|
|||||||||
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|
|||||||||
FORM 10-K
|
|||||||||
(Mark One)
|
|||||||||
[X]
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
||||||||
For the fiscal year ended
|
December 31, 2013
|
||||||||
OR
|
|||||||||
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
||||||||
For the transition period from
|
to
|
||||||||
Commission File No.
|
Exact Name of Registrants as Specified in their Charters, Address and Telephone Number
|
State of Incorporation
|
I.R.S. Employer
Identification Nos.
|
||||||
1-14201
|
SEMPRA ENERGY
|
California
|
33-0732627
|
||||||
101 Ash Street
|
|||||||||
San Diego, California 92101
|
|||||||||
(619)696-2000
|
|||||||||
1-03779
|
SAN DIEGO GAS & ELECTRIC COMPANY
|
California
|
95-1184800
|
||||||
8326 Century Park Court
|
|||||||||
San Diego, California 92123
|
|||||||||
(619)696-2000
|
|||||||||
1-01402
|
SOUTHERN CALIFORNIA GAS COMPANY
|
California
|
95-1240705
|
||||||
555 West Fifth Street
|
|||||||||
Los Angeles, California 90013
|
|||||||||
(213)244-1200
|
|||||||||
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
|
|||||||||
Title of Each Class
|
Name of Each Exchange on Which Registered
|
||||||||
Sempra Energy Common Stock, without par value
|
NYSE
|
||||||||
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
|
|||||||||
Southern California Gas Company Preferred Stock, $25 par value
6% Series A, 6% Series
|
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
|
|||||
Sempra Energy
|
Yes
|
X
|
No
|
||
San Diego Gas & Electric Company
|
Yes
|
No
|
X
|
||
Southern California Gas Company
|
Yes
|
No
|
X
|
||
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
|
|||||
Sempra Energy
|
Yes
|
No
|
X
|
||
San Diego Gas & Electric Company
|
Yes
|
No
|
X
|
||
Southern California Gas Company
|
Yes
|
No
|
X
|
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
|
|||||||||
Yes
|
X
|
No
|
|||||||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
|
|||||||||
Sempra Energy
|
Yes
|
X
|
No
|
||||||
San Diego Gas & Electric Company
|
Yes
|
X
|
No
|
||||||
Southern California Gas Company
|
Yes
|
X
|
No
|
||||||
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
|
|||||||||
Sempra Energy
|
X
|
||||||||
San Diego Gas & Electric Company
|
X
|
||||||||
Southern California Gas Company
|
X
|
||||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|
|||||||||
Large
accelerated filer
|
Accelerated filer
|
Non-accelerated filer
|
Smaller reporting company
|
||||||
Sempra Energy
|
[ X ]
|
[ ]
|
[ ]
|
[ ]
|
|||||
San Diego Gas & Electric Company
|
[ ]
|
[ ]
|
[ X ]
|
[ ]
|
|||||
Southern California Gas Company
|
[ ]
|
[ ]
|
[ X ]
|
[ ]
|
|||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
|
|||||||||
Sempra Energy
|
Yes
|
No
|
X
|
||||||
San Diego Gas & Electric Company
|
Yes
|
No
|
X
|
||||||
Southern California Gas Company
|
Yes
|
No
|
X
|
||||||
Aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2013:
|
|
Sempra Energy
|
$19.9 billion (based on the price at which the common equity was last sold as of the last business day of the most recently completed second fiscal quarter)
|
San Diego Gas & Electric Company
|
$0
|
Southern California Gas Company
|
$0
|
Common Stock outstanding, without par value, as of February 21, 2014:
|
|
Sempra Energy
|
245,089,822 shares
|
San Diego Gas & Electric Company
|
Wholly owned by Enova Corporation, which is wholly owned by Sempra Energy
|
Southern California Gas Company
|
Wholly owned by Pacific Enterprises, which is wholly owned by Sempra Energy
|
SAN DIEGO GAS & ELECTRIC COMPANY MEETS THE CONDITIONS OF GENERAL INSTRUCTIONS I(1)(a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS REPORT WITH A REDUCED DISCLOSURE FORMAT AS PERMITTED BY GENERAL INSTRUCTION 1(2).
DOCUMENTS INCORPORATED BY REFERENCE:
|
|||||
Portions of the 2013 Annual Report to Shareholders of Sempra Energy, San Diego Gas & Electric Company and Southern California Gas Company are incorporated by reference into Parts I, II and IV.
|
|||||
Portions of the Sempra Energy Proxy Statement prepared for its May 2014 annual meeting of shareholders are incorporated by reference into Part III.
|
|||||
Portions of the Southern California Gas Company Information Statement prepared for its June 2014 annual meeting of shareholders are incorporated by reference into Part III.
|
|||||
|
SEMPRA ENERGY FORM 10-K
SAN DIEGO GAS & ELECTRIC COMPANY FORM 10-K
SOUTHERN CALIFORNIA GAS COMPANY FORM 10-K
TABLE OF CONTENTS
|
|||
Page
|
|||
Information Regarding Forward-Looking Statements
|
6
|
||
PART I
|
|||
Item 1.
|
Business
|
7
|
|
Description of Business
|
7
|
||
Company Websites
|
7
|
||
Government Regulation
|
8
|
||
California Natural Gas Utility Operations
|
11
|
||
Electric Utility Operations
|
12
|
||
Rates and Regulation – Utilities
|
16
|
||
Sempra International and Sempra U.S. Gas & Power
|
16
|
||
Environmental Matters
|
18
|
||
Executive Officers of the Registrants
|
19
|
||
Other Matters
|
20
|
||
Item 1A.
|
Risk Factors
|
22
|
|
Item 1B.
|
Unresolved Staff Comments
|
35
|
|
Item 2.
|
Properties
|
35
|
|
Item 3.
|
Legal Proceedings
|
36
|
|
Item 4.
|
Mine Safety Disclosures
|
36
|
|
PART II
|
|||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
37
|
|
Item 6.
|
Selected Financial Data
|
38
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
38
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
38
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
38
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
38
|
|
Item 9A.
|
Controls and Procedures
|
38
|
|
Item 9B.
|
Other Information
|
38
|
|
PART III
|
|||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
39
|
|
Item 11.
|
Executive Compensation
|
39
|
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
39
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
39
|
|
Item 14.
|
Principal Accountant Fees and Services
|
40
|
|
SEMPRA ENERGY FORM 10-K
SAN DIEGO GAS & ELECTRIC COMPANY FORM 10-K
SOUTHERN CALIFORNIA GAS COMPANY FORM 10-K
TABLE OF CONTENTS (CONTINUED)
|
Page
|
|||
PART IV
|
|||
Item 15.
|
Exhibits, Financial Statement Schedules
|
42
|
|
Sempra Energy: Consent of Independent Registered Public Accounting Firm and Report on Schedule
|
43
|
||
San Diego Gas & Electric Company: Consent of Independent Registered Public Accounting Firm
|
44
|
||
Southern California Gas Company: Consent of Independent Registered Public Accounting Firm
|
45
|
||
Schedule I – Sempra Energy Condensed Financial Information of Parent
|
46
|
||
Signatures
|
51
|
||
Exhibit Index
|
54
|
||
Glossary
|
64
|
||
§
|
local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments;
|
§
|
actions and the timing of actions, including issuances of permits to construct and licenses for operation, by the California Public Utilities Commission, California State Legislature, U.S. Department of Energy, Federal Energy Regulatory Commission, Nuclear Regulatory Commission, Atomic Safety and Licensing Board, California Energy Commission, California Air Resources Board, and other regulatory, governmental and environmental bodies in the United States and other countries in which we operate;
|
§
|
capital markets conditions, including the availability of credit and the liquidity of our investments;
|
§
|
the timing and success of business development efforts and construction, maintenance and capital projects, including risks in obtaining permits, licenses, certificates and other authorizations on a timely basis and risks in obtaining adequate and competitive financing for such projects;
|
§
|
inflation, interest and exchange rates;
|
§
|
the impact of benchmark interest rates, generally Moody’s A-rated utility bond yields, on our California Utilities’ cost of capital;
|
§
|
energy markets, including the timing and extent of changes and volatility in commodity prices;
|
§
|
the availability of electric power, natural gas and liquefied natural gas, including disruptions caused by failures in the North American transmission grid, pipeline explosions and equipment failures and the decommissioning of San Onofre Nuclear Generating Station (SONGS);
|
§
|
weather conditions, natural disasters, catastrophic accidents, and conservation efforts;
|
§
|
risks inherent with nuclear power facilities and radioactive materials storage, including the catastrophic release of such materials, the disallowance of the recovery of the investment in, or operating costs of, the nuclear facility due to an extended outage and facility closure, and increased regulatory oversight;
|
§
|
risks posed by decisions and actions of third parties who control the operations of investments in which we do not have a controlling interest;
|
§
|
wars, terrorist attacks and cybersecurity threats;
|
§
|
business, regulatory, environmental and legal decisions and requirements;
|
§
|
expropriation of assets by foreign governments and title and other property disputes;
|
§
|
the impact on reliability of San Diego Gas & Electric Company’s electric transmission and distribution system due to increased amount and variability of power supply from renewable energy sources;
|
§
|
the impact on competitive customer rates of the growth in distributed and local power generation and the corresponding decrease in demand for power delivered through our electric transmission and distribution system;
|
§
|
the inability or determination not to enter into long-term supply and sales agreements or long-term firm capacity agreements;
|
§
|
the resolution of litigation; and
|
§
|
other uncertainties, all of which are difficult to predict and many of which are beyond our control.
|
§
|
Sempra Energy and its consolidated entities
|
§
|
San Diego Gas & Electric Company (SDG&E)
|
§
|
Southern California Gas Company (SoCalGas)
|
§
|
SDG&E and SoCalGas, which are separate, reportable segments;
|
§
|
Sempra International, which includes our Sempra South American Utilities and Sempra Mexico reportable segments; and
|
§
|
Sempra U.S. Gas & Power, which includes our Sempra Renewables and Sempra Natural Gas reportable segments.
|
§
|
consists of five commissioners appointed by the Governor of California for staggered, six-year terms.
|
§
|
regulates SDG&E’s and SoCalGas’ rates and conditions of service, sales of securities, rates of return, capital structure, rates of depreciation, and long-term resource procurement, except as described below in “United States Utility Regulation.”
|
§
|
has jurisdiction over the proposed construction of major new electric generation, transmission and distribution, and natural gas storage, transmission and distribution facilities in California.
|
§
|
conducts reviews and audits of utility performance and compliance with regulatory guidelines, and conducts investigations into various matters, such as deregulation, competition and the environment, to determine its future policies.
|
§
|
regulates the interactions and transactions of the California Utilities with Sempra Energy and its other affiliates.
|
§
|
determines the need for additional energy sources and conservation programs;
|
§
|
sponsors alternative-energy research and development projects;
|
§
|
promotes energy conservation programs;
|
§
|
maintains a statewide plan of action in case of energy shortages; and
|
§
|
certifies power-plant sites and related facilities within California.
|
§
|
electric franchises with the three counties and the 27 cities in or adjoining its electric service territory; and
|
§
|
natural gas franchises with the one county and the 18 cities in its natural gas service territory.
|
§
|
Sempra Renewables and Sempra Natural Gas: market-based for wholesale electricity sales
|
§
|
Sempra Natural Gas: cost-based and market-based for the transportation and storage of natural gas, respectively
|
§
|
Sempra Natural Gas: market-based for the receipt, storage, and vaporization of LNG and liquefaction of natural gas and the purchase and sale of LNG and natural gas
|
§
|
a natural gas-fired power plant in Baja California, Mexico
|
§
|
natural gas distribution systems in Mexicali, Chihuahua, and the La Laguna-Durango zone in north-central Mexico
|
§
|
natural gas pipelines between the U.S. border and Baja California, Mexico and Sonora, Mexico. Sempra Mexico also owns a 50-percent interest in a joint venture with PEMEX (the Mexican state-owned oil company) that operates several natural gas pipelines and propane systems in Mexico
|
§
|
the Energía Costa Azul LNG terminal located in Baja California, Mexico
|
§
|
5,568,200 residential
|
§
|
246,700 commercial
|
§
|
27,000 industrial
|
§
|
40 electric generation and wholesale
|
§
|
832,000 residential
|
§
|
28,600 commercial
|
§
|
3,700 electric generation and cogeneration
|
§
|
1,252,400 residential
|
§
|
148,000 commercial
|
§
|
500 industrial
|
§
|
2,100 street and highway lighting
|
§
|
5,400 direct access
|
SDG&E ELECTRIC RESOURCES
|
|||||||
Resource
|
|
Number of Contracts
|
|
Expiration date
|
Megawatts (MW)
|
||
PURCHASED-POWER CONTRACTS:
|
|
|
|
|
|
|
|
Contracts with Qualifying Facilities (QFs)(1):
|
|
|
|
|
|
|
|
|
Cogeneration
|
|
4
|
|
2015 and thereafter
|
|
246
|
|
|
|
|
|
|
|
|
Other contracts with renewable sources:
|
|
|
|
|
|
|
|
|
Wind
|
|
9
|
|
2018 - 2033
|
|
1,056
|
|
Solar PV
|
|
6
|
|
2033 - 2038
|
|
565
|
|
Bio-gas/Hydro/Wind
|
|
21
|
|
2014 and thereafter
|
|
46
|
|
Biomass
|
|
2
|
|
2017, 2025
|
|
60
|
|
Geothermal
|
|
1
|
|
2014
|
|
25
|
|
Total
|
|
|
|
|
|
1,752
|
|
|
|
|
|
|
|
|
Other long-term and tolling contracts(2):
|
|
|
|
|
|
|
|
|
Natural gas
|
|
3
|
|
2019 - 2035
|
|
752
|
|
Hydro/Pump storage
|
|
1
|
|
2037
|
|
40
|
|
Demand response/Distributed generation
|
|
1
|
|
2016
|
|
25
|
|
Total
|
|
|
|
|
|
817
|
Total contracted
|
|
|
|
|
|
2,815
|
|
|
|
|
|
|
|
|
|
OWNED GENERATION, NATURAL GAS:
|
|
|
|
|
|
|
|
|
Palomar Energy Center
|
|
|
|
|
|
560
|
|
Miramar Energy Center
|
|
|
|
|
|
96
|
|
Desert Star Energy Center
|
|
|
|
|
|
495
|
|
Cuyamaca Peak Energy Plant
|
|
|
|
|
|
42
|
Total generation
|
|
|
|
|
|
1,193
|
|
TOTAL CONTRACTED AND GENERATION
|
|
|
|
|
|
4,008
|
|
(1)
|
A QF is a generating facility which meets the requirements for QF status under the Public Utility Regulatory Policies Act of 1978. It includes cogeneration facilities, which produce electricity and another form of useful thermal energy (such as heat or steam) used for industrial, commercial, residential or institutional purposes.
|
||||||
(2)
|
Tolling contracts are purchased-power agreements under which SDG&E provides the fuel for generation to the energy supplier.
|
§
|
590,500 residential
|
§
|
37,200 commercial
|
§
|
1,400 industrial
|
§
|
5,900 street and highway lighting
|
§
|
4,700 agricultural
|
CHILQUINTA ENERGÍA ELECTRIC RESOURCES
|
|||||||
Resource
|
|
Number of Contracts
|
|
Expiration date
|
Megawatts (MW)
|
||
PURCHASED-POWER CONTRACTS(1)(2):
|
|
|
|
|
|||
|
Thermal/Hydro/Wind
|
|
10
|
|
2020 to 2026
|
|
436
|
|
|
|
|
|
|
|
|
SMALL GENERATION PLANTS(3):
|
|
|
|
|
|
|
|
|
Thermal
|
|
|
|
|
|
11
|
TOTAL CONTRACTED AND GENERATION
|
|
|
|
|
|
447
|
|
(1)
|
Contracts with fuel sources that include natural gas, coal or diesel are collectively referred to as thermal.
|
||||||
(2)
|
In 2013, energy contracts in the Central Interconnected System, where Chilquinta Energía operates, were supplied from 61 percent thermal, 38 percent hydro and 1 percent wind sources.
|
||||||
(3)
|
Compañía de Petróleos de Chile Copec S.A. supplies diesel fuel to six small generation plants using trucks from different stations throughout the region.
|
§
|
924,500 residential
|
§
|
61,400 commercial
|
§
|
3,900 industrial
|
§
|
4,900 street and highway lighting
|
§
|
1,300 agricultural
|
LUZ DEL SUR ELECTRIC RESOURCES
|
|||||||
Resource
|
|
Number of Contracts
|
|
Expiration date
|
Megawatts (MW)
|
||
PURCHASED-POWER CONTRACTS(1):
|
|
|
|
|
|||
Bilateral contracts:
|
|
|
|
|
|
|
|
|
Hydro
|
|
1
|
|
2014
|
|
20
|
|
|
|
|
|
|
|
|
Auction contracts:
|
|
|
|
|
|
|
|
|
Hydro
|
|
7
|
|
2014-2021
|
|
269
|
|
Thermal
|
|
5
|
|
2021-2023
|
|
674
|
|
Hydro/Thermal
|
|
3
|
|
2021-2023
|
|
510
|
|
Total
|
|
|
|
|
|
1,453
|
TOTAL CONTRACTED
|
|
|
|
|
|
1,473
|
|
(1)
|
Contracts with fuel sources that include natural gas, coal or diesel are collectively referred to as thermal.
|
§ Exelon Energy
§ Iberdrola Renewables
§ MidAmerican Energy
|
§ NextEra Energy Resources
§ NRG Energy
|
§ Calpine
|
§ NextEra Energy Resources
|
§ Dynegy
§ Exelon Corporation
|
§ NRG Energy
|
§ AGL Resources
§ Boardwalk Pipeline Partners
§ Cardinal Gas Storage Partners
§ Clean Energy
§ Duke Energy
§ Enbridge
§ Energy Transfer Partners
§ Enstor
|
§ Enterprise Products Partners
§ Kinder Morgan
§ Macquarie Infrastructure Partners
§ NiSource
§ Plains All American Pipeline
§ Spectra Energy
§ TransCanada
§ The Williams Companies
|
§ EDF Energy
§ Elecnor
§ Enagas
§ Fermaca
§ GDF SUEZ
|
§ Kinder Morgan
§ Mitsui
§ PEMEX (MGI)
§ Promigas
§ TransCanada
|
§
|
high levels of undeveloped North American unconventional natural gas and tight oil resources relative to domestic consumption levels;
|
§
|
increasing gas and oil drilling productivity and decreasing unit costs of gas production;
|
§
|
low breakeven prices of marginal North American unconventional gas production;
|
§
|
proximity to ample existing gas transmission pipeline and underground gas storage capacity; and
|
§
|
existing LNG tankage and berths.
|
§ BG
|
§ Kogas
|
§ BP
|
§ Mitsubishi
|
§ Cheniere Energy
|
§ Mitsui
|
§ Chevron
|
§ Petronas
|
§ China National Petroleum Company
|
§ Qatar Petroleum
|
§ ConocoPhillips
|
§ Santos
|
§ Dow Chemical
|
§ Royal Dutch Shell
|
§ ExxonMobil
|
§ Total
|
§ GDF SUEZ
|
§ Woodside
|
§ Kinder Morgan
|
Name
|
Age(1)
|
Position(1)
|
|
Debra L. Reed
|
57
|
Chairman and Chief Executive Officer
|
|
Mark A. Snell
|
57
|
President
|
|
Joseph A. Householder
|
58
|
Executive Vice President and Chief Financial Officer
|
|
Martha B. Wyrsch
|
56
|
Executive Vice President and General Counsel
|
|
Trevor I. Mihalik
|
47
|
Senior Vice President, Controller and Chief Accounting Officer
|
|
G. Joyce Rowland
|
59
|
Senior Vice President – Human Resources, Diversity and Inclusion
|
|
(1) Ages and positions are as of February 27, 2014.
|
Name
|
Age(1)
|
Position(1)
|
SAN DIEGO GAS & ELECTRIC COMPANY
|
||
Jeffrey W. Martin
|
52
|
Chief Executive Officer
|
Steven D. Davis
|
58
|
President and Chief Operating Officer
|
James P. Avery
|
57
|
Senior Vice President – Power Supply
|
J. Chris Baker
|
54
|
Senior Vice President – Chief Information Technology Officer
|
Lee Schavrien
|
59
|
Senior Vice President – Finance, Regulatory and Legislative Affairs
|
W. Davis Smith
|
64
|
Senior Vice President and General Counsel
|
Robert M. Schlax
|
58
|
Vice President, Controller, Chief Financial Officer, Chief Accounting Officer and Treasurer
|
SOUTHERN CALIFORNIA GAS COMPANY
|
||
Anne S. Smith(2)
|
60
|
Chairman and Chief Executive Officer
|
Dennis V. Arriola(3)
|
53
|
President
|
J. Bret Lane
|
54
|
Chief Operating Officer
|
J. Chris Baker
|
54
|
Senior Vice President and Chief Information Technology Officer
|
Erbin B. Keith
|
53
|
Senior Vice President and General Counsel
|
Lee Schavrien
|
59
|
Senior Vice President – Finance, Regulatory and Legislative Affairs
|
Robert M. Schlax | 58 | Vice President, Controller, Chief Financial Officer, Chief Accounting Officer and Treasurer |
(1) Ages and positions are as of February 27, 2014.
(2) Ms. Smith will retire effective February 28, 2014.
(3) On March 1, 2014, Mr. Arriola will become the Chief Executive Officer of SoCalGas and retain his position as President of SoCalGas.
|
|
|
December 31,
|
|
||
|
|
2013
|
2012
|
|
|
Sempra Energy Consolidated(1)
|
17,122
|
|
16,893
|
|
|
SDG&E
|
4,603
|
|
4,996
|
|
|
SoCalGas
|
8,196
|
|
7,788
|
|
|
(1)
|
Excludes employees of variable interest entities as defined by accounting principles generally accepted in the U.S.
|
|
§
|
the rates charged to our customers;
|
§
|
our ability to site and construct new facilities;
|
§
|
our ability to purchase or construct generating facilities;
|
§
|
safety;
|
§
|
the issuance of securities;
|
§
|
accounting matters;
|
§
|
transactions between affiliates;
|
§
|
the installation of environmental emission controls equipment;
|
§
|
our ability to decommission generating facilities and recover the remaining carrying value of such facilities;
|
§
|
the amount of certain sources of energy we must use, such as renewable sources and reductions in energy usage by customers; and
|
§
|
the amount of costs associated with these operations that may be recovered from customers.
|
§ power generation plants
|
§ natural gas, propane and ethane pipelines and storage
|
§ electric transmission and distribution
|
§ nuclear fuel and nuclear waste storage facilities
|
§ LNG terminals and storage
|
§ nuclear power facilities
|
§ chartered LNG tankers
|
§
|
California Utilities—Factors that could change the utilization of natural gas distribution and electric generation, transmission and distribution assets include
|
□
|
efficient battery storage technology, combined with
|
□
|
the expanded cost effective utilization of distributed generation (i.e., solar rooftop, community solar projects)
|
§
|
Sempra U.S. Gas & Power
|
□
|
At Sempra Renewables, technological advances in distributed and local power generation and energy storage could reduce the demand for large-scale renewable electricity generation. Sempra Renewables’ power sales customers’ ability to perform under long-term agreements could be impacted by utility rate structures and advances in distributed and local power generation.
|
□
|
At Sempra Natural Gas, technological advances in alternative fuels and other alternative energy sources could reduce the demand for natural gas.
|
□
|
At our LNG businesses, technologies that lower global natural gas and LNG consumption would have the greatest impact on the business. These technologies include cost effective batteries for renewable electricity generation, economic gas to liquids conversion processes and advances associated with seabed or Arctic gas hydrate exploitation.
|
§ conditions of service
|
§ rates of depreciation
|
§ capital structure
|
§ long-term resource procurement
|
§ rates of return
|
§ sales of securities
|
§
|
the potential that a natural disaster such as an earthquake or tsunami could cause a catastrophic failure of the safety systems in place that are designed to prevent the release of radioactive material. If such a failure were to occur, a substantial amount of radiation could be released and cause catastrophic harm to human health and the environment;
|
§
|
the potential harmful effects on the environment and human health resulting from the prior operation of nuclear facilities and the storage, handling and disposal of radioactive materials;
|
§
|
limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with operations and the decommissioning of the facility;
|
§
|
uncertainties with respect to the technological and financial aspects of decommissioning the facility; and
|
§
|
the results of the CPUC’s Order Instituting Investigation (OII), as described in more detail below, into the SONGS outage that began in the first quarter of 2012.
|
§
|
weather conditions
|
§
|
seasonality
|
§
|
changes in supply and demand
|
§
|
transmission or transportation constraints or inefficiencies
|
§
|
availability of competitively priced alternative energy sources
|
§
|
commodity production levels
|
§
|
actions by oil producing nations or organizations affecting the global supply of crude oil
|
§
|
federal, state and foreign energy and environmental regulation and legislation
|
§
|
natural disasters, wars, embargoes and other catastrophic events
|
§
|
expropriation of assets by foreign countries
|
§
|
negotiation of satisfactory engineering, procurement and construction agreements
|
§
|
negotiation of supply and natural gas sales agreements or firm capacity service agreements
|
§
|
timely receipt of required governmental permits, licenses, authorizations, and rights of way
|
§
|
timely implementation and satisfactory completion of construction
|
§
|
obtaining adequate and reasonably priced financing for the project
|
§
|
unforeseen engineering problems
|
§
|
construction delays and contractor performance shortfalls
|
§
|
work stoppages
|
§
|
equipment unavailability or delay and cost increases
|
§
|
adverse weather conditions
|
§
|
environmental and geological conditions
|
§
|
litigation
|
§
|
unsettled property rights
|
§
|
other factors
|
§
|
deliver the electricity and natural gas we sell to wholesale markets,
|
§
|
supply natural gas to our electric generation facilities, and
|
§
|
provide retail energy services to customers.
|
§
|
changes in foreign laws and regulations, including tax and environmental laws and regulations, and U.S. laws and regulations, in each case, that are related to foreign operations
|
§
|
governance by and decisions of local regulatory bodies, including setting of rates and tariffs that may be earned by our businesses
|
§
|
high rates of inflation
|
§
|
volatility in exchange rates between the U.S. dollar and currencies of the countries in which we operate
|
§
|
changes in government policies or personnel
|
§
|
trade restrictions
|
§
|
limitations on U.S. company ownership in foreign countries
|
§
|
permitting and regulatory compliance
|
§
|
changes in labor supply and labor relations
|
§
|
adverse rulings by foreign courts or tribunals, challenges to permits and approvals, difficulty in enforcing contractual and property rights, and unsettled property rights and titles in Mexico and other foreign jurisdictions
|
§
|
expropriation of assets
|
§
|
adverse changes in the stability of the governments in the countries in which we operate
|
§
|
general political, social, economic and business conditions
|
§
|
a 560-MW electric generation facility (the Palomar generation facility) in Escondido, California
|
§
|
a 485-MW electric generation facility (the Desert Star generation facility) in Boulder City, Nevada
|
§
|
a 96-MW electric generation peaking facility (the Miramar Energy Center) in San Diego, California
|
§
|
a 47-MW electric generation facility (the Cuyamaca Peak Energy Plant) in El Cajon, California
|
|
|
Number of shares to
|
|
|
|
|
|
be issued upon
|
|
Number of
|
|
|
|
exercise of
|
Weighted-average
|
additional
|
|
|
|
outstanding
|
exercise price of
|
shares remaining
|
|
|
|
options, warrants
|
outstanding options,
|
available for future
|
|
|
|
and rights(A)
|
warrants and rights(B)
|
issuance(C)(D)
|
|
Equity compensation plan approved
|
|
|
|
|
|
by shareholders:
|
|
|
|
|
|
2013 Long-Term Incentive Plan
|
4,839,304
|
$
|
53.18
|
7,210,346
|
|
(A)
|
Consists of 1,459,145 options to purchase shares of our common stock, all of which were granted at an exercise price of 100% of the grant date fair market value of the shares subject to the option, 215,598 service-based restricted stock units and 3,164,561 performance-based restricted stock units. Each performance-based restricted stock unit represents the right to receive one share of our common stock if applicable performance conditions are satisfied; up to an additional 50 percent of shares represented by these units may be issued if Sempra Energy exceeds target performance conditions. The 4,839,304 also includes awards granted under two previously shareholder-approved long-term incentive plans (Predecessor Plans). No new awards may be granted under these Predecessor Plans.
|
||||
(B)
|
Represents only the weighted-average exercise price of the 1,459,145 options to purchase shares of common stock.
|
||||
(C)
|
The number of shares available for future issuance is increased by the number of shares withheld or surrendered to satisfy the exercise price or to satisfy tax withholding obligations relating to any plan awards.
|
||||
(D)
|
The number of shares available for future issuance is increased by the number of shares subject to awards that expire or are forfeited, canceled or otherwise terminated without the issuance of shares.
|
PRINCIPAL ACCOUNTANT FEES
|
|||||||||||||
(Dollars in thousands)
|
|||||||||||||
|
|
Sempra Energy
|
|
|
|||||||||
|
|
Consolidated
|
SDG&E
|
SoCalGas
|
|||||||||
|
|
|
%
|
|
%
|
|
%
|
||||||
|
|
Fees
|
of Total
|
Fees
|
of Total
|
Fees
|
of Total
|
||||||
2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated financial statements and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
internal controls audits, subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and statutory audits
|
$
|
9,462
|
|
|
$
|
2,451
|
|
|
$
|
2,246
|
|
|
|
Regulatory filings and related services
|
|
155
|
|
|
|
64
|
|
|
|
―
|
|
|
|
Total audit fees
|
|
9,617
|
80
|
%
|
|
2,515
|
87
|
%
|
|
2,246
|
92
|
%
|
|
Audit-related fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee benefit plan audits
|
|
475
|
|
|
|
125
|
|
|
|
192
|
|
|
|
Other audit-related services,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounting consultation
|
|
325
|
|
|
|
66
|
|
|
|
―
|
|
|
|
Total audit-related fees
|
|
800
|
7
|
|
|
191
|
7
|
|
|
192
|
8
|
|
|
Tax fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax planning and compliance
|
|
1,473
|
|
|
|
175
|
|
|
|
―
|
|
|
|
Other tax services
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
Total tax fees
|
|
1,473
|
12
|
|
|
175
|
6
|
|
|
―
|
―
|
|
|
All other fees
|
|
77
|
1
|
|
|
―
|
―
|
|
|
―
|
―
|
|
|
Total fees
|
$
|
11,967
|
100
|
%
|
$
|
2,881
|
100
|
%
|
$
|
2,438
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sempra Energy
|
|
|
|||||||||
|
|
Consolidated
|
SDG&E
|
SoCalGas
|
|||||||||
|
|
|
%
|
|
%
|
|
%
|
||||||
|
|
Fees
|
of Total
|
Fees
|
of Total
|
Fees
|
of Total
|
||||||
2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated financial statements and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
internal controls audits, subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and statutory audits
|
$
|
9,290
|
|
|
$
|
2,055
|
|
|
$
|
2,000
|
|
|
|
Regulatory filings and related services
|
|
480
|
|
|
|
186
|
|
|
|
59
|
|
|
|
Total audit fees
|
|
9,770
|
82
|
%
|
|
2,241
|
78
|
%
|
|
2,059
|
91
|
%
|
|
Audit-related fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee benefit plan audits
|
|
470
|
|
|
|
126
|
|
|
|
187
|
|
|
|
Other audit-related services,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounting consultation
|
|
445
|
|
|
|
34
|
|
|
|
―
|
|
|
|
Total audit-related fees
|
|
915
|
8
|
|
|
160
|
6
|
|
|
187
|
8
|
|
|
Tax fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax planning and compliance
|
|
1,006
|
|
|
|
449
|
|
|
|
―
|
|
|
|
Other tax services
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
Total tax fees
|
|
1,006
|
8
|
|
|
449
|
16
|
|
|
―
|
―
|
|
|
All other fees
|
|
196
|
2
|
|
|
13
|
―
|
|
|
13
|
1
|
|
|
Total fees
|
$
|
11,887
|
100
|
%
|
$
|
2,863
|
100
|
%
|
$
|
2,259
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page in Annual Report(1)
|
|||
Sempra Energy
|
San Diego
Gas & Electric Company
|
Southern California Gas Company
|
|
Management’s Report On Internal Control Over Financial Reporting
|
84
|
84
|
84
|
Reports of Independent Registered Public Accounting Firm
|
86
|
88
|
90
|
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011
|
92
|
100
|
107
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011
|
93
|
101
|
108
|
Consolidated Balance Sheets at December 31, 2013 and 2012
|
94
|
102
|
109
|
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011
|
96
|
104
|
111
|
Consolidated Statements of Changes in Equity for the years ended December 31, 2013, 2012 and 2011
|
98
|
106
|
N/A
|
Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2013, 2012 and 2011
|
N/A
|
N/A
|
112
|
Notes to Consolidated Financial Statements
|
113
|
113
|
113
|
(1) Incorporated by reference from the indicated pages of the 2013 Annual Report to Shareholders, filed as Exhibit 13.1.
|
SEMPRA ENERGY
|
||||||
CONDENSED STATEMENTS OF OPERATIONS
|
||||||
(Dollars in millions, except per share amounts)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
Interest income
|
$
|
42
|
$
|
83
|
$
|
109
|
Interest expense
|
|
(239)
|
|
(247)
|
|
(242)
|
Operation and maintenance
|
|
(63)
|
|
(68)
|
|
(64)
|
Other income, net
|
|
41
|
|
66
|
|
42
|
Income tax benefits
|
|
117
|
|
145
|
|
82
|
Loss before equity in earnings of subsidiaries
|
|
(102)
|
|
(21)
|
|
(73)
|
Equity in earnings of subsidiaries, net of income taxes
|
|
1,103
|
|
880
|
|
1,404
|
Net income/earnings
|
$
|
1,001
|
$
|
859
|
$
|
1,331
|
|
|
|
|
|
|
|
Basic earnings per common share
|
$
|
4.10
|
$
|
3.56
|
$
|
5.55
|
Weighted-average number of shares outstanding (thousands)
|
|
243,863
|
|
241,347
|
|
239,720
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
$
|
4.01
|
$
|
3.48
|
$
|
5.51
|
Weighted-average number of shares outstanding (thousands)
|
|
249,332
|
|
246,693
|
|
241,523
|
See Notes to Condensed Financial Information of Parent.
|
SEMPRA ENERGY
|
|||||||
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Years ended December 31, 2013, 2012 and 2011
|
|||||
|
|
Pretax
|
Income Tax
|
Net-of-tax
|
|||
|
|
Amount
|
(Expense) Benefit
|
Amount
|
|||
2013:
|
|
|
|
|
|
|
|
Net income
|
$
|
884
|
$
|
117
|
$
|
1,001
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
111
|
|
―
|
|
111
|
|
Pension and other postretirement benefits
|
|
47
|
|
(19)
|
|
28
|
|
Financial instruments
|
|
13
|
|
(4)
|
|
9
|
|
Total other comprehensive income
|
|
171
|
|
(23)
|
|
148
|
|
Comprehensive income
|
$
|
1,055
|
$
|
94
|
$
|
1,149
|
|
2012:
|
|
|
|
|
|
|
|
Net income
|
$
|
714
|
$
|
145
|
$
|
859
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
119
|
|
―
|
|
119
|
|
Pension and other postretirement benefits
|
|
(4)
|
|
2
|
|
(2)
|
|
Financial instruments
|
|
(6)
|
|
2
|
|
(4)
|
|
Total other comprehensive income
|
|
109
|
|
4
|
|
113
|
|
Comprehensive income
|
$
|
823
|
$
|
149
|
$
|
972
|
|
2011:
|
|
|
|
|
|
|
|
Net income
|
$
|
1,249
|
$
|
82
|
$
|
1,331
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
(79)
|
|
3
|
|
(76)
|
|
Reclassification to net income of foreign
|
|
|
|
|
|
|
|
currency translation adjustment related
|
|
|
|
|
|
|
|
to remeasurement of equity method
|
|
|
|
|
|
|
|
investments
|
|
(54)
|
|
―
|
|
(54)
|
|
Available-for-sale securities
|
|
(2)
|
|
1
|
|
(1)
|
|
Pension and other postretirement benefits
|
|
(20)
|
|
8
|
|
(12)
|
|
Financial instruments
|
|
(26)
|
|
10
|
|
(16)
|
|
Total other comprehensive loss
|
|
(181)
|
|
22
|
|
(159)
|
|
Comprehensive income
|
$
|
1,068
|
$
|
104
|
$
|
1,172
|
|
See Notes to Condensed Financial Information of Parent.
|
SEMPRA ENERGY
|
|||||
CONDENSED BALANCE SHEETS
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
December 31,
|
||
|
|
2013
|
2012
|
||
Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
6
|
$
|
18
|
|
Due from affiliates
|
|
132
|
|
125
|
|
Deferred income taxes
|
|
170
|
|
109
|
|
Other current assets
|
|
16
|
|
16
|
|
Total current assets
|
|
324
|
|
268
|
|
|
|
|
|
|
|
Investments in subsidiaries
|
|
13,866
|
|
12,545
|
|
Due from affiliates
|
|
802
|
|
1,759
|
|
Deferred income taxes
|
|
1,466
|
|
1,541
|
|
Other assets
|
|
555
|
|
576
|
|
Total assets
|
$
|
17,013
|
$
|
16,689
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity:
|
|
|
|
|
|
Current portion of long-term debt
|
$
|
800
|
$
|
652
|
|
Due to affiliates
|
|
273
|
|
539
|
|
Income taxes payable
|
|
64
|
|
26
|
|
Other current liabilities
|
|
276
|
|
260
|
|
Total current liabilities
|
|
1,413
|
|
1,477
|
|
|
|
|
|
|
|
Long-term debt
|
|
4,117
|
|
4,409
|
|
Other long-term liabilities
|
|
475
|
|
521
|
|
Shareholders’ equity
|
|
11,008
|
|
10,282
|
|
Total liabilities and shareholders’ equity
|
$
|
17,013
|
$
|
16,689
|
|
See Notes to Condensed Financial Information of Parent.
|
|
|
SEMPRA ENERGY
|
||||||
CONDENSED STATEMENTS OF CASH FLOWS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
Net cash used in operating activities
|
$
|
(131)
|
$
|
(809)
|
$
|
(287)
|
|
|
|
|
|
|
|
Dividends received from subsidiary
|
|
50
|
|
250
|
|
50
|
Expenditures for property, plant and equipment
|
|
(1)
|
|
(1)
|
|
(2)
|
Purchase of trust assets
|
|
(5)
|
|
(6)
|
|
(7)
|
Proceeds from sales by trust
|
|
10
|
|
10
|
|
12
|
Capital contribution to subsidiaries
|
|
(6)
|
|
―
|
|
(200)
|
Decrease (increase) in loans to affiliates, net
|
|
962
|
|
(33)
|
|
82
|
Cash provided by (used in) investing activities
|
|
1,010
|
|
220
|
|
(65)
|
|
|
|
|
|
|
|
Common stock dividends paid
|
|
(606)
|
|
(550)
|
|
(440)
|
Issuances of common stock
|
|
62
|
|
78
|
|
28
|
Repurchases of common stock
|
|
(45)
|
|
(16)
|
|
(18)
|
Issuances of long-term debt
|
|
498
|
|
1,100
|
|
799
|
Payments on long-term debt
|
|
(650)
|
|
(8)
|
|
(24)
|
Decrease in loans from affiliates, net
|
|
(147)
|
|
―
|
|
(136)
|
Other
|
|
(3)
|
|
(8)
|
|
(3)
|
Cash (used in) provided by financing activities
|
|
(891)
|
|
596
|
|
206
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
(12)
|
|
7
|
|
(146)
|
Cash and cash equivalents, January 1
|
|
18
|
|
11
|
|
157
|
Cash and cash equivalents, December 31
|
$
|
6
|
$
|
18
|
$
|
11
|
See Notes to Condensed Financial Information of Parent.
|
|
December 31,
|
December 31,
|
||
(Dollars in millions)
|
2013
|
2012
|
||
|
|
|
|
|
6% Notes February 1, 2013
|
$
|
―
|
$
|
400
|
8.9% Notes November 15, 2013, including $200 at variable rates after
|
|
|
|
|
fixed-to-floating rate swaps effective January 2011
|
|
―
|
|
250
|
2% Notes March 15, 2014
|
|
500
|
|
500
|
Notes at variable rates (1.01% at December 31, 2013) March 15, 2014
|
|
300
|
|
300
|
6.5% Notes June 1, 2016, including $300 at variable rates after
|
|
|
|
|
fixed-to-floating rate swaps effective January 2011 (4.46% at December 31, 2013)
|
|
750
|
|
750
|
2.3% Notes April 1, 2017
|
|
600
|
|
600
|
6.15% Notes June 15, 2018
|
|
500
|
|
500
|
9.8% Notes February 15, 2019
|
|
500
|
|
500
|
2.875% Notes October 1, 2022
|
|
500
|
|
500
|
4.05% Notes December 1, 2023
|
|
500
|
|
―
|
6% Notes October 15, 2039
|
|
750
|
|
750
|
Market value adjustments for interest rate swaps, net
|
|
|
|
|
(expire November 2013 and June 2016)
|
|
12
|
|
19
|
Build-to-suit lease
|
|
14
|
|
―
|
|
|
4,926
|
|
5,069
|
Current portion of long-term debt
|
|
(800)
|
|
(652)
|
Unamortized discount on long-term debt
|
|
(9)
|
|
(8)
|
Total long-term debt
|
$
|
4,117
|
$
|
4,409
|
Sempra Energy:
|
|||
SIGNATURES
|
|||
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|||
SEMPRA ENERGY,
(Registrant)
|
|||
By: /s/ Debra L. Reed
|
|||
Debra L. Reed
Chairman and Chief Executive Officer
|
|||
Date: February 27, 2014
|
|||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
|
|||
Name/Title
|
Signature
|
Date
|
|
Principal Executive Officer:
Debra L. Reed
Chief Executive Officer
|
/s/ Debra L. Reed
|
February 27, 2014
|
|
Principal Financial Officer:
Joseph A. Householder
Executive Vice President and
Chief Financial Officer
|
/s/ Joseph A. Householder
|
February 27, 2014
|
|
Principal Accounting Officer:
Trevor I. Mihalik
Senior Vice President, Controller and
Chief Accounting Officer
|
/s/ Trevor I. Mihalik
|
February 27, 2014
|
|
Directors:
|
|||
Debra L. Reed, Chairman
|
/s/ Debra L. Reed
|
February 27, 2014
|
|
Alan L. Boeckmann, Director
|
/s/ Alan L. Boeckmann
|
February 27, 2014
|
|
James G. Brocksmith, Jr., Director
|
/s/ James G. Brocksmith, Jr.
|
February 27, 2014
|
|
Kathleen L. Brown, Director
|
/s/ Kathleen L. Brown
|
February 27, 2014
|
|
Pablo A. Ferrero, Director
|
/s/ Pablo A. Ferrero
|
February 27, 2014
|
|
William D. Jones, Director
|
/s/ William D. Jones
|
February 27, 2014
|
|
William G. Ouchi, Ph.D., Director
|
/s/ William G. Ouchi
|
February 27, 2014
|
|
William C. Rusnack, Director
|
/s/ William C. Rusnack
|
February 27, 2014
|
|
William P. Rutledge, Director
|
/s/ William P. Rutledge
|
February 27, 2014
|
|
Lynn Schenk, Director
|
/s/ Lynn Schenk
|
February 27, 2014
|
|
Jack T. Taylor, Director
|
/s/ Jack T. Taylor
|
February 27, 2014
|
|
Luis M. Téllez, Ph.D., Director
|
/s/ Luis M. Téllez
|
February 27, 2014
|
|
James C. Yardley, Director
|
/s/ James C. Yardley
|
February 27, 2014
|
|
San Diego Gas & Electric Company:
|
|
SIGNATURES
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
SAN DIEGO GAS & ELECTRIC COMPANY,
(Registrant)
|
|
By: /s/ Jeffrey W. Martin
|
|
Jeffrey W. Martin
Chief Executive Officer
|
|
Date: February 27, 2014
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
|
||
Name/Title
|
Signature
|
Date
|
Principal Executive Officer:
Jeffrey W. Martin
Chief Executive Officer
|
/s/ Jeffrey W. Martin
|
February 27, 2014
|
Principal Financial and Accounting Officer:
Robert M. Schlax
Vice President, Controller, Chief Financial Officer and Chief Accounting Officer
|
/s/ Robert M. Schlax
|
February 27, 2014
|
Directors:
|
||
Jessie J. Knight, Jr., Chairman
|
/s/ Jessie J. Knight, Jr.
|
February 27, 2014
|
Steven D. Davis, Director
|
/s/ Steven D. Davis
|
February 27, 2014
|
Joseph A. Householder, Director
|
/s/ Joseph A. Householder
|
February 27, 2014
|
Jeffrey W. Martin, Director
|
/s/ Jeffrey W. Martin
|
February 27, 2014
|
Southern California Gas Company:
|
|
SIGNATURES
|
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
SOUTHERN CALIFORNIA GAS COMPANY,
(Registrant)
|
|
By: /s/ Anne S. Smith
|
|
Anne S. Smith
Chairman and Chief Executive Officer
|
|
Date: February 27, 2014
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
|
||
Name/Title
|
Signature
|
Date
|
Principal Executive Officer:
Anne S. Smith
Chief Executive Officer
|
/s/ Anne S. Smith
|
February 27, 2014
|
Principal Financial and Accounting Officer:
Robert M. Schlax
Vice President, Controller, Chief Financial Officer and Chief Accounting Officer
|
/s/ Robert M. Schlax
|
February 27, 2014
|
Directors:
|
||
Anne S. Smith, Chairman
|
/s/ Anne S. Smith
|
February 27, 2014
|
Dennis V. Arriola, Director
|
/s/ Dennis V. Arriola
|
February 27, 2014
|
Joseph A. Householder, Director
|
/s/ Joseph A. Householder
|
February 27, 2014
|
Martha B. Wyrsch, Director
|
/s/ Martha B. Wyrsch
|
February 27, 2014
|
EXHIBIT INDEX
|
|
The exhibits filed under the Registration Statements, Proxy Statements and Forms 8-K, 10-K and 10-Q that are incorporated herein by reference were filed under Commission File Number 1-14201 (Sempra Energy), Commission File Number 1-40 (Pacific Lighting Corporation), Commission File Number 1-03779 (San Diego Gas & Electric Company) and/or Commission File Number 1-01402 (Southern California Gas Company).
|
|
The following exhibits relate to each registrant as indicated.
|
|
EXHIBIT 3 -- BYLAWS AND ARTICLES OF INCORPORATION
|
|
Sempra Energy
|
|
3.1
|
Amended and Restated Articles of Incorporation of Sempra Energy effective May 23, 2008 (Appendix B to the 2008 Sempra Energy Definitive Proxy Statement, filed on April 15, 2008).
|
3.2
|
Amended and Restated Bylaws of Sempra Energy effective September 13, 2012 (Sempra Energy Form 8-K filed on September 18, 2012, Exhibit 3(ii)).
|
San Diego Gas & Electric Company
|
|
3.3
|
Amended and Restated Bylaws of San Diego Gas & Electric effective June 15, 2010 (Form 8-K filed on June 17, 2010, Exhibit 3).
|
3.4
|
Restated Articles of Incorporation of San Diego Gas & Electric Company as amended effective November 13, 2006 (2006 SDG&E Form 10-K, Exhibit 3.02).
|
Southern California Gas Company
|
|
3.5
|
Amended and Restated Bylaws of Southern California Gas Company effective June 14, 2010 (Form 8-K filed on June 17, 2010, Exhibit 3.1).
|
3.6
|
Restated Articles of Incorporation of Southern California Gas Company effective October 7, 1996 (1996 SoCalGas Form 10-K, Exhibit 3.01).
|
EXHIBIT 4 -- INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
|
|
The companies agree to furnish a copy of each such instrument to the Commission upon request.
|
|
Sempra Energy
|
|
4.1
|
Description of rights of Sempra Energy Common Stock (Amended and Restated Articles of Incorporation of Sempra Energy effective May 23, 2008, Exhibit 3.1 above).
|
4.2
|
Indenture dated as of February 23, 2000, between Sempra Energy and U.S. Bank Trust National Association, as Trustee (Sempra Energy Registration Statement on Form S-3 (No. 333-153425), filed on September 11, 2008, Exhibit 4.1).
|
Southern California Gas Company
|
|
4.3
|
Description of preferences of Preferred Stock, Preference Stock and Series Preferred Stock (Southern California Gas Company Restated Articles of Incorporation, Exhibit 3.6 above).
|
Sempra Energy / San Diego Gas & Electric Company
|
|
4.4
|
Mortgage and Deed of Trust dated July 1, 1940 (SDG&E Registration Statement No. 2-4769, Exhibit B-3).
|
4.5
|
Second Supplemental Indenture dated as of March 1, 1948 (SDG&E Registration Statement No. 2-7418, Exhibit B-5B).
|
4.6
|
Ninth Supplemental Indenture dated as of August 1, 1968 (SDG&E Registration Statement No. 333-52150, Exhibit 4.5).
|
4.7
|
Tenth Supplemental Indenture dated as of December 1, 1968 (SDG&E Registration Statement No. 2-36042, Exhibit 2-K).
|
4.8
|
Sixteenth Supplemental Indenture dated August 28, 1975 (SDG&E Registration Statement No. 33-34017, Exhibit 4.2).
|
Sempra Energy / Southern California Gas Company
|
|
4.9
|
First Mortgage Indenture of Southern California Gas Company to American Trust Company dated October 1, 1940 (Registration Statement No. 2-4504 filed by Southern California Gas Company on September 16, 1940, Exhibit B-4).
|
4.10
|
Supplemental Indenture of Southern California Gas Company to American Trust Company dated as of August 1, 1955 (Registration Statement No. 2-11997 filed by Pacific Lighting Corporation on October 26, 1955, Exhibit 4.07).
|
4.11
|
Supplemental Indenture of Southern California Gas Company to American Trust Company dated as of December 1, 1956 (2006 Sempra Energy Form 10-K, Exhibit 4.09).
|
4.12
|
Supplemental Indenture of Southern California Gas Company to Wells Fargo Bank dated as of June 1, 1965 (2006 Sempra Energy Form 10-K, Exhibit 4.10).
|
4.13
|
Supplemental Indenture of Southern California Gas Company to Wells Fargo Bank, National Association dated as of August 1, 1972 (Registration Statement No. 2-59832 filed by Southern California Gas Company on September 6, 1977, Exhibit 2.19).
|
4.14
|
Supplemental Indenture of Southern California Gas Company to Wells Fargo Bank, National Association dated as of May 1, 1976 (Registration Statement No. 2-56034 filed by Southern California Gas Company on April 14, 1976, Exhibit 2.20).
|
4.15
|
Supplemental Indenture of Southern California Gas Company to Wells Fargo Bank, National Association dated as of September 15, 1981 (Registration Statement No. 333-70654, Exhibit 4.24).
|
EXHIBIT 10 -- MATERIAL CONTRACTS
|
|
Sempra Energy / San Diego Gas & Electric Company / Southern California Gas Company
|
|
10.1
|
Form of Continental Forge and California Class Action Price Reporting Settlement Agreement dated as of January 4, 2006 (Form 8-K filed on January 5, 2006, Exhibit 99.1).
|
10.2
|
Form of Nevada Antitrust Settlement Agreement dated as of January 4, 2006 (Form 8-K filed on January 5, 2006, Exhibit 99.2).
|
Sempra Energy
|
|
10.3
|
Indemnity Agreement, dated as of April 1, 2008, between Sempra Energy, Pacific Enterprises, Enova Corporation and The Royal Bank of Scotland plc (Sempra Energy March 31, 2008 Form 10-Q, Exhibit 10.2).
|
10.4
|
First Amendment to Indemnity Agreement, dated as of March 30, 2009, by and among Sempra Energy, Pacific Enterprises, Enova Corporation and The Royal Bank of Scotland plc (Sempra Energy March 31, 2009 Form 10-Q, Exhibit 10.3).
|
10.5
|
Second Amendment to Indemnity Agreement, dated as of June 30, 2009, by and among Sempra Energy, Pacific Enterprises, Enova Corporation and The Royal Bank of Scotland plc (Sempra Energy June 30, 2009 Form 10-Q, Exhibit 10.1).
|
10.6
|
Third Amendment to Indemnity Agreement, dated as of December 3, 2009, by and among Sempra Energy, Pacific Enterprises, Enova Corporation and The Royal Bank of Scotland plc (2009 Sempra Energy Form 10-K, Exhibit 10.06).
|
10.7
|
Fourth Amendment to Indemnity Agreement, dated as of April 15, 2011, by and among The Royal Bank of Scotland plc, Sempra Energy, Pacific Enterprises and Enova Corporation (Sempra Energy Form 8-K filed on April 21, 2011, Exhibit 10.2).
|
10.8
|
Letter Agreement, dated as of April 15, 2011, by and among The Royal Bank of Scotland plc, Sempra Energy, Sempra Commodities, Inc. and Sempra Energy Holdings VII B.V. (Sempra Energy Form 8-K/A filed on April 21, 2011, Exhibit 10.1).
|
10.9
|
Purchase and Sale Agreement, dated as of February 16, 2010, entered into by and among J.P. Morgan Ventures Energy Corporation, Sempra Energy Trading LLC, RBS Sempra Commodities LLP, Sempra Energy and The Royal Bank of Scotland plc (Sempra Energy Form 8-K filed on February 19, 2010, Exhibit 10.1).
|
10.10
|
First Amendment to Purchase and Sale Agreement, dated as of June 30, 2010, entered into by and among J.P. Morgan Ventures Energy Corporation, Sempra Energy Trading LLC, RBS Sempra Commodities LLP, Sempra Energy and The Royal Bank of Scotland plc (Sempra Energy June 30, 2010 Form 10-Q, Exhibit 10.1).
|
10.11
|
Letter Agreement, dated as of February 16, 2010, entered into by and between Sempra Energy and The Royal Bank of Scotland plc (Sempra Energy Form 8-K filed on February 19, 2010, Exhibit 10.2).
|
10.12
|
Limited Liability Partnership Agreement, dated as of April 1, 2008, between Sempra Energy, Sempra Commodities, Inc., Sempra Energy Holdings, VII B.V., RBS Sempra Commodities LLP and The Royal Bank of Scotland plc (Sempra Energy March 31, 2008 Form 10-Q, Exhibit 10.1).
|
10.13
|
First Amendment to Limited Liability Partnership Agreement, dated as of April 6, 2009 and effective as of November 14, 2008, by and among The Royal Bank of Scotland plc, Sempra Energy, Sempra Commodities, Inc., Sempra Energy Holdings VII B.V. and RBS Sempra Commodities LLP (Sempra Energy March 31, 2009 Form 10-Q, Exhibit 10.4).
|
10.14
|
Second Amendment to Limited Liability Partnership Agreement, dated December 23, 2009, by and among The Royal Bank of Scotland plc, Sempra Energy, Sempra Commodities, Inc., Sempra Energy Holdings VII B.V. and RBS Sempra Commodities LLP (2009 Sempra Energy Form 10-K, Exhibit 10.11).
|
10.15
|
Master Formation and Equity Interest Purchase Agreement, dated as of July 9, 2007, by and among Sempra Energy, Sempra Global, Sempra Energy Trading International, B.V. and The Royal Bank of Scotland plc (Sempra Energy Form 8-K filed on July 9, 2007, Exhibit 10.2).
|
10.16
|
First amendment to the Master Formation and Equity Interest Purchase Agreement, dated as of April 1, 2008, by and among Sempra Energy, Sempra Global, Sempra Energy Trading International, B.V. and The Royal Bank of Scotland plc (Sempra Energy March 31, 2008 Form 10-Q, Exhibit 10.3).
|
Sempra Energy / San Diego Gas & Electric Company
|
|
10.17
|
Amended and Restated Operating Order between San Diego Gas & Electric Company and the California Department of Water Resources effective March 10, 2011 (Sempra Energy March 31, 2011 Form 10-Q, Exhibit 10.4).
|
10.18
|
Amended and Restated Servicing Order between San Diego Gas & Electric Company and the California Department of Water Resources effective March 10, 2011 (Sempra Energy March 31, 2011 Form 10-Q, Exhibit 10.5).
|
Compensation
|
|
Sempra Energy / San Diego Gas & Electric Company / Southern California Gas Company
|
|
10.19
|
Form of Sempra Energy Shared Services Executive Incentive Compensation Plan.
|
10.20
|
Form of Sempra Energy 2013 Long-Term Incentive Plan 2013 Performance-Based Restricted Stock Unit Award (Sempra Energy September 30, 2013 Form 10-Q, Exhibit 10.1).
|
10.21
|
Sempra Energy 2013 Long-Term Incentive Plan (March 21, 2013 Sempra Energy Proxy Statement, Appendix D).
|
10.22
|
Third Amendment to the Sempra Energy Employee and Director Retirement Savings Plan (2012 Sempra Energy Form 10-K, Exhibit 10.21).
|
10.23
|
Sempra Energy Amended and Restated Executive Life Insurance Plan (2012 Sempra Energy Form 10-K, Exhibit 10.22).
|
10.24
|
Severance Pay Agreement between Sempra Energy and Dennis Arriola (September 30, 2012 Sempra Energy Form 10-Q, Exhibit 10.1).
|
10.25
|
Second Amendment to the Sempra Energy Employee and Director Retirement Savings Plan (June 30, 2012 Sempra Energy Form 10-Q, Exhibit 10.1).
|
10.26
|
General Release Agreement between Sempra Energy and Michael W. Allman (June 30, 2012 Sempra Energy Form 10-Q, Exhibit 10.2).
|
10.27 | Severance Pay Agreement between Sempra Energy and Trevor Mihalik (June 30, 2012 Sempra Energy Form 10-Q, Exhibit 10.3). |
10.28
|
Severance Pay Agreement between Sempra Energy and Anne S. Smith (June 30, 2012 Sempra Energy Form 10-Q, Exhibit 10.4).
|
10.29
|
Form of Sempra Energy 2008 Long Term Incentive Plan 2012 Performance-Based Restricted Stock Unit Award (March 31, 2012 Sempra Energy Form 10-Q, Exhibit 10.1).
|
10.30
|
First Amendment to the Sempra Energy Employee and Director Savings Plan (2011 Sempra Energy Form 10-K, Exhibit 10.22).
|
10.31
|
Severance Pay Agreement between Sempra Energy and M. Javade Chaudhri (2011 Sempra Energy Form 10-K, Exhibit 10.23).
|
10.32
|
Severance Pay Agreement between Sempra Energy and Jessie J. Knight, Jr. (2011 Sempra Energy Form 10-K, Exhibit 10.24).
|
10.33
|
Severance Pay Agreement between Sempra Energy and Michael W. Allman (2011 Sempra Energy Form 10-K, Exhibit 10.25).
|
10.34
|
Severance Pay Agreement between Sempra Energy and G. Joyce Rowland (2011 Sempra Energy Form 10-K, Exhibit 10.26).
|
10.35
|
Amended and Restated Sempra Energy Severance Pay Agreement between Sempra Energy and Debra L. Reed (Sempra Energy Form 8-K filed on July 1, 2011, Exhibit 10.1).
|
10.36
|
Amendment to Severance Pay Agreement between Sempra Energy and Mark A. Snell (Sempra Energy Form 8-K filed on September 15, 2011, Exhibit 10.1).
|
10.37 | Severance Pay Agreement between Sempra Energy and Joseph A. Householder (Sempra Energy Form 8-K filed on September 15, 2011, Exhibit 10.2). |
10.38
|
Amendment to the Amendment and Restatement of the Sempra Energy 2005 Deferred Compensation Plan (2010 Sempra Energy Form 10-K, Exhibit 10.20).
|
10.39
|
Form of Sempra Energy 2008 Long Term Incentive Plan, 2011 Performance-Based Restricted Stock Unit Award. (Sempra Energy March 31, 2011 Form 10-Q, Exhibit 10.2).
|
10.40
|
Form of Sempra Energy 2008 Long Term Incentive Plan, 2010 Performance-Based Restricted Stock Unit Award (Sempra Energy March 31, 2010 Form 10-Q, Exhibit 10.1).
|
10.41
|
Form of Sempra Energy 2008 Long Term Incentive Plan, 2009 Nonqualified Stock Option Agreement (March 31, 2009 Sempra Energy Form 10-Q, Exhibit 10.2).
|
10.42
|
Sempra Energy 2008 Long Term Incentive Plan (Appendix A to the 2008 Sempra Energy Definitive Proxy Statement, filed on April 15, 2008).
|
10.43
|
Form of Indemnification Agreement with Directors and Executive Officers (June 30, 2008 Sempra Energy Form 10-Q, Exhibit 10.2).
|
10.44
|
Form of Sempra Energy 2008 Long Term Incentive Plan, 2008 Nonqualified Stock Option Agreement (June 30, 2008 Sempra Energy Form 10-Q, Exhibit 10.4).
|
10.45
|
Amendment and Restatement of the Sempra Energy Cash Balance Restoration Plan (2008 Sempra Energy Form 10-K, Exhibit 10.16).
|
10.46
|
Amendment and Restatement of the Sempra Energy 2005 Deferred Compensation Plan (2008 Sempra Energy Form 10-K, Exhibit 10.18).
|
10.47
|
Amendment and Restatement of the Sempra Energy Supplemental Executive Retirement Plan (2008 Sempra Energy Form 10-K, Exhibit 10.19).
|
10.48
|
Sempra Energy Executive Personal Financial Planning Program Policy Document (September 30, 2004 Sempra Energy Form 10-Q, Exhibit 10.11).
|
10.49
|
2003 Sempra Energy Executive Incentive Plan B (2003 Sempra Energy Form 10-K, Exhibit 10.10).
|
10.50
|
Sempra Energy Executive Incentive Plan effective January 1, 2003 (2002 Sempra Energy Form 10-K, Exhibit 10.09).
|
10.51
|
Amended and Restated Sempra Energy Deferred Compensation and Excess Savings Plan (September 30, 2002 Sempra Energy Form 10-Q, Exhibit 10.3).
|
10.52
|
Sempra Energy Employee Stock Ownership Plan and Trust Agreement effective January 1, 2001 (September 30, 2008 Sempra Energy Form 10-Q, Exhibit 10.1).
|
10.53
|
Amendment to the Amended and Restated Sempra Energy Deferred Compensation and Excess Savings Plan (2008 Sempra Energy Form 10-K, Exhibit 10.25).
|
10.54
|
Sempra Energy Amended and Restated Executive Medical Plan (2008 Sempra Energy Form 10-K, Exhibit 10.26).
|
10.55
|
Form of Sempra Energy 1998 Long Term Incentive Plan, 2008 Non-Qualified Stock Option Agreement (2007 Sempra Energy Form 10-K, Exhibit 10.10).
|
10.56
|
Amended and Restated Sempra Energy 1998 Long-Term Incentive Plan (June 30, 2003 Sempra Energy Form 10-Q, Exhibit 10.2).
|
Sempra Energy
|
|
10.57 | Severance Pay Agreement between Sempra Energy and Martha B. Wyrsch, dated September 3, 2013. |
10.58
|
Form of Sempra Energy 2008 Long Term Incentive Plan, 2010 Restricted Stock Unit Award for Sempra Energy’s Board of Directors (Sempra Energy June 30, 2010 Form 10-Q, Exhibit 10.2).
|
10.59
|
Sempra Energy 2008 Long Term Incentive Plan for EnergySouth, Inc. Employees and Other Eligible Individuals (Registration Statement on Form S-8 Sempra Energy Registration Statement No. 333-155191 dated November 7, 2008, Exhibit 10.1).
|
10.60
|
Form of Sempra Energy 2008 Non-Employee Directors’ Stock Plan, Nonqualified Stock Option Agreement (June 30, 2008 Sempra Energy Form 10-Q, Exhibit 10.5).
|
10.61
|
Sempra Energy Amended and Restated Sempra Energy Retirement Plan for Directors (June 30, 2008 Sempra Energy Form 10-Q, Exhibit 10.7).
|
10.62 | Form of Sempra Energy 1998 Non-Employee Directors' Stock Plan Non-Qualified Stock Option Agreement (2006 Sempra Energy Form 10-K, Exhibit 10.09). |
10.63
|
Sempra Energy 1998 Non-Employee Directors’ Stock Plan (Registration Statement on Form S-8 Sempra Energy Registration Statement No. 333-56161 dated June 5, 1998, Exhibit 4.2).
|
Sempra Energy / San Diego Gas & Electric Company
|
|
10.64 | Form of Sempra Energy and San Diego Gas & Electric Company Executive Incentive Compensation Plan. |
10.65 | Severance Pay Agreement between Sempra Energy and Jeffrey W. Martin, dated April 3, 2010. |
10.66
|
Severance Pay Agreement between Sempra Energy and Robert M. Schlax, dated January 17, 2014.
|
10.67
|
Severance Pay Agreement between Sempra Energy and Michael R. Niggli, dated February 18, 2013 (Sempra Energy March 31, 2013 Form 10-Q, Exhibit 10.1).
|
10.68
|
Severance Pay Agreement between Sempra Energy and James P. Avery, dated February 18, 2013 (Sempra Energy March 31, 2013 Form 10-Q, Exhibit 10.2).
|
10.69
|
Severance Pay Agreement between Sempra Energy and Lee Schavrien, dated February 18, 2013 (Sempra Energy March 31, 2013 Form 10-Q, Exhibit 10.3).
|
10.70
|
Severance Pay Agreement between Sempra Energy and Woodrow D. Smith, dated February 18, 2013 (Sempra Energy March 31, 2013 Form 10-Q, Exhibit 10.4).
|
Sempra Energy / Southern California Gas Company
|
|
10.71
|
Form of Sempra Energy and Southern California Gas Company Executive Incentive Compensation Plan.
|
10.72
|
Severance Pay Agreement between Sempra Energy and J. Bret Lane, dated August 4, 2012.
|
10.73
|
Severance Pay Agreement between Sempra Energy and Erbin Keith, dated February 18, 2013 (Sempra Energy March 31, 2013 Form 10-Q, Exhibit 10.5).
|
Nuclear
|
|
Sempra Energy / San Diego Gas & Electric Company
|
|
10.74
|
Nuclear Facilities Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station, approved November 25, 1987 (1992 SDG&E Form 10-K, Exhibit 10.7).
|
10.75
|
Amendment No. 1 to the Qualified CPUC Decommissioning Master Trust Agreement dated September 22, 1994 (see Exhibit 10.74 above)(1994 SDG&E Form 10-K, Exhibit 10.56).
|
10.76
|
Second Amendment to the San Diego Gas & Electric Company Nuclear Facilities Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station (see Exhibit 10.74 above)(1994 SDG&E Form 10-K, Exhibit 10.57).
|
10.77
|
Third Amendment to the San Diego Gas & Electric Company Nuclear Facilities Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station (see Exhibit 10.74 above)(1996 SDG&E Form 10-K, Exhibit 10.59).
|
10.78
|
Fourth Amendment to the San Diego Gas & Electric Company Nuclear Facilities Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station (see Exhibit 10.74 above)(1996 SDG&E Form 10-K, Exhibit 10.60).
|
10.79
|
Fifth Amendment to the San Diego Gas & Electric Company Nuclear Facilities Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station (see Exhibit 10.74 above)(1999 SDG&E Form 10-K, Exhibit 10.26).
|
10.80
|
Sixth Amendment to the San Diego Gas & Electric Company Nuclear Facilities Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station (see Exhibit 10.74 above)(1999 SDG&E Form 10-K, Exhibit 10.27).
|
10.81
|
Seventh Amendment to the San Diego Gas & Electric Company Nuclear Facilities Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station dated December 24, 2003 (see Exhibit 10.74 above)(2003 Sempra Energy Form 10-K, Exhibit 10.42).
|
10.82
|
Eighth Amendment to the San Diego Gas & Electric Company Nuclear Facilities Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station dated October 12, 2011 (see Exhibit 10.74 above)(2011 SDG&E Form 10-K, Exhibit 10.70).
|
10.83
|
Ninth Amendment to the San Diego Gas & Electric Company Nuclear Facilities Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station dated January 9, 2014 (see Exhibit 10.74 above).
|
10.84
|
Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station, approved November 25, 1987 (1992 SDG&E Form 10-K, Exhibit 10.8).
|
10.85
|
First Amendment to the San Diego Gas & Electric Company Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station (see Exhibit 10.84 above)(1996 SDG&E Form 10-K, Exhibit 10.62).
|
10.86
|
Second Amendment to the San Diego Gas & Electric Company Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station (see Exhibit 10.84 above)(1996 SDG&E Form 10-K, Exhibit 10.63).
|
10.87
|
Third Amendment to the San Diego Gas & Electric Company Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station (see Exhibit 10.84 above)(1999 SDG&E Form 10-K, Exhibit 10.31).
|
10.88
|
Fourth Amendment to the San Diego Gas & Electric Company Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station (see Exhibit 10.84 above)(1999 SDG&E Form 10-K, Exhibit 10.32).
|
10.89
|
Fifth Amendment to the San Diego Gas & Electric Company Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station dated December 24, 2003 (see Exhibit 10.84 above)(2003 Sempra Energy Form 10-K, Exhibit 10.48).
|
10.90
|
Sixth Amendment to the San Diego Gas & Electric Company Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station dated October 12, 2011 (see Exhibit 10.84 above)(2011 SDG&E Form 10-K, Exhibit 10.77).
|
10.91
|
Seventh Amendment to the San Diego Gas & Electric Company Nuclear Facilities Non-Qualified CPUC Decommissioning Master Trust Agreement for San Onofre Nuclear Generating Station dated January 9, 2014 (see Exhibit 10.84 above).
|
10.92
|
Second Amended San Onofre Operating Agreement among Southern California Edison Company, SDG&E, the City of Anaheim and the City of Riverside, dated February 26, 1987 (1990 SDG&E Form 10-K, Exhibit 10.6).
|
10.93
|
U. S. Department of Energy contract for disposal of spent nuclear fuel and/or high-level radioactive waste, entered into between the DOE and Southern California Edison Company, as agent for SDG&E and others; Contract DE-CR01-83NE44418, dated June 10, 1983 (1988 SDG&E Form 10-K, Exhibit 10N).
|
10.94
|
San Onofre Unit No. 1 Decommissioning Agreement between Southern California Edison Company and San Diego Gas & Electric Company dated March 23, 2000 (2009 Sempra Energy Form 10-K, Exhibit 10.62).
|
10.95
|
First Amendment to the San Onofre Unit No. 1 Decommissioning Agreement between Southern California Edison Company and San Diego Gas & Electric Company dated January 22, 2010 (2009 Sempra Energy Form 10-K, Exhibit 10.63).
|
EXHIBIT 12 -- STATEMENTS RE: COMPUTATION OF RATIOS
|
|
Sempra Energy
|
|
12.1
|
Sempra Energy Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends for the years ended December 31, 2013, 2012, 2011, 2010 and 2009.
|
San Diego Gas & Electric Company
|
|
12.2
|
San Diego Gas & Electric Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends for the years ended December 31, 2013, 2012, 2011, 2010 and 2009.
|
Southern California Gas Company
|
|
12.3
|
Southern California Gas Company Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends for the years ended December 31, 2013, 2012, 2011, 2010 and 2009.
|
EXHIBIT 13 -- ANNUAL REPORT TO SECURITY HOLDERS
|
|
Sempra Energy / San Diego Gas & Electric Company / Southern California Gas Company
|
|
13.1
|
Sempra Energy 2013 Annual Report to Shareholders. (Such report, except for the portions thereof which are expressly incorporated by reference in this Annual Report, is furnished for the information of the Securities and Exchange Commission and is not to be deemed “filed” as part of this Annual Report).
|
EXHIBIT 14 -- CODE OF ETHICS
|
|
San Diego Gas & Electric Company / Southern California Gas Company
|
|
14.1
|
Sempra Energy Code of Business Conduct and Ethics for Board of Directors and Senior Officers (also applies to directors and officers of San Diego Gas & Electric Company and Southern California Gas Company) (2006 SDG&E and SoCalGas Forms 10-K, Exhibit 14.01).
|
EXHIBIT 21 -- SUBSIDIARIES
|
|
Sempra Energy
|
|
21.1
|
Sempra Energy Schedule of Certain Subsidiaries at December 31, 2013.
|
EXHIBIT 23 -- CONSENTS OF EXPERTS AND COUNSEL
|
|
23.1
|
Consents of Independent Registered Public Accounting Firm and Report on Schedule, pages 43 through 45.
|
EXHIBIT 31 -- SECTION 302 CERTIFICATIONS
|
|
Sempra Energy
|
|
31.1
|
Statement of Sempra Energy’s Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
|
31.2
|
Statement of Sempra Energy’s Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
|
San Diego Gas & Electric Company
|
|
31.3
|
Statement of San Diego Gas & Electric Company’s Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
|
31.4
|
Statement of San Diego Gas & Electric Company’s Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
|
Southern California Gas Company
|
|
31.5
|
Statement of Southern California Gas Company’s Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
|
31.6
|
Statement of Southern California Gas Company’s Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
|
EXHIBIT 32 -- SECTION 906 CERTIFICATIONS
|
|
Sempra Energy
|
|
32.1
|
Statement of Sempra Energy’s Chief Executive Officer pursuant to 18 U.S.C. Sec. 1350.
|
32.2
|
Statement of Sempra Energy’s Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350.
|
San Diego Gas & Electric Company
|
|
32.3
|
Statement of San Diego Gas & Electric Company’s Chief Executive Officer pursuant to 18 U.S.C. Sec. 1350.
|
32.4
|
Statement of San Diego Gas & Electric Company’s Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350.
|
Southern California Gas Company
|
|
32.5
|
Statement of Southern California Gas Company’s Chief Executive Officer pursuant to 18 U.S.C. Sec. 1350.
|
32.6
|
Statement of Southern California Gas Company’s Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350.
|
EXHIBIT 101 -- INTERACTIVE DATA FILE
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
GLOSSARY
|
||||
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AB
|
Assembly Bill
|
|
kV
|
Kilovolt
|
Annual Report
|
2013 Annual Report to Shareholders
|
|
kW
|
Kilowatt
|
Bcf
|
Billion cubic feet (of natural gas)
|
|
LNG
|
Liquefied natural gas
|
BMV
|
La Bolsa Mexicana de Valores, S.A.B. de C.V. (the Mexican Stock Exchange)
|
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Luz del Sur
|
Luz del Sur S.A.A. and its subsidiaries
|
California Utilities
|
San Diego Gas & Electric Company and Southern California Gas Company
|
|
Mobile Gas
|
Mobile Gas Service Corporation
|
CARB
|
California Air Resources Board
|
|
Mtpa
|
Million tonnes per annum
|
CCC
|
California Coastal Commission
|
|
MW
|
Megawatt
|
CDEC
|
Centros de Despacho Económico de Carga (Centers for Economic Load Dispatch) (Chile)
|
|
MWh
|
Megawatt hours
|
CDEC-SIC
|
Sistema Interconectado Central (Central Interconnected System) (Chile)
|
|
NRC
|
Nuclear Regulatory Commission
|
CDEC-SING
|
Sistema Interconectado del Norte Grande (Northern Interconnected System) (Chile)
|
|
NYK
|
Nippon Yusen Kabushiki Kaisha
|
CEC
|
California Energy Commission
|
|
OII
|
Order Instituting Investigation
|
Chilquinta Energía
|
Chilquinta Energía S.A. and its subsidiaries
|
|
OSINERGMIN
|
Organismo Supervisor de la Inversión en Energía y Minería (Energy and Mining Investment Supervisory Body) (Peru)
|
CNBV
|
Comisión Nacional Bancaria y de Valores (Mexican National Banking and Securities Commission)
|
|
PEMEX
|
Petróleos Mexicanos (Mexican state-owned oil company)
|
CNE
|
Comisión Nacional de Energía (National Energy Commission) (Chile)
|
|
PG&E
|
Pacific Gas and Electric Company
|
COES
|
Comité de Operación Económica del Sistema Interconectado Nacional (Committee of Economic Operation of the National Interconnected System) (Peru)
|
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QF
|
Qualifying Facility
|
CPUC
|
California Public Utilities Commission
|
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RBS Sempra Commodities
|
RBS Sempra Commodities LLP
|
CRE
|
Comisión Reguladora de Energía (Energy Regulatory Commission) (Mexico)
|
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REX
|
Rockies Express Pipeline
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DOE
|
U.S. Department of Energy
|
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RNV
|
Registro Nacional de Valores (Mexican National Securities Registry)
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DOT
|
U.S. Department of Transportation
|
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Rockies Express
|
Rockies Express Pipeline LLC
|
Edison
|
Southern California Edison Company
|
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RPS
|
Renewables Portfolio Standard
|
EPA
|
Environmental Protection Agency
|
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SDG&E
|
San Diego Gas & Electric Company
|
ERR
|
Eligible Renewable Energy Resource
|
|
SEC
|
Securities and Exchange Commission
|
ERRA
|
Energy Resource Recovery Account
|
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SEIN
|
Sistema Eléctrico Interconectado Nacional (Peruvian National Interconnected System) (Peru)
|
FERC
|
Federal Energy Regulatory Commission
|
|
SoCalGas
|
Southern California Gas Company
|
FTA
|
Free Trade Agreement
|
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SONGS
|
San Onofre Nuclear Generating Station
|
GHG
|
Greenhouse Gas
|
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The Board
|
Sempra Energy's Board of Directors
|
IEnova
|
Infraestructura Energética Nova, S.A.B. de C.V.
|
|
Willmut Gas
|
Willmut Gas Company
|
IOUs
|
Investor-owned utilities
|
|
|
|
Exhibit 10.19
<YEAR> Executive Incentive Compensation Plan Shared Services
ICP Plan Year: January 1, <YEAR> to December 31, <YEAR>
INTRODUCTION
The San Diego Gas & Electric (SDG&E) and Southern California Gas Company (SoCalGas) Shared Services Incentive Compensation Plan (ICP) is designed to attract, retain, and engage executives whose efforts contribute to the success of the utilities and Sempra Energy (SE). The plan aligns with Sempra Energys goal of sustained earnings growth and the utilities regulatory framework with goals that encourage executives to drive towards our aspirations and to:
*
Maintain high safety standards,
*
Grow the business through enterprise thinking while maximizing revenues/profits,
*
Focus on the high-level goals for SDG&E and SoCalGas that encourages teamwork and achievement of operational excellence,
*
Focus on business efficiencies and investments that produce long-term efficiency benefits,
*
Increase reliability of delivery service,
*
Enhance customer focus to achieve optimal customer satisfaction, and
*
Achieve high level of employee commitment and contribution through sharing of business success and the establishment of key performance indicators.
PARTICIPATION
Executives who meet all of the following eligibility requirements will participate in this incentive plan for <YEAR>.
1.
Employee is an eligible executive, as determined by the SDG&E and SoCalGas Boards of Directors, for at least three consecutive full months during <YEAR> and is an employee on December 31, <YEAR> or meets other eligibility requirements as listed under section: Employee Status Changes.
2.
Participant has met minimum job expectations and performed satisfactorily, as determined by his/her supervisor in conjunction with Human Resources.
3.
Participant is not in another formal incentive plan in <YEAR>.
Participation in one plan year does not constitute the right to participate in succeeding plan years. This plan does not constitute a contract of employment or guarantee of an incentive award payment and cannot be relied on as such.
BASIS FOR AWARD CALCULATION
Awards are calculated based on the employees Basis for Award Calculation (BAC) while on the active payroll. BAC includes annual base salary on December 31, <YEAR> plus any eligible lump sum payment that may be granted during <YEAR>. Other awards (e.g. spot cash); incentives, premiums and payments are not included in the BAC.
<YEAR> PERFORMANCE GOALS AND MEASURES
SDG&E <YEAR> ICP Goals & Measures | WEIGHT | MULTIPLIER | MIN | TARGET | MAX |
FINANCIAL GOALS (in Millions) |
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OPERATIONAL GOALS |
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Operational Goals Total |
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TOTAL | 100% |
|
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X SDG&E Weighting Factor | 50% |
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TOTAL WEIGHT | 50% |
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SoCalGas <YEAR> ICP Goals & Measures | WEIGHT | Leverage | MIN | TARGET | MAX | |||
FINANCIAL GOALS (in Millions) |
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OPERATIONAL GOALS |
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Operational Goals Total |
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TOTAL | 100% |
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X SCG Weighting Factor | 50% |
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| TOTAL WEIGHT | 50% |
FINANCIAL MEASURES
Sempra Energy Earnings
Sempra Energy Earnings are revenue minus expense, less tax. Employees can influence earnings by either increasing revenue or decreasing expenses. Earnings are determined after accounting for the appropriate accrued level of incentive compensation expense.
Sempra Energy Earnings exclude:
·
<DEFINE EXCLUSIONS>
San Diego Gas & Electric Earnings
<Define SDG&E Financial Measure>
Southern California Gas Company (SoCalGas) Earnings
<Define SCG Financial Measure>
OPERATIONAL GOALS SAN DIEGO GAS & ELECTRIC
The payout for all Operational Goals range between 0%-200%.
<Define Operational Measures>
OPERATIONAL GOALS SOUTHERN CALIFORNIA GAS COMPANY
The payout for all Operational Goals range between 0%-200%.
<Define Operational Measures>
CALCULATION, CERTIFICATION AND PAYMENT OF AWARDS
Award potentials will be linearly interpolated between the minimum and target, or target and maximum goals. There is no award payout for performance at or below the minimum goals. The payout for the financial component may, at the boards discretion, be reduced in consideration of individual performance. The Shared Services plan results will be calculated by taking the average of the SDG&E and SoCalGas plan results.
Adjustments to the budget target for ICP calculation purposes will require the written approval of the Chief Executive Officer of SDG&E and President and Chief Executive Officer of SoCalGas. The approved exceptions will be limited to costs or expenses related to future growth opportunities and the funding of process improvements above the planned budget.
The SDG&E and SoCalGas Board of Directors must approve awards. Approved awards will be paid by
March 15, 2014 and will be subject to appropriate tax withholding. Such awards are considered pension-eligible earnings for the Cash Balance Plan and are included as eligible earnings for the 401(k) Plan. Employees with outstanding loan payments to the 401(k) plan and/or for medical premiums may, at the Companys option, have up to the full arrears deducted from their ICP check. Employees will be notified by mail with respect to any arrears payments for these deductions.
EMPLOYEE STATUS CHANGES
All eligible employees (including new hires) will have their award prorated for the period of participation in the plan while on the active payroll. For employees who change target percentages during a plan year, their award will be calculated based on the effective period for each target percentage.
Employees who transfer within the corporation or among incentive plans during the year will be eligible for an award under this plan provided that all eligibility requirements are met. The award will be based on the employees December 31, <YEAR> BAC, prorated for the participation period in this plan.
An award will still be paid if a participant meets all other eligibility requirements during <YEAR> but is not a regular employee on December 31, <YEAR> due to the following reasons:
*
Participants employment terminates for any reason after he/she has attained age 55 and at the time his/her employment terminated he/she had completed at least five years of service; or
*
Participant leaves his/her position under disability (as defined in the company disability benefit plan), or
*
Participant dies during an award year (award will be paid to the participants estate).
In the above circumstances, the award will be calculated based on the participants BAC prorated for the period of participation in the plan while on the active payroll. Awards will be paid the same time payment is made to other participants.
If a participant leaves the company for any other reason, eligibility for an award for the plan year will be forfeited unless an exception is made at the discretion of the Chairman and CEO and will be offset by any amount paid pursuant the Severance Benefits upon Termination of Employment due to Death or Disability section of the participants Severance Pay Agreement.
PLAN ADMINISTRATION
The Company retains the discretion and authority to interpret, amend or modify the plan; to grant incentive awards; as well as to terminate, increase or decrease any incentive award opportunity during the performance period; and to reduce or eliminate any incentive awards that would otherwise be payable at the end of the performance period. The Company, in its sole discretion determines Sempra Energy Earnings, SDG&E Earnings, SoCalGas Earnings, operational measures, and award calculations.
The Company shall require the forfeiture, recovery or reimbursement of awards or compensation under this Plan as (i) required by applicable law, or (ii) required under any policy implemented or maintained by the Company pursuant to any applicable rules or requirements of a national securities exchange or national securities association on which any securities of the Company are listed. The Company reserves the right to recoup compensation paid if it determines that the results on which the compensation was paid were not actually achieved.
The SDG&E or SoCalGas Board may, in its sole discretion, require the recovery or reimbursement of short-term incentive compensation awards from any employee whose fraudulent or intentional misconduct materially affects the operations or financial results of the Company or its subsidiaries.
Questions concerning the plan should be directed to the Sr. Vice President Human Resources, Diversity & Inclusion, Sempra Energy.
Exhibit 10.57
SEMPRA ENERGY
SEVERANCE PAY AGREEMENT
THIS AGREEMENT (this Agreement), dated as of September 3, 2013 (the Effective Date), is made by and between SEMPRA ENERGY, a California corporation (Sempra Energy), and MARTHA B. WYRSCH (the Executive).
WHEREAS, the Executive is currently employed by Sempra Energy or a direct or indirect subsidiary of Sempra Energy (Sempra Energy and its subsidiaries are hereinafter collectively referred to as the Company) as Executive Vice President and General Counsel; and
WHEREAS, Sempra Energy and the Executive desire to enter into this Agreement; and
WHEREAS, the Board of Directors of Sempra Energy (the Board) has authorized this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and the Executive hereby agree as follows:
Section 1.
Definitions. For purposes of this Agreement, the following capitalized terms have the meanings set forth below:
Accounting Firm has the meaning assigned thereto in Section 8(d) hereof.
Accrued Obligations means the sum of (A) the Executives Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) an amount equal to any annual Incentive Compensation Awards earned with respect to fiscal years ended prior to the year that includes the Date of Termination to the extent not theretofore paid, (C) any accrued and unpaid vacation, if any, and (D) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of his duties in accordance with policies established from time to time by the Board, in each case to the extent not theretofore paid.
Affiliate has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act.
Annual Base Salary means the Executives annual base salary from the Company.
Asset Purchaser has the meaning assigned thereto in Section 16(e).
Asset Sale has the meaning assigned thereto in Section 16(e).
Average Annual Bonus means the average of the annual bonuses from the Company earned by the Executive with respect to the three (3) fiscal years of the Company immediately preceding the Date of Termination (the Bonus Fiscal Years); provided, however, that, if the Executive was employed by the Company for less than three (3) Bonus Fiscal Years, Average Annual Bonus means the average of the annual bonuses (if any) from the Company earned by the Executive with respect to the Bonus Fiscal Years during which the Executive was employed by the Company; and, provided, further, that, if the Executive was not employed by the Company during any of the Bonus Fiscal Years, Average Annual Bonus means zero.
Cause means:
(a)
Prior to a Change in Control, (i) the willful failure by the Executive to substantially perform the Executives duties with the Company (other than any such failure resulting from the Executives incapacity due to physical or mental illness, (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) the Executives gross insubordination; and/or (iv) the Executives commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i) of this subsection (a), no act, or failure to act, on the Executives part shall be deemed willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executives act, or failure to act, was in the best interests of the Company.
(b)
From and after a Change in Control, (i) the willful and continued failure by the Executive to substantially perform the Executives duties with the Company (other than any such failure resulting from the Executives incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 2 hereof) and/or (ii) the Executives commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i) of this subsection (b), no act, or failure to act, on the Executives part shall be deemed willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executives act, or failure to act, was in the best interests of the Company. Notwithstanding the foregoing, the Executive shall not be deemed terminated for Cause pursuant to clause (i) of this subsection (b) unless and until the Executive shall have been provided with reasonable notice of and, if possible, a reasonable opportunity to cure the facts and circumstances claimed to provide a basis for termination of the Executives employment for Cause.
Change in Control shall be deemed to have occurred on the date that a change in the ownership of Sempra Energy, a change in the effective control of Sempra Energy, or a change in the ownership of a substantial portion of assets of Sempra Energy occurs (each, as defined in subsection (a) below), except as otherwise provided in subsections (b), (c) and (d) below:
(a)
(i)
a change in the ownership of Sempra Energy occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of Sempra Energy that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of Sempra Energy,
(ii)
a change in the effective control of Sempra Energy occurs only on either of the following dates:
(A)
the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of Sempra Energy possessing thirty percent (30%) or more of the total voting power of the stock of Sempra Energy, or
(B)
the date a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of appointment or election, and
(iii)
a change in the ownership of a substantial portion of assets of Sempra Energy occurs on the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from Sempra Energy that have a total gross fair market value equal to or more than eighty-five percent (85%) of the total gross fair market value of all of the assets of Sempra Energy immediately before such acquisition or acquisitions.
(b)
A change in the ownership of Sempra Energy or a change in the effective control of Sempra Energy shall not occur under clause (a)(i) or (a)(ii) by reason of any of the following:
(i)
an acquisition of ownership of stock of Sempra Energy directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business,
(ii)
a merger or consolidation which would result in the voting securities of Sempra Energy outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least sixty percent (60%) of the combined voting power of the securities of Sempra Energy or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or
(iii)
a merger or consolidation effected to implement a recapitalization of Sempra Energy (or similar transaction) in which no Person is or becomes the Beneficial Owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Sempra Energy (not including the securities beneficially owned by such Person any securities acquired directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business) representing twenty percent (20%) or more of the combined voting power of Sempra Energys then outstanding securities.
