1.0.0.3 false DERIVATIVE FINANCIAL INSTRUMENTS false 1 $ false false 2 Notes to 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 Derivative Financial Instruments Disclosure 1 us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock 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">Interest Rate Swaps We discuss our fair value interest rate swaps and interest rate swaps to hedge cash flows in Note 11.NOTE 11. DERIVATIVE FINANCIAL INSTRUMENTS On January 1, 2009, we adopted SFAS 161 (ASC 815) as discussed in Note 2. The adoption had no impact on our consolidated financial statements, but requires additional disclosures, which we provide below. Comparative disclosures for periods prior to the date of adoption are not required and we have not provided them. We use derivative instruments primarily to manage exposures arising in the normal course of business. These exposures are commodity market risk and benchmark interest rate risk. Our use of derivatives for these risks is integrated into the economic management of our anticipated revenues, anticipated expenses, assets and liabilities. Derivatives may be effective in mitigating these risks that could lead to declines in anticipated revenues or increases in anticipated expenses, or that our asset values may fall or our liabilities increase. Accordingly, our derivative activity summarized below generally represents an impact that is intended to offset associated revenues, expenses, assets or liabilities that are not presented below. We record all derivatives at fair value on the Consolidated Balance Sheets. We designate each derivative as 1) a cash flow hedge, 2) a fair value hedge, or 3) undesignated. Depending on the applicability of hedge accounting and, for the Sempra Utilities and other operations subject to regulatory accounting, the requirement to pass impacts through to customers, the impact of derivative instruments may be offset in other comprehensive income (cash flow hedge), on the balance sheet (fair value hedges and regulatory offsets), or recognized in earnings. We classify cash flows from the settlements of derivative instruments as operating activities on the Statements of Consolidated Cash Flows. In certain cases, we apply the normal purchase or sale exception to derivative accounting and have other commodity contracts that are not derivatives. These contracts are not recorded at fair value and are therefore excluded from the disclosures below. HEDGE ACCOUNTING We may designate a derivative as a cash flow hedging instrument if it effectively converts anticipated revenues or expenses to a fixed dollar amount. We may utilize cash flow hedge accounting for derivative commodity instruments and interest rate instruments. Designating cash flow hedges is dependent on the business context in which the instrument is being used, the effectiveness of the instrument in offsetting the risk that a given future revenue or expense item may vary, and other criteria. We may designate an interest rate derivative as a fair value hedging instrument if it effectively converts our own debt from a fixed interest rate to a variable rate. The combination of the derivative and debt instruments results in fixing that portion of the fair value of the debt that is related to benchmark interest rates. Designating fair value hedges is dependent on the instrument being used, the effectiveness of the instrument in offsetting changes in the fair value of our debt instruments, and other criteria. ENERGY DERIVATIVES Our market risk is primarily related to natural gas and electricity price volatility and the specific physical locations where we transact. We use energy derivatives to manage these risks. The use of energy derivatives in our various businesses depends on the particular energy market, and the operating and regulatory environments applicable to the business. <ul><li>The Sempra Utilities use natural gas energy derivatives, on their customers' behalf, with the objective of managing price risk and lowering natural gas costs. These derivatives include fixed price natural gas positions, options, and basis risk instruments and are 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. </li><li>SDG&E is allocated and may purchase congestion revenue rights (CRRs), which serve to reduce the regional electricity price volatility risk which 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 on the Consolidated Statements of Operations. We provide further discussion in Note 15. </li><li>Sempra Generation uses natural gas and electricity instruments to market and optimize the earnings of its power generation fleet. Gains and losses associated with these derivatives are recognized in Sempra Global and Parent Revenues or in Cost of Natural Gas, Electric Fuel and Purchased Power on the Consolidated Statements of Operations. </li><li>Sempra LNG and Sempra Pipelines & Storage use natural gas derivatives to market and optimize the earnings of the liquefied natural gas business and Sempra Pipelines & Storage's natural gas storage and transportation assets. Sempra Pipelines & Storage also uses natural gas energy derivatives with the objective of managing price risk and lowering natural gas prices at its Mexican distribution operations. Sempra Pipelines & Storage’s derivatives are either undesignated or are recorded as commodity costs that are offset by regulatory account balances and are recovered in rates. Sempra LNG’s derivatives are undesignated and their impact on earnings is recorded in Sempra Global and Parent Revenues on the Consolidated Statements of Operations. The impacts on earnings are recognized in Sempra Global and Parent Revenues or in Cost of Natural Gas, Electric Fuel and Purchased Power on the Consolidated Statements of Operations. </li></ul>From time to time, our various businesses, including the Sempra Utilities, may use other energy derivatives to hedge exposures such as the price of vehicle fuel. These derivatives are typically accounted for as cash flow hedges. We summarize net commodity derivative volumes as of December 31, 2009 as follows:<table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="293" align="left" colspan="3" style="border-bottom: 1px solid #000000;" height="14">Business Unit and Commodity</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="124">Volume</td><td height="14" style="border-bottom: 1px solid #000000;" align="left" width="37"> </td></tr><tr><td width="293" align="left" colspan="3" style="border-top: 1px solid #000000;" height="17">Sempra Utilities:</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="124"> </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="37"> </td></tr><tr><td height="17" width="38" align="left"> </td><td width="255" align="left" height="17" colspan="2">SDG&E:</td><td height="17" width="124" align="right"> </td><td height="17" width="37" align="left"> </td></tr><tr><td height="17" width="38" align="left"> </td><td height="17" width="19" align="left"> </td><td height="17" width="236" align="left">Natural gas</td><td height="17" width="124" align="right">44 million MMBtu</td><td height="17" width="37" align="right">(1)</td></tr><tr><td height="17" width="38" align="left"> </td><td height="17" width="19" align="left"> </td><td height="17" width="236" align="left">Congestion revenue rights</td><td height="17" width="124" align="right">18 million MWh</td><td