UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | ||||||||||||
FORM 10-Q | ||||||||||||
(Mark One) | ||||||||||||
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
For the quarterly period ended | March 31, 2018 | |||||||||||
or | ||||||||||||
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
For the transition period from | to | |||||||||||
Commission File No. | Exact Name of Registrants as Specified in their Charters, Address and Telephone Number | State of Incorporation | I.R.S. Employer Identification Nos. | Former name, former address and former fiscal year, if changed since last report | ||||||||
1-14201 | SEMPRA ENERGY | California | 33-0732627 | No change | ||||||||
488 8th Avenue | ||||||||||||
San Diego, California 92101 | ||||||||||||
(619) 696-2000 | ||||||||||||
1-03779 | SAN DIEGO GAS & ELECTRIC COMPANY | California | 95-1184800 | No change | ||||||||
8326 Century Park Court | ||||||||||||
San Diego, California 92123 | ||||||||||||
(619) 696-2000 | ||||||||||||
1-01402 | SOUTHERN CALIFORNIA GAS COMPANY | California | 95-1240705 | No change | ||||||||
555 West Fifth Street | ||||||||||||
Los Angeles, California 90013 | ||||||||||||
(213) 244-1200 | ||||||||||||
Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. | ||||||||||
Yes | X | No |
Indicate by check mark whether the registrants have submitted electronically and posted on their corporate websites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files). | ||||||||||
Yes | X | 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. |
Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company | ||||||||
Sempra Energy | [ X ] | [ ] | [ ] | [ ] | [ ] | |||||||
San Diego Gas & Electric Company | [ ] | [ ] | [ X ] | [ ] | [ ] | |||||||
Southern California Gas Company | [ ] | [ ] | [ X ] | [ ] | [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ||||||||||
Sempra Energy | Yes | No | ||||||||
San Diego Gas & Electric Company | Yes | No | ||||||||
Southern California Gas Company | Yes | No | ||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | ||||||||||
Sempra Energy | Yes | No | X | |||||||
San Diego Gas & Electric Company | Yes | No | X | |||||||
Southern California Gas Company | Yes | No | X | |||||||
Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date. | ||||||||||
Common stock outstanding on May 3, 2018: |
Sempra Energy | 264,137,837 shares |
San Diego Gas & Electric Company | Wholly owned by Enova Corporation, which is wholly owned by Sempra Energy |
Southern California Gas Company | Wholly owned by Pacific Enterprises, which is wholly owned by Sempra Energy |
SEMPRA ENERGY FORM 10-Q SAN DIEGO GAS & ELECTRIC COMPANY FORM 10-Q SOUTHERN CALIFORNIA GAS COMPANY FORM 10-Q TABLE OF CONTENTS | ||
Page | ||
PART I – FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II – OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 6. | ||
GLOSSARY | |
2016 GRC FD | final decision in the California Utilities’ 2016 General Rate Case |
AB | Assembly Bill |
AFUDC | allowance for funds used during construction |
Annual Report | Annual Report on Form 10-K for the year ended December 31, 2017 |
AOCI | accumulated other comprehensive income (loss) |
ASC | Accounting Standards Codification |
ASU | Accounting Standards Update |
Bankruptcy Court | U.S. Bankruptcy Court for the District of Delaware |
Bay Gas | Bay Gas Storage Company, Ltd. |
Bcf | billion cubic feet |
bps | basis points |
California Utilities | San Diego Gas & Electric Company and Southern California Gas Company, collectively |
Cameron LNG JV | Cameron LNG Holdings, LLC |
CARB | California Air Resources Board |
CCA | Community Choice Aggregation |
CCM | cost of capital adjustment mechanism |
CEC | California Energy Commission |
CEQA | California Environmental Quality Act |
CFE | Comisión Federal de Electricidad (Federal Electricity Commission in Mexico) |
Chilquinta Energía | Chilquinta Energía S.A. and its subsidiaries |
CPCN | Certificate of Public Convenience and Necessity |
CPI | Consumer Price Index |
CPUC | California Public Utilities Commission |
CRE | Comisión Reguladora de Energía (Energy Regulatory Commission in Mexico) |
CRR | congestion revenue right |
DA | Direct Access |
DOE | U.S. Department of Energy |
DOGGR | California Department of Conservation’s Division of Oil, Gas, and Geothermal Resources |
DPH | Los Angeles County Department of Public Health |
ECA | Energía Costa Azul |
Ecogas | Ecogas México, S. de R.L. de C.V. |
Edison | Southern California Edison Company, a subsidiary of Edison International |
EFH | Energy Future Holdings Corp. (renamed Sempra Texas Holdings Corp.) |
EFIH | Energy Future Intermediate Holding Company LLC (renamed Sempra Texas Intermediate Holding Company LLC) |
EIR | environmental impact review |
Eletrans | Eletrans S.A., Eletrans II S.A. and Eletrans III S.A., collectively |
EPA | U.S. Environmental Protection Agency |
EPC | engineering, procurement and construction |
EPS | earnings per common share |
ERCOT | Electric Reliability Council of Texas, Inc., the independent system operator and the regional coordinator of various electricity systems within Texas |
ETR | effective income tax rate |
EV | electric vehicle |
FASB | Financial Accounting Standards Board |
FERC | Federal Energy Regulatory Commission |
FTA | Free Trade Agreement |
GCIM | Gas Cost Incentive Mechanism |
GHG | greenhouse gas |
GRC | General Rate Case |
HLBV | hypothetical liquidation at book value |
HMRC | United Kingdom’s Revenue and Customs Department |
IEnova | Infraestructura Energética Nova, S.A.B. de C.V. |
IMG | Infraestructura Marina del Golfo |
IOU | investor-owned utility |
IRC | U.S. Internal Revenue Code of 1986 (as amended) |
IRS | Internal Revenue Service |
ISFSI | independent spent fuel storage installation |
ISO | Independent System Operator |
GLOSSARY (CONTINUED) | |
JP Morgan | J.P. Morgan Chase & Co. |
kV | kilovolt |
LA Storage | LA Storage, LLC |
LA Superior Court | Los Angeles County Superior Court |
the Leak | The leak at the SoCalGas Aliso Canyon natural gas storage facility injection-and-withdrawal well, SS25, discovered by SoCalGas on October 23, 2015 |
LNG | liquefied natural gas |
LPG | liquid petroleum gas |
Luz del Sur | Luz del Sur S.A.A. and its subsidiaries |
MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Merger | The merger of EFH with an indirect subsidiary of Sempra Energy, with EFH continuing as the surviving company and as an indirect, wholly owned subsidiary of Sempra Energy |
Merger Agreement | Agreement and Plan of Merger dated August 21, 2017, as supplemented by a Waiver Agreement dated October 3, 2017 and an amendment dated February 15, 2018, between Sempra Energy, EFH, EFIH and an indirect subsidiary of Sempra Energy |
Merger Consideration | Pursuant to the Merger Agreement, Sempra Energy paid consideration of $9.45 billion in cash |
MHI | Mitsubishi Heavy Industries, Ltd., Mitsubishi Nuclear Energy Systems, Inc., and Mitsubishi Heavy Industries America, Inc., collectively |
Mississippi Hub | Mississippi Hub, LLC |
MMBtu | million British thermal units (of natural gas) |
Mtpa | million tonnes per annum |
MW | megawatt |
MWh | megawatt hour |
NAFTA | North American Free Trade Agreement |
NCI | noncontrolling interest(s) |
NDT | nuclear decommissioning trusts |
NEIL | Nuclear Electric Insurance Limited |
NOL | net operating loss |
NRC | Nuclear Regulatory Commission |
OCI | other comprehensive income (loss) |
OII | Order Instituting Investigation |
OIR | Order Instituting a Rulemaking |
O&M | operation and maintenance expense |
OMEC | Otay Mesa Energy Center |
OMEC LLC | Otay Mesa Energy Center LLC |
OMI | Oncor Management Investment LLC |
Oncor | Oncor Electric Delivery Company LLC |
Oncor Holdings | Oncor Electric Delivery Holdings Company LLC |
ORA | CPUC Office of Ratepayer Advocates |
Otay Mesa VIE | OMEC LLC VIE |
PEMEX | Petróleos Mexicanos (Mexican state-owned oil company) |
PG&E | Pacific Gas and Electric Company |
PHMSA | Pipeline and Hazardous Materials Safety Administration |
PPA | power purchase agreement |
PSEP | Pipeline Safety Enhancement Plan |
PSRP | Pipeline Safety & Reliability Project |
PUCT | Public Utility Commission of Texas |
PURA | Public Utility Regulatory Act |
RAMP | Risk Assessment Mitigation Phase |
RBS | The Royal Bank of Scotland plc |
RBS SEE | RBS Sempra Energy Europe |
RBS Sempra Commodities | RBS Sempra Commodities LLP |
ROE | return on equity |
RSA | restricted stock award |
RSU | restricted stock unit |
SB | Senate Bill |
SCAQMD | South Coast Air Quality Management District |
SDG&E | San Diego Gas & Electric Company |
SEC | U.S. Securities and Exchange Commission |
SEDATU | Secretaría de Desarrollo Agrario, Territorial y Urbano (Mexican agency in charge of agriculture, land and urban development) |
Sempra Global | holding company for most of Sempra Energy’s subsidiaries not subject to California or Texas utility regulation |
GLOSSARY (CONTINUED) | |
SFP | secondary financial protection |
SGRP | Steam Generator Replacement Project |
SoCalGas | Southern California Gas Company |
SONGS | San Onofre Nuclear Generating Station |
SONGS OII | CPUC’s Order Instituting Investigation into the SONGS Outage |
TAG | TAG Pipelines Norte, S. de R.L. de C.V. |
TCJA | Tax Cuts and Jobs Act of 2017 |
TdM | Termoeléctrica de Mexicali |
Tecnored | Tecnored S.A. |
Tecsur | Tecsur S.A. |
TTI | Texas Transmission Investment LLC |
TURN | The Utility Reform Network |
U.S. GAAP | accounting principles generally accepted in the United States of America |
VAT | value-added tax |
VIE | variable interest entity |
▪ | actions and the timing of actions, including decisions, new regulations, and issuances of permits and other authorizations by the CPUC, DOE, DOGGR, FERC, EPA, PHMSA, DPH, PUCT, states, cities and counties, and other regulatory and governmental bodies in the U.S. and other countries in which we operate; |
▪ | the timing and success of business development efforts and construction projects, including risks in obtaining or maintaining permits and other authorizations on a timely basis, risks in completing construction projects on schedule and on budget, and risks in obtaining the consent and participation of partners and counterparties; |
▪ | the resolution of civil and criminal litigation and regulatory investigations; |
▪ | deviations from regulatory precedent or practice that result in a reallocation of benefits or burdens among shareholders and ratepayers; denial of approvals of proposed settlements or modifications of settlements; and delays in, or disallowance or denial of, regulatory agency authorizations to recover costs in rates from customers (including with respect to amounts associated with the SONGS facility and 2007 wildfires) or regulatory agency approval for projects required to enhance safety and reliability, any of which may raise our cost of capital and materially impair our ability to finance our operations; |
▪ | the greater degree and prevalence of wildfires in California in recent years and risk that we may be found liable for damages regardless of fault, such as in cases where inverse condemnation applies, and risk that we may not be able to recover any such costs in rates from customers in California; |
▪ | the availability of electric power, natural gas and liquefied natural gas, and natural gas pipeline and storage capacity, including disruptions caused by failures in the transmission grid, moratoriums or limitations on the withdrawal or injection of natural gas from or into storage facilities, and equipment failures; |
▪ | changes in energy markets; volatility in commodity prices; moves to reduce or eliminate reliance on natural gas; and the impact on the value of our investments in natural gas storage and related assets from low natural gas prices, low volatility of natural gas prices and the inability to procure favorable long-term contracts for storage services; |
▪ | risks posed by actions of third parties who control the operations of our investments, and risks that our partners or counterparties will be unable or unwilling to fulfill their contractual commitments; |
▪ | weather conditions, natural disasters, accidents, equipment failures, computer system outages, explosions, terrorist attacks and other events that disrupt our operations, damage our facilities and systems, cause the release of GHG, radioactive materials and harmful emissions, cause wildfires and subject us to third-party 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 insurance, to the extent that such insurance is available or not prohibitively expensive; |
▪ | 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; |
▪ | capital markets and economic conditions, including the availability of credit and the liquidity of our investments; and fluctuations in inflation, interest and currency exchange rates and our ability to effectively hedge the risk of such fluctuations; |
▪ | the impact of recent federal tax reform and uncertainty as to how it may be applied, and our ability to mitigate adverse impacts; |
▪ | actions by credit rating agencies to downgrade our credit ratings or those of our subsidiaries or to place those ratings on negative outlook; |
▪ | changes in foreign and domestic trade policies and laws, including border tariffs, and revisions to international trade agreements, such as NAFTA, that make us less competitive or impair our ability to resolve trade disputes; |
▪ | the ability to win competitively bid infrastructure projects against a number of strong and aggressive competitors; |
▪ | expropriation of assets by foreign governments and title and other property disputes; |
▪ | the impact on reliability of SDG&E’s electric transmission and distribution system due to increased amount and variability of power supply from renewable energy sources; |
▪ | the impact on competitive customer rates due to the growth in distributed and local power generation and the corresponding decrease in demand for power delivered through SDG&E’s electric transmission and distribution system and from possible departing retail load resulting from customers transferring to DA and CCA or other forms of distributed and local power generation and the potential risk of nonrecovery for stranded assets and contractual obligations; |
▪ | the ability to realize the anticipated benefits from our investment in Oncor Holdings; |
▪ | the ability to obtain additional permanent equity financing for the acquisition of our investment in Oncor Holdings on favorable terms; |
▪ | indebtedness we have incurred to fund the acquisition of our investment in Oncor Holdings, which may make it more difficult for us to repay or refinance our debt or may require us to take other actions that may decrease business flexibility and increase borrowing costs; |
▪ | Oncor’s ability to eliminate or reduce its quarterly dividends due to its requirement to meet and maintain its regulatory capital structure, or because any of the three major credit rating agencies rates Oncor's senior secured debt securities below BBB (or the equivalent) or Oncor's independent directors or a minority member director determine it is in the best interest of Oncor to retain such amounts to meet future capital expenditures; and |
▪ | other uncertainties, some of which may be difficult to predict and are beyond our control. |
SEMPRA ENERGY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(Dollars in millions, except per share amounts) | |||||||
Three months ended March 31, | |||||||
2018 | 2017(1) | ||||||
(unaudited) | |||||||
REVENUES | |||||||
Utilities | $ | $ | |||||
Energy-related businesses | |||||||
Total revenues | |||||||
EXPENSES AND OTHER INCOME | |||||||
Utilities: | |||||||
Cost of electric fuel and purchased power | ( | ) | ( | ) | |||
Cost of natural gas | ( | ) | ( | ) | |||
Energy-related businesses: | |||||||
Cost of natural gas, electric fuel and purchased power | ( | ) | ( | ) | |||
Other cost of sales | ( | ) | ( | ) | |||
Operation and maintenance | ( | ) | ( | ) | |||
Depreciation and amortization | ( | ) | ( | ) | |||
Franchise fees and other taxes | ( | ) | ( | ) | |||
Other income, net | |||||||
Interest income | |||||||
Interest expense | ( | ) | ( | ) | |||
Income before income taxes and equity losses of unconsolidated subsidiaries | |||||||
Income tax expense | ( | ) | ( | ) | |||
Equity losses | ( | ) | ( | ) | |||
Net income | |||||||
Losses (earnings) attributable to noncontrolling interests | ( | ) | |||||
Mandatory convertible preferred stock dividends | ( | ) | |||||
Earnings attributable to common shares | $ | $ | |||||
Basic earnings per common share | $ | $ | |||||
Weighted-average number of shares outstanding, basic (thousands) | |||||||
Diluted earnings per common share | $ | $ | |||||
Weighted-average number of shares outstanding, diluted (thousands) | |||||||
Dividends declared per share of common stock | $ | $ |
(1) |
SEMPRA ENERGY | |||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Sempra Energy shareholders’ equity | |||||||||||||||||||
Pretax amount | Income tax expense | Net-of-tax amount | Noncontrolling interests (after-tax) | Total | |||||||||||||||
Three months ended March 31, 2018 and 2017 | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
2018: | |||||||||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustments | |||||||||||||||||||
Financial instruments | ( | ) | |||||||||||||||||
Pension and other postretirement benefits | ( | ) | |||||||||||||||||
Total other comprehensive income | ( | ) | |||||||||||||||||
Comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||
Mandatory convertible preferred stock dividends | ( | ) | ( | ) | ( | ) | |||||||||||||
Comprehensive income (loss), after | |||||||||||||||||||
preferred dividends | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||
2017: | |||||||||||||||||||
Net income | $ | $ | ( | ) | $ | $ | $ | ||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustments | |||||||||||||||||||
Financial instruments | ( | ) | |||||||||||||||||
Pension and other postretirement benefits | ( | ) | |||||||||||||||||
Total other comprehensive income | ( | ) | |||||||||||||||||
Comprehensive income | $ | $ | ( | ) | $ | $ | $ |
SEMPRA ENERGY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in millions) | |||||||
March 31, 2018 | December 31, 2017(1) | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash | |||||||
Accounts receivable – trade, net | |||||||
Accounts receivable – other, net | |||||||
Due from unconsolidated affiliates | |||||||
Income taxes receivable | |||||||
Inventories | |||||||
Regulatory assets | |||||||
Fixed-price contracts and other derivatives | |||||||
Greenhouse gas allowances | |||||||
Assets held for sale | |||||||
Other | |||||||
Total current assets | |||||||
Other assets: | |||||||
Restricted cash | |||||||
Due from unconsolidated affiliates | |||||||
Regulatory assets | |||||||
Nuclear decommissioning trusts | |||||||
Investment in Oncor Holdings | |||||||
Other investments | |||||||
Goodwill | |||||||
Other intangible assets | |||||||
Dedicated assets in support of certain benefit plans | |||||||
Insurance receivable for Aliso Canyon costs | |||||||
Deferred income taxes | |||||||
Greenhouse gas allowances | |||||||
Sundry | |||||||
Total other assets | |||||||
Property, plant and equipment: | |||||||
Property, plant and equipment | |||||||
Less accumulated depreciation and amortization | ( | ) | ( | ) | |||
Property, plant and equipment, net ($316 and $321 at March 31, 2018 and December 31, 2017, respectively, related to VIE) | |||||||
Total assets | $ | $ |
(1) |
SEMPRA ENERGY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||
(Dollars in millions) | |||||||
March 31, 2018 | December 31, 2017(1) | ||||||
(unaudited) | |||||||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | $ | |||||
Accounts payable – trade | |||||||
Accounts payable – other | |||||||
Due to unconsolidated affiliates | |||||||
Dividends and interest payable | |||||||
Accrued compensation and benefits | |||||||
Regulatory liabilities | |||||||
Current portion of long-term debt | |||||||
Fixed-price contracts and other derivatives | |||||||
Customer deposits | |||||||
Reserve for Aliso Canyon costs | |||||||
Greenhouse gas obligations | |||||||
Liabilities held for sale | |||||||
Other | |||||||
Total current liabilities | |||||||
Long-term debt ($282 and $284 at March 31, 2018 and December 31, 2017, respectively, related to VIE) | |||||||
Deferred credits and other liabilities: | |||||||
Customer advances for construction | |||||||
Due to unconsolidated affiliates | |||||||
Pension and other postretirement benefit plan obligations, net of plan assets | |||||||
Deferred income taxes | |||||||
Deferred investment tax credits | |||||||
Regulatory liabilities | |||||||
Asset retirement obligations | |||||||
Fixed-price contracts and other derivatives | |||||||
Greenhouse gas obligations | |||||||
Deferred credits and other | |||||||
Total deferred credits and other liabilities | |||||||
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) | |||||||
Common stock (750 million shares authorized; 264 million and 251 million shares outstanding at March 31, 2018 and December 31, 2017, respectively; no par value) | |||||||
Retained earnings | |||||||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Total Sempra Energy shareholders’ equity | |||||||
Preferred stock of subsidiary | |||||||
Other noncontrolling interests | |||||||
Total equity | |||||||
Total liabilities and equity | $ | $ |
(1) | Derived from audited financial statements. |
SEMPRA ENERGY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017(1) | ||||||
(unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Deferred income taxes and investment tax credits | |||||||
Equity losses | |||||||
Fixed-price contracts and other derivatives | ( | ) | ( | ) | |||
Other | ( | ) | |||||
Net change in other working capital components | |||||||
Insurance receivable for Aliso Canyon costs | ( | ) | ( | ) | |||
Changes in other assets | ( | ) | ( | ) | |||
Changes in other liabilities | |||||||
Net cash provided by operating activities | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Expenditures for property, plant and equipment | ( | ) | ( | ) | |||
Expenditures for investments and acquisitions, net of cash and cash equivalents acquired | ( | ) | ( | ) | |||
Distributions from investments | |||||||
Purchases of nuclear decommissioning trust assets | ( | ) | ( | ) | |||
Proceeds from sales by nuclear decommissioning trusts | |||||||
Advances to unconsolidated affiliates | ( | ) | ( | ) | |||
Repayments of advances to unconsolidated affiliates | |||||||
Other | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Common dividends paid | ( | ) | ( | ) | |||
Issuances of mandatory convertible preferred stock, net of $32 in offering costs | |||||||
Issuances of common stock, net of $24 in offering costs | |||||||
Repurchases of common stock | ( | ) | ( | ) | |||
Issuances of debt (maturities greater than 90 days) | |||||||
Payments on debt (maturities greater than 90 days) | ( | ) | ( | ) | |||
Increase (decrease) in short-term debt, net | ( | ) | |||||
Settlement of cross-currency swaps | ( | ) | |||||
Other | ( | ) | ( | ) | |||
Net cash provided by (used in) financing activities | ( | ) | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | |||||||
Decrease in cash, cash equivalents and restricted cash | ( | ) | ( | ) | |||
Cash, cash equivalents and restricted cash, January 1 | |||||||
Cash, cash equivalents and restricted cash, March 31 | $ | $ |
(1) |
SEMPRA ENERGY | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) | ||||||||
(Dollars in millions) | ||||||||
Three months ended March 31, | ||||||||
2018 | 2017(1) | |||||||
(unaudited) | ||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
Interest payments, net of amounts capitalized | $ | $ | ||||||
Income tax payments, net of refunds | ||||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||||||||
Acquisition: | ||||||||
Assets acquired | $ | $ | ||||||
Liabilities assumed | ( | ) | ||||||
Cash paid | $ | $ | ||||||
Accrued capital expenditures | $ | $ | ||||||
Accrued Merger-related transaction and financing costs | ||||||||
Increase in capital lease obligations for investment in property, plant and equipment | ||||||||
Equitization of note receivable due from unconsolidated affiliate | ||||||||
Preferred dividends declared but not paid | ||||||||
Common dividends issued in stock | ||||||||
Common dividends declared but not paid |
(1) | As adjusted for the retrospective adoption of ASU 2016-18, which we discuss in Note 2. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017(1) | ||||||
(unaudited) | |||||||
Operating revenues | |||||||
Electric | $ | $ | |||||
Natural gas | |||||||
Total operating revenues | |||||||
Operating expenses | |||||||
Cost of electric fuel and purchased power | |||||||
Cost of natural gas | |||||||
Operation and maintenance | |||||||
Depreciation and amortization | |||||||
Franchise fees and other taxes | |||||||
Total operating expenses | |||||||
Operating income | |||||||
Other income, net | |||||||
Interest income | |||||||
Interest expense | ( | ) | ( | ) | |||
Income before income taxes | |||||||
Income tax expense | ( | ) | ( | ) | |||
Net income | |||||||
Losses (earnings) attributable to noncontrolling interest | ( | ) | |||||
Earnings attributable to common shares | $ | $ |
(1) | As adjusted for the retrospective adoption of ASU 2017-07, which we discuss in Note 2. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
SDG&E shareholder’s equity | |||||||||||||||||||
Pretax amount | Income tax expense | Net-of-tax amount | Noncontrolling interest (after-tax) | Total | |||||||||||||||
Three months ended March 31, 2018 and 2017 | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
2018: | |||||||||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Financial instruments | |||||||||||||||||||
Total other comprehensive income | |||||||||||||||||||
Comprehensive income | $ | $ | ( | ) | $ | $ | $ | ||||||||||||
2017: | |||||||||||||||||||
Net income | $ | $ | ( | ) | $ | $ | $ | ||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Financial instruments | |||||||||||||||||||
Total other comprehensive income | |||||||||||||||||||
Comprehensive income | $ | $ | ( | ) | $ | $ | $ |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in millions) | |||||||
March 31, 2018 | December 31, 2017(1) | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash | |||||||
Accounts receivable – trade, net | |||||||
Accounts receivable – other, net | |||||||
Inventories | |||||||
Prepaid expenses | |||||||
Regulatory assets | |||||||
Fixed-price contracts and other derivatives | |||||||
Greenhouse gas allowances | |||||||
Other | |||||||
Total current assets | |||||||
Other assets: | |||||||
Restricted cash | |||||||
Regulatory assets | |||||||
Nuclear decommissioning trusts | |||||||
Greenhouse gas allowances | |||||||
Sundry | |||||||
Total other assets | |||||||
Property, plant and equipment: | |||||||
Property, plant and equipment | |||||||
Less accumulated depreciation and amortization | ( | ) | ( | ) | |||
Property, plant and equipment, net ($316 and $321 at March 31, 2018 and December 31, 2017, respectively, related to VIE) | |||||||
Total assets | $ | $ |
(1) | Derived from audited financial statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||
(Dollars in millions) | |||||||
March 31, 2018 | December 31, 2017(1) | ||||||
(unaudited) | |||||||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | $ | |||||
Accounts payable | |||||||
Due to unconsolidated affiliates | |||||||
Interest payable | |||||||
Accrued compensation and benefits | |||||||
Accrued franchise fees | |||||||
Current portion of long-term debt | |||||||
Asset retirement obligations | |||||||
Regulatory liabilities | |||||||
Fixed-price contracts and other derivatives | |||||||
Customer deposits | |||||||
Greenhouse gas obligations | |||||||
Other | |||||||
Total current liabilities | |||||||
Long-term debt ($282 and $284 at March 31, 2018 and December 31, 2017, respectively, related to VIE) | |||||||
Deferred credits and other liabilities: | |||||||
Customer advances for construction | |||||||
Pension and other postretirement benefit plan obligations, net of plan assets | |||||||
Deferred income taxes | |||||||
Deferred investment tax credits | |||||||
Regulatory liabilities | |||||||
Asset retirement obligations | |||||||
Fixed-price contracts and other derivatives | |||||||
Greenhouse gas obligations | |||||||
Deferred credits and other | |||||||
Total deferred credits and other liabilities | |||||||
Commitments and contingencies (Note 11) | |||||||
Equity: | |||||||
Preferred stock (45 million shares authorized; none issued) | |||||||
Common stock (255 million shares authorized; 117 million shares outstanding; no par value) | |||||||
Retained earnings | |||||||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Total SDG&E shareholder’s equity | |||||||
Noncontrolling interest | |||||||
Total equity | |||||||
Total liabilities and equity | $ | $ |
(1) | Derived from audited financial statements. |
SAN DIEGO GAS & ELECTRIC COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017(1) | ||||||
(unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Deferred income taxes and investment tax credits | ( | ) | |||||
Other | ( | ) | |||||
Net change in other working capital components | |||||||
Changes in other assets | ( | ) | ( | ) | |||
Changes in other liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Expenditures for property, plant and equipment | ( | ) | ( | ) | |||
Purchases of nuclear decommissioning trust assets | ( | ) | ( | ) | |||
Proceeds from sales by nuclear decommissioning trusts | |||||||
Decrease in loans to affiliate, net | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Common dividends paid | ( | ) | |||||
Payments on debt (maturities greater than 90 days) | ( | ) | ( | ) | |||
Increase in short-term debt, net | |||||||
Capital distributions made by VIE, net | ( | ) | |||||
Net cash provided by financing activities | |||||||
(Decrease) increase in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash, January 1 | |||||||
Cash, cash equivalents and restricted cash, March 31 | $ | $ | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||
Interest payments, net of amounts capitalized | $ | $ | |||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITY | |||||||
Accrued capital expenditures | $ | $ |
(1) | As adjusted for the retrospective adoption of ASU 2016-18, which we discuss in Note 2. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||
CONDENSED STATEMENTS OF OPERATIONS | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017(1) | ||||||
(unaudited) | |||||||
Operating revenues | $ | $ | |||||
Operating expenses | |||||||
Cost of natural gas | |||||||
Operation and maintenance | |||||||
Depreciation and amortization | |||||||
Franchise fees and other taxes | |||||||
Total operating expenses | |||||||
Operating income | |||||||
Other income, net | |||||||
Interest expense | ( | ) | ( | ) | |||
Income before income taxes | |||||||
Income tax expense | ( | ) | ( | ) | |||
Net Income/Earnings attributable to common shares | $ | $ |
(1) | As adjusted for the retrospective adoption of ASU 2017-07, which we discuss in Note 2. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||||||
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||
(Dollars in millions) | |||||||||||
Pretax amount | Income tax expense | Net-of-tax amount | |||||||||
Three months ended March 31, 2018 and 2017 | |||||||||||
(unaudited) | |||||||||||
2018: | |||||||||||
Net income/Comprehensive income | $ | $ | ( | ) | $ | ||||||
2017: | |||||||||||
Net income/Comprehensive income | $ | $ | ( | ) | $ |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||
CONDENSED BALANCE SHEETS | |||||||
(Dollars in millions) | |||||||
March 31, 2018 | December 31, 2017(1) | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable – trade, net | |||||||
Accounts receivable – other, net | |||||||