(c)
A change in the ownership of a substantial portion of assets of Sempra Energy shall not occur under clause (a)(iii) by reason of a sale or disposition by Sempra Energy of the assets of Sempra Energy to an entity, at least sixty percent (60%) of the combined voting power of the voting securities of which are owned by shareholders of Sempra Energy in substantially the same proportions as their ownership of Sempra Energy immediately prior to such sale.
(d)
This definition of Change in Control shall be limited to the definition of a change in control event relating to Sempra Energy under Treasury Regulation Section 1.409A-3(i)(5). A Change in Control shall only occur if there is a change in control event relating to Sempra Energy under Treasury Regulation Section 1.409A-3(i)(5) with respect to the Executive.
Change in Control Date means the date on which a Change in Control occurs.
Code means the Internal Revenue Code of 1986, as amended.
Compensation Committee means the compensation committee of the Board.
Consulting Payment has the meaning assigned thereto in Section 14(d) hereof.
Consulting Period has the meaning assigned thereto in Section 14(e) hereof.
Date of Termination has the meaning assigned thereto in Section 2(b) hereof.
Deferred Compensation Plan has the meaning assigned thereto in Section 4(f) hereof.
Disability has the meaning set forth in the Companys long-term disability plan or its successor; provided, however, that the Board may not terminate the Executives employment hereunder by reason of Disability unless (i) at the time of such termination there is no reasonable expectation that the Executive will return to work within the next ninety (90) day period and (ii) such termination is permitted by all applicable disability laws.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the applicable rulings and regulations thereunder.
Excise Tax has the meaning assigned thereto in Section 8(a) hereof.
Good Reason means:
(a)
Prior to a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 2 hereof):
(i)
the assignment to the Executive of any duties materially inconsistent with the range of duties and responsibilities appropriate to a senior Executive within the Company (such range determined by reference to past, current and reasonable practices within the Company);
(ii)
a material reduction in the Executives overall standing and responsibilities within the Company, but not including (A) a mere change in title or (B) a transfer within the Company, which, in the case of both (A) and (B), does not adversely affect the Executives overall status within the Company;
(iii)
a material reduction by the Company in the Executives aggregate annualized compensation and benefits opportunities, except for across-the-board reductions (or modifications of benefit plans) similarly affecting all similarly situated executives (both of the Company and of any Person then in control of the Company) of comparable rank with the Executive;
(iv)
the failure by the Company to pay to the Executive any portion of the Executives current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)
any purported termination of the Executives employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 2 hereof; for purposes of this Agreement, no such purported termination shall be effective;
(vi)
the failure by Sempra Energy to perform its obligations under Section 16(c), (d) or (e) hereof;
(vii)
the failure by the Company to provide the indemnification and D&O insurance protection Section 10 of this Agreement requires it to provide; or
(viii)
the failure by Sempra Energy to comply with any material provision of this Agreement.
(b)
From and after a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 2 hereof):
(i)
an adverse change in the Executives title, authority, duties, responsibilities or reporting lines as in effect immediately prior to the Change in Control;
(ii)
a reduction by the Company in the Executives aggregate annualized compensation opportunities, except for across-the-board reductions in base salaries, annual bonus opportunities or long-term incentive compensation opportunities of less than ten percent (10%) similarly affecting all similarly situated executives (both of the Company and of any Person then in control of the Company) of comparable rank with the Executive; or the failure by the Company to continue in effect any material benefit plan in which the Executive participates immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executive's participation relative to other participants, as existed at the time of the Change in Control;
(iii)
the relocation of the Executives principal place of employment immediately prior to the Change in Control Date (the Principal Location) to a location which is both further away from the Executives residence and more than thirty (30) miles from such Principal Location, or the Companys requiring the Executive to be based anywhere other than such Principal Location (or permitted relocation thereof), or a substantial increase in the Executives business travel obligations outside of the Southern California area as of the Effective Date other than any such increase that (A) arises in connection with extraordinary business activities of the Company of limited duration and (B) is understood not to be part of the Executives regular duties with the Company;
(iv)
the failure by the Company to pay to the Executive any portion of the Executives current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)
any purported termination of the Executives employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 2 hereof; for purposes of this Agreement, no such purported termination shall be effective;
(vi)
the failure by Sempra Energy to perform its obligations under Section 16(c), (d) or (e) hereof;
(vii)
the failure by the Company to provide the indemnification and D&O insurance protection Section 10 of this Agreement requires it to provide; or
(viii)
the failure by Sempra Energy to comply with any material provision of this Agreement.
Following a Change in Control, the Executives determination that an act or failure to act constitutes Good Reason shall be presumed to be valid unless such determination is deemed to be unreasonable by an arbitrator pursuant to the procedure described in Section 13 hereof. The Executives right to terminate the Executives employment for Good Reason shall not be affected by the Executives incapacity due to physical or mental illness. The Executives continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
Incentive Compensation Awards means awards granted under Incentive Compensation Plans providing the Executive with the opportunity to earn, on a year-by-year basis, annual and long-term incentive compensation.
Incentive Compensation Plans means annual incentive compensation plans and long-term incentive compensation plans of the Company, which long-term incentive compensation plans may include plans offering stock options, restricted stock and other long-term incentive compensation.
Involuntary Termination means (a) the Executives Separation from Service by reason other than for Cause, death, or Disability, or Mandatory Retirement, or (b) the Executives Separation from Service by reason of resignation of employment for Good Reason.
JAMS Rules has the meaning assigned thereto in Section 13 hereof.
Mandatory Retirement means termination of employment pursuant to the Companys mandatory retirement policy.
Notice of Termination has the meaning assigned thereto in Section 2(a) hereof.
Payment has the meaning assigned thereto in Section 8(a) hereof.
Payment in Lieu of Notice has the meaning assigned thereto in Section 2(b) hereof.
Person has the meaning set forth in section 3(a)(9) of the Exchange Act, as modified and used in sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, or (v) a person or group as used in Rule 13d-1(b) promulgated under the Exchange Act.
Post-Change in Control Severance Payment has the meaning assigned thereto in Section 5 hereof.
Pre-Change in Control Severance Payment has the meaning assigned thereto in Section 4 hereof.
Principal Location has the meaning assigned thereto in clause (b)(iii) of the definition of Good Reason, above.
Proprietary Information has the meaning assigned thereto in Section 14(a) hereof.
Pro Rata Bonus has the meaning assigned thereto in Section 5(b) hereof.
Release has the meaning assigned thereto in Section 4 hereof.
Section 409A Payments means any of the following: (a) the Payment in Lieu of Notice; (b) the Pre-Change in Control Severance Payment; (c) the Post-Change in Control Severance Payment; (d) the Pro Rata Bonus; (e) the Consulting Payment; (f) the payment under Section 5(c); (g) the financial planning services and the related payments provided under Sections 4(e) and 5(g); (h) the legal fees and expenses reimbursed under Section 15; and (i) any other payment that the Company determines in its sole discretion is subject to Section 409A of the Code as non-qualified deferred compensation.
Sempra Energy Control Group means Sempra Energy and all persons with whom Sempra Energy would be considered a single employer under Section 414(b) or 414(c) of the Code, as determined from time to time.
Separation from Service has the meaning set forth in Treasury Regulation Section 1.409A-1(h), with respect to the Service Recipient.
SERP has the meaning assigned thereto in Section 5(c) hereof.
Specified Employee shall be determined in accordance with Section 409A(a)(2)(B)(i) of the Code and Treasury Regulation 1.409A-1(i).
For purposes of this Agreement, references to any Treasury Regulation shall mean such Treasury Regulation as in effect on the date hereof.
Section 2.
Notice and Date of Termination.
(a)
Any termination of the Executives employment by the Company or by the Executive shall be communicated by a written notice of termination to the other party (the Notice of Termination). Where applicable, the Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executives employment under the provision so indicated. Unless the Board determines otherwise, a Notice of Termination by the Executive alleging a termination for Good Reason must be made within 180 days of the act or failure to act that the Executive alleges to constitute Good Reason.
(b)
The date of the Executives termination of employment with the Company (the Date of Termination) shall be determined as follows: (i) if the Executives Separation from Service is at the volition of the Company, the Date of Termination shall be the date specified in the Notice of Termination (which, in the case of a termination by the Company other than for Cause, shall not be less than two (2) weeks from the date such Notice of Termination is given unless the Company elects to pay the Executive, in addition to any other amounts payable hereunder, an amount (the Payment in Lieu of Notice) equal to two (2) weeks of the Executives Annual Base Salary in effect on the Date of Termination), and (ii) if the Executives Separation from Service is by the Executive for Good Reason, the Date of Termination shall be determined by the Executive and specified in the Notice of Termination, but shall not in any event be less than fifteen (15) days nor more than sixty (60) days after the date such Notice of Termination is given. The Payment in Lieu of Notice shall be paid on such date as is required by law, but no later than thirty (30) days after the date of the Executives Separation from Service; provided, however, that if the Executive is a Specified Employee on the date of his or her Separation from Service, such Payment in Lieu of Notice shall be paid as provided in Section 9 hereof.
Section 3.
Termination from the Board. Upon the termination of the Executives employment for any reason, the Executives membership on the Board, the board of directors of any of the Companys Affiliates, any committees of the Board and any committees of the board of directors of any of the Companys Affiliates, if applicable, shall be automatically terminated.
Section 4.
Severance Benefits upon Involuntary Termination Prior to Change in Control. Except as provided in Section 5(h) and Section 19(i) hereof, in the event of the Involuntary Termination of the Executive prior to a Change in Control, the Company shall pay the Executive, in one lump sum cash payment, an amount (the Pre-Change in Control Severance Payment) equal to the greater of: (X) 165% of the Executives Annual Base Salary as in effect on the Date of Termination, and (Y) the Executives Annual Base Salary as in effect on the Date of Termination, plus the Executives Average Annual Bonus. In addition to the Pre-Change in Control Severance Payment, the Executive shall be entitled to the following additional benefits specified in subsections (a) through (e). The Company's obligation to pay the Pre-Change in Control Severance Payment or provide the benefits set forth in subsections (c), (d) and (e) are subject to and conditioned upon the Executive executing a release (the Release) of all claims substantially in the form attached hereto as Exhibit A within fifty (50) days after the date of Involuntary Termination and Executive not revoking such Release in accordance with the terms thereof. Except as provided in Section 4(f), the Pre-Change in Control Severance Payment shall be paid on such date as is determined by the Company within sixty (60) days after the date of the Involuntary Termination; but not before the Release becomes effective and irrevocable. If the fifty (50) day period in which the Release could become effective spans more than one taxable year, then the Pre-Change in Control Severance Payment shall not be made until the later taxable year. Notwithstanding the foregoing, if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Pre-Change in Control Severance Payment and the financial planning services and the related payments provided under Section 4(e) shall be paid as provided in Section 9 hereof.
(a)
Accrued Obligations. The Company shall pay the Executive a lump sum amount in cash equal to the Accrued Obligations within the time required by law.
(b)
Equity Based Compensation. The Executive shall retain all rights to any equity-based compensation awards to the extent set forth in the applicable plan and/or award agreement.
(c)
Welfare Benefits. Subject to Section 12 below, for a period of twelve (12) months following the date of the Involuntary Termination (and an additional twelve (12) months if the Executive provides consulting services under Section 14(e) hereof), the Executive and his dependents shall be provided with health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the date of the Involuntary Termination; provided, however, that such benefits shall be provided on substantially the same terms and conditions and at the same cost to the Executive as in effect immediately prior to the date of the Involuntary Termination. Such benefits shall be provided through insurance maintained by the Company under the Companys benefit plans. Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5). Notwithstanding the foregoing, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to the Executive a taxable monthly payment in an amount equal to the monthly premium that the Executive would be required to pay to continue the Executives and his covered dependents group insurance coverages under COBRA as in effect on the Date of Termination (which amount shall be based on the premiums for the first month of COBRA coverage); provided, however, that, if the Executive is a Specified Employee on the Date of Termination, then such payments shall be paid as provided in Section 9 hereof.
(d)
Outplacement Services. The Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executives Involuntary Termination, for a period of twenty-four (24) months following the date of the Involuntary Termination, in an aggregate amount of cost to the Company not to exceed $50,000. Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer. Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(e)
Financial Planning Services. The Executive shall receive financial planning services, on an in-kind basis, for a period of twenty-four (24) months following the Date of Termination. Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial planning services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000. The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services. The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive. The Executives right to financial planning services shall not be subject to liquidation or exchange for any other benefit. Such financial planning services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv).
(f)
Deferral of Payments. The Executive shall have the right to elect to defer the Pre-Change in Control Severance Payment to be received by the Executive pursuant to this Section 4 under the terms and conditions of the Sempra Energy 2005 Deferred Compensation Plan (the Deferred Compensation Plan). Any such deferral election shall be made in accordance with Section 18(b) hereof.
Section 5.
Severance Benefits upon Involuntary Termination in Connection with and after Change in Control. Notwithstanding the provisions of Section 4 above, and except as provided in Section 19(i) hereof, in the event of the Involuntary Termination of the Executive on or within two (2) years following a Change in Control, in lieu of the payments described in Section 4 above, the Company shall pay the Executive, in one lump sum cash payment, an amount (the Post-Change in Control Severance Payment) equal to two times the greater of: (X) 165% of the Executives Annual Base Salary as in effect immediately prior to the Change in Control or the Date of Termination, whichever is greater, and (Y) the Executives Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, plus the Executives Average Annual Bonus. In addition to the Post-Change in Control Severance Payment, the Executive shall be entitled to the following additional benefits specified in subsections (a) through (g). The Company's obligation to pay the Post-Change in Control Severance Payment or provide the benefits set forth in subsections (b),(c), (d), (e), (f) and (g) are subject to and conditioned upon the Executive executing the Release within fifty (50) days after the date of Involuntary Termination and Executive not revoking such Release in accordance with the terms thereof. Except as provided in Sections 5(h) and 5(i), the Post-Change in Control Severance Payment, the Pro Rata Bonus and the payments under Section 6(c) shall be paid on such date as is determined by the Company within sixty (60) days after the date of the Involuntary Termination. If the fifty (50) day period in which the Release could become effective spans more than one taxable year, then the Post-Change in Control Severance Payment, Pro Rata Bonus and payments under Section 5(c) shall not be made until the later taxable year. Notwithstanding the foregoing, if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Post-Change in Control Severance Payment, the Pro Rata Bonus, the payment under Section 5(c) and the financial planning services and the related payments provided under Section 5(g) shall be paid as provided in Section 9 hereof.
(a)
Accrued Obligations. The Company shall pay the Executive a lump sum amount in cash equal to the Accrued Obligations within the time required by law.
(b)
Pro Rata Bonus. The Company shall pay the Executive a lump sum amount in cash equal to: (i) the greater of: (X) 65% of the Executives Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, or (Y) the Executives Average Annual Bonus, multiplied by (ii) a fraction, the numerator of which shall be the number of days from the beginning of such fiscal year to and including the Date of Termination and the denominator of which shall be 365 equal to (the Pro Rata Bonus).
(c)
Pension Supplement. The Executive shall be entitled to receive a Supplemental Retirement Benefit under the Sempra Energy Supplemental Executive Retirement Plan, as in effect from time to time (SERP), determined in accordance with this Section 5(c), in the event that the Executive is a Participant (as defined in the SERP) as of the Date of Termination. Such Supplemental Retirement Benefit shall be determined by crediting the Executive with additional months of Service (if any) equal to the number of full calendar months from the Date of Termination to the date on which the Executive would have attained age 62. The Executive shall be entitled to receive such Supplemental Retirement Benefit without regard to whether the Executive has attained age 55 or completed five years of Service (as defined in the SERP) as of the Date of Termination. The Executive shall be treated as qualified for Retirement (as defined in the SERP) as of the Date of Termination, and the Executives Vesting Factor with respect to the Supplemental Retirement Benefit shall be 100%. The Executives Supplemental Retirement Benefit shall be calculated based on the Executives actual age as of the date of commencement of payment of such Supplemental Retirement Benefit (the SERP Distribution Date), and by applying the applicable early retirement factors under the SERP, if the Executive has not attained age 62 but has attained age 55 as of the SERP Distribution Date. If the Executive has not attained age 55 as of the SERP Distribution Date, the Executives Supplemental Retirement Benefit shall be calculated by applying the applicable early retirement factor under the SERP for age 55, and the Supplemental Retirement Benefit otherwise payable at age 55 shall be actuarially adjusted to the Executives actual age as of the SERP Distribution Date using the following actuarial assumptions: (i) the applicable mortality table promulgated by the Internal Revenue Service under Section 417(e)(3) of the Code, as in effect on the first day of the calendar year in which the SERP Distribution Date occurs, and (ii) the applicable interest rate promulgated by the Internal Revenue Service under Section 417(a)(3) of the Code for the November next preceding the first day of the calendar year in which the SERP Distribution Date occurs. The Executives Supplemental Retirement Benefit shall be determined in accordance with this Section 5(c), notwithstanding any contrary provisions of the SERP and, to the extent subject to Section 409A of the Code, shall be paid in accordance with Treasury Regulation Section 1.409A-3(c)(1). The Supplemental Retirement Benefit paid to or on behalf of the Executive in accordance with this Section 5(c) shall be in full satisfaction of any and all of the benefits payable to or on behalf of the Executive under the SERP.
(d)
Equity-Based Compensation. Notwithstanding the provisions of any applicable equity-compensation plan or award agreement to the contrary, all equity-based Incentive Compensation Awards (including, without limitation, stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share awards, awards covered under Section 162(m) of the Code, and dividend equivalents) held by the Executive shall immediately vest and become exercisable or payable, as the case may be, as of the Date of Termination, to be exercised or paid, as the case may be, in accordance with the terms of the applicable Incentive Compensation Plan and Incentive Compensation Award agreement, and any restrictions on any such Incentive Compensation Awards shall automatically lapse; provided, however, that any such stock option or stock appreciation rights awards granted on or after June 26, 1998 shall remain outstanding and exercisable until the earlier of (A) the later of eighteen (18) months following the Date of Termination or the period specified in the applicable Incentive Compensation Award agreements or (B) the expiration of the original term of such Incentive Compensation Award (or, if earlier, the tenth anniversary of the original date of grant) (it being understood that all Incentive Compensation Awards granted prior to or after June 26, 1998 shall remain outstanding and exercisable for a period that is no less than that provided for in the applicable agreement in effect as of the date of grant).
(e)
Welfare Benefits. Subject to Section 12 below, for a period of twenty-four (24) months following the date of Involuntary Termination (and an additional twelve (12) months if the Executive provides consulting services under Section 14(e) hereof), the Executive and his dependents shall be provided with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive; provided, however, that such benefits shall be provided on substantially the same terms and conditions and at the same cost to the Executive as in effect immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive. Such benefits shall be provided through insurance maintained by the Company under the Company benefit plans. Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5). Notwithstanding the foregoing, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to the Executive a taxable monthly payment in an amount equal to the monthly premium that the Executive would be required to pay to continue the Executives and his covered dependents group insurance coverages under COBRA as in effect on the Date of Termination (which amount shall be based on the premiums for the first month of COBRA coverage); provided, however, that, if the Executive is a Specified Employee on the Date of Termination, then such payments shall be paid as provided in Section 9 hereof.
(f)
Outplacement Services. The Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executives Involuntary Termination, for a period of thirty-six (36) months following the date of Involuntary Termination (but in no event beyond the last day of the Executives second taxable year following the Executives taxable year in which the Involuntary Termination occurs), in the aggregate amount of cost to the Company not to exceed $50,000. Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer. Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(g)
Financial Planning Services. The Executive shall receive financial planning services, on an in-kind basis, for a period of thirty-six (36) months following the date of Involuntary Termination. Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000. The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services. The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive. The Executives right to financial planning services shall not be subject to liquidation or exchange for any other benefit. Such financial planning services shall be provided in a manner that complies with Section 1.409A-3(i)(1)(iv).
(h)
Involuntary Termination in Connection with a Change in Control. Notwithstanding anything contained herein, in the event of an Involuntary Termination prior to a Change in Control, if the Involuntary Termination (1) was at the request of a third party who has taken steps reasonably calculated to effect such Change in Control or (2) otherwise arose in connection with or in anticipation of such Change in Control, then the Executive shall, in lieu of the payments described in Section 4 hereof, be entitled to the Post-Change in Control Severance Payment and the additional benefits described in this Section 5 as if such Involuntary Termination had occurred within two (2) years following the Change in Control. The amounts specified in Section 5 that are to be paid under this Section 5(h) shall be reduced by any amount previously paid under Section 4. The amounts to be paid under this Section 5(h) shall be paid within sixty (60) days after the Change in Control Date of such Change in Control.
(i)
Deferral of Payments. The Executive shall have the right to elect to defer the Post-Change in Control Severance Payment and the Pro Rata Bonus to be received by the Executive pursuant to this Section 5 under the terms and conditions of the Deferred Compensation Plan. Any such deferral election shall be made in accordance with Section 18(b) hereof.
Section 6.
Severance Benefits upon Termination by the Company for Cause or by the Executive Other than for Good Reason. If the Executives employment shall be terminated for Cause, or if the Executive terminates employment other than for Good Reason, the Company shall have no further obligations to the Executive under this Agreement other than the Accrued Obligations and any amounts or benefits described in Section 10 hereof.
Section 7.
Severance Benefits upon Termination due to Death or Disability. If the Executive has a Separation from Service by reason of death or Disability, the Company shall pay the Executive or his estate, as the case may be, the Accrued Obligations and the Pro Rata Bonus (without regard to whether a Change in Control has occurred) and any amounts or benefits described in Section 10 hereof. Such payments shall be in addition to those rights and benefits to which the Executive or his estate may be entitled under the relevant Company plans or programs. The Company's obligation to pay the Pro Rata Bonus is conditioned upon the Executive, the Executive's representative or the Executive's estate, as the case may be executing the Release within fifty (50) days after the date of Executive's Separation from Service and not revoking such Release in accordance with the terms thereof. The Accrued Obligations shall be paid within the time required by law and the Pro Rata Bonus shall be paid on such date as determined by the Company within sixty (60) days after the date of the Separation from Service but not before the Release becomes effective and irrevocable. If the fifty (50) day period in which the Release could become effective spans more than one taxable year, then the Pro Rata Bonus shall not be made until the later taxable year. Notwithstanding the foregoing, if the Executive is a Specified Employee on the date of the Executives Separation from Service, the Pro Rata Bonus shall be paid as provided in Section 9 hereof.
Section 8.
Limitations on Payments by the Company.
(a)
Anything in this Agreement to the contrary notwithstanding and except as set forth in this Section 8 below, in the event it shall be determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise (the Payment) would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code, (the Excise Tax), then, subject to subsection (b), the Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall be reduced under this subsection (a) to the amount equal to the Reduced Payment. For such Payment payable under this Agreement, the Reduced Payment shall be the amount equal to the greatest portion of the Payment (which may be zero) that, if paid, would result in no portion of any Payment being subject to the Excise Tax.
(b)
The Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall not be reduced under subsection (a) if:
(i)
such reduction in such Payment is not sufficient to cause no portion of any Payment to be subject to the Excise Tax, or
(ii)
the Net After-Tax Unreduced Payments (as defined below) would equal or exceed one hundred and five percent (105%) of the Net After-Tax Reduced Payments (as defined below).
For purposes of determining the amount of any Reduced Payment under subsection (a), and the Net-After Tax Reduced Payments and the Net After-Tax Unreduced Payments, the Executive shall be considered to pay federal, state and local income and employment taxes at the Executives applicable marginal rates taking into consideration any reduction in federal income taxes which could be obtained from the deduction of state and local income taxes, and any reduction or disallowance of itemized deductions and personal exemptions under applicable tax law). The applicable federal, state and local income and employment taxes and the Excise Tax (to the extent applicable) are collectively referred to as the Taxes.
(c)
The following definitions shall apply for purposes of this Section 8:
(i)
Net After-Tax Reduced Payments shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are reduced pursuant to subsection (a).
(ii)
Net After-Tax Unreduced Payments shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are not reduced pursuant to subsection (a).
(iii)
Net After-Tax Basis shall mean, with respect to the Payments, either with or without reduction under subsection (a) (as applicable), the amount that would be retained by the Executive from such Payments after the payment of all Taxes.
(d)
All determinations required to be made under this Section 8 and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm as may be agreed by the Company and the Executive (the Accounting Firm); provided, that the Accounting Firms determination shall be made based upon substantial authority within the meaning of Section 6662 of the Code. The Accounting Firm shall provide detailed supporting calculations to both the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. For purposes of determining whether and the extent to which the Payments will be subject to the Excise Tax, (i) no portion of the Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a payment within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Payments shall be taken into account which, in the written opinion of the Accounting Firm, does not constitute a parachute payment within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Payments shall be taken into account which, in the opinion of the Accounting Firm, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the base amount (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Payments shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
Section 9.
Delayed Distribution under Section 409A of the Code. If the Executive is a Specified Employee on the date of the Executives Involuntary Termination (or on the date of the Executives Separation from Service by reason of Disability), the Section 409A Payments, and any other payments or benefits under this Agreement subject to Section 409A of the Code, shall be delayed in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, and such payments or benefits shall be paid or distributed to the Executive during the thirty (30) day period commencing on the earlier of (a) the expiration of the six-month period measured from the date of the Executives Separation from Service or (b) the date of the Executives death. Upon the expiration of the applicable six-month period under Section 409A(a)(2)(B)(i) of the Code, all payments deferred pursuant to this Section 9 (excluding in-kind benefits) shall be paid in a lump sum payment to the Executive, plus interest thereon from the date of the Executives Involuntary Termination through the payment date at an annual rate equal to Moodys Rate. The Moodys Rate shall mean the average of the daily Moodys Corporate Bond Yield Average Monthly Average Corporates as published by Moodys Investors Service, Inc. (or any successor) for the month next preceding the Date of Termination. Any remaining payments due under the Agreement shall be paid as otherwise provided herein.
Section 10.
Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executives continuing or future participation in any benefit, plan, program, policy or practice provided by the Company and for which the Executive may qualify (except with respect to any benefit to which the Executive has waived his rights in writing), including, without limitation, any and all indemnification arrangements in favor of the Executive (whether under agreements or under the Companys charter documents or otherwise), and insurance policies covering the Executive, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement entered into after the Effective Date with the Company. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any benefit, plan, policy, practice or program of, or any contract or agreement entered into with, the Company shall be payable in accordance with such benefit, plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. At all times during the Executives employment with the Company and thereafter, the Company shall provide (to the extent permissible under applicable law) the Executive with indemnification and D&O insurance insuring the Executive against insurable events which occur or have occurred while the Executive was a director or the Executive officer of the Company, on terms and conditions that are at least as generous as that then provided to any other current or former director or the Executive officer of the Company or any Affiliate. Such indemnification and D&O insurance shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(10).
Section 11.
Clawbacks. Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that if the Executive is required to forfeit or to make any repayment of any compensation or benefit(s) to the Company under the Sarbanes-Oxley Act of 2002 or pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other law, such forfeiture or repayment shall not constitute Good Reason.
Section 12.
Full Settlement; Mitigation. The Companys obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others, provided that nothing herein shall preclude the Company from separately pursuing recovery from the Executive based on any such claim. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts (including amounts for damages for breach) payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment.
Section 13.
Dispute Resolution.
(a)
If any dispute arises between Executive and the Company, including, but not limited to, disputes relating to or arising out of this Agreement, any action relating to or arising out of my employment or its termination, and/or any disputes regarding the interpretation, enforceability, or validity of this Agreement (Arbitrable Dispute), Executive and the Company waive the right to resolve the dispute through litigation in a judicial forum and agree to resolve the Arbitrable Dispute through final and binding arbitration, except as prohibited by law. Arbitration shall be the exclusive remedy for any Arbitrable Dispute.
(b)
As to any Arbitrable Dispute, the Company and Executive waive any right to a jury trial or a court bench trial. The Company and Executive also waive the right to bring, maintain, or participate in any class, collective, or representative proceeding, whether in arbitration or otherwise. Further, Arbitrable Disputes must be brought in the individual capacity of the party asserting the claim, and cannot be maintained on a class, collective, or representative basis.
(c)
Arbitration shall take place at the office of the Judicial Arbitration and Mediation Service (JAMS) (or, if Executive is employed outside of California, the American Arbitration Association (AAA)) nearest to the location where Executive last worked for the Company. Except to the extent it conflicts with the rules and procedures set forth in this Arbitration Agreement, arbitration shall be conducted in accordance with the JAMs Employment Arbitration Rules & Procedures (if Executive is employed outside of California, the AAA Employment Arbitration Rules & Mediation Procedures), copies of which are attached for my reference and available at www.jamsadr.com; tel: 800.352.5267 and www.adr.org; tel: 800.778.7879, before a single experienced, neutral employment arbitrator selected in accordance with those rules.
(d)
The Company will be responsible for paying any filing fee and the fees and costs of the arbitrator. Each party shall pay its own attorneys fees. However, if any party prevails on a statutory claim that authorizes an award of attorneys fees to the prevailing party, or if there is a written agreement providing for attorneys fees, the arbitrator may award reasonable attorneys fees to the prevailing party, applying the same standards a court would apply under the law applicable to the claim.
(e)
The arbitrator shall apply the Federal Rules of Evidence, shall have the authority to entertain a motion to dismiss or a motion for summary judgment by any party, and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The arbitrator does not have the authority to consider, certify, or hear an arbitration as a class action, collective action, or any other type of representative action. The Company and Executive recognize that this Agreement arises out of or concerns interstate commerce and that the Federal Arbitration Act shall govern the arbitration and shall govern the interpretation or enforcement of this Arbitration Agreement or any arbitration award.
(f)
EXECUTIVE ACKNOWLEDGES THAT BY ENTERING INTO THIS AGREEMENT, EXECUTIVE IS WAIVING ANY RIGHT HE OR SHE MAY HAVE TO A TRIAL BY JURY.
Section 14.
Executives Covenants.
(a)
Confidentiality. The Executive acknowledges that in the course of his employment with the Company, he has acquired non-public privileged or confidential information and trade secrets concerning the operations, future plans and methods of doing business (Proprietary Information) of the Company and its Affiliates; and the Executive agrees that it would be extremely damaging to the Company and its Affiliates if such Proprietary Information were disclosed to a competitor of the Company and its Affiliates or to any other person or corporation. The Executive understands and agrees that all Proprietary Information has been divulged to the Executive in confidence and further understands and agrees to keep all Proprietary Information secret and confidential (except for such information which is or becomes publicly available other than as a result of a breach by the Executive of this provision or information the Executive is required by any governmental, administrative or court order to disclose) without limitation in time. In view of the nature of the Executives employment and the Proprietary Information the Executive has acquired during the course of such employment, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any disclosure of Proprietary Information in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them. Inquiries regarding whether specific information constitutes Proprietary Information shall be directed to the Companys Senior Vice President, Public Policy (or, if such position is vacant, the Companys then Chief Executive Officer); provided, that the Company shall not unreasonably classify information as Proprietary Information.
(b)
Non-Solicitation of Employees. The Executive recognizes that he possesses and will possess confidential information about other employees of the Company and its Affiliates relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with customers of the Company and its Affiliates. The Executive recognizes that the information he possesses and will possess about these other employees is not generally known, is of substantial value to the Company and its Affiliates in developing their business and in securing and retaining customers, and has been and will be acquired by him because of his business position with the Company and its Affiliates. The Executive agrees that at all times during the Executives employment with the Company and for a period of one (1) year thereafter, he will not, directly or indirectly, solicit or recruit any employee of the Company or its Affiliates for the purpose of being employed by him or by any competitor of the Company or its Affiliates on whose behalf he is acting as an agent, representative or employee and that he will not convey any such confidential information or trade secrets about other employees of the Company and its Affiliates to any other person; provided, however, that it shall not constitute a solicitation or recruitment of employment in violation of this paragraph to discuss employment opportunities with any employee of the Company or its Affiliates who has either first contacted the Executive or regarding whose employment the Executive has discussed with and received the written approval of the Companys Vice President, Human Resources (or, if such position is vacant, the Companys then Chief Executive Officer), prior to making such solicitation or recruitment. In view of the nature of the Executives employment with the Company, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any solicitation or recruitment in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them.
(c)
Survival of Provisions. The obligations contained in Section 14(a) and Section 14(b) above shall survive the termination of the Executives employment within the Company and shall be fully enforceable thereafter. If it is determined by a court of competent jurisdiction in any state that any restriction in Section 14(a) or Section 14(b) above is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.
(d)
Release; Lump Sum Payment. In the event of the Executives Involuntary Termination, if the Executive (i) reconfirms and agrees to abide by the covenants described in Section 14(a) and Section 14(b) above, (ii) executes the Release within fifty (50) days after the date of Involuntary Termination and does not revoke such Release in accordance with the terms thereof, and (iii) agrees to provide the consulting services described in Section 14(e) below, then in consideration for such covenants and consulting services, the Company shall pay the Executive, in one cash lump sum, an amount (the Consulting Payment) in cash equal to the greater of: (X) 165% of the Executives Annual Base Salary as in effect on the Date of Termination, and (Y) the Executives Annual Base Salary as in effect on the Date of Termination, plus the Executives Average Annual Bonus. Except as provided in this subsection, the Consulting Payment shall be paid on such date as is determined by the Company within the ten (10) day period commencing on the 60th day after the date of the Executives Involuntary Termination; provided, however, that if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Consulting Payment shall be paid as provided in Section 9 hereof. The Executive shall have the right to elect to defer the Consulting Payment under the terms and conditions of the Companys Deferred Compensation Plan. Any such deferral election shall be made in accordance with Section 18(b) hereof.
(e)
Consulting. If the Executive agrees to the provisions of Section 14(d) above, then the Executive shall have the obligation to provide consulting services to the Company as an independent contractor, commencing on the Date of Termination and ending on the second anniversary of the Date of Termination (the Consulting Period). The Executive shall hold himself available at reasonable times and on reasonable notice to render such consulting services as may be so assigned to him by the Board or the Companys then Chief Executive Officer; provided, however, that unless the parties otherwise agree, the consulting services rendered by the Executive during the Consulting Period shall not exceed twenty (20) hours each month; and, provided, further, that the consulting services rendered by the Executive during the Consulting Period shall in no event exceed twenty percent (20%) of the average level of services performed by the Executive for the Company over the thirty-six (36) month period immediately preceding the Executives Separation from Service (or the full period of services to the Company, if the Executive has been providing services to the Company for less than thirty-six (36) months). The Company agrees to use its best efforts during the Consulting Period to secure the benefit of the Executives consulting services so as to minimize the interference with the Executives other activities, including requiring the performance of consulting services at the Companys offices only when such services may not be reasonably performed off-site by the Executive.
Section 15.
Legal Fees.
(a)
Reimbursement of Legal Fees. Subject to subsection (b), in the event of the Executives Separation from Service either (1) prior to a Change in Control, or (2) on or within two (2) years following a Change in Control, the Company shall reimburse the Executive for all legal fees and expenses (including but not limited to fees and expenses in connection with any arbitration) incurred by the Executive in disputing any issue arising under this Agreement relating to the Executives Separation from Service or in seeking to obtain or enforce any benefit or right provided by this Agreement.
(b)
Requirements for Reimbursement. The Company shall reimburse the Executives legal fees and expenses pursuant to subsection (a) above only to the extent the arbitrator or court determines the following: (i) the Executive disputed such issue, or sought to obtain or enforce such benefit or right, in good faith, (ii) the Executive had a reasonable basis for such claim, and (iii) in the case of subsection (a)(1) above, the Executive is the prevailing party. In addition, the Company shall reimburse such legal fees and expenses, only if such legal fees and expenses are incurred during the twenty (20) year period beginning on the date of the Executives Separation from Service. The legal fees and expenses paid to the Executive for any taxable year of the Executive shall not affect the legal fees and expenses paid to the Executive for any other taxable year of the Executive. The legal fees and expenses shall be paid to the Executive on or before the last day of the Executives taxable year following the taxable year in which the fees or expenses are incurred. The Executives right to reimbursement of legal fees and expenses shall not be subject to liquidation or exchange for any other benefit. Such right to reimbursement of legal fees and expenses shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv). If the Executive is a Specified Employee on the date of the Executives Separation from Service, such right to reimbursement of legal fees and expenses shall be paid as provided in Section 10 hereof.
Section 16.
Successors.
(a)
Assignment by the Executive. This Agreement is personal to the Executive and without the prior written consent of Sempra Energy shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executives legal representatives.
(b)
Successors and Assigns of Sempra Energy. This Agreement shall inure to the benefit of and be binding upon Sempra Energy, its successors and assigns. Sempra Energy may not assign this Agreement to any person or entity (except for a successor described in Section 16(c), (d) or (e) below) without the Executives written consent.
(c)
Assumption. Sempra Energy shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Sempra Energy to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities of this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement if no such succession had taken place, and Sempra Energy shall have no further obligations and liabilities under this Agreement. Upon such assumption, references to Sempra Energy in this Agreement shall be replaced with references to such successor.
(d)
Sale of Subsidiary. In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy that is a member of the Sempra Energy Control Group, (ii) Sempra Energy, directly or indirectly through one or more intermediaries, sells or otherwise disposes of such subsidiary, and (iii) such subsidiary ceases to be a member of the Sempra Energy Control Group, then if, on the date such subsidiary ceases to be a member of the Sempra Energy Control Group, the Executive continues in employment with such subsidiary and the Executive does not have a Separation from Service, Sempra Energy shall require such subsidiary or any successor (whether direct or indirect, by purchase merger, consolidation or otherwise) to such subsidiary, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if such subsidiary had not ceased to be part of the Sempra Energy Control Group, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement. Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to such subsidiary, or such successor or parent thereof, assuming this Agreement, and (ii) subsection (b) of the definition of Cause and subsection (b) of the definition of Good Reason shall apply thereafter, as if a Change in Control had occurred on the date of such cessation.
(e)
Sale of Assets of Subsidiary. In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) such subsidiary sells or otherwise disposes of substantial assets of such subsidiary to an unrelated service recipient, as determined under Treasury Regulation Section 1.409A-1(f)(2)(ii) (the Asset Purchaser), in a transaction described in Treasury Regulation Section 1.409A-1(h)(4) (an Asset Sale), then if, on the date of such Asset Sale, the Executive becomes employed by the Asset Purchaser, Sempra Energy and the Asset Purchaser shall specify, in accordance with Treasury Regulation Section 1.409A-1(h)(4), that the Executive shall not be treated as having a Separation from Service, and Sempra Energy shall require such Asset Purchaser, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if the Asset Sale had not taken place, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement. Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to the Asset Purchaser or the parent thereof, as applicable, and (ii) subsection (b) of the definition of Cause and subsection (b) of the definition of Good Reason shall apply thereafter, as if a Change in Control had occurred on the date of the Asset Sale.
Section 17.
Administration Prior to Change in Control. Prior to a Change in Control, the Compensation Committee shall have full and complete authority to construe and interpret the provisions of this Agreement, to determine an individuals entitlement to benefits under this Agreement, to make in its sole and absolute discretion all determinations contemplated under this Agreement, to investigate and make factual determinations necessary or advisable to administer or implement this Agreement, and to adopt such rules and procedures as it deems necessary or advisable for the administration or implementation of this Agreement. All determinations made under this Agreement by the Compensation Committee shall be final and binding on all interested persons. Prior to a Change in Control, the Compensation Committee may delegate responsibilities for the operation and administration of this Agreement to one or more officers or employees of the Company. The provisions of this Section 17 shall terminate and be of no further force and effect upon the occurrence of a Change in Control.
Section 18.
Section 409A of the Code.
(a)
Compliance with and Exemption from Section 409A of the Code. Certain payments and benefits payable under this Agreement (including, without limitation, the Section 409A Payments) are intended to comply with the requirements of Section 409A of the Code. Certain payments and benefits payable under this Agreement are intended to be exempt from the requirements of Section 409A of the Code. This Agreement shall be interpreted in accordance with the applicable requirements of, and exemptions from, Section 409A of the Code and the Treasury Regulations thereunder. To the extent the payments and benefits under this Agreement are subject to Section 409A of the Code, this Agreement shall be interpreted, construed and administered in a manner that satisfies the requirements of Sections 409A(a)(2), (3) and (4) of the Code and the Treasury Regulations thereunder (subject to the transitional relief under Internal Revenue Service Notice 2005-1, the Proposed Regulations under Section 409A of the Code, Internal Revenue Service Notice 2006-79, Internal Revenue Service Notice 2007-78, Internal Revenue Service Notice 2007-86 and other applicable authority issued by the Internal Revenue Service). As provided in Internal Revenue Notice 2007-86, notwithstanding any other provision of this Agreement, with respect to an election or amendment to change a time or form of payment under this Agreement made on or after January 1, 2008 and on or before December 31, 2008, the election or amendment shall apply only with respect to payments that would not otherwise be payable in 2008, and shall not cause payments to be made in 2008 that would not otherwise be payable in 2008. If the Company and the Executive determine that any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not comply with Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, to the extent permitted under Section 409A of the Code, the Treasury Regulations thereunder and any applicable authority issued by the Internal Revenue Service, the Company and the Executive agree to amend this Agreement, or take such other actions as the Company and the Executive deem reasonably necessary or appropriate, to cause such compensation, benefits and other payments to comply with the requirements of Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, while providing compensation, benefits and other payments that are, in the aggregate, no less favorable than the compensation, benefits and other payments provided under this Agreement. In the case of any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code, if any provision of the Agreement would cause such compensation, benefits or other payments to fail to so comply, such provision shall not be effective and shall be null and void with respect to such compensation, benefits or other payments to the extent such provision would cause a failure to comply, and such provision shall otherwise remain in full force and effect.
(b)
Deferral Elections. As provided in Sections 4(f), 5(i) and 14(d), the Executive may elect to defer the Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and the Consulting Payment as follows. The Executives deferral election shall satisfy the requirements of Treasury Regulation Section 1.409A-2(b) and the terms and conditions of the Deferred Compensation Plan. Such deferral election shall designate the whole percentage (up to a maximum of 100%) of the Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and the Consulting Payment to be deferred, shall be irrevocable when made, and shall not take effect until at least twelve (12) months after the date on which the election is made. Such deferral election shall provide that the amount deferred shall be deferred for a period of not less than five (5) years from the date the payment of the amount deferred would otherwise have been made, in accordance with Treasury Regulation Section 1.409A-2(b)(1)(ii).
Section 19.
Miscellaneous.
(a)
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to its principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing signed by the party against whom enforcement of such amendment, modification, repeal, waiver, extension or discharge is sought. No person, other than pursuant to a resolution of the Board or a committee thereof, shall have authority on behalf of the Company to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto.
(b)
Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed, in either case, to the Companys headquarters or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.
(c)
Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d)
Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(e)
No Waiver. The Executives or the Companys failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 1 hereof, or the right of the Company to terminate the Executives employment for Cause pursuant to Section 1 hereof shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(f)
Entire Agreement; Exclusive Benefit; Supersession of Prior Agreement. This instrument contains the entire agreement of the Executive, the Company or any predecessor or subsidiary thereof with respect to any severance or termination pay. The Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and all other benefits provided hereunder shall be in lieu of any other severance payments to which the Executive is entitled under any other severance plan or program or arrangement sponsored by the Company, as well as pursuant to any individual employment or severance agreement that was entered into by the Executive and the Company, and, upon the Effective Date of this Agreement, all such plans, programs, arrangements and agreements are hereby automatically superseded and terminated.
(g)
No Right of Employment. Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of the Company or shall interfere in any way with the right of the Company to terminate the Executives employment at any time, with or without Cause.
(h)
Unfunded Obligation. The obligations under this Agreement shall be unfunded. Benefits payable under this Agreement shall be paid from the general assets of the Company. The Company shall have no obligation to establish any fund or to set aside any assets to provide benefits under this Agreement.
(i)
Termination upon Sale of Assets of Subsidiary. Notwithstanding anything contained herein, this Agreement shall automatically terminate and be of no further force and effect and no benefits shall be payable hereunder in the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) an Asset Sale (as defined in Section 16(e)) occurs (other than such a sale or disposition which is part of a transaction or series of transactions which would result in a Change in Control), and (iii) as a result of such Asset Sale, the Executive is offered employment by the Asset Purchaser in an executive position with reasonably comparable status, compensation, benefits and severance agreement (including the assumption of this Agreement in accordance with Section 16(e)) and which is consistent with the Executives experience and education, but the Executive declines to accept such offer and the Executive fails to become employed by the Asset Purchaser on the date of the Asset Sale.
(j)
Term. The term of this Agreement shall commence on the Effective Date and shall continue until the third (3rd) anniversary of the Effective Date; provided, however, that commencing on the second (2nd) anniversary of the Effective Date (and each anniversary of the Effective Date thereafter), the term of this Agreement shall automatically be extended for one (1) additional year, unless at least ninety (90) days prior to such date, the Company or the Executive shall give written notice to the other party that it or he, as the case may be, does not wish to so extend this Agreement. Notwithstanding the foregoing, if the Company gives such written notice to the Executive less than two (2) years after a Change in Control, the term of this Agreement shall be automatically extended until the later of (A) the date that is one (1) year after the anniversary of the Effective Date that follows such written notice or (B) the second (2nd) anniversary of the Change in Control Date.
(k)
Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from its Board of Directors, the Company have caused this Agreement to be executed as of the day and year first above written.
SEMPRA ENERGY
G. Joyce Rowland
Senior Vice President, Human Resources, Diversity and Inclusion
_____________________________________
Date
EXECUTIVE
Martha B. Wyrsch
Executive Vice President and General Counsel
_____________________________________
Date
EXHIBIT A
GENERAL RELEASE
This GENERAL RELEASE (the Agreement), dated ___________, is made by and between ______________________________, a California corporation (the Company) and ___________________________ (you or your).
WHEREAS, you and the Company have previously entered into that certain Severance Pay Agreement dated ____________, 20___ (the Severance Pay Agreement); and
WHEREAS, your right to receive certain severance pay and benefits pursuant to the terms of Section 4 or Section 5 of the Severance Pay Agreement, as applicable, are subject to and conditioned upon your execution and non-revocation of a general release of claims by you against the Company and its subsidiaries and affiliates.
WHEREAS, your right to receive the Consulting Payment provided pursuant to Section 14(d) of the Severance Pay Agreement is subject to and conditioned upon your execution and non-revocation of a general release of claims by you against the Company and its subsidiaries and affiliates; and your adherence to the covenants described under Section 14 of the Severance Pay Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, you and the Company hereby agree as follows:
ONE: Your signing of this Agreement confirms that your employment with the Company shall terminate at the close of business on ____________, or earlier upon our mutual agreement.
TWO: As a material inducement for the payment of the severance and benefit under the Severance Pay Agreement, and except as otherwise provided in this Agreement, you and the Company hereby irrevocably and unconditionally release, acquit and forever discharge the other from any and all Claims either may have against the other. For purposes of this Agreement and the preceding sentence, the words Releasee or Releasees and Claim or Claims shall have the meanings set forth below:
(a)
The words Releasee or Releasees shall refer to you and to the Company and each of the Companys owners, stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, advisors, parent companies, divisions, subsidiaries, affiliates (and agents, directors, officers, employees, representatives, attorneys and advisors of such parent companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them.
(b)
The words Claim or Claims shall refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, which you or the Company now, in the past or, in the future may have, own or hold against any of the Releasees; provided, however, that the word Claim or Claims shall not refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys fees and costs actually incurred) arising under [identify severance, employee benefits, stock option, indemnification and D&O and other agreements containing duties, rights obligations etc. of either party that are to remain operative]. Claims released pursuant to this Agreement by you and the Company include, but are not limited to, rights arising out of alleged violations of any contracts, express or implied, any tort, claim, any claim that you failed to perform or negligently performed or breached your duties during employment at the Company, any legal restrictions on the Companys right to terminate employment relationships; and any federal, state or other governmental statute, regulation, or ordinance, governing the employment relationship including, without limitation, all state and federal laws and regulations prohibiting discrimination based on protected categories, and all state and federal laws and regulations prohibiting retaliation against employees for engaging in protected activity or legal off-duty conduct. This release does not extend to claims for workers compensation or other claims which by law may not be waived or released by this Agreement.
THREE: You and the Company expressly waive and relinquish all rights and benefits afforded by any statute (including but not limited to Section 1542 of the Civil Code of the State of California and analogous laws of other states) which limits the effect of a release with respect to unknown claims. You and the Company do so understanding and acknowledging the significance of the release of unknown claims and the waiver of statutory protection against a release of unknown claims (including but not limited to Section 1542 and analogous laws of other states). Section 1542 of the Civil Code of the State of California states as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
Thus, notwithstanding the provisions of Section 1542 or of any similar statute, and for the purpose of implementing a full and complete release and discharge of the Releasees, you and the Company expressly acknowledge that this Agreement is intended to include in its effect, without limitation, all Claims which are known and all Claims which you or the Company do not know or suspect to exist in your or the Companys favor at the time of execution of this Agreement and that this Agreement contemplates the extinguishment of all such Claims.
FOUR: The parties acknowledge that they might hereafter discover facts different from, or in addition to, those they now know or believe to be true with respect to a Claim or Claims released herein, and they expressly agree to assume the risk of possible discovery of additional or different facts, and agree that this Agreement shall be and remain effective, in all respects, regardless of such additional or different discovered facts.
FIVE: You hereby represent and acknowledge that you have not filed any Claim of any kind against the Company or others released in this Agreement. You further hereby expressly agree never to initiate against the Company or others released in this Agreement any administrative proceeding, lawsuit or any other legal or equitable proceeding of any kind asserting any Claims that are released in this Agreement. You agree that you will not be entitled to any monetary recovery that may result from any agency action against the Company related to the Claims released by this Agreement.
The Company hereby represents and acknowledges that it has not filed any Claim of any kind against you or others released in this Agreement. The Company further hereby expressly agrees never to initiate against you or others released in this Agreement any administrative proceeding, lawsuit or any other legal or equitable proceeding of any kind asserting any Claims that are released in this Agreement.
SIX: You hereby represent and agree that you have not assigned or transferred, or attempted to have assigned or transfer, to any person or entity, any of the Claims that you are releasing in this Agreement.
The Company hereby represents and agrees that it has not assigned or transferred, or attempted to have assigned or transfer, to any person or entity, any of the Claims that it is releasing in this Agreement.
SEVEN: As a further material inducement to the Company to enter into this Agreement, you hereby agree to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys fees incurred by the Releasees, arising out of any breach of this Agreement by you or the fact that any representation made in this Agreement by you was false when made.
As a further material inducement to you to enter into this Agreement, the Company hereby agrees to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys fees incurred by the Releasees, arising out of any breach of this Agreement by it or the fact that any representation made in this Agreement by it was knowingly false when made.
EIGHT: You and the Company represent and acknowledge that in executing this Agreement, neither is relying upon any representation or statement not set forth in this Agreement or the Severance Agreement.
NINE: (a)
This Agreement shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to you or any other person, or that you have any rights whatsoever against the Company, and the Company specifically disclaims any liability to or wrongful acts against you or any other person, on the part of itself, its employees or its agents. This Agreement shall not in any way be construed as an admission by you that you have acted wrongfully with respect to the Company, or that you failed to perform your duties or negligently performed or breached your duties, or that the Company had good cause to terminate your employment.
(b)
If you are a party or are threatened to be made a party to any proceeding by reason of the fact that you were an officer or director of the Company, the Company shall indemnify you against any expenses (including reasonable attorneys fees; provided, that counsel has been approved by the Company prior to retention, which approval shall not be unreasonably withheld), judgments, fines, settlements and other amounts actually or reasonably incurred by you in connection with that proceeding; provided, that you acted in good faith and in a manner you reasonably believed to be in the best interest of the Company. The limitations of California Corporations Code Section 317 shall apply to this assurance of indemnification.
(c)
You agree to cooperate with the Company and its designated attorneys, representatives and agents in connection with any actual or threatened judicial, administrative or other legal or equitable proceeding in which the Company is or may become involved. Upon reasonable notice, you agree to meet with and provide to the Company or its designated attorneys, representatives or agents all information and knowledge you have relating to the subject matter of any such proceeding. The Company agrees to reimburse you for any reasonable costs you incur in providing such cooperation.
TEN: This Agreement is entered into in California and shall be governed by substantive California law, except as provided in this section. If any dispute arises between you and the Company, including but not limited to, disputes relating to this Agreement, or if you prosecute a claim you purported to release by means of this Agreement (Arbitrable Dispute), you and the Company agree to resolve that Arbitrable Dispute through final and binding arbitration under this section. You also agree to arbitrate any Arbitrable Dispute which also involves any other released party who offers or agrees to arbitrate the dispute under this section. Your agreement to arbitrate applies, for example, to disputes about the validity, interpretation, or effect of this Agreement or alleged violations of it, claims of discrimination under federal or state law, or other statutory violation claims.
As to any Arbitrable Dispute, you and the Company waive any right to a jury trial or a court bench trial. You and the Company also waive the right to bring, maintain, or participate in any class, collective, or representative proceeding, whether in arbitration or otherwise. Further, Arbitrable Disputes must be brought in the individual capacity of the party asserting the claim, and cannot be maintained on a class, collective, or representative basis.
Arbitration shall take place in San Diego, California under the employment dispute resolution rules of the Judicial Arbitration and Mediation Service (JAMS), (or, if you are employed outside of California at the time of the termination of your employment, at the nearest location of the American Arbitration Association and in accordance with the AAA rules), before an experienced employment arbitrator selected in accordance with those rules. The arbitrator may not modify or change this Agreement in any way. The Company will be responsible for paying any filing fee and the fees and costs of the Arbitrator; provided, however, that if you are the party initiating the claim, you will contribute an amount equal to the filing fee to initiate a claim in the court of general jurisdiction in the state in which you are employed by the Company. Each party shall pay for its own costs and attorneys fees, if any. However if any party prevails on a statutory claim which affords the prevailing party attorneys fees and costs, or if there is a written agreement providing for attorneys fees and/or costs, the Arbitrator may award reasonable attorneys fees and/or costs to the prevailing party, applying the same standards a court would apply under the law applicable to the claim. The Arbitrator shall apply the Federal Rules of Evidence and shall have the authority to entertain a motion to dismiss or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The Federal Arbitration Act shall govern the arbitration and shall govern the interpretation or enforcement of this section or any arbitration award. The arbitrator will not have the authority to consider, certify, or hear an arbitration as a class action, collective action, or any other type of representative action.
To the extent that the Federal Arbitration Act is inapplicable, California law pertaining to arbitration agreements shall apply. Arbitration in this manner shall be the exclusive remedy for any Arbitrable Dispute. Except as prohibited by the ADEA, should you or the Company attempt to resolve an Arbitrable Dispute by any method other than arbitration pursuant to this section, the responding party will be entitled to recover from the initiating party all damages, expenses, and attorneys fees incurred as a result of this breach. This Section TEN supersedes any existing arbitration agreement between the Company and me as to any Arbitrable Dispute. Notwithstanding anything in this Section TEN to the contrary, a claim for benefits under an ERISA-covered plan shall not be an Arbitrable Dispute.
ELEVEN: Both you and the Company understand that this Agreement is final and binding eight (8) days after its execution and return. Should you nevertheless attempt to challenge the enforceability of this Agreement as provided in Paragraph TEN or, in violation of that Paragraph, through litigation, as a further limitation on any right to make such a challenge, you shall initially tender to the Company, by certified check delivered to the Company, all monies received pursuant to Sections 4 or 5 of the Severance Pay Agreement, as applicable, plus interest, and invite the Company to retain such monies and agree with you to cancel this Agreement and void the Companys obligations under Section 14(d) of the Severance Pay Agreement. In the event the Company accepts this offer, the Company shall retain such monies and this Agreement shall be canceled and the Company shall have no obligation under the Severance Pay Agreement. In the event the Company does not accept such offer, the Company shall so notify you and shall place such monies in an interest-bearing escrow account pending resolution of the dispute between you and the Company as to whether or not this Agreement and the Companys obligations under the Severance Pay Agreement shall be set aside and/or otherwise rendered voidable or unenforceable. Additionally, any consulting agreement then in effect between you and the Company shall be immediately rescinded with no requirement of notice.
TWELVE: Any notices required to be given under this Agreement shall be delivered either personally or by first class United States mail, postage prepaid, addressed to the respective parties as follows:
To Company:
[TO COME]
Attn: [TO COME]
To You:
______________________
______________________
______________________
THIRTEEN: You understand and acknowledge that you have been given a period of forty-five (45) days to review and consider this Agreement (as well as statistical data on the persons eligible for similar benefits) before signing it and may use as much of this forty-five (45) day period as you wish prior to signing. You are encouraged, at your personal expense, to consult with an attorney before signing this Agreement. You understand and acknowledge that whether or not you do so is your decision. You may revoke this Agreement within seven (7) days of signing it. If you wish to revoke, the Companys Vice President, Human Resources must receive written notice from you no later than the close of business on the seventh (7th) day after you have signed the Agreement. If revoked, this Agreement shall not be effective and enforceable, and you will not receive payments or benefits under Sections 4 or 5, and Section 14 of the Severance Pay Agreement, as applicable.
FOURTEEN: This Agreement constitutes the entire agreement of the parties hereto and supersedes any and all other agreements (except the Severance Pay Agreement) with respect to the subject matter of this Agreement, whether written or oral, between you and the Company. All modifications and amendments to this Agreement must be in writing and signed by the parties.
FIFTEEN: Each party agrees, without further consideration, to sign or cause to be signed, and to deliver to the other party, any other documents and to take any other action as may be necessary to fulfill the obligations under this Agreement.
SIXTEEN: If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or application; and to this end the provisions of this Agreement are declared to be severable.
SEVENTEEN: This Agreement may be executed in counterparts.
I have read the foregoing General Release, and I accept and agree to the provisions it contains and hereby execute it voluntarily and with full understanding of its consequences. I am aware it includes a release of all known or unknown claims.
DATED: __________
__________________________________________
DATED: __________
__________________________________________
You acknowledge that you first received this Agreement on [date].
_________________________
Exhibit 10.64
<YEAR> Executive Incentive Compensation Plan San Diego Gas & Electric
ICP Plan Year: January 1, <YEAR> to December 31, <YEAR>
INTRODUCTION
The San Diego Gas & Electric (SDG&E) Incentive Compensation Plan (ICP) is designed to attract, retain, and engage executives whose efforts contribute to the success of SDG&E and Sempra Energy (SE). The plan aligns with Sempra Energys goal of sustained earnings growth and the utilitys regulatory framework with goals that encourage executives to drive towards our aspirations and to:
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Maintain high safety standards,
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Grow the business through enterprise thinking while maximizing revenues/profits,
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Focus on a common set of high-level goals that encourages teamwork and achievement of operational excellence,
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Focus on business efficiencies and investments that produce long-term efficiency benefits,
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Increase reliability of delivery service,
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Enhance customer focus to achieve optimal customer satisfaction, and
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Achieve high level of employee commitment and contribution through sharing of business success and the establishment of key performance indicators.
PARTICIPATION
Executives who meet all of the following eligibility requirements will participate in this incentive plan for <YEAR>.
1.
Employee is an eligible executive, as determined by the SDG&E Board of Directors, for at least three consecutive full months during <YEAR> and is an employee on December 31, <YEAR> or meets other eligibility requirements as listed under section: Employee Status Changes.
2.
Participant has met minimum job expectations and performed satisfactorily, as determined by his/her supervisor in conjunction with Human Resources.
3.
Participant is not in another formal incentive plan in <YEAR>.
Participation in one plan year does not constitute the right to participate in succeeding plan years. This plan does not constitute a contract of employment or guarantee of an incentive award payment and cannot be relied on as such.
BASIS FOR AWARD CALCULATION
Awards are calculated based on the employees Basis for Award Calculation (BAC) while on the active payroll. BAC includes annual base salary on December 31, <YEAR> plus any eligible lump sum payment that may be granted during <YEAR>. Other awards (e.g. spot cash); incentives, premiums and payments are not included in the BAC.
PERFORMANCE GOALS AND MEASURES
SDG&E ICP Goals & Measures | WEIGHT | MULTIPLIER | MIN | TARGET | MAX |
FINANCIAL GOALS (in Millions) |
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OPERATIONAL GOALS |
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TOTAL | 100.00% | Capped at 200% |
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FINANCIAL MEASURES
Sempra Energy Earnings
Sempra Energy Earnings are revenue minus expense, less tax. Employees can influence earnings by either increasing revenue or decreasing expenses. Earnings are determined after accounting for the appropriate accrued level of incentive compensation expense.
Sempra Energy Earnings exclude:
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<DEFINE EXCLUSIONS>
San Diego Gas & Electric Financial Measure:
<Define SDG&E Financial Measure>
OPERATIONAL GOALS
The payout for all Operational Goals range between 0%-200%.
<Define Operational Measures>
CALCULATION, CERTIFICATION AND PAYMENT OF AWARDS
Award potentials will be linearly interpolated between the minimum and target, or target and maximum goals. There is no award payout for performance at or below the minimum goals. The payout for the financial component may, at the boards discretion, be reduced in consideration of individual performance.
Adjustments to the budget target for ICP calculation purposes will require the written approval of the Chief Executive Officer of SDG&E. The approved exceptions will be limited to costs or expenses related to future growth opportunities and the funding of process improvements above the planned budget.
The SDG&E Board of Directors must approve awards. Approved awards will be paid by March 15, <YEAR> and will be subject to appropriate tax withholding. Such awards are considered pension-eligible earnings for the Cash Balance Plan and are included as eligible earnings for the 401(k) Plan. Employees with outstanding loan payments to the 401(k) plan and/or for medical premiums may, at the Companys option, have up to the full arrears deducted from their ICP check. Employees will be notified by mail with respect to any arrears payments for these deductions.
EMPLOYEE STATUS CHANGES
All eligible employees (including new hires) will have their award prorated for the period of participation in the plan while on the active payroll. For employees who change target percentages during a plan year, their award will be calculated based on the effective period for each target percentage.
Employees who transfer within the corporation or among incentive plans during the year will be eligible for an award under this plan provided that all eligibility requirements are met. The award will be based on the employees December 31, <YEAR> BAC, prorated for the participation period in this plan.
An award will still be paid if a participant meets all other eligibility requirements during <YEAR> but is not a regular employee on December 31, <YEAR> due to the following reasons:
*
Participants employment terminates for any reason after he/she has attained age 55 and at the time his/her employment terminated he/she had completed at least five years of service; or
*
Participant leaves his/her position under disability (as defined in the company disability benefit plan); or
*
Participant dies during an award year (award will be paid to the participants estate).
In the above circumstances, the award will be calculated based on the participants BAC prorated for the period of participation in the plan while on the active payroll. Awards will be paid the same time payment is made to other participants and will be offset by any amount paid pursuant the Severance Benefits upon Termination of Employment due to Death or Disability section of the participants Severance Pay Agreement.
If a participant leaves the company for any other reason, eligibility for an award for the plan year will be forfeited unless an exception is made at the discretion of the Chairman and CEO.
PLAN ADMINISTRATION
The Company retains the discretion and authority to interpret, amend or modify the plan; to grant incentive awards; as well as to terminate, increase or decrease any incentive award opportunity during the performance period; and to reduce or eliminate any incentive awards that would otherwise be payable at the end of the performance period. The Company, in its sole discretion determines Sempra Energy Earnings, SDG&E Earnings, aspirational measures and award calculations.
The Company shall require the forfeiture, recovery or reimbursement of awards or compensation under this Plan as (i) required by applicable law, or (ii) required under any policy implemented or maintained by the Company pursuant to any applicable rules or requirements of a national securities exchange or national securities association on which any securities of the Company are listed. The Company reserves the right to recoup compensation paid if it determines that the results on which the compensation was paid were not actually achieved.
The SDG&E Board may, in its sole discretion, require the recovery or reimbursement of short-term incentive compensation awards from any employee whose fraudulent or intentional misconduct materially affects the operations or financial results of the Company or its subsidiaries.
Questions concerning the plan should be directed to the Sr. Vice President Human Resources, Diversity & Inclusion, Sempra Energy.
Exhibit 10.65
SEMPRA ENERGY
SEVERANCE PAY AGREEMENT
THIS AGREEMENT (this Agreement), dated as of April 3, 2010 (the Effective Date), is made by and between SEMPRA ENERGY, a California corporation (Sempra Energy), and Jeffrey W. Martin (the Executive).
WHEREAS, the Executive is currently employed by Sempra Energy or a direct or indirect subsidiary of Sempra Energy (Sempra Energy and its subsidiaries are hereinafter collectively referred to as the Company) as President & CEO - Generation; and
WHEREAS, Sempra Energy and the Executive desire to enter into this Agreement; and
WHEREAS, the Board of Directors of Sempra Energy (the Board) has authorized this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and the Executive hereby agree as follows:
Section 1.
Definitions. For purposes of this Agreement, the following capitalized terms have the meanings set forth below:
Accounting Firm has the meaning assigned thereto in Section 9(b) hereof.
Act has the meaning assigned thereto in Section 2 hereof.
Additional Post-Change in Control Severance Payment has the meaning assigned thereto in Section 6(a) hereof.
Affiliate has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act.
Annual Base Salary means the Executives annual base salary from the Company.
Asset Purchaser has the meaning assigned thereto in Section 16(e).
Asset Sale has the meaning assigned thereto in Section 16(e).
Average Annual Bonus means the average of the annual bonuses from the Company earned by the Executive with respect to the three (3) fiscal years of the Company immediately preceding the Date of Termination (the Bonus Fiscal Years); provided, however, that, if the Executive was employed by the Company during all or any portion of one or two of the Bonus Fiscal Years (but not three of the Bonus Fiscal Years), Average Annual Bonus means the average of the annual bonuses (if any) from the Company earned by the Executive with respect to the Bonus Fiscal Years during all or any portion of which the Executive was employed by the Company; and, provided, further, that, if the Executive was not employed by the Company during all or any portion of any of the Bonus Fiscal Years, Average Annual Bonus means zero.
Beneficial Owner has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.
Cause means:
(a)
Prior to a Change in Control, (i) the willful failure by the Executive to substantially perform the Executives duties with the Company (other than any such failure resulting from the Executives incapacity due to physical or mental illness, (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) the Executives gross insubordination; and/or (iv) the Executives commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i) of this subsection (a), no act, or failure to act, on the Executives part shall be deemed willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executives act, or failure to act, was in the best interests of the Company.
(b)
From and after a Change in Control, (i) the willful and continued failure by the Executive to substantially perform the Executives duties with the Company (other than any such failure resulting from the Executives incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 3 hereof) and/or (ii) the Executives commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i) of this subsection (b), no act, or failure to act, on the Executives part shall be deemed willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executives act, or failure to act, was in the best interests of the Company. Notwithstanding the foregoing, the Executive shall not be deemed terminated for Cause pursuant to clause (i) of this subsection (b) unless and until the Executive shall have been provided with reasonable notice of and, if possible, a reasonable opportunity to cure the facts and circumstances claimed to provide a basis for termination of the Executives employment for Cause.
Change in Control shall be deemed to have occurred on the date that a change in the ownership of Sempra Energy, a change in the effective control of Sempra Energy, or a change in the ownership of a substantial portion of assets of Sempra Energy occurs (each, as defined in subsection (a) below), except as otherwise provided in subsections (b), (c) and (d) below:
(a)
(i)
a change in the ownership of Sempra Energy occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of Sempra Energy that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of Sempra Energy,
(ii)
a change in the effective control of Sempra Energy occurs only on either of the following dates:
(A)
the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of Sempra Energy possessing thirty percent (30%) or more of the total voting power of the stock of Sempra Energy, or
(B)
the date a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of appointment or election, and
(iii)
a change in the ownership of a substantial portion of assets of Sempra Energy occurs on the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from Sempra Energy that have a total gross fair market value equal to or more than eighty-five percent (85%) of the total gross fair market value of all of the assets of Sempra Energy immediately before such acquisition or acquisitions.
(b)
A change in the ownership of Sempra Energy or a change in the effective control of Sempra Energy shall not occur under clause (a)(i) or (a)(ii) by reason of any of the following:
(i)
an acquisition of ownership of stock of Sempra Energy directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business,
(ii)
a merger or consolidation which would result in the voting securities of Sempra Energy outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least sixty percent (60%) of the combined voting power of the securities of Sempra Energy or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or
(iii)
a merger or consolidation effected to implement a recapitalization of Sempra Energy (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Sempra Energy (not including the securities beneficially owned by such Person any securities acquired directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business) representing twenty percent (20%) or more of the combined voting power of Sempra Energys then outstanding securities.
(c)
A change in the ownership of a substantial portion of assets of Sempra Energy shall not occur under clause (a)(iii) by reason of a sale or disposition by Sempra Energy of the assets of Sempra Energy to an entity, at least sixty percent (60%) of the combined voting power of the voting securities of which are owned by shareholders of Sempra Energy in substantially the same proportions as their ownership of Sempra Energy immediately prior to such sale.
(d)
This definition of Change in Control shall be limited to the definition of a change in control event relating to Sempra Energy under Treasury Regulation Section 1.409A-3(i)(5). A Change in Control shall only occur if there is a change in control event relating to Sempra Energy under Treasury Regulation Section 1.409A-3(i)(5) with respect to the Executive.
Change in Control Date means the date on which a Change in Control occurs.
Code means the Internal Revenue Code of 1986, as amended.
Compensation Committee means the compensation committee of the Board.
Consulting Period has the meaning assigned thereto in Section 14(e) hereof.
Date of Termination has the meaning assigned thereto in Section 3(b) hereof.
Deferred Compensation Plan has the meaning assigned thereto in Section 5(f) hereof.
Disability has the meaning set forth in the Companys long-term disability plan or its successor; provided, however, that the Board may not terminate the Executives employment hereunder by reason of Disability unless (i) at the time of such termination there is no reasonable expectation that the Executive will return to work within the next ninety (90) day period and (ii) such termination is permitted by all applicable disability laws.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the applicable rulings and regulations thereunder.
Excise Tax has the meaning assigned thereto in Section 9(a) hereof.
Good Reason means:
(a)
Prior to a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 3 hereof):
(i)
the assignment to the Executive of any duties materially inconsistent with the range of duties and responsibilities appropriate to a senior Executive within the Company (such range determined by reference to past, current and reasonable practices within the Company);
(ii)
a material reduction in the Executives overall standing and responsibilities within the Company, but not including (A) a mere change in title or (B) a transfer within the Company, which, in the case of both (A) and (B), does not adversely affect the Executives overall status within the Company;
(iii)
a material reduction by the Company in the Executives aggregate annualized compensation and benefits opportunities, except for across-the-board reductions (or modifications of benefit plans) similarly affecting all similarly situated executives (both of the Company and of any Person then in control of the Company) of comparable rank with the Executive;
(iv)
the failure by the Company to pay to the Executive any portion of the Executives current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)
any purported termination of the Executives employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3 hereof; for purposes of this Agreement, no such purported termination shall be effective;
(vi)
the failure by Sempra Energy to perform its obligations under Section 16(c), (d) or (e) hereof;
(vii)
the failure by the Company to provide the indemnification and D&O insurance protection Section 11 of this Agreement requires it to provide; or
(viii)
the failure by Sempra Energy to comply with any material provision of this Agreement.
(b)
From and after a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 3 hereof):
(i)
an adverse change in the Executives title, authority, duties, responsibilities or reporting lines as in effect immediately prior to the Change in Control;
(ii)
a reduction by the Company in the Executives aggregate annualized compensation opportunities, except for across-the-board reductions in base salaries, annual bonus opportunities or long-term incentive compensation opportunities of less than ten percent (10%) similarly affecting all similarly situated executives (both of the Company and of any Person then in control of the Company) of comparable rank with the Executive; or the failure by the Company to continue in effect any material benefit plan in which the Executive participates immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executive's participation relative to other participants, as existed at the time of the Change in Control;
(iii)
the relocation of the Executives principal place of employment immediately prior to the Change in Control Date (the Principal Location) to a location which is both further away from the Executives residence and more than thirty (30) miles from such Principal Location, or the Companys requiring the Executive to be based anywhere other than such Principal Location (or permitted relocation thereof), or a substantial increase in the Executives business travel obligations outside of the Southern California area as of the Effective Date other than any such increase that (A) arises in connection with extraordinary business activities of the Company of limited duration and (B) is understood not to be part of the Executives regular duties with the Company;
(iv)
the failure by the Company to pay to the Executive any portion of the Executives current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)
any purported termination of the Executives employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3 hereof; for purposes of this Agreement, no such purported termination shall be effective;
(vi)
the failure by Sempra Energy to perform its obligations under Section 16(c), (d) or (e) hereof;
(vii)
the failure by the Company to provide the indemnification and D&O insurance protection Section 11 of this Agreement requires it to provide; or
(viii)
the failure by Sempra Energy to comply with any material provision of this Agreement.
Following a Change in Control, the Executives determination that an act or failure to act constitutes Good Reason shall be presumed to be valid unless such determination is deemed to be unreasonable by an arbitrator pursuant to the procedure described in Section 13 hereof. The Executives right to terminate the Executives employment for Good Reason shall not be affected by the Executives incapacity due to physical or mental illness. The Executives continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
Incentive Compensation Awards means awards granted under Incentive Compensation Plans providing the Executive with the opportunity to earn, on a year-by-year basis, annual and long-term incentive compensation.
Incentive Compensation Plans means annual incentive compensation plans and long-term incentive compensation plans of the Company, which long-term incentive compensation plans may include plans offering stock options, restricted stock and other long-term incentive compensation.
Involuntary Termination means (a) the Executives Separation from Service by reason of a termination of employment by the Company other than for Cause, death, or Disability, or (b) the Executives Separation from Service by reason of resignation of employment with the Company for Good Reason.
JAMS Rules has the meaning assigned thereto in Section 13 hereof.
Notice of Termination has the meaning assigned thereto in Section 3(a) hereof.
Payment has the meaning assigned thereto in Section 9(a) hereof.
Payment in Lieu of Notice has the meaning assigned thereto in Section 3(b) hereof.
Person has the meaning set forth in section 3(a)(9) of the Exchange Act, as modified and used in sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, or (v) a person or group as used in Rule 13d-1(b) promulgated under the Exchange Act.
Post-Change in Control Accrued Obligations has the meaning assigned thereto in Section 6(a) hereof.
Post-Change in Control Severance Payment has the meaning assigned thereto in Section 6 hereof.
Pre-Change in Control Accrued Obligations has the meaning assigned thereto in Section 5(a) hereof.
Pre-Change in Control Severance Payment has the meaning assigned thereto in Section 5 hereof.
Principal Location has the meaning assigned thereto in clause (b)(iii) of the definition of Good Reason, above.
Proprietary Information has the meaning assigned thereto in Section 14(a) hereof.
Release has the meaning assigned thereto in Section 14(d) hereof.
Section 409A Payments means any of the following: (a) the Payment in Lieu of Notice; (b) the Pre-Change in Control Severance Payment; (c) the Post-Change in Control Severance Payment; (d) the Additional Post-Change in Control Severance Payment; (e) the Consulting Payment; (f) the payment under Section 6(b) (but only to the extent such payment or portion thereof is subject to Section 409A of the Code); (g) the financial planning services and the related payments provided under Sections 5(e) and 6(f); and (h) the legal fees and expenses reimbursed under Section 15.
Sempra Energy Control Group means Sempra Energy and all persons with whom Sempra Energy would be considered a single employer under Section 414(b) or 414(c) of the Code, as determined from time to time.
Separation from Service, with respect to the Executive (or another Service Provider), means the Executives (or such Service Providers) (a) termination of employment or (b) other termination or reduction in services, provided that such termination or reduction in clause (a) or (b) constitutes a separation from service, as defined in Treasury Regulation Section 1.409A-1(h), with respect to the Service Recipient.
SERP has the meaning assigned thereto in Section 6(b) hereof.
Service Provider means the Executive or any other service provider, as defined in Treasury Regulation Section 1.409A-1(f).
Service Recipient, with respect to the Executive, means Sempra Energy (if the Executive is employed by Sempra Energy), or the subsidiary of Sempra Energy employing the Executive, whichever is applicable, and all persons considered part of the service recipient, as defined in Treasury Regulation Section 1.409A-1(g), as determined from time to time. As provided in Treasury Regulation Section 1.409A-1(g), the Service Recipient shall mean the person for whom the services are performed and with respect to whom the legally binding right to compensation arises, and all persons with whom such person would be considered a single employer under Section 414(b) or 414(c) of the Code.
Specified Employee means a Service Provider who, as of the date of the Service Providers Separation from Service is a Key Employee of the Service Recipient any stock of which is publicly traded on an established securities market or otherwise. For purposes of this definition, a Service Provider is a Key Employee if the Service Provider meets the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the Treasury Regulations thereunder and disregarding Section 416(i)(5) of the Code) at any time during the Testing Year. If a Service Provider is a Key Employee (as defined above) as of a Specified Employee Identification Date, the Service Provider shall be treated as Key Employee for the entire twelve (12) month period beginning on the Specified Employee Effective Date. For purposes of this definition, a Service Providers compensation for a Testing Year shall mean such Service Providers compensation, as determined under Treasury Regulation Section 1.415(c)-2(a) (and applied as if the Service Recipient were not using any safe harbor provided in Treasury Regulation Section 1.415(c)-2(d), were not using any of the elective special timing rules provided in Treasury Regulation Section 1.415(c)-2(e), and were not using any of the elective special rules provided in Treasury Regulation Section 1.415(c)-2(g)), from the Service Recipient for such Testing Year. The Specified Employees shall be determined in accordance with Section 409A(a)(2)(B)(i) of the Code and Treasury Regulation Section 1.409A-1(i).
Specified Employee Effective Date means the first day of the fourth month following the Specified Employee Identification Date. The Specified Employee Effective Date may be changed by Sempra Energy, in its discretion, in accordance with Treasury Regulation Section 1.409A-1(i)(4).
Specified Employee Identification Date, for purposes of Treasury Regulation Section 1.409A-1(i)(3), shall mean December 31. The Specified Employee Identification Date shall apply to all nonqualified deferred compensation plans (as defined in Treasury Regulation Section 1.409A-1(a)) of the Service Recipient and all affected Service Providers. The Specified Employee Identification Date may be changed by Sempra Energy, in its discretion, in accordance with Treasury Regulation Section 1.409A-1(i)(3).
Testing Year shall mean the twelve (12) month period ending on the Specified Employee Identification Date, as determined from time to time.
Underpayment has the meaning assigned thereto in Section 9(b) hereof.
For purposes of this Agreement, references to any Treasury Regulation shall mean such Treasury Regulation as in effect on the date hereof.
Section 2.
Sarbanes-Oxley Act of 2002. Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that any provision of this Agreement is likely to be interpreted as a personal loan prohibited by the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder (the Act), then such provision shall be modified as necessary or appropriate so as to not violate the Act; and if this cannot be accomplished, then the Company shall use its reasonable efforts to provide the Executive with similar, but lawful, substitute benefit(s) at a cost to the Company not to significantly exceed the amount the Company would have otherwise paid to provide such benefit(s) to the Executive. In addition, if the Executive is required to forfeit or to make any repayment of any compensation or benefit(s) to the Company under the Act or any other law, such forfeiture or repayment shall not constitute Good Reason.
Section 3.
Notice and Date of Termination.
(a)
Any termination of the Executives employment by the Company or by the Executive shall be communicated by a written notice of termination to the other party (the Notice of Termination). Where applicable, the Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executives employment under the provision so indicated. Unless the Board determines otherwise, a Notice of Termination by the Executive alleging a termination for Good Reason must be made within 180 days of the act or failure to act that the Executive alleges to constitute Good Reason.
(b)
The date of the Executives termination of employment with the Company (the Date of Termination) shall be determined as follows: (i) if the Executive has a Separation from Service by reason of the Company terminating his or her employment, either with or without Cause, the Date of Termination shall be the date specified in the Notice of Termination (which, in the case of a termination by the Company other than for Cause, shall not be less than two (2) weeks from the date such Notice of Termination is given unless the Company elects to pay the Executive, in addition to any other amounts payable hereunder, an amount (the Payment in Lieu of Notice) equal to two (2) weeks of the Executives Annual Base Salary in effect on the Date of Termination), and (ii) if the basis for the Executives Involuntary Termination is his resignation for Good Reason, the Date of Termination shall be determined by the Executive and specified in the Notice of Termination, but shall not in any event be less than fifteen (15) days nor more than sixty (60) days after the date such Notice of Termination is given. The Payment in Lieu of Notice shall be paid on such date as is determined by the Company within thirty (30) days after the date of the Executives Separation from Service; provided, however, that if the Executive is a Specified Employee on the date of his or her Separation from Service, such Payment in Lieu of Notice shall be paid as provided in Section 10 hereof.
Section 4.
Termination from the Board. Upon the termination of the Executives employment for any reason, the Executives membership on the Board, the board of directors of any of the Companys Affiliates, any committees of the Board and any committees of the board of directors of any of the Companys Affiliates, if applicable, shall be automatically terminated.
Section 5.
Severance Benefits upon Involuntary Termination Prior to Change in Control. Except as provided in Section 6 and Section 19(i) hereof, in the event of the Involuntary Termination of the Executive prior to a Change in Control, the Company shall pay the Executive, in one lump sum cash payment, an amount (the Pre-Change in Control Severance Payment) equal to one-half (0.5) times the greater of: (X) 160% of the Executives Annual Base Salary as in effect on the Date of Termination, and (Y) the Executives Annual Base Salary as in effect on the Date of Termination, plus the Executives Average Annual Bonus. In addition to the Pre-Change in Control Severance Payment, the Executive shall be entitled to the following additional benefits specified in subsections (a) through (e). Except as provided in Section 5(f), the Pre-Change in Control Severance Payment and the payment under Section 5(a) shall be paid on such date as is determined by the Company within thirty (30) days after the date of the Involuntary Termination; provided, however, that, if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Pre-Change in Control Severance Payment and the financial planning services and the related payments provided under Section 5(e) shall be paid as provided in Section 10 hereof.
(a)
Accrued Obligations. The Company shall pay the Executive a lump sum amount in cash equal to the sum of (A) the Executives Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) an amount equal to any annual Incentive Compensation Awards earned with respect to fiscal years ended prior to the year that includes the Date of Termination to the extent not theretofore paid, (C) any accrued and unpaid vacation, if any, and (D) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of his duties in accordance with policies established from time to time by the Board, in each case to the extent not theretofore paid. (The amounts specified in clauses (A), (B), (C) and (D) shall be hereinafter referred to as the Pre-Change in Control Accrued Obligations).
(b)
Equity Based Compensation. The Executive shall retain all rights to any equity-based compensation awards to the extent set forth in the applicable plan and/or award agreement.
(c)
Welfare Benefits. Subject to Section 12 below, for a period of six (6) months following the date of the Involuntary Termination (and an additional twelve (12) months if the Executive provides consulting services under Section 14(e) hereof), the Executive and his dependents shall be provided with health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the date of the Involuntary Termination; provided, however, that such benefits shall be provided on substantially the same terms and conditions and at the same cost to the Executive as in effect immediately prior to the date of the Involuntary Termination. Such benefits shall be provided through insurance maintained by the Company under the Companys benefit plans. Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5).
(d)
Outplacement Services. The Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executives Involuntary Termination, for a period of eighteen (18) months following the date of the Involuntary Termination, in an aggregate amount of cost to the Company not to exceed $50,000. Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer. Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(e)
Financial Planning Services. The Executive shall receive financial planning services, on an in-kind basis, for a period of eighteen (18) months following the Date of Termination. Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial planning services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000. The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services. The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive. The Executives right to financial planning services shall not be subject to liquidation or exchange for any other benefit. Such financial planning services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv).
(f)
Deferral of Payments. The Executive shall have the right to elect to defer the Pre-Change in Control Severance Payment to be received by the Executive pursuant to this Section 5 under the terms and conditions of the Sempra Energy 2005 Deferred Compensation Plan (the Deferred Compensation Plan). Any such deferral election shall be made in accordance with Section 18(b) hereof.
Section 6.
Severance Benefits upon Involuntary Termination in Connection with and after Change in Control. Notwithstanding the provisions of Section 5 above, and except as provided in Section 19(i) hereof, in the event of the Involuntary Termination of the Executive on or within two (2) years following a Change in Control, in lieu of the payments described in Section 5 above, the Company shall pay the Executive, in one lump sum cash payment, an amount (the Post-Change in Control Severance Payment) equal to the greater of: (X) 160% of the Executives Annual Base Salary as in effect immediately prior to the Change in Control or the Date of Termination, whichever is greater, and (Y) the Executives Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, plus the Executives Average Annual Bonus; provided, however, that, in the event that the Involuntary Termination occurs prior to the fifth anniversary of the Effective Date, the Post-Change in Control Severance Payment shall be increased by twenty-five percent (25%). In addition to the Post-Change in Control Severance Payment, the Executive shall be entitled to the following additional benefits specified in subsections (a) through (f). Except as provided in Sections 6(g) and 6(h), the Post-Change in Control Severance Payment and the payments under Sections 6(a) and (b) shall be paid on such date as is determined by the Company within thirty (30) days after the date of the Involuntary Termination; provided, however, that, if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Post-Change in Control Severance Payment, the Additional Post-Change in Control Severance Payment under Section 6(a)(E), the payment under Section 6(b) (but only to the extent such payment or portion thereof is subject to Section 409A of the Code), and the financial planning services and the related payments provided under Section 6(f) shall be paid as provided in Section 10 hereof.
(a)
Accrued Obligations. The Company shall pay the Executive a lump sum amount in cash equal to the sum of (A) the Executives Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) an amount equal to any annual Incentive Compensation Awards earned with respect to fiscal years ended prior to the year that includes the Date of Termination to the extent not theretofore paid, (C) any accrued and unpaid vacation, if any, (D) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of his duties in accordance with policies established from time to time by the Board, and (E) an amount (the Additional Post-Change in Control Severance Payment) equal to: (i) the greater of: (X) 60% of the Executives Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, or (Y) the Executives Average Annual Bonus, multiplied by (ii) a fraction, the numerator of which shall be the number of days from the beginning of such fiscal year to and including the Date of Termination and the denominator of which shall be 365, in the case of each amount described in clause (A), (B), (C) or (D) to the extent not theretofore paid. (The amounts specified in clauses (A), (B), (C), (D) and (E) shall be hereinafter referred to as the Post-Change in Control Accrued Obligations).
(b)
Pension Supplement. The Executive shall be entitled to receive a Supplemental Retirement Benefit under the Sempra Energy Supplemental Executive Retirement Plan, as in effect from time to time (SERP), determined in accordance with this Section 6(b), in the event that the Executive is a Participant (as defined in the SERP) as of the Date of Termination. Such Supplemental Retirement Benefit shall be determined by crediting the Executive with additional months of Service (if any) equal to the number of full calendar months from the Date of Termination to the date on which the Executive would have attained age 62. The Executive shall be entitled to receive such Supplemental Retirement Benefit without regard to whether the Executive has attained age 55 or completed five years of Service (as defined in the SERP) as of the Date of Termination. The Executive shall be treated as qualified for Retirement (as defined in the SERP) as of the Date of Termination, and the Executives Vesting Factor with respect to the Supplemental Retirement Benefit shall be 100%. The Executives Supplemental Retirement Benefit shall be calculated based on the Executives actual age as of the date of commencement of payment of such Supplemental Retirement Benefit (the SERP Distribution Date), and by applying the applicable early retirement factors under the SERP, if the Executive has not attained age 62 but has attained age 55 as of the SERP Distribution Date. If the Executive has not attained age 55 as of the SERP Distribution Date, the Executives Supplemental Retirement Benefit shall be calculated by applying the applicable early retirement factor under the SERP for age 55, and the Supplemental Retirement Benefit otherwise payable at age 55 shall be actuarially adjusted to the Executives actual age as of the SERP Distribution Date using the following actuarial assumptions: (i) the applicable mortality table promulgated by the Internal Revenue Service under Section 417(e)(3) of the Code, as in effect on the first day of the calendar year in which the SERP Distribution Date occurs, and (ii) the applicable interest rate promulgated by the Internal Revenue Service under Section 417(a)(3) of the Code for the November next preceding the first day of the calendar year in which the SERP Distribution Date occurs. The Executives Supplemental Retirement Benefit shall be determined in accordance with this Section 6(b), notwithstanding any contrary provisions of the SERP and, to the extent subject to Section 409A of the Code, shall be paid in accordance with Treasury Regulation Section 1.409A-3(c)(1). The Supplemental Retirement Benefit paid to or on behalf of the Executive in accordance with this Section 6(b) shall be in full satisfaction of any and all of the benefits payable to or on behalf of the Executive under the SERP.
