FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2018

For the CRRs settling from January 1 to December 31, the auction price inputs, at a given location, were in the following ranges for the years indicated below:



CONGESTION REVENUE RIGHTS AUCTION PRICE INPUTS

Settlement year	Price per MWh
2018	$	(7.25	)	to	$	11.99
2017	(11.88		)	to	6.93

Recurring Fair Value Measures Table



RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
	Fair value at September 30, 2018
	Level 1			Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	482		$	4	$	—	$	486
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	40			10		—		50
Municipal bonds	—			258		—		258
Other securities	—			231		—		231
Total debt securities	40			499		—		539
Total nuclear decommissioning trusts⁽¹⁾	522			503		—		1,025
Interest rate and foreign exchange instruments⁽²⁾	—			45		—		45
Commodity contracts not subject to rate recovery	4			7		—		11
Effect of netting and allocation of collateral⁽³⁾	11			—		—		11
Commodity contracts subject to rate recovery	—			5		101		106
Effect of netting and allocation of collateral⁽³⁾	24			—		5		29
Total	$	561		$	560	$	106	$	1,227

Liabilities:
Interest rate and foreign exchange instruments	$	—		$	132	$	—	$	132
Commodity contracts not subject to rate recovery	—			12		—		12
Commodity contracts subject to rate recovery	3			5		113		121
Effect of netting and allocation of collateral⁽³⁾	(3		)	—		—		(3		)
Total	$	—		$	149	$	113	$	262

	Fair value at December 31, 2017
	Level 1			Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	491		$	5	$	—	$	496
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	45			9		—		54
Municipal bonds	—			250		—		250
Other securities	—			217		—		217
Total debt securities	45			476		—		521
Total nuclear decommissioning trusts⁽¹⁾	536			481		—		1,017
Interest rate and foreign exchange instruments	—			7		—		7
Commodity contracts not subject to rate recovery	5			12		—		17
Effect of netting and allocation of collateral⁽³⁾	2			—		—		2
Commodity contracts subject to rate recovery	—			2		126		128
Effect of netting and allocation of collateral⁽³⁾	12			—		5		17
Total	$	555		$	502	$	131	$	1,188

Liabilities:
Interest rate and foreign exchange instruments	$	—		$	217	$	—	$	217
Commodity contracts not subject to rate recovery	—			6		—		6
Commodity contracts subject to rate recovery	23			7		154		184
Effect of netting and allocation of collateral⁽³⁾	(23		)	—		—		(23		)
Total	$	—		$	230	$	154	$	384


⁽¹⁾	Excludes cash balances and cash equivalents.


⁽²⁾	Includes $3 million of interest rate instruments classified as Assets Held for Sale, as we discuss in Note 5.


⁽³⁾	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.



RECURRING FAIR VALUE MEASURES – SDG&E
(Dollars in millions)
	Fair value at September 30, 2018
	Level 1			Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	482		$	4	$	—	$	486
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	40			10		—		50
Municipal bonds	—			258		—		258
Other securities	—			231		—		231
Total debt securities	40			499		—		539
Total nuclear decommissioning trusts⁽¹⁾	522			503		—		1,025
Commodity contracts subject to rate recovery	—			2		101		103
Effect of netting and allocation of collateral⁽²⁾	21			—		5		26
Total	$	543		$	505	$	106	$	1,154

Liabilities:
Interest rate instruments	$	—		$	4	$	—	$	4
Commodity contracts subject to rate recovery	3			—		113		116
Effect of netting and allocation of collateral⁽²⁾	(3		)	—		—		(3		)
Total	$	—		$	4	$	113	$	117

	Fair value at December 31, 2017
	Level 1			Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	491		$	5	$	—	$	496
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	45			9		—		54
Municipal bonds	—			250		—		250
Other securities	—			217		—		217
Total debt securities	45			476		—		521
Total nuclear decommissioning trusts⁽¹⁾	536			481		—		1,017
Commodity contracts subject to rate recovery	—			—		126		126
Effect of netting and allocation of collateral⁽²⁾	11			—		5		16
Total	$	547		$	481	$	131	$	1,159

Liabilities:
Interest rate instruments	$	—		$	13	$	—	$	13
Commodity contracts subject to rate recovery	23			5		154		182
Effect of netting and allocation of collateral⁽²⁾	(23		)	—		—		(23		)
Total	$	—		$	18	$	154	$	172


⁽¹⁾	Excludes cash balances and cash equivalents.


⁽²⁾	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.



RECURRING FAIR VALUE MEASURES – SOCALGAS
(Dollars in millions)
	Fair value at September 30, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Commodity contracts subject to rate recovery	$	—	$	3	$	—	$	3
Effect of netting and allocation of collateral⁽¹⁾	3		—		—		3
Total	$	3	$	3	$	—	$	6

Liabilities:
Commodity contracts subject to rate recovery	$	—	$	5	$	—	$	5
Total	$	—	$	5	$	—	$	5

	Fair value at December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Commodity contracts subject to rate recovery	$	—	$	2	$	—	$	2
Effect of netting and allocation of collateral⁽¹⁾	1		—		—		1
Total	$	1	$	2	$	—	$	3

Liabilities:
Commodity contracts subject to rate recovery	$	—	$	2	$	—	$	2
Total	$	—	$	2	$	—	$	2

⁽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.