Due from unconsolidated affiliates | |||||||
Income taxes receivable | |||||||
Inventories | |||||||
Regulatory assets | |||||||
Greenhouse gas allowances | |||||||
Other | |||||||
Total current assets | |||||||
Other assets: | |||||||
Regulatory assets | |||||||
Insurance receivable for Aliso Canyon costs | |||||||
Greenhouse gas allowances | |||||||
Sundry | |||||||
Total other assets | |||||||
Property, plant and equipment: | |||||||
Property, plant and equipment | |||||||
Less accumulated depreciation and amortization | ( | ) | ( | ) | |||
Property, plant and equipment, net | |||||||
Total assets | $ | $ |
(1) | Derived from audited financial statements. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||
CONDENSED BALANCE SHEETS (CONTINUED) | |||||||
(Dollars in millions) | |||||||
March 31, 2018 | December 31, 2017(1) | ||||||
(unaudited) | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | $ | |||||
Accounts payable – trade | |||||||
Accounts payable – other | |||||||
Due to unconsolidated affiliates | |||||||
Accrued compensation and benefits | |||||||
Regulatory liabilities | |||||||
Current portion of long-term debt | |||||||
Customer deposits | |||||||
Reserve for Aliso Canyon costs | |||||||
Greenhouse gas obligations | |||||||
Other | |||||||
Total current liabilities | |||||||
Long-term debt | |||||||
Deferred credits and other liabilities: | |||||||
Customer advances for construction | |||||||
Pension obligation, net of plan assets | |||||||
Deferred income taxes | |||||||
Deferred investment tax credits | |||||||
Regulatory liabilities | |||||||
Asset retirement obligations | |||||||
Greenhouse gas obligations | |||||||
Deferred credits and other | |||||||
Total deferred credits and other liabilities | |||||||
Commitments and contingencies (Note 11) | |||||||
Shareholders’ equity: | |||||||
Preferred stock (11 million shares authorized; 1 million shares outstanding) | |||||||
Common stock (100 million shares authorized; 91 million shares outstanding; | |||||||
no par value) | |||||||
Retained earnings | |||||||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Total shareholders’ equity | |||||||
Total liabilities and shareholders’ equity | $ | $ |
(1) | Derived from audited financial statements. |
SOUTHERN CALIFORNIA GAS COMPANY | |||||||
CONDENSED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Deferred income taxes and investment tax credits | |||||||
Other | ( | ) | |||||
Net change in other working capital components | |||||||
Insurance receivable for Aliso Canyon costs | ( | ) | ( | ) | |||
Changes in other assets | ( | ) | ( | ) | |||
Changes in other liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Expenditures for property, plant and equipment | ( | ) | ( | ) | |||
Increase in loans to affiliate, net | ( | ) | |||||
Other | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Decrease in short-term debt, net | ( | ) | ( | ) | |||
Net cash used in financing activities | ( | ) | ( | ) | |||
Increase in cash and cash equivalents | |||||||
Cash and cash equivalents, January 1 | |||||||
Cash and cash equivalents, March 31 | $ | $ | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||
Interest payments, net of amounts capitalized | $ | $ | |||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | |||||||
Accrued capital expenditures | $ | $ | |||||
Increase in capital lease obligations for investment in property, plant and equipment |
▪ | Sempra Utilities, which includes our SDG&E, SoCalGas, Sempra South American Utilities and our newly formed Sempra Texas Utility reportable segments. We discuss our new Sempra Texas Utility reportable segment in Notes 5 and 6; and |
▪ | Sempra Infrastructure, which includes our Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream reportable segments. |
▪ | 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; and |
▪ | the Condensed Financial Statements and related Notes of SoCalGas. |
SEMPRA ENERGY – RECLASSIFICATION | ||||||||||||
(Dollars in millions) | ||||||||||||
Three months ended March 31, 2017 | ||||||||||||
As previously presented | As currently presented | |||||||||||
Condensed Consolidated Statement of Operations: | ||||||||||||
Equity earnings, before income tax | $ | $ | — | |||||||||
Income before income taxes and equity losses of certain | ||||||||||||
unconsolidated subsidiaries | — | |||||||||||
Income before income taxes and equity losses of | ||||||||||||
unconsolidated subsidiaries | — | |||||||||||
Equity losses, net of income tax | ( | ) | — | |||||||||
Equity losses | — | ( | ) |
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||
(Dollars in millions) | |||
March 31, | |||
2018 | |||
Sempra Energy Consolidated: | |||
Cash and cash equivalents | $ | ||
Restricted cash, current | |||
Restricted cash, noncurrent | |||
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statement of Cash Flows | $ | ||
SDG&E: | |||
Cash and cash equivalents | $ | ||
Restricted cash, current | |||
Restricted cash, noncurrent | |||
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statement of Cash Flows | $ |
INVENTORY BALANCES | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||
Natural gas | LNG | Materials and supplies | Total | |||||||||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2018 | December 31, 2017 | March 31, 2018 | December 31, 2017 | March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||
SDG&E | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
SoCalGas | ||||||||||||||||||||||||||||||||||
Sempra South American Utilities | ||||||||||||||||||||||||||||||||||
Sempra Mexico | ||||||||||||||||||||||||||||||||||
Sempra Renewables | ||||||||||||||||||||||||||||||||||
Sempra LNG & Midstream | ||||||||||||||||||||||||||||||||||
Sempra Energy Consolidated | $ | $ | $ | $ | $ | $ | $ | $ |
CAPITALIZED FINANCING COSTS | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Sempra Energy Consolidated | $ | $ | |||||
SDG&E | |||||||
SoCalGas |
▪ | 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 |
▪ |
AMOUNTS ASSOCIATED WITH OTAY MESA VIE | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Operating expenses | |||||||
Cost of electric fuel and purchased power | $ | ( | ) | $ | ( | ) | |
Operation and maintenance | |||||||
Depreciation and amortization | |||||||
Total operating expenses | ( | ) | ( | ) | |||
Operating income | |||||||
Interest expense | ( | ) | ( | ) | |||
(Losses) income before income taxes/Net (loss) income | ( | ) | |||||
Losses (earnings) attributable to noncontrolling interest | ( | ) | |||||
Earnings attributable to common shares | $ | $ |
AMOUNTS ASSOCIATED WITH TAX EQUITY ARRANGEMENTS | ||||||||
(Dollars in millions) | ||||||||
Three months ended March 31, | ||||||||
2018 | 2017 | |||||||
REVENUES | ||||||||
Energy-related businesses | $ | $ | ||||||
EXPENSES | ||||||||
Operation and maintenance | ( | ) | ( | ) | ||||
Depreciation and amortization | ( | ) | ( | ) | ||||
Income before income taxes | ||||||||
Income tax expense | ( | ) | ( | ) | ||||
Net (loss) income | ( | ) | ||||||
Losses attributable to noncontrolling interests(1) | ||||||||
Earnings | $ | $ |
(1) |
NET PERIODIC BENEFIT COST – SEMPRA ENERGY CONSOLIDATED | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Pension benefits | Other postretirement benefits | ||||||||||||||
Three months ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Expected return on assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of: | |||||||||||||||
Prior service cost | |||||||||||||||
Actuarial loss (gain) | ( | ) | ( | ) | |||||||||||
Settlements | |||||||||||||||
Net periodic benefit cost (credit) | ( | ) | ( | ) | |||||||||||
Regulatory adjustment | ( | ) | ( | ) | |||||||||||
Total expense recognized | $ | $ | $ | $ |
NET PERIODIC BENEFIT COST – SDG&E | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Pension benefits | Other postretirement benefits | ||||||||||||||
Three months ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Expected return on assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of: | |||||||||||||||
Prior service cost | |||||||||||||||
Actuarial loss (gain) | ( | ) | |||||||||||||
Settlements | |||||||||||||||
Net periodic benefit cost | |||||||||||||||
Regulatory adjustment | ( | ) | ( | ) | ( | ) | |||||||||
Total expense recognized | $ | $ | $ | $ |
NET PERIODIC BENEFIT COST – SOCALGAS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Pension benefits | Other postretirement benefits | ||||||||||||||
Three months ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Expected return on assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of: | |||||||||||||||
Prior service cost (credit) | ( | ) | ( | ) | |||||||||||
Actuarial loss | |||||||||||||||
Net periodic benefit cost (credit) | ( | ) | ( | ) | |||||||||||
Regulatory adjustment | ( | ) | ( | ) | |||||||||||
Total expense recognized | $ | $ | $ | $ |
BENEFIT PLAN CONTRIBUTIONS | ||||||||||||
(Dollars in millions) | ||||||||||||
Sempra Energy Consolidated | SDG&E | SoCalGas | ||||||||||
Contributions through March 31, 2018: | ||||||||||||
Pension plans | $ | $ | $ | |||||||||
Other postretirement benefit plans | ||||||||||||
Total expected contributions in 2018: | ||||||||||||
Pension plans | $ | $ | $ | |||||||||
Other postretirement benefit plans |
EARNINGS PER COMMON SHARE COMPUTATIONS | |||||||
(Dollars in millions, except per share amounts; shares in thousands) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Numerator: | |||||||
Earnings/Income attributable to common shares | $ | $ | |||||
Denominator: | |||||||
Weighted-average common shares outstanding for basic EPS(1) | |||||||
Dilutive effect of stock options, RSAs and RSUs(2) | |||||||
Dilutive effect of common stock shares sold forward | |||||||
Weighted-average common shares outstanding for diluted EPS | |||||||
EPS: | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ |
(1) | Includes |
(2) | 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 8 of the Notes to Consolidated Financial Statements in the Annual Report, dilutive RSUs may vary widely from period-to-period. |
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, 2018 and 2017 | |||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||
Balance as of December 31, 2017 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Cumulative-effect adjustment from change in accounting principle | ( | ) | ( | ) | |||||||||||
OCI before reclassifications | |||||||||||||||
Amounts reclassified from AOCI | ( | ) | ( | ) | |||||||||||
Net OCI | |||||||||||||||
Balance as of March 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
. | |||||||||||||||
Balance as of December 31, 2016 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
OCI before reclassifications | ( | ) | |||||||||||||
Amounts reclassified from AOCI | |||||||||||||||
Net OCI | |||||||||||||||
Balance as of March 31, 2017 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
SDG&E: | |||||||||||||||
Balance as of December 31, 2017 and March 31, 2018 | $ | ( | ) | $ | ( | ) | |||||||||
Balance as of December 31, 2016 and March 31, 2017 | $ | ( | ) | $ | ( | ) | |||||||||
SoCalGas: | |||||||||||||||
Balance as of December 31, 2017 and March 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Balance as of December 31, 2016 and March 31, 2017 | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(1) | All amounts are net of income tax, if subject to tax, and exclude NCI. |
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, | |||||||||
2018 | 2017 | ||||||||
Sempra Energy Consolidated: | |||||||||
Financial instruments: | |||||||||
Interest rate and foreign exchange instruments(1) | $ | ( | ) | $ | ( | ) | Interest Expense | ||
( | ) | Other Income, Net | |||||||
Interest rate and foreign exchange instruments | Equity Losses | ||||||||
Foreign exchange instruments | Revenues: Energy-Related Businesses | ||||||||
Commodity contracts not subject to rate recovery | Revenues: Energy-Related Businesses | ||||||||
Total before income tax | ( | ) | |||||||
( | ) | Income Tax Expense | |||||||
Net of income tax | ( | ) | |||||||
( | ) | Losses (Earnings) Attributable to Noncontrolling Interests | |||||||
$ | ( | ) | $ | ||||||
Pension and other postretirement benefits: | |||||||||
Amortization of actuarial loss(2) | $ | $ | Other Income, Net | ||||||
( | ) | ( | ) | Income Tax Expense | |||||
Net of income tax | $ | $ | |||||||
Total reclassifications for the period, net of tax | $ | ( | ) | $ | |||||
SDG&E: | |||||||||
Financial instruments: | |||||||||
Interest rate instruments(1) | $ | $ | Interest Expense | ||||||
( | ) | ( | ) | Losses (Earnings) Attributable to Noncontrolling Interest | |||||
Total reclassifications for the period, net of tax | $ | $ |
(1) | Amounts 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). |
SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS – SEMPRA ENERGY CONSOLIDATED | |||||||||||
(Dollars in millions) | |||||||||||
Sempra Energy shareholders’ equity | Non- controlling interests(1) | Total equity | |||||||||
Balance at December 31, 2017 | $ | $ | $ | ||||||||
Cumulative-effect adjustment from change in accounting principle | ( | ) | ( | ) | |||||||
Comprehensive income (loss) | ( | ) | |||||||||
Share-based compensation expense | |||||||||||
Mandatory convertible preferred stock dividends declared | ( | ) | ( | ) | |||||||
Common stock dividends declared | ( | ) | ( | ) | |||||||
Issuances of mandatory convertible preferred stock | |||||||||||
Issuances of common stock | |||||||||||
Repurchases of common stock | ( | ) | ( | ) | |||||||
Distributions to noncontrolling interests | ( | ) | ( | ) | |||||||
Balance at March 31, 2018 | $ | $ | $ | ||||||||
Balance at December 31, 2016 | $ | $ | $ | ||||||||
Comprehensive income | |||||||||||
Share-based compensation expense | |||||||||||
Common stock dividends declared | ( | ) | ( | ) | |||||||
Issuances of common stock | |||||||||||
Repurchases of common stock | ( | ) | ( | ) | |||||||
Distributions to noncontrolling interests | ( | ) | ( | ) | |||||||
Balance at March 31, 2017 | $ | $ | $ |
(1) | NCI includes the preferred stock of SoCalGas and other NCI as listed in the table below under “Other Noncontrolling Interests.” |
SHAREHOLDER’S EQUITY AND NONCONTROLLING INTEREST – SDG&E | |||||||||||
(Dollars in millions) | |||||||||||
SDG&E shareholder’s equity | Non- controlling interest | Total equity | |||||||||
Balance at December 31, 2017 | $ | $ | $ | ||||||||
Comprehensive income | |||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | |||||||
Balance at March 31, 2018 | $ | $ | $ | ||||||||
Balance at December 31, 2016 | $ | $ | $ | ||||||||
Comprehensive income | |||||||||||
Common stock dividends declared | ( | ) | ( | ) | |||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | |||||||
Balance at March 31, 2017 | $ | $ | $ |
SHAREHOLDERS’ EQUITY – SOCALGAS | |||
(Dollars in millions) | |||
Total equity | |||
Balance at December 31, 2017 | $ | ||
Comprehensive income | |||
Balance at March 31, 2018 | $ | ||
Balance at December 31, 2016 | $ | ||
Comprehensive income | |||
Balance at March 31, 2017 | $ |
OTHER NONCONTROLLING INTERESTS | |||||||||||
(Dollars in millions) | |||||||||||
Percent ownership held by noncontrolling interests | Equity held by noncontrolling interests | ||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2018 | December 31, 2017 | ||||||||
SDG&E: | |||||||||||
Otay Mesa VIE | % | % | $ | $ | |||||||
Sempra South American Utilities: | |||||||||||
Chilquinta Energía subsidiaries(1) | 22.9 – 43.4 | 22.9 – 43.4 | |||||||||
Luz del Sur | |||||||||||
Tecsur | |||||||||||
Sempra Mexico: | |||||||||||
IEnova(2) | |||||||||||
Sempra Renewables: | |||||||||||
Tax equity arrangements – wind(3) | NA | NA | |||||||||
Tax equity arrangements – solar(3) | NA | NA | |||||||||
Sempra LNG & Midstream: | |||||||||||
Bay Gas | |||||||||||
Liberty Gas Storage, LLC | |||||||||||
Total Sempra Energy | $ | $ |
(1) | Chilquinta Energía has |
(2) | IEnova has a subsidiary with a |
(3) | Net income or loss attributable to NCI is computed using the HLBV method and is not based on ownership percentages. |
AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES | |||||||
(Dollars in millions) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
Sempra Energy Consolidated: | |||||||
Total due from various unconsolidated affiliates – current | $ | $ | |||||
Sempra South American Utilities(1): | |||||||
Eletrans – 4% Note(2) | $ | $ | |||||
Other related party receivables | |||||||
Sempra Mexico(1): | |||||||
IMG – Note due March 15, 2022(3) | |||||||
Energía Sierra Juárez – Note(4) | |||||||
Total due from unconsolidated affiliates – noncurrent | $ | $ | |||||
Total due to various unconsolidated affiliates – current | $ | ( | ) | $ | ( | ) | |
Sempra Mexico(1): | |||||||
Total due to unconsolidated affiliates – noncurrent – TAG – Note due December 20, 2021(5) | $ | ( | ) | $ | ( | ) | |
SDG&E: | |||||||
Sempra Energy | $ | ( | ) | $ | ( | ) | |
SoCalGas | ( | ) | ( | ) | |||
Various affiliates | ( | ) | ( | ) | |||
Total due to unconsolidated affiliates – current | $ | ( | ) | $ | ( | ) | |
Income taxes due (to) from Sempra Energy(6) | $ | ( | ) | $ | |||
SoCalGas: | |||||||
SDG&E | $ | $ | |||||
Various affiliates | |||||||
Total due from unconsolidated affiliates – current | $ | $ | |||||
Total due to unconsolidated affiliates – current – Sempra Energy | $ | ( | ) | $ | ( | ) | |
Income taxes due (to) from Sempra Energy(6) | $ | ( | ) | $ |
(1) | Amounts include principal balances plus accumulated interest outstanding. |
(2) | U.S. dollar-denominated loan, at a fixed interest rate with no stated maturity date, to provide project financing for the construction of transmission lines at Eletrans, comprising joint ventures of Chilquinta Energía. |
(3) | Mexican peso-denominated revolving line of credit for up to $ |
(4) | U.S. dollar-denominated loan, at a variable interest rate based on the 30-day LIBOR plus |
(5) | U.S. dollar-denominated loan, at a variable interest rate based on the 6-month LIBOR plus |
(6) | SDG&E and SoCalGas are included in the consolidated income tax return of Sempra Energy and are allocated income tax expense from Sempra Energy in an amount equal to that which would result from each company having always filed a separate return. |
REVENUES AND COST OF SALES FROM UNCONSOLIDATED AFFILIATES | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Revenues: | |||||||
Sempra Energy Consolidated | $ | $ | |||||
SDG&E | |||||||
SoCalGas | |||||||
Cost of Sales: | |||||||
Sempra Energy Consolidated | $ | $ | |||||
SDG&E |
OTHER INCOME, NET | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017(1) | ||||||
Sempra Energy Consolidated: | |||||||
Allowance for equity funds used during construction | $ | $ | |||||
Investment (losses) gains(2) | ( | ) | |||||
Gains on interest rate and foreign exchange instruments, net | |||||||
Foreign currency transaction gains, net(3) | |||||||
Non-service component of net periodic benefit credit | |||||||
Interest on regulatory balancing accounts, net | |||||||
Sundry, net | |||||||
Total | $ | $ | |||||
SDG&E: | |||||||
Allowance for equity funds used during construction | $ | $ | |||||
Non-service component of net periodic benefit credit | |||||||
Interest on regulatory balancing accounts, net | |||||||
Sundry, net | |||||||
Total | $ | $ | |||||
SoCalGas: | |||||||
Allowance for equity funds used during construction | $ | $ | |||||
Non-service component of net periodic benefit credit | |||||||
Sundry, net | ( | ) | |||||
Total | $ | $ |
(1) | As adjusted for the retrospective adoption of ASU 2017-07, which we discuss in Note 2. |
(2) | 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 Operation and Maintenance on the Condensed Consolidated Statements of Operations. |
(3) |
INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Pretax income | Income tax expense | ETR | Pretax income | Income tax expense | ETR | ||||||||||||||||
Three months ended March 31, | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
Sempra Energy Consolidated(1) | $ | $ | % | $ | $ | % | |||||||||||||||
SDG&E | |||||||||||||||||||||
SoCalGas |
(1) | Sempra Energy's pretax income represents Income Before Income Taxes and Equity Losses of Unconsolidated Subsidiaries plus equity earnings before income tax of $ |
▪ | repairs expenditures related to a certain portion of utility plant assets |
▪ | the equity portion of AFUDC |
▪ | a portion of the cost of removal of utility plant assets |
▪ | utility self-developed software expenditures |
▪ | depreciation on a certain portion of utility plant assets |
▪ | state income taxes |
IMPACT FROM ADOPTION OF ASU 2016-18 | ||||||||||||
(Dollars in millions) | ||||||||||||
Three months ended March 31, 2017 | ||||||||||||
As previously reported | Effect of adoption | As adjusted | ||||||||||
Sempra Energy Condensed Consolidated Statement of Cash Flows: | ||||||||||||
Cash flows from investing activities: | ||||||||||||
Increases in restricted cash | $ | ( | ) | $ | $ | |||||||
Decreases in restricted cash | ( | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ||||||||||||
Decrease in cash and cash equivalents | ( | ) | ||||||||||
Decrease in cash, cash equivalents, and restricted cash | ( | ) | ( | ) | ||||||||
Cash and cash equivalents, January 1 | ( | ) | ||||||||||
Cash, cash equivalents and restricted cash, January 1 | ||||||||||||
Cash and cash equivalents, March 31 | ( | ) | ||||||||||
Cash, cash equivalents and restricted cash, March 31 | ||||||||||||
SDG&E Condensed Consolidated Statement of Cash Flows: | ||||||||||||
Cash flows from investing activities: | ||||||||||||
Increases in restricted cash | $ | ( | ) | $ | $ | |||||||
Decreases in restricted cash | ( | ) | ||||||||||
Net cash used in investing activities | ( | ) | ( | ) | ||||||||
Increase in cash and cash equivalents | ( | ) | ||||||||||
Increase in cash, cash equivalents, and restricted cash | ||||||||||||
Cash and cash equivalents, January 1 | ( | ) | ||||||||||
Cash, cash equivalents and restricted cash, January 1 | ||||||||||||
Cash and cash equivalents, March 31 | ( | ) | ||||||||||
Cash, cash equivalents and restricted cash, March 31 |
IMPACT FROM ADOPTION OF ASU 2017-07 | |||||||||||
(Dollars in millions) | |||||||||||
Three months ended March 31, 2017 | |||||||||||
As previously reported | Effect of adoption | As adjusted | |||||||||
Sempra Energy Condensed Consolidated Statement of Operations: | |||||||||||
Operation and maintenance | $ | $ | $ | ||||||||
Other income, net | |||||||||||
SDG&E Condensed Consolidated Statement of Operations: | |||||||||||
Operation and maintenance | $ | $ | $ | ||||||||
Total operating expenses | |||||||||||
Operating income | ( | ) | |||||||||
Other income, net | |||||||||||
SoCalGas Condensed Statement of Operations: | |||||||||||
Operation and maintenance | $ | $ | $ | ||||||||
Total operating expenses | |||||||||||
Operating income | ( | ) | |||||||||
Other income, net |
DISAGGREGATED REVENUES | |||||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||
Three months ended March 31, 2018 | |||||||||||||||||||||||||||||||
SDG&E | SoCalGas | Sempra South American Utilities | Sempra Mexico | Sempra Renewables | Sempra LNG & Midstream | Consolidating adjustments | Sempra Energy Consolidated | ||||||||||||||||||||||||
By major service line: | |||||||||||||||||||||||||||||||
Utilities | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Midstream | ( | ) | |||||||||||||||||||||||||||||
Renewables | ( | ) | |||||||||||||||||||||||||||||
Other | ( | ) | |||||||||||||||||||||||||||||
Revenues from contracts with customers | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
By market: | |||||||||||||||||||||||||||||||
Electric | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Gas | ( | ) | |||||||||||||||||||||||||||||
Revenues from contracts with customers | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
By timing of recognition: | |||||||||||||||||||||||||||||||
Over time | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Point in time | ( | ) | |||||||||||||||||||||||||||||
Revenues from contracts with customers | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Revenues from contracts with customers | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Utilities regulatory revenues | ( | ) | ( | ) | |||||||||||||||||||||||||||
Other revenues | ( | ) | |||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ |
▪ | SDG&E |
▪ | Sempra South American Utilities’ Chilquinta Energía and Luz del Sur |
▪ | SDG&E |
▪ | SoCalGas |
▪ | Sempra Mexico’s Ecogas |
REMAINING PERFORMANCE OBLIGATIONS(1) | ||||||
(Dollars in millions) | ||||||
Sempra Energy Consolidated | SDG&E | |||||
2018 | $ | $ | ||||
2019 | ||||||
2020 | ||||||
2021 | ||||||
2022 | ||||||
Thereafter | ||||||
Total revenues to be recognized | $ | $ |
(1) |
CONTRACT LIABILITIES | |||
(Dollars in millions) | |||
Opening balance, January 1, 2018 | $ | ||
Adoption of ASC 606 adjustment | ( | ) | |
Revenue from performance obligations satisfied during reporting period | |||
Payments received in advance | ( | ) | |
Closing balance, March 31, 2018(1) | $ | ( | ) |
(1) | Includes $ |
RECEIVABLES FROM REVENUES FROM CONTRACTS WITH CUSTOMERS | |||||||
(Dollars in millions) | |||||||
March 31, 2018 | January 1, 2018 | ||||||
Sempra Energy Consolidated: | |||||||
Accounts receivable – trade, net | $ | $ | |||||
Accounts receivable – other, net | |||||||
Due from unconsolidated affiliates – current | |||||||
Total | $ | $ | |||||
SDG&E: | |||||||
Accounts receivable – trade, net | $ | $ | |||||
Accounts receivable – other, net | |||||||
Due from unconsolidated affiliates – current(1) | |||||||
Total | $ | $ | |||||
SoCalGas: | |||||||
Accounts receivable – trade, net | $ | $ | |||||
Accounts receivable – other, net | |||||||
Total | $ | $ |
(1) |
▪ | fees related to contractual counterparty obligations for non-delivery of LNG cargoes, as described above. |
▪ |
REGULATORY ASSETS (LIABILITIES) | |||||||
(Dollars in millions) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
SDG&E: | |||||||
Fixed-price contracts and other derivatives | $ | $ | |||||
Deferred income taxes refundable in rates | ( | ) | ( | ) | |||
Pension and other postretirement benefit plan obligations | |||||||
Removal obligations | ( | ) | ( | ) | |||
Unamortized loss on reacquired debt | |||||||
Environmental costs | |||||||
Sunrise Powerlink fire mitigation | |||||||
Regulatory balancing accounts(1) | |||||||
Commodity – electric | |||||||
Gas transportation | |||||||
Safety and reliability | |||||||
Public purpose programs | ( | ) | ( | ) | |||
Other balancing accounts | |||||||
Other regulatory liabilities | ( | ) | ( | ) | |||
Total SDG&E | ( | ) | ( | ) | |||
SoCalGas: | |||||||
Pension and other postretirement benefit plan obligations | |||||||
Employee benefit costs | |||||||
Removal obligations | ( | ) | ( | ) | |||
Deferred income taxes refundable in rates | ( | ) | ( | ) | |||
Unamortized loss on reacquired debt | |||||||
Environmental costs | |||||||
Workers’ compensation | |||||||
Regulatory balancing accounts(1) | |||||||
Commodity – gas, including transportation | |||||||
Safety and reliability | |||||||
Public purpose programs | ( | ) | ( | ) | |||
Other balancing accounts | ( | ) | ( | ) | |||
Other regulatory liabilities | ( | ) | ( | ) | |||
Total SoCalGas | ( | ) | ( | ) | |||
Sempra Mexico: | |||||||
Deferred income taxes recoverable in rates | |||||||
Total Sempra Energy Consolidated | $ | ( | ) | $ | ( | ) |
(1) |
AUTHORIZED COST OF CAPITAL AND RATE STRUCTURE – CPUC | ||||||||||||
SDG&E | SoCalGas | |||||||||||
Authorized weighting | Return on rate base | Weighted return on rate base | Authorized weighting | Return on rate base | Weighted return on rate base | |||||||
% | % | % | Long-Term Debt | % | % | % | ||||||
Preferred Stock | ||||||||||||
Common Equity | ||||||||||||
% | % | % | % |
IMPACT OF THE EMBEDDED COST OF DEBT | |||||||||||||
SDG&E | SoCalGas | ||||||||||||
Cost of debt | Return on rate base | Cost of debt | Return on rate base | ||||||||||
Previously | % | % | % | % | |||||||||
Authorized, effective January 1, 2018 | % | % | % | % | |||||||||
Differences | (41 | ) | bps | (24 | ) | bps | (144 | ) | bps | (68 | ) | bps |
The foregoing is a simplified ownership structure that does not show all the subsidiaries of, or other equity interests owned by, these entities. |
▪ | $ |
▪ | $ |
▪ | $ |
▪ | $ |
PURCHASE PRICE ALLOCATION | ||||
(Dollars in millions) | ||||
Assets acquired: | ||||
Accounts receivable – other, net | $ | |||
Due from unconsolidated affiliates | ||||
Investment in Oncor Holdings | ||||
Deferred income tax assets | ||||
Other noncurrent assets | ||||
Total assets acquired | ||||
Liabilities assumed: | ||||
Other current liabilities | ||||
Pension and other postretirement benefit plan obligations | ||||
Deferred credits and other | ||||
Total liabilities assumed | ||||
Net assets acquired | $ | |||
Total purchase price paid | $ |
ASSETS HELD FOR SALE AT MARCH 31, 2018 | |||||
(Dollars in millions) | |||||
Termoeléctrica de Mexicali | |||||
Inventories | $ | ||||
Other current assets | |||||
Property, plant and equipment, net | |||||
Other noncurrent assets | |||||
Total assets held for sale | $ | ||||
Accounts payable | $ | ||||
Other current liabilities | |||||
Asset retirement obligations | |||||
Other noncurrent liabilities | |||||
Total liabilities held for sale | $ |
SUMMARIZED FINANCIAL INFORMATION – ONCOR HOLDINGS | |||
(Dollars in millions) | |||
March 9 - March 31, 2018 | |||
Gross revenues | $ | ||
Operating expense | ( | ) | |
Income from operations | |||
Interest expense | ( | ) | |
Income tax expense | ( | ) | |
Net income | |||
Earnings |
PRIMARY U.S. COMMITTED LINES OF CREDIT | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
March 31, 2018 | |||||||||||||||||
Total facility | Commercial paper outstanding(1) | Adjustment for combined limit | Available unused credit | ||||||||||||||
Sempra Energy(2) | $ | $ | $ | $ | |||||||||||||
Sempra Global(3) | ( | ) | |||||||||||||||
California Utilities(4): | |||||||||||||||||
SDG&E | ( | ) | |||||||||||||||
SoCalGas | ( | ) | ( | ) | |||||||||||||
Less: combined limit of $1 billion for both utilities | ( | ) | ( | ) | |||||||||||||
( | ) | ||||||||||||||||
Total | $ | $ | ( | ) | $ | $ |
(1) | 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. |
(2) | The facility also provides for issuance of up to $ |
(3) | Sempra Energy guarantees Sempra Global’s obligations under the credit facility. |
(4) | The facility also provides for the issuance of letters of credit on behalf of each utility, subject to a combined letter of credit commitment of $ |
CREDIT FACILITIES IN SOUTH AMERICA AND MEXICO | ||||||||||||||
(U.S. dollar-equivalent in millions) | ||||||||||||||
March 31, 2018 | ||||||||||||||
Denominated in | Total facility | Amount outstanding | Available unused credit | |||||||||||
Sempra South American Utilities(1): | ||||||||||||||
Peru(2) | Peruvian sol | $ | $ | ( | ) | (3) | $ | |||||||
Chile | Chilean peso | |||||||||||||
Sempra Mexico: | ||||||||||||||
IEnova(4) | U.S. dollar | ( | ) | |||||||||||
Total | $ | $ | ( | ) | $ |
(1) | The credit facilities were entered into to finance working capital and for general corporate purposes and expire between 2018 and 2021. |
(2) | The Peruvian facilities require a debt to equity ratio of no more than |
(3) | Includes bank guarantees of $ |
(4) | Five-year revolver expiring in August 2020 with a syndicate of eight lenders. |
NOTES ISSUED IN LONG-TERM DEBT OFFERING | |||||||
(Dollars in millions) | |||||||
Title of each class of securities | Aggregate principal amount | Maturity | Interest payments | ||||
Floating Rate(1) Notes due 2019 | $ | July 15, 2019 | Quarterly | ||||
Floating Rate(2) Notes due 2021 | January 15, 2021 | Quarterly | |||||
2.400% Senior Notes due 2020 | February 1, 2020 | Semi-annually | |||||
2.900% Senior Notes due 2023 | February 1, 2023 | Semi-annually | |||||
3.400% Senior Notes due 2028 | February 1, 2028 | Semi-annually | |||||
