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GENERAL INFORMATION AND OTHER FINANCIAL DATA
 9 Months Ended
Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
GENERAL INFORMATION AND OTHER FINANCIAL DATA GENERAL INFORMATION AND OTHER FINANCIAL DATA
PRINCIPLES OF CONSOLIDATION
Sempra
Sempra’s Condensed Consolidated Financial Statements include the accounts of Sempra Energy, a California-based holding company doing business as Sempra, and its consolidated entities. Sempra’s business activities are organized under five reportable segments, which we discuss in Note 12. All references in these Notes to our reportable segments are not intended to refer to any legal entity with the same or similar name.
SDG&E
SDG&E’s common stock is wholly owned by Enova Corporation, which is a wholly owned subsidiary of Sempra.
SoCalGas
SoCalGas’ common stock is wholly owned by Pacific Enterprises, which is a wholly owned subsidiary of Sempra.
BASIS OF PRESENTATION
This is a combined report of Sempra, SDG&E and SoCalGas. We provide separate information for SDG&E and SoCalGas as required. References in this report to “we,” “our,” “us” and “Sempra” are to Sempra and its consolidated entities, collectively, unless otherwise stated or indicated by the context. We refer to SDG&E and SoCalGas collectively as the California Utilities. Sempra Infrastructure Partners (formerly Sempra Global) is the holding company for our subsidiaries that are not subject to California or Texas utility regulation. We have eliminated intercompany accounts and transactions within the consolidated financial statements of each reporting entity.
Throughout these Notes, we refer to the following as Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements when discussed together or collectively:
▪the Condensed Consolidated Financial Statements and related Notes of Sempra;
▪the Condensed Financial Statements and related Notes of SDG&E; and
▪the Condensed Financial Statements and related Notes of SoCalGas.
We have prepared our Condensed Consolidated Financial Statements in conformity with U.S. GAAP and in accordance with the interim-period-reporting requirements of Form 10-Q and applicable rules of the SEC. The financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods. These adjustments are only of a normal, recurring nature. Results of operations for interim periods are not necessarily indicative of results for the entire year or for any other period. We evaluated events and transactions that occurred after September 30, 2021 through the date the financial statements were issued and, in the opinion of management, the accompanying statements reflect all adjustments necessary for a fair presentation.
All December 31, 2020 balance sheet information in the Condensed Consolidated Financial Statements has been derived from our audited 2020 Consolidated Financial Statements in the Annual Report. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the interim-period-reporting provisions of U.S. GAAP and the SEC.
We describe our significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report and the impact of the adoption of new accounting standards on those policies in Note 2 below. We follow the same accounting policies for interim period reporting purposes.
You should read the information in this report in conjunction with the Annual Report.
Discontinued Operations
In January 2019, our board of directors approved a plan to sell our South American businesses based on our strategic focus on North America. We determined that these businesses, which previously constituted the Sempra South American Utilities segment, and certain activities associated with these businesses, met the held-for-sale criteria. These businesses are presented as discontinued operations, which we discuss further in Note 5. We completed the sales of our South American businesses in the second quarter of 2020. Our discussions in the Notes below relate only to our continuing operations unless otherwise noted.
Regulated Operations
The California Utilities and Sempra Mexico’s natural gas distribution utility, Ecogas, prepare their financial statements in accordance with the provisions of U.S. GAAP governing rate-regulated operations. We discuss revenue recognition and the effects of regulation at our utilities in Notes 3 and 4 below and in Notes 1, 3 and 4 of the Notes to Consolidated Financial Statements in the Annual Report.
Our Sempra Texas Utilities segment is comprised of our equity method investments in holding companies that own interests in regulated electric transmission and distribution utilities in Texas.
Our Sempra Mexico segment includes the operating companies of our subsidiary, IEnova, as well as certain holding companies and risk management activity. Certain business activities at IEnova are regulated by the CRE and meet the regulatory accounting requirements of U.S. GAAP. Pipeline projects under construction at IEnova that meet the regulatory accounting requirements of U.S. GAAP record the impact of AFUDC related to equity. We discuss AFUDC below and in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on Sempra’s Condensed Consolidated Balance Sheets to the sum of such amounts reported on Sempra’s 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)
September 30,December 31,
 20212020
Cash and cash equivalents$873 $960 
Restricted cash, current31 22 
Restricted cash, noncurrent3 3 
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows$907 $985 
CREDIT LOSSES
We are exposed to credit losses from financial assets measured at amortized cost, including trade and other accounts receivable and amounts due from unconsolidated affiliates. We are also exposed to credit losses from off-balance sheet arrangements through Sempra’s guarantee related to Cameron LNG JV’s SDSRA, which we discuss in Note 6.
We regularly monitor and evaluate credit losses and record allowances for expected credit losses, if necessary, for trade and other accounts receivable using a combination of factors, including past-due status based on contractual terms, trends in write-offs, the age of the receivable, historical and industry trends, counterparty creditworthiness, economic conditions and specific events, such as bankruptcies. We write off financial assets measured at amortized cost in the period in which we determine they are not recoverable. We record recoveries of amounts previously written off when it is known that they will be recovered.
In connection with the COVID-19 pandemic, the California Utilities implemented certain measures to assist customers, including suspending service disconnections due to nonpayment for all customers (except for SoCalGas’ noncore customers), waiving late payment fees, and offering flexible payment plans. Such measures ended on June 30, 2021, except for the suspension of service disconnections that ended on September 30, 2021. At the CPUC’s direction, the California Utilities have started to automatically enroll residential and small business customers with past-due balances in long-term repayment plans. The CPUC is continuing to consider the impacts of any state or federal relief programs on customer arrearages and if further debt relief is warranted.
As we discuss in Note 4, the CPUC authorized each of the California Utilities to track and request recovery of incremental costs, including uncollectible expenses, associated with complying with customer protection measures ordered by the CPUC related to the COVID-19 pandemic.
In connection with a separate CPUC decision addressing residential service disconnections, the California Utilities each established a two-way balancing account to record the uncollectible expenses associated with residential customers’ inability to pay their electric or gas bills, including as a result of the relief from outstanding utility bill amounts provided under the AMP. We discuss the AMP in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.
The California Utilities have recorded increases in their allowances for expected credit losses primarily related to expected forgiveness of outstanding utility bill amounts, including increases due to the effect of the COVID-19 pandemic, for participating, income-qualified residential customers eligible under the AMP. Our businesses will continue to monitor macroeconomic factors and customer payment patterns when evaluating their allowances for credit losses, which may increase significantly due to the effects of the COVID-19 pandemic or other factors.
We provide below allowances and changes in allowances for credit losses for trade and other accounts receivable. The California Utilities record changes in the allowances for credit losses related to Accounts Receivable – Trade in regulatory accounts.
TRADE AND OTHER ACCOUNTS RECEIVABLE – ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
20212020
Sempra:
Allowances for credit losses at January 1$138 $29 
Incremental allowance upon adoption of ASU 2016-13— 1 
Provisions for expected credit losses96 84 
Write-offs (28)(11)
Allowances for credit losses at September 30(1)
$206 $103 
SDG&E:
Allowances for credit losses at January 1$69 $14 
Provisions for expected credit losses30 44 
Write-offs(16)(6)
Allowances for credit losses at September 30(2)
$83 $52 
SoCalGas:
Allowances for credit losses at January 1$68 $15 
Provisions for expected credit losses64 40 
Write-offs(12)(5)
Allowances for credit losses at September 30(3)
$120 $50 
(1)    At September 30, 2021, includes $146 million in Accounts Receivable – Trade, Net, $50 million in Accounts Receivable – Other, Net and $10 million in Other Long-Term Assets.
