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GENERAL INFORMATION AND OTHER FINANCIAL DATA (Tables)
 6 Months Ended
Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Cash and Cash Equivalents The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Condensed Consolidated Balance Sheets to the sum of such amounts reported on the Condensed Consolidated Statements of Cash Flows. We provide information about the nature of restricted cash in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(Dollars in millions)
 
June 30,
December 31,
 
2018
2017
Sempra Energy Consolidated:
 
 
Cash and cash equivalents
$
252

$
288

Restricted cash, current
60

62

Restricted cash, noncurrent
15

14

Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows
$
327

$
364

SDG&E:
 

 
Cash and cash equivalents
$
8

$
12

Restricted cash, current
5

6

Restricted cash, noncurrent
12

11

Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows
$
25

$
29
Schedule of Prior Period Adjustments We discuss this presentation further in Note 6. The following table summarizes the financial statement line items that were affected by this reclassification:
SEMPRA ENERGY – RECLASSIFICATION
(Dollars in millions)
 
 
 
Three months ended
June 30, 2017
 
Six months ended
June 30, 2017
 
As previously presented
 
As currently presented
 
As previously presented
 
As currently presented
Condensed Consolidated Statement of Operations:
 
 
 
 
 
 
 
Equity earnings, before income tax
$
18

 
$
—

 
$
21

 
$
—

Income before income taxes and equity losses of certain
 
 
 
 
 
 
 
unconsolidated subsidiaries
415

 
—

 
1,170

 
—

Income before income taxes and equity earnings of
 
 
 
 
 
 
 
unconsolidated subsidiaries
—

 
397

 
—

 
1,149

Equity losses, net of income tax
—

 
—

 
(8
)
 
—

Equity earnings
—

 
18

 
—

 
13
Inventory Table The components of inventories by segment are as follows:
INVENTORY BALANCES
(Dollars in millions)
 
Natural gas
 
 
LNG
 
 
Materials and supplies
 
 
Total
 
June 30, 2018
 
December 31, 2017
 
 
June 30, 2018
 
December 31, 2017
 
 
June 30, 2018
 
December 31, 2017
 
 
June 30, 2018
 
December 31, 2017
SDG&E
$
—

 
$
4

 
 
$
—

 
$
—

 
 
$
105

 
$
101

 
 
$
105

 
$
105

SoCalGas
41

 
75

 
 
—

 
—

 
 
39

 
49

 
 
80

 
124

Sempra South American Utilities
—

 
—

 
 
—

 
—

 
 
34

 
30

 
 
34

 
30

Sempra Mexico
—

 
—

 
 
10

 
7

 
 
13

 
2

 
 
23

 
9

Sempra Renewables
—

 
—

 
 
—

 
—

 
 
—

 
5

 
 
—

 
5

Sempra LNG & Midstream
46

 
30

 
 
—

 
4

 
 
—

 
—

 
 
46

 
34

Sempra Energy Consolidated
$
87

 
$
109

 
 
$
10

 
$
11

 
 
$
191

 
$
187

 
 
$
288

 
$
307
Schedule of Finite-Lived Intangible Assets Other Intangible Assets included on the Sempra Energy Condensed Consolidated Balance Sheets are as follows:
 
OTHER INTANGIBLE ASSETS
 
(Dollars in millions)
 
 
Amortization period (years)
 
June 30,
2018
 
December 31,
2017
 
 
Development rights
50
 
$
—

 
$
322

 
Renewable energy transmission and consumption permit
19
 
154

 
154

 
Storage rights
46
 
—

 
138

 
O&M agreement
23
 
66

 
66

 
Other
10 years to indefinite
 
22

 
18

 
 
 
 
242

 
698

 
Less accumulated amortization:
 
 
 
 
 
 
Development rights
 
 
—

 
(60
)
 
Renewable energy transmission and consumption permit
 
 
(12
)
 
(8
)
 
Storage rights
 
 
—

 
(28
)
 
O&M agreement
 
 
(2
)
 
—

 
Other
 
 
(7
)
 
(6
)
 
 
 
 
(21
)
 
(102
)
 
 
 
 
$
221

 
$
596
Variable Interest Entity Table
AMOUNTS ASSOCIATED WITH TAX EQUITY ARRANGEMENTS
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2018
2017
 
2018
2017
REVENUES
 
 
 
 
 
Energy-related businesses
$
32

$
18

 
$
49

$
31

EXPENSES
 
 
 
 
 
Operation and maintenance
(4
)
(7
)
 