(c)
Equity-Based Compensation. Notwithstanding the provisions of any applicable equity-compensation plan or award agreement to the contrary, all equity-based Incentive Compensation Awards (including, without limitation, stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share awards, awards covered under Section 162(m) of the Code, and dividend equivalents) held by the Executive shall immediately vest and become exercisable or payable, as the case may be, as of the Date of Termination, to be exercised or paid, as the case may be, in accordance with the terms of the applicable Incentive Compensation Plan and Incentive Compensation Award agreement, and any restrictions on any such Incentive Compensation Awards shall automatically lapse; provided, however, that any such stock option or stock appreciation rights awards granted on or after June 26, 1998 shall remain outstanding and exercisable until the earlier of (A) the later of eighteen (18) months following the Date of Termination or the period specified in the applicable Incentive Compensation Award agreements or (B) the expiration of the original term of such Incentive Compensation Award (or, if earlier, the tenth anniversary of the original date of grant) (it being understood that all Incentive Compensation Awards granted prior to or after June 26, 1998 shall remain outstanding and exercisable for a period that is no less than that provided for in the applicable agreement in effect as of the date of grant).
(d)
Welfare Benefits. Subject to Section 12 below, for a period of twelve (12) months following the date of Involuntary Termination (and an additional twelve (12) months if the Executive provides consulting services under Section 14(e) hereof), the Executive and his dependents shall be provided with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive; provided, however, that such benefits shall be provided on substantially the same terms and conditions and at the same cost to the Executive as in effect immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive. Such benefits shall be provided through insurance maintained by the Company under the Company benefit plans. Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5).
(e)
Outplacement Services. The Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executives Involuntary Termination, for a period of twenty-four (24) months following the date of Involuntary Termination (but in no event beyond the last day of the Executives second taxable year following the Executives taxable year in which the Involuntary Termination occurs), in the aggregate amount of cost to the Company not to exceed $50,000. Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer. Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(f)
Financial Planning Services. The Executive shall receive financial planning services, on an in-kind basis, for a period of twenty-four (24) months following the date of Involuntary Termination. Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000. The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services. The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive. The Executives right to financial planning services shall not be subject to liquidation or exchange for any other benefit. Such financial planning services shall be provided in a manner that complies with Section 1.409A-3(i)(1)(iv).
(g)
Involuntary Termination in Connection with a Change in Control. Notwithstanding anything contained herein, in the event of an Involuntary Termination prior to a Change in Control, if the Involuntary Termination (1) was at the request of a third party who has taken steps reasonably calculated to effect such Change in Control or (2) otherwise arose in connection with or in anticipation of such Change in Control, then the Executive shall, in lieu of the payments described in Section 5 hereof, be entitled to the Post-Change in Control Severance Payment and the additional benefits described in this Section 6 as if such Involuntary Termination had occurred within two (2) years following the Change in Control. The amounts specified in Section 6 that are to be paid under this Section 6(g) shall be reduced by any amount previously paid under Section 5. The amounts to be paid under this Section 6(g) shall be paid within thirty (30) days after the Change in Control Date of such Change in Control.
(h)
Deferral of Payments. The Executive shall have the right to elect to defer the Post-Change in Control Severance Payment to be received by the Executive pursuant to this Section 6 under the terms and conditions of the Deferred Compensation Plan. Any such deferral election shall be made in accordance with Section 18(b) hereof.
Section 7.
Severance Benefits upon Termination by the Company for Cause or by the Executive Other than for Good Reason. If the Executives employment shall be terminated for Cause, or if the Executive terminates employment other than for Good Reason, the Company shall have no further obligations to the Executive under this Agreement other than the Pre-Change in Control Accrued Obligations and any amounts or benefits described in Section 11 hereof.
Section 8.
Severance Benefits upon Termination due to Death or Disability. If the Executive has a Separation from Service by reason of death or Disability, the Company shall pay the Executive or his estate, as the case may be, the Post-Change in Control Accrued Obligations (without regard to whether a Change in Control has occurred) and any amounts or benefits described in Section 11 hereof. Such payments shall be in addition to those rights and benefits to which the Executive or his estate may be entitled under the relevant Company plans or programs. Such payments shall be paid on such date as determined by the Company within thirty (30) days after the date of the Separation from Service; provided, however, that if the Executive is a Specified Employee on the date of the Executives Separation from Service by reason of Disability, the Additional Post-Change in Control Severance Payment under Section 6(a)(E) shall be paid as provided in Section 10 hereof.
Section 9.
Limitations on Payments by the Company.
(a)
Anything in this Agreement to the contrary notwithstanding and except as set forth in this Section 9 below, in the event it shall be determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise (the Payment) would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code, (the Excise Tax), then, subject to subsection (b), the Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall be reduced under this subsection (a) to the amount equal to the Reduced Payment. For such Payment payable under this Agreement, the Reduced Payment shall be the amount equal to the greatest portion of the Payment (which may be zero) that, if paid, would result in no portion of any Payment being subject to the Excise Tax.
(b)
The Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall not be reduced under subsection (a) if:
(i)
such reduction in such Payment is not sufficient to cause no portion of any Payment to be subject to the Excise Tax, or
(ii)
the Net After-Tax Unreduced Payments (as defined below) would equal or exceed one hundred and five percent (105%) of the Net After-Tax Reduced Payments (as defined below).
For purposes of determining the amount of any Reduced Payment under subsection (a), and the Net-After Tax Reduced Payments and the Net After-Tax Unreduced Payments, the Executive shall be considered to pay federal, state and local income and employment taxes at the Executives applicable marginal rates taking into consideration any reduction in federal income taxes which could be obtained from the deduction of state and local income taxes, and any reduction or disallowance of itemized deductions and personal exemptions under applicable tax law). The applicable federal, state and local income and employment taxes and the Excise Tax (to the extent applicable) are collectively referred to as the Taxes.
(c)
The following definitions shall apply for purposes of this Section 9:
(i)
Net After-Tax Reduced Payments shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are reduced pursuant to subsection (a).
(ii)
Net After-Tax Unreduced Payments shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are not reduced pursuant to subsection (a).
(iii)
Net After-Tax Basis shall mean, with respect to the Payments, either with or without reduction under subsection (a) (as applicable), the amount that would be retained by the Executive from such Payments after the payment of all Taxes.
(d)
All determinations required to be made under this Section 9 and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm as may be agreed by the Company and the Executive (the Accounting Firm); provided, that the Accounting Firms determination shall be made based upon substantial authority within the meaning of Section 6662 of the Code. The Accounting Firm shall provide detailed supporting calculations to both the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. For purposes of determining whether and the extent to which the Payments will be subject to the Excise Tax, (i) no portion of the Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a payment within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Payments shall be taken into account which, in the written opinion of the Accounting Firm, does not constitute a parachute payment within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Payments shall be taken into account which, in the opinion of the Accounting Firm, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the base amount (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Payments shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
Section 10.
Delayed Distribution under Section 409A of the Code. If the Executive is a Specified Employee on the date of the Executives Involuntary Termination (or on the date of the Executives Separation from Service by reason of Disability), the Section 409A Payments, and any other payments or benefits under this Agreement subject to Section 409A of the Code, shall be delayed in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, and such payments or benefits shall be paid or distributed to the Executive during the thirty (30) day period commencing on the earlier of (a) the expiration of the six-month period measured from the date of the Executives Separation from Service or (b) the date of the Executives death. Upon the expiration of the applicable six-month period under Section 409A(a)(2)(B)(i) of the Code, all payments deferred pursuant to this Section 10 (excluding in-kind benefits) shall be paid in a lump sum payment to the Executive, plus interest thereon from the date of the Executives Involuntary Termination through the payment date at an annual rate equal to Moodys Rate. The Moodys Rate shall mean the average of the daily Moodys Corporate Bond Yield Average Monthly Average Corporates as published by Moodys Investors Service, Inc. (or any successor) for the month next preceding the Date of Termination. Any remaining payments due under the Agreement shall be paid as otherwise provided herein.
Section 11.
Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executives continuing or future participation in any benefit, plan, program, policy or practice provided by the Company and for which the Executive may qualify (except with respect to any benefit to which the Executive has waived his rights in writing), including, without limitation, any and all indemnification arrangements in favor of the Executive (whether under agreements or under the Companys charter documents or otherwise), and insurance policies covering the Executive, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement entered into after the Effective Date with the Company. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any benefit, plan, policy, practice or program of, or any contract or agreement entered into with, the Company shall be payable in accordance with such benefit, plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. At all times during the Executives employment with the Company and thereafter, the Company shall provide (to the extent permissible under applicable law) the Executive with indemnification and D&O insurance insuring the Executive against insurable events which occur or have occurred while the Executive was a director or the Executive officer of the Company, on terms and conditions that are at least as generous as that then provided to any other current or former director or the Executive officer of the Company or any Affiliate. Such indemnification and D&O insurance shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(10).
Section 12.
Full Settlement; Mitigation. The Companys obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others, provided that nothing herein shall preclude the Company from separately pursuing recovery from the Executive based on any such claim. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts (including amounts for damages for breach) payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment.
Section 13.
Dispute Resolution.
Any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation of this Agreement or any arrangements relating to this Agreement or contemplated in this Agreement or the breach, termination or invalidity thereof shall be settled by final and binding arbitration administered by JAMS in San Diego, California in accordance with the then existing JAMS arbitration rules applicable to employment disputes (the JAMS Rules); provided that, notwithstanding any provision in such rules to the contrary, in all cases the parties shall be entitled to reasonable discovery. In the event of such an arbitration proceeding, the Executive and the Company shall select a mutually acceptable neutral arbitrator from among the JAMS panel of arbitrators. In the event the Executive and the Company cannot agree on an arbitrator, the arbitrator shall be selected in accordance with the then existing JAMS Rules. Neither the Executive nor the Company nor the arbitrator shall disclose the existence, content or results of any arbitration hereunder without the prior written consent of all parties, except to the extent necessary to enforce any arbitration award in a court of competent jurisdiction. Except as provided herein, the Federal Arbitration Act shall govern the interpretation of, enforcement of and all proceedings under this agreement to arbitrate. The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the state of California, or federal law, or both, as applicable, and the arbitrator is without jurisdiction to apply any different substantive law. The arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The arbitrator shall render an award and a written, reasoned opinion in support thereof. Judgment upon the award may be entered in any court having jurisdiction thereof. The Executive shall not be required to pay any arbitration fee or cost that is unique to arbitration or greater than any amount he would be required to pay to pursue his claims in a court of competent jurisdiction.
Section 14.
Executives Covenants.
(a)
Confidentiality. The Executive acknowledges that in the course of his employment with the Company, he has acquired non-public privileged or confidential information and trade secrets concerning the operations, future plans and methods of doing business (Proprietary Information) of the Company and its Affiliates; and the Executive agrees that it would be extremely damaging to the Company and its Affiliates if such Proprietary Information were disclosed to a competitor of the Company and its Affiliates or to any other person or corporation. The Executive understands and agrees that all Proprietary Information has been divulged to the Executive in confidence and further understands and agrees to keep all Proprietary Information secret and confidential (except for such information which is or becomes publicly available other than as a result of a breach by the Executive of this provision or information the Executive is required by any governmental, administrative or court order to disclose) without limitation in time. In view of the nature of the Executives employment and the Proprietary Information the Executive has acquired during the course of such employment, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any disclosure of Proprietary Information in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them. Inquiries regarding whether specific information constitutes Proprietary Information shall be directed to the Companys Senior Vice President, Public Policy (or, if such position is vacant, the Companys then Chief Executive Officer); provided, that the Company shall not unreasonably classify information as Proprietary Information.
(b)
Non-Solicitation of Employees. The Executive recognizes that he possesses and will possess confidential information about other employees of the Company and its Affiliates relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with customers of the Company and its Affiliates. The Executive recognizes that the information he possesses and will possess about these other employees is not generally known, is of substantial value to the Company and its Affiliates in developing their business and in securing and retaining customers, and has been and will be acquired by him because of his business position with the Company and its Affiliates. The Executive agrees that at all times during the Executives employment with the Company and for a period of one (1) year thereafter, he will not, directly or indirectly, solicit or recruit any employee of the Company or its Affiliates for the purpose of being employed by him or by any competitor of the Company or its Affiliates on whose behalf he is acting as an agent, representative or employee and that he will not convey any such confidential information or trade secrets about other employees of the Company and its Affiliates to any other person; provided, however, that it shall not constitute a solicitation or recruitment of employment in violation of this paragraph to discuss employment opportunities with any employee of the Company or its Affiliates who has either first contacted the Executive or regarding whose employment the Executive has discussed with and received the written approval of the Companys Vice President, Human Resources (or, if such position is vacant, the Companys then Chief Executive Officer), prior to making such solicitation or recruitment. In view of the nature of the Executives employment with the Company, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any solicitation or recruitment in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them.
(c)
Survival of Provisions. The obligations contained in Section 14(a) and Section 14(b) above shall survive the termination of the Executives employment within the Company and shall be fully enforceable thereafter. If it is determined by a court of competent jurisdiction in any state that any restriction in Section 14(a) or Section 14(b) above is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.
(d)
Release; Lump Sum Payment. In the event of the Executives Involuntary Termination, if the Executive (i) agrees to the covenants described in Section 14(a) and Section 14(b) above, (ii) executes a release (the Release) of all claims substantially in the form attached hereto as Exhibit A within fifty (50) days after the date of Involuntary Termination and does not revoke such Release in accordance with the terms thereof, and (iii) agrees to provide the consulting services described in Section 14(e) below, then in consideration for such covenants, the Company shall pay the Executive, in one cash lump sum, an amount (the Consulting Payment) in cash equal to the greater of: (X) 160% of the Executives Annual Base Salary as in effect on the Date of Termination, and (Y) the Executives Annual Base Salary as in effect on the Date of Termination, plus the Executives Average Annual Bonus. Except as provided in this subsection, the Consulting Payment shall be paid on such date as is determined by the Company within the ten (10) day period commencing on the 60th day after the date of the Executives Involuntary Termination; provided, however, that if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Consulting Payment shall be paid as provided in Section 10 hereof. The Executive shall have the right to elect to defer the Consulting Payment under the terms and conditions of the Companys Deferred Compensation Plan. Any such deferral election shall be made in accordance with Section 18(b) hereof.
(e)
Consulting. If the Executive agrees to the covenants described in Section 14(d) above, then the Executive shall have the obligation to provide consulting services to the Company as an independent contractor, commencing on the Date of Termination and ending on the second anniversary of the Date of Termination (the Consulting Period). The Executive shall hold himself available at reasonable times and on reasonable notice to render such consulting services as may be so assigned to him by the Board or the Companys then Chief Executive Officer; provided, however, that unless the parties otherwise agree, the consulting services rendered by the Executive during the Consulting Period shall not exceed twenty (20) hours each month; and, provided, further, that the consulting services rendered by the Executive during the Consulting Period shall in no event exceed twenty percent (20%) of the average level of services performed by the Executive for the Company over the thirty-six (36) month period immediately preceding the Executives Separation from Service (or the full period of services to the Company, if the Executive has been providing services to the Company for less than thirty-six (36) months). The Company agrees to use its best efforts during the Consulting Period to secure the benefit of the Executives consulting services so as to minimize the interference with the Executives other activities, including requiring the performance of consulting services at the Companys offices only when such services may not be reasonably performed off-site by the Executive.
Section 15.
Legal Fees.
(a)
Reimbursement of Legal Fees. Subject to subsection (b), in the event of the Executives Separation from Service either (1) prior to a Change in Control, or (2) on or within two (2) years following a Change in Control, the Company shall reimburse the Executive for all legal fees and expenses (including but not limited to fees and expenses in connection with any arbitration) incurred by the Executive in disputing any issue arising under this Agreement relating to the Executives Separation from Service or in seeking to obtain or enforce any benefit or right provided by this Agreement.
(b)
Requirements for Reimbursement. The Company shall reimburse the Executives legal fees and expenses pursuant to subsection (a) above only to the extent the arbitrator or court determines the following: (i) the Executive disputed such issue, or sought to obtain or enforce such benefit or right, in good faith, (ii) the Executive had a reasonable basis for such claim, and (iii) in the case of subsection (a)(1) above, the Executive is the prevailing party. In addition, the Company shall reimburse such legal fees and expenses, only if such legal fees and expenses are incurred during the twenty (20) year period beginning on the date of the Executives Separation from Service. The legal fees and expenses paid to the Executive for any taxable year of the Executive shall not affect the legal fees and expenses paid to the Executive for any other taxable year of the Executive. The legal fees and expenses shall be paid to the Executive on or before the last day of the Executives taxable year following the taxable year in which the fees or expenses are incurred. The Executives right to reimbursement of legal fees and expenses shall not be subject to liquidation or exchange for any other benefit. Such right to reimbursement of legal fees and expenses shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv). If the Executive is a Specified Employee on the date of the Executives Separation from Service, such right to reimbursement of legal fees and expenses shall be paid as provided in Section 10 hereof.
Section 16.
Successors.
(a)
Assignment by the Executive. This Agreement is personal to the Executive and without the prior written consent of Sempra Energy shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executives legal representatives.
(b)
Successors and Assigns of Sempra Energy. This Agreement shall inure to the benefit of and be binding upon Sempra Energy, its successors and assigns. Sempra Energy may not assign this Agreement to any person or entity (except for a successor described in Section 16(c), (d) or (e) below) without the Executives written consent.
(c)
Assumption. Sempra Energy shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Sempra Energy to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities of this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement if no such succession had taken place, and Sempra Energy shall have no further obligations and liabilities under this Agreement. Upon such assumption, references to Sempra Energy in this Agreement shall be replaced with references to such successor.
(d)
Sale of Subsidiary. In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy that is a member of the Sempra Energy Control Group, (ii) Sempra Energy, directly or indirectly through one or more intermediaries, sells or otherwise disposes of such subsidiary, and (iii) such subsidiary ceases to be a member of the Sempra Energy Control Group, then if, on the date such subsidiary ceases to be a member of the Sempra Energy Control Group, the Executive continues in employment with such subsidiary and the Executive does not have a Separation from Service, Sempra Energy shall require such subsidiary or any successor (whether direct or indirect, by purchase merger, consolidation or otherwise) to such subsidiary, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if such subsidiary had not ceased to be part of the Sempra Energy Control Group, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement. Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to such subsidiary, or such successor or parent thereof, assuming this Agreement, and (ii) subsection (b) of the definition of Cause and subsection (b) of the definition of Good Reason shall apply thereafter, as if a Change in Control had occurred on the date of such cessation.
(e)
Sale of Assets of Subsidiary. In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) such subsidiary sells or otherwise disposes of substantial assets of such subsidiary to an unrelated service recipient, as determined under Treasury Regulation Section 1.409A-1(f)(2)(ii) (the Asset Purchaser), in a transaction described in Treasury Regulation Section 1.409A-1(h)(4) (an Asset Sale), then if, on the date of such Asset Sale, the Executive becomes employed by the Asset Purchaser, Sempra Energy and the Asset Purchaser shall specify, in accordance with Treasury Regulation Section 1.409A-1(h)(4), that the Executive shall not be treated as having a Separation from Service, and Sempra Energy shall require such Asset Purchaser, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if the Asset Sale had not taken place, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement. Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to the Asset Purchaser or the parent thereof, as applicable, and (ii) subsection (b) of the definition of Cause and subsection (b) of the definition of Good Reason shall apply thereafter, as if a Change in Control had occurred on the date of the Asset Sale.
Section 17.
Administration Prior to Change in Control. Prior to a Change in Control, the Compensation Committee shall have full and complete authority to construe and interpret the provisions of this Agreement, to determine an individuals entitlement to benefits under this Agreement, to make in its sole and absolute discretion all determinations contemplated under this Agreement, to investigate and make factual determinations necessary or advisable to administer or implement this Agreement, and to adopt such rules and procedures as it deems necessary or advisable for the administration or implementation of this Agreement. All determinations made under this Agreement by the Compensation Committee shall be final and binding on all interested persons. Prior to a Change in Control, the Compensation Committee may delegate responsibilities for the operation and administration of this Agreement to one or more officers or employees of the Company. The provisions of this Section 17 shall terminate and be of no further force and effect upon the occurrence of a Change in Control.
Section 18.
Section 409A of the Code.
(a)
Compliance with and Exemption from Section 409A of the Code. Certain payments and benefits payable under this Agreement (including, without limitation, the Section 409A Payments) are intended to comply with the requirements of Section 409A of the Code. Certain payments and benefits payable under this Agreement are intended to be exempt from the requirements of Section 409A of the Code. This Agreement shall be interpreted in accordance with the applicable requirements of, and exemptions from, Section 409A of the Code and the Treasury Regulations thereunder. To the extent the payments and benefits under this Agreement are subject to Section 409A of the Code, this Agreement shall be interpreted, construed and administered in a manner that satisfies the requirements of Sections 409A(a)(2), (3) and (4) of the Code and the Treasury Regulations thereunder (subject to the transitional relief under Internal Revenue Service Notice 2005-1, the Proposed Regulations under Section 409A of the Code, Internal Revenue Service Notice 2006-79, Internal Revenue Service Notice 2007-78, Internal Revenue Service Notice 2007-86 and other applicable authority issued by the Internal Revenue Service). As provided in Internal Revenue Notice 2007-86, notwithstanding any other provision of this Agreement, with respect to an election or amendment to change a time or form of payment under this Agreement made on or after January 1, 2008 and on or before December 31, 2008, the election or amendment shall apply only with respect to payments that would not otherwise be payable in 2008, and shall not cause payments to be made in 2008 that would not otherwise be payable in 2008. If the Company and the Executive determine that any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not comply with Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, to the extent permitted under Section 409A of the Code, the Treasury Regulations thereunder and any applicable authority issued by the Internal Revenue Service, the Company and the Executive agree to amend this Agreement, or take such other actions as the Company and the Executive deem reasonably necessary or appropriate, to cause such compensation, benefits and other payments to comply with the requirements of Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, while providing compensation, benefits and other payments that are, in the aggregate, no less favorable than the compensation, benefits and other payments provided under this Agreement. In the case of any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code, if any provision of the Agreement would cause such compensation, benefits or other payments to fail to so comply, such provision shall not be effective and shall be null and void with respect to such compensation, benefits or other payments to the extent such provision would cause a failure to comply, and such provision shall otherwise remain in full force and effect.
(b)
Deferral Elections. As provided in Sections 5(f), 6(h) and 14(d), the Executive may elect to defer the Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and the Consulting Payment as follows. The Executives deferral election shall satisfy the requirements of Treasury Regulation Section 1.409A-2(b) and the terms and conditions of the Deferred Compensation Plan. Such deferral election shall designate the whole percentage (up to a maximum of 100%) of the Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and the Consulting Payment to be deferred, shall be irrevocable when made, and shall not take effect until at least twelve (12) months after the date on which the election is made. Such deferral election shall provide that the amount deferred shall be deferred for a period of not less than five (5) years from the date the payment of the amount deferred would otherwise have been made, in accordance with Treasury Regulation Section 1.409A-2(b)(1)(ii).
Section 19.
Miscellaneous.
(a)
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to its principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing signed by the party against whom enforcement of such amendment, modification, repeal, waiver, extension or discharge is sought. No person, other than pursuant to a resolution of the Board or a committee thereof, shall have authority on behalf of the Company to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto.
(b)
Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed, in either case, to the Companys headquarters or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.
(c)
Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d)
Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(e)
No Waiver. The Executives or the Companys failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 1 hereof, or the right of the Company to terminate the Executives employment for Cause pursuant to Section 1 hereof shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(f)
Entire Agreement; Exclusive Benefit; Supersession of Prior Agreement. This instrument contains the entire agreement of the Executive, the Company or any predecessor or subsidiary thereof with respect to any severance or termination pay. The Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and all other benefits provided hereunder shall be in lieu of any other severance payments to which the Executive is entitled under any other severance plan or program or arrangement sponsored by the Company, as well as pursuant to any individual employment or severance agreement that was entered into by the Executive and the Company, and, upon the Effective Date of this Agreement, all such plans, programs, arrangements and agreements are hereby automatically superseded and terminated.
(g)
No Right of Employment. Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of the Company or shall interfere in any way with the right of the Company to terminate the Executives employment at any time, with or without Cause.
(h)
Unfunded Obligation. The obligations under this Agreement shall be unfunded. Benefits payable under this Agreement shall be paid from the general assets of the Company. The Company shall have no obligation to establish any fund or to set aside any assets to provide benefits under this Agreement.
(i)
Termination upon Sale of Assets of Subsidiary. Notwithstanding anything contained herein, this Agreement shall automatically terminate and be of no further force and effect and no benefits shall be payable hereunder in the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) an Asset Sale (as defined in Section 16(e)) occurs (other than such a sale or disposition which is part of a transaction or series of transactions which would result in a Change in Control), and (iii) as a result of such Asset Sale, the Executive is offered employment by the Asset Purchaser in an executive position with reasonably comparable status, compensation, benefits and severance agreement (including the assumption of this Agreement in accordance with Section 16(e)) and which is consistent with the Executives experience and education, but the Executive declines to accept such offer and the Executive fails to become employed by the Asset Purchaser on the date of the Asset Sale.
(j)
Term. The term of this Agreement shall commence on the Effective Date and shall continue until the third (3rd) anniversary of the Effective Date; provided, however, that commencing on the second (2nd) anniversary of the Effective Date (and each anniversary of the Effective Date thereafter), the term of this Agreement shall automatically be extended for one (1) additional year, unless at least ninety (90) days prior to such date, the Company or the Executive shall give written notice to the other party that it or he, as the case may be, does not wish to so extend this Agreement. Notwithstanding the foregoing, if the Company gives such written notice to the Executive less than two (2) years after a Change in Control, the term of this Agreement shall be automatically extended until the later of (A) the date that is one (1) year after the anniversary of the Effective Date that follows such written notice or (B) the second (2nd) anniversary of the Change in Control Date.
(k)
Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from its Board of Directors, the Company have caused this Agreement to be executed as of the day and year first above written.
SEMPRA ENERGY
G. Joyce Rowland
Senior Vice President, Human Resources
_____________________________________
Date
EXECUTIVE
Jeffrey W. Martin
President & CEO, Generation
_____________________________________
Date
EXHIBIT A
GENERAL RELEASE
This GENERAL RELEASE (the Agreement), dated ___________, is made by and between ______________________________, a California corporation (the Company) and ___________________________ (you or your).
WHEREAS, you and the Company have previously entered into that certain Severance Pay Agreement dated ____________, 20___ (the Severance Pay Agreement); and
WHEREAS, Section 14(d) of the Severance Pay Agreement provides for the payment of a benefit to you by the Company in consideration for certain covenants, including your execution and non-revocation of a general release of claims by you against the Company and its subsidiaries and affiliates.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, you and the Company hereby agree as follows:
ONE: Your signing of this Agreement confirms that your employment with the Company shall terminate at the close of business on ____________, or earlier upon our mutual agreement.
TWO: As a material inducement for the payment of the benefit under Section 14(d) of the Severance Pay Agreement, and except as otherwise provided in this Agreement, you and the Company hereby irrevocably and unconditionally release, acquit and forever discharge the other from any and all Claims either may have against the other. For purposes of this Agreement and the preceding sentence, the words Releasee or Releasees and Claim or Claims shall have the meanings set forth below:
(a)
The words Releasee or Releasees shall refer to you and to the Company and each of the Companys owners, stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, advisors, parent companies, divisions, subsidiaries, affiliates (and agents, directors, officers, employees, representatives, attorneys and advisors of such parent companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them.
(b)
The words Claim or Claims shall refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, which you or the Company now, in the past or, except as limited by law or regulation such as the Age Discrimination in Employment Act (ADEA), in the future may have, own or hold against any of the Releasees; provided, however, that the word Claim or Claims shall not refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys fees and costs actually incurred) arising under [identify severance, employee benefits, stock option, indemnification and D&O and other agreements containing duties, rights obligations etc. of either party that are to remain operative]. Claims released pursuant to this Agreement by you and the Company include, but are not limited to, rights arising out of alleged violations of any contracts, express or implied, any tort, any claim that you failed to perform or negligently performed or breached your duties during employment at the Company, any legal restrictions on the Companys right to terminate employees or any federal, state or other governmental statute, regulation, or ordinance, including, without limitation: (1) Title VII of the Civil Rights Act of 1964 (race, color, religion, sex and national origin discrimination); (2) 42 U.S.C. § 1981 (discrimination); (3) 29 U.S.C. §§ 621634 (age discrimination); (4) 29 U.S.C. § 206(d)(l) (equal pay); (5) 42 U.S.C. §§ 12101, et seq. (disability); (6) the California Constitution, Article I, Section 8 (discrimination); (7) the California Fair Employment and Housing Act (discrimination, including race, color, national origin, ancestry, physical handicap, medical condition, marital status, religion, sex or age); (8) California Labor Code Section 1102.1 (sexual orientation discrimination); (9) the Executive Order 11246 (race, color, religion, sex and national origin discrimination); (10) the Executive Order 11141 (age discrimination); (11) §§ 503 and 504 of the Rehabilitation Act of 1973 (handicap discrimination); (12) The Worker Adjustment and Retraining Act (WARN Act); (13) the California Labor Code (wages, hours, working conditions, benefits and other matters); (14) the Fair Labor Standards Act (wages, hours, working conditions and other matters); the Federal Employee Polygraph Protection Act (prohibits employer from requiring employee to take polygraph test as condition of employment); and (15) any federal, state or other governmental statute, regulation or ordinance which is similar to any of the statutes described in clauses (1) through (14).
THREE: You and the Company expressly waive and relinquish all rights and benefits afforded by any statute (including but not limited to Section 1542 of the Civil Code of the State of California) which limits the effect of a release with respect to unknown claims. You and the Company do so understanding and acknowledging the significance of the release of unknown claims and the waiver of statutory protection against a release of unknown claims (including but not limited to Section 1542). Section 1542 of the Civil Code of the State of California states as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Thus, notwithstanding the provisions of Section 1542 or of any similar statute, and for the purpose of implementing a full and complete release and discharge of the Releasees, you and the Company expressly acknowledge that this Agreement is intended to include in its effect, without limitation, all Claims which are known and all Claims which you or the Company do not know or suspect to exist in your or the Companys favor at the time of execution of this Agreement and that this Agreement contemplates the extinguishment of all such Claims.
FOUR: The parties acknowledge that they might hereafter discover facts different from, or in addition to, those they now know or believe to be true with respect to a Claim or Claims released herein, and they expressly agree to assume the risk of possible discovery of additional or different facts, and agree that this Agreement shall be and remain effective, in all respects, regardless of such additional or different discovered facts.
FIVE: You hereby represent and acknowledge that you have not filed any Claim of any kind against the Company or others released in this Agreement. You further hereby expressly agree never to initiate against the Company or others released in this Agreement any administrative proceeding, lawsuit or any other legal or equitable proceeding of any kind asserting any Claims that are released in this Agreement.
The Company hereby represents and acknowledges that it has not filed any Claim of any kind against you or others released in this Agreement. The Company further hereby expressly agrees never to initiate against you or others released in this Agreement any administrative proceeding, lawsuit or any other legal or equitable proceeding of any kind asserting any Claims that are released in this Agreement.
SIX: You hereby represent and agree that you have not assigned or transferred, or attempted to have assigned or transfer, to any person or entity, any of the Claims that you are releasing in this Agreement.
The Company hereby represents and agrees that it has not assigned or transferred, or attempted to have assigned or transfer, to any person or entity, any of the Claims that it is releasing in this Agreement.
SEVEN: As a further material inducement to the Company to enter into this Agreement, you hereby agree to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys fees incurred by the Releasees, arising out of any breach of this Agreement by you or the fact that any representation made in this Agreement by you was false when made.
As a further material inducement to you to enter into this Agreement, the Company hereby agrees to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys fees incurred by the Releasees, arising out of any breach of this Agreement by it or the fact that any representation made in this Agreement by it was knowingly false when made.
EIGHT: You and the Company represent and acknowledge that in executing this Agreement, neither is relying upon any representation or statement not set forth in this Agreement or the Severance Agreement.
NINE:
(a)
This Agreement shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to you or any other person, or that you have any rights whatsoever against the Company, and the Company specifically disclaims any liability to or wrongful acts against you or any other person, on the part of itself, its employees or its agents. This Agreement shall not in any way be construed as an admission by you that you have acted wrongfully with respect to the Company, or that you failed to perform your duties or negligently performed or breached your duties, or that the Company had good cause to terminate your employment.
(b)
If you are a party or are threatened to be made a party to any proceeding by reason of the fact that you were an officer or director of the Company, the Company shall indemnify you against any expenses (including reasonable attorneys fees; provided, that counsel has been approved by the Company prior to retention, which approval shall not be unreasonably withheld), judgments, fines, settlements and other amounts actually or reasonably incurred by you in connection with that proceeding; provided, that you acted in good faith and in a manner you reasonably believed to be in the best interest of the Company. The limitations of California Corporations Code Section 317 shall apply to this assurance of indemnification.
(c)
You agree to cooperate with the Company and its designated attorneys, representatives and agents in connection with any actual or threatened judicial, administrative or other legal or equitable proceeding in which the Company is or may become involved. Upon reasonable notice, you agree to meet with and provide to the Company or its designated attorneys, representatives or agents all information and knowledge you have relating to the subject matter of any such proceeding. The Company agrees to reimburse you for any reasonable costs you incur in providing such cooperation.
TEN: This Agreement is made and entered into in California. This Agreement shall in all respects be interpreted, enforced and governed by and under the laws of the State of California and applicable Federal law. Any dispute about the validity, interpretation, effect or alleged violation of this Agreement (an arbitrable dispute) must be submitted to arbitration in San Diego, California. Arbitration shall take place before an experienced employment arbitrator licensed to practice law in such state and selected in accordance with the then existing JAMS arbitration rules applicable to employment disputes; provided, however, that in any event, the arbitrator shall allow reasonable discovery. Arbitration shall be the exclusive remedy for any arbitrable dispute. The arbitrator in any arbitrable dispute shall not have authority to modify or change the Agreement in any respect. You and the Company shall each be responsible for payment of one-half (1/2) the amount of the arbitrators fee(s); provided, however, that in no event shall you be required to pay any fee or cost of arbitration that is unique to arbitration or exceeds the costs you would have incurred had any arbitrable dispute been pursued in a court of competent jurisdiction. The Company shall make up any shortfall. Should any party to this Agreement institute any legal action or administrative proceeding against the other with respect to any Claim waived by this Agreement or pursue any arbitrable dispute by any method other than arbitration, the prevailing party shall be entitled to recover from the non-prevailing party all damages, costs, expenses and attorneys fees incurred as a result of that action. The arbitrators decision and/or award shall be rendered in writing and will be fully enforceable and subject to an entry of judgment by the Superior Court of the State of California for the County of San Diego, or any other court of competent jurisdiction.
ELEVEN: Both you and the Company understand that this Agreement is final and binding eight (8) days after its execution and return. Should you nevertheless attempt to challenge the enforceability of this Agreement as provided in Paragraph TEN or, in violation of that Paragraph, through litigation, as a further limitation on any right to make such a challenge, you shall initially tender to the Company, by certified check delivered to the Company, all monies received pursuant to Section 14(d) of the Severance Pay Agreement, plus interest, and invite the Company to retain such monies and agree with you to cancel this Agreement and void the Companys obligations under Section 14(d) of the Severance Pay Agreement. In the event the Company accepts this offer, the Company shall retain such monies and this Agreement shall be canceled and the Company shall have no obligation under Section 14(d) of the Severance Pay Agreement. In the event the Company does not accept such offer, the Company shall so notify you and shall place such monies in an interest-bearing escrow account pending resolution of the dispute between you and the Company as to whether or not this Agreement and the Companys obligations under Section 14(d) of the Severance Pay Agreement shall be set aside and/or otherwise rendered voidable or unenforceable. Additionally, any consulting agreement then in effect between you and the Company shall be immediately rescinded with no requirement of notice.
TWELVE: Any notices required to be given under this Agreement shall be delivered either personally or by first class United States mail, postage prepaid, addressed to the respective parties as follows:
To Company:
[TO COME]
Attn: [TO COME]
To You:
______________________
______________________
______________________
THIRTEEN: You understand and acknowledge that you have been given a period of forty-five (45) days to review and consider this Agreement (as well as statistical data on the persons eligible for similar benefits) before signing it and may use as much of this forty-five (45) day period as you wish prior to signing. You are encouraged, at your personal expense, to consult with an attorney before signing this Agreement. You understand and acknowledge that whether or not you do so is your decision. You may revoke this Agreement within seven (7) days of signing it. If you wish to revoke, the Companys Vice President, Human Resources must receive written notice from you no later than the close of business on the seventh (7th) day after you have signed the Agreement. If revoked, this Agreement shall not be effective and enforceable, and you will not receive payments or benefits under Section 14(d) of the Severance Pay Agreement.
FOURTEEN: This Agreement constitutes the entire agreement of the parties hereto and supersedes any and all other agreements (except the Severance Pay Agreement) with respect to the subject matter of this Agreement, whether written or oral, between you and the Company. All modifications and amendments to this Agreement must be in writing and signed by the parties.
FIFTEEN: Each party agrees, without further consideration, to sign or cause to be signed, and to deliver to the other party, any other documents and to take any other action as may be necessary to fulfill the obligations under this Agreement.
SIXTEEN: If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or application; and to this end the provisions of this Agreement are declared to be severable.
SEVENTEEN: This Agreement may be executed in counterparts.
I have read the foregoing General Release, and I accept and agree to the provisions it contains and hereby execute it voluntarily and with full understanding of its consequences. I am aware it includes a release of all known or unknown claims.
DATED: __________
__________________________________________
DATED: __________
__________________________________________
You acknowledge that you first received this Agreement on [date].
_________________________
Exhibit 10.66
SEMPRA ENERGY
SEVERANCE PAY AGREEMENT
THIS AGREEMENT (this Agreement), dated as of January 17, 2014, (the Effective Date) is made by and between SEMPRA ENERGY, a California corporation (Sempra Energy), and Robert M. Schlax (the Executive).
WHEREAS, the Executive is currently employed by Sempra Energy or a direct or indirect subsidiary of Sempra Energy (Sempra Energy and its subsidiaries are hereinafter collectively referred to as the Company) as Vice President, Controller and Chief Financial Officer; and
WHEREAS, Sempra Energy and the Executive desire to enter into this Agreement; and
WHEREAS, the Board of Directors of Sempra Energy (the Board) has authorized this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and the Executive hereby agree as follows:
Section 1.
Definitions. For purposes of this Agreement, the following capitalized terms have the meanings set forth below:
Accounting Firm has the meaning assigned thereto in Section 8(d) hereof.
Accrued Obligations" means the sum of (A) the Executives Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) an amount equal to any annual Incentive Compensation Awards earned with respect to fiscal years ended prior to the year that includes the Date of Termination to the extent not theretofore paid, (C) any accrued and unpaid vacation, if any, and (D) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of his duties in accordance with policies established from time to time by the Board, in each case to the extent not theretofore paid.
Affiliate has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act.
Annual Base Salary means the Executives annual base salary from the Company.
Asset Purchaser has the meaning assigned thereto in Section 16(e).
Asset Sale has the meaning assigned thereto in Section 16(e).
Average Annual Bonus means the average of the annual bonuses from the Company earned by the Executive with respect to the three (3) fiscal years of the Company immediately preceding the Date of Termination (the Bonus Fiscal Years); provided, however, that, if the Executive was employed by the Company for less than three (3) years of the Bonus Fiscal Years, Average Annual Bonus means the average of the annual bonuses (if any) from the Company earned by the Executive with respect to the Bonus Fiscal Years during which the Executive was employed by the Company; and, provided, further, that, if the Executive was not employed by the Company during any portion of any of the Bonus Fiscal Years, Average Annual Bonus means zero.
Cause means:
(a)
Prior to a Change in Control, (i) the willful failure by the Executive to substantially perform the Executives duties with the Company (other than any such failure resulting from the Executives incapacity due to physical or mental illness, (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) the Executives gross insubordination; and/or (iv) the Executives commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i) of this subsection (a), no act, or failure to act, on the Executives part shall be deemed willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executives act, or failure to act, was in the best interests of the Company.
(b)
From and after a Change in Control, (i) the willful and continued failure by the Executive to substantially perform the Executives duties with the Company (other than any such failure resulting from the Executives incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 2 hereof) and/or (ii) the Executives commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i) of this subsection (b), no act, or failure to act, on the Executives part shall be deemed willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executives act, or failure to act, was in the best interests of the Company. Notwithstanding the foregoing, the Executive shall not be deemed terminated for Cause pursuant to clause (i) of this subsection (b) unless and until the Executive shall have been provided with reasonable notice of and, if possible, a reasonable opportunity to cure the facts and circumstances claimed to provide a basis for termination of the Executives employment for Cause.
Change in Control shall be deemed to have occurred on the date that a change in the ownership of Sempra Energy, a change in the effective control of Sempra Energy, or a change in the ownership of a substantial portion of assets of Sempra Energy occurs (each, as defined in subsection (a) below), except as otherwise provided in subsections (b), (c) and (d) below:
(a)
(i)
a change in the ownership of Sempra Energy occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of Sempra Energy that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of Sempra Energy,
(ii)
a change in the effective control of Sempra Energy occurs only on either of the following dates:
(A)
the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of Sempra Energy possessing thirty percent (30%) or more of the total voting power of the stock of Sempra Energy, or
(B)
the date a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of appointment or election, and
(iii)
a change in the ownership of a substantial portion of assets of Sempra Energy occurs on the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from Sempra Energy that have a total gross fair market value equal to or more than eighty-five percent (85%) of the total gross fair market value of all of the assets of Sempra Energy immediately before such acquisition or acquisitions.
(b)
A change in the ownership of Sempra Energy or a change in the effective control of Sempra Energy shall not occur under clause (a)(i) or (a)(ii) by reason of any of the following:
(i)
an acquisition of ownership of stock of Sempra Energy directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business,
(ii)
a merger or consolidation which would result in the voting securities of Sempra Energy outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least sixty percent (60%) of the combined voting power of the securities of Sempra Energy or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or
(iii)
a merger or consolidation effected to implement a recapitalization of Sempra Energy (or similar transaction) in which no Person is or becomes the Beneficial Owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act, directly or indirectly, of securities of Sempra Energy (not including the securities beneficially owned by such Person any securities acquired directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business) representing twenty percent (20%) or more of the combined voting power of Sempra Energys then outstanding securities.
(c)
A change in the ownership of a substantial portion of assets of Sempra Energy shall not occur under clause (a)(iii) by reason of a sale or disposition by Sempra Energy of the assets of Sempra Energy to an entity, at least sixty percent (60%) of the combined voting power of the voting securities of which are owned by shareholders of Sempra Energy in substantially the same proportions as their ownership of Sempra Energy immediately prior to such sale.
(d)
This definition of Change in Control shall be limited to the definition of a change in control event relating to Sempra Energy under Treasury Regulation Section 1.409A-3(i)(5). A Change in Control shall only occur if there is a change in control event relating to Sempra Energy under Treasury Regulation Section 1.409A-3(i)(5) with respect to the Executive.
Change in Control Date means the date on which a Change in Control occurs.
Code means the Internal Revenue Code of 1986, as amended.
Compensation Committee means the compensation committee of the Board.
Consulting Payment has the meaning assigned thereto in Section 14(d) hereof.
Consulting Period has the meaning assigned thereto in Section 14(e) hereof.
Date of Termination has the meaning assigned thereto in Section 2(b) hereof.
Deferred Compensation Plan has the meaning assigned thereto in Section 4(f) hereof.
Disability has the meaning set forth in the Companys long-term disability plan or its successor; provided, however, that the Board may not terminate the Executives employment hereunder by reason of Disability unless (i) at the time of such termination there is no reasonable expectation that the Executive will return to work within the next ninety (90) day period and (ii) such termination is permitted by all applicable disability laws.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the applicable rulings and regulations thereunder.
Excise Tax has the meaning assigned thereto in Section 8(a) hereof.
Good Reason means:
(a)
Prior to a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 2 hereof):
(i)
the assignment to the Executive of any duties materially inconsistent with the range of duties and responsibilities appropriate to a senior Executive within the Company (such range determined by reference to past, current and reasonable practices within the Company);
(ii)
a material reduction in the Executives overall standing and responsibilities within the Company, but not including (A) a mere change in title or (B) a transfer within the Company, which, in the case of both (A) and (B), does not adversely affect the Executives overall status within the Company;
(iii)
a material reduction by the Company in the Executives aggregate annualized compensation and benefits opportunities, except for across-the-board reductions (or modifications of benefit plans) similarly affecting all similarly situated executives (both of the Company and of any Person then in control of the Company) of comparable rank with the Executive;
(iv)
the failure by the Company to pay to the Executive any portion of the Executives current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)
any purported termination of the Executives employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3 hereof; for purposes of this Agreement, no such purported termination shall be effective;
(vi)
the failure by Sempra Energy to perform its obligations under Section 16(c), (d) or (e) hereof;
(vii)
the failure by the Company to provide the indemnification and D&O insurance protection Section 10 of this Agreement requires it to provide; or
(viii)
the failure by Sempra Energy to comply with any material provision of this Agreement.
(b)
From and after a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 2 hereof):
(i)
an adverse change in the Executives title, authority, duties, responsibilities or reporting lines as in effect immediately prior to the Change in Control;
(ii)
a reduction by the Company in the Executives aggregate annualized compensation opportunities, except for across-the-board reductions in base salaries, annual bonus opportunities or long-term incentive compensation opportunities of less than ten percent (10%) similarly affecting all similarly situated executives (both of the Company and of any Person then in control of the Company) of comparable rank with the Executive; or the failure by the Company to continue in effect any material benefit plan in which the Executive participates immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executive's participation relative to other participants, as existed at the time of the Change in Control;
(iii)
the relocation of the Executives principal place of employment immediately prior to the Change in Control Date (the Principal Location) to a location which is both further away from the Executives residence and more than thirty (30) miles from such Principal Location, or the Companys requiring the Executive to be based anywhere other than such Principal Location (or permitted relocation thereof), or a substantial increase in the Executives business travel obligations outside of the Southern California area as of the Effective Date other than any such increase that (A) arises in connection with extraordinary business activities of the Company of limited duration and (B) is understood not to be part of the Executives regular duties with the Company;
(iv)
the failure by the Company to pay to the Executive any portion of the Executives current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)
any purported termination of the Executives employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3 hereof; for purposes of this Agreement, no such purported termination shall be effective;
(vi)
the failure by Sempra Energy to perform its obligations under Section 16(c), (d) or (e) hereof;
(vii)
the failure by the Company to provide the indemnification and D&O insurance protection Section 10 of this Agreement requires it to provide; or
(viii)
the failure by Sempra Energy to comply with any material provision of this Agreement.
Following a Change in Control, the Executives determination that an act or failure to act constitutes Good Reason shall be presumed to be valid unless such determination is deemed to be unreasonable by an arbitrator pursuant to the procedure described in Section 13 hereof. The Executives right to terminate the Executives employment for Good Reason shall not be affected by the Executives incapacity due to physical or mental illness. The Executives continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
Incentive Compensation Awards means awards granted under Incentive Compensation Plans providing the Executive with the opportunity to earn, on a year-by-year basis, annual and long-term incentive compensation.
Incentive Compensation Plans means annual incentive compensation plans and long-term incentive compensation plans of the Company, which long-term incentive compensation plans may include plans offering stock options, restricted stock and other long-term incentive compensation.
Involuntary Termination means (a) the Executives Separation from Service by reason other than for Cause, death, Disability or Mandatory Retirement, or (b) the Executives Separation from Service by reason of resignation of employment for Good Reason.
JAMS Rules has the meaning assigned thereto in Section 13 hereof.
Mandatory Retirement means termination of employment pursuant to the Companys mandatory retirement policy.
Notice of Termination has the meaning assigned thereto in Section 2(a) hereof.
Payment has the meaning assigned thereto in Section 8(a) hereof.
Payment in Lieu of Notice has the meaning assigned thereto in Section 2(b) hereof.
Person has the meaning set forth in section 3(a)(9) of the Exchange Act, as modified and used in sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, or (v) a person or group as used in Rule 13d-1(b) promulgated under the Exchange Act.
Post-Change in Control Severance Payment has the meaning assigned thereto in Section 5 hereof.
Pre-Change in Control Severance Payment has the meaning assigned thereto in Section 4 hereof.
Principal Location has the meaning assigned thereto in clause (b)(iii) of the definition of Good Reason, above.
Proprietary Information has the meaning assigned thereto in Section 14(a) hereof.
Pro Rata Bonus has the meaning assigned thereto in Section 5(b).
Release has the meaning assigned thereto in Section 4 hereof.
Section 409A Payments means any of the following: (a) the Payment in Lieu of Notice; (b) the Pre-Change in Control Severance Payment; (c) the Post-Change in Control Severance Payment; (d) the Pro Rata Bonus; (e) the Consulting Payment; (f) the financial planning services and the related payments provided under Sections 4(e) and 5(f); (g) the legal fees and expenses reimbursed under Section 15; and (h) any other payment that the Company determines in its sole discretion is subject to Section 409A of the Code as non-qualified deferred compensation.
Sempra Energy Control Group means Sempra Energy and all persons with whom Sempra Energy would be considered a single employer under Section 414(b) or 414(c) of the Code, as determined from time to time.
Separation from Service has the meaning set forth in Treasury Regulation Section 1.409A-1(h).
Specified Employee shall be determined in accordance with Section 409A(a)(2)(B)(i) of the Code and Treasury Regulation Section 1.409A-1(i).
For purposes of this Agreement, references to any Treasury Regulation shall mean such Treasury Regulation as in effect on the date hereof.
Section 2.
Notice and Date of Termination.
(a)
Any termination of the Executives employment by the Company or by the Executive shall be communicated by a written notice of termination to the other party (the Notice of Termination). Where applicable, the Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executives employment under the provision so indicated. Unless the Board determines otherwise, a Notice of Termination by the Executive alleging a termination for Good Reason must be made within 180 days of the act or failure to act that the Executive alleges to constitute Good Reason.
(b)
The date of the Executives termination of employment with the Company (the Date of Termination) shall be determined as follows: (i) if the Executives Separation from Service is at the volition of the Company, then the Date of Termination shall be the date specified in the Notice of Termination (which, in the case of a termination by the Company other than for Cause, shall not be less than two (2) weeks from the date such Notice of Termination is given unless the Company elects to pay the Executive, in addition to any other amounts payable hereunder, an amount (the Payment in Lieu of Notice) equal to two (2) weeks of the Executives Annual Base Salary in effect on the Date of Termination), and (ii) if the Executives Separation from Service is by the Executive for Good Reason, the Date of Termination shall be determined by the Executive and specified in the Notice of Termination, but in no event less than fifteen (15) days nor more than sixty (60) days after the date such Notice of Termination is given. The Payment in Lieu of Notice shall be paid on such date as is required by law, but no later than thirty (30) days after the date of the Executives Separation from Service; provided, however, that if the Executive is a Specified Employee on the date of his or her Separation from Service, such Payment in Lieu of Notice shall be paid as provided in Section 9 hereof.
Section 3.
Termination from the Board. Upon the termination of the Executives employment for any reason, the Executives membership on the Board, the board of directors of any of the Companys Affiliates, any committees of the Board and any committees of the board of directors of any of the Companys Affiliates, if applicable, shall be automatically terminated.
Section 4.
Severance Benefits upon Involuntary Termination Prior to Change in Control. Except as provided in Section 5(g) and Section 19(i) hereof, in the event of the Involuntary Termination of the Executive prior to a Change in Control, the Company shall pay the Executive, in one lump sum cash payment, an amount (the Pre-Change in Control Severance Payment) equal to one-half (0.5) times the greater of: (X) 145% of the Executives Annual Base Salary as in effect on the Date of Termination, and (Y) the Executives Annual Base Salary as in effect on the Date of Termination, plus the Executives Average Annual Bonus. In addition to the Pre-Change in Control Severance Payment, the Executive shall be entitled to the following additional benefits specified in subsections (a) through (e). The Company's obligation to pay the Pre-Change in Control Severance Payment or provide the benefits set forth in subsections (c), (d) and (e) are subject to and conditioned upon the Executive executing a release (the Release) of all claims substantially in the form attached hereto as Exhibit A within fifty (50) days after the date of Involuntary Termination and Executive not revoking such Release in accordance with the terms thereof. Except as provided in Section 4(f), the Pre-Change in Control Severance Payment shall be paid on such date as is determined by the Company within sixty (60) days after the date of the Involuntary Termination; but not before the Release becomes effective and irrevocable. If the fifty (50) day period in which the Release could become effective spans more than one taxable year, then the Pre-Change in Control Severance Payment shall not be made until the later taxable year. Notwithstanding the foregoing, if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Pre-Change in Control Severance Payment and the financial planning services and the related payments provided under Section 4(e) shall be paid as provided in Section 9 hereof.
(a)
Accrued Obligations. The Company shall pay the Executive a lump sum amount in cash equal to the Accrued Obligations within the time required by law.
(b)
Equity Based Compensation. The Executive shall retain all rights to any equity-based compensation awards to the extent set forth in the applicable plan and/or award agreement.
(c)
Welfare Benefits. Subject to Section 12 below, for a period of six (6) months following the date of the Involuntary Termination (and an additional six (6) months if the Executive provides consulting services under Section 14(e) hereof), the Executive and his dependents shall be provided with health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the date of the Involuntary Termination; provided, however, that such benefits shall be provided on substantially the same terms and conditions and at the same cost to the Executive as in effect immediately prior to the date of the Involuntary Termination. Such benefits shall be provided through insurance maintained by the Company under the Companys benefit plans. Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5). Notwithstanding the foregoing, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to the Executive a taxable monthly payment in an amount equal to the monthly premium that the Executive would be required to pay to continue the Executives and his covered dependents group insurance coverages under COBRA as in effect on the Date of Termination (which amount shall be based on the premiums for the first month of COBRA coverage); provided, however, that, if the Executive is a Specified Employee on the Date of Termination, then such payments shall be paid as provided in Section 9 hereof.
(d)
Outplacement Services. The Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executives Involuntary Termination, for a period of twelve (12) months following the date of the Involuntary Termination, in an aggregate amount of cost to the Company not to exceed $50,000. Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer. Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(e)
Financial Planning Services. The Executive shall receive financial planning services, on an in-kind basis, for a period of twelve (12) months following the Date of Termination. Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial planning services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000. The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services. The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive. The Executives right to financial planning services shall not be subject to liquidation or exchange for any other benefit. Such financial planning services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv).
(f)
Deferral of Payments. The Executive shall have the right to elect to defer the Pre-Change in Control Severance Payment to be received by the Executive pursuant to this Section 4 under the terms and conditions of the Sempra Energy 2005 Deferred Compensation Plan (the Deferred Compensation Plan). Any such deferral election shall be made in accordance with Section 18(b) hereof.
Section 5.
Severance Benefits upon Involuntary Termination in Connection with and after Change in Control. Notwithstanding the provisions of Section 4 above, and except as provided in Section 19(i) hereof, in the event of the Involuntary Termination of the Executive on or within two (2) years following a Change in Control, in lieu of the payments described in Section 4 above, the Company shall pay the Executive, in one lump sum cash payment, an amount (the Post-Change in Control Severance Payment) equal to the greater of: (X) 145% of the Executives Annual Base Salary as in effect immediately prior to the Change in Control or the Date of Termination, whichever is greater, and (Y) the Executives Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, plus the Executives Average Annual Bonus. In addition to the Post-Change in Control Severance Payment, the Executive shall be entitled to the benefits specified in subsections (a) through (f). The Company's obligation to pay the Post-Change in Control Severance Payment or provide the benefits set forth in subsections (b), (c), (d), (e) and (f) are subject to and conditioned upon the Executive executing the Release within fifty (50) days after the date of Involuntary Termination and Executive not revoking such Release in accordance with the terms thereof. Except as provided in Sections 5(g) and 5(h), the Post-Change in Control Severance Payment, and the Pro Rata Bonus shall be paid on such date as is determined by the Company within sixty (60) days after the date of the Involuntary Termination. If the fifty (50) day period in which the Release could become effective spans more than one taxable year, then the Post-Change in Control Severance Payment and Pro Rata Bonus shall not be made until the later taxable year. Notwithstanding the foregoing, if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Post-Change in Control Severance Payment, the Pro Rata Bonus and the financial planning services and the related payments provided under Section 5(f) shall be paid as provided in Section 9 hereof.
(a)
Accrued Obligations. The Company shall pay the Executive a lump sum amount in cash equal to the Executive's Accrued Obligations within the time required by law.
(b)
Pro Rata Bonus. The Company shall pay the Executive a lump sum amount in cash equal to: (i) the greater of: (X) 45% of the Executives Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, or (Y) the Executives Average Annual Bonus, multiplied by (ii) a fraction, the numerator of which shall be the number of days from the beginning of such fiscal year to and including the Date of Termination and the denominator of which shall be 365 equal to the (Pro Rata Bonus).
(c)
Equity-Based Compensation. Notwithstanding the provisions of any applicable equity-compensation plan or award agreement to the contrary, all equity-based Incentive Compensation Awards (including, without limitation, stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share awards, awards covered under Section 162(m) of the Code, and dividend equivalents) held by the Executive shall immediately vest and become exercisable or payable, as the case may be, as of the Date of Termination, to be exercised or paid, as the case may be, in accordance with the terms of the applicable Incentive Compensation Plan and Incentive Compensation Award agreement, and any restrictions on any such Incentive Compensation Awards shall automatically lapse; provided, however, that any such stock option or stock appreciation rights awards granted on or after June 26, 1998 shall remain outstanding and exercisable until the earlier of (A) the later of eighteen (18) months following the Date of Termination or the period specified in the applicable Incentive Compensation Award agreements or (B) the expiration of the original term of such Incentive Compensation Award (or, if earlier, the tenth anniversary of the original date of grant) (it being understood that all Incentive Compensation Awards granted prior to or after June 26, 1998 shall remain outstanding and exercisable for a period that is no less than that provided for in the applicable agreement in effect as of the date of grant).
(d)
Welfare Benefits. Subject to Section 12 below, for a period of six (6) months following the date of Involuntary Termination (and an additional twelve (12) months if the Executive provides consulting services under Section 14(e) hereof), the Executive and his dependents shall be provided with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive; provided, however, that such benefits shall be provided on substantially the same terms and conditions and at the same cost to the Executive as in effect immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive. Such benefits shall be provided through insurance maintained by the Company under the Company benefit plans. Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5). Notwithstanding the foregoing, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to the Executive a taxable monthly payment in an amount equal to the monthly premium that the Executive would be required to pay to continue the Executives and his covered dependents group insurance coverages under COBRA as in effect on the Date of Termination (which amount shall be based on the premiums for the first month of COBRA coverage); provided, however, that, if the Executive is a Specified Employee on the Date of Termination, then such payments shall be paid as provided in Section 9 hereof.
(e)
Outplacement Services. The Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executives Involuntary Termination, for a period of eighteen (18) months following the date of Involuntary Termination (but in no event beyond the last day of the Executives second taxable year following the Executives taxable year in which the Involuntary Termination occurs), in the aggregate amount of cost to the Company not to exceed $50,000. Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer. Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(f)
Financial Planning Services. The Executive shall receive financial planning services, on an in-kind basis, for a period of eighteen (18) months following the date of Involuntary Termination. Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000. The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services. The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive. The Executives right to financial planning services shall not be subject to liquidation or exchange for any other benefit. Such financial planning services shall be provided in a manner that complies with Section 1.409A-3(i)(1)(iv).
(g)
Involuntary Termination in Connection with a Change in Control. Notwithstanding anything contained herein, in the event of an Involuntary Termination prior to a Change in Control, if the Involuntary Termination (1) was at the request of a third party who has taken steps reasonably calculated to effect such Change in Control or (2) otherwise arose in connection with or in anticipation of such Change in Control, then the Executive shall, in lieu of the payments described in Section 4 hereof, be entitled to the Post-Change in Control Severance Payment and the additional benefits described in this Section 5 as if such Involuntary Termination had occurred within two (2) years following the Change in Control. The amounts specified in Section 5 that are to be paid under this Section 5(g) shall be reduced by any amount previously paid under Section 4. The amounts to be paid under this Section 5(g) shall be paid within sixty (60) days after the Change in Control Date of such Change in Control.
(h)
Deferral of Payments. The Executive shall have the right to elect to defer the Post-Change in Control Severance Payment and the Pro Rata Bonus to be received by the Executive pursuant to this Section 5 under the terms and conditions of the Deferred Compensation Plan. Any such deferral election shall be made in accordance with Section 18(b) hereof.
Section 6.
Severance Benefits upon Termination by the Company for Cause or by the Executive Other than for Good Reason. If the Executives employment shall be terminated for Cause, or if the Executive terminates employment other than for Good Reason, the Company shall have no further obligations to the Executive under this Agreement other than the Accrued Obligations and any amounts or benefits described in Section 10 hereof.
Section 7.
Severance Benefits upon Termination due to Death or Disability. If the Executive has a Separation from Service by reason of death or Disability, the Company shall pay the Executive or his estate, as the case may be, the Accrued Obligations and the Pro Rata Bonus (without regard to whether a Change in Control has occurred) and any amounts or benefits described in Section 10 hereof. Such payments shall be in addition to those rights and benefits to which the Executive or his estate may be entitled under the relevant Company plans or programs. The Company's obligation to pay the Pro Rata Bonus is conditioned upon the Executive, the Executive's representative or the Executive's estate, as the case may be executing the Release within fifty (50) days after the date of Executive's Separation from Service and not revoking such Release in accordance with the terms thereof. The Accrued Obligations shall be paid within the time required by law and the Pro Rata Bonus shall be paid on such date as determined by the Company within sixty (60) days after the date of the Separation from Service but not before the Release becomes effective and irrevocable. If the fifty (50) day period in which the Release could become effective spans more than one taxable year, then the Pro Rata Bonus shall not be made until the later taxable year. Notwithstanding the foregoing, if the Executive is a Specified Employee on the date of the Executives Separation from Service, the Pro Rata Bonus shall be paid as provided in Section 9 hereof.
Section 8.
Limitation on Payments by the Company.
(a)
Anything in this Agreement to the contrary notwithstanding and except as set forth in this Section 8 below, in the event it shall be determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise (the Payment) would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code, (the Excise Tax), then, subject to subsection (b), the Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall be reduced under this subsection (a) to the amount equal to the Reduced Payment. For such Payment payable under this Agreement, the Reduced Payment shall be the amount equal to the greatest portion of the Payment (which may be zero) that, if paid, would result in no portion of any Payment being subject to the Excise Tax.
(b)
The Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall not be reduced under subsection (a) if:
(i)
such reduction in such Payment is not sufficient to cause no portion of any Payment to be subject to the Excise Tax, or
(ii)
the Net After-Tax Unreduced Payments (as defined below) would equal or exceed one hundred and five percent (105%) of the Net After-Tax Reduced Payments (as defined below).
For purposes of determining the amount of any Reduced Payment under subsection (a), and the Net-After Tax Reduced Payments and the Net After-Tax Unreduced Payments, the Executive shall be considered to pay federal, state and local income and employment taxes at the Executives applicable marginal rates taking into consideration any reduction in federal income taxes which could be obtained from the deduction of state and local income taxes, and any reduction or disallowance of itemized deductions and personal exemptions under applicable tax law). The applicable federal, state and local income and employment taxes and the Excise Tax (to the extent applicable) are collectively referred to as the Taxes.
(c)
The following definitions shall apply for purposes of this Section 8:
(i)
Net After-Tax Reduced Payments shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are reduced pursuant to subsection (a).
(ii)
Net After-Tax Unreduced Payments shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are not reduced pursuant to subsection (a).
(iii)
Net After-Tax Basis shall mean, with respect to the Payments, either with or without reduction under subsection (a) (as applicable), the amount that would be retained by the Executive from such Payments after the payment of all Taxes.
(d)
All determinations required to be made under this Section 8 and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm as may be agreed by the Company and the Executive (the Accounting Firm); provided, that the Accounting Firms determination shall be made based upon substantial authority within the meaning of Section 6662 of the Code. The Accounting Firm shall provide detailed supporting calculations to both the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. For purposes of determining whether and the extent to which the Payments will be subject to the Excise Tax, (i) no portion of the Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a payment within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Payments shall be taken into account which, in the written opinion of the Accounting Firm, does not constitute a parachute payment within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Payments shall be taken into account which, in the opinion of the Accounting Firm, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the base amount (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Payments shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
Section 9.
Delayed Distribution under Section 409A of the Code. If the Executive is a Specified Employee on the date of the Executives Involuntary Termination (or on the date of the Executives Separation from Service by reason of Disability), the Section 409A Payments, and any other payments or benefits under this Agreement subject to Section 409A of the Code, shall be delayed in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, and such payments or benefits shall be paid or distributed to the Executive during the thirty (30) day period commencing on the earlier of (a) the expiration of the six-month period measured from the date of the Executives Separation from Service or (b) the date of the Executives death. Upon the expiration of the applicable six-month period under Section 409A(a)(2)(B)(i) of the Code, all payments deferred pursuant to this Section 9 (excluding in-kind benefits) shall be paid in a lump sum payment to the Executive, plus interest thereon from the date of the Executives Involuntary Termination through the payment date at an annual rate equal to Moodys Rate. The Moodys Rate shall mean the average of the daily Moodys Corporate Bond Yield Average Monthly Average Corporates as published by Moodys Investors Service, Inc. (or any successor) for the month next preceding the Date of Termination. Any remaining payments due under the Agreement shall be paid as otherwise provided herein.
Section 10.
Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executives continuing or future participation in any benefit, plan, program, policy or practice provided by the Company and for which the Executive may qualify (except with respect to any benefit to which the Executive has waived his rights in writing), including, without limitation, any and all indemnification arrangements in favor of the Executive (whether under agreements or under the Companys charter documents or otherwise), and insurance policies covering the Executive, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement entered into after the Effective Date with the Company. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any benefit, plan, policy, practice or program of, or any contract or agreement entered into with, the Company shall be payable in accordance with such benefit, plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. At all times during the Executives employment with the Company and thereafter, the Company shall provide (to the extent permissible under applicable law) the Executive with indemnification and D&O insurance insuring the Executive against insurable events which occur or have occurred while the Executive was a director or the Executive officer of the Company, on terms and conditions that are at least as generous as that then provided to any other current or former director or the Executive officer of the Company or any Affiliate. Such indemnification and D&O insurance shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(10).
Section 11.
Clawbacks. Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that if the Executive is required to forfeit or to make any repayment of any compensation or benefit(s) to the Company under the Sarbanes-Oxley Act of 2002 or pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other law, such forfeiture or repayment shall not constitute Good Reason.
Section 12.
Full Settlement; Mitigation. The Companys obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others, provided that nothing herein shall preclude the Company from separately pursuing recovery from the Executive based on any such claim. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts (including amounts for damages for breach) payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment.
Section 13.
Dispute Resolution.
(a)
If any dispute arises between Executive and the Company, including, but not limited to, disputes relating to or arising out of this Agreement, any action relating to or arising out of my employment or its termination, and/or any disputes regarding the interpretation, enforceability, or validity of this Agreement (Arbitrable Dispute), Executive and the Company waive the right to resolve the dispute through litigation in a judicial forum and agree to resolve the Arbitrable Dispute through final and binding arbitration, except as prohibited by law. Arbitration shall be the exclusive remedy for any Arbitrable Dispute.
(b)
As to any Arbitrable Dispute, the Company and Executive waive any right to a jury trial or a court bench trial. The Company and Executive also waive the right to bring, maintain, or participate in any class, collective, or representative proceeding, whether in arbitration or otherwise. Further, Arbitrable Disputes must be brought in the individual capacity of the party asserting the claim, and cannot be maintained on a class, collective, or representative basis.
(c)
Arbitration shall take place at the office of the Judicial Arbitration and Mediation Service (JAMS) (or, if Executive is employed outside of California, the American Arbitration Association (AAA)) nearest to the location where Executive last worked for the Company. Except to the extent it conflicts with the rules and procedures set forth in this Arbitration Agreement, arbitration shall be conducted in accordance with the JAMs Employment Arbitration Rules & Procedures (if Executive is employed outside of California, the AAA Employment Arbitration Rules & Mediation Procedures), copies of which are attached for my reference and available at www.jamsadr.com; tel: 800.352.5267 and www.adr.org; tel: 800.778.7879, before a single experienced, neutral employment arbitrator selected in accordance with those rules.
(d)
The Company will be responsible for paying any filing fee and the fees and costs of the arbitrator. Each party shall pay its own attorneys fees. However, if any party prevails on a statutory claim that authorizes an award of attorneys fees to the prevailing party, or if there is a written agreement providing for attorneys fees, the arbitrator may award reasonable attorneys fees to the prevailing party, applying the same standards a court would apply under the law applicable to the claim.
(e)
The arbitrator shall apply the Federal Rules of Evidence, shall have the authority to entertain a motion to dismiss or a motion for summary judgment by any party, and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The arbitrator does not have the authority to consider, certify, or hear an arbitration as a class action, collective action, or any other type of representative action. The Company and Executive recognize that this Agreement arises out of or concerns interstate commerce and that the Federal Arbitration Act shall govern the arbitration and shall govern the interpretation or enforcement of this Arbitration Agreement or any arbitration award.
(f)
EXECUTIVE ACKNOWLEDGES THAT BY ENTERING INTO THIS AGREEMENT, EXECUTIVE IS WAIVING ANY RIGHT HE OR SHE MAY HAVE TO A TRIAL BY JURY.
Section 14.
Executives Covenants.
(a)
Confidentiality. The Executive acknowledges that in the course of his employment with the Company, he has acquired non-public privileged or confidential information and trade secrets concerning the operations, future plans and methods of doing business (Proprietary Information) of the Company and its Affiliates; and the Executive agrees that it would be extremely damaging to the Company and its Affiliates if such Proprietary Information were disclosed to a competitor of the Company and its Affiliates or to any other person or corporation. The Executive understands and agrees that all Proprietary Information has been divulged to the Executive in confidence and further understands and agrees to keep all Proprietary Information secret and confidential (except for such information which is or becomes publicly available other than as a result of a breach by the Executive of this provision or information the Executive is required by any governmental, administrative or court order to disclose) without limitation in time. In view of the nature of the Executives employment and the Proprietary Information the Executive has acquired during the course of such employment, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any disclosure of Proprietary Information in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them. Inquiries regarding whether specific information constitutes Proprietary Information shall be directed to the Companys Senior Vice President, Public Policy (or, if such position is vacant, the Companys then Chief Executive Officer); provided, that the Company shall not unreasonably classify information as Proprietary Information.
(b)
Non-Solicitation of Employees. The Executive recognizes that he possesses and will possess confidential information about other employees of the Company and its Affiliates relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with customers of the Company and its Affiliates. The Executive recognizes that the information he possesses and will possess about these other employees is not generally known, is of substantial value to the Company and its Affiliates in developing their business and in securing and retaining customers, and has been and will be acquired by him because of his business position with the Company and its Affiliates. The Executive agrees that at all times during the Executives employment with the Company and for a period of one (1) year thereafter, he will not, directly or indirectly, solicit or recruit any employee of the Company or its Affiliates for the purpose of being employed by him or by any competitor of the Company or its Affiliates on whose behalf he is acting as an agent, representative or employee and that he will not convey any such confidential information or trade secrets about other employees of the Company and its Affiliates to any other person; provided, however, that it shall not constitute a solicitation or recruitment of employment in violation of this paragraph to discuss employment opportunities with any employee of the Company or its Affiliates who has either first contacted the Executive or regarding whose employment the Executive has discussed with and received the written approval of the Companys Vice President, Human Resources (or, if such position is vacant, the Companys then Chief Executive Officer), prior to making such solicitation or recruitment. In view of the nature of the Executives employment with the Company, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any solicitation or recruitment in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them.
(c)
Survival of Provisions. The obligations contained in Section 14(a) and Section 14(b) above shall survive the termination of the Executives employment within the Company and shall be fully enforceable thereafter. If it is determined by a court of competent jurisdiction in any state that any restriction in Section 14(a) or Section 14(b) above is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.
(d)
Release; Lump Sum Payment. In the event of the Executives Involuntary Termination, if the Executive (i) reconfirms and agrees to abide by the covenants described in Section 14(a) and Section 14(b) above, (ii) executes the Release within fifty (50) days after the date of Involuntary Termination and does not revoke such Release in accordance with the terms thereof, and (iii) agrees to provide the consulting services described in Section 14(e) below, then in consideration for such covenants and consulting services, the Company shall pay the Executive, in one cash lump sum, an amount (the Consulting Payment) in cash equal to one-half (0.5) times the greater of: (X) 145% of the Executives Annual Base Salary as in effect on the Date of Termination, and (Y) the Executives Annual Base Salary as in effect on the Date of Termination, plus the Executives Average Annual Bonus. Except as provided in this subsection, the Consulting Payment shall be paid on such date as is determined by the Company within the ten (10) day period commencing on the 60th day after the date of the Executives Involuntary Termination; provided, however, that if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Consulting Payment shall be paid as provided in Section 9 hereof. The Executive shall have the right to elect to defer the Consulting Payment under the terms and conditions of the Companys Deferred Compensation Plan. Any such deferral election shall be made in accordance with Section 18(b) hereof.
(e)
Consulting. If the Executive agrees to the provisions of in Section 14(d) above, then the Executive shall have the obligation to provide consulting services to the Company as an independent contractor, commencing on the Date of Termination and ending on the first anniversary of the Date of Termination (the Consulting Period). The Executive shall hold himself available at reasonable times and on reasonable notice to render such consulting services as may be so assigned to him by the Board or the Companys then Chief Executive Officer; provided, however, that unless the parties otherwise agree, the consulting services rendered by the Executive during the Consulting Period shall not exceed twenty (20) hours each month; and, provided, further, that the consulting services rendered by the Executive during the Consulting Period shall in no event exceed twenty percent (20%) of the average level of services performed by the Executive for the Company over the thirty-six (36) month period immediately preceding the Executives Separation from Service (or the full period of services to the Company, if the Executive has been providing services to the Company for less than thirty-six (36) months). The Company agrees to use its best efforts during the Consulting Period to secure the benefit of the Executives consulting services so as to minimize the interference with the Executives other activities, including requiring the performance of consulting services at the Companys offices only when such services may not be reasonably performed off-site by the Executive.
Section 15.
Legal Fees.
(a)
Reimbursement of Legal Fees. Subject to subsection (b), in the event of the Executives Separation from Service either (1) prior to a Change in Control, or (2) on or within two (2) years following a Change in Control, the Company shall reimburse the Executive for all legal fees and expenses (including but not limited to fees and expenses in connection with any arbitration) incurred by the Executive in disputing any issue arising under this Agreement relating to the Executives Separation from Service or in seeking to obtain or enforce any benefit or right provided by this Agreement.
(b)
Requirements for Reimbursement. The Company shall reimburse the Executives legal fees and expenses pursuant to subsection (a) above only to the extent the arbitrator or court determines the following: (i) the Executive disputed such issue, or sought to obtain or enforce such benefit or right, in good faith, (ii) the Executive had a reasonable basis for such claim, and (iii) in the case of subsection (a)(1) above, the Executive is the prevailing party. In addition, the Company shall reimburse such legal fees and expenses, only if such legal fees and expenses are incurred during the twenty (20) year period beginning on the date of the Executives Separation from Service. The legal fees and expenses paid to the Executive for any taxable year of the Executive shall not affect the legal fees and expenses paid to the Executive for any other taxable year of the Executive. The legal fees and expenses shall be paid to the Executive on or before the last day of the Executives taxable year following the taxable year in which the fees or expenses are incurred. The Executives right to reimbursement of legal fees and expenses shall not be subject to liquidation or exchange for any other benefit. Such right to reimbursement of legal fees and expenses shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv). If the Executive is a Specified Employee on the date of the Executives Separation from Service, such right to reimbursement of legal fees and expenses shall be paid as provided in Section 9 hereof.
Section 16.
Successors.
(a)
Assignment by the Executive. This Agreement is personal to the Executive and without the prior written consent of Sempra Energy shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executives legal representatives.
(b)
Successors and Assigns of Sempra Energy. This Agreement shall inure to the benefit of and be binding upon Sempra Energy, its successors and assigns. Sempra Energy may not assign this Agreement to any person or entity (except for a successor described in Section 16(c), (d) or (e) below) without the Executives written consent.
(c)
Assumption. Sempra Energy shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Sempra Energy to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities of this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement if no such succession had taken place, and Sempra Energy shall have no further obligations and liabilities under this Agreement. Upon such assumption, references to Sempra Energy in this Agreement shall be replaced with references to such successor.
(d)
Sale of Subsidiary. In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy that is a member of the Sempra Energy Control Group, (ii) Sempra Energy, directly or indirectly through one or more intermediaries, sells or otherwise disposes of such subsidiary, and (iii) such subsidiary ceases to be a member of the Sempra Energy Control Group, then if, on the date such subsidiary ceases to be a member of the Sempra Energy Control Group, the Executive continues in employment with such subsidiary and the Executive does not have a Separation from Service, Sempra Energy shall require such subsidiary or any successor (whether direct or indirect, by purchase merger, consolidation or otherwise) to such subsidiary, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if such subsidiary had not ceased to be part of the Sempra Energy Control Group, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement. Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to such subsidiary, or such successor or parent thereof, assuming this Agreement, and (ii) subsection (b) of the definition of Cause and subsection (b) of the definition of Good Reason shall apply thereafter, as if a Change in Control had occurred on the date of such cessation.
(e)
Sale of Assets of Subsidiary. In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) such subsidiary sells or otherwise disposes of substantial assets of such subsidiary to an unrelated service recipient, as determined under Treasury Regulation Section 1.409A-1(f)(2)(ii) (the Asset Purchaser), in a transaction described in Treasury Regulation Section 1.409A-1(h)(4) (an Asset Sale), then if, on the date of such Asset Sale, the Executive becomes employed by the Asset Purchaser, Sempra Energy and the Asset Purchaser shall specify, in accordance with Treasury Regulation Section 1.409A-1(h)(4), that the Executive shall not be treated as having a Separation from Service, and Sempra Energy shall require such Asset Purchaser, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if the Asset Sale had not taken place, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement. Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to the Asset Purchaser or the parent thereof, as applicable, and (ii) subsection (b) of the definition of Cause and subsection (b) of the definition of Good Reason shall apply thereafter, as if a Change in Control had occurred on the date of the Asset Sale.
Section 17.
Administration Prior to Change in Control. Prior to a Change in Control, the Compensation Committee shall have full and complete authority to construe and interpret the provisions of this Agreement, to determine an individuals entitlement to benefits under this Agreement, to make in its sole and absolute discretion all determinations contemplated under this Agreement, to investigate and make factual determinations necessary or advisable to administer or implement this Agreement, and to adopt such rules and procedures as it deems necessary or advisable for the administration or implementation of this Agreement. All determinations made under this Agreement by the Compensation Committee shall be final and binding on all interested persons. Prior to a Change in Control, the Compensation Committee may delegate responsibilities for the operation and administration of this Agreement to one or more officers or employees of the Company. The provisions of this Section 17 shall terminate and be of no further force and effect upon the occurrence of a Change in Control.
Section 18.
Section 409A of the Code.
(a)
Compliance with and Exemption from Section 409A of the Code. Certain payments and benefits payable under this Agreement (including, without limitation, the Section 409A Payments) are intended to comply with the requirements of Section 409A of the Code. Certain payments and benefits payable under this Agreement are intended to be exempt from the requirements of Section 409A of the Code. This Agreement shall be interpreted in accordance with the applicable requirements of, and exemptions from, Section 409A of the Code and the Treasury Regulations thereunder. To the extent the payments and benefits under this Agreement are subject to Section 409A of the Code, this Agreement shall be interpreted, construed and administered in a manner that satisfies the requirements of Sections 409A(a)(2), (3) and (4) of the Code and the Treasury Regulations thereunder (subject to the transitional relief under Internal Revenue Service Notice 2005-1, the Proposed Regulations under Section 409A of the Code, Internal Revenue Service Notice 2006-79, Internal Revenue Service Notice 2007-78, Internal Revenue Service Notice 2007-86 and other applicable authority issued by the Internal Revenue Service). As provided in Internal Revenue Notice 2007-86, notwithstanding any other provision of this Agreement, with respect to an election or amendment to change a time or form of payment under this Agreement made on or after January 1, 2008 and on or before December 31, 2008, the election or amendment shall apply only with respect to payments that would not otherwise be payable in 2008, and shall not cause payments to be made in 2008 that would not otherwise be payable in 2008. If the Company and the Executive determine that any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not comply with Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, to the extent permitted under Section 409A of the Code, the Treasury Regulations thereunder and any applicable authority issued by the Internal Revenue Service, the Company and the Executive agree to amend this Agreement, or take such other actions as the Company and the Executive deem reasonably necessary or appropriate, to cause such compensation, benefits and other payments to comply with the requirements of Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, while providing compensation, benefits and other payments that are, in the aggregate, no less favorable than the compensation, benefits and other payments provided under this Agreement. In the case of any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code, if any provision of the Agreement would cause such compensation, benefits or other payments to fail to so comply, such provision shall not be effective and shall be null and void with respect to such compensation, benefits or other payments to the extent such provision would cause a failure to comply, and such provision shall otherwise remain in full force and effect.
(b)
Deferral Elections. As provided in Sections 4(f), 5(h) and 14(d), the Executive may elect to defer the Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and the Consulting Payment as follows. The Executives deferral election shall satisfy the requirements of Treasury Regulation Section 1.409A-2(b) and the terms and conditions of the Deferred Compensation Plan. Such deferral election shall designate the whole percentage (up to a maximum of 100%) of the Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and the Consulting Payment to be deferred, shall be irrevocable when made, and shall not take effect until at least twelve (12) months after the date on which the election is made. Such deferral election shall provide that the amount deferred shall be deferred for a period of not less than five (5) years from the date the payment of the amount deferred would otherwise have been made, in accordance with Treasury Regulation Section 1.409A-2(b)(1)(ii).
Section 19.
Miscellaneous.
(a)
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to its principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing signed by the party against whom enforcement of such amendment, modification, repeal, waiver, extension or discharge is sought. No person, other than pursuant to a resolution of the Board or a committee thereof, shall have authority on behalf of the Company to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto.
(b)
Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed, in either case, to the Companys headquarters or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.
(c)
Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d)
Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(e)
No Waiver. The Executives or the Companys failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 1 hereof, or the right of the Company to terminate the Executives employment for Cause pursuant to Section 1 hereof shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(f)
Entire Agreement; Exclusive Benefit; Supersession of Prior Agreement. This instrument contains the entire agreement of the Executive, the Company or any predecessor or subsidiary thereof with respect to any severance or termination pay. The Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and all other benefits provided hereunder shall be in lieu of any other severance payments to which the Executive is entitled under any other severance plan or program or arrangement sponsored by the Company, as well as pursuant to any individual employment or severance agreement that was entered into by the Executive and the Company, and, upon the Effective Date of this Agreement, all such plans, programs, arrangements and agreements are hereby automatically superseded and terminated.
(g)
No Right of Employment. Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of the Company or shall interfere in any way with the right of the Company to terminate the Executives employment at any time, with or without Cause.
(h)
Unfunded Obligation. The obligations under this Agreement shall be unfunded. Benefits payable under this Agreement shall be paid from the general assets of the Company. The Company shall have no obligation to establish any fund or to set aside any assets to provide benefits under this Agreement.
(i)
Termination upon Sale of Assets of Subsidiary. Notwithstanding anything contained herein, this Agreement shall automatically terminate and be of no further force and effect and no benefits shall be payable hereunder in the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) an Asset Sale (as defined in Section 16(e)) occurs (other than such a sale or disposition which is part of a transaction or series of transactions which would result in a Change in Control), and (iii) as a result of such Asset Sale, the Executive is offered employment by the Asset Purchaser in an executive position with reasonably comparable status, compensation, benefits and severance agreement (including the assumption of this Agreement in accordance with Section 16(e)) and which is consistent with the Executives experience and education, but the Executive declines to accept such offer and the Executive fails to become employed by the Asset Purchaser on the date of the Asset Sale.
(j)
Term. The term of this Agreement shall commence on the Effective Date and shall continue until the third (3rd) anniversary of the Effective Date; provided, however, that commencing on the second (2nd) anniversary of the Effective Date (and each anniversary of the Effective Date thereafter), the term of this Agreement shall automatically be extended for one (1) additional year, unless at least ninety (90) days prior to such date, the Company or the Executive shall give written notice to the other party that it or he, as the case may be, does not wish to so extend this Agreement. Notwithstanding the foregoing, if the Company gives such written notice to the Executive less than two (2) years after a Change in Control, the term of this Agreement shall be automatically extended until the later of (A) the date that is one (1) year after the anniversary of the Effective Date that follows such written notice or (B) the second (2nd) anniversary of the Change in Control Date.
(k)
Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from its Board of Directors, the Company have caused this Agreement to be executed as of the day and year first above written.
SEMPRA ENERGY
G. Joyce Rowland
Senior Vice President, Human Resources, Diversity and Inclusion
_____________________________________
Date
EXECUTIVE
Robert M. Schlax
Vice President, Controller, and Chief Financial Officer
_____________________________________
Date
EXHIBIT A
GENERAL RELEASE
This GENERAL RELEASE (the Agreement), dated ___________, is made by and between ______________________________, a California corporation (the Company) and ___________________________ (you or your).
WHEREAS, you and the Company have previously entered into that certain Severance Pay Agreement dated ____________, 20__ (the Severance Pay Agreement); and
WHEREAS, your right to receive certain severance pay and benefits pursuant to the terms of Section 4 or Section 5 of the Severance Pay Agreement, as applicable, are subject to and conditioned upon your execution and non-revocation of a general release of claims by you against the Company and its subsidiaries and affiliates.
WHEREAS, your right to receive the Consulting Payment provided pursuant to Section 14(d) of the Severance Pay Agreement is subject to and conditioned upon your execution and non-revocation of a general release of claims by you against the Company and its subsidiaries and affiliates; and your adherence to the covenants described under Section 14 of the Severance Pay Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, you and the Company hereby agree as follows:
ONE: Your signing of this Agreement confirms that your employment with the Company shall terminate at the close of business on ____________, or earlier upon our mutual agreement.
TWO: As a material inducement for the payment of the severance and benefits under the Severance Pay Agreement, and except as otherwise provided in this Agreement, you and the Company hereby irrevocably and unconditionally release, acquit and forever discharge the other from any and all Claims either may have against the other. For purposes of this Agreement and the preceding sentence, the words Releasee or Releasees and Claim or Claims shall have the meanings set forth below:
(a)
The words Releasee or Releasees shall refer to you and to the Company and each of the Companys owners, stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, advisors, parent companies, divisions, subsidiaries, affiliates (and agents, directors, officers, employees, representatives, attorneys and advisors of such parent companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them.
(b)
The words Claim or Claims shall refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, which you or the Company now, in the past or, in the future may have, own or hold against any of the Releasees; provided, however, that the word Claim or Claims shall not refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys fees and costs actually incurred) arising under [identify severance, employee benefits, stock option, indemnification and D&O and other agreements containing duties, rights obligations etc. of either party that are to remain operative]. Claims released pursuant to this Agreement by you and the Company include, but are not limited to, rights arising out of alleged violations of any contracts, express or implied, any tort, claim, any claim that you failed to perform or negligently performed or breached your duties during employment at the Company; any legal restrictions on the Companys right to terminate employment relationships or any federal, state or other governmental statute, regulation, or ordinance, governing the employment relationship including, without limitation: all state and federal laws and regulations prohibiting discrimination based on protected categories, and all state and federal laws and regulations prohibiting retaliation against employees for engaging in protected activity or legal off-duty conduct. This release does not extend to claims for workers compensation or other claims which by law may not be waived or released by this Agreement.
THREE: You and the Company expressly waive and relinquish all rights and benefits afforded by any statute (including but not limited to Section 1542 of the Civil Code of the State of California and analogous laws of other states) which limits the effect of a release with respect to unknown claims. You and the Company do so understanding and acknowledging the significance of the release of unknown claims and the waiver of statutory protection against a release of unknown claims (including but not limited to Section 1542 and analogous laws of other states). Section 1542 of the Civil Code of the State of California states as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Thus, notwithstanding the provisions of Section 1542 or of any similar statute, and for the purpose of implementing a full and complete release and discharge of the Releasees, you and the Company expressly acknowledge that this Agreement is intended to include in its effect, without limitation, all Claims which are known and all Claims which you or the Company do not know or suspect to exist in your or the Companys favor at the time of execution of this Agreement and that this Agreement contemplates the extinguishment of all such Claims.
FOUR: The parties acknowledge that they might hereafter discover facts different from, or in addition to, those they now know or believe to be true with respect to a Claim or Claims released herein, and they expressly agree to assume the risk of possible discovery of additional or different facts, and agree that this Agreement shall be and remain effective, in all respects, regardless of such additional or different discovered facts.
FIVE: You hereby represent and acknowledge that you have not filed any Claim of any kind against the Company or others released in this Agreement. You further hereby expressly agree never to initiate against the Company or others released in this Agreement any administrative proceeding, lawsuit or any other legal or equitable proceeding of any kind asserting any Claims that are released in this Agreement. You agree that you will not be entitled to any monetary recovery that may result from any agency action against the Company related to the Claims released by this Agreement.
