REGULATORY MATTERS (Tables)

3 Months Ended

Mar. 31, 2018

Regulated Operations [Abstract]

Schedule of Regulatory Assets

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

REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	March 31, 2018			December 31, 2017
SDG&E:
Fixed-price contracts and other derivatives	$	103		$	96
Deferred income taxes refundable in rates	(305		)	(281		)
Pension and other postretirement benefit plan obligations	170			153
Removal obligations	(1,827		)	(1,846		)
Unamortized loss on reacquired debt	8			9
Environmental costs	29			29
Sunrise Powerlink fire mitigation	120			119
Regulatory balancing accounts(1)
Commodity – electric	112			82
Gas transportation	19			22
Safety and reliability	52			48
Public purpose programs	(83		)	(70		)
Other balancing accounts	149			233
Other regulatory liabilities	(89		)	(70		)
Total SDG&E	(1,542		)	(1,476		)
SoCalGas:
Pension and other postretirement benefit plan obligations	529			513
Employee benefit costs	45			45
Removal obligations	(910		)	(924		)
Deferred income taxes refundable in rates	(395		)	(437		)
Unamortized loss on reacquired debt	7			8
Environmental costs	21			22
Workers’ compensation	12			12
Regulatory balancing accounts(1)
Commodity – gas, including transportation	168			151
Safety and reliability	275			266
Public purpose programs	(353		)	(274		)
Other balancing accounts	(149		)	(114		)
Other regulatory liabilities	(85		)	(64		)
Total SoCalGas	(835		)	(796		)
Sempra Mexico:
Deferred income taxes recoverable in rates	83			83
Total Sempra Energy Consolidated	$	(2,294	)	$	(2,189	)

⁽¹⁾ 

At March 31, 2018 and December 31, 2017, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $72 million and $63 million, respectively. At March 31, 2018 and December 31, 2017, the noncurrent portion of regulatory balancing accounts – net undercollected for SoCalGas was $141 million and $118 million, respectively.

Schedule of Regulatory Liabilities

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

REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	March 31, 2018			December 31, 2017
SDG&E:
Fixed-price contracts and other derivatives	$	103		$	96
Deferred income taxes refundable in rates	(305		)	(281		)
Pension and other postretirement benefit plan obligations	170			153
Removal obligations	(1,827		)	(1,846		)
Unamortized loss on reacquired debt	8			9
Environmental costs	29			29
Sunrise Powerlink fire mitigation	120			119
Regulatory balancing accounts(1)
Commodity – electric	112			82
Gas transportation	19			22
Safety and reliability	52			48
Public purpose programs	(83		)	(70		)
Other balancing accounts	149			233
Other regulatory liabilities	(89		)	(70		)
Total SDG&E	(1,542		)	(1,476		)
SoCalGas:
Pension and other postretirement benefit plan obligations	529			513
Employee benefit costs	45			45
Removal obligations	(910		)	(924		)
Deferred income taxes refundable in rates	(395		)	(437		)
Unamortized loss on reacquired debt	7			8
Environmental costs	21			22
Workers’ compensation	12			12
Regulatory balancing accounts(1)
Commodity – gas, including transportation	168			151
Safety and reliability	275			266
Public purpose programs	(353		)	(274		)
Other balancing accounts	(149		)	(114		)
Other regulatory liabilities	(85		)	(64		)
Total SoCalGas	(835		)	(796		)
Sempra Mexico:
Deferred income taxes recoverable in rates	83			83
Total Sempra Energy Consolidated	$	(2,294	)	$	(2,189	)

⁽¹⁾ 

At March 31, 2018 and December 31, 2017, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $72 million and $63 million, respectively. At March 31, 2018 and December 31, 2017, the noncurrent portion of regulatory balancing accounts – net undercollected for SoCalGas was $141 million and $118 million, respectively.

Proposed Revenue Requirements

In October 2017, the CPUC approved the embedded cost of debt presented in the filed advice letters, resulting in a revised return on rate base for SDG&E of 7.55 percent and for SoCalGas of 7.34 percent, effective January 1, 2018, as depicted in the table below:

AUTHORIZED COST OF CAPITAL AND RATE STRUCTURE – CPUC
SDG&E							SoCalGas
Authorized weighting		Return on rate base		Weighted return on rate base			Authorized weighting		Return on rate base		Weighted return on rate base
45.25	%	4.59	%	2.08	%	Long-Term Debt	45.60	%	4.33	%	1.97	%
2.75		6.22		0.17		Preferred Stock	2.40		6.00		0.14
52.00		10.20		5.30		Common Equity	52.00		10.05		5.23
100.00	%			7.55	%		100.00	%			7.34	%

As a result of the updates included in the filed advice letters, the impact of the changes to the embedded cost of debt and return on rate base is summarized below:

IMPACT OF THE EMBEDDED COST OF DEBT
	SDG&E						SoCalGas
	Cost of debt			Return on rate base			Cost of debt			Return on rate base
Previously	5.00		%	7.79		%	5.77		%	8.02		%
Authorized, effective January 1, 2018	4.59		%	7.55		%	4.33		%	7.34		%
Differences	(41	)	bps	(24	)	bps	(144	)	bps	(68	)	bps