height="17" width="37" align="right">(2)</td></tr><tr><td height="17" width="38" align="left"> </td><td width="255" align="left" height="17" colspan="2">SoCalGas - natural gas</td><td height="17" width="124" align="right">1 million MMBtu</td><td height="17" width="37" align="left"> </td></tr><tr><td height="17" width="38" align="left"> </td><td height="17" width="19" align="left"> </td><td height="17" width="236" align="left"> </td><td height="17" width="124" align="right"> </td><td height="17" width="37" align="left"> </td></tr><tr><td width="293" align="left" height="17" colspan="3">Sempra Global:</td><td height="17" width="124" align="right"> </td><td height="17" width="37" align="left"> </td></tr><tr><td height="17" width="38" align="left"> </td><td width="255" align="left" height="17" colspan="2">Sempra LNG - natural gas</td><td height="17" width="124" align="right">8 million MMBtu</td><td height="17" width="37" align="left"> </td></tr><tr><td height="18" style="border-bottom: 3px solid #C0C0C0;" align="left" width="38"> </td><td width="255" align="left" colspan="2" style="border-bottom: 3px solid #C0C0C0;" height="18">Sempra Generation - electric power</td><td height="18" style="border-bottom: 3px solid #C0C0C0;" align="right" width="124">1 million MWh</td><td height="18" style="border-bottom: 3px solid #C0C0C0;" align="left" width="37"> </td></tr><tr><td height="18" style="border-top: 3px solid #C0C0C0;" align="right" width="38">(1)</td><td width="416" align="left" colspan="4" style="border-top: 3px solid #C0C0C0;" height="18">Million British thermal units (of natural gas)</td></tr><tr><td height="17" width="38" align="right">(2)</td><td width="416" align="left" height="17" colspan="4">Megawatt hours</td></tr></table>In addition to the amounts noted above, we frequently use commodity derivatives to manage risks associated with the physical locations of our customers, assets and other contractual obligations, such as natural gas purchases. INTEREST RATE DERIVATIVES We are exposed to interest rates primarily as a result of our current and expected use of financing. We periodically enter into interest rate derivative agreements intended to moderate our exposure to interest rates and to lower our overall costs of borrowing. We utilize interest rate swaps typically designated as fair value hedges, as a means to achieve our targeted level of variable rate debt as a percent of total debt. In addition, we may utilize interest rate swaps, which are typically designated as cash flow hedges, to lock in interest rates in anticipation of future financings. Interest rate derivatives are utilized by the Sempra Utilities as well as by other Sempra Energy subsidiaries. Although the Sempra Utilities generally recover borrowing costs in rates over time, the use of interest rate derivatives is subject to certain regulatory constraints, and the impact of interest rate derivatives may not be recovered from customers as timely as described above with regard to natural gas derivatives. Accordingly, interest rate derivatives are generally accounted for as hedges at the Sempra Utilities, as at the rest of Sempra Energy's subsidiaries. The net notional amounts of our interest-rate derivatives as of December 31, 2009 and December 31, 2008 were:<table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="14" width="278" align="left"> </td><td width="186" align="center" colspan="3" style="border-bottom: 1px solid #000000;" height="14">December 31, 2009</td><td width="186" align="center" colspan="3" style="border-bottom: 1px solid #000000;" height="14">December 31, 2008</td></tr><tr><td height="14" style="border-bottom: 1px solid #000000;" align="left" width="278">(Dollars in millions)</td><td width="97" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">Notional Debt</td><td height="14" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="89">Maturities</td><td width="97" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">Notional Debt</td><td height="14" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="89">Maturities</td></tr><tr><td height="16" style="border-top: 1px solid #000000;" align="left" width="278">Sempra Energy Consolidated(1)</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22">$</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="75">75-355</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="89">2010-2019</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22">$</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="75">65-355</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="89">2009-2019</td></tr><tr><td height="16" width="278" align="left">SDG&E(1)</td><td height="16" width="22" align="right"> </td><td height="16" width="75" align="right">285-375</td><td height="16" width="89" align="right">2019</td><td height="16" width="22" align="right"> </td><td height="16" width="75" align="right">285-515</td><td height="16" width="89" align="right">2009-2019</td></tr><tr><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="278">SoCalGas</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="22"> </td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="75">150</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="89">2011</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="22"> </td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="75">150</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="89">2011</td></tr><tr><td width="464" align="left" colspan="4" style="border-top: 3px solid #C0C0C0;" height="16">(1) Includes Otay Mesa VIE. All of SDG&E's interest rate derivatives relate to Otay Mesa VIE.</td><td height="16" style="border-top: 3px solid #C0C0C0;" align="left" width="22"> </td><td height="16" style="border-top: 3px solid #C0C0C0;" align="left" width="75"> </td><td height="16" style="border-top: 3px solid #C0C0C0;" align="left" width="89"> </td></tr></table>FINANCIAL STATEMENT PRESENTATION The following table provides the fair values of derivative instruments, without consideration of margin deposits held or posted, on the Consolidated Balance Sheets as of December 31, 2009:<table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="714" align="left" colspan="10" style="border-top: 1px solid #000000;" height="19">DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED BALANCE SHEETS</td></tr><tr><td width="714" align="left" height="19" colspan="10">(Dollars in millions)</td></tr><tr><td height="14" width="34" align="left"> </td><td height="14" width="286" align="left"> </td><td width="394" align="center" colspan="8" style="border-bottom: 1px solid #000000;" height="14">December 31, 2009</td></tr><tr><td height="14" width="34" align="left"> </td><td height="14" width="286" align="left"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="81"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="80"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="85"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="72">Deferred</td></tr><tr><td height="14" width="34" align="left"> </td><td height="14" width="286" align="left"> </td><td height="14" width="19" align="center"> </td><td height="14" width="81" align="center"> </td><td height="14" width="19" align="center"> </td><td height="14" width="80" align="center"> </td><td height="14" width="19" align="center"> </td><td height="14" width="85" align="center"> </td><td height="14" width="19" align="center"> </td><td height="14" width="72" align="center">credits</td></tr><tr><td height="14" width="34" align="left"> </td><td height="14" width="286" align="left"> </td><td height="14" width="19" align="right"> </td><td height="14" width="81" align="center">Current</td><td height="14" width="19" align="right"> </td><td height="14" width="80" align="center"> </td><td height="14" width="19" align="right"> </td><td height="14" width="85" align="center">Current</td><td height="14" width="19" align="right"> </td><td height="14" width="72" align="center">and other</td></tr><tr><td height="14" width="34" align="left"> </td><td height="14" width="286" align="left"> </td><td height="14" width="19" align="right"> </td><td height="14" width="81" align="center">assets:</td><td height="14" width="19" align="right"> </td><td height="14" width="80" align="center"> </td><td height="14" width="19" align="right"> </td><td height="14" width="85" align="center">liabilities:</td><td height="14" width="19" align="right"> </td><td height="14" width="72" align="center">liabilities:</td></tr><tr><td height="14" width="34" align="left"> </td><td height="14" width="286" align="left"> </td><td height="14" width="19" align="right"> </td><td height="14" width="81" align="center">Fixed-price</td><td height="14" width="19" align="right"> </td><td height="14" width="80" align="center">Investments</td><td height="14" width="19" align="right"> </td><td height="14" width="85" align="center">Fixed-price</td><td height="14" width="19" align="right"> </td><td height="14" width="72" align="center">Fixed-price</td></tr><tr><td height="14" width="34" align="left"> </td><td height="14" width="286" align="left"> </td><td height="14" width="19" align="right"> </td><td height="14" width="81" align="center">contracts</td><td height="14" width="19" align="right"> </td><td height="14" width="80" align="center">and other</td><td height="14" width="19" align="right"> </td><td height="14" width="85" align="center">contracts</td><td height="14" width="19" align="right"> </td><td height="14" width="72" align="center">contracts</td></tr><tr><td height="14" width="34" align="left"> </td><td height="14" width="286" align="left"> </td><td height="14" width="19" align="right"> </td><td height="14" width="81" align="center">and other</td><td height="14" width="19" align="right"> </td><td height="14" width="80" align="center">assets:</td><td height="14" width="19" align="right"> </td><td height="14" width="85" align="center">and other</td><td height="14" width="19" align="right"> </td><td height="14" width="72" align="center">and other</td></tr><tr><td width="320" align="left" colspan="2" style="border-bottom: 1px solid #000000;" height="14">Derivatives designated as hedging instruments </td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="81">derivatives(1)</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="80">Sundry</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="85">derivatives(2)</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="72">derivatives</td></tr><tr><td width="320" align="left" colspan="2" style="border-top: 1px solid #000000;" height="16">Sempra Energy Consolidated:</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="center" width="81"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="center" width="80"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="center" width="85"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="center" width="72"> </td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">Interest rate instruments</td><td height="16" width="19" align="right">$</td><td height="16" width="81" align="right"> 12 </td><td height="16" width="19" align="right">$</td><td height="16" width="80" align="right"> 2 </td><td height="16" width="19" align="right">$</td><td height="16" width="85" align="right"> - </td><td height="16" width="19" align="right">$</td><td height="16" width="72" align="right"> - </td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">Commodity contracts not subject to rate recovery</td><td height="16" width="19" align="right"> </td><td height="16" width="81" align="right"> 1 </td><td height="16" width="19" align="right"> </td><td height="16" width="80" align="right"> - </td><td height="16" width="19" align="right"> </td><td height="16" width="85" align="right"> - </td><td height="16" width="19" align="right"> </td><td height="16" width="72" align="right"> - </td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">    Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="81"> - </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="80"> - </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="85"> - </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="72"> - </td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="34"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="286">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="81"> 13 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="80"> 2 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="85"> - </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="72"> - </td></tr><tr><td width="320" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16">SoCalGas:</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="81"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="80"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="85"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="72"> </td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="34"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="286">Interest rate instruments</td><td height="16" style="border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-bottom: 3px solid #000000;" align="right" width="81"> 6 </td><td height="16" style="border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-bottom: 3px solid #000000;" align="right" width="80"> 2 </td><td height="16" style="border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-bottom: 3px solid #000000;" align="right" width="85"> - </td><td height="16" style="border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-bottom: 3px solid #000000;" align="right" width="72"> - </td></tr><tr><td height="16" style="border-top: 3px solid #000000;" align="left" width="34"> </td><td height="16" style="border-top: 3px solid #000000;" align="left" width="286"> </td><td height="16" style="border-top: 3px solid #000000;" align="left" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="81"> </td><td height="16" style="border-top: 3px solid #000000;" align="left" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="80"> </td><td height="16" style="border-top: 3px solid #000000;" align="left" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="85"> </td><td height="16" style="border-top: 3px solid #000000;" align="left" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="72"> </td></tr><tr><td width="320" align="left" colspan="2" style="border-bottom: 1px solid #000000;" height="16">Derivatives not designated as hedging instruments</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="81"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="80"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="85"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="72"> </td></tr><tr><td width="320" align="left" colspan="2" style="border-top: 1px solid #000000;" height="16">Sempra Energy