The Company hereby represents and acknowledges that it has not filed any Claim of any kind against you or others released in this Agreement. The Company further hereby expressly agrees never to initiate against you or others released in this Agreement any administrative proceeding, lawsuit or any other legal or equitable proceeding of any kind asserting any Claims that are released in this Agreement.
SIX: You hereby represent and agree that you have not assigned or transferred, or attempted to have assigned or transfer, to any person or entity, any of the Claims that you are releasing in this Agreement.
The Company hereby represents and agrees that it has not assigned or transferred, or attempted to have assigned or transfer, to any person or entity, any of the Claims that it is releasing in this Agreement.
SEVEN: As a further material inducement to the Company to enter into this Agreement, you hereby agree to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys fees incurred by the Releasees, arising out of any breach of this Agreement by you or the fact that any representation made in this Agreement by you was false when made.
As a further material inducement to you to enter into this Agreement, the Company hereby agrees to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys fees incurred by the Releasees, arising out of any breach of this Agreement by it or the fact that any representation made in this Agreement by it was knowingly false when made.
EIGHT: You and the Company represent and acknowledge that in executing this Agreement, neither is relying upon any representation or statement not set forth in this Agreement or the Severance Agreement.
NINE: (a)
This Agreement shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to you or any other person, or that you have any rights whatsoever against the Company, and the Company specifically disclaims any liability to or wrongful acts against you or any other person, on the part of itself, its employees or its agents. This Agreement shall not in any way be construed as an admission by you that you have acted wrongfully with respect to the Company, or that you failed to perform your duties or negligently performed or breached your duties, or that the Company had good cause to terminate your employment.
(b)
If you are a party or are threatened to be made a party to any proceeding by reason of the fact that you were an officer or director of the Company, the Company shall indemnify you against any expenses (including reasonable attorneys fees; provided, that counsel has been approved by the Company prior to retention, which approval shall not be unreasonably withheld), judgments, fines, settlements and other amounts actually or reasonably incurred by you in connection with that proceeding; provided, that you acted in good faith and in a manner you reasonably believed to be in the best interest of the Company. The limitations of California Corporations Code Section 317 shall apply to this assurance of indemnification.
(c)
You agree to cooperate with the Company and its designated attorneys, representatives and agents in connection with any actual or threatened judicial, administrative or other legal or equitable proceeding in which the Company is or may become involved. Upon reasonable notice, you agree to meet with and provide to the Company or its designated attorneys, representatives or agents all information and knowledge you have relating to the subject matter of any such proceeding. The Company agrees to reimburse you for any reasonable costs you incur in providing such cooperation.
TEN: This Agreement is entered into in California and shall be governed by substantive California law, except as provided in this section. If any dispute arises between you and the Company, including but not limited to, disputes relating to this Agreement, or if you prosecute a claim you purported to release by means of this Agreement (Arbitrable Dispute), you and the Company agree to resolve that Arbitrable Dispute through final and binding arbitration under this section. You also agree to arbitrate any Arbitrable Dispute which also involves any other released party who offers or agrees to arbitrate the dispute under this section. Your agreement to arbitrate applies, for example, to disputes about the validity, interpretation, or effect of this Agreement or alleged violations of it, claims of discrimination under federal or state law, or other statutory violation claims.
As to any Arbitrable Dispute, you and the Company waive any right to a jury trial or a court bench trial. You and the Company also waive the right to bring, maintain, or participate in any class, collective, or representative proceeding, whether in arbitration or otherwise. Further, Arbitrable Disputes must be brought in the individual capacity of the party asserting the claim, and cannot be maintained on a class, collective, or representative basis.
Arbitration shall take place in San Diego, California under the employment dispute resolution rules of the Judicial Arbitration and Mediation Service (JAMS), (or, if you are employed outside of California at the time of the termination of your employment, at the nearest location of the American Arbitration Association and in accordance with the AAA rules), before an experienced employment arbitrator selected in accordance with those rules. The arbitrator may not modify or change this Agreement in any way. The Company will be responsible for paying any filing fee and the fees and costs of the Arbitrator; provided, however, that if you are the party initiating the claim, you will contribute an amount equal to the filing fee to initiate a claim in the court of general jurisdiction in the state in which you are employed by the Company. Each party shall pay for its own costs and attorneys fees, if any. However if any party prevails on a statutory claim which affords the prevailing party attorneys fees and costs, or if there is a written agreement providing for attorneys fees and/or costs, the Arbitrator may award reasonable attorneys fees and/or costs to the prevailing party, applying the same standards a court would apply under the law applicable to the claim. The Arbitrator shall apply the Federal Rules of Evidence and shall have the authority to entertain a motion to dismiss or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The Federal Arbitration Act shall govern the arbitration and shall govern the interpretation or enforcement of this section or any arbitration award. The arbitrator will not have the authority to consider, certify, or hear an arbitration as a class action, collective action, or any other type of representative action.
To the extent that the Federal Arbitration Act is inapplicable, California law pertaining to arbitration agreements shall apply. Arbitration in this manner shall be the exclusive remedy for any Arbitrable Dispute. Except as prohibited by the ADEA, should you or the Company attempt to resolve an Arbitrable Dispute by any method other than arbitration pursuant to this section, the responding party will be entitled to recover from the initiating party all damages, expenses, and attorneys fees incurred as a result of this breach. This section TEN supersedes any existing arbitration agreement between the Company and me as to any Arbitrable Dispute. Notwithstanding anything in this section TEN to the contrary, a claim for benefits under an ERISA-covered plan shall not be an Arbitrable Dispute.
ELEVEN: Both you and the Company understand that this Agreement is final and binding eight (8) days after its execution and return. Should you nevertheless attempt to challenge the enforceability of this Agreement as provided in Paragraph TEN or, in violation of that Paragraph, through litigation, as a further limitation on any right to make such a challenge, you shall initially tender to the Company, by certified check delivered to the Company, all monies received pursuant to Sections 4 or 5 of the Severance Pay Agreement, as applicable, plus interest, and invite the Company to retain such monies and agree with you to cancel this Agreement and void the Companys obligations under of the Severance Pay Agreement. In the event the Company accepts this offer, the Company shall retain such monies and this Agreement shall be canceled and the Company shall have no obligation under of the Severance Pay Agreement. In the event the Company does not accept such offer, the Company shall so notify you and shall place such monies in an interest-bearing escrow account pending resolution of the dispute between you and the Company as to whether or not this Agreement and the Companys obligations under of the Severance Pay Agreement shall be set aside and/or otherwise rendered voidable or unenforceable. Additionally, any consulting agreement then in effect between you and the Company shall be immediately rescinded with no requirement of notice.
TWELVE: Any notices required to be given under this Agreement shall be delivered either personally or by first class United States mail, postage prepaid, addressed to the respective parties as follows:
To Company:
[TO COME]
Attn: [TO COME]
To You:
______________________
______________________
______________________
THIRTEEN: You understand and acknowledge that you have been given a period of forty-five (45) days to review and consider this Agreement (as well as statistical data on the persons eligible for similar benefits) before signing it and may use as much of this forty-five (45) day period as you wish prior to signing. You are encouraged, at your personal expense, to consult with an attorney before signing this Agreement. You understand and acknowledge that whether or not you do so is your decision. You may revoke this Agreement within seven (7) days of signing it. If you wish to revoke, the Companys Vice President, Human Resources must receive written notice from you no later than the close of business on the seventh (7th) day after you have signed the Agreement. If revoked, this Agreement shall not be effective and enforceable, and you will not receive payments or benefits under Sections 4 or 5 of the Severance Pay Agreement, as applicable.
FOURTEEN: This Agreement constitutes the entire agreement of the parties hereto and supersedes any and all other agreements (except the Severance Pay Agreement) with respect to the subject matter of this Agreement, whether written or oral, between you and the Company. All modifications and amendments to this Agreement must be in writing and signed by the parties.
FIFTEEN: Each party agrees, without further consideration, to sign or cause to be signed, and to deliver to the other party, any other documents and to take any other action as may be necessary to fulfill the obligations under this Agreement.
SIXTEEN: If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or application; and to this end the provisions of this Agreement are declared to be severable.
SEVENTEEN: This Agreement may be executed in counterparts.
I have read the foregoing General Release, and I accept and agree to the provisions it contains and hereby execute it voluntarily and with full understanding of its consequences. I am aware it includes a release of all known or unknown claims.
DATED: __________
__________________________________________
DATED: __________
__________________________________________
You acknowledge that you first received this Agreement on [date].
_________________________
Exhibit 10.71
<YEAR> Executive Incentive Compensation Plan Southern California Gas Company
ICP Plan Year: January 1, <YEAR> to December 31, <YEAR>
INTRODUCTION
The Southern California Gas Company (SoCalGas) Incentive Compensation Plan (ICP) is designed to attract, retain, and engage executives whose efforts contribute to the success of SoCalGas and Sempra Energy (SE). The plan aligns with Sempra Energys goal of sustained earnings growth and the utilitys regulatory framework with goals that encourage executives to drive towards our aspirations and to:
*
Maintain high safety standards,
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Grow the business through enterprise thinking while maximizing revenues/profits,
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Focus on a common set of high-level goals that encourages teamwork and achievement of operational excellence,
*
Focus on business efficiencies and investments that produce long-term efficiency benefits,
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Increase reliability of delivery service,
*
Enhance customer focus to achieve optimal customer satisfaction, and
*
Achieve high level of employee commitment and contribution through sharing of business success and the establishment of key performance indicators.
PARTICIPATION
Executives who meet all of the following eligibility requirements will participate in this incentive plan for <YEAR>.
1.
Employee is an eligible executive, as determined by the SoCalGas Board of Directors, for at least three consecutive full months during <YEAR> and is an employee on December 31, <YEAR> or meets other eligibility requirements as listed under section: Employee Status Changes.
2.
Participant has met minimum job expectations and performed satisfactorily, as determined by his/her supervisor in conjunction with Human Resources.
3.
Participant is not in another formal incentive plan in <YEAR>.
Participation in one plan year does not constitute the right to participate in succeeding plan years. This plan does not constitute a contract of employment or guarantee of an incentive award payment and cannot be relied on as such.
BASIS FOR AWARD CALCULATION
Awards are calculated based on the employees Basis for Award Calculation (BAC) while on the active payroll. BAC includes annual base salary on December 31, <YEAR> plus any eligible lump sum payment that may be granted during <YEAR>. Other awards (e.g. spot cash); incentives, premiums and payments are not included in the BAC.
<YEAR> PERFORMANCE GOALS AND MEASURES
<YEAR> Performance Goals & Measures | Weight | Multiplier | Min | Target | Max |
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FINANCIAL GOALS (in millions) |
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OPERATIONAL GOALS |
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TOTAL | 100% |
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FINANCIAL MEASURES
Sempra Energy Earnings
Sempra Energy Earnings are revenue minus expense, less tax. Employees can influence earnings by either increasing revenue or decreasing expenses. Earnings are determined after accounting for the appropriate accrued level of incentive compensation expense.
Sempra Energy Earnings exclude:
·
<DEFINE EXCLUSIONS>
Southern California Gas Company (SoCalGas) Earnings
<Define SCG Financial Measure>
OPERATIONAL GOALS
The payout for all Operational Goals range between 0%-200%.
<Define Operational Measures>
CALCULATION, CERTIFICATION AND PAYMENT OF AWARDS
Award potentials will be linearly interpolated between the minimum and target, or target and maximum goals. There is no award payout for performance at or below the minimum goals. The payout for the financial component may, at managements discretion, be reduced in consideration of individual performance.
Adjustments to the budget target for ICP calculation purposes will require the written approval of the Chief Executive Officer of SoCalGas. The approved exceptions will be limited to costs or expenses related to future growth opportunities and the funding of process improvements above the planned budget.
The SoCalGas Board of Directors must approve awards. Approved awards will be paid by March 15, 2014 and will be subject to appropriate tax withholding. Such awards are considered pension-eligible earnings for the Cash Balance Plan and are included as eligible earnings for the 401(k) Plan. Employees with outstanding loan payments to the 401(k) plan and/or for medical premiums may, at the Companys option, have up to the full arrears deducted from their ICP check. Employees will be notified by mail with respect to any arrears payments for these deductions.
EMPLOYEE STATUS CHANGES
All eligible employees (including new hires) will have their award prorated for the period of participation in the plan while on the active payroll. For employees who change target percentages during a plan year, their award will be calculated based on the effective period for each target percentage.
Employees who transfer within the corporation or among incentive plans during the year will be eligible for an award under this plan provided that all eligibility requirements are met. The award will be based on the employees BAC for the participation period in this plan.
An award will still be paid if a participant meets all other eligibility requirements during <YEAR> but is not a regular employee on December 31, <YEAR> due to the following reasons:
*
Participants employment terminates for any reason after he/she has attained age 55 and at the time his/her employment terminated he/she had completed at least five years of service; or
*
Participant leaves his/her position under disability (as defined in the company disability benefit plan), or
*
Participant dies during an award year (award will be paid to the participants estate).
In the above circumstances, the award will be calculated based on the participants BAC prorated for the period of participation in the plan while on the active payroll. Awards will be paid the same time payment is made to other participants and will be offset by any amount paid pursuant the Severance Benefits upon Termination of Employment due to Death or Disability section of the participants Severance Pay Agreement.
If a participant leaves the company for any other reason, eligibility for an award for the plan year will be forfeited unless an exception is made at the discretion of the CEO.
PLAN ADMINISTRATION
The Company retains the discretion and authority to interpret, amend or modify the plan; to grant incentive awards; as well as to terminate, increase or decrease any incentive award opportunity during the performance period; and to reduce or eliminate any incentive awards that would otherwise be payable at the end of the performance period. The Company, in its sole discretion determines Sempra Energy Earnings, SoCalGas Earnings, operational measures and award calculations.
The Company shall require the forfeiture, recovery or reimbursement of awards or compensation under this Plan as (i) required by applicable law, or (ii) required under any policy implemented or maintained by the Company pursuant to any applicable rules or requirements of a national securities exchange or national securities association on which any securities of the Company are listed. The Company reserves the right to recoup compensation paid if it determines that the results on which the compensation was paid were not actually achieved.
The SoCalGas Board may, in its sole discretion, require the recovery or reimbursement of short-term incentive compensation awards from any employee whose fraudulent or intentional misconduct materially affects the operations or financial results of the Company or its subsidiaries.
Questions concerning the plan should be directed to the Sr. Vice President Human Resources, Diversity & Inclusion, Sempra Energy.
Exhibit 10.72
SEMPRA ENERGY
SEVERANCE PAY AGREEMENT
THIS AGREEMENT (this Agreement), dated as of August 4, 2012 (the Effective Date), is made by and between SEMPRA ENERGY, a California corporation (Sempra Energy), and J. Bret Lane (the Executive).
WHEREAS, the Executive is currently employed by Sempra Energy or a direct or indirect subsidiary of Sempra Energy (Sempra Energy and its subsidiaries are hereinafter collectively referred to as the Company) as Senior Vice President Gas Operations & System Integrity; and
WHEREAS, Sempra Energy and the Executive desire to enter into this Agreement; and
WHEREAS, the Board of Directors of Sempra Energy (the Board) has authorized this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and the Executive hereby agree as follows:
Section 1.
Definitions. For purposes of this Agreement, the following capitalized terms have the meanings set forth below:
Accounting Firm has the meaning assigned thereto in Section 9(b) hereof.
Act has the meaning assigned thereto in Section 2 hereof.
Additional Post-Change in Control Severance Payment has the meaning assigned thereto in Section 6(a) hereof.
Affiliate has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act.
Annual Base Salary means the Executives annual base salary from the Company.
Asset Purchaser has the meaning assigned thereto in Section 16(e).
Asset Sale has the meaning assigned thereto in Section 16(e).
Average Annual Bonus means the average of the annual bonuses from the Company earned by the Executive with respect to the three (3) fiscal years of the Company immediately preceding the Date of Termination (the Bonus Fiscal Years); provided, however, that, if the Executive was employed by the Company during all or any portion of one or two of the Bonus Fiscal Years (but not three of the Bonus Fiscal Years), Average Annual Bonus means the average of the annual bonuses (if any) from the Company earned by the Executive with respect to the Bonus Fiscal Years during all or any portion of which the Executive was employed by the Company; and, provided, further, that, if the Executive was not employed by the Company during all or any portion of any of the Bonus Fiscal Years, Average Annual Bonus means zero.
Beneficial Owner has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.
Cause means:
(a)
Prior to a Change in Control, (i) the willful failure by the Executive to substantially perform the Executives duties with the Company (other than any such failure resulting from the Executives incapacity due to physical or mental illness, (ii) the grossly negligent performance of such obligations referenced in clause (i) of this definition, (iii) the Executives gross insubordination; and/or (iv) the Executives commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i) of this subsection (a), no act, or failure to act, on the Executives part shall be deemed willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executives act, or failure to act, was in the best interests of the Company.
(b)
From and after a Change in Control, (i) the willful and continued failure by the Executive to substantially perform the Executives duties with the Company (other than any such failure resulting from the Executives incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 3 hereof) and/or (ii) the Executives commission of one or more acts of moral turpitude that constitute a violation of applicable law (including but not limited to a felony) which have or result in an adverse effect on the Company, monetarily or otherwise, or one or more significant acts of dishonesty. For purposes of clause (i) of this subsection (b), no act, or failure to act, on the Executives part shall be deemed willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executives act, or failure to act, was in the best interests of the Company. Notwithstanding the foregoing, the Executive shall not be deemed terminated for Cause pursuant to clause (i) of this subsection (b) unless and until the Executive shall have been provided with reasonable notice of and, if possible, a reasonable opportunity to cure the facts and circumstances claimed to provide a basis for termination of the Executives employment for Cause.
Change in Control shall be deemed to have occurred on the date that a change in the ownership of Sempra Energy, a change in the effective control of Sempra Energy, or a change in the ownership of a substantial portion of assets of Sempra Energy occurs (each, as defined in subsection (a) below), except as otherwise provided in subsections (b), (c) and (d) below:
(a)
(i)
a change in the ownership of Sempra Energy occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of Sempra Energy that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of Sempra Energy,
(ii)
a change in the effective control of Sempra Energy occurs only on either of the following dates:
(A)
the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of Sempra Energy possessing thirty percent (30%) or more of the total voting power of the stock of Sempra Energy, or
(B)
the date a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of appointment or election, and
(iii)
a change in the ownership of a substantial portion of assets of Sempra Energy occurs on the date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from Sempra Energy that have a total gross fair market value equal to or more than eighty-five percent (85%) of the total gross fair market value of all of the assets of Sempra Energy immediately before such acquisition or acquisitions.
(b)
A change in the ownership of Sempra Energy or a change in the effective control of Sempra Energy shall not occur under clause (a)(i) or (a)(ii) by reason of any of the following:
(i)
an acquisition of ownership of stock of Sempra Energy directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business,
(ii)
a merger or consolidation which would result in the voting securities of Sempra Energy outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least sixty percent (60%) of the combined voting power of the securities of Sempra Energy or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or
(iii)
a merger or consolidation effected to implement a recapitalization of Sempra Energy (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Sempra Energy (not including the securities beneficially owned by such Person any securities acquired directly from Sempra Energy or its Affiliates other than in connection with the acquisition by Sempra Energy or its Affiliates of a business) representing twenty percent (20%) or more of the combined voting power of Sempra Energys then outstanding securities.
(c)
A change in the ownership of a substantial portion of assets of Sempra Energy shall not occur under clause (a)(iii) by reason of a sale or disposition by Sempra Energy of the assets of Sempra Energy to an entity, at least sixty percent (60%) of the combined voting power of the voting securities of which are owned by shareholders of Sempra Energy in substantially the same proportions as their ownership of Sempra Energy immediately prior to such sale.
(d)
This definition of Change in Control shall be limited to the definition of a change in control event relating to Sempra Energy under Treasury Regulation Section 1.409A-3(i)(5). A Change in Control shall only occur if there is a change in control event relating to Sempra Energy under Treasury Regulation Section 1.409A-3(i)(5) with respect to the Executive.
Change in Control Date means the date on which a Change in Control occurs.
Code means the Internal Revenue Code of 1986, as amended.
Compensation Committee means the compensation committee of the Board.
Consulting Period has the meaning assigned thereto in Section 14(e) hereof.
Date of Termination has the meaning assigned thereto in Section 3(b) hereof.
Deferred Compensation Plan has the meaning assigned thereto in Section 5(f) hereof.
Disability has the meaning set forth in the Companys long-term disability plan or its successor; provided, however, that the Board may not terminate the Executives employment hereunder by reason of Disability unless (i) at the time of such termination there is no reasonable expectation that the Executive will return to work within the next ninety (90) day period and (ii) such termination is permitted by all applicable disability laws.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the applicable rulings and regulations thereunder.
Excise Tax has the meaning assigned thereto in Section 9(a) hereof.
Good Reason means:
(a)
Prior to a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 3 hereof):
(i)
the assignment to the Executive of any duties materially inconsistent with the range of duties and responsibilities appropriate to a senior Executive within the Company (such range determined by reference to past, current and reasonable practices within the Company);
(ii)
a material reduction in the Executives overall standing and responsibilities within the Company, but not including (A) a mere change in title or (B) a transfer within the Company, which, in the case of both (A) and (B), does not adversely affect the Executives overall status within the Company;
(iii)
a material reduction by the Company in the Executives aggregate annualized compensation and benefits opportunities, except for across-the-board reductions (or modifications of benefit plans) similarly affecting all similarly situated executives (both of the Company and of any Person then in control of the Company) of comparable rank with the Executive;
(iv)
the failure by the Company to pay to the Executive any portion of the Executives current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)
any purported termination of the Executives employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3 hereof; for purposes of this Agreement, no such purported termination shall be effective;
(vi)
the failure by Sempra Energy to perform its obligations under Section 16(c), (d) or (e) hereof;
(vii)
the failure by the Company to provide the indemnification and D&O insurance protection Section 11 of this Agreement requires it to provide; or
(viii)
the failure by Sempra Energy to comply with any material provision of this Agreement.
(b)
From and after a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as required under Section 3 hereof):
(i)
an adverse change in the Executives title, authority, duties, responsibilities or reporting lines as in effect immediately prior to the Change in Control;
(ii)
a reduction by the Company in the Executives aggregate annualized compensation opportunities, except for across-the-board reductions in base salaries, annual bonus opportunities or long-term incentive compensation opportunities of less than ten percent (10%) similarly affecting all similarly situated executives (both of the Company and of any Person then in control of the Company) of comparable rank with the Executive; or the failure by the Company to continue in effect any material benefit plan in which the Executive participates immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executive's participation relative to other participants, as existed at the time of the Change in Control;
(iii)
the relocation of the Executives principal place of employment immediately prior to the Change in Control Date (the Principal Location) to a location which is both further away from the Executives residence and more than thirty (30) miles from such Principal Location, or the Companys requiring the Executive to be based anywhere other than such Principal Location (or permitted relocation thereof), or a substantial increase in the Executives business travel obligations outside of the Southern California area as of the Effective Date other than any such increase that (A) arises in connection with extraordinary business activities of the Company of limited duration and (B) is understood not to be part of the Executives regular duties with the Company;
(iv)
the failure by the Company to pay to the Executive any portion of the Executives current compensation and benefits or any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days of the date such compensation is due;
(v)
any purported termination of the Executives employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3 hereof; for purposes of this Agreement, no such purported termination shall be effective;
(vi)
the failure by Sempra Energy to perform its obligations under Section 16(c), (d) or (e) hereof;
(vii)
the failure by the Company to provide the indemnification and D&O insurance protection Section 11 of this Agreement requires it to provide; or
(viii)
the failure by Sempra Energy to comply with any material provision of this Agreement.
Following a Change in Control, the Executives determination that an act or failure to act constitutes Good Reason shall be presumed to be valid unless such determination is deemed to be unreasonable by an arbitrator pursuant to the procedure described in Section 13 hereof. The Executives right to terminate the Executives employment for Good Reason shall not be affected by the Executives incapacity due to physical or mental illness. The Executives continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
Incentive Compensation Awards means awards granted under Incentive Compensation Plans providing the Executive with the opportunity to earn, on a year-by-year basis, annual and long-term incentive compensation.
Incentive Compensation Plans means annual incentive compensation plans and long-term incentive compensation plans of the Company, which long-term incentive compensation plans may include plans offering stock options, restricted stock and other long-term incentive compensation.
Involuntary Termination means (a) the Executives Separation from Service by reason of a termination of employment by the Company other than for Cause, death, or Disability, or (b) the Executives Separation from Service by reason of resignation of employment with the Company for Good Reason.
JAMS Rules has the meaning assigned thereto in Section 13 hereof.
Notice of Termination has the meaning assigned thereto in Section 3(a) hereof.
Payment has the meaning assigned thereto in Section 9(a) hereof.
Payment in Lieu of Notice has the meaning assigned thereto in Section 3(b) hereof.
Person has the meaning set forth in section 3(a)(9) of the Exchange Act, as modified and used in sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, or (v) a person or group as used in Rule 13d-1(b) promulgated under the Exchange Act.
Post-Change in Control Accrued Obligations has the meaning assigned thereto in Section 6(a) hereof.
Post-Change in Control Severance Payment has the meaning assigned thereto in Section 6 hereof.
Pre-Change in Control Accrued Obligations has the meaning assigned thereto in Section 5(a) hereof.
Pre-Change in Control Severance Payment has the meaning assigned thereto in Section 5 hereof.
Principal Location has the meaning assigned thereto in clause (b)(iii) of the definition of Good Reason, above.
Proprietary Information has the meaning assigned thereto in Section 14(a) hereof.
Release has the meaning assigned thereto in Section 14(d) hereof.
Section 409A Payments means any of the following: (a) the Payment in Lieu of Notice; (b) the Pre-Change in Control Severance Payment; (c) the Post-Change in Control Severance Payment; (d) the Additional Post-Change in Control Severance Payment; (e) the Consulting Payment; (f) the financial planning services and the related payments provided under Sections 5(e) and 6(e); and (g) the legal fees and expenses reimbursed under Section 15.
Sempra Energy Control Group means Sempra Energy and all persons with whom Sempra Energy would be considered a single employer under Section 414(b) or 414(c) of the Code, as determined from time to time.
Separation from Service, with respect to the Executive (or another Service Provider), means the Executives (or such Service Providers) (a) termination of employment or (b) other termination or reduction in services, provided that such termination or reduction in clause (a) or (b) constitutes a separation from service, as defined in Treasury Regulation Section 1.409A-1(h), with respect to the Service Recipient.
Service Provider means the Executive or any other service provider, as defined in Treasury Regulation Section 1.409A-1(f).
Service Recipient, with respect to the Executive, means Sempra Energy (if the Executive is employed by Sempra Energy), or the subsidiary of Sempra Energy employing the Executive, whichever is applicable, and all persons considered part of the service recipient, as defined in Treasury Regulation Section 1.409A-1(g), as determined from time to time. As provided in Treasury Regulation Section 1.409A-1(g), the Service Recipient shall mean the person for whom the services are performed and with respect to whom the legally binding right to compensation arises, and all persons with whom such person would be considered a single employer under Section 414(b) or 414(c) of the Code.
Specified Employee means a Service Provider who, as of the date of the Service Providers Separation from Service is a Key Employee of the Service Recipient any stock of which is publicly traded on an established securities market or otherwise. For purposes of this definition, a Service Provider is a Key Employee if the Service Provider meets the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the Treasury Regulations thereunder and disregarding Section 416(i)(5) of the Code) at any time during the Testing Year. If a Service Provider is a Key Employee (as defined above) as of a Specified Employee Identification Date, the Service Provider shall be treated as Key Employee for the entire twelve (12) month period beginning on the Specified Employee Effective Date. For purposes of this definition, a Service Providers compensation for a Testing Year shall mean such Service Providers compensation, as determined under Treasury Regulation Section 1.415(c)-2(a) (and applied as if the Service Recipient were not using any safe harbor provided in Treasury Regulation Section 1.415(c)-2(d), were not using any of the elective special timing rules provided in Treasury Regulation Section 1.415(c)-2(e), and were not using any of the elective special rules provided in Treasury Regulation Section 1.415(c)-2(g)), from the Service Recipient for such Testing Year. The Specified Employees shall be determined in accordance with Section 409A(a)(2)(B)(i) of the Code and Treasury Regulation Section 1.409A-1(i).
Specified Employee Effective Date means the first day of the fourth month following the Specified Employee Identification Date. The Specified Employee Effective Date may be changed by Sempra Energy, in its discretion, in accordance with Treasury Regulation Section 1.409A-1(i)(4).
Specified Employee Identification Date, for purposes of Treasury Regulation Section 1.409A-1(i)(3), shall mean December 31. The Specified Employee Identification Date shall apply to all nonqualified deferred compensation plans (as defined in Treasury Regulation Section 1.409A-1(a)) of the Service Recipient and all affected Service Providers. The Specified Employee Identification Date may be changed by Sempra Energy, in its discretion, in accordance with Treasury Regulation Section 1.409A-1(i)(3).
Testing Year shall mean the twelve (12) month period ending on the Specified Employee Identification Date, as determined from time to time.
Underpayment has the meaning assigned thereto in Section 9(b) hereof.
For purposes of this Agreement, references to any Treasury Regulation shall mean such Treasury Regulation as in effect on the date hereof.
Section 2.
Sarbanes-Oxley Act of 2002. Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that any provision of this Agreement is likely to be interpreted as a personal loan prohibited by the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder (the Act), then such provision shall be modified as necessary or appropriate so as to not violate the Act; and if this cannot be accomplished, then the Company shall use its reasonable efforts to provide the Executive with similar, but lawful, substitute benefit(s) at a cost to the Company not to significantly exceed the amount the Company would have otherwise paid to provide such benefit(s) to the Executive. In addition, if the Executive is required to forfeit or to make any repayment of any compensation or benefit(s) to the Company under the Act or any other law, such forfeiture or repayment shall not constitute Good Reason.
Section 3.
Notice and Date of Termination.
(a)
Any termination of the Executives employment by the Company or by the Executive shall be communicated by a written notice of termination to the other party (the Notice of Termination). Where applicable, the Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executives employment under the provision so indicated. Unless the Board determines otherwise, a Notice of Termination by the Executive alleging a termination for Good Reason must be made within 180 days of the act or failure to act that the Executive alleges to constitute Good Reason.
(b)
The date of the Executives termination of employment with the Company (the Date of Termination) shall be determined as follows: (i) if the Executive has a Separation from Service by reason of the Company terminating his or her employment, either with or without Cause, the Date of Termination shall be the date specified in the Notice of Termination (which, in the case of a termination by the Company other than for Cause, shall not be less than two (2) weeks from the date such Notice of Termination is given unless the Company elects to pay the Executive, in addition to any other amounts payable hereunder, an amount (the Payment in Lieu of Notice) equal to two (2) weeks of the Executives Annual Base Salary in effect on the Date of Termination), and (ii) if the basis for the Executives Involuntary Termination is his resignation for Good Reason, the Date of Termination shall be determined by the Executive and specified in the Notice of Termination, but shall not in any event be less than fifteen (15) days nor more than sixty (60) days after the date such Notice of Termination is given. The Payment in Lieu of Notice shall be paid on such date as is determined by the Company within thirty (30) days after the date of the Executives Separation from Service; provided, however, that if the Executive is a Specified Employee on the date of his or her Separation from Service, such Payment in Lieu of Notice shall be paid as provided in Section 10 hereof.
Section 4.
Termination from the Board. Upon the termination of the Executives employment for any reason, the Executives membership on the Board, the board of directors of any of the Companys Affiliates, any committees of the Board and any committees of the board of directors of any of the Companys Affiliates, if applicable, shall be automatically terminated.
Section 5.
Severance Benefits upon Involuntary Termination Prior to Change in Control. Except as provided in Section 6 and Section 19(i) hereof, in the event of the Involuntary Termination of the Executive prior to a Change in Control, the Company shall pay the Executive, in one lump sum cash payment, an amount (the Pre-Change in Control Severance Payment) equal to one-half (0.5) times the greater of: (X) 150% of the Executives Annual Base Salary as in effect on the Date of Termination, and (Y) the Executives Annual Base Salary as in effect on the Date of Termination, plus the Executives Average Annual Bonus. In addition to the Pre-Change in Control Severance Payment, the Executive shall be entitled to the following additional benefits specified in subsections (a) through (e). Except as provided in Section 5(f), the Pre-Change in Control Severance Payment and the payment under Section 5(a) shall be paid on such date as is determined by the Company within thirty (30) days after the date of the Involuntary Termination; provided, however, that, if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Pre-Change in Control Severance Payment and the financial planning services and the related payments provided under Section 5(e) shall be paid as provided in Section 10 hereof.
(a)
Accrued Obligations. The Company shall pay the Executive a lump sum amount in cash equal to the sum of (A) the Executives Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) an amount equal to any annual Incentive Compensation Awards earned with respect to fiscal years ended prior to the year that includes the Date of Termination to the extent not theretofore paid, (C) any accrued and unpaid vacation, if any, and (D) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of his duties in accordance with policies established from time to time by the Board, in each case to the extent not theretofore paid. (The amounts specified in clauses (A), (B), (C) and (D) shall be hereinafter referred to as the Pre-Change in Control Accrued Obligations).
(b)
Equity Based Compensation. The Executive shall retain all rights to any equity-based compensation awards to the extent set forth in the applicable plan and/or award agreement.
(c)
Welfare Benefits. Subject to Section 12 below, for a period of six (6) months following the date of the Involuntary Termination (and an additional twelve (12) months if the Executive provides consulting services under Section 14(e) hereof), the Executive and his dependents shall be provided with health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the date of the Involuntary Termination; provided, however, that such benefits shall be provided on substantially the same terms and conditions and at the same cost to the Executive as in effect immediately prior to the date of the Involuntary Termination. Such benefits shall be provided through insurance maintained by the Company under the Companys benefit plans. Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5).
(d)
Outplacement Services. The Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executives Involuntary Termination, for a period of eighteen (18) months following the date of the Involuntary Termination, in an aggregate amount of cost to the Company not to exceed $50,000. Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer. Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(e)
Financial Planning Services. The Executive shall receive financial planning services, on an in-kind basis, for a period of eighteen (18) months following the Date of Termination. Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial planning services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000. The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services. The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive. The Executives right to financial planning services shall not be subject to liquidation or exchange for any other benefit. Such financial planning services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv).
(f)
Deferral of Payments. The Executive shall have the right to elect to defer the Pre-Change in Control Severance Payment to be received by the Executive pursuant to this Section 5 under the terms and conditions of the Sempra Energy 2005 Deferred Compensation Plan (the Deferred Compensation Plan). Any such deferral election shall be made in accordance with Section 18(b) hereof.
Section 6.
Severance Benefits upon Involuntary Termination in Connection with and after Change in Control. Notwithstanding the provisions of Section 5 above, and except as provided in Section 19(i) hereof, in the event of the Involuntary Termination of the Executive on or within two (2) years following a Change in Control, in lieu of the payments described in Section 5 above, the Company shall pay the Executive, in one lump sum cash payment, an amount (the Post-Change in Control Severance Payment) equal to the greater of: (X) 150% of the Executives Annual Base Salary as in effect immediately prior to the Change in Control or the Date of Termination, whichever is greater, and (Y) the Executives Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, plus the Executives Average Annual Bonus. In addition to the Post-Change in Control Severance Payment, the Executive shall be entitled to the following additional benefits specified in subsections (a) through (e). Except as provided in Sections 6(f) and 6(g), the Post-Change in Control Severance Payment and the payments under Section 6(a) shall be paid on such date as is determined by the Company within thirty (30) days after the date of the Involuntary Termination; provided, however, that, if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Post-Change in Control Severance Payment, the Additional Post-Change in Control Severance Payment under Section 6(a)(E), and the financial planning services and the related payments provided under Section 6(e) shall be paid as provided in Section 10 hereof.
(a)
Accrued Obligations. The Company shall pay the Executive a lump sum amount in cash equal to the sum of (A) the Executives Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) an amount equal to any annual Incentive Compensation Awards earned with respect to fiscal years ended prior to the year that includes the Date of Termination to the extent not theretofore paid, (C) any accrued and unpaid vacation, if any, (D) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of his duties in accordance with policies established from time to time by the Board, and (E) an amount (the Additional Post-Change in Control Severance Payment) equal to: (i) the greater of: (X) 50% of the Executives Annual Base Salary as in effect immediately prior to the Change in Control or on the Date of Termination, whichever is greater, or (Y) the Executives Average Annual Bonus, multiplied by (ii) a fraction, the numerator of which shall be the number of days from the beginning of such fiscal year to and including the Date of Termination and the denominator of which shall be 365, in the case of each amount described in clause (A), (B), (C) or (D) to the extent not theretofore paid. (The amounts specified in clauses (A), (B), (C), (D) and (E) shall be hereinafter referred to as the Post-Change in Control Accrued Obligations).
(b)
Equity-Based Compensation. Notwithstanding the provisions of any applicable equity-compensation plan or award agreement to the contrary, all equity-based Incentive Compensation Awards (including, without limitation, stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share awards, awards covered under Section 162(m) of the Code, and dividend equivalents) held by the Executive shall immediately vest and become exercisable or payable, as the case may be, as of the Date of Termination, to be exercised or paid, as the case may be, in accordance with the terms of the applicable Incentive Compensation Plan and Incentive Compensation Award agreement, and any restrictions on any such Incentive Compensation Awards shall automatically lapse; provided, however, that any such stock option or stock appreciation rights awards granted on or after June 26, 1998 shall remain outstanding and exercisable until the earlier of (A) the later of eighteen (18) months following the Date of Termination or the period specified in the applicable Incentive Compensation Award agreements or (B) the expiration of the original term of such Incentive Compensation Award (or, if earlier, the tenth anniversary of the original date of grant) (it being understood that all Incentive Compensation Awards granted prior to or after June 26, 1998 shall remain outstanding and exercisable for a period that is no less than that provided for in the applicable agreement in effect as of the date of grant).
(c)
Welfare Benefits. Subject to Section 12 below, for a period of twelve (12) months following the date of Involuntary Termination (and an additional twelve (12) months if the Executive provides consulting services under Section 14(e) hereof), the Executive and his dependents shall be provided with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive; provided, however, that such benefits shall be provided on substantially the same terms and conditions and at the same cost to the Executive as in effect immediately prior to the date of Involuntary Termination or the Change in Control Date, whichever is more favorable to the Executive. Such benefits shall be provided through insurance maintained by the Company under the Company benefit plans. Such benefits shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(a)(5).
(d)
Outplacement Services. The Executive shall receive reasonable outplacement services, on an in-kind basis, suitable to his position and directly related to the Executives Involuntary Termination, for a period of twenty-four (24) months following the date of Involuntary Termination (but in no event beyond the last day of the Executives second taxable year following the Executives taxable year in which the Involuntary Termination occurs), in the aggregate amount of cost to the Company not to exceed $50,000. Notwithstanding the foregoing, the Executive shall cease to receive outplacement services on the date the Executive accepts employment with a subsequent employer. Such outplacement services shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(9)(v)(A).
(e)
Financial Planning Services. The Executive shall receive financial planning services, on an in-kind basis, for a period of twenty-four (24) months following the date of Involuntary Termination. Such financial planning services shall include expert financial and legal resources to assist the Executive with financial planning needs and shall be limited to (i) current investment portfolio management, (ii) tax planning, (iii) tax return preparation, and (iv) estate planning advice and document preparation (including wills and trusts); provided, however, that the Company shall provide such financial services during any taxable year of the Executive only to the extent the cost to the Company for such taxable year does not exceed $25,000. The Company shall provide such financial planning services through a financial planner selected by the Company, and shall pay the fees for such financial planning services. The financial planning services provided during any taxable year of the Executive shall not affect the financial planning services provided in any other taxable year of the Executive. The Executives right to financial planning services shall not be subject to liquidation or exchange for any other benefit. Such financial planning services shall be provided in a manner that complies with Section 1.409A-3(i)(1)(iv).
(f)
Involuntary Termination in Connection with a Change in Control. Notwithstanding anything contained herein, in the event of an Involuntary Termination prior to a Change in Control, if the Involuntary Termination (1) was at the request of a third party who has taken steps reasonably calculated to effect such Change in Control or (2) otherwise arose in connection with or in anticipation of such Change in Control, then the Executive shall, in lieu of the payments described in Section 5 hereof, be entitled to the Post-Change in Control Severance Payment and the additional benefits described in this Section 6 as if such Involuntary Termination had occurred within two (2) years following the Change in Control. The amounts specified in Section 6 that are to be paid under this Section 6(f) shall be reduced by any amount previously paid under Section 5. The amounts to be paid under this Section 6(f) shall be paid within thirty (30) days after the Change in Control Date of such Change in Control.
(g)
Deferral of Payments. The Executive shall have the right to elect to defer the Post-Change in Control Severance Payment to be received by the Executive pursuant to this Section 6 under the terms and conditions of the Deferred Compensation Plan. Any such deferral election shall be made in accordance with Section 18(b) hereof.
Section 7.
Severance Benefits upon Termination by the Company for Cause or by the Executive Other than for Good Reason. If the Executives employment shall be terminated for Cause, or if the Executive terminates employment other than for Good Reason, the Company shall have no further obligations to the Executive under this Agreement other than the Pre-Change in Control Accrued Obligations and any amounts or benefits described in Section 11 hereof.
Section 8.
Severance Benefits upon Termination due to Death or Disability. If the Executive has a Separation from Service by reason of death or Disability, the Company shall pay the Executive or his estate, as the case may be, the Post-Change in Control Accrued Obligations (without regard to whether a Change in Control has occurred) and any amounts or benefits described in Section 11 hereof. Such payments shall be in addition to those rights and benefits to which the Executive or his estate may be entitled under the relevant Company plans or programs. Such payments shall be paid on such date as determined by the Company within thirty (30) days after the date of the Separation from Service; provided, however, that if the Executive is a Specified Employee on the date of the Executives Separation from Service by reason of Disability, the Additional Post-Change in Control Severance Payment under Section 6(a)(E) shall be paid as provided in Section 10 hereof.
Section 9.
Limitation on Payments by the Company.
(a)
Anything in this Agreement to the contrary notwithstanding and except as set forth in this Section below, in the event it shall be determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise (the Payment) would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code, (the Excise Tax), then, subject to subsection (b), the Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall be reduced under this subsection (a) to the amount equal to the Reduced Payment. For such Payment payable under this Agreement, the Reduced Payment shall be the amount equal to the greatest portion of the Payment (which may be zero) that, if paid, would result in no portion of any Payment being subject to the Excise Tax.
(b)
The Pre-Change in Control Severance Benefit or the Post-Change in Control Severance Payment (whichever is applicable) payable under this Agreement shall not be reduced under subsection (a) if:
(i)
such reduction in such Payment is not sufficient to cause no portion of any Payment to be subject to the Excise Tax, or
(ii)
the Net After-Tax Unreduced Payments (as defined below) would equal or exceed one hundred and five percent (105%) of the Net After-Tax Reduced Payments (as defined below).
For purposes of determining the amount of any Reduced Payment under subsection (a), and the Net-After Tax Reduced Payments and the Net After-Tax Unreduced Payments, the Executive shall be considered to pay federal, state and local income and employment taxes at the Executives applicable marginal rates taking into consideration any reduction in federal income taxes which could be obtained from the deduction of state and local income taxes, and any reduction or disallowance of itemized deductions and personal exemptions under applicable tax law). The applicable federal, state and local income and employment taxes and the Excise Tax (to the extent applicable) are collectively referred to as the Taxes.
(c)
The following definitions shall apply for purposes of this Section 9:
(i)
Net After-Tax Reduced Payments shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are reduced pursuant to subsection (a).
(ii)
Net After-Tax Unreduced Payments shall mean the total amount of all Payments that the Executive would retain, on a Net After-Tax Basis, in the event that the Payments payable under this Agreement are not reduced pursuant to subsection (a).
(iii)
Net After-Tax Basis shall mean, with respect to the Payments, either with or without reduction under subsection (a) (as applicable), the amount that would be retained by the Executive from such Payments after the payment of all Taxes.
(d)
All determinations required to be made under this Section 9 and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm as may be agreed by the Company and the Executive (the Accounting Firm); provided, that the Accounting Firms determination shall be made based upon substantial authority within the meaning of Section 6662 of the Code. The Accounting Firm shall provide detailed supporting calculations to both the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. For purposes of determining whether and the extent to which the Payments will be subject to the Excise Tax, (i) no portion of the Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a payment within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Payments shall be taken into account which, in the written opinion of the Accounting Firm, does not constitute a parachute payment within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Payments shall be taken into account which, in the opinion of the Accounting Firm, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the base amount (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Payments shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
Section 10.
Delayed Distribution under Section 409A of the Code. If the Executive is a Specified Employee on the date of the Executives Involuntary Termination (or on the date of the Executives Separation from Service by reason of Disability), the Section 409A Payments, and any other payments or benefits under this Agreement subject to Section 409A of the Code, shall be delayed in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, and such payments or benefits shall be paid or distributed to the Executive during the thirty (30) day period commencing on the earlier of (a) the expiration of the six-month period measured from the date of the Executives Separation from Service or (b) the date of the Executives death. Upon the expiration of the applicable six-month period under Section 409A(a)(2)(B)(i) of the Code, all payments deferred pursuant to this Section 10 (excluding in-kind benefits) shall be paid in a lump sum payment to the Executive, plus interest thereon from the date of the Executives Involuntary Termination through the payment date at an annual rate equal to Moodys Rate. The Moodys Rate shall mean the average of the daily Moodys Corporate Bond Yield Average Monthly Average Corporates as published by Moodys Investors Service, Inc. (or any successor) for the month next preceding the Date of Termination. Any remaining payments due under the Agreement shall be paid as otherwise provided herein.
Section 11.
Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executives continuing or future participation in any benefit, plan, program, policy or practice provided by the Company and for which the Executive may qualify (except with respect to any benefit to which the Executive has waived his rights in writing), including, without limitation, any and all indemnification arrangements in favor of the Executive (whether under agreements or under the Companys charter documents or otherwise), and insurance policies covering the Executive, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement entered into after the Effective Date with the Company. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any benefit, plan, policy, practice or program of, or any contract or agreement entered into with, the Company shall be payable in accordance with such benefit, plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. At all times during the Executives employment with the Company and thereafter, the Company shall provide (to the extent permissible under applicable law) the Executive with indemnification and D&O insurance insuring the Executive against insurable events which occur or have occurred while the Executive was a director or the Executive officer of the Company, on terms and conditions that are at least as generous as that then provided to any other current or former director or the Executive officer of the Company or any Affiliate. Such indemnification and D&O insurance shall be provided in a manner that complies with Treasury Regulation Section 1.409A-1(b)(10).
Section 12.
Full Settlement; Mitigation. The Companys obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others, provided that nothing herein shall preclude the Company from separately pursuing recovery from the Executive based on any such claim. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts (including amounts for damages for breach) payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment.
Section 13.
Dispute Resolution.
Any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation of this Agreement or any arrangements relating to this Agreement or contemplated in this Agreement or the breach, termination or invalidity thereof shall be settled by final and binding arbitration administered by JAMS in San Diego, California in accordance with the then existing JAMS arbitration rules applicable to employment disputes (the JAMS Rules); provided that, notwithstanding any provision in such rules to the contrary, in all cases the parties shall be entitled to reasonable discovery. In the event of such an arbitration proceeding, the Executive and the Company shall select a mutually acceptable neutral arbitrator from among the JAMS panel of arbitrators. In the event the Executive and the Company cannot agree on an arbitrator, the arbitrator shall be selected in accordance with the then existing JAMS Rules. Neither the Executive nor the Company nor the arbitrator shall disclose the existence, content or results of any arbitration hereunder without the prior written consent of all parties, except to the extent necessary to enforce any arbitration award in a court of competent jurisdiction. Except as provided herein, the Federal Arbitration Act shall govern the interpretation of, enforcement of and all proceedings under this agreement to arbitrate. The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the state of California, or federal law, or both, as applicable, and the arbitrator is without jurisdiction to apply any different substantive law. The arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The arbitrator shall render an award and a written, reasoned opinion in support thereof. Judgment upon the award may be entered in any court having jurisdiction thereof. The Executive shall not be required to pay any arbitration fee or cost that is unique to arbitration or greater than any amount he would be required to pay to pursue his claims in a court of competent jurisdiction.
Section 14.
Executives Covenants.
(a)
Confidentiality. The Executive acknowledges that in the course of his employment with the Company, he has acquired non-public privileged or confidential information and trade secrets concerning the operations, future plans and methods of doing business (Proprietary Information) of the Company and its Affiliates; and the Executive agrees that it would be extremely damaging to the Company and its Affiliates if such Proprietary Information were disclosed to a competitor of the Company and its Affiliates or to any other person or corporation. The Executive understands and agrees that all Proprietary Information has been divulged to the Executive in confidence and further understands and agrees to keep all Proprietary Information secret and confidential (except for such information which is or becomes publicly available other than as a result of a breach by the Executive of this provision or information the Executive is required by any governmental, administrative or court order to disclose) without limitation in time. In view of the nature of the Executives employment and the Proprietary Information the Executive has acquired during the course of such employment, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any disclosure of Proprietary Information in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them. Inquiries regarding whether specific information constitutes Proprietary Information shall be directed to the Companys Senior Vice President, Public Policy (or, if such position is vacant, the Companys then Chief Executive Officer); provided, that the Company shall not unreasonably classify information as Proprietary Information.
(b)
Non-Solicitation of Employees. The Executive recognizes that he possesses and will possess confidential information about other employees of the Company and its Affiliates relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with customers of the Company and its Affiliates. The Executive recognizes that the information he possesses and will possess about these other employees is not generally known, is of substantial value to the Company and its Affiliates in developing their business and in securing and retaining customers, and has been and will be acquired by him because of his business position with the Company and its Affiliates. The Executive agrees that at all times during the Executives employment with the Company and for a period of one (1) year thereafter, he will not, directly or indirectly, solicit or recruit any employee of the Company or its Affiliates for the purpose of being employed by him or by any competitor of the Company or its Affiliates on whose behalf he is acting as an agent, representative or employee and that he will not convey any such confidential information or trade secrets about other employees of the Company and its Affiliates to any other person; provided, however, that it shall not constitute a solicitation or recruitment of employment in violation of this paragraph to discuss employment opportunities with any employee of the Company or its Affiliates who has either first contacted the Executive or regarding whose employment the Executive has discussed with and received the written approval of the Companys Vice President, Human Resources (or, if such position is vacant, the Companys then Chief Executive Officer), prior to making such solicitation or recruitment. In view of the nature of the Executives employment with the Company, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any solicitation or recruitment in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them.
(c)
Survival of Provisions. The obligations contained in Section 14(a) and Section 14(b) above shall survive the termination of the Executives employment within the Company and shall be fully enforceable thereafter. If it is determined by a court of competent jurisdiction in any state that any restriction in Section 14(a) or Section 14(b) above is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.
(d)
Release; Lump Sum Payment. In the event of the Executives Involuntary Termination, if the Executive (i) agrees to the covenants described in Section 14(a) and Section 14(b) above, (ii) executes a release (the Release) of all claims substantially in the form attached hereto as Exhibit A within fifty (50) days after the date of Involuntary Termination and does not revoke such Release in accordance with the terms thereof, and (iii) agrees to provide the consulting services described in Section 14(e) below, then in consideration for such covenants, the Company shall pay the Executive, in one cash lump sum, an amount (the Consulting Payment) in cash equal to the greater of: (X) 150% of the Executives Annual Base Salary as in effect on the Date of Termination, and (Y) the Executives Annual Base Salary as in effect on the Date of Termination, plus the Executives Average Annual Bonus. Except as provided in this subsection, the Consulting Payment shall be paid on such date as is determined by the Company within the ten (10) day period commencing on the 60th day after the date of the Executives Involuntary Termination; provided, however, that if the Executive is a Specified Employee on the date of the Executives Involuntary Termination, the Consulting Payment shall be paid as provided in Section 10 hereof. The Executive shall have the right to elect to defer the Consulting Payment under the terms and conditions of the Companys Deferred Compensation Plan. Any such deferral election shall be made in accordance with Section 18(b) hereof.
(e)
Consulting. If the Executive agrees to the covenants described in Section 14(d) above, then the Executive shall have the obligation to provide consulting services to the Company as an independent contractor, commencing on the Date of Termination and ending on the second anniversary of the Date of Termination (the Consulting Period). The Executive shall hold himself available at reasonable times and on reasonable notice to render such consulting services as may be so assigned to him by the Board or the Companys then Chief Executive Officer; provided, however, that unless the parties otherwise agree, the consulting services rendered by the Executive during the Consulting Period shall not exceed twenty (20) hours each month; and, provided, further, that the consulting services rendered by the Executive during the Consulting Period shall in no event exceed twenty percent (20%) of the average level of services performed by the Executive for the Company over the thirty-six (36) month period immediately preceding the Executives Separation from Service (or the full period of services to the Company, if the Executive has been providing services to the Company for less than thirty-six (36) months). The Company agrees to use its best efforts during the Consulting Period to secure the benefit of the Executives consulting services so as to minimize the interference with the Executives other activities, including requiring the performance of consulting services at the Companys offices only when such services may not be reasonably performed off-site by the Executive.
Section 15.
Legal Fees.
(a)
Reimbursement of Legal Fees. Subject to subsection (b), in the event of the Executives Separation from Service either (1) prior to a Change in Control, or (2) on or within two (2) years following a Change in Control, the Company shall reimburse the Executive for all legal fees and expenses (including but not limited to fees and expenses in connection with any arbitration) incurred by the Executive in disputing any issue arising under this Agreement relating to the Executives Separation from Service or in seeking to obtain or enforce any benefit or right provided by this Agreement.
(b)
Requirements for Reimbursement. The Company shall reimburse the Executives legal fees and expenses pursuant to subsection (a) above only to the extent the arbitrator or court determines the following: (i) the Executive disputed such issue, or sought to obtain or enforce such benefit or right, in good faith, (ii) the Executive had a reasonable basis for such claim, and (iii) in the case of subsection (a)(1) above, the Executive is the prevailing party. In addition, the Company shall reimburse such legal fees and expenses, only if such legal fees and expenses are incurred during the twenty (20) year period beginning on the date of the Executives Separation from Service. The legal fees and expenses paid to the Executive for any taxable year of the Executive shall not affect the legal fees and expenses paid to the Executive for any other taxable year of the Executive. The legal fees and expenses shall be paid to the Executive on or before the last day of the Executives taxable year following the taxable year in which the fees or expenses are incurred. The Executives right to reimbursement of legal fees and expenses shall not be subject to liquidation or exchange for any other benefit. Such right to reimbursement of legal fees and expenses shall be provided in a manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv). If the Executive is a Specified Employee on the date of the Executives Separation from Service, such right to reimbursement of legal fees and expenses shall be paid as provided in Section 10 hereof.
Section 16.
Successors.
(a)
Assignment by the Executive. This Agreement is personal to the Executive and without the prior written consent of Sempra Energy shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executives legal representatives.
(b)
Successors and Assigns of Sempra Energy. This Agreement shall inure to the benefit of and be binding upon Sempra Energy, its successors and assigns. Sempra Energy may not assign this Agreement to any person or entity (except for a successor described in Section 16(c), (d) or (e) below) without the Executives written consent.
(c)
Assumption. Sempra Energy shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Sempra Energy to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities of this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement if no such succession had taken place, and Sempra Energy shall have no further obligations and liabilities under this Agreement. Upon such assumption, references to Sempra Energy in this Agreement shall be replaced with references to such successor.
(d)
Sale of Subsidiary. In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy that is a member of the Sempra Energy Control Group, (ii) Sempra Energy, directly or indirectly through one or more intermediaries, sells or otherwise disposes of such subsidiary, and (iii) such subsidiary ceases to be a member of the Sempra Energy Control Group, then if, on the date such subsidiary ceases to be a member of the Sempra Energy Control Group, the Executive continues in employment with such subsidiary and the Executive does not have a Separation from Service, Sempra Energy shall require such subsidiary or any successor (whether direct or indirect, by purchase merger, consolidation or otherwise) to such subsidiary, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if such subsidiary had not ceased to be part of the Sempra Energy Control Group, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement. Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to such subsidiary, or such successor or parent thereof, assuming this Agreement, and (ii) subsection (b) of the definition of Cause and subsection (b) of the definition of Good Reason shall apply thereafter, as if a Change in Control had occurred on the date of such cessation.
(e)
Sale of Assets of Subsidiary. In the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) such subsidiary sells or otherwise disposes of substantial assets of such subsidiary to an unrelated service recipient, as determined under Treasury Regulation Section 1.409A-1(f)(2)(ii) (the Asset Purchaser), in a transaction described in Treasury Regulation Section 1.409A-1(h)(4) (an Asset Sale), then if, on the date of such Asset Sale, the Executive becomes employed by the Asset Purchaser, Sempra Energy and the Asset Purchaser shall specify, in accordance with Treasury Regulation Section 1.409A-1(h)(4), that the Executive shall not be treated as having a Separation from Service, and Sempra Energy shall require such Asset Purchaser, or the parent thereof, to assume expressly and agree to perform the obligations and satisfy and discharge the liabilities under this Agreement in the same manner and to the same extent that Sempra Energy would have been required to perform the obligations and satisfy and discharge the liabilities under this Agreement, if the Asset Sale had not taken place, and, upon such assumption, Sempra Energy shall have no further obligations and liabilities under the Agreement. Upon such assumption, (i) references to Sempra Energy in this Agreement shall be replaced with references to the Asset Purchaser or the parent thereof, as applicable, and (ii) subsection (b) of the definition of Cause and subsection (b) of the definition of Good Reason shall apply thereafter, as if a Change in Control had occurred on the date of the Asset Sale.
Section 17.
Administration Prior to Change in Control. Prior to a Change in Control, the Compensation Committee shall have full and complete authority to construe and interpret the provisions of this Agreement, to determine an individuals entitlement to benefits under this Agreement, to make in its sole and absolute discretion all determinations contemplated under this Agreement, to investigate and make factual determinations necessary or advisable to administer or implement this Agreement, and to adopt such rules and procedures as it deems necessary or advisable for the administration or implementation of this Agreement. All determinations made under this Agreement by the Compensation Committee shall be final and binding on all interested persons. Prior to a Change in Control, the Compensation Committee may delegate responsibilities for the operation and administration of this Agreement to one or more officers or employees of the Company. The provisions of this Section 17 shall terminate and be of no further force and effect upon the occurrence of a Change in Control.
Section 18.
Section 409A of the Code.
(a)
Compliance with and Exemption from Section 409A of the Code. Certain payments and benefits payable under this Agreement (including, without limitation, the Section 409A Payments) are intended to comply with the requirements of Section 409A of the Code. Certain payments and benefits payable under this Agreement are intended to be exempt from the requirements of Section 409A of the Code. This Agreement shall be interpreted in accordance with the applicable requirements of, and exemptions from, Section 409A of the Code and the Treasury Regulations thereunder. To the extent the payments and benefits under this Agreement are subject to Section 409A of the Code, this Agreement shall be interpreted, construed and administered in a manner that satisfies the requirements of Sections 409A(a)(2), (3) and (4) of the Code and the Treasury Regulations thereunder (subject to the transitional relief under Internal Revenue Service Notice 2005-1, the Proposed Regulations under Section 409A of the Code, Internal Revenue Service Notice 2006-79, Internal Revenue Service Notice 2007-78, Internal Revenue Service Notice 2007-86 and other applicable authority issued by the Internal Revenue Service). As provided in Internal Revenue Notice 2007-86, notwithstanding any other provision of this Agreement, with respect to an election or amendment to change a time or form of payment under this Agreement made on or after January 1, 2008 and on or before December 31, 2008, the election or amendment shall apply only with respect to payments that would not otherwise be payable in 2008, and shall not cause payments to be made in 2008 that would not otherwise be payable in 2008. If the Company and the Executive determine that any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not comply with Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, to the extent permitted under Section 409A of the Code, the Treasury Regulations thereunder and any applicable authority issued by the Internal Revenue Service, the Company and the Executive agree to amend this Agreement, or take such other actions as the Company and the Executive deem reasonably necessary or appropriate, to cause such compensation, benefits and other payments to comply with the requirements of Section 409A of the Code, the Treasury Regulations thereunder and other applicable authority issued by the Internal Revenue Service, while providing compensation, benefits and other payments that are, in the aggregate, no less favorable than the compensation, benefits and other payments provided under this Agreement. In the case of any compensation, benefits or other payments that are payable under this Agreement and intended to comply with Sections 409A(a)(2), (3) and (4) of the Code, if any provision of the Agreement would cause such compensation, benefits or other payments to fail to so comply, such provision shall not be effective and shall be null and void with respect to such compensation, benefits or other payments to the extent such provision would cause a failure to comply, and such provision shall otherwise remain in full force and effect.
(b)
Deferral Elections. As provided in Sections 5(f), 6(g) and 14(d), the Executive may elect to defer the Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and the Consulting Payment as follows. The Executives deferral election shall satisfy the requirements of Treasury Regulation Section 1.409A-2(b) and the terms and conditions of the Deferred Compensation Plan. Such deferral election shall designate the whole percentage (up to a maximum of 100%) of the Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and the Consulting Payment to be deferred, shall be irrevocable when made, and shall not take effect until at least twelve (12) months after the date on which the election is made. Such deferral election shall provide that the amount deferred shall be deferred for a period of not less than five (5) years from the date the payment of the amount deferred would otherwise have been made, in accordance with Treasury Regulation Section 1.409A-2(b)(1)(ii).
Section 19.
Miscellaneous.
(a)
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to its principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing signed by the party against whom enforcement of such amendment, modification, repeal, waiver, extension or discharge is sought. No person, other than pursuant to a resolution of the Board or a committee thereof, shall have authority on behalf of the Company to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto.
(b)
Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed, in either case, to the Companys headquarters or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.
(c)
Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d)
Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(e)
No Waiver. The Executives or the Companys failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 1 hereof, or the right of the Company to terminate the Executives employment for Cause pursuant to Section 1 hereof shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(f)
Entire Agreement; Exclusive Benefit; Supersession of Prior Agreement. This instrument contains the entire agreement of the Executive, the Company or any predecessor or subsidiary thereof with respect to any severance or termination pay. The Pre-Change in Control Severance Payment, the Post-Change in Control Severance Payment and all other benefits provided hereunder shall be in lieu of any other severance payments to which the Executive is entitled under any other severance plan or program or arrangement sponsored by the Company, as well as pursuant to any individual employment or severance agreement that was entered into by the Executive and the Company, and, upon the Effective Date of this Agreement, all such plans, programs, arrangements and agreements are hereby automatically superseded and terminated.
(g)
No Right of Employment. Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of the Company or shall interfere in any way with the right of the Company to terminate the Executives employment at any time, with or without Cause.
(h)
Unfunded Obligation. The obligations under this Agreement shall be unfunded. Benefits payable under this Agreement shall be paid from the general assets of the Company. The Company shall have no obligation to establish any fund or to set aside any assets to provide benefits under this Agreement.
(i)
Termination upon Sale of Assets of Subsidiary. Notwithstanding anything contained herein, this Agreement shall automatically terminate and be of no further force and effect and no benefits shall be payable hereunder in the event that (i) the Executive is employed by a direct or indirect subsidiary of Sempra Energy, and (ii) an Asset Sale (as defined in Section 16(e)) occurs (other than such a sale or disposition which is part of a transaction or series of transactions which would result in a Change in Control), and (iii) as a result of such Asset Sale, the Executive is offered employment by the Asset Purchaser in an executive position with reasonably comparable status, compensation, benefits and severance agreement (including the assumption of this Agreement in accordance with Section 16(e)) and which is consistent with the Executives experience and education, but the Executive declines to accept such offer and the Executive fails to become employed by the Asset Purchaser on the date of the Asset Sale.
(j)
Term. The term of this Agreement shall commence on the Effective Date and shall continue until the third (3rd) anniversary of the Effective Date; provided, however, that commencing on the second (2nd) anniversary of the Effective Date (and each anniversary of the Effective Date thereafter), the term of this Agreement shall automatically be extended for one (1) additional year, unless at least ninety (90) days prior to such date, the Company or the Executive shall give written notice to the other party that it or he, as the case may be, does not wish to so extend this Agreement. Notwithstanding the foregoing, if the Company gives such written notice to the Executive less than two (2) years after a Change in Control, the term of this Agreement shall be automatically extended until the later of (A) the date that is one (1) year after the anniversary of the Effective Date that follows such written notice or (B) the second (2nd) anniversary of the Change in Control Date.
(k)
Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from its Board of Directors, the Company have caused this Agreement to be executed as of the day and year first above written.
SEMPRA ENERGY
G. Joyce Rowland
Senior Vice President, HR, Diversity & Inclusion
_____________________________________
Date
EXECUTIVE
J. Bret Lane
Senior Vice President, Gas Operations & System Integrity
_____________________________________
Date
EXHIBIT A
GENERAL RELEASE
This GENERAL RELEASE (the Agreement), dated ___________, is made by and between ______________________________, a California corporation (the Company) and ___________________________ (you or your).
WHEREAS, you and the Company have previously entered into that certain Severance Pay Agreement dated ____________, 20___ (the Severance Pay Agreement); and
WHEREAS, Section 14(d) of the Severance Pay Agreement provides for the payment of a benefit to you by the Company in consideration for certain covenants, including your execution and non-revocation of a general release of claims by you against the Company and its subsidiaries and affiliates.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, you and the Company hereby agree as follows:
ONE: Your signing of this Agreement confirms that your employment with the Company shall terminate at the close of business on ____________, or earlier upon our mutual agreement.
TWO: As a material inducement for the payment of the benefit under Section 14(d) of the Severance Pay Agreement, and except as otherwise provided in this Agreement, you and the Company hereby irrevocably and unconditionally release, acquit and forever discharge the other from any and all Claims either may have against the other. For purposes of this Agreement and the preceding sentence, the words Releasee or Releasees and Claim or Claims shall have the meanings set forth below:
(a)
The words Releasee or Releasees shall refer to you and to the Company and each of the Companys owners, stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, advisors, parent companies, divisions, subsidiaries, affiliates (and agents, directors, officers, employees, representatives, attorneys and advisors of such parent companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them.
(b)
The words Claim or Claims shall refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, which you or the Company now, in the past or, except as limited by law or regulation such as the Age Discrimination in Employment Act (ADEA), in the future may have, own or hold against any of the Releasees; provided, however, that the word Claim or Claims shall not refer to any charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys fees and costs actually incurred) arising under [identify severance, employee benefits, stock option, indemnification and D&O and other agreements containing duties, rights obligations etc. of either party that are to remain operative]. Claims released pursuant to this Agreement by you and the Company include, but are not limited to, rights arising out of alleged violations of any contracts, express or implied, any tort, any claim that you failed to perform or negligently performed or breached your duties during employment at the Company, any legal restrictions on the Companys right to terminate employees or any federal, state or other governmental statute, regulation, or ordinance, including, without limitation: (1) Title VII of the Civil Rights Act of 1964 (race, color, religion, sex and national origin discrimination); (2) 42 U.S.C. § 1981 (discrimination); (3) 29 U.S.C. §§ 621634 (age discrimination); (4) 29 U.S.C. § 206(d)(l) (equal pay); (5) 42 U.S.C. §§ 12101, et seq. (disability); (6) the California Constitution, Article I, Section 8 (discrimination); (7) the California Fair Employment and Housing Act (discrimination, including race, color, national origin, ancestry, physical handicap, medical condition, marital status, religion, sex or age); (8) California Labor Code Section 1102.1 (sexual orientation discrimination); (9) the Executive Order 11246 (race, color, religion, sex and national origin discrimination); (10) the Executive Order 11141 (age discrimination); (11) §§ 503 and 504 of the Rehabilitation Act of 1973 (handicap discrimination); (12) The Worker Adjustment and Retraining Act (WARN Act); (13) the California Labor Code (wages, hours, working conditions, benefits and other matters); (14) the Fair Labor Standards Act (wages, hours, working conditions and other matters); the Federal Employee Polygraph Protection Act (prohibits employer from requiring employee to take polygraph test as condition of employment); and (15) any federal, state or other governmental statute, regulation or ordinance which is similar to any of the statutes described in clauses (1) through (14).
THREE: You and the Company expressly waive and relinquish all rights and benefits afforded by any statute (including but not limited to Section 1542 of the Civil Code of the State of California) which limits the effect of a release with respect to unknown claims. You and the Company do so understanding and acknowledging the significance of the release of unknown claims and the waiver of statutory protection against a release of unknown claims (including but not limited to Section 1542). Section 1542 of the Civil Code of the State of California states as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Thus, notwithstanding the provisions of Section 1542 or of any similar statute, and for the purpose of implementing a full and complete release and discharge of the Releasees, you and the Company expressly acknowledge that this Agreement is intended to include in its effect, without limitation, all Claims which are known and all Claims which you or the Company do not know or suspect to exist in your or the Companys favor at the time of execution of this Agreement and that this Agreement contemplates the extinguishment of all such Claims.
FOUR: The parties acknowledge that they might hereafter discover facts different from, or in addition to, those they now know or believe to be true with respect to a Claim or Claims released herein, and they expressly agree to assume the risk of possible discovery of additional or different facts, and agree that this Agreement shall be and remain effective, in all respects, regardless of such additional or different discovered facts.
FIVE: You hereby represent and acknowledge that you have not filed any Claim of any kind against the Company or others released in this Agreement. You further hereby expressly agree never to initiate against the Company or others released in this Agreement any administrative proceeding, lawsuit or any other legal or equitable proceeding of any kind asserting any Claims that are released in this Agreement.
The Company hereby represents and acknowledges that it has not filed any Claim of any kind against you or others released in this Agreement. The Company further hereby expressly agrees never to initiate against you or others released in this Agreement any administrative proceeding, lawsuit or any other legal or equitable proceeding of any kind asserting any Claims that are released in this Agreement.
SIX: You hereby represent and agree that you have not assigned or transferred, or attempted to have assigned or transfer, to any person or entity, any of the Claims that you are releasing in this Agreement.
The Company hereby represents and agrees that it has not assigned or transferred, or attempted to have assigned or transfer, to any person or entity, any of the Claims that it is releasing in this Agreement.
SEVEN: As a further material inducement to the Company to enter into this Agreement, you hereby agree to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys fees incurred by the Releasees, arising out of any breach of this Agreement by you or the fact that any representation made in this Agreement by you was false when made.
As a further material inducement to you to enter into this Agreement, the Company hereby agrees to indemnify and hold each of the Releasees harmless from all loss, costs, damages, or expenses, including without limitation, attorneys fees incurred by the Releasees, arising out of any breach of this Agreement by it or the fact that any representation made in this Agreement by it was knowingly false when made.
EIGHT: You and the Company represent and acknowledge that in executing this Agreement, neither is relying upon any representation or statement not set forth in this Agreement or the Severance Agreement.
NINE:
(a)
This Agreement shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to you or any other person, or that you have any rights whatsoever against the Company, and the Company specifically disclaims any liability to or wrongful acts against you or any other person, on the part of itself, its employees or its agents. This Agreement shall not in any way be construed as an admission by you that you have acted wrongfully with respect to the Company, or that you failed to perform your duties or negligently performed or breached your duties, or that the Company had good cause to terminate your employment.
(b)
If you are a party or are threatened to be made a party to any proceeding by reason of the fact that you were an officer or director of the Company, the Company shall indemnify you against any expenses (including reasonable attorneys fees; provided, that counsel has been approved by the Company prior to retention, which approval shall not be unreasonably withheld), judgments, fines, settlements and other amounts actually or reasonably incurred by you in connection with that proceeding; provided, that you acted in good faith and in a manner you reasonably believed to be in the best interest of the Company. The limitations of California Corporations Code Section 317 shall apply to this assurance of indemnification.
(c)
You agree to cooperate with the Company and its designated attorneys, representatives and agents in connection with any actual or threatened judicial, administrative or other legal or equitable proceeding in which the Company is or may become involved. Upon reasonable notice, you agree to meet with and provide to the Company or its designated attorneys, representatives or agents all information and knowledge you have relating to the subject matter of any such proceeding. The Company agrees to reimburse you for any reasonable costs you incur in providing such cooperation.
TEN: This Agreement is made and entered into in California. This Agreement shall in all respects be interpreted, enforced and governed by and under the laws of the State of California and applicable Federal law. Any dispute about the validity, interpretation, effect or alleged violation of this Agreement (an arbitrable dispute) must be submitted to arbitration in San Diego, California. Arbitration shall take place before an experienced employment arbitrator licensed to practice law in such state and selected in accordance with the then existing JAMS arbitration rules applicable to employment disputes; provided, however, that in any event, the arbitrator shall allow reasonable discovery. Arbitration shall be the exclusive remedy for any arbitrable dispute. The arbitrator in any arbitrable dispute shall not have authority to modify or change the Agreement in any respect. You and the Company shall each be responsible for payment of one-half (1/2) the amount of the arbitrators fee(s); provided, however, that in no event shall you be required to pay any fee or cost of arbitration that is unique to arbitration or exceeds the costs you would have incurred had any arbitrable dispute been pursued in a court of competent jurisdiction. The Company shall make up any shortfall. Should any party to this Agreement institute any legal action or administrative proceeding against the other with respect to any Claim waived by this Agreement or pursue any arbitrable dispute by any method other than arbitration, the prevailing party shall be entitled to recover from the non-prevailing party all damages, costs, expenses and attorneys fees incurred as a result of that action. The arbitrators decision and/or award shall be rendered in writing and will be fully enforceable and subject to an entry of judgment by the Superior Court of the State of California for the County of San Diego, or any other court of competent jurisdiction.
ELEVEN: Both you and the Company understand that this Agreement is final and binding eight (8) days after its execution and return. Should you nevertheless attempt to challenge the enforceability of this Agreement as provided in Paragraph TEN or, in violation of that Paragraph, through litigation, as a further limitation on any right to make such a challenge, you shall initially tender to the Company, by certified check delivered to the Company, all monies received pursuant to Section 14(d) of the Severance Pay Agreement, plus interest, and invite the Company to retain such monies and agree with you to cancel this Agreement and void the Companys obligations under Section 14(d) of the Severance Pay Agreement. In the event the Company accepts this offer, the Company shall retain such monies and this Agreement shall be canceled and the Company shall have no obligation under Section 14(d) of the Severance Pay Agreement. In the event the Company does not accept such offer, the Company shall so notify you and shall place such monies in an interest-bearing escrow account pending resolution of the dispute between you and the Company as to whether or not this Agreement and the Companys obligations under Section 14(d) of the Severance Pay Agreement shall be set aside and/or otherwise rendered voidable or unenforceable. Additionally, any consulting agreement then in effect between you and the Company shall be immediately rescinded with no requirement of notice.
TWELVE: Any notices required to be given under this Agreement shall be delivered either personally or by first class United States mail, postage prepaid, addressed to the respective parties as follows:
To Company:
[TO COME]
Attn: [TO COME]
To You:
______________________
______________________
______________________
THIRTEEN: You understand and acknowledge that you have been given a period of forty-five (45) days to review and consider this Agreement (as well as statistical data on the persons eligible for similar benefits) before signing it and may use as much of this forty-five (45) day period as you wish prior to signing. You are encouraged, at your personal expense, to consult with an attorney before signing this Agreement. You understand and acknowledge that whether or not you do so is your decision. You may revoke this Agreement within seven (7) days of signing it. If you wish to revoke, the Companys Vice President, Human Resources must receive written notice from you no later than the close of business on the seventh (7th) day after you have signed the Agreement. If revoked, this Agreement shall not be effective and enforceable, and you will not receive payments or benefits under Section 14(d) of the Severance Pay Agreement.
FOURTEEN: This Agreement constitutes the entire agreement of the parties hereto and supersedes any and all other agreements (except the Severance Pay Agreement) with respect to the subject matter of this Agreement, whether written or oral, between you and the Company. All modifications and amendments to this Agreement must be in writing and signed by the parties.
FIFTEEN: Each party agrees, without further consideration, to sign or cause to be signed, and to deliver to the other party, any other documents and to take any other action as may be necessary to fulfill the obligations under this Agreement.
SIXTEEN: If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or application; and to this end the provisions of this Agreement are declared to be severable.
SEVENTEEN: This Agreement may be executed in counterparts.
I have read the foregoing General Release, and I accept and agree to the provisions it contains and hereby execute it voluntarily and with full understanding of its consequences. I am aware it includes a release of all known or unknown claims.
DATED: __________
__________________________________________
DATED: __________
__________________________________________
You acknowledge that you first received this Agreement on [date].
_________________________
Exhibit 10.83
AMENDMENT NO. 9
TO THE
SAN DIEGO GAS & ELECTRIC COMPANY
NUCLEAR FACILITIES QUALIFIED CPUC DECOMMISSIONING
MASTER TRUST AGREEMENT
FOR
SAN ONOFRE NUCLEAR GENERATING STATIONS
This Amendment No. 9 made this _______ day of ____________, 2013, by and between San Diego Gas & Electric Company (Company) and The Bank of New York Mellon, a New York state bank, successor by operation of law to Mellon Bank, N.A (Trustee).
WHEREAS, pursuant to Section 2.12 of the Nuclear Facilities Qualified Decommissioning Master Trust for San Onofre Nuclear Generating Stations dated as of June 29, 1992, as amended (Agreement) between the Company and the Trustee, the parties specifically reserve the right to amend the Agreement;
NOW, THEREFORE, the Company and the Trustee agree as follows:
1.
The Fee Schedule attached as Exhibit C to the Agreement is hereby replaced with the revised Fee Schedule attached hereto.
2.
Each Party hereby represents and warrants to the others that it has full authority to enter into this Amendment No. 9 upon the terms and conditions hereof and that the individual executing this Amendment No. 9 on its behalf has the requisite authority to bind that Party.
IN WITNESS WHEREOF, the Company, the Trustee, and the California Public Utilities Commission have set their hands and seals in agreement to these amendments effective as provided above.
SAN DIEGO GAS & ELECTRIC COMPANY
By:
________________________________________
Date:
________________________________________
Attest:
________________________________________
THE BANK OF NEW YORK MELLON
By:
________________________________________
Date:
________________________________________
Attest:
________________________________________
CALIFORNIA PUBLIC UTILITIES COMMISSION
By:
________________________________________
Date:
________________________________________
Attest:
________________________________________
Exhibit 10.91
AMENDMENT NO. 7
TO THE
SAN DIEGO GAS & ELECTRIC COMPANY
NUCLEAR FACILITIES NON-QUALIFIED CPUC DECOMMISSIONING
MASTER TRUST AGREEMENT
FOR
SAN ONOFRE NUCLEAR GENERATING STATIONS
This Amendment No. 7 made this _______ day of ____________, 2013, by and between San Diego Gas & Electric Company (Company) and The Bank of New York Mellon, a New York state bank, successor by operation of law to Mellon Bank, N.A (Trustee).
WHEREAS, pursuant to Section 2.10 of the Nuclear Facilities Non-Qualified Decommissioning Master Trust for San Onofre Nuclear Generating Stations dated as of June 29, 1992, as amended (Agreement) between the Company and the Trustee, the parties specifically reserve the right to amend the Agreement;
NOW, THEREFORE, the Company and the Trustee agree as follows:
1.
The Fee Schedule attached as Exhibit C to the Agreement is hereby replaced with the revised Fee Schedule attached hereto.
2.
Each Party hereby represents and warrants to the others that it has full authority to enter into this Amendment No. 7 upon the terms and conditions hereof and that the individual executing this Amendment No. 7 on its behalf has the requisite authority to bind that Party.
IN WITNESS WHEREOF, the Company, the Trustee, and the California Public Utilities Commission have set their hands and seals in agreement to these amendments effective as provided above.
