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GENERAL INFORMATION AND OTHER FINANCIAL DATA (Tables)
 9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Cash and Cash Equivalents The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Condensed Consolidated Balance Sheets to the sum of such amounts reported on the 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,
 
2018
2017
Sempra Energy Consolidated:
 
 
Cash and cash equivalents
$
212

$
288

Restricted cash, current
73

62

Restricted cash, noncurrent
3

14

Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows
$
288

$
364

SDG&E:
 

 
Cash and cash equivalents
$
27

$
12

Restricted cash, current
17

6

Restricted cash, noncurrent
—

11

Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows
$
44

$
29
Schedule of Prior Period Adjustments We discuss our equity method investments further in Note 6. The following table summarizes the financial statement line items that were affected by this reclassification:
SEMPRA ENERGY – RECLASSIFICATION
(Dollars in millions)
 
 
 
Three months ended
September 30, 2017
 
Nine months ended
September 30, 2017
 
As previously presented
 
As currently presented
 
As previously presented
 
As currently presented
Condensed Consolidated Statement of Operations:
 
 
 
 
 
 
 
Equity earnings, before income tax
$
10

 
$
—

 
$
31

 
$
—

Income before income taxes and equity earnings (losses)
 
 
 
 
 
 
 
of certain unconsolidated subsidiaries
15

 
—

 
1,185

 
—

Income before income taxes and equity earnings of
 
 
 
 
 
 
 
unconsolidated subsidiaries
—

 
5

 
—

 
1,154

Equity earnings (losses), net of income tax
3

 
—

 
(5
)
 
—

Equity earnings
—

 
13

 
—

 
26
Inventory Table The following table presents the components of inventories by segment.
INVENTORY BALANCES
(Dollars in millions)
 
Natural gas
 
 
LNG
 
 
Materials and supplies
 
 
Total
 
September 30, 2018
 
December 31, 2017
 
 
September 30, 2018
 
December 31, 2017
 
 
September 30, 2018
 
December 31, 2017
 
 
September 30, 2018
 
December 31, 2017
SDG&E
$
1

 
$
4

 
 
$
—

 
$
—

 
 
$
102

 
$
101

 
 
$
103

 
$
105

SoCalGas
116

 
75

 
 
—

 
—

 
 
40

 
49

 
 
156

 
124

Sempra South American Utilities
—

 
—

 
 
—

 
—

 
 
41

 
30

 
 
41

 
30

Sempra Mexico
—

 
—

 
 
6

 
7

 
 
15

 
2

 
 
21

 
9

Sempra Renewables
—

 
—

 
 
—

 
—

 
 
—

 
5

 
 
—

 
5

Sempra LNG & Midstream
24

 
30

 
 
—

 
4

 
 
—

 
—

 
 
24

 
34

Sempra Energy Consolidated
$
141

 
$
109

 
 
$
6

 
$
11

 
 
$
198

 
$
187

 
 
$
345

 
$
307
Schedule of Finite-Lived Intangible Assets The following table provides the detail of Other Intangible Assets included on the Sempra Energy Condensed Consolidated Balance Sheets.
 
OTHER INTANGIBLE ASSETS
 
(Dollars in millions)
 
 
Amortization period (years)
 
September 30,
2018
 
December 31,
2017
 
 
Development rights
50
 
$
—

 
$
322

 
Renewable energy transmission and consumption permit
19
 
154

 
154

 
Storage rights
46
 
—

 
138

 
O&M agreement
23
 
66

 
66

 
Other
10 years to indefinite
 
32

 
18

 
 
 
 
252

 
698

 
Less accumulated amortization:
 
 
 
 
 
 
Development rights
 
 
—

 
(60
)
 
Renewable energy transmission and consumption permit
 
 
(14
)
 
(8
)
 
Storage rights
 
 
—

 
(28
)
 
O&M agreement
 
 
(2
)
 
—

 
Other
 
 
(7
)
 
(6
)
 
 
 
 
(23
)
 
(102
)
 
 
 
 
$
229

 
$
596
Variable Interest Entity Table The Condensed Consolidated Statements of Operations of Sempra Energy and SDG&E include the following amounts associated with Otay Mesa VIE. The amounts are net of eliminations of transactions between SDG&E and Otay Mesa VIE. The captions in the table below correspond to SDG&E’s Condensed Consolidated Statements of Operations.
AMOUNTS ASSOCIATED WITH OTAY MESA VIE
 