Consolidated:</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="81"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="80"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="85"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="72"> </td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">Interest rate instruments(3)</td><td height="16" width="19" align="right">$</td><td height="16" width="81" align="right"> 9 </td><td height="16" width="19" align="right">$</td><td height="16" width="80" align="right"> 15 </td><td height="16" width="19" align="right">$</td><td height="16" width="85" align="right"> (25)</td><td height="16" width="19" align="right">$</td><td height="16" width="72" align="right"> (33)</td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">Commodity contracts not subject to rate recovery</td><td height="16" width="19" align="right"> </td><td height="16" width="81" align="right"> 74 </td><td height="16" width="19" align="right"> </td><td height="16" width="80" align="right"> 30 </td><td height="16" width="19" align="right"> </td><td height="16" width="85" align="right"> (64)</td><td height="16" width="19" align="right"> </td><td height="16" width="72" align="right"> (42)</td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">    Associated offsetting commodity contracts</td><td height="16" width="19" align="right"> </td><td height="16" width="81" align="right"> (34)</td><td height="16" width="19" align="right"> </td><td height="16" width="80" align="right"> (6)</td><td height="16" width="19" align="right"> </td><td height="16" width="85" align="right"> 34 </td><td height="16" width="19" align="right"> </td><td height="16" width="72" align="right"> 6 </td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">Commodity contracts subject to rate recovery</td><td height="16" width="19" align="right"> </td><td height="16" width="81" align="right"> 20 </td><td height="16" width="19" align="right"> </td><td height="16" width="80" align="right"> 7 </td><td height="16" width="19" align="right"> </td><td height="16" width="85" align="right"> (20)</td><td height="16" width="19" align="right"> </td><td height="16" width="72" align="right"> (13)</td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">    Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="81"> (14)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="80"> (9)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="85"> 14 </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="72"> 9 </td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="34"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="286">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="81"> 55 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="80"> 37 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="85"> (61)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="72"> (73)</td></tr><tr><td width="320" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16">SDG&E:</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="81"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="80"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="85"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="72"> </td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">Interest rate instruments(3)</td><td height="16" width="19" align="right">$</td><td height="16" width="81" align="right"> - </td><td height="16" width="19" align="right">$</td><td height="16" width="80" align="right"> - </td><td height="16" width="19" align="right">$</td><td height="16" width="85" align="right"> (17)</td><td height="16" width="19" align="right">$</td><td height="16" width="72" align="right"> (26)</td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">Commodity contracts subject to rate recovery</td><td height="16" width="19" align="right"> </td><td height="16" width="81" align="right"> 18 </td><td height="16" width="19" align="right"> </td><td height="16" width="80" align="right"> 7 </td><td height="16" width="19" align="right"> </td><td height="16" width="85" align="right"> (13)</td><td height="16" width="19" align="right"> </td><td height="16" width="72" align="right"> (9)</td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">    Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="81"> (13)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="80"> (9)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="85"> 13 </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="72"> 9 </td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="34"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="286">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="81"> 5 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="80"> (2)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="85"> (17)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="72"> (26)</td></tr><tr><td width="320" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16">SoCalGas:</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="81"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="80"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="85"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="72"> </td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">Commodity contracts subject to rate recovery</td><td height="16" width="19" align="right">$</td><td height="16" width="81" align="right"> 2 </td><td height="16" width="19" align="right">$</td><td height="16" width="80" align="right"> - </td><td height="16" width="19" align="right">$</td><td height="16" width="85" align="right"> (1)</td><td height="16" width="19" align="right">$</td><td height="16" width="72" align="right"> - </td></tr><tr><td height="16" width="34" align="left"> </td><td height="16" width="286" align="left">    Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="81"> (1)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="80"> - </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="85"> 1 </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="72"> - </td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="34"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="286">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="81"> 1 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="80"> - </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="85"> - </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="72"> - </td></tr><tr><td height="12" style="border-top: 3px solid #000000;" align="right" width="34">(1)</td><td width="680" align="left" colspan="9" style="border-top: 3px solid #000000;" height="12">Included in Current assets: Other for SoCalGas.</td></tr><tr><td height="12" width="34" align="right">(2)</td><td width="680" align="left" height="12" colspan="9">Included in Current liabilities: Other for SoCalGas.</td></tr><tr><td height="12" width="34" align="right">(3)</td><td width="680" align="left" height="12" colspan="9">Includes Otay Mesa VIE. All of SDG&E's amounts relate to Otay Mesa VIE.