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2000000 -346000000 -357000000 -1000000 -7000000 -1000000 -4000000 501000000 499000000 114000000 112000000 -156000000 0 -270000000 -112000000 100000000 0 -100000000 0 131000000 387000000 206000000 593000000 9000000 8000000 23000000 23000000 <div style="font-size:12pt"><p>NOTE 1. GENERAL <br />Principles of Consolidation<br />Sempra Energy<br />Sempra Energy's Condensed Consolidated Financial Statements include the accounts of Sempra Energy, a California-based Fortune 500 holding company, its consolidated subsidiaries, and variable interest entities. Sempra Energy&#8217;s principal subsidiaries are<br /></p><ul><li>San Diego Gas &amp; Electric Company (SDG&amp;E) and Southern California Gas Company (SoCalGas), which we collectively refer to as the Sempra Utilities; and<br /></li><li>Sempra Global, which is the holding company for Sempra Commodities, Sempra Generation, Sempra Pipelines &amp; Storage, Sempra LNG and other, smaller businesses. <br /></li></ul><p>Sempra Energy uses the equity method to account for investments in affiliated companies over which we have the ability to exercise significant influence, but not control. We discuss our investments in unconsolidated subsidiaries in Note 4 below and Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. <br />SDG&amp;E<br />SDG&amp;E's Condensed Consolidated Financial Statements include its accounts and the accounts of Otay Mesa Energy Center LLC (Otay Mesa VIE) and Orange Grove Energy L.P. (Orange Grove VIE), which are variable interest entities of which SDG&amp;E is the primary beneficiary, as we discuss in Note 5 under "Variable Interest Entities." SDG&amp;E&#8217;s common stock is wholly owned by Enova Corporation, which is a wholly owned subsidiary of Sempra Energy. <br />Pacific Enterprises and SoCalGas<br />The Condensed Consolidated Financial Statements of Pacific Enterprises include the accounts of Pacific Enterprises (PE) and its subsidiary, SoCalGas. Sempra Energy owns all of PE&#8217;s common stock and PE owns all of SoCalGas&#8217; common stock. SoCalGas&#8217; Condensed Consolidated Financial Statements include its subsidiaries, which comprise less than one percent of its consolidated financial position and results of operations. <br />PE's operations consist solely of those of SoCalGas and additional items (e.g., cash, intercompany accounts and equity) attributable to serving as a holding company for SoCalGas.</p><p>Basis of Presentation<br />This is a combined report of Sempra Energy, SDG&amp;E, PE and SoCalGas. We provide separate information for SDG&amp;E, PE and SoCalGas as required. In the Notes to Condensed Consolidated Financial Statements (except in Note 11), when only information for SoCalGas is provided, it is the same for PE. References in this report to "we," "our" and "Sempra Energy Consolidated" are to Sempra Energy and its consolidated entities, unless otherwise indicated by the context. We have eliminated intercompany accounts and transactions within each set of consolidated financial statements.<br />We have prepared the Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) and in accordance with the interim-period-reporting requirements of Form 10-Q. Results of operations for interim periods are not necessarily indicative of results for the entire year. We evaluated events and transactions that occurred after March 31, 2010 through the date the financial statements were issued, and in the opinion of management, the accompanying statements reflect all adjustments necessary for a fair presentation. These adjustments are only of a normal, recurring nature. <br />You should read the information in this Quarterly Report in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2009 (the Annual Report), which is a combined report for Sempra Energy, SDG&amp;E, PE and SoCalGas.<br />Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. We follow the same accounting policies for interim reporting purposes, except for the adoption of new accounting standards as we discuss in Note 2.<br />The Sempra Utilities and Sempra Pipelines &amp; Storage's Mobile Gas Service Corporation (Mobile Gas) and Ecogas Mexico, S de RL de CV (Ecogas) prepare their financial statements in accordance with GAAP provisions governing regulated operations, as we discuss in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.</p></div> <div style="font-size:12pt"><p>NOTE 2. NEW ACCOUNTING STANDARDS <br />We describe below recent pronouncements that have had or may have a significant effect on our financial statements. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our financial condition, results of operations, or disclosures. <br />SEMPRA ENERGY, SDG&amp;E, PE AND SOCALGAS <br />Accounting Standards Update (ASU) 2009-17, "Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" (ASU 2009-17): ASU 2009-17 amends Financial Accounting Standards Board (FASB) Interpretation No. 46(R), Consolidation of Variable Interest Entities &#8211; an interpretation of ARB No. 51 (FIN 46(R)), which provides consolidation guidance related to variable interest entities. <br />ASU 2009-17 amends FASB Accounting Standards Codification (ASC) Topic 810, Consolidations, and requires<br /></p><ul><li>a qualitative approach for identifying the primary beneficiary of a variable interest entity based on 1) the power to direct activities that most significantly impact the economic performance of the entity, and 2) the obligation to absorb losses or right to receive benefits that could be significant to the entity;<br /></li><li>ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; and <br /></li><li>separate disclosure by the primary beneficiary on the face of the balance sheet to identify 1) assets that can only be used to settle obligations of the variable interest entity, and 2) liabilities for which creditors do not have recourse to the primary beneficiary.<br /></li></ul><p>We adopted ASU 2009-17 on January 1, 2010 and it did not have a material effect on earnings, nor on presentation on the interim Condensed Consolidated Balance Sheets for Sempra Energy and SDG&amp;E. We provide the required additional disclosure in Note 5.<br />ASU 2010-06, "Improving Disclosures About Fair Value Measurements" (ASU 2010-06): ASU 2010-06 amends ASC Topic 820, Fair Value Measurements and Disclosures, and requires the following additional fair value measurement disclosures: <br /></p><ul><li>transfers into and out of Levels 1 and 2<br /></li><li>segregation of classes of assets and liabilities measured at fair value<br /></li><li>valuation techniques and inputs used for Level 2 and Level 3 instruments<br /></li><li>detailed activity for Level 3 instruments, including separate presentation of purchases, sales, issuances and settlements<br /></li></ul><p>We adopted ASU 2010-06 on January 1, 2010, and we provide the additional disclosure in Note 8. <br /></p></div> <div style="font-size:12pt"><p>NOTE 3. RECENT investment activity<br />SEMPRA PIPELINES &amp; STORAGE<br />Sempra Pipelines &amp; Storage&#8217;s Sempra Midstream is the general partner and 91-percent owner of Bay Gas Storage Company (Bay Gas) and owned 60 percent of Mississippi Hub, LLC (Mississippi Hub) through December 31, 2008. On January 16, 2009, Sempra Midstream purchased the remaining 40-percent ownership interest of Mississippi Hub for $94 million in cash.<br />On April 30, 2010, Sempra Pipelines &amp; Storage completed the acquisition of the Mexican pipeline and natural gas infrastructure assets of El Paso Corporation for $300 million ($260 million, net of cash acquired and debt assumed).<br />The acquisition involves El Paso Corporation&#8217;s wholly owned natural gas pipeline and compression assets in the Mexican border state of Sonora. It also includes El Paso Corporation&#8217;s 50-percent interest in a joint venture with PEMEX, the Mexican state-owned oil company. The joint venture operates two natural gas pipelines and a propane system in northern Mexico.</p></div> <div style="font-size:12pt"><p>NOTE 4. INVESTMENTS IN UNCONSOLIDATED ENTITIES</p><p>SEMPRA COMMODITIES<br />RBS Sempra Commodities LLP (RBS Sempra Commodities) is 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 report our share of partnership earnings in the Sempra Commodities segment. <br />For the three months ended March 31, 2010 and 2009, we had $7 million and $153 million, respectively, of pretax equity earnings from RBS Sempra Commodities. 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 ended March 31, 2010, the partnership recorded a loss, on an IFRS basis, of $1 million. In the three months ended March 31, 2009, the distributable income, on an IFRS basis, was $114 million. On April 30, 2010, the partnership made a cash distribution to us of $197 million. In the first quarter 2009, we received cash distributions from the partnership of $305 million. We discuss the equity method investment in RBS Sempra Commodities further in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. <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. This liability is being amortized over its expected life. <br />In November 2009, RBS announced its intention to divest its interest in RBS Sempra Commodities in connection with a directive from the European Commission to dispose of certain assets. On February 16, 2010, