FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2016



RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
	Fair value at September 30, 2016
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	607	$	—	$	—	$	—		$	607
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	48		52		—		—			100
Municipal bonds	—		161		—		—			161
Other securities	—		188		—		—			188
Total debt securities	48		401		—		—			449
Total nuclear decommissioning trusts(2)	655		401		—		—			1,056
Interest rate and foreign exchange instruments	—		5		—		—			5
Commodity contracts not subject to rate recovery	—		18		—		13			31
Commodity contracts subject to rate recovery	—		1		90		19			110
Total	$	655	$	425	$	90	$	32		$	1,202

Liabilities:
Interest rate and foreign exchange instruments	$	—	$	269	$	—	$	—		$	269
Commodity contracts not subject to rate recovery	19		1		—		(19		)	1
Commodity contracts subject to rate recovery	1		40		177		(29		)	189
Total	$	20	$	310	$	177	$	(48	)	$	459

	Fair value at December 31, 2015
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	619	$	—	$	—	$	—		$	619
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	47		44		—		—			91
Municipal bonds	—		156		—		—			156
Other securities	—		182		—		—			182
Total debt securities	47		382		—		—			429
Total nuclear decommissioning trusts(2)	666		382		—		—			1,048
Interest rate and foreign exchange instruments	—		5		—		—			5
Commodity contracts not subject to rate recovery	22		16		—		(4		)	34
Commodity contracts subject to rate recovery	—		1		72		28			101
Total	$	688	$	404	$	72	$	24		$	1,188

Liabilities:
Interest rate and foreign exchange instruments	$	—	$	171	$	—	$	—		$	171
Commodity contracts not subject to rate recovery	5		3		—		(4		)	4
Commodity contracts subject to rate recovery	—		68		53		(54		)	67
Total	$	5	$	242	$	53	$	(58	)	$	242


(1)	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.


(2)	Excludes cash balances and cash equivalents.



RECURRING FAIR VALUE MEASURES – SDG&E
(Dollars in millions)
	Fair value at September 30, 2016
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	607	$	—	$	—	$	—		$	607
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	48		52		—		—			100
Municipal bonds	—		161		—		—			161
Other securities	—		188		—		—			188
Total debt securities	48		401		—		—			449
Total nuclear decommissioning trusts(2)	655		401		—		—			1,056
Commodity contracts not subject to rate recovery	—		—		—		1			1
Commodity contracts subject to rate recovery	—		—		90		17			107
Total	$	655	$	401	$	90	$	18		$	1,164

Liabilities:
Interest rate instruments	$	—	$	31	$	—	$	—		$	31
Commodity contracts subject to rate recovery	—		39		177		(29		)	187
Total	$	—	$	70	$	177	$	(29	)	$	218

	Fair value at December 31, 2015
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	619	$	—	$	—	$	—		$	619
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	47		44		—		—			91
Municipal bonds	—		156		—		—			156
Other securities	—		182		—		—			182
Total debt securities	47		382		—		—			429
Total nuclear decommissioning trusts(2)	666		382		—		—			1,048
Commodity contracts not subject to rate recovery	—		—		—		1			1
Commodity contracts subject to rate recovery	—		—		72		27			99
Total	$	666	$	382	$	72	$	28		$	1,148

Liabilities:
Interest rate instruments	$	—	$	37	$	—	$	—		$	37
Commodity contracts not subject to rate recovery	1		—		—		(1		)	—
Commodity contracts subject to rate recovery	—		67		53		(54		)	66
Total	$	1	$	104	$	53	$	(55	)	$	103


(1)	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.


(2)	Excludes cash balances and cash equivalents.



RECURRING FAIR VALUE MEASURES – SOCALGAS
(Dollars in millions)
	Fair value at September 30, 2016
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Commodity contracts not subject to rate recovery	$	—	$	—	$	—	$	1		$	1
Commodity contracts subject to rate recovery	—		1		—		2			3
Total	$	—	$	1	$	—	$	3		$	4

Liabilities:
Commodity contracts subject to rate recovery	$	1	$	1	$	—	$	—		$	2
Total	$	1	$	1	$	—	$	—		$	2

	Fair value at December 31, 2015
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Commodity contracts subject to rate recovery	$	—	$	1	$	—	$	1		$	2
Total	$	—	$	1	$	—	$	1		$	2

Liabilities:
Commodity contracts not subject to rate recovery	$	1	$	—	$	—	$	(1	)	$	—
Commodity contracts subject to rate recovery	—		1		—		—			1
Total	$	1	$	1	$	—	$	(1	)	$	1


(1)	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 Level 3 Rollforward Table