</td></tr></table>The effects of derivative instruments designated as hedges on the Consolidated Statements of Operations for the year ended December 31, 2009 were:<table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="605" align="left" colspan="5" style="border-top: 1px solid #000000;" height="19">FAIR VALUE HEDGE IMPACT ON THE CONSOLIDATED STATEMENTS OF OPERATIONS</td></tr><tr><td width="605" align="left" height="19" colspan="5">(Dollars in millions)</td></tr><tr><td height="14" width="19" align="left"> </td><td height="14" width="256" align="left"> </td><td width="330" align="center" colspan="3" style="border-bottom: 1px solid #000000;" height="14">Year ended December 31, 2009</td></tr><tr><td height="14" width="19" align="left"> </td><td height="14" width="256" align="left"> </td><td width="330" align="center" colspan="3" style="border-top: 1px solid #000000;" height="14">Gain (loss) on derivative </td></tr><tr><td height="14" width="19" align="left"> </td><td height="14" width="256" align="left"> </td><td width="330" align="center" colspan="3" style="border-bottom: 1px solid #000000;" height="14">recognized in earnings</td></tr><tr><td width="275" align="left" colspan="2" style="border-bottom: 1px solid #000000;" height="14"> </td><td height="14" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="256">Location</td><td height="14" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="14" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="55">Amount</td></tr><tr><td width="275" align="left" colspan="2" style="border-top: 1px solid #000000;" height="16">Sempra Energy Consolidated:</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="256"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="center" width="55"> </td></tr><tr><td height="16" width="19" align="left"> </td><td height="16" width="256" align="left">Interest rate instruments</td><td height="16" width="256" align="left">Interest Expense</td><td height="16" width="19" align="right">$</td><td height="16" width="55" align="right"> 19 </td></tr><tr><td height="16" width="19" align="left"> </td><td height="16" width="256" align="left">Interest rate instruments</td><td height="16" width="256" align="left">Other Income (Expense), Net</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="55"> (11)</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="19"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="256">Total</td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="256"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="55"> 8 </td></tr><tr><td width="275" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16">SoCalGas:</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="256"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="center" width="55"> </td></tr><tr><td height="16" width="19" align="left"> </td><td height="16" width="256" align="left">Interest rate instrument</td><td height="16" width="256" align="left">Interest Expense</td><td height="16" width="19" align="right">$</td><td height="16" width="55" align="right"> 6 </td></tr><tr><td height="16" width="19" align="left"> </td><td height="16" width="256" align="left">Interest rate instrument</td><td height="16" width="256" align="left">Other Income (Expense), Net</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="55"> (2)</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="19"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="256">Total</td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="256"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="55"> 4 </td></tr></table><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="663" align="left" colspan="8" style="border-top: 1px solid #000000;" height="19">CASH FLOW HEDGE IMPACT ON THE CONSOLIDATED STATEMENTS OF OPERATIONS</td></tr><tr><td width="663" align="left" height="19" colspan="8">(Dollars in millions) </td></tr><tr><td height="14" width="32" align="left"> </td><td height="14" width="201" align="left"> </td><td height="14" width="21" align="right"> </td><td width="409" align="center" colspan="5" style="border-bottom: 1px solid #000000;" height="14">Year ended December 31, 2009</td></tr><tr><td height="14" width="32" align="left"> </td><td height="14" width="201" align="left"> </td><td height="14" width="21" align="right"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="103">Amount of pretax</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19"> </td><td height="14" style="border-top: 1px solid #000000;" align="left" width="187"> </td><td height="14" style="border-top: 1px solid #000000;" align="left" width="21"> </td><td height="14" style="border-top: 1px solid #000000;" align="left" width="79"> </td></tr><tr><td height="14" width="32" align="left"> </td><td height="14" width="201" align="left"> </td><td height="14" width="21" align="right"> </td><td height="14" width="103" align="center">gain (loss)</td><td height="14" width="19" align="center"> </td><td height="14" width="187" align="left"> </td><td height="14" width="21" align="left"> </td><td height="14" width="79" align="left"> </td></tr><tr><td height="14" width="32" align="left"> </td><td height="14" width="201" align="left"> </td><td height="14" width="21" align="right"> </td><td height="14" width="103" align="center">on derivative</td><td height="14" width="19" align="center"> </td><td width="287" align="center" height="14" colspan="3">Gain (loss) reclassified from AOCI</td></tr><tr><td height="14" width="32" align="left"> </td><td height="14" width="201" align="left"> </td><td height="14" width="21" align="right"> </td><td height="14" width="103" align="center">recognized in OCI</td><td height="14" width="19" align="center"> </td><td width="287" align="center" colspan="3" style="border-bottom: 1px solid #000000;" height="14">into earnings (effective portion)</td></tr><tr><td width="233" align="left" colspan="2" style="border-bottom: 1px solid #000000;" height="14"> </td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="21"> </td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="103">(effective portion)</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="19"> </td><td height="14" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="187">Location</td><td height="14" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="21"> </td><td height="14" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="79">Amount</td></tr><tr><td width="233" align="left" colspan="2" style="border-top: 1px solid #000000;" height="16">Sempra Energy Consolidated:</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="21"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="103"> </td><td height="16" style="border-top: 1px solid #000000;" align="center" width="19"> </td><td height="16" style="border-top: 1px solid #000000;" align="center" width="187"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="21"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="79"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Interest rate instruments</td><td height="16" width="21" align="right">$</td><td height="16" width="103" align="right"> - </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Interest Expense</td><td height="16" width="21" align="right">$</td><td height="16" width="79" align="right"> (2)</td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Interest rate instruments</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> 13 </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Other Income, Net(1)</td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> 3 </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Commodity contracts not subject</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Revenues: Sempra Global</td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">    to rate recovery</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> 