REGULATORY MATTERS (Tables)

6 Months Ended

Jun. 30, 2020

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



REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	June 30, 2020			December 31, 2019

SDG&E:
Fixed-price contracts and other derivatives	$	16		$	8
Deferred income taxes refundable in rates	(55		)	(108		)
Pension and other postretirement benefit plan obligations	95			103
Removal obligations	(2,109		)	(2,056		)
Environmental costs	44			45
Sunrise Powerlink fire mitigation	119			121
Regulatory balancing accounts⁽¹⁾⁽²⁾
Commodity – electric	182			102
Gas transportation	6			22
Safety and reliability	74			77
Public purpose programs	(150		)	(124		)
2019 GRC retroactive impacts	84			111
Other balancing accounts	172			106
Other regulatory liabilities, net⁽²⁾	(20		)	(153		)
Total SDG&E	(1,542		)	(1,746		)
SoCalGas:
Deferred income taxes refundable in rates	(123		)	(203		)
Pension and other postretirement benefit plan obligations	393			400
Employee benefit costs	44			44
Removal obligations	(714		)	(728		)
Environmental costs	38			40
Regulatory balancing accounts⁽¹⁾⁽²⁾
Commodity – gas, including transportation	(180		)	(118		)
Safety and reliability	331			295
Public purpose programs	(356		)	(273		)
2019 GRC retroactive impacts	302			400
Other balancing accounts	(22		)	(7		)
Other regulatory assets (liabilities), net⁽²⁾	19			(101		)
Total SoCalGas	(268		)	(251		)
Sempra Mexico:
Deferred income taxes recoverable in rates	83			83
Other regulatory assets	2			6
Total Sempra Energy Consolidated	$	(1,725	)	$	(1,908	)


⁽¹⁾	At June 30, 2020 and December 31, 2019, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $120 million and $108 million, respectively, and for SoCalGas was $535 million and $500 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.



REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	June 30, 2020			December 31, 2019

SDG&E:
Fixed-price contracts and other derivatives	$	16		$	8
Deferred income taxes refundable in rates	(55		)	(108		)
Pension and other postretirement benefit plan obligations	95			103
Removal obligations	(2,109		)	(2,056		)
Environmental costs	44			45
Sunrise Powerlink fire mitigation	119			121
Regulatory balancing accounts⁽¹⁾⁽²⁾
Commodity – electric	182			102
Gas transportation	6			22
Safety and reliability	74			77
Public purpose programs	(150		)	(124		)
2019 GRC retroactive impacts	84			111
Other balancing accounts	172			106
Other regulatory liabilities, net⁽²⁾	(20		)	(153		)
Total SDG&E	(1,542		)	(1,746		)
SoCalGas:
Deferred income taxes refundable in rates	(123		)	(203		)
Pension and other postretirement benefit plan obligations	393			400
Employee benefit costs	44			44
Removal obligations	(714		)	(728		)
Environmental costs	38			40
Regulatory balancing accounts⁽¹⁾⁽²⁾
Commodity – gas, including transportation	(180		)	(118		)
Safety and reliability	331			295
Public purpose programs	(356		)	(273		)
2019 GRC retroactive impacts	302			400
Other balancing accounts	(22		)	(7		)
Other regulatory assets (liabilities), net⁽²⁾	19			(101		)
Total SoCalGas	(268		)	(251		)
Sempra Mexico:
Deferred income taxes recoverable in rates	83			83
Other regulatory assets	2			6
Total Sempra Energy Consolidated	$	(1,725	)	$	(1,908	)


⁽¹⁾	At June 30, 2020 and December 31, 2019, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $120 million and $108 million, respectively, and for SoCalGas was $535 million and $500 million, respectively.

⁽²⁾

Includes regulatory assets earning a return.

CPUC Authorized Cost of Capital and Rate Structure

The following table summarizes the location of balances related to the Wildfire Fund on Sempra Energy’s and SDG&E’s Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.



WILDFIRE FUND
(Dollars in millions)
	Location	June 30, 2020		December 31, 2019
Wildfire Fund asset:
Current	Other Current Assets⁽¹⁾	$	29	$	29
Noncurrent	Wildfire Fund	378		392
Wildfire Fund obligation:
Current	Other Current Liabilities	$	13	$	13
Noncurrent	Deferred Credits and Other	87		86
		Three months ended		Six months ended
		June 30, 2020		June 30, 2020
Amortization of Wildfire Fund asset	Operation and Maintenance	$	7	$	14
Accretion of Wildfire Fund obligation	Operation and Maintenance	1		1

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 the CPUC approved in March 2020.



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 Equity	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	%