3.800% Senior Notes due 2038 | February 1, 2038 | Semi-annually | |||||
4.000% Senior Notes due 2048 | February 1, 2048 | Semi-annually |
(1) | Bears interest at a rate per annum equal to the 3-month LIBOR rate, plus |
(2) |
▪ | 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 |
▪ | 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, Sempra LNG & Midstream, and Sempra Renewables 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 Cost of Natural Gas, Electric Fuel and Purchased Power 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. |
NET ENERGY DERIVATIVE VOLUMES | |||||||
(Quantities in millions) | |||||||
Commodity | Unit of measure | March 31, 2018 | December 31, 2017 | ||||
California Utilities: | |||||||
SDG&E: | |||||||
Natural gas | MMBtu | ||||||
Electricity | MWh | ||||||
Congestion revenue rights | MWh | ||||||
Energy-Related Businesses: | |||||||
Sempra LNG & Midstream – natural gas | MMBtu | ||||||
Sempra Mexico – natural gas | MMBtu |
INTEREST RATE DERIVATIVES | |||||||||||
(Dollars in millions) | |||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||
Notional debt | Maturities | Notional debt | Maturities | ||||||||
Sempra Energy Consolidated: | |||||||||||
Cash flow hedges(1) | $ | 2018-2032 | $ | 2018-2032 | |||||||
SDG&E: | |||||||||||
Cash flow hedge(1) | 2018-2019 | 2018-2019 |
(1) | Includes Otay Mesa VIE. All of SDG&E’s interest rate derivatives relate to Otay Mesa VIE. |
FOREIGN CURRENCY DERIVATIVES | |||||||||||
(Dollars in millions) | |||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||
Notional amount | Maturities | Notional amount | Maturities | ||||||||
Sempra Energy Consolidated: | |||||||||||
Cross-currency swaps | $ | 2018-2023 | $ | 2018-2023 | |||||||
Other foreign currency derivatives | 2018-2019 | 2018-2019 |
DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
March 31, 2018 | |||||||||||||||
Current assets: Fixed-price contracts and other derivatives(1) | Other assets: Sundry | Current liabilities: Fixed-price contracts and other derivatives(2) | Deferred credits and other liabilities: Fixed-price contracts and other derivatives | ||||||||||||
Sempra Energy Consolidated: | |||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Interest rate and foreign exchange instruments(3) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Foreign exchange instruments | |||||||||||||||
Commodity contracts not subject to rate recovery | ( | ) | ( | ) | |||||||||||
Associated offsetting commodity contracts | ( | ) | ( | ) | |||||||||||
Commodity contracts subject to rate recovery | ( | ) | ( | ) | |||||||||||
Associated offsetting cash collateral | |||||||||||||||
Net amounts presented on the balance sheet | ( | ) | ( | ) | |||||||||||
Additional cash collateral for commodity contracts not subject to rate recovery | |||||||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | |||||||||||||||
Total(4) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
SDG&E: | |||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Interest rate instruments(3) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity contracts subject to rate recovery | ( | ) | ( | ) | |||||||||||
Associated offsetting cash collateral | |||||||||||||||
Net amounts presented on the balance sheet | ( | ) | ( | ) | |||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | |||||||||||||||
Total(4) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
SoCalGas: | |||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity contracts subject to rate recovery | $ | $ | $ | ( | ) | $ | |||||||||
Net amounts presented on the balance sheet | ( | ) | |||||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | |||||||||||||||
Total | $ | $ | $ | ( | ) | $ |
(1) | Included in Current Assets: Other for SoCalGas. |
(2) | Included in Current Liabilities: Other for SoCalGas. |
(3) | Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE. |
(4) | Normal purchase contracts previously measured at fair value are excluded. |
DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
December 31, 2017 | |||||||||||||||
Current assets: Fixed-price contracts and other derivatives(1) | Other assets: Sundry | Current liabilities: Fixed-price contracts and other derivatives(2) | Deferred credits and other liabilities: Fixed-price contracts and other derivatives | ||||||||||||
Sempra Energy Consolidated: | |||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Interest rate and foreign exchange instruments(3) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Foreign exchange instruments | ( | ) | |||||||||||||
Commodity contracts not subject to rate recovery | ( | ) | ( | ) | |||||||||||
Associated offsetting commodity contracts | ( | ) | ( | ) | |||||||||||
Commodity contracts subject to rate recovery | ( | ) | ( | ) | |||||||||||
Associated offsetting commodity contracts | ( | ) | |||||||||||||
Associated offsetting cash collateral | |||||||||||||||
Net amounts presented on the balance sheet | ( | ) | ( | ) | |||||||||||
Additional cash collateral for commodity contracts not subject to rate recovery | |||||||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | |||||||||||||||
Total(4) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
SDG&E: | |||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Interest rate instruments(3) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity contracts subject to rate recovery | ( | ) | ( | ) | |||||||||||
Associated offsetting commodity contracts | ( | ) | |||||||||||||
Associated offsetting cash collateral | |||||||||||||||
Net amounts presented on the balance sheet | ( | ) | ( | ) | |||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | |||||||||||||||
Total(4) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
SoCalGas: | |||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity contracts subject to rate recovery | $ | $ | $ | ( | ) | $ | |||||||||
Net amounts presented on the balance sheet | ( | ) | |||||||||||||
Additional cash collateral for commodity contracts subject to rate recovery | |||||||||||||||
Total | $ | $ | $ | ( | ) | $ |
CASH FLOW HEDGE IMPACTS | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
Pretax gain (loss) recognized in OCI | Pretax (loss) gain reclassified from AOCI into earnings | ||||||||||||||||
Three months ended March 31, | Three months ended March 31, | ||||||||||||||||
2018 | 2017 | Location | 2018 | 2017 | |||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||
Interest rate and foreign exchange instruments(1) | $ | $ | Interest Expense | $ | $ | ||||||||||||
Other Income, Net | |||||||||||||||||
Interest rate and foreign exchange instruments | ( | ) | Equity Losses | ( | ) | ( | ) | ||||||||||
Foreign exchange instruments | ( | ) | ( | ) | Revenues: Energy- Related Businesses | ( | ) | ||||||||||
Commodity contracts not subject to rate recovery | Revenues: Energy- Related Businesses | ( | ) | ||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||
SDG&E: | |||||||||||||||||
Interest rate instruments(1) | $ | $ | Interest Expense | $ | ( | ) | $ | ( | ) |
(1) | Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE. |
UNDESIGNATED DERIVATIVE IMPACTS | ||||||||
(Dollars in millions) | ||||||||
Pretax gain (loss) on derivatives recognized in earnings | ||||||||
Three months ended March 31, | ||||||||
Location | 2018 | 2017 | ||||||
Sempra Energy Consolidated: | ||||||||
Foreign exchange instruments | Other Income, Net | $ | $ | |||||
Commodity contracts not subject to rate recovery | Revenues: Energy-Related Businesses | ( | ) | |||||
Commodity contracts not subject to rate recovery | Operation and Maintenance | ( | ) | |||||
Commodity contracts subject to rate recovery | Cost of Electric Fuel and Purchased Power | ( | ) | |||||
Commodity contracts subject to rate recovery | Cost of Natural Gas | |||||||
Total | $ | $ | ||||||
SDG&E: | ||||||||
Commodity contracts subject to rate recovery | Cost of Electric Fuel and Purchased Power | $ | $ | ( | ) | |||
SoCalGas: | ||||||||
Commodity contracts not subject to rate recovery | Operation and Maintenance | $ | $ | ( | ) | |||
Commodity contracts subject to rate recovery | Cost of Natural Gas | |||||||
Total | $ | $ | ( | ) |
▪ | 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 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.” |
▪ |
RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Fair value at March 31, 2018 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||
Equity securities | $ | $ | $ | $ | |||||||||||
Debt securities: | |||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||
U.S. government corporations and agencies | |||||||||||||||
Municipal bonds | |||||||||||||||
Other securities | |||||||||||||||
Total debt securities | |||||||||||||||
Total nuclear decommissioning trusts(1) | |||||||||||||||
Interest rate and foreign exchange instruments | |||||||||||||||
Commodity contracts not subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | |||||||||||||||
Commodity contracts subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Interest rate and foreign exchange instruments | $ | $ | $ | $ | |||||||||||
Commodity contracts not subject to rate recovery | |||||||||||||||
Commodity contracts subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | ( | ) | ( | ) | |||||||||||
Total | $ | $ | $ | $ | |||||||||||
Fair value at December 31, 2017 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||
Equity securities | $ | $ | $ | $ | |||||||||||
Debt securities: | |||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||
U.S. government corporations and agencies | |||||||||||||||
Municipal bonds | |||||||||||||||
Other securities | |||||||||||||||
Total debt securities | |||||||||||||||
Total nuclear decommissioning trusts(1) | |||||||||||||||
Interest rate and foreign exchange instruments | |||||||||||||||
Commodity contracts not subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | |||||||||||||||
Commodity contracts subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Interest rate and foreign exchange instruments | $ | $ | $ | $ | |||||||||||
Commodity contracts not subject to rate recovery | |||||||||||||||
Commodity contracts subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | ( | ) | ( | ) | |||||||||||
Total | $ | $ | $ | $ |
(1) | Excludes cash balances 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 March 31, 2018 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||
Equity securities | $ | $ | $ | $ | |||||||||||
Debt securities: | |||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||
U.S. government corporations and agencies | |||||||||||||||
Municipal bonds | |||||||||||||||
Other securities | |||||||||||||||
Total debt securities | |||||||||||||||
Total nuclear decommissioning trusts(1) | |||||||||||||||
Commodity contracts subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Interest rate instruments | $ | $ | $ | $ | |||||||||||
Commodity contracts subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | ( | ) | ( | ) | |||||||||||
Total | $ | $ | $ | $ | |||||||||||
Fair value at December 31, 2017 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||
Equity securities | $ | $ | $ | $ | |||||||||||
Debt securities: | |||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||
U.S. government corporations and agencies | |||||||||||||||
Municipal bonds | |||||||||||||||
Other securities | |||||||||||||||
Total debt securities | |||||||||||||||
Total nuclear decommissioning trusts(1) | |||||||||||||||
Commodity contracts subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Interest rate instruments | $ | $ | $ | $ | |||||||||||
Commodity contracts subject to rate recovery | |||||||||||||||
Effect of netting and allocation of collateral(2) | ( | ) | ( | ) | |||||||||||
Total | $ | $ | $ | $ |
(1) | Excludes cash balances 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 – SOCALGAS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Fair value at March 31, 2018 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Commodity contracts subject to rate recovery | $ | $ | $ | $ | |||||||||||
Effect of netting and allocation of collateral(1) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Commodity contracts subject to rate recovery | $ | $ | $ | $ | |||||||||||
Total | $ | $ | $ | $ | |||||||||||
Fair value at December 31, 2017 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Commodity contracts subject to rate recovery | $ | $ | $ | $ | |||||||||||
Effect of netting and allocation of collateral(1) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Commodity contracts subject to rate recovery | $ | $ | $ | $ | |||||||||||
Total | $ | $ | $ | $ |
(1) |
LEVEL 3 RECONCILIATIONS(1) | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Balance at January 1 | $ | ( | ) | $ | ( | ) | |
Realized and unrealized gains (losses) | ( | ) | |||||
Allocated transmission instruments | |||||||
Settlements | ( | ) | ( | ) | |||
Balance at March 31 | $ | ( | ) | $ | ( | ) | |
Change in unrealized losses relating to instruments still held at March 31 | $ | ( | ) | $ | ( | ) |
CONGESTION REVENUE RIGHTS AUCTION PRICE INPUTS | ||||||||
Settlement year | Price per MWh | |||||||
2018 | $ | ( | ) | to | $ | |||
2017 | ( | ) | to |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
March 31, 2018 | |||||||||||||||||||
Carrying amount | Fair value | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||||
Long-term amounts due from unconsolidated affiliates(1) | $ | $ | $ | $ | $ | ||||||||||||||
Long-term amounts due to unconsolidated affiliates(2) | |||||||||||||||||||
Total long-term debt(3)(4) | |||||||||||||||||||
SDG&E: | |||||||||||||||||||
Total long-term debt(4)(5) | $ | $ | $ | $ | $ | ||||||||||||||
SoCalGas: | |||||||||||||||||||
Total long-term debt(6) | $ | $ | $ | $ | $ | ||||||||||||||
December 31, 2017 | |||||||||||||||||||
Carrying amount | Fair value | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Sempra Energy Consolidated: | |||||||||||||||||||
Long-term amounts due from unconsolidated affiliates(1) | $ | $ | $ | $ | $ | ||||||||||||||
Long-term amounts due to unconsolidated affiliates(2) | |||||||||||||||||||
Total long-term debt(3)(4) | |||||||||||||||||||
SDG&E: | |||||||||||||||||||
Total long-term debt(4)(5) | $ | $ | $ | $ | $ | ||||||||||||||
SoCalGas: | |||||||||||||||||||
Total long-term debt(6) | $ | $ | $ | $ | $ |
(1) | Excluding accumulated interest outstanding of $ |
(2) | Excluding negligible interest outstanding at March 31, 2018 and December 31, 2017. |
(3) | Before reductions for unamortized discount (net of premium) and debt issuance costs of $ |
(4) | Level 3 instruments include $ |
(5) | Before reductions for unamortized discount and debt issuance costs of $ |
(6) | Before reductions for unamortized discount and debt issuance costs of $ |
NUCLEAR DECOMMISSIONING TRUSTS | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | ||||||||||||
At March 31, 2018: | |||||||||||||||
Debt securities: | |||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||
U.S. government corporations and agencies(1) | $ | $ | $ | $ | |||||||||||
Municipal bonds(1) | ( | ) | |||||||||||||
Other securities(2) | ( | ) | |||||||||||||
Total debt securities | ( | ) | |||||||||||||
Equity securities | ( | ) | |||||||||||||
Cash and cash equivalents | |||||||||||||||
Total | $ | $ | $ | ( | ) | $ | |||||||||
At December 31, 2017: | |||||||||||||||
Debt securities: | |||||||||||||||
Debt securities issued by the U.S. Treasury and other | |||||||||||||||
U.S. government corporations and agencies | $ | $ | $ | $ | |||||||||||
Municipal bonds | ( | ) | |||||||||||||
Other securities | ( | ) | |||||||||||||
Total debt securities | ( | ) | |||||||||||||
Equity securities | ( | ) | |||||||||||||
Cash and cash equivalents | |||||||||||||||
Total | $ | $ | $ | ( | ) | $ |
(1) | Maturity dates are 2018-2048. |
(2) | Maturity dates are 2018-2064. |
SALES OF SECURITIES IN THE NDT | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Proceeds from sales(1) | $ | $ | |||||
Gross realized gains | |||||||
Gross realized losses | ( | ) | ( | ) |
(1) |
▪ | 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 Utility holds our investment in Oncor Holdings, which owns an |
▪ | Sempra South American Utilities develops, owns and operates, or holds interests in, electric transmission, distribution and generation infrastructure in Chile and Peru. |
▪ | Sempra Mexico develops, owns and operates, or holds interests in, natural gas, 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. In February 2016, management approved a plan to market and sell the TdM natural gas-fired power plant located in Mexicali, Baja California, as we discuss in Note 5. |
▪ | Sempra Renewables develops, owns and operates, or holds interests in, wind and solar energy generation facilities serving wholesale electricity markets in the U.S. |
▪ | Sempra LNG & Midstream develops, owns and operates, or holds interests in, a terminal for the import and export of LNG and sale of natural gas, and natural gas pipelines, storage facilities and marketing operations, all within the U.S. |
SEGMENT INFORMATION | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
REVENUES | |||||||
SDG&E | $ | $ | |||||
SoCalGas | |||||||
Sempra South American Utilities | |||||||
Sempra Mexico | |||||||
Sempra Renewables | |||||||
Sempra LNG & Midstream | |||||||
Adjustments and eliminations | ( | ) | |||||
Intersegment revenues(1) | ( | ) | ( | ) | |||
Total | $ | $ | |||||
INTEREST EXPENSE | |||||||
SDG&E | $ | $ | |||||
SoCalGas | |||||||
Sempra South American Utilities | |||||||
Sempra Mexico | |||||||
Sempra Renewables | |||||||
Sempra LNG & Midstream | |||||||
All other | |||||||
Intercompany eliminations | ( | ) | ( | ) | |||
Total | $ | $ | |||||
INTEREST INCOME | |||||||
SDG&E | $ | $ | |||||
Sempra South American Utilities | |||||||
Sempra Mexico | |||||||
Sempra Renewables | |||||||
Sempra LNG & Midstream | |||||||
All other | |||||||
Intercompany eliminations | ( | ) | ( | ) | |||
Total | $ | $ | |||||
DEPRECIATION AND AMORTIZATION | |||||||
SDG&E | $ | $ | |||||
SoCalGas | |||||||
Sempra South American Utilities | |||||||
Sempra Mexico | |||||||
Sempra Renewables | |||||||
Sempra LNG & Midstream | |||||||
All other | |||||||
Total | $ | $ | |||||
INCOME TAX EXPENSE (BENEFIT) | |||||||
SDG&E | $ | $ | |||||
SoCalGas | |||||||
Sempra South American Utilities | |||||||
Sempra Mexico | |||||||
Sempra Renewables | ( | ) | ( | ) | |||
Sempra LNG & Midstream | |||||||
All other | ( | ) | ( | ) | |||
Total | $ | $ |
SEGMENT INFORMATION (CONTINUED) | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
EQUITY EARNINGS (LOSSES) | |||||||
Equity earnings before income tax: | |||||||
Sempra Renewables | $ | $ | |||||
Sempra LNG & Midstream | |||||||
Equity earnings (losses) net of income tax: | |||||||
Sempra Texas Utility | |||||||
Sempra South American Utilities | |||||||
Sempra Mexico | ( | ) | ( | ) | |||
( | ) | ( | ) | ||||
Total | $ | ( | ) | $ | ( | ) | |
EARNINGS (LOSSES) ATTRIBUTABLE TO COMMON SHARES | |||||||
SDG&E | $ | $ | |||||
SoCalGas(2) | |||||||
Sempra Texas Utility | |||||||
Sempra South American Utilities | |||||||
Sempra Mexico | |||||||
Sempra Renewables | |||||||
Sempra LNG & Midstream | ( | ) | |||||
All other(2) | ( | ) | ( | ) | |||
Total | $ | $ | |||||
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT | |||||||
SDG&E | $ | $ | |||||
SoCalGas | |||||||
Sempra South American Utilities | |||||||
Sempra Mexico | |||||||
Sempra Renewables | |||||||
Sempra LNG & Midstream | |||||||
All other | |||||||
Total | $ | $ | |||||
March 31, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
SDG&E | $ | $ | |||||
SoCalGas | |||||||
Sempra Texas Utility | |||||||
Sempra South American Utilities | |||||||
Sempra Mexico | |||||||
Sempra Renewables | |||||||
Sempra LNG & Midstream | |||||||
All other | |||||||
Intersegment receivables | ( | ) | ( | ) | |||
Total | $ | $ | |||||
EQUITY METHOD AND OTHER INVESTMENTS | |||||||
Sempra Texas Utility | $ | $ | |||||
Sempra South American Utilities | |||||||
Sempra Mexico | |||||||
Sempra Renewables | |||||||
Sempra LNG & Midstream | |||||||
All other | |||||||
Total | $ | $ |
(1) | Revenues for reportable segments include intersegment revenues of $ |
(2) |
▪ | Sempra Energy and its consolidated entities |
▪ | SDG&E and its consolidated VIE |
▪ | SoCalGas |
▪ | the Condensed Consolidated Financial Statements and related Notes of Sempra Energy and its subsidiaries and VIEs; |
▪ | the Condensed Consolidated Financial Statements and related Notes of SDG&E and its VIE; and |
▪ | the Condensed Financial Statements and related Notes of SoCalGas. |
▪ | Overall results of our operations |
▪ | Segment results |
▪ | Adjusted earnings and adjusted earnings per common share |
▪ | Significant changes in revenues, costs and earnings between periods |
▪ | Impact of foreign currency and inflation rates on our results of operations |
SEMPRA ENERGY EARNINGS (LOSSES) BY SEGMENT | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Sempra Utilities: | |||||||
SDG&E | $ | 170 | $ | 155 | |||
SoCalGas(1) | 225 | 203 | |||||
Sempra Texas Utility | 15 | — | |||||
Sempra South American Utilities | 46 | 47 | |||||
Sempra Infrastructure: | |||||||
Sempra Mexico | 20 | 48 | |||||
Sempra Renewables | 21 | 11 | |||||
Sempra LNG & Midstream | (16 | ) | 1 | ||||
Parent and other(1)(2) | (134 | ) | (24 | ) | |||
Earnings | $ | 347 | $ | 441 |
(1) | After preferred dividends. |
(2) | Includes after-tax interest expense ($81 million and $41 million for the three months ended March 31, 2018 and 2017, respectively), intercompany eliminations recorded in consolidation and certain corporate costs. |
▪ | $14 million increased margin as a result of revised electric distribution seasonality factors in 2018; |
▪ | $12 million higher CPUC base operating margin authorized for 2018, of which $9 million relates to the lower federal income tax rate in 2018; and |
▪ | $6 million higher earnings from electric transmission operations, of which $2 million relates to the lower federal income tax rate in 2018; offset by |
▪ | $8 million higher net interest expense, of which $6 million relates to the lower federal income tax rate in 2018; and |
▪ | $6 million reimbursement in 2017 of litigation costs associated with the arbitration ruling over the SONGS replacement steam generators, as we discuss in Note 10 of the Notes to Condensed Consolidated Financial Statements herein. |
▪ | $31 million higher CPUC base operating margin authorized for 2018, net of expenses including depreciation. Of this increase, $26 million relates to the lower federal income tax rate in 2018; and |
▪ | $4 million higher PSEP earnings; offset by |
▪ | $7 million unfavorable impact due to lower cost of capital in 2018, of which $1 million relates to the lower federal income tax rate in 2018; and |
▪ | $4 million income tax expense in 2018 associated with excess tax deficiencies related to share-based compensation. |
▪ | $35 million lower earnings from the recognition of AFUDC related to equity in the first quarter of 2017, of which $18 million related to a cumulative amount recognized when regulatory recovery became probable for the Ojinaga and San Isidro pipelines. These projects were completed in the first half of 2017; |
▪ | $12 million higher income tax expense in 2018 from the outside basis differences in joint venture investments; and |
▪ | $5 million higher unfavorable impact from foreign currency and inflation effects net of gains on foreign currency derivatives, comprised of: |
◦ | in 2018, $95 million unfavorable foreign currency and inflation effects, offset by $32 million gain from foreign currency derivatives, which we are using to hedge Sempra Mexico’s foreign currency exposure from its controlling interest in IEnova, and |
◦ | in 2017, $102 million unfavorable foreign currency and inflation effects, offset by $44 million gain from foreign currency derivatives. We discuss these effects below in “Impact of Foreign Currency and Inflation Rates on Results of Operations;” offset by |
▪ | $12 million higher pipeline operational earnings, primarily attributable to assets placed in service in the second quarter of 2017; and |
▪ | $2 million losses attributable to noncontrolling interests at IEnova in 2018 compared to $5 million earnings in 2017. |
▪ | $11 million lower results from midstream activities primarily driven by changes in natural gas prices, of which $1 million relates to the lower federal income tax rate in 2018; and |
▪ | $9 million unfavorable adjustment in 2018 to TCJA provisional amounts recorded in 2017 related to the remeasurement of deferred income taxes. |
▪ | $25 million income tax expense in 2018 compared to $11 million income tax benefit in 2017, which included $16 million income tax expense in 2018 to adjust TCJA provisional amounts recorded in 2017 primarily related to withholding tax on our expected future repatriation of foreign undistributed earnings; |
▪ | $30 million increase in net interest expense, of which $12 million relates to a lower tax rate in 2018; |
▪ | $28 million of mandatory convertible preferred stock dividends; and |
▪ | $4 million investment losses in 2018 compared to $10 million investment gains in 2017 on dedicated assets in support of our executive retirement and deferred compensation plans, net of lower deferred compensation expense associated with these investments. |
SEMPRA ENERGY ADJUSTED EARNINGS AND ADJUSTED EPS | |||||||||||||||
(Dollars in millions, except per share amounts) | |||||||||||||||
Income tax expense (benefit)(1) | Non-controlling interests | Earnings | Diluted EPS | ||||||||||||
Three months ended March 31, 2018 | |||||||||||||||
Sempra Energy GAAP Earnings | $ | 347 | $ | 1.33 | |||||||||||
Excluded item: | |||||||||||||||
Impact from the TCJA | $ | 25 | $ | — | 25 | 0.10 | |||||||||
Sempra Energy Adjusted Earnings | $ | 372 | $ | 1.43 | |||||||||||
Weighted-average number of shares outstanding, diluted (thousands) | 259,490 | ||||||||||||||
Three months ended March 31, 2017 | |||||||||||||||
Sempra Energy GAAP Earnings | $ | 441 | $ | 1.75 | |||||||||||
Excluded item: | |||||||||||||||
Deferred income tax benefit associated with TdM | $ | (5 | ) | $ | 2 | (3 | ) | (0.01 | ) | ||||||
Sempra Energy Adjusted Earnings | $ | 438 | $ | 1.74 | |||||||||||
Weighted-average number of shares outstanding, diluted (thousands) | 252,246 |
(1) | Income taxes associated with TdM were calculated based on the applicable statutory tax rate, including translation from historic to current exchange rates. |
▪ | SDG&E |
▪ | Sempra South American Utilities’ Chilquinta Energía and Luz del Sur |
▪ | SDG&E |
▪ | SoCalGas |
▪ | Sempra Mexico’s Ecogas |
▪ | permits 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 in subsequent periods through rates. |
▪ | 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 1 of the Notes to Consolidated Financial Statements and “Item 1. Business – Ratemaking Mechanisms” in the Annual Report. |
▪ | also permits the California Utilities to recover certain expenses for programs authorized by the CPUC, or “refundable programs.” |
UTILITIES REVENUES AND COST OF SALES | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Electric revenues: | |||||||
SDG&E | $ | 884 | $ | 875 | |||
Sempra South American Utilities | 408 | 390 | |||||
Eliminations and adjustments(1) | (2 | ) | (2 | ) | |||
Total | 1,290 | 1,263 | |||||
Natural gas revenues: | |||||||
SoCalGas | 1,126 | 1,241 | |||||
SDG&E | 171 | 182 | |||||
Sempra Mexico | 28 | 30 | |||||
Eliminations and adjustments(1) | (17 | ) | (18 | ) | |||
Total | 1,308 | 1,435 | |||||
Total utilities revenues | $ | 2,598 | $ | 2,698 | |||
Cost of electric fuel and purchased power: | |||||||
SDG&E | $ | 274 | $ | 261 | |||
Sempra South American Utilities | 275 | 266 | |||||
Eliminations and adjustments(1) | (3 | ) | — | ||||
Total | $ | 546 | $ | 527 | |||
Cost of natural gas: | |||||||
SoCalGas | $ | 289 | $ | 408 | |||
SDG&E | 50 | 65 | |||||
Sempra Mexico | 13 | 19 | |||||
Eliminations and adjustments(1) | (4 | ) | (7 | ) | |||
Total | $ | 348 | $ | 485 |
(1) | Includes eliminations of intercompany activity. |
▪ | $18 million increase at Sempra South American Utilities, which included: |
◦ | $21 million higher rates at Luz del Sur and Chilquinta Energía, and |
◦ | $17 million due to foreign currency exchange rate effects, offset by |
◦ | $18 million lower volumes at Luz del Sur, primarily driven by weather and the migration of regulated and non-regulated customers to tolling customers, who pay only a tolling fee; and |
▪ | $9 million increase at SDG&E, which included: |
◦ | $19 million due to revised electric distribution seasonality factors in 2018, |
◦ | $13 million higher cost of electric fuel and purchased power, which we discuss below, and |
◦ | $8 million increase in 2018 due to an increase in rates permitted under the attrition mechanism in the 2016 GRC FD, offset by |
◦ | $15 million revenue requirement deferral due to the effect of the TCJA, and |
◦ | $6 million higher non-service component of net periodic benefit credit in 2018, which fully offsets in Other Income. |
▪ | $13 million increase at SDG&E primarily due to higher electricity market costs, offset by lower renewable generation costs due to decrease in solar and wind production; and |
▪ | $9 million increase at Sempra South American Utilities, which included: |
◦ | $12 million due to foreign currency exchange rate effects, and |
◦ | $11 million higher prices at Luz del Sur, offset by |
◦ | $14 million lower volumes at Luz del Sur. |
CALIFORNIA UTILITIES AVERAGE COST OF NATURAL GAS | |||||||
(Dollars per thousand cubic feet) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
SoCalGas | $ | 2.92 | $ | 3.70 | |||
SDG&E | 3.54 | 4.24 |
▪ | $115 million decrease at SoCalGas, which included: |
◦ | $119 million decrease in cost of natural gas sold, which we discuss below, |
◦ | $22 million higher non-service component of net periodic benefit credit in 2018, which fully offsets in Other Income, |
◦ | $19 million revenue requirement deferral due to the effect of the TCJA, |
◦ | $10 million lower cost of capital in 2018 due to the CPUC decision reducing ROE from 10.10 percent in 2017 to 10.05 percent in 2018, and |
◦ | $3 million lower revenues from capital projects, including $15 million decrease for advanced metering infrastructure, offset by $5 million increase for PSEP and $7 million increase for other capital projects, offset by |
◦ | $33 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in O&M, and |
◦ | $24 million increase due to 2018 attrition; and |
▪ | $11 million decrease at SDG&E, which includes a $15 million decrease in cost of natural gas sold, discussed below. |
▪ | $119 million decrease at SoCalGas due to $77 million from lower average gas prices and $42 million from lower volumes driven by weather; and |
▪ | $15 million decrease at SDG&E due to $10 million from lower average gas prices and $5 million from lower volumes driven by weather. |
ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
REVENUES | |||||||
Sempra South American Utilities | $ | 18 | $ | 22 | |||
Sempra Mexico | 280 | 234 | |||||
Sempra Renewables | 25 | 22 | |||||
Sempra LNG & Midstream | 104 | 132 | |||||
Eliminations and adjustments(1) | (63 | ) | (77 | ) | |||
Total revenues | $ | 364 | $ | 333 | |||
COST OF SALES(2) | |||||||
Cost of natural gas, electric fuel and purchased power: | |||||||
Sempra South American Utilities | $ | 5 | $ | 4 | |||
Sempra Mexico | 58 | 51 | |||||
Sempra LNG & Midstream | 65 | 88 | |||||
Eliminations and adjustments(1) | (59 | ) | (76 | ) | |||
Total | $ | 69 | $ | 67 | |||
Other cost of sales: | |||||||
Sempra South American Utilities | $ | 13 | $ | 15 | |||
Sempra Mexico | 3 | 3 | |||||
Sempra LNG & Midstream | 5 | 7 | |||||
Eliminations and adjustments(1) | (3 | ) | (3 | ) | |||
Total | $ | 18 | $ | 22 |
(1) | Includes eliminations of intercompany activity. |
(2) | Excludes depreciation and amortization, which are presented separately on the Sempra Energy Condensed Consolidated Statements of Operations. |
