The detailed information presented below covers the employee benefit plans of Sempra Energy and its principal subsidiaries.

Sempra Energy has funded and unfunded noncontributory defined benefit plans, including separate plans for SDG&E and SoCalGas, which collectively cover substantially all domestic and certain foreign employees, and members of the Sempra Energy board of directors who were participants in a predecessor plan on or before June 1, 1998. The plans generally provide defined benefits based on years of service and either final average or career salary.

Chilquinta Energía, which was acquired by Sempra Energy in 2011, has an unfunded contributory defined benefit plan covering all employees hired before October 1, 1981 and an unfunded noncontributory termination indemnity obligation covering all employees. The plans generally provide defined benefits to retirees based on date of hire, years of service and final average salary.

Sempra Energy also has other postretirement benefit plans (PBOP), including separate plans for SDG&E and SoCalGas, which collectively cover all domestic (except Willmut Gas) and certain foreign employees. The life insurance plans are both contributory and noncontributory, and the health care plans are contributory. Participants' contributions are adjusted annually. Other postretirement benefits include medical benefits for retirees' spouses.

Chilquinta Energía also has two noncontributory postretirement benefit plans which cover substantially all employees – a health care plan and an energy subsidy plan that provides for reduced energy rates. The health care plan includes benefits for retirees' spouses and dependents.

Pension and other postretirement benefits costs and obligations are dependent on assumptions used in calculating such amounts. These assumptions include

We review these assumptions on an annual basis prior to the beginning of each year and update them as appropriate. We consider current market conditions, including interest rates, in making these assumptions. We use a December 31 measurement date for all of our plans.

In support of its Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans, Sempra Energy maintains dedicated assets, including a Rabbi Trust and investments in life insurance contracts, which totaled $506 million and $510 million at December 31, 2013 and 2012, respectively.

Effective July 1, 2014, an enhanced pension benefit will be provided to certain employees of SoCalGas who transfer from a represented to a nonrepresented position after June 30, 1998. This increased the pension benefit obligation by $27 million at each of Sempra Energy Consolidated and SoCalGas.

Effective April 1, 2014, we will provide a one-time, ad hoc cost of living adjustment of 13.2 percent for SoCalGas and PE retirees who retired prior to July 1, 1996 and their beneficiaries that are receiving qualified pension benefits in the form of an annuity. This election increased the pension benefit obligation by $40 million at Sempra Energy Consolidated and $39 million at SoCalGas.

Effective January 1, 2013, the face value of the fully paid life insurance benefit for employees that participate in our Executive Retirement Life Insurance Program and retire after December 31, 2012 was increased from one times pay to one-and-a-half times pay. In addition, the tax gross-ups paid to the retiring employee based on the value of the final premium were eliminated. These changes resulted in a decrease of the other postretirement benefit obligation of $4 million at Sempra Energy Consolidated.

Effective January 1, 2014, the benefits provided by one of the dental plans available to all employees that participate in the plans, except the represented employees at SoCalGas, were enhanced to increase the annual total maximum and lifetime orthodontic maximum covered costs. In addition, the costs of diagnostic and preventive services were excluded from the total covered annual maximum costs. These plan design changes increased the recorded liability for other postretirement benefits by $1 million at each of Sempra Energy Consolidated and SoCalGas.

The plan amendments above were adopted in 2013, and therefore reflected in the 2013 pension and other postretirement benefit obligations.

Effective January 1, 2012, the pension plan death benefit for represented employees at SoCalGas was enhanced to the full value of the benefit that the participant would have received had the employee terminated employment and taken a distribution of their benefit. Effective October 1, 2012, the death benefit for represented employees at SDG&E was similarly enhanced. This increased the benefit obligation by approximately $8 million for Sempra Energy Consolidated, $1 million for SDG&E and $7 million for SoCalGas.

Effective January 1, 2012, SoCalGas' represented employees with less than 15 years of service now receive a defined dollar benefit to cover postretirement medical benefits. This amendment was the result of the ratification on March 1, 2012 of the SoCalGas union collective bargaining agreement (CBA) covering wages, hours, working conditions and medical and other benefit plans effective January 1, 2012 through September 30, 2015. The amendment resulted in a remeasurement of the SoCalGas other postretirement benefit liability as of February 29, 2012. The effect of this plan change as of December 31, 2012 was a decrease in the recorded liability for other postretirement benefits of $53 million at each of Sempra Energy Consolidated and SoCalGas.

Effective January 1, 2012, certain postretirement plans were amended to effectively reverse the 2011 amendment that increased employer contributions to maintain the grandfathered retiree plan status under the Patient Protection and Affordable Care Act (PPACA), described below, as it was no longer required due to a restructuring of benefits provided under the plans. The 2012 amendment resulted in a decrease in the recorded liability for other postretirement benefits of approximately $3 million for Sempra Energy Consolidated, $2 million for SDG&E and $1 million for SoCalGas.

All nonrepresented employees of SDG&E and SoCalGas who were age 62 and had 5 years of service and all other nonrepresented employees who were age 55 and had 10 years of service that retired under the Voluntary Retirement Enhancement Program (VREP) offered in 2013 received an additional postretirement health benefit in the form of a $50,000 Health Reimbursement Account (HRA). In accordance with U.S. GAAP, we elected to treat the benefit obligation attributable to the HRA as special termination benefits. This resulted in a one-time charge that increased the recorded liability for other postretirement benefits by approximately $5 million for Sempra Energy Consolidated, $2 million for SDG&E and $2 million for SoCalGas.