(2)    At September 30, 2021, includes $58 million in Accounts Receivable – Trade, Net, $21 million in Accounts Receivable – Other, Net and $4 million in Other Long-Term Assets.
(3)    At September 30, 2021, includes $85 million in Accounts Receivable – Trade, Net, $29 million in Accounts Receivable – Other, Net and $6 million in Other Long-Term Assets.

For amounts due from unconsolidated affiliates, on a quarterly basis, we evaluate credit losses and record allowances for expected credit losses, if necessary, based on credit quality indicators such as external credit ratings, published default rate studies, the maturity date of the instrument and past delinquencies. However, we do not record allowances for expected credit losses related to accrued interest receivable on loans due from unconsolidated affiliates because we write off such amounts, if any, through a reversal of interest income in the period we determine such amounts are uncollectible. In the absence of external credit ratings, we may utilize an internally developed credit rating based on our analysis of a counterparty’s financial statements to determine our expected credit losses.
As we discuss below in “Transactions with Affiliates,” Sempra has loans due from unconsolidated affiliates with varying tenors, interest rates and currencies. We provide below the allowances and changes in allowances for credit losses for loans and other amounts due from unconsolidated affiliates.
AMOUNTS DUE FROM UNCONSOLIDATED AFFILIATES – ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
20212020
Sempra:
Allowances for credit losses at January 1$3 $— 
Allowance established upon adoption of ASU 2016-13— 6 
Reductions to expected credit losses(2)(3)
Allowances for credit losses at September 30(1)
$1 $3 
(1)    At September 30, 2021, $1 million is included in Due from Unconsolidated Affiliates – Noncurrent.

As we discuss in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report, Sempra previously provided guarantees for the benefit of Cameron LNG JV related to its construction-period debt obligations for a maximum aggregate amount of $4.0 billion. In March 2021, Cameron LNG JV reached financial completion of the three-train liquefaction project, which terminated the guarantees. There are no longer any expected credit losses related to these terminated guarantees.
As we discuss below in Note 6, Sempra provided a guarantee for the benefit of Cameron LNG JV related to amounts withdrawn by Sempra LNG from the SDSRA. At September 30, 2021, expected credit losses of $7 million related to this guarantee are included in Deferred Credits and Other on Sempra’s Condensed Consolidated Balance Sheet.
INVENTORIES
The components of inventories are as follows:
INVENTORY BALANCES
(Dollars in millions)
 Natural gasLNGMaterials and suppliesTotal
 September 30, 2021 December 31, 2020September 30, 2021 December 31, 2020September 30, 2021 December 31, 2020September 30, 2021 December 31, 2020
Sempra$169 $118 $17 $7 $185 $183 $371 $308 
SDG&E— — — — 112 104 112 104 
SoCalGas110 94 — — 58 59 168 153 
WILDFIRE FUND
In July 2019, the Wildfire Legislation was signed into law to address certain issues related to catastrophic wildfires in the State of California and their impact on electric IOUs. We discuss the Wildfire Legislation further in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
In July 2021, the CPUC approved SDG&E’s 2021 Wildfire Mitigation Plan Update. In July 2021, the CPUC’s Wildfire Safety Division became the Office of Energy Infrastructure Safety (OEIS) under the California Natural Resources Agency. As successor to the Wildfire Safety Division, OEIS maintains the duties and responsibilities of the former Wildfire Safety Division with respect to Wildfire Mitigation Plans.
SDG&E submitted its request to OEIS for a 2021 wildfire safety certification in September 2021. OEIS has until December 7, 2021 to issue the certification or provide written notice explaining why additional time is needed. SDG&E’s existing safety certification remains valid until this pending request is resolved.
In a complaint filed in U.S. District Court for the Northern District of California in July 2019, plaintiffs seek to invalidate AB 1054 based on allegations that the legislation violates federal law. The district court dismissed the complaint and the plaintiffs have petitioned the U.S. Court of Appeals for the Ninth Circuit for review.
CAPITALIZED FINANCING COSTS
Capitalized financing costs include capitalized interest costs and AFUDC related to both debt and equity financing of construction projects. We capitalize interest costs incurred to finance capital projects and interest at equity method investments that have not commenced planned principal operations.
The table below summarizes capitalized interest and AFUDC.
CAPITALIZED FINANCING COSTS
(Dollars in millions)
Three months ended September 30,Nine months ended September 30,
 2021202020212020
Sempra$52 $51 $166 $149 
SDG&E24 26 82 79 
SoCalGas18 14 49 39 
OTHER INTANGIBLE ASSETS
Other Intangible Assets included on Sempra’s Condensed Consolidated Balance Sheets are as follows:
OTHER INTANGIBLE ASSETS
(Dollars in millions)
Amortization period (years)September 30,
2021		December 31,
2020
Renewable energy transmission and consumption permits
15 to 19
$169 $169 
O&M agreement2366 66 
PPA14190 — 
Other
10 to indefinite
15 15 
440 250 
Less accumulated amortization:
Renewable energy transmission and consumption permits(38)(32)
O&M agreement(11)(9)
PPA(7)— 
Other(8)(7)
(64)(48)
$376 $202 

Other Intangible Assets at September 30, 2021 primarily include:
▪renewable energy transmission and consumption permits previously granted by the CRE at the Ventika wind power generation facilities, Don Diego Solar and Border Solar;
▪a favorable O&M agreement acquired in connection with the acquisition of Ductos y Energéticos del Norte, S. de R.L. de C.V.; and
▪an intangible asset of $190 million, representing the relative fair value of the PPA that was acquired in connection with the acquisition of ESJ in March 2021.
Intangible assets subject to amortization are amortized over their estimated useful lives. Amortization expense for intangible assets was $6 million, including $4 million recorded against revenues, and $3 million in the three months ended September 30, 2021 and 2020, respectively, and $16 million, including $7 million recorded against revenues, and $8 million in the nine months ended September 30, 2021 and 2020, respectively. We estimate the remaining amortization expense in 2021 to be $7 million, including $3 million recorded against revenues, and amortization expense of $26 million per year for the next four years, including $13 million recorded against revenues.
VARIABLE INTEREST ENTITIES
We consolidate a VIE if we are the primary beneficiary of the VIE. Our determination of whether we are the primary beneficiary is based on qualitative and quantitative analyses, which assess:
▪the purpose and design of the VIE;
▪the nature of the VIE’s risks and the risks we absorb;
▪the power to direct activities that most significantly impact the economic performance of the VIE; and
▪the obligation to absorb losses or the right to receive benefits that could be significant to the VIE.
We will continue to evaluate our VIEs for any changes that may impact our determination of whether an entity is a VIE and if we are the primary beneficiary.
SDG&E
SDG&E’s power procurement is subject to reliability requirements that may require SDG&E to enter into various PPAs that include variable interests. SDG&E evaluates the respective entities to determine if variable interests exist and, based on the qualitative and quantitative analyses described above, if SDG&E, and indirectly Sempra, is the primary beneficiary.