▪ | $46 million increase at Sempra Mexico primarily due to: |
◦ | $25 million higher revenues primarily due to pipeline assets placed in service in the second quarter of 2017, |
◦ | $13 million increase due to higher power prices and volumes at TdM, and |
◦ | $5 million higher revenues from the marketing business, primarily due to higher customer base offset by lower natural gas prices and volumes; and |
▪ | $14 million from lower intercompany eliminations associated with sales between Sempra LNG & Midstream and Sempra Mexico; offset by |
▪ | $28 million decrease at Sempra LNG & Midstream primarily due to: |
◦ | $24 million costs associated with indemnity payments to Sempra Mexico in 2018. Indemnity payments for 2017 were recorded in Cost of Natural Gas, Electric Fuel and Purchased Power prior to adoption of ASC 606, and |
◦ | $18 million from natural gas marketing activities primarily from changes in natural gas prices, offset by |
◦ | $12 million from LNG sales to Cameron LNG JV in January 2018. |
▪ | $17 million lower intercompany eliminations of costs associated with 2017 indemnity payments from Sempra LNG & Midstream to Sempra Mexico; and |
▪ | $7 million increase at Sempra Mexico mainly due to higher volumes at TdM and higher customer base at the marketing business; offset by |
▪ | $23 million decrease at Sempra LNG & Midstream primarily due to indemnity payments to Sempra Mexico in 2017. |
▪ | $28 million increase at SoCalGas, which included: |
◦ | $33 million higher expenses associated with CPUC-authorized refundable programs for which all costs incurred are fully recovered in revenue (refundable program expenses), offset by |
◦ | $5 million lower non-refundable operating costs, including labor, contract services and administrative and support costs; |
▪ | $17 million increase at SDG&E, which included: |
◦ | $11 million reimbursement of litigation costs in 2017 associated with the arbitration ruling over the SONGS replacement steam generators, as we discuss in Note 10 of the Notes to the Condensed Consolidated Financial Statements herein, and |
◦ | $9 million higher non-refundable operating costs, including labor, contract services and administrative and support costs; and |
▪ | $6 million increase at Sempra Renewables, primarily due to solar and wind assets placed in service in 2017 and higher general and administrative costs. |
▪ | $45 million decrease in equity-related AFUDC mainly from completion of the Ojinaga, San Isidro and Sonora pipeline projects in 2017; and |
▪ | $1 million investment loss in 2018 on dedicated assets in support of our executive retirement and deferred compensation plans compared to a $16 million investment gain in 2017; offset by |
▪ | $27 million higher non-service component of net periodic benefit credit in 2018, including $5 million at SDG&E and $22 million at SoCalGas; and |
▪ | $19 million higher gains in 2018 from interest rate and foreign exchange instruments and foreign currency transactions primarily due to: |
◦ | $39 million foreign currency gain in 2018 on a Mexican peso-denominated loan to the IMG joint venture, offset by |
◦ | $21 million lower gains in 2018 on foreign currency derivatives as a result of fluctuation of the Mexican peso. |
INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Pretax income | Income tax expense | ETR | Pretax income | Income tax expense | ETR | ||||||||||||||||
Three months ended March 31, | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
Sempra Energy Consolidated(1) | $ | 672 | $ | 289 | 43 | % | $ | 755 | $ | 295 | 39 | % | |||||||||
SDG&E | 225 | 56 | 25 | 247 | 90 | 36 | |||||||||||||||
SoCalGas | 284 | 59 | 21 | 301 | 98 | 33 |
(1) | Sempra Energy's pretax income represents Income Before Income Taxes and Equity Losses of Unconsolidated Subsidiaries plus equity earnings before income tax of $5 million and $3 million in the three months ended March 31, 2018 and 2017, respectively. We discuss how we recognize equity earnings in Note 6 of the Notes to Condensed Consolidated Financial Statements herein. |
▪ | $25 million income tax expense to adjust provisional estimates recorded in 2017 for the effects of TCJA; |
▪ | $13 million higher income tax expense associated with excess tax deficiencies related to share-based compensation; and |
▪ | $8 million income tax expense associated with the global intangible low-tax income provisions of the TCJA; offset by |
▪ | $36 million lower income tax expense from the lower U.S. statutory corporate federal income tax rate in 2018; and |
▪ | $3 million lower income tax expense from foreign currency and inflation effects in the first quarter of 2018. |
▪ | $32 million increase in equity losses, net of income tax, at Sempra Mexico primarily at the IMG joint venture due to a $39 million foreign currency loss on its peso-denominated loan from Sempra Mexico; offset by |
▪ | $15 million equity earnings, net of income tax, from our investment in Oncor Holdings, which we acquired in March 2018 and which owns an 80.25-percent interest in Oncor. |
▪ | $18 million higher pretax losses attributed to tax equity investors at Sempra Renewables; and |
▪ | $2 million losses attributable to NCI at Sempra Mexico in 2018 compared to earnings of $5 million in 2017. |
TRANSLATION IMPACT FROM CHANGE IN AVERAGE FOREIGN CURRENCY EXCHANGE RATES | |||
(Dollars in millions) | |||
First quarter 2018 compared to first quarter 2017 | |||
Higher earnings from foreign currency translation: | |||
Sempra South American Utilities | $ | 2 |
TRANSACTIONAL GAINS (LOSSES) FROM FOREIGN CURRENCY AND INFLATION | |||||||||||||||
(Dollars in millions) | |||||||||||||||
Total reported amounts | Transactional gains (losses) included in reported amounts | ||||||||||||||
Three months ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Other income, net(1) | $ | 153 | $ | 174 | $ | 92 | $ | 75 | |||||||
Income tax expense | (289 | ) | (295 | ) | (94 | ) | (97 | ) | |||||||
Equity losses | (20 | ) | (5 | ) | (51 | ) | (13 | ) | |||||||
Net income | 358 | 452 | (64 | ) | (61 | ) | |||||||||
Earnings attributable to common shares | 347 | 441 | (31 | ) | (27 | ) |
(1) | Total reported amount for the three months ended March 31, 2017 adjusted for the retrospective adoption of ASU 2017-07, which we discuss in Note 2 of the Notes to Condensed Consolidated Financial Statements herein. |
AVAILABLE FUNDS AT MARCH 31, 2018 | |||||||||||
(Dollars in millions) | |||||||||||
Sempra Energy Consolidated | SDG&E | SoCalGas | |||||||||
Unrestricted cash and cash equivalents(1) | $ | 239 | $ | 9 | $ | 11 | |||||
Available unused credit(2)(3) | 2,169 | 410 | 560 |
(1) | Amounts at Sempra Energy Consolidated include $186 million held in non-U.S. jurisdictions. We discuss repatriation in “Item 7. MD&A – Changes in Revenues, Costs and Earnings – Income Taxes” in the Annual Report and below in “Impacts of the TCJA.” |
(2) | Available unused credit is the total available on Sempra Energy’s, Sempra Global’s and the California Utilities’ credit facilities that we discuss in Note 7 of the Notes to Condensed Consolidated Financial Statements herein. Borrowings on the shared line of credit at SDG&E and SoCalGas are limited to $750 million for each utility and a combined total of $1 billion. |
(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. |
▪ | finance capital expenditures |
▪ | meet liquidity requirements |
▪ | 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 |
▪ | Energy Resource Recovery Balancing Account (ERRA) – tracks the difference between amounts billed to customers and the actual cost of electric fuel and purchased power. The CPUC authorized an ERRA Trigger mechanism in conjunction with California state law that allows for recovery of ERRA balances that exceed 5 percent of the prior year’s electric commodity revenues. In August 2017, the CPUC approved SDG&E’s request to amortize $120 million in rates over a 14-month period beginning November 2017. SDG&E’s ERRA balance was undercollected by $100 million and $51 million at March 31, 2018 and December 31, 2017, respectively. The increase in the ERRA undercollected balance in 2018 was primarily due to lower than forecasted electric volume in conjunction with seasonalized electric rates. |
▪ | Electric Distribution Fixed Cost Account (EDFCA) – tracks the difference between the amounts billed to customers and the authorized margin and other costs allocated to electric distribution customers. SDG&E’s EDFCA balance was undercollected by $103 million and $112 million at March 31, 2018 and December 31, 2017, respectively. The undercollection is driven by lower than forecasted electric volumes sold in 2018 and 2017. |
▪ | Core Fixed Cost Account (CFCA) – tracks the difference between amounts billed to customers and the authorized margin and other costs allocated to core customers. Because mild weather experienced in 2018 and 2017 resulted in lower natural gas consumption compared to authorized levels, SoCalGas’ CFCA balance was undercollected by $213 million and $164 million at March 31, 2018 and December 31, 2017, respectively. |
CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Three months ended March 31, 2018 | 2018 change | Three months ended March 31, 2017 | ||||||||||||||
Sempra Energy Consolidated | $ | 966 | $ | (38 | ) | (4 | )% | $ | 1,004 | |||||||
SDG&E | 404 | 18 | 5 | 386 | ||||||||||||
SoCalGas | 419 | (44 | ) | (10 | ) | 463 |
▪ | $34 million increase in accounts receivable in 2018 compared to a $94 million decrease in 2017; |
▪ | $62 million in purchases of GHG allowances in 2018 compared to $13 million in 2017 at the California Utilities; |
▪ | $30 million increase in seasonal liability related to temporary last-in-first-out (LIFO) liquidation at SoCalGas in 2017, primarily due to changes in natural gas inventory value; |
▪ | $26 million payment for marine concession fees for liquid fuels terminals; and |
▪ | $22 million decrease in inventory in 2018 compared to a $43 million decrease in 2017; offset by |
▪ | $83 million decrease in accounts payable in 2018 compared to a $137 million decrease in 2017; |
▪ | $29 million decrease in income taxes receivable in 2018 compared to a $23 million increase in 2017; |
▪ | $47 million higher net income, adjusted for noncash items included in earnings, in 2018 compared to 2017; |
▪ | $94 million increase in net overcollected regulatory balancing accounts (including long-term amounts included in regulatory assets) at SoCalGas in 2018 compared to a $51 million increase in 2017; and |
▪ | $59 million decrease in net undercollected regulatory balancing accounts (including long-term amounts included in regulatory assets) at SDG&E in 2018 compared to a $27 million decrease in 2017. |
▪ | $59 million decrease in net undercollected regulatory balancing accounts (including long-term amounts included in regulatory assets) in 2018 compared to a $27 million decrease in 2017; and |
▪ | $9 million decrease in NDT in 2018 as a result of CPUC authorization to withdraw trust funds for SONGS decommissioning costs incurred primarily in 2018; offset by |
▪ | $30 million in purchases of GHG allowances in 2018 compared to $2 million in 2017. |
▪ | $6 million decrease in accounts receivable in 2018 compared to an $81 million decrease in 2017; |
▪ | $30 million increase in seasonal liability related to temporary LIFO liquidation in 2017, primarily due to changes in natural gas inventory value; and |
▪ | $32 million in purchases of GHG allowances in 2018 compared to $11 million in 2017; offset by |
▪ | $94 million increase in net overcollected regulatory balancing accounts (including long-term amounts included in regulatory assets) in 2018 compared to a $51 million increase in 2017; and |
▪ | $24 million higher net income, adjusted for noncash items included in earnings, in 2018 compared to 2017. |
CASH USED IN INVESTING ACTIVITIES | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Three months ended March 31, 2018 | 2018 change | Three months ended March 31, 2017(1) | ||||||||||||||
Sempra Energy Consolidated | $ | (10,632 | ) | $ | 9,606 | 936 | % | $ | (1,026 | ) | ||||||
SDG&E | (475 | ) | 95 | 25 | (380 | ) | ||||||||||
SoCalGas | (400 | ) | 8 | 2 | (392 | ) |
▪ | $9.55 billion paid, including $9.45 billion of Merger Consideration, for the acquisition of our investment in Oncor Holdings in March 2018, as we discuss in Note 5 of the Notes to Condensed Consolidated Financial Statements herein; and |
▪ | $43 million increase in capital expenditures. |
▪ | $57 million increase in capital expenditures; and |
▪ | $31 million repayment received in 2017 from advances to Sempra Energy. |
▪ | $46 million increase in capital expenditures; offset by |
▪ | $35 million increase in advances to Sempra Energy in 2017. |
EXPENDITURES FOR PROPERTY, PLANT AND EQUIPMENT | |||||||
(Dollars in millions) | |||||||
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
SDG&E: | |||||||
Improvements to electric and natural gas distribution systems, including certain pipeline safety | |||||||
and generation systems | $ | 350 | $ | 308 | |||
PSEP | 8 | 10 | |||||
Improvements to electric transmission systems | 114 | 92 | |||||
Electric generation plants and equipment | 3 | 8 | |||||
SoCalGas: | |||||||
Improvements to natural gas distribution, transmission and storage systems, and for certain | |||||||
pipeline safety | 357 | 307 | |||||
PSEP | 44 | 36 | |||||
Advanced metering infrastructure | 2 | 14 | |||||
Sempra South American Utilities: | |||||||
Improvements to electric transmission and distribution systems and generation projects in Peru | 40 | 29 | |||||
Improvements to electric transmission and distribution infrastructure in Chile | 16 | 14 | |||||
Sempra Mexico: | |||||||
Construction of the Sonora, Ojinaga and San Isidro pipeline projects | 18 | 85 | |||||
Construction of other natural gas pipeline and renewables projects, and capital expenditures at Ecogas | 41 | 9 | |||||
Sempra Renewables: | |||||||
Construction costs for wind projects | 5 | 28 | |||||
Construction costs for solar projects | 26 | 41 | |||||
Sempra LNG & Midstream: | |||||||
Cameron Interstate Pipeline expansion and other LNG liquefaction development costs | 5 | 3 | |||||
Other | 1 | — | |||||
Parent and other | 5 | 8 | |||||
Total | $ | 1,035 | $ | 992 |
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||
(Dollars in millions) | |||||||||||||
Three months ended March 31, 2018 | 2018 change | Three months ended March 31, 2017 | |||||||||||
Sempra Energy Consolidated | $ | 9,608 | $ | 9,654 | $ | (46 | ) | ||||||
SDG&E | 67 | 62 | 5 | ||||||||||
SoCalGas | (16 | ) | 46 | (62 | ) |
▪ | $5.4 billion higher issuances of debt with maturities greater than 90 days, primarily to fund the acquisition of our investment in Oncor Holdings in March 2018, as we discuss in Notes 5 and 7 of the Notes to Condensed Consolidated Financial Statements herein, including: |
◦ | $4.9 billion for long-term debt ($5 billion in 2018 compared to $50 million in 2017), and |
◦ | $527 million for commercial paper and other short-term debt ($1 billion in 2018 compared to $492 million in 2017); |
▪ | $1.7 billion proceeds, net of $32 million in offering costs, from the issuance of mandatory convertible preferred stock in 2018; |
▪ | $1.3 billion proceeds, net of $24 million in offering costs, from issuances of common stock in 2018; |
▪ | $1.1 billion increase in short-term debt in 2018 compared to a $97 million decrease in 2017; and |
▪ | $120 million lower payments of debt with maturities greater than 90 days, including: |
◦ | $84 million for long-term debt ($105 million in 2018 compared to $189 million in 2017), and |
◦ | $36 million for commercial paper and other short-term debt ($88 million in 2018 compared to $124 million in 2017). |
▪ | $175 million common dividends paid in 2017; and |
▪ | $140 million lower payments of long-term debt in 2018; offset by |
▪ | $256 million lower increase in short-term debt borrowings in 2018. |
INCREASE IN PRINCIPAL CONTRACTUAL COMMITMENTS – SEMPRA ENERGY CONSOLIDATED | |||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||
2018 | 2019 and 2020 | 2021 and 2022 | Thereafter | Total | |||||||||||||||
Long-term debt | $ | — | $ | 1,000 | $ | 700 | $ | 3,300 | $ | 5,000 | |||||||||
Interest on long-term debt(1) | 161 | 310 | 238 | 1,550 | 2,259 | ||||||||||||||
Total | $ | 161 | $ | 1,310 | $ | 938 | $ | 4,850 | $ | 7,259 |
(1) | We calculate expected interest payments using the stated interest rate for fixed-rate obligations. We calculate expected interest payments for variable-rate obligations based on forward rates in effect at March 31, 2018. |
CAPITAL PROJECTS – SDG&E | |||||||||
Project description | Estimated capital cost (in millions) | Status | |||||||
Electric Vehicle Charging | |||||||||
§ | January 2017 application, pursuant to SB 350, to perform various activities and make investments in support of residential EV charging. | $ | 50 | § | In January 2018, received approval for six priority projects at $20 million. | ||||
§ | In March 2018, draft decision issued, revising the proposal to five years, providing rebates to customers for 60,000 installations, reducing the estimated capital cost from $302 million to a total of $30 million. The O&M costs are estimated to be $169 million. | ||||||||
§ | January 2018 application, pursuant to SB 350, to make investments to support medium-duty and high-duty EVs with an estimated implementation cost of $7 million of O&M. | $ | 226 | § | Application pending; draft decision expected in the first quarter of 2019. | ||||
Energy Storage Projects | |||||||||
§ | April 2017 application to procure up to 70 MW of utility-owned energy storage to provide local capacity. | Not disclosed | § | Draft decision issued in April 2018 approving the project. | |||||
§ | February 2018 application, pursuant to AB 2868, to make investments to accelerate the widespread deployment of distributed energy storage systems. SDG&E’s application requests approval of 100 MW of utility-owned energy storage. | $ 161 | § | Application pending | |||||
Utility Billing and Customer Information Systems Software | |||||||||
§ | April 2017 application to replace the software, with an estimated implementation cost of $76 million of O&M. | $ | 222 | § | Application pending; joint party settlement filed January 2018; draft decision expected in the second quarter of 2018. |
▪ | Electric Rate Reform – California Assembly Bill 327 |
▪ | Potential Impacts of Community Choice Aggregation and Direct Access |
▪ | Renewable Energy Procurement |
▪ | Clean Energy and Pollution Reduction Act – California SB 350 |
▪ | SONGS |
CAPITAL PROJECT – SOCALGAS | |||||||||
Project description | Estimated capital cost (in millions) | Status | |||||||
San Joaquin Valley OIR | |||||||||
§ | In 2014, AB 2672 was signed into law providing increased access to energy for disadvantaged communities in the San Joaquin Valley. | $ | 85 | § | Decision expected in the third quarter of 2018. | ||||
§ | In January 2018, submitted pilot proposals for seven communities to extend existing pipelines, install gas service to each household, and replace existing propane appliances with new, energy efficient natural gas appliances, with an estimated implementation cost of $14 million of O&M. | ||||||||
▪ | Local Community Mitigation Efforts |
▪ | Insurance |
▪ | Governmental Investigations and Civil and Criminal Litigation |
▪ | Regulatory Proceedings |
▪ | Governmental Orders and Additional Regulation |
▪ | SB 380 |
▪ | SB 888 |
▪ | Additional Safety Enhancements |
JOINT CAPITAL PROJECTS – CALIFORNIA UTILITIES | |||||||||
Project description | Estimated capital cost (in millions) | Status | |||||||
Pipeline Safety & Reliability Project | |||||||||
§ | September 2015 application and March 2016 amended application seeking authority to recover the estimated $633 million cost of the project, involving construction of an approximately 47-mile, 36-inch natural gas transmission pipeline in San Diego County. | $ | 633 | § | Procedural schedule set for two phases to address (1) long-term need and planning assumptions, and (2) costs, alternatives and environmental impacts. | ||||
§ | In May 2018, a draft decision was issued that denies the application, without prejudice, and instead directs SDG&E and SoCalGas to submit a hydrotest or replacement plan for the existing Line 1600 in its present corridor. If the draft decision is adopted, phase 2 will become moot. | ||||||||
§ | Would implement pipeline safety requirements and modernize system; improve system reliability and resiliency by minimizing dependence on a single pipeline; and enhance operational flexibility to manage stress conditions by increasing system capacity. | ||||||||
§ | PSRP is a PSEP project. Our investment in PSRP, totaling approximately $35 million at SDG&E as of March 31, 2018, evaluated test or replace options for Line 1600 consistent with the PSEP decision tree previously approved by the CPUC. We expect a final decision on PSRP as early as the second quarter of 2018. | ||||||||
Mobile Home Park Utility Upgrade Program | |||||||||
§ | May 2017 application filed with the CPUC to convert an additional 20 percent of eligible units to direct utility service, for a total of 30 percent of mobile homes. | $ | 471 | § | A CPUC OIR will incorporate the proposals sponsored by SDG&E and SoCalGas, and their pending applications filed in May 2017 will be dismissed without prejudice. | ||||
to | |||||||||
$ | 508 | ||||||||
§ | Estimated implementation cost of $2 million of O&M at SDG&E and $3 million to $4 million of O&M at SoCalGas. | § | September 2017 resolution approved extension of pilot program through the earlier of 2019 or the issuance of a CPUC decision on pending applications, while also allowing an increase from 10 percent to 15 percent of mobile homes to be converted. |
PIPELINE SAFETY ENHANCEMENT PLAN – REASONABLENESS REVIEW SUMMARY | |||||||||||||||
(Dollars in millions) | |||||||||||||||
2011 through March 31, 2018 | |||||||||||||||
Total invested(1) | CPUC review completed(2) | CPUC review pending(3) | 2018 and future applications(4)(5) | ||||||||||||
Sempra Energy Consolidated: | |||||||||||||||
Capital | $ | 1,544 | $ | 8 | $ | 144 | $ | 1,392 | |||||||
Operation and maintenance | 185 | 25 | 63 | 97 | |||||||||||
Total | $ | 1,729 | $ | 33 | $ | 207 | $ | 1,489 | |||||||
SoCalGas: | |||||||||||||||
Capital | $ | 1,189 | $ | 8 | $ | 130 | $ | 1,051 | |||||||
Operation and maintenance | 176 | 25 | 62 | 89 | |||||||||||
Total | $ | 1,365 | $ | 33 | $ | 192 | $ | 1,140 | |||||||
SDG&E: | |||||||||||||||
Capital | $ | 355 | $ | — | $ | 14 | $ | 341 | |||||||
Operation and maintenance | 9 | — | 1 | 8 | |||||||||||
Total | $ | 364 | $ | — | $ | 15 | $ | 349 |
(1) | Excludes disallowed costs through March 31, 2018 of $7 million at SoCalGas and $4 million at SDG&E for pressure testing or replacing pipelines installed between January 1, 1956 and July 1, 1961. Also excludes $35 million of costs incurred for the PSRP. |
(2) | Approved in December 2016; excludes $2 million of PSEP-specific insurance costs for which SoCalGas and SDG&E are authorized to request recovery in a future filing. |
(3) | Reasonableness Review Application for completed projects totaling $195 million filed in September 2016. Also includes approximately $12 million of pre-engineering costs incurred to support projects under development and submitted as part of the Forecast Application filed in March 2017. Both decisions are expected in 2018. |
(4) | Authorized to recover in rates 50 percent of the balances recorded in the PSEP balancing accounts each year, subject to refund. |
(5) | Reasonableness Review Application to be filed in late 2018 and expected to include the majority of these costs. Remaining costs not the subject of prior applications are to be included for review in subsequent GRCs. |
▪ | A majority of the independent directors of Oncor must approve any annual or multi-year budget if the aggregate amount of capital expenditures or O&M in such budget is more than a 10 percent increase or decrease from the corresponding amounts of such expenditures in the budget for the preceding fiscal year or multi-year period, as applicable; |
▪ | Oncor will make minimum aggregate capital expenditures equal to at least $7.5 billion over the period from January 1, 2018 through December 31, 2022 (subject to certain possible adjustments); |
▪ | Oncor may not pay any dividends or make any other distributions (except for contractual tax payments) if a majority of its independent directors or a minority member director determines that it is in the best interests of Oncor to retain such amounts to meet expected future requirements; |
▪ | At all times, Oncor will remain in compliance with the debt-to-equity ratio established by the PUCT from time to time for ratemaking purposes, and Oncor will not pay dividends or other distributions (except for contractual tax payments), if that payment would cause its debt-to-equity ratio to exceed the debt-to-equity ratio approved by the PUCT; |
▪ | If the credit rating on 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; |
▪ | Without the prior approval of the PUCT, neither Sempra Energy nor any of its affiliates (excluding Oncor) will incur, guarantee or pledge assets in respect of any indebtedness that is dependent on the revenues of Oncor in more than a proportionate degree than the other revenues of Sempra Energy or on the stock of Oncor, and there will be no debt at Sempra Texas Holdings Corp. or Sempra Texas Intermediate Holding Company LLC at any time; |
▪ | Neither Oncor nor Oncor Holdings will lend money to or borrow money from Sempra Energy or any of its affiliates (other than Oncor subsidiaries), or any entity with a direct or indirect ownership interest in Oncor Holdings or Oncor, and neither Oncor Holdings nor Oncor will share credit facilities with Sempra Energy or any of its affiliates (other than Oncor subsidiaries), or any entity with a direct or indirect ownership interest in Oncor Holdings or Oncor; |
▪ | Oncor will not seek recovery in rates of any expenses or liabilities related to EFH’s bankruptcy, or (1) any tax liabilities resulting from EFH’s spinoff of its former subsidiary Texas Competitive Electric Holdings Company LLC, (2) any asbestos claims relating to non-Oncor operations of EFH or (3) any make-whole claims by holders of debt securities issued by EFH or EFIH, and Sempra Energy was required to and has filed with the PUCT a plan providing for the extinguishment of the liabilities described in items (1) through (3) above, which protects Oncor from any harm; |
▪ | There must be maintained certain “separateness measures” that reinforce the financial separation of Oncor from Sempra Energy, including a requirement that dealings between Oncor, Oncor Holdings and their subsidiaries and Sempra Energy, any of Sempra Energy’s other affiliates or any entity with a direct or indirect ownership interest in Oncor Holdings or Oncor, must be on an arm’s-length basis, limitations on affiliate transactions, separate recordkeeping requirements and a prohibition on pledging Oncor assets or stock for any entity other than Oncor; |
▪ | No transaction costs or transition costs related to the Merger (excluding Oncor employee time) will be borne by Oncor’s customers nor included in Oncor’s rates; |
▪ | Sempra Energy will continue to hold indirectly at least 51 percent of the ownership interests in Oncor Holdings and Oncor for at least five years following the closing of the Merger, unless otherwise specifically authorized by the PUCT; and |
▪ | Oncor will provide bill credits to customers in an amount equal to 90 percent of any interest rate savings achieved due to any improvement in its credit ratings or market spreads compared to those as of June 30, 2017 until final rates are set in the next Oncor base rate case filed after PUCT Docket No. 46957 (except that savings will not be included in credits if already realized in rates); and one year after the Merger, Oncor will provide bill credits to its customers equal to 90 percent of any synergy savings until final rates are set in the next Oncor base rate proceeding after PUCT Docket No. 46957, at which time any total synergy savings shall be reflected in Oncor’s rates. |
CAPITAL PROJECTS – SEMPRA MEXICO | |||||||||
Project description | Estimated capital cost (in millions) | Status | |||||||
Don Diego Solar Complex | |||||||||
§ | Plan to develop, construct and operate a 125-MW photovoltaic project located in Sonora, Mexico. | $ | 130 | § | Estimated completion: second half of 2019 | ||||
§ | In February 2018, entered into a 15-year, U.S. dollar-denominated PPA with various subsidiaries of El Puerto de Liverpool, S.A.B. de C.V. for a portion of the capacity. | ||||||||
Baja Refinados Terminal | |||||||||
§ | Plan to develop, construct and operate a liquid fuels marine storage terminal within the La Jovita Energy Center, located 23 km north of Ensenada, Baja California, Mexico. | $ | 130 | § | Estimated completion: second half of 2020 | ||||
§ | Capacity of 1 million barrels of hydrocarbons, primarily gasoline and diesel, to increase fuel supply capacity and reliability in Baja California. | ||||||||
§ | In April 2018, entered into two long-term contracts for the receipt, storage and delivery of hydrocarbons with Chevron Combustibles de México S. de R.L. de C.V. and another global oil company for 100 percent of the terminal’s storage capacity. Both contracts contain an option for the customer to acquire 20 percent of the equity of the terminal after commercial operations begin. |
CAPITAL PROJECT COMPLETED IN 2018 – SEMPRA RENEWABLES | |||||||
Project description | |||||||
Great Valley Solar Project | |||||||
§ | Capable of producing up to 200 MW of solar power, located in Fresno County, California, acquired in July 2017. | § | Commercial operation dates and corresponding contracted energy sales commenced in four phases. Three phases commenced in the fourth quarter of 2017 and the final phase commenced in April 2018. | ||||
§ | Fully contracted under four PPAs with an average contract term of 18 years. |
▪ | two natural gas liquefaction trains with production capability of approximately 13.5 Mtpa, or 698 Bcf per year; |
▪ | three LNG storage tanks; |
▪ | natural gas liquids and refrigerant storage; |
▪ | feed gas pre-treatment facilities; and |
▪ | two berths and associated marine and loading facilities. |
NOMINAL AMOUNT OF LONG-TERM DEBT(1) | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||
Sempra Energy Consolidated | SDG&E | SoCalGas | Sempra Energy Consolidated | SDG&E | SoCalGas | |||||||||||||||||||
California Utilities fixed-rate | $ | 7,565 | $ | 4,556 | $ | 3,009 | $ | 7,582 | $ | 4,573 | $ | 3,009 | ||||||||||||
California Utilities variable-rate | 292 | 292 | — | 295 | 295 | — | ||||||||||||||||||
Other fixed-rate | 11,559 | — | — | 7,735 | — | — | ||||||||||||||||||
Other variable-rate | 2,660 | — | — | 1,539 | — | — |
(1) | Before the effects of acquisition-related fair value adjustments, interest rate swaps, reductions/increases for unamortized discount/premium and reduction for debt issuance costs, and excluding capital lease obligations and build-to-suit lease. |
EXHIBIT 10 -- MATERIAL CONTRACTS | ||
Sempra Energy | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 |
10.7 | ||
Sempra Energy/San Diego Gas & Electric/Southern California Gas Company | ||
Compensation | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
10.13 | ||
EXHIBIT 12 -- STATEMENTS RE: COMPUTATION OF RATIOS | ||
Sempra Energy | ||
12.1 | ||
San Diego Gas & Electric Company | ||
12.2 | ||
Southern California Gas Company | ||
12.3 | ||
EXHIBIT 31 -- SECTION 302 CERTIFICATIONS | ||
Sempra Energy | ||
31.1 | ||
31.2 | ||
San Diego Gas & Electric Company | ||
31.3 | ||
31.4 |
Southern California Gas Company | ||
31.5 | ||
31.6 | ||
EXHIBIT 32 -- SECTION 906 CERTIFICATIONS | ||
Sempra Energy | ||
32.1 | ||
32.2 | ||
San Diego Gas & Electric Company | ||
32.3 | ||