The following three tables provide a reconciliation of the changes in the plans' projected benefit obligations and the fair value of assets during 2013 and 2012, and a statement of the funded status at December 31, 2013 and 2012:

PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
Sempra Energy Consolidated	2013		2012		2013		2012
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Net obligation at January 1	$	3,804	$	3,406	$	1,115	$	1,160
Service cost		109		90		28		25
Interest cost		148		162		44		52
Contributions from plan participants		―		―		16		15
Actuarial (gain) loss		(371)		374		(177)		(25)
Benefit payments		(293)		(217)		(55)		(56)
Plan amendments		67		8		(3)		(56)
Special termination benefits		―		―		5		―
Settlements		(5)		(19)		―		―
Net obligation at December 31		3,459		3,804		973		1,115

CHANGE IN PLAN ASSETS:
Fair value of plan assets at January 1		2,558		2,332		873		778
Actual return on plan assets		396		339		151		97
Employer contributions		133		123		27		39
Contributions from plan participants		―		―		16		15
Benefit payments		(293)		(217)		(55)		(56)
Settlements		(5)		(19)		―		―
Fair value of plan assets at December 31		2,789		2,558		1,012		873
Funded status at December 31	$	(670)	$	(1,246)	$	39	$	(242)
Net recorded (liability) asset at December 31	$	(670)	$	(1,246)	$	39	$	(242)

PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
SDG&E	2013		2012		2013		2012
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Net obligation at January 1	$	1,067	$	981	$	185	$	182
Service cost		32		28		8		7
Interest cost		41		45		8		9
Contributions from plan participants		―		―		6		6
Actuarial (gain) loss		(66)		87		(19)		(5)
Benefit payments		(89)		(75)		(12)		(12)
Plan amendments		―		1		―		(2)
Special termination benefits		―		―		2		―
Settlements		(4)		―		―		―
Transfer of liability to other plans		(42)		―		(7)		―
Net obligation at December 31		939		1,067		171		185

CHANGE IN PLAN ASSETS:
Fair value of plan assets at January 1		781		712		126		106
Actual return on plan assets		117		99		18		13
Employer contributions		51		45		14		13
Contributions from plan participants		―		―		6		6
Benefit payments		(89)		(75)		(12)		(12)
Settlements		(4)		―		―		―
Transfer of assets to other plans		(37)		―		(6)		―
Fair value of plan assets at December 31		819		781		146		126
Funded status at December 31	$	(120)	$	(286)	$	(25)	$	(59)
Net recorded liability at December 31	$	(120)	$	(286)	$	(25)	$	(59)

PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
SoCalGas	2013		2012		2013		2012
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Net obligation at January 1	$	2,299	$	2,017	$	873	$	921
Service cost		67		53		17		16
Interest cost		90		99		34		41
Contributions from plan participants		―		―		10		9
Actuarial (gain) loss		(285)		245		(151)		(19)
Benefit payments		(169)		(120)		(40)		(41)
Plan amendments		66		7		1		(54)
Special termination benefits		―		―		2		―
Settlements		―		(2)		―		―
Transfer of liability from other plans		42		―		7		―
Net obligation at December 31		2,110		2,299		753		873

CHANGE IN PLAN ASSETS:
Fair value of plan assets at January 1		1,581		1,443		732		658
Actual return on plan assets		250		213		131		83
Employer contributions		59		47		9		23
Contributions from plan participants		―		―		10		9
Benefit payments		(169)		(120)		(40)		(41)
Settlements		―		(2)		―		―
Transfer of assets from other plans		37		―		6		―
Fair value of plan assets at December 31		1,758		1,581		848		732
Funded status at December 31	$	(352)	$	(718)	$	95	$	(141)
Net recorded (liability) asset at December 31	$	(352)	$	(718)	$	95	$	(141)

The actuarial gains for pension plans in 2013 were primarily due to an increase in the weighted average discount rate and the rate used to convert monthly annuity-type benefits to a lump sum benefit payment.

The actuarial gains for other postretirement plans in 2013 resulted from several factors, including an increase in the discount rate, updated census data and actual claims costs at SoCalGas, updates in actual premiums and retiree contributions for 2013, expected decrease in 2014 claims costs based on 2014 renewal premium rates, and a decrease in the healthcare cost trending rate. The actuarial gains were partially offset by the impact of updated census data and actual claims costs at all companies except SoCalGas, changes in retirement and termination rates, and an expected increase in non-spouse dependents for all employees of SoCalGas not covered by the defined dollar benefit.

The actuarial losses for pension plans in 2012 were primarily due to a decrease in the weighted average discount rate and the rate used to convert monthly annuity-type benefits to a lump sum benefit payment.

The actuarial gains for other postretirement plans in 2012 resulted from several factors, including updated census data and actual claims costs, premiums and retiree contributions for 2012, expected gains on 2013 claims costs based on 2013 renewal premium rates, changes in retirement rate assumptions and the move to an Employer Group Waiver Plan (EGWP) for all represented employees of SoCalGas effective February 29, 2012. An EGWP is an alternative means of providing the existing pharmacy benefit, discussed below. The actuarial gains were partially offset by the impact of a lower discount rate for the obligation remeasurement on February 29, 2012 discussed above and a lower discount rate at the December 31, 2012 measurement date.

The assets and liabilities of the pension and other postretirement benefit plans are affected by changing market conditions as well as when actual plan experience is different than assumed. Such events result in investment gains and losses, which we defer and recognize in pension and other postretirement benefit costs over a period of years. Sempra Energy Consolidated (except for SDG&E) and SoCalGas use the asset smoothing method for their pension and other postretirement plans. This method develops an asset value that recognizes realized and unrealized investment gains and losses over a three-year period. This adjusted asset value, known as the market-related value of assets, is used in conjunction with an expected long-term rate of return to determine the expected return-on-assets component of net periodic cost. SDG&E does not use the asset smoothing method, but rather recognizes realized and unrealized investment gains and losses during the current year.