SDG&E has agreements under which it purchases power generated by facilities for which it supplies all of the natural gas to fuel the power plant (i.e., tolling agreements). SDG&E’s obligation to absorb natural gas costs may be a significant variable interest. In addition, SDG&E has the power to direct the dispatch of electricity generated by these facilities. Based on our analysis, the ability to direct the dispatch of electricity may have the most significant impact on the economic performance of the entity owning the generating facility because of the associated exposure to the cost of natural gas, which fuels the plants, and the value of electricity produced. To the extent that SDG&E (1) is obligated to purchase and provide fuel to operate the facility, (2) has the power to direct the dispatch, and (3) purchases all of the output from the facility for a substantial portion of the facility’s useful life, SDG&E may be the primary beneficiary of the entity owning the generating facility. SDG&E determines if it is the primary beneficiary in these cases based on a qualitative approach in which it considers the operational characteristics of the facility, including its expected power generation output relative to its capacity to generate and the financial structure of the entity, among other factors. If SDG&E determines that it is the primary beneficiary, SDG&E and Sempra consolidate the entity that owns the facility as a VIE.
In addition to tolling agreements, other variable interests involve various elements of fuel and power costs, and other components of cash flows expected to be paid to or received by our counterparties. In most of these cases, the expectation of variability is not substantial, and SDG&E generally does not have the power to direct activities, including the operation and maintenance activities of the generating facility, that most significantly impact the economic performance of the other VIEs. If our ongoing evaluation of these VIEs were to conclude that SDG&E becomes the primary beneficiary and consolidation by SDG&E becomes necessary, the effects could be significant to the financial position and liquidity of SDG&E and Sempra.
SDG&E determined that none of its PPAs and tolling agreements resulted in SDG&E being the primary beneficiary of a VIE at September 30, 2021 and December 31, 2020. PPAs and tolling agreements that relate to SDG&E’s involvement with VIEs are primarily accounted for as finance leases. The carrying amounts of the assets and liabilities under these contracts are included in PP&E, net, and finance lease liabilities with balances of $1,223 million and $1,237 million at September 30, 2021 and December 31, 2020, respectively. SDG&E recovers costs incurred on PPAs, tolling agreements and other variable interests through CPUC-approved long-term power procurement plans. SDG&E has no residual interest in the respective entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees or other commitments associated with these contracts other than the purchase commitments described in Note 16 of the Notes to Consolidated Financial Statements in the Annual Report. As a result, SDG&E’s potential exposure to loss from its variable interest in these VIEs is not significant.
Sempra Texas Utilities
Our 100% interest in Oncor Holdings is a VIE that owns an 80.25% interest in Oncor. Sempra is not the primary beneficiary of this VIE because of the structural and operational ring-fencing and governance measures in place that prevent us from having the power to direct the significant activities of Oncor Holdings. As a result, we do not consolidate Oncor Holdings and instead account for our ownership interest as an equity method investment. See Note 6 of the Notes to Consolidated Financial Statements in the Annual Report for additional information about our equity method investment in Oncor Holdings and restrictions on our ability to influence its activities. Our maximum exposure to loss, which fluctuates over time, from our interest in Oncor Holdings does not exceed the carrying value of our investment, which was $12,475 million at September 30, 2021 and $12,440 million at December 31, 2020.
Sempra LNG
Cameron LNG JV
Cameron LNG JV is a VIE principally due to contractual provisions that transfer certain risks to customers. Sempra is not the primary beneficiary of this VIE because we do not have the power to direct the most significant activities of Cameron LNG JV, including LNG production and operation and maintenance activities at the liquefaction facility. Therefore, we account for our investment in Cameron LNG JV under the equity method. The carrying value of our investment, including amounts recognized in AOCI related to interest-rate cash flow hedges at Cameron LNG JV, was $454 million at September 30, 2021 and $433 million at
December 31, 2020. Our maximum exposure to loss, which fluctuates over time, includes the carrying value of our investment and our obligation under the SDSRA, which we discuss in Note 6.
CFIN
As we discuss in Note 6, in July 2020, Sempra entered into a Support Agreement, which was amended in June 2021, for the benefit of CFIN, which is a VIE. Sempra is not the primary beneficiary of this VIE because we do not have the power to direct the most significant activities of CFIN, including modification, prepayment, and refinance decisions related to the financing arrangement with external lenders and Cameron LNG JV’s four project owners as well as the ability to determine and enforce remedies in the event of default. The conditional obligations of the Support Agreement represent a variable interest that we measure at fair value on a recurring basis (see Note 9). Sempra’s maximum exposure to loss under the terms of the Support Agreement is $979 million.
ECA LNG Phase 1
ECA LNG Phase 1 is a VIE because its total equity at risk is not sufficient to finance its activities without additional subordinated financial support. We expect that ECA LNG Phase 1 will require future capital contributions or other financial support to finance the construction of the facility. Sempra is the primary beneficiary of this VIE because we have the power to direct the development activities related to the construction of the liquefaction facility, which we consider to be the most significant activities of ECA LNG Phase 1 during the construction phase of its natural gas liquefaction export project. As a result, we consolidate ECA LNG Phase 1. Sempra LNG consolidated $522 million and $207 million of assets at September 30, 2021 and December 31, 2020, respectively, consisting primarily of PP&E, net, attributable to ECA LNG Phase 1 that could be used only to settle obligations of this VIE and that are not available to settle obligations of Sempra, and $367 million and $49 million of liabilities at September 30, 2021 and December 31, 2020, respectively, consisting primarily of long-term debt and accounts payable attributable to ECA LNG Phase 1 for which creditors do not have recourse to the general credit of Sempra. Additionally, as we discuss in Note 7 of the Notes to Consolidated Financial Statements in the Annual Report, Sempra, IEnova and TOTAL SE have provided guarantees for the loan facility supporting construction of the liquefaction facility based on their respective proportionate ownership interest in ECA LNG Phase 1.
PENSION AND OTHER POSTRETIREMENT BENEFITS
Settlement Accounting for Lump Sum Payments
Sempra recorded settlement charges of $7 million in the nine months ended September 30, 2021 and $13 million and $22 million in the three months and nine months ended September 30, 2020, respectively, in net periodic benefit cost for lump sum payments from its nonqualified pension plan that were in excess of the plan’s service cost plus interest cost.
Net Periodic Benefit Cost
The following three tables provide the components of net periodic benefit cost.