SAN DIEGO GAS & ELECTRIC COMPANY
By:
________________________________________
Date:
________________________________________
Attest:
________________________________________
THE BANK OF NEW YORK MELLON
By:
________________________________________
Date:
________________________________________
Attest:
________________________________________
CALIFORNIA PUBLIC UTILITIES COMMISSION
By:
________________________________________
Date:
________________________________________
Attest:
________________________________________
|
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| |||||||||||||||
EXHIBIT 12.1 | ||||||||||||||||||
SEMPRA ENERGY | ||||||||||||||||||
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES | ||||||||||||||||||
AND PREFERRED STOCK DIVIDENDS | ||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||
|
|
|
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|
|
|
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|
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|
|
|
| |||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| 2009 |
|
| 2010 |
|
| 2011 |
|
| 2012 |
|
| 2013 | |||
Fixed charges and preferred stock dividends: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Interest |
| $ | 455 |
| $ | 492 |
| $ | 549 |
| $ | 601 |
| $ | 620 | |||
Interest portion of annual rentals |
|
| 2 |
|
| 3 |
|
| 2 |
|
| 2 |
|
| 2 | |||
Preferred dividends of subsidiaries (1) |
|
| 13 |
|
| 11 |
|
| 10 |
|
| 6 |
|
| 6 | |||
Total fixed charges |
|
| 470 |
|
| 506 |
|
| 561 |
|
| 609 |
|
| 628 | |||
Preferred dividends for purpose of ratio |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - | |||
Total fixed charges and preferred dividends for purpose of ratio |
| $ | 470 |
| $ | 506 |
| $ | 561 |
| $ | 609 |
| $ | 628 | |||
Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Pretax income from continuing operations before adjustment for income or loss from equity investees |
| $ | 977 |
| $ | 1,078 |
| $ | 1,747 |
| $ | 1,255 |
| $ | 1,399 | |||
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total fixed charges (from above) |
|
| 470 |
|
| 506 |
|
| 561 |
|
| 609 |
|
| 628 | |||
Distributed income of equity investees |
|
| 493 |
|
| 260 |
|
| 96 |
|
| 50 |
|
| 51 | |||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Interest capitalized |
|
| 73 |
|
| 74 |
|
| 27 |
|
| 53 |
|
| 23 | |||
Preferred dividends of subsidiaries (1) |
|
| 13 |
|
| 11 |
|
| 10 |
|
| 6 |
|
| 6 | |||
Total earnings for purpose of ratio |
| $ | 1,854 |
| $ | 1,759 |
| $ | 2,367 |
| $ | 1,855 |
| $ | 2,049 | |||
Ratio of earnings to combined fixed charges and preferred stock dividends |
|
| 3.94 |
|
| 3.48 |
|
| 4.22 |
|
| 3.05 |
|
| 3.26 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of earnings to fixed charges |
|
| 3.94 |
|
| 3.48 |
|
| 4.22 |
|
| 3.05 |
|
| 3.26 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
(1) | In computing this ratio, Preferred dividends of subsidiaries represents the before-tax earnings necessary to pay such dividends, computed at the effective tax rates for the applicable periods. | |||||||||||||||||
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EXHIBIT 12.2 | ||||||||||||||||||
SAN DIEGO GAS & ELECTRIC COMPANY | ||||||||||||||||||
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES | ||||||||||||||||||
AND PREFERRED STOCK DIVIDENDS | ||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||
|
|
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|
|
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|
|
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|
|
|
| |||
|
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|
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|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| 2009 |
|
| 2010 |
|
| 2011 |
|
| 2012 |
|
| 2013 | |||
Fixed Charges and Preferred Stock Dividends: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Interest |
| $ | 118 |
| $ | 153 |
| $ | 193 |
| $ | 220 |
| $ | 231 | |||
Interest portion of annual rentals |
|
| 1 |
|
| 1 |
|
| 1 |
|
| 1 |
|
| 1 | |||
Total fixed charges |
|
| 119 |
|
| 154 |
|
| 194 |
|
| 221 |
|
| 232 | |||
Preferred stock dividends (1) |
|
| 7 |
|
| 7 |
|
| 7 |
|
| 7 |
|
| 5 | |||
Combined fixed charges and preferred stock dividends for purpose of ratio |
| $ | 126 |
| $ | 161 |
| $ | 201 |
| $ | 228 |
| $ | 237 | |||
Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Pretax income from continuing operations |
| $ | 550 |
| $ | 531 |
| $ | 692 |
| $ | 705 |
| $ | 626 | |||
Total fixed charges (from above) |
|
| 119 |
|
| 154 |
|
| 194 |
|
| 221 |
|
| 232 | |||
Less: Interest capitalized |
|
| 4 |
|
| 1 |
|
| 1 |
|
| - |
|
| - | |||
Total earnings for purpose of ratio |
| $ | 665 |
| $ | 684 |
| $ | 885 |
| $ | 926 |
| $ | 858 | |||
Ratio of earnings to combined fixed charges and preferred stock dividends |
|
| 5.28 |
|
| 4.25 |
|
| 4.40 |
|
| 4.06 |
|
| 3.62 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of earnings to fixed charges |
|
| 5.59 |
|
| 4.44 |
|
| 4.56 |
|
| 4.19 |
|
| 3.70 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
(1) | In computing this ratio, Preferred stock dividends represents the before-tax earnings necessary to pay such dividends, computed at the effective tax rates for the applicable periods. | |||||||||||||||||
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EXHIBIT 12.3 | |||||||||||||||||
SOUTHERN CALIFORNIA GAS COMPANY | |||||||||||||||||
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES | |||||||||||||||||
AND PREFERRED STOCK DIVIDENDS | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
|
|
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|
|
|
|
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|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| 2009 |
|
| 2010 |
|
| 2011 |
|
| 2012 |
|
| 2013 |
| |
Fixed Charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Interest |
| $ | 74 |
| $ | 72 |
| $ | 77 |
| $ | 77 |
| $ | 76 |
| |
Interest portion of annual rentals |
|
| 1 |
|
| 2 |
|
| 1 |
|
| 1 |
|
| 1 |
| |
Total fixed charges |
|
| 75 |
|
| 74 |
|
| 78 |
|
| 78 |
|
| 77 |
| |
Preferred stock dividends (1) |
|
| 2 |
|
| 2 |
|
| 2 |
|
| 2 |
|
| 2 |
| |
Combined fixed charges and preferred stock dividends for purpose of ratio |
| $ | 77 |
| $ | 76 |
| $ | 80 |
| $ | 80 |
| $ | 79 |
| |
Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Pretax income from continuing operations |
| $ | 418 |
| $ | 463 |
| $ | 431 |
| $ | 369 |
| $ | 481 |
| |
Add: Total fixed charges (from above) |
|
| 75 |
|
| 74 |
|
| 78 |
|
| 78 |
|
| 77 |
| |
Less: Interest capitalized |
|
| 1 |
|
| 1 |
|
| 1 |
|
| 1 |
|
| 1 |
| |
Total earnings for purpose of ratio |
| $ | 492 |
| $ | 536 |
| $ | 508 |
| $ | 446 |
| $ | 557 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Ratio of earnings to combined fixed charges and preferred stock dividends |
|
| 6.39 |
|
| 7.05 |
|
| 6.35 |
|
| 5.58 |
|
| 7.05 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Ratio of earnings to fixed charges |
|
| 6.56 |
|
| 7.24 |
|
| 6.51 |
|
| 5.72 |
|
| 7.23 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | In computing this ratio, Preferred stock dividends represents the before-tax earnings necessary to pay such dividends, computed at the effective tax rates for the applicable periods. | ||||||||||||||||
|
|
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|
|
|
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|
|
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|
|
|
|
|
|
|
SEMPRA ENERGY FINANCIAL REPORT
TABLE OF CONTENTS
|
||||
Page
|
||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
2
|
|||
Our Business
|
2
|
|||
Executive Summary
|
9
|
|||
Business Strategy
|
9
|
|||
Key Events and Issues in 2013
|
9
|
|||
Results of Operations
|
11
|
|||
Overall Results of Operations of Sempra Energy and Factors Affecting the Results
|
11
|
|||
Segment Results
|
14
|
|||
Changes in Revenues, Costs and Earnings
|
20
|
|||
Transactions with Affiliates
|
39
|
|||
Book Value Per Share
|
39
|
|||
Capital Resources and Liquidity
|
39
|
|||
Overview
|
39
|
|||
Cash Flows from Operating Activities
|
43
|
|||
Cash Flows from Investing Activities
|
46
|
|||
Cash Flows from Financing Activities
|
51
|
|||
Credit Ratings
|
58
|
|||
Factors Influencing Future Performance
|
58
|
|||
California Utilities
|
58
|
|||
Sempra International
|
63
|
|||
Sempra U.S. Gas & Power
|
65
|
|||
Other Sempra Energy Matters
|
68
|
|||
Litigation
|
69
|
|||
Market Risk
|
69
|
|||
Critical Accounting Policies and Estimates, and Key Noncash Performance Indicators
|
72
|
|||
New Accounting Standards
|
78
|
|||
Information Regarding Forward-Looking Statements
|
79
|
|||
Common Stock Data
|
80
|
|||
Performance Graph – Comparative Total Shareholder Returns
|
81
|
|||
Five-Year Summaries
|
82
|
|||
Controls and Procedures
|
84
|
|||
Evaluation of Disclosure Controls and Procedures
|
84
|
|||
Management’s Report on Internal Control over Financial Reporting
|
84
|
|||
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
|
85
|
|||
Reports of Independent Registered Public Accounting Firm
|
86
|
|||
Consolidated Financial Statements
|
92
|
|||
Sempra Energy
|
92
|
|||
San Diego Gas & Electric Company
|
100
|
|||
Southern California Gas Company
|
107
|
|||
Notes to Consolidated Financial Statements
|
113
|
|||
Glossary
|
240
|
|||
This Financial Report is a combined report for the following separate companies (each a separate Securities and Exchange Commission registrant):
|
||||
Sempra Energy
|
San Diego Gas & Electric Company
|
Southern California Gas Company
|
§
|
A description of our business
|
§
|
An executive summary
|
§
|
A discussion and analysis of our operating results for 2011 through 2013
|
§
|
Information about our capital resources and liquidity
|
§
|
Major factors expected to influence our future operating results
|
§
|
A discussion of market risk affecting our businesses
|
§
|
A table of accounting policies that we consider critical to our financial condition and results of operations
|
§
|
Sempra Energy and its consolidated entities
|
§
|
SDG&E
|
§
|
SoCalGas
|
CALIFORNIA UTILITIES
|
||
MARKET
|
SERVICE TERRITORY
|
|
SAN DIEGO GAS & ELECTRIC COMPANY (SDG&E)
A regulated public utility; infrastructure supports electric generation, transmission and distribution, and natural gas distribution
|
§ Provides electricity to 3.4 million consumers (1.4 million meters)
§ Provides natural gas to 3.2 million consumers (0.9 million meters)
|
Serves the county of San Diego, California and an adjacent portion of southern Orange County covering 4,100 square miles
|
SOUTHERN CALIFORNIA GAS COMPANY (SOCALGAS)
A regulated public utility; infrastructure supports natural gas distribution, transmission and storage
|
§ Residential, commercial, industrial, utility electric generation and wholesale customers
§ Covers a population of 21.3 million (5.8 million meters)
|
Southern California and portions of central California (excluding San Diego County, the city of Long Beach and the desert area of San Bernardino County) covering 20,000 square miles
|
SEMPRA INTERNATIONAL
|
||
MARKET
|
GEOGRAPHIC REGION
|
|
SEMPRA SOUTH AMERICAN UTILITIES
Infrastructure supports electric transmission and distribution
|
§ Provides electricity to approximately 640,000 customers in Chile and 996,000 customers in Peru
|
§ Chile
§ Peru
|
SEMPRA MEXICO
Develops, owns and operates, or holds interests in:
§ natural gas transmission pipelines and propane and ethane systems
§ a natural gas distribution utility
§ electric generation facilities, including wind
§ a terminal for the import of liquefied natural gas (LNG)
§ marketing operations for the purchase of LNG and the purchase and sale of natural gas
|
§ Natural gas
§ Wholesale electricity
§ Liquefied natural gas
|
§ Mexico
|
SEMPRA U.S. GAS & POWER
|
||
MARKET
|
GEOGRAPHIC REGION
|
|
SEMPRA RENEWABLES
Develops, owns, operates, or holds interests in renewable energy generation projects
|
§ Wholesale electricity
|
§ U.S.A.
|
SEMPRA NATURAL GAS
Develops, owns and operates, or holds interests in:
§ a natural gas-fired electric generation asset
§ natural gas pipelines and storage facilities
§ natural gas distribution utilities
§ a terminal in the U.S. for the import and export of LNG and sale of natural gas
§ marketing operations
|
§ Wholesale electricity
§ Natural gas
§ Liquefied natural gas
|
§ U.S.A.
|
SEMPRA RENEWABLES OPERATING FACILITIES
|
|||||||
Capacity in Megawatts (MW) at December 31, 2013
|
|||||||
Name
|
Generating Capacity
|
PPA Term in Years
|
First In Service
|
Location
|
|||
Wholly owned facility:
|
|||||||
Copper Mountain Solar 1
|
10/48
|
20
|
2008/2010
|
Boulder City, Nevada
|
|||
Jointly owned facilities(1):
|
|||||||
Auwahi Wind Farm
|
11
|
20
|
2012
|
Maui, Hawaii
|
|||
Cedar Creek 2 Wind Farm
|
125
|
25
|
2011
|
New Raymer, Colorado
|
|||
Copper Mountain Solar 2
|
46
|
25
|
2012
|
Boulder City, Nevada
|
|||
Flat Ridge 2 Wind Farm
|
235
|
20 and 25
|
2012
|
Wichita, Kansas
|
|||
Fowler Ridge 2 Wind Farm
|
100
|
20
|
2009
|
Benton County, Indiana
|
|||
Mehoopany Wind Farm
|
71
|
20
|
2012
|
Wyoming County, Pennsylvania
|
|||
Mesquite Solar 1
|
21/54
|
(2)
|
20
|
2011/2012
|
Arlington, Arizona
|
||
Total MW in operation | 721 | ||||||
(1)
|
Sempra Renewables has a 50-percent interest in each of these facilities and accounts for them as equity method investments. The generating capacity represents Sempra Renewables’ share only.
|
||||||
(2)
|
Total generating capacity of 42 MW/108 MW was placed in service in 2011 and 2012, respectively. The capacity noted in the above table represents Sempra Renewables’ share only.
|
§
|
U.S. utilities
|
§
|
South American utilities and Mexican midstream
|
§
|
U.S. natural gas midstream and renewables
|
§
|
In February 2013, IEnova publicly offered and sold in Mexico notes totaling $408 million (U.S. equivalent). Then, in March 2013, IEnova sold 18.9 percent of its common shares in a private offering in the U.S. and outside of Mexico and in a concurrent initial public offering in Mexico for net proceeds of $574 million (U.S. equivalent) (133).
|
§
|
In February 2013, Sempra Natural Gas completed the sale of one 625-MW block of its Mesquite Power plant to the Salt River Project Agricultural Improvement and Power District for $371 million in cash (144).
|
§
|
In May 2013, the CPUC approved a final decision in the California Utilities’ 2012 General Rate Case (2012 GRC). In the second quarter of 2013, SDG&E and SoCalGas recorded earnings of $52 million and $25 million, respectively, from the retroactive impact for full-year 2012 as a result of the final decision (213).
|
§
|
In June 2013, Southern California Edison announced that it would permanently retire SONGS, which has been offline since early 2012 due to operating issues. Consequently, we recorded a $200 million pretax loss from plant closure representing the portion of SDG&E’s net investment in the facility and SDG&E’s associated costs incurred through the closure date, including replacement power costs, that management estimates may not be recovered in rates (208).
|
§
|
In June 2013, Eletrans II S.A., a joint venture between Sempra South American Utilities’ Chilquinta Energía and Sociedad Austral de Electricidad Sociedad Anónima (SAESA), was awarded the construction of two 220-kilovolt (kV) transmission lines in Chile (64).
|
§
|
In October 2013, SDG&E redeemed all six series of its outstanding shares of contingently redeemable preferred stock for $83 million (including call premium and accrued dividends) (205).
|
§
|
SDG&E continued to settle claims related to the 2007 California wildfire litigation; there are approximately 40 cases left to be resolved (220).
|
§
|
Updates for projects at Sempra Mexico’s IEnova subsidiary:
|
□
|
In January 2013, PEMEX announced that the first phase of the Los Ramones Pipeline project, or Los Ramones I, was assigned to and will be developed by our joint venture with PEMEX; construction began in January 2014. Los Ramones I will be a 70-mile natural gas pipeline from the northern portion of the state of Tamaulipas bordering the United States to Los Ramones in the Mexican state of Nuevo León (65).
|
□
|
In the third quarter of 2013, IEnova began construction on the first phase, or approximately 300 miles, of the Sonora Pipeline, a 500-mile natural gas pipeline network in northern Mexico (65).
|
□
|
In the third quarter of 2013, through its joint venture with PEMEX, IEnova began construction on the Ethane Pipeline, a 140-mile pipeline to transport ethane from Tabasco, Mexico to Veracruz, Mexico (65).
|
□
|
In the fourth quarter of 2013, IEnova began construction on the Energía Sierra Juárez wind project (65).
|
§
|
Updates for projects at Sempra Renewables:
|
□
|
In March 2013, we started construction on Copper Mountain Solar 3 (CMS 3), which will have 250 MW of generating capacity when completed (66).
|
□
|
In the third quarter of 2013, Sempra Renewables sold 50-percent equity interests in Copper Mountain Solar 2 and Mesquite Solar 1 to ConEdison Development (144).
|
□
|
In September 2013, Sempra Renewables acquired the rights to develop the 75-MW Broken Bow 2 Wind project in Custer County, Nebraska (66).
|
§
|
Updates for Sempra Natural Gas’ Cameron liquefaction project:
|
□
|
In May 2013, Sempra Natural Gas signed a joint venture agreement (subject to a final investment decision, finalization of permit authorizations, securing financing commitments and other conditions) with affiliates of GDF SUEZ S.A., Mitsubishi Corporation (through a related company jointly established with Nippon Yusen Kabushiki Kaisha (NYK)), and Mitsui & Co., Ltd. each to acquire 16.6 percent equity in the existing facilities and the Cameron liquefaction project. We will have a 50.2-percent interest in the joint venture (67).
|
□
|
In May 2013, Sempra Natural Gas signed 20-year liquefaction and regasification tolling capacity agreements (subject to a final investment decision, finalization of permit authorizations, securing financing commitments and other conditions) with GDF SUEZ S.A. and affiliates of Mitsubishi Corporation and Mitsui & Co., Ltd. to subscribe the full nameplate capacity of the facility (68).
|
□
|
In June and November 2013, Sempra Natural Gas signed agreements totaling 1.45 Bcf per day of firm natural gas transportation service to Cameron LNG on the Cameron Interstate Pipeline (subject to effectiveness of the liquefaction and regasification tolling capacity agreements) with GDF SUEZ S.A. and affiliates of Mitsubishi Corporation and Mitsui & Co., Ltd. The terms of these agreements are concurrent with the liquefaction and regasification tolling capacity agreements (68).
|
§
|
Overall results of our operations and factors affecting those results
|
§
|
Our segment results
|
§
|
Significant changes in revenues, costs and earnings between periods
|
OVERALL OPERATIONS OF SEMPRA ENERGY FROM 2009 TO 2013
|
(Dollars and shares in millions, except per share amounts)
|
§
|
$61 million higher earnings from CPUC base operations and electric transmission, including Sunrise Powerlink
|
§
|
$52 million ($0.21 per share) favorable impact on 2013 earnings from the retroactive impact for 2012 of the 2012 GRC, for which a final decision by the CPUC was issued in the second quarter of 2013
|
§
|
$(119) million ($0.48 per share) charge for loss from plant closure associated with SDG&E’s investment in the SONGS nuclear facility
|
§
|
$(54) million from an income tax benefit recorded in 2012 related to a change in the income tax treatment of certain repairs expenditures, the lower rate of return authorized in our CPUC cost of capital proceeding and higher interest expense
|
§
|
$51 million higher operating margin and newly recovered costs as a result of the 2012 GRC
|
§
|
$25 million ($0.10 per share) favorable impact on 2013 earnings from the retroactive impact for 2012 of the 2012 GRC
|
§
|
$(26) million decrease in Sempra Mexico’s earnings for earnings attributable to noncontrolling interests at IEnova following its March 2013 offerings of 18.9 percent of its common stock
|
§
|
$24 million ($0.10 per share) gains from the sale of 50-percent equity interests in MS 1 and CMS 2 in 2013
|
§
|
$(50) million lower deferred income tax benefits, including $5 million decrease from U.S. Treasury grant sequestration in 2013, as a result of solar and wind generating assets placed in service in 2012
|
§
|
$239 million ($0.97 per share) in noncash impairment charges in 2012 to write down our investment in Rockies Express, partially offset by a $25 million income tax make-whole payment received in 2012 from Kinder Morgan ($0.10 per share)
|
§
|
$44 million ($0.18 per share) gain on the sale of one 625-MW block of Sempra Natural Gas’ 1,250-MW Mesquite Power natural gas-fired power plant in the first quarter of 2013
|
§
|
$41 million higher earnings from LNG operations, primarily due to lower of cost or market adjustments in 2012 associated with the timing of cargoes, the impact of higher natural gas prices on marketing operations and lower costs resulting from commercial arrangements entered into with affiliates
|
§
|
$(63) million ($0.25 per share) income tax expense in the first quarter of 2013 resulting from a corporate reorganization in connection with the IEnova stock offerings
|
§
|
$(54) million ($0.22 per share) income tax benefit in 2012 primarily associated with our decision to hold life insurance contracts kept in support of certain benefit plans to term
|
§
|
a $277 million ($1.15 per share) gain resulting from the remeasurement of our equity method investments at our South American Utilities segment related to its acquisition of additional interests in Chilquinta Energía and Luz del Sur in April 2011;
|
§
|
$239 million ($0.97 per share) in noncash impairment charges in 2012 to write down our investment in Rockies Express, partially offset by a $25 million income tax make-whole payment received from Kinder Morgan ($0.10 per share); and
|
§
|
lower earnings at Sempra Natural Gas and Sempra Mexico in 2012 compared to 2011 primarily due to the end of the DWR contract in September 2011; offset by
|
§
|
improved results at the California Utilities, Sempra Renewables and Parent and Other.
|
SEMPRA ENERGY EARNINGS (LOSSES) BY SEGMENT 2011-2013
|
|||||||||||||
(Dollars in millions)
|
|||||||||||||
|
|
Years ended December 31,
|
|||||||||||
|
|
2013
|
2012
|
2011
|
|||||||||
California Utilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E(1)
|
$
|
404
|
41
|
%
|
$
|
484
|
56
|
%
|
$
|
431
|
32
|
%
|
|
SoCalGas(2)
|
|
364
|
37
|
|
|
289
|
34
|
|
|
287
|
22
|
|
|
Sempra International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sempra South American Utilities
|
|
153
|
15
|
|
|
164
|
19
|
|
|
425
|
32
|
|
|
Sempra Mexico
|
|
122
|
12
|
|
|
157
|
18
|
|
|
192
|
14
|
|
|
Sempra U.S. Gas & Power:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sempra Renewables
|
|
62
|
6
|
|
|
61
|
7
|
|
|
7
|
1
|
|
|
Sempra Natural Gas
|
|
64
|
6
|
|
|
(241)
|
(28)
|
|
|
115
|
9
|
|
|
Parent and other(3)
|
|
(168)
|
(17)
|
|
|
(55)
|
(6)
|
|
|
(126)
|
(10)
|
|
|
Earnings
|
$
|
1,001
|
100
|
%
|
$
|
859
|
100
|
%
|
$
|
1,331
|
100
|
%
|
|
(1)
|
After preferred dividends and 2013 call premium on preferred stock.
|
||||||||||||
(2)
|
After preferred dividends.
|
||||||||||||
(3)
|
Includes after-tax interest expense ($144 million in 2013, $150 million in 2012 and $138 million in 2011), intercompany eliminations recorded in consolidation and certain corporate costs.
|
EARNINGS BY SEGMENT – CALIFORNIA UTILITIES
|
(Dollars in millions)
|
§
|
$404 million in 2013 ($411 million before preferred dividends and call premium)
|
§
|
$484 million in 2012 ($489 million before preferred dividends)
|
§
|
$431 million in 2011 ($436 million before preferred dividends)
|
§
|
$119 million charge for loss from plant closure associated with SDG&E’s investment in SONGS;
|
§
|
$22 million income tax benefit recorded in the third quarter of 2012 for full-year 2011 from the change in the income tax treatment of certain repairs expenditures, as we discuss below in “Income Taxes;”
|
§
|
$20 million lower CPUC-authorized rate of return established in the CPUC cost of capital proceeding effective as of January 1, 2013;
|
§
|
$12 million higher interest expense;
|
§
|
$11 million loss of revenue from SONGS due to the early closure of the plant; and
|
§
|
$6 million for the recovery from the U.S. Department of Energy (DOE) in 2012 of incremental costs incurred in prior years for the long-term storage of spent nuclear fuel; offset by
|
§
|
$52 million favorable impact on 2013 earnings from the retroactive application for 2012 of the final decision in the 2012 GRC;
|
§
|
$38 million higher CPUC base operating margin as a result of the final 2012 GRC decision, net of operating costs; and
|
§
|
$23 million higher electric transmission margin (including Sunrise Powerlink).
|
§
|
$52 million reduction in 2012 income tax expense primarily due to a change in the income tax treatment of certain repairs expenditures, as we discuss below in “Income Taxes;”
|
§
|
$33 million higher earnings related to Sunrise Powerlink;
|
§
|
$13 million higher earnings for Desert Star in 2012, which was acquired in October 2011;
|
§
|
$11 million higher electric transmission margin (excluding Sunrise Powerlink);
|
§
|
$8 million increase in AFUDC related to equity (excluding Sunrise Powerlink);
|
§
|
$7 million lower expense associated with the settlement of 2007 wildfire claims; and
|
§
|
$6 million for the recovery from the DOE in 2012 of incremental costs incurred in prior years for the long-term storage of spent nuclear fuel; offset by
|
§
|
$28 million higher depreciation and operation and maintenance expenses related to CPUC-regulated operations (excluding insurance premiums for wildfire coverage, litigation and Desert Star) with no corresponding increase in the CPUC-authorized margin in 2012 due to the delay in the 2012 GRC decision;
|
§
|
$18 million unfavorable earnings impact due to higher revenues in 2011 associated with incremental wildfire insurance premiums (revenues in 2011 were for an 18-month period compared to a 12-month period in 2012);
|
§
|
$18 million higher interest expense;
|
§
|
$6 million lower regulatory incentive awards; and
|
§
|
$5 million higher litigation expense.
|
§
|
$364 million in 2013 ($365 million before preferred dividends)
|
§
|
$289 million in 2012 ($290 million before preferred dividends)
|
§
|
$287 million in 2011 ($288 million before preferred dividends)
|
§
|
$36 million higher CPUC base operating margin as a result of the final 2012 GRC decision and lower non-refundable operating costs;
|
§
|
$25 million favorable impact on 2013 earnings from the retroactive application for 2012 of the final decision in the 2012 GRC;
|
§
|
$20 million higher favorable resolution of prior years’ income tax issues in 2013; and
|
§
|
$15 million due to costs associated with the Transmission Integrity Management Program (TIMP) being expensed in 2012 now being fully recovered (balanced) in revenues pursuant to the 2012 GRC; offset by
|
§
|
$14 million lower CPUC-authorized rate of return established in the CPUC cost of capital proceeding effective as of January 1, 2013.
|
§
|
$37 million from a lower effective tax rate, primarily due to a change in the income tax treatment of certain repairs expenditures, as we discuss below in “Income Taxes;” and
|
§
|
$6 million from an increase in AFUDC related to equity; offset by
|
§
|
$37 million increase in non-refundable operating expenses, primarily due to depreciation and expenses related to the TIMP, with no corresponding increase in CPUC-authorized margin in 2012 due to the delay in the 2012 GRC decision; and
|
§
|
$2 million higher bad debt accruals.
|
EARNINGS BY SEGMENT – SEMPRA INTERNATIONAL
|
(Dollars in millions)
|
§
|
$153 million in 2013
|
§
|
$164 million in 2012
|
§
|
$425 million in 2011
|
§
|
$11 million equity losses related to our investments in two Argentine natural gas utility holding companies, including $7 million noncash impairment charge in the first quarter of 2013 and $4 million loss from the sale of the investments in the second quarter of 2013; and
|
§
|
$4 million equity losses from our joint venture in Chile in 2013 resulting from a forward exchange contract to manage foreign currency exchange rate risk; offset by
|
§
|
$4 million lower income tax expense from an unfavorable resolution of prior years’ tax matters in 2012.
|
§
|
a $277 million gain related to the remeasurement of the Chilquinta Energía and Luz del Sur equity method investments in April 2011; and
|
§
|
$12 million earnings in 2011 from foreign currency rate effect mainly for a previously held U.S. dollar monetary position in Chile; offset by
|
§
|
$21 million higher earnings in 2012 due to the acquisition of additional interests in Chilquinta Energía and Luz del Sur in April 2011; and
|
§
|
$7 million higher earnings from operations in 2012 primarily attributable to an increase in customer base and higher consumption.
|
§
|
$122 million in 2013
|
§
|
$157 million in 2012
|
§
|
$192 million in 2011
|
§
|
$26 million decrease in Sempra Mexico’s earnings for earnings attributable to noncontrolling interests at IEnova following its stock offerings in March 2013;
|
§
|
$13 million increase in deferred income tax liability due to Mexico income tax law enacted in the fourth quarter of 2013 and effective January 1, 2014, as we discuss below in “Income Taxes;”
|
§
|
$10 million lower earnings mainly due to administrative expenses related to the new IEnova public company structure, scheduled plant maintenance at our Mexicali power plant in 2013, and the net impact of changes in affiliate agreements;
|
§
|
$7 million negative translation effect primarily on Peso-denominated tax receivables; and
|
§
|
$6 million higher interest expense, including interest associated with the IEnova debt offering in February 2013; offset by
|
§
|
$19 million AFUDC related to equity associated with construction of the natural gas pipeline in Sonora; and
|
§
|
$7 million lower income tax expense, including the favorable impact of Mexican currency inflation and translation adjustments in 2013 compared to 2012.
|
|
The decrease in earnings of $35 million (18%) in 2012 compared to 2011 was primarily due to:
|
§
|
$43 million lower earnings at our Mexicali power plant in 2012 compared to 2011 primarily due to the expiration of the DWR contract in September 2011, which resulted in a change in the intercompany agreement with Sempra Natural Gas effective January 1, 2012. This decrease was partially offset by an increase in earnings from a prior year outage at the plant; and
|
§
|
$8 million income tax expense in 2012 compared to $12 million income tax benefit in 2011, primarily related to Mexican currency translation and inflation adjustments and to changes in tax valuation allowances, net of the effects of a Mexican peso income tax hedge; offset by
|
§
|
$22 million in improved operations primarily due to increased earnings from Sempra Mexico’s joint venture with PEMEX and from Sempra Mexico’s LNG operations; and
|
§
|
$4 million positive translation effect on Peso-denominated receivables.
|
EARNINGS (LOSSES) BY SEGMENT – SEMPRA U.S. GAS & POWER
|
(Dollars in millions)
|
§
|
$62 million in 2013
|
§
|
$61 million in 2012
|
§
|
$7 million in 2011
|
§
|
$24 million gains from the sale of 50-percent equity interests in Mesquite Solar 1 and Copper Mountain Solar 2;
|
§
|
$16 million higher earnings attributable to our wind assets; and
|
§
|
$13 million higher earnings from our solar assets, including $6 million from interest rate hedges; offset by
|
§
|
$50 million lower deferred income tax benefits, including $5 million decrease from U.S. Treasury grant sequestration in 2013, as a result of solar and wind generating assets placed in service in 2012.
|
§
|
$35 million higher deferred income tax benefits as a result of increased investments in solar and wind generating assets in 2012;
|
§
|
$7 million higher production tax credits from our wind assets;
|
§
|
$6 million higher earnings attributable to our solar assets; and
|
§
|
$3 million higher interest income.
|
§
|
$64 million in 2013
|
§
|
$(241) million in 2012
|
§
|
$115 million in 2011
|
§
|
$239 million write-down of our investment in Rockies Express in 2012;
|
§
|
$44 million gain in 2013 on the sale of a 625-MW block of the Mesquite Power plant, net of related expenses;
|
§
|
$41 million higher earnings from LNG operations, primarily due to lower of cost or market adjustments in 2012 associated with the timing of cargoes, the impact of higher natural gas prices on marketing operations and lower costs resulting from commercial arrangements entered into with affiliates;
|
§
|
$11 million lower interest expense and operating costs at the Mesquite Power plant due to the sale of one block of the plant in the first quarter of 2013; and
|
§
|
$10 million improved results at our marketing and storage operations primarily driven by sales of natural gas in 2013; offset by
|
§
|
a $25 million payment received from Kinder Morgan in 2012 due to tax impacts related to the sale of their interest in Rockies Express; and
|
§
|
$12 million lower earnings at Sempra Rockies Marketing due to expiring capacity release contracts.
|
§
|
$239 million write-down of our investment in Rockies Express in 2012;
|
§
|
$121 million lower earnings from natural gas power plant operations in 2012 compared to 2011 primarily from lower natural gas and power prices, including the impact from the end of the DWR contract as of September 30, 2011; and
|
§
|
$44 million lower earnings from LNG primarily due to lower natural gas prices, timing of cargo marketing operations, and costs in 2012 related to the development of the Cameron liquefaction project; offset by
|
§
|
a $25 million payment received from Kinder Morgan due to tax impacts related to the sale of their interest in Rockies Express; and
|
§
|
$23 million operating losses in 2011 from the El Dorado power plant sold to SDG&E as of October 1, 2011.
|
§
|
$168 million in 2013
|
§
|
$55 million in 2012
|
§
|
$126 million in 2011
|
§
|
$63 million income tax expense resulting from a corporate reorganization in connection with the IEnova stock offerings;
|
§
|
$54 million income tax benefit in 2012 primarily associated with our decision to hold life insurance contracts kept in support of certain benefit plans to term, as we discuss below in “Income Taxes;” and
|
§
|
$42 million higher net interest expense primarily due to lower intercompany interest income from a debt restructuring at Sempra Natural Gas and increased borrowings from Sempra Renewables; offset by
|
§
|
$42 million higher income tax benefits, excluding income tax items discussed above, primarily due to higher favorable resolution of prior years’ income tax issues and the timing of a change in tax law. We discuss this new law, the American Taxpayer Relief Act of 2012, in “Income Taxes” below.
|
§
|
$54 million income tax benefit primarily associated with the decision to hold life insurance contracts to term, as we discuss below in “Income Taxes;”
|
§
|
$20 million higher investment gains on dedicated assets in support of our executive retirement and deferred compensation plans, net of the increase in deferred compensation liability associated with the investments;
|
§
|
$15 million equity losses in 2011 from the RBS Sempra Commodities joint venture, including a $10 million write-down of the investment; and
|
§
|
higher earnings from foreign currency exchange effects mainly related to a Chilean holding company, and hedging transactions; offset by
|
§
|
$27 million lower income tax benefits, excluding the $54 million income tax benefit discussed above.
|
§
|
SDG&E
|
§
|
SoCalGas
|
§
|
Sempra Mexico’s Ecogas
|
§
|
Sempra Natural Gas’ Mobile Gas and Willmut Gas
|
§
|
SDG&E
|
§
|
Sempra South American Utilities’ Chilquinta Energía and Luz del Sur
|
UTILITIES REVENUES AND COST OF SALES 2011-2013
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
Electric revenues:
|
|
|
|
|
|
|
|
SDG&E
|
$
|
3,537
|
$
|
3,226
|
$
|
2,830
|
|
Sempra South American Utilities
|
|
1,383
|
|
1,349
|
|
1,009
|
|
Eliminations and adjustments
|
|
(9)
|
|
(7)
|
|
(6)
|
|
|
Total
|
|
4,911
|
|
4,568
|
|
3,833
|
Natural gas revenues:
|
|
|
|
|
|
|
|
SoCalGas
|
|
3,736
|
|
3,282
|
|
3,816
|
|
SDG&E
|
|
529
|
|
468
|
|
543
|
|
Sempra Mexico
|
|
97
|
|
75
|
|
91
|
|
Sempra Natural Gas
|
|
109
|
|
96
|
|
93
|
|
Eliminations and adjustments
|
|
(73)
|
|
(48)
|
|
(54)
|
|
|
Total
|
|
4,398
|
|
3,873
|
|
4,489
|
Total utilities revenues
|
$
|
9,309
|
$
|
8,441
|
$
|
8,322
|
|
Cost of electric fuel and purchased power:
|
|
|
|
|
|
|
|
SDG&E
|
$
|
1,019
|
$
|
892
|
$
|
715
|
|
Sempra South American Utilities
|
|
913
|
|
868
|
|
682
|
|
|
Total
|
$
|
1,932
|
$
|
1,760
|
$
|
1,397
|
Cost of natural gas:
|
|
|
|
|
|
|
|
SoCalGas
|
$
|
1,362
|
$
|
1,074
|
$
|
1,568
|
|
SDG&E
|
|
204
|
|
151
|
|
226
|
|
Sempra Mexico
|
|
63
|
|
45
|
|
63
|
|
Sempra Natural Gas
|
|
35
|
|
25
|
|
27
|
|
Eliminations and adjustments
|
|
(18)
|
|
(5)
|
|
(18)
|
|
|
Total
|
$
|
1,646
|
$
|
1,290
|
$
|
1,866
|
§
|
$311 million increase at SDG&E, including:
|
□
|
$140 million higher authorized revenues from electric transmission,
|
□
|
$127 million increase in cost of electric fuel and purchased power,
|
□
|
$94 million higher authorized revenue from implementation of the 2012 GRC decision and 2013 attrition. Due to the delay in the issuance of the 2012 GRC decision by the CPUC, 2012 authorized revenue was essentially unchanged from the 2011 authorized revenue, and
|
□
|
$61 million increase due to the retroactive application in 2013 of the 2012 GRC decision for the period from January 2012 through December 2012, offset by
|
□
|
$40 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses,
|
□
|
$33 million loss of revenue from SONGS due to the early closure of the plant, and
|
□
|
$30 million lower CPUC-authorized rate of return established in the CPUC cost of capital proceeding effective as of January 1, 2013; and
|
§
|
$34 million increase at our South American utilities primarily due to higher volumes, net of foreign currency exchange rate effects.
|
§
|
$396 million increase at SDG&E, which we discuss below; and
|
§
|
$340 million increase at our South American utilities, primarily from the consolidation of Chilquinta Energía and Luz del Sur acquired in April 2011. In addition, electric revenues increased due to higher commodity prices and volume at Luz del Sur, offset by lower commodity prices at Chilquinta Energía.
|
§
|
$127 million increase in SDG&E’s cost of electric fuel and purchased power primarily due to the incremental cost and purchases of renewable energy, and increased cost of other purchased power primarily due to higher power prices, slightly offset by lower demand driven by an overall cooler summer in 2013 compared to 2012; and
|
§
|
$45 million increase at our South American utilities driven primarily by higher volumes and higher costs of purchased power, net of foreign currency exchange rate effects.
|
§
|
$186 million increase at Chilquinta Energía and Luz del Sur associated with the higher revenues; and
|
§
|
$177 million increase at SDG&E, which we discuss below.
|
§
|
an increase in cost of natural gas sold at both SoCalGas and SDG&E, as we discuss below;
|
§
|
increases of $64 million and $20 million at SoCalGas and SDG&E, respectively, primarily due to higher authorized revenues from implementation of the 2012 GRC decision and 2013 attrition. Due to the delay in the issuance of the 2012 GRC decision by the CPUC, 2012 authorized revenue was essentially unchanged from the 2011 authorized revenue;
|
§
|
higher recovery of costs at SoCalGas associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses; and
|
§
|
$30 million increase due to the retroactive application in 2013 of the 2012 GRC decision for the period from January 2012 through December 2012.
|
§
|
$494 million and $75 million decreases in cost of natural gas sold at SoCalGas and SDG&E, respectively, from lower natural gas prices and volumes sold; and
|
§
|
$64 million lower recovery of the California Utilities’ costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses.
|
SDG&E
|
||||||||||
ELECTRIC DISTRIBUTION AND TRANSMISSION 2011-2013
|
||||||||||
(Volumes in millions of kilowatt-hours, dollars in millions)
|
||||||||||
|
|
Years ended December 31,
|
||||||||
|
|
2013
|
2012
|
2011
|
||||||
Customer class
|
Volumes
|
Revenue
|
Volumes
|
Revenue
|
Volumes
|
Revenue
|
||||
Residential
|
7,392
|
$
|
1,283
|
7,587
|
$
|
1,242
|
7,374
|
$
|
1,215
|
|
Commercial
|
6,722
|
|
1,080
|
6,902
|
|
1,017
|
6,736
|
|
1,000
|
|
Industrial
|
1,962
|
|
257
|
2,042
|
|
249
|
2,037
|
|
247
|
|
Direct access(1)
|
3,593
|
|
151
|
3,399
|
|
148
|
3,265
|
|
148
|
|
Street and highway lighting
|
87
|
|
12
|
95
|
|
13
|
100
|
|
14
|
|
|
|
19,756
|
|
2,783
|
20,025
|
|
2,669
|
19,512
|
|
2,624
|
CAISO shared transmission revenue - net(2)
|
|
|
268
|
|
|
64
|
|
|
11
|
|
Other revenues
|
|
|
172
|
|
|
134
|
|
|
106
|
|
Balancing accounts
|
|
|
314
|
|
|
359
|
|
|
89
|
|
Total(3)
|
|
$
|
3,537
|
|
$
|
3,226
|
|
$
|
2,830
|
|
(1)
|
The Direct Access (DA) program, which offered all customers the option to purchase their electric commodity services from a third-party Energy Service Provider (ESP) instead of continuing to receive these services from SDG&E, was implemented in 1998 and suspended in 2001. In 2009, Senate Bill 695 required the CPUC to develop a process and rules for a limited re-opening of DA to be phased in over a period of time. In 2010, the CPUC adopted the process and rules for the limited re-opening of DA for non-residential customers under a 4-year phase-in schedule. The 2013 tranche of non-residential customers switching to DA resulted in higher volumes in 2013. The increase in revenues from the higher volumes was offset by lower tariffs in 2013 compared to 2012.
|
|||||||||
(2)
|
California Independent System Operator (CAISO) shared transmission revenue increased in both 2013 and 2012 compared to the prior year due to the Sunrise Powerlink transmission line being placed in service in June 2012.
|
|||||||||
(3)
|
Includes sales to affiliates of $9 million in 2013, $7 million in 2012 and $6 million in 2011.
|
§
|
$140 million higher authorized revenues from electric transmission including:
|
□
|
$80 million from placing the Sunrise Powerlink transmission line in service in June 2012, and
|
□
|
$60 million from increased investment in other transmission assets;
|
§
|
$127 million increase in cost of electric fuel and purchased power primarily due to the incremental cost and purchases of renewable energy, and increased cost of other purchased power primarily due to higher power prices, slightly offset by lower demand driven by an overall cooler summer in 2013 compared to 2012;
|
§
|
$94 million higher authorized revenue from implementation of the 2012 GRC decision and 2013 attrition. Due to the delay in the issuance of the 2012 GRC decision by the CPUC, SDG&E’s 2012 authorized revenue was essentially unchanged from the 2011 authorized revenue; and
|
§
|
$61 million increase due to the retroactive application in 2013 of the 2012 GRC decision for the period from January 2012 through December 2012; offset by
|
§
|
$40 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses;
|
§
|
$33 million loss of revenue from SONGS due to the early closure of the plant; and
|
§
|
$30 million lower CPUC-authorized rate of return established in the CPUC cost of capital proceeding effective as of January 1, 2013.
|
§
|
$177 million increase in cost of electric fuel and purchased power in 2012 including:
|
□
|
$100 million due to the incremental cost of renewable energy and other purchased power, and
|
□
|
$77 million due to the cost of power purchased to replace power scheduled to be generated and delivered to SDG&E from SONGS;
|
§
|
$130 million higher authorized revenues from electric transmission including:
|
□
|
$83 million from placing the Sunrise Powerlink transmission line in service in June 2012, and
|
□
|
$47 million from increased investment in other transmission assets;
|
§
|
$45 million higher authorized revenues from electric generation, primarily due to the acquisition of the Desert Star generation facility in October 2011;
|
§
|
$42 million higher recoverable expenses that are fully offset in operation and maintenance expenses; and
|
§
|
$21 million from advanced meter program costs; offset by
|
§
|
$22 million lower revenues associated with incremental wildfire insurance premiums; and
|
§
|
$10 million lower regulatory awards.
|
SDG&E
|
|||||||||
NATURAL GAS SALES AND TRANSPORTATION 2011-2013
|
|||||||||
(Volumes in billion cubic feet, dollars in millions)
|
|||||||||
|
|
|
|
|
|
|
|
||
|
Natural Gas Sales
|
Transportation
|
Total
|
||||||
Customer class
|
Volumes
|
Revenue
|
Volumes
|
Revenue
|
Volumes
|
Revenue
|
|||
2013:
|
|
|
|
|
|
|
|
|
|
Residential
|
31
|
$
|
323
|
―
|
$
|
1
|
31
|
$
|
324
|
Commercial and industrial
|
15
|
|
98
|
9
|
|
13
|
24
|
|
111
|
Electric generation plants
|
―
|
|
―
|
25
|
|
15
|
25
|
|
15
|
|
46
|
$
|
421
|
34
|
$
|
29
|
80
|
|
450
|
Other revenues
|
|
|
|
|
|
|
|
|
42
|
Balancing accounts
|
|
|
|
|
|
|
|
|
37
|
Total(1)
|
|
|
|
|
|
|
|
$
|
529
|
2012:
|
|
|
|
|
|
|
|
|
|
Residential
|
30
|
$
|
266
|
―
|
$
|
1
|
30
|
$
|
267
|
Commercial and industrial
|
15
|
|
76
|
8
|
|
11
|
23
|
|
87
|
Electric generation plants
|
―
|
|
―
|
37
|
|
15
|
37
|
|
15
|
|
45
|
$
|
342
|
45
|
$
|
27
|
90
|
|
369
|
Other revenues
|
|
|
|
|
|
|
|
|
40
|
Balancing accounts
|
|
|
|
|
|
|
|
|
59
|
Total(1)
|
|
|
|
|
|
|
|
$
|
468
|
2011:
|
|
|
|
|
|
|
|
|
|
Residential
|
32
|
$
|
341
|
―
|
$
|
1
|
32
|
$
|
342
|
Commercial and industrial
|
15
|
|
103
|
8
|
|
10
|
23
|
|
113
|
Electric generation plants
|
―
|
|
―
|
25
|
|
8
|
25
|
|
8
|
|
47
|
$
|
444
|
33
|
$
|
19
|
80
|
|
463
|
Other revenues
|
|
|
|
|
|
|
|
|
36
|
Balancing accounts
|
|
|
|
|
|
|
|
|
44
|
Total(1)
|
|
|
|
|
|
|
|
$
|
543
|
(1) Includes sales to affiliates of $3 million in 2013, $2 million in 2012 and $1 million in 2011.
|
§
|
higher cost of natural gas sold, as we discuss below;
|
§
|
$20 million higher authorized revenue from implementation of the 2012 GRC decision and 2013 attrition. Due to the delay in the issuance of the 2012 GRC decision by the CPUC, SDG&E’s 2012 authorized revenue was essentially unchanged from the 2011 authorized revenue; and
|
§
|
$5 million increase from the retroactive application in 2013 of the 2012 GRC decision for the period from January 2012 through December 2012; offset by
|
§
|
$5 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses.
|
§
|
the decrease in cost of natural gas sold from lower natural gas prices and volumes sold, as we discuss below; and
|
§
|
$13 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses; offset by
|
§
|
$10 million increase associated with the advanced meter program.
|
SOCALGAS
|
|||||||||
NATURAL GAS SALES AND TRANSPORTATION 2011-2013
|
|||||||||
(Volumes in billion cubic feet, dollars in millions)
|
|||||||||
|
|
|
|
|
|
|
|
||
|
Natural Gas Sales
|
Transportation
|
Total
|
||||||
Customer class
|
Volumes
|
Revenue
|
Volumes
|
Revenue
|
Volumes
|
Revenue
|
|||
2013:
|
|
|
|
|
|
|
|
|
|
Residential
|
234
|
$
|
2,204
|
2
|
$
|
8
|
236
|
$
|
2,212
|
Commercial and industrial
|
100
|
|
691
|
293
|
|
242
|
393
|
|
933
|
Electric generation plants
|
―
|
|
―
|
200
|
|
44
|
200
|
|
44
|
Wholesale
|
―
|
|
―
|
170
|
|
27
|
170
|
|
27
|
|
334
|
$
|
2,895
|
665
|
$
|
321
|
999
|
|
3,216
|
Other revenues
|
|
|
|
|
|
|
|
|
101
|
Balancing accounts
|
|
|
|
|
|
|
|
|
419
|
Total(1)
|
|
|
|
|
|
|
|
$
|
3,736
|
2012:
|
|
|
|
|
|
|
|
|
|
Residential
|
234
|
$
|
1,963
|
2
|
$
|
8
|
236
|
$
|
1,971
|
Commercial and industrial
|
101
|
|
608
|
283
|
|
240
|
384
|
|
848
|
Electric generation plants
|
―
|
|
―
|
231
|
|
39
|
231
|
|
39
|
Wholesale
|
―
|
|
―
|
175
|
|
24
|
175
|
|
24
|
|
335
|
$
|
2,571
|
691
|
$
|
311
|
1,026
|
|
2,882
|
Other revenues
|
|
|
|
|
|
|
|
|
91
|
Balancing accounts
|
|
|
|
|
|
|
|
|
309
|
Total(1)
|
|
|
|
|
|
|
|
$
|
3,282
|
2011:
|
|
|
|
|
|
|
|
|
|
Residential
|
253
|
$
|
2,358
|
1
|
$
|
4
|
254
|
$
|
2,362
|
Commercial and industrial
|
103
|
|
759
|
272
|
|
219
|
375
|
|
978
|
Electric generation plants
|
―
|
|
―
|
166
|
|
42
|
166
|
|
42
|
Wholesale
|
―
|
|
―
|
148
|
|
19
|
148
|
|
19
|
|
356
|
$
|
3,117
|
587
|
$
|
284
|
943
|
|
3,401
|
Other revenues
|
|
|
|
|
|
|
|
|
99
|
Balancing accounts
|
|
|
|
|
|
|
|
|
316
|
Total(1)
|
|
|
|
|
|
|
|
$
|
3,816
|
(1) Includes sales to affiliates of $70 million in 2013, $46 million in 2012 and $53 million in 2011.
|
§
|
an increase in cost of natural gas sold from higher natural gas prices (as we discuss below);
|
§
|
$76 million higher recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses;
|
§
|
$64 million increase primarily due to higher authorized revenue from implementation of the 2012 GRC decision and 2013 attrition. Due to the delay in the issuance of the 2012 GRC decision by the CPUC, SoCalGas’ 2012 authorized revenue was essentially unchanged from the 2011 authorized revenue; and
|
§
|
$25 million increase due to the retroactive application in 2013 of the 2012 GRC decision for the period from January 2012 through December 2012.
|
§
|
the decrease in cost of natural gas sold from lower natural gas prices and volumes sold (as we discuss below); and
|
§
|
$51 million lower recovery of costs associated with CPUC-authorized refundable programs, which revenues are fully offset in operation and maintenance expenses.
|
OTHER UTILITIES
|
||||||||||
NATURAL GAS AND ELECTRIC REVENUES 2011-2013
|
||||||||||
(Dollars in millions)
|
||||||||||
|
|
Years ended December 31,
|
||||||||
|
|
2013
|
2012
|
2011
|
||||||
|
|
Volumes
|
Revenue
|
Volumes
|
Revenue
|
Volumes
|
Revenue
|
|||
Natural Gas Sales (billion cubic feet):
|
|
|
|
|
|
|
|
|
|
|
Sempra Mexico - Ecogas
|
24
|
$
|
97
|
23
|
$
|
75
|
22
|
$
|
91
|
|
Sempra Natural Gas:
|
|
|
|
|
|
|
|
|
|
|
Mobile Gas
|
40
|
|
88
|
43
|
|
86
|
40
|
|
93
|
|
Willmut Gas(1)
|
3
|
|
21
|
1
|
|
10
|
―
|
|
―
|
|
Total
|
67
|
$
|
206
|
67
|
$
|
171
|
62
|
$
|
184
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Sales (million kilowatt hours)(2):
|
|
|
|
|
|
|
|
|
|
|
Sempra South American Utilities:
|
|
|
|
|
|
|
|
|
|
|
Luz del Sur
|
6,984
|
$
|
785
|
6,668
|
$
|
759
|
4,715
|
$
|
487
|
|
Chilquinta Energía
|
2,856
|
|
537
|
2,698
|
|
533
|
1,859
|
|
481
|
|
|
|
9,840
|
|
1,322
|
9,366
|
|
1,292
|
6,574
|
|
968
|
Other service revenues
|
|
|
61
|
|
|
57
|
|
|
41
|
|
Total
|
|
$
|
1,383
|
|
$
|
1,349
|
|
$
|
1,009
|
|
(1)
|
We acquired Willmut Gas in May 2012.
|
|||||||||
(2)
|
We accounted for Luz del Sur and Chilquinta Energía under the equity method until April 6, 2011, when they became consolidated entities upon our acquisition of additional ownership interests.
|
ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES 2011-2013
|
|||||||||||||
(Dollars in millions)
|
|||||||||||||
|
|
Years ended December 31,
|
|||||||||||
|
|
2013
|
2012
|
2011
|
|||||||||
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sempra South American Utilities
|
$
|
112
|
9
|
%
|
$
|
92
|
8
|
%
|
$
|
71
|
4
|
%
|
|
Sempra Mexico
|
|
578
|
46
|
|
|
530
|
44
|
|
|
645
|
38
|
|
|
Sempra Renewables
|
|
82
|
7
|
|
|
68
|
6
|
|
|
22
|
1
|
|
|
Sempra Natural Gas
|
|
799
|
64
|
|
|
835
|
69
|
|
|
1,539
|
90
|
|
|
Intersegment revenues, adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and eliminations(1)
|
|
(323)
|
(26)
|
|
|
(319)
|
(27)
|
|
|
(563)
|
(33)
|
|
|
Total revenues
|
$
|
1,248
|
100
|
%
|
$
|
1,206
|
100
|
%
|
$
|
1,714
|
100
|
%
|
|
COST OF SALES(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sempra Mexico
|
$
|
253
|
58
|
%
|
$
|
197
|
41
|
%
|
$
|
276
|
37
|
%
|
|
Sempra Renewables
|
|
3
|
1
|
|
|
3
|
―
|
|
|
―
|
―
|
|
|
Sempra Natural Gas
|
|
497
|
114
|
|
|
581
|
121
|
|
|
1,034
|
139
|
|
|
Adjustments and eliminations(1)
|
|
(318)
|
(73)
|
|
|
(300)
|
(62)
|
|
|
(564)
|
(76)
|
|
|
Total cost of natural gas, electric fuel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and purchased power
|
$
|
435
|
100
|
%
|
$
|
481
|
100
|
%
|
$
|
746
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sempra South American Utilities
|
$
|
84
|
47
|
%
|
$
|
66
|
41
|
%
|
$
|
45
|
33
|
%
|
|
Sempra Mexico
|
|
10
|
6
|
|
|
21
|
13
|
|
|
4
|
3
|
|
|
Sempra Natural Gas
|
|
91
|
51
|
|
|
90
|
57
|
|
|
89
|
65
|
|
|
Adjustments and eliminations(1)
|
|
(7)
|
(4)
|
|
|
(18)
|
(11)
|
|
|
(1)
|
(1)
|
|
|
Total other cost of sales
|
$
|
178
|
100
|
%
|
$
|
159
|
100
|
%
|
$
|
137
|
100
|
%
|
|
(1)
|
Includes eliminations of intercompany activity.
|
||||||||||||
(2)
|
Excludes depreciation and amortization, which are shown separately on the Consolidated Statements of Operations.
|
§
|
$48 million increase at Sempra Mexico primarily due to higher natural gas and power prices, partially offset by the net impact of changes in affiliate agreements;
|
§
|
$20 million increase at Sempra South American Utilities primarily due to higher electric construction service and energy distribution revenues at Tecnored; and
|
§
|
$14 million increase at Sempra Renewables mainly from revenues generated by our solar assets placed in service during 2012; offset by
|
§
|
$36 million decrease at Sempra Natural Gas primarily due to lower power production at Mesquite Power, a portion of which was due to the sale of one 625-MW block of the natural gas-fired power plant, and expiring capacity release contracts at Sempra Rockies Marketing, offset by higher physical gas sales at natural gas marketing and storage operations, and the impact of higher natural gas prices on LNG marketing operations.
|
§
|
$704 million decrease at Sempra Natural Gas due to decreased power sales in 2012 compared to 2011 primarily from the end of the DWR contract in September 2011, lower natural gas revenues from its LNG operations as a result of lower natural gas prices and volumes, and lower revenues due to power sales associated with the EMA with Sempra Mexico, which we discuss above in “Sempra Mexico – Power Business;” and
|
§
|
$115 million decrease in 2012 compared to 2011 at Sempra Mexico primarily due to the expiration of the DWR contract, which resulted in a change in the intercompany agreement with Sempra Natural Gas effective January 1, 2012, and from lower natural gas prices at its LNG operations, partially offset by an increase in revenues due to an outage at the Mexicali power plant in 2011; offset by
|
§
|
$244 million lower intercompany eliminations primarily associated with sales between Sempra Mexico and Sempra Natural Gas; and
|
§
|
$46 million increase at Sempra Renewables mainly from revenues generated by our solar and wind assets.
|
§
|
an $84 million decrease at Sempra Natural Gas primarily due to lower natural gas costs as a result of lower power production at Mesquite Power, as discussed above, and a decrease at its LNG operations primarily due to lower natural gas sales and lower costs resulting from commercial arrangements entered into with affiliates; offset by
|
§
|
a $56 million increase at Sempra Mexico primarily due to higher natural gas prices and costs associated with greenhouse gas allowances.
|
§
|
$453 million decrease at Sempra Natural Gas primarily associated with lower natural gas prices and lower power costs associated with the EMA with Sempra Mexico, which we discuss above in “Sempra Mexico – Power Business;” and
|
§
|
$79 million decrease at Sempra Mexico primarily due to lower natural gas prices; offset by
|
§
|
$264 million lower intercompany eliminations primarily associated with sales between Sempra Mexico and Sempra Natural Gas.
|
OPERATION AND MAINTENANCE 2011-2013
|
|||||||||||||
(Dollars in millions)
|
|||||||||||||
|
|
Years ended December 31,
|
|||||||||||
|
|
2013
|
2012
|
2011
|
|||||||||
California Utilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E
|
$
|
1,157
|
39
|
%
|
$
|
1,154
|
39
|
%
|
$
|
1,072
|
38
|
%
|
|
SoCalGas
|
|
1,324
|
44
|
|
|
1,304
|
44
|
|
|
1,305
|
46
|
|
|
Sempra International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sempra South American Utilities
|
|
170
|
6
|
|
|
177
|
6
|
|
|
132
|
5
|
|
|
Sempra Mexico
|
|
124
|
4
|
|
|
94
|
3
|
|
|
98
|
3
|
|
|
Sempra U.S. Gas & Power:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sempra Renewables
|
|
46
|
1
|
|
|
34
|
1
|
|
|
17
|
1
|
|
|
Sempra Natural Gas
|
|
167
|
6
|
|
|
168
|
6
|
|
|
169
|
6
|
|
|
Parent and other(1)
|
|
7
|
―
|
|
|
25
|
1
|
|
|
32
|
1
|
|
|
Total operation and maintenance
|
$
|
2,995
|
100
|
%
|
$
|
2,956
|
100
|
%
|
$
|
2,825
|
100
|
%
|
|
(1)
|
Includes intercompany eliminations recorded in consolidation.
|
§
|
$30 million higher expenses at Sempra Mexico mainly due to higher administrative expenses from the new IEnova public company structure and scheduled plant maintenance at the Mexicali power plant in 2013;
|
§
|
$20 million increase at SoCalGas, which we discuss below; and
|
§
|
$12 million increase at Sempra Renewables primarily due to higher corporate allocations, land lease costs for CMS 3, and operating expenses of CMS 2 and MS 1 prior to the projects’ deconsolidation in the third quarter of 2013; offset by
|
§
|
$18 million decrease at Parent and Other mainly due to higher eliminations of intersegment operating costs.
|
§
|
$82 million increase at SDG&E, which we discuss below;
|
§
|
$45 million increase at Sempra South American Utilities primarily from the consolidation of expenses in Chile and Peru for a full year; and
|
§
|
$17 million higher costs at Sempra Renewables primarily due to growth in the business.
|
§
|
$36 million higher non-refundable operating costs, including:
|
□
|
$10 million recovery from the DOE in 2012 of incremental costs incurred in prior years for the long-term storage of spent nuclear fuel, and
|
□
|
$4 million increase in liability insurance premiums for wildfire coverage in 2013;
|
§
|
$7 million higher litigation expense; and
|
§
|
$5 million higher operation and maintenance expenses at Otay Mesa VIE; offset by
|
§
|
$45 million lower refundable program expenses.
|
§
|
$56 million higher other operation and maintenance costs, including:
|
□
|
$14 million associated with the Desert Star generation facility acquired by SDG&E in October 2011 and from increased costs from the operations of other electric generating facilities,
|
□
|
$12 million of advanced meter program costs, and
|
□
|
$9 million increase in liability insurance premiums for wildfire coverage, offset by
|
□
|
$10 million recovery in 2012 of incremental costs incurred in prior years for the long-term storage of spent nuclear fuel; and
|
§
|
$29 million higher recoverable expenses primarily due to an increase in electric transmission-related operating expenses.
|
§
|
$76 million higher refundable program expenses; offset by
|
§
|
$49 million lower non-refundable operating costs; and
|
§
|
$7 million insurance recovery in 2013 of previously expensed costs.
|
§
|
$51 million lower recoverable expenses, primarily from reduced funding requirements for employee benefit programs; offset by
|
§
|
$49 million higher other operational and maintenance costs, including expenses related to the TIMP, with no corresponding increase in CPUC-authorized margin in 2012 due to the delay in the 2012 GRC decision.
|
§
|
$1,113 million in 2013
|
§
|
$1,090 million in 2012
|
§
|
$976 million in 2011
|
§
|
$36 million higher depreciation and amortization at SoCalGas from higher utility plant base; and
|
§
|
$22 million net increase in depreciation and amortization at SDG&E mainly from Sunrise Powerlink going into service in June 2012 and higher amortization of legacy meters, offset by lower depreciation from the retirement of SONGS; offset by
|
§
|
lower depreciation and amortization of $18 million at SDG&E and $15 million at SoCalGas due to the retroactive application to the period of January 1 to December 2012 of the extension of the useful lives of depreciable assets as adopted in the 2012 GRC; and
|
§
|
$12 million lower depreciation expense at Sempra Natural Gas largely due to the sale of one block of the Mesquite Power plant in February 2013.
|
§
|
$68 million at SDG&E, primarily from higher electric plant depreciation;
|
§
|
$31 million at SoCalGas from an increase in net utility plant base;
|
§
|
$16 million from the consolidation of entities in Chile and Peru for a full year; and
|
§
|
$10 million at Sempra Renewables mainly due to Mesquite Solar 1 going into service starting in December 2011; offset by
|
§
|
$10 million decrease at Sempra Natural Gas primarily due to the sale of El Dorado in 2011.
|
§
|
$31 million in 2013
|
§
|
$(319) million in 2012
|
§
|
$9 million in 2011
|
§
|
$140 million in 2013
|
§
|
$172 million in 2012
|
§
|
$130 million in 2011
|
§
|
$21 million decrease in equity-related AFUDC, including:
|
□
|
$32 million decrease at SDG&E primarily due to completion of construction on the Sunrise Powerlink project in June 2012, and
|
□
|
$8 million decrease at SoCalGas, offset by
|
□
|
$19 million increase at Sempra Mexico related to construction of the Sonora Pipeline; and
|
§
|
$9 million foreign currency gains in 2012.
|
§
|
$10 million gains on interest rate and foreign exchange instruments in 2012 compared to $14 million losses in 2011; and
|
§
|
$19 million higher gains from investment activity related to our executive retirement and deferred compensation plans in 2012.
|
§
|
$40 million in 2013
|
§
|
$69 million in 2012
|
§
|
$79 million in 2011
|
INTEREST EXPENSE 2011-2013
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated
|
$
|
559
|
$
|
493
|
$
|
465
|
SDG&E
|
|
197
|
|
173
|
|
142
|
SoCalGas
|
|
69
|
|
68
|
|
69
|
§
|
$46 million decrease in capitalized interest mainly due to projects placed in service, including: SDG&E’s Sunrise Powerlink, which was placed in service in June 2012; Sempra Renewables’ solar and wind projects, which went online in the fourth quarter of 2012; and additional capacity at Sempra Natural Gas’ Mississippi Hub facility, which went online in September 2012; and
|
§
|
$20 million net increase in interest expense primarily related to long-term debt issuances, including:
|
□
|
the IEnova debt offering in February 2013,
|
□
|
long-term debt issuances in 2012 and 2013 and remarketing of industrial development bonds in 2012 from floating to fixed rates at SDG&E,
|
□
|
long-term debt issuances of $1.6 billion in March and September 2012 and November 2013 at Parent and Other, offset by lower interest expense associated with the maturity of $650 million of notes in February and November 2013, and
|
□
|
project financing of selected projects at Sempra Renewables.
|
§
|
$31 million higher interest expense at SDG&E, which we discuss below; and
|
§
|
$19 million higher long-term debt interest expense at Parent and Other from debt issuances in 2012; offset by
|
§
|
$24 million higher capitalized interest associated with energy projects at Sempra Renewables.
|
INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES 2011-2013
|
||||||||||||||||
(Dollars in millions)
|
||||||||||||||||
|
Years ended December 31,
|
|||||||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
|||||||||
|
|
|
Income Tax
|
|
Effective Income
|
|
|
Income Tax
|
|
Effective Income
|
|
|
Income Tax
|
|
Effective Income
|
|
|
|
|
Expense
|
|
Tax Rate
|
|
|
Expense
|
|
Tax Rate
|
|
|
Expense
|
|
Tax Rate
|
|
Sempra Energy Consolidated
|
$
|
366
|
|
26
|
%
|
$
|
59
|
|
6
|
%
|
$
|
394
|
|
23
|
%
|
|
SDG&E
|
|
191
|
|
31
|
|
|
190
|
|
27
|
|
|
237
|
|
34
|
|
|
SoCalGas
|
|
116
|
|
24
|
|
|
79
|
|
21
|
|
|
143
|
|
33
|
|
|
|
|
§
|
$63 million income tax expense recorded in the first quarter of 2013 resulting from a corporate reorganization in connection with the IEnova stock offerings. We discuss the stock offerings further in Note 1 of the Notes to Consolidated Financial Statements;
|
§
|
a $62 million income tax benefit recorded in 2012 for life insurance contracts, of which $54 million is primarily associated with our decision in the second quarter of 2012 to hold life insurance contracts kept in support of certain benefit plans to term. Previously, we took the position that we might cash in or sell these contracts before maturity, which required that we record deferred income taxes on unrealized gains on investments held within the insurance contracts;
|
§
|
lower deferred income tax benefits related to renewable energy projects;
|
§
|
lower income tax benefit in 2013 relating to certain repairs expenditures that are capitalized for financial statement purposes, including $22 million income tax benefit recorded in 2012 for 2011 resulting from a favorable change made in the third quarter of 2012, as we discuss below;
|
§
|
lower favorable impact of exclusions from taxable income of the equity portion of AFUDC; and
|
§
|
lower deductions for self-developed software expenditures; offset by
|
§
|
a lower unfavorable impact on our effective tax rate in 2013 from the reversal through book depreciation of previously recognized tax benefits for a certain portion of utility fixed assets; and
|
§
|
favorable adjustments to prior years’ income tax items in 2013, primarily at SoCalGas.
|
§
|
a change in the income tax treatment of certain repairs expenditures at SDG&E and SoCalGas that are capitalized for financial statement purposes, which resulted in a $70 million higher income tax benefit compared to 2011, including a $22 million income tax benefit related to the 2011 U.S. federal income tax return filed in the third quarter of 2012. This higher income tax benefit reflects the offsetting impact of lower income tax depreciation and unrecognized income tax benefits. We discuss this change in income tax treatment of certain repairs expenditures for electric transmission and distribution assets and for gas plant assets in Note 6 of the Notes to Consolidated Financial Statements;
|
§
|
a $62 million income tax benefit for life insurance contracts, of which $54 million is primarily associated with our decision in the second quarter of 2012 to hold life insurance contracts kept in support of certain benefit plans to term, as we discuss above;
|
§
|
higher renewable energy income tax credits and deferred income tax benefits related to renewable energy projects; and
|
§
|
higher deductions for self-developed software expenditures; offset by
|
§
|
the impact of the $277 million remeasurement gain (non-U.S. earnings) in 2011 related to our acquisition of controlling interests in Chilquinta Energía and Luz del Sur, which was non-taxable;
|
§
|
higher reversal through book depreciation in 2012 of previously recognized tax benefits for a certain portion of utility fixed assets; and
|
§
|
higher income tax expense due to Mexican currency translation and inflation adjustments.
|
§
|
$22 million income tax benefit recorded in 2012 for 2011 resulting from a favorable change made in the third quarter of 2012 in the income tax treatment of certain repairs expenditures that are capitalized for book purposes; and
|
§
|
lower favorable impact of exclusions from taxable income of the equity portion of AFUDC.
|
§
|
lower income tax benefit in 2013 relating to certain repairs expenditures for gas assets that are capitalized for financial statement purposes; and
|
§
|
lower deductions for self-developed software expenditures; offset by
|
§
|
higher favorable adjustments to prior years’ income tax items in 2013.
|
§
|
a change in the income tax treatment of certain repairs expenditures that are capitalized for financial statement purposes, which resulted in a $34 million higher income tax benefit compared to 2011. This higher income tax benefit reflects the offsetting impact of lower income tax depreciation and unrecognized income tax benefits. The change in income tax treatment of certain repairs expenditures for gas plant assets was made pursuant to an IRS Revenue Procedure which allows, under an Internal Revenue Code section, for such expenditures to be deducted from taxable income when incurred; and
|
§
|
higher deductions for self-developed software expenditures; offset by
|
§
|
higher reversal through book depreciation in 2012 of previously recognized tax benefits for a certain portion of utility fixed assets.
|
§
|
repairs expenditures related to a certain portion of utility plant fixed assets
|
§
|
the equity portion of AFUDC
|
§
|
a portion of the cost of removal of utility plant assets
|
§
|
self-developed software expenditures
|
§
|
depreciation on a certain portion of utility plant fixed assets
|
§
|
Higher Corporate Tax Rate: Previously, the law provided that the corporate income tax rate would return to the previously enacted rate of 28 percent for 2014 and future years. The newly enacted rate is 30 percent for 2014 and future years. The earnings impact of this rate change is:
|
□
|
For 2013, $13 million additional income tax expense related to the revaluation of deferred tax liabilities.
|
□
|
For 2014 through 2017, estimated higher income tax expense of approximately $18 million in total over the four years.
|
§
|
Tax Consolidation: The current consolidation rules under the income tax law were replaced with new rules under which tax benefits are recaptured in three years instead of five years. As part of the revocation of the old rules, we are required to make a prepayment of approximately $38 million in 2014 that we expect to recover in 2015. The new rules do not have a material earnings impact at Sempra Energy or our Sempra Mexico segment.
|
§
|
10-Percent Dividends Tax: A new “corporate” tax on dividends is payable by the Mexican entity that distributes the dividend to its foreign shareholder, which will increase Mexico’s income tax rate to an effective 37 percent. Under the law, this tax is reduced or offset in accordance with bilateral tax treaties. The dividends from our Mexican entities to Sempra Energy will be to a country which has a bilateral tax treaty with Mexico that we expect will fully offset the tax. Accordingly, we do not expect this rule to have a material financial impact.
|
MEXICAN CURRENCY IMPACT ON INCOME TAXES AND RELATED ECONOMIC HEDGING ACTIVITY
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
Income tax (expense) benefit on currency exchange
|
|
|
|
|
|
|
|
|
rate movement of monetary assets and liabilities
|
$
|
(6)
|
$
|
(6)
|
$
|
11
|
Translation of non-U.S. deferred income tax balances
|
|
1
|
|
(2)
|
|
11
|
|
Income tax expense on inflation
|
|
―
|
|
(2)
|
|
(4)
|
|
|
Total impact on income taxes
|
|
(5)
|
|
(10)
|
|
18
|
After-tax gains (losses) on Mexican peso exchange rate
|
|
|
|
|
|
|
|
|
instruments (included in Other Income, Net)
|
|
4
|
|
6
|
|
(9)
|
Net impacts on Sempra Energy Consolidated
|
|
|
|
|
|
|
|
|
Statements of Operations
|
$
|
(1)
|
$
|
(4)
|
$
|
9
|
§
|
$24 million in 2013
|
§
|
$36 million in 2012
|
§
|
$52 million in 2011
|
§
|
$11 million equity losses related to our investments in two Argentine natural gas utility holding companies, including $7 million noncash impairment charge in the first quarter of 2013 and $4 million loss from the sale of the investments in the second quarter of 2013, as we discuss in Note 4 of the Notes to Consolidated Financial Statements; and
|
§
|
$4 million of equity losses in 2013 from our Eletrans S.A. and Eletrans II S.A. (collectively, Eletrans) joint ventures in Chile resulting from a forward exchange contract to manage foreign currency exchange rate risk; offset by
|
§
|
$3 million higher earnings in 2013 from Sempra Mexico’s joint-venture interest in pipeline assets.
|
§
|
$24 million earnings in 2011 related to equity method investments in Chile and Peru, for entities that we have consolidated since April 2011; offset by
|
§
|
$7 million higher earnings from Sempra Mexico’s joint-venture interest in pipeline assets.
|
§
|
$26 million earnings attributable to noncontrolling interests of IEnova in 2013; offset by
|
§
|
$2 million lower earnings attributable to noncontrolling interest at Otay Mesa VIE in 2013.
|
§
|
$7 million higher earnings attributable to noncontrolling interest at Otay Mesa VIE, which we discuss below; and
|
§
|
$5 million higher earnings at Sempra South American Utilities primarily from noncontrolling interests at Luz del Sur.
|
§
|
$45.03 in 2013
|
§
|
$42.43 in 2012
|
§
|
$40.74 in 2011
|
§
|
$574 million net proceeds from IEnova common stock offerings
|
§
|
$546 million proceeds from Sempra Natural Gas’ sale of a 625-MW block of its Mesquite Power plant ($371 million) and Sempra Renewables’ sale of equity interests in Mesquite Solar 1 and Copper Mountain Solar 2 ($175 million)
|
§
|
$238 million U.S. Treasury grant proceeds received
|
§
|
long-term debt issuances of $1.6 billion, including $500 million at Sempra Energy, $450 million at SDG&E and $408 million (U.S. equivalent) at IEnova
|
§
|
$1 billion of long-term debt retirements and paydowns, including $650 million at Sempra Energy, and $199 million at SDG&E
|
§
|
$2.6 billion in expenditures for property, plant and equipment, including $978 million at SDG&E and $762 million at SoCalGas
|
§
|
$204 million undercollection of electric resource costs at SDG&E
|
§
|
$83 million redemption of SDG&E’s outstanding preferred stock (including call premium and accrued dividends)
|
AVAILABLE FUNDS AT DECEMBER 31, 2013
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Sempra Energy
|
|
|
|||
|
|
Consolidated
|
SDG&E
|
SoCalGas
|
|||
Unrestricted cash and cash equivalents(1)
|
$
|
904
|
$
|
27
|
$
|
27
|
|
Available unused credit(2)
|
|
3,430
|
|
599
|
|
616
|
|
(1)
|
Amounts at Sempra Energy Consolidated include $814 million held in non-U.S. jurisdictions that are unavailable to fund U.S. operations unless repatriated, as we discuss below.
|
||||||
(2)
|
Borrowings on the shared line of credit at SDG&E and SoCalGas, discussed in Note 5 of the Notes to Consolidated Financial Statements, are limited to $658 million for each utility and a combined total of $877 million. SDG&E's available funds reflect commercial paper outstanding of $59 million supported by the line. SoCalGas' available funds reflect commercial paper outstanding of $42 million supported by the line.
|
§
|
finance capital expenditures
|
§
|
meet liquidity requirements
|
§
|
fund shareholder dividends
|
§
|
fund new business acquisitions or start-ups
|
§
|
repay maturing long-term debt
|
COMMERCIAL PAPER STATISTICS
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
Sempra Energy Consolidated
|
|
SDG&E
|
|
SoCalGas
|
||||
Amount outstanding at December 31, 2013
|
$
|
691
|
(1)
|
$
|
59
|
|
$
|
42
|
|
Weighted average interest rate at December 31, 2013
|
|
0.32%
|
|
|
0.13%
|
|
|
0.13%
|
|
|
|
|
|
|
|
|
|
|
|
Maximum month-end amount outstanding during 2013(2)
|
$
|
995
|
|
$
|
136
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
|
|
Monthly weighted average amount outstanding during 2013
|
$
|
711
|
|
$
|
10
|
|
$
|
1
|
|
Monthly weighted average interest rate during 2013
|
|
0.44%
|
|
|
0.16%
|
|
|
0.13%
|
|
(1)
|
Includes $200 million classified as long-term, as we discuss in Note 5 of the Notes to Consolidated Financial Statements.
|
||||||||
(2)
|
The largest amount outstanding at the end of the last day of any month during the year.
|
§
|
issuance of long-term debt at Sempra Energy ($500 million);
|
§
|
repatriated funds received from non-U.S. subsidiaries (approximately $200 million);
|
§
|
cash proceeds from the sale of a 625-MW block of Sempra Natural Gas’ Mesquite Power plant ($371 million);
|
§
|
cash proceeds from the sale of a 50-percent equity interest in Copper Mountain Solar 2 ($72 million);
|
§
|
cash proceeds from the sale of a 50-percent equity interest in Mesquite Solar 1 ($103 million); and
|
§
|
U.S. Treasury grant proceeds ($238 million); offset by
|
§
|
repayments of debt ($650 million); and
|
§
|
payments of common dividends ($606 million) at Sempra Energy.
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
||||||||||||||
(Dollars in millions)
|
||||||||||||||
|
2013
|
2013 Change
|
2012
|
2012 Change
|
2011
|
|||||||||
Sempra Energy Consolidated
|
$
|
1,784
|
$
|
(234)
|
(12)
|
%
|
$
|
2,018
|
$
|
151
|
8
|
%
|
$
|
1,867
|
SDG&E
|
|
719
|
|
(382)
|
(35)
|
|
|
1,101
|
|
219
|
25
|
|
|
882
|
SoCalGas
|
|
681
|
|
(165)
|
(20)
|
|
|
846
|
|
292
|
53
|
|
|
554
|
§
|
$110 million decrease in net overcollected regulatory balancing accounts in 2013 at SoCalGas (including long-term amounts included in regulatory assets) compared to a $31 million increase in net overcollected regulatory balancing accounts in 2012. Over- and undercollected regulatory balancing accounts reflect the difference between customer billings and recorded or CPUC-authorized costs. These differences are required to be balanced over time. See further explanation for changes in regulatory balances at both SDG&E and SoCalGas below;
|
§
|
$273 million increase in accounts receivable in 2013, primarily due to a $60 million increase at SoCalGas as a result of an increase in billing rates in 2013, and a $69 million increase in natural gas sales at Sempra Natural Gas in 2013;
|
§
|
$375 million of funds received from wildfire litigation settlements at SDG&E in 2012; and
|
§
|
$85 million payment received by SDG&E in 2012 for third party transmission line access (which we discuss in Note 15 of the Notes to Consolidated Financial Statements); offset by
|
§
|
$259 million higher net income, adjusted for noncash items included in earnings, in 2013 compared to 2012;
|
§
|
a $203 million decrease in settlement payments and associated legal fees in 2013 for wildfire claims at SDG&E; and
|
§
|
$116 million decrease in inventory in 2013 (including an $82 million decrease at SoCalGas) compared to a $78 million increase in 2012.
|
§
|
$290 million higher net income, adjusted for noncash items included in earnings, in 2012 compared to 2011;
|
§
|
$375 million of funds received in 2012 compared to $300 million received in 2011 from wildfire litigation settlements;
|
§
|
$130 million settlement payment in 2011 related to energy crisis litigation;
|
§
|
a $36 million decrease in accounts receivable in 2012 compared to a $32 million increase in accounts receivable in 2011; and
|
§
|
an $85 million payment received by SDG&E for third party transmission line access; offset by
|
§
|
$29 million increase in income taxes receivable in 2012 compared to a $269 million decrease in income taxes receivable in 2011;
|
§
|
an increase of $291 million in net undercollected regulatory balancing accounts in 2012 compared to an increase of $150 million in such accounts in 2011; and
|
§
|
$53 million of distributions from RBS Sempra Commodities in 2011.
|
§
|
$375 million of funds received from wildfire litigation settlements in 2012;
|
§
|
$85 million payment received in 2012 for third party transmission line access; and
|
§
|
$50 million increase in income taxes receivable in 2013 compared to an $85 million decrease in 2012; offset by
|
§
|
$301 million increase in net undercollected regulatory balancing accounts in 2013 (including long-term amounts included in regulatory assets) compared to a $322 million increase in 2012, as detailed below in the discussion of the increase in cash provided by operating activities in 2012. The increase in the net undercollected balancing accounts in 2013 was primarily due to:
|
□
|
$103 million increase in the net undercollected balance due to the adoption of the 2012 GRC in 2013; and
|
□
|
$204 million increase in the undercollected balancing account for electric resource cost;
|
§
|
$40 million higher net income, adjusted for noncash items included in earnings, in 2013 compared to 2012; and
|
§
|
$203 million decrease in settlement payments and associated legal fees in 2013 for wildfire claims.
|
§
|
$375 million of funds received in 2012 compared to $300 million received in 2011 from wildfire litigation settlements;
|
§
|
$242 million net income tax refunds in 2012 compared to $59 million net income tax payments in 2011;
|
§
|
$129 million higher net income, adjusted for noncash items included in earnings, in 2012 compared to 2011; and
|
§
|
an $85 million payment received in 2012 for third party transmission line access; offset by
|
§
|
$42 million decrease in accounts payable in 2012 compared to a $68 million increase in accounts payable in 2011; and
|
§
|
an increase of $322 million in net undercollected regulatory balancing accounts in 2012 compared to an increase of $87 million in such accounts in 2011, as follows:
|
□
|
the increase in net undercollected regulatory balancing accounts in 2012 was primarily due to:
|
§
|
$214 million undercollection of electric resource costs, and
|
§
|
$71 million return of prior year’s overcollection to customers and $83 million of unrecovered current year spending for advanced metering infrastructure costs, offset by
|
§
|
$54 million reduction of prior year’s undercollected electric distribution fixed costs.
|
□
|
the increase in net undercollected regulatory balancing accounts in 2011 was primarily due to:
|
§
|
$18 million undercollection of electric resource costs,
|
§
|
$36 million undercollection of power commodity costs and costs associated with SDG&E’s contracts with qualifying electric generation facilities, and
|
§
|
$18 million undercollection of rate design settlement costs.
|
§
|
$110 million decrease in overcollected regulatory balancing accounts in 2013 (including long-term amounts included in regulatory assets) compared to a $31 million increase in 2012, as detailed below in the discussion of the increase in cash provided from operating activities in 2012. The decrease in the net overcollected balancing accounts in 2013 was primarily due to:
|
□
|
$26 million decrease in the net overcollected balancing accounts due to the adoption of the 2012 GRC in 2013, and
|
□
|
$86 million change in the balancing account for fixed costs associated with core customer activities. In 2013, this account changed from a $36 million overcollected balance to a $50 million undercollected balance at year-end;
|
§
|
$113 million increase in accounts receivable in 2013, primarily due to a $60 million increase in trade accounts receivable and a $30 million increase in physical gas sales. The $60 million increase in trade accounts receivable is primarily due to the increase in billing rates in 2013 compared to 2012; and
|
§
|
$54 million decrease in accounts payable in 2013 compared to a $54 million increase in 2012; offset by
|
§
|
$92 million higher net income, adjusted for noncash items included in earnings, in 2013 compared to 2012; and
|
§
|
$82 million decrease in inventory in 2013 compared to $1 million increase in 2012, due to higher net withdrawal volume and higher rate of natural gas withdrawn in 2013.
|
§
|
$37 million decrease in accounts receivable in 2012 compared to a $57 million increase in accounts receivable in 2011;
|
§
|
a $54 million increase in accounts payable in 2012 compared to a $7 million decrease in accounts payable in 2011;
|
§
|
$46 million increase in inventory in 2011;
|
§
|
$25 million higher net income, adjusted for noncash items included in earnings, in 2012 compared to 2011; and
|
§
|
an increase of $31 million in net overcollected regulatory balancing accounts in 2012 as compared to a decrease of $63 million in net overcollected regulatory balancing accounts in 2011, as follows:
|
□
|
the increase in net overcollected regulatory balancing accounts in 2012 was primarily due to:
|
§
|
overcollection of California Alternate Rates for Energy (CARE) program costs of $54 million; and
|
§
|
overcollection of advanced metering infrastructure costs of $38 million; offset by
|
§
|
undercollection of fixed costs associated with core customer activities of $59 million.
|
□
|
the decrease in net overcollected regulatory balancing accounts in 2011 was primarily due to:
|
§
|
undercollection of direct assistance program costs of $32 million; and
|
§
|
undercollection of postretirement benefit plans costs of $27 million.
|
CONTRIBUTIONS TO PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS 2011-2013
|
|||||||||||||
(Dollars in millions)
|
|||||||||||||
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||
|
2013
|
2012
|
2011
|
|
2013
|
2012
|
2011
|
||||||
Sempra Energy Consolidated
|
$
|
133
|
$
|
123
|
$
|
212
|
|
$
|
27
|
$
|
39
|
$
|
72
|
SDG&E
|
|
51
|
|
45
|
|
69
|
|
|
14
|
|
13
|
|
15
|
SoCalGas
|
|
59
|
|
47
|
|
95
|
|
|
9
|
|
23
|
|
55
|
CASH USED IN INVESTING ACTIVITIES
|
||||||||||||||
(Dollars in millions)
|
||||||||||||||
|
2013
|
2013 Change
|
2012
|
2012 Change
|
2011
|
|||||||||
Sempra Energy Consolidated
|
$
|
(1,689)
|
$
|
(1,469)
|
(47)
|
%
|
$
|
(3,158)
|
$
|
88
|
3
|
%
|
$
|
(3,070)
|
SDG&E
|
|
(973)
|
|
(262)
|
(21)
|
|
|
(1,235)
|
|
(529)
|
(30)
|
|
|
(1,764)
|
SoCalGas
|
|
(728)
|
|
85
|
13
|
|
|
(643)
|
|
9
|
1
|
|
|
(634)
|
§
|
$384 million decrease in capital expenditures;
|
§
|
$371 million proceeds received from Sempra Natural Gas’ 2013 sale of a 625-MW block of its Mesquite Power plant;
|
§
|
$372 million invested in wind assets in 2012, including $291 million in the Flat Ridge 2 Wind Farm;
|
§
|
$238 million U.S. Treasury grant proceeds;
|
§
|
$103 million proceeds received from the sale of a 50-percent equity interest in Mesquite Solar 1; and
|
§
|
$72 million proceeds received from the sale of a 50-percent equity interest in Copper Mountain Solar 2; offset by
|
§
|
$55 million lower distributions from investments, including a $50 million distribution in 2013 from RBS Sempra Commodities.
|
§
|
$570 million in distributions received from RBS Sempra Commodities in 2011;
|
§
|
$381 million in payments in 2011 for claims related to wildfire litigation using restricted funds received from a wildfire litigation settlement;
|
§
|
$127 million increase in investments in wind assets; and
|
§
|
$112 million increase in capital expenditures; offset by
|
§
|
$611 million in cash used to fund Sempra South American Utilities’ purchase of South American entities in 2011;
|
§
|
a $300 million increase in SDG&E’s restricted cash in 2011 due to funds received from a wildfire litigation settlement;
|
§
|
$148 million in distributions received from Flat Ridge 2 in 2012; and
|
§
|
$59 million from the sale of Chilquinta Energía bonds in 2012.
|
§
|
a $594 million decrease in capital expenditures, primarily due to the completion of the Sunrise Powerlink project in June 2012; and
|
§
|
a $300 million increase in restricted cash in 2011 due to funds received from a wildfire litigation settlement; offset by
|
§
|
$381 million in payments for claims in 2011 related to wildfire litigation using restricted funds received from a wildfire litigation settlement.
|
§
|
a $123 million increase in capital expenditures; offset by
|
§
|
$34 million decrease in advances to Sempra Energy in 2013 compared to a $4 million increase in advances to Sempra Energy in 2012.
|
§
|
a $4 million increase in advances to Sempra Energy in 2012 compared to a $49 million decrease in advances to Sempra Energy in 2011; offset by
|
§
|
a $44 million decrease in capital expenditures.
|
SEMPRA ENERGY CONSOLIDATED
|
|||||
CAPITAL EXPENDITURES AND INVESTMENTS/ACQUISITIONS
|
|||||
(Dollars in millions)
|
|||||
|
Property, plant and equipment
|
|
Investments and acquisition of businesses
|
||
2013
|
$
|
2,572
|
|
$
|
22
|
2012
|
|
2,956
|
|
|
445
|
2011
|
|
2,844
|
|
|
941
|
2010
|
|
2,062
|
|
|
611
|
2009
|
|
1,912
|
|
|
939
|
(Dollars in millions)
|
2013
|
2012
|
2011
|
|||
SDG&E
|
$
|
978
|
$
|
1,237
|
$
|
1,831
|
SoCalGas
|
|
762
|
|
639
|
|
683
|
§
|
$458 million of improvements to natural gas and electric distribution systems
|
§
|
$439 million of improvements to electric transmission systems
|
§
|
$33 million for substation expansions (transmission)
|
§
|
$48 million for electric generation plants and equipment
|
§
|
$580 million of improvements to distribution and transmission systems and storage facilities, and for pipeline safety
|
§
|
$170 million for advanced metering infrastructure
|
§
|
$10 million for other natural gas projects
|
§
|
$11 million for the acquisition of the rights to develop the Broken Bow 2 Wind project
|
§
|
$291 million for the investment in Flat Ridge 2 Wind Farm
|
§
|
$62 million for the investment in Auwahi Wind Farm
|
§
|
the purchase of $53 million in industrial development bonds
|
§
|
$611 million in cash used to fund Sempra South American Utilities’ purchase of South American entities
|
§
|
$146 million for the initial investment in Flat Ridge 2 Wind Farm
|
§
|
$88 million for the initial investment in Mehoopany Wind Farm
|
§
|
the purchase of $84 million in industrial development bonds
|
(Dollars in millions)
|
2013
|
2012
|
2011
|
||||
Sempra Renewables
|
|
|
|
|
|
|
|
|
Auwahi Wind Farm
|
$
|
19
|
$
|
―
|
$
|
―
|
|
Cedar Creek 2 Wind Farm
|
|
6
|
|
2
|
|
5
|
|
Copper Mountain Solar 2
|
|
1
|
|
―
|
|
―
|
|
Flat Ridge 2 Wind Farm
|
|
―
|
|
148
|
|
―
|
|
Fowler Ridge 2 Wind Farm
|
|
―
|
|
―
|
|
2
|
|
Mehoopany Wind Farm
|
|
13
|
|
17
|
|
―
|
|
Mesquite Solar 1
|
|
28
|
|
―
|
|
―
|
|
|
|
|
|
|
|
|
Sempra Natural Gas
|
|
|
|
|
|
|
|
|
Rockies Express
|
|
31
|
|
37
|
|
57
|
|
|
|
|
|
|
|
|
Parent and other
|
|
4
|
|
3
|
|
―
|
|
Total
|
$
|
102
|
$
|
207
|
$
|
64
|
§
|
$2.2 billion at the California Utilities for capital projects and plant improvements ($1.1 billion at SDG&E and $1.1 billion at SoCalGas)
|
§
|
$1 billion at our other subsidiaries for capital projects in Mexico and South America, and development of natural gas and renewable generation projects
|
§
|
$620 million for improvements to SDG&E’s natural gas and electric distribution systems
|
§
|
$320 million for improvements to SDG&E’s electric transmission systems
|
§
|
$100 million at SDG&E for substation expansions (transmission)
|
§
|
$20 million for SDG&E’s electric generation plants and equipment
|
§
|
$880 million for improvements to SoCalGas’ distribution and transmission systems and storage, and for pipeline safety
|
§
|
$190 million for SoCalGas’ advanced metering infrastructure
|
§
|
$30 million for SoCalGas’ other natural gas projects
|
§
|
$5.5 billion at SDG&E
|
§
|
$6.2 billion at SoCalGas
|
§
|
approximately $150 million to $200 million for capital projects in South America (approximately $100 million to $150 million in Peru and approximately $50 million in Chile)
|
§
|
approximately $300 million to $350 million for capital projects in Mexico, including approximately $300 million for the development of the Sonora Pipeline project developed solely by Sempra Mexico
|
§
|
approximately $450 million of expenditures for pipeline projects within our joint venture with PEMEX. We expect expenditures for projects done within the joint venture to be funded by the joint venture’s cash flows from operations and project financing without additional contributions from its partners
|
§
|
approximately $180 million of expenditures for a renewable wind project to be primarily funded by project financing
|
§
|
approximately $300 million for development of renewable projects, including approximately $100 million for investment in Copper Mountain Solar 3, a 250-MW solar project located near Boulder City, Nevada, and approximately $80 million for investment in the 75-MW Broken Bow 2 Wind project in Custer County, Nebraska. These amounts are net of anticipated project financing and joint venture structures.
|
§
|
approximately $200 million for development of natural gas transportation and storage projects
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||
(Dollars in millions)
|
||||||||||||||
|
2013
|
2013 Change
|
2012
|
2012 Change
|
2011
|
|||||||||
Sempra Energy Consolidated
|
$
|
338
|
$
|
(1,017)
|
|
|
$
|
1,355
|
$
|
821
|
|
|
$
|
534
|
SDG&E
|
|
194
|
|
2
|
|
|
|
192
|
|
(592)
|
|
|
|
784
|
SoCalGas
|
|
(9)
|
|
147
|
|
|
|
(156)
|
|
145
|
|
|
|
(301)
|
§
|
$1 billion lower issuances of debt, including a decrease in issuances of long-term debt of $631 million ($1,636 million in 2013 compared to $2,267 million in 2012) and a decrease in issuances of commercial paper and other short-term debt with maturities greater than 90 days of $385 million ($445 million in 2013 compared to $830 million in 2012);
|
§
|
$661 million higher payments on long-term debt ($984 million in 2013 compared to $323 million in 2012), excluding amounts related to commercial paper with maturities greater than 90 days;
|
§
|
$83 million redemption of SDG&E’s outstanding preferred stock (including call premium and accrued dividends); and
|
§
|
$56 million increase in common dividends paid primarily due to an increase in the dividend rate; offset by
|
§
|
$574 million net proceeds received from the sale of noncontrolling interests at Sempra Mexico; and
|
§
|
$256 million increase in short-term debt in 2013 compared to $47 million decrease in 2012.
|
§
|
$999 million higher issuances of debt, primarily long-term debt of $693 million (issuances of $2,267 million in 2012 compared to $1,574 million in 2011) and commercial paper with maturities greater than 90 days of $309 million (issuances of $824 million in 2012 compared to $515 million in 2011);
|
§
|
$47 million decrease in short-term debt in 2012 compared to a $498 million decrease in 2011;
|
§
|
$80 million for the redemption of subsidiary preferred stock in 2011; and
|
§
|
$43 million related to Sempra South American Utilities’ September 2011 tender offer discussed in Note 3 of the Notes to Consolidated Financial Statements; offset by
|
§
|
$628 million higher payments of commercial paper with maturities greater than 90 days, offset by $31 million lower payments on long-term debt; and
|
§
|
$110 million increase in common dividends paid.
|
§
|
$201 million higher issuances of long-term debt;
|
§
|
$59 million increase in short-term debt in 2013; and
|
§
|
$14 million reduction in capital distributions made by Otay Mesa VIE ($26 million in 2013 compared to $40 million in 2012); offset by
|
§
|
$83 million redemption of outstanding preferred stock (including call premium and accrued dividends); and
|
§
|
$189 million higher payments on long-term debt.
|
§
|
$349 million lower issuances of long-term debt;
|
§
|
a $200 million capital contribution from Sempra Energy in 2011; and
|
§
|
$40 million of capital distributions made by Otay Mesa VIE in 2012.
|
§
|
$250 million repayment of long-term debt in 2012;
|
§
|
$200 million reduction in common dividends paid ($50 million in 2013 compared to $250 million in 2012); and
|
§
|
$42 million increase in short-term debt in 2013; offset by
|
§
|
$348 million issuance of long-term debt in 2012.
|
§
|
$348 million issuance of long-term debt in 2012; offset by
|
§
|
$200 million increase in common dividends paid.