The 10-percent corridor accounting method is used at Sempra Energy, SDG&E and SoCalGas. Under the corridor accounting method, if as of the beginning of a year unrecognized net gain or loss exceeds 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets, the excess is amortized over the average remaining service period of active participants. The asset smoothing and 10-percent corridor accounting methods help mitigate volatility of net periodic costs from year to year.

We recognize the overfunded or underfunded status of defined benefit pension and other postretirement plans as assets or liabilities, respectively; unrecognized changes in these assets and/or liabilities are normally recorded in Accumulated Other Comprehensive Income (Loss) on the balance sheet. The California Utilities and Mobile Gas record regulatory assets and liabilities that offset the funded pension and other postretirement plans' assets or liabilities, as these costs are expected to be recovered in future utility rates based on agreements with regulatory agencies. At Willmut Gas, pension contributions are recovered in rates on a prospective basis, but are not recorded as a regulatory asset pending recovery.

The California Utilities record annual pension and other postretirement net periodic benefit costs equal to the contributions to their plans as authorized by the CPUC. The annual contributions to the pension plans are limited to a minimum required funding amount as determined by the Internal Revenue Service. The annual contributions to the other postretirement plans are equal to the lesser of the maximum tax deductible amount or the net periodic cost calculated in accordance with U.S. GAAP for pension and other postretirement benefit plans. Mobile Gas records annual pension and other postretirement net periodic benefit costs based on an estimate of the net periodic cost at the beginning of the year calculated in accordance with U.S. GAAP for pension and other postretirement benefit plans, as authorized by the Alabama Public Service Commission. Any differences between booked net periodic benefit cost and amounts contributed to the pension and other postretirement plans for the California Utilities are disclosed as regulatory adjustments in accordance with U.S. GAAP for regulated entities.

The net liability is included in the following captions on the Consolidated Balance Sheets at December 31:

	Pension Benefits				Other Postretirement Benefits
(Dollars in millions)	2013		2012		2013		2012
Sempra Energy Consolidated
Noncurrent assets	$	―	$	―	$	95	$	―
Current liabilities		(59)		(31)		―		(1)
Noncurrent liabilities		(611)		(1,215)		(56)		(241)
Net recorded liability	$	(670)	$	(1,246)	$	39	$	(242)
SDG&E
Current liabilities	$	(13)	$	(5)	$	―	$	―
Noncurrent liabilities		(107)		(281)		(25)		(59)
Net recorded liability	$	(120)	$	(286)	$	(25)	$	(59)
SoCalGas
Noncurrent assets	$	―	$	―	$	95	$	―
Current liabilities		(13)		(4)		―		―
Noncurrent liabilities		(339)		(714)		―		(141)
Net recorded liability	$	(352)	$	(718)	$	95	$	(141)

Amounts recorded in Accumulated Other Comprehensive Income (Loss) as of December 31, 2013 and 2012, net of income tax effects and amounts recorded as regulatory assets, are as follows:

AMOUNTS IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
	2013		2012		2013		2012
Sempra Energy Consolidated
Net actuarial loss	$	(73)	$	(96)	$	―	$	(6)
Prior service credit		―		1		―		―
Total	$	(73)	$	(95)	$	―	$	(6)
SDG&E
Net actuarial loss	$	(10)	$	(12)
Prior service credit		1		1
Total	$	(9)	$	(11)
SoCalGas
Net actuarial loss	$	(5)	$	(4)
Prior service credit		1		1
Total	$	(4)	$	(3)

The accumulated benefit obligation for defined benefit pension plans at December 31, 2013 and 2012 was as follows:

Sempra Energy has unfunded and funded pension plans. SDG&E and SoCalGas each have an unfunded and a funded pension plan. The following table shows the obligations of funded pension plans with benefit obligations in excess of plan assets as of December 31:

(Dollars in millions)	2013		2012
Sempra Energy Consolidated
Projected benefit obligation	$	3,212	$	3,544
Accumulated benefit obligation		3,027		3,295
Fair value of plan assets		2,789		2,558
SDG&E
Projected benefit obligation	$	899	$	1,025
Accumulated benefit obligation		886		1,003
Fair value of plan assets		819		781
SoCalGas
Projected benefit obligation	$	2,085	$	2,275
Accumulated benefit obligation		1,920		2,057
Fair value of plan assets		1,758		1,581

The following three tables provide the components of net periodic benefit cost and amounts recognized in other comprehensive income for the years ended December 31:

NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OTHER COMPREHENSIVE INCOME
(Dollars in millions)
	Pension Benefits						Other Postretirement Benefits
Sempra Energy Consolidated	2013		2012		2011		2013		2012		2011
Net Periodic Benefit Cost
Service cost	$	109	$	90	$	83	$	28	$	25	$	31
Interest cost		148		162		168		44		52		65
Expected return on assets		(162)		(155)		(144)		(58)		(53)		(48)
Amortization of:
Prior service cost (credit)		4		3		4		(4)		(4)		―
Actuarial loss		54		47		34		7		12		17
Settlement charge		2		8		13		―		―		―
Special termination benefits		―		―		―		5		―		―
Regulatory adjustment		(20)		(29)		43		6		7		7
Total net periodic benefit cost		135		126		201		28		39		72

Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income
Net (gain) loss		(30)		19		23		(8)		(6)		7
Prior service cost		1		―		―		―		―		―
Amortization of actuarial loss		(9)		(9)		(10)		(1)		―		―
Total recognized in other comprehensive income		(38)		10		13		(9)		(6)		7
Total recognized in net periodic benefit cost and other comprehensive income	$	97	$	136	$	214	$	19	$	33	$	79

NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OTHER COMPREHENSIVE INCOME
(Dollars in millions)
	Pension Benefits						Other Postretirement Benefits
SDG&E	2013		2012		2011		2013		2012		2011
Net Periodic Benefit Cost
Service cost	$	32	$	28	$	28	$	8	$	7	$	7
Interest cost		41		45		49		8		9		10
Expected return on assets		(52)		(47)		(46)		(8)		(8)		(8)
Amortization of:
Prior service cost		2		2		1		4		4		4
Actuarial loss		14		14		9		―		―		―
Settlement charge		1		1		1		―		―		―
Special termination benefits		―		―		―		2		―		―
Regulatory adjustment		14		6		31		―		1		2
Total net periodic benefit cost		52		49		73		14		13		15

Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income
Net (gain) loss		(2)		2		1		―		―		―
Amortization of actuarial loss		(1)		(1)		(1)		―		―		―
Total recognized in other comprehensive income		(3)		1		―		―		―		―
Total recognized in net periodic benefit cost and other comprehensive income	$	49	$	50	$	73	$	14	$	13	$	15

NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OTHER COMPREHENSIVE INCOME
(Dollars in millions)
	Pension Benefits						Other Postretirement Benefits
SoCalGas	2013		2012		2011		2013		2012		2011
Net Periodic Benefit Cost
Service cost	$	67	$	53	$	46	$	17	$	16	$	22
Interest cost		90		99		99		34		41		53
Expected return on assets		(98)		(96)		(85)		(48)		(44)		(40)
Amortization of:
Prior service cost (credit)		2		2		2		(8)		(7)		(4)
Actuarial loss		31		23		17		6		11		17
Settlement charge		―		1		1		―		―		―
Special termination benefits		―		―		―		2		―		―
Regulatory adjustment		(34)		(36)		12		6		5		5
Total net periodic benefit cost		58		46		92		9		22		53

Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income
Net loss (gain)		3		(4)		2		―		―		―
Amortization of actuarial loss		(1)		(1)		(1)		―		―		―
Total recognized in other comprehensive income		2		(5)		1		―		―		―
Total recognized in net periodic benefit cost and other comprehensive income	$	60	$	41	$	93	$	9	$	22	$	53

The estimated net loss for the pension plans that will be amortized from Accumulated Other Comprehensive Income (Loss) into net periodic benefit cost in 2014 is $10 million for Sempra Energy Consolidated, $1 million for SDG&E and $1 million for SoCalGas. Negligible amounts of prior service credit for the pension plans will be similarly amortized in 2014.

The Patient Protection and Affordable Care Act of 2010 was enacted in March 2010. We have incorporated the impact on costs of the provisions of this legislation into our determination of projected benefit obligations and accumulated benefit obligations for all of Sempra Energy's affected plans.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 establishes a prescription drug benefit under Medicare (Medicare Part D) and a tax-exempt federal subsidy to sponsors of retiree health-care benefit plans that provide a benefit that actuarially is at least equivalent to Medicare Part D. As a result of the ratification of the SoCalGas CBA on March 1, 2012, described above, there was a change in medical plans offered for post-age 65 medical benefits. SoCalGas now administers the Medicare Part D benefit through an EGWP. The EGWP allows a plan sponsor to contract with a Medicare Part D sponsor to receive the benefit of the subsidy through reduced premiums. We have determined that benefits provided to certain participants actuarially will be at least equivalent to Medicare Part D. Due to this election of an EGWP for SoCalGas' represented employees effective February 29, 2012, and the same election for all other employees on January 1, 2012, as of these dates, we are no longer entitled to a tax-exempt subsidy that reduces our accumulated postretirement benefit obligation under our plans and reduces our net periodic cost in future years.

Except for the Chilquinta Energía plans, we develop the discount rate assumptions based on the results of a third party modeling tool that develops the discount rate by matching each plan's expected cash flows to interest rates and expected maturity values of individually selected bonds in a hypothetical portfolio. The model controls the level of accumulated surplus that may result from the selection of bonds based solely on their premium yields by limiting the number of years to look back for selection to 3 years for pre-30-year and 6 years for post-30-year benefit payments. Additionally, the model ensures that an adequate number of bonds are selected in the portfolio by limiting the amount of the plan's benefit payments that can be met by a single bond to 7.5 percent.

We believe that this bond selection approach provides the best estimate of discount rates to estimate settlement values for our plans' benefit obligations as required by applicable U.S. GAAP.

We develop the discount rate assumptions for the plans at Chilquinta Energía based on 10-year Chilean government bond yields and the expected local long-term rate of inflation. This method for developing the discount rate is required when there is no deep market for high quality corporate bonds.

Long-term return on assets is based on the weighted-average of the plans' investment allocation as of the measurement date and the expected returns for those asset types.

The significant assumptions affecting benefit obligation and net periodic benefit cost are as follows:

WEIGHTED-AVERAGE ASSUMPTIONS USED TO DETERMINE BENEFIT OBLIGATION AT DECEMBER 31

	Pension Benefits				Other Postretirement Benefits
	2013		2012		2013		2012
Sempra Energy Consolidated
Discount rate	4.84	%	4.04	%	4.95	%	4.09	%
Rate of compensation increase	3.50-10.00		3.50-9.50		3.50-10.00		3.50-9.50
SDG&E
Discount rate	4.69	%	3.94	%	5.00	%	4.10	%
Rate of compensation increase	3.50-10.00		3.50-9.50		3.50-10.00		3.50-9.50
SoCalGas
Discount rate	4.94	%	4.10	%	4.95	%	4.10	%
Rate of compensation increase	3.50-10.00		3.50-9.50		3.50-10.00		3.50-9.50

