1.0.0.3 false VARIABLE INTEREST ENTITIES false 1 $ false false 2 Notes to Condensed Consolidated Financial Statements 0 sre_NotesToConsolidatedFinancialStatementsAbstract sre false na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false No definition available. false 3 Variable Interest Entities Disclosure 1 us-gaap_ScheduleOfVariableInterestEntitiesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div style="font-size:12pt">NOTE 5. OTHER FINANCIAL DATAVARIABLE INTEREST ENTITIES ASC 810, Consolidation (ASC 810) (FIN 46(R)), requires an enterprise to consolidate a variable interest entity (VIE), as defined in ASC 810, if the company is the primary beneficiary of the VIE’s activities. Our determination of whether we are the primary beneficiary is based upon qualitative and quantitative analyses, which assess <ul><li>the purpose and design of the VIE; </li><li>the nature of the VIE's risks and the risks we absorb; and </li><li>whether the variable interest holders will absorb a majority of the VIE's expected losses or receive a majority of its expected residual returns (or both). </li></ul>SDG&E has a 10-year agreement to purchase power to be generated at the Otay Mesa Energy Center (OMEC), a 573-MW generating facility. The facility began commercial operations in October 2009. As defined in ASC 810, the facility owner, Otay Mesa Energy Center LLC (OMEC LLC), is a VIE (Otay Mesa VIE), of which SDG&E is the primary beneficiary. Accordingly, Sempra Energy and SDG&E have consolidated Otay Mesa VIE. SDG&E has no OMEC LLC voting rights and does not operate OMEC. Otay Mesa VIE's equity of $141 million at September 30, 2009 and $128 million at December 31, 2008 is included on the Condensed Consolidated Balance Sheets in Other Noncontrolling Interests for Sempra Energy and in Noncontrolling Interests for SDG&E. We provide additional information about Otay Mesa VIE in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. OMEC LLC has a project finance credit facility with third party lenders, secured by its assets, that provides for up to $377 million for the construction of OMEC. SDG&E is not a party to the credit agreement and does not have any additional implicit or explicit financial responsibility to Otay Mesa VIE. The loan matures in April 2019. Borrowings under the facility bear interest at rates varying with market rates. OMEC LLC had $344 million of outstanding borrowings under this facility at September 30, 2009. In addition, OMEC LLC has entered into interest-rate swap agreements to moderate its exposure to interest-rate changes on this facility. We provide additional information concerning the interest-rate swaps in Note 7.SDG&E has a 25-year agreement to purchase power to be generated by Orange Grove Energy L.P. (Orange Grove), at its 94-MW generating facility located in San Diego County, California. The facility is currently under construction, and we expect it to be available for commercial operation during the second quarter of 2010. As defined in ASC 810, Orange Grove is a VIE of which SDG&E is the primary beneficiary. During the third quarter of 2009, all of the conditions precedent in the purchased-power agreement were satisfied, therefore, effective on September 30, 2009, Sempra Energy and SDG&E have consolidated Orange Grove. Orange Grove has credit facilities that provide for a total of $100 million for construction of the generating facility. These credit agreements are with a third party lender and are secured by Orange Grove's assets. SDG&E is not a party to the credit agreements and does not have any additional implicit or explicit financial responsibility to Orange Grove. When Orange Grove completes construction of the generating facility, or on June 30, 2010 if construction is not completed by that date, the credit facilities will convert to a term loan that matures in June 2035. Borrowings under the credit facilities bear interest at rates varying with market rates. At September 30, 2009, Orange Grove had $66 million of outstanding borrowings under the credit facilities and $3 million of letters of credit supported by the facilities. Contracts under which SDG&E acquires power from generation facilities otherwise unrelated to SDG&E could also result in a requirement for SDG&E to consolidate the entity that owns the facility. In accordance with ASC 810, SDG&E continues the process of determining if it has any such situations and, if so, gathering the information that would be needed to perform the consolidation. However, such information has not been made available to us and an evaluation of variable interests has not been completed for these entities that are grandfathered pursuant to ASC 810. The effects of any required consolidation are not expected to significantly affect the financial position, results of operations or liquidity of SDG&E.</div> NOTE 5. OTHER FINANCIAL DATAVARIABLE INTEREST ENTITIESASC 810, Consolidation (ASC 810) (FIN 46(R)), requires an enterprise to consolidate a variable interest false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true