NET PERIODIC BENEFIT COST – SEMPRA
(Dollars in millions)
 Pension benefitsOther postretirement benefits
 Three months ended September 30,
 2021202020212020
Service cost$36 $31 $6 $5 
Interest cost28 32 7 8 
Expected return on assets(44)(41)(14)(14)
Amortization of:  
Prior service cost (credit)3 3 (1)(1)
Actuarial loss (gain)12 9 (3)(2)
Settlement charges— 13 — — 
Net periodic benefit cost (credit)35 47 (5)(4)
Regulatory adjustments73 37 5 4 
Total expense recognized$108 $84 $— $— 
 Nine months ended September 30,
 2021202020212020
Service cost$109 $97 $17 $14 
Interest cost84 97 21 24 
Expected return on assets(130)(126)(44)(41)
Amortization of:    
Prior service cost (credit)8 9 (2)(2)
Actuarial loss (gain)34 26 (7)(7)
Settlement charges7 22 — — 
Net periodic benefit cost (credit)112 125 (15)(12)
Regulatory adjustments66 31 15 12 
Total expense recognized$178 $156 $— $— 

NET PERIODIC BENEFIT COST – SDG&E
(Dollars in millions)
 Pension benefitsOther postretirement benefits
 Three months ended September 30,
 2021202020212020
Service cost$9 $7 $2 $1 
Interest cost6 7 1 2 
Expected return on assets(11)(12)(2)(3)
Amortization of:  
Prior service cost— 1 — — 
Actuarial loss (gain)1 1 (1)(1)
Net periodic benefit cost (credit)5 4 — (1)
Regulatory adjustments21 22 — 1 
Total expense recognized$26 $26 $— $— 
 Nine months ended September 30,
 2021202020212020
Service cost$26 $23 $4 $3 
Interest cost18 22 4 5 
Expected return on assets(36)(37)(7)(8)
Amortization of:  
Prior service cost— 2 — — 
Actuarial loss (gain)2 3 (2)(2)
Net periodic benefit cost (credit)10 13 (1)(2)
Regulatory adjustments30 28 1 2 
Total expense recognized$40 $41 $— $— 
NET PERIODIC BENEFIT COST – SOCALGAS
(Dollars in millions)
 Pension benefitsOther postretirement benefits
 Three months ended September 30,
 2021202020212020
Service cost$23 $20 $5 $3 
Interest cost19 22 5 7 
Expected return on assets(27)(27)(12)(11)
Amortization of:  
Prior service cost (credit)2 2 (1)(1)
Actuarial loss (gain)8 6 (2)(1)
Net periodic benefit cost (credit)25 23 (5)(3)
Regulatory adjustments52 15 5 3 
Total expense recognized$77 $38 $— $— 
 Nine months ended September 30,
 2021202020212020
Service cost$73 $64 $13 $10 
Interest cost59 66 16 19 
Expected return on assets(85)(81)(36)(32)
Amortization of:   
Prior service cost (credit)6 6 (2)(2)
Actuarial loss (gain)27 19 (5)(5)
Net periodic benefit cost (credit)80 74 (14)(10)
Regulatory adjustments36 3 14 10 
Total expense recognized$116 $77 $— $— 
RABBI TRUST
In support of its Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans, Sempra maintains dedicated assets, including a Rabbi Trust and investments in life insurance contracts, which totaled $539 million and $512 million at September 30, 2021 and December 31, 2020, respectively.
SEMPRA EARNINGS PER COMMON SHARE
Basic EPS is calculated by dividing earnings attributable to common shares (from both continuing and discontinued operations) by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
EARNINGS PER COMMON SHARE COMPUTATIONS
(Dollars in millions, except per share amounts; shares in thousands)
 Three months ended September 30,Nine months ended September 30,
 2021202020212020
Numerator for continuing operations:    
(Loss) income from continuing operations, net of income tax$(632)$428 $751 $1,823 
Earnings attributable to noncontrolling interests(5)(22)(48)(191)
Preferred dividends(11)(48)(52)(121)
Preferred dividends of subsidiary
— — (1)(1)
(Losses) earnings from continuing operations attributable to common shares$(648)$358 $650 $1,510 
Numerator for discontinued operations:
(Loss) income from discontinued operations, net of income tax$— $(7)$— $1,850 
Earnings attributable to noncontrolling interests— — — (10)
(Losses) earnings from discontinued operations attributable to common shares$— $(7)$— $1,840 
Numerator for (losses) earnings:
(Losses) earnings attributable to common shares$(648)$351 $650 $3,350 
Denominator:    
Weighted-average common shares outstanding for basic EPS(1)
319,144 289,490 309,350 291,771 
Dilutive effect of stock options and RSUs(2)(3)
— 1,092 797 1,164 
Dilutive effect of mandatory convertible preferred stock— — 707 — 
Weighted-average common shares outstanding for diluted EPS319,144 290,582 310,854 292,935 
Basic EPS:
(Losses) earnings from continuing operations$(2.03)$1.23 $2.10 $5.17 
(Losses) earnings from discontinued operations$— $(0.02)$— $6.31 
(Losses) earnings$(2.03)$1.21 $2.10 $11.48 
Diluted EPS:    
(Losses) earnings from continuing operations$(2.03)$1.23 $2.09 $5.15 
(Losses) earnings from discontinued operations$— $(0.02)$— $6.28 
(Losses) earnings$(2.03)$1.21 $2.09 $11.43 
(1)    Includes 451 and 535 fully vested RSUs held in our Deferred Compensation Plan for the three months ended September 30, 2021 and 2020, respectively, and 453 and 536 of such RSUs for the nine months ended September 30, 2021 and 2020, 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 ended September 30, 2021, the total weighted-average number of potentially dilutive stock options and RSUs was 699. However, these securities were not included in the computation of EPS because to do so would have decreased losses per share.
(3)    Due to market fluctuations of both Sempra 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 10 of the Notes to Consolidated Financial Statements in the Annual Report, dilutive RSUs may vary widely from period-to-period.

The potentially dilutive impact from stock options and RSUs is calculated under the treasury stock method. Under this method, proceeds based on the exercise price and unearned compensation are assumed to be used to repurchase shares on the open market at the average market price for the period, reducing the number of potential new shares to be issued and sometimes causing an antidilutive effect. The computation of diluted EPS for the three months and nine months ended September 30, 2021 excludes 147,840 and 240,654 potentially dilutive shares, respectively, because to include them would be antidilutive for the period. The computation of diluted EPS for the three months and nine months ended September 30, 2020 excludes 142,100 and 204,426 potentially dilutive shares, respectively, of such potentially dilutive shares. However, these shares could potentially dilute basic EPS in the future.
The potentially dilutive impact from mandatory convertible preferred stock is calculated under the if-converted method until the mandatory conversion date. After the mandatory conversion date, the converted shares are included in weighted-average common shares outstanding for basic EPS. As we discuss below in “Shareholders’ Equity and Noncontrolling Interests,” we converted our
series A preferred stock into common stock on January 15, 2021 and our series B preferred stock into common stock on July 15, 2021. The computation of diluted EPS for the three months and nine months ended September 30, 2021 excludes 639,733 and 3,037,812 potentially dilutive shares, respectively. The computation of diluted EPS for both the three months and nine months ended September 30, 2020 excludes 19,292,641 potentially dilutive shares.
Pursuant to Sempra’s share-based compensation plans, the Compensation and Talent Committee of Sempra’s board of directors granted 222,620 nonqualified stock options, 323,889 performance-based RSUs and 143,980 service-based RSUs in the nine months ended September 30, 2021, primarily in January.
We discuss share-based compensation plans and related awards and the terms and conditions of Sempra’s equity securities further in Notes 10, 13 and 14 of the Notes to Consolidated Financial Statements in the Annual Report.