(8
)
(9
)
Depreciation and amortization
(12
)
(8
)
 
(23
)
(16
)
Income before income taxes
16

3

 
18

6

Income tax expense
(7
)
(4
)
 
(12
)
(6
)
Net income (loss)
9

(1
)
 
6

—

Losses attributable to noncontrolling interests(1)
20

7

 
41

10

Earnings
$
29

$
6

 
$
47

$
10


(1)
Net income or loss attributable to NCI is computed using the HLBV method and is not based on ownership percentages.The Condensed Consolidated Statements of Operations of Sempra Energy and SDG&E include the following amounts associated with Otay Mesa VIE. The amounts are net of eliminations of transactions between SDG&E and Otay Mesa VIE. The captions in the table below correspond to SDG&E’s Condensed Consolidated Statements of Operations.
AMOUNTS ASSOCIATED WITH OTAY MESA VIE
 
 
 
 
(Dollars in millions)
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Operating expenses
 
 
 
 
 
 
 
Cost of electric fuel and purchased power
$
(16
)
 
$
(21
)
 
$
(32
)
 
$
(39
)
Operation and maintenance
4

 
5

 
8

 
9

Depreciation and amortization
7

 
7

 
15

 
14

Total operating expenses
(5
)
 
(9
)
 
(9
)
 
(16
)
Operating income
5

 
9

 
9

 
16

Interest expense
(5
)
 
(5
)
 
(10
)
 
(10
)
Income (loss) before income taxes/Net income (loss)
—

 
4

 
(1
)
 
6

(Earnings) losses attributable to noncontrolling interest
—

 
(4
)
 
1

 
(6
)
Earnings attributable to common shares
$
—

 
$
—

 
$
—

 
$
—
Schedule of Asset Retirement Obligations The changes in asset retirement obligations are as follows:
CHANGES IN ASSET RETIREMENT OBLIGATIONS
(Dollars in millions)
 
 
Sempra Energy
 
 
 
 
 
 
 
 
Consolidated
 
 SDG&E
 
 SoCalGas
 
 
2018
2017
 
2018
2017
 
2018
2017
Balance at January 1(1)
$
2,877

$
2,553

 
$
839

$
830

 
$
1,953

$
1,659

Accretion expense
60

54

 
19

19

 
38

33

Liabilities incurred
7

20

 
—

17

 
—

—

Reclassifications(2)
(60
)
—

 
—

—

 
—

—

Payments
(23
)
(26
)
 
(21
)
(25
)
 
(2
)
(1
)
Revisions
28

(6
)
 
29

—

 
(1
)
(6
)
Balance at June 30(1)
$
2,889

$
2,595

 
$
866

$
841

 
$
1,988

$
1,685

(1) 
Current portions of the obligations for Sempra Energy Consolidated and SoCalGas are included in Other Current Liabilities on the Condensed Consolidated Balance Sheets.
(2) 
In June 2018, we reclassified $57 million at Sempra Renewables and $8 million at Sempra LNG & Midstream to Liabilities Held for Sale, and $5 million related to TdM from Liabilities Held for Sale, as we discuss in Note 5.
Net Periodic Benefit Cost Table The following three tables provide the components of net periodic benefit cost:
NET PERIODIC BENEFIT COST – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
 
Pension benefits
 
Other postretirement benefits
 
Three months ended June 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
33

 
$
29

 
$
5

 
$
5

Interest cost
34

 
37

 
9

 
11

Expected return on assets
(39
)
 
(40
)
 
(17
)
 
(17
)
Amortization of:
 
 
 
 
 
 
 
Prior service cost
2

 
2

 
—

 
—

Actuarial loss (gain)
10

 
8

 
(1
)
 
—

Settlements
25

 
—

 
—

 
—

Net periodic benefit cost (credit)
65

 
36

 
(4
)
 
(1
)
Regulatory adjustment
(35
)
 
(29
)
 
5

 
2

Total expense recognized
$
30

 
$
7

 
$
1

 
$
1

 
 
 
 
 
 
 
 
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
66

 
$
57

 
$
11

 
$
11

Interest cost
69

 
74

 
18

 
20

Expected return on assets
(81
)
 
(80
)
 
(35
)
 
(33
)
Amortization of:
 
 
 
 
 
 
 
Prior service cost
5

 
5

 
—

 
—

Actuarial loss (gain)
19

 
16

 
(2
)
 
(1
)
Settlements
39

 
—

 
—

 
—

Net periodic benefit cost (credit)
117

 
72

 
(8
)
 