WEIGHTED-AVERAGE ASSUMPTIONS USED TO DETERMINE NET PERIODIC BENEFIT COST FOR YEARS ENDED DECEMBER 31

	Pension Benefits						Other Postretirement Benefits
	2013		2012		2011		2013		2012		2011
Sempra Energy Consolidated
Discount rate	4.04	%	4.40-5.05	%	4.40-5.14	%	4.09	%	4.10-5.15	%	4.10-5.15	%
Expected return on plan assets	7.00		7.00		7.00		6.96		6.96		6.25
Rate of compensation increase	3.50-9.50		3.50-8.50		3.50-8.50		3.50-9.50		3.50-9.50		3.50-9.50
SDG&E
Discount rate	3.94	%	4.70-4.80	%	4.70-4.80	%	4.10	%	5.05	%	5.05	%
Expected return on plan assets	7.00		7.00		7.00		6.81		6.81		6.69
Rate of compensation increase	3.50-9.50		3.50-8.50		3.50-8.50		N/A		N/A		N/A
SoCalGas
Discount rate	4.10	%	4.70-5.05	%	4.70-5.05	%	4.10	%	5.15	%	5.15	%
Expected return on plan assets	7.00		7.00		7.00		7.00		7.00		7.00
Rate of compensation increase	3.50-9.50		3.50-8.50		3.50-8.50		3.50-9.50		3.50-9.50		3.50-9.50

Assumed health care cost trend rates have a significant effect on the amounts that we report for the health care plan costs. Following are the health care cost trend rates applicable to our postretirement benefit plans

		2013	2012
ASSUMED HEALTH CARE COST TREND RATES AT DECEMBER 31:
Health care cost trend rate		(1)	(2)
Rate to which the cost trend rate is assumed to decline (the ultimate trend)		(3)	(4)
Year that the rate reaches the ultimate trend		(5)	2020
(1)	8.25% for pre-65 retirees and 5.50% for retirees aged 65 years and older. For Mobile Gas, the health care cost trend rate is assumed to be 7.50%.
(2)	10.00% for pre-65 retirees and 8.25% for retirees aged 65 years and older. For Mobile Gas, the health care cost trend rate is assumed to be 8.00%.
(3)	5.00% for pre-65 retirees and 4.50% for retirees aged 65 years and older. For Mobile Gas, the rate to which the cost trend rate is assumed to decline is 5.00%.
(4)	5.00% for pre-65 retirees and 4.75% for retirees aged 65 years and older. For Mobile Gas, the rate to which the cost trend rate is assumed to decline is 5.00%.
(5)	2019 for Mobile Gas plan and 2020 for all other plans.

A one-percent change in assumed health care cost trend rates would have the following effects:

Sempra Energy's pension master trust holds the investments for the pension and other postretirement benefit plans. We maintain additional trusts as we discuss below for certain of the California Utilities' other postretirement benefit plans. Other than through indexing strategies, the trusts do not invest in securities of Sempra Energy.

The current asset allocation objective for the pension master trust is to protect the funded status of the plans while generating sufficient returns to cover future benefit payments and accruals. We assess the portfolio performance by comparing actual returns with relevant benchmarks. Currently, the pension plans' asset allocations are

The following are descriptions of the valuation methods and assumptions we use to estimate the fair values of investments held by pension and other postretirement benefit plan trusts.

Equity Securities — Equity securities are valued using quoted prices listed on nationally recognized securities exchanges.

Fixed Income Securities — Certain fixed income securities are valued at the closing price reported in the active market in which the security is traded. Other fixed income securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar securities, the security is valued under a discounted cash flows approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks.

Registered Investment Companies — Investments in mutual funds sponsored by a registered investment company are valued based on exchange listed prices for equity and certain fixed income securities or are valued under a discounted cash flows approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks for the remaining fixed income securities.

Common/Collective Trusts — Investments in common/collective trust funds are valued based on the redemption price of units owned, which is based on the current fair value of the funds' underlying assets.

Private Equity Funds — Investments in private equity funds do not trade in active markets. Fair value is determined by the fund managers, based upon their review of the underlying investments as well as their utilization of discounted cash flows and other valuation models.

Real Estate — Real estate investments are valued on the basis of a discounted cash flows approach, which includes the future rental receipts, expenses, and residual values for the highest and best use of the real estate from a market participant view as rental property.

The methods described are intended to produce a fair value calculation that is indicative of net realizable value or reflective of future fair values. However, while management believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

We provide more discussion of fair value measurements in Notes 1 and 10. The following tables set forth by level within the fair value hierarchy a summary of the investments in our pension and other postretirement benefit plan trusts measured at fair value on a recurring basis.

FAIR VALUE MEASUREMENTS — SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
		At fair value as of December 31, 2013
PENSION PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
SDG&E (see table below)		$	576	$	269	$	6	$	851
SoCalGas (see table below)			1,157		540		13		1,710
Other Sempra Energy
Equity securities:
Domestic(1)			79		―		―		79
Foreign			52		―		―		52
Registered investment companies			11		―		―		11
Fixed income securities:
U.S. Treasury securities			1		―		―		1
Domestic municipal bonds			―		3		―		3
Foreign government bonds			―		7		―		7
Domestic corporate bonds(2)			―		38		―		38
Foreign corporate bonds			―		13		―		13
Common/collective trusts(3)			―		5		―		5
Other types of investments:
Private equity funds(4) (stated at net asset value)			―		―		2		2
Total other Sempra Energy(5)			143		66		2		211
Total Sempra Energy Consolidated(6)		$	1,876	$	875	$	21	$	2,772