COMPREHENSIVE INCOME
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 September 30, 2021 and 2020
Sempra:
Balance at June 30, 2021$(88)$(265)$(91)$(444)
OCI before reclassifications— 15 (8)7 
Amounts reclassified from AOCI— 16 3 19 
Net OCI(2)
— 31 (5)26 
Balance at September 30, 2021$(88)$(234)$(96)$(418)
   
Balance at June 30, 2020$(83)$(361)$(98)$(542)
OCI before reclassifications
6 14 (7)13 
Amounts reclassified from AOCI
— 4 12 16 
Net OCI(2)
6 18 5 29 
Balance at September 30, 2020$(77)$(343)$(93)$(513)
SDG&E:
Balance at June 30, 2021$(10)$(10)
Amounts reclassified from AOCI
1 1 
Net OCI1 1 
Balance at September 30, 2021$(9)$(9)
Balance as of June 30, 2020 and September 30, 2020$(12)$(12)
SoCalGas:
Balance at June 30, 2021$(13)$(17)$(30)
Amounts reclassified from AOCI— 1 1 
Net OCI— 1 1 
Balance at September 30, 2021$(13)$(16)$(29)
Balance as of June 30, 2020 and September 30, 2020$(13)$(9)$(22)
(1)    All amounts are net of income tax, if subject to tax, and exclude NCI.
(2)    Total AOCI includes $(4) million and $3 million of foreign currency translation adjustments and $(2) million and $2 million of financial instruments associated with the IEnova cash tender offer in 2021 and purchases of NCI in 2020, respectively, which we discuss below in “Other Noncontrolling Interests – Sempra Mexico,” and which do not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) (CONTINUED)
(Dollars in millions)
 Foreign
currency
translation
adjustments		Financial
instruments		Pension
and other
postretirement
benefits		Total
accumulated other
comprehensive
income (loss)
 Nine months ended September 30, 2021 and 2020
Sempra(2):
Balance as of December 31, 2020$(64)$(331)$(105)$(500)
OCI before reclassifications(24)52 (3)25 
Amounts reclassified from AOCI— 45 12 57 
Net OCI(3)
(24)97 9 82 
Balance as of September 30, 2021$(88)$(234)$(96)$(418)
   
Balance as of December 31, 2019$(607)$(215)$(117)$(939)
OCI before reclassifications(4)
(115)(153)(5)(273)
Amounts reclassified from AOCI(4)
645 25 29 699 
Net OCI(3)
530 (128)24 426 
Balance as of September 30, 2020$(77)$(343)$(93)$(513)
SDG&E:
Balance as of December 31, 2020$(10)$(10)
Amounts reclassified from AOCI1 1 
Net OCI1 1 
Balance at September 30, 2021$(9)$(9)
Balance as of December 31, 2019$(16)$(16)
Amounts reclassified from AOCI(4)
4 4 
Net OCI4 4 
Balance as of September 30, 2020$(12)$(12)
SoCalGas:
Balance as of December 31, 2020$(13)$(18)$(31)
Amounts reclassified from AOCI— 2 2 
Net OCI— 2 2 
Balance as of September 30, 2021$(13)$(16)$(29)
Balance as of December 31, 2019$(13)$(10)$(23)
Amounts reclassified from AOCI
— 1 1 
Net OCI— 1 1 
Balance as of September 30, 2020$(13)$(9)$(22)
(1)    All amounts are net of income tax, if subject to tax, and exclude NCI.
(2)    Includes discontinued operations in 2020.
(3)    Total AOCI includes $20 million and $3 million of foreign currency translation adjustments and $12 million and $2 million of financial instruments associated with the IEnova exchange and cash tender offers in 2021 and purchases of NCI in 2020, respectively, which we discuss below in “Other Noncontrolling Interests – Sempra Mexico,” and which do not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).
(4)    Pension and Other Postretirement Benefits and Total AOCI include $3 million in transfers of liabilities from SDG&E to Sempra in 2020 related to the nonqualified pension plans.
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 September 30,  
 20212020 
Sempra:   
Financial instruments:   
Interest rate instruments
$(1)$3 Interest Expense
Interest rate instruments
19 5 
Equity Earnings(1)
Interest rate and foreign exchange instruments5 (4)
Other (Expense) Income, Net
Total before income tax23 4  
 (7)— Income Tax Benefit (Expense)
Net of income tax$16 $4  
Pension and other postretirement benefits(2):
   
Amortization of actuarial loss$3 $3 
Other (Expense) Income, Net
Amortization of prior service cost1 1 
Other (Expense) Income, Net
Settlement charges— 13 
Other (Expense) Income, Net
Total before income tax4 17 
 (1)(5)Income Tax Benefit (Expense)
Net of income tax$3 $12  
Total reclassifications for the period, net of tax$19 $16  
SDG&E:   
Pension and other postretirement benefits(2):
Amortization of prior service cost$1 $— Other Income (Expense), Net
Total reclassifications for the period, net of tax$1 $—  
SoCalGas:   
Pension and other postretirement benefits(2):
   
Amortization of actuarial loss$1 $— 
Other (Expense) Income, Net
Total reclassifications for the period, net of tax$1 $— 
(1)    Equity earnings at Sempra Mexico are recognized after tax.
(2)    Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits” above).
RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (CONTINUED)
(Dollars in millions)
Details about accumulated other
comprehensive income (loss) components		Amounts reclassified
from accumulated other
comprehensive income (loss)		Affected line item on Condensed
Consolidated Statements of Operations
Nine months ended September 30,
20212020
Sempra:
Foreign currency translation adjustments$— $645 
(Loss) Income from Discontinued Operations,
Net of Income Tax
Financial instruments:
Interest rate instruments$— $6 Interest Expense
Interest rate instruments57 8 
Equity Earnings(1)
Foreign exchange instruments1 (2)Revenues: Energy-Related Businesses
— (1)Other (Expense) Income, Net
Foreign exchange instruments1 (2)
Equity Earnings(1)
Interest rate and foreign exchange instruments— 1 Interest Expense
4 33 
Other (Expense) Income, Net
Total before income tax63 43 
(16)(12)Income Tax Benefit (Expense)
Net of income tax47 31 
(2)(6)Earnings Attributable to Noncontrolling Interests
$45 $25 
Pension and other postretirement benefits(2):
  
Amortization of actuarial loss$6 $6 
Other (Expense) Income, Net
Amortization of actuarial loss— 6 
(Loss) Income from Discontinued Operations,
Net of Income Tax
Amortization of prior service cost3 3 
Other (Expense) Income, Net
Settlement charges7 22 
Other (Expense) Income, Net
Total before income tax16 37 
— (2)
(Loss) Income from Discontinued Operations,
Net of Income Tax
(4)(9)Income Tax Benefit (Expense)
Net of income tax$12 $26 
Total reclassifications for the period, net of tax$57 $696 
SDG&E:  
Pension and other postretirement benefits(2):
Amortization of prior service cost$1 $1 Other Income (Expense), Net
Total reclassifications for the period, net of tax$1 $1  
SoCalGas:   
Pension and other postretirement benefits(2):
   
Amortization of actuarial loss$1 $— Other (Expense) Income, Net
Amortization of prior service cost1 1 Other (Expense) Income, Net
Total reclassifications for the period, net of tax$2 $1 
(1)    Equity earnings at Sempra Mexico are recognized after tax.
(2)    Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits” above).
SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS
Sempra Series A Preferred Stock
On January 15, 2021, we converted 17,250,000 shares of series A preferred stock into 13,781,025 shares of our common stock based on a conversion rate of 0.7989 shares of our common stock for each issued and outstanding share of series A preferred
stock. As a consequence, no shares of series A preferred stock were outstanding after January 15, 2021 and the 17,250,000 shares that were formerly series A preferred stock have returned to the status of authorized and unissued shares of preferred stock.
