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San Diego Gas & Electric 8-K 2/23/2005

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934

Date of Report
(Date of earliest event reported):	February 23, 2005 - ----------------------

SAN DIEGO GAS & ELECTRIC COMPANY
- ---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

CALIFORNIA - --------------------------------	1-3779 - --------------------------------	95-1184800 - --------------------------------
(State of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.

8330 CENTURY PARK COURT, SAN DIEGO, CA - ------------------------------------------------------------------	92123 - ----------------------
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code

(619) 696-2000
- -------------------

---------------------------------------------------------------------
(Former name or former address, if changed since last report.)

FORM 8-K

Item 2.02 Results of Operations and Financial Condition

On February 23, 2005, Sempra Energy, of which San Diego Gas & Electric Company is a consolidated subsidiary, issued its earnings press release for the fourth quarter of 2004. The Sempra Energy financial information contained in the press release includes, on a consolidated basis, information regarding San Diego Gas & Electric Company's results of operations and financial condition. A copy of the press release is attached as Exhibit 99.1. The information furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed to be "filed" for purposes of the Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by reference in any filing of Sempra Energy, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

99.1 February 23, 2005 Sempra Energy News Release (including tables)

SIGNATURE

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

Date: February 23, 2005	By: /s/ S.D. Davis - -----------------------------------------
	Name: S.D. Davis Sr. Vice President-External Relations and Chief Financial Officer

SEMPRA ENERGY 4th QTR 2004 EARNINGS RELEASE

Exhibit 99.1

NEWS RELEASE

Media Contact:	Doug Kline Sempra Energy (877) 866-2066 www.sempra.com

Financial Contact:	Karen Sedgwick Sempra Energy (877) 736-7727

SEMPRA ENERGY POSTS 38-PERCENT INCREASE IN
2004 NET INCOME

Earnings Per Share Rise 26 Percent to $3.83

Commodity-Trading, Electric-Generation Units Pace Growth

Company Raises 2005 Earnings-Per-Share Guidance to $3.10 to $3.30
From $3.00 to $3.20

SAN DIEGO, Feb. 23, 2005 - Sempra Energy (NYSE: SRE) today reported 2004 earnings of $895 million, or $3.83 per diluted share, up 38 percent over 2003 earnings of $649 million, or $3.03 per diluted share.

For the fourth quarter 2004, Sempra Energy's earnings were $346 million, or $1.46 per diluted share, an increase of 48 percent over fourth-quarter 2003 earnings of $234 million, or $1.03 per diluted share.

"This marks the sixth consecutive year of record earnings for Sempra Energy, a period during which we have averaged earnings growth of more than 20 percent annually," said Stephen L. Baum, chairman and chief executive officer. "In 2004, we further strengthened our balance sheet and significantly advanced our liquefied natural gas (LNG) business. Our commodity-trading and electric-generation businesses experienced robust growth and our California utilities continue to excel."

-more-

Yesterday, Sempra Energy's board of directors announced a dividend increase of 16 percent, raising the quarterly dividend on common shares to 29 cents ($1.16 on an annualized basis). The increase was the first change in the company's dividend since 2000.

Revenues for Sempra Energy in 2004 were $9.4 billion, compared with $7.9 billion in 2003, due to increased power sales and commodity trading. Fourth-quarter 2004 revenues were $2.9 billion, up from $2.1 billion in the year-earlier period.

SUBSIDIARY OPERATING RESULTS

Sempra Utilities

Net income for Southern California Gas Co. (SoCalGas) increased to $232 million in 2004 from $209 million in 2003, due primarily to lower operating expenses, the favorable settlement of its rate case at the California Public Utilities Commission (CPUC) and a one-time gain from a property sale. Fourth-quarter 2004 net income for SoCalGas was $58 million, versus $61 million in the year-earlier period.

