DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Sep. 30, 2014

Derivative Financial Instruments (Tables) [Abstract]

NET ENERGY DERIVATIVE VOLUMES

Segment and Commodity		September 30, 2014	December 31, 2013
California Utilities:
SDG&E:
Natural gas		43 million MMBtu	43 million MMBtu	(1)
Congestion revenue rights		27 million MWh	33 million MWh	(2)
SoCalGas - natural gas		―	2 million MMBtu

Energy-Related Businesses:
Sempra Natural Gas:
Electric power		―	1 million MWh
Natural gas		31 million MMBtu	15 million MMBtu
(1)	Million British thermal units
(2)	Megawatt hours

Notional Amounts of Interest Rate Derivatives Table

INTEREST RATE DERIVATIVES
(Dollars in millions)
		September 30, 2014			December 31, 2013
		Notional Debt		Maturities	Notional Debt		Maturities
Sempra Energy Consolidated:
Cash flow hedges(1)		$	404	2014-2028	$	413	2014-2028
Fair value hedges			300	2016		300	2016
SDG&E:
Cash flow hedge(1)			327	2019		335	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)
		September 30, 2014
									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)		$	12	$	7	$	(17)	$	(77)
Commodity contracts not subject to rate recovery			1		―		―		―
Derivatives not designated as hedging instruments:
Interest rate and foreign exchange instruments			8		24		(7)		(20)
Commodity contracts not subject to rate recovery			39		10		(36)		(7)
Associated offsetting commodity contracts			(32)		(7)		32		7
Associated offsetting cash collateral			―		―		1		―
Commodity contracts subject to rate recovery			14		82		(13)		(6)
Associated offsetting commodity contracts			(4)		(2)		4		2
Associated offsetting cash collateral			―		―		3		―
Net amounts presented on the balance sheet			38		114		(33)		(101)
Additional cash collateral for commodity contracts
not subject to rate recovery			15		―		―		―
Additional cash collateral for commodity contracts
subject to rate recovery			30		―		―		―
Total(4)		$	83	$	114	$	(33)	$	(101)
SDG&E:
Derivatives designated as hedging instruments:
Interest rate instruments(3)		$	―	$	―	$	(16)	$	(32)
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery			11		82		(11)		(6)
Associated offsetting commodity contracts			(2)		(2)		2		2
Associated offsetting cash collateral			―		―		3		―
Net amounts presented on the balance sheet			9		80		(22)		(36)
Additional cash collateral for commodity contracts
not subject to rate recovery			1		―		―		―
Additional cash collateral for commodity contracts
subject to rate recovery			28		―		―		―
Total(4)		$	38	$	80	$	(22)	$	(36)
SoCalGas:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery		$	3	$	―	$	(2)	$	―
Associated offsetting commodity contracts			(2)		―		2		―
Net amounts presented on the balance sheet			1		―		―		―
Additional cash collateral for commodity contracts
not subject to rate recovery			2		―		―		―
Additional cash collateral for commodity contracts
subject to rate recovery			2		―		―		―
Total		$	5	$	―	$	―	$	―
(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, 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)		$	14	$	12	$	(18)	$	(75)
Derivatives not designated as hedging instruments:
Interest rate and foreign exchange instruments			8		22		(7)		(17)
Commodity contracts not subject to rate recovery			47		7		(51)		(5)
Associated offsetting commodity contracts			(43)		(5)		43		5
Associated offsetting cash collateral			―		―		1		―
Commodity contracts subject to rate recovery			35		72		(10)		(8)
Associated offsetting commodity contracts			(3)		(2)		3		2
Net amounts presented on the balance sheet			58		106		(39)		(98)
Additional cash collateral for commodity contracts
not subject to rate recovery			17		―		―		―
Additional cash collateral for commodity contracts
subject to rate recovery			31		―		―		―
Total(4)		$	106	$	106	$	(39)	$	(98)
SDG&E:
Derivatives designated as hedging instruments:
Interest rate instruments(3)		$	―	$	―	$	(16)	$	(39)
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery			34		72		(9)		(8)
Associated offsetting commodity contracts			(3)		(2)		3		2
Net amounts presented on the balance sheet			31		70		(22)		(45)
Additional cash collateral for commodity contracts
not subject to rate recovery			1		―		―		―
Additional cash collateral for commodity contracts
subject to rate recovery			29		―		―		―
Total(4)		$	61	$	70	$	(22)	$	(45)
SoCalGas:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery		$	1	$	―	$	(1)	$	―
Net amounts presented on the balance sheet			1		―		(1)		―
Additional cash collateral for commodity contracts
not subject to rate recovery			2		―		―		―
Additional cash collateral 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)	Normal purchase contracts previously measured at fair value are excluded.