		At fair value as of December 31, 2012
PENSION PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
SDG&E (see table below)		$	530	$	241	$	6	$	777
SoCalGas (see table below)			1,074		485		13		1,572
Other Sempra Energy
Equity securities:
Domestic(1)			77		―		―		77
Foreign			54		―		―		54
Registered investment companies			2		―		―		2
Fixed income securities:
Domestic municipal bonds			―		3		―		3
Foreign government bonds			―		5		―		5
Domestic corporate bonds(2)			―		37		―		37
Foreign corporate bonds			―		13		―		13
Common/collective trusts(3)			―		2		―		2
Other types of investments:
Private equity funds(4) (stated at net asset value)			―		―		2		2
Total other Sempra Energy(5)			133		60		2		195
Total Sempra Energy Consolidated(6)		$	1,737	$	786	$	21	$	2,544
(1)	Investments in common stock of domestic corporations.
(2)	Bonds of U.S. issuers from diverse industries, primarily investment-grade.
(3)	Investments in common/collective trusts held in Sempra Energy’s Pension Master Trust.
(4)	Investments in venture capital and real estate funds.
(5)	Excludes cash and cash equivalents of $1 million at each of December 31, 2013 and 2012.
(6)	Excludes cash and cash equivalents of $17 million and $14 million at December 31, 2013 and 2012, respectively.

FAIR VALUE MEASUREMENTS — SDG&E
(Dollars in millions)
		At fair value as of December 31, 2013
PENSION PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
Equity securities:
Domestic(1)		$	317	$	―	$	―	$	317
Foreign			211		―		―		211
Foreign preferred			2		―		―		2
Registered investment companies			44		―		―		44
Fixed income securities:
U.S. Treasury securities			2		―		―		2
Domestic municipal bonds			―		11		―		11
Foreign government bonds			―		25		―		25
Domestic corporate bonds(2)			―		152		―		152
Domestic partnership bonds(2)			―		1		―		1
Foreign corporate bonds			―		55		―		55
Common/collective trusts(3)			―		25		―		25
Other types of investments:
Private equity funds(4) (stated at net asset value)			―		―		6		6
Total investment assets(5)		$	576	$	269	$	6	$	851

		At fair value as of December 31, 2012
PENSION PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
Equity securities:
Domestic(1)		$	307	$	―	$	―	$	307
Foreign			215		―		―		215
Foreign preferred			2		―		―		2
Registered investment companies			6		―		―		6
Fixed income securities:
Domestic municipal bonds			―		12		―		12
Foreign government bonds			―		22		―		22
Domestic corporate bonds(2)			―		147		―		147
Foreign corporate bonds			―		52		―		52
Common/collective trusts(3)			―		8		―		8
Other types of investments:
Private equity funds(4) (stated at net asset value)			―		―		6		6
Total investment assets(6)		$	530	$	241	$	6	$	777
(1)	Investments in common stock of domestic corporations.
(2)	Bonds of U.S. issuers from diverse industries, primarily investment-grade.
(3)	Investments in common/collective trusts held in Sempra Energy’s Pension Master Trust.
(4)	Investments in venture capital and real estate funds.
(5)	Excludes cash and cash equivalents of $5 million and transfers payable to other plans of $37 million.
(6)	Excludes cash and cash equivalents of $4 million.

FAIR VALUE MEASUREMENTS — SOCALGAS
(Dollars in millions)
		At fair value as of December 31, 2013
PENSION PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
Equity securities:
Domestic(1)		$	637	$	―	$	―	$	637
Foreign			423		―		―		423
Foreign preferred			4		―		―		4
Registered investment companies			89		―		―		89
Fixed income securities:
U.S. Treasury securities			4		―		―		4
Domestic municipal bonds			―		21		―		21
Foreign government bonds			―		51		―		51
Domestic corporate bonds(2)			―		306		―		306
Domestic partnership bonds(2)			―		2		―		2
Foreign corporate bonds			―		110		―		110
Common/collective trusts(3)			―		50		―		50
Other types of investments:
Private equity funds(4) (stated at net asset value)			―		―		13		13
Total investment assets(5)		$	1,157	$	540	$	13	$	1,710

		At fair value as of December 31, 2012
PENSION PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
Equity securities:
Domestic(1)		$	622	$	―	$	―	$	622
Foreign			436		―		―		436
Foreign preferred			4		―		―		4
Registered investment companies			12		―		―		12
Fixed income securities:
Domestic municipal bonds			―		24		―		24
Foreign government bonds			―		44		―		44
Domestic corporate bonds(2)			―		297		―		297
Foreign corporate bonds			―		105		―		105
Common/collective trusts(3)			―		15		―		15
Other types of investments:
Private equity funds(4) (stated at net asset value)			―		―		13		13
Total investment assets(6)		$	1,074	$	485	$	13	$	1,572
(1)	Investments in common stock of domestic corporations.
(2)	Bonds of U.S. issuers from diverse industries, primarily investment-grade.
(3)	Investments in common/collective trusts held in Sempra Energy’s Pension Master Trust.
(4)	Investments in venture capital and real estate funds.
(5)	Excludes cash and cash equivalents of $11 million and transfers receivable from other plans of $37 million.
(6)	Excludes cash and cash equivalents of $9 million.