|
(Dollars in millions)
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated
|
$
|
12,400
|
$
|
12,346
|
$
|
10,414
|
SDG&E
|
|
4,554
|
|
4,308
|
|
4,077
|
SoCalGas
|
|
1,411
|
|
1,413
|
|
1,321
|
|
Sempra Energy
|
|
|
|
|
|
|
Consolidated
|
SDG&E
|
SoCalGas
|
|||
Weighted average life to maturity, in years
|
12.4
|
|
17.0
|
|
17.6
|
|
Weighted average interest rate
|
4.71
|
%
|
4.72
|
%
|
5.02
|
%
|
(Dollars in millions)
|
|
Amount
|
|
Rate
|
|
Maturing
|
|
|
|
|
|
|
|
|
|
Sempra Energy
|
|
|
|
|
|
|
|
|
Notes, November 2013
|
$
|
500
|
|
4.05
|
%
|
2023
|
|
Notes, September 2012
|
|
500
|
|
2.875
|
|
2022
|
|
Notes, March 2012
|
|
600
|
|
2.30
|
|
2017
|
|
Variable rate notes (1.01% at December 31, 2013),
|
|
|
|
|
|
|
|
March 2011
|
|
300
|
|
1.01
|
|
2014
|
|
Notes, March 2011
|
|
500
|
|
2.00
|
|
2014
|
|
|
|
|
|
|
|
|
Sempra Mexico
|
|
|
|
|
|
|
|
|
Notes, February 2013
|
|
100
|
|
2.66
|
|
2018
|
|
Notes, February 2013
|
|
298
|
|
4.12
|
|
2023
|
|
|
|
|
|
|
|
|
SDG&E
|
|
|
|
|
|
|
|
|
First mortgage bonds, September 2013
|
|
450
|
|
3.60
|
|
2023
|
|
First mortgage bonds, March 2012
|
|
250
|
|
4.30
|
|
2042
|
|
First mortgage bonds, November 2011
|
|
250
|
|
3.95
|
|
2041
|
|
First mortgage bonds, August 2011
|
|
350
|
|
3.00
|
|
2021
|
|
|
|
|
|
|
|
|
SoCalGas
|
|
|
|
|
|
|
|
|
First mortgage bonds, September 2012
|
|
350
|
|
3.750
|
|
2042
|
|
|
§
|
for general working capital purposes;
|
§
|
to support their electric (at SDG&E) and natural gas (SDG&E and SoCalGas) procurement programs;
|
§
|
to redeem all outstanding shares of SDG&E’s preferred stock;
|
§
|
to repay commercial paper at SDG&E; and
|
§
|
to replenish amounts expended and fund future expenditures for the expansion and improvement of their utility plants.
|
§
|
$400 million of Sempra Energy’s 6-percent notes due in 2013
|
§
|
$250 million of Sempra Energy’s 8.9-percent notes due in 2013, including $200 million at variable rates after fixed-to-floating interest rate swaps
|
§
|
$60 million of SDG&E’s 5.85-percent Pollution Control Revenue Bonds (PCRB) due in 2021
|
§
|
$115 million of SDG&E’s 5.9-percent PCRBs due in 2014
|
§
|
$14 million of SDG&E’s 6.8-percent PCRBs due in 2015
|
§
|
$86 million of 2.75-percent Series A Chilean public bonds maturing in 2014
|
§
|
$100 million of SoCalGas 4.375-percent first mortgage bonds at maturity in January 2011
|
§
|
$150 million of SoCalGas variable rate first mortgage bonds at maturity in January 2011
|
§
|
$62 million in 2013
|
§
|
$78 million in 2012
|
§
|
$28 million in 2011
|
§
|
$606 million in 2013
|
§
|
$550 million in 2012
|
§
|
$440 million in 2011
|
§
|
$50 million in 2013
|
§
|
$250 million in 2012
|
§
|
$50 million in 2011
|
TOTAL CAPITALIZATION AND DEBT-TO-CAPITALIZATION RATIOS
|
||||||||||
(Dollars in millions)
|
||||||||||
|
|
December 31, 2013
|
||||||||
|
|
Sempra Energy
|
|
|
|
|
|
|
|
|
|
|
Consolidated(1)
|
|
SDG&E(1)
|
|
SoCalGas
|
|
|||
Total capitalization
|
$
|
24,795
|
|
$
|
9,332
|
|
$
|
4,002
|
|
|
Debt-to-capitalization ratio
|
|
52
|
%
|
|
49
|
%
|
|
36
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
||||||||
|
|
Sempra Energy
|
|
|
|
|
|
|
|
|
|
|
Consolidated(1)
|
|
SDG&E(1)
|
|
SoCalGas
|
|
|||
Total capitalization
|
$
|
23,654
|
|
$
|
8,685
|
|
$
|
3,648
|
|
|
Debt-to-capitalization ratio
|
|
55
|
%
|
|
50
|
%
|
|
39
|
%
|
|
(1)
|
Includes noncontrolling interest and debt of Otay Mesa Energy Center LLC for Sempra Energy Consolidated and SDG&E with no significant impact.
|
§
|
Sempra Energy Consolidated: comprehensive income exceeding dividends and increase in noncontrolling interests from the IEnova stock offerings, partially offset by redemption of subsidiary preferred stock
|
§
|
SDG&E: comprehensive income, partially offset by a net increase in long-term debt and preferred stock redemption
|
§
|
SoCalGas: comprehensive income exceeding dividends
|
PRINCIPAL CONTRACTUAL COMMITMENTS OF SEMPRA ENERGY CONSOLIDATED
|
|||||||||||
(Dollars in millions)
|
|||||||||||
|
|
2014
|
2015 and 2016
|
2017 and 2018
|
Thereafter
|
Total
|
|||||
Long-term debt(1)
|
$
|
1,140
|
$
|
1,158
|
$
|
1,745
|
$
|
7,964
|
$
|
12,007
|
|
Interest on long-term debt(2)
|
|
543
|
|
1,030
|
|
890
|
|
4,972
|
|
7,435
|
|
Operating leases
|
|
85
|
|
154
|
|
143
|
|
576
|
|
958
|
|
Capital leases
|
|
7
|
|
7
|
|
7
|
|
160
|
|
181
|
|
Purchased-power contracts
|
|
1,328
|
|
2,960
|
|
2,977
|
|
11,826
|
|
19,091
|
|
Natural gas contracts
|
|
404
|
|
473
|
|
430
|
|
377
|
|
1,684
|
|
LNG contracts(3)
|
|
670
|
|
1,316
|
|
1,336
|
|
8,277
|
|
11,599
|
|
Construction commitments
|
|
1,317
|
|
509
|
|
136
|
|
47
|
|
2,009
|
|
Build-to-suit lease
|
|
―
|
|
14
|
|
20
|
|
277
|
|
311
|
|
SONGS decommissioning
|
|
49
|
|
117
|
|
135
|
|
455
|
|
756
|
|
Sunrise Powerlink wildfire mitigation fund
|
|
3
|
|
6
|
|
6
|
|
306
|
|
321
|
|
Other asset retirement obligations
|
|
20
|
|
43
|
|
40
|
|
1,293
|
|
1,396
|
|
Pension and other postretirement benefit
|
|
|
|
|
|
|
|
|
|
|
|
obligations(4)
|
|
211
|
|
305
|
|
230
|
|
572
|
|
1,318
|
|
Environmental commitments
|
|
15
|
|
16
|
|
3
|
|
5
|
|
39
|
|
Other
|
|
24
|
|
25
|
|
23
|
|
59
|
|
131
|
|
Totals
|
$
|
5,816
|
$
|
8,133
|
$
|
8,121
|
$
|
37,166
|
$
|
59,236
|
|
(1)
|
Excludes $200 million commercial paper classified as long-term, as we discuss in Note 5 of the Notes to Consolidated Financial Statements.
|
||||||||||
(2)
|
We calculate expected interest payments using the stated interest rate for fixed-rate obligations, including floating-to-fixed interest rate swaps. We calculate expected interest payments for variable-rate obligations, including fixed-to-floating interest rate swaps, based on forward rates in effect at December 31, 2013.
|
||||||||||
(3)
|
Our LNG facilities have various LNG purchase agreements with major international companies for the supply of LNG to our Energía Costa Azul and Cameron terminals. The agreements range from short-term to multi-year periods and are priced using a predetermined formula based on U.S. market indices. The expected payments under the contracts are based on forward prices of the applicable market index from 2014 to 2023 and an estimated one percent escalation per year after 2023. We provide more information about these contracts in Note 15 of the Notes to Consolidated Financial Statements.
|
||||||||||
(4)
|
Amounts represent expected company contributions to the plans for the next 10 years.
|
PRINCIPAL CONTRACTUAL COMMITMENTS OF SDG&E
|
|||||||||||
(Dollars in millions)
|
|||||||||||
|
|
2014
|
2015 and 2016
|
2017 and 2018
|
Thereafter
|
Total
|
|||||
Long-term debt
|
$
|
24
|
$
|
270
|
$
|
181
|
$
|
3,910
|
$
|
4,385
|
|
Interest on long-term debt(1)
|
|
206
|
|
397
|
|
384
|
|
2,645
|
|
3,632
|
|
Operating leases
|
|
23
|
|
44
|
|
37
|
|
91
|
|
195
|
|
Capital leases
|
|
5
|
|
7
|
|
7
|
|
160
|
|
179
|
|
Purchased-power contracts
|
|
471
|
|
1,067
|
|
1,005
|
|
6,349
|
|
8,892
|
|
Construction commitments
|
|
177
|
|
60
|
|
50
|
|
45
|
|
332
|
|
SONGS decommissioning
|
|
49
|
|
117
|
|
135
|
|
455
|
|
756
|
|
Sunrise Powerlink wildfire mitigation fund
|
|
3
|
|
6
|
|
6
|
|
306
|
|
321
|
|
Other asset retirement obligations
|
|
3
|
|
5
|
|
5
|
|
143
|
|
156
|
|
Pension and other postretirement benefit
|
|
|
|
|
|
|
|
|
|
|
|
obligations(2)
|
|
81
|
|
73
|
|
62
|
|
174
|
|
390
|
|
Environmental commitments
|
|
6
|
|
8
|
|
2
|
|
4
|
|
20
|
|
Totals
|
$
|
1,048
|
$
|
2,054
|
$
|
1,874
|
$
|
14,282
|
$
|
19,258
|
|
(1)
|
SDG&E calculates expected interest payments using the stated interest rate for fixed-rate obligations, including floating-to-fixed interest rate swaps.
|
||||||||||
(2)
|
Amounts represent expected company contributions to the plans for the next 10 years.
|
PRINCIPAL CONTRACTUAL COMMITMENTS OF SOCALGAS
|
|||||||||||
(Dollars in millions)
|
|||||||||||
|
|
2014
|
2015 and 2016
|
2017 and 2018
|
Thereafter
|
Total
|
|||||
Long-term debt
|
$
|
250
|
$
|
8
|
$
|
250
|
$
|
905
|
$
|
1,413
|
|
Interest on long-term debt(1)
|
|
60
|
|
114
|
|
104
|
|
893
|
|
1,171
|
|
Natural gas contracts
|
|
183
|
|
233
|
|
198
|
|
157
|
|
771
|
|
Operating leases
|
|
32
|
|
57
|
|
58
|
|
174
|
|
321
|
|
Capital leases
|
|
2
|
|
―
|
|
―
|
|
―
|
|
2
|
|
Construction commitments
|
|
190
|
|
168
|
|
84
|
|
―
|
|
442
|
|
Environmental commitments
|
|
5
|
|
8
|
|
1
|
|
1
|
|
15
|
|
Pension and other postretirement benefit
|
|
|
|
|
|
|
|
|
|
|
|
obligations(2)
|
|
85
|
|
163
|
|
115
|
|
290
|
|
653
|
|
Asset retirement obligations
|
|
17
|
|
37
|
|
35
|
|
1,110
|
|
1,199
|
|
Totals
|
$
|
824
|
$
|
788
|
$
|
845
|
$
|
3,530
|
$
|
5,987
|
|
(1)
|
SoCalGas calculates interest payments using the stated interest rate for fixed-rate obligations.
|
||||||||||
(2)
|
Amounts represent expected company contributions to the plans for the next 10 years.
|
§
|
contracts between consolidated affiliates
|
§
|
intercompany debt
|
§
|
individual contracts that have annual cash requirements less than $1 million
|
§
|
employment contracts
|
§
|
$53 million for Sempra Energy Consolidated
|
§
|
$17 million for SDG&E
|
§
|
$13 million for SoCalGas
|
§
|
The PD identified $182.8 million as SDG&E’s share of the costs incurred by Edison, including overheads and capital, in 2012. Of this amount, the PD deemed $19.3 million to have been unreasonably incurred and recommended that this amount be refunded in rates effective January 1, 2014.
|
§
|
In addition, the PD identified $27 million as SDG&E’s share of the $122 million in costs incurred by Edison in 2012 associated with the steam generator inspection and repair, which costs will be reviewed in Phase 3, but not removed from rates yet. These costs are to be separately accounted for and interest accrued at the one-year U.S. Treasury rate should the CPUC decide in Phase 3 that they should also be refunded.
|
§
|
the net book value of SDG&E’s investment in SONGS plant and nuclear fuel of $516 million, which prior to the date of the plant retirement, had been reported as Property, Plant and Equipment on the Consolidated Balance Sheet;
|
§
|
SDG&E’s SONGS-related materials and supplies of $10 million, which prior to the date of the plant retirement, had been reported as Inventory on the Consolidated Balance Sheet;
|
§
|
SDG&E’s 2013 cost of replacement power that is in excess of the amount previously authorized for recovery in ERRA of $67 million which, prior to the date of the plant retirement, would have been reported as Regulatory Balancing Accounts, Net in Current Assets on the Consolidated Balance Sheet;
|
§
|
miscellaneous costs incurred or expected to be incurred by SDG&E associated with the early closure of the plant of $35 million; net of
|
§
|
a $200 million reserve for disallowance of rate recovery reported as Loss from Plant Closure on the Consolidated Statement of Operations; and
|
§
|
$125 million for amounts billed to customers for operating costs and the recovery of and return on investment in SONGS since the plant closure in early June 2013 that are subject to refund.
|
§
|
Bay Gas, a facility located 40 miles north of Mobile, Alabama, that provides underground storage and delivery of natural gas. Sempra Natural Gas owns 91 percent of the project. It is the easternmost salt dome storage facility on the Gulf Coast, with direct service to the Florida market and markets across the Southeast, Mid-Atlantic and Northeast regions.
|
§
|
Mississippi Hub, located 45 miles southeast of Jackson, Mississippi, an underground salt dome natural gas storage project with access to shale basins of East Texas and Louisiana, traditional gulf supplies and LNG, with multiple interconnections to serve the Southeast and Northeast regions.
|
§
|
LA Storage, a salt cavern development project in Cameron Parish, Louisiana. Sempra Natural Gas owns 75 percent of the project and ProLiance Transportation LLC owns the remaining 25 percent. The project’s location provides access to several LNG facilities in the area.
|
|
Sempra Energy
|
|
|
|
|
|
|
|||||||
|
Consolidated
|
|
SDG&E
|
|
SoCalGas
|
|||||||||
|
Nominal
|
One-Year
|
|
Nominal
|
One-Year
|
|
Nominal
|
One-Year
|
||||||
(Dollars in millions)
|
Debt
|
VaR(1)
|
|
Debt
|
VaR(1)
|
|
Debt
|
VaR(1)
|
||||||
At December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California Utilities fixed-rate
|
$
|
5,464
|
$
|
531
|
|
$
|
4,051
|
$
|
407
|
|
$
|
1,413
|
$
|
124
|
California Utilities variable-rate
|
|
335
|
|
15
|
|
|
335
|
|
15
|
|
|
―
|
|
―
|
All other, fixed-rate and variable-rate
|
|
6,211
|
|
308
|
|
|
―
|
|
―
|
|
|
―
|
|
―
|
At December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California Utilities fixed-rate
|
$
|
5,203
|
$
|
601
|
|
$
|
3,790
|
$
|
451
|
|
$
|
1,413
|
$
|
150
|
California Utilities variable-rate
|
|
345
|
|
14
|
|
|
345
|
|
14
|
|
|
―
|
|
―
|
All other, fixed-rate and variable-rate
|
|
6,306
|
|
302
|
|
|
―
|
|
―
|
|
|
―
|
|
―
|
(1) After the effects of interest rate swaps.
|
§
|
prospective counterparties’ financial condition (including credit ratings)
|
§
|
collateral requirements
|
§
|
the use of standardized agreements that allow for the netting of positive and negative exposures associated with a single counterparty
|
§
|
downgrade triggers
|
(Dollars in millions)
|
|
Hypothetical Effects
|
|
|
Translation of 2013 earnings to U.S. dollars
|
$
|
(2)
|
|
Transactional exposures
|
|
―
|
|
Translation of net assets of foreign subsidiaries and investments in foreign entities
|
|
(22)
|
CRITICAL ACCOUNTING POLICIES
|
|||
SEMPRA ENERGY, SDG&E AND SOCALGAS
|
|||
CONTINGENCIES
|
|||
Assumptions & Approach Used
|
We accrue losses for the estimated impacts of various conditions, situations or circumstances involving uncertain outcomes. For loss contingencies, we accrue the loss if an event has occurred on or before the balance sheet date and:
§ information available through the date we file our financial statements indicates it is probable that a loss has been incurred, given the likelihood of uncertain future events, and
§ the amount of the loss can be reasonably estimated.
We do not accrue contingencies that might result in gains. We continuously assess contingencies for litigation claims, environmental remediation and other events.
|
||
Effect if Different
Assumptions Used
|
Details of our issues in this area are discussed in Note 15 of the Notes to Consolidated Financial Statements.
|
||
REGULATORY ACCOUNTING
|
|||
Assumptions & Approach Used
|
As regulated entities, the California Utilities’ rates, as set and monitored by regulators, are designed to recover the cost of providing service and provide the opportunity to earn a competitive return on their investments. The California Utilities record a regulatory asset, which are generally costs that would otherwise be charged to expense, if it is probable that, through the ratemaking process, the utility will recover that asset from customers in future rates. Similarly, regulatory liabilities are recorded for amounts recovered in rates in advance or in excess of costs incurred. The California Utilities assess probabilities of future rate recovery associated with regulatory account balances at the end of each reporting period and whenever new and/or unusual events occur, such as:
§ changes in the regulatory and political environment or the utility’s competitive position
§ issuance of a regulatory commission order
§ passage of new legislation
To the extent that circumstances associated with regulatory balances change, the regulatory balances are adjusted accordingly.
|
||
Effect if Different
Assumptions Used
|
Adverse legislative or regulatory actions could materially impact the amounts of such regulatory assets and liabilities and could materially adversely impact our financial statements. Details of the California Utilities’ regulatory assets and liabilities and additional factors that management considers when assessing probabilities associated with regulatory balances are discussed in Notes 1, 13, 14 and 15 of the Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY, SDG&E AND SOCALGAS (CONTINUED)
|
||
INCOME TAXES
|
||
Assumptions & Approach Used
|
Our income tax expense and related balance sheet amounts involve significant management estimates and judgments. Amounts of deferred income tax assets and liabilities, as well as current and noncurrent accruals, involve judgments and estimates of the timing and probability of recognition of income and deductions by taxing authorities. When we evaluate the anticipated resolution of income tax issues, we consider
§ past resolutions of the same or similar issue
§ the status of any income tax examination in progress
§ positions taken by taxing authorities with other taxpayers with similar issues
The likelihood of deferred tax recovery is based on analyses of the deferred tax assets and our expectation of future taxable income, based on our strategic planning.
|
|
Effect if Different
Assumptions Used
|
Actual income taxes could vary from estimated amounts because of:
§ future impacts of various items, including changes in tax laws, regulations, interpretations and rulings
§ our financial condition in future periods
§ the resolution of various income tax issues between us and taxing authorities
We discuss details of our issues in this area in Note 6 of the Notes to Consolidated Financial Statements.
|
|
Assumptions & Approach Used
|
For an uncertain position to qualify for benefit recognition, the position must have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. If we do not have a more likely than not position with respect to a tax position, then we do not recognize any of the potential tax benefit associated with the position. A tax position that meets the “more likely than not” recognition is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon the effective resolution of the tax position.
|
|
Effect if Different
Assumptions Used
|
Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows.
We discuss additional information related to accounting for uncertainty in income taxes in Note 6 of the Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY, SDG&E AND SOCALGAS (CONTINUED)
|
|||
DERIVATIVES
|
|||
Assumptions & Approach Used
|
We value derivative instruments at fair value on the balance sheet. Depending on the purpose for the contract and the applicability of hedge accounting, the impact of instruments may be offset in earnings, on the balance sheet, or in other comprehensive income. We also use normal purchase or sale accounting for certain contracts. As discussed elsewhere in this report, whenever possible, we use exchange quotations or other third-party pricing to estimate fair values; if no such data is available, we use internally developed models and other techniques. The assumed collectability of derivative assets and receivables considers
§ events specific to a given counterparty
§ the tenor of the transaction
§ the credit-worthiness of the counterparty
|
||
Effect if Different
Assumptions Used
|
The application of hedge accounting to certain derivatives and the normal purchase or sale accounting election is made on a contract-by-contract basis. Using hedge accounting or the normal purchase or sale election in a different manner could materially impact Sempra Energy’s results of operations. However, such alternatives would not have a significant impact on the California Utilities’ results of operations because of regulatory accounting principles. We provide details of our financial instruments in Note 9 of the Notes to Consolidated Financial Statements.
|
||
DEFINED BENEFIT PLANS
|
|||
Assumptions & Approach Used
|
To measure our pension and other postretirement obligations, costs and liabilities, we rely on several assumptions. We consider current market conditions, including interest rates, in making these assumptions. We annually review these assumptions prior to the beginning of each year and update when appropriate.
The critical assumptions used to develop the required estimates include the following key factors:
§ discount rates
§ expected return on plan assets
§ health care cost trend rates
§ mortality rates
§ rate of compensation increases
§ termination and retirement rates
§ utilization of postretirement welfare benefits
§ payout elections (lump sum or annuity)
§ lump sum interest rates
|
SEMPRA ENERGY, SDG&E AND SOCALGAS (CONTINUED)
|
||
DEFINED BENEFIT PLANS (CONTINUED)
|
||
Effect if Different
Assumptions Used
|
The actuarial assumptions we use may differ materially from actual results due to:
§ return on plan assets
§ changing market and economic conditions
§ higher or lower withdrawal rates
§ longer or shorter participant life spans
§ more or fewer lump sum versus annuity payout elections made by plan participants
§ retirement rates
These differences, other than those related to the California Utilities’ plans, where rate recovery offsets any effects of the assumptions on earnings, may result in a significant impact to the amount of pension and postretirement benefit expense we record. For the remaining plans, the approximate annual effect on earnings of a 100 basis point increase or decrease in the assumed discount rate would be less than $3 million and the effect of a 100 basis point increase or decrease in the assumed rate of return on plan assets would be less than $2 million.
We provide additional information, including the impact of increases and decreases in the health care cost trend rate, in Note 7 of the Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY AND SDG&E
|
|||
ASSET RETIREMENT OBLIGATIONS
|
|||
Assumptions & Approach Used
|
SDG&E’s legal asset retirement obligations (AROs) related to the decommissioning of SONGS are recorded at fair value based on a site specific study performed every three years. The fair value of the obligations includes
§ estimated decommissioning costs, including labor, equipment, material and other disposal costs
§ inflation adjustment applied to estimated cash flows
§ discount rate based on a credit-adjusted risk-free rate
§ expected initiation and duration of decommissioning activities
|
||
Effect if Different
Assumptions Used
|
Changes in the estimated decommissioning costs, or in the assumptions and judgments made by management underlying these estimates, could cause revisions to the estimated total cost associated with retiring the assets. SDG&E’s nuclear decommissioning expenses are subject to rate recovery and, therefore, rate-making accounting treatment is applied to SDG&E’s nuclear decommissioning activities. SDG&E recognizes a regulatory asset, or liability, to the extent that its SONGS ARO exceeds, or is less than, the amount collected from customers and the amount earned in SDG&E’s Nuclear Decommissioning Trusts.
We provide additional detail in Notes 13 and 14 of the Notes to the Consolidated Financial Statements.
|
SEMPRA ENERGY
|
|||
IMPAIRMENT TESTING OF LONG-LIVED ASSETS
|
|||
Assumptions & Approach Used
|
Whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable, we consider if the estimated future undiscounted cash flows are less than the carrying amount of the assets. If so, we estimate the fair value of these assets to determine the extent to which cost exceeds fair value. For these estimates, we may consider data from multiple valuation methods, including data from market participants. We exercise judgment to estimate the future cash flows and the useful lives of long-lived assets and to determine our intent to use the assets. Our intent to use or dispose of assets is subject to re-evaluation and can change over time.
|
||
Effect if Different
Assumptions Used
|
If an impairment test is required, the fair value of long-lived assets can vary if differing estimates and assumptions are used in the valuation techniques applied as indicated by changing market or other conditions. We discuss impairment of long-lived assets in Note 1 of the Notes to Consolidated Financial Statements.
|
||
IMPAIRMENT TESTING OF GOODWILL
|
|||
Assumptions & Approach Used
|
On an annual basis or whenever events or changes in circumstances necessitate an evaluation, we consider whether goodwill may be impaired. For our annual goodwill impairment testing, we have the option to first make a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before applying the two-step, quantitative goodwill impairment test. If we elect to perform the qualitative assessment, we evaluate relevant events and circumstances, including but not limited to, macroeconomic conditions, industry and market considerations, cost factors, changes in key personnel and the overall financial performance of the reporting unit. If, after assessing these qualitative factors, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform the two-step goodwill impairment test. When we perform the two-step, quantitative goodwill impairment test, we exercise judgment to develop estimates of the fair value of the reporting unit and compare that to the carrying value. Our fair value estimates are developed from the perspective of a knowledgeable market participant. We consider observable transactions in the marketplace for similar investments, if available, as well as an income-based approach such as discounted cash flow analysis. A discounted cash flow analysis may be based directly on anticipated future revenues and expenses and may be performed based on free cash flows generated within the reporting unit. Critical assumptions that affect our estimates of fair value may include
§ consideration of market transactions
§ future cash flows
§ the appropriate risk-adjusted discount rate
§ country risk
§ entity risk
|
||
Effect if Different
Assumptions Used
|
When we choose to make a qualitative assessment as discussed above, the two-step, quantitative goodwill impairment test is not required if we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount or when we choose to proceed directly to the two-step, quantitative goodwill impairment test, the test requires us to first determine if the carrying value of a reporting unit exceeds its fair value and if so, to measure the amount of goodwill impairment, if any. When determining if goodwill is impaired, the fair value of the reporting unit and goodwill can vary if differing estimates and assumptions are used in the valuation techniques applied as indicated by changing market or other conditions. As a result, recognizing a goodwill impairment may or may not be required. Sempra Energy has $1.0 billion of goodwill on its Consolidated Balance Sheet at December 31, 2013, of which $927 million is attributable to our operations in South America. Based on our qualitative assessment, we determined that it is more likely than not that the estimated fair values of the reporting units to which this goodwill was allocated substantially exceeded their carrying values as of October 1, 2013, our most recent goodwill impairment testing date. We discuss goodwill in Notes 1 and 3 of the Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY
|
||
CARRYING VALUE OF EQUITY METHOD INVESTMENTS
|
||
Assumptions & Approach Used
|
We generally account for investments under the equity method when we have an ownership interest of 20 to 50 percent. The premium, or excess cost over the underlying carrying value of net assets, is referred to as equity method goodwill, which is included in the impairment testing of the equity method investment.
We consider whether the fair value of each equity investment as a whole, not the underlying net assets, has declined and whether that decline is other than temporary. To help evaluate whether a decline in fair value below cost has occurred and if the decline is other than temporary, we may develop fair value estimates for the investment. Our fair value estimates are developed from the perspective of a knowledgeable market participant. In the absence of observable transactions in the marketplace for similar investments, we consider an income-based approach such as discounted cash flow analysis or, with less weighting, the replacement cost of the underlying net assets. A discounted cash flow analysis may be based directly on anticipated future distributions from the investment, or may be performed based on free cash flows generated within the entity and adjusted for our ownership share total. When calculating estimates of fair or realizable values, we also consider whether we intend to hold or sell the investment. For certain held investments, critical assumptions may include
§ equity sale offer price for the investment
§ transportation rates for natural gas
§ the appropriate risk-adjusted discount rate
§ the availability and costs of natural gas
§ competing fuels (primarily propane) and electricity
§ estimated future power generation and associated production tax credits
§ renewable power price expectations
For investments that we hold for sale, we consider comparable sales values or indicative offers, executed sales transactions or indications of value determined by cash and affiliate receivables within the entity when determining our estimates of fair value.
|
|
Effect if Different
Assumptions Used
|
The risk assumptions applied by other market participants to value the investments could vary significantly or the appropriate approaches could be weighted differently. These differences could impact whether or not the fair value of the investment is less than its cost, and if so, whether that condition is other than temporary. This could result in an impairment charge or a different amount of impairment charge, and, in cases where an impairment charge has been recorded, additional loss or gain upon sale.
We provide additional details in Notes 4 and 10 of the Notes to Consolidated Financial Statements.
|
§
|
local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments;
|
§
|
actions and the timing of actions, including issuances of permits to construct and licenses for operation, by the California Public Utilities Commission, California State Legislature, U.S. Department of Energy, Federal Energy Regulatory Commission, Nuclear Regulatory Commission, Atomic Safety and Licensing Board, California Energy Commission, California Air Resources Board, and other regulatory, governmental and environmental bodies in the United States and other countries in which we operate;
|
§
|
capital markets conditions, including the availability of credit and the liquidity of our investments;
|
§
|
the timing and success of business development efforts and construction, maintenance and capital projects, including risks in obtaining permits, licenses, certificates and other authorizations on a timely basis and risks in obtaining adequate and competitive financing for such projects;
|
§
|
inflation, interest and exchange rates;
|
§
|
the impact of benchmark interest rates, generally Moody’s A-rated utility bond yields, on our California Utilities’ cost of capital;
|
§
|
energy markets, including the timing and extent of changes and volatility in commodity prices;
|
§
|
the availability of electric power, natural gas and liquefied natural gas, including disruptions caused by failures in the North American transmission grid, pipeline explosions and equipment failures and the decommissioning of San Onofre Nuclear Generating Station (SONGS);
|
§
|
weather conditions, natural disasters, catastrophic accidents, and conservation efforts;
|
§
|
risks inherent with nuclear power facilities and radioactive materials storage, including the catastrophic release of such materials, the disallowance of the recovery of the investment in, or operating costs of, the nuclear facility due to an extended outage and facility closure, and increased regulatory oversight;
|
§
|
risks posed by decisions and actions of third parties who control the operations of investments in which we do not have a controlling interest;
|
§
|
wars, terrorist attacks and cybersecurity threats;
|
§
|
business, regulatory, environmental and legal decisions and requirements;
|
§
|
expropriation of assets by foreign governments and title and other property disputes;
|
§
|
the impact on reliability of San Diego Gas & Electric Company’s electric transmission and distribution system due to increased amount and variability of power supply from renewable energy sources;
|
§
|
the impact on competitive customer rates of the growth in distributed and local power generation and the corresponding decrease in demand for power delivered through our electric transmission and distribution system;
|
§
|
the inability or determination not to enter into long-term supply and sales agreements or long-term firm capacity agreements;
|
§
|
the resolution of litigation; and
|
§
|
other uncertainties, all of which are difficult to predict and many of which are beyond our control.
|
|
First
|
Second
|
Third
|
Fourth
|
||||
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||
2013
|
|
|
|
|
|
|
|
|
Market price
|
|
|
|
|
|
|
|
|
High
|
$
|
80.21
|
$
|
84.85
|
$
|
89.46
|
$
|
93.00
|
Low
|
$
|
70.61
|
$
|
78.11
|
$
|
78.67
|
$
|
84.55
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
Market price
|
|
|
|
|
|
|
|
|
High
|
$
|
60.36
|
$
|
69.46
|
$
|
72.32
|
$
|
72.87
|
Low
|
$
|
54.70
|
$
|
60.04
|
$
|
63.87
|
$
|
64.47
|
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA FOR SEMPRA ENERGY
|
|||||||||||||||
(In millions, except per share amounts)
|
|||||||||||||||
|
At December 31 or for the years then ended
|
||||||||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||
Sempra Energy Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric
|
$
|
4,911
|
|
$
|
4,568
|
|
$
|
3,833
|
|
$
|
2,528
|
|
$
|
2,419
|
|
Natural gas
|
|
4,398
|
|
|
3,873
|
|
|
4,489
|
|
|
4,491
|
|
|
4,002
|
|
Energy-related businesses
|
|
1,248
|
|
|
1,206
|
|
|
1,714
|
|
|
1,984
|
|
|
1,685
|
|
Total revenues
|
$
|
10,557
|
|
$
|
9,647
|
|
$
|
10,036
|
|
$
|
9,003
|
|
$
|
8,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
1,088
|
|
$
|
920
|
|
$
|
1,381
|
|
$
|
703
|
|
$
|
1,122
|
|
(Earnings) losses from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to noncontrolling interests
|
|
(79)
|
|
|
(55)
|
|
|
(42)
|
|
|
16
|
|
|
7
|
|
Call premium on preferred stock of subsidiary
|
|
(3)
|
|
|
―
|
|
|
―
|
|
|
―
|
|
|
―
|
|
Preferred dividends of subsidiaries
|
|
(5)
|
|
|
(6)
|
|
|
(8)
|
|
|
(10)
|
|
|
(10)
|
|
Earnings/Income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to common shares
|
$
|
1,001
|
|
$
|
859
|
|
$
|
1,331
|
|
$
|
709
|
|
$
|
1,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/Income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
4.10
|
|
$
|
3.56
|
|
$
|
5.55
|
|
$
|
2.90
|
|
$
|
4.60
|
|
Diluted
|
$
|
4.01
|
|
$
|
3.48
|
|
$
|
5.51
|
|
$
|
2.86
|
|
$
|
4.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
$
|
2.52
|
|
$
|
2.40
|
|
$
|
1.92
|
|
$
|
1.56
|
|
$
|
1.56
|
|
Return on common equity
|
|
9.4
|
%
|
|
8.6
|
%
|
|
14.2
|
%
|
|
7.9
|
%
|
|
13.2
|
%
|
Effective income tax rate
|
|
26
|
%
|
|
6
|
%
|
|
23
|
%
|
|
17
|
%
|
|
29
|
%
|
Price range of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
$
|
93.00
|
|
$
|
72.87
|
|
$
|
55.97
|
|
$
|
56.61
|
|
$
|
57.18
|
|
Low
|
$
|
70.61
|
|
$
|
54.70
|
|
$
|
44.78
|
|
$
|
43.91
|
|
$
|
36.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average rate base:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SoCalGas
|
$
|
3,499
|
|
$
|
3,178
|
|
$
|
2,948
|
|
$
|
2,860
|
|
$
|
2,758
|
|
SDG&E
|
$
|
7,244
|
|
$
|
6,295
|
|
$
|
5,071
|
|
$
|
4,697
|
|
$
|
4,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT DECEMBER 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
$
|
3,997
|
|
$
|
3,695
|
|
$
|
2,332
|
|
$
|
3,363
|
|
$
|
2,296
|
|
Total assets
|
$
|
37,244
|
|
$
|
36,499
|
|
$
|
33,249
|
|
$
|
30,231
|
|
$
|
28,501
|
|
Current liabilities
|
$
|
4,369
|
|
$
|
4,258
|
|
$
|
4,152
|
|
$
|
3,786
|
|
$
|
3,887
|
|
Long-term debt (excludes current portion)
|
$
|
11,253
|
|
$
|
11,621
|
|
$
|
10,078
|
|
$
|
8,980
|
|
$
|
7,460
|
|
Short-term debt(1)
|
$
|
1,692
|
|
$
|
1,271
|
|
$
|
785
|
|
$
|
507
|
|
$
|
1,191
|
|
Contingently redeemable preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of subsidiary
|
$
|
―
|
|
$
|
79
|
|
$
|
79
|
|
$
|
79
|
|
$
|
79
|
|
Sempra Energy shareholders’ equity
|
$
|
11,008
|
|
$
|
10,282
|
|
$
|
9,775
|
|
$
|
8,990
|
|
$
|
9,000
|
|
Common shares outstanding
|
|
244.5
|
|
|
242.4
|
|
|
239.9
|
|
|
240.4
|
|
|
246.5
|
|
Book value per share
|
$
|
45.03
|
|
$
|
42.43
|
|
$
|
40.74
|
|
$
|
37.39
|
|
$
|
36.51
|
|
(1) Includes long-term debt due within one year.
|
FIVE-YEAR SUMMARIES OF SELECTED FINANCIAL DATA FOR SDG&E AND SOCALGAS
|
||||||||||
(Dollars in millions)
|
||||||||||
|
At December 31 or for the years then ended
|
|||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||
SDG&E
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
4,066
|
$
|
3,694
|
$
|
3,373
|
$
|
3,049
|
$
|
2,916
|
Operating income
|
|
782
|
|
809
|
|
755
|
|
657
|
|
589
|
Dividends on preferred stock
|
|
4
|
|
5
|
|
5
|
|
5
|
|
5
|
Earnings attributable to common shares
|
|
404
|
|
484
|
|
431
|
|
369
|
|
344
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
15,377
|
$
|
14,744
|
$
|
13,555
|
$
|
12,077
|
$
|
10,229
|
Long-term debt (excludes current portion)
|
|
4,525
|
|
4,292
|
|
4,058
|
|
3,479
|
|
2,623
|
Short-term debt(1)
|
|
88
|
|
16
|
|
19
|
|
19
|
|
78
|
Contingently redeemable preferred stock
|
|
―
|
|
79
|
|
79
|
|
79
|
|
79
|
SDG&E shareholder's equity
|
|
4,628
|
|
4,222
|
|
3,739
|
|
3,108
|
|
2,739
|
SoCalGas
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
3,736
|
$
|
3,282
|
$
|
3,816
|
$
|
3,822
|
$
|
3,355
|
Operating income
|
|
539
|
|
420
|
|
486
|
|
516
|
|
476
|
Dividends on preferred stock
|
|
1
|
|
1
|
|
1
|
|
1
|
|
1
|
Earnings attributable to common shares
|
|
364
|
|
289
|
|
287
|
|
286
|
|
273
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
9,147
|
$
|
9,071
|
$
|
8,475
|
$
|
7,986
|
$
|
7,287
|
Long-term debt (excludes current portion)
|
|
1,159
|
|
1,409
|
|
1,064
|
|
1,320
|
|
1,283
|
Short-term debt(1)
|
|
294
|
|
4
|
|
257
|
|
262
|
|
11
|
SoCalGas shareholders’ equity
|
|
2,549
|
|
2,235
|
|
2,193
|
|
1,955
|
|
1,766
|
(1) Includes long-term debt due within one year.
|
SEMPRA ENERGY
|
|||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|||||||
(Dollars in millions, except per share amounts)
|
|||||||
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
|
|
|
|||||
REVENUES
|
|
|
|
|
|
|
|
Utilities
|
$
|
9,309
|
$
|
8,441
|
$
|
8,322
|
|
Energy-related businesses
|
|
1,248
|
|
1,206
|
|
1,714
|
|
Total revenues
|
|
10,557
|
|
9,647
|
|
10,036
|
|
EXPENSES AND OTHER INCOME
|
|
|
|
|
|
|
|
Utilities:
|
|
|
|
|
|
|
|
Cost of natural gas
|
|
(1,646)
|
|
(1,290)
|
|
(1,866)
|
|
Cost of electric fuel and purchased power
|
|
(1,932)
|
|
(1,760)
|
|
(1,397)
|
|
Energy-related businesses:
|
|
|
|
|
|
|
|
Cost of natural gas, electric fuel and purchased power
|
|
(435)
|
|
(481)
|
|
(746)
|
|
Other cost of sales
|
|
(178)
|
|
(159)
|
|
(137)
|
|
Operation and maintenance
|
|
(2,995)
|
|
(2,956)
|
|
(2,825)
|
|
Depreciation and amortization
|
|
(1,113)
|
|
(1,090)
|
|
(976)
|
|
Franchise fees and other taxes
|
|
(374)
|
|
(359)
|
|
(343)
|
|
Loss from plant closure
|
|
(200)
|
|
―
|
|
―
|
|
Gain on sale of assets
|
|
114
|
|
7
|
|
―
|
|
Equity earnings (losses), before income tax
|
|
31
|
|
(319)
|
|
9
|
|
Remeasurement of equity method investments
|
|
―
|
|
―
|
|
277
|
|
Other income, net
|
|
140
|
|
172
|
|
130
|
|
Interest income
|
|
20
|
|
24
|
|
26
|
|
Interest expense
|
|
(559)
|
|
(493)
|
|
(465)
|
|
Income before income taxes and equity earnings
|
|
|
|
|
|
|
|
of certain unconsolidated subsidiaries
|
|
1,430
|
|
943
|
|
1,723
|
|
Income tax expense
|
|
(366)
|
|
(59)
|
|
(394)
|
|
Equity earnings, net of income tax
|
|
24
|
|
36
|
|
52
|
|
Net income
|
|
1,088
|
|
920
|
|
1,381
|
|
Earnings attributable to noncontrolling interests
|
|
(79)
|
|
(55)
|
|
(42)
|
|
Call premium on preferred stock of subsidiary
|
|
(3)
|
|
―
|
|
―
|
|
Preferred dividends of subsidiaries
|
|
(5)
|
|
(6)
|
|
(8)
|
|
Earnings
|
$
|
1,001
|
$
|
859
|
$
|
1,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
$
|
4.10
|
$
|
3.56
|
$
|
5.55
|
|
Weighted-average number of shares outstanding, basic (thousands)
|
|
243,863
|
|
241,347
|
|
239,720
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
$
|
4.01
|
$
|
3.48
|
$
|
5.51
|
|
Weighted-average number of shares outstanding, diluted (thousands)
|
|
249,332
|
|
246,693
|
|
241,523
|
|
See Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY
|
|||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|||||||||||
(Dollars in millions)
|
|||||||||||
|
|
Years ended December 31, 2013, 2012 and 2011
|
|||||||||
|
|
Sempra Energy Shareholders' Equity
|
|
|
|
|
|||||
|
|
Pretax
|
Income Tax
|
Net-of-Tax
|
Noncontrolling
|
|
|||||
|
|
Amount
|
(Expense) Benefit
|
Amount
|
Interests (After-Tax)
|
Total
|
|||||
2013:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1,375
|
$
|
(366)
|
$
|
1,009
|
$
|
79
|
$
|
1,088
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
111
|
|
―
|
|
111
|
|
(27)
|
|
84
|
|
Pension and other postretirement benefits
|
|
47
|
|
(19)
|
|
28
|
|
―
|
|
28
|
|
Financial instruments
|
|
13
|
|
(4)
|
|
9
|
|
19
|
|
28
|
|
Total other comprehensive income (loss)
|
|
171
|
|
(23)
|
|
148
|
|
(8)
|
|
140
|
|
Comprehensive income
|
|
1,546
|
|
(389)
|
|
1,157
|
|
71
|
|
1,228
|
|
Preferred dividends of subsidiaries
|
|
(5)
|
|
―
|
|
(5)
|
|
―
|
|
(5)
|
|
Comprehensive income, after
|
|
|
|
|
|
|
|
|
|
|
|
preferred dividends of subsidiaries
|
$
|
1,541
|
$
|
(389)
|
$
|
1,152
|
$
|
71
|
$
|
1,223
|
|
2012:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
924
|
$
|
(59)
|
$
|
865
|
$
|
55
|
$
|
920
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
119
|
|
―
|
|
119
|
|
15
|
|
134
|
|
Pension and other postretirement benefits
|
|
(4)
|
|
2
|
|
(2)
|
|
―
|
|
(2)
|
|
Financial instruments
|
|
(6)
|
|
2
|
|
(4)
|
|
(11)
|
|
(15)
|
|
Total other comprehensive income
|
|
109
|
|
4
|
|
113
|
|
4
|
|
117
|
|
Comprehensive income
|
|
1,033
|
|
(55)
|
|
978
|
|
59
|
|
1,037
|
|
Preferred dividends of subsidiaries
|
|
(6)
|
|
―
|
|
(6)
|
|
―
|
|
(6)
|
|
Comprehensive income, after
|
|
|
|
|
|
|
|
|
|
|
|
preferred dividends of subsidiaries
|
$
|
1,027
|
$
|
(55)
|
$
|
972
|
$
|
59
|
$
|
1,031
|
|
2011:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1,733
|
$
|
(394)
|
$
|
1,339
|
$
|
42
|
$
|
1,381
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
(79)
|
|
3
|
|
(76)
|
|
6
|
|
(70)
|
|
Reclassification to net income of foreign
|
|
|
|
|
|
|
|
|
|
|
|
currency translation adjustment related
|
|
|
|
|
|
|
|
|
|
|
|
to remeasurement of equity method
|
|
|
|
|
|
|
|
|
|
|
|
investments
|
|
(54)
|
|
―
|
|
(54)
|
|
―
|
|
(54)
|
|
Available-for-sale securities
|
|
(2)
|
|
1
|
|
(1)
|
|
―
|
|
(1)
|
|
Pension and other postretirement benefits
|
|
(20)
|
|
8
|
|
(12)
|
|
―
|
|
(12)
|
|
Financial instruments
|
|
(26)
|
|
10
|
|
(16)
|
|
(36)
|
|
(52)
|
|
Total other comprehensive loss
|
|
(181)
|
|
22
|
|
(159)
|
|
(30)
|
|
(189)
|
|
Comprehensive income
|
|
1,552
|
|
(372)
|
|
1,180
|
|
12
|
|
1,192
|
|
Preferred dividends of subsidiaries
|
|
(8)
|
|
―
|
|
(8)
|
|
―
|
|
(8)
|
|
Comprehensive income, after
|
|
|
|
|
|
|
|
|
|
|
|
preferred dividends of subsidiaries
|
$
|
1,544
|
$
|
(372)
|
$
|
1,172
|
$
|
12
|
$
|
1,184
|
|
See Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY
|
|||||
CONSOLIDATED BALANCE SHEETS
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
December 31,
|
||
|
|
2013
|
2012
|
||
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
904
|
$
|
475
|
|
Restricted cash
|
|
24
|
|
46
|
|
Trade accounts receivable, net
|
|
1,308
|
|
1,146
|
|
Other accounts and notes receivable, net
|
|
214
|
|
153
|
|
Due from unconsolidated affiliates
|
|
4
|
|
―
|
|
Income taxes receivable
|
|
85
|
|
56
|
|
Deferred income taxes
|
|
301
|
|
148
|
|
Inventories
|
|
287
|
|
408
|
|
Regulatory balancing accounts – undercollected
|
|
556
|
|
395
|
|
Regulatory assets
|
|
38
|
|
62
|
|
Fixed-price contracts and other derivatives
|
|
106
|
|
95
|
|
U.S. Treasury grants receivable
|
|
―
|
|
258
|
|
Asset held for sale, power plant
|
|
―
|
|
296
|
|
Other
|
|
170
|
|
157
|
|
Total current assets
|
|
3,997
|
|
3,695
|
|
|
|
|
|
|
|
Investments and other assets:
|
|
|
|
|
|
Restricted cash
|
|
25
|
|
22
|
|
Due from unconsolidated affiliate
|
|
14
|
|
―
|
|
Regulatory assets arising from pension and other postretirement
|
|
|
|
|
|
benefit obligations
|
|
435
|
|
1,151
|
|
Other regulatory assets
|
|
2,113
|
|
1,591
|
|
Nuclear decommissioning trusts
|
|
1,034
|
|
908
|
|
Investments
|
|
1,575
|
|
1,516
|
|
Goodwill
|
|
1,024
|
|
1,111
|
|
Other intangible assets
|
|
426
|
|
436
|
|
Sundry
|
|
1,141
|
|
878
|
|
Total investments and other assets
|
|
7,787
|
|
7,613
|
|
|
|
|
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
Property, plant and equipment
|
|
34,407
|
|
33,528
|
|
Less accumulated depreciation and amortization
|
|
(8,947)
|
|
(8,337)
|
|
Property, plant and equipment, net ($438 and $466 at December 31, 2013 and
|
|
|
|
|
|
2012, respectively, related to VIE)
|
|
25,460
|
|
25,191
|
|
Total assets
|
$
|
37,244
|
$
|
36,499
|
|
See Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY
|
|||||
CONSOLIDATED BALANCE SHEETS (CONTINUED)
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
December 31,
|
||
|
|
2013
|
2012
|
||
LIABILITIES AND EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Short-term debt
|
$
|
545
|
$
|
546
|
|
Accounts payable – trade
|
|
1,088
|
|
976
|
|
Accounts payable – other
|
|
127
|
|
134
|
|
Dividends and interest payable
|
|
271
|
|
266
|
|
Accrued compensation and benefits
|
|
376
|
|
337
|
|
Regulatory balancing accounts – overcollected
|
|
91
|
|
141
|
|
Current portion of long-term debt
|
|
1,147
|
|
725
|
|
Fixed-price contracts and other derivatives
|
|
55
|
|
77
|
|
Customer deposits
|
|
154
|
|
143
|
|
Reserve for wildfire litigation
|
|
63
|
|
305
|
|
Other
|
|
452
|
|
608
|
|
Total current liabilities
|
|
4,369
|
|
4,258
|
|
Long-term debt ($325 and $335 at December 31, 2013 and 2012, respectively,
|
|
|
|
|
|
related to VIE)
|
|
11,253
|
|
11,621
|
|
|
|
|
|
|
|
Deferred credits and other liabilities:
|
|
|
|
|
|
Customer advances for construction
|
|
155
|
|
144
|
|
Pension and other postretirement benefit obligations, net of plan assets
|
|
667
|
|
1,456
|
|
Deferred income taxes
|
|
2,804
|
|
2,100
|
|
Deferred investment tax credits
|
|
42
|
|
46
|
|
Regulatory liabilities arising from removal obligations
|
|
2,623
|
|
2,720
|
|
Asset retirement obligations
|
|
2,084
|
|
2,033
|
|
Fixed-price contracts and other derivatives
|
|
228
|
|
252
|
|
Deferred credits and other
|
|
1,169
|
|
1,107
|
|
Total deferred credits and other liabilities
|
|
9,772
|
|
9,858
|
|
Contingently redeemable preferred stock of subsidiary
|
|
―
|
|
79
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 15)
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Preferred stock (50 million shares authorized; none issued)
|
|
―
|
|
―
|
|
Common stock (750 million shares authorized; 244 million and 242 million
|
|
|
|
|
|
shares outstanding at December 31, 2013 and 2012, respectively; no par value)
|
|
2,409
|
|
2,217
|
|
Retained earnings
|
|
8,827
|
|
8,441
|
|
Accumulated other comprehensive income (loss)
|
|
(228)
|
|
(376)
|
|
Total Sempra Energy shareholders’ equity
|
|
11,008
|
|
10,282
|
|
Preferred stock of subsidiary
|
|
20
|
|
20
|
|
Other noncontrolling interests
|
|
822
|
|
381
|
|
Total equity
|
|
11,850
|
|
10,683
|
|
Total liabilities and equity
|
$
|
37,244
|
$
|
36,499
|
|
See Notes to Consolidated Financial Statements.
|
|||||
|
|
|
|
|
|
SEMPRA ENERGY
|
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(Dollars in millions)
|
|||||||
|
Years ended December 31,
|
||||||
|
2013
|
2012
|
2011
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income
|
$
|
1,088
|
$
|
920
|
$
|
1,381
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
1,113
|
|
1,090
|
|
976
|
|
Deferred income taxes and investment tax credits
|
|
334
|
|
(43)
|
|
3
|
|
Gain on sale of assets
|
|
(114)
|
|
(7)
|
|
―
|
|
Loss from plant closure
|
|
200
|
|
―
|
|
―
|
|
Equity (earnings) losses
|
|
(55)
|
|
324
|
|
(61)
|
|
Remeasurement of equity method investments
|
|
―
|
|
―
|
|
(277)
|
|
Fixed-price contracts and other derivatives
|
|
(21)
|
|
(26)
|
|
2
|
|
Other
|
|
13
|
|
41
|
|
(15)
|
|
Net change in other working capital components
|
|
(620)
|
|
(630)
|
|
(224)
|
|
Distributions from RBS Sempra Commodities LLP
|
|
―
|
|
―
|
|
53
|
|
Changes in other assets
|
|
(171)
|
|
219
|
|
34
|
|
Changes in other liabilities
|
|
17
|
|
130
|
|
(5)
|
|
Net cash provided by operating activities
|
|
1,784
|
|
2,018
|
|
1,867
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
|
(2,572)
|
|
(2,956)
|
|
(2,844)
|
|
Proceeds from sale of assets and investments
|
|
570
|
|
74
|
|
2
|
|
Expenditures for investments and acquisition of businesses, net of cash acquired
|
|
(22)
|
|
(445)
|
|
(941)
|
|
Proceeds from U.S. Treasury grants
|
|
238
|
|
―
|
|
―
|
|
Distributions from RBS Sempra Commodities LLP
|
|
50
|
|
―
|
|
570
|
|
Distributions from other investments
|
|
102
|
|
207
|
|
64
|
|
Purchases of nuclear decommissioning and other trust assets
|
|
(697)
|
|
(738)
|
|
(755)
|
|
Proceeds from sales by nuclear decommissioning and other trusts
|
|
695
|
|
733
|
|
753
|
|
Decrease in restricted cash
|
|
329
|
|
196
|
|
653
|
|
Increase in restricted cash
|
|
(356)
|
|
(218)
|
|
(541)
|
|
Advances to unconsolidated affiliates
|
|
(14)
|
|
―
|
|
―
|
|
Other
|
|
(12)
|
|
(11)
|
|
(31)
|
|
Net cash used in investing activities
|
|
(1,689)
|
|
(3,158)
|
|
(3,070)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Common dividends paid
|
|
(606)
|
|
(550)
|
|
(440)
|
|
Redemption of preferred stock of subsidiaries
|
|
(82)
|
|
―
|
|
(80)
|
|
Preferred dividends paid by subsidiaries
|
|
(5)
|
|
(6)
|
|
(8)
|
|
Issuances of common stock
|
|
62
|
|
78
|
|
28
|
|
Repurchases of common stock
|
|
(45)
|
|
(16)
|
|
(18)
|
|
Issuances of debt (maturities greater than 90 days)
|
|
2,081
|
|
3,097
|
|
2,098
|
|
Payments on debt (maturities greater than 90 days)
|
|
(1,788)
|
|
(1,112)
|
|
(482)
|
|
Proceeds from sale of noncontrolling interest, net of $25 in offering costs
|
|
574
|
|
―
|
|
―
|
|
Increase (decrease) in short-term debt, net
|
|
256
|
|
(47)
|
|
(498)
|
|
Purchase of noncontrolling interests
|
|
―
|
|
(7)
|
|
(43)
|
|
Distributions to noncontrolling interests
|
|
(69)
|
|
(61)
|
|
(16)
|
|
Other
|
|
(40)
|
|
(21)
|
|
(7)
|
|
Net cash provided by financing activities
|
|
338
|
|
1,355
|
|
534
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(4)
|
|
8
|
|
9
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
429
|
|
223
|
|
(660)
|
|
Cash and cash equivalents, January 1
|
|
475
|
|
252
|
|
912
|
|
Cash and cash equivalents, December 31
|
$
|
904
|
$
|
475
|
$
|
252
|
|
See Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY
|
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
CHANGES IN OTHER WORKING CAPITAL COMPONENTS
|
|
|
|
|
|
|
|
(Excluding cash and cash equivalents, and debt due within one year)
|
|
|
|
|
|
|
|
Accounts and notes receivable
|
$
|
(273)
|
$
|
36
|
$
|
(32)
|
|
Income taxes, net
|
|
(38)
|
|
(29)
|
|
269
|
|
Inventories
|
|
116
|
|
(78)
|
|
(84)
|
|
Regulatory balancing accounts
|
|
(198)
|
|
(291)
|
|
(150)
|
|
Regulatory assets and liabilities
|
|
1
|
|
(6)
|
|
(2)
|
|
Other current assets
|
|
15
|
|
180
|
|
295
|
|
Accounts and notes payable
|
|
(28)
|
|
3
|
|
60
|
|
Other current liabilities
|
|
(215)
|
|
(445)
|
|
(580)
|
|
Net change in other working capital components
|
$
|
(620)
|
$
|
(630)
|
$
|
(224)
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
Interest payments, net of amounts capitalized
|
$
|
544
|
$
|
458
|
$
|
440
|
|
Income tax payments, net of refunds
|
|
120
|
|
130
|
|
144
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Nuclear facility plant reclassified to regulatory asset, net of depreciation and amortization
|
$
|
512
|
$
|
―
|
$
|
―
|
|
Accrued capital expenditures
|
|
437
|
|
357
|
|
368
|
|
Capital expenditures recoverable by U.S. Treasury grants receivable(1)
|
|
3
|
|
213
|
|
―
|
|
Sequestration of U.S. Treasury grants receivable
|
|
(23)
|
|
―
|
|
―
|
|
Dividends declared but not paid
|
|
157
|
|
150
|
|
120
|
|
Cancellation of debt and return of investment (industrial development bonds)
|
|
―
|
|
―
|
|
180
|
|
Conversion of debt into equity
|
|
―
|
|
―
|
|
30
|
|
Financing of build-to-suit property
|
|
14
|
|
―
|
|
―
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of businesses:
|
|
|
|
|
|
|
|
Assets acquired
|
$
|
13
|
$
|
29
|
$
|
2,833
|
|
Cash paid, net of cash acquired
|
|
(11)
|
|
(19)
|
|
(611)
|
|
Fair value of equity method investments immediately prior to the acquisition
|
|
―
|
|
―
|
|
(882)
|
|
Fair value of noncontrolling interests
|
|
―
|
|
―
|
|
(279)
|
|
Additional consideration accrued
|
|
―
|
|
―
|
|
(32)
|
|
Liabilities assumed
|
$
|
2
|
$
|
10
|
$
|
1,029
|
|
(1)
|
Cash grants; the 2012 amount excludes $45 million previously recorded in 2011 as investment tax credits.
|
|
|
||||
See Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY
|
|||||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|||||||||||||||
(Dollars in millions)
|
|||||||||||||||
|
|
Years ended December 31, 2013, 2012 and 2011
|
|||||||||||||
|
|
|
|
|
|
Deferred
|
|
|
|
|
|||||
|
|
|
|
|
|
Compen-
|
Accumulated
|
|
|
|
|||||
|
|
|
|
|
|
sation
|
Other
|
Sempra
|
|
|
|||||
|
|
|
|
|
|
Relating
|
Compre-
|
Energy
|
Non-
|
|
|||||
|
|
Common
|
Retained
|
to
|
hensive
|
Shareholders’
|
controlling
|
Total
|
|||||||
|
|
Stock
|
Earnings
|
ESOP
|
Income (Loss)
|
Equity
|
Interests
|
Equity
|
|||||||
Balance at December 31, 2010
|
$
|
2,036
|
$
|
7,292
|
$
|
(8)
|
$
|
(330)
|
$
|
8,990
|
$
|
211
|
$
|
9,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
1,339
|
|
|
|
|
|
1,339
|
|
42
|
|
1,381
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
(159)
|
|
(159)
|
|
(30)
|
|
(189)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense
|
|
48
|
|
|
|
|
|
|
|
48
|
|
|
|
48
|
|
Common stock dividends declared
|
|
|
|
(461)
|
|
|
|
|
|
(461)
|
|
|
|
(461)
|
|
Preferred dividends of subsidiaries
|
|
|
|
(8)
|
|
|
|
|
|
(8)
|
|
|
|
(8)
|
|
Issuance of common stock
|
|
28
|
|
|
|
|
|
|
|
28
|
|
|
|
28
|
|
Repurchases of common stock
|
|
(18)
|
|
|
|
|
|
|
|
(18)
|
|
|
|
(18)
|
|
Common stock released from ESOP
|
|
14
|
|
|
|
6
|
|
|
|
20
|
|
|
|
20
|
|
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
(16)
|
|
(16)
|
|
Equity contributed by noncontrolling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests
|
|
|
|
|
|
|
|
|
|
|
|
36
|
|
36
|
|
Acquisition of South American entities
|
|
|
|
|
|
|
|
|
|
|
|
279
|
|
279
|
|
Purchase of noncontrolling interests in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subsidiary
|
|
(4)
|
|
|
|
|
|
|
|
(4)
|
|
(39)
|
|
(43)
|
|
Redemption of preferred stock of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
(80)
|
|
(80)
|
|
Balance at December 31, 2011
|
|
2,104
|
|
8,162
|
|
(2)
|
|
(489)
|
|
9,775
|
|
403
|
|
10,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
865
|
|
|
|
|
|
865
|
|
55
|
|
920
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
113
|
|
113
|
|
4
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense
|
|
44
|
|
|
|
|
|
|
|
44
|
|
|
|
44
|
|
Common stock dividends declared
|
|
|
|
(580)
|
|
|
|
|
|
(580)
|
|
|
|
(580)
|
|
Preferred dividends of subsidiaries
|
|
|
|
(6)
|
|
|
|
|
|
(6)
|
|
|
|
(6)
|
|
Issuance of common stock
|
|
78
|
|
|
|
|
|
|
|
78
|
|
|
|
78
|
|
Repurchases of common stock
|
|
(16)
|
|
|
|
|
|
|
|
(16)
|
|
|
|
(16)
|
|
Common stock released from ESOP
|
|
7
|
|
|
|
2
|
|
|
|
9
|
|
|
|
9
|
|
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
(62)
|
|
(62)
|
|
Equity contributed by noncontrolling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
8
|
|
Purchase of noncontrolling interest in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
(7)
|
|
(7)
|
|
Balance at December 31, 2012
|
$
|
2,217
|
$
|
8,441
|
$
|
―
|
$
|
(376)
|
$
|
10,282
|
$
|
401
|
$
|
10,683
|
|
See Notes to Consolidated Financial Statements.
|
SEMPRA ENERGY
|
|||||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
|
|||||||||||||||
(Dollars in millions)
|
|||||||||||||||
|
|
Years ended December 31, 2013, 2012 and 2011
|
|||||||||||||
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
||||
|
|
|
|
|
|
Compen-
|
Accumulated
|
|
|
|
|||||
|
|
|
|
|
|
sation
|
Other
|
Sempra
|
|
|
|||||
|
|
|
|
|
|
Relating
|
Compre-
|
Energy
|
Non-
|
|
|||||
|
|
Common
|
Retained
|
to
|
hensive
|
Shareholders’
|
controlling
|
Total
|
|||||||
|
|
Stock
|
Earnings
|
ESOP
|
Income (Loss)
|
Equity
|
Interests
|
Equity
|
|||||||
Balance at December 31, 2012
|
$
|
2,217
|
$
|
8,441
|
$
|
―
|
$
|
(376)
|
$
|
10,282
|
$
|
401
|
$
|
10,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
1,009
|
|
|
|
|
|
1,009
|
|
79
|
|
1,088
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
148
|
|
148
|
|
(8)
|
|
140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense
|
|
40
|
|
|
|
|
|
|
|
40
|
|
|
|
40
|
|
Common stock dividends declared
|
|
|
|
(615)
|
|
|
|
|
|
(615)
|
|
|
|
(615)
|
|
Preferred dividends of subsidiaries
|
|
|
|
(5)
|
|
|
|
|
|
(5)
|
|
|
|
(5)
|
|
Issuance of common stock
|
|
62
|
|
|
|
|
|
|
|
62
|
|
|
|
62
|
|
Repurchases of common stock
|
|
(45)
|
|
|
|
|
|
|
|
(45)
|
|
|
|
(45)
|
|
Sale of noncontrolling interests, net of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
offering costs
|
|
135
|
|
|
|
|
|
|
|
135
|
|
439
|
|
574
|
|
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
(69)
|
|
(69)
|
|
Call premium on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of subsidiary
|
|
|
|
(3)
|
|
|
|
|
|
(3)
|
|
|
|
(3)
|
|
Balance at December 31, 2013
|
$
|
2,409
|
$
|
8,827
|
$
|
―
|
$
|
(228)
|
$
|
11,008
|
$
|
842
|
$
|
11,850
|
|
See Notes to Consolidated Financial Statements.
|
SAN DIEGO GAS & ELECTRIC COMPANY
|
||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Operating revenues
|
|
|
|
|
|
|
Electric
|
$
|
3,537
|
$
|
3,226
|
$
|
2,830
|
Natural gas
|
|
529
|
|
468
|
|
543
|
Total operating revenues
|
|
4,066
|
|
3,694
|
|
3,373
|
Operating expenses
|
|
|
|
|
|
|
Cost of electric fuel and purchased power
|
|
1,019
|
|
892
|
|
715
|
Cost of natural gas
|
|
204
|
|
151
|
|
226
|
Operation and maintenance
|
|
1,157
|
|
1,154
|
|
1,072
|
Depreciation and amortization
|
|
494
|
|
490
|
|
422
|
Franchise fees and other taxes
|
|
210
|
|
198
|
|
183
|
Loss from plant closure
|
|
200
|
|
―
|
|
―
|
Total operating expenses
|
|
3,284
|
|
2,885
|
|
2,618
|
Operating income
|
|
782
|
|
809
|
|
755
|
Other income, net
|
|
40
|
|
69
|
|
79
|
Interest income
|
|
1
|
|
―
|
|
―
|
Interest expense
|
|
(197)
|
|
(173)
|
|
(142)
|
Income before income taxes
|
|
626
|
|
705
|
|
692
|
Income tax expense
|
|
(191)
|
|
(190)
|
|
(237)
|
Net income
|
|
435
|
|
515
|
|
455
|
Earnings attributable to noncontrolling interest
|
|
(24)
|
|
(26)
|
|
(19)
|
Earnings
|
|
411
|
|
489
|
|
436
|
Call premium on preferred stock
|
|
(3)
|
|
―
|
|
―
|
Preferred dividend requirements
|
|
(4)
|
|
(5)
|
|
(5)
|
Earnings attributable to common shares
|
$
|
404
|
$
|
484
|
$
|
431
|
See Notes to Consolidated Financial Statements.
|
SAN DIEGO GAS & ELECTRIC COMPANY
|
|||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|||||||||||
(Dollars in millions)
|
|
|
|
|
|||||||
|
|
Years ended December 31, 2013, 2012 and 2011
|
|||||||||
|
|
SDG&E Shareholder's Equity
|
|
|
|
|
|||||
|
|
Pretax
|
Income Tax
|
Net-of-Tax
|
Noncontrolling
|
|
|||||
|
|
Amount
|
Expense
|
Amount
|
Interest (After-Tax)
|
Total
|
|||||
2013:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
602
|
$
|
(191)
|
$
|
411
|
$
|
24
|
$
|
435
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement benefits
|
|
3
|
|
(1)
|
|
2
|
|
―
|
|
2
|
|
Financial instruments
|
|
―
|
|
―
|
|
―
|
|
17
|
|
17
|
|
Total other comprehensive income
|
|
3
|
|
(1)
|
|
2
|
|
17
|
|
19
|
|
Comprehensive income
|
$
|
605
|
$
|
(192)
|
$
|
413
|
$
|
41
|
$
|
454
|
|
2012:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
679
|
$
|
(190)
|
$
|
489
|
$
|
26
|
$
|
515
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement benefits
|
|
(1)
|
|
―
|
|
(1)
|
|
―
|
|
(1)
|
|
Financial instruments
|
|
―
|
|
―
|
|
―
|
|
(11)
|
|
(11)
|
|
Total other comprehensive loss
|
|
(1)
|
|
―
|
|
(1)
|
|
(11)
|
|
(12)
|
|
Comprehensive income
|
$
|
678
|
$
|
(190)
|
$
|
488
|
$
|
15
|
$
|
503
|
|
2011:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
673
|
$
|
(237)
|
$
|
436
|
$
|
19
|
$
|
455
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments
|
|
―
|
|
―
|
|
―
|
|
(36)
|
|
(36)
|
|
Total other comprehensive loss
|
|
―
|
|
―
|
|
―
|
|
(36)
|
|
(36)
|
|
Comprehensive income (loss)
|
$
|
673
|
$
|
(237)
|
$
|
436
|
$
|
(17)
|
$
|
419
|
|
See Notes to Consolidated Financial Statements.
|
SAN DIEGO GAS & ELECTRIC COMPANY
|
|||||
CONSOLIDATED BALANCE SHEETS
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
December 31,
|
||
|
|
2013
|
2012
|
||
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
27
|
$
|
87
|
|
Restricted cash
|
|
6
|
|
10
|
|
Accounts receivable – trade, net
|
|
266
|
|
252
|
|
Accounts receivable – other, net
|
|
28
|
|
21
|
|
Due from unconsolidated affiliates
|
|
1
|
|
39
|
|
Income taxes receivable
|
|
32
|
|
35
|
|
Deferred income taxes
|
|
103
|
|
―
|
|
Inventories
|
|
86
|
|
82
|
|
Regulatory balancing accounts, net
|
|
556
|
|
395
|
|
Regulatory assets arising from fixed-price contracts and other derivatives
|
|
―
|
|
39
|
|
Other regulatory assets
|
|
29
|
|
10
|
|
Fixed-price contracts and other derivatives
|
|
61
|
|
41
|
|
Other
|
|
75
|
|
76
|
|
Total current assets
|
|
1,270
|
|
1,087
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
Restricted cash
|
|
25
|
|
22
|
|
Deferred taxes recoverable in rates
|
|
788
|
|
718
|
|
Regulatory assets arising from fixed-price contracts and other derivatives
|
|
63
|
|
110
|
|
Regulatory assets arising from pension and other postretirement
|
|
|
|
|
|
benefit obligations
|
|
106
|
|
303
|
|
Other regulatory assets
|
|
991
|
|
616
|
|
Nuclear decommissioning trusts
|
|
1,034
|
|
908
|
|
Sundry
|
|
254
|
|
117
|
|
Total other assets
|
|
3,261
|
|
2,794
|
|
|
|
|
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
Property, plant and equipment
|
|
14,346
|
|
14,124
|
|
Less accumulated depreciation and amortization
|
|
(3,500)
|
|
(3,261)
|
|
Property, plant and equipment, net ($438 and $466 at December 31, 2013
|
|
|
|
|
|
and 2012, respectively, related to VIE)
|
|
10,846
|
|
10,863
|
|
Total assets
|
$
|
15,377
|
$
|
14,744
|
|
See Notes to Consolidated Financial Statements.
|
|
|
|
|
SAN DIEGO GAS & ELECTRIC COMPANY
|
|||||
CONSOLIDATED BALANCE SHEETS (CONTINUED)
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
December 31,
|
||
|
|
2013
|
2012
|
||
LIABILITIES AND EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Short-term debt
|
$
|
59
|
$
|
―
|
|
Accounts payable
|
|
420
|
|
300
|
|
Due to unconsolidated affiliates
|
|
39
|
|
19
|
|
Deferred income taxes
|
|
―
|
|
26
|
|
Dividends and interest payable
|
|
39
|
|
36
|
|
Accrued compensation and benefits
|
|
113
|
|
129
|
|
Current portion of long-term debt
|
|
29
|
|
16
|
|
Fixed-price contracts and other derivatives
|
|
38
|
|
56
|
|
Customer deposits
|
|
71
|
|
60
|
|
Reserve for wildfire litigation
|
|
63
|
|
305
|
|
Other
|
|
208
|
|
157
|
|
Total current liabilities
|
|
1,079
|
|
1,104
|
|
Long-term debt ($325 and $335 at December 31, 2013 and 2012, respectively,
|
|
|
|
|
|
related to VIE)
|
|
4,525
|
|
4,292
|
|
|
|
|
|
|
|
Deferred credits and other liabilities:
|
|
|
|
|
|
Customer advances for construction
|
|
34
|
|
17
|
|
Pension and other postretirement benefit obligations, net of plan assets
|
|
132
|
|
340
|
|
Deferred income taxes
|
|
2,021
|
|
1,636
|
|
Deferred investment tax credits
|
|
24
|
|
25
|
|
Regulatory liabilities arising from removal obligations
|
|
1,403
|
|
1,603
|
|
Asset retirement obligations
|
|
861
|
|
733
|
|
Fixed-price contracts and other derivatives
|
|
175
|
|
209
|
|
Deferred credits and other
|
|
404
|
|
408
|
|
Total deferred credits and other liabilities
|
|
5,054
|
|
4,971
|
|
Contingently redeemable preferred stock
|
|
―
|
|
79
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 15)
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Common stock (255 million shares authorized; 117 million shares outstanding;
|
|
|
|
|
|
no par value)
|
|
1,338
|
|
1,338
|
|
Retained earnings
|
|
3,299
|
|
2,895
|
|
Accumulated other comprehensive income (loss)
|
|
(9)
|
|
(11)
|
|
Total SDG&E shareholder’s equity
|
|
4,628
|
|
4,222
|
|
Noncontrolling interest
|
|
91
|
|
76
|
|
Total equity
|
|
4,719
|
|
4,298
|
|
Total liabilities and equity
|
$
|
15,377
|
$
|
14,744
|
|
See Notes to Consolidated Financial Statements.
|
SAN DIEGO GAS & ELECTRIC COMPANY
|
||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net income
|
$
|
435
|
$
|
515
|
$
|
455
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
494
|
|
490
|
|
422
|
Deferred income taxes and investment tax credits
|
|
171
|
|
285
|
|
290
|
Loss from plant closure
|
|
200
|
|
―
|
|
―
|
Fixed-price contracts and other derivatives
|
|
(8)
|
|
(12)
|
|
(13)
|
Other
|
|
(37)
|
|
(63)
|
|
(68)
|
Changes in other assets
|
|
(150)
|
|
201
|
|
33
|
Changes in other liabilities
|
|
19
|
|
129
|
|
7
|
Changes in working capital components:
|
|
|
|
|
|
|
Accounts receivable
|
|
(40)
|
|
12
|
|
6
|
Due to/from affiliates, net
|
|
38
|
|
29
|
|
6
|
Inventories
|
|
(14)
|
|
―
|
|
(11)
|
Other current assets
|
|
7
|
|
208
|
|
309
|
Income taxes
|
|
(50)
|
|
85
|
|
(111)
|
Accounts payable
|
|
50
|
|
(42)
|
|
68
|
Regulatory balancing accounts
|
|
(140)
|
|
(322)
|
|
(87)
|
Interest payable
|
|
4
|
|
5
|
|
6
|
Other current liabilities
|
|
(260)
|
|
(419)
|
|
(430)
|
Net cash provided by operating activities
|
|
719
|
|
1,101
|
|
882
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
|
(978)
|
|
(1,237)
|
|
(1,831)
|
Purchases of nuclear decommissioning trust assets
|
|
(692)
|
|
(732)
|
|
(748)
|
Proceeds from sales by nuclear decommissioning trusts
|
|
685
|
|
723
|
|
741
|
Proceeds from sale of assets
|
|
11
|
|
―
|
|
1
|
Decrease in restricted cash
|
|
82
|
|
92
|
|
520
|
Increase in restricted cash
|
|
(81)
|
|
(81)
|
|
(447)
|
Net cash used in investing activities
|
|
(973)
|
|
(1,235)
|
|
(1,764)
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
Capital contribution
|
|
―
|
|
―
|
|
200
|
Redemption of preferred stock
|
|
(82)
|
|
―
|
|
―
|
Preferred dividends paid
|
|
(5)
|
|
(5)
|
|
(5)
|
Issuances of long-term debt
|
|
450
|
|
249
|
|
598
|
Payments on long-term debt
|
|
(199)
|
|
(10)
|
|
(10)
|
Capital contribution received by Otay Mesa VIE
|
|
―
|
|
―
|
|
5
|
Capital distributions made by Otay Mesa VIE
|
|
(26)
|
|
(40)
|
|
―
|
Increase in short-term debt, net
|
|
59
|
|
―
|
|
―
|
Other
|
|
(3)
|
|
(2)
|
|
(4)
|
Net cash provided by financing activities
|
|
194
|
|
192
|
|
784
|
(Decrease) increase in cash and cash equivalents
|
|
(60)
|
|
58
|
|
(98)
|
Cash and cash equivalents, January 1
|
|
87
|
|
29
|
|
127
|
Cash and cash equivalents, December 31
|
$
|
27
|
$
|
87
|
$
|
29
|
See Notes to Consolidated Financial Statements.
|
SAN DIEGO GAS & ELECTRIC COMPANY
|
||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
Interest payments, net of amounts capitalized
|
$
|
187
|
$
|
162
|
$
|
131
|
Income tax payments (refunds), net
|
|
84
|
|
(242)
|
|
59
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
Nuclear facility plant reclassified to regulatory asset, net of depreciation
|
|
|
|
|
|
|
and amortization
|
$
|
512
|
$
|
―
|
$
|
―
|
Accrued capital expenditures
|
|
182
|
|
153
|
|
187
|
Dividends declared but not paid
|
|
―
|
|
1
|
|
1
|
See Notes to Consolidated Financial Statements.
|
SAN DIEGO GAS & ELECTRIC COMPANY
|
||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
||||||||||||
(Dollars in millions)
|
||||||||||||
|
Years ended December 2013, 2012 and 2011
|
|||||||||||
|
|
|
|
Accumulated
|
|
|
|
|||||
|
|
|
|
Other
|
SDG&E
|
|
|
|||||
|
Common
|
Retained
|
Comprehensive
|
Shareholder’s
|
Noncontrolling
|
Total
|
||||||
|
Stock
|
Earnings
|
Income (Loss)
|
Equity
|
Interest
|
Equity
|
||||||
Balance at December 31, 2010
|
$
|
1,138
|
$
|
1,980
|
$
|
(10)
|
$
|
3,108
|
$
|
113
|
$
|
3,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
436
|
|
|
|
436
|
|
19
|
|
455
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(36)
|
|
(36)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared
|
|
|
|
(5)
|
|
|
|
(5)
|
|
|
|
(5)
|
Capital contribution
|
|
200
|
|
|
|
|
|
200
|
|
|
|
200
|
Equity contributed by noncontrolling interest
|
|
|
|
|
|
|
|
|
|
6
|
|
6
|
Balance at December 31, 2011
|
|
1,338
|
|
2,411
|
|
(10)
|
|
3,739
|
|
102
|
|
3,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
489
|
|
|
|
489
|
|
26
|
|
515
|
Other comprehensive loss
|
|
|
|
|
|
(1)
|
|
(1)
|
|
(11)
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared
|
|
|
|
(5)
|
|
|
|
(5)
|
|
|
|
(5)
|
Distributions to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
(41)
|
|
(41)
|
Balance at December 31, 2012
|
|
1,338
|
|
2,895
|
|
(11)
|
|
4,222
|
|
76
|
|
4,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
411
|
|
|
|
411
|
|
24
|
|
435
|
Other comprehensive income
|
|
|
|
|
|
2
|
|
2
|
|
17
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
Distributions to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
(26)
|
|
(26)
|
Call premium on preferred stock
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
Balance at December 31, 2013
|
$
|
1,338
|
$
|
3,299
|
$
|
(9)
|
$
|
4,628
|
$
|
91
|
$
|
4,719
|
See Notes to Consolidated Financial Statements.
|
SOUTHERN CALIFORNIA GAS COMPANY
|
||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
Operating revenues
|
$
|
3,736
|
$
|
3,282
|
$
|
3,816
|
Operating expenses
|
|
|
|
|
|
|
Cost of natural gas
|
|
1,362
|
|
1,074
|
|
1,568
|
Operation and maintenance
|
|
1,324
|
|
1,304
|
|
1,305
|
Depreciation and amortization
|
|
383
|
|
362
|
|
331
|
Franchise fees and other taxes
|
|
128
|
|
122
|
|
126
|
Total operating expenses
|
|
3,197
|
|
2,862
|
|
3,330
|
Operating income
|
|
539
|
|
420
|
|
486
|
Other income, net
|
|
11
|
|
17
|
|
13
|
Interest income
|
|
―
|
|
―
|
|
1
|
Interest expense
|
|
(69)
|
|
(68)
|
|
(69)
|
Income before income taxes
|
|
481
|
|
369
|
|
431
|
Income tax expense
|
|
(116)
|
|
(79)
|
|
(143)
|
Net income
|
|
365
|
|
290
|
|
288
|
Preferred dividend requirements
|
|
(1)
|
|
(1)
|
|
(1)
|
Earnings attributable to common shares
|
$
|
364
|
$
|
289
|
$
|
287
|
See Notes to Consolidated Financial Statements.
|
SOUTHERN CALIFORNIA GAS COMPANY
|
|||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Years ended December 31, 2013, 2012 and 2011
|
|||||
|
|
Pretax
|
Income Tax
|
Net-of-Tax
|
|||
|
|
Amount
|
(Expense) Benefit
|
Amount
|
|||
2013:
|
|
|
|
|
|
|
|
Net income
|
$
|
481
|
$
|
(116)
|
$
|
365
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
Pension and other postretirement benefits
|
|
(2)
|
|
1
|
|
(1)
|
|
Financial instruments
|
|
1
|
|
―
|
|
1
|
|
Total other comprehensive income
|
|
(1)
|
|
1
|
|
―
|
|
Comprehensive income
|
$
|
480
|
$
|
(115)
|
$
|
365
|
|
2012:
|
|
|
|
|
|
|
|
Net income
|
$
|
369
|
$
|
(79)
|
$
|
290
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
Pension and other postretirement benefits
|
|
5
|
|
(3)
|
|
2
|
|
Financial instruments
|
|
2
|
|
(1)
|
|
1
|
|
Total other comprehensive income
|
|
7
|
|
(4)
|
|
3
|
|
Comprehensive income
|
$
|
376
|
$
|
(83)
|
$
|
293
|
|
2011:
|
|
|
|
|
|
|
|
Net income
|
$
|
431
|
$
|
(143)
|
$
|
288
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
Pension and other postretirement benefits
|
|
(2)
|
|
1
|
|
(1)
|
|
Financial instruments
|
|
3
|
|
(1)
|
|
2
|
|
Total other comprehensive income
|
|
1
|
|
―
|
|
1
|
|
Comprehensive income
|
$
|
432
|
$
|
(143)
|
$
|
289
|
|
See Notes to Consolidated Financial Statements.
|
SOUTHERN CALIFORNIA GAS COMPANY
|
||||
CONSOLIDATED BALANCE SHEETS
|
||||
(Dollars in millions)
|
||||
|
December 31,
|
December 31,
|
||
|
2013
|
2012
|
||
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
27
|
$
|
83
|
Accounts receivable – trade, net
|
|
595
|
|
539
|
Accounts receivable – other, net
|
|
97
|
|
51
|
Due from unconsolidated affiliates
|
|
21
|
|
24
|
Income taxes receivable
|
|
25
|
|
104
|
Deferred income taxes
|
|
―
|
|
3
|
Inventories
|
|
69
|
|
151
|
Regulatory assets
|
|
5
|
|
4
|
Other
|
|
34
|
|
35
|
Total current assets
|
|
873
|
|
994
|
|
|
|
|
|
Other assets:
|
|
|
|
|
Regulatory assets arising from pension obligations
|
|
326
|
|
694
|
Regulatory assets arising from other postretirement benefit obligations
|
|
―
|
|
141
|
Other regulatory assets
|
|
262
|
|
148
|
Other postretirement benefit assets, net of plan liabilities
|
|
95
|
|
―
|
Sundry
|
|
124
|
|
77
|
Total other assets
|
|
807
|
|
1,060
|
|
|
|
|
|
Property, plant and equipment:
|
|
|
|
|
Property, plant and equipment
|
|
11,831
|
|
11,187
|
Less accumulated depreciation and amortization
|
|
(4,364)
|
|
(4,170)
|
Property, plant and equipment, net
|
|
7,467
|
|
7,017
|
Total assets
|
$
|
9,147
|
$
|
9,071
|
See Notes to Consolidated Financial Statements.
|
SOUTHERN CALIFORNIA GAS COMPANY
|
||||
CONSOLIDATED BALANCE SHEETS (CONTINUED)
|
||||
(Dollars in millions)
|
||||
|
December 31,
|
December 31,
|
||
|
2013
|
2012
|
||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Short-term debt
|
$
|
42
|
$
|
―
|
Accounts payable – trade
|
|
346
|
|
383
|
Accounts payable – other
|
|
79
|
|
82
|
Due to unconsolidated affiliates
|
|
16
|
|
37
|
Deferred income taxes
|
|
45
|
|
―
|
Accrued compensation and benefits
|
|
141
|
|
116
|
Regulatory balancing accounts, net
|
|
91
|
|
141
|
Current portion of long-term debt
|
|
252
|
|
4
|
Customer deposits
|
|
75
|
|
76
|
Other
|
|
125
|
|
124
|
Total current liabilities
|
|
1,212
|
|
963
|
Long-term debt
|
|
1,159
|
|
1,409
|
Deferred credits and other liabilities:
|
|
|
|
|
Customer advances for construction
|
|
108
|
|
111
|
Pension obligation, net of plan assets
|
|
339
|
|
714
|
Other postretirement benefit obligations, net of plan assets
|
|
―
|
|
141
|
Regulatory liabilities arising from other postretirement benefit assets
|
|
95
|
|
―
|
Deferred income taxes
|
|
993
|
|
881
|
Deferred investment tax credits
|
|
18
|
|
20
|
Regulatory liabilities arising from removal obligations
|
|
1,205
|
|
1,103
|
Asset retirement obligations
|
|
1,182
|
|
1,238
|
Deferred credits and other
|
|
287
|
|
256
|
Total deferred credits and other liabilities
|
|
4,227
|
|
4,464
|
|
|
|
|
|
Commitments and contingencies (Note 15)
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
Preferred stock
|
|
22
|
|
22
|
Common stock (100 million shares authorized; 91 million shares outstanding;
|
|
|
|
|
no par value)
|
|
866
|
|
866
|
Retained earnings
|
|
1,679
|
|
1,365
|
Accumulated other comprehensive income (loss)
|
|
(18)
|
|
(18)
|
Total shareholders’ equity
|
|
2,549
|
|
2,235
|
Total liabilities and shareholders’ equity
|
$
|
9,147
|
$
|
9,071
|
See Notes to Consolidated Financial Statements.
|
SOUTHERN CALIFORNIA GAS COMPANY
|
||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net income
|
$
|
365
|
$
|
290
|
$
|
288
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
383
|
|
362
|
|
331
|
Deferred income taxes and investment tax credits
|
|
117
|
|
128
|
|
130
|
Other
|
|
(5)
|
|
(12)
|
|
(6)
|
Changes in other assets
|
|
(52)
|
|
14
|
|
19
|
Changes in other liabilities
|
|
(4)
|
|
4
|
|
(7)
|
Changes in working capital components:
|
|
|
|
|
|
|
Accounts receivable
|
|
(113)
|
|
37
|
|
(57)
|
Inventories
|
|
82
|
|
(1)
|
|
(46)
|
Other current assets
|
|
3
|
|
(6)
|
|
5
|
Accounts payable
|
|
(54)
|
|
54
|
|
(7)
|
Income taxes
|
|
51
|
|
(83)
|
|
(12)
|
Due to/from affiliates, net
|
|
(57)
|
|
51
|
|
(18)
|
Regulatory balancing accounts
|
|
(58)
|
|
31
|
|
(63)
|
Customer deposits
|
|
(1)
|
|
1
|
|
2
|
Other current liabilities
|
|
24
|
|
(24)
|
|
(5)
|
Net cash provided by operating activities
|
|
681
|
|
846
|
|
554
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
|
(762)
|
|
(639)
|
|
(683)
|
Decrease (increase) in loans to affiliate, net
|
|
34
|
|
(4)
|
|
49
|
Net cash used in investing activities
|
|
(728)
|
|
(643)
|
|
(634)
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
Common dividends paid
|
|
(50)
|
|
(250)
|
|
(50)
|
Preferred dividends paid
|
|
(1)
|
|
(1)
|
|
(1)
|
Issuances of long-term debt
|
|
―
|
|
348
|
|
―
|
Payments on long-term debt
|
|
―
|
|
(250)
|
|
(250)
|
Debt issuance costs
|
|
―
|
|
(3)
|
|
―
|
Increase in short-term debt, net
|
|
42
|
|
―
|
|
―
|
Net cash used in financing activities
|
|
(9)
|
|
(156)
|
|
(301)
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
(56)
|
|
47
|
|
(381)
|
Cash and cash equivalents, January 1
|
|
83
|
|
36
|
|
417
|
Cash and cash equivalents, December 31
|
$
|
27
|
$
|
83
|
$
|
36
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
Interest payments, net of amounts capitalized
|
$
|
65
|
$
|
62
|
$
|
65
|
Income tax (refunds) payments, net
|
|
(52)
|
|
16
|
|
25
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITY
|
|
|
|
|
|
|
Accrued capital expenditures
|
$
|
130
|
$
|
115
|
$
|
97
|
See Notes to Consolidated Financial Statements.
|
SOUTHERN CALIFORNIA GAS COMPANY
|
||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
|
||||||||||
(Dollars in millions)
|
||||||||||
|
Years ended December 31, 2013, 2012 and 2011
|
|||||||||
|
|
|
|
|
|
Accumulated
|
|
|||
|
|
|
|
|
|
Other
|
Total
|
|||
|
Preferred
|
Common
|
Retained
|
Comprehensive
|
Shareholders’
|
|||||
|
Stock
|
Stock
|
Earnings
|
Income (Loss)
|
Equity
|
|||||
Balance at December 31, 2010
|
$
|
22
|
$
|
866
|
$
|
1,089
|
$
|
(22)
|
$
|
1,955
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
288
|
|
|
|
288
|
Other comprehensive income
|
|
|
|
|
|
|
|
1
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared
|
|
|
|
|
|
(1)
|
|
|
|
(1)
|
Common stock dividends declared
|
|
|
|
|
|
(50)
|
|
|
|
(50)
|
Balance at December 31, 2011
|
|
22
|
|
866
|
|
1,326
|
|
(21)
|
|
2,193
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
290
|
|
|
|
290
|
Other comprehensive income
|
|
|
|
|
|
|
|
3
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared
|
|
|
|
|
|
(1)
|
|
|
|
(1)
|
Common stock dividends declared
|
|
|
|
|
|
(250)
|
|
|
|
(250)
|
Balance at December 31, 2012
|
|
22
|
|
866
|
|
1,365
|
|
(18)
|
|
2,235
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
365
|
|
|
|
365
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends declared
|
|
|
|
|
|
(1)
|
|
|
|
(1)
|
Common stock dividends declared
|
|
|
|
|
|
(50)
|
|
|
|
(50)
|
Balance at December 31, 2013
|
$
|
22
|
$
|
866
|
$
|
1,679
|
$
|
(18)
|
$
|
2,549
|
See Notes to Consolidated Financial Statements.
