DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Jun. 30, 2013

Derivative Financial Instruments (Tables) [Abstract]

NET ENERGY DERIVATIVE VOLUMES

Segment and Commodity		June 30, 2013	December 31, 2012
California Utilities:
SDG&E:
Natural gas		23 million MMBtu	25 million MMBtu	(1)
Congestion revenue rights		24 million MWh	30 million MWh	(2)
SoCalGas - natural gas		1 million MMBtu	―

Energy-Related Businesses:
Sempra Natural Gas:
Electric power		1 million MWh	1 million MWh
Natural gas		43 million MMBtu	36 million MMBtu
Sempra Mexico - natural gas		―	1 million MMBtu
(1)	Million British thermal units
(2)	Megawatt hours

Notional Amounts of Interest Rate Derivatives Table

INTEREST RATE DERIVATIVES
(Dollars in millions)
		June 30, 2013			December 31, 2012
		Notional Debt		Maturities	Notional Debt		Maturities
Sempra Energy Consolidated:
Cash flow hedges(1)		$	422	2013-2028	$	439	2013-2028
Fair value hedges			500	2013-2016		500	2013-2016
Undesignated contracts			216	2015-2035		―	―
SDG&E:
Cash flow hedge(1)			340	2019		345	2019
(1)	Includes Otay Mesa VIE. All of SDG&E’s interest rate derivatives relate to Otay Mesa VIE.

Derivative Instruments on the Condensed Consolidated Balance Sheets Table

DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
		June 30, 2013
									Deferred
									credits
			Current				Current		and other
			assets:				liabilities:		liabilities:
			Fixed-price		Investments		Fixed-price		Fixed-price
			contracts		and other		contracts		contracts
			and other		assets:		and other		and other
			derivatives(1)		Sundry		derivatives(2)		derivatives
Sempra Energy Consolidated:
Derivatives designated as hedging instruments:
Interest rate and foreign exchange instruments(3)		$	17	$	11	$	(18)	$	(74)
Commodity contracts not subject to rate recovery			4		―		―		―
Derivatives not designated as hedging instruments:
Interest rate and foreign exchange instruments			9		36		(10)		(22)
Commodity contracts not subject to rate recovery:			82		14		(75)		(13)
Associated offsetting commodity contracts			(62)		(11)		62		11
Associated offsetting cash collateral			(3)		―		1		―
Commodity contracts subject to rate recovery:			13		34		(26)		(2)
Associated offsetting commodity contracts			(2)		―		2		―
Associated offsetting cash collateral			―		―		15		2
Net amounts presented on the balance sheet			58		84		(49)		(98)
Additional margin posted for commodity contracts
not subject to rate recovery			9		―		―		―
Additional margin posted for commodity contracts
subject to rate recovery			14		―		―		―
Total		$	81	$	84	$	(49)	$	(98)
SDG&E:
Derivatives designated as hedging instruments:
Interest rate instruments(3)		$	―	$	―	$	(16)	$	(44)
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery:			12		34		(24)		(2)
Associated offsetting commodity contracts			(1)		―		1		―
Associated offsetting cash collateral			―		―		15		2
Net amounts presented on the balance sheet			11		34		(24)		(44)
Additional margin posted for commodity contracts
not subject to rate recovery(4)			2		―		―		―
Additional margin posted for commodity contracts
subject to rate recovery			12		―		―		―
Total		$	25	$	34	$	(24)	$	(44)
SoCalGas:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery:		$	1	$	―	$	(2)	$	―
Associated offsetting commodity contracts			(1)		―		1		―
Net amounts presented on the balance sheet			―		―		(1)		―
Additional margin posted for commodity contracts
not subject to rate recovery(4)			3		―		―		―
Additional margin posted for commodity contracts
subject to rate recovery			2		―		―		―
Total		$	5	$	―	$	(1)	$	―
(1)	Included in Current Assets: Other for SoCalGas.
(2)	Included in Current Liabilities: Other for SoCalGas.
(3)	Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE.
(4)	Includes cash collateral not offset related to a negligible amount of commodity contracts not subject to rate recovery.

DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
		December 31, 2012
									Deferred
									credits
			Current				Current		and other
			assets:				liabilities:		liabilities:
			Fixed-price		Investments		Fixed-price		Fixed-price
			contracts		and other		contracts		contracts
			and other		assets:		and other		and other
			derivatives(1)		Sundry		derivatives(2)		derivatives
Sempra Energy Consolidated:
Derivatives designated as hedging instruments:
Interest rate instruments(3)		$	7	$	12	$	(19)	$	(64)
Commodity contracts not subject to rate recovery			1		―		―		―
Derivatives not designated as hedging instruments:
Interest rate instruments			8		40		(8)		(35)
Commodity contracts not subject to rate recovery:			117		15		(116)		(27)
Associated offsetting commodity contracts			(102)		(12)		102		12
Associated offsetting cash collateral			―		―		4		7
Commodity contracts subject to rate recovery:			30		35		(35)		(1)
Associated offsetting commodity contracts			(4)		―		4		―
Associated offsetting cash collateral			―		―		22		1
Net amounts presented on the balance sheet			57		90		(46)		(107)
Additional margin posted for commodity contracts
not subject to rate recovery			22		―		―		―
Additional margin posted for commodity contracts
subject to rate recovery			13		―		―		―
Total		$	92	$	90	$	(46)	$	(107)
SDG&E:
Derivatives designated as hedging instruments:
Interest rate instruments(3)		$	―	$	―	$	(17)	$	(64)
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery:			28		35		(33)		(1)
Associated offsetting commodity contracts			(3)		―		3		―
Associated offsetting cash collateral			―		―		22		1
Net amounts presented on the balance sheet			25		35		(25)		(64)
Additional margin posted for commodity contracts
not subject to rate recovery(4)			1		―		―		―
Additional margin posted for commodity contracts
subject to rate recovery			12		―		―		―
Total		$	38	$	35	$	(25)	$	(64)
SoCalGas:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery:		$	2	$	―	$	(2)	$	―
Associated offsetting commodity contracts			(1)		―		1		―
Net amounts presented on the balance sheet			1		―		(1)		―
Additional margin posted for commodity contracts
not subject to rate recovery(4)			2		―		―		―
Additional margin posted for commodity contracts
subject to rate recovery			1		―		―		―
Total		$	4	$	―	$	(1)	$	―
(1)	Included in Current Assets: Other for SoCalGas.
(2)	Included in Current Liabilities: Other for SoCalGas.
(3)	Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE.
(4)	Includes cash collateral not offset related to a negligible amount of commodity contracts not subject to rate recovery.

