SUBSEQUENT EVENT

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Event

SUBSEQUENT EVENT

SDG&E

On July 12, 2019, AB 1054 and AB 111 (together, the “Wildfire Legislation”) were signed into law and took immediate effect. The Wildfire Legislation addresses certain important issues related to catastrophic wildfires in the State of California and their impact on electric IOUs. Investor-owned gas distribution utilities such as SoCalGas are not covered by this legislation. The issues addressed include cost recovery standards and requirements, wildfire mitigation, a wildfire recovery fund, a cap on liability, and the establishment of a wildfire safety board.

A Liquidity Fund will be created pursuant to the Wildfire Legislation. The Liquidity Fund will be administered by the state and is intended to provide liquidity to pay, under certain circumstances and with certain limitations, electric IOU wildfire-related claims. The Liquidity Fund will be initially capitalized by a loan of up to $10.5 billion from the SMIF. The SMIF loan helps ensure funds are available, if needed. The SMIF loan will be repaid with proceeds anticipated to be received from the issuance of new DWR bonds.

A larger Wildfire Fund will be created if California’s initially eligible electric IOUs elect to participate. The Wildfire Fund will be partially funded by the Liquidity Fund and partially funded by shareholder contributions from California’s electric IOUs. PG&E, Edison and SDG&E have each elected to participate in the Wildfire Fund and will make initial shareholder contributions totaling $7.5 billion with additional annual contributions of $300 million in each of the next 10 years for a total shareholder contribution of $10.5 billion. These shareholder contributions will be combined with the Liquidity Fund proceeds, for a total of $21 billion. However, PG&E’s participation in the Wildfire Fund is subject to specific conditions. If PG&E does not contribute to the Wildfire Fund, the total amount in the fund would be materially less.

SDG&E’s portion of the shareholder contribution will be approximately $452 million, with an initial contribution of $322.5 million to be paid by September 10, 2019. SDG&E expects to fund its initial shareholder contribution with proceeds from an equity contribution from Sempra Energy. We expect to fund the equity contribution to SDG&E with proceeds from issuances of commercial paper that may be replaced by long-term debt issuances or settling forward sale agreements through physical delivery of shares of our common stock in exchange for cash. SDG&E will also be required to make annual shareholder contributions of $12.9 million in each of the next 10 years. These initial and annual contributions are not subject to rate recovery.