The fair values by asset category of the postretirement benefit plan assets held in the pension master trust and in the additional trusts for SoCalGas' postretirement benefit plans and SDG&E's postretirement benefit plan (PBOP plan trusts) are as follows:

FAIR VALUE MEASUREMENTS — SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
		At fair value as of December 31, 2013
OTHER POSTRETIREMENT BENEFIT PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
SDG&E (see table below)		$	105	$	45	$	1	$	151
SoCalGas (see table below)			256		581		2		839
Other Sempra Energy
Equity securities:
Domestic(1)			4		―		―		4
Foreign			4		―		―		4
Registered investment companies			4		―		―		4
Fixed income securities:
Domestic corporate bonds(2)			―		3		―		3
Foreign government bonds			―		1		―		1
Foreign corporate bonds			―		1		―		1
Registered investment companies			―		1		―		1
Total other Sempra Energy			12		6		―		18
Total Sempra Energy Consolidated(3)		$	373	$	632	$	3	$	1,008

		At fair value as of December 31, 2012
OTHER POSTRETIREMENT BENEFIT PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
SDG&E (see table below)		$	87	$	38	$	1	$	126
SoCalGas (see table below)			213		514		2		729
Other Sempra Energy
Equity securities:
Domestic(1)			5		―		―		5
Foreign			1		―		―		1
Foreign preferred			1		―		―		1
Registered investment companies			3		1		―		4
Fixed income securities:
Domestic corporate bonds(2)			―		2		―		2
Foreign government bonds			―		1		―		1
Foreign corporate bonds			―		1		―		1
Total other Sempra Energy			10		5		―		15
Total Sempra Energy Consolidated(4)		$	310	$	557	$	3	$	870
(1)	Investments in common stock of domestic corporations.
(2)	Bonds of U.S. issuers from diverse industries, primarily investment-grade.
(3)	Excludes cash and cash equivalents of $4 million, $3 million and $1 million of which is held in SoCalGas and SDG&E PBOP plan trusts, respectively.
(4)	Excludes cash and cash equivalents of $3 million, all of which is held in SoCalGas PBOP plan trusts.

FAIR VALUE MEASUREMENTS — SDG&E
(Dollars in millions)
		At fair value as of December 31, 2013
OTHER POSTRETIREMENT BENEFIT PLAN - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
Equity securities:
Domestic(1)		$	37	$	―	$	―	$	37
Foreign			25		―		―		25
Registered investment companies			43		―		―		43
Fixed income securities:
Domestic municipal bonds(2)			―		3		―		3
Domestic corporate bonds(3)			―		18		―		18
Foreign government bonds			―		3		―		3
Foreign corporate bonds			―		6		―		6
Common/collective trusts(4)			―		3		―		3
Registered investment companies			―		12		―		12
Other types of investments:
Private equity funds(5) (stated at net asset value)			―		―		1		1
Total investment assets(6)		$	105	$	45	$	1	$	151

		At fair value as of December 31, 2012
OTHER POSTRETIREMENT BENEFIT PLAN - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
Equity securities:
Domestic(1)		$	32	$	―	$	―	$	32
Foreign			23		―		―		23
Registered investment companies			32		―		―		32
Fixed income securities:
Domestic municipal bonds(2)			―		3		―		3
Domestic corporate bonds(3)			―		15		―		15
Foreign government bonds			―		2		―		2
Foreign corporate bonds			―		5		―		5
Common/collective trusts(4)			―		1		―		1
Registered investment companies			―		12		―		12
Other types of investments:
Private equity funds(5) (stated at net asset value)			―		―		1		1
Total investment assets		$	87	$	38	$	1	$	126
(1)	Investments in common stock of domestic corporations.
(2)	Bonds of California municipalities held in SDG&E PBOP plan trusts.
(3)	Bonds of U.S. issuers from diverse industries, primarily investment-grade.
(4)	Investment in common/collective trusts held in PBOP plan VEBA trusts.
(5)	Investments in venture capital and real estate funds.
(6)	Excludes cash and cash equivalents of $1 million, all of which is held in SDG&E PBOP plan trusts, and transfers payable to other plans of $6 million.

FAIR VALUE MEASUREMENTS — SOCALGAS
(Dollars in millions)
		At fair value as of December 31, 2013
OTHER POSTRETIREMENT BENEFIT PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
Equity securities:
Domestic(1)		$	128	$	―	$	―	$	128
Foreign			83		―		―		83
Foreign preferred			1		―		―		1
Registered investment companies			43		―		―		43
Broad market funds			―		220		―		220
Fixed income securities:
U.S. Treasury securities			1		―		―		1
Domestic municipal bonds			―		4		―		4
Domestic corporate bonds(2)			―		60		―		60
Foreign government bonds			―		10		―		10
Foreign corporate bonds			―		22		―		22
Common/collective trusts(3)			―		262		―		262
Registered investment companies			―		3		―		3
Other types of investments:
Private equity funds(4) (stated at net asset value)			―		―		2		2
Total investment assets(5)		$	256	$	581	$	2	$	839

		At fair value as of December 31, 2012
OTHER POSTRETIREMENT BENEFIT PLANS - INVESTMENT ASSETS			Level 1		Level 2		Level 3		Total
Equity securities:
Domestic(1)		$	118	$	―	$	―	$	118
Foreign			84		―		―		84
Registered investment companies			11		―		―		11
Broad market funds			―		316		―		316
Fixed income securities:
Domestic municipal bonds			―		5		―		5
Domestic corporate bonds(2)			―		57		―		57
Foreign government bonds			―		8		―		8
Foreign corporate bonds			―		20		―		20
Common/collective trusts(3)			―		107		―		107
Registered investment companies			―		1		―		1
Other types of investments:
Private equity funds(4) (stated at net asset value)			―		―		2		2
Total investment assets(6)		$	213	$	514	$	2	$	729
(1)	Investments in common stock of domestic corporations.
(2)	Bonds of U.S. issuers from diverse industries, primarily investment-grade.
(3)	Investments in common/collective trusts held in PBOP plan VEBA trusts.
(4)	Investments in venture capital and real estate funds.
(5)	Excludes cash and cash equivalents of $3 million, all of which is held in SoCalGas PBOP plan trusts, and transfers receivable from other plans of $6 million.
(6)	Excludes cash and cash equivalents of $3 million, all of which is held in SoCalGas PBOP plan trusts.