(3
)
Regulatory adjustment
(80
)
 
(41
)
 
9

 
4

Total expense recognized
$
37

 
$
31

 
$
1

 
$
1

NET PERIODIC BENEFIT COST – SDG&E
(Dollars in millions)
 
Pension benefits
 
Other postretirement benefits
 
Three months ended June 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
8

 
$
7

 
$
1

 
$
2

Interest cost
8

 
10

 
1

 
2

Expected return on assets
(12
)
 
(13
)
 
(4
)
 
(4
)
Amortization of:
 
 
 
 
 
 
 
Prior service cost
1

 
1

 
1

 
1

Actuarial loss
2

 
2

 
—

 
—

Settlements
2

 
—

 
—

 
—

Net periodic benefit cost (credit)
9

 
7

 
(1
)
 
1

Regulatory adjustment
(8
)
 
(7
)
 
1

 
(1
)
Total expense recognized
$
1

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
16

 
$
15

 
$
2

 
$
3

Interest cost
17

 
19

 
3

 
4

Expected return on assets
(25
)
 
(24
)
 
(7
)
 
(7
)
Amortization of:

 
 
 

 
 
Prior service cost
1

 
1

 
2

 
2

Actuarial loss (gain)
3

 
4

 
(1
)
 
—

Settlements
16

 
—

 
—

 
—

Net periodic benefit cost (credit)
28

 
15

 
(1
)
 
2

Regulatory adjustment
(27
)
 
(14
)
 
1

 
(2
)
Total expense recognized
$
1

 
$
1

 
$
—

 
$
—

NET PERIODIC BENEFIT COST – SOCALGAS
(Dollars in millions)
 
Pension benefits
 
Other postretirement benefits
 
Three months ended June 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
21

 
$
18

 
$
4

 
$
3

Interest cost
22

 
24

 
7

 
8

Expected return on assets
(25
)
 
(25
)
 
(14
)
 
(13
)
Amortization of:
 
 
 
 
 
 
 
Prior service cost
2

 
2

 
—

 
—

Actuarial loss (gain)
6

 
4

 
(1
)
 
(1
)
Settlements
23

 
—

 
—

 
—

Net periodic benefit cost (credit)
49

 
23

 
(4
)
 
(3
)
Regulatory adjustment
(27
)
 
(22
)
 
4

 
3

Total expense recognized
$
22

 
$
1

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
43

 
$
36

 
$
8

 
$
7

Interest cost
45

 
48

 
14

 
15

Expected return on assets
(51
)
 
(51
)
 
(28
)
 
(26
)
Amortization of:
 
 
 
 

 
 
Prior service cost (credit)
4

 
4

 
(1
)
 
(1
)
Actuarial loss (gain)
12

 
8

 
(1
)
 
(1
)
Settlements
23

 
—

 
—

 
—

Net periodic benefit cost (credit)
76

 
45

 
(8
)
 
(6
)
Regulatory adjustment
(53
)
 
(27
)
 
8

 
6

Total expense recognized
$
23

 
$
18

 
$
—

 
$
—
Contributions to Benefit Plans Table The following table shows our year-to-date contributions to pension and other postretirement benefit plans and the amounts we expect to contribute in 2018:
BENEFIT PLAN CONTRIBUTIONS
(Dollars in millions)
 
 
Sempra Energy
Consolidated
 
SDG&E
 
SoCalGas
Contributions through June 30, 2018:
 
 
 
 
 
 
Pension plans
 
$
37

 
$
2

 
$
23

Other postretirement benefit plans
 
2

 
—

 
1

Total expected contributions in 2018:
 
 
 
 
 
 
Pension plans
 
$
226

 
$
48

 
$
113

Other postretirement benefit plans
 
9

 
3

 
2
Earnings Per Share Computations Table The following table provides EPS computations for the three months and six months ended June 30, 2018 and 2017. Basic EPS is calculated by dividing (losses) earnings attributable to common stock by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
(LOSSES) EARNINGS PER COMMON SHARE COMPUTATIONS
 
 
 
 
 
 
 
(Dollars in millions, except per share amounts; shares in thousands)
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Numerator:
 
 
 
 
 
 
 
(Losses) earnings attributable to common shares
$
(561
)
 
$
259

 
$
(214
)
 
$
700

 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
Weighted-average common shares outstanding for basic EPS(1)
265,837