Net income for San Diego Gas & Electric (SDG&E) in 2004 was $208 million, compared with $334 million in 2003. SDG&E's net income was $68 million in the fourth quarter 2004, compared with $128 million in the same quarter of 2003. In the fourth quarter 2004, SDG&E benefited from the settlement of its rate case at the CPUC. The 2003 results for SDG&E included a $79 million gain recorded in the fourth quarter for the favorable resolution of tax issues and a $65 million gain recorded in the third quarter for a contract settlement with the CPUC.

In December 2004, the CPUC approved base rates for SDG&E and SoCalGas for a four-year period extending through 2007.

"The approval of new rate plans for SDG&E and SoCalGas ensures that our utilities will continue to earn a reasonable return as they invest in critical new infrastructure to serve their customers," Baum said.

-more-

Sempra Commodities

In 2004, net income for Sempra Commodities (formerly Sempra Energy Trading) more than doubled to $320 million from $157 million in 2003, due to improved performance in all of its key commodity segments worldwide, including natural gas, petroleum and base metals. Fourth-quarter 2004 net income for Sempra Commodities increased to $171 million from $73 million in the year-earlier period on the strength of its natural gas and power trading.

"In 2004, Sempra Commodities recorded its best year ever," said Baum. "Quarter after quarter, Sempra Commodities has remained consistently profitable, while carefully managing risk and entering into transactions that convert to cash quickly."

Sempra Generation

Net income for Sempra Generation (formerly Sempra Energy Resources) rose to $137 million in 2004 from $71 million in the previous year, due primarily to a full year of contributions from the company's new generating fleet in the Pacific Southwest, as well as power plants acquired in Texas.

Sempra Generation's fourth-quarter net income was $19 million in 2004, compared with $32 million in 2003, due primarily to litigation reserves.

Sempra Pipelines & Storage

Sempra Pipelines & Storage (formerly Sempra Energy International) recorded net income of $63 million in 2004, up from $3 million in 2003. Results for 2003 included an impairment charge of $50 million in the third quarter. In 2004, Sempra Pipelines & Storage also benefited from a $5 million gain from reducing its ownership in Luz del Sur, a Peruvian utility, to 38 percent from 44 percent. For the fourth quarter, net income for Sempra Pipelines & Storage increased to $28 million in 2004 from $10 million in 2003, due primarily to favorable resolution of foreign-tax issues.

-more-

Sempra LNG

Last month, Sempra LNG (formerly Sempra Energy LNG) awarded the engineering and construction contracts for its Energía Costa Azul and Cameron LNG receipt terminals in Baja California, Mexico, and Louisiana. Construction has commenced on the Energía Costa Azul terminal, which is expected to be operational in 2008.

Also last month, Sempra LNG was awarded a 15-year natural gas contract to supply Mexico's state-owned electric utility, Comisión Federal de Electricidad.

On Jan. 27, 2005, Sempra LNG announced it had signed a Heads of Agreement (HOA) to provide Tractebel LNG North America LLC with up to one-third of the processing capacity of the Cameron LNG receipt terminal for a period of 20 years, beginning in 2008. The non-binding HOA contemplates finalizing a definitive agreement by June 30, 2005. Additional supply and capacity agreements involving Cameron LNG are being negotiated. The facility is expected to be operational in 2008.

2005 Earnings Outlook

Sempra Energy today updated its 2005 earnings-per-share guidance to $3.10 to $3.30 from previous guidance of $3.00 to $3.20. The company also announced a capital budget of approximately $1.6 billion for 2005.

Internet Broadcast

Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. Eastern Time with senior management of the company. Access is available by logging onto the Web site at www.sempra.com. For those unable to log onto the live Webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (706) 645-9291 and entering the passcode, 3346152.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2004 revenues of $9.4 billion. The Sempra Energy companies' 13,000 employees serve more than 10 million customers in the United States, Europe, Canada, Mexico, South America and Asia.