The investments of the pension master trust allocated to the pension and postretirement benefit plans classified as Level 3 are private equity funds and represent a percentage of each plan's total allocated assets as follows at December 31:

	Private Equity Funds
	2013				2012
(Dollars in millions)	SDG&E	SoCalGas	All Other	Sempra Energy Consolidated	SDG&E	SoCalGas	All Other	Sempra Energy Consolidated
PENSION PLANS
Total Level 3 investment assets	$6	$13	$2	$21	$6	$13	$2	$21
Percentage of total investment assets	1%	1%	1%	1%	1%	1%	1%	1%
OTHER POSTRETIREMENT BENEFIT PLANS
Total Level 3 investment assets	$1	$2	$-	$3	$1	$2	$-	$3
Percentage of total investment assets	1%	-%	-%	-%	1%	-%	-%	-%

The following table provides a reconciliation of changes in the fair value of investments classified as Level 3:

LEVEL 3 RECONCILIATIONS
(Dollars in millions)
	Private Equity Funds
		SDG&E		SoCalGas		All Other		Sempra Energy Consolidated
PENSION PLANS
Balance as of January 1, 2012	$	7	$	15	$	2	$	24
Unrealized gains		2		4		―		6
Sales		(3)		(6)		―		(9)
Balance as of December 31, 2012		6		13		2		21
Realized gains		1		2		―		3
Unrealized losses		(1)		(1)		―		(2)
Sales		―		(1)		―		(1)
Balance as of December 31, 2013	$	6	$	13	$	2	$	21
OTHER POSTRETIREMENT BENEFIT PLANS
Balance as of January 1, 2012	$	1	$	3	$	―	$	4
Sales		―		(1)		―		(1)
Balance as of December 31, 2012 and 2013	$	1	$	2	$	―	$	3

In accordance with the Sempra Energy pension investment guidelines, derivative financial instruments are used by the pension master trust's equity and fixed income portfolio investment managers. Equity index future contracts are typically used to equitize cash. Foreign currency exchange transactions are used primarily to purchase foreign currency denominated shares or to hedge underlying exposure to foreign currency. Fixed income futures and options may be used as substitutes for certain types of fixed income securities.

We expect to contribute the following amounts to our pension and other postretirement benefit plans in 2014:

The following table shows the total benefits we expect to pay for the next 10 years to current employees and retirees from the plans or from company assets.

Under Chilean law, Chilquinta Energía is required to pay all employees either (1) 30 percent of Chilquinta Energía's taxable income after deducting a 10 percent return on equity, allocated in proportion to the annual salary of each employee or (2) 25 percent of each employee's annual salary, with a maximum mandatory profit sharing of 4.75 months of Chile's legal minimum salary. Chilquinta Energía has elected the second option but calculates the profit sharing amounts with actual employee salaries instead of the legal minimum salary, resulting in a higher cost. The amounts are paid out each pay period. Chilquinta Energía recorded annual profit sharing expense of $4 million for 2013, $6 million for 2012 and $5 million for 2011 related to this plan.

Under Peruvian law, Luz del Sur is required to pay their employees 5 percent of Luz del Sur's taxable income, paid once a year and allocated as follows: 50 percent based on each employee's annual hours worked and 50 percent based on each employee's annual salary. Luz del Sur recorded annual profit sharing expense of $9 million for 2013, $10 million for 2012 and $9 million for 2011 related to this plan.

Sempra Energy offers trusteed savings plans to all domestic employees. Participation in the plans is immediate for salary deferrals for all employees except for the represented employees at SoCalGas, who are eligible upon completion of one year of service. Subject to plan provisions, employees may contribute from one percent to 50 percent of their regular earnings, subject to annual IRS limits, when they begin employment. After one year of the employee's completed service, Sempra Energy makes matching contributions. Employer contribution amounts and methodology vary by plan, but generally the contributions are equal to 50 percent of the first 6 percent of eligible base salary contributed by employees and, if certain company goals are met, an additional amount related to incentive compensation payments.

Beginning September 1, 2012 for the Sempra Energy, SDG&E and Mobile Gas savings plans and October 1, 2012 for the SoCalGas savings plan, employer contributions are invested based upon each employee's investment elections in effect at the time of contribution. Prior to that, employer contributions were initially invested in Sempra Energy common stock, but the employee could transfer the contribution to other investments. Contributions are invested in Sempra Energy common stock, mutual funds and/or institutional trusts. Prior to the termination of the ESOP discussed below, employer contributions for substantially all plans were partially funded by the ESOP.

The market value of Sempra Energy common stock held by the savings plans was $1.3 billion and $1.1 billion at December 31, 2013 and 2012, respectively.

Sempra Energy terminated the ESOP effective June 30, 2012, as all ESOP debt was paid and all shares were released from the ESOP Trust as of that date. Prior to the plan's termination all contributions to the ESOP Trust (Trust) were made by Sempra Energy; there were no contributions made by the participants. The Trust was used to fund part of the retirement savings plan described above. As Sempra Energy made contributions, the ESOP debt service was paid and shares were released in proportion to the total expected debt service. We charged compensation expense and credited equity for the market value of the released shares. Dividends on unallocated shares were used to pay debt service and were applied against the liability. The shares held by the Trust were unallocated and consisted of 0.2 million shares of Sempra Energy common stock with a fair value of $8 million at December 31, 2011.

ESOP debt was paid down by a total of $34 million in 2012 and 2011 when 504,440 shares of Sempra Energy common stock were released from the Trust in order to fund employer contributions to the Sempra Energy savings plan trust. Interest on the ESOP debt was a negligible amount in each of 2012 and 2011. Dividends used for debt service consisted of a negligible amount in 2012 and $1 million in 2011.