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
			Three months ended September 30,				Nine months ended September 30,
		Location	2014		2013		2014		2013
Sempra Energy Consolidated:
Interest rate instruments		Interest Expense	$	1	$	2	$	6	$	6
Interest rate instruments		Other Income, Net		(1)		1		―		(4)
Total(1)			$	―	$	3	$	6	$	2
(1)	There were negligible gains from hedge ineffectiveness on these swaps for the three-month period, and $9 million of gains from hedge ineffectiveness for the nine-month period ended September 30, 2014, respectively. All other changes in the fair value of the interest rate swap agreements are exactly offset by changes in the fair value of the underlying long-term debt and recorded in Other Income, Net. There was no hedge ineffectiveness in 2013.

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 September 30,					Three months ended September 30,
		2014		2013		Location	2014		2013
Sempra Energy Consolidated:
Interest rate and foreign
exchange instruments(1)		$	(5)	$	(8)	Interest Expense	$	(8)	$	(3)
						Gain on Sale of Equity
Interest rate instruments			5		―	Interests and Assets		5		―
						Equity Earnings,
Interest rate instruments			(4)		(3)	Before Income Tax		(2)		(3)
Commodity contracts not subject						Revenues: Energy-Related
to rate recovery			1		1	Businesses		2		―
Total(2)		$	(3)	$	(10)		$	(3)	$	(6)
SDG&E:
Interest rate instruments(1)(2)		$	1	$	(3)	Interest Expense	$	(3)	$	(2)

		Nine months ended September 30,					Nine months ended September 30,
		2014		2013		Location	2014		2013
Sempra Energy Consolidated:
Interest rate and foreign
exchange instruments(1)		$	(15)	$	(3)	Interest Expense	$	(17)	$	(9)
						Gain on Sale of Equity
Interest rate instruments			3		―	Interests and Assets		3		―
						Equity Earnings,
Interest rate instruments			(34)		11	Before Income Tax		(7)		(7)
Commodity contracts not subject						Revenues: Energy-Related
to rate recovery			(5)		5	Businesses		(8)		5
Total(2)		$	(51)	$	13		$	(29)	$	(11)
SDG&E:
Interest rate instruments(1)(2)		$	(5)	$	8	Interest Expense	$	(8)	$	(6)
SoCalGas:
Interest rate instruments		$	―	$	―	Interest Expense	$	―	$	(1)
(1)	Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE.
(2)	There was a negligible amount of ineffectiveness related to these hedges in 2014 and 2013.

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 endedSeptember 30,				Nine months ended September 30,
	Location	2014		2013		2014		2013
Sempra Energy Consolidated:
Interest rate and foreign exchange
instruments	Other Income, Net	$	(6)	$	4	$	(6)	$	17
Foreign exchange instruments	Equity Earnings,
	Net of Income Tax		(2)		―		(4)		(3)
Commodity contracts not subject	Revenues: Energy-Related
to rate recovery	Businesses		3		1		2		2
Commodity contracts not subject	Cost of Natural Gas, Electric Fuel
to rate recovery	and Purchased Power		1		―		3		―
Commodity contracts subject	Cost of Electric Fuel
to rate recovery	and Purchased Power		(1)		―		19		(9)
Commodity contracts subject
to rate recovery	Cost of Natural Gas		1		1		2		―
Total		$	(4)	$	6	$	16	$	7
SDG&E:
Commodity contracts subject	Cost of Electric Fuel
to rate recovery	and Purchased Power	$	(1)	$	―	$	19	$	(9)
SoCalGas:
Commodity contracts subject
to rate recovery	Cost of Natural Gas	$	1	$	1	$	2	$	―