32.4 | ||
Southern California Gas Company | ||
32.5 | ||
32.6 | ||
EXHIBIT 101 -- INTERACTIVE DATA FILE | ||
Sempra Energy/San Diego Gas & Electric Company/Southern California Gas Company | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
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 7, 2018 | By: /s/ Peter R. Wall |
Peter R. Wall Vice President, Controller and Chief Accounting 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 7, 2018 | By: /s/ Bruce A. Folkmann |
Bruce A. Folkmann Vice President, Controller, Chief Financial Officer and Chief Accounting 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 7, 2018 | By: /s/ Bruce A. Folkmann |
Bruce A. Folkmann Vice President, Controller, Chief Financial Officer and Chief Accounting Officer |
Morgan Stanley & Co. LLC 1585 Broadway, 5th Floor New York, NY 10036 |
To: | Sempra Energy |
488 8th Avenue | |
San Diego, CA 92101 | |
Attention: General Counsel | |
Re: | Amendment to Registered Forward Transaction Confirmation |
By: | /s/ Darren McCarley |
Name: | Darren McCarley |
Title: | Managing Director |
By: | /s/ Kathryn Collier |
Name: | Kathryn Collier |
Title: | Vice President and Treasurer |
RBC Capital Markets, LLC Brookfield Place 200 Vesey Street, New York, NY 10281 Telephone: (212) 858-7000 |
To: | Sempra Energy |
488 8th Avenue | |
San Diego, CA 92101 | |
Attention: General Counsel | |
Re: | Amendment to Registered Forward Transaction Confirmation |
By: | /s/ Shane Didier |
Name: | Shane Didier |
Title: | Analyst |
By: | /s/ Kathryn Collier |
Name: | Kathryn Collier |
Title: | Vice President and Treasurer |
To: | Sempra Energy |
By: | ___________________________ |
By: | ___________________________ |
You have been granted a performance-based restricted stock unit award representing the right to receive the number of shares of Sempra Energy Common Stock set forth below, subject to the vesting conditions set forth below. The restricted stock units, and dividend equivalents with respect to the restricted stock units, under your award may not be sold or assigned and will be subject to forfeiture unless and until they vest based upon the satisfaction of total shareholder return performance criteria for a performance period beginning on <DATE>, <YEAR> and ending at <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“. Shares of Common Stock will be distributed to you after the completion of the performance period if the restricted stock units vest under the terms and conditions of your award. The terms and conditions of your award are set forth in the attached Year <YEAR> Restricted Stock Unit Award Agreement and in the Sempra Energy 2013 Long Term Incentive Plan, which has been provided to you. The summary below highlights selected terms and conditions but it is not complete and you should carefully read the attachments to fully understand the terms and conditions of your award. | ||||||
SUMMARY | ||||||
Date of Award: | <DATE>, <YEAR> | |||||
Name of Recipient: | ||||||
Recipient’s Employee Number: | ||||||
Number of Restricted Stock Units (prior to any dividend equivalents): | ||||||
At Target: | ||||||
At Maximum: | 200% of Target (e.g. 1,000 at Target = 2,000 at Maximum) | |||||
Award Date Fair Market Value per Share of Common Stock (Closing Stock Price on Date of Award): | $<PRICE> | |||||
Restricted Stock Units: | ||||||
Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. The target number of restricted stock units will vest (subject to adjustment as described below), if the target total shareholder return (a return at the 50th percentile) is achieved. If above target total shareholder return is achieved, you may vest in up to the maximum number of restricted stock units plus reinvested dividend equivalents as described below. | ||||||
Vesting/Forfeiture of Restricted Stock Units: | ||||||
Subject to certain exceptions set forth in the Year <YEAR> Restricted Stock Unit Award Agreement, your restricted stock units will vest immediately following the Compensation Committee’s determination and certification of the extent to which Sempra Energy has met specified total shareholder return performance criteria for the performance period beginning on <DATE>, <YEAR> and ending at <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“. Any restricted stock units that do not vest with the Compensation Committee's determination and certification (or otherwise in accordance with your Restricted Stock Unit Award Agreement) will be forfeited. | ||||||
Transfer Restrictions: | ||||||
Your restricted stock units may not be sold or otherwise transferred and will remain subject to forfeiture conditions until they vest. | ||||||
Termination of Employment: | ||||||
Your restricted stock units also may be forfeited if your employment terminates. | ||||||
Dividend Equivalents: | ||||||
You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as the shares represented by your restricted stock units. |
Distribution of Shares: | ||||||
Shares of Common Stock will be distributed to you to the extent your restricted stock units (and corresponding dividend equivalents) vest. Except as provided otherwise in the attached Year <YEAR> Restricted Stock Unit Award Agreement, the shares will be distributed to you after the completion of the performance period ending at <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“ and the Compensation Committee’s determination and certification of Sempra Energy’s total shareholder return for the performance period. The shares of Common Stock will include the additional shares to be distributed pursuant to your vested dividend equivalents. | ||||||
Taxes: | ||||||
Upon distribution of shares of Common Stock to you, you will be subject to income taxes on the value of the distributed shares at the time of distribution and must pay applicable withholding taxes. | ||||||
By your acceptance of this award, you agree to all of the terms and conditions set forth in this Cover Page/Summary, the attached Year <YEAR> Restricted Stock Unit Award Agreement and the Sempra Energy 2013 Long Term Incentive Plan. | ||||||
Recipient: | X | |||||
(Signature) | ||||||
Sempra Energy: | <CEO> | |||||
(Signature) | ||||||
Title: | <TITLE> |
Award: | You have been granted a performance-based restricted stock unit award under Sempra Energy’s 2013 Long Term Incentive Plan. The award consists of the number of restricted stock units set forth on the Cover Page/Summary to this Agreement, and dividend equivalents with respect to the restricted stock units (described below). Capitalized terms used in this Agreement and not defined shall have the meaning set forth in the Plan. Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. Each restricted stock unit initially represents the right to receive one share of Common Stock upon the vesting of the unit. Unless and until they vest, your restricted stock units and any dividend equivalents (as described below) will be subject to transfer restrictions and forfeiture and vesting conditions. Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, your restricted stock units (and dividend equivalents) will vest immediately following and only to the extent that the Compensation Committee of Sempra Energy's Board of Directors (the “Compensation Committee”) determines and certifies that Sempra Energy has met specified total shareholder return criteria for the performance period beginning <DATE>, <YEAR> and ending at <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“. Any restricted stock units (and dividend equivalents) that do not vest will be forfeited. Your restricted stock units (and dividend equivalents) also may be forfeited if your employment terminates before they vest. See “Vesting/Forfeiture,” “Transfer Restrictions,” and “Termination of Employment” below. |
Vesting/Forfeiture: | Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, your restricted stock units (and dividend equivalents, as described below) will vest immediately following and only to the extent that the Compensation Committee determines and certifies that Sempra Energy has met the following total shareholder return performance criteria for the performance period beginning on <DATE>, <YEAR> and ending on <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“: Preliminary Calculation Based on Sempra Energy’s cumulative total shareholder return relative to the S&P 500 Index: § The percentage of your target number of restricted stock units that vest will be determined as follows, based on the percentile ranking for the performance period (as measured based on the thirty-day average closing stock price immediately preceding the start of the performance period compared to the thirty-day average closing stock price immediately preceding the end of the performance period) of Sempra Energy’s cumulative total shareholder return (consisting of per share appreciation in Common Stock plus reinvested dividends and other distributions paid on Common Stock) among the companies (ranked by cumulative total shareholder returns) in the S&P 500 Index, as determined and certified by the Compensation Committee, subject to adjustment as described below. For the avoidance of doubt, the thirty-day average preceding the beginning of the performance period shall be based on the thirty calendar days prior to and excluding <DATE>, <YEAR> and the thirty day average preceding the end of the performance period shall be based on the thirty calendar days prior to and including <DATE>, <YEAR> or “the first NYSE trading day of <YEAR>”. |
Sempra Energy Total Shareholder Return Percentile Ranking | Percentage of Target Number of Restricted Stock Units that Vest | ||||
90th | 200% | ||||
80th | 175% | ||||
70th | 150% | ||||
60th | 125% | ||||
50th | 100% | ||||
40th | 70% | ||||
35th | 55% | ||||
30th | 40% | ||||
25th | 0% |
If the percentile ranking does not equal a ranking shown in the above table, the percentage of your target number of restricted stock units that vest will be determined by a linear interpolation between the next lowest percentile shown in the table and the next highest percentile shown on the table, subject to adjustment as described below. o If the percentile ranking is at or above the 90th percentile, 200% of your target number of restricted stock units will vest, subject to adjustment as described below. o If the percentile ranking is at or below the 25th percentile, none of your restricted stock units will vest. Final Calculation with Potential Adjustment based on Sempra Energy’s cumulative total shareholder return: • The Compensation Committee will then determine and certify the final percentage of your target restricted stock units that vest (based on the relative total shareholder return performance criteria described above) and as adjusted by the cumulative total shareholder return performance criteria described below: o If Sempra Energy’s cumulative total shareholder return for the performance period (as measured based on the thirty-day average closing stock price immediately preceding the start of the performance period compared to the thirty-day average closing stock price immediately preceding the end of the performance period) is at or above <PERCENTAGE>%, the percentage of your restricted stock units that vest will be increased by 20%, but in no event shall the percentage of your target restricted stock unit that vest exceed 200%. o If Sempra Energy’s cumulative total shareholder return for the performance period (as measured based on the thirty-day average closing stock price immediately preceding the start of the performance period compared to the thirty-day average closing stock price immediately preceding the end of the performance period) is at or below <PERCENTAGE>%, the percentage of your restricted stock units that vest will be decreased by 20%. o If Sempra Energy’s cumulative total shareholder return for the performance period (as measured based on the thirty-day average closing stock price immediately preceding the start of the performance period compared to the thirty-day average closing stock price immediately preceding the end of the performance period) is above <PERCENTAGE>% but below <PERCENTAGE>%, no adjustment will be applied. • As soon as reasonably practicable following the end of the performance period, the Compensation Committee will determine and certify the extent to which Sempra Energy has met the performance criteria and the extent, if any, as to which your restricted stock units have then vested and any such vesting shall occur immediately following such determination and certification by the Compensation Committee. You will receive the number of shares of Common Stock equal to the number of your vested restricted stock units after the Compensation Committee’s determination and certification. Also, you will receive the number of shares of Common Stock equal to your vested dividend equivalents after the Compensation Committee’s determination and certification. Certificates for the shares will be issued to you or transferred to an account that you designate. When the shares of Common Stock are issued to you, your restricted stock units (vested and unvested) and your dividend equivalents will terminate. • Examples illustrating the application of the vesting provisions are shown in Exhibit A to this Award Agreement. |
Transfer Restrictions: | You may not sell or otherwise transfer or assign your restricted stock units (or your dividend equivalents). |
Dividend Equivalents: | You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as your restricted stock units. They will vest when and to the extent your restricted stock units vest. Also, your restricted stock units (and dividend equivalents), including the terms and conditions thereof, will be adjusted to prevent dilution or enlargement of your rights in the event of a stock dividend on shares of Common Stock or as the result of a stock-split, recapitalization, reorganization or other similar transaction in accordance with the terms and conditions of the 2013 Long Term Incentive Plan. Any additional restricted stock units (and dividend equivalents) awarded to you as a result of such an adjustment also will be subject to the same transfer restrictions, forfeiture and vesting conditions and other terms and conditions that are applicable to your restricted stock units (and dividend equivalents). |
No Shareholder Rights: | Your restricted stock units (and dividend equivalents) are not shares of Common Stock. You will have no rights as a shareholder unless and until shares of Common Stock are issued to you following the vesting of your restricted stock units (and dividend equivalents) as provided in this Agreement and the 2013 Long Term Incentive Plan. |
Distribution of Shares: | As described in “Vesting/Forfeiture” above, the Compensation Committee will determine and certify the extent to which Sempra Energy has met the performance criteria and the extent, if any, as to which your restricted stock units have then vested. You will receive the number of shares of Common Stock equal to the number of your restricted stock units that have vested. However, in no event will you receive under this award, and other awards granted to you under the 2013 Long Term Incentive Plan in the same fiscal year of Sempra Energy, more than the maximum number of shares of Common Stock permitted under the 2013 Long Term Incentive Plan. Also, you will receive the number of shares of Common Stock equal to your vested dividend equivalents after the Compensation Committee’s determination and certification. You will receive the shares as soon as reasonably practicable following the Compensation Committee’s determination and certification (and in no event later than March 15, <YEAR>). Once you receive the shares of Common Stock, your vested and unvested restricted stock units (and dividend equivalents) will terminate. |
Termination of Employment: |
§ Termination: | If your employment with Sempra Energy and its Subsidiaries terminates for any reason prior to the vesting of your restricted stock units (and dividend equivalents) (other than under the circumstances set forth in the following provisions of this section), all of your restricted stock units (and dividend equivalents) will be forfeited. Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, the vesting of your restricted stock units (and dividend equivalents) does not occur until the date of the Compensation Committee’s determination and certification described above. If your employment terminates prior to a Change in Control, other than by termination for cause, and you had both completed at least five years of continuous service with Sempra Energy and its Subsidiaries AND met any of the following conditions: 1.) your employment terminates after <DATE>, <YEAR> and at the date of termination you had attained age 55; or 2.) your employment terminates after <DATE>, <YEAR> and at the date of termination you had attained age 62; or 3.) at the date of termination you had attained age 65 and you were an officer subject to the company’s mandatory retirement policy; your restricted stock units (and dividend equivalents) will not be forfeited but will continue to be subject to the transfer restrictions and vesting conditions and other terms and conditions of this Agreement. If your employment terminates by reason of your death prior to the vesting of your restricted stock units and your award would otherwise be forfeited (for example, you do not meet the age and service conditions described above), your award will be deemed forfeited immediately prior to the date and time it would otherwise vest, unless, and to the extent that, prior to such date and time, the Compensation Committee in its sole discretion takes action to waive the service requirement described above. |
§ Termination for Cause: | If your employment with Sempra Energy and its Subsidiaries terminates for cause, or your employment would have been subject to termination for cause, prior to the vesting of your restricted stock units (and dividend equivalents), all of your restricted stock units (and dividend equivalents) will be cancelled. Prior to the consummation of a Change in Control, a termination for cause is (i) the willful failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness), (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) your gross insubordination; and/or (iv) your commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i), no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your act, or failure to act, was in the best interests of the Company. If your restricted stock units remain outstanding following a Change in Control pursuant to a Replacement Award, a termination for cause following such Change in Control shall be determined in accordance with Section 2.8 of the 2013 Long Term Incentive Plan (which defines “Cause” for purposes of the plan), including reasonable notice and, if possible, a reasonable opportunity to cure as provided therein. |
Taxes: |
§ Withholding Taxes: | When you become subject to withholding taxes upon distribution of the shares of Common Stock or otherwise, Sempra Energy or its Subsidiary is required to withhold taxes. Unless you instruct otherwise and pay or make arrangements satisfactory to Sempra Energy to pay these taxes, upon the distribution of your shares, Sempra Energy will withhold a sufficient number of shares of common stock or restricted stock units to cover the minimum required withholding taxes and transfer to you only the remaining balance of your shares. In the event that, following a Change in Control, your restricted stock units become eligible for a distribution upon your Retirement by reason of your combined age and service, your restricted stock units may become subject to employment tax withholding prior to the distribution of shares with respect to such units. |
§ Code Section 409A: | Your restricted stock units are subject to Sections 16.5 and 20.12 of the 2013 Long Term Incentive Plan, which set forth terms to comply with Code Section 409A. |
Recoupment (“Clawback”) Policy: | The Company shall require the forfeiture, recovery or reimbursement of awards or compensation under the Plan and this Award as (i) required by applicable law, or (ii) required under any policy implemented or maintained by the Company pursuant to any applicable rules or requirements of a national securities exchange or national securities association on which any securities of the Company are listed. The Company reserves the right to recoup compensation paid if it determines that the results on which the compensation was paid were not actually achieved. The Compensation Committee may, in its sole discretion, require the recovery or reimbursement of long-term incentive compensation awards from any employee whose fraudulent or intentional misconduct materially affects the operations or financial results of the Company or its Subsidiaries. |
Retention Rights: | Neither your restricted stock unit award nor this Agreement gives you any right to be retained by Sempra Energy or any of its Subsidiaries in any capacity and your employer reserves the right to terminate your employment at any time, with or without cause. The value of your award will not be included as compensation or earnings for purposes of any other benefit plan offered by Sempra Energy or any of its Subsidiaries. |
Change in Control: | In the event of a Change in Control, the following terms shall apply: § If (i) you have achieved age 55 and have completed at least five years of continuous service with Sempra Energy and its Subsidiaries as of the date of a Change in Control and your restricted stock units have not been forfeited prior to the Change in Control, (ii) your outstanding restricted stock units as of the date of a Change in Control are not subject to a “substantial risk of forfeiture” within the meaning of Code Section 409A and/or (iii) your outstanding restricted stock units are not assumed or substituted with one or more Replacement Awards (as defined in Section 16.1 of the 2013 Long Term Incentive Plan), then in each case your outstanding restricted stock units and any associated dividend equivalents will vest immediately prior to the Change in Control with the applicable performance goals deemed to have been achieved at the greater of target level as of the date of such vesting or the actual performance level had the performance period ended on the date of the Change in Control. If the foregoing terms apply, immediately prior to the date of the Change in Control you will receive a number of shares of Common Stock equal to the number of your restricted stock units and dividend equivalents that have vested. • If your outstanding restricted stock awards are assumed or substituted with one or more Replacement Awards (as defined in Section 16.1 of the 2013 Long Term Incentive Plan), then, except as provided otherwise in an individual severance agreement or employment agreement to which you are a party, the terms set forth in Sections 16.3 and 16.4 of the 2013 Long Term Incentive Plan shall apply with respect to such Replacement Award following the Change in Control. If the foregoing terms apply and the Replacement Award vests upon your separation from service or death, on such date, you will receive a number of shares or other property in settlement of the Replacement Awards. |
Further Actions: | You agree to take all actions and execute all documents appropriate to carry out the provisions of this Agreement. You shall not be deemed to have accepted this award unless you execute the Arbitration Agreement provided with your award letter. You also appoint as your attorney-in-fact each individual who at the time of so acting is the Secretary or an Assistant Secretary of Sempra Energy with full authority to effect any transfer of any shares of Common Stock distributable to you, including any transfer to pay withholding taxes, that is authorized by this Agreement. |
Applicable Law: | This Agreement will be interpreted and enforced under the laws of the State of California. |
Disputes: | Any and all disputes between you and the Company relating to or arising out of the Plan or your restricted stock unit award shall be subject to the Arbitration Agreement provided with your award letter, including, but not limited to, any disputes referenced in Section 16.4 of the Plan. |
Other Agreements: | In the event of any conflict between the terms of this Agreement and any written employment, severance or other employment-related agreement between you and Sempra Energy, the terms of this Agreement, or the terms of such other agreement, whichever are more favorable to you, shall prevail, provided that in each case a conflict shall be resolved in a manner consistent with the intent that your restricted stock units comply with Code Section 409A. In the event of a conflict between the terms of this Agreement and the 2013 Long Term Incentive Plan, the plan document shall prevail. |
You have been granted a performance-based restricted stock unit award representing the right to receive the number of shares of Sempra Energy Common Stock set forth below, subject to the vesting conditions set forth below. The restricted stock units, and dividend equivalents with respect to the restricted stock units, under your award may not be sold or assigned and will be subject to forfeiture unless and until they vest based upon the satisfaction of total shareholder return performance criteria for a performance period beginning on <DATE>, <YEAR> and ending at <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“. Shares of Common Stock will be distributed to you after the completion of the performance period if the restricted stock units vest under the terms and conditions of your award. The terms and conditions of your award are set forth in the attached Year <YEAR> Restricted Stock Unit Award Agreement and in the Sempra Energy 2013 Long Term Incentive Plan, which has been provided to you. The summary below highlights selected terms and conditions but it is not complete and you should carefully read the attachments to fully understand the terms and conditions of your award. | ||||||
SUMMARY | ||||||
Date of Award: | <DATE>, <YEAR> | |||||
Name of Recipient: | ||||||
Recipient’s Employee Number: | ||||||
Number of Restricted Stock Units (prior to any dividend equivalents): | ||||||
At Target: | ||||||
At Maximum: | 200% of Target (e.g. 1,000 at Target = 2,000 at Maximum) | |||||
Award Date Fair Market Value per Share of Common Stock (Closing Stock Price on Date of Award): | $<PRICE> | |||||
Restricted Stock Units: | ||||||
Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. The target number of restricted stock units will vest, if the target total shareholder return (a return at the 50th percentile) is achieved. If above target total shareholder return is achieved, you may vest in up to the maximum number of restricted stock units plus reinvested dividend equivalents as described below. | ||||||
Vesting/Forfeiture of Restricted Stock Units: | ||||||
Subject to certain exceptions set forth in the Year <YEAR> Restricted Stock Unit Award Agreement, your restricted stock units will vest immediately following the Compensation Committee’s determination and certification of the extent to which Sempra Energy has met specified total shareholder return performance criteria for the performance period beginning on <DATE>, <YEAR> and ending at <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“. Any restricted stock units that do not vest with the Compensation Committee's determination and certification (or otherwise in accordance with your Restricted Stock Unit Award Agreement) will be forfeited. | ||||||
Transfer Restrictions: | ||||||
Your restricted stock units may not be sold or otherwise transferred and will remain subject to forfeiture conditions until they vest. | ||||||
Termination of Employment: | ||||||
Your restricted stock units also may be forfeited if your employment terminates. | ||||||
Dividend Equivalents: | ||||||
You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as the shares represented by your restricted stock units. |
Distribution of Shares: | ||||||
Shares of Common Stock will be distributed to you to the extent your restricted stock units (and corresponding dividend equivalents) vest. Except as provided otherwise in the attached Year <YEAR> Restricted Stock Unit Award Agreement, the shares will be distributed to you after the completion of the performance period ending at <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“ and the Compensation Committee’s determination and certification of Sempra Energy’s total shareholder return for the performance period. The shares of Common Stock will include the additional shares to be distributed pursuant to your vested dividend equivalents. | ||||||
Taxes: | ||||||
Upon distribution of shares of Common Stock to you, you will be subject to income taxes on the value of the distributed shares at the time of distribution and must pay applicable withholding taxes. | ||||||
By your acceptance of this award, you agree to all of the terms and conditions set forth in this Cover Page/Summary, the attached Year <YEAR> Restricted Stock Unit Award Agreement and the Sempra Energy 2013 Long Term Incentive Plan. | ||||||
Recipient: | X | |||||
(Signature) | ||||||
Sempra Energy: | <CEO> | |||||
(Signature) | ||||||
Title: | <TITLE> |
Award: | You have been granted a performance-based restricted stock unit award under Sempra Energy’s 2013 Long Term Incentive Plan. The award consists of the number of restricted stock units set forth on the Cover Page/Summary to this Agreement, and dividend equivalents with respect to the restricted stock units (described below). Capitalized terms used in this Agreement and not defined shall have the meaning set forth in the Plan. Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. Each restricted stock unit initially represents the right to receive one share of Common Stock upon the vesting of the unit. Unless and until they vest, your restricted stock units and any dividend equivalents (as described below) will be subject to transfer restrictions and forfeiture and vesting conditions. Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, your restricted stock units (and dividend equivalents) will vest immediately following and only to the extent that the Compensation Committee of Sempra Energy's Board of Directors (the “Compensation Committee”) determines and certifies that Sempra Energy has met specified total shareholder return criteria for the performance period beginning <DATE>, <YEAR> and ending at <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“. Any restricted stock units (and dividend equivalents) that do not vest will be forfeited. Your restricted stock units (and dividend equivalents) also may be forfeited if your employment terminates before they vest. See “Vesting/Forfeiture,” “Transfer Restrictions,” and “Termination of Employment” below. |
Vesting/Forfeiture: | Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, your restricted stock units (and dividend equivalents, as described below) will vest immediately following and only to the extent that the Compensation Committee determines and certifies that Sempra Energy has met the following total shareholder return performance criteria for the performance period beginning on <DATE>, <YEAR> and ending on <DATE>, <YEAR> or “the close of trading on the first New York Stock Exchange trading day of <YEAR>“: § The percentage of your target number of restricted stock units that vest will be determined as follows, based on the percentile ranking for the performance period (as measured based on the thirty-day average closing stock price immediately preceding the start of the performance period compared to the thirty-day average closing stock price immediately preceding the end of the performance period) of Sempra Energy’s cumulative total shareholder return (consisting of per share appreciation in Common Stock plus reinvested dividends and other distributions paid on Common Stock) among the companies (ranked by cumulative total shareholder returns) in the S&P 500 Utilities Index (excluding water companies), as determined and certified by the Compensation Committee. For the avoidance of doubt, the thirty-day average preceding the beginning of the performance period shall be based on the thirty calendar days prior to and excluding <DATE>, <YEAR> and the thirty day average preceding the end of the performance period shall be based on the thirty calendar days prior to and including the first NYSE trading day of <YEAR> |