Fair Value Hedge Impact on the Condensed Consolidated Statements of Operations Table

FAIR VALUE HEDGE IMPACT ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
			Gain (loss) on derivatives recognized in earnings				Gain (loss) on derivatives recognized in earnings
			Three months ended June 30,				Six months ended June 30,
		Location	2013		2012		2013		2012
Sempra Energy Consolidated:
Interest rate instruments		Interest Expense	$	2	$	2	$	4	$	4
Interest rate instruments		Other Income, Net		(5)		―		(5)		2
Total(1)			$	(3)	$	2	$	(1)	$	6
(1)	There has been no hedge ineffectiveness on these swaps. Changes in the fair values of the interest rate swap agreements are exactly offset by changes in the fair value of the underlying long-term debt.

Cash Flow Hedge Impact on the Condensed Consolidated Statements of Operations Table

CASH FLOW HEDGE IMPACT ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
		Pretax gain (loss) recognized					Gain (loss) reclassified from AOCI
		in OCI (effective portion)					into earnings (effective portion)
		Three months ended June 30,					Three months ended June 30,
		2013		2012		Location	2013		2012
Sempra Energy Consolidated:
Interest rate and foreign
exchange instruments(1)		$	33	$	(18)	Interest Expense	$	(3)	$	(1)
						Equity Earnings (Losses),
Interest rate instruments			13		(7)	Before Income Tax		(2)		2
Commodity contracts not subject						Cost of Natural Gas, Electric
to rate recovery			4		―	Fuel and Purchased Power		5		―
Total		$	50	$	(25)		$	―	$	1
SDG&E:
Interest rate instruments(1)		$	10	$	(10)	Interest Expense	$	(2)	$	(1)
SoCalGas:
Interest rate instruments		$	―	$	―	Interest Expense	$	(1)	$	―
		Six months ended June 30,					Six months ended June 30,
		2013		2012		Location	2013		2012
Sempra Energy Consolidated:
Interest rate and foreign
exchange instruments(1)		$	5	$	(15)	Interest Expense	$	(6)	$	(2)
						Equity Earnings (Losses),
Interest rate instruments			14		(6)	Before Income Tax		(4)		―
Commodity contracts not subject						Cost of Natural Gas, Electric
to rate recovery			4		―	Fuel and Purchased Power		5		―
Total		$	23	$	(21)		$	(5)	$	(2)
SDG&E:
Interest rate instruments(1)		$	11	$	(10)	Interest Expense	$	(4)	$	(1)
SoCalGas:
Interest rate instruments		$	―	$	―	Interest Expense	$	(1)	$	(1)
(1)	Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE; there has been a negligible amount of ineffectiveness related to these swaps.

Undesignated Derivative Impact on the Condensed Consolidated Statements of Operations Table

UNDESIGNATED DERIVATIVE IMPACT ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
		Gain (loss) on derivatives recognized in earnings
		Three months ended June 30,				Six months ended June 30,
	Location	2013		2012		2013		2012
Sempra Energy Consolidated:
Interest rate and foreign exchange
instruments	Other Income, Net	$	6	$	(1)	$	13	$	10
Foreign exchange instruments	Equity Earnings,
	Net of Income Tax		4		―		4		―
Commodity contracts not subject	Revenues: Energy-Related
to rate recovery	Businesses		21		(9)		1		2
Commodity contracts not subject
to rate recovery	Operation and Maintenance		―		(1)		―		―
Commodity contracts subject	Cost of Electric Fuel
to rate recovery	and Purchased Power		(18)		12		(9)		(9)
Commodity contracts subject
to rate recovery	Cost of Natural Gas		(1)		(1)		(1)		(1)
Total		$	12	$	―	$	8	$	2
SDG&E:
Commodity contracts subject	Cost of Electric Fuel
to rate recovery	and Purchased Power	$	(18)	$	12	$	(9)	$	(9)
SoCalGas:
Commodity contracts not subject
to rate recovery	Operation and Maintenance	$	―	$	(1)	$	―	$	―
Commodity contracts subject
to rate recovery	Cost of Natural Gas		(1)		(1)		(1)		(1)
Total		$	(1)	$	(2)	$	(1)	$	(1)

- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

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- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

+ References+ Details