 
251,447

 
261,906

 
251,290

Dilutive effect of stock options, RSAs and RSUs(2)(3)
—

 
1,375

 
—

 
1,319

Dilutive effect of common stock shares sold forward(2)
—

 
—

 
—

 
—

Weighted-average common shares outstanding for diluted EPS(2)
265,837

 
252,822

 
261,906

 
252,609

 
 
 
 
 
 
 
 
EPS:
 
 
 
 
 
 
 
Basic
$
(2.11
)
 
$
1.03

 
$
(0.82
)
 
$
2.79

Diluted
$
(2.11
)
 
$
1.03

 
$
(0.82
)
 
$
2.77

(1)
Includes 640 and 608 average fully vested RSUs held in our Deferred Compensation Plan for the three months ended June 30, 2018 and 2017, respectively, and 634 and 604 of such RSUs for the six months ended June 30, 2018 and 2017, respectively. These fully vested RSUs are included in weighted-average common shares outstanding for basic EPS because there are no conditions under which the corresponding shares will not be issued.
(2) 
In the three months and six months ended June 30, 2018, the total weighted-average number of potentially dilutive stock options, RSAs and RSUs was 986 and 931, respectively, and the total weighted-average number of potentially dilutive common stock shares sold forward was 714 and 746, respectively. However, these securities were not included in the computation of EPS since to do so would have decreased the loss per share.
(3) 
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.
Capitalized Financing Costs Table Interest capitalized and AFUDC are as follows:
CAPITALIZED FINANCING COSTS
(Dollars in millions)
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Sempra Energy Consolidated
$
57

 
$
62

 
$
108

 
$
144

SDG&E
23

 
21

 
47

 
41

SoCalGas
16

 
15

 
29

 
30
Schedule of Accumulated Other Comprehensive Income (Loss) Table The following tables present the changes in AOCI by component and amounts reclassified out of AOCI to net income, excluding amounts attributable to NCI:
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 June 30, 2018 and 2017
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Balance as of March 31, 2018
$
(396
)
 
$
(67
)
 
$
(82
)
 
$
(545
)
OCI before reclassifications
(86
)
 
19

 
1

 
(66
)
Amounts reclassified from AOCI
—

 
8

 
2

 
10

Net OCI
(86
)
 
27

 
3

 
(56
)
Balance as of June 30, 2018
$
(482
)
 
$
(40
)
 
$
(79
)
 
$
(601
)
 
 
 
 
 
.
 
 
Balance as of March 31, 2017
$
(481
)
 
$
(121
)
 
$
(94
)
 
$
(696
)
OCI before reclassifications
3

 
(26
)
 
—

 
(23
)
Amounts reclassified from AOCI
—

 
—

 
1

 
1

Net OCI
3

 
(26
)
 
1

 
(22
)
Balance as of June 30, 2017
$
(478
)
 
$
(147
)
 
$
(93
)
 
$
(718
)
SDG&E:
 
 
 
 
 
 
 
Balance as of March 31, 2018 and June 30, 2018
 
 
 
 
$
(8
)
 
$
(8
)
 
 
 
 
 
 
 
 
Balance as of March 31, 2017 and June 30, 2017
 
 
 
 
$
(8
)
 
$
(8
)
SoCalGas:
 
 
 
 
 
 
 
Balance as of March 31, 2018
 
 
$
(13
)
 
$
(8
)
 
$
(21
)
Amounts reclassified from AOCI
 
 
—

 
1

 
1

Net OCI
 
 
—

 
1

 
1

Balance as of June 30, 2018
 
 
$
(13
)
 
$
(7
)
 
$
(20
)
 
 
 
 
 
 
 
 
Balance as of March 31, 2017
 
 
$
(13
)
 
$
(9
)
 
$
(22
)
Amounts reclassified from AOCI
 
 
—

 
1

 
1

Net OCI
 
 
—

 
1

 
1

Balance as of June 30, 2017
 
 
$
(13
)
 
$
(8
)
 
$
(21
)
(1) 
All amounts are net of income tax, if subject to tax, and exclude NCI.

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)
 
Six months ended June 30, 2018 and 2017
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Balance as of December 31, 2017
$
(420
)
 
$
(122
)
 
$
(84
)
 
$
(626
)
Cumulative-effect adjustment from change in accounting principle
—

 
(3
)
 
—

 
(3
)
OCI before reclassifications
(62
)
 
85

 
1

 
24

Amounts reclassified from AOCI
—

 
—

 
4

 
4

Net OCI
(62
)
 
85

 
5

 
28

Balance as of June 30, 2018
$
(482
)
 
$
(40
)
 
$
(79
)
 
$
(601
)
 
 
 
 
 
 
 
 
Balance as of December 31, 2016
$
(527
)
 
$
(125
)
 
$
(96
)
 
$
(748
)
OCI before reclassifications
49

 
(28
)
 
—

 
21

Amounts reclassified from AOCI
—

 
6

 
3

 
9

Net OCI
49

 
(22
)
 
3

 
30

Balance as of June 30, 2017
$
(478
)
 
$
(147
)
 
$
(93
)
 
$
(718
)
SDG&E:
 
 
 
 
 
 
 
Balance as of December 31, 2017 and June 30, 2018
 
 
 
 
$
(8
)
 
$
(8
)
 
 
 
 
 
 
 
 
Balance as of December 31, 2016 and June 30, 2017
 
 
 
 
$
(8
)
 
$
(8
)
SoCalGas:
 
 
 
 
 
 
 
Balance as of December 31, 2017
 
 
$
(13
)
 
$
(8
)
 
$
(21
)
Amounts reclassified from AOCI
 
 
—

 
1

 
1

Net OCI
 
 
—

 
1

 
1

Balance as of June 30, 2018
 
 
$
(13
)
 
$
(7
)
 
$
(20
)
 
 
 
 
 
 
 
 
Balance as of December 31, 2016
 
 
$
(13
)
 
$
(9
)
 
$
(22
)
Amounts reclassified from AOCI
 
 
—

 
1

 
1

Net OCI
 
 
—

 
1

 
1

Balance as of June 30, 2017
 
 
$
(13
)
 
$
(8
)
 
$
(21
)
(1) 
All amounts are net of income tax, if subject to tax, and exclude NCI.
Reclassifications out of AOCI Table
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 June 30,
 
 
 
2018
 
2017
 
 
Sempra Energy Consolidated:
 
 
 
 
 
Financial instruments:
 
 
 
 
 
Interest rate and foreign exchange instruments(1)
$
1

 
$
(1
)
 
Interest Expense
Interest rate and foreign exchange instruments
18

 
—

 
Other (Expense) Income, Net
Interest rate and foreign exchange instruments
1

 
5

 
Equity (Losses) Earnings
Foreign exchange instruments
(1
)
 
(1
)
 
Revenues: Energy-Related Businesses
Total before income tax
19

 
3

 
 
 
(4
)
 
(1
)
 
Income Tax Benefit (Expense)
Net of income tax
15

 
2

 
 
 
(7
)
 
(2
)
 
(Earnings) Losses Attributable to Noncontrolling Interests
 
$
8

 
$
—

 
 
Pension and other postretirement benefits:
 
 
 
 
 
Amortization of actuarial loss(2)
$
3

 
$
2

 
Other (Expense) Income, Net
 
(1
)
 
(1
)
 
Income Tax Benefit (Expense)
Net of income tax
$
2

 
$
1

 
 
 
 
 
 
 
 
Total reclassifications for the period, net of tax
$
10

 
$
1

 
 
SDG&E:
 
 
 
 
 
Financial instruments:
 
 
 
 
 
Interest rate instruments(1)
$
1

 
$
3

 
Interest Expense
 
(1
)
 
(3
)
 
(Earnings) Losses Attributable to Noncontrolling Interest
Total reclassifications for the period, net of tax
$
—

 
$
—

 
 
SoCalGas:
 

 
 

 
 
Pension and other postretirement benefits:
 

 
 

 
 
Amortization of actuarial loss(2)
$
1

 
$
1

 
Other Income, Net
Total reclassifications for the period, net of tax
$
1

 
$
1

 
 

(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).
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
 
Six months ended June 30,
 
 
 
2018
 
2017
 
 
Sempra Energy Consolidated:
 
 
 
 
 
Financial instruments:
 
 
 
 
 
Interest rate and foreign exchange instruments(1)
$
(1
)
 
$
(4
)
 
Interest Expense
Interest rate and foreign exchange instruments
5

 
9

 
Equity (Losses) Earnings
Foreign exchange instruments
(1
)
 
1

 
Revenues: Energy-Related Businesses
Commodity contracts not subject to rate recovery
—

 
9

 
Revenues: Energy-Related Businesses
Total before income tax
3

 
15

 
 
 
(1
)
 
(5
)
 
Income Tax Benefit (Expense)
Net of income tax
2

 
10

 
 
 
(2
)
 
(4
)
 
(Earnings) Losses Attributable to Noncontrolling Interests
 
$
—

 
$
6

 
 