Sempra Energy Total Shareholder Return Percentile Ranking | Percentage of Target Number of Restricted Stock Units that Vest | |||
90th | 200% | |||
80th | 175% | |||
70th | 150% | |||
60th | 125% | |||
50th | 100% | |||
40th | 70% | |||
35th | 55% | |||
30th | 40% | |||
25th | 0% |
If the percentile ranking does not equal a ranking shown in the above table, the percentage of your target number of restricted stock units that vest will be determined by a linear interpolation between the next lowest percentile shown in the table and the next highest percentile shown on the table. o If the percentile ranking is at or above the 90th percentile, 200% of your target number of restricted stock units will vest. o If the percentile ranking is at or below the 25th percentile, none of your restricted stock units will vest. • As soon as reasonably practicable following the end of the performance period, the Compensation Committee will determine and certify the extent to which Sempra Energy has met the performance criteria and the extent, if any, as to which your restricted stock units have then vested and any such vesting shall occur immediately following such determination and certification by the Compensation Committee. You will receive the number of shares of Common Stock equal to the number of your vested restricted stock units after the Compensation Committee’s determination and certification. Also, you will receive the number of shares of Common Stock equal to your vested dividend equivalents after the Compensation Committee’s determination and certification. Certificates for the shares will be issued to you or transferred to an account that you designate. When the shares of Common Stock are issued to you, your restricted stock units (vested and unvested) and your dividend equivalents will terminate. | |
Transfer Restrictions: | You may not sell or otherwise transfer or assign your restricted stock units (or your dividend equivalents). |
Dividend Equivalents: | You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as your restricted stock units. They will vest when and to the extent your restricted stock units vest. Also, your restricted stock units (and dividend equivalents), including the terms and conditions thereof, will be adjusted to prevent dilution or enlargement of your rights in the event of a stock dividend on shares of Common Stock or as the result of a stock-split, recapitalization, reorganization or other similar transaction in accordance with the terms and conditions of the 2013 Long Term Incentive Plan. Any additional restricted stock units (and dividend equivalents) awarded to you as a result of such an adjustment also will be subject to the same transfer restrictions, forfeiture and vesting conditions and other terms and conditions that are applicable to your restricted stock units (and dividend equivalents). |
No Shareholder Rights: | Your restricted stock units (and dividend equivalents) are not shares of Common Stock. You will have no rights as a shareholder unless and until shares of Common Stock are issued to you following the vesting of your restricted stock units (and dividend equivalents) as provided in this Agreement and the 2013 Long Term Incentive Plan. |
Distribution of Shares: | As described in “Vesting/Forfeiture” above, the Compensation Committee will determine and certify the extent to which Sempra Energy has met the performance criteria and the extent, if any, as to which your restricted stock units have then vested. You will receive the number of shares of Common Stock equal to the number of your restricted stock units that have vested. However, in no event will you receive under this award, and other awards granted to you under the 2013 Long Term Incentive Plan in the same fiscal year of Sempra Energy, more than the maximum number of shares of Common Stock permitted under the 2013 Long Term Incentive Plan. Also, you will receive the number of shares of Common Stock equal to your vested dividend equivalents after the Compensation Committee’s determination and certification. You will receive the shares as soon as reasonably practicable following the Compensation Committee’s determination and certification (and in no event later than March 15, <YEAR>). Once you receive the shares of Common Stock, your vested and unvested restricted stock units (and dividend equivalents) will terminate. |
Termination of Employment: |
§ Termination: | If your employment with Sempra Energy and its Subsidiaries terminates for any reason prior to the vesting of your restricted stock units (and dividend equivalents) (other than under the circumstances set forth in the following provisions of this section), all of your restricted stock units (and dividend equivalents) will be forfeited. Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, the vesting of your restricted stock units (and dividend equivalents) does not occur until the date of the Compensation Committee’s determination and certification described above. If your employment terminates prior to a Change in Control, other than by termination for cause, and you had both completed at least five years of continuous service with Sempra Energy and its Subsidiaries AND met any of the following conditions: 1.) your employment terminates after <DATE>, <YEAR> and at the date of termination you had attained age 55; or 2.) your employment terminates after <DATE>, <YEAR> and at the date of termination you had attained age 62; or 3.) at the date of termination you had attained age 65 and you were an officer subject to the company’s mandatory retirement policy; your restricted stock units (and dividend equivalents) will not be forfeited but will continue to be subject to the transfer restrictions and vesting conditions and other terms and conditions of this Agreement. If your employment terminates by reason of your death prior to the vesting of your restricted stock units and your award would otherwise be forfeited (for example, you do not meet the age and service conditions described above), your award will be deemed forfeited immediately prior to the date and time it would otherwise vest, unless, and to the extent that, prior to such date and time, the Compensation Committee in its sole discretion takes action to waive the service requirement described above. |
§ Termination for Cause: | If your employment with Sempra Energy and its Subsidiaries terminates for cause, or your employment would have been subject to termination for cause, prior to the vesting of your restricted stock units (and dividend equivalents), all of your restricted stock units (and dividend equivalents) will be cancelled. Prior to the consummation of a Change in Control, a termination for cause is (i) the willful failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness), (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) your gross insubordination; and/or (iv) your commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i), no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your act, or failure to act, was in the best interests of the Company. If your restricted stock units remain outstanding following a Change in Control pursuant to a Replacement Award, a termination for cause following such Change in Control shall be determined in accordance with Section 2.8 of the 2013 Long Term Incentive Plan (which defines “Cause” for purposes of the plan), including reasonable notice and, if possible, a reasonable opportunity to cure as provided therein. |
Taxes: |
§ Withholding Taxes: | When you become subject to withholding taxes upon distribution of the shares of Common Stock or otherwise, Sempra Energy or its Subsidiary is required to withhold taxes. Unless you instruct otherwise and pay or make arrangements satisfactory to Sempra Energy to pay these taxes, upon the distribution of your shares, Sempra Energy will withhold a sufficient number of shares of common stock or restricted stock units to cover the minimum required withholding taxes and transfer to you only the remaining balance of your shares. In the event that, following a Change in Control, your restricted stock units become eligible for a distribution upon your Retirement by reason of your combined age and service, your restricted stock units may become subject to employment tax withholding prior to the distribution of shares with respect to such units. |
§ Code Section 409A: | Your restricted stock units are subject to Sections 16.5 and 20.12 of the 2013 Long Term Incentive Plan, which set forth terms to comply with Code Section 409A. |
Recoupment (“Clawback”) Policy: | The Company shall require the forfeiture, recovery or reimbursement of awards or compensation under the Plan and this Award as (i) required by applicable law, or (ii) required under any policy implemented or maintained by the Company pursuant to any applicable rules or requirements of a national securities exchange or national securities association on which any securities of the Company are listed. The Company reserves the right to recoup compensation paid if it determines that the results on which the compensation was paid were not actually achieved. The Compensation Committee may, in its sole discretion, require the recovery or reimbursement of long-term incentive compensation awards from any employee whose fraudulent or intentional misconduct materially affects the operations or financial results of the Company or its Subsidiaries. |
Retention Rights: | Neither your restricted stock unit award nor this Agreement gives you any right to be retained by Sempra Energy or any of its Subsidiaries in any capacity and your employer reserves the right to terminate your employment at any time, with or without cause. The value of your award will not be included as compensation or earnings for purposes of any other benefit plan offered by Sempra Energy or any of its Subsidiaries. |
Change in Control: | In the event of a Change in Control, the following terms shall apply: § If (i) you have achieved age 55 and have completed at least five years of continuous service with Sempra Energy and its Subsidiaries as of the date of a Change in Control and your restricted stock units have not been forfeited prior to the Change in Control, (ii) your outstanding restricted stock units as of the date of a Change in Control are not subject to a “substantial risk of forfeiture” within the meaning of Code Section 409A and/or (iii) your outstanding restricted stock units are not assumed or substituted with one or more Replacement Awards (as defined in Section 16.1 of the 2013 Long Term Incentive Plan), then in each case your outstanding restricted stock units and any associated dividend equivalents will vest immediately prior to the Change in Control with the applicable performance goals deemed to have been achieved at the greater of target level as of the date of such vesting or the actual performance level had the performance period ended on the date of the Change in Control. If the foregoing terms apply, immediately prior to the date of the Change in Control you will receive a number of shares of Common Stock equal to the number of your restricted stock units and dividend equivalents that have vested. • If your outstanding restricted stock awards are assumed or substituted with one or more Replacement Awards (as defined in Section 16.1 of the 2013 Long Term Incentive Plan), then, except as provided otherwise in an individual severance agreement or employment agreement to which you are a party, the terms set forth in Sections 16.3 and 16.4 of the 2013 Long Term Incentive Plan shall apply with respect to such Replacement Award following the Change in Control. If the foregoing terms apply and the Replacement Award vests upon your separation from service or death, on such date, you will receive a number of shares or other property in settlement of the Replacement Awards. |
Further Actions: | You agree to take all actions and execute all documents appropriate to carry out the provisions of this Agreement. You shall not be deemed to have accepted this award unless you execute the Arbitration Agreement provided with your award letter. You also appoint as your attorney-in-fact each individual who at the time of so acting is the Secretary or an Assistant Secretary of Sempra Energy with full authority to effect any transfer of any shares of Common Stock distributable to you, including any transfer to pay withholding taxes, that is authorized by this Agreement. |
Applicable Law: | This Agreement will be interpreted and enforced under the laws of the State of California. |
Disputes: | Any and all disputes between you and the Company relating to or arising out of the Plan or your restricted stock unit award shall be subject to the Arbitration Agreement provided with your award letter, including, but not limited to, any disputes referenced in Section 16.4 of the Plan. |
Other Agreements: | In the event of any conflict between the terms of this Agreement and any written employment, severance or other employment-related agreement between you and Sempra Energy, the terms of this Agreement, or the terms of such other agreement, whichever are more favorable to you, shall prevail, provided that in each case a conflict shall be resolved in a manner consistent with the intent that your restricted stock units comply with Code Section 409A. In the event of a conflict between the terms of this Agreement and the 2013 Long Term Incentive Plan, the plan document shall prevail. |
You have been granted a performance-based restricted stock unit award representing the right to receive the number of shares of Sempra Energy Common Stock set forth below, subject to the vesting conditions set forth below. The restricted stock units, and dividend equivalents with respect to the restricted stock units, under your award may not be sold or assigned. They will be subject to forfeiture unless and until they vest based upon the satisfaction of performance criteria for a performance period beginning on January 1, <YEAR> and ending on December 31, <YEAR>. Shares of Common Stock will be distributed to you after the completion of the performance period ending on December 31, <YEAR>, if the restricted stock units vest under the terms and conditions of your award. The terms and conditions of your award are set forth in the attached Year <YEAR> Restricted Stock Unit Award Agreement and in the Sempra Energy 2013 Long Term Incentive Plan, which has been provided to you. The summary below highlights selected terms and conditions but it is not complete and you should carefully read the attachments to fully understand the terms and conditions of your award. | |||||
SUMMARY | |||||
Date of Award: | <DATE>, <YEAR> | ||||
Name of Recipient: | NAME | ||||
Recipient’s Employee Number: | EE ID | ||||
Number of Restricted Stock Units (prior to any dividend equivalents): | |||||
At Target: | # RSU | ||||
At Maximum: | 200% of Target (e.g. 1,000 at Target = 2,000 at Maximum) | ||||
Award Date Fair Market Value per Share of Common Stock (Closing Stock Price on Date of Award): | $<PRICE> | ||||
Restricted Stock Units: | |||||
Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. The target number of restricted stock units will vest (as described below), if the target “Earnings Per Share Growth” (as defined in the attached Year <YEAR> Restricted Stock Unit Award Agreement) is achieved. If above target Earnings Per Share Growth is achieved, you may vest in up to the maximum number of restricted stock units plus reinvested dividend equivalents as described below. | |||||
Vesting/Forfeiture of Restricted Stock Units: | |||||
Subject to certain exceptions set forth in the Year <YEAR> Restricted Stock Unit Award Agreement, your restricted stock units will vest only in the event the Compensation Committee determines and certifies that Sempra Energy has achieved positive cumulative net income (to be determined in accordance with GAAP) for the performance period beginning on January 1, <YEAR> and ending December 31, <YEAR>. In such event, the percentage of restricted stock units that vest shall be a maximum of 200% of target, subject to the Compensation Committee’s exercise of negative discretion and the Compensation Committee’s determination and certification that Sempra Energy has met specified earnings per share growth criteria, as described below, for the performance period beginning on January 1, <YEAR> and ending December 31, <YEAR>. Any restricted stock units that do not vest with the Compensation Committee's determination and certification (or otherwise in accordance with your Restricted Stock Unit Award Agreement) will be forfeited. | |||||
Transfer Restrictions: | |||||
Your restricted stock units may not be sold or otherwise transferred and will remain subject to forfeiture conditions until they vest. | |||||
Termination of Employment: | |||||
Your restricted stock units also may be forfeited if your employment terminates. | |||||
Dividend Equivalents: |
You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as the shares represented by your restricted stock units. | |||||
Distribution of Shares: | |||||
Shares of Common Stock will be distributed to you to the extent your restricted stock units and corresponding dividend equivalents vest. Except as provided otherwise in the attached Year <YEAR> Restricted Stock Unit Award Agreement, the shares will be distributed to you after the completion of the performance period ending on December 31, <YEAR> and the Compensation Committee’s determination and certification of Sempra Energy’s Earnings Per Share Growth for the performance period. The shares of Common Stock will include the additional shares to be distributed pursuant to your vested dividend equivalents. | |||||
Taxes: | |||||
Upon distribution of shares of Common Stock to you, you will be subject to income taxes on the value of the distributed shares at the time of distribution and must pay applicable withholding taxes. | |||||
By your acceptance of this award, you agree to all of the terms and conditions set forth in this Cover Page/Summary, the attached Year <YEAR> Restricted Stock Unit Award Agreement and the Sempra Energy 2013 Long Term Incentive Plan. | |||||
Recipient: | X | ||||
(Signature) | |||||
Sempra Energy: | <CEO> | ||||
(Signature) | |||||
Title: | <TITLE> |
Award: | You have been granted a performance-based restricted stock unit award under Sempra Energy’s 2013 Long Term Incentive Plan. The award consists of the number of restricted stock units set forth on the Cover Page/Summary to this Agreement, and dividend equivalents with respect to the restricted stock units (described below). Capitalized terms used in this Agreement and not defined shall have the meaning set forth in the Plan. Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. Each restricted stock unit initially represents the right to receive one share of Common Stock upon the vesting of the unit. Unless and until they vest, your restricted stock units and any dividend equivalents (as described below) will be subject to transfer restrictions and forfeiture and vesting conditions. Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, your restricted stock units (and dividend equivalents) will vest immediately following and only to the extent that the Compensation Committee of Sempra Energy's Board of Directors (the “Compensation Committee”) determines and certifies that Sempra Energy has met specified positive cumulative net income and earnings per share growth performance criteria for the performance period beginning January 1, <YEAR> and ending on December 31, <YEAR>. Any restricted stock units (and dividend equivalents) that do not vest will be forfeited. Your restricted stock units (and dividend equivalents) also may be forfeited if your employment terminates before they vest. See “Vesting/Forfeiture,” “Transfer Restrictions,” and “Termination of Employment” below. |
Vesting/Forfeiture: | Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, your restricted stock units (and dividend equivalents, as described below) will vest only in the event that the Compensation Committee determines and certifies that Sempra Energy has achieved positive cumulative fiscal <YEAR> through fiscal <YEAR> net income (to be determined in accordance with GAAP). In such event, the percentage of restricted stock units that vest shall be a maximum of 200% of target, SUBJECT TO THE COMPENSATION COMMITTEE’S EXERCISE OF NEGATIVE DISCRETION BASED ON THE EARNINGS PER SHARE GROWTH PERFORMANCE CRITERIA DESCRIBED BELOW AND CERTIFIED BY THE COMPENSATION COMMITTEE: |
Earnings Per Share Growth is determined based upon the compound annual growth rate (CAGR) of Sempra Energy’s fiscal <YEAR> and fiscal <YEAR> earnings per share, subject to adjustments by the Committee in its sole discretion. For purposes of this calculation, (i) the starting point to calculate Earnings Per Share Growth shall be Sempra Energy’s <YEAR> earnings per share, (ii) the ending point to calculate Earnings Per Share Growth shall be Sempra Energy’s <YEAR> earnings per share and (iii) earnings per share shall be calculated using weighted average shares outstanding (WASO) for fiscal <YEAR> and fiscal <YEAR>, as diluted to reflect outstanding stock options and RSUs (Diluted WASO). For fiscal <YEAR>, earnings per share shall exclude the effect of any common stock buybacks not contemplated in Sempra Energy’s most recent financial plans t publicly communicated prior to the Date of Award. For the avoidance of doubt, Diluted WASO shall include the impact of any compensation or incentive plan transactions that reduce diluted WASO including, without limitation, transactions from tax withholding obligations and expirations or forfeitures of stock options and restricted stock units. The calculation of the Earnings component of Earnings Per Share is intended to be consistent with the calculation of the Earnings under the Sempra Energy Incentive Compensation Plans (ICP) and Executive Incentive Compensation Plans (EICP). Adjustments to Earnings are intended to be generally consistent with the adjustments applied under the ICP and EICP, but the Committee shall determine which adjustments shall apply for purposes of calculating Earnings Per Share Growth. The Committee in its sole discretion shall determine the extent to which the Earnings Per Share Growth performance criteria have been achieved. In exercising negative discretion, the percentage of your target number of restricted stock units that vest will be determined as follows: |
Earnings Per Share Growth <YEAR> - <YEAR> | Percentage of Target Number of Restricted Stock Units That Vest | ||
<PERCENTAGE>% | 200% | ||
<PERCENTAGE>% | 150% | ||
<PERCENTAGE>% | 100% | ||
<PERCENTAGE>% | 0% |
If the Earnings Per Share Growth does not equal a growth rate level shown in the above table, the percentage of your target number of restricted stock units that vest will be determined by a linear interpolation between the next lowest percentage shown in the table and the next highest percentage shown on the table. o If the Earnings Per Share Growth is at or above <PERCENTAGE>%, 200% of your target number of restricted stock units will vest. o If the Earnings Per Share Growth is at or below <PERCENTAGE>%, none of your restricted stock units will vest. As soon as reasonably practicable following the end of the performance period, the Compensation Committee will determine and certify the extent to which Sempra Energy has met the cumulative net income performance measure and, after the application of negative discretion based on the earnings per share growth performance criteria, the extent, if any, as to which your restricted stock units have then vested and any such vesting shall occur immediately following such determination and certification by the Compensation Committee. You will receive the number of shares of Common Stock equal to the number of your vested restricted stock units after the Compensation Committee’s determination and certification. Also, you will receive the number of shares of Common Stock equal to your vested dividend equivalents after the Compensation Committee’s determination and certification. Certificates for the shares will be issued to you or transferred to an account that you designate. When the shares of Common Stock are issued to you, your restricted stock units (vested and unvested) and your dividend equivalents will terminate. Notwithstanding anything to the contrary herein, the Compensation Committee, in its sole discretion, may exercise negative discretion in determining Earnings Per Share Growth to reduce the number of restricted stock units that otherwise would vest based on achievement of the applicable performance criteria set forth herein. | ||
Transfer Restrictions: | You may not sell or otherwise transfer or assign your restricted stock units (or your dividend equivalents). | |
Dividend Equivalents: | You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as your restricted stock units. They will vest when and to the extent that your restricted stock units vest. Also, your restricted stock units (and dividend equivalents), including the terms and conditions thereof, will be adjusted to prevent dilution or enlargement of your rights in the event of a stock dividend on shares of Common Stock or as the result of a stock-split, recapitalization, reorganization or other similar transaction in accordance with the terms and conditions of the 2013 Long Term Incentive Plan. Any additional restricted stock units (and dividend equivalents) awarded to you as a result of such an adjustment also will be subject to the same transfer restrictions, forfeiture and vesting conditions and other terms and conditions that are applicable to your restricted stock units (and dividend equivalents). |
No Shareholder Rights: | Your restricted stock units (and dividend equivalents) are not shares of Common Stock. You will have no rights as a shareholder unless and until shares of Common Stock are issued to you following the vesting of your restricted stock units (and dividend equivalents) as provided in this Agreement and the 2013 Long Term Incentive Plan. | |
Distribution of Shares: | As described in “Vesting/Forfeiture” above, the Compensation Committee will determine and certify the extent to which Sempra Energy has met the performance criteria and the extent, if any, as to which your restricted stock units have then vested in accordance with the terms of the Award. You will receive the number of shares of Common Stock equal to the number of your restricted stock units that have vested. However, in no event will you receive under this award, and other awards granted to you under the 2013 Long Term Incentive Plan in the same fiscal year of Sempra Energy, more than the maximum number of shares of Common Stock permitted under the 2013 Long Term Incentive Plan. Also, you will receive the number of shares of Common Stock equal to your vested dividend equivalents after the Compensation Committee’s determination and certification. You will receive the shares as soon as reasonably practicable following the Compensation Committee’s determination and certification (and in no event later than March 15, <YEAR>). Once you receive the shares of Common Stock, your vested and unvested restricted stock units (and dividend equivalents) will terminate. | |
Termination of Employment: | ||
Termination | If your employment with Sempra Energy and its Subsidiaries terminates for any reason prior to the vesting of your restricted stock units (and dividend equivalents) (other than under the circumstances set forth in the following provisions of this section), all of your restricted stock units (and dividend equivalents) will be forfeited. Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, the vesting of your restricted stock units (and dividend equivalents) does not occur until the date of the Compensation Committee’s determination and certification described above. If your employment terminates prior to a Change in Control, other than by Termination for cause, and you had both completed at least five years of continuous service with Sempra Energy and its Subsidiaries AND met any of the following conditions: 1.) your employment terminates after <DATE>, <YEAR> and at the date of termination you had attained age 55; or 2.) your employment terminates after <DATE>, <YEAR> and at the date of termination you had attained age 62; or 3.) at the date of termination you had attained age 65 and you were an officer subject to the company’s mandatory retirement policy; your restricted stock units (and dividend equivalents) will not be forfeited but will continue to be subject to the transfer restrictions and vesting conditions and other terms and conditions of this Agreement. If your employment terminates by reason of your death prior to the vesting of your restricted stock units and your award would otherwise be forfeited (for example, you do not meet the age and service conditions described above), your award will be deemed forfeited immediately prior to the date and time it would otherwise vest, unless, and to the extent that, prior to such date and time, the Compensation Committee in its sole discretion takes action to waive the service requirement described above. |
Termination for Cause | If your employment with Sempra Energy and its Subsidiaries terminates for cause, or your employment would have been subject to termination for cause, prior to the vesting of your restricted stock units (and dividend equivalents), all of your restricted stock units (and dividend equivalents) will be cancelled. Prior to the consummation of a Change in Control, a termination for cause is (i) the willful failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness), (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) your gross insubordination; and/or (iv) your commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i), no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your act, or failure to act, was in the best interests of the Company. If your restricted stock units remain outstanding following a Change in Control pursuant to a Replacement Award, a termination for cause following such Change in Control shall be determined in accordance with Section 2.8 of the 2013 Long Term Incentive Plan (which defines “Cause” for purposes of the plan), including reasonable notice and, if possible, a reasonable opportunity to cure as provided therein. |
Taxes: | |
Withholding Taxes | When you become subject to withholding taxes upon distribution of the shares of Common Stock or otherwise, Sempra Energy or its Subsidiary is required to withhold taxes. Unless you instruct otherwise and pay or make arrangements satisfactory to Sempra Energy to pay these taxes, upon the distribution of your shares, Sempra Energy will withhold a sufficient number of shares of common stock or restricted stock units to cover the minimum required withholding taxes and transfer to you only the remaining balance of your shares. In the event that, following a Change in Control, your restricted stock units become eligible for a distribution upon your Retirement by reason of your combined age and service, your restricted stock units may become subject to employment tax withholding prior to the distribution of shares with respect to such units. |
Code Section 409A | Your restricted stock units are subject to Sections 16.5 and 20.12 of the 2013 Long Term Incentive Plan, which set forth terms to comply with Code Section 409A. |