17 </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">    and Parent</td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> 22 </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Commodity contracts not subject</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Cost of Natural Gas, Electric</td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">    to rate recovery</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> - </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">    Fuel and Purchased Power</td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> (16)</td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Commodity contracts not subject</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left"> </td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">    to rate recovery</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> 1 </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Operation and Maintenance</td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> 2 </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Commodity contracts not subject</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Equity Earnings: RBS</td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">    to rate recovery</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="21"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="103"> 37 </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">    Sempra Commodities LLP</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="21"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="79"> 7 </td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="32"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="201">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="21">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="103"> 68 </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="19"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="187"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="21">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="79"> 16 </td></tr><tr><td width="233" align="left" colspan="2" style="border-top: 3px solid #C0C0C0;" height="16">SDG&E:</td><td height="16" style="border-top: 3px solid #C0C0C0;" align="right" width="21"> </td><td height="16" style="border-top: 3px solid #C0C0C0;" align="right" width="103"> </td><td height="16" style="border-top: 3px solid #C0C0C0;" align="center" width="19"> </td><td height="16" style="border-top: 3px solid #C0C0C0;" align="center" width="187"> </td><td height="16" style="border-top: 3px solid #C0C0C0;" align="right" width="21"> </td><td height="16" style="border-top: 3px solid #C0C0C0;" align="right" width="79"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Interest rate instruments</td><td height="16" width="21" align="right">$</td><td height="16" width="103" align="right"> - </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Interest Expense</td><td height="16" width="21" align="right">$</td><td height="16" width="79" align="right"> 3 </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Commodity contracts not subject</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left"> </td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">    to rate recovery</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="21"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="103"> - </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Operation and Maintenance</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="21"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="79"> 1 </td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="32"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="201">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="21">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="103"> - </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="19"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="187"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="21">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="79"> 4 </td></tr><tr><td width="233" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16">SoCalGas:</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="21"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="103"> </td><td height="16" style="border-top: 3px solid #000000;" align="center" width="19"> </td><td height="16" style="border-top: 3px solid #000000;" align="left" width="187"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="21"> </td><td height="16" style="border-top: 3px solid #000000;" align="right" width="79"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Interest rate instrument</td><td height="16" width="21" align="right">$</td><td height="16" width="103" align="right"> - </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Interest Expense</td><td height="16" width="21" align="right">$</td><td height="16" width="79" align="right"> (4)</td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">Commodity contracts not subject</td><td height="16" width="21" align="right"> </td><td height="16" width="103" align="right"> </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left"> </td><td height="16" width="21" align="right"> </td><td height="16" width="79" align="right"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="201" align="left">    to rate recovery</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="21"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="103"> 1 </td><td height="16" width="19" align="left"> </td><td height="16" width="187" align="left">Operation and Maintenance</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="21"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="79"> 1 </td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="32"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="201">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="21">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="103"> 1 </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="19"> </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="187"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="21">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="79"> (3)</td></tr><tr><td height="18" style="border-top: 3px solid #000000;" align="right" width="32">(1)</td><td width="631" align="left" colspan="7" style="border-top: 3px solid #000000;" height="18">Gains reclassified into earnings due to changes in timing of forecasted interest payments.