###

This presentation contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When the company uses words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "would," "should" or similar expressions, or when the company discusses its strategy or plans, the company is making forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Pu blic Utilities Commission, the California State Legislature, the California Department of Water Resources, the Federal Energy Regulatory Commission and other regulatory bodies in the United States and other countries; capital markets conditions, inflation rates, interest rates and exchange rates; energy and trading markets, including the timing and extent of changes in commodity prices; the availability of natural gas; weather conditions and conservation efforts; war and terrorist attacks; business, regulatory, environmental, and legal decisions and requirements; the status of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts; and other uncertainties, all of which are difficult to predict and many of which are beyond the company's control. These risks and uncertainties are further discussed in the company's reports filed with the Securities and Exchange Commission that are available through the EDGAR system without charge at its Web site, www.sec.gov and on the company's Web site, www.sempra.com.

SEMPRA ENERGY
Table A


STATEMENTS OF CONSOLIDATED INCOME


		Three months ended		Years ended
		December 31,		December 31,

(Dollars in millions, except per share amounts)		2004	2003	2004	2003

		(Unaudited)
Operating revenues
California utilities:
	Natural gas	$ 1,348	$ 1,049	$ 4,537	$ 4,010
	Electric	412	419	1,658	1,787
Other		1,129	598	3,215	2,090

	Total operating revenues	2,889	2,066	9,410	7,887

Operating expenses
California utilities:
	Cost of natural gas	849	542	2,593	2,071
	Cost of electric fuel and purchased power	151	113	576	541
Other cost of sales		555	318	1,741	1,204
Other operating expenses		774	656	2,371	2,287
Depreciation and amortization		120	160	621	615
Franchise fees and other taxes		65	63	236	230

	Total operating expenses	2,514	1,852	8,138	6,948

Operating income		375	214	1,272	939
Other income (expense) - net		46	(12)	104	26
Interest income		11	74	69	104
Interest expense		(88)	(85)	(322)	(308)
Preferred dividends / distributions by subsidiaries		(3)	(2)	(10)	(19)

Income from continuing operations before income taxes		341	189	1,113	742
Income tax expense (benefit)		2	(62)	193	47

Income from continuing operations		339	251	920	695
Income (loss) from discontinued operations, net of tax		7	-	(23)	-
Loss on disposal of discontinued operations, net of tax		-	-	(2)	-

Income before cumulative effect of changes in accounting principles		346	251	895	695
Cumulative effect of changes in accounting principles, net of tax		-	(17)	-	(46)

Net income		$ 346	$ 234	$ 895	$ 649




Basic earnings per share:
Income from continuing operations		$ 1.47	$ 1.12	$ 4.03	$ 3.29
Discontinued operations, net of tax		0.03	-	(0.11)	-
Cumulative effect of changes in accounting principles, net of tax		-	(0.07)	-	(0.22)

Net income		$ 1.50	$ 1.05	$ 3.92	$ 3.07



Weighted-average number of shares outstanding (thousands)		230,832	223,962	228,271	211,740




Diluted earnings per share:
Income from continuing operations		$ 1.43	$ 1.11	$ 3.93	$ 3.24
Discontinued operations, net of tax		0.03	-	(0.10)	-
Cumulative effect of changes in accounting principles, net of tax		-	(0.08)	-	(0.21)

Net income		$ 1.46	$ 1.03	$ 3.83	$ 3.03



Weighted-average number of shares outstanding (thousands)		237,500	227,214	233,852	214,482



Dividends declared per share of common stock		$ 0.25	$ 0.25	$ 1.00	$ 1.00

SEMPRA ENERGY
Table B

CONSOLIDATED BALANCE SHEETS


		December 31,	December 31,
(Dollars in millions)		2004	2003

Assets
Current assets:
	Cash and cash equivalents	$ 419	$ 409
	Short-term investments	15	386
	Accounts receivable	1,032	874
	Due from unconsolidated affiliate	4	-
	Deferred income taxes	15	-
	Interest receivable	80	62
	Trading-related receivables and deposits, net	2,606	2,350
	Derivative trading instruments	2,339	1,607
	Commodities owned	1,547	1,420
	Regulatory assets arising from fixed-price contracts and other derivatives	152	144
	Other regulatory assets	103	89
	Inventories	172	147
	Other	222	158