 
 
 
(Dollars in millions)
 
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Operating expenses
 
 
 
 
 
 
 
Cost of electric fuel and purchased power
$
(28
)
 
$
(26
)
 
$
(60
)
 
$
(65
)
Operation and maintenance
3

 
4

 
11

 
13

Depreciation and amortization
8

 
7

 
23

 
21

Total operating expenses
(17
)
 
(15
)
 
(26
)
 
(31
)
Operating income
17

 
15

 
26

 
31

Interest expense
(6
)
 
(6
)
 
(16
)
 
(16
)
Income before income taxes/Net income
11

 
9

 
10

 
15

Earnings attributable to noncontrolling interest
(11
)
 
(9
)
 
(10
)
 
(15
)
Earnings attributable to common shares
$
—

 
$
—

 
$
—

 
$
—

Sempra Energy’s Condensed Consolidated Statements of Operations include the following amounts associated with the tax equity limited liability companies, net of eliminations of transactions between Sempra Energy and these entities.
AMOUNTS ASSOCIATED WITH TAX EQUITY ARRANGEMENTS
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2018
2017
 
2018
2017
REVENUES
 
 
 
 
 
Energy-related businesses
$
28

$
17

 
$
77

$
48

EXPENSES
 
 
 
 
 
Operation and maintenance
(5
)
(5
)
 
(13
)
(14
)
Depreciation and amortization
(13
)
(8
)
 
(36
)
(24
)
Income before income taxes
10

4

 
28

10

Income tax expense
(4
)
(3
)
 
(16
)
(9
)
Net income
6

1

 
12

1

Losses attributable to noncontrolling interests(1)
9

6

 
50

16

Earnings attributable to common shares
$
15

$
7

 
$
62

$
17

(1)
Net income or loss attributable to NCI is computed using the HLBV method and is not based on ownership percentages.
Schedule of Asset Retirement Obligations changes in asset retirement obligations in the following table.
CHANGES IN ASSET RETIREMENT OBLIGATIONS
(Dollars in millions)
 
 
Sempra Energy
 
 
 
 
 
 
 
 
Consolidated
 
 SDG&E
 
 SoCalGas
 
 
2018
2017
 
2018
2017
 
2018
2017
Balance at January 1(1)
$
2,877

$
2,553

 
$
839

$
830

 
$
1,953

$
1,659

Accretion expense
90

81

 
29

30

 
58

49

Liabilities incurred
7

22

 
—

17

 
—

—

Reclassifications(2)
(60
)
—

 
—

—

 
—

—

Payments
(34
)
(44
)
 
(31
)
(43
)
 
(2
)
(1
)
Revisions
28

(8
)
 
29

—

 
(2
)
(8
)
Balance at September 30(1)
$
2,908

$
2,604

 
$
866

$
834

 
$
2,007

$
1,699

(1) 
Current portions of the obligations for Sempra Energy Consolidated and SoCalGas are included in Other Current Liabilities on the Condensed Consolidated Balance Sheets.
(2) 
In 2018, we reclassified $57 million at Sempra Renewables and $8 million at Sempra LNG & Midstream to Liabilities Held for Sale, and $5 million related to TdM from Liabilities Held for Sale, as we discuss in Note 5.
Net Periodic Benefit Cost Table The following three tables provide the components of net periodic benefit cost.
NET PERIODIC BENEFIT COST – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
 
Pension benefits
 
Other postretirement benefits
 
Three months ended September 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
29

 
$
31

 
$
4

 
$
4

Interest cost
36

 
39

 
9

 
9

Expected return on assets
(36
)
 
(41
)
 
(18
)
 
(16
)
Amortization of:
 
 
 
 
 
 
 
Prior service cost
3

 
3

 
—

 
—

Actuarial loss (gain)
7

 
11

 
(2
)
 
(2
)
Settlements
9

 
8

 
—

 
—

Special termination benefits
—

 
—

 
5

 
16

Net periodic benefit cost
48

 
51

 
(2
)
 
11

Regulatory adjustment
(11
)
 
(18
)
 
2

 
(11
)
Total expense recognized
$
37

 
$
33

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
95

 
$
88

 
$
15

 
$
15

Interest cost
105

 
113

 
27

 
29

Expected return on assets
(117
)
 
(121
)
 
(53
)
 
(49
)
Amortization of:
 