Pension and other postretirement benefits:
 
 
 
 
 
Amortization of actuarial loss(2)
$
6

 
$
5

 
Other (Expense) Income, Net
 
(2
)
 
(2
)
 
Income Tax Benefit (Expense)
Net of income tax
$
4

 
$
3

 
 
 
 
 
 
 
 
Total reclassifications for the period, net of tax
$
4

 
$
9

 
 
SDG&E:
 
 
 
 
 
Financial instruments:
 
 
 
 
 
Interest rate instruments(1)
$
4

 
$
6

 
Interest Expense
 
(4
)
 
(6
)
 
(Earnings) Losses Attributable to Noncontrolling Interest
Total reclassifications for the period, net of tax
$
—

 
$
—

 
 
SoCalGas:
 

 
 

 
 
Pension and other postretirement benefits:
 

 
 

 
 
Amortization of actuarial loss(2)
$
1

 
$
1

 
Other Income, Net
Total reclassifications for the period, net of tax
$
1

 
$
1

 
 

(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 Table The following tables provide reconciliations of changes in Sempra Energy’s, SDG&E’s and SoCalGas’ shareholders’ equity and NCI for the six months ended June 30, 2018 and 2017.
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
$
12,670

 
$
2,470

 
$
15,140

Cumulative-effect adjustment from change in accounting principle(2)
(1
)
 
—

 
(1
)
Comprehensive (loss) income
(132
)
 
1

 
(131
)
Share-based compensation expense
33

 
—

 
33

Mandatory convertible preferred stock dividends declared
(53
)
 
—

 
(53
)
Preferred dividends of subsidiary
(1
)
 
—

 
(1
)
Common stock dividends declared
(480
)
 
—

 
(480
)
Issuances of mandatory convertible preferred stock
1,693

 
—

 
1,693

Issuances of common stock
2,117

 
—

 
2,117

Repurchases of common stock
(20
)
 
—

 
(20
)
Equity contributed by noncontrolling interest
—

 
1

 
1

Distributions to noncontrolling interests
—

 
(18
)
 
(18
)
Purchase of noncontrolling interests
—

 
(1
)
 
(1
)
Sale of noncontrolling interests, net of offering costs
—

 
85

 
85

Balance at June 30, 2018
$
15,826

 
$
2,538

 
$
18,364

Balance at December 31, 2016
$
12,951

 
$
2,290

 
$
15,241

Comprehensive income
731

 
8

 
739

Share-based compensation expense
23

 
—

 
23

Preferred dividends of subsidiary
(1
)
 
—

 
(1
)
Common stock dividends declared
(413
)
 
—

 
(413
)
Issuances of common stock
55

 
—

 
55

Repurchases of common stock
(14
)
 
—

 
(14
)
Equity contributed by noncontrolling interests
—

 
1

 
1

Distributions to noncontrolling interests
—

 
(26
)
 
(26
)
Balance at June 30, 2017
$
13,332

 
$
2,273

 
$
15,605

(1) 
NCI includes the preferred stock of SoCalGas and other NCI as listed in the table below under “Other Noncontrolling Interests.”
(2) 
Represents impact from adoption of ASU 2016-01, which we discuss in Note 2.
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
$
5,598

 
$
28

 
$
5,626

Comprehensive income
316

 
4

 
320

Equity contributed by noncontrolling interest
—

 
1

 
1

Distributions to noncontrolling interest
—

 
(4
)
 
(4
)
Balance at June 30, 2018
$
5,914

 
$
29

 
$
5,943

Balance at December 31, 2016
$
5,641

 
$
37

 
$
5,678

Comprehensive income
304

 
10

 
314

Common stock dividends declared
(175
)
 
—

 
(175
)
Equity contributed by noncontrolling interest
—

 
1

 
1

Distributions to noncontrolling interest
—

 
(14
)
 
(14
)
Balance at June 30, 2017
$
5,770

 
$
34

 
$
5,804


SHAREHOLDERS’ EQUITY – SOCALGAS
(Dollars in millions)
 
Total
equity
Balance at December 31, 2017
$
3,907

Comprehensive income
260

Preferred stock dividends declared
(1
)
Balance at June 30, 2018
$
4,166

Balance at December 31, 2016
$
3,510

Comprehensive income
263

Preferred stock dividends declared
(1
)
Balance at June 30, 2017
$
3,772
Ownership Interests Held By Others Table At June 30, 2018 and December 31, 2017, we reported the following noncontrolling ownership interests held by others (not including preferred shareholders) in Other Noncontrolling Interests in Total Equity on Sempra Energy’s Condensed Consolidated Balance Sheets:
OTHER NONCONTROLLING INTERESTS
(Dollars in millions)
 
