-quarter 2008 net income rose to $61 million from $51 million in the second quarter 2007, primarily due to performance incentive awards approved during the quarter by the California Public Utilities Commission (CPUC).

SoCalGas’ net income in the second quarter 2008 was $56 million, compared with $54 million in the second quarter last year.

On July 31, 2008, the CPUC approved the four-year rate-case filed by SDG&E and SoCalGas.  The terms of the approved rate-case allow for recovery of the forecasted operating costs and capital requirements necessary to operate the utilities.  The rate adjustment for both utilities was retroactive to Jan. 1, 2008.


This excerpt taken from the SRE 8-K filed May 2, 2008.

Sempra Utilities

Net income for Sempra Utilities — San Diego Gas & Electric (SDG&E) and Southern California Gas Co. (SoCalGas) — rose 12 percent to $131 million in the first quarter 2008 from $117 million in the prior-year’s quarter.  

SDG&E’s first-quarter net income rose to $74 million in 2008 from $62 million in 2007, due primarily to a favorable resolution of prior-years’ income-tax issues in 2008.

SoCalGas’ first-quarter 2008 net income was $57 million, compared with $55 million in the first quarter 2007.


This excerpt taken from the SRE 10-Q filed May 2, 2008.

Sempra Utilities


Note 6 of the Notes to Condensed Consolidated Financial Statements herein and Notes 14 and 15 of the Notes to Consolidated Financial Statements in the Annual Report describe electric and natural gas regulation and rates, and other pending proceedings and investigations.




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These excerpts taken from the SRE 10-K filed Feb 26, 2008.

Sempra Utilities


At the Sempra Utilities, the use of derivative instruments is subject to certain limitations imposed by company policy and regulatory requirements. These instruments enable the company to estimate with greater certainty the effective prices to be received by the company and the prices to be charged to its customers. The Sempra Utilities record realized gains or losses on derivative instruments associated with transactions for electric energy and natural gas contracts in Cost of Electric Fuel and Purchased Power and Cost of Natural Gas, respectively, on the Statements of Consolidated Income. On the Consolidated Balance Sheets, the Sempra Utilities record corresponding regulatory assets and liabilities related to unrealized gains and losses from these derivative instruments to the extent derivative gains and losses associated with these derivative instruments will be payable or recoverable in future rates.


Sempra Utilities




At the Sempra Utilities, the use of derivative instruments is subject to certain limitations imposed by company policy and regulatory requirements. These instruments enable the company to estimate with greater certainty the effective prices to be received by the company and the prices to be charged to its customers. The Sempra Utilities record realized gains or losses on derivative instruments associated with transactions for electric energy and natural gas contracts in Cost of Electric Fuel and Purchased Power and Cost of Natural Gas, respectively, on the Statements of Consolidated Income. On the Consolidated Balance Sheets, the Sempra Utilities record corresponding regulatory assets and liabilities related to unrealized gains and losses from these derivative instruments to the extent derivative gains and losses associated with these derivative instruments will be payable or recoverable in future rates.




This excerpt taken from the SRE 8-K filed Feb 26, 2008.

Sempra Utilities

Sempra Utilities – San Diego Gas & Electric (SDG&E) and Southern California Gas Co. (SoCalGas) – had net income of $513 million in 2007, up 12 percent from $460 million in 2006.  The utilities’ fourth-quarter 2007 net income was $105 million, compared with $110 million in 2006.

Net income for SDG&E rose to $283 million in 2007, from $237 million in 2006, due primarily to the favorable resolution of tax issues, and higher electric transmission and generation earnings.   SDG&E’s fourth-quarter 2007 net income was $47 million, compared with $55 million quarterly net income in 2006, primarily due to lower taxes in 2006. 





SoCalGas’ 2007 net income increased to $230 million from $223 million in 2006, due primarily to higher operating margin.  Fourth-quarter net income for SoCalGas was $58 million in 2007, compared with $55 million in 2006.


