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INVESTMENTS IN UNCONSOLIDATED ENTITIES
 6 Months Ended
Jun. 30, 2020
Investments [Abstract]  
Investments in Unconsolidated Entities INVESTMENTS IN UNCONSOLIDATED ENTITIES
We generally account for investments under the equity method when we have significant influence over, but do not have control of, these entities. Equity earnings and losses, both before and net of income tax, are combined and presented as Equity Earnings on the Condensed Consolidated Statements of Operations. See Note 12 for information on equity earnings and losses, both before and net of income tax, by segment. See Note 1 for information on how equity earnings and losses before income taxes are factored into the calculations of our pretax income or loss and ETR.
We provide additional information concerning our equity method investments in Notes 5 and 6 of the Notes to Consolidated Financial Statements in the Annual Report.
SEMPRA TEXAS UTILITIES
Oncor Holdings
We account for our 100% ownership interest in Oncor Holdings, which owns an 80.25% interest in Oncor, as an equity method investment. Due to the ring-fencing measures, governance mechanisms, and commitments in effect, we do not have the power to direct the significant activities of Oncor Holdings and Oncor. See Note 6 of the Notes to Consolidated Financial Statements in the Annual Report for additional information related to the restrictions on our ability to direct the significant activities of Oncor Holdings and Oncor.
In the six months ended June 30, 2020, Sempra Energy contributed $139 million to Oncor, and Oncor Holdings distributed to Sempra Energy $146 million in dividends.
In the six months ended June 30, 2019, Sempra Energy contributed $1,180 million to Oncor, which includes $1,067 million to fund Oncor’s acquisition of interests in InfraREIT and certain acquisition-related expenses, which we discuss in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report. In the six months ended June 30, 2019, Oncor Holdings distributed to Sempra Energy $108 million in dividends.
We provide summarized income statement information for Oncor Holdings in the following table.
SUMMARIZED FINANCIAL INFORMATION – ONCOR HOLDINGS
 
 
(Dollars in millions)
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
2020
2019
 
2020
 
2019
Operating revenues
$
1,090

$
1,041

 
$
2,162

 
$
2,057

Operating expenses
(767
)
(757
)
 
(1,568
)
 
(1,532
)
Income from operations
323

284

 
594

 
525

Interest expense
(102
)
(93
)
 
(203
)
 
(179
)
Income tax expense
(37
)
(30
)
 
(65
)
 
(53
)
Net income
173

136

 
302

 
250

Noncontrolling interest held by TTI
(35
)
(27
)
 
(61
)
 
(50
)
Earnings attributable to Sempra Energy
138

109

 
241

 
200


SEMPRA LNG
In the six months ended June 30, 2020 and 2019, Sempra LNG invested cash of $1 million and $77 million, respectively, in Cameron LNG JV. In the six months ended June 30, 2020, Cameron LNG JV distributed to Sempra Energy $74 million in dividends. Prior to commencing commercial operations in August 2019, Sempra LNG capitalized $26 million of interest in the six months ended June 30, 2019 related to its investment in Cameron LNG JV.
Sempra Energy Guarantee for an Affiliate of Cameron LNG JV
In July 2020, an affiliate of Cameron LNG JV entered into a financing arrangement with Cameron LNG JV’s four project owners and received aggregate proceeds of $1.5 billion from two project owners and from external lenders on behalf of the other two project owners (collectively, the affiliate loans), based on their proportionate ownership interest in Cameron LNG JV. The affiliate used the proceeds from the affiliate loans to provide a loan to Cameron LNG JV. The affiliate loans mature in 2039. Principal and interest will be paid from Cameron LNG JV’s project cash flows from its three-train natural gas liquefaction export facility. Cameron LNG JV will use the proceeds from its loan to return equity to its project owners. Sempra Energy plans to use its share of the proceeds received for working capital and other general corporate purposes, including the repayment of indebtedness.
Sempra Energy’s proportionate share of the affiliate loans, based on its 50.2% ownership interest in Cameron LNG JV, was funded by external lenders comprised of a syndicate of eight banks (the bank debt) to whom Sempra Energy has provided a $753 million guarantee. Under the terms of the guarantee, Sempra Energy is responsible for repayment of the bank debt if the affiliate of Cameron LNG JV fails to pay the external lenders. Additionally, the external lenders may exercise an option to put the bank debt to Sempra Energy on every one-year anniversary of the closing of the affiliate loans, as well as upon the occurrence of certain transfer events, including a failure by the affiliate to meet its payment obligations under the bank debt. In addition, some or all of the bank debt will be transferred by the external lenders back to Sempra Energy on the five-year anniversary of the affiliate loans, unless the external lenders elect to waive their transfer rights six months prior to the five-year anniversary of the affiliate loans. Sempra Energy also has a right to call the bank debt back from, or to refinance the bank debt with, the external lenders at any time. The guarantee will terminate upon full repayment of the bank debt, including repayment following an event in which the bank debt is put to Sempra Energy. Sempra Energy will record a liability in July 2020 for the fair value of its obligation associated with this guarantee.
RBS SEMPRA COMMODITIES
As we discuss in Note 11, in the first quarter of 2020, we recorded a charge of $100 million in Equity Earnings on Sempra Energy’s Condensed Consolidated Statement of Operations for losses from our investment in RBS Sempra Commodities. We recognized a corresponding liability of $25 million in Other Current Liabilities and $75 million in Deferred Credits and Other for our share of estimated losses in excess of the carrying value of our equity method investment.
GUARANTEES
At June 30, 2020, Sempra LNG has provided guarantees aggregating a maximum of $4.0 billion with an aggregate carrying value of $2 million associated with Cameron LNG JV’s debt obligations. We discuss these guarantees in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.