Sempra Series B Preferred Stock
The terms of our series B preferred stock require a notice to holders when the aggregate adjustment to the conversion rates at which shares of series B preferred stock are convertible into shares of Sempra common stock is more than 1%. On July 7, 2021, we notified the holders of the series B preferred stock of such an adjustment. These adjustments, which resulted from the incremental impact of our second quarter dividend declared on our common stock and which became effective as of July 6, 2021, the ex-dividend date for such dividend, included adjustments to the minimum and maximum conversion rates and the related initial and threshold appreciation prices.
As of July 15, 2021, we had converted, pursuant to either early conversions at the election of the holder or the mandatory conversion of all outstanding shares, all 5,750,000 shares of series B preferred stock into an aggregate of 4,256,720 shares of our common stock and a nominal amount of cash in lieu of fractional share interests, based on a conversion rate of 0.7403 shares of our common stock for each issued and outstanding share of series B preferred stock. As a consequence, no shares of series B preferred stock were outstanding after July 15, 2021 and the 5,750,000 shares that were formerly series B preferred stock have returned to the status of authorized and unissued shares of preferred stock.
Sempra Series C Preferred Stock
On June 19, 2020, we issued 900,000 shares of our 4.875% fixed-rate reset cumulative redeemable perpetual preferred stock, series C (series C preferred stock) in a registered public offering at a price to the public of $1,000 per share and received net proceeds of $889 million after deducting the underwriting discount and equity issuance costs of $11 million. We used the net proceeds for working capital and other general corporate purposes, including the repayment of indebtedness.
Sempra Common Stock Repurchases
On September 11, 2007, our board of directors authorized the repurchase of shares of our common stock, provided that the amounts spent for such purpose do not exceed the greater of $2 billion or amounts spent to purchase no more than 40,000,000 shares. On July 1, 2020, we entered into an ASR program under which we prepaid $500 million to repurchase shares of our common stock in a share forward transaction. The total number of shares purchased was determined by dividing the $500 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of July 2, 2020 through August 4, 2020, minus a fixed discount. The program was completed on August 4, 2020 with an aggregate of 4,089,375 shares of Sempra common stock repurchased at an average price of $122.27 per share. Following the completion of the ASR program, the aggregate dollar amount authorized by the September 11, 2007 share repurchase authorization was exhausted.
On July 6, 2020, our board of directors authorized the repurchase of shares of our common stock at any time and from time to time in an aggregate amount not to exceed the lesser of $2 billion or amounts spent to purchase no more than 25 million shares. No shares have been repurchased under this authorization.
Other Noncontrolling Interests
The following table provides information about NCI held by others in subsidiaries or entities consolidated by us and recorded in Other Noncontrolling Interests in Total Equity on Sempra’s Condensed Consolidated Balance Sheets.
OTHER NONCONTROLLING INTERESTS
(Dollars in millions) 
 Percent ownership held by noncontrolling interests Equity held by
noncontrolling interests
 September 30,
2021		December 31,
2020		September 30,
2021		December 31,
2020
Sempra Mexico:    
IEnova0.1 %29.8 %$2 $1,487 
ICM Ventures Holdings B.V.— 17.5 — 7 
Sempra LNG:
ECA LNG Phase 116.6 29.0 28 46 
Parent and other:
PXiSE20.0 20.0 — 1 
Total Sempra  $30 $1,541 
Sempra Mexico
In May 2021, we acquired 381,015,194 publicly owned shares of IEnova in exchange for 12,306,777 newly issued shares of our common stock upon completion of our exchange offer launched in the U.S. and Mexico. In addition to being traded on the New York Stock Exchange, Sempra’s common stock is now also listed on the Mexican Stock Exchange under the ticker symbol SRE.MX. We acquired the IEnova shares at an exchange ratio of 0.0323 shares of our common stock for each one IEnova ordinary share. In connection with the exchange offer, we recorded an increase in Sempra’s shareholders’ equity of $1,361 million, net of $12 million in transactions costs, and increased our ownership interest in IEnova from 70.2% to 96.4%.
In September 2021, we acquired 51,014,545 publicly owned shares of IEnova for 4.0 billion Mexican pesos (approximately $202 million in U.S. dollars) in cash upon completion of our tender offer launched in the U.S. and Mexico in August 2021, which increased our ownership interest in IEnova from 96.4% to 99.9%. We acquired these IEnova shares at a price of 78.97 Mexican pesos per share (approximately $3.95 per share in U.S. dollars). Following the cash tender offer, we recorded a decrease in Sempra’s shareholders’ equity of $14 million, including $1 million in transaction costs. IEnova’s shares were delisted from the Mexican Stock Exchange effective October 15, 2021. In connection with the delisting, we are maintaining a trust for the purpose of purchasing the 1,212,981 remaining publicly owned IEnova shares for 78.97 Mexican pesos per share, the same price per share that was offered in our cash tender offer. The trust will be in place through the earlier of April 14, 2022 or the date on which we acquire all the remaining publicly owned IEnova shares.
As a result of the increase in our ownership interest in IEnova, we recorded an increase in Sempra’s shareholders’ equity of $84 million offset by a deferred income tax asset related to the outside basis difference in IEnova’s shares. Upon completing the sale of a 20% equity interest in Sempra Infrastructure Partners in October 2021, which we discuss below, we recorded $72 million in net income tax expense related to the utilization of this deferred income tax asset, net of the income tax effect reclassified from AOCI to earnings.
In the nine months ended September 30, 2020, IEnova repurchased 57,547,381 shares of its outstanding common stock held by NCI for $167 million, resulting in an increase in Sempra’s ownership interest in IEnova from 66.6% at December 31, 2019 to 69.2% at September 30, 2020.
In the first quarter of 2020, IEnova purchased additional shares in ICM Ventures Holdings B.V. for $9 million, increasing its ownership from 53.7% to 82.5%. ICM Ventures Holdings B.V. owns certain permits and land where IEnova is building a terminal for the receipt, storage and delivery of liquid fuels. In July 2021, IEnova acquired the remaining 17.5% interest held by NCI in ICM Ventures Holdings B.V. for $7 million.
Sempra LNG
In March 2020, Sempra LNG purchased for $7 million the 24.6% minority interest in Liberty Gas Storage LLC, which owns 100% of LA Storage, LLC, increasing Sempra LNG’s ownership in Liberty Gas Storage LLC to 100%. Prior to the purchase, the minority partner converted $22 million in notes payable due from Sempra LNG to equity. As a result of the purchase, we recorded an increase in Sempra’s shareholders’ equity of $2 million for the difference between the carrying value and fair value related to the change in ownership.
Sempra Infrastructure Partners
Sale of NCI. On October 1, 2021, Sempra, its wholly owned subsidiary, Sempra Infrastructure Partners (formerly Sempra Global), and KKR consummated the transactions contemplated under a purchase and contribution agreement dated April 4, 2021 (as amended on September 27, 2021 to reflect immaterial revisions prior to closing, the Purchase Agreement). Pursuant to the Purchase Agreement, KKR acquired for a purchase price of $3.37 billion, which remains subject to post-closing adjustments, newly designated Class A Units representing 20% of the equity interests of Sempra Infrastructure Partners. Prior to closing the transaction, we completed an internal legal reorganization to consolidate the assets of Sempra LNG and our ownership of IEnova under Sempra Global, which was renamed Sempra Infrastructure Partners. On October 1, 2021, Sempra Infrastructure Partners paid $149 million to KKR for reimbursement of certain expenses that KKR incurred in connection with closing the transaction. As of September 30, 2021, the composition of our reportable segments did not change.