 
 
 
 
 
 
Prior service cost
8

 
8

 
—

 
—

Actuarial loss (gain)
26

 
27

 
(4
)
 
(3
)
Settlements
48

 
8

 
—

 
—

Special termination benefits
—

 
—

 
5

 
16

Net periodic benefit cost
165

 
123

 
(10
)
 
8

Regulatory adjustment
(91
)
 
(59
)
 
11

 
(7
)
Total expense recognized
$
74

 
$
64

 
$
1

 
$
1

NET PERIODIC BENEFIT COST – SDG&E
(Dollars in millions)
 
Pension benefits
 
Other postretirement benefits
 
Three months ended September 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
7

 
$
7

 
$
1

 
$
1

Interest cost
9

 
9

 
2

 
2

Expected return on assets
(10
)
 
(11
)
 
(3
)
 
(2
)
Amortization of:
 
 
 
 
 
 
 
Actuarial loss (gain)
—

 
3

 
(1
)
 
—

Settlements
1

 
—

 
—

 
—

Special termination benefits
—

 
—

 
3

 
—

Net periodic benefit cost
7

 
8

 
2

 
1

Regulatory adjustment
(7
)
 
(7
)
 
(2
)
 
(1
)
Total expense recognized
$
—

 
$
1

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
23

 
$
22

 
$
3

 
$
4

Interest cost
26

 
28

 
5

 
6

Expected return on assets
(35
)
 
(35
)
 
(10
)
 
(9
)
Amortization of:

 
 
 

 
 
Prior service cost
1

 
1

 
2

 
2

Actuarial loss (gain)
3

 
7

 
(2
)
 
—

Settlements
17

 
—

 
—

 
—

Special termination benefits
—

 
—

 
3

 
—

Net periodic benefit cost
35

 
23

 
1

 
3

Regulatory adjustment
(34
)
 
(21
)
 
(1
)
 
(3
)
Total expense recognized
$
1

 
$
2

 
$
—

 
$
—

NET PERIODIC BENEFIT COST – SOCALGAS
(Dollars in millions)
 
Pension benefits
 
Other postretirement benefits
 
Three months ended September 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
19

 
$
21

 
$
3

 
$
4

Interest cost
23

 
25

 
6

 
6

Expected return on assets
(22
)
 
(26
)
 
(13
)
 
(14
)
Amortization of:
 
 
 
 
 
 
 
Prior service cost (credit)
2

 
3

 
(1
)
 
(1
)
Actuarial loss (gain)
3

 
6

 
(1
)
 
(1
)
Settlements
2

 
—

 
—

 
—

Special termination benefits
—

 
—

 
2

 
16

Net periodic benefit cost
27

 
29

 
(4
)
 
10

Regulatory adjustment
(4
)
 
(11
)
 
4

 
(10
)
Total expense recognized
$
23

 
$
18

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
62

 
$
57

 
$
11

 
$
11

Interest cost
68

 
73

 
20

 
21

Expected return on assets
(73
)
 
(77
)
 
(41
)
 
(40
)
Amortization of:
 
 
 
 

 
 
Prior service cost (credit)
6

 
7

 
(2
)
 
(2
)
Actuarial loss (gain)
15

 
14

 
(2
)
 
(2
)
Settlements
25

 
—

 
—

 
—

Special termination benefits
—

 
—

 
2

 
16

Net periodic benefit cost
103

 
74

 
(12
)
 
4

Regulatory adjustment
(57
)
 
(38
)
 
12

 
(4
)
Total expense recognized
$
46

 
$
36

 
$
—

 
$
—
Contributions to Benefit Plans Table The following table shows our year-to-date contributions to pension and other postretirement benefit plans and the amounts we expect to contribute in 2018.
BENEFIT PLAN CONTRIBUTIONS
(Dollars in millions)
 
 
Sempra Energy
Consolidated
 
SDG&E
 
SoCalGas
Contributions through September 30, 2018:
 
 
 
 
 
 
Pension plans
 
$
76

 
$
3

 
$
46

Other postretirement benefit plans
 
2

 
—

 
1

Total expected contributions in 2018:
 
 
 
 
 
 
Pension plans
 
$
192

 
$
48

 
$
105

Other postretirement benefit plans
 
6

 
1

 
2
Earnings Per Share Computations Table The following table provides EPS computations for the three months and nine months ended September 30, 2018 and 2017. Basic EPS is calculated by dividing earnings attributable to common shares 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,
 
