1.0.0.3 false EQUITY METHOD INVESTMENTS 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 Investments in Unconsolidated Entities Disclosure 1 us-gaap_EquityMethodInvestmentsDisclosureTextBlock 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"><p>SEMPRA COMMODITIES<br />On April 1, 2008, Sempra Energy and The Royal Bank of Scotland (RBS) completed the formation of RBS Sempra Commodities LLP (RBS Sempra Commodities), a limited liability partnership formed in the United Kingdom to own and operate the commodities-marketing businesses previously operated through wholly owned subsidiaries of Sempra Energy. We account for our investment in RBS Sempra Commodities under the equity method, and our share of partnership earnings is reported in the Sempra Commodities segment. <br />For the three months and nine months ended September 30, 2009, we had $105 million and $384 million, respectively, of pretax equity earnings from RBS Sempra Commodities. For the three months and nine months ended September 30, 2008, pretax equity earnings (losses) from RBS Sempra Commodities were $(4) million and $142 million, respectively. The partnership income that is distributable to us on an annual basis is computed on the partnership's basis of accounting, International Financial Reporting Standards (IFRS) as adopted by the European Union. For the three months and nine months ended September 30, 2009, this distributable income, on an IFRS basis, was $60 million and $276 million, respectively. In the three months ended September 30, 2008, the distributable income, on an IFRS basis, decreased by $29 million. For the nine months ended September 30, 2008, the distributable income was $136 million. In the first quarter of 2009, we received the remaining distribution of 2008 partnership income of $305 million, and through the nine months ended September 30, 2009, we received $102 million to fund estimated tax payments as provided in the partnership agreement. <br />We have indemnified the partnership for certain litigation and tax liabilities related to the businesses purchased by the partnership. We recorded these obligations at a fair value of $5 million on April 1, 2008, the date we formed the partnership, and they are being amortized over 4 years. <br />We provide information regarding the Sempra Commodities segment in Note 11. <br />The following table shows summarized financial information for RBS Sempra Commodities (on a GAAP basis):</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="14" width="235" align="left"> </td><td width="208" align="center" colspan="4" style="border-bottom: 1px solid #000000;" height="14">Three months ended September 30,</td><td width="193" align="center" colspan="4" style="border-bottom: 1px solid #000000;" height="14">Nine months ended September 30,</td></tr><tr><td height="14" style="border-bottom: 1px solid #000000;" align="left" width="235"><i>(Dollars in millions)</i></td><td width="95" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2009 </td><td width="113" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2008 </td><td width="87" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2009 </td><td width="106" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2008 </td></tr><tr><td height="16" style="border-top: 1px solid #000000;" align="left" width="235">Gross revenues and fee income</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="26">$</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="69"> 291 </td><td height="16" style="border-top: 1px solid #000000;" align="left" width="26">$</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="87"> 48 </td><td height="16" style="border-top: 1px solid #000000;" align="left" width="26">$</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="61"> 1,167 </td><td height="16" style="border-top: 1px solid #000000;" align="left" width="26">$</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="80"> 586 </td></tr><tr><td height="16" width="235" align="left">Gross profit</td><td height="16" width="26" align="left"> </td><td height="16" width="69" align="right"> 268 </td><td height="16" width="26" align="left"> </td><td height="16" width="87" align="right"> 23 </td><td height="16" width="26" align="left"> </td><td height="16" width="61" align="right"> 1,096 </td><td height="16" width="26" align="left"> </td><td height="16" width="80" align="right"> 540 </td></tr><tr><td height="16" width="235" align="left">Income (loss) from continuing operations</td><td height="16" width="26" align="left"> </td><td height="16" width="69" align="right"> 115 </td><td height="16" width="26" align="left"> </td><td height="16" width="87" align="right"> (56)</td><td height="16" width="26" align="left"> </td><td height="16" width="61" align="right"> 504 </td><td height="16" width="26" align="left"> </td><td height="16" width="80" align="right"> 198 </td></tr><tr><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="235">Partnership net income (loss)</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="26"> </td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="69"> 115 </td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="26"> </td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="87"> (56)</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="26"> </td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="61"> 504 </td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="26"> </td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="80"> 198 </td></tr></table><p>SEMPRA GENERATION<br />In September 2009, Sempra Generation contributed $182 million to become an equal partner with BP Wind Energy, a wholly owned subsidiary of BP p.l.c., in the development of the 200-megawatt (MW) Fowler Ridge II Wind Farm (Fowler Ridge) which is under construction near Indianapolis, Indiana. We expect it to be operational in late 2009. The project will use 133 wind turbines, each with the ability to generate 1.5 MW. The project's entire power output has been sold under four long-term contracts, each for 50 MW and 20-year terms. Our investment in Fowler Ridge will be accounted for as an equity method investment. <br />SEMPRA PIPELINES & STORAGE<br />In the three months and nine months ended September 30, 2009, Sempra Pipelines & Storage contributed $315 million and $527 million, respectively, to Rockies Express, a joint venture for the development of the Rockies Express Pipeline. Sempra Pipelines & Storage contributed $150 million in the first quarter of 2008. We discuss this investment in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.<br />Sempra Pipelines & Storage owns 43 percent of two Argentine natural gas utility holding companies, Sodigas Pampeana and Sodigas Sur. The Argentine economic decline and government responses (including Argentina’s unilateral, retroactive abrogation of utility agreements early in 2002) continue to adversely affect the operations of these Argentine utilities. In 2002, Sempra Pipelines & Storage initiated arbitration proceedings at the International Center for the Settlement of Investment Disputes (ICSID) under the 1994 Bilateral Investment Treaty between the United States and Argentina for recovery of the diminution of the value of its investments that has resulted from Argentine governmental actions. In September 2007, the tribunal officially closed the arbitration proceedings and awarded us compensation of $172 million, which includes interest up to the award date. In January 2008, Argentina filed an action at the ICSID seeking to annul the award. The Annulment Committee lifted the stay of enforcement so that we may now attach and sell any non-sovereign assets of the Argentine government. The annulment hearing was held in early September 2009 and we anticipate a decision by year end. We will not recognize the ICSID award until collectibility is assured. <br /></p></div> SEMPRA COMMODITIESOn April 1, 2008, Sempra Energy and The Royal Bank of Scotland (RBS) completed the formation of RBS Sempra Commodities LLP (RBS Sempra false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true