|
§
|
San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas), which are separate, reportable segments;
|
§
|
Sempra International, which includes our Sempra South American Utilities and Sempra Mexico reportable segments; and
|
§
|
Sempra U.S. Gas & Power, which includes our Sempra Renewables and Sempra Natural Gas reportable segments.
|
§
|
the nature of the event giving rise to the assessment;
|
§
|
existing statutes and regulatory code;
|
§
|
legal precedence;
|
§
|
regulatory principles and analogous regulatory actions;
|
§
|
testimony presented in regulatory hearings;
|
§
|
proposed regulatory decisions;
|
§
|
final regulatory orders;
|
§
|
a commission-authorized mechanism established for the accumulation of costs;
|
§
|
status of applications for rehearings or state court appeals;
|
§
|
specific approval from a commission; and
|
§
|
historical experience.
|
SUMMARY OF REGULATORY BALANCING ACCOUNTS AT DECEMBER 31
|
|||||||||||||
(Dollars in millions)
|
|||||||||||||
|
|
Sempra Energy
|
|
|
|||||||||
|
|
Consolidated
|
SDG&E
|
SoCalGas
|
|||||||||
|
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
||||||
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overcollected
|
$
|
(1,077)
|
$
|
(643)
|
$
|
(645)
|
$
|
(340)
|
$
|
(432)
|
$
|
(303)
|
|
Undercollected
|
|
1,542
|
|
897
|
|
1,201
|
|
735
|
|
341
|
|
162
|
|
Net current receivable (payable)(1)
|
|
465
|
|
254
|
|
556
|
|
395
|
|
(91)
|
|
(141)
|
|
Non-current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undercollected(2)
|
|
213
|
|
―
|
|
161
|
|
―
|
|
52
|
|
―
|
|
Total net receivable (payable)(1)
|
$
|
678
|
$
|
254
|
$
|
717
|
$
|
395
|
$
|
(39)
|
$
|
(141)
|
|
(1)
|
At December 31, 2013 and 2012, the net receivable at SDG&E and the net payable at SoCalGas are shown separately on Sempra Energy's Consolidated Balance Sheets.
|
||||||||||||
(2)
|
Long-term undercollected balance included in Other Regulatory Assets (long-term) on the Consolidated Balance Sheets.
|
REGULATORY ASSETS (LIABILITIES) AT DECEMBER 31
|
|||||
(Dollars in millions)
|
|||||
|
|
2013
|
2012
|
||
SDG&E
|
|
|
|
|
|
Fixed-price contracts and other derivatives
|
$
|
58
|
$
|
149
|
|
Costs related to SONGS plant closure
|
|
303
|
|
―
|
|
Costs related to wildfire litigation
|
|
330
|
|
364
|
|
Deferred taxes recoverable in rates
|
|
788
|
|
718
|
|
Pension and other postretirement benefit obligations
|
|
106
|
|
303
|
|
Removal obligations(1)
|
|
(1,403)
|
|
(1,603)
|
|
Unamortized loss on reacquired debt
|
|
14
|
|
16
|
|
Environmental costs
|
|
20
|
|
16
|
|
Legacy meters
|
|
62
|
|
90
|
|
Sunrise Powerlink fire mitigation
|
|
115
|
|
117
|
|
Other
|
|
15
|
|
23
|
|
Total SDG&E
|
|
408
|
|
193
|
|
SoCalGas
|
|
|
|
|
|
Pension and other postretirement benefit obligations
|
|
231
|
|
835
|
|
Employee benefit costs
|
|
51
|
|
58
|
|
Removal obligations(1)
|
|
(1,205)
|
|
(1,103)
|
|
Deferred taxes recoverable in rates
|
|
110
|
|
38
|
|
Unamortized loss on reacquired debt
|
|
14
|
|
17
|
|
Environmental costs
|
|
14
|
|
14
|
|
Workers’ compensation
|
|
26
|
|
27
|
|
Other
|
|
―
|
|
(2)
|
|
Total SoCalGas
|
|
(759)
|
|
(116)
|
|
Other Sempra Energy
|
|
|
|
|
|
Sempra Natural Gas
|
|
(11)
|
|
3
|
|
Sempra Mexico
|
|
8
|
|
1
|
|
Total Other Sempra Energy
|
|
(3)
|
|
4
|
|
Total Sempra Energy Consolidated
|
$
|
(354)
|
$
|
81
|
|
(1)
|
Related to obligations discussed below in “Asset Retirement Obligations.”
|
NET REGULATORY ASSETS (LIABILITIES) AS PRESENTED ON THE CONSOLIDATED BALANCE SHEETS AT DECEMBER 31
|
||||||||||||||
(Dollars in millions)
|
||||||||||||||
|
|
2013
|
|
2012
|
||||||||||
|
|
Sempra
|
|
|
|
Sempra
|
|
|
||||||
|
|
Energy
|
|
|
|
Energy
|
|
|
||||||
|
|
Consolidated
|
SDG&E
|
SoCalGas
|
|
Consolidated
|
SDG&E
|
SoCalGas
|
||||||
Current regulatory assets
|
$
|
38
|
$
|
29
|
$
|
5
|
|
$
|
62
|
$
|
49
|
$
|
4
|
|
Noncurrent regulatory assets(1)
|
|
2,335
|
|
1,787
|
|
536
|
|
|
2,742
|
|
1,747
|
|
983
|
|
Current regulatory liabilities(2)
|
|
(7)
|
|
(5)
|
|
―
|
|
|
(2)
|
|
―
|
|
―
|
|
Noncurrent regulatory liabilities(3)
|
|
(2,720)
|
|
(1,403)
|
|
(1,300)
|
|
|
(2,721)
|
|
(1,603)
|
|
(1,103)
|
|
Total
|
$
|
(354)
|
$
|
408
|
$
|
(759)
|
|
$
|
81
|
$
|
193
|
$
|
(116)
|
|
(1)
|
Excludes long-term undercollected balancing accounts of $213 million at Sempra Energy, $161 million at SDG&E and $52 million at SoCalGas recorded in Other Regulatory Assets (long-term).
|
|||||||||||||
(2)
|
Included in Other Current Liabilities.
|
|||||||||||||
(3)
|
At December 31, 2013 and 2012, $97 million and $1 million, respectively, at Sempra Energy Consolidated is included in Deferred Credits and Other.
|
§
|
Regulatory assets arising from fixed-price contracts and other derivatives are offset by corresponding liabilities arising from purchased power and natural gas commodity and transportation contracts. The regulatory asset is increased/decreased based on changes in the fair market value of the contracts. It is also reduced as payments are made for commodities and services under these contracts.
|
§
|
Regulatory assets related to the San Onofre Nuclear Generating Station (SONGS) plant closure represent management’s estimate of what SDG&E will be allowed to recover in rates in the future associated with SDG&E’s investment in SONGS as of the plant closure date, the cost of operations since Units 2 and 3 were taken offline, and the cost of purchased replacement power, as we discuss further in Note 13.
|
§
|
Regulatory assets arising from costs related to wildfire litigation are costs in excess of liability insurance coverage and amounts recovered from third parties, as we discuss in Note 14 under “Excess Wildfire Claims Cost Recovery at the CPUC” and Note 15 under “SDG&E—2007 Wildfire Litigation.”
|
§
|
Deferred taxes recoverable in rates are based on current regulatory ratemaking and income tax laws. SDG&E and SoCalGas expect to recover net regulatory assets related to deferred income taxes over the lives of the assets that give rise to the accumulated deferred income tax liabilities. These net assets are included in ratebase.
|
§
|
Regulatory assets/liabilities related to pension and other postretirement benefit obligations are offset by corresponding liabilities/assets and are being recovered in rates as the plans are funded.
|
§
|
Regulatory assets related to unamortized losses on reacquired debt are recovered over the remaining original amortization periods of the losses on reacquired debt. These periods range from 5 months to 14 years for SDG&E and from 8 years to 12 years for SoCalGas.
|
§
|
Regulatory assets related to environmental costs represent the portion of our environmental liability recognized at the end of the period in excess of the amount that has been recovered through rates charged to customers. We expect this amount to be recovered in future rates as expenditures are made.
|
§
|
The regulatory asset related to the legacy meters removed from service and replaced under the Smart Meter Program is their undepreciated value. SDG&E is recovering this asset over a 4-year period in ratebase.
|
§
|
The regulatory asset related to Sunrise Powerlink fire mitigation is offset by a corresponding liability for the funding of a trust to cover the mitigation costs. SDG&E expects to recover the regulatory asset in rates as the trust is funded over a 50-year period.
|
§
|
quoted forward prices for commodities
|
§
|
time value
|
§
|
current market and contractual prices for the underlying instruments
|
§
|
volatility factors
|
§
|
other relevant economic measures
|
COLLECTION ALLOWANCES
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated
|
|
|
|
|
|
|
Allowances for collection of receivables at January 1
|
$
|
31
|
$
|
29
|
$
|
29
|
Provisions for uncollectible accounts
|
|
16
|
|
21
|
|
20
|
Write-offs of uncollectible accounts
|
|
(18)
|
|
(19)
|
|
(20)
|
Allowances for collection of receivables at December 31
|
$
|
29
|
$
|
31
|
$
|
29
|
SDG&E
|
|
|
|
|
|
|
Allowances for collection of receivables at January 1
|
$
|
6
|
$
|
6
|
$
|
5
|
Provisions for uncollectible accounts
|
|
4
|
|
5
|
|
8
|
Write-offs of uncollectible accounts
|
|
(5)
|
|
(5)
|
|
(7)
|
Allowances for collection of receivables at December 31
|
$
|
5
|
$
|
6
|
$
|
6
|
SoCalGas
|
|
|
|
|
|
|
Allowances for collection of receivables at January 1
|
$
|
14
|
$
|
12
|
$
|
14
|
Provisions for uncollectible accounts
|
|
7
|
|
12
|
|
8
|
Write-offs of uncollectible accounts
|
|
(9)
|
|
(10)
|
|
(10)
|
Allowances for collection of receivables at December 31
|
$
|
12
|
$
|
14
|
$
|
12
|
INVENTORY BALANCES AT DECEMBER 31
|
|||||||||||||||||
(Dollars in millions)
|
|||||||||||||||||
|
|
Natural Gas
|
|
LNG
|
Materials and supplies
|
Total
|
|||||||||||
|
|
2013
|
2012
|
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
|||||||
SDG&E
|
$
|
3
|
$
|
3
|
$
|
―
|
$
|
―
|
$
|
83
|
$
|
79
|
$
|
86
|
$
|
82
|
|
SoCalGas
|
|
42
|
|
128
|
|
―
|
|
―
|
|
27
|
|
23
|
|
69
|
|
151
|
|
Sempra South American Utilities
|
|
―
|
|
―
|
|
―
|
|
―
|
|
40
|
|
34
|
|
40
|
|
34
|
|
Sempra Mexico
|
|
―
|
|
―
|
|
3
|
|
8
|
|
9
|
|
8
|
|
12
|
|
16
|
|
Sempra Renewables
|
|
―
|
|
―
|
|
―
|
|
―
|
|
2
|
|
3
|
|
2
|
|
3
|
|
Sempra Natural Gas
|
|
68
|
|
109
|
|
5
|
|
8
|
|
5
|
|
5
|
|
78
|
|
122
|
|
Sempra Energy Consolidated
|
$
|
113
|
$
|
240
|
$
|
8
|
$
|
16
|
$
|
166
|
$
|
152
|
$
|
287
|
$
|
408
|
§
|
regulatory assets to offset deferred tax liabilities if it is probable that the amounts will be recovered from customers; and
|
§
|
regulatory liabilities to offset deferred tax assets if it is probable that the amounts will be returned to customers.
|
§
|
labor
|
§
|
materials and contract services
|
§
|
expenditures for replacement parts incurred during a major maintenance outage of a generating plant
|
PROPERTY, PLANT AND EQUIPMENT BY MAJOR FUNCTIONAL CATEGORY
|
||||||||||||
(Dollars in millions)
|
||||||||||||
|
|
Property, Plant
|
|
|
||||||||
|
|
and Equipment at
|
|
Depreciation rates for
|
||||||||
|
|
December 31,
|
|
years ended December 31,
|
||||||||
|
|
2013
|
2012
|
|
2013
|
2012
|
2011
|
|||||
SDG&E:
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas operations
|
$
|
1,454
|
$
|
1,406
|
|
2.35
|
%
|
3.20
|
%
|
3.15
|
%
|
|
Electric distribution
|
|
5,492
|
|
5,217
|
|
3.36
|
|
4.15
|
|
4.13
|
|
|
Electric transmission(1)
|
|
3,932
|
|
3,714
|
|
2.58
|
|
2.63
|
|
2.74
|
|
|
Electric generation(2)
|
|
1,768
|
|
2,242
|
|
3.76
|
|
4.68
|
|
4.92
|
|
|
Other electric(3)
|
|
759
|
|
679
|
|
7.58
|
|
7.92
|
|
8.26
|
|
|
Construction work in progress(1)
|
|
941
|
|
866
|
|
NA
|
|
NA
|
|
NA
|
|
|
Total SDG&E
|
|
14,346
|
|
14,124
|
|
|
|
|
|
|
|
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas operations(4)
|
|
11,394
|
|
10,756
|
|
3.70
|
|
3.74
|
|
3.62
|
|
|
Other non-utility
|
|
118
|
|
129
|
|
1.56
|
|
1.36
|
|
1.62
|
|
|
Construction work in progress
|
|
319
|
|
302
|
|
NA
|
|
NA
|
|
NA
|
|
|
Total SoCalGas
|
|
11,831
|
|
11,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
Weighted Average
|
||||
Other operating units and parent(5):
|
|
|
|
|
|
Useful Lives
|
Useful Life
|
|||||
Land and land rights
|
|
276
|
|
298
|
|
20 to 50 years(6)
|
47
|
|||||
Machinery and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility electric distribution operations
|
|
1,440
|
|
1,459
|
|
10 to 46 years
|
40
|
|||||
Generating plants
|
|
993
|
|
1,568
|
|
3 to 35 years
|
31
|
|||||
LNG terminals
|
|
2,094
|
|
2,061
|
|
3 to 50 years
|
46
|
|||||
Pipelines and storage
|
|
1,638
|
|
1,634
|
|
3 to 50 years
|
42
|
|||||
Other
|
|
212
|
|
241
|
|
1 to 47 years
|
13
|
|||||
Construction work in progress
|
|
1,283
|
|
692
|
|
NA
|
NA
|
|||||
Other
|
|
294
|
|
264
|
|
2 to 80 years
|
29
|
|||||
|
|
8,230
|
|
8,217
|
|
|
|
|
|
|
|
|
Total Sempra Energy Consolidated
|
$
|
34,407
|
$
|
33,528
|
|
|
|
|
|
|
|
|
(1)
|
At December 31, 2013, includes $350 million in electric transmission assets and $5 million in construction work in progress related to SDG&E's 91-percent interest in the Southwest Powerlink (SWPL) transmission line, jointly owned by SDG&E with other utilities. SDG&E, and each of the other owners, holds its undivided interest as a tenant in common in the property. Each owner is responsible for its share of the project and participates in decisions concerning operations and capital expenditures.
|
|||||||||||
(2)
|
Includes capital lease assets of $183 million at both December 31, 2013 and 2012, primarily related to variable interest entities of which SDG&E is not the primary beneficiary.
|
|||||||||||
(3)
|
Includes capital lease assets of $23 million at both December 31, 2013 and 2012.
|
|||||||||||
(4)
|
Includes capital lease assets of $33 million and $32 million at December 31, 2013 and 2012, respectively.
|
|||||||||||
(5)
|
December 31, 2013 balances include $155 million, $180 million and $22 million of utility plant, primarily pipelines and other distribution assets, at Ecogas, Mobile Gas and Willmut Gas, respectively. December 31, 2012 balances include $144 million, $171 million and $18 million of utility plant, primarily pipelines and other distribution assets, at Ecogas, Mobile Gas and Willmut Gas, respectively.
|
|||||||||||
(6)
|
Estimated useful lives are for land rights.
|
ACCUMULATED DEPRECIATION AND DECOMMISSIONING AMOUNTS
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
|||
|
|
2013
|
2012
|
||
SDG&E:
|
|
|
|
|
|
Accumulated depreciation and decommissioning of utility plant in service:
|
|
|
|
|
|
Electric(1)
|
$
|
2,861
|
$
|
2,660
|
|
Natural gas
|
|
639
|
|
601
|
|
Total SDG&E
|
|
3,500
|
|
3,261
|
|
SoCalGas:
|
|
|
|
|
|
Accumulated depreciation of natural gas utility plant in service(2)
|
|
4,279
|
|
4,067
|
|
Accumulated depreciation – other non-utility
|
|
85
|
|
103
|
|
Total SoCalGas
|
|
4,364
|
|
4,170
|
|
Other operating units and parent:
|
|
|
|
|
|
Accumulated depreciation – other(3)
|
|
938
|
|
806
|
|
Accumulated depreciation of utility electric distribution operations
|
|
145
|
|
100
|
|
|
|
|
1,083
|
|
906
|
Total Sempra Energy Consolidated
|
$
|
8,947
|
$
|
8,337
|
|
(1)
|
Includes accumulated depreciation for assets under capital lease of $26 million and $21 million at December 31, 2013 and 2012, respectively. Includes $199 million related to SDG&E's 91-percent interest in the SWPL transmission line, jointly owned by SDG&E and other utilities.
|
||||
(2)
|
Includes accumulated depreciation for assets under capital lease of $31 million and $28 million at December 31, 2013 and 2012, respectively.
|
||||
(3)
|
December 31, 2013 balances include $38 million, $25 million and $2 million of accumulated depreciation for utility plant at Ecogas, Mobile Gas and Willmut Gas, respectively. December 31, 2012 balances include $34 million, $21 million and $1 million of accumulated depreciation for utility plant at Ecogas, Mobile Gas and Willmut Gas, respectively.
|
CAPITALIZED FINANCING COSTS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
AFUDC related to debt
|
$
|
22
|
$
|
38
|
$
|
40
|
AFUDC related to equity
|
|
75
|
|
96
|
|
99
|
Other capitalized financing costs
|
|
22
|
|
52
|
|
26
|
Total Sempra Energy Consolidated
|
$
|
119
|
$
|
186
|
$
|
165
|
SDG&E:
|
|
|
|
|
|
|
AFUDC related to debt
|
$
|
16
|
$
|
30
|
$
|
33
|
AFUDC related to equity
|
|
39
|
|
71
|
|
80
|
Total SDG&E
|
$
|
55
|
$
|
101
|
$
|
113
|
SoCalGas:
|
|
|
|
|
|
|
AFUDC related to debt
|
$
|
6
|
$
|
8
|
$
|
7
|
AFUDC related to equity
|
|
17
|
|
25
|
|
19
|
Other capitalized financing costs
|
|
1
|
|
1
|
|
―
|
Total SoCalGas
|
$
|
24
|
$
|
34
|
$
|
26
|
(Dollars in millions)
|
2012
|
||
Property, plant, and equipment, net
|
$
|
292
|
|
Inventories
|
|
4
|
|
Total assets held for sale
|
|
296
|
|
Liability held for sale - asset retirement obligation(1)
|
|
(5)
|
|
Total
|
$
|
291
|
|
(1)
|
Included in Other Current Liabilities on the Consolidated Balance Sheet.
|
§
|
consideration of market transactions
|
§
|
future cash flows
|
§
|
the appropriate risk-adjusted discount rate
|
§
|
country risk
|
§
|
entity risk
|
GOODWILL
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sempra
|
|
|
|
|
|
|
|
|
South American
|
Sempra
|
|
Sempra
|
|
|
||
|
|
|
Utilities
|
|
Mexico
|
|
Natural Gas
|
|
Total
|
Balance at December 31, 2011
|
$
|
949
|
$
|
25
|
$
|
62
|
$
|
1,036
|
|
Acquisition of subsidiary
|
|
―
|
|
―
|
|
10
|
|
10
|
|
Foreign currency translation(1)
|
|
65
|
|
―
|
|
―
|
|
65
|
|
Balance at December 31, 2012
|
|
1,014
|
|
25
|
|
72
|
|
1,111
|
|
Foreign currency translation(1)
|
|
(87)
|
|
―
|
|
―
|
|
(87)
|
|
Balance at December 31, 2013
|
$
|
927
|
$
|
25
|
$
|
72
|
$
|
1,024
|
|
(1)
|
We record the offset of this fluctuation to other comprehensive income.
|
|
|
|
OTHER INTANGIBLE ASSETS
|
|
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
Amortization period
|
December 31,
|
|||
|
(years)
|
2013
|
2012
|
||
Storage rights
|
46
|
$
|
138
|
$
|
138
|
Development rights
|
50
|
|
322
|
|
322
|
Other
|
15 years to indefinite
|
|
19
|
|
19
|
|
|
|
479
|
|
479
|
Less accumulated amortization:
|
|
|
|
|
|
Storage rights
|
|
|
(16)
|
|
(13)
|
Development rights
|
|
|
(34)
|
|
(27)
|
Other
|
|
|
(3)
|
|
(3)
|
|
|
|
(53)
|
|
(43)
|
|
|
$
|
426
|
$
|
436
|
§
|
significant decreases in the market price of an asset
|
§
|
a significant adverse change in the extent or manner in which we use an asset or in its physical condition
|
§
|
a significant adverse change in legal or regulatory factors or in the business climate that could affect the value of an asset
|
§
|
a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection of continuing losses associated with the use of a long-lived asset
|
§
|
a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life
|
§
|
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 right to receive benefits that could be significant to the VIE.
|
AMOUNTS ASSOCIATED WITH OTAY MESA VIE
|
|||||||||
(Dollars in millions)
|
|||||||||
|
|
|
December 31,
|
||||||
|
|
|
2013
|
2012
|
|||||
Cash and cash equivalents
|
$
|
17
|
$
|
8
|
|||||
Restricted cash
|
|
|
|
|
|
6
|
|
10
|
|
Inventories
|
|
2
|
|
2
|
|||||
Other
|
|
1
|
|
1
|
|||||
Total current assets
|
|
26
|
|
21
|
|||||
Restricted cash
|
|
|
|
|
|
25
|
|
22
|
|
Sundry
|
|
4
|
|
5
|
|||||
Property, plant and equipment, net
|
|
438
|
|
466
|
|||||
Total assets
|
$
|
493
|
$
|
514
|
|||||
|
|
|
|
|
|||||
Current portion of long-term debt
|
$
|
10
|
$
|
10
|
|||||
Fixed-price contracts and other derivatives
|
|
16
|
|
17
|
|||||
Other
|
|
19
|
|
8
|
|||||
Total current liabilities
|
|
45
|
|
35
|
|||||
Long-term debt
|
|
325
|
|
335
|
|||||
Fixed-price contracts and other derivatives
|
|
39
|
|
64
|
|||||
Deferred credits and other
|
|
(7)
|
|
4
|
|||||
Other noncontrolling interest
|
|
91
|
|
76
|
|||||
Total liabilities and equity
|
$
|
493
|
$
|
514
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|||||
|
|
|
2013
|
2012
|
2011
|
||||
Operating expenses
|
|
|
|
|
|
|
|||
Cost of electric fuel and purchased power
|
$
|
(91)
|
$
|
(83)
|
$
|
(72)
|
|||
Operation and maintenance
|
24
|
|
19
|
|
19
|
||||
Depreciation and amortization
|
|
|
|
28
|
|
26
|
|
22
|
|
Total operating expenses
|
|
|
|
(39)
|
|
(38)
|
|
(31)
|
|
Operating income
|
|
|
|
39
|
|
38
|
|
31
|
|
Other expense, net
|
|
|
|
―
|
|
(1)
|
|
(1)
|
|
Interest expense
|
|
|
|
(15)
|
|
(11)
|
|
(11)
|
|
Income before income taxes/Net income
|
|
24
|
|
26
|
|
19
|
|||
Earnings attributable to noncontrolling interest
|
|
(24)
|
|
(26)
|
|
(19)
|
|||
Earnings
|
$
|
―
|
$
|
―
|
$
|
―
|
§
|
fuel and storage tanks
|
§
|
natural gas distribution systems
|
§
|
hazardous waste storage facilities
|
§
|
asbestos-containing construction materials
|
§
|
decommissioning of nuclear power facilities
|
§
|
electric distribution and transmission systems
|
§
|
site restoration of a former power plant
|
§
|
power generation plant (natural gas)
|
§
|
natural gas transmission pipelines
|
§
|
underground natural gas storage facilities and wells
|
§
|
power generation plant (natural gas)
|
§
|
natural gas distribution and transportation systems
|
§
|
LNG terminal
|
§
|
certain power generation plants (solar)
|
§
|
power generation plant (natural gas)
|
§
|
natural gas distribution and transportation systems
|
§
|
underground natural gas storage facilities
|
CHANGES IN ASSET RETIREMENT OBLIGATIONS
|
|||||||||||||||
(Dollars in millions)
|
|||||||||||||||
|
|
Sempra Energy
|
|
|
|
|
|
|
|||||||
|
|
Consolidated
|
|
SDG&E
|
|
SoCalGas
|
|||||||||
|
|
2013
|
2012
|
|
2013
|
2012
|
|
2013
|
2012
|
||||||
Balance as of January 1(1)
|
$
|
2,056
|
$
|
1,925
|
|
$
|
741
|
$
|
698
|
|
$
|
1,253
|
$
|
1,175
|
|
Accretion expense
|
|
97
|
|
92
|
|
|
45
|
|
42
|
|
|
49
|
|
48
|
|
Liabilities incurred
|
|
4
|
|
21
|
|
|
―
|
|
―
|
|
|
―
|
|
―
|
|
Reclassification(2)
|
|
―
|
|
(5)
|
|
|
―
|
|
―
|
|
|
―
|
|
―
|
|
Payments
|
|
(49)
|
|
(2)
|
|
|
(48)
|
|
―
|
|
|
―
|
|
(1)
|
|
Revisions, GRC-related(3)
|
|
(135)
|
|
―
|
|
|
(30)
|
|
―
|
|
|
(105)
|
|
―
|
|
Revisions, other(4)
|
|
179
|
|
25
|
|
|
205
|
|
1
|
|
|
2
|
|
31
|
|
Balance as of December 31(1)
|
$
|
2,152
|
$
|
2,056
|
|
$
|
913
|
$
|
741
|
|
$
|
1,199
|
$
|
1,253
|
|
(1)
|
The current portions of the obligations are included in Other Current Liabilities on the Consolidated Balance Sheets.
|
||||||||||||||
(2)
|
Reclassification to liability held for sale - asset retirement obligation which is included in Other Current Liabilities on the Consolidated Balance Sheets, as we discuss in "Assets Held for Sale" above.
|
||||||||||||||
(3)
|
The decreases in asset retirement obligations in 2013 at SDG&E and SoCalGas are due to revised estimates related to the 2012 General Rate Case (GRC) that received final approval in May 2013. At SDG&E, these revisions included increases in asset service lives ranging from 2 percent to 7 percent, and lower estimated cost of removal. At SoCalGas, the decrease includes increases in asset service lives ranging from 4 percent to 6 percent, partially offset by a higher estimated cost of removal.
|
||||||||||||||
(4)
|
The increase in asset retirement obligations in 2013 at SDG&E is due to revised estimates recorded in the third quarter of 2013 related to the early decommissioning of SONGS Units 2 and 3 (see Note 13).
|
§
|
information available through the date we file our financial statements indicates it is probable that a loss has been incurred, given the likelihood of uncertain future events; and
|
§
|
the amount of the loss can be reasonably estimated.
|
§
|
foreign currency translation adjustments
|
§
|
changes in unamortized net actuarial gain or loss and prior service cost related to pension and other postretirement benefits plans
|
§
|
unrealized gains or losses on available-for-sale securities
|
§
|
certain hedging activities
|
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1)
|
|||||||||||
(Dollars in millions)
|
|||||||||||
|
|
Year ended December 31, 2013
|
|||||||||
|
|
|
|
Pension and Other
|
|
|
|
|
|||
|
|
|
|
Postretirement Benefits
|
|
|
|
|
|||
|
|
Foreign
|
|
|
|
|
|
Total
|
|||
|
|
Currency
|
Unamortized
|
Unamortized
|
|
Accumulated Other
|
|||||
|
|
Translation
|
Net Actuarial
|
Prior Service
|
Financial
|
Comprehensive
|
|||||
|
|
Adjustments
|
Gain (Loss)
|
Credit (Cost)
|
Instruments
|
Income (Loss)
|
|||||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
$
|
(240)
|
$
|
(102)
|
$
|
1
|
$
|
(35)
|
$
|
(376)
|
|
Other comprehensive (loss) income before
|
|
|
|
|
|
|
|
|
|
|
|
reclassifications
|
|
(159)
|
|
―
|
|
―
|
|
2
|
|
(157)
|
|
Amounts reclassified from accumulated other
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income
|
|
270
|
(2)
|
29
|
|
(1)
|
|
7
|
|
305
|
|
Net other comprehensive income (loss)
|
|
111
|
|
29
|
|
(1)
|
|
9
|
|
148
|
|
Balance as of December 31, 2013
|
$
|
(129)
|
$
|
(73)
|
$
|
―
|
$
|
(26)
|
$
|
(228)
|
|
SDG&E:
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
$
|
―
|
$
|
(12)
|
$
|
1
|
$
|
―
|
$
|
(11)
|
|
Amounts reclassified from accumulated other
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income
|
|
―
|
|
2
|
|
―
|
|
―
|
|
2
|
|
Net other comprehensive income
|
|
―
|
|
2
|
|
―
|
|
―
|
|
2
|
|
Balance as of December 31, 2013
|
$
|
―
|
$
|
(10)
|
$
|
1
|
$
|
―
|
$
|
(9)
|
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
$
|
―
|
$
|
(4)
|
$
|
1
|
$
|
(15)
|
$
|
(18)
|
|
Amounts reclassified from accumulated other
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive (loss) income
|
|
―
|
|
(1)
|
|
―
|
|
1
|
|
―
|
|
Net other comprehensive (loss) income
|
|
―
|
|
(1)
|
|
―
|
|
1
|
|
―
|
|
Balance as of December 31, 2013
|
$
|
―
|
$
|
(5)
|
$
|
1
|
$
|
(14)
|
$
|
(18)
|
|
(1)
|
All amounts are net of income tax, if subject to tax, and exclude noncontrolling interests.
|
||||||||||
(2)
|
Represents cumulative foreign currency translation adjustment related to the impairment of our Argentine investments in 2006, which is substantially offset by an accrued liability established at that time. We provide additional information about these investments in Note 4.
|
RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
||||||||||
(Dollars in millions)
|
||||||||||
Year ended December 31, 2013
|
||||||||||
|
Amount reclassified
|
|
||||||||
Details about accumulated
|
from accumulated other
|
Affected line item
|
||||||||
other comprehensive income (loss) components
|
comprehensive income (loss)
|
on Consolidated Statement of Operations
|
||||||||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
||
Foreign currency translation adjustments
|
|
$
|
270
|
|
Equity Earnings, Net of Income Tax(1)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Financial instruments:
|
|
|
|
|
|
|
|
|
||
Interest rate and foreign exchange instruments
|
|
$
|
11
|
|
Interest Expense
|
|||||
Interest rate instruments
|
|
|
10
|
|
Equity Losses, Before Income Tax
|
|||||
Commodity contracts not subject to
|
|
|
|
|
Cost of Natural Gas, Electric Fuel and Purchased
|
|||||
|
rate recovery
|
|
|
(1)
|
|
Power
|
||||
Total before income tax
|
|
20
|
|
|
||||||
|
|
|
|
|
(4)
|
|
Income Tax Expense
|
|||
Net of income tax
|
|
16
|
|
|
||||||
|
|
|
|
|
(9)
|
|
Earnings Attributable to Noncontrolling Interests
|
|||
|
|
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement benefits:
|
|
|
|
|
|
|
|
|
||
Net actuarial gain
|
|
$
|
38
|
|
(2)
|
|||||
Amortization of actuarial loss
|
|
|
10
|
|
(2)
|
|||||
Prior service cost
|
|
|
(1)
|
|
(2)
|
|||||
|
|
|
|
|
(19)
|
|
Income Tax Expense
|
|||
Net of income tax
|
$
|
28
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period, net of tax
|
|
$
|
305
|
|
|
|
|
|
||
SDG&E:
|
|
|
|
|
|
|
|
|
||
Financial instruments:
|
|
|
|
|
|
|
|
|
||
Interest rate instruments
|
|
$
|
9
|
|
Interest Expense
|
|||||
|
|
|
|
|
(9)
|
|
Earnings Attributable to Noncontrolling Interest
|
|||
|
|
|
|
$
|
―
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement benefits:
|
|
|
|
|
|
|
|
|
||
Net actuarial gain
|
|
$
|
2
|
|
(2)
|
|||||
Amortization of actuarial loss
|
|
|
1
|
|
(2)
|
|||||
|
|
|
|
|
(1)
|
|
Income Tax Expense
|
|||
Net of income tax
|
$
|
2
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period, net of tax
|
|
$
|
2
|
|
|
|
|
|
||
SoCalGas:
|
|
|
|
|
|
|
|
|
||
Financial instruments:
|
|
|
|
|
|
|
|
|
||
Interest rate instruments
|
|
$
|
1
|
|
Interest Expense
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement benefits:
|
|
|
|
|
|
|
|
|
||
Net actuarial loss
|
|
$
|
(3)
|
|
(2)
|
|||||
Amortization of actuarial loss
|
|
|
1
|
|
(2)
|
|||||
|
|
|
|
|
1
|
|
Income Tax Expense
|
|||
Net of income tax
|
$
|
(1)
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period, net of tax
|
|
$
|
―
|
|
|
|
|
|
||
(1)
|
Represents cumulative foreign currency translation adjustment related to the impairment of our Argentine investments in 2006, which is substantially offset by an accrued liability established at that time. We provide additional information about these investments in Note 4.
|
|||||||||
(2)
|
Amounts are included in the computation of net periodic benefit cost (see "Net Periodic Benefit Cost, 2011 - 2013" in Note 7).
|
OTHER NONCONTROLLING INTERESTS
|
|
|
|||||
(Dollars in millions)
|
|
|
|||||
|
|
|
|
December 31,
|
|||
|
|
Percent Ownership Held by Others
|
|
2013
|
2012
|
||
SDG&E:
|
|
|
|
|
|
|
|
Otay Mesa VIE
|
100
|
%
|
$
|
91
|
$
|
76
|
|
Sempra South American Utilities:
|
|
|
|
|
|
|
|
Chilquinta Energía subsidiaries(1)
|
24.4 - 43.4
|
|
|
27
|
|
29
|
|
Luz del Sur
|
20.2
|
|
|
222
|
|
236
|
|
Tecsur
|
9.8
|
|
|
3
|
|
4
|
|
Sempra Mexico:
|
|
|
|
|
|
|
|
IEnova, S.A.B. de C.V.
|
18.9
|
|
|
442
|
|
―
|
|
Sempra Natural Gas:
|
|
|
|
|
|
|
|
Bay Gas Storage Company, Ltd.
|
9.1
|
|
|
22
|
|
20
|
|
Liberty Gas Storage, LLC
|
25.0
|
|
|
14
|
|
15
|
|
Southern Gas Transmission Company
|
49.0
|
|
|
1
|
|
1
|
|
Total Sempra Energy
|
|
|
$
|
822
|
$
|
381
|
|
(1)
|
Chilquinta Energía has four subsidiaries with noncontrolling interests held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries.
|
TOTAL UTILITIES REVENUES AT SEMPRA ENERGY CONSOLIDATED(1)
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
Electric revenues
|
$
|
4,911
|
$
|
4,568
|
$
|
3,833
|
|
Natural gas revenues
|
|
4,398
|
|
3,873
|
|
4,489
|
|
Total
|
$
|
9,309
|
$
|
8,441
|
$
|
8,322
|
|
(1)
|
Excludes intercompany revenues.
|
|
|
|
|
|
|
§
|
pipeline capacity marketing costs, and pipeline transportation and natural gas marketing costs incurred at Sempra Natural Gas;
|
§
|
electric construction services costs at Sempra South American Utilities; and
|
§
|
energy management service fees at Sempra Mexico.
|
|
|
|
Upward (downward)
adjustment to investments
|
|
Investment
|
Currency
|
2011(1)
|
||
Chilquinta Energía
|
Chilean Peso
|
$
|
(10)
|
|
Luz del Sur
|
Peruvian Nuevo Sol
|
|
―
|
|
(1)
|
As discussed in Note 3, the cumulative foreign currency translation adjustment balances totaling $54 million in Accumulated Other Comprehensive Income (Loss) as of April 6, 2011 were reclassified to net income as a result of the gain on the remeasurement of our equity method investments in Chilquinta Energía and Luz del Sur during the second quarter of 2011.
|
|
Years ended December 31,
|
|||||
(Dollars in millions)
|
2013
|
2012
|
2011
|
|||
Currency transaction gain (loss)
|
$
|
(3)
|
$
|
9
|
$
|
11
|
AMOUNTS DUE TO AND FROM AFFILIATES AT SDG&E AND SOCALGAS
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
|||
|
2013
|
2012
|
|||
SDG&E
|
|
|
|
|
|
Current:
|
|
|
|
|
|
Due from SoCalGas
|
$
|
―
|
$
|
37
|
|
Due from various affiliates
|
|
1
|
|
2
|
|
|
$
|
1
|
$
|
39
|
|
|
|
|
|
|
|
Due to Sempra Energy
|
$
|
25
|
$
|
19
|
|
Due to various affiliates
|
|
14
|
|
―
|
|
|
|
$
|
39
|
$
|
19
|
|
|
|
|
|
|
Income taxes due from Sempra Energy(1)
|
$
|
70
|
$
|
12
|
|
|
|
|
|
|
|
SoCalGas
|
|
|
|
|
|
Current:
|
|
|
|
|
|
Due from Sempra Energy
|
$
|
―
|
$
|
24
|
|
Due from various affiliates
|
|
21
|
|
―
|
|
|
|
$
|
21
|
$
|
24
|
|
|
|
|
|
|
Due to SDG&E
|
$
|
―
|
$
|
37
|
|
Due to Sempra Energy
|
|
16
|
|
―
|
|
|
$
|
16
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes due from Sempra Energy(1)
|
$
|
18
|
$
|
99
|
|
(1)
|
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 the companies’ having always filed a separate return.
|
REVENUES FROM UNCONSOLIDATED AFFILIATES AT SDG&E AND SOCALGAS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
SDG&E
|
$
|
12
|
$
|
9
|
$
|
7
|
SoCalGas
|
|
70
|
|
46
|
|
53
|
AMOUNTS RECORDED FOR TRANSACTIONS WITH RBS SEMPRA COMMODITIES(1)
|
|||||
(Dollars in millions)
|
|||||
|
|
|
|
|
Cost of
|
|
|
|
Revenues
|
|
Natural Gas
|
Sempra Mexico
|
$
|
37
|
$
|
74
|
|
Sempra Natural Gas
|
|
7
|
|
3
|
|
(1)
|
With the exception of Sempra Mexico, whose contract with RBS Sempra Commodities expired in July 2011, amounts only include activities prior to May 1, 2011, the date by which substantially all the contracts with RBS Sempra Commodities were assigned to buyers of the joint venture businesses.
|
§
|
The CPUC requires that SDG&E’s and SoCalGas’ common equity ratios be no lower than one percentage point below the CPUC-authorized percentage of each entity’s authorized capital structure. The authorized percentage at December 31, 2013 is 52 percent at both SDG&E and SoCalGas.
|
§
|
The FERC requires SDG&E to maintain a common equity ratio of 30 percent or above.
|
§
|
The California Utilities have a combined revolving credit line that requires each utility to maintain a ratio of consolidated indebtedness to consolidated capitalization (as defined in the agreement) of no more than 65 percent, as we discuss in Note 5.
|
§
|
Peru and Mexico require domestic corporations to maintain minimum legal reserves as a percentage of capital stock, resulting in restricted net assets of $35 million at Luz del Sur and $79 million at Sempra Energy’s consolidated Mexican subsidiaries at December 31, 2013.
|
§
|
Wholly owned Copper Mountain Solar 1 has a long-term debt agreement that requires the establishment and funding of project accounts to which the proceeds of loans, project revenues and other amounts are deposited and applied in accordance with the debt agreement. This long-term debt agreement also limits Copper Mountain Solar 1’s ability to incur liens, incur additional indebtedness, make acquisitions and undertake certain actions, while also requiring maintenance of certain debt ratios. Under these restrictions, net assets totaling $11 million are restricted at December 31, 2013.
|
§
|
50-percent owned and unconsolidated joint ventures at Sempra Renewables have debt agreements which require each joint venture to maintain reserve accounts in order to pay the projects’ debt service and operation and maintenance requirements. We discuss Sempra Energy guarantees associated with these requirements in Note 5. As a result of these requirements, there were total restricted assets at December 31, 2013 at our joint ventures of approximately:
|
□
|
$34 million at Cedar Creek 2 Wind Farm (Cedar Creek 2)
|
□
|
$14 million at Copper Mountain Solar 2
|
□
|
$47 million at Flat Ridge 2 Wind Farm (Flat Ridge 2)
|
□
|
$37 million at Fowler Ridge 2 Wind Farm (Fowler Ridge 2)
|
□
|
$19 million at Mehoopany Wind Farm (Mehoopany Wind)
|
□
|
$48 million at Mesquite Solar 1.
|
§
|
Wholly owned Mobile Gas has long-term debt instruments containing restrictions relating to the payment of dividends and other distributions with respect to capital stock. Under these restrictions, net assets of approximately $116 million are restricted at December 31, 2013.
|
§
|
91-percent owned Bay Gas has long-term debt instruments containing restrictions relating to the payment of dividends and other distributions if Bay Gas does not maintain a specified debt service coverage ratio. Bay Gas had no restricted net assets at December 31, 2013.
|
OTHER INCOME, NET
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
Allowance for equity funds used during construction
|
$
|
75
|
$
|
96
|
$
|
99
|
|
Investment gains(1)
|
|
39
|
|
41
|
|
22
|
|
Gains (losses) on interest rate and foreign exchange instruments, net(2)
|
|
17
|
|
10
|
|
(14)
|
|
Regulatory interest, net(3)
|
|
5
|
|
1
|
|
2
|
|
Sundry, net
|
|
4
|
|
24
|
|
21
|
|
|
Total
|
$
|
140
|
$
|
172
|
$
|
130
|
SDG&E:
|
|
|
|
|
|
|
|
Allowance for equity funds used during construction
|
$
|
39
|
$
|
71
|
$
|
80
|
|
Regulatory interest, net(3)
|
|
4
|
|
2
|
|
2
|
|
Losses on interest rate instruments(4)
|
|
―
|
|
―
|
|
(1)
|
|
Sundry, net
|
|
(3)
|
|
(4)
|
|
(2)
|
|
|
Total
|
$
|
40
|
$
|
69
|
$
|
79
|
SoCalGas:
|
|
|
|
|
|
|
|
Allowance for equity funds used during construction
|
$
|
17
|
$
|
25
|
$
|
19
|
|
Regulatory interest, net(3)
|
|
1
|
|
(1)
|
|
―
|
|
Sundry, net
|
|
(7)
|
|
(7)
|
|
(6)
|
|
|
Total
|
$
|
11
|
$
|
17
|
$
|
13
|
(1)
|
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.
|
||||||
(2)
|
Sempra Energy Consolidated includes Otay Mesa VIE and additional instruments.
|
||||||
(3)
|
Interest on regulatory balancing accounts.
|
||||||
(4)
|
Related to Otay Mesa VIE.
|
|
|
|
|
|
|
PURCHASE PRICE ALLOCATION
|
||||||||||
(Dollars in millions)
|
||||||||||
|
|
|
At April 6, 2011
|
|||||||
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Chilean
|
|
Peruvian
|
|
holding
|
|
|
|
|
entities
|
|
entities
|
|
companies
|
|
Total
|
||
Fair value of businesses acquired:
|
|
|
|
|
|
|
|
|
||
|
Cash consideration (fair value of total
|
|
|
|
|
|
|
|
|
|
|
consideration)
|
$
|
495
|
$
|
385
|
$
|
8
|
$
|
888
|
|
|
Fair value of equity method
|
|
|
|
|
|
|
|
|
|
|
investments immediately prior to
|
|
|
|
|
|
|
|
|
|
|
the acquisition
|
|
495
|
|
385
|
|
2
|
|
882
|
|
|
Fair value of noncontrolling interests
|
|
37
|
|
242
|
|
―
|
|
279
|
|
Total fair value of businesses acquired
|
|
1,027
|
|
1,012
|
|
10
|
|
2,049
|
||
|
|
|
|
|
|
|
|
|
|
|
Recognized amounts of identifiable assets
|
|
|
|
|
|
|
|
|
||
|
acquired and liabilities assumed:
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
219
|
|
22
|
|
4
|
|
245
|
|
|
Property, plant and equipment
|
|
555
|
|
931
|
|
―
|
|
1,486
|
|
|
Long-term debt
|
|
(305)
|
|
(179)
|
|
―
|
|
(484)
|
|
|
Other net assets (liabilities) acquired
|
|
44
|
|
(223)
|
|
6
|
|
(173)
|
Total identifiable net assets
|
|
513
|
|
551
|
|
10
|
|
1,074
|
||
Goodwill
|
$
|
514
|
$
|
461
|
$
|
―
|
$
|
975
|
§
|
the replacement cost approach for property, plant and equipment; and
|
§
|
goodwill associated primarily with the value of residual future cash flows that we believe these businesses will generate, to be tested annually for impairment. For income tax purposes, none of the goodwill recorded is deductible in Chile, Peru or the United States.
|
|
|
Year ended
|
|
(Dollars in millions)
|
December 31, 2011
|
||
Revenues
|
$
|
10,379
|
|
Earnings(1)
|
|
1,079
|
|
(1)
|
Excludes the $277 million gain related to the remeasurement of equity method investments.
|
(Dollars in millions)
|
Copper Mountain Solar 2
|
Mesquite Solar 1
|
|||
Proceeds from sale, net of transaction costs(1)
|
$
|
69
|
$
|
100
|
|
Property, plant and equipment, net
|
|
(266)
|
|
(461)
|
|
Other assets
|
|
(30)
|
|
(72)
|
|
Long-term debt, including current portion
|
|
146
|
|
297
|
|
Other liabilities
|
|
19
|
|
31
|
|
Gain on sale of assets
|
|
(4)
|
|
(36)
|
|
Equity method investments upon deconsolidation
|
$
|
(66)
|
$
|
(141)
|
|
(1)
|
Transaction costs were $3 million at each of Copper Mountain Solar 2 and Mesquite Solar 1.
|
EQUITY METHOD AND OTHER INVESTMENTS ON THE CONSOLIDATED BALANCE SHEETS
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
|||
|
|
2013
|
2012
|
||
Sempra South American Utilities:
|
|
|
|
|
|
Eletrans(1)
|
$
|
(3)
|
$
|
―
|
|
Sempra Mexico:
|
|
|
|
|
|
Gasoductos de Chihuahua
|
|
379
|
|
340
|
|
Sempra Renewables:
|
|
|
|
|
|
Auwahi Wind Farm
|
|
53
|
|
72
|
|
Cedar Creek 2 Wind Farm
|
|
92
|
|
93
|
|
Copper Mountain Solar 2
|
|
67
|
|
―
|
|
Flat Ridge 2 Wind Farm
|
|
292
|
|
291
|
|
Fowler Ridge 2 Wind Farm
|
|
51
|
|
47
|
|
Mehoopany Wind Farm
|
|
85
|
|
89
|
|
Mesquite Solar 1
|
|
67
|
|
―
|
|
Sempra Natural Gas:
|
|
|
|
|
|
Rockies Express Pipeline LLC
|
|
329
|
|
361
|
|
Parent and other:
|
|
|
|
|
|
RBS Sempra Commodities LLP
|
|
73
|
|
126
|
|
Other
|
|
―
|
|
8
|
|
Total equity method investments
|
|
1,485
|
|
1,427
|
|
Other(2)
|
|
90
|
|
89
|
|
Total
|
$
|
1,575
|
$
|
1,516
|
|
(1)
|
Includes losses on forward exchange contracts as we discuss below.
|
||||
(2)
|
Other includes Sempra South American Utilities' $10 million and $11 million in real estate investments at December 31, 2013 and 2012, respectively, and Sempra Natural Gas' $77 million and $74 million investment in industrial development bonds at Mississippi Hub at December 31, 2013 and 2012, respectively.
|
EQUITY METHOD INVESTMENTS ON THE CONSOLIDATED STATEMENTS OF OPERATIONS
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
Earnings (losses) recorded before income tax:
|
|
|
|
|
|
|
|
Sempra Renewables:
|
|
|
|
|
|
|
|
Auwahi Wind Farm
|
$
|
4
|
$
|
―
|
$
|
―
|
|
Cedar Creek 2 Wind Farm
|
|
(4)
|
|
(4)
|
|
(2)
|
|
Flat Ridge 2 Wind Farm
|
|
(8)
|
|
1
|
|
―
|
|
Fowler Ridge 2 Wind Farm
|
|
(3)
|
|
(3)
|
|
(4)
|
|
Mehoopany Wind Farm
|
|
(2)
|
|
―
|
|
―
|
|
Mesquite Solar 1
|
|
1
|
|
―
|
|
―
|
|
Sempra Natural Gas:
|
|
|
|
|
|
|
|
Rockies Express Pipeline LLC:
|
|
|
|
|
|
|
|
Impairment
|
|
―
|
|
(400)
|
|
―
|
|
Income tax make-whole payment received
|
|
―
|
|
41
|
|
―
|
|
Other equity earnings
|
|
47
|
|
47
|
|
43
|
|
Parent and other:
|
|
|
|
|
|
|
|
RBS Sempra Commodities LLP:
|
|
|
|
|
|
|
|
Impairment
|
|
―
|
|
―
|
|
(16)
|
|
Other equity losses
|
|
(3)
|
|
―
|
|
(8)
|
|
Other
|
|
(1)
|
|
(1)
|
|
(4)
|
|
|
$
|
31
|
$
|
(319)
|
$
|
9
|
|
|
|
|
|
|
|
|
|
Earnings (losses) recorded net of income tax:
|
|
|
|
|
|
|
|
Sempra South American Utilities:
|
|
|
|
|
|
|
|
Sodigas Pampeana and Sodigas Sur
|
$
|
(11)
|
$
|
―
|
$
|
(1)
|
|
Chilquinta Energía(1)
|
|
―
|
|
―
|
|
12
|
|
Luz del Sur(1)
|
|
―
|
|
―
|
|
12
|
|
Eletrans
|
|
(4)
|
|
―
|
|
―
|
|
Sempra Mexico:
|
|
|
|
|
|
|
|
Gasoductos de Chihuahua
|
|
39
|
|
36
|
|
29
|
|
|
|
$
|
24
|
$
|
36
|
$
|
52
|
(1)
|
These investments were accounted for under the equity method until April 6, 2011, when they became consolidated entities upon our acquisition of additional ownership interests.
|
||||||
|
LONG-TERM DEBT
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
|||
|
|
2013
|
2012
|
||
SDG&E
|
|
|
|
|
|
First mortgage bonds:
|
|
|
|
|
|
|
6.8% June 1, 2015
|
$
|
―
|
$
|
14
|
|
5.3% November 15, 2015
|
|
250
|
|
250
|
|
1.65% July 1, 2018(1)
|
|
161
|
|
161
|
|
5.85% June 1, 2021(1)
|
|
―
|
|
60
|
|
3% August 15, 2021
|
|
350
|
|
350
|
|
3.6% September 1, 2023
|
|
450
|
|
―
|
|
6% June 1, 2026
|
|
250
|
|
250
|
|
5% to 5.25% December 1, 2027(1)
|
|
150
|
|
150
|
|
5.875% January and February 2034(1)
|
|
176
|
|
176
|
|
5.35% May 15, 2035
|
|
250
|
|
250
|
|
6.125% September 15, 2037
|
|
250
|
|
250
|
|
4% May 1, 2039(1)
|
|
75
|
|
75
|
|
6% June 1, 2039
|
|
300
|
|
300
|
|
5.35% May 15, 2040
|
|
250
|
|
250
|
|
4.5% August 15, 2040
|
|
500
|
|
500
|
|
3.95% November 15, 2041
|
|
250
|
|
250
|
|
4.3% April 1, 2042
|
|
250
|
|
250
|
|
|
|
3,912
|
|
3,536
|
Other long-term debt (unsecured unless otherwise noted):
|
|
|
|
|
|
|
5.9% Notes June 1, 2014
|
|
15
|
|
130
|
|
5.3% Notes July 1, 2021(1)
|
|
39
|
|
39
|
|
5.5% Notes December 1, 2021(1)
|
|
60
|
|
60
|
|
4.9% Notes March 1, 2023(1)
|
|
25
|
|
25
|
|
5.2925% OMEC LLC loan
|
|
|
|
|
|
payable 2013 through April 2019 (secured by plant assets)
|
|
335
|
|
345
|
Capital lease obligations:
|
|
|
|
|
|
|
Purchased-power agreements
|
|
176
|
|
178
|
|
Other
|
|
3
|
|
7
|
|
|
|
653
|
|
784
|
|
|
|
4,565
|
|
4,320
|
Current portion of long-term debt
|
|
(29)
|
|
(16)
|
|
Unamortized discount on long-term debt
|
|
(11)
|
|
(12)
|
|
Total SDG&E
|
|
4,525
|
|
4,292
|
|
|
|
|
|
|
|
SoCalGas
|
|
|
|
|
|
First mortgage bonds:
|
|
|
|
|
|
|
5.5% March 15, 2014
|
|
250
|
|
250
|
|
5.45% April 15, 2018
|
|
250
|
|
250
|
|
5.75% November 15, 2035
|
|
250
|
|
250
|
|
5.125% November 15, 2040
|
|
300
|
|
300
|
|
3.75% September 15, 2042
|
|
350
|
|
350
|
|
|
|
1,400
|
|
1,400
|
Other long-term debt (unsecured):
|
|
|
|
|
|
|
4.75% Notes May 14, 2016(1)
|
|
8
|
|
8
|
|
5.67% Notes January 18, 2028
|
|
5
|
|
5
|
Capital lease obligations
|
|
2
|
|
4
|
|
|
|
|
15
|
|
17
|
|
|
|
1,415
|
|
1,417
|
Current portion of long-term debt
|
|
(252)
|
|
(4)
|
|
Unamortized discount on long-term debt
|
|
(4)
|
|
(4)
|
|
Total SoCalGas
|
|
1,159
|
|
1,409
|
LONG-TERM DEBT (CONTINUED)
|
|||||
(Dollars in millions)
|
|||||
|
|
December 31,
|
|||
|
|
2013
|
2012
|
||
Sempra Energy
|
|
|
|
|
|
Other long-term debt (unsecured):
|
|
|
|
|
|
|
6% Notes February 1, 2013
|
|
―
|
|
400
|
|
8.9% Notes November 15, 2013, including $200 at variable rates after fixed-to-floating
|
|
|
|
|
|
rate swaps effective January 2011
|
|
―
|
|
250
|
|
2% Notes March 15, 2014
|
|
500
|
|
500
|
|
Notes at variable rates (1.01% at December 31, 2013) March 15, 2014
|
|
300
|
|
300
|
|
6.5% Notes June 1, 2016, including $300 at variable rates after fixed-to-floating
|
|
|
|
|
|
rate swaps effective January 2011 (4.46% at December 31, 2013)
|
|
750
|
|
750
|
|
2.3% Notes April 1, 2017
|
|
600
|
|
600
|
|
6.15% Notes June 15, 2018
|
|
500
|
|
500
|
|
9.8% Notes February 15, 2019
|
|
500
|
|
500
|
|
2.875% Notes October 1, 2022
|
|
500
|
|
500
|
|
4.05% Notes December 1, 2023
|
|
500
|
|
―
|
|
6% Notes October 15, 2039
|
|
750
|
|
750
|
Market value adjustments for interest rate swaps, net (expire November 2013 and June 2016)
|
|
12
|
|
19
|
|
Build-to-suit lease(2)
|
|
14
|
|
―
|
|
Sempra Global
|
|
|
|
|
|
Other long-term debt (unsecured):
|
|
|
|
|
|
|
Commercial paper borrowings at variable rates, classified as long-term debt
|
|
|
|
|
|
(0.35% weighted average at December 31, 2013)
|
|
200
|
|
300
|
Sempra South American Utilities
|
|
|
|
|
|
Other long-term debt (unsecured):
|
|
|
|
|
|
Chilquinta Energía
|
|
|
|
|
|
|
2.75% Series A Bonds October 30, 2014(1)
|
|
―
|
|
86
|
|
4.25% Series B Bonds October 30, 2030(1)
|
|
209
|
|
224
|
Luz del Sur
|
|
|
|
|
|
|
Bank loans 5.5% to 6.75% payable 2016 through December 2018
|
|
70
|
|
31
|
|
Notes at 4.75% to 7.09% payable 2014 through October 2022
|
|
292
|
|
284
|
Sempra Mexico
|
|
|
|
|
|
Other long-term debt (unsecured):
|
|
|
|
|
|
|
Notes February 8, 2018 at variable rates at 2.66% after floating-to-fixed rate cross-currency
|
|
|
|
|
|
swaps effective February 2013
|
|
100
|
|
―
|
|
6.3% Notes February 2, 2023 (4.12% after cross-currency swap)
|
|
298
|
|
―
|
Sempra Renewables
|
|
|
|
|
|
Other long-term debt (secured):
|
|
|
|
|
|
|
Loan at variable rates payable 2014 through December 2028, including $78 at 4.54%
|
|
|
|
|
|
after floating-to-fixed rate swaps effective June 2012 (2.75% at December 31, 2013)(1)
|
|
104
|
|
111
|
|
Loans at 2.24% to 2.26% payable 2014 through January 2031
|
|
―
|
|
286
|
Sempra Natural Gas
|
|
|
|
|
|
First mortgage bonds (Mobile Gas):
|
|
|
|
|
|
|
4.14% September 30, 2021
|
|
20
|
|
20
|
|
5% September 30, 2031
|
|
42
|
|
42
|
Other long-term debt (unsecured unless otherwise noted):
|
|
|
|
|
|
|
Notes at 2.87% to 3.51% October 1, 2016(1)
|
|
18
|
|
17
|
|
9% Notes May 13, 2013
|
|
―
|
|
1
|
|
8.45% Notes payable 2014 through December 2017, secured
|
|
21
|
|
25
|
|
3.1% Notes December 30, 2018, secured(1)
|
|
5
|
|
―
|
|
4.5% Notes July 1, 2024, secured(1)
|
|
77
|
|
74
|
|
Industrial development bonds at variable rates (0.05% at December 31, 2013)
|
|
|
|
|
|
August 1, 2037, secured(1)
|
|
55
|
|
55
|
|
|
|
6,437
|
|
6,625
|
Current portion of long-term debt
|
|
(866)
|
|
(705)
|
|
Unamortized discount on long-term debt
|
|
(9)
|
|
(8)
|
|
Unamortized premium on long-term debt
|
|
7
|
|
8
|
|
Total other Sempra Energy
|
|
5,569
|
|
5,920
|
|
Total Sempra Energy Consolidated
|
$
|
11,253
|
$
|
11,621
|
|
(1)
|
Callable long-term debt not subject to make-whole provisions.
|
||||
(2)
|
We discuss this lease in Note 15.
|
MATURITIES OF LONG-TERM DEBT(1)
|
|||||||||
(Dollars in millions)
|
|||||||||
|
|
|
|
|
Total
|
||||
|
|
|
|
Other
|
Sempra
|
||||
|
|
|
|
Sempra
|
Energy
|
||||
|
|
SDG&E
|
SoCalGas
|
Energy
|
Consolidated
|
||||
2014
|
$
|
24
|
$
|
250
|
$
|
866
|
$
|
1,140
|
|
2015
|
|
260
|
|
―
|
|
52
|
|
312
|
|
2016
|
|
10
|
|
8
|
|
828
|
|
846
|
|
2017
|
|
10
|
|
―
|
|
662
|
|
672
|
|
2018
|
|
171
|
|
250
|
|
652
|
|
1,073
|
|
Thereafter
|
|
3,910
|
|
905
|
|
3,349
|
|
8,164
|
|
Total
|
$
|
4,385
|
$
|
1,413
|
$
|
6,409
|
$
|
12,207
|
|
(1)
|
Excludes capital lease obligations, build-to-suit lease and market value adjustments for interest rate swaps.
|
CALLABLE LONG-TERM DEBT
|
||||||||
(Dollars in millions)
|
||||||||
|
|
|
|
Total
|
||||
|
|
|
Other
|
Sempra
|
||||
|
|
|
Sempra
|
Energy
|
||||
|
SDG&E
|
SoCalGas
|
Energy
|
Consolidated
|
||||
Not subject to make-whole provisions
|
$
|
686
|
$
|
8
|
$
|
468
|
$
|
1,162
|
Subject to make-whole provisions
|
|
3,350
|
|
1,400
|
|
4,683
|
|
9,433
|
2013 BANK LOAN DRAWS – LUZ DEL SUR
|
||||||
(Dollars in millions)
|
||||||
|
|
Amount at
|
|
|
|
|
Month Issued
|
Issuance
|
Interest Rate
|
|
Maturity Date
|
||
June
|
$
|
11
|
5.50%
|
|
June 25, 2016
|
|
July
|
|
5
|
6.00%
|
|
July 11, 2016
|
|
July
|
|
14
|
5.85%
|
|
July 24, 2016
|
|
December
|
|
22
|
6.41%
|
|
December 20, 2018
|
RECONCILIATION OF FEDERAL INCOME TAX RATES TO EFFECTIVE INCOME TAX RATES
|
|||||||
|
|||||||
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated
|
|
|
|
|
|
|
|
U.S. federal statutory income tax rate
|
35
|
%
|
35
|
%
|
35
|
%
|
|
Utility depreciation
|
4
|
|
6
|
|
3
|
|
|
Income tax restructuring related to IEnova stock offerings
|
4
|
|
―
|
|
―
|
|
|
State income taxes, net of federal income tax benefit
|
1
|
|
(1)
|
|
2
|
|
|
Utility repairs expenditures
|
(5)
|
|
(8)
|
|
(1)
|
|
|
Tax credits
|
(3)
|
|
(7)
|
|
(1)
|
|
|
Non-U.S. earnings taxed at lower statutory income tax rates
|
(3)
|
|
(4)
|
|
(8)
|
|
|
Self-developed software expenditures
|
(3)
|
|
(5)
|
|
(3)
|
|
|
Adjustments to prior years’ income tax items
|
(3)
|
|
(1)
|
|
―
|
|
|
Allowance for equity funds used during construction
|
(1)
|
|
(4)
|
|
(2)
|
|
|
Variable interest entities
|
(1)
|
|
(1)
|
|
―
|
|
|
Life insurance contracts
|
―
|
|
(7)
|
|
―
|
|
|
Mexican foreign exchange and inflation effects
|
―
|
|
1
|
|
(1)
|
|
|
Other, net
|
1
|
|
2
|
|
(1)
|
|
|
Effective income tax rate
|
26
|
%
|
6
|
%
|
23
|
%
|
|
SDG&E
|
|
|
|
|
|
|
|
U.S. federal statutory income tax rate
|
35
|
%
|
35
|
%
|
35
|
%
|
|
Depreciation
|
5
|
|
4
|
|
4
|
|
|
State income taxes, net of federal income tax benefit
|
3
|
|
4
|
|
5
|
|
|
Utility repairs expenditures
|
(4)
|
|
(4)
|
|
(1)
|
|
|
Self-developed software expenditures
|
(3)
|
|
(3)
|
|
(3)
|
|
|
Allowance for equity funds used during construction
|
(2)
|
|
(4)
|
|
(4)
|
|
|
Variable interest entity
|
(1)
|
|
(1)
|
|
(1)
|
|
|
Adjustments to prior years’ income tax items
|
(1)
|
|
(3)
|
|
―
|
|
|
Other, net
|
(1)
|
|
(1)
|
|
(1)
|
|
|
Effective income tax rate
|
31
|
%
|
27
|
%
|
34
|
%
|
|
SoCalGas
|
|
|
|
|
|
|
|
U.S. federal statutory income tax rate
|
35
|
%
|
35
|
%
|
35
|
%
|
|
Depreciation
|
6
|
|
7
|
|
6
|
|
|
State income taxes, net of federal income tax benefit
|
4
|
|
3
|
|
4
|
|
|
Utility repairs expenditures
|
(9)
|
|
(12)
|
|
―
|
|
|
Self-developed software expenditures
|
(6)
|
|
(9)
|
|
(7)
|
|
|
Adjustments to prior years’ income tax items
|
(5)
|
|
―
|
|
―
|
|
|
Allowance for equity funds used during construction
|
(1)
|
|
(2)
|
|
(2)
|
|
|
Other, net
|
―
|
|
(1)
|
|
(3)
|
|
|
Effective income tax rate
|
24
|
%
|
21
|
%
|
33
|
%
|
§
|
repairs expenditures related to a certain portion of utility plant fixed assets
|
§
|
the equity portion of AFUDC
|
§
|
a portion of the cost of removal of utility plant assets
|
§
|
self-developed software expenditures
|
§
|
depreciation on a certain portion of utility plant assets
|
|
Years ended December 31,
|
|||||
(Dollars in millions)
|
2013
|
2012
|
2011
|
|||
U.S.
|
$
|
941
|
$
|
442
|
$
|
1,011
|
Non-U.S.
|
|
489
|
|
501
|
|
712
|
Total
|
$
|
1,430
|
$
|
943
|
$
|
1,723
|
INCOME TAX EXPENSE (BENEFIT)
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
U.S. Federal
|
$
|
(70)
|
$
|
(36)
|
$
|
76
|
U.S. State
|
|
(5)
|
|
(6)
|
|
(3)
|
Non-U.S.
|
|
107
|
|
144
|
|
149
|
Total
|
|
32
|
|
102
|
|
222
|
Deferred:
|
|
|
|
|
|
|
U.S. Federal
|
|
275
|
|
(63)
|
|
176
|
U.S. State
|
|
15
|
|
3
|
|
43
|
Non-U.S.
|
|
48
|
|
20
|
|
(45)
|
Total
|
|
338
|
|
(40)
|
|
174
|
Deferred investment tax credits
|
|
(4)
|
|
(3)
|
|
(2)
|
Total income tax expense
|
$
|
366
|
$
|
59
|
$
|
394
|
SDG&E
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
U.S. Federal
|
$
|
9
|
$
|
(109)
|
$
|
(59)
|
U.S. State
|
|
11
|
|
14
|
|
6
|
Total
|
|
20
|
|
(95)
|
|
(53)
|
Deferred:
|
|
|
|
|
|
|
U.S. Federal
|
|
149
|
|
255
|
|
253
|
U.S. State
|
|
24
|
|
30
|
|
36
|
Total
|
|
173
|
|
285
|
|
289
|
Deferred investment tax credits
|
|
(2)
|
|
―
|
|
1
|
Total income tax expense
|
$
|
191
|
$
|
190
|
$
|
237
|
SoCalGas
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
U.S. Federal
|
$
|
4
|
$
|
(73)
|
$
|
(6)
|
U.S. State
|
|
(5)
|
|
24
|
|
19
|
Total
|
|
(1)
|
|
(49)
|
|
13
|
Deferred:
|
|
|
|
|
|
|
U.S. Federal
|
|
103
|
|
136
|
|
128
|
U.S. State
|
|
16
|
|
(6)
|
|
5
|
Total
|
|
119
|
|
130
|
|
133
|
Deferred investment tax credits
|
|
(2)
|
|
(2)
|
|
(3)
|
Total income tax expense
|
$
|
116
|
$
|
79
|
$
|
143
|
DEFERRED INCOME TAXES FOR SEMPRA ENERGY CONSOLIDATED
|
||||
(Dollars in millions)
|
||||
|
December 31,
|
|||
|
2013
|
2012
|
||
Deferred income tax liabilities:
|
|
|
|
|
Differences in financial and tax bases of depreciable and amortizable assets
|
$
|
3,951
|
$
|
3,710
|
Regulatory balancing accounts
|
|
663
|
|
770
|
Unrealized revenue
|
|
15
|
|
3
|
Loss on reacquired debt
|
|
8
|
|
9
|
Property taxes
|
|
50
|
|
46
|
Difference in financial and tax bases of partnership interests
|
|
256
|
|
118
|
Other deferred income tax liabilities
|
|
72
|
|
55
|
Total deferred income tax liabilities
|
|
5,015
|
|
4,711
|
Deferred income tax assets:
|
|
|
|
|
Tax credits
|
|
105
|
|
67
|
Equity losses
|
|
16
|
|
16
|
Net operating losses
|
|
2,023
|
|
1,898
|
Compensation-related items
|
|
128
|
|
156
|
Postretirement benefits
|
|
264
|
|
587
|
Other deferred income tax assets
|
|
14
|
|
90
|
State income taxes
|
|
30
|
|
58
|
Bad debt allowance
|
|
8
|
|
8
|
Litigation and other accruals not yet deductible
|
|
20
|
|
7
|
Deferred income tax assets before valuation allowances
|
|
2,608
|
|
2,887
|
Less: valuation allowances
|
|
96
|
|
128
|
Total deferred income tax assets
|
|
2,512
|
|
2,759
|
Net deferred income tax liability
|
$
|
2,503
|
$
|
1,952
|
Our policy is to show deferred income taxes of VIEs on a net basis, including valuation allowances. See table “Amounts Associated with Otay Mesa VIE” in Note 1 for further information.
|
DEFERRED INCOME TAXES FOR SDG&E AND SOCALGAS
|
||||||||
(Dollars in millions)
|
||||||||
|
SDG&E
|
SoCalGas
|
||||||
|
December 31,
|
December 31,
|
||||||
|
2013
|
2012
|
2013
|
2012
|
||||
Deferred income tax liabilities:
|
|
|
|
|
|
|
|
|
Differences in financial and tax bases of
|
|
|
|
|
|
|
|
|
utility plant and other assets
|
$
|
2,040
|
$
|
1,947
|
$
|
1,045
|
$
|
938
|
Regulatory balancing accounts
|
|
411
|
|
344
|
|
265
|
|
439
|
Loss on reacquired debt
|
|
3
|
|
4
|
|
6
|
|
7
|
Property taxes
|
|
36
|
|
32
|
|
16
|
|
15
|
Other
|
|
25
|
|
22
|
|
―
|
|
―
|
Total deferred income tax liabilities
|
|
2,515
|
|
2,349
|
|
1,332
|
|
1,399
|
Deferred income tax assets:
|
|
|
|
|
|
|
|
|
Net operating losses
|
|
440
|
|
446
|
|
65
|
|
34
|
Postretirement benefits
|
|
57
|
|
137
|
|
126
|
|
370
|
Tax credits
|
|
15
|
|
16
|
|
12
|
|
14
|
Compensation-related items
|
|
13
|
|
14
|
|
38
|
|
48
|
State income taxes
|
|
22
|
|
31
|
|
10
|
|
18
|
Litigation and other accruals not yet deductible
|
|
45
|
|
38
|
|
27
|
|
21
|
Hedging transaction
|
|
1
|
|
1
|
|
5
|
|
7
|
Other
|
|
4
|
|
4
|
|
11
|
|
9
|
Total deferred income tax assets
|
|
597
|
|
687
|
|
294
|
|
521
|
Net deferred income tax liability
|
$
|
1,918
|
$
|
1,662
|
$
|
1,038
|
$
|
878
|
Our policy is to show deferred income taxes of VIEs on a net basis, including valuation allowances. See table “Amounts Associated with Otay Mesa VIE” in Note 1 for further information.
|
NET DEFERRED INCOME TAX LIABILITY
|
||||||||||||
(Dollars in millions)
|
||||||||||||
|
Sempra Energy
|
|
|
|
|
|||||||
|
Consolidated
|
SDG&E
|
SoCalGas
|
|||||||||
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
||||||
Current (asset) liability
|
$
|
(301)
|
$
|
(148)
|
$
|
(103)
|
$
|
26
|
$
|
45
|
$
|
(3)
|
Noncurrent liability
|
|
2,804
|
|
2,100
|
|
2,021
|
|
1,636
|
|
993
|
|
881
|
Total
|
$
|
2,503
|
$
|
1,952
|
$
|
1,918
|
$
|
1,662
|
$
|
1,038
|
$
|
878
|
SUMMARY OF UNRECOGNIZED INCOME TAX BENEFITS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
Total
|
$
|
90
|
$
|
82
|
$
|
72
|
Of the total, amounts related to tax positions that,
|
|
|
|
|
|
|
if recognized in future years, would
|
|
|
|
|
|
|
decrease the effective tax rate
|
$
|
(86)
|
$
|
(81)
|
$
|
(72)
|
increase the effective tax rate
|
|
19
|
|
16
|
|
7
|
SDG&E:
|
|
|
|
|
|
|
Total
|
$
|
17
|
$
|
12
|
$
|
7
|
Of the total, amounts related to tax positions that,
|
|
|
|
|
|
|
if recognized in future years, would
|
|
|
|
|
|
|
decrease the effective tax rate
|
$
|
(14)
|
$
|
(12)
|
$
|
(7)
|
increase the effective tax rate
|
|
11
|
|
12
|
|
7
|
SoCalGas:
|
|
|
|
|
|
|
Total
|
$
|
13
|
$
|
5
|
$
|
―
|
Of the total, amounts related to tax positions that,
|
|
|
|
|
|
|
if recognized in future years, would
|
|
|
|
|
|
|
decrease the effective tax rate
|
$
|
(13)
|
$
|
(5)
|
$
|
―
|
increase the effective tax rate
|
|
8
|
|
4
|
|
―
|
RECONCILIATION OF UNRECOGNIZED INCOME TAX BENEFITS
|
||||||
(Dollars in millions)
|
||||||
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
Balance as of January 1
|
$
|
82
|
$
|
72
|
$
|
97
|
Increase in prior period tax positions
|
|
26
|
|
2
|
|
7
|
Decrease in prior period tax positions
|
|
(24)
|
|
(1)
|
|
(26)
|
Increase in current period tax positions
|
|
7
|
|
10
|
|
3
|
Settlements with taxing authorities
|
|
(1)
|
|
(1)
|
|
(9)
|
Balance as of December 31
|
$
|
90
|
$
|
82
|
$
|
72
|
SDG&E:
|
|
|
|
|
|
|
Balance as of January 1
|
$
|
12
|
$
|
7
|
$
|
5
|
Increase in prior period tax positions
|
|
7
|
|
1
|
|
―
|
Decrease in prior period tax positions
|
|
(4)
|
|
―
|
|
―
|
Increase in current period tax positions
|
|
2
|
|
4
|
|
2
|
Balance as of December 31
|
$
|
17
|
$
|
12
|
$
|
7
|
SoCalGas:
|
|
|
|
|
|
|
Balance as of January 1
|
$
|
5
|
$
|
―
|
$
|
8
|
Increase in prior period tax positions
|
|
4
|
|
―
|
|
2
|
Increase in current period tax positions
|
|
5
|
|
5
|
|
―
|
Settlements with taxing authorities
|
|
(1)
|
|
―
|
|
(10)
|
Balance as of December 31
|
$
|
13
|
$
|
5
|
$
|
―
|
POSSIBLE DECREASES IN UNRECOGNIZED INCOME TAX BENEFITS WITHIN 12 MONTHS
|
||||||
(Dollars in millions)
|
||||||
|
At December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
Expiration of statutes of limitations on tax assessments
|
$
|
(7)
|
$
|
(7)
|
$
|
(7)
|
Potential resolution of audit issues with various
|
|
|
|
|
|
|
U.S. federal, state and local and non-U.S. taxing authorities
|
|
(63)
|
|
(10)
|
|
―
|
|
$
|
(70)
|
$
|
(17)
|
$
|
(7)
|
SDG&E:
|
|
|
|
|
|
|
Potential resolution of audit issues with various
|
|
|
|
|
|
|
U.S. federal, state and local and non-U.S. taxing authorities
|
$
|
(14)
|
$
|
(5)
|
$
|
―
|
SoCalGas:
|
|
|
|
|
|
|
Potential resolution of audit issues with various
|
|
|
|
|
|
|
U.S. federal, state and local and non-U.S. taxing authorities
|
$
|
(11)
|
$
|
(4)
|
$
|
―
|
INTEREST AND PENALTIES ASSOCIATED WITH UNRECOGNIZED INCOME TAX BENEFITS
|
|||||||||||
(Dollars in millions)
|
|||||||||||
|
Interest and penalties
|
|
Accrued interest and penalties
|
||||||||
|
Years ended December 31,
|
|
December 31,
|
||||||||
|
2013
|
2012
|
2011
|
|
2013
|
2012
|
|||||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (income)
|
$
|
1
|
$
|
―
|
$
|
(3)
|
|
$
|
4
|
$
|
3
|
Penalties
|
|
―
|
|
―
|
|
(1)
|
|
|
3
|
|
3
|
SDG&E:
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
$
|
―
|
$
|
―
|
$
|
―
|
|
$
|
1
|
$
|
1
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income) expense
|
$
|
(1)
|
$
|
―
|
$
|
(1)
|
|
$
|
―
|
$
|
1
|
§
|
recognize an asset for a plan’s overfunded status or a liability for a plan’s underfunded status in the statement of financial position;
|
§
|
measure a plan’s assets and its obligations that determine its funded status as of the end of the fiscal year (with limited exceptions); and
|
§
|
recognize changes in the funded status of pension and other postretirement benefit plans in the year in which the changes occur. Generally, those changes are reported in other comprehensive income and as a separate component of shareholders’ equity.
|
§
|
discount rates
|
§
|
expected return on plan assets
|
§
|
health care cost trend rates
|
§
|
mortality rates
|
§
|
rate of compensation increases
|
§
|
termination and retirement rates
|
§
|
utilization of postretirement welfare benefits
|
§
|
payout elections (lump sum or annuity)
|
§
|
lump sum interest rates
|
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)
|
|
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 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)
|
|
|
|
|
|
|
Sempra Energy Consolidated
|
|
SDG&E
|
|
SoCalGas
|
|||||||||
(Dollars in millions)
|
2013
|
2012
|
|
2013
|
2012
|
|
2013
|
2012
|
||||||
Accumulated benefit obligation
|
$
|
3,254
|
$
|
3,530
|
|
$
|
923
|
$
|
1,041
|
|
$
|
1,944
|
$
|
2,080
|
(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
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
§
|
have an outstanding issue of at least $50 million;
|
§
|
are non-callable (or callable with make-whole provisions);
|
§
|
exclude collateralized bonds; and
|
§
|
exclude the top and bottom 10 percent of yields to avoid relying on bonds which might be mispriced or misgraded.
|
§
|
The issuer is on review for downgrade by a major rating agency if the downgrade would eliminate the issuer from the portfolio.
|
§
|
Recent events have caused significant price volatility to which rating agencies have not reacted.
|
§
|
Lack of liquidity is causing price quotes to vary significantly from broker to broker.
|
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
|
|
|
|
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.
|
|
Sempra Energy
|
|
|
|
|
|||||||||
|
Consolidated
|
|
SDG&E
|
|
SoCalGas
|
|||||||||
|
1%
|
1%
|
|
1%
|
1%
|
|
1%
|
1%
|
||||||
(Dollars in millions)
|
Increase
|
Decrease
|
|
Increase
|
Decrease
|
|
Increase
|
Decrease
|
||||||
Effect on total of service and interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cost components of net periodic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
postretirement health care benefit cost
|
$
|
8
|
$
|
(6)
|
|
$
|
1
|
$
|
(1)
|
|
$
|
6
|
$
|
(5)
|
Effect on the health care component of the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accumulated other postretirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
benefit obligations
|
|
100
|
|
(62)
|
|
|
8
|
|
(6)
|
|
|
90
|
|
(54)
|
§
|
38 percent domestic equity
|
§
|
26 percent international equity
|
§
|
5 percent high yield credit
|
§
|
12 percent intermediate credit
|
§
|
14 percent long credit
|
§
|
5 percent real assets
|
§
|
long-term cost
|
§
|
variability and level of contributions
|
§
|
funded status
|
§
|
a range of expected outcomes over varying confidence levels
|
§
|
Level 1, for securities valued using quoted prices from active markets for identical assets;
|
§
|
Level 2, for securities not traded on an active market but for which observable market inputs are readily available; and
|
§
|
Level 3, for securities and investments valued based on significant unobservable inputs. Investments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
|
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.
|
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.
|
|
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%
|
-%
|
-%
|
-%
|
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
|
|
Sempra Energy
|
|
|
|||
(Dollars in millions)
|
Consolidated
|
SDG&E
|
SoCalGas
|
|||
Pension plans
|
$
|
199
|
$
|
72
|
$
|
85
|
Other postretirement benefit plans
|
|
12
|
|
9
|
|
―
|
|
Sempra Energy Consolidated
|
|
SDG&E
|
|
SoCalGas
|
|||||||||
|
|
Other
|
|
|
Other
|
|
|
Other
|
||||||
|
Pension
|
Postretirement
|
|
Pension
|
Postretirement
|
|
Pension
|
Postretirement
|
||||||
(Dollars in millions)
|
Benefits
|
Benefits
|
|
Benefits
|
Benefits
|
|
Benefits
|
Benefits
|
||||||
2014
|
$
|
390
|
$
|
47
|
|
$
|
109
|
$
|
8
|
|
$
|
234
|
$
|
36
|
2015
|
|
335
|
|
52
|
|
|
95
|
|
9
|
|
|
202
|
|
40
|
2016
|
|
329
|
|
55
|
|
|
89
|
|
10
|
|
|
199
|
|
43
|
2017
|
|
317
|
|
60
|
|
|
88
|
|
11
|
|
|
194
|
|
46
|
2018
|
|
308
|
|
64
|
|
|
85
|
|
12
|
|
|
188
|
|
49
|
2019-2023
|
|
1,305
|
|
346
|
|
|
381
|
|
65
|
|
|
772
|
|
261
|
(Dollars in millions)
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated
|
$
|
35
|
$
|
34
|
$
|
32
|
SDG&E
|
|
14
|
|
16
|
|
14
|
SoCalGas
|
|
17
|
|
15
|
|
14
|
§
|
non-qualified stock options
|
§
|
incentive stock options
|
§
|
restricted stock
|
§
|
restricted stock units
|
§
|
stock appreciation rights
|
§
|
performance awards
|
§
|
stock payments
|
§
|
dividend equivalents
|
§
|
Non-Qualified Stock Options: Options have an exercise price equal to the market price of the common stock at the date of grant, are service-based, become exercisable over a four-year period, and expire 10 years from the date of grant. Vesting and/or the ability to exercise may be accelerated upon a change in control, in accordance with severance pay agreements or upon eligibility for retirement. Options are subject to forfeiture or earlier expiration when an employee terminates employment.
|
§
|
Performance-Based Restricted Stock Units: These restricted stock unit awards vest in Sempra Energy common stock at the end of four-year performance periods based on Sempra Energy’s total return to shareholders relative to that of market indices. If Sempra Energy’s total return to shareholders exceeds the target levels established under the 2008 Long Term Incentive Plan for awards granted beginning in 2008 and under the 2013 Long-Term Incentive Plan beginning in May 2013, up to an additional 50 percent of the number of granted restricted stock units may be issued. If Sempra Energy’s total return to shareholders is below the target levels, shares are subject to partial vesting on a pro rata basis. Restricted stock units may also be solely service-based; these are generally exercisable at the end of four years of service. Vesting is subject to earlier forfeiture upon termination of employment and accelerated vesting upon a change in control under the applicable long-term incentive plan, in accordance with severance pay agreements or upon eligibility for retirement. Dividend equivalents on shares subject to restricted stock units are reinvested to purchase additional shares that become subject to the same vesting conditions as the restricted stock units to which the dividends relate.
|
§
|
Service-Based Restricted Stock Units: Restricted stock units may also be service-based; these generally vest at the end of four years of service. Vesting is subject to earlier forfeiture upon termination of employment and accelerated vesting upon a change in control under the applicable long-term incentive plan, or in accordance with severance pay agreements. Dividend equivalents on shares subject to restricted stock units are reinvested to purchase additional shares that become subject to the same vesting conditions as the restricted stock units to which the dividends relate.
|
§
|
Restricted Stock: Prior to 2009, substantially all restricted stock awards were performance-based and vested at the end of four-year performance periods based on Sempra Energy’s total return to shareholders relative to that of market indices. Since 2009, restricted stock awards have been solely service-based and are generally exercisable at the end of four years of service. Vesting is subject to earlier forfeiture upon termination of employment and accelerated vesting upon a change in control under the applicable long-term incentive plan, in accordance with severance pay agreements or upon eligibility for retirement. Holders of restricted stock have full voting rights. They also have full dividend rights; however, dividends paid on restricted stock held by officers are reinvested to purchase additional shares that become subject to the same vesting conditions as the restricted stock to which the dividends relate.
|
SHARE-BASED COMPENSATION EXPENSE ― SEMPRA ENERGY CONSOLIDATED
|
||||||
(Dollars in millions, except per share amounts)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Share-based compensation expense, before income taxes
|
$
|
38
|
$
|
40
|
$
|
44
|
Income tax benefit
|
|
(15)
|
|
(16)
|
|
(18)
|
Share-based compensation expense, net of income taxes
|
$
|
23
|
$
|
24
|
$
|
26
|
|
|
|
|
|
|
|
Net share-based compensation expense, per common share
|
|
|
|
|
|
|
Basic
|
$
|
0.09
|
$
|
0.10
|
$
|
0.11
|
Diluted
|
$
|
0.09
|
$
|
0.10
|
$
|
0.11
|
SHARE-BASED COMPENSATION EXPENSE ― SDG&E AND SOCALGAS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
SDG&E:
|
|
|
|
|
|
|
Compensation expense
|
$
|
8
|
$
|
8
|
$
|
8
|
Capitalized compensation cost
|
|
3
|
|
3
|
|
3
|
SoCalGas:
|
|
|
|
|
|
|
Compensation expense
|
$
|
8
|
$
|
7
|
$
|
9
|
Capitalized compensation cost
|
|
1
|
|
1
|
|
1
|
NON-QUALIFIED STOCK OPTIONS
|
||||||||
|
||||||||
|
|
|
Weighted-
|
|
||||
|
|
Weighted-
|
Average
|
|
||||
|
Shares
|
Average
|
Remaining
|
Aggregate
|
||||
|
Under
|
Exercise
|
Contractual Term
|
Intrinsic Value
|
||||
|
Option
|
Price
|
(in years)
|
(in millions)
|
||||
Outstanding at December 31, 2012
|
|
2,701,118
|
$
|
51.86
|
|
|
|
|
Exercised
|
|
(1,237,348)
|
$
|
50.32
|
|
|
|
|
Forfeited/canceled
|
|
(4,625)
|
$
|
48.40
|
|
|
|
|
Outstanding at December 31, 2013
|
|
1,459,145
|
$
|
53.18
|
|
4.0
|
$
|
53
|
|
|
|
|
|
|
|
|
|
Vested or expected to vest, at December 31, 2013
|
|
1,459,145
|
$
|
53.18
|
|
4.0
|
$
|
53
|
Exercisable at December 31, 2013
|
|
1,300,745
|
$
|
52.86
|
|
3.8
|
$
|
48
|
§
|
$41 million in 2013
|
§
|
$45 million in 2012
|
§
|
$23 million in 2011
|
§
|
$2 million in 2013
|
§
|
$4 million in 2012
|
§
|
$7 million in 2011
|
|
2013
|
2012
|
2011
|
|||
Risk-free rate of return
|
0.6%
|
|
0.6%
|
|
1.5%
|
|
Annual dividend yield
|
3.3%
|
|
3.4%
|
|
3.0%
|
|
Stock price volatility
|
19%
|
|
27%
|
|
27%
|
|
RESTRICTED STOCK AWARDS
|
||||
|
||||
|
|
Weighted-
|
||
|
|
Average
|
||
|
|
Grant-Date
|
||
|
Shares
|
Fair Value
|
||
Nonvested at December 31, 2012
|
|
24,689
|
$
|
56.59
|
Granted
|
|
4,617
|
$
|
75.82
|
Vested
|
|
(11,837)
|
$
|
55.49
|
Nonvested at December 31, 2013
|
|
17,469
|
$
|
62.43
|
Vested or expected to vest, at December 31, 2013
|
|
17,469
|
$
|
62.43
|
§
|
$1 million in 2013
|
§
|
$1 million in 2012
|
§
|
$28 million in 2011
|
RESTRICTED STOCK UNITS
|
|
|
|
|
||||
|
|
|
|
|
||||
|
|
Performance-Based
|
|
Service-Based
|
||||
|
|
Restricted Stock Units
|
|
Restricted Stock Units
|
||||
|
|
|
Weighted-
|
|
|
Weighted-
|
||
|
|
|
Average
|
|
|
Average
|
||
|
|
|
Grant-Date
|
|
|
Grant-Date
|
||
|
|
Units
|
Fair Value
|
|
Units
|
Fair Value
|
||
Nonvested at December 31, 2012
|
3,400,033
|
$
|
42.72
|
|
135,241
|
$
|
55.42
|
|
Granted
|
657,168
|
$
|
57.55
|
|
107,718
|
$
|
72.71
|
|
Vested
|
(864,100)
|
$
|
36.04
|
|
(24,751)
|
$
|
61.97
|
|
Forfeited
|
(28,540)
|
$
|
50.55
|
|
(2,610)
|
$
|
56.23
|
|
Nonvested at December 31, 2013(1)
|
3,164,561
|
$
|
47.55
|
|
215,598
|
$
|
63.30
|
|
Vested or expected to vest, at December 31, 2013
|
3,107,020
|
$
|
47.45
|
|
203,655
|
$
|
63.12
|
|
(1)
|
Each unit represents the right to receive one share of our common stock if applicable performance conditions are satisfied. For all performance-based restricted stock units, up to an additional 50 percent of the shares represented by the units may be issued if Sempra Energy exceeds target performance conditions.