2018
 
2017
 
2018
 
2017
Numerator:
 
 
 
 
 
 
 
Earnings attributable to common shares
$
274

 
$
57

 
$
60

 
$
757

 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
Weighted-average common shares outstanding for basic EPS(1)
273,944

 
251,692

 
265,963

 
251,425

Dilutive effect of stock options, RSAs and RSUs(2)
854

 
1,672

 
736

 
1,562

Dilutive effect of common shares sold forward
1,109

 
—

 
945

 
—

Weighted-average common shares outstanding for diluted EPS
275,907

 
253,364

 
267,644

 
252,987

 
 
 
 
 
 
 
 
EPS:
 
 
 
 
 
 
 
Basic
$
1.00

 
$
0.23

 
$
0.23

 
$
3.01

Diluted
$
0.99

 
$
0.22

 
$
0.22

 
$
2.99

(1)
Includes 645 and 612 average fully vested RSUs held in our Deferred Compensation Plan for the three months ended September 30, 2018 and 2017, respectively, and 638 and 607 of such RSUs for the nine months ended September 30, 2018 and 2017, 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) 
Due to market fluctuations of both Sempra Energy 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 8 of the Notes to Consolidated Financial Statements in the Annual Report, dilutive RSUs may vary widely from period-to-period.
Capitalized Financing Costs Table
CAPITALIZED FINANCING COSTS
(Dollars in millions)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Sempra Energy Consolidated
$
49

 
$
54

 
$
157

 
$
198

SDG&E
20

 
21

 
67

 
62

SoCalGas
10

 
15

 
39

 
45
Schedule of Accumulated Other Comprehensive Income (Loss) Table 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, 2018 and 2017
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Balance as of June 30, 2018
$
(482
)
 
$
(40
)
 
$
(79
)
 
$
(601
)
OCI before reclassifications
(16
)
 
19

 
(18
)
 
(15
)
Amounts reclassified from AOCI
—

 
(4
)
 
8

 
4

Net OCI
(16
)
 
15

 
(10
)
 
(11
)
Balance as of September 30, 2018
$
(498
)
 
$
(25
)
 
$
(89
)
 
$
(612
)
 
 
 
 
 
.
 
 
Balance as of June 30, 2017
$
(478
)
 
$
(147
)
 
$
(93
)
 
$
(718
)
OCI before reclassifications
27

 
8

 
—

 
35

Amounts reclassified from AOCI
—

 
(2
)
 
7

 
5

Net OCI
27

 
6

 
7

 
40

Balance as of September 30, 2017
$
(451
)
 
$
(141
)
 
$
(86
)
 
$
(678
)
SDG&E:
 
 
 
 
 
 
 
Balance as of June 30, 2018
 
 
 
 
$
(8
)
 
$
(8
)
OCI before reclassifications
 
 
 
 
(6
)
 
(6
)
Net OCI
 
 
 
 
(6
)
 
(6
)
Balance as of September 30, 2018
 
 
 
 
$
(14
)
 
$
(14
)
 
 
 
 
 
 
 
 
Balance as of June 30, 2017
 
 
 
 
$
(8
)
 
$
(8
)
Amounts reclassified from AOCI
 
 
 
 
1

 
1

Net OCI
 
 
 
 
1

 
1

Balance as of September 30, 2017
 
 
 
 
$
(7
)
 
$
(7
)
SoCalGas:
 
 
 
 
 
 
 
Balance as of June 30, 2018 and September 30, 2018
 
 
$
(13
)
 
$
(7
)
 
$
(20
)
 
 
 
 
 
 
 
 
Balance as of June 30, 2017 and September 30, 2017
 
 
$
(13
)
 
$
(8
)
 
$
(21
)
(1) 
All amounts are net of income tax, if subject to tax, and exclude 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)
 
Nine months ended September 30, 2018 and 2017
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Balance as of December 31, 2017
$
(420
)
 
$
(122
)
 
$
(84
)
 
$
(626
)
Cumulative-effect adjustment from change in accounting principle(2)
—

 
(3
)
 
—

 
(3
)
OCI before reclassifications
(78
)
 
104

 
(17
)
 
9

Amounts reclassified from AOCI
—

 
(4
)
 
12

 
8

Net OCI
(78
)
 
100

 
(5
)
 