Recoupment (“Clawback”) Policy: | The Company shall require the forfeiture, recovery or reimbursement of awards or compensation under the Plan and this Award as (i) required by applicable law, or (ii) required under any policy implemented or maintained by the Company pursuant to any applicable rules or requirements of a national securities exchange or national securities association on which any securities of the Company are listed. The Company reserves the right to recoup compensation paid if it determines that the results on which the compensation was paid were not actually achieved. The Compensation Committee may, in its sole discretion, require the recovery or reimbursement of long-term incentive compensation awards from any employee whose fraudulent or intentional misconduct materially affects the operations or financial results of the Company or its Subsidiaries. |
Retention Rights: | Neither your restricted stock unit award nor this Agreement gives you any right to be retained by Sempra Energy or any of its Subsidiaries in any capacity and your employer reserves the right to terminate your employment at any time, with or without cause. The value of your award will not be included as compensation or earnings for purposes of any other benefit plan offered by Sempra Energy or any of its Subsidiaries. |
Change in Control: | In the event of a Change in Control, the following terms shall apply: § If (i) you have achieved age 55 and have completed at least five years of continuous service with Sempra Energy and its Subsidiaries as of the date of a Change in Control and your restricted stock units have not been forfeited prior to the Change in Control, (ii) your outstanding restricted stock units as of the date of a Change in Control are not subject to a “substantial risk of forfeiture” within the meaning of Code Section 409A and/or (iii) your outstanding restricted stock units are not assumed or substituted with one or more Replacement Awards (as defined in Section 16.1 of the 2013 Long Term Incentive Plan), then in each case your outstanding restricted stock units and any associated dividend equivalents will vest immediately prior to the Change in Control with the applicable performance goals deemed to have been achieved at the greater of target level as of the date of such vesting or the actual performance level had the performance period ended on the last day of the calendar year immediately preceding the date of the Change in Control. If the foregoing terms apply, immediately prior to the date of the Change in Control you will receive a number of shares of Common Stock equal to the number of your restricted stock units and dividend equivalents that have vested. § If your outstanding restricted stock awards are assumed or substituted with one or more Replacement Awards (as defined in Section 16.1 of the 2013 Long Term Incentive Plan), then, except as provided otherwise in an individual severance agreement or employment agreement to which you are a party, the terms set forth in Sections 16.3 and 16.4 of the 2013 Long Term Incentive Plan shall apply with respect to such Replacement Award following the Change in Control. If the foregoing terms apply and the Replacement Award vests upon your separation from service or death, on such date, you will receive a number of shares or other property in settlement of the Replacement Awards. |
Further Actions: | You agree to take all actions and execute all documents appropriate to carry out the provisions of this Agreement. You shall not be deemed to have accepted this award unless you execute the Arbitration Agreement provided with your award letter. You also appoint as your attorney-in-fact each individual who at the time of so acting is the Secretary or an Assistant Secretary of Sempra Energy with full authority to effect any transfer of any shares of Common Stock distributable to you, including any transfer to pay withholding taxes, that is authorized by this Agreement. |
Applicable Law: | This Agreement will be interpreted and enforced under the laws of the State of California. |
Disputes: | Any and all disputes between you and the Company relating to or arising out of the Plan or your restricted stock unit award shall be subject to the Arbitration Agreement provided with your award letter, including, but not limited to, any disputes referenced in Section 16.4 of the Plan. |
Other Agreements: | In the event of any conflict between the terms of this Agreement and any written employment, severance or other employment-related agreement between you and Sempra Energy, the terms of this Agreement, or the terms of such other agreement, whichever are more favorable to you, shall prevail, provided that in each case a conflict shall be resolved in a manner consistent with the intent that your restricted stock units comply with Code Section 409A. In the event of a conflict between the terms of this Agreement and the 2013 Long Term Incentive Plan, the plan document shall prevail. |
You have been granted a restricted stock unit award representing the right to receive the number of shares of Sempra Energy Common Stock set forth below, subject to the vesting conditions set forth below. The restricted stock units, and dividend equivalents with respect to the restricted stock units, under your award may not be sold or assigned and will be subject to forfeiture unless and until they vest. Shares of Common Stock will be distributed to you after the completion of the service period ending in <MONTH><YEAR>, if the restricted stock units vest under the terms and conditions of your award. The terms and conditions of your award are set forth in the attached Year <YEAR> Restricted Stock Unit Award Agreement and in the Sempra Energy 2013 Long Term Incentive Plan, which has been provided to you. The summary below highlights selected terms and conditions but it is not complete and you should carefully read the attachments to fully understand the terms and conditions of your award. | |||||
SUMMARY | |||||
Date of Award: | <DATE>, <YEAR> | ||||
Name of Recipient: | NAME | ||||
Recipient’s Employee Number: | Employee ID | ||||
Number of Restricted Stock Units (prior to any dividend equivalents): | # RSU | ||||
Restricted Stock Units: | |||||
Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. | |||||
Vesting/Forfeiture of Restricted Stock Units: | |||||
Your restricted stock units will vest subject to your continued employment by Sempra Energy or its Subsidiaries through [<DATE>, <YEAR>] OR [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF YEAR”>]. Subject to certain exceptions set forth in the Year <YEAR> Restricted Stock Unit Award Agreement, if your employment terminates for any reason prior to [<DATE>,<YEAR>]OR [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF YEAR”>], your restricted stock units will be forfeited. | |||||
Transfer Restrictions: | |||||
Your restricted stock units may not be sold or otherwise transferred and will remain subject to forfeiture conditions until they vest. | |||||
Termination of Employment: | |||||
Subject to certain exceptions set forth in the Year <YEAR> Restricted Stock Unit Award Agreement, your restricted stock units will be forfeited if your employment terminates before such units vest. | |||||
Dividend Equivalents: | |||||
You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received, had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as the shares represented by your restricted stock units. | |||||
Distribution of Shares: | |||||
Shares of Common Stock will be distributed to you to the extent your restricted stock units vest. Except as provided otherwise in the Year <YEAR> Restricted Stock Unit Award Agreement, the shares will be distributed to you after the completion of the service period ending in <MONTH><YEAR>. The shares of Common Stock will include the additional shares to be distributed pursuant to your vested dividend equivalents. | |||||
Taxes: |
Upon distribution of shares of Common Stock to you, you will be subject to income taxes on the value of the distributed shares at the time of distribution and must pay applicable withholding taxes. | |||||
By your acceptance of this award, you agree to all of the terms and conditions set forth in this Cover Page/Summary, the attached Year <YEAR> Restricted Stock Unit Award Agreement and the Sempra Energy 2013 Long Term Incentive Plan. | |||||
Recipient: | X | ||||
(Signature) | |||||
Sempra Energy: | <CEO> | ||||
(Signature) | |||||
Title: | <TITLE> |
Award: | You have been granted a restricted stock unit award under Sempra Energy’s 2013 Long Term Incentive Plan. The award consists of the number of restricted stock units set forth on the Cover Page/Summary to this Agreement, and dividend equivalents with respect to the restricted stock units (described below). Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. Each restricted stock unit represents the right to receive one share of Common Stock upon the vesting of the unit. Unless and until they vest, your restricted stock units and any dividend equivalents (as described below) will be subject to transfer restrictions and forfeiture and vesting conditions. Your restricted stock units (and dividend equivalents) will be forfeited if your employment terminates before they vest; provided, however, that the Compensation Committee in its sole discretion may determine to vest you in all or any portion your restricted stock units (subject to Code Section 409A requirements). See “Vesting/Forfeiture,” “Transfer Restrictions,” and “Termination of Employment” below. |
Vesting/Forfeiture: | Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, your restricted stock units (and dividend equivalents, as described below) will vest <DATE>,<YEAR> OR “THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>”, subject to your continued employment by Sempra Energy or its Subsidiaries through that date. Certificates for the shares will be issued to you or transferred to an account that you designate. When the shares of Common Stock are issued to you, your restricted stock units (vested and unvested) and your dividend equivalents will terminate. |
Transfer Restrictions: | You may not sell or otherwise transfer or assign your restricted stock units (or your dividend equivalents). |
Dividend Equivalents: | You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received, had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as your restricted stock units. They will vest when your restricted stock units vest. Also, your restricted stock units (and dividend equivalents), including the terms and conditions thereof, will be adjusted to prevent dilution or enlargement of your rights in the event of a stock dividend on shares of Common Stock or as the result of a stock-split, recapitalization, reorganization or other similar transaction in accordance with the terms and conditions of the 2013 Long Term Incentive Plan. Any additional restricted stock units (and dividend equivalents) awarded to you as a result of such an adjustment also will be subject to the same transfer restrictions, forfeiture and vesting conditions and other terms and conditions that are applicable to your restricted stock units. |
No Shareholder Rights: | Your restricted stock units (and dividend equivalents) are not shares of Common Stock. You will have no rights as a shareholder unless and until shares of Common Stock are issued to you following the vesting of your restricted stock units (and dividend equivalents) as provided in this Agreement and the 2013 Long Term Incentive Plan. |
Distribution of Shares: | Following the vesting of your restricted stock units, you will receive the number of shares of Common Stock equal to the number of your restricted stock units that have vested. However, in no event will you receive under this award, and other awards granted to you under the 2013 Long Term Incentive Plan in the same fiscal year of Sempra Energy, more than the maximum number of shares of Common Stock permitted under the 2013 Long Term Incentive Plan. Also, you will receive the number of shares of Common Stock equal to your vested dividend equivalents. You will receive the shares as soon as reasonably practicable following the vesting date (and in no event later than March 15, <YEAR>). Once you receive the shares of Common Stock, your restricted stock units (and dividend equivalents) will terminate. |
Termination of Employment: | |
§ Termination: | If your employment with Sempra Energy and its Subsidiaries terminates for any reason other than by reason of your death prior to the vesting of your restricted stock units (and dividend equivalents) all of your restricted stock units (and dividend equivalents) will be forfeited; provided, however, that the Compensation Committee in its sole discretion may determine to vest you in all or any portion your restricted stock units (subject to Code Section 409A requirements). If your employment terminates by reason of your death prior to the vesting of your restricted stock units (and dividend equivalents), all of your restricted stock units (and dividend equivalents) will vest upon your death. |
§ Termination for Cause: | If your employment with Sempra Energy and its Subsidiaries terminates for cause, all of your restricted stock units (and dividend equivalents) will be cancelled. Prior to the consummation of a Change in Control, a termination for cause is (i) the willful failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness), (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) your gross insubordination; and/or (iv) your commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i), no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your act, or failure to act, was in the best interests of the Company. If your restricted stock units remain outstanding following a Change in Control pursuant to a Replacement Award, a termination for cause following such Change in Control shall be determined in accordance with Section 2.8 of the 2013 Long Term Incentive Plan (which defines “Cause” for purposes of the plan), including reasonable notice and, if possible, a reasonable opportunity to cure as provided therein. |
Taxes: | |
§ Withholding Taxes: | When you become subject to withholding taxes upon distribution of the shares of Common Stock or otherwise, Sempra Energy or its Subsidiary is required to withhold taxes. Unless you instruct otherwise and pay or make arrangements satisfactory to Sempra Energy to pay these taxes, upon the distribution of your shares, Sempra Energy will withhold a sufficient number of shares of common stock or restricted stock units to cover the minimum required withholding taxes and transfer to you only the remaining balance of your shares. In the event that, following a Change in Control, your restricted stock units become eligible for a distribution upon your Retirement by reason of your combined age and service, your restricted stock units may become subject to employment tax withholding prior to the distribution of shares with respect to such units. |
§ Code Section 409A: Recoupment (“Clawback”) Policy: | Your restricted stock units are subject to Sections 16.5 and 20.12 of the 2013 Long Term Incentive Plan, which set forth terms to comply with Code Section 409A. The Company shall require the forfeiture, recovery or reimbursement of awards or compensation under this Plan as (i) required by applicable law, or (ii) required under any policy implemented or maintained by the Company pursuant to any applicable rules or requirements of a national securities exchange or national securities association on which any securities of the Company are listed. The Company reserves the right to recoup compensation paid if it determines that the results on which the compensation was paid were not actually achieved. The Compensation Committee may, in its sole discretion, require the recovery or reimbursement of long-term incentive compensation awards from any employee whose fraudulent or intentional misconduct materially affects the operations or financial results of the Company or its Subsidiaries. |
Retention Rights: | Neither your restricted stock unit award nor this Agreement gives you any right to be retained by Sempra Energy or any of its Subsidiaries in any capacity and your employer reserves the right to terminate your employment at any time, with or without cause. The value of your award will not be included as compensation or earnings for purposes of any other benefit plan offered by Sempra Energy or any of its Subsidiaries. |
Change in Control: | In the event of a Change in Control, the following terms shall apply: If (i) you have achieved age 55 and have completed at least five years of continuous service with Sempra Energy and its Subsidiaries as of the date of a Change in Control and your restricted stock units have not been forfeited prior to the Change in Control, (ii) your outstanding restricted stock units as of the date of a Change in Control are not subject to a “substantial risk of forfeiture” within the meaning of Code Section 409A and/or (iii) your outstanding restricted stock units are not assumed or substituted with one or more Replacement Awards as contemplated in Section 16.1 of the 2013 Long Term Incentive Plan, then in each case your outstanding restricted stock units and any associated dividend equivalents will become fully vested immediately prior to the Change in Control. If the foregoing terms apply, immediately prior to the date of the Change in Control you will receive a number of shares of Common Stock equal to the number of your restricted stock units and dividend equivalents that have vested. If your outstanding restricted stock awards are assumed or substituted with one or more Replacement Awards as contemplated in Section 16.1 of the 2013 Long Term Incentive Plan, then, except as provided otherwise in an individual severance agreement or employment agreement to which you are a party, the terms set forth in Sections 16.3 and 16.4 of the 2013 Long Term Incentive Plan shall apply with respect to such Replacement Award following the Change in Control. If the foregoing terms apply and the Replacement Award vests upon your separation from service or death, on such date, you will receive a number of shares or other property in settlement of the Replacement Awards. |
Further Actions: | You agree to take all actions and execute all documents appropriate to carry out the provisions of this Agreement. You shall not be deemed to have accepted this award unless you execute the Arbitration Agreement provided with your award letter. You also appoint as your attorney-in-fact each individual who at the time of so acting is the Secretary or an Assistant Secretary of Sempra Energy with full authority to effect any transfer of any shares of Common Stock distributable to you, including any transfer to pay withholding taxes, that is authorized by this Agreement. |
Applicable Law: | This Agreement will be interpreted and enforced under the laws of the State of California. |
Disputes: | Any and all disputes between you and the Company relating to or arising out of the Plan or your restricted stock unit award shall be subject to the Arbitration Agreement provided with your award letter, including, but not limited to, any disputes referenced in Section 16.4 of the Plan. |
Other Agreements: | In the event of any conflict between the terms of this Agreement and any written employment, severance or other employment-related agreement between you and Sempra Energy, the terms of this Agreement, or the terms of such other agreement, whichever are more favorable to you, shall prevail, provided that in each case a conflict shall be resolved in a manner consistent with the intent that your restricted stock units comply with Code Section 409A. In the event of a conflict between the terms of this Agreement and the 2013 Long Term Incentive Plan, the plan document shall prevail. |
You have been granted a restricted stock unit award representing the right to receive the number of shares of Sempra Energy Common Stock set forth below, subject to the vesting conditions set forth below. The restricted stock units, and dividend equivalents with respect to the restricted stock units, under your award may not be sold or assigned and will be subject to forfeiture unless and until they vest. Shares of Common Stock will be distributed to you after the completion of the service periods ending in <MONTH> <YEAR> and <YEAR>, if the restricted stock units vest under the terms and conditions of your award. The terms and conditions of your award are set forth in the attached Year <YEAR> Restricted Stock Unit Award Agreement and in the Sempra Energy 2013 Long Term Incentive Plan, which has been provided to you. The summary below highlights selected terms and conditions but it is not complete and you should carefully read the attachments to fully understand the terms and conditions of your award. | |||||
SUMMARY | |||||
Date of Award: | <DATE>, <YEAR> | ||||
Name of Recipient: | NAME | ||||
Recipient’s Employee Number: | Employee ID | ||||
Number of Restricted Stock Units (prior to any dividend equivalents): | # RSU | ||||
Restricted Stock Units: | |||||
Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. | |||||
Vesting/Forfeiture of Restricted Stock Units: | |||||
Your restricted stock units (together with additional units attributable to reinvested dividend equivalents) will vest in installments of 50 percent on [<DATE>, <YEAR>] or [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>“] and the remainder (including units attributable to reinvested dividends) on [<DATE>, <YEAR>] or [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>”],subject to your continued employment by Sempra Energy or its Subsidiaries through the applicable vesting date. Subject to certain exceptions set forth in the Year <YEAR> Restricted Stock Unit Award Agreement, if your employment terminates for any reason prior to the applicable vesting date, your restricted stock units will be forfeited. | |||||
Transfer Restrictions: | |||||
Your restricted stock units may not be sold or otherwise transferred and will remain subject to forfeiture conditions until they vest. | |||||
Termination of Employment: | |||||
Subject to certain exceptions set forth in the Year <YEAR> Restricted Stock Unit Award Agreement, your restricted stock units will be forfeited if your employment terminates before such units vest. | |||||
Dividend Equivalents: | |||||
You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received, had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as the shares represented by your restricted stock units. | |||||
Distribution of Shares: | |||||
Shares of Common Stock will be distributed to you to the extent your restricted stock units vest. Except as provided otherwise in the Year <YEAR> Restricted Stock Unit Award Agreement, the shares will be distributed to you after the completion of the applicable service period. The shares of Common Stock will include the additional shares to be distributed pursuant to your vested dividend equivalents. | |||||
Taxes: | |||||
Upon distribution of shares of Common Stock to you, you will be subject to income taxes on the value of the distributed shares at the time of distribution and must pay applicable withholding taxes. | |||||
By your acceptance of this award, you agree to all of the terms and conditions set forth in this Cover Page/Summary, the attached Year <YEAR> Restricted Stock Unit Award Agreement and the Sempra Energy 2013 Long Term Incentive Plan. | |||||
Recipient: | X | ||||
(Signature) | |||||
Sempra Energy: | <CEO> | ||||
(Signature) | |||||
Title: | <TITLE> |
Award: | You have been granted a restricted stock unit award under Sempra Energy’s 2013 Long Term Incentive Plan. The award consists of the number of restricted stock units set forth on the Cover Page/Summary to this Agreement, and dividend equivalents with respect to the restricted stock units (described below). Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. Each restricted stock unit represents the right to receive one share of Common Stock upon the vesting of the unit. Unless and until they vest, your restricted stock units and any dividend equivalents (as described below) will be subject to transfer restrictions and forfeiture and vesting conditions. Your restricted stock units (and dividend equivalents) will be forfeited if your employment terminates before they vest; provided, however, that the Compensation Committee in its sole discretion may determine to vest you in all or any portion your restricted stock units (subject to Code Section 409A requirements). See “Vesting/Forfeiture,” “Transfer Restrictions,” and “Termination of Employment” below. |
Vesting/Forfeiture: | Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, your restricted stock units (and dividend equivalents, as described below) will vest in installments of 50 percent on [<DATE>, <YEAR>] or [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>“] and the remainder (including units attributable to reinvested dividends) on [<DATE>, <YEAR>] or [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>“], subject to your continued employment by Sempra Energy or its Subsidiaries through the applicable vesting date. Certificates for the shares will be issued to you or transferred to an account that you designate. When the shares of Common Stock are issued to you, your restricted stock units (vested and unvested) and your dividend equivalents will terminate. |
Transfer Restrictions: | You may not sell or otherwise transfer or assign your restricted stock units (or your dividend equivalents). |
Dividend Equivalents: | You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received, had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as your restricted stock units. They will vest when your restricted stock units vest. Also, your restricted stock units (and dividend equivalents), including the terms and conditions thereof, will be adjusted to prevent dilution or enlargement of your rights in the event of a stock dividend on shares of Common Stock or as the result of a stock-split, recapitalization, reorganization or other similar transaction in accordance with the terms and conditions of the 2013 Long Term Incentive Plan. Any additional restricted stock units (and dividend equivalents) awarded to you as a result of such an adjustment also will be subject to the same transfer restrictions, forfeiture and vesting conditions and other terms and conditions that are applicable to your restricted stock units. |
No Shareholder Rights: | Your restricted stock units (and dividend equivalents) are not shares of Common Stock. You will have no rights as a shareholder unless and until shares of Common Stock are issued to you following the vesting of your restricted stock units (and dividend equivalents) as provided in this Agreement and the 2013 Long Term Incentive Plan. |
Distribution of Shares: | Following the vesting of your restricted stock units, you will receive the number of shares of Common Stock equal to the number of your restricted stock units that have vested. However, in no event will you receive under this award, and other awards granted to you under the 2013 Long Term Incentive Plan in the same fiscal year of Sempra Energy, more than the maximum number of shares of Common Stock permitted under the 2013 Long Term Incentive Plan. Also, you will receive the number of shares of Common Stock equal to your vested dividend equivalents. You will receive the shares as soon as reasonably practicable following each vesting date (and in no event later than March 15 of the year following the applicable vesting date). Once you receive the shares of Common Stock, your restricted stock units (and dividend equivalents) will terminate. |
Termination of Employment: | |
§ Termination: | If your employment with Sempra Energy and its Subsidiaries terminates for any reason other than by reason of your death prior to the vesting of your restricted stock units (and dividend equivalents) all of your restricted stock units (and dividend equivalents) will be forfeited; provided, however, that the Compensation Committee in its sole discretion may determine to vest you in all or any portion your restricted stock units (subject to Code Section 409A requirements). If your employment terminates by reason of your death prior to the vesting of your restricted stock units (and dividend equivalents), all of your restricted stock units (and dividend equivalents) will vest upon your death. |
§ Termination for Cause: | If your employment with Sempra Energy and its Subsidiaries terminates for cause, all of your restricted stock units (and dividend equivalents) will be cancelled. Prior to the consummation of a Change in Control, a termination for cause is (i) the willful failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness), (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) your gross insubordination; and/or (iv) your commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i), no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your act, or failure to act, was in the best interests of the Company. If your restricted stock units remain outstanding following a Change in Control pursuant to a Replacement Award, a termination for cause following such Change in Control shall be determined in accordance with Section 2.8 of the 2013 Long Term Incentive Plan (which defines “Cause” for purposes of the plan), including reasonable notice and, if possible, a reasonable opportunity to cure as provided therein. |
Taxes: | |
§ Withholding Taxes: | When you become subject to withholding taxes upon distribution of the shares of Common Stock or otherwise, Sempra Energy or its Subsidiary is required to withhold taxes. Unless you instruct otherwise and pay or make arrangements satisfactory to Sempra Energy to pay these taxes, upon the distribution of your shares, Sempra Energy will withhold a sufficient number of shares of common stock or restricted stock units to cover the minimum required withholding taxes and transfer to you only the remaining balance of your shares. In the event that, following a Change in Control, your restricted stock units become eligible for a distribution upon your Retirement by reason of your combined age and service, your restricted stock units may become subject to employment tax withholding prior to the distribution of shares with respect to such units. |
§ Code Section 409A: Recoupment (“Clawback”) Policy: | Your restricted stock units are subject to Sections 16.5 and 20.12 of the 2013 Long Term Incentive Plan, which set forth terms to comply with Code Section 409A. The Company shall require the forfeiture, recovery or reimbursement of awards or compensation under this Plan as (i) required by applicable law, or (ii) required under any policy implemented or maintained by the Company pursuant to any applicable rules or requirements of a national securities exchange or national securities association on which any securities of the Company are listed. The Company reserves the right to recoup compensation paid if it determines that the results on which the compensation was paid were not actually achieved. The Compensation Committee may, in its sole discretion, require the recovery or reimbursement of long-term incentive compensation awards from any employee whose fraudulent or intentional misconduct materially affects the operations or financial results of the Company or its Subsidiaries. |
Retention Rights: | Neither your restricted stock unit award nor this Agreement gives you any right to be retained by Sempra Energy or any of its Subsidiaries in any capacity and your employer reserves the right to terminate your employment at any time, with or without cause. The value of your award will not be included as compensation or earnings for purposes of any other benefit plan offered by Sempra Energy or any of its Subsidiaries. |