At the closing of the transactions contemplated under the Purchase Agreement on October 1, 2021, we owned 99.9% of the outstanding ordinary shares of IEnova. Under the terms of the Purchase Agreement, the base purchase price was adjusted downward at closing by $1 million based on the number of IEnova ordinary shares we did not own at the closing. If we later acquire additional shares of IEnova after the closing, such additional shares will be acquired by Sempra Infrastructure Partners and KKR will provide 20% of the funding.
We estimate that Sempra Infrastructure Partners had approximately $8.37 billion of direct and indirect net debt at the closing, and there will be a customary upward or downward adjustment to the purchase price to the extent the actual net debt at closing was greater or less than such estimated amount. Direct and indirect net debt at Sempra Infrastructure Partners includes consolidated long-term and short-term debt less cash at Sempra LNG and IEnova plus their proportionate ownership share of equity method investees’ long-term and short-term debt less cash.
Pursuant to the Purchase Agreement, we have agreed to indemnify Sempra Infrastructure Partners for, among other things, certain losses arising from liabilities of Sempra Infrastructure Partners and its subsidiaries to the extent not primarily relating to the undertaking of the business of Sempra Infrastructure Partners, and we have agreed to indemnify KKR for losses attributable to pre-closing taxes.
We have also entered into an accommodation and support agreement under which KKR has the ability to borrow from Sempra up to $300 million plus reimbursement of certain fees related to such borrowing, which we fully funded on November 1, 2021. This loan is due to be repaid in full no later than October 1, 2029 and bears compound interest at 5% per annum.
Limited Partnership Agreement. At the closing of the sale of NCI in Sempra Infrastructure Partners, Sempra and KKR entered into a limited partnership agreement (the LP Agreement), which governs our and their respective rights and obligations in respect of our ownership of Sempra Infrastructure Partners. We maintain control of Sempra Infrastructure Partners as the 80% owner with KKR having certain minority protections commensurate with the size of its investment.
Sempra Infrastructure Partners has two authorized classes of units, designated as “Class A Units” (which are common voting units) and “Sole Risk Interests.” If KKR approves our request that a project not be pursued jointly, or if KKR decides not to participate in any proposed project for which we nevertheless desire to make a positive final investment decision, we will be permitted to proceed with such project either independently through a different investment vehicle or as a “Sole Risk Project” within Sempra Infrastructure Partners and receive Sole Risk Interests in respect thereof. Sole Risk Projects are separated from other Sempra Infrastructure Partners projects and are conducted at our sole cost, expense and liability and we receive, through the acquisition of Sole Risk Interests, any economic and other benefits from such projects. KKR is not entitled to any benefits or rights in respect of any Sole Risk Project. The Guaymas-El Oro segment of the Sonora pipeline at IEnova currently constitutes a Sole Risk Project. Until a specified date, KKR has certain discretionary rights to cause the Guaymas-El Oro segment of the Sonora pipeline to cease to be a Sole Risk Project and be pursued jointly within Sempra Infrastructure Partners.
Under the LP Agreement, Sempra Infrastructure Partners is managed by a board of managers comprised of members designated by us and by KKR. Matters are generally decided by majority vote. The managers designated by us and the managers designated by KKR each, as a group, have voting power equivalent to the ownership percentage of their respective designating member. However, Sempra Infrastructure Partners and its controlled subsidiaries are prohibited from taking certain actions without the prior written approval of KKR (subject to KKR maintaining certain ownership thresholds in Sempra Infrastructure Partners).
The LP Agreement contains certain default remedies if we or KKR fails to fund any amounts required to be funded under the LP Agreement.
The LP Agreement also requires that Sempra Infrastructure Partners distribute to us and to KKR at least 85% of distributable cash flow of Sempra Infrastructure Partners and its subsidiaries on a quarterly basis, subject to certain exceptions and reserves. Generally, distributions from Sempra Infrastructure Partners are made to us and KKR on a pro rata basis in accordance with our and their respective ownership interests in Sempra Infrastructure Partners. However, KKR is entitled to certain priority distributions in the event of material deviations between certain specified projected cash flows and actual cash flows. Additionally, KKR is entitled to certain priority distributions in the event a specified project that reaches a positive final investment decision does not have projected internal rates of return over a specified threshold or in the event we have not made a positive final investment decision by a certain date on specified LNG projects that are currently in development.
In addition, under the LP Agreement, both parties are granted customary registration rights in the event of an initial public offering of Sempra Infrastructure Partners, which is subject to certain consent rights of KKR.
Management Agreement. At the closing of the transactions contemplated under the Purchase Agreement, Sempra Infrastructure Partners entered into a management agreement with Sempra to engage Sempra for certain staffing and general and administrative services. The management agreement governs the services that Sempra will provide to Sempra Infrastructure Partners and the charges associated with those services.
Discontinued Operations
As we discuss in Note 5, we completed the sales of our equity interests in our Peruvian and Chilean businesses in the second quarter of 2020. The minority interests in Luz del Sur and Tecsur were deconsolidated upon the sale of our Peruvian businesses in April 2020, and the minority interests in Chilquinta Energía and its subsidiaries were deconsolidated upon the sale of our Chilean businesses in June 2020.
TRANSACTIONS WITH AFFILIATES
We summarize amounts due from and to unconsolidated affiliates at Sempra, SDG&E and SoCalGas in the following table.
AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES
(Dollars in millions)
 September 30,
2021		December 31,
2020
Sempra:  
Total due from various unconsolidated affiliates – current$30 $20 
Sempra Mexico(1):
ESJ – Note due December 31, 2022, net of negligible allowance for credit losses at December 31, 2020(2)
$— $85 
IMG JV – Note due March 15, 2022, net of allowance for credit losses of $1 and $3 at
September 30, 2021 and December 31, 2020, respectively(3)
684 695 
Total due from unconsolidated affiliates – noncurrent$684 $780 
Sempra Mexico – TAG Pipelines Norte, S. de. R.L. de C.V. – Note due December 20, 2021(1)(4)
$(42)$(41)
Various affiliates— (4)
Total due to unconsolidated affiliates – current$(42)$(45)
Sempra Mexico(1)(5):
TAG Pipelines Norte, S. de. R.L. de C.V.:
5.5% Note due January 9, 2024
$(71)$(68)
5.5% Note due January 14, 2025
(21)— 
5.5% Note due July 16, 2025
(20)— 
TAG JV – 5.74% Note due December 17, 2029
(174)(166)
Total due to unconsolidated affiliates – noncurrent$(286)$(234)
SDG&E:  
Total due from various unconsolidated affiliates – current$1 $— 
Sempra $(45)$(38)
SoCalGas(9)(21)
Various affiliates(7)(5)
Total due to unconsolidated affiliates – current$(61)$(64)
Income taxes due from Sempra(6)
$29 $— 
SoCalGas:  
SDG&E$9 $21 
Various affiliates2 1 
Total due from unconsolidated affiliates – current$11 $22 
Sempra $(45)$(31)
Total due to unconsolidated affiliates – current$(45)$(31)
Income taxes due from (to) Sempra(6)
$1 $(37)
(1)    Amounts include principal balances plus accumulated interest outstanding.