Recurring Fair Value Measures Level 3 Rollforward Table

Fair Value of Financial Instruments Table

The following table provides the carrying amounts and fair values of certain other financial instruments that are not recorded at fair value on the Condensed Consolidated Balance Sheets:



FAIR VALUE OF FINANCIAL INSTRUMENTS
(Dollars in millions)
	September 30, 2018
	Carrying amount		Fair value
	Carrying amount		Level 1		Level 2		Level 3		Total
Sempra Energy Consolidated:
Long-term amounts due from unconsolidated affiliates⁽¹⁾	$	626	$	—	$	599	$	40	$	639
Long-term amounts due to unconsolidated affiliates⁽²⁾	35		—		32		—		32
Total long-term debt^(3)(4)(5)	22,207		738		20,791		487		22,016
SDG&E:
Total long-term debt⁽⁵⁾⁽⁶⁾	$	5,064	$	—	$	4,902	$	287	$	5,189
SoCalGas:
Total long-term debt⁽⁷⁾	$	3,459	$	—	$	3,474	$	—	$	3,474

	December 31, 2017
	Carrying amount		Fair value
	Carrying amount		Level 1		Level 2		Level 3		Total
Sempra Energy Consolidated:
Long-term amounts due from unconsolidated affiliates⁽¹⁾	$	604	$	—	$	528	$	96	$	624
Long-term amounts due to unconsolidated affiliates⁽²⁾	35		—		32		—		32
Total long-term debt⁽⁴⁾⁽⁵⁾	17,138		817		17,134		458		18,409
SDG&E:
Total long-term debt⁽⁵⁾⁽⁶⁾	$	4,868	$	—	$	5,073	$	295	$	5,368
SoCalGas:
Total long-term debt⁽⁷⁾	$	3,009	$	—	$	3,192	$	—	$	3,192


⁽¹⁾	Excludes accumulated interest outstanding of $66 million and $29 million at September 30, 2018 and December 31, 2017, respectively, and excludes foreign currency translation losses of $10 million and $35 million on a Mexican peso-denominated loan at September 30, 2018 and December 31, 2017, respectively.


⁽²⁾	Excludes accumulated interest of $1 million outstanding at September 30, 2018 and negligible interest outstanding at December 31, 2017.


⁽³⁾	Includes $70 million of long-term debt classified as Liabilities Held for Sale, as we discuss in Notes 5 and 7.

⁽⁴⁾

Before reductions for unamortized discount (net of premium) and debt issuance costs of $211 million and $143 million at September 30, 2018 and December 31, 2017, respectively, and excludes build-to-suit and capital lease obligations of $873 million and $877 million at September 30, 2018 and December 31, 2017, respectively. We discuss our long-term debt in Note 7 above and in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report.


⁽⁵⁾	Level 3 instruments include $287 million and $295 million at September 30, 2018 and December 31, 2017, respectively, related to Otay Mesa VIE.


⁽⁶⁾	Before reductions for unamortized discount and debt issuance costs of $49 million and $45 million at September 30, 2018 and December 31, 2017, respectively, and excludes capital lease obligations of $725 million and $732 million at September 30, 2018 and December 31, 2017, respectively.


⁽⁷⁾	Before reductions for unamortized discount and debt issuance costs of $33 million and $24 million at September 30, 2018 and December 31, 2017, respectively, and excludes capital lease obligations of $4 million and $1 million at September 30, 2018 and December 31, 2017, respectively.

Nonrecurring Fair Value Measurements

The following table summarizes significant inputs that impacted our non-recurring fair value measures.

NON-RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED

Estimated

fair

value (in millions)

Valuation technique

Fair

value

hierarchy

% of

fair value

measurement

Inputs used to
develop
measurement

Range of
inputs

Certain of our U.S. wind equity method investments

145

⁽¹⁾

Discounted cash flows

Level 3

100%

Contracted and observable merchant prices per MWh

$29 - $92

⁽²⁾

Discount rate

8% - 10%

⁽³⁾

Non-utility natural gas storage assets

190

⁽⁴⁾

Discounted cash flows

Level 3

100%

Storage rates
per Dth/month

$0.06 - $0.22

⁽²⁾

Discount rate

10%

⁽³⁾


⁽¹⁾	At measurement date of June 25, 2018. At September 30, 2018, these U.S. wind equity method investments had a carrying value of $136 million reflecting subsequent business activity.


⁽²⁾	Generally, significant increases (decreases) in this input in isolation would result in a significantly higher (lower) fair value measurement.


⁽³⁾	An increase in the discount rate would result in a decrease in fair value.

⁽⁴⁾

At measurement date of June 25, 2018. At September 30, 2018, Mississippi Hub and Bay Gas were classified as held for sale and had a net carrying value of $141 million, reflecting subsequent business activity and estimated costs to sell, as we discuss in Note 5. Our other U.S. midstream assets that were measured at fair value, including LA Storage, continue to be classified as property, plant and equipment and had a net carrying value of $32 million at September 30, 2018.