 
 
Percent ownership held by noncontrolling interests
 
 Equity (deficit)
held by
noncontrolling interests
 
June 30,
2018
 
December 31,
2017
 
June 30,
2018
 
December 31,
2017
SDG&E:
 
 
 
 
 
 
 
Otay Mesa VIE
100
%
100
%
$
29

 
$
28

Sempra South American Utilities:
 
 
 
 
 
 
 
Chilquinta Energía subsidiaries(1)
19.8 – 43.4
 
22.9 – 43.4
 
23

 
24

Luz del Sur
16.4
 
16.4
 
192

 
189

Tecsur
9.8
 
9.8
 
4

 
4

Sempra Mexico:
 
 
 
 
 
 
 
IEnova(2)
33.6
 
33.6
 
1,605

 
1,532

Sempra Renewables:
 
 
 
 
 
 
 
Tax equity arrangements – wind(3)
NA
 
 NA
 
160

 
181

Tax equity arrangements – solar(3)
NA
 
NA
 
509

 
450

Sempra LNG & Midstream:
 
 
 
 
 
 
 
Bay Gas
9.1
 
9.1
 
8

 
28

Liberty Gas Storage, LLC
24.6
 
24.6
 
(12
)
 
14

Total Sempra Energy
 
 
 
 
$
2,518

 
$
2,450

(1) 
Chilquinta Energía has four subsidiaries with NCI held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries.
(2) 
IEnova has a subsidiary with a 10-percent NCI held by others. The equity held by NCI is negligible at both June 30, 2018 and December 31, 2017.
(3) 
Net income or loss attributable to NCI is computed using the HLBV method and is not based on ownership percentages.
Transactions with Affiliates Table Amounts due from and to unconsolidated affiliates at Sempra Energy Consolidated, SDG&E and SoCalGas are as follows:
AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES
(Dollars in millions)
 
June 30,
2018
 
December 31,
2017
Sempra Energy Consolidated:
 
 
 
Total due from various unconsolidated affiliates – current
$
40

 
$
37

 
 
 
 
Sempra South American Utilities(1):
 
 
 
Eletrans – 4% Note(2)
$
38

 
$
103

Other related party receivables
1

 
1

Sempra Mexico(1):
 
 
 
IMG – Note due March 15, 2022(3)
589

 
487

Energía Sierra Juárez – Note(4)
6

 
7

Total due from unconsolidated affiliates – noncurrent
$
634

 
$
598

 
 
 
 
Total due to various unconsolidated affiliates – current
$
(10
)
 
$
(7
)
 
 
 
 
Sempra Mexico(1):
 
 
 
Total due to unconsolidated affiliates – noncurrent – TAG – Note due December 20, 2021(5)
$
(36
)
 
$
(35
)
SDG&E:
 
 
 
Total due from various unconsolidated affiliates – current
$
1

 
$
—

 
 
 
 
Sempra Energy
$
(38
)
 
$
(30
)
SoCalGas
—

 
(4
)
Various affiliates
(11
)
 
(6
)
Total due to unconsolidated affiliates – current
$
(49
)
 
$
(40
)
 
 
 
 
Income taxes due from Sempra Energy(6)
$
47

 
$
27

SoCalGas:
 
 
 
Total due from unconsolidated affiliates – current – SDG&E
$
—

 
$
4

 
 
 
 
Total due to unconsolidated affiliates – current – Sempra Energy
$
(48
)
 
$
(35
)
 
 
 
 
Income taxes due from Sempra Energy(6)
$
5

 
$
10

(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 $14.2 billion Mexican pesos or approximately $711 million U.S. dollar-equivalent, at a variable interest rate based on the 91-day Interbank Equilibrium Interest Rate plus 220 bps (10.34 percent at June 30, 2018), to finance construction of the natural gas marine pipeline.
(4) 
U.S. dollar-denominated loan, at a variable interest rate based on the 30-day LIBOR plus 637.5 bps (8.47 percent at June 30, 2018) with no stated maturity date, to finance the first phase of the Energía Sierra Juárez wind project, which is a joint venture of IEnova.
(5) 
U.S. dollar-denominated loan, at a variable interest rate based on the 6-month LIBOR plus 290 bps (5.40 percent at June 30, 2018).
(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 are as follows:
REVENUES AND COST OF SALES FROM UNCONSOLIDATED AFFILIATES
 