Change in Control: | In the event of a Change in Control, the following terms shall apply: If (i) you have achieved age 55 and have completed at least five years of continuous service with Sempra Energy and its Subsidiaries as of the date of a Change in Control and your restricted stock units have not been forfeited prior to the Change in Control, (ii) your outstanding restricted stock units as of the date of a Change in Control are not subject to a “substantial risk of forfeiture” within the meaning of Code Section 409A and/or (iii) your outstanding restricted stock units are not assumed or substituted with one or more Replacement Awards as contemplated in Section 16.1 of the 2013 Long Term Incentive Plan, then in each case your outstanding restricted stock units and any associated dividend equivalents will become fully vested immediately prior to the Change in Control. If the foregoing terms apply, immediately prior to the date of the Change in Control you will receive a number of shares of Common Stock equal to the number of your restricted stock units and dividend equivalents that have vested. If your outstanding restricted stock awards are assumed or substituted with one or more Replacement Awards as contemplated in Section 16.1 of the 2013 Long Term Incentive Plan, then, except as provided otherwise in an individual severance agreement or employment agreement to which you are a party, the terms set forth in Sections 16.3 and 16.4 of the 2013 Long Term Incentive Plan shall apply with respect to such Replacement Award following the Change in Control. If the foregoing terms apply and the Replacement Award vests upon your separation from service or death, on such date, you will receive a number of shares or other property in settlement of the Replacement Awards. |
Further Actions: | You agree to take all actions and execute all documents appropriate to carry out the provisions of this Agreement. You shall not be deemed to have accepted this award unless you execute the Arbitration Agreement provided with your award letter. You also appoint as your attorney-in-fact each individual who at the time of so acting is the Secretary or an Assistant Secretary of Sempra Energy with full authority to effect any transfer of any shares of Common Stock distributable to you, including any transfer to pay withholding taxes, that is authorized by this Agreement. |
Applicable Law: | This Agreement will be interpreted and enforced under the laws of the State of California. |
Disputes: Other Agreements: | Any and all disputes between you and the Company relating to or arising out of the Plan or your restricted stock unit award shall be subject to the Arbitration Agreement provided with your award letter, including, but not limited to, any disputes referenced in Section 16.4 of the Plan. In the event of any conflict between the terms of this Agreement and any written employment, severance or other employment-related agreement between you and Sempra Energy, the terms of this Agreement, or the terms of such other agreement, whichever are more favorable to you, shall prevail, provided that in each case a conflict shall be resolved in a manner consistent with the intent that your restricted stock units comply with Code Section 409A. In the event of a conflict between the terms of this Agreement and the 2013 Long Term Incentive Plan, the plan document shall prevail. |
You have been granted a restricted stock unit award representing the right to receive the number of shares of Sempra Energy Common Stock set forth below, subject to the vesting conditions set forth below. The restricted stock units, and dividend equivalents with respect to the restricted stock units, under your award may not be sold or assigned and will be subject to forfeiture unless and until they vest. Shares of Common Stock will be distributed to you after the completion of the service periods ending in <MONTH> <YEAR>, <YEAR> and <YEAR>, if the restricted stock units vest under the terms and conditions of your award. The terms and conditions of your award are set forth in the attached Year <YEAR> Restricted Stock Unit Award Agreement and in the Sempra Energy 2013 Long Term Incentive Plan, which has been provided to you. The summary below highlights selected terms and conditions but it is not complete and you should carefully read the attachments to fully understand the terms and conditions of your award. | |||||
SUMMARY | |||||
Date of Award: | <DATE>, <YEAR> | ||||
Name of Recipient: | NAME | ||||
Recipient’s Employee Number: | Employee ID | ||||
Number of Restricted Stock Units (prior to any dividend equivalents): | # RSU | ||||
Restricted Stock Units: | |||||
Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. | |||||
Vesting/Forfeiture of Restricted Stock Units: | |||||
Your restricted stock units (together with additional units attributable to reinvested dividend equivalents) will vest in installments of 50 percent on [<DATE>, <YEAR>] or [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>]”, 50 percent of the remaining balance (including units attributable to reinvested dividend equivalents) on [<DATE>, <YEAR>] or [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>“], and the remaining balance (including units attributable to reinvested dividend equivalents) on [<DATE>, <YEAR>] or [<”THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>”], subject to your continued employment by Sempra Energy or its Subsidiaries through the applicable vesting date. Subject to certain exceptions set forth in the Year <YEAR> Restricted Stock Unit Award Agreement, if your employment terminates for any reason prior to the applicable vesting date, your restricted stock units will be forfeited. | |||||
Transfer Restrictions: | |||||
Your restricted stock units may not be sold or otherwise transferred and will remain subject to forfeiture conditions until they vest. | |||||
Termination of Employment: | |||||
Subject to certain exceptions set forth in the Year <YEAR> Restricted Stock Unit Award Agreement, your restricted stock units will be forfeited if your employment terminates before such units vest. | |||||
Dividend Equivalents: | |||||
You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received, had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as the shares represented by your restricted stock units. | |||||
Distribution of Shares: | |||||
Shares of Common Stock will be distributed to you to the extent your restricted stock units vest. Except as provided otherwise in the Year <YEAR> Restricted Stock Unit Award Agreement, the shares will be distributed to you after the completion of the applicable service period. The shares of Common Stock will include the additional shares to be distributed pursuant to your vested dividend equivalents. | |||||
Taxes: | |||||
Upon distribution of shares of Common Stock to you, you will be subject to income taxes on the value of the distributed shares at the time of distribution and must pay applicable withholding taxes. | |||||
By your acceptance of this award, you agree to all of the terms and conditions set forth in this Cover Page/Summary, the attached Year <YEAR> Restricted Stock Unit Award Agreement and the Sempra Energy 2013 Long Term Incentive Plan. | |||||
Recipient: | X | ||||
(Signature) | |||||
Sempra Energy: | <CEO> | ||||
(Signature) | |||||
Title: | <TITLE> |
Award: | You have been granted a restricted stock unit award under Sempra Energy’s 2013 Long Term Incentive Plan. The award consists of the number of restricted stock units set forth on the Cover Page/Summary to this Agreement, and dividend equivalents with respect to the restricted stock units (described below). Your restricted stock units represent the right to receive shares of Common Stock in the future, subject to the terms and conditions of your award. Your restricted stock units are not shares of Common Stock. Each restricted stock unit represents the right to receive one share of Common Stock upon the vesting of the unit. Unless and until they vest, your restricted stock units and any dividend equivalents (as described below) will be subject to transfer restrictions and forfeiture and vesting conditions. Your restricted stock units (and dividend equivalents) will be forfeited if your employment terminates before they vest; provided, however, that the Compensation Committee in its sole discretion may determine to vest you in all or any portion your restricted stock units (subject to Code Section 409A requirements). See “Vesting/Forfeiture,” “Transfer Restrictions,” and “Termination of Employment” below. |
Vesting/Forfeiture: | Subject to the provisions below relating to the treatment of your restricted stock units in connection with a Change in Control, your restricted stock units (and dividend equivalents, as described below) will vest in installments of 50 percent on [<DATE>, <YEAR>] or [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>“], 50 percent of the remaining balance (including units attributable to reinvested dividend equivalents) on [<DATE>, <YEAR>] or [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>”], and the remaining balance (including units attributable to reinvested dividend equivalents) on [<DATE>, <YEAR>] or [“THE FIRST NEW YORK STOCK EXCHANGE TRADING DAY OF <YEAR>“], subject to your continued employment by Sempra Energy or its Subsidiaries through the applicable vesting date. Certificates for the shares will be issued to you or transferred to an account that you designate. When the shares of Common Stock are issued to you, your restricted stock units (vested and unvested) and your dividend equivalents will terminate. |
Transfer Restrictions: | You may not sell or otherwise transfer or assign your restricted stock units (or your dividend equivalents). |
Dividend Equivalents: | You also have been awarded dividend equivalents with respect to your restricted stock units. Your dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of your award. Your dividend equivalents will be determined based on the dividends that you would have received, had you held shares of Common Stock equal to the vested number of your restricted stock units from the date of your award to the date of the distribution of shares of Common Stock following the vesting of your restricted stock units, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividends will be deemed reinvested in Common Stock in the same manner as dividends reinvested pursuant to the terms of the Sempra Dividend Reinvestment Plan. Your dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as your restricted stock units. They will vest when your restricted stock units vest. Also, your restricted stock units (and dividend equivalents), including the terms and conditions thereof, will be adjusted to prevent dilution or enlargement of your rights in the event of a stock dividend on shares of Common Stock or as the result of a stock-split, recapitalization, reorganization or other similar transaction in accordance with the terms and conditions of the 2013 Long Term Incentive Plan. Any additional restricted stock units (and dividend equivalents) awarded to you as a result of such an adjustment also will be subject to the same transfer restrictions, forfeiture and vesting conditions and other terms and conditions that are applicable to your restricted stock units. |
No Shareholder Rights: | Your restricted stock units (and dividend equivalents) are not shares of Common Stock. You will have no rights as a shareholder unless and until shares of Common Stock are issued to you following the vesting of your restricted stock units (and dividend equivalents) as provided in this Agreement and the 2013 Long Term Incentive Plan. |
Distribution of Shares: | Following the vesting of your restricted stock units, you will receive the number of shares of Common Stock equal to the number of your restricted stock units that have vested. However, in no event will you receive under this award, and other awards granted to you under the 2013 Long Term Incentive Plan in the same fiscal year of Sempra Energy, more than the maximum number of shares of Common Stock permitted under the 2013 Long Term Incentive Plan. Also, you will receive the number of shares of Common Stock equal to your vested dividend equivalents. You will receive the shares as soon as reasonably practicable following each vesting date (and in no event later than March 15 of the year following the applicable vesting date). Once you receive the shares of Common Stock, your restricted stock units (and dividend equivalents) will terminate. |
Termination of Employment: | |
§ Termination: | If your employment with Sempra Energy and its Subsidiaries terminates for any reason other than by reason of your death prior to the vesting of your restricted stock units (and dividend equivalents) all of your restricted stock units (and dividend equivalents) will be forfeited; provided, however, that the Compensation Committee in its sole discretion may determine to vest you in all or any portion your restricted stock units (subject to Code Section 409A requirements). If your employment terminates by reason of your death prior to the vesting of your restricted stock units (and dividend equivalents), all of your restricted stock units (and dividend equivalents) will vest upon your death. |
§ Termination for Cause: | If your employment with Sempra Energy and its Subsidiaries terminates for cause, all of your restricted stock units (and dividend equivalents) will be cancelled. Prior to the consummation of a Change in Control, a termination for cause is (i) the willful failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness), (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) your gross insubordination; and/or (iv) your commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i), no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your act, or failure to act, was in the best interests of the Company. If your restricted stock units remain outstanding following a Change in Control pursuant to a Replacement Award, a termination for cause following such Change in Control shall be determined in accordance with Section 2.8 of the 2013 Long Term Incentive Plan (which defines “Cause” for purposes of the plan), including reasonable notice and, if possible, a reasonable opportunity to cure as provided therein. |
Taxes: | |
§ Withholding Taxes: | When you become subject to withholding taxes upon distribution of the shares of Common Stock or otherwise, Sempra Energy or its Subsidiary is required to withhold taxes. Unless you instruct otherwise and pay or make arrangements satisfactory to Sempra Energy to pay these taxes, upon the distribution of your shares, Sempra Energy will withhold a sufficient number of shares of common stock or restricted stock units to cover the minimum required withholding taxes and transfer to you only the remaining balance of your shares. In the event that, following a Change in Control, your restricted stock units become eligible for a distribution upon your Retirement by reason of your combined age and service, your restricted stock units may become subject to employment tax withholding prior to the distribution of shares with respect to such units. |
§ Code Section 409A: Recoupment (“Clawback”) Policy: | Your restricted stock units are subject to Sections 16.5 and 20.12 of the 2013 Long Term Incentive Plan, which set forth terms to comply with Code Section 409A. The Company shall require the forfeiture, recovery or reimbursement of awards or compensation under this Plan as (i) required by applicable law, or (ii) required under any policy implemented or maintained by the Company pursuant to any applicable rules or requirements of a national securities exchange or national securities association on which any securities of the Company are listed. The Company reserves the right to recoup compensation paid if it determines that the results on which the compensation was paid were not actually achieved. The Compensation Committee may, in its sole discretion, require the recovery or reimbursement of long-term incentive compensation awards from any employee whose fraudulent or intentional misconduct materially affects the operations or financial results of the Company or its Subsidiaries. |
Retention Rights: | Neither your restricted stock unit award nor this Agreement gives you any right to be retained by Sempra Energy or any of its Subsidiaries in any capacity and your employer reserves the right to terminate your employment at any time, with or without cause. The value of your award will not be included as compensation or earnings for purposes of any other benefit plan offered by Sempra Energy or any of its Subsidiaries. |
Change in Control: | In the event of a Change in Control, the following terms shall apply: If (i) you have achieved age 55 and have completed at least five years of continuous service with Sempra Energy and its Subsidiaries as of the date of a Change in Control and your restricted stock units have not been forfeited prior to the Change in Control, (ii) your outstanding restricted stock units as of the date of a Change in Control are not subject to a “substantial risk of forfeiture” within the meaning of Code Section 409A and/or (iii) your outstanding restricted stock units are not assumed or substituted with one or more Replacement Awards as contemplated in Section 16.1 of the 2013 Long Term Incentive Plan, then in each case your outstanding restricted stock units and any associated dividend equivalents will become fully vested immediately prior to the Change in Control. If the foregoing terms apply, immediately prior to the date of the Change in Control you will receive a number of shares of Common Stock equal to the number of your restricted stock units and dividend equivalents that have vested. If your outstanding restricted stock awards are assumed or substituted with one or more Replacement Awards as contemplated in Section 16.1 of the 2013 Long Term Incentive Plan, then, except as provided otherwise in an individual severance agreement or employment agreement to which you are a party, the terms set forth in Sections 16.3 and 16.4 of the 2013 Long Term Incentive Plan shall apply with respect to such Replacement Award following the Change in Control. If the foregoing terms apply and the Replacement Award vests upon your separation from service or death, on such date, you will receive a number of shares or other property in settlement of the Replacement Awards. |
Further Actions: | You agree to take all actions and execute all documents appropriate to carry out the provisions of this Agreement. You shall not be deemed to have accepted this award unless you execute the Arbitration Agreement provided with your award letter. You also appoint as your attorney-in-fact each individual who at the time of so acting is the Secretary or an Assistant Secretary of Sempra Energy with full authority to effect any transfer of any shares of Common Stock distributable to you, including any transfer to pay withholding taxes, that is authorized by this Agreement. |
Applicable Law: | This Agreement will be interpreted and enforced under the laws of the State of California. |
Disputes: Other Agreements: | Any and all disputes between you and the Company relating to or arising out of the Plan or your restricted stock unit award shall be subject to the Arbitration Agreement provided with your award letter, including, but not limited to, any disputes referenced in Section 16.4 of the Plan. In the event of any conflict between the terms of this Agreement and any written employment, severance or other employment-related agreement between you and Sempra Energy, the terms of this Agreement, or the terms of such other agreement, whichever are more favorable to you, shall prevail, provided that in each case a conflict shall be resolved in a manner consistent with the intent that your restricted stock units comply with Code Section 409A. In the event of a conflict between the terms of this Agreement and the 2013 Long Term Incentive Plan, the plan document shall prevail. |
EXHIBIT 12.1 | |||||||||||||||||||||||||
SEMPRA ENERGY | |||||||||||||||||||||||||
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES | |||||||||||||||||||||||||
AND PREFERRED STOCK DIVIDENDS | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Three months ended | |||||||||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||||||
March 31, 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Earnings: | |||||||||||||||||||||||||
Pretax income from continuing operations before income or loss from equity | |||||||||||||||||||||||||
investees, noncontrolling interests and preferred dividends | $ | 667 | $ | 1,551 | $ | 1,824 | $ | 1,600 | $ | 1,443 | $ | 1,399 | |||||||||||||
Add: | |||||||||||||||||||||||||
Combined fixed charges and preferred stock dividends | |||||||||||||||||||||||||
for purpose of ratio (from below) | 316 | 812 | 706 | 681 | 640 | 628 | |||||||||||||||||||
Amortization of capitalized interest(1) | — | — | — | — | — | — | |||||||||||||||||||
Distributed income of equity investees | 22 | 39 | 53 | 83 | 61 | 51 | |||||||||||||||||||
Pretax losses of equity investees for which charges arising from | |||||||||||||||||||||||||
guarantees are included in fixed charges | — | — | — | — | — | — | |||||||||||||||||||
Less: | |||||||||||||||||||||||||
Interest capitalized | 15 | 69 | 90 | 69 | 40 | 23 | |||||||||||||||||||
Preference security dividend requirements(2) | 48 | — | — | — | — | — | |||||||||||||||||||
Preference security dividend requirements of consolidated subsidiaries(2) | 1 | 6 | 2 | 2 | 1 | 6 | |||||||||||||||||||
Noncontrolling interest in pretax income of subsidiaries that have | |||||||||||||||||||||||||
not incurred fixed charges | — | — | — | — | — | — | |||||||||||||||||||
Total earnings for purpose of ratio | $ | 941 | $ | 2,327 | $ | 2,491 | $ | 2,293 | $ | 2,103 | $ | 2,049 | |||||||||||||
Fixed charges: | |||||||||||||||||||||||||
Interest expensed and capitalized and amortization of premiums, | |||||||||||||||||||||||||
discounts and capitalized expenses related to indebtedness(1) | $ | 266 | $ | 803 | $ | 701 | $ | 677 | $ | 636 | $ | 620 | |||||||||||||
Estimate of interest within rental expense | 1 | 3 | 3 | 2 | 3 | 2 | |||||||||||||||||||
Preference security dividend requirements of consolidated subsidiaries(2) | 1 | 6 | 2 | 2 | 1 | 6 | |||||||||||||||||||
Total fixed charges for purpose of ratio | 268 | 812 | 706 | 681 | 640 | 628 | |||||||||||||||||||
Preference security dividend requirements(2) | 48 | — | — | — | — | — | |||||||||||||||||||
Combined fixed charges and preferred stock dividends | |||||||||||||||||||||||||
for purpose of ratio | $ | 316 | $ | 812 | $ | 706 | $ | 681 | $ | 640 | $ | 628 | |||||||||||||
Ratio of earnings to fixed charges | 3.51 | 2.87 | 3.53 | 3.37 | 3.29 | 3.26 | |||||||||||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends | 2.98 | 2.87 | 3.53 | 3.37 | 3.29 | 3.26 | |||||||||||||||||||
(1) | In computing these ratios, our public utilities that follow FASB ASC Topic 980, Regulated Operations, do not add amortization of capitalized interest in determining Earnings or reduce Fixed Charges by allowance for funds used during construction. | ||||||||||||||||||||||||
(2) | In computing these ratios, “Preference security dividend requirements” and “Preference security dividend requirements of consolidated subsidiaries” represent the pretax earnings necessary to pay such dividends, computed at the effective tax rates for the applicable periods. |
EXHIBIT 12.2 | ||||||||||||||||||||||||||
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||||||||||||||||||
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES | ||||||||||||||||||||||||||
AND PREFERRED STOCK DIVIDENDS | ||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||
Three months ended | ||||||||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||||||||
March 31, 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||
Earnings: | ||||||||||||||||||||||||||
Pretax income from continuing operations before income or loss | ||||||||||||||||||||||||||
from equity investees, noncontrolling interests and preferred dividends | $ | 225 | $ | 576 | $ | 845 | $ | 890 | $ | 797 | $ | 626 | ||||||||||||||
Add: | ||||||||||||||||||||||||||
Combined fixed charges and preference security dividends for purpose of | ||||||||||||||||||||||||||
ratio (from below) | 84 | 279 | 240 | 242 | 239 | 237 | ||||||||||||||||||||
Amortization of capitalized interest(1) | — | — | — | — | — | — | ||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Interest capitalized | — | 1 | — | — | 1 | — | ||||||||||||||||||||
Preference security dividend requirements(2) | — | — | — | — | — | 5 | ||||||||||||||||||||
Noncontrolling interest in pretax income of subsidiaries that have not incurred | ||||||||||||||||||||||||||
fixed charges | — | — | — | — | — | — | ||||||||||||||||||||
Total earnings for purpose of ratio | $ | 309 | $ | 854 | $ | 1,085 | $ | 1,132 | $ | 1,035 | $ | 858 | ||||||||||||||
Fixed charges and preferred stock dividends: | ||||||||||||||||||||||||||
Interest expensed and capitalized and amortization of premiums, discounts | ||||||||||||||||||||||||||
and capitalized expenses related to indebtedness(1) | $ | 84 | $ | 278 | $ | 239 | $ | 241 | $ | 238 | $ | 231 | ||||||||||||||
Estimate of interest within rental expense | — | 1 | 1 | 1 | 1 | 1 | ||||||||||||||||||||
Total fixed charges | 84 | 279 | 240 | 242 | 239 | 232 | ||||||||||||||||||||
Preference security dividend requirements(2) | — | — | — | — | — | 5 | ||||||||||||||||||||
Combined fixed charges and preferred stock dividends for purpose of ratio | $ | 84 | $ | 279 | $ | 240 | $ | 242 | $ | 239 | $ | 237 | ||||||||||||||
Ratio of earnings to fixed charges | 3.68 | 3.06 | 4.52 | 4.68 | 4.33 | 3.70 | ||||||||||||||||||||
Ratio of earnings to combined fixed charges and preference security dividends | 3.68 | 3.06 | 4.52 | 4.68 | 4.33 | 3.62 | ||||||||||||||||||||
(1 | ) | In computing this ratio, our public utilities that follow FASB ASC Topic 980, Regulated Operations, do not add amortization of capitalized interest in determining Earnings or reduce Fixed Charges by allowance for funds used during construction. | ||||||||||||||||||||||||
(2 | ) | In computing this ratio, “Preference security dividend requirements” represents the pretax earnings necessary to pay such dividends, computed at the effective tax rates for the applicable periods. |
EXHIBIT 12.3 | |||||||||||||||||||||||||
SOUTHERN CALIFORNIA GAS COMPANY | |||||||||||||||||||||||||
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES | |||||||||||||||||||||||||
AND PREFERRED STOCK DIVIDENDS | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Three months ended | |||||||||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||||||
March 31, 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Earnings: | |||||||||||||||||||||||||
Pretax income from continuing operations before income or loss | |||||||||||||||||||||||||
from equity investees, noncontrolling interests and preferred dividends | $ | 284 | $ | 557 | $ | 493 | $ | 558 | $ | 472 | $ | 481 | |||||||||||||
Add: | |||||||||||||||||||||||||
Combined fixed charges and preference security dividends for purpose of | |||||||||||||||||||||||||
ratio (from below) | 31 | 122 | 115 | 99 | 81 | 79 | |||||||||||||||||||
Amortization of capitalized interest(1) | — | — | — | — | — | — | |||||||||||||||||||
Less: | |||||||||||||||||||||||||
Interest capitalized | — | 1 | 1 | 1 | 1 | 1 | |||||||||||||||||||
Preference security dividend requirements(2) | — | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||
Total earnings for purpose of ratio | $ | 315 | $ | 676 | $ | 605 | $ | 654 | $ | 550 | $ | 557 | |||||||||||||
Fixed charges: | |||||||||||||||||||||||||
Interest expensed and capitalized and amortization of premiums, discounts | |||||||||||||||||||||||||
and capitalized expenses related to indebtedness(1) | $ | 30 | $ | 118 | $ | 111 | $ | 96 | $ | 77 | $ | 76 | |||||||||||||
Estimate of interest within rental expense | 1 | 2 | 2 | 1 | 2 | 1 | |||||||||||||||||||
Total fixed charges | 31 | 120 | 113 | 97 | 79 | 77 | |||||||||||||||||||
Preference security dividend requirements(2) | — | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||
Combined fixed charges and preference security dividends for purpose of ratio | $ | 31 | $ | 122 | $ | 115 | $ | 99 | $ | 81 | $ | 79 | |||||||||||||
Ratio of earnings to fixed charges | 10.16 | 5.63 | 5.35 | 6.74 | 6.96 | 7.23 | |||||||||||||||||||
Ratio of earnings to combined fixed charges and preference security dividends | 10.16 | 5.54 | 5.26 | 6.61 | 6.79 | 7.05 | |||||||||||||||||||
(1) | In computing this ratio, our public utilities that follow FASB ASC Topic 980, Regulated Operations, do not add amortization of capitalized interest in determining Earnings or reduce Fixed Charges by allowance for funds used during construction. | ||||||||||||||||||||||||
(2) | In computing this ratio, “Preference security dividend requirements” represents the pretax earnings necessary to pay such dividends, computed at the effective tax rates for the applicable periods. |
1. | I have reviewed this report on Form 10-Q of Sempra Energy; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
May 7, 2018 | /s/ J. Walker Martin |
J. Walker Martin | |
Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of Sempra Energy; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
May 7, 2018 | /s/ Trevor I. Mihalik |
Trevor I. Mihalik | |
Chief Financial Officer |
1. | I have reviewed this report on Form 10-Q of San Diego Gas & Electric Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
May 7, 2018 | /s/ Scott D. Drury |
Scott D. Drury | |
President |
1. | I have reviewed this report on Form 10-Q of San Diego Gas & Electric Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
May 7, 2018 | /s/ Bruce A. Folkmann |
Bruce A. Folkmann | |
Chief Financial Officer |
1. | I have reviewed this report on Form 10-Q of Southern California Gas Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
May 7, 2018 | /s/ Patricia K. Wagner |
Patricia K. Wagner | |
Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of Southern California Gas Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
May 7, 2018 | /s/ Bruce A. Folkmann |
Bruce A. Folkmann | |
Chief Financial Officer |
(i) | the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission for the quarter ended March 31, 2018 (the "Quarterly Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
May 7, 2018 | /s/ J. Walker Martin |
J. Walker Martin | |
Chief Executive Officer |
(i) | the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission for the quarter ended March 31, 2018 (the "Quarterly Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
May 7, 2018 | /s/ Trevor I. Mihalik |
Trevor I. Mihalik | |
Chief Financial Officer |
(i) | the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission for the quarter ended March 31, 2018 (the "Quarterly Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
May 7, 2018 | /s/ Scott D. Drury |
Scott D. Drury | |
President |
(i) | the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission for the quarter ended March 31, 2018 (the "Quarterly Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
May 7, 2018 | /s/ Bruce A. Folkmann |
Bruce A. Folkmann | |
Chief Financial Officer |
(i) | the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission for the quarter ended March 31, 2018 (the "Quarterly Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
May 7, 2018 | /s/ Patricia K. Wagner |
Patricia K. Wagner | |
Chief Executive Officer |
(i) | the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission for the quarter ended March 31, 2018 (the "Quarterly Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
May 7, 2018 | /s/ Bruce A. Folkmann |
Bruce A. Folkmann | |
Chief Financial Officer |