17

Balance as of September 30, 2018
$
(498
)
 
$
(25
)
 
$
(89
)
 
$
(612
)
 
 
 
 
 
 
 
 
Balance as of December 31, 2016
$
(527
)
 
$
(125
)
 
$
(96
)
 
$
(748
)
OCI before reclassifications
76

 
(20
)
 
—

 
56

Amounts reclassified from AOCI
—

 
4

 
10

 
14

Net OCI
76

 
(16
)
 
10

 
70

Balance as of September 30, 2017
$
(451
)
 
$
(141
)
 
$
(86
)
 
$
(678
)
SDG&E:
 
 
 
 
 
 
 
Balance as of December 31, 2017
 
 
 
 
$
(8
)
 
$
(8
)
OCI before reclassifications
 
 
 
 
(6
)
 
(6
)
Net OCI
 
 
 
 
(6
)
 
(6
)
Balance as of September 30, 2018
 
 
 
 
$
(14
)
 
$
(14
)
 
 
 
 
 
 
 
 
Balance as of December 31, 2016
 
 
 
 
$
(8
)
 
$
(8
)
Amounts reclassified from AOCI
 
 
 
 
1

 
1

Net OCI
 
 
 
 
1

 
1

Balance as of September 30, 2017
 
 
 
 
$
(7
)
 
$
(7
)
SoCalGas:
 
 
 
 
 
 
 
Balance as of December 31, 2017
 
 
$
(13
)
 
$
(8
)
 
$
(21
)
Amounts reclassified from AOCI
 
 
—

 
1

 
1

Net OCI
 
 
—

 
1

 
1

Balance as of September 30, 2018
 
 
$
(13
)
 
$
(7
)
 
$
(20
)
 
 
 
 
 
 
 
 
Balance as of December 31, 2016
 
 
$
(13
)
 
$
(9
)
 
$
(22
)
Amounts reclassified from AOCI
 
 
—

 
1

 
1

Net OCI
 
 
—

 
1

 
1

Balance as of September 30, 2017
 
 
$
(13
)
 
$
(8
)
 
$
(21
)
(1) 
All amounts are net of income tax, if subject to tax, and exclude NCI.
(2) 
Represents impact from adoption of ASU 2017-12, which we discuss in Note 2.
Reclassifications out of AOCI Table
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,
 
 
 
2018
 
2017
 
 
Sempra Energy Consolidated:
 
 
 
 
 
Financial instruments:
 
 
 
 
 
Interest rate and foreign exchange instruments
$
(11
)
 
$
—

 
Other Income, Net
Interest rate and foreign exchange instruments
3

 
—

 
Equity Earnings
Foreign exchange instruments
—

 
(2
)
 
Revenues: Energy-Related Businesses
Total before income tax
(8
)
 
(2
)
 
 
 
4

 
1

 
Income Tax (Expense) Benefit
Net of income tax
(4
)
 
(1
)
 
 
 
—

 
(1
)
 
Earnings Attributable to Noncontrolling Interests
 
$
(4
)
 
$
(2
)
 
 
Pension and other postretirement benefits:
 
 
 
 
 
Amortization of actuarial loss(1)
$
9

 
$
11

 
Other Income, Net
Amortization of prior service cost(1)
1

 
—

 
Other Income, Net
Total before income tax
10

 
11

 
 
 
(2
)
 
(4
)
 
Income Tax (Expense) Benefit
Net of income tax
$
8

 
$
7

 
 
 
 
 
 
 
 
Total reclassifications for the period, net of tax
$
4

 
$
5

 
 
SDG&E:
 
 
 
 
 
Financial instruments:
 
 
 
 
 
Interest rate instruments(2)
$
2

 
$
3

 
Interest Expense
 
(2
)
 
(3
)
 
Earnings Attributable to Noncontrolling Interest
 
$
—

 
$
—

 
 
Pension and other postretirement benefits:
 
 
 
 
 
Amortization of actuarial loss(1)
$
—

 
$
1

 
Other Income, Net
 
 
 
 
 
 
Total reclassifications for the period, net of tax
$
—

 
$
1

 
 

(1) 
Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits” above).
(2) 
All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE.

