FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2017



RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
	Fair value at September 30, 2017
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	503	$	5	$	—	$	—		$	508
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	44		7		—		—			51
Municipal bonds	—		245		—		—			245
Other securities	—		210		—		—			210
Total debt securities	44		462		—		—			506
Total nuclear decommissioning trusts(2)	547		467		—		—			1,014
Interest rate and foreign exchange instruments	—		135		—		—			135
Commodity contracts not subject to rate recovery	6		12		—		2			20
Commodity contracts subject to rate recovery	—		2		122		16			140
Total	$	553	$	616	$	122	$	18		$	1,309

Liabilities:
Interest rate and foreign exchange instruments	$	—	$	194	$	—	$	—		$	194
Commodity contracts not subject to rate recovery	—		4		—		—			4
Commodity contracts subject to rate recovery	23		7		159		(23		)	166
Total	$	23	$	205	$	159	$	(23	)	$	364

	Fair value at December 31, 2016
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	508	$	—	$	—	$	—		$	508
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	36		16		—		—			52
Municipal bonds	—		206		—		—			206
Other securities	—		141		—		—			141
Total debt securities	36		363		—		—			399
Total nuclear decommissioning trusts(2)	544		363		—		—			907
Interest rate and foreign exchange instruments	—		9		—		—			9
Commodity contracts not subject to rate recovery	—		15		—		9			24
Commodity contracts subject to rate recovery	1		3		96		32			132
Total	$	545	$	390	$	96	$	41		$	1,072

Liabilities:
Interest rate and foreign exchange instruments	$	—	$	252	$	—	$	—		$	252
Commodity contracts not subject to rate recovery	16		11		—		(17		)	10
Commodity contracts subject to rate recovery	19		8		170		(18		)	179
Total	$	35	$	271	$	170	$	(35	)	$	441


(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, 2017
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	503	$	5	$	—	$	—		$	508
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	44		7		—		—			51
Municipal bonds	—		245		—		—			245
Other securities	—		210		—		—			210
Total debt securities	44		462		—		—			506
Total nuclear decommissioning trusts(2)	547		467		—		—			1,014
Commodity contracts subject to rate recovery	—		—		122		15			137
Total	$	547	$	467	$	122	$	15		$	1,151

Liabilities:
Interest rate instruments	$	—	$	17	$	—	$	—		$	17
Commodity contracts subject to rate recovery	23		5		159		(23		)	164
Total	$	23	$	22	$	159	$	(23	)	$	181

	Fair value at December 31, 2016
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	508	$	—	$	—	$	—		$	508
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	36		16		—		—			52
Municipal bonds	—		206		—		—			206
Other securities	—		141		—		—			141
Total debt securities	36		363		—		—			399
Total nuclear decommissioning trusts(2)	544		363		—		—			907
Commodity contracts not subject to rate recovery	—		—		—		1			1
Commodity contracts subject to rate recovery	1		2		96		30			129
Total	$	545	$	365	$	96	$	31		$	1,037

Liabilities:
Interest rate instruments	$	—	$	25	$	—	$	—		$	25
Commodity contracts subject to rate recovery	17		7		170		(16		)	178
Total	$	17	$	32	$	170	$	(16	)	$	203


(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, 2017
	Level 1		Level 2		Level 3		Netting(1)			Total
Assets:
Commodity contracts subject to rate recovery	$	—	$	2	$	—	$	1		$	3
Total	$	—	$	2	$	—	$	1		$	3

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

	Fair value at December 31, 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	$	2	$	1	$	—	$	(2	)	$	1
Total	$	2	$	1	$	—	$	(2	)	$	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 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,
	2017			2016
Balance at July 1	$	(90	)	$	24
Realized and unrealized gains (losses)	30			(145		)
Settlements	23			34
Balance at September 30	$	(37	)	$	(87	)
Change in unrealized gains (losses) relating to
instruments still held at September 30	$	38		$	(114	)



	Nine months ended September 30,
	2017			2016
Balance at January 1	$	(74	)	$	19
Realized and unrealized gains (losses)	14			(138		)
Settlements	23			32
Balance at September 30	$	(37	)	$	(87	)
Change in unrealized gains (losses) relating to
instruments still held at September 30	$	26		$	(111	)

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, 2017 and December 31, 2016:



FAIR VALUE OF FINANCIAL INSTRUMENTS
(Dollars in millions)
	September 30, 2017
	Carrying amount		Fair value
	Carrying amount		Level 1		Level 2		Level 3		Total
Sempra Energy Consolidated:
Long-term amounts due from unconsolidated affiliates(1)	$	476	$	—	$	346	$	92	$	438
Total long-term debt(2)(3)	15,459		—		15,930		464		16,394
SDG&E:
Total long-term debt(3)(4)	$	4,871	$	—	$	5,029	$	297	$	5,326
SoCalGas:
Total long-term debt(5)	$	3,009	$	—	$	3,169	$	—	$	3,169

	December 31, 2016
	Carrying amount		Fair value
	Carrying amount		Level 1		Level 2		Level 3		Total
Sempra Energy Consolidated:
Long-term amounts due from unconsolidated affiliates(1)	$	184	$	—	$	91	$	84	$	175
Total long-term debt(2)(3)	15,068		—		15,455		492		15,947
SDG&E:
Total long-term debt(3)(4)	$	4,654	$	—	$	4,727	$	305	$	5,032
SoCalGas:
Total long-term debt(5)	$	3,009	$	—	$	3,131	$	—	$	3,131


(1)	Excluding accumulated interest outstanding of $31 million and $17 million at September 30, 2017 and December 31, 2016, respectively, and excluding foreign currency translation of $(1) million on a Mexican peso-denominated loan at September 30, 2017.

(2)

Before reductions for unamortized discount (net of premium) and debt issuance costs of $112 million and $109 million at September 30, 2017 and December 31, 2016, respectively, and excluding build-to-suit and capital lease obligations of $879 million and $383 million at September 30, 2017 and December 31, 2016, 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 $297 million and $305 million at September 30, 2017 and December 31, 2016, respectively, related to Otay Mesa VIE.


(4)	Before reductions for unamortized discount and debt issuance costs of $47 million and $45 million at September 30, 2017 and December 31, 2016, respectively, and excluding capital lease obligations of $734 million and $240 million at September 30, 2017 and December 31, 2016, respectively.

(5)

Before reductions for unamortized discount and debt issuance costs of $25 million and $27 million at September 30, 2017 and December 31, 2016, respectively, and excluding capital lease obligations of $1 million at September 30, 2017.

Nonrecurring Fair Value Measures Table

The following table summarizes significant inputs impacting this non-recurring fair value measure:

NON-RECURRING FAIR VALUE MEASURE – 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

(1)

Market approach

Level 2

100%

Purchase price offer

100%

(1)

At measurement date of June 30, 2017. At September 30, 2017, TdM has a carrying value of $70 million, reflecting subsequent business activity, and is classified as held for sale.