</td></tr></table>In the third quarter of 2005, Sempra Energy entered into derivative transactions to hedge future interest payments associated with forecasted borrowings of $450 million for facilities related to Sempra LNG’s Energía Costa Azul project. The swaps expire in 2027. During the second quarter of 2007, we revised our borrowing plans in anticipation of receiving net cash proceeds in connection with the sale of the commodities-marketing businesses. Accordingly, as of June 30, 2007, we reclassified the cash flow hedge gain of $30 million pretax from Accumulated Other Comprehensive Income (Loss) to Other Income (Expense), Net in the Consolidated Statements of Operations. In August 2007, we entered into interest rate swaps with a collective notional value of $450 million to economically offset the original swap instruments. Sempra Energy expects that gains of $12 million, which are net of income tax expense, that are currently recorded in Accumulated Other Comprehensive Income (Loss) related to cash flow hedges will be reclassified into earnings during the next twelve months as the hedged items affect earnings. Actual amounts ultimately reclassified to earnings depend on the commodity prices and interest rates in effect when derivative contracts that are currently outstanding mature. For all forecasted transactions, the maximum term over which we are hedging exposures to the variability of cash flows, excluding interest payments, is 30 months at December 31, 2009. The maximum term over which RBS Sempra Commodities hedges forecasted natural gas purchases and sales is six years. SDG&E and SoCalGas expect that losses of $1 million and $3 million, respectively, which are net of income tax benefit, that are currently recorded in Accumulated Other Comprehensive Income (Loss) related to these cash flow hedges will be reclassified into earnings during the next twelve months as the hedged items affect earnings.Hedge Ineffectiveness We recorded negligible hedge ineffectiveness in 2009. Following is a summary of the hedge ineffectiveness gains (losses) in 2008 and 2007 for Sempra Energy. Information related to the Sempra Utilities is noted separately within the table:<table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="14" width="32" align="left"> </td><td height="14" width="285" align="left"> </td><td width="177" align="center" colspan="4" style="border-bottom: 1px solid #000000;" height="14">Years ended December 31,</td></tr><tr><td width="317" align="left" colspan="2" style="border-bottom: 1px solid #000000;" height="14">(Dollars in millions)</td><td width="90" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2008 </td><td width="87" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2007 </td></tr><tr><td width="317" align="left" colspan="2" style="border-top: 1px solid #000000;" height="16">Commodity hedges(1):</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-top: 1px solid #000000;" align="left" width="68"> </td><td height="16" style="border-top: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="285" align="left">Cash flow hedges</td><td height="16" width="22" align="left">$</td><td height="16" width="68" align="right"> (3)</td><td height="16" width="22" align="left">$</td><td height="16" width="65" align="right"> 3 </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="285" align="left">Fair value hedges</td><td height="16" width="22" align="left"> </td><td height="16" width="68" align="right"> (9)</td><td height="16" width="22" align="left"> </td><td height="16" width="65" align="right"> 29 </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="285" align="left">Time value exclusions from hedge assessment</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="68"> - </td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65"> 192 </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="285" align="left">Total unrealized gains (losses)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="68"> (12)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65"> 224 </td></tr><tr><td width="317" align="left" height="16" colspan="2">Interest rate hedges(2):</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-top: 1px solid #000000;" align="left" width="68"> </td><td height="16" style="border-top: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65"> </td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="285" align="left">Cash flow hedges held by SDG&E(3)</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="68"> (1)</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65"> (3)</td></tr><tr><td height="16" width="32" align="left"> </td><td height="16" width="285" align="left">Total unrealized losses</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="68"> (1)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="22"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65"> (3)</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="32">   </td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="285">Total ineffectiveness gains (losses)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="68"> (13)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65"> 221 </td></tr><tr><td height="18" style="border-top: 3px solid #000000;" align="right" width="32">(1)</td><td width="462" align="left" colspan="5" style="border-top: 3px solid #000000;" height="18">For commodity derivative instruments, we record ineffectiveness gains (losses) in Revenues from Sempra Global and Parent on the Consolidated Statements of Operations.</td></tr><tr><td height="17" width="32" align="right">(2)</td><td width="462" align="left" height="17" colspan="5">For interest rate swap instruments, all companies record ineffectiveness gains (losses) in Other Income (Expense), Net on the Consolidated Statements of Operations.</td></tr><tr><td height="17" width="32" align="right">(3)</td><td width="462" align="left" height="17" colspan="5">These losses include $(1) million in 2008 and a negligible amount in 2007 associated with Otay Mesa VIE.</td></tr></table>For commodity derivative instruments designated as fair value hedges, <ul><li>the ineffectiveness gains relate to hedges of commodity inventory and include gains that represent the time value of money, which is excluded for hedge assessment purposes. </li></ul>For commodity derivative instruments designated as cash flow hedges, <ul><li>the ineffectiveness amounts relate to hedges of natural gas purchases and sales related to transportation and storage capacity arrangements. </li></ul>These commodity derivative instruments were held by our commodities-marketing businesses. The effects of derivative instruments not designated as hedging instruments on the Consolidated Statements of Operations for the year ended December 31, 2009 were:<table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="631" align="left" colspan="5" style="border-top: 1px solid #000000;" height="19">UNDESIGNATED DERIVATIVE IMPACT ON THE CONSOLIDATED STATEMENTS OF OPERATIONS</td></tr><tr><td width="631" align="left" height="19" colspan="5">(Dollars in millions)</td></tr><tr><td height="14" width="43" align="left"> </td><td height="14" width="236" align="left"> </td><td width="352" align="center" colspan="3" style="border-bottom: 1px solid #000000;" height="14">Gain (loss) on derivative recognized in earnings</td></tr><tr><td height="14" width="43" align="left"> </td><td height="14" width="236" align="left"> </td><td height="14" style="border-top: 1px solid #000000;" align="center" width="236"> </td><td width="116" align="center" colspan="2" style="border-top: 1px solid #000000;" height="14">Year ended</td></tr><tr><td height="14" style="border-bottom: 1px solid #000000;" align="left" width="43"> </td><td height="14" style="border-bottom: 1px solid #000000;" align="left" width="236"> </td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="236">Location</td><td width="116" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="14">December 31, 2009</td></tr><tr><td width="279" align="left" colspan="2" style="border-top: 1px solid #000000;" height="16">Sempra Energy Consolidated:</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="236"> </td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22"> </td><td height="16" style="border-top: 1px solid #000000;" align="center" width="94"> </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">Interest rate instruments(1)</td><td height="16" width="236" align="left">Other Income (Expense), Net</td><td height="16" width="22" align="right">$</td><td height="16" width="94" align="right"> 30 </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">Commodity contracts not subject</td><td height="16" width="236" align="left"> </td><td height="16" width="22" align="left"> </td><td height="16" width="94" align="right"> </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">    to rate recovery</td><td height="16" width="236" align="left">Revenues: Sempra Global and Parent</td><td height="16" width="22" align="right"> </td><td height="16" width="94" align="right"> 47 </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">Commodity contracts not subject</td><td height="16" width="236" align="left">Cost of Natural Gas, Electric</td><td height="16" width="22" align="right"> </td><td height="16" width="94" align="right"> </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">    to rate recovery</td><td height="16" width="236" align="left">    Fuel and Purchased Power</td><td height="16" width="22" align="right"> </td><td height="16" width="94" align="right"> (39)</td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">Commodity contracts subject</td><td height="16" width="236" align="left"> </td><td height="16" width="22" align="right"> </td><td height="16" width="94" align="right"> </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">    to rate recovery</td><td height="16" width="236" align="left">Cost of Natural Gas</td><td height="16" width="22" align="right"> </td><td height="16" width="94" align="right"> (5)</td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">Commodity contracts subject</td><td height="16" width="236" align="left">Cost of Electric Fuel</td><td height="16" width="22" align="right"> </td><td height="16" width="94" align="right"> </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">    to rate recovery</td><td height="16" width="236" align="left">    and Purchased Power</td><td height="16" width="22" align="right"> </td><td height="16" width="94" align="right"> (54)</td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">Commodity contracts subject</td><td height="16" width="236" align="left">Cost of Natural Gas, Electric</td><td height="16" width="22" align="left"> </td><td height="16" width="94" align="right"> </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">    to rate recovery</td><td height="16" width="236" align="left">    Fuel and Purchased Power</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="22"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="94"> (5)</td></tr><tr><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="43"> </td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="236">Total</td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="236"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="22">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="94"> (26)</td></tr><tr><td width="279" align="left" colspan="2" style="border-top: 3px solid #000000;" height="17">SDG&E:</td><td height="17" style="border-top: 3px solid #000000;" align="center" width="236"> </td><td height="17" style="border-top: 3px solid #000000;" align="right" width="22"> </td><td height="17" style="border-top: 3px solid #000000;" align="center" width="94"> </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">Interest rate instruments(1)</td><td height="16" width="236" align="left">Other Income (Expense), Net</td><td height="16" width="22" align="right">$</td><td height="16" width="94" align="right"> 27 </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">Commodity contracts subject</td><td height="16" width="236" align="left">Cost of Electric Fuel</td><td height="16" width="22" align="right"> </td><td height="16" width="94" align="right"> </td></tr><tr><td height="16" width="43" align="left"> </td><td height="16" width="236" align="left">    to rate recovery</td><td height="16" width="236" align="left">    and Purchased Power</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="22"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="94"> (54)</td></tr><tr><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="43"> </td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="236">Total</td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="236"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="22">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="94"> (27)</td></tr><tr><td width="279" align="left" colspan="2" style="border-top: 3px solid #000000;" height="17">SoCalGas:</td><td height="17" style="border-top: 3px solid #000000;" align="center" width="236"> </td><td height="17" style="border-top: 3px solid #000000;" align="right" width="22"> </td><td height="17" style="border-top: 3px solid #000000;" align="center" width="94"> </td></tr><tr><td height="17" width="43" align="left"> </td><td height="17" width="236" align="left">Commodity contracts subject</td><td height="17" width="236" align="left"> </td><td height="17" width="22" align="right"> </td><td height="17" width="94" align="left"> </td></tr><tr><td height="18" style="border-bottom: 3px solid #C0C0C0;" align="left" width="43"> </td><td height="18" style="border-bottom: 3px solid #C0C0C0;" align="left" width="236">    to rate recovery</td><td height="18" style="border-bottom: 3px solid #C0C0C0;" align="left" width="236">Cost of Natural Gas</td><td height="18" style="border-bottom: 3px solid #C0C0C0;" align="right" width="22">$</td><td height="18" style="border-bottom: 3px solid #C0C0C0;" align="right" width="94"> (5)</td></tr><tr><td height="18" style="border-top: 3px solid #C0C0C0;" align="right" width="43">(1)</td><td width="588" align="left" colspan="4" style="border-top: 3px solid #C0C0C0;" height="18">Related to Otay Mesa VIE. Sempra Energy Consolidated also includes additional instruments.</td></tr></table>CONTINGENT FEATURES For Sempra Energy and SDG&E, certain of our derivative instruments contain credit limits which vary depending upon our credit rating.  Generally, these provisions, if applicable, may reduce our credit limit if a specified credit rating agency reduces our rating. In certain cases, if our credit rating were to fall below investment grade, the counterparty to these derivative liability instruments could request immediate payment or demand immediate and ongoing full collateralization.  For Sempra Energy, the total fair value of this group of derivative instruments in a net liability position at December 31, 2009 is $4 million. As of December 31, 2009, if the credit rating of Sempra Energy were reduced below investment grade, $4 million of additional assets could be required to be posted as collateral for these derivative contracts. For Sempra Energy, SDG&E, PE and SoCalGas, some of our derivative contracts contain a provision that would permit the counterparty, in certain circumstances, to request adequate assurance of our performance under the contract. Such additional assurance, if needed, is not material and is not included in the amounts above.</div> Interest Rate SwapsWe discuss our fair value interest rate swaps and interest rate swaps to hedge cash flows in Note 11.NOTE 11. DERIVATIVE FINANCIAL false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true