This excerpt taken from the SRE 8-K filed Nov 1, 2007.

Sempra Utilities

Sempra Utilities – San Diego Gas & Electric (SDG&E) and Southern California Gas Co. (SoCalGas) – reported third-quarter net income of $186 million in 2007, compared with $131 million in 2006.

SDG&E’s third-quarter net income increased to $123 million in 2007 from $70 million in 2006.  Third-quarter 2007 and 2006 results included a net benefit of $46 million and $9 million, respectively, from the resolution of prior-years’ income-tax issues and regulatory matters.  

SoCalGas’ net income in the third quarter 2007 increased to $63 million from $61 million in the same quarter last year.

As a result of the wildfires that spread across Southern California during the week of Oct. 21, a state of emergency was declared for seven counties, all within SDG&E’s and SoCalGas’ service territories.

 “These fires have been among the most devastating in the history of California,” said Felsinger.  “I am proud of the way our employees have responded, working around the clock to repair facilities, restore service, aid our customers and extend a helping hand to the affected communities.  They’ve done an incredible job under the most trying circumstances.”

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This excerpt taken from the SRE 10-Q filed Nov 1, 2007.

Sempra Utilities


Note 9 of the Notes to Condensed Consolidated Financial Statements herein and Notes 13 and 14 of the Notes to Consolidated Financial Statements in the Annual Report describe electric and natural gas regulation and rates, and other pending proceedings and investigations.


This excerpt taken from the SRE 10-Q filed Aug 2, 2007.

Sempra Utilities


Note 9 of the Notes to Condensed Consolidated Financial Statements herein and Notes 13 and 14 of the Notes to Consolidated Financial Statements in the Annual Report describe electric and natural gas regulation and rates, and other pending proceedings and investigations.




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This excerpt taken from the SRE 8-K filed Aug 2, 2007.

Sempra Utilities

Second-quarter net income for Sempra Utilities – San Diego Gas & Electric (SDG&E) and Southern California Gas Co. (SoCalGas) – was $105 million in 2007, compared with $123 million in 2006.

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SDG&E earned second-quarter 2007 net income of $51 million, compared with $65 million in the year-ago period.  In the most recent quarter, SDG&E benefited from higher transmission earnings, while, in last year’s second quarter, the utility realized a $16-million benefit from the favorable resolution of certain regulatory and tax issues and a positive litigation-reserve adjustment.

SDG&E recently energized its Otay-Metro Powerloop electric-transmission project, a new 52-mile loop around the center of San Diego County designed to improve electric reliability in the region.   

Southern California Gas Co.’s net income in the second quarter 2007 was $54 million, compared with $58 million in the same quarter last year.


This excerpt taken from the SRE 8-K filed May 2, 2007.

Sempra Utilities

Net income for Sempra Utilities -- San Diego Gas & Electric (SDG&E) and Southern California Gas Co. (SoCalGas) -- increased 22 percent to $117 million in the first quarter 2007 from $96 million in the first quarter 2006.

SDG&E’s first-quarter net income rose to $62 million in 2007 from $47 million in 2006, due primarily to higher earnings from the Palomar Energy Center and the San Onofre Nuclear Generating Station.

Net income for SoCalGas rose to $55 million in the first quarter 2007 from $49 million in the prior-year’s quarter, due to improved operations.

“The majority of our $11 billion, five-year capital plan is being dedicated to investments in new infrastructure and technology for Sempra Utilities,” Felsinger said.  “These investments will enhance energy reliability, provide access to renewable resources, reduce customer costs and promote conservation.”

On April 12, 2007, the California Public Utilities Commission approved SDG&E’s “smart meter” project, which will dramatically change how SDG&E delivers services and will help customers manage their energy usage efficiently.  SDG&E plans to spend $572 million through 2011 to replace an estimated 1.4 million electric meters with smart meters and to retrofit approximately 900,000 gas meters throughout its service territory.  