|
§
|
The California Utilities use natural gas energy derivatives, on their customers’ behalf, with the objective of managing price risk and basis risks, and lowering natural gas costs. These derivatives include fixed price natural gas positions, options, and basis risk instruments, which are either exchange-traded or over-the-counter financial instruments. This activity is governed by risk management and transacting activity plans that have been filed with and approved by the CPUC. Natural gas derivative activities are recorded as commodity costs that are offset by regulatory account balances and are recovered in rates. Net commodity cost impacts on the Consolidated Statements of Operations are reflected in Cost of Electric Fuel and Purchased Power or in Cost of Natural Gas.
|
§
|
SDG&E is allocated and may purchase congestion revenue rights (CRRs), which serve to reduce the regional electricity price volatility risk that may result from local transmission capacity constraints. Unrealized gains and losses do not impact earnings, as they are offset by regulatory account balances. Realized gains and losses associated with CRRs are recorded in Cost of Electric Fuel and Purchased Power, which is recoverable in rates, on the Consolidated Statements of Operations.
|
§
|
Sempra Mexico and Sempra Natural Gas may use natural gas and electricity derivatives, as appropriate, to optimize the earnings of their assets which support the following businesses: LNG, natural gas transportation, power generation, and Sempra Natural Gas’ storage. Gains and losses associated with undesignated derivatives are recognized in Energy-Related Businesses Revenues or in Cost of Natural Gas, Electric Fuel and Purchased Power on the Consolidated Statements of Operations. Certain of these derivatives may also be designated as cash flow hedges. Sempra Mexico also uses natural gas energy derivatives with the objective of managing price risk and lowering natural gas prices at its Mexican distribution operations. These derivatives, which are recorded as commodity costs that are offset by regulatory account balances and recovered in rates, are recognized in Cost of Natural Gas on the Consolidated Statements of Operations.
|
§
|
From time to time, our various businesses, including the California Utilities, may use other energy derivatives to hedge exposures such as the price of vehicle fuel.
|
|
|
|
|
||
|
|
|
December 31,
|
||
Segment and Commodity
|
2013
|
2012
|
|||
California Utilities:
|
|
|
|
||
SDG&E:
|
|
|
|
||
|
Natural gas
|
43 million MMBtu
|
25 million MMBtu
|
(1)
|
|
|
Congestion revenue rights
|
33 million MWh
|
30 million MWh
|
(2)
|
|
SoCalGas - natural gas
|
2 million MMBtu
|
―
|
|
||
|
|
|
|
|
|
Energy-Related Businesses:
|
|
|
|
||
Sempra Natural Gas:
|
|
|
|
||
Electric power
|
1 million MWh
|
1 million MWh
|
|
||
Natural gas
|
15 million MMBtu
|
36 million MMBtu
|
|
||
Sempra Mexico - natural gas
|
―
|
1 million MMBtu
|
|
||
(1)
|
Million British thermal units
|
|
|||
(2)
|
Megawatt hours
|
|
|
|
December 31, 2013
|
December 31, 2012
|
||||
(Dollars in millions)
|
Notional Debt
|
Maturities
|
Notional Debt
|
Maturities
|
|||
Sempra Energy Consolidated
|
|
|
|
|
|
|
|
|
Cash flow hedges(1)
|
$
|
413
|
2014-2028
|
$
|
439
|
2013-2028
|
|
Fair value hedges
|
|
300
|
2016
|
|
500
|
2013-2016
|
SDG&E
|
|
|
|
|
|
|
|
|
Cash flow hedge(1)
|
|
335
|
2019
|
|
345
|
2019
|
(1)
|
Includes Otay Mesa VIE. All of SDG&E’s interest rate derivatives relate to Otay Mesa VIE.
|
DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED BALANCE SHEETS
|
|||||||||
(Dollars in millions)
|
|||||||||
|
|
December 31, 2013
|
|||||||
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
credits
|
|
|
|
Current
|
|
|
|
Current
|
|
and other
|
|
|
|
assets:
|
|
|
|
liabilities:
|
|
liabilities:
|
|
|
|
Fixed-price
|
|
Investments
|
|
Fixed-price
|
|
Fixed-price
|
|
|
|
contracts
|
|
and other
|
|
contracts
|
|
contracts
|
|
|
|
and other
|
|
assets:
|
|
and other
|
|
and other
|
|
|
derivatives(1)
|
|
Sundry
|
|
derivatives(2)
|
|
derivatives
|
|
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Interest rate and foreign exchange instruments(3)
|
$
|
14
|
$
|
12
|
$
|
(18)
|
$
|
(75)
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Interest rate and foreign exchange instruments
|
|
8
|
|
22
|
|
(7)
|
|
(17)
|
|
Commodity contracts not subject to rate recovery
|
|
47
|
|
7
|
|
(51)
|
|
(5)
|
|
Associated offsetting commodity contracts
|
|
(43)
|
|
(5)
|
|
43
|
|
5
|
|
Associated offsetting cash collateral
|
|
―
|
|
―
|
|
1
|
|
―
|
|
Commodity contracts subject to rate recovery
|
|
35
|
|
72
|
|
(10)
|
|
(8)
|
|
Associated offsetting commodity contracts
|
|
(3)
|
|
(2)
|
|
3
|
|
2
|
|
Net amounts presented on the balance sheet
|
|
58
|
|
106
|
|
(39)
|
|
(98)
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
not subject to rate recovery
|
|
17
|
|
―
|
|
―
|
|
―
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
subject to rate recovery
|
|
31
|
|
―
|
|
―
|
|
―
|
|
Total
|
$
|
106
|
$
|
106
|
$
|
(39)
|
$
|
(98)
|
|
SDG&E:
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Interest rate instruments(3)
|
$
|
―
|
$
|
―
|
$
|
(16)
|
$
|
(39)
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Commodity contracts subject to rate recovery
|
|
34
|
|
72
|
|
(9)
|
|
(8)
|
|
Associated offsetting commodity contracts
|
|
(3)
|
|
(2)
|
|
3
|
|
2
|
|
Net amounts presented on the balance sheet
|
|
31
|
|
70
|
|
(22)
|
|
(45)
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
not subject to rate recovery
|
|
1
|
|
―
|
|
―
|
|
―
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
subject to rate recovery
|
|
29
|
|
―
|
|
―
|
|
―
|
|
Total
|
$
|
61
|
$
|
70
|
$
|
(22)
|
$
|
(45)
|
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Commodity contracts subject to rate recovery
|
$
|
1
|
$
|
―
|
$
|
(1)
|
$
|
―
|
|
Net amounts presented on the balance sheet
|
|
1
|
|
―
|
|
(1)
|
|
―
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
not subject to rate recovery
|
|
2
|
|
―
|
|
―
|
|
―
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
subject to rate recovery
|
|
2
|
|
―
|
|
―
|
|
―
|
|
Total
|
$
|
5
|
$
|
―
|
$
|
(1)
|
$
|
―
|
|
(1)
|
Included in Current Assets: Other for SoCalGas.
|
|
|
|
|
|
|
|
|
(2)
|
Included in Current Liabilities: Other for SoCalGas.
|
|
|
|
|
|
|
|
|
(3)
|
Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE.
|
DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED BALANCE SHEETS
|
|||||||||
(Dollars in millions)
|
|||||||||
|
|
December 31, 2012
|
|||||||
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
credits
|
|
|
|
Current
|
|
|
|
Current
|
|
and other
|
|
|
|
assets:
|
|
|
|
liabilities:
|
|
liabilities:
|
|
|
|
Fixed-price
|
|
Investments
|
|
Fixed-price
|
|
Fixed-price
|
|
|
|
contracts
|
|
and other
|
|
contracts
|
|
contracts
|
|
|
|
and other
|
|
assets:
|
|
and other
|
|
and other
|
|
|
derivatives(1)
|
|
Sundry
|
|
derivatives(2)
|
|
derivatives
|
|
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Interest rate instruments(3)
|
$
|
7
|
$
|
12
|
$
|
(19)
|
$
|
(64)
|
|
Commodity contracts not subject to rate recovery
|
|
1
|
|
―
|
|
―
|
|
―
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Interest rate instruments
|
|
8
|
|
40
|
|
(8)
|
|
(35)
|
|
Commodity contracts not subject to rate recovery
|
|
117
|
|
15
|
|
(116)
|
|
(27)
|
|
Associated offsetting commodity contracts
|
|
(102)
|
|
(12)
|
|
102
|
|
12
|
|
Associated offsetting cash collateral
|
|
―
|
|
―
|
|
4
|
|
7
|
|
Commodity contracts subject to rate recovery
|
|
30
|
|
35
|
|
(35)
|
|
(1)
|
|
Associated offsetting commodity contracts
|
|
(4)
|
|
―
|
|
4
|
|
―
|
|
Associated offsetting cash collateral
|
|
―
|
|
―
|
|
22
|
|
1
|
|
Net amounts presented on the balance sheet
|
|
57
|
|
90
|
|
(46)
|
|
(107)
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
not subject to rate recovery
|
|
22
|
|
―
|
|
―
|
|
―
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
subject to rate recovery
|
|
13
|
|
―
|
|
―
|
|
―
|
|
Total
|
$
|
92
|
$
|
90
|
$
|
(46)
|
$
|
(107)
|
|
SDG&E:
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Interest rate instruments(3)
|
$
|
―
|
$
|
―
|
$
|
(17)
|
$
|
(64)
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Commodity contracts subject to rate recovery
|
|
28
|
|
35
|
|
(33)
|
|
(1)
|
|
Associated offsetting commodity contracts
|
|
(3)
|
|
―
|
|
3
|
|
―
|
|
Associated offsetting cash collateral
|
|
―
|
|
―
|
|
22
|
|
1
|
|
Net amounts presented on the balance sheet
|
|
25
|
|
35
|
|
(25)
|
|
(64)
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
not subject to rate recovery
|
|
1
|
|
―
|
|
―
|
|
―
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
subject to rate recovery
|
|
12
|
|
―
|
|
―
|
|
―
|
|
Total
|
$
|
38
|
$
|
35
|
$
|
(25)
|
$
|
(64)
|
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Commodity contracts subject to rate recovery
|
$
|
2
|
$
|
―
|
$
|
(2)
|
$
|
―
|
|
Associated offsetting commodity contracts
|
|
(1)
|
|
―
|
|
1
|
|
―
|
|
Net amounts presented on the balance sheet
|
|
1
|
|
―
|
|
(1)
|
|
―
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
not subject to rate recovery
|
|
2
|
|
―
|
|
―
|
|
―
|
|
Additional cash collateral for commodity contracts
|
|
|
|
|
|
|
|
|
|
subject to rate recovery
|
|
1
|
|
―
|
|
―
|
|
―
|
|
Total
|
$
|
4
|
$
|
―
|
$
|
(1)
|
$
|
―
|
|
(1)
|
Included in Current Assets: Other for SoCalGas.
|
|
|
|
|
|
|
|
|
(2)
|
Included in Current Liabilities: Other for SoCalGas.
|
|
|
|
|
|
|
|
|
(3)
|
Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE.
|
FAIR VALUE HEDGE IMPACT ON THE CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
(Dollars in millions)
|
||||||||
|
|
|
Gain (loss) on derivatives recognized in earnings
|
|||||
|
|
|
Years ended December 31,
|
|||||
|
Location
|
2013
|
2012
|
2011
|
||||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
|
Interest rate instruments
|
Interest Expense
|
$
|
8
|
$
|
6
|
$
|
9
|
|
Interest rate instruments
|
Other Income, Net
|
|
(7)
|
|
3
|
|
13
|
|
Total(1)
|
|
$
|
1
|
$
|
9
|
$
|
22
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
Interest rate instrument
|
Interest Expense
|
$
|
―
|
$
|
―
|
$
|
1
|
|
Interest rate instrument
|
Other Income, Net
|
|
―
|
|
―
|
|
(3)
|
|
Total(1)
|
|
$
|
―
|
$
|
―
|
$
|
(2)
|
(1)
|
There has been no hedge ineffectiveness on these swaps. Changes in the fair values of the interest rate swap agreements are exactly offset by changes in the fair value of the underlying long-term debt.
|
CASH FLOW HEDGE IMPACT ON THE CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||
(Dollars in millions)
|
||||||||||||||
|
|
Pretax gain (loss)
recognized in OCI
|
|
Gain (loss) reclassified
from AOCI into earnings
|
||||||||||
|
|
(effective portion)
|
|
(effective portion)
|
||||||||||
|
|
Years ended December 31,
|
|
Years ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
Location
|
|
2013
|
|
2012
|
|
2011
|
|
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate and foreign
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
exchange instruments(1)
|
$
|
1
|
$
|
(22)
|
$
|
(42)
|
Interest Expense
|
$
|
(11)
|
$
|
(9)
|
$
|
(8)
|
|
|
|
|
|
|
|
|
Equity Earnings (Losses),
|
|
|
|
|
|
|
|
Interest rate instruments
|
|
15
|
|
(10)
|
|
(32)
|
Before Income Tax
|
|
(10)
|
|
(6)
|
|
(5)
|
|
Commodity contracts not
|
|
|
|
|
|
|
Cost of Natural Gas, Electric
|
|
|
|
|
|
|
|
subject to rate recovery
|
|
(4)
|
|
(1)
|
|
―
|
Fuel and Purchased Power
|
|
1
|
|
―
|
|
―
|
|
Total
|
$
|
12
|
$
|
(33)
|
$
|
(74)
|
|
$
|
(20)
|
$
|
(15)
|
$
|
(13)
|
SDG&E:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate instruments(1)
|
$
|
8
|
$
|
(16)
|
$
|
(40)
|
Interest Expense
|
$
|
(9)
|
$
|
(5)
|
$
|
(5)
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate instrument
|
$
|
―
|
$
|
―
|
$
|
―
|
Interest Expense
|
$
|
(1)
|
$
|
(2)
|
$
|
(3)
|
(1)
|
Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE. There was a negligible amount of ineffectiveness related to these swaps.
|
UNDESIGNATED DERIVATIVE IMPACT ON THE CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
(Dollars in millions)
|
||||||||
|
|
|
Gain (loss) on derivatives recognized in earnings
|
|||||
|
|
|
Years ended December 31,
|
|||||
|
|
Location
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
|
Interest rate and foreign
|
|
|
|
|
|
|
|
|
exchange instruments(1)
|
Other Income, Net
|
$
|
17
|
$
|
10
|
$
|
(14)
|
|
Foreign exchange instruments
|
Equity Earnings, Net of Income Tax
|
|
(4)
|
|
―
|
|
―
|
|
Commodity contracts not subject
|
Revenues: Energy-Related
|
|
|
|
|
|
|
|
to rate recovery
|
Businesses
|
|
(1)
|
|
7
|
|
30
|
|
Commodity contracts not subject
|
Cost of Natural Gas, Electric
|
|
|
|
|
|
|
|
to rate recovery
|
Fuel and Purchased Power
|
|
―
|
|
―
|
|
1
|
|
Commodity contracts not subject
|
|
|
|
|
|
|
|
|
to rate recovery
|
Other Operation and Maintenance
|
|
1
|
|
1
|
|
1
|
|
Commodity contracts subject
|
Cost of Electric Fuel
|
|
|
|
|
|
|
|
to rate recovery
|
and Purchased Power
|
|
53
|
|
69
|
|
(14)
|
|
Commodity contracts subject
|
|
|
|
|
|
|
|
|
to rate recovery
|
Cost of Natural Gas
|
|
―
|
|
(2)
|
|
(2)
|
|
Total
|
|
$
|
66
|
$
|
85
|
$
|
2
|
SDG&E:
|
|
|
|
|
|
|
|
|
|
Interest rate instruments(1)
|
Other Income, Net
|
$
|
―
|
$
|
―
|
$
|
(1)
|
|
Commodity contracts subject
|
Cost of Electric Fuel
|
|
|
|
|
|
|
|
to rate recovery
|
and Purchased Power
|
|
53
|
|
69
|
|
(14)
|
|
Total
|
|
$
|
53
|
$
|
69
|
$
|
(15)
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
Commodity contracts not subject
|
|
|
|
|
|
|
|
|
to rate recovery
|
Operation and Maintenance
|
$
|
1
|
$
|
1
|
$
|
1
|
|
Commodity contracts subject
|
|
|
|
|
|
|
|
|
to rate recovery
|
Cost of Natural Gas
|
|
―
|
|
(2)
|
|
(2)
|
|
Total
|
|
$
|
1
|
$
|
(1)
|
$
|
(1)
|
(1)
|
Amount for 2011 is related to Otay Mesa VIE. Sempra Energy Consolidated also includes additional instruments.
|
|
|
§
|
Nuclear decommissioning trusts reflect the assets of SDG&E’s nuclear decommissioning trusts, excluding cash balances. A third party trustee values the trust assets using prices from a pricing service based on a market approach. We validate these prices by comparison to prices from other independent data sources. Equity and certain debt securities are valued using quoted prices listed on nationally recognized securities exchanges or based on closing prices reported in the active market in which the identical security is traded (Level 1). Other debt securities are valued based on yields that are currently available for comparable securities of issuers with similar credit ratings (Level 2).
|
§
|
We enter into commodity contracts and interest rate derivatives primarily as a means to manage price exposures. We may also manage foreign exchange rate exposures using derivatives. We primarily use a market approach with market participant assumptions to value these derivatives. Market participant assumptions include those about risk, and the risk inherent in the inputs to the valuation techniques. These inputs can be readily observable, market corroborated, or generally unobservable. We have exchange-traded derivatives that are valued based on quoted prices in active markets for the identical instruments (Level 1). We also may have other commodity derivatives that are valued using industry standard models that consider quoted forward prices for commodities, time value, current market and contractual prices for the underlying instruments, volatility factors, and other relevant economic measures (Level 2). All Level 3 recurring items are related to CRRs at SDG&E, as we discuss below under “Level 3 Information.” We record commodity derivative contracts that are subject to rate recovery as commodity costs that are offset by regulatory account balances and are recovered in rates.
|
§
|
Investments include marketable securities that we value using a market approach based on closing prices reported in the active market in which the identical security is traded (Level 1).
|
RECURRING FAIR VALUE MEASURES ― SEMPRA ENERGY CONSOLIDATED
|
|||||||||||
(Dollars in millions)
|
|||||||||||
|
|
At fair value as of December 31, 2013
|
|||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trusts
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
614
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
614
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities issued by the U.S. Treasury and other
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government corporations and agencies
|
|
59
|
|
58
|
|
―
|
|
―
|
|
117
|
|
Municipal bonds
|
|
―
|
|
111
|
|
―
|
|
―
|
|
111
|
|
Other securities
|
|
―
|
|
153
|
|
―
|
|
―
|
|
153
|
|
Total debt securities
|
|
59
|
|
322
|
|
―
|
|
―
|
|
381
|
|
Total nuclear decommissioning trusts(2)
|
|
673
|
|
322
|
|
―
|
|
―
|
|
995
|
|
Interest rate instruments
|
|
―
|
|
56
|
|
―
|
|
―
|
|
56
|
|
Commodity contracts subject to rate recovery
|
|
2
|
|
1
|
|
99
|
|
31
|
|
133
|
|
Commodity contracts not subject to rate recovery
|
|
1
|
|
5
|
|
―
|
|
17
|
|
23
|
|
Total
|
$
|
676
|
$
|
384
|
$
|
99
|
$
|
48
|
$
|
1,207
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate and foreign exchange instruments
|
$
|
―
|
$
|
117
|
$
|
―
|
$
|
―
|
$
|
117
|
|
Commodity contracts subject to rate recovery
|
|
―
|
|
13
|
|
―
|
|
―
|
|
13
|
|
Commodity contracts not subject to rate recovery
|
|
4
|
|
8
|
|
―
|
|
(5)
|
|
7
|
|
Total
|
$
|
4
|
$
|
138
|
$
|
―
|
$
|
(5)
|
$
|
137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At fair value as of December 31, 2012
|
||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trusts
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
539
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
539
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities issued by the U.S. Treasury and other
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government corporations and agencies
|
|
87
|
|
69
|
|
―
|
|
―
|
|
156
|
|
Municipal bonds
|
|
―
|
|
63
|
|
―
|
|
―
|
|
63
|
|
Other securities
|
|
―
|
|
130
|
|
―
|
|
―
|
|
130
|
|
Total debt securities
|
|
87
|
|
262
|
|
―
|
|
―
|
|
349
|
|
Total nuclear decommissioning trusts(2)
|
|
626
|
|
262
|
|
―
|
|
―
|
|
888
|
|
Interest rate instruments
|
|
―
|
|
68
|
|
―
|
|
―
|
|
68
|
|
Commodity contracts subject to rate recovery
|
|
―
|
|
―
|
|
61
|
|
13
|
|
74
|
|
Commodity contracts not subject to rate recovery
|
|
13
|
|
8
|
|
―
|
|
22
|
|
43
|
|
Investments
|
|
1
|
|
―
|
|
―
|
|
―
|
|
1
|
|
Total
|
$
|
640
|
$
|
338
|
$
|
61
|
$
|
35
|
$
|
1,074
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate instruments
|
$
|
―
|
$
|
126
|
$
|
―
|
$
|
―
|
$
|
126
|
|
Commodity contracts subject to rate recovery
|
|
23
|
|
9
|
|
―
|
|
(23)
|
|
9
|
|
Commodity contracts not subject to rate recovery
|
|
6
|
|
23
|
|
―
|
|
(11)
|
|
18
|
|
Total
|
$
|
29
|
$
|
158
|
$
|
―
|
$
|
(34)
|
$
|
153
|
|
(1)
|
Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.
|
||||||||||
(2)
|
Excludes cash balances and cash equivalents.
|
|
|
|
|
|
|
|
|
|
|
RECURRING FAIR VALUE MEASURES ― SDG&E
|
|||||||||||
(Dollars in millions)
|
|||||||||||
|
At fair value as of December 31, 2013
|
||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trusts
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
614
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
614
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities issued by the U.S. Treasury and other
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government corporations and agencies
|
|
59
|
|
58
|
|
―
|
|
―
|
|
117
|
|
Municipal bonds
|
|
―
|
|
111
|
|
―
|
|
―
|
|
111
|
|
Other securities
|
|
―
|
|
153
|
|
―
|
|
―
|
|
153
|
|
Total debt securities
|
|
59
|
|
322
|
|
―
|
|
―
|
|
381
|
|
Total nuclear decommissioning trusts(2)
|
|
673
|
|
322
|
|
―
|
|
―
|
|
995
|
|
Commodity contracts subject to rate recovery
|
|
1
|
|
1
|
|
99
|
|
29
|
|
130
|
|
Commodity contracts not subject to rate recovery
|
|
―
|
|
―
|
|
―
|
|
1
|
|
1
|
|
Total
|
$
|
674
|
$
|
323
|
$
|
99
|
$
|
30
|
$
|
1,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate instruments
|
$
|
―
|
$
|
55
|
$
|
―
|
$
|
―
|
$
|
55
|
|
Commodity contracts subject to rate recovery
|
|
―
|
|
12
|
|
―
|
|
―
|
|
12
|
|
Total
|
$
|
―
|
$
|
67
|
$
|
―
|
$
|
―
|
$
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At fair value as of December 31, 2012
|
||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trusts
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
539
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
539
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities issued by the U.S. Treasury and other
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government corporations and agencies
|
|
87
|
|
69
|
|
―
|
|
―
|
|
156
|
|
Municipal bonds
|
|
―
|
|
63
|
|
―
|
|
―
|
|
63
|
|
Other securities
|
|
―
|
|
130
|
|
―
|
|
―
|
|
130
|
|
Total debt securities
|
|
87
|
|
262
|
|
―
|
|
―
|
|
349
|
|
Total nuclear decommissioning trusts(2)
|
|
626
|
|
262
|
|
―
|
|
―
|
|
888
|
|
Commodity contracts subject to rate recovery
|
|
―
|
|
―
|
|
61
|
|
12
|
|
73
|
|
Commodity contracts not subject to rate recovery
|
|
―
|
|
―
|
|
―
|
|
1
|
|
1
|
|
Total
|
$
|
626
|
$
|
262
|
$
|
61
|
$
|
13
|
$
|
962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate instruments
|
$
|
―
|
$
|
81
|
$
|
―
|
$
|
―
|
$
|
81
|
|
Commodity contracts subject to rate recovery
|
|
23
|
|
8
|
|
―
|
|
(23)
|
|
8
|
|
Total
|
$
|
23
|
$
|
89
|
$
|
―
|
$
|
(23)
|
$
|
89
|
|
(1)
|
Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.
|
||||||||||
(2)
|
Excludes cash balances and cash equivalents.
|
|
|
|
|
|
|
|
|
|
|
RECURRING FAIR VALUE MEASURES ― SOCALGAS
|
|||||||||||
(Dollars in millions)
|
|||||||||||
|
|
At fair value as of December 31, 2013
|
|||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts subject to rate recovery
|
$
|
1
|
$
|
―
|
$
|
―
|
$
|
2
|
$
|
3
|
|
Commodity contracts not subject to rate recovery
|
|
―
|
|
―
|
|
―
|
|
2
|
|
2
|
|
Total
|
$
|
1
|
$
|
―
|
$
|
―
|
$
|
4
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts subject to rate recovery
|
$
|
―
|
$
|
1
|
$
|
―
|
$
|
―
|
$
|
1
|
|
Total
|
$
|
―
|
$
|
1
|
$
|
―
|
$
|
―
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At fair value as of December 31, 2012
|
|||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts subject to rate recovery
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
1
|
$
|
1
|
|
Commodity contracts not subject to rate recovery
|
|
1
|
|
―
|
|
―
|
|
2
|
|
3
|
|
Total
|
$
|
1
|
$
|
―
|
$
|
―
|
$
|
3
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts subject to rate recovery
|
$
|
―
|
$
|
1
|
$
|
―
|
$
|
―
|
$
|
1
|
|
Total
|
$
|
―
|
$
|
1
|
$
|
―
|
$
|
―
|
$
|
1
|
|
(1)
|
Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.
|
LEVEL 3 RECONCILIATIONS
|
||||||
(Dollars in millions)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Balance as of January 1
|
$
|
61
|
$
|
23
|
$
|
2
|
Realized and unrealized gains
|
|
11
|
|
31
|
|
32
|
Allocated transmission instruments
|
|
51
|
|
58
|
|
7
|
Settlements
|
|
(24)
|
|
(51)
|
|
(18)
|
Balance as of December 31
|
$
|
99
|
$
|
61
|
$
|
23
|
Change in unrealized gains or losses relating to
|
|
|
|
|
|
|
instruments still held at December 31
|
$
|
11
|
$
|
17
|
$
|
17
|
|
December 31,
|
|||
(Dollars in millions)
|
2013
|
2012
|
||
Sempra Energy Consolidated
|
$
|
48
|
$
|
35
|
SDG&E
|
|
30
|
|
13
|
SoCalGas
|
|
4
|
|
3
|
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
||||||||||||
(Dollars in millions)
|
||||||||||||
|
|
December 31, 2013
|
||||||||||
|
|
Carrying
|
|
Fair Value
|
||||||||
|
|
Amount
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt(1)
|
$
|
12,022
|
|
$
|
―
|
$
|
11,925
|
$
|
751
|
$
|
12,676
|
|
Preferred stock of subsidiary
|
|
20
|
|
|
―
|
|
20
|
|
―
|
|
20
|
|
SDG&E:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt(2)
|
$
|
4,386
|
|
$
|
―
|
$
|
4,226
|
$
|
335
|
$
|
4,561
|
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt(3)
|
$
|
1,413
|
|
$
|
―
|
$
|
1,469
|
$
|
―
|
$
|
1,469
|
|
Preferred stock
|
|
22
|
|
|
―
|
|
22
|
|
―
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
||||||||||
|
|
Carrying
|
|
Fair Value
|
||||||||
|
|
Amount
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||
Sempra Energy Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in affordable housing partnerships(4)
|
$
|
12
|
|
$
|
―
|
$
|
―
|
$
|
36
|
$
|
36
|
|
Total long-term debt(1)
|
|
11,873
|
|
|
―
|
|
12,287
|
|
956
|
|
13,243
|
|
Preferred stock of subsidiaries
|
|
99
|
|
|
―
|
|
107
|
|
―
|
|
107
|
|
SDG&E:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt(2)
|
$
|
4,135
|
|
$
|
―
|
$
|
4,243
|
$
|
345
|
$
|
4,588
|
|
Contingently redeemable preferred stock(5)
|
|
79
|
|
|
―
|
|
85
|
|
―
|
|
85
|
|
SoCalGas:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt(3)
|
$
|
1,413
|
|
$
|
―
|
$
|
1,599
|
$
|
―
|
$
|
1,599
|
|
Preferred stock
|
|
22
|
|
|
―
|
|
24
|
|
―
|
|
24
|
|
(1)
|
Before reductions for unamortized discount (net of premium) of $17 million and $16 million at December 31, 2013 and 2012, respectively, and excluding build-to-suit and capital leases of $195 million and capital leases of $189 million at December 31, 2013 and 2012, respectively, and commercial paper classified as long-term debt of $200 million and $300 million at December 31, 2013 and 2012, respectively. We discuss our long-term debt in Note 5.
|
|||||||||||
(2)
|
Before reductions for unamortized discount of $11 million and $12 million at December 31, 2013 and 2012, respectively, and excluding capital leases of $179 million and $185 million at December 31, 2013, respectively.
|
|||||||||||
(3)
|
Before reductions for unamortized discount of $4 million at both December 31, 2013 and 2012 and excluding capital leases of $2 million and $4 million at December 31, 2013 and 2012, respectively.
|
|||||||||||
(4)
|
Investments in affordable housing partnerships at Parent and Other. At December 31, 2013, the carrying amount and fair value of these investments were negligible.
|
|||||||||||
(5)
|
On October 15, 2013, SDG&E redeemed all outstanding shares of its contingently redeemable preferred stock for $82 million. We discuss the redemption in Note 11.
|
§
|
the extent to which future cash flows are hedged by capacity sales contracts and their duration (generally through 2019), as well as the creditworthiness of the various counterparties;
|
§
|
Rockies Express’ future financing needs, including the ability to secure borrowings at reasonable rates as well as potentially using operating cash to retire principal;
|
§
|
prospects for generating attractive revenues and cash flows beyond 2019, including natural gas’ future basis differentials (driven by the location and extent of future supply and demand) and alternative strategies potentially available to utilize the assets; and
|
§
|
discount rates commensurate with the risks inherent in the cash flows.
|
NON-RECURRING FAIR VALUE MEASURES ― SEMPRA ENERGY CONSOLIDATED
|
|||||||
(Dollars in millions)
|
|||||||
|
|
|
|
% of
|
|
|
|
|
Estimated
|
|
Fair
|
Fair Value
|
|
|
|
|
Fair
|
|
Value
|
Measure-
|
|
Range of
|
|
|
Value
|
Valuation Technique
|
Hierarchy
|
ment
|
Inputs Used to Develop Measurement
|
Inputs
|
|
Investment in
|
|
|
|
|
|
|
|
Rockies Express
|
$369(1)
|
Market approach
|
Level 2
|
67%
|
Equity sale offer price
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Probability weighted
|
Level 3
|
33%
|
Combined transportation rate assumption(2)
|
6% - 78%
|
|
|
|
discounted cash flow
|
|
|
Counterparty credit risk on existing contracts
|
Low
|
|
|
|
|
|
|
Operation and maintenance escalation rate
|
0% - 1%
|
|
|
|
|
|
|
Forecasted interest rate on debt to be refinanced
|
5% - 10%
|
|
|
|
|
|
|
Discount rate
|
8% - 10%
|
|
Investment in
|
|
|
|
|
|
|
|
RBS Sempra
|
|
|
|
|
|
|
|
Commodities
|
$126(3)
|
Discounted cash flow
|
Level 3
|
100%
|
Future cash distributions
|
90% - 110%
|
|
(1)
|
At measurement date of September 30, 2012. At December 31, 2013, our investment in Rockies Express had a carrying value of $329 million, reflecting subsequent equity method activity to record distributions and earnings.
|
||||||
(2)
|
Transportation rate beyond existing contract terms as a percentage of current mean REX rates.
|
||||||
(3)
|
At measurement date of September 30, 2011. At December 31, 2013, our investment in RBS Sempra Commodities had a carrying value of $73 million, reflecting subsequent equity method activity to record distributions and losses.
|
PREFERRED STOCK
|
|||||||||
|
|
|
|
|
|
|
|
||
|
|
|
Final Call/
|
|
|
|
|
||
|
|
|
Redemption
|
December 31,
|
|||||
|
|
|
Price
|
2013
|
2012
|
||||
|
|
|
|
(in millions)
|
|||||
Contingently redeemable:
|
|
|
|
|
|
|
|||
|
SDG&E:
|
|
|
|
|
|
|
||
|
$20 par value, authorized 1,375,000 shares(1):
|
|
|
|
|
|
|
||
|
5% Series, 375,000 shares outstanding
|
$
|
24.00
|
$
|
―
|
$
|
8
|
||
|
4.5% Series, 300,000 shares outstanding
|
$
|
21.20
|
|
―
|
|
6
|
||
|
4.4% Series, 325,000 shares outstanding
|
$
|
21.00
|
|
―
|
|
7
|
||
|
4.6% Series, 373,770 shares outstanding
|
$
|
20.25
|
|
―
|
|
7
|
||
|
Without par value(1):
|
|
|
|
|
|
|
||
|
$1.70 Series, 1,400,000 shares outstanding
|
$
|
25.00
|
|
―
|
|
35
|
||
|
$1.82 Series, 640,000 shares outstanding
|
$
|
26.00
|
|
―
|
|
16
|
||
|
SDG&E - Total contingently redeemable preferred stock
|
|
|
|
―
|
|
79
|
||
|
Sempra Energy - Total contingently redeemable preferred
|
|
|
|
|
|
|
||
|
stock of subsidiary
|
|
|
$
|
―
|
$
|
79
|
||
|
|
|
|
|
|
|
|||
SoCalGas:
|
|
|
|
|
|
|
|||
$25 par value, authorized 1,000,000 shares:
|
|
|
|
|
|
|
|||
6% Series, 79,011 shares outstanding
|
|
|
$
|
3
|
$
|
3
|
|||
6% Series A, 783,032 shares outstanding
|
|
|
|
19
|
|
19
|
|||
SoCalGas - Total preferred stock
|
|
|
|
22
|
|
22
|
|||
Less: 50,970 shares of the 6% Series outstanding owned by PE
|
|
|
|
(2)
|
|
(2)
|
|||
|
|
|
|
20
|
|
20
|
|||
|
|
|
|
|
|
|
|
||
|
Sempra Energy - Total preferred stock of subsidiary
|
|
|
$
|
20
|
$
|
20
|
||
(1) |
Represents shares outstanding at December 31, 2012, which were fully redeemed in October 2013.
|
§
|
None of SoCalGas’ outstanding preferred stock is callable.
|
§
|
All outstanding series have one vote per share, cumulative preferences as to dividends and liquidation preferences of $25 per share plus any unpaid dividends.
|
EARNINGS PER SHARE COMPUTATIONS AND DIVIDENDS DECLARED
|
||||||
(Dollars in millions, except per share amounts; shares in thousands)
|
||||||
|
Years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Numerator:
|
|
|
|
|
|
|
Earnings/Income attributable to common shareholders
|
$
|
1,001
|
$
|
859
|
$
|
1,331
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
Weighted-average common shares outstanding for basic EPS
|
|
243,863
|
|
241,347
|
|
239,720
|
Dilutive effect of stock options, restricted stock awards and
|
|
|
|
|
|
|
restricted stock units
|
|
5,469
|
|
5,346
|
|
1,803
|
Weighted-average common shares outstanding for diluted EPS
|
|
249,332
|
|
246,693
|
|
241,523
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
Basic
|
$
|
4.10
|
$
|
3.56
|
$
|
5.55
|
Diluted
|
$
|
4.01
|
$
|
3.48
|
$
|
5.51
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
$
|
2.52
|
$
|
2.40
|
$
|
1.92
|
Four-Year Cumulative Total Shareholder Return Ranking versus S&P 500 Utilities Index(1)
|
Number of Sempra Energy Common Shares Received for Each Performance-Based Restricted Stock Unit(2)
|
|
75th Percentile or Above
|
1.5
|
|
50th Percentile
|
1
|
|
35th Percentile or Below
|
―
|
|
(1)
|
If Sempra Energy ranks at or above the 50th percentile compared to the S&P 500 Index, participants will receive a minimum of 1.0 share for each RSU.
|
|
(2)
|
Participants also receive additional shares for dividend equivalents on shares subject to RSUs, which are reinvested to purchase additional units that become subject to the same vesting conditions as the RSUs to which the dividends relate.
|
COMMON STOCK ACTIVITY
|
|||||||
|
|
|
|||||
|
|
Years ended December 31,
|
|||||
|
|
|
2013
|
|
2012
|
|
2011
|
Common shares outstanding, January 1
|
|
242,368,836
|
|
239,934,681
|
|
240,447,416
|
|
Stock options exercised
|
|
1,237,348
|
|
1,876,303
|
|
958,126
|
|
Restricted stock issuances
|
|
21,121
|
|
2,580
|
|
11,876
|
|
Restricted stock units vesting(1)
|
|
1,491,170
|
|
683,416
|
|
2,625
|
|
Shares released from ESOP
|
|
―
|
|
153,625
|
|
350,815
|
|
Shares repurchased(2)
|
|
(657,148)
|
|
(281,769)
|
|
(1,836,177)
|
|
Common shares outstanding, December 31
|
|
244,461,327
|
|
242,368,836
|
|
239,934,681
|
|
(1)
|
Includes dividend equivalents.
|
||||||
(2)
|
In addition to formal common stock repurchase programs which we discuss below, we also, from time to time, purchase shares of our common stock from restricted stock plan participants who elect to sell a sufficient number of vesting restricted shares to meet minimum statutory tax withholding requirements.
|
||||||
|
|
|
|
|
|
|
|
§
|
The PD identified $182.8 million as SDG&E’s share of the costs incurred by Edison, including overheads and capital, in 2012. Of this amount, the PD deemed $19.3 million to have been unreasonably incurred and recommended that this amount be refunded in rates effective January 1, 2014.
|
§
|
In addition, the PD identified $27 million as SDG&E’s share of the $122 million in costs incurred by Edison in 2012 associated with the steam generator inspection and repair, which costs will be reviewed in Phase 3, but not removed from rates yet. These costs are to be separately accounted for and interest accrued at the one-year U.S. Treasury rate should the CPUC decide in Phase 3 that they should also be refunded.
|
§
|
the net book value of SDG&E’s investment in SONGS plant and nuclear fuel of $516 million, which prior to the date of the plant retirement, had been reported as Property, Plant and Equipment on the Consolidated Balance Sheet;
|
§
|
SDG&E’s SONGS-related materials and supplies of $10 million, which prior to the date of the plant retirement, had been reported as Inventory on the Consolidated Balance Sheet;
|
§
|
SDG&E’s 2013 cost of replacement power that is in excess of the amount previously authorized for recovery in ERRA of $67 million which, prior to the date of the plant retirement, would have been reported as Regulatory Balancing Accounts, Net in Current Assets on the Consolidated Balance Sheet;
|
§
|
miscellaneous costs incurred or expected to be incurred by SDG&E associated with the early closure of the plant of $35 million; net of
|
§
|
a $200 million reserve for disallowance of rate recovery reported as Loss from Plant Closure on the Consolidated Statement of Operations; and
|
§
|
$125 million for amounts billed to customers for operating costs and the recovery of and return on investment in SONGS since the plant closure in early June 2013 that are subject to refund.
|
NUCLEAR DECOMMISSIONING TRUSTS
|
|||||||||
(Dollars in millions)
|
|||||||||
|
|
|
Gross
|
Gross
|
Estimated
|
||||
|
|
|
Unrealized
|
Unrealized
|
Fair
|
||||
|
|
Cost
|
Gains
|
Losses
|
Value
|
||||
At December 31, 2013:
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
Debt securities issued by the U.S. Treasury and other
|
|
|
|
|
|
|
|
|
|
U.S. government corporations and agencies(1)
|
$
|
116
|
$
|
3
|
$
|
(2)
|
$
|
117
|
|
Municipal bonds(2)
|
|
110
|
|
2
|
|
(1)
|
|
111
|
|
Other securities(3)
|
|
155
|
|
3
|
|
(5)
|
|
153
|
|
Total debt securities
|
|
381
|
|
8
|
|
(8)
|
|
381
|
|
Equity securities
|
|
207
|
|
409
|
|
(2)
|
|
614
|
|
Cash and cash equivalents
|
|
39
|
|
―
|
|
―
|
|
39
|
|
Total
|
$
|
627
|
$
|
417
|
$
|
(10)
|
$
|
1,034
|
|
At December 31, 2012:
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
Debt securities issued by the U.S. Treasury and other
|
|
|
|
|
|
|
|
|
|
U.S. government corporations and agencies
|
$
|
147
|
$
|
9
|
$
|
―
|
$
|
156
|
|
Municipal bonds
|
|
57
|
|
6
|
|
―
|
|
63
|
|
Other securities
|
|
121
|
|
10
|
|
(1)
|
|
130
|
|
Total debt securities
|
|
325
|
|
25
|
|
(1)
|
|
349
|
|
Equity securities
|
|
249
|
|
292
|
|
(2)
|
|
539
|
|
Cash and cash equivalents
|
|
20
|
|
―
|
|
―
|
|
20
|
|
Total
|
$
|
594
|
$
|
317
|
$
|
(3)
|
$
|
908
|
|
(1)
|
Maturity dates are 2014-2056.
|
|
|
|
|
|
|
|
|
(2)
|
Maturity dates are 2014-2062.
|
|
|
|
|
|
|
|
|
(3)
|
Maturity dates are 2014-2111.
|
|
|
|
|
|
|
|
|
SALES OF SECURITIES
|
|||||||
(Dollars in millions)
|
|||||||
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
Proceeds from sales(1)
|
$
|
685
|
$
|
723
|
$
|
715
|
|
Gross realized gains
|
|
26
|
|
21
|
|
75
|
|
Gross realized losses
|
|
(18)
|
|
(13)
|
|
(52)
|
|
(1)
|
Excludes securities that are held to maturity.
|
COST OF CAPITAL FINAL DECISION SUMMARY
|
|
|
||||||||||
|
|
|
||||||||||
SDG&E
|
|
|
|
SoCalGas
|
||||||||
Authorized Weighting
|
|
Authorized Rate of Recovery
|
|
Weighted Authorized ROR
|
|
|
|
Authorized Weighting
|
|
Authorized Rate of Recovery
|
|
Weighted Authorized ROR
|
45.25%
|
|
5.00%
|
|
2.26%
|
|
Long-Term Debt
|
|
45.60%
|
|
5.77%
|
|
2.63%
|
2.75%
|
|
6.22%
|
|
0.17%
|
|
Preferred Stock
|
|
2.40%
|
|
6.00%
|
|
0.14%
|
52.00%
|
|
10.30%
|
|
5.36%
|
|
Common Equity
|
|
52.00%
|
|
10.10%
|
|
5.25%
|
100.00%
|
|
|
|
7.79%
|
|
|
|
100.00%
|
|
|
|
8.02%
|
§
|
Phase 1 focuses on populated areas of SoCalGas’ and SDG&E’s service territories and would be implemented over a 10-year period, from 2012 to 2022.
|
§
|
Phase 2 covers unpopulated areas of SoCalGas’ and SDG&E’s service territories and will be filed with the CPUC at a later date.
|
§
|
operational incentives
|
§
|
energy efficiency
|
§
|
energy efficiency
|
§
|
natural gas procurement
|
§
|
unbundled natural gas storage and system operator hub services
|
UTILITY INCENTIVE AWARDS RECORDED IN EARNINGS 2011-2013(1)
|
||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
||||||||
|
|
2013
|
2012
|
2011
|
||||||
Sempra Energy Consolidated
|
|
|
|
|
|
|
|
|
|
|
Energy efficiency
|
$
|
7
|
|
$
|
6
|
|
$
|
16
|
|
|
Unbundled natural gas storage and hub services
|
|
1
|
|
|
3
|
|
|
4
|
|
|
Natural gas procurement
|
|
5
|
|
|
6
|
|
|
6
|
|
|
Operational incentives
|
|
―
|
|
|
5
|
|
|
3
|
|
|
Total awards
|
$
|
13
|
|
$
|
20
|
|
$
|
29
|
|
|
SDG&E
|
|
|
|
|
|
|
|
|
|
|
Energy efficiency
|
$
|
4
|
|
$
|
3
|
|
$
|
14
|
|
|
Operational incentives
|
|
―
|
|
|
2
|
|
|
1
|
|
|
Total awards
|
$
|
4
|
|
$
|
5
|
|
$
|
15
|
|
|
SoCalGas
|
|
|
|
|
|
|
|
|
|
|
Energy efficiency
|
$
|
3
|
|
$
|
3
|
|
$
|
2
|
|
|
Unbundled natural gas storage and hub services
|
|
1
|
|
|
3
|
|
|
4
|
|
|
Natural gas procurement
|
|
5
|
|
|
6
|
|
|
6
|
|
|
Operational incentives
|
|
―
|
|
|
3
|
|
|
2
|
|
|
Total awards
|
$
|
9
|
|
$
|
15
|
|
$
|
14
|
|
|
(1)
|
Awards are included in earnings upon CPUC approval of the award.
|
§
|
the first $15 million of net revenue to be shared 90 percent ratepayers/10 percent shareholders;
|
§
|
the next $15 million of net revenue to be shared 75 percent ratepayers/25 percent shareholders;
|
§
|
all additional net revenues to be shared evenly between ratepayers and shareholders; and
|
§
|
the maximum total annual shareholder-allocated portion of the net revenues cannot exceed $20 million.
|
§
|
access to electric transmission infrastructure;
|
§
|
timely regulatory approval of contracted renewable energy projects;
|
§
|
the renewable energy project developers’ ability to obtain project financing and permitting; and
|
§
|
successful development and implementation of the renewable energy technologies.
|
Sempra Energy Consolidated
|
|||||||
|
|
Storage and
|
|
|
|
|
|
(Dollars in millions)
|
Transportation
|
Natural Gas(1)
|
Total(1)
|
||||
2014
|
$
|
242
|
$
|
162
|
$
|
404
|
|
2015
|
|
239
|
|
4
|
|
243
|
|
2016
|
|
226
|
|
4
|
|
230
|
|
2017
|
|
220
|
|
4
|
|
224
|
|
2018
|
|
202
|
|
4
|
|
206
|
|
Thereafter
|
|
361
|
|
16
|
|
377
|
|
Total minimum payments
|
$
|
1,490
|
$
|
194
|
$
|
1,684
|
|
(1)
|
Excludes amounts related to LNG purchase agreements as discussed below.
|
SoCalGas
|
||||||
(Dollars in millions)
|
Transportation
|
Natural Gas
|
Total
|
|||
2014
|
$
|
126
|
$
|
57
|
$
|
183
|
2015
|
|
120
|
|
1
|
|
121
|
2016
|
|
111
|
|
1
|
|
112
|
2017
|
|
107
|
|
1
|
|
108
|
2018
|
|
89
|
|
1
|
|
90
|
Thereafter
|
|
157
|
|
―
|
|
157
|
Total minimum payments
|
$
|
710
|
$
|
61
|
$
|
771
|
|
Years ended December 31,
|
|||||
(Dollars in millions)
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated
|
$
|
1,680
|
$
|
1,345
|
$
|
1,991
|
SoCalGas
|
|
1,464
|
|
1,222
|
|
1,810
|
§
|
$670 million in 2014
|
§
|
$662 million in 2015
|
§
|
$654 million in 2016
|
§
|
$658 million in 2017
|
§
|
$678 million in 2018
|
§
|
$8.3 billion in 2019 – 2029
|
§
|
Long-term contracts: 31 percent (of which 25.4 percent is provided by renewable energy contracts expiring on various dates through 2039)
|
§
|
SDG&E-owned generation (including Palomar Energy Center, Miramar Energy Center, Desert Star Energy Center and Cuyamaca Peak Energy Plant) and tolling contracts (including OMEC): 55 percent
|
§
|
Spot market purchases: 14 percent
|
|
|
Sempra
|
|
|
|
|
|
Energy
|
|
|
|
(Dollars in millions)
|
Consolidated
|
SDG&E
|
|||
2014
|
$
|
1,328
|
$
|
471
|
|
2015
|
|
1,473
|
|
543
|
|
2016
|
|
1,487
|
|
524
|
|
2017
|
|
1,494
|
|
517
|
|
2018
|
|
1,483
|
|
488
|
|
Thereafter
|
|
11,826
|
|
6,349
|
|
Total minimum payments(1)
|
$
|
19,091
|
$
|
8,892
|
|
(1)
|
Excludes purchase agreements accounted for as capital leases and amounts related to Otay Mesa VIE, as it is consolidated by Sempra Energy and SDG&E.
|
|
Years ended December 31,
|
|||||
(Dollars in millions)
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated
|
$
|
1,377
|
$
|
1,205
|
$
|
918
|
SDG&E
|
|
570
|
|
381
|
|
346
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|||||
(Dollars in millions)
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated
|
$
|
81
|
$
|
74
|
$
|
77
|
SDG&E
|
|
23
|
|
20
|
|
18
|
SoCalGas
|
|
31
|
|
26
|
|
35
|
|
Sempra
|
|
|
|||
|
Energy
|
|
|
|||
(Dollars in millions)
|
Consolidated
|
SDG&E
|
SoCalGas
|
|||
2014
|
$
|
85
|
$
|
23
|
$
|
32
|
2015
|
|
83
|
|
22
|
|
32
|
2016
|
|
71
|
|
22
|
|
25
|
2017
|
|
74
|
|
20
|
|
30
|
2018
|
|
69
|
|
17
|
|
28
|
Thereafter
|
|
576
|
|
91
|
|
174
|
Total future rental commitments
|
$
|
958
|
$
|
195
|
$
|
321
|
|
Sempra
|
|
|
||||
|
Energy
|
|
|
||||
(Dollars in millions)
|
Consolidated
|
SDG&E
|
SoCalGas
|
||||
2014
|
$
|
4
|
$
|
2
|
$
|
2
|
|
2015
|
|
1
|
|
1
|
|
―
|
|
Total minimum lease payments
|
$
|
5
|
$
|
3
|
$
|
2
|
|
Present value of net minimum lease payments(1)
|
$
|
5
|
$
|
3
|
$
|
2
|
|
(1)
|
Excludes negligible amounts of interest.
|
|
|
|
|
|
|
(Dollars in millions)
|
|
|
2014
|
$
|
―
|
2015
|
|
4
|
2016
|
|
10
|
2017
|
|
10
|
2018
|
|
10
|
Thereafter
|
|
277
|
Total future payments
|
$
|
311
|
(Dollars in millions)
|
|
||
|
2014
|
$
|
24
|
|
2015
|
|
24
|
|
2016
|
|
24
|
|
2017
|
|
24
|
|
2018
|
|
24
|
|
Thereafter
|
|
394
|
|
Total minimum lease payments(1)
|
|
514
|
|
Less: estimated executory costs
|
|
(84)
|
|
Less: interest(2)
|
|
(254)
|
|
Present value of net minimum lease payments(3)
|
$
|
176
|
(1)
|
This amount will be recorded over the lives of the leases as Cost of Electric Fuel and Purchased Power on Sempra Energy’s and SDG&E’s Consolidated Statements of Operations. This expense will receive ratemaking treatment consistent with purchased-power costs.
|
||
(2)
|
Amount necessary to reduce net minimum lease payments to present value at the inception of the leases.
|
||
(3)
|
Includes $3 million in Current Portion of Long-Term Debt and $173 million in Long-Term Debt on Sempra Energy’s and SDG&E’s Consolidated Balance Sheets at December 31, 2013.
|
§
|
$87 million for the engineering, material procurement and construction costs associated with the East County Substation project;
|
§
|
$132 million related to nuclear fuel fabrication and other construction projects at SONGS; and
|
§
|
$113 million for infrastructure improvements for natural gas and electric transmission and distribution operations.
|
|
|
Years ended December 31,
|
|||||
|
|
2013
|
2012
|
2011
|
|||
Sempra Energy Consolidated(1)
|
$
|
31
|
$
|
92
|
$
|
144
|
|
SDG&E
|
|
13
|
|
77
|
|
130
|
|
SoCalGas
|
|
15
|
|
12
|
|
13
|
|
(1)
|
In cases of non-wholly owned affiliates, includes only our share.
|
|
|
# Sites
|
# Sites
|
||
|
|
Completed(1)
|
In Process
|
||
SDG&E
|
|
|
|
|
|
Manufactured-gas sites
|
|
3
|
|
―
|
|
Third-party waste-disposal sites
|
|
2
|
|
3
|
|
SoCalGas
|
|
|
|
|
|
Manufactured-gas sites
|
|
39
|
|
3
|
|
Third-party waste-disposal sites
|
|
5
|
|
1
|
|
(1)
|
There may be on-going compliance obligations for completed sites, such as regular inspections, adherence to land use covenants and water quality monitoring.
|
|
|
|
Waste
|
Former Fossil-
|
Other
|
|
|||||
|
|
Manufactured-
|
Disposal
|
Fueled Power
|
Hazardous
|
|
|||||
|
|
Gas Sites
|
Sites (PRP)(1)
|
Plants
|
Waste Sites
|
Total
|
|||||
SDG&E(2)(3)
|
$
|
―
|
$
|
―
|
$
|
5.2
|
$
|
0.4
|
$
|
5.6
|
|
SoCalGas(3)
|
|
14.7
|
|
0.2
|
|
―
|
|
0.2
|
|
15.1
|
|
Other
|
|
2.2
|
|
1.2
|
|
―
|
|
0.8
|
|
4.2
|
|
Total Sempra Energy
|
$
|
16.9
|
$
|
1.4
|
$
|
5.2
|
$
|
1.4
|
$
|
24.9
|
|
(1)
|
Sites for which we have been identified as a Potentially Responsible Party.
|
||||||||||
(2)
|
Does not include SDG&E’s liability for SONGS marine mitigation.
|
||||||||||
(3)
|
This includes $5.5 million at SDG&E and $15.1 million at SoCalGas related to hazardous waste sites subject to the Hazardous Waste Collaborative mechanism approved by the CPUC in 1994. This mechanism permits California’s IOUs, including the California Utilities, to recover in rates 90 percent of hazardous waste cleanup costs and related third-party litigation costs, and 70 percent of the related insurance-litigation expenses for certain sites. In addition, the California Utilities have the opportunity to retain a percentage of any recoveries from insurance carriers and other third parties to offset the cleanup and associated litigation costs not recovered in rates.
|
1.
|
SDG&E provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County.
|
2.
|
SoCalGas is a natural gas distribution utility, serving customers throughout most of Southern California and part of central California.
|
3.
|
Sempra South American Utilities operates electric transmission and distribution utilities in Chile and Peru. In June 2013, we sold our interests in two Argentine utilities, which we discuss further in Note 4 above.
|
4.
|
Sempra Mexico develops, owns and operates, or holds interests in, natural gas transmission pipelines and propane and ethane systems, a natural gas distribution utility, electric generation facilities (including wind), a terminal for the import of LNG, and marketing operations for the purchase of LNG and the purchase and sale of natural gas in Mexico.
|
5.
|
Sempra Renewables develops, owns and operates, or holds interests in, wind and solar energy projects in Arizona, California, Colorado, Hawaii, Indiana, Kansas, Nebraska, Nevada and Pennsylvania to serve wholesale electricity markets in the United States.
|
6.
|
Sempra Natural Gas develops, owns and operates, or holds interests in, a natural gas-fired electric generation asset, natural gas pipelines and storage facilities, natural gas distribution utilities and a terminal for the import and export of LNG and sale of natural gas, all within the United States.
|
SEGMENT INFORMATION
|
||||||||||||
(Dollars in millions)
|
||||||||||||
|
Years ended December 31,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E
|
$
|
4,066
|
39
|
%
|
$
|
3,694
|
38
|
%
|
$
|
3,373
|
34
|
%
|
SoCalGas
|
|
3,736
|
35
|
|
|
3,282
|
34
|
|
|
3,816
|
38
|
|
Sempra South American Utilities
|
|
1,495
|
14
|
|
|
1,441
|
15
|
|
|
1,080
|
11
|
|
Sempra Mexico
|
|
675
|
6
|
|
|
605
|
6
|
|
|
736
|
7
|
|
Sempra Renewables
|
|
82
|
1
|
|
|
68
|
1
|
|
|
22
|
―
|
|
Sempra Natural Gas
|
|
908
|
9
|
|
|
931
|
10
|
|
|
1,632
|
16
|
|
Adjustments and eliminations
|
|
(2)
|
―
|
|
|
(2)
|
―
|
|
|
(2)
|
―
|
|
Intersegment revenues(1)
|
|
(403)
|
(4)
|
|
|
(372)
|
(4)
|
|
|
(621)
|
(6)
|
|
Total
|
$
|
10,557
|
100
|
%
|
$
|
9,647
|
100
|
%
|
$
|
10,036
|
100
|
%
|
INTEREST EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E
|
$
|
197
|
|
|
$
|
173
|
|
|
$
|
142
|
|
|
SoCalGas
|
|
69
|
|
|
|
68
|
|
|
|
69
|
|
|
Sempra South American Utilities
|
|
27
|
|
|
|
32
|
|
|
|
34
|
|
|
Sempra Mexico
|
|
17
|
|
|
|
8
|
|
|
|
19
|
|
|
Sempra Renewables
|
|
23
|
|
|
|
22
|
|
|
|
13
|
|
|
Sempra Natural Gas
|
|
116
|
|
|
|
98
|
|
|
|
80
|
|
|
All other
|
|
241
|
|
|
|
251
|
|
|
|
233
|
|
|
Intercompany eliminations
|
|
(131)
|
|
|
|
(159)
|
|
|
|
(125)
|
|
|
Total
|
$
|
559
|
|
|
$
|
493
|
|
|
$
|
465
|
|
|
INTEREST INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E
|
$
|
1
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
SoCalGas
|
|
―
|
|
|
|
―
|
|
|
|
1
|
|
|
Sempra South American Utilities
|
|
14
|
|
|
|
15
|
|
|
|
22
|
|
|
Sempra Mexico
|
|
2
|
|
|
|
2
|
|
|
|
1
|
|
|
Sempra Renewables
|
|
20
|
|
|
|
6
|
|
|
|
―
|
|
|
Sempra Natural Gas
|
|
88
|
|
|
|
55
|
|
|
|
34
|
|
|
All other
|
|
―
|
|
|
|
4
|
|
|
|
―
|
|
|
Intercompany eliminations
|
|
(105)
|
|
|
|
(58)
|
|
|
|
(32)
|
|
|
Total
|
$
|
20
|
|
|
$
|
24
|
|
|
$
|
26
|
|
|
DEPRECIATION AND AMORTIZATION
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E
|
$
|
494
|
44
|
%
|
$
|
490
|
45
|
%
|
$
|
422
|
43
|
%
|
SoCalGas
|
|
383
|
35
|
|
|
362
|
33
|
|
|
331
|
34
|
|
Sempra South American Utilities
|
|
59
|
5
|
|
|
56
|
5
|
|
|
40
|
4
|
|
Sempra Mexico
|
|
63
|
6
|
|
|
62
|
6
|
|
|
63
|
6
|
|
Sempra Renewables
|
|
21
|
2
|
|
|
16
|
1
|
|
|
6
|
1
|
|
Sempra Natural Gas
|
|
81
|
7
|
|
|
93
|
9
|
|
|
103
|
11
|
|
All other
|
|
12
|
1
|
|
|
11
|
1
|
|
|
11
|
1
|
|
Total
|
$
|
1,113
|
100
|
%
|
$
|
1,090
|
100
|
%
|
$
|
976
|
100
|
%
|
INCOME TAX EXPENSE (BENEFIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E
|
$
|
191
|
|
|
$
|
190
|
|
|
$
|
237
|
|
|
SoCalGas
|
|
116
|
|
|
|
79
|
|
|
|
143
|
|
|
Sempra South American Utilities
|
|
67
|
|
|
|
78
|
|
|
|
42
|
|
|
Sempra Mexico
|
|
60
|
|
|
|
73
|
|
|
|
37
|
|
|
Sempra Renewables
|
|
(19)
|
|
|
|
(63)
|
|
|
|
(28)
|
|
|
Sempra Natural Gas
|
|
40
|
|
|
|
(157)
|
|
|
|
72
|
|
|
All other
|
|
(89)
|
|
|
|
(141)
|
|
|
|
(109)
|
|
|
Total
|
$
|
366
|
|
|
$
|
59
|
|
|
$
|
394
|
|
|
SEGMENT INFORMATION (Continued)
|
|||||||||||||
(Dollars in millions)
|
|||||||||||||
|
|
At December 31 or for the years ended December 31,
|
|||||||||||
|
|
2013
|
2012
|
2011
|
|||||||||
EARNINGS (LOSSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E(2)
|
$
|
404
|
41
|
%
|
$
|
484
|
56
|
%
|
$
|
431
|
32
|
%
|
|
SoCalGas(3)
|
|
364
|
37
|
|
|
289
|
34
|
|
|
287
|
22
|
|
|
Sempra South American Utilities
|
|
153
|
15
|
|
|
164
|
19
|
|
|
425
|
32
|
|
|
Sempra Mexico
|
|
122
|
12
|
|
|
157
|
18
|
|
|
192
|
14
|
|
|
Sempra Renewables
|
|
62
|
6
|
|
|
61
|
7
|
|
|
7
|
1
|
|
|
Sempra Natural Gas
|
|
64
|
6
|
|
|
(241)
|
(28)
|
|
|
115
|
9
|
|
|
All other
|
|
(168)
|
(17)
|
|
|
(55)
|
(6)
|
|
|
(126)
|
(10)
|
|
|
Total
|
$
|
1,001
|
100
|
%
|
$
|
859
|
100
|
%
|
$
|
1,331
|
100
|
%
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E
|
$
|
15,377
|
41
|
%
|
$
|
14,744
|
40
|
%
|
$
|
13,555
|
41
|
%
|
|
SoCalGas
|
|
9,147
|
25
|
|
|
9,071
|
25
|
|
|
8,475
|
25
|
|
|
Sempra South American Utilities
|
|
3,531
|
10
|
|
|
3,310
|
9
|
|
|
2,981
|
9
|
|
|
Sempra Mexico
|
|
3,246
|
9
|
|
|
2,591
|
7
|
|
|
2,502
|
8
|
|
|
Sempra Renewables
|
|
1,219
|
3
|
|
|
2,439
|
7
|
|
|
1,210
|
4
|
|
|
Sempra Natural Gas
|
|
7,200
|
19
|
|
|
5,145
|
14
|
|
|
5,738
|
17
|
|
|
All other
|
|
838
|
2
|
|
|
818
|
2
|
|
|
442
|
1
|
|
|
Intersegment receivables
|
|
(3,314)
|
(9)
|
|
|
(1,619)
|
(4)
|
|
|
(1,654)
|
(5)
|
|
|
Total
|
$
|
37,244
|
100
|
%
|
$
|
36,499
|
100
|
%
|
$
|
33,249
|
100
|
%
|
|
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SDG&E
|
$
|
978
|
38
|
%
|
$
|
1,237
|
42
|
%
|
$
|
1,831
|
64
|
%
|
|
SoCalGas
|
|
762
|
30
|
|
|
639
|
22
|
|
|
683
|
24
|
|
|
Sempra South American Utilities
|
|
200
|
8
|
|
|
183
|
6
|
|
|
110
|
4
|
|
|
Sempra Mexico
|
|
371
|
14
|
|
|
45
|
2
|
|
|
16
|
―
|
|
|
Sempra Renewables
|
|
176
|
7
|
|
|
717
|
24
|
|
|
248
|
9
|
|
|
Sempra Natural Gas
|
|
83
|
3
|
|
|
131
|
4
|
|
|
157
|
6
|
|
|
All other
|
|
2
|
―
|
|
|
4
|
―
|
|
|
4
|
―
|
|
|
Intercompany eliminations(4)
|
|
―
|
―
|
|
|
―
|
―
|
|
|
(205)
|
(7)
|
|
|
Total
|
$
|
2,572
|
100
|
%
|
$
|
2,956
|
100
|
%
|
$
|
2,844
|
100
|
%
|
|
GEOGRAPHIC INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-lived assets(5):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
$
|
22,654
|
84
|
%
|
$
|
22,698
|
85
|
%
|
$
|
21,405
|
85
|
%
|
|
Mexico
|
|
2,597
|
9
|
|
|
2,219
|
8
|
|
|
2,189
|
9
|
|
|
South America
|
|
1,784
|
7
|
|
|
1,790
|
7
|
|
|
1,542
|
6
|
|
|
Total
|
$
|
27,035
|
100
|
%
|
$
|
26,707
|
100
|
%
|
$
|
25,136
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
$
|
8,478
|
80
|
%
|
$
|
7,711
|
80
|
%
|
$
|
8,521
|
85
|
%
|
|
South America
|
|
1,495
|
14
|
|
|
1,441
|
15
|
|
|
1,080
|
11
|
|
|
Mexico
|
|
584
|
6
|
|
|
495
|
5
|
|
|
435
|
4
|
|
|
Total
|
$
|
10,557
|
100
|
%
|
$
|
9,647
|
100
|
%
|
$
|
10,036
|
100
|
%
|
|
(1)
|
Revenues for reportable segments include intersegment revenues of:
|
||||||||||||
|
$10 million, $70 million, $91 million and $232 million for 2013, $8 million, $46 million, $108 million and $210 million for 2012, and $6 million, $53 million, $300 million and $262 million for 2011 for SDG&E, SoCalGas, Sempra Mexico and Sempra Natural Gas, respectively.
|
||||||||||||
(2)
|
After preferred dividends and 2013 call premium on preferred stock.
|
||||||||||||
(3)
|
After preferred dividends.
|
||||||||||||
(4)
|
Amount represents elimination of intercompany sale of El Dorado power plant (renamed Desert Star Energy Center) in 2011, by Sempra Natural Gas to SDG&E.
|
||||||||||||
(5)
|
Includes net property, plant and equipment and investments.
|
SEMPRA ENERGY
|
|||||||||
(In millions, except per share amounts)
|
|||||||||
|
|
Quarters ended
|
|||||||
|
|
March 31
|
June 30
|
September 30
|
December 31
|
||||
2013
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
2,650
|
$
|
2,651
|
$
|
2,551
|
$
|
2,705
|
|
Expenses and other income
|
$
|
2,298
|
$
|
2,353
|
$
|
2,119
|
$
|
2,357
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
178
|
$
|
267
|
$
|
323
|
$
|
320
|
|
Earnings attributable to Sempra Energy
|
$
|
178
|
$
|
245
|
$
|
296
|
$
|
282
|
|
|
|
|
|
|
|
|
|
|
|
Basic per-share amounts(1):
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
0.73
|
$
|
1.10
|
$
|
1.32
|
$
|
1.31
|
|
Earnings attributable to Sempra Energy
|
$
|
0.73
|
$
|
1.00
|
$
|
1.21
|
$
|
1.15
|
|
Weighted average common shares outstanding
|
|
243.3
|
|
243.6
|
|
244.1
|
|
244.4
|
|
|
|
|
|
|
|
|
|
|
|
Diluted per-share amounts(1):
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
0.72
|
$
|
1.07
|
$
|
1.29
|
$
|
1.28
|
|
Earnings attributable to Sempra Energy
|
$
|
0.72
|
$
|
0.98
|
$
|
1.19
|
$
|
1.13
|
|
Weighted average common shares outstanding
|
|
247.5
|
|
248.5
|
|
249.3
|
|
249.9
|
|
2012
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
2,383
|
$
|
2,089
|
$
|
2,507
|
$
|
2,668
|
|
Expenses and other income
|
$
|
2,026
|
$
|
2,141
|
$
|
2,178
|
$
|
2,359
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
251
|
$
|
74
|
$
|
290
|
$
|
305
|
|
Earnings attributable to Sempra Energy
|
$
|
236
|
$
|
62
|
$
|
268
|
$
|
293
|
|
|
|
|
|
|
|
|
|
|
|
Basic per-share amounts(1):
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1.04
|
$
|
0.31
|
$
|
1.20
|
$
|
1.26
|
|
Earnings attributable to Sempra Energy
|
$
|
0.98
|
$
|
0.26
|
$
|
1.11
|
$
|
1.21
|
|
Weighted average common shares outstanding
|
|
240.6
|
|
241.1
|
|
241.7
|
|
242.0
|
|
|
|
|
|
|
|
|
|
|
|
Diluted per-share amounts(1):
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1.02
|
$
|
0.30
|
$
|
1.18
|
$
|
1.23
|
|
Earnings attributable to Sempra Energy
|
$
|
0.97
|
$
|
0.25
|
$
|
1.09
|
$
|
1.18
|
|
Weighted average common shares outstanding
|
|
243.8
|
|
246.3
|
|
245.8
|
|
247.6
|
|
(1)
|
Earnings per share are computed independently for each of the quarters and therefore may not sum to the total for the year.
|
||||||||
|
SDG&E
|
||||||||
(Dollars in millions)
|
||||||||
|
Quarters ended
|
|||||||
|
March 31
|
June 30
|
September 30
|
December 31
|
||||
2013
|
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
939
|
$
|
1,064
|
$
|
1,063
|
$
|
1,000
|
Operating expenses
|
|
771
|
|
939
|
|
800
|
|
774
|
Operating income
|
$
|
168
|
$
|
125
|
$
|
263
|
$
|
226
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
81
|
$
|
73
|
$
|
139
|
$
|
142
|
Losses (earnings) attributable to noncontrolling interest
|
|
11
|
|
(7)
|
|
(5)
|
|
(23)
|
Earnings
|
|
92
|
|
66
|
|
134
|
|
119
|
Call premium on preferred stock
|
|
―
|
|
―
|
|
(3)
|
|
―
|
Dividends on preferred stock
|
|
(1)
|
|
(1)
|
|
(2)
|
|
―
|
Earnings attributable to common shares
|
$
|
91
|
$
|
65
|
$
|
129
|
$
|
119
|
2012
|
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
834
|
$
|
780
|
$
|
1,092
|
$
|
988
|
Operating expenses
|
|
656
|
|
611
|
|
822
|
|
796
|
Operating income
|
$
|
178
|
$
|
169
|
$
|
270
|
$
|
192
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
112
|
$
|
101
|
$
|
188
|
$
|
114
|
Earnings attributable to noncontrolling interest
|
|
(6)
|
|
(5)
|
|
(12)
|
|
(3)
|
Earnings
|
|
106
|
|
96
|
|
176
|
|
111
|
Dividends on preferred stock
|
|
(1)
|
|
(1)
|
|
(2)
|
|
(1)
|
Earnings attributable to common shares
|
$
|
105
|
$
|
95
|
$
|
174
|
$
|
110
|
|
§
|
$19 million and $94 million, respectively, from the incremental cost of renewable energy and increased cost of other purchased power primarily due to higher prices; and
|
§
|
$27 million and $18 million, respectively, of increases in the cost of power purchased to replace power scheduled to be generated and delivered to SDG&E from SONGS.
|
SOCALGAS
|
||||||||
(Dollars in millions)
|
||||||||
|
Quarters ended
|
|||||||
|
March 31
|
June 30
|
September 30
|
December 31
|
||||
2013
|
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
983
|
$
|
904
|
$
|
807
|
$
|
1,042
|
Operating expenses
|
|
900
|
|
725
|
|
652
|
|
920
|
Operating income
|
$
|
83
|
$
|
179
|
$
|
155
|
$
|
122
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
46
|
$
|
119
|
$
|
102
|
$
|
98
|
Dividends on preferred stock
|
|
―
|
|
(1)
|
|
―
|
|
―
|
Earnings attributable to common shares
|
$
|
46
|
$
|
118
|
$
|
102
|
$
|
98
|
2012
|
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
880
|
$
|
720
|
$
|
728
|
$
|
954
|
Operating expenses
|
|
761
|
|
625
|
|
609
|
|
867
|
Operating income
|
$
|
119
|
$
|
95
|
$
|
119
|
$
|
87
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
66
|
$
|
54
|
$
|
71
|
$
|
99
|
Dividends on preferred stock
|
|
―
|
|
(1)
|
|
―
|
|
―
|
Earnings attributable to common shares
|
$
|
66
|
$
|
53
|
$
|
71
|
$
|
99
|
GLOSSARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Tax Act
|
Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
|
|
ConEdison Development
|
Consolidated Edison Development
|
2012 GRC
|
2012 General Rate Case
|
|
Cox
|
Cox Communications
|
2012 Tax Act
|
American Taxpayer Relief Act of 2012
|
|
CPSD
|
Consumer Protection and Safety Division, now known as the Safety and Enforcement Division
|
AB
|
Assembly Bill
|
|
CPUC
|
California Public Utilities Commission
|
AFUDC
|
Allowance for funds used during construction
|
|
CRE
|
Comisión Reguladora de Energía (Energy Regulatory Commission) (Mexico)
|
AMI
|
Advanced metering infrastructure
|
|
CRRs
|
Congestion revenue rights
|
AOCI
|
Accumulated other comprehensive income (loss)
|
|
DA
|
Direct Access
|
ARO
|
Asset retirement obligation
|
|
DOE
|
U.S. Department of Energy
|
ASLB
|
Atomic Safety and Licensing Board
|
|
DRA
|
Division of Ratepayer Advocates
|
ASU
|
Accounting Standards Update
|
|
DWR
|
California Department of Water Resources
|
Bay Gas
|
Bay Gas Storage Company, Ltd.
|
|
EBITDA
|
Earnings before interest, taxes, depreciation and amortization
|
Bcf
|
Billion cubic feet
|
|
Ecogas
|
Ecogas Mexico, S de RL de CV
|
Black-Scholes model
|
Black-Scholes option-pricing model
|
|
Edison
|
Southern California Edison Company
|
BLM
|
Bureau of Land Management
|
|
EGWP
|
Employer Group Waiver Plan
|
BMV
|
La Bolsa Mexicana de Valores, S.A.B. de C.V. (Mexican Stock Exchange)
|
|
EIA
|
Environmental impact authorization
|
CAL
|
Confirmatory Action Letter
|
|
EIR
|
Environmental impact report
|
Cal Fire
|
California Department of Forestry and Fire Protection
|
|
Eletrans
|
Eletrans, collectively for Eletrans S.A. and Eletrans II S. A.
|
California Utilities
|
San Diego Gas & Electric Company and Southern California Gas Company
|
|
EMA
|
Energy Management Agreement
|
Cameron LNG
|
Cameron LNG, LLC
|
|
EPA
|
Environmental Protection Agency
|
CARE
|
California Alternate Rates for Energy
|
|
EPS
|
Earnings per common share
|
CBA
|
Collective bargaining agreement
|
|
ERRA
|
Energy Resource Recovery Account
|
Cedar Creek 2
|
Cedar Creek 2 Wind Farm
|
|
ESOP
|
Employee stock ownership plan
|
CFE
|
Comisión Federal de Electricidad (Federal Electricity Commission) (Mexico)
|
|
ESP
|
Energy Service Provider
|
CFTC
|
U.S. Commodity Futures Trading Commission
|
|
FERC
|
Federal Energy Regulatory Commission
|
Chilquinta Energía
|
Chilquinta Energía S.A. and its subsidiaries
|
|
Final GRC Decision
|
Final CPUC decision on 2012 General Rate Case
|
Citizens
|
Citizens Sunrise Transmission, LLC
|
|
Flat Ridge 2
|
Flat Ridge 2 Wind Farm
|
CLF
|
Chilean Unidad de Fomento
|
|
Fowler Ridge 2
|
Fowler Ridge 2 Wind Farm
|
CMS 1
|
Copper Mountain Solar 1
|
|
FTC
|
Federal Trade Commission
|
CMS 2
|
Copper Mountain Solar 2
|
|
Gazprom
|
Gazprom Marketing & Trading Mexico
|
CMS 3
|
Copper Mountain Solar 3
|
|
GCIM
|
Gas cost incentive mechanism
|
CNE
|
Comisión Nacional de Energía (National Energy Commission) (Chile)
|
|
GRC
|
General Rate Case
|
CNF
|
Cleveland National Forest
|
|
HMRC
|
United Kingdom's Revenue and Customs Department
|
GLOSSARY (CONTINUED)
|
|
|
||
|
|
|
|
|
|
|
|
|
|
HRA
|
Health Retirement Account
|
|
NDT
|
Nuclear Decommissioning Trusts
|
IEnova
|
Infraestructura Energética Nova, S.A.B. de C.V.
|
|
NEIL
|
Nuclear Electric Insurance Limited
|
IFRS
|
International Financial Reporting Standards
|
|
NERC
|
North American Electric Reliability Corporation
|
IOUs
|
Investor-owned utilities
|
|
NOL
|
Net operating loss
|
IRS
|
Internal Revenue Service
|
|
NRC
|
Nuclear Regulatory Commission
|
ISFSI
|
Independent spent fuel storage installation
|
|
NYK
|
Nippon Yusen Kabushiki Kaisha
|
ISO
|
California Independent System Operator, also known as CAISO
|
|
OCI
|
Other comprehensive income
|
ITC
|
Investment tax credits
|
|
OII
|
Order Instituting Investigation
|
JP Morgan
|
J.P. Morgan Chase & Co.
|
|
OMEC
|
Otay Mesa Energy Center
|
J.P. Morgan Ventures
|
J.P. Morgan Ventures Energy Corporation
|
|
OMEC LLC
|
Otay Mesa Energy Center LLC
|
KMI
|
Kinder Morgan, Inc.
|
|
ORA
|
Office of Ratepayer Advocates (formerly the Division of Ratepayer Advocates or DRA)
|
KMP
|
Kinder Morgan Energy Partners, L.P.
|
|
OSINERGMIN
|
Organismo Supervisor de la Inversión en Energía y Minería (Energy and Mining Investment Supervisory Body) (Peru)
|
kV
|
Kilovolt
|
|
Otay Mesa VIE
|
Otay Mesa Energy Center LLC
|
Liberty
|
Liberty Gas Storage, LLC
|
|
OTC
|
Over-the-counter
|
LIFO
|
Last-in first-out
|
|
PBOP
|
Other postretirement benefit plans
|
LNG
|
Liquefied natural gas
|
|
PBOP plan trusts
|
Postretirement benefit plan trusts
|
Luz del Sur
|
Luz del Sur S.A.A. and its subsidiaries
|
|
PCB
|
Polychlorinated Biphenyl
|
Luzlinares
|
Luzlinares S.A.
|
|
PCRB
|
Pollution Control Revenue Bonds
|
MBFC
|
Mississippi Business Finance Corporation
|
|
PD
|
Proposed Decision
|
Mcf
|
Thousand cubic feet
|
|
PE
|
Pacific Enterprises
|
Mehoopany Wind
|
Mehoopany Wind Farm
|
|
PEMEX
|
Petróleos Mexicanos (Mexican state-owned oil company)
|
MHI
|
Mitsubishi Heavy Industries
|
|
PG&E
|
Pacific Gas and Electric Company
|
MHI Collectively
|
Mitsubishi Heavy Industries, Ltd., Mitsubishi Nuclear Energy Systems, Inc., and Mitsubishi Heavy Industries America, Inc.
|
|
PPA
|
Power Purchase Agreement
|
Mississippi Hub
|
Mississippi Hub, LLC
|
|
PPACA
|
Patient Protection and Affordable Care Act
|
MMBtu
|
Million British thermal units (of natural gas)
|
|
PRP
|
Potentially Responsible Party
|
MMcf
|
Million Cubic Feet
|
|
PSEP
|
Pipeline Safety Enhancement Plan
|
Mobile Gas
|
Mobile Gas Service Corporation
|
|
PTC
|
Production tax credit
|
MS 1
|
Mesquite Solar 1
|
|
RBS
|
The Royal Bank of Scotland plc
|
MSUP
|
Master Special Use Permit
|
|
RBS SEE
|
RBS Sempra Energy Europe
|
Mtpa
|
Million Tonnes per annum
|
|
RBS Sempra Commodities
|
RBS Sempra commodities LLP
|
MW
|
Megawatt
|
|
RECs
|
Renewable energy certificates
|
MWh
|
Megawatt Hour
|
|
REX
|
Rockies Express Pipeline
|
|
|
|
|
|
GLOSSARY (CONTINUED)
|
|
|
||
|
|
|
|
|
|
|
|
|
|
Rockies Express
|
Rockies Express Pipeline LLC
|
|
U.S. GAAP
|
Accounting Principles Generally Accepted in the United States
|
ROE
|
Return on equity
|
|
USFS
|
United States Forest Service
|
ROR
|
Rate of return
|
|
VaR
|
Value at Risk
|
RPS
|
Renewables Portfolio Standard
|
|
VAT
|
Value added tax
|
RSAs
|
Restricted Stock Awards
|
|
VEBA
|
Voluntary Employee Beneficiary Association
|
RSUs
|
Restricted Stock Units
|
|
VIE
|
Variable interest entity
|
SAESA
|
Sociedad Austral de Electricidad Sociedad Anónima
|
|
VNR
|
Valor Nuevo de Reemplazo (New replacement value) (Chile and Peru)
|
SB
|
Senate Bill
|
|
VREP
|
Voluntary Retirement Enhancement Program
|
SDG&E
|
San Diego Gas & Electric Company
|
|
Williams
|
Williams Midstream Natural Gas Liquids, Inc.
|
SEDATU
|
Secretaria de Desarrollo Agrario, Territorial y Urbano
|
|
Willmut Gas
|
Willmut Gas Company
|
SEMARNAT
|
Mexican environmental protection agency
|
|
|
|
SFP
|
Secondary financial protection
|
|
|
|
Shell
|
Shell México Gas Natural
|
|
|
|
SoCalGas
|
Southern California Gas Company
|
|
|
|
SONGS
|
San Onofre Nuclear Generating Station
|
|
|
|
SPPR Group
|
Southwest Public Power Resources Group
|
|
|
|
SRP
|
Salt River Project Agricultural Improvement and Power District
|
|
|
|
S&P
|
Standard & Poor's
|
|
|
|
SWPL
|
Southwest Power Link
|
|
|
|
Tallgrass
|
Tallgrass Energy Partners, L.P.
|
|
|
|
Tangguh PSC
|
Tangguh PSC Contractors
|
|
|
|
TCAP
|
Triennial Cost Allocation Proceeding
|
|
|
|
Tecnored
|
Tecnored S.A.
|
|
|
|
Tecsur
|
Tecsur S.A.
|
|
|
|
The 2013 Plan
|
Sempra Energy 2013 Long-Term Incentive Plan
|
|
|
|
The Committees
|
Pension and Benefits Investments Committee
|
|
|
|
TIMP
|
Transmission Integrity Management Program
|
|
|
|
TO4
|
Electric Transmission Formula Rate
|
|
|
|
ESOP
|
ESOP Trust
|
|
|
|
TURN
|
The Utility Reform Network
|
|
|
|
|
|
|
|
|
Exhibit 21.1
Sempra Energy
Schedule of Certain Subsidiaries
at December 31, 2013
| State of Incorporation or Other Jurisdiction |
AEI Asociacion en Participacion | Peru |
Enova Corporation | California |
Infraestructura Energetica Nova, S.A.B. de C.V. | Mexico |
Luz del Sur S.A.A. | Peru |
Pacific Enterprises | California |
Pacific Enterprises International | California |
San Diego Gas & Electric Company | California |
Sempra Energy International | California |
Semco Holdco, S. de R.L. de C.V. | Mexico |
Sempra Energy Holdings III B.V. | Netherlands |
Sempra Energy Holdings VIII B.V. | Netherlands |
Sempra Energy Holdings XI B.V. | Netherlands |
Sempra Energy International Holdings N.V. | Netherlands |
Sempra Generation, LLC | Delaware |
Sempra Global | Delaware |
Southern California Gas Company | California |
EXHIBIT 31.1
CERTIFICATION
I, Debra L. Reed, certify that:
1.
I have reviewed this report on Form 10-K of Sempra Energy;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
February 27, 2014
/s/ Debra L. Reed |
Debra L. Reed |
Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Joseph A. Householder, certify that:
1.
I have reviewed this report on Form 10-K of Sempra Energy;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
February 27, 2014
/s/ Joseph A. Householder |
Joseph A. Householder |
Chief Financial Officer |
EXHIBIT 31.3
CERTIFICATION
I, Jeffrey W. Martin, certify that:
1.
I have reviewed this report on Form 10-K of San Diego Gas & Electric Company;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
February 27, 2014
/s/ Jeffrey W. Martin |
Jeffrey W. Martin |
Chief Executive Officer |
EXHIBIT 31.4
CERTIFICATION
I, Robert M. Schlax, certify that:
1.
I have reviewed this report on Form 10-K of San Diego Gas & Electric Company;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
February 27, 2014
/s/ Robert M. Schlax |
Robert M. Schlax |
Chief Financial Officer |
EXHIBIT 31.5
CERTIFICATION
I, Anne S. Smith, certify that:
1.
I have reviewed this report on Form 10-K of Southern California Gas Company;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
February 27, 2014
/s/ Anne S. Smith |
Anne S. Smith |
Chief Executive Officer |
EXHIBIT 31.6
CERTIFICATION
I, Robert M. Schlax, certify that:
1.
I have reviewed this report on Form 10-K of Southern California Gas Company;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
February 27, 2014
/s/ Robert M. Schlax |
Robert M. Schlax |
Chief Financial Officer |
Exhibit 32.1
Statement of Chief Executive Officer
Pursuant to 18 U.S.C. Sec 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Sempra Energy (the "Company") certifies that:
(i)
the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission for the year ended December 31, 2013 (the "Annual Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
February 27, 2014
/s/ Debra L. Reed |
Debra L. Reed |
Chief Executive Officer |
Exhibit 32.2
Statement of Chief Financial Officer
Pursuant to 18 U.S.C. Sec 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of Sempra Energy (the "Company") certifies that:
(i)
the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission for the year ended December 31, 2013 (the "Annual Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
February 27, 2014
Exhibit 32.3
Statement of Chief Executive Officer
Pursuant to 18 U.S.C. Sec 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of San Diego Gas & Electric Company (the "Company") certifies that:
(i)
the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission for the year ended December 31, 2013 (the "Annual Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
February 27, 2014
/s/ Jeffrey W. Martin |
Jeffrey W. Martin |
Chief Executive Officer |
Exhibit 32.4
Statement of Chief Financial Officer
Pursuant to 18 U.S.C. Sec 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of San Diego Gas & Electric Company (the "Company") certifies that:
(i)
the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission for the year ended December 31, 2013 (the "Annual Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
February 27, 2014
/s/ Robert M. Schlax |
Robert M. Schlax |
Chief Financial Officer |
Exhibit 32.5
Statement of Chief Executive Officer
Pursuant to 18 U.S.C. Sec 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Southern California Gas Company (the "Company") certifies that:
(i)
the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission for the year ended December 31, 2013 (the "Annual Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
February 27, 2014
/s/ Anne S. Smith |
Anne S. Smith |
Chief Executive Officer |
Exhibit 32.6
Statement of Chief Financial Officer
Pursuant to 18 U.S.C. Sec 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of Southern California Gas Company (the "Company") certifies that:
(i)
the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission for the year ended December 31, 2013 (the "Annual Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
February 27, 2014
/s/ Robert M. Schlax |
Robert M. Schlax |
Chief Financial Officer |