For the three months ended September 30, 2018 and 2017, reclassifications out of AOCI to net income were negligible for SoCalGas.
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
 
Nine months ended September 30,
 
 
 
2018
 
2017
 
 
Sempra Energy Consolidated:
 
 
 
 
 
Financial instruments:
 
 
 
 
 
Interest rate and foreign exchange instruments(1)
$
(1
)
 
$
(4
)
 
Interest Expense
 
(11
)
 
—

 
Other Income, Net
Interest rate and foreign exchange instruments
8

 
9

 
Equity Earnings
Foreign exchange instruments
(1
)
 
(1
)
 
Revenues: Energy-Related Businesses
Commodity contracts not subject to rate recovery
—

 
9

 
Revenues: Energy-Related Businesses
Total before income tax
(5
)
 
13

 
 
 
3

 
(4
)
 
Income Tax (Expense) Benefit
Net of income tax
(2
)
 
9

 
 
 
(2
)
 
(5
)
 
Earnings Attributable to Noncontrolling Interests
 
$
(4
)
 
$
4

 
 
Pension and other postretirement benefits:
 
 
 
 
 
Amortization of actuarial loss(2)
$
15

 
$
16

 
Other Income, Net
Amortization of prior service cost(2)
1

 
—

 
Other Income, Net
Total before income tax
16

 
16

 
 
 
(4
)
 
(6
)
 
Income Tax (Expense) Benefit
Net of income tax
$
12

 
$
10

 
 
 
 
 
 
 
 
Total reclassifications for the period, net of tax
$
8

 
$
14

 
 
SDG&E:
 
 
 
 
 
Financial instruments:
 
 
 
 
 
Interest rate instruments(1)
$
6

 
$
9

 
Interest Expense
 
(6
)
 
(9
)
 
Earnings Attributable to Noncontrolling Interest
 
$
—

 
$
—

 
 
Pension and other postretirement benefits:
 
 
 
 
 
Amortization of actuarial loss(2)
$
—

 
$
1

 
Other Income, Net
 
 
 
 
 
 
Total reclassifications for the period, net of tax
$
—

 
$
1

 
 
SoCalGas:
 

 
 

 
 
Pension and other postretirement benefits:
 

 
 

 
 
Amortization of actuarial loss(2)
$
1

 
$
1

 
Other Income, Net
Total reclassifications for the period, net of tax
$
1

 
$
1

 
 

(1) 
Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE.
(2) 
Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits” above).
Schedule of Conversion Rates of Convertible Debt Issued The following table illustrates the conversion rate per share of the series B preferred stock, subject to certain anti-dilution adjustments.
CONVERSION RATES
 
 
 
Applicable market value per share of
our common stock
 
Conversion rate (number of shares of our common stock to be received upon conversion of each share of series B preferred stock)
 
 
 
Greater than $136.50 (which is the threshold appreciation price)
 
0.7326 shares (approximately equal to $100.00 divided by the threshold appreciation price)
Equal to or less than $136.50 but greater than or equal to $113.75
 
Between 0.7326 and 0.8791 shares, determined by dividing $100.00 by the applicable market value of our common stock
Less than $113.75 (which is the initial price)
 
0.8791 shares (approximately equal to $100.00 divided by the initial price)
Ownership Interests Held By Others Table The following table provides information on noncontrolling ownership interests held by others (not including preferred shareholders) in Other Noncontrolling Interests in Total Equity on Sempra Energy’s Condensed Consolidated Balance Sheets.
OTHER NONCONTROLLING INTERESTS
(Dollars in millions)
 
 
 
Percent ownership held by noncontrolling interests
 
 Equity (deficit)
held by
noncontrolling interests
 
September 30,
2018
 
December 31,
2017
 
September 30,
2018
 
December 31,
2017
SDG&E:
 
 
 
 
 
 
 
Otay Mesa VIE
100
%
100
%
$
37

 
$
28

Sempra South American Utilities:
 
 
 
 
 
 
 
Chilquinta Energía subsidiaries(1)
19.8 – 43.4
 
22.9 – 43.4
 
23

 
24

Luz del Sur
16.4
 
16.4
 
193

 
189

Tecsur
9.8
 
9.8
 
4

 
4

Sempra Mexico:
 
 
 
 
 
 
 
IEnova(2)(3)
33.6
 
33.6
 
1,564

 
1,532

Sempra Renewables:
 
 
 
 
 
 
 
Tax equity arrangements – wind(4)
NA
 
 NA
 
161

 
181

Tax equity arrangements – solar(4)
NA
 
NA
 
495

 
450

PXiSE Energy Solutions, LLC
11.1
 
—
 
1

 
—

Sempra LNG & Midstream:
 