	Current assets of continuing operations	8,706	7,646
	Current assets of discontinued operations	70	220

	Total current assets	8,776	7,866

Investments and other assets:
	Due from unconsolidated affiliates	42	55
	Regulatory assets arising from fixed-price contracts and other derivatives	500	650
	Other regulatory assets	619	552
	Nuclear decommissioning trusts	612	570
	Investments	1,164	1,112
	Sundry	844	707

	Total investments and other assets	3,781	3,646

Property, plant and equipment - net		11,086	10,476

Total assets		$ 23,643	$ 21,988




Liabilities and Shareholders' Equity
Current liabilities:
	Short-term debt	$ 405	$ 28
	Accounts payable	1,126	788
	Due to unconsolidated affiliates	205	1
	Income taxes payable	187	336
	Deferred income taxes	-	31
	Trading-related payables	3,182	2,255
	Derivative trading instruments sold, not yet purchased	1,484	1,340
	Commodities sold with agreement to repurchase	513	922
	Dividends and interest payable	123	136
	Regulatory balancing accounts - net	509	424
	Fixed-price contracts and other derivatives	157	148
	Current portion of long-term debt	398	1,433
	Other	776	675

	Current liabilities of continuing operations	9,065	8,517
	Current liabilities of discontinued operations	17	52

	Total current liabilities	9,082	8,569

Long-term debt		4,192	3,841

Deferred credits and other liabilities:
	Due to unconsolidated affiliates	162	362
	Customer advances for construction	97	89
	Postretirement benefits other than pensions	129	131
	Deferred income taxes	420	368
	Deferred investment tax credits	78	84
	Regulatory liabilities arising from cost of removal obligations	2,359	2,238
	Regulatory liabilities arising from asset retirement obligations	333	303
	Other regulatory liabilities	67	109
	Fixed-price contracts and other derivatives	500	680
	Asset retirement obligations	326	313
	Deferred credits and other	854	832

	Total deferred credits and other liabilities	5,325	5,509

Preferred stock of subsidiaries		179	179

Shareholders' equity		4,865	3,890

Total liabilities and shareholders' equity		$ 23,643	$ 21,988

SEMPRA ENERGY
Table C

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

		Years ended
		December 31,

(Dollars in millions)		2004		2003

Cash Flows from Operating Activities:
Net income		$ 895		$ 649
Adjustments to reconcile net income to net cash provided by operating
activities:
	Discontinued operations, net of tax	25		-
	Cumulative effect of changes in accounting principles, net of tax	-		46
	Depreciation and amortization	621		615
	Deferred income taxes and investment tax credits	13		(118)
	Impairment losses	12		101
	Other - net	61		99
Net changes in other working capital components		(427)		(154)
Changes in other assets		(200)		(71)
Changes in other liabilities		(21)		(26)

	Net cash provided by continuing operations	979		1,141
	Net cash used in discontinued operations	(30)		-

	Net cash provided by operating activities	949		1,141

Cash Flows from Investing Activities:
Expenditures for property, plant and equipment		(1,083)		(1,049)
Investments in and acquisitions of subsidiaries, net of cash acquired		(74)		(202)
Proceeds from disposal of discontinued operations		157		-
Net proceeds from sale of assets		372	(1)	29
Dividends received from unconsolidated affiliates		59		72
Affiliate loans		-		(99)
Other - net		10		1

	Net cash used in investing activities	(559)		(1,248)

Cash Flows from Financing Activities:
Common dividends paid		(195)		(182)
Issuances of common stock		110		505
Repurchases of common stock		(5)		(7)
Issuances of long-term debt		997		900
Payments on long-term debt		(1,670)		(601)
Increase (decrease) in short-term debt - net		397		(518)
Other - net		(14)		(8)

	Net cash (used in) provided by financing activities	(380)		89

Increase (decrease) in cash and cash equivalents		10		(18)	(2)
Cash and cash equivalents, January 1		409		427

Cash and cash equivalents, December 31		$ 419		$ 409




(1)	Primarily proceeds from the sale of U.S. Treasury obligations which previously securitized the Mesquite synthetic lease.