 
 
 
(Dollars in millions)
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
Sempra Energy Consolidated
$
16

 
$
8

 
$
32

 
$
15

SDG&E
1

 
2

 
3

 
4

SoCalGas
15

 
17

 
32

 
35

Cost of Sales:
 
 
 
 
 
 
 
Sempra Energy Consolidated
$
15

 
$
14

 
$
27

 
$
28

SDG&E
16

 
19

 
35

 
39
Other Income and Expense Table Other Income (Expense), Net on the Condensed Consolidated Statements of Operations consists of the following:
OTHER INCOME (EXPENSE), NET
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017(1)
 
2018
 
2017(1)
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Allowance for equity funds used during construction
$
29

 
$
40

 
$
56

 
$
112

Investment gains(2)
6

 
14

 
5

 
30

(Losses) gains on interest rate and foreign exchange instruments, net
(55
)
 
31

 
7

 
94

Foreign currency transaction (losses) gains, net(3)
(41
)
 
7

 
(11
)
 
17

Non-service component of net periodic benefit credit
7

 
17

 
39

 
22

Interest on regulatory balancing accounts, net
1

 
—

 
1

 
2

Sundry, net
(1
)
 
(1
)
 
2

 
5

Total
$
(54
)
 
$
108

 
$
99

 
$
282

SDG&E:
 
 
 
 
 
 
 
Allowance for equity funds used during construction
$
16

 
$
16

 
$
34

 
$
31

Non-service component of net periodic benefit credit
8

 
4

 
17

 
8

Interest on regulatory balancing accounts, net
2

 
—

 
2

 
2

Sundry, net
(1
)
 
(1
)
 
—

 
—

Total
$
25

 
$
19

 
$
53

 
$
41

SoCalGas:
 
 
 
 
 
 
 
Allowance for equity funds used during construction
$
13

 
$
11

 
$
22

 
$
22

Non-service component of net periodic benefit credit
3

 
15

 
28

 
18

Interest on regulatory balancing accounts, net
(1
)
 
—

 
(1
)
 
—

Sundry, net
(2
)
 
(2
)
 
(3
)
 
(2
)
Total
$
13

 
$
24

 
$
46

 
$
38

(1) 
As adjusted for the retrospective adoption of ASU 2017-07, which we discuss in Note 2.
(2) 
Represents investment 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) 
Includes losses of $47 million and $8 million in the three months and six months ended June 30, 2018, respectively, and gains of $6 million in both the three months and six months ended June 30, 2017 from translation to U.S. dollars of a Mexican peso-denominated loan to the IMG joint venture, which are offset by corresponding amounts included in Equity (Losses) Earnings on the Condensed Consolidated Statements of Operations.
Income Tax Expense and Effective Income Tax Rates Table
INCOME TAX (BENEFIT) EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
 
Three months ended June 30,
Six months ended June 30,
 
2018
2017
2018
2017
Sempra Energy Consolidated:
 
 
 
 
 
 
 
 
Income tax (benefit) expense
$
(583
)
 
$
167

 
$
(294
)
 
$
462

 
 
 
 
 
 
 
 
 
 
(Loss) income before income taxes and equity (losses) earnings
 
 
 
 
 
 
 
 
 of unconsolidated subsidiaries
$
(1,109
)
 
$
397

 
$
(442
)
 
$
1,149

 
Equity (losses) earnings, before income tax(1)
(189
)
 
18

 
(184
)
 
21

 
Pretax (loss) income
$
(1,298
)
 
$
415

 
$
(626
)
 
$
1,170

 
 
 
 
 
 
 
 
 
 
Effective income tax rate
45
%
 
40
%
 
47
%
 
39
%
 
SDG&E:
 
 
 
 
 
 
 
 
Income tax expense
$
42

 
$
54

 
$
98

 
$
144

 
Income before income taxes
$
188

 
$
207

 
$
413

 
$
454

 
Effective income tax rate
22
%
 
26
%
 
24
%
 
32
%
 
SoCalGas:
 
 
 
 
 
 
 
 
Income tax expense
$
23

 
$
19

 
$
82

 
$
117

 
Income before income taxes
$
57

 
$
78

 
$
341

 
$
379

 
Effective income tax rate
40
%
 
24
%
 
24
%
 
31
%
 

(1) 
We discuss how we recognize equity (losses) earnings in Note 6.