This excerpt taken from the SRE 10-Q filed May 2, 2007.

Sempra Utilities


Note 8 of the Notes to Condensed Consolidated Financial Statements herein and Notes 13 and 14 of the Notes to Consolidated Financial Statements in the Annual Report describe electric and natural gas regulation and rates, and other pending proceedings and investigations.


This excerpt taken from the SRE 10-K filed Feb 23, 2007.

Sempra Utilities


At the Sempra Utilities, the use of derivative instruments is subject to certain limitations imposed by company policy and regulatory requirements. These instruments allow the company to estimate with greater certainty the effective prices to be received by the company and the prices to be charged to its customers. The Sempra Utilities record transactions for natural gas and electric energy contracts in Cost of Natural Gas and Cost of Electric Fuel and Purchased Power, respectively, in the Statements of Consolidated Income. On the Consolidated Balance Sheets, the Sempra Utilities record corresponding regulatory assets and liabilities relating to unrealized gains and losses from these derivative instruments to the extent derivative gains and losses associated with these derivative instruments will be payable or recoverable in future rates.


This excerpt taken from the SRE 8-K filed Feb 22, 2007.

Sempra Utilities

Net income for San Diego Gas & Electric (SDG&E) was $237 million in 2006, compared with $262 million in 2005.   SDG&E’s fourth-quarter 2006 net income was $55 million, compared with net income of $72 million in the fourth quarter 2005.  The change in net income for the quarter and full year was due primarily to the positive effect in 2005 of demand-side-management incentives and favorable resolution of prior-years’ tax and regulatory issues, offset by higher net income from electric generation in 2006, including the addition of the new Palomar generating facility.

Net income for Southern California Gas Co. (SoCalGas) was $223 million in 2006, compared with $211 million in the prior year.  The improvement from the prior year was due primarily to energy-crisis litigation expense in 2005, offset by the favorable resolution of tax and regulatory issues.  SoCalGas’ fourth-quarter net income was $55 million in 2006, up from $48 million in the previous year.





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This excerpt taken from the SRE 8-K filed Nov 2, 2006.

Sempra Utilities

Third-quarter net income for Southern California Gas Co. (SoCalGas) rose to $61 million in 2006 from $36 million last year.  In the prior-year's quarter, SoCalGas recorded a $53 million after-tax increase in litigation reserves, partially offset by an $18 million benefit from the resolution of prior-years' tax issues.

San Diego Gas & Electric (SDG&E) had net income of $70 million in the third quarter 2006, compared with $102 million in the same quarter last year.  In the third quarter 2006, SDG&E benefited from a favorable regulatory outcome and contributions from its new Palomar Energy Center.  In the year-ago quarter, SDG&E recorded a $39 million  benefit from the resolution of prior-years' tax issues and a $27 million benefit from an electric-transmission cost settlement, offset by the effect of a $27 million after-tax increase in litigation reserves.



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In August 2006, the California Independent System Operator, the agency that manages the state's power grid, endorsed SDG&E's proposal to build Sunrise Powerlink, a major new transmission line.  The project, if approved by the California Public Utilities Commission, will be built and placed into service in 2010.


This excerpt taken from the SRE 10-Q filed Nov 2, 2006.

Sempra Utilities


At the Sempra Utilities, the use of derivative instruments is subject to certain limitations imposed by company policy and regulatory requirements. These instruments allow the company to estimate with greater certainty the effective prices to be received by the company and the prices to be charged to its customers. The Sempra Utilities record transactions for natural gas and electric energy contracts in Cost of Natural Gas and Cost of Electric Fuel and Purchased Power, respectively, in the Statements of Consolidated Income. Unrealized gains and losses related to these derivative instruments are offset by regulatory assets and liabilities on the Consolidated Balance Sheets to the extent derivative gains and losses associated with these derivative instruments will be payable or recoverable in future rates.


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