The following table sets forth reconciliations of changes in the fair value of congestion revenue rights (CRRs) and long-term, fixed-price electricity positions classified as Level 3 in the fair value hierarchy for Sempra Energy Consolidated and SDG&E:



LEVEL 3 RECONCILIATIONS
(Dollars in millions)
	Three months ended September 30,
	2016			2015
Balance as of July 1	$	24		$	42
Realized and unrealized losses	(145		)	(49		)
Settlements	34			43
Balance as of September 30	$	(87	)	$	36
Change in unrealized losses relating to
instruments still held at September 30	$	(114	)	$	(8	)



	Nine months ended September 30,
	2016			2015
Balance as of January 1	$	19		$	107
Realized and unrealized losses	(138		)	(103		)
Allocated transmission instruments	—			1
Settlements	32			31
Balance as of September 30	$	(87	)	$	36
Change in unrealized losses relating to
instruments still held at September 30	$	(111	)	$	(54	)

Fair Value of Financial Instruments Table

The following table provides the carrying amounts and fair values of certain other financial instruments that are not recorded at fair value on the Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015:



FAIR VALUE OF FINANCIAL INSTRUMENTS
(Dollars in millions)
	September 30, 2016
	Carrying amount		Fair value
	Carrying amount		Level 1		Level 2		Level 3		Total
Sempra Energy Consolidated:
Due from unconsolidated affiliates(1)	$	180	$	—	$	91	$	81	$	172
Total long-term debt(2)(3)	14,149		—		15,335		532		15,867
Preferred stock of subsidiary	20		—		26		—		26
SDG&E:
Total long-term debt(3)(4)	$	4,656	$	—	$	5,024	$	307	$	5,331
SoCalGas:
Total long-term debt(5)	$	3,009	$	—	$	3,323	$	—	$	3,323
Preferred stock	22		—		28		—		28

	December 31, 2015
	Carrying amount		Fair value
	Carrying amount		Level 1		Level 2		Level 3		Total
Sempra Energy Consolidated:
Noncurrent due from unconsolidated affiliates(1)	$	175	$	—	$	97	$	69	$	166
Total long-term debt(2)(3)	13,761		—		13,985		648		14,633
Preferred stock of subsidiary	20		—		23		—		23
SDG&E:
Total long-term debt(3)(4)	$	4,304	$	—	$	4,355	$	315	$	4,670
SoCalGas:
Total long-term debt(5)	$	2,513	$	—	$	2,621	$	—	$	2,621
Preferred stock	22		—		25		—		25


(1)	Excluding accumulated interest outstanding of $15 million and $11 million at September 30, 2016 and December 31, 2015, respectively.

(2)

Before reductions for unamortized discount (net of premium) and debt issuance costs of $108 million and $107 million at September 30, 2016 and December 31, 2015, respectively, and excluding build-to-suit and capital lease obligations of $385 million and $387 million at September 30, 2016 and December 31, 2015, respectively. We discuss our long-term debt in Note 6 above and in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report.


(3)	Level 3 instruments include $307 million and $315 million at September 30, 2016 and December 31, 2015, respectively, related to Otay Mesa VIE.


(4)	Before reductions for unamortized discount and debt issuance costs of $46 million and $43 million at September 30, 2016 and December 31, 2015, respectively, and excluding capital lease obligations of $241 million and $244 million at September 30, 2016 and December 31, 2015, respectively.


(5)	Before reductions for unamortized discount and debt issuance costs of $27 million and $24 million at September 30, 2016 and December 31, 2015, respectively, and excluding capital lease obligations of $1 million at both September 30, 2016 and December 31, 2015, respectively.

Fair Value Measurements, Nonrecurring Table

The following table summarizes significant inputs impacting our non-recurring fair value measures:



NON-RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
	Estimated fair value			Valuation technique	Fair value hierarchy	% of fair value measurement	Inputs used to develop measurement	Range of inputs
TdM	$	145	(1)	Market approach	Level 2	100%	Purchase price offers	100%
Investment in GdC	$	1,144	(2)	Market approach	Level 2	100%	Equity sale price	100%
Investment in Rockies Express	$	440	(3)	Market approach	Level 2	100%	Equity sale price	100%


(1)	At measurement date of September 29, 2016. At September 30, 2016, TdM has a carrying value of $146 million, reflecting subsequent business activity, and is classified as held for sale.


(2)	At measurement date of September 26, 2016, immediately prior to acquiring a 100-percent ownership interest in GdC.


(3)	At measurement date of March 29, 2016. On May 9, 2016, Sempra Natural Gas sold its equity interest in Rockies Express.