(2)    U.S. dollar-denominated loan at a variable interest rate based on 1-month LIBOR plus 196 bps (2.11% at December 31, 2020). At December 31, 2020, $1 million of accrued interest receivable is included in Due from Unconsolidated Affiliates – Current. In March 2021, IEnova acquired the 50% equity interest in ESJ that it did not already own and ESJ became a wholly owned, consolidated subsidiary, resulting in the elimination of this note receivable.
(3)    Mexican peso-denominated revolving line of credit for up to 14.2 billion Mexican pesos or approximately $689 million U.S. dollar-equivalent at September 30, 2021, at a variable interest rate based on the 91-day Interbank Equilibrium Interest Rate plus 220 bps (7.02% at September 30, 2021), to finance construction of a natural gas marine pipeline. At both September 30, 2021 and December 31, 2020, $2 million of accrued interest receivable is included in Due from Unconsolidated Affiliates – Current. At September 30, 2021, we classified this revolving line of credit as noncurrent because we expect to extend the maturity date on a long-term basis prior to its stated maturity date.
(4)    U.S. dollar-denominated loan at a variable interest rate based on 6-month LIBOR plus 290 bps (3.06% at September 30, 2021).
(5)     U.S. dollar-denominated loans at fixed interest rates.
(6)    SDG&E and SoCalGas are included in the consolidated income tax return of Sempra, and their respective income tax expense is computed as an amount equal to that which would result from each company having always filed a separate return.

The following table summarizes income statement information from unconsolidated affiliates.
INCOME STATEMENT IMPACT FROM UNCONSOLIDATED AFFILIATES  
(Dollars in millions)  
 Three months ended September 30,Nine months ended
September 30,
 2021202020212020
Sempra:    
Revenues$7 $9 $22 $31 
Cost of sales— 9 11 35 
Interest income11 12 38 44 
Interest expense4 4 11 11 
SDG&E:    
Revenues$3 $1 $7 $4 
Cost of sales20 17 75 56 
SoCalGas:
Revenues$24 $23 $72 $61 
Cost of sales(1)
(2)2 1 2 
(1)     Includes net commodity costs from natural gas transactions with unconsolidated affiliates.
Guarantees
Sempra provided guarantees related to Cameron LNG JV’s construction-period debt, which were terminated in March 2021, as well as guarantees related to Cameron LNG JV’s SDSRA and CFIN’s Support Agreement, which remain outstanding. We discuss these guarantees in Note 6 below and in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.
OTHER (EXPENSE) INCOME, NET
Other (expense) income, net, consists of the following:
OTHER (EXPENSE) INCOME, NET   
(Dollars in millions)   
 Three months ended September 30,Nine months ended September 30,
 2021202020212020
Sempra:    
Allowance for equity funds used during construction$31 $34 $103 $96 
Investment gains, net(1)
— 16 28 9 
(Losses) gains on interest rate and foreign exchange instruments, net
(3)19 (26)(129)
Foreign currency transaction (losses) gains, net(2)
(17)15 (10)(95)
Non-service component of net periodic benefit cost
(66)(48)(52)(45)
Fine related to Energy Efficiency Program inquiry— (6)— (6)
Interest on regulatory balancing accounts, net2 — 5 13 
Sundry, net(2)(1)4 (6)
Total$(55)$29 $52 $(163)
SDG&E:    
Allowance for equity funds used during construction$18 $21 $63 $61 
Non-service component of net periodic benefit cost
(15)(18)(10)(15)
Fine related to Energy Efficiency Program inquiry— (6)— (6)
Interest on regulatory balancing accounts, net2 — 5 8 
Sundry, net(1)1 3 (1)
Total$4 $(2)$61 $47 
SoCalGas:   
Allowance for equity funds used during construction$13 $11 $36 $29 
Non-service component of net periodic benefit cost
(49)(15)(30)(3)
Interest on regulatory balancing accounts, net— — — 5 
Sundry, net(3)(3)(8)(10)
Total$(39)$(7)$(2)$21 
(1)    Represents net investment gains on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are offset by corresponding changes in compensation expense related to the plans, recorded in O&M on the Condensed Consolidated Statements of Operations.
(2)    Includes losses of $18 million and $13 million in the three months and nine months ended September 30, 2021, respectively, and gains of $15 million and losses of $120 million in the three months and nine months ended September 30, 2020, respectively, from translation to U.S. dollars of a Mexican peso-denominated loan to IMG JV, which are offset by corresponding amounts included in Equity Earnings on the Condensed Consolidated Statements of Operations.
INCOME TAXES
We provide our calculations of ETRs in the following table.
INCOME TAX (BENEFIT) EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
Three months ended September 30,Nine months ended September 30,
2021202020212020
Sempra:
Income tax (benefit) expense from continuing operations
$(342)$99 $(45)$60 
(Loss) income from continuing operations before income taxes
and equity earnings
$(1,365)$201 $(316)$1,061 
Equity earnings, before income tax(1)
137 117 457 158 
Pretax (loss) income$(1,228)$318 $141 $1,219 
Effective income tax rate28 %31 %(32)%5 %
SDG&E:
Income tax expense$90 $33 $168 $161 
Income before income taxes$295 $211 $771 $794 
Effective income tax rate31 %16 %22 %20 %
SoCalGas:
Income tax (benefit) expense
$(437)$(6)$(335)$95 
(Loss) income before income taxes
$(1,563)$(30)$(959)$521 
Effective income tax rate28 %20 %35 %18 %
(1)    We discuss how we recognize equity earnings in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

Sempra, SDG&E and SoCalGas record income taxes for interim periods utilizing a forecasted ETR anticipated for the full year. Unusual and infrequent items and items that cannot be reliably estimated are recorded in the interim period in which they occur, which can result in variability in the ETR.
For SDG&E and SoCalGas, the CPUC requires flow-through rate-making treatment for the current income tax benefit or expense arising from certain property-related and other temporary differences between the treatment for financial reporting and income tax, which will reverse over time. Under the regulatory accounting treatment required for these flow-through temporary differences, deferred income tax assets and liabilities are not recorded to deferred income tax expense, but rather to a regulatory asset or liability, which impacts the ETR. As a result, changes in the relative size of these items compared to pretax income, from period to period, can cause variations in the ETR. The following items are subject to flow-through treatment:
▪repairs expenditures related to a certain portion of utility plant fixed assets
▪the equity portion of AFUDC, which is non-taxable
▪a portion of the cost of removal of utility plant assets
▪utility self-developed software expenditures
▪depreciation on a certain portion of utility plant assets
▪state income taxes
The AFUDC related to equity recorded for regulated construction projects at Sempra Mexico has similar flow-through treatment.
We record income tax (expense) benefit from the transactional effects of foreign currency and inflation. Through the first quarter of 2021, such effects were offset by net gains (losses) from foreign currency derivatives that were hedging Sempra Mexico parent’s exposure to movements in the Mexican peso from its controlling interest in IEnova.
Discontinued Operations
In January 2019, our board of directors approved a plan to sell our South American businesses. We completed the sales in the second quarter of 2020, as we discuss in Note 5. Because of our decision to sell our South American businesses, we no longer asserted indefinite reinvestment of basis differences related to these businesses. Accordingly, in the nine months ended September 30, 2020, we recorded a $7 million income tax benefit from changes in outside basis differences in our discontinued operations in South America.