REGULATORY MATTERS (Tables)

12 Months Ended

Dec. 31, 2019

We show the details of regulatory assets and liabilities in the following table and discuss them below.



REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	December 31,
	2019			2018
SDG&E:
Fixed-price contracts and other derivatives	$	8		$	(150	)
Deferred income taxes refundable in rates	(108		)	(236		)
Pension and other postretirement benefit plan obligations	103			186
Removal obligations	(2,056		)	(1,848		)
Environmental costs	45			28
Sunrise Powerlink fire mitigation	121			120
Regulatory balancing accounts⁽¹⁾⁽²⁾
Commodity – electric	102			(8		)
Gas transportation	22			45
Safety and reliability	77			70
Public purpose programs	(124		)	(62		)
2019 GRC retroactive impacts	111			—
Other balancing accounts	106			145
Other regulatory liabilities, net⁽²⁾	(153		)	(170		)
Total SDG&E	(1,746		)	(1,880		)
SoCalGas:
Deferred income taxes refundable in rates	(203		)	(336		)
Pension and other postretirement benefit plan obligations	400			470
Employee benefit costs	44			49
Removal obligations	(728		)	(833		)
Environmental costs	40			28
Regulatory balancing accounts⁽¹⁾⁽²⁾
Commodity – gas, including transportation	(118		)	196
Safety and reliability	295			332
Public purpose programs	(273		)	(325		)
2019 GRC retroactive impacts	400			—
Other balancing accounts	(7		)	(68		)
Other regulatory liabilities, net⁽²⁾	(101		)	(114		)
Total SoCalGas	(251		)	(601		)
Sempra Mexico:
Deferred income taxes recoverable in rates	83			81
Other regulatory assets	6			6
Total Sempra Energy Consolidated	$	(1,908	)	$	(2,394	)


⁽¹⁾	At December 31, 2019 and 2018, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $108 million and $78 million, respectively. At December 31, 2019 and 2018, the noncurrent portion of regulatory balancing accounts – net undercollected for SoCalGas was $500 million and $185 million, respectively.


⁽²⁾	Includes regulatory assets earning a return.

Schedule of Regulatory Liabilities

We show the details of regulatory assets and liabilities in the following table and discuss them below.



REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	December 31,
	2019			2018
SDG&E:
Fixed-price contracts and other derivatives	$	8		$	(150	)
Deferred income taxes refundable in rates	(108		)	(236		)
Pension and other postretirement benefit plan obligations	103			186
Removal obligations	(2,056		)	(1,848		)
Environmental costs	45			28
Sunrise Powerlink fire mitigation	121			120
Regulatory balancing accounts⁽¹⁾⁽²⁾
Commodity – electric	102			(8		)
Gas transportation	22			45
Safety and reliability	77			70
Public purpose programs	(124		)	(62		)
2019 GRC retroactive impacts	111			—
Other balancing accounts	106			145
Other regulatory liabilities, net⁽²⁾	(153		)	(170		)
Total SDG&E	(1,746		)	(1,880		)
SoCalGas:
Deferred income taxes refundable in rates	(203		)	(336		)
Pension and other postretirement benefit plan obligations	400			470
Employee benefit costs	44			49
Removal obligations	(728		)	(833		)
Environmental costs	40			28
Regulatory balancing accounts⁽¹⁾⁽²⁾
Commodity – gas, including transportation	(118		)	196
Safety and reliability	295			332
Public purpose programs	(273		)	(325		)
2019 GRC retroactive impacts	400			—
Other balancing accounts	(7		)	(68		)
Other regulatory liabilities, net⁽²⁾	(101		)	(114		)
Total SoCalGas	(251		)	(601		)
Sempra Mexico:
Deferred income taxes recoverable in rates	83			81
Other regulatory assets	6			6
Total Sempra Energy Consolidated	$	(1,908	)	$	(2,394	)


⁽¹⁾	At December 31, 2019 and 2018, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $108 million and $78 million, respectively. At December 31, 2019 and 2018, the noncurrent portion of regulatory balancing accounts – net undercollected for SoCalGas was $500 million and $185 million, respectively.


⁽²⁾	Includes regulatory assets earning a return.

Proposed Revenue Requirements

The increases include separately authorized components for O&M and capital-related costs, as follows:



AUTHORIZED REVENUE REQUIREMENT INCREASES FOR 2020 AND 2021
(Dollars in millions)
	2020 increase from 2019				2021 increase from 2020
	Revenue increase		Percent increase		Revenue increase		Percent increase
SDG&E:
O&M	$	20	2.64	%	$	19	2.47	%
Capital-related costs	114		9.74		83		6.47
Total increase	$	134	6.74		$	102	4.83
SoCalGas:
O&M	$	36	2.64	%	$	34	2.40	%
Capital-related costs	184		14.36		116		7.93
Total increase	$	220	7.92		$	150	5.00

In December 2019, the CPUC approved the cost of capital and rate structures (shown in the table below) for SDG&E and SoCalGas that are effective January 1, 2020 and will remain in effect through December 31, 2022. SDG&E did not propose a 2020 cost of preferred equity in this proceeding. In January 2020, SDG&E filed an advice letter to continue the cost of preferred equity for test year 2020 at 6.22%, which is pending CPUC approval.



CPUC AUTHORIZED COST OF CAPITAL AND RATE STRUCTURE

SDG&E							SoCalGas
Authorized weighting		Return on rate base		Weighted return on rate base			Authorized weighting		Return on rate base		Weighted return on rate base
45.25	%	4.59	%	2.08	%	Long-Term Debt	45.60	%	4.23	%	1.93	%
2.75		6.22		0.17		Preferred Stock	2.40		6.00		0.14
52.00		10.20		5.30		Common Equity	52.00		10.05		5.23
100.00	%			7.55	%		100.00	%			7.30	%

Schedule Of FERC Cost Of Capital Table

SDG&E’s current estimated FERC return on rate base under the TO4 formula rate request filing is 7.51% based on its capital structure as follows:



FERC–AUTHORIZED COST OF CAPITAL AND RATE STRUCTURE – SDG&E

	Weighting		Return on rate base		Weighted return on rate base
Long-Term Debt	43.44	%	4.21	%	1.83	%
Common Equity	56.56		10.05		5.68
	100.00	%			7.51	%