 
 
 
 
 
 
Bay Gas
9.1
 
9.1
 
8

 
28

Liberty Gas Storage, LLC
24.6
 
24.6
 
(12
)
 
14

Total Sempra Energy
 
 
 
 
$
2,474

 
$
2,450

(1) 
Chilquinta Energía has four subsidiaries with NCI held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries.
(2) 
IEnova has a subsidiary with a 10-percent NCI held by others. The equity held by NCI is negligible at both September 30, 2018 and December 31, 2017.
(3) 
IEnova has a subsidiary with a 49-percent NCI held by others. The equity held by NCI is $13 million at September 30, 2018.
(4) 
Net income or loss attributable to NCI is computed using the HLBV method and is not based on ownership percentages.
Transactions with Affiliates Table We summarize amounts due from and to unconsolidated affiliates at Sempra Energy Consolidated, SDG&E and SoCalGas in the following table.
AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES
(Dollars in millions)
 
September 30,
2018
 
December 31,
2017
Sempra Energy Consolidated:
 
 
 
Total due from various unconsolidated affiliates – current
$
43

 
$
37

 
 
 
 
Sempra South American Utilities(1):
 
 
 
Eletrans – 4% Note(2)
$
40

 
$
103

Other related party receivables
1

 
1

Sempra Mexico(1):
 
 
 
IMG – Note due March 15, 2022(3)
638

 
487

Energía Sierra Juárez – Note(4)
3

 
7

Total due from unconsolidated affiliates – noncurrent
$
682

 
$
598

 
 
 
 
Total due to various unconsolidated affiliates – current
$
(7
)
 
$
(7
)
 
 
 
 
Sempra Mexico(1):
 
 
 
Total due to unconsolidated affiliates – noncurrent – TAG – Note due December 20, 2021(5)
$
(36
)
 
$
(35
)
SDG&E:
 
 
 
Total due from unconsolidated affiliates – current – SoCalGas
$
1

 
$
—

 
 
 
 
Sempra Energy
$
(45
)
 
$
(30
)
SoCalGas
—

 
(4
)
Enova Corporation
(250
)
 
—

Various affiliates
(8
)
 
(6
)
Total due to unconsolidated affiliates – current
$
(303
)
 
$
(40
)
 
 
 
 
Income taxes due from Sempra Energy(6)
$
44

 
$
27

SoCalGas:
 
 
 
SDG&E
$
—

 
$
4

Sempra Energy(7)
49

 
—

Total due from unconsolidated affiliates – current
$
49

 
$
4

 
 
 
 
SDG&E
$
(1
)
 
$
—

Sempra Energy
—

 
(35
)
Pacific Enterprises
(50
)
 
—

Total due to unconsolidated affiliates – current
$
(51
)
 
$
(35
)
 
 
 
 
Income taxes due from Sempra Energy(6)
$
3

 
$
10

(1) 
Amounts include principal balances plus accumulated interest outstanding.
(2) 
U.S. dollar-denominated loan, at a fixed interest rate with no stated maturity date, to provide project financing for the construction of transmission lines at Eletrans, comprising joint ventures of Chilquinta Energía.
(3) 
Mexican peso-denominated revolving line of credit for up to $14.2 billion Mexican pesos or approximately $757 million U.S. dollar-equivalent, at a variable interest rate based on the 91-day Interbank Equilibrium Interest Rate plus 220 bps (10.37 percent at September 30, 2018), to finance construction of the natural gas marine pipeline.
(4) 
U.S. dollar-denominated loan, at a variable interest rate based on the 30-day LIBOR plus 637.5 bps (8.63 percent at September 30, 2018) with no stated maturity date, to finance the first phase of the Energía Sierra Juárez wind project, which is a joint venture of IEnova.
(5) 
U.S. dollar-denominated loan, at a variable interest rate based on the 6-month LIBOR plus 290 bps (5.50 percent at September 30, 2018).
(6) 
SDG&E and SoCalGas are included in the consolidated income tax return of Sempra Energy and are allocated income tax expense from Sempra Energy in an amount equal to that which would result from each company having always filed a separate return.
(7) 
At September 30, 2018, net receivable included outstanding advances to Sempra Energy of $88 million at an interest rate of 2.35 percent.
The following table summarizes revenues and cost of sales from unconsolidated affiliates.
REVENUES AND COST OF SALES FROM UNCONSOLIDATED AFFILIATES
 