(2)	Change from $(23) as reported in prior year reflects reclassification of restricted cash.

SEMPRA ENERGY
Table D


BUSINESS UNIT EARNINGS AND CAPITAL EXPENDITURES & INVESTMENTS (Unaudited)


			Three months ended			Years ended
			December 31,			December 31,

(Dollars in millions)			2004	2003		2004	2003

Net Income
California Utilities:
	San Diego Gas & Electric		$ 68	$ 128		$ 208	$ 334
	Southern California Gas		58	61		232	209

		Total California Utilities	126	189		440	543


Sempra Global:
	Sempra Commodities		171	73		320	157
	Sempra Generation		19	32		137	71
	Sempra Pipelines & Storage		28	10		63	3	(3)
	Sempra LNG		(8)	(2)		(8)	(2)

		Total Sempra Global	210	113		512	229


Sempra Financial			10	9		36	41

Parent & Other			(7)	(60)	(4)	(68)	(118)	(4)


Continuing Operations			339	251		920	695

Discontinued Operations (1)			7	-		(25)	-

Cumulative Effect of Changes in Accounting Principles			-	(17)	(2)	-	(46)	(2)


Consolidated Net Income			$ 346	$ 234		$ 895	$ 649





(1)	Reflects Atlantic Electric & Gas and for the three months ended December 31, 2004 includes $7 related to favorable tax adjustment.
(2)	The effects were ($29) at Sempra Commodities, $9 at Sempra Generation and ($26) at Parent & Other, respectively. The effects at Sempra Generation and Parent & Other were recorded in the three months ended December 31, 2003.
(3)	Includes ($50) write-down of the carrying value of assets of Frontier Energy.

(4)	Includes the ($21) impairment of the carrying value of assets of AEG at Parent & Other.


			Three months ended			Years ended
			December 31,			December 31,

(Dollars in millions)			2004	2003		2004	2003

Capital Expenditures and Investments:
California Utilities:
	San Diego Gas & Electric		$ 131	$ 159		$ 414	$ 444
	Southern California Gas		77	101		311	318

	Total California Utilities		208	260		725	762


Sempra Global:
	Sempra Generation		41	69		194	300
	Sempra Commodities		28	31		131	51
	Sempra Pipelines & Storage		4	13		22	50
	Sempra LNG		20	23		55	51

	Total Sempra Global		93	136		402	452


Parent & Other			4	9		30	37


Consolidated Capital Expenditures and Investments			$ 305	$ 405		$ 1,157	$ 1,251

SEMPRA ENERGY
Table E


OTHER OPERATING STATISTICS (Unaudited)



		Three months ended		Years Ended
		December 31,		December 31,

CALIFORNIA UTILITIES		2004	2003	2004	2003

Revenues (Dollars in millions)
	SDG&E (excludes intercompany sales)	$ 599	$ 557	$ 2,248	$ 2,292
	SoCalGas (excludes intercompany sales)	$ 1,161	$ 911	$ 3,947	$ 3,505

Gas Sales (Bcf)		125	115	413	394
Transportation and Exchange (Bcf)		139	130	550	540

Total Deliveries (Bcf)		264	245	963	934

Total Gas Customers (Thousands)				6,297	6,210

Electric Sales (Millions of kWhs)		3,993	3,817	15,799	15,040
Direct Access (Millions of kWhs)		881	866	3,441	3,322

Total Deliveries (Millions of kWhs)		4,874	4,683	19,240	18,362

Total Electric Customers (Thousands)				1,319	1,296


SEMPRA GENERATION

Power Sold (Millions of kWhs)		5,943	3,787	20,739	11,251


SEMPRA PIPELINES & STORAGE
(Represents 100% of these subsidiaries, although only the Mexican subsidiaries are 100% owned by Sempra Energy).