 
 
 
(Dollars in millions)
 
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
Sempra Energy Consolidated
$
17

 
$
13

 
$
49

 
$
28

SDG&E
1

 
2

 
4

 
6

SoCalGas
15

 
21

 
47

 
56

Cost of Sales:
 
 
 
 
 
 
 
Sempra Energy Consolidated
$
9

 
$
8

 
$
36

 
$
36

SDG&E
21

 
16

 
56

 
55
Other Income and Expense Table Other Income, Net on the Condensed Consolidated Statements of Operations consisted of the following:
OTHER INCOME, NET
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017(1)
 
2018
 
2017(1)
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Allowance for equity funds used during construction
$
23

 
$
27

 
$
79

 
$
139

Investment gains(2)
8

 
13

 
13

 
43

Gains on interest rate and foreign exchange instruments, net
39

 
5

 
46

 
99

Foreign currency transaction gains (losses), net(3)
28

 
(10
)
 
17

 
7

Non-service component of net periodic benefit (cost) credit
(4
)
 
(1
)
 
35

 
21

Interest on regulatory balancing accounts, net
1

 
1

 
2

 
3

Sundry, net
2

 
5

 
4

 
10

Total
$
97

 
$
40

 
$
196

 
$
322

SDG&E:
 
 
 
 
 
 
 
Allowance for equity funds used during construction
$
15

 
$
15

 
$
49

 
$
46

Non-service component of net periodic benefit credit
8

 
4

 
25

 
12

Interest on regulatory balancing accounts, net
2

 
1

 
4

 
3

Sundry, net
(1
)
 
—

 
(1
)
 
—

Total
$
24

 
$
20

 
$
77

 
$
61

SoCalGas:
 
 
 
 
 
 
 
Allowance for equity funds used during construction
$
8

 
$
11

 
$
30

 
$
33

Non-service component of net periodic benefit (cost) credit
(1
)
 
5

 
27

 
23

Interest on regulatory balancing accounts, net
(1
)
 
—

 
(2
)
 
—

Sundry, net
(3
)
 
(3
)
 
(6
)
 
(5
)
Total
$
3

 
$
13

 
$
49

 
$
51

(1) 
As adjusted for the retrospective adoption of ASU 2017-07, which we discuss in Note 2.
(2) 
Represents investment gains on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are partially offset by corresponding changes in compensation expense related to the plans, recorded in O&M on the Condensed Consolidated Statements of Operations.
(3) 
Includes gains of $33 million and $25 million in the three months and nine months ended September 30, 2018, respectively, and losses of $6 million and a negligible amount in the three months and nine months ended September 30, 2017, respectively, from translation to U.S. dollars of a Mexican peso-denominated loan to the IMG joint venture, which are offset by corresponding amounts included in Equity Earnings on the Condensed Consolidated Statements of Operations.
Income Tax Expense and Effective Income Tax Rates Table
INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Income tax expense (benefit)
$
167

 
$
(84
)
 
$
(127
)
 
$
378

 
 
 
 
 
 
 
 
Income (loss) before income taxes and equity earnings
 
 
 
 
 
 
 
 of unconsolidated subsidiaries
$
427

 
$
5

 
$
(15
)
 
$
1,154

Equity (losses) earnings, before income tax(1)
(52
)
 
10

 
(236
)
 
31

Pretax income (loss)
$
375

 
$
15

 
$
(251
)
 
$
1,185

 
 
 
 
 
 
 
 
Effective income tax rate
45
%
 
(560
)%
 
51
%
 
32
%
SDG&E:
 
 
 
 
 
 
 
Income tax expense (benefit)
$
53

 
$
(72
)
 
$
151

 
$
72

Income (loss) before income taxes
$
269

 
$
(91
)
 
$
682

 
$
363

Effective income tax rate
20
%
 
79
 %
 
22
%
 
20
%
SoCalGas:
 
 
 
 
 
 
 
Income tax (benefit) expense
$
(7
)
 
$
(14
)
 
$
75

 
$
103

(Loss) income before income taxes
$
(21
)
 
$
(7
)
 
$
320

 
$
372

Effective income tax rate
33
%
 
200
 %
 
23
%
 
28
%

(1) 
We discuss how we recognize equity earnings in Note 6.