Natural Gas Sales (Bcf)
	Argentina	60	58	251	232
	Mexico	9	10	42	40
	Chile	1	1	3	3
Natural Gas Customers (Thousands)
	Argentina			1,449	1,404
	Mexico			97	95
	Chile			37	37
Electric Sales (Millions of kWhs)
	Peru	1,024	1,023	4,044	4,032
	Chile	475	453	1,959	1,832
Electric Customers (Thousands)
	Peru			748	732
	Chile			508	496

SEMPRA ENERGY
Table E (Continued)


SEMPRA COMMODITIES


		Three months ended			Years ended
		December 31,			December 31,

Trading Margin (Dollars in millions)*		2004	2003		2004	2003

Geographical:
	North America	$ 300	$ 120		$ 689	$ 439
	Europe/Asia	165	75		338	172

	Total	$ 465	$ 195		$ 1,027	$ 611


Product Line:
	Gas	$ 234	$ 29		$ 314	$ 146
	Power	85	36		166	137
	Oil - Crude & Products	69	51		265	128
	Metals	54	49		179	96
	Other	23	30		103	104

	Total	$ 465	$ 195		$ 1,027	$ 611


* Trading margin consists of net trading revenues less related costs (primarily brokerage, transportation and storage) plus or minus
net interest income/expense.

Physical Statistics

Natural Gas (BcF/Day)		11.9	13.0		13.0	13.3
Electric (Billions of kWhs)		108.1	102.6		373.7	324.4
Oil & Liquid Products (Millions Bbls/Day)		2.1	2.0		2.1	1.7


		Fair
		Market Value
		December 31,	Scheduled Maturity (in months)
Net Unrealized Revenue (Dollars in millions)		2004	0 - 12	13 - 24	25 - 36	> 36

Sources of Over-the-Counter (OTC) Fair Value:
	Prices actively quoted	$ 844	$ 788	$ 12	$ 10	$ 34
	Prices provided by other external sources	23	(14)	-	-	37
	Prices based on models and other valuation methods	(21)	(20)	-	-	(1)

	Total OTC Fair Value (1)	$ 846	$ 754	$ 12	$ 10	$ 70

Maturity of OTC Fair Value

	Percentage	100.0%	89.1%	1.4%	1.2%	8.3%
	Cumulative Percentages		89.1%	90.5%	91.7%	100.0%




Exchange Contracts (2)		$ 347	$ 337	$ 21	$ 8	$ (19)


Total Net Unrealized Revenue		$ 1,193


(1) The present value of unrealized revenue to be received or (paid) from outstanding OTC contracts
(2) Cash received associated with open Exchange Contracts



		December 31,	December 31,
Credit Quality of Unrealized Trading Assets (net of margin)		2004	2003

Commodity Exchanges		10%	8%
Investment Grade		66%	68%
Below Investment Grade		24%	24%

		100%	100%

		Three months ended			Years ended
		December 31,			December 31,

Risk Adjusted Performance Indicators		2004	2003		2004	2003

VaR at 95% (Dollars in millions) (1)		$ 11.2	$ 4.4		$ 7.9	$ 6.5
VaR at 99% (Dollars in millions) (2)		$ 15.7	$ 6.3		$ 11.2	$ 9.2
Risk Adjusted Return on Capital (RAROC) (3)		34%	38%		38%	23%

(1) Average Daily Value-at-Risk for the period using a 95% confidence level
(2) Average Daily Value-at-Risk for the period using a 99% confidence level
(3) Average Daily Trading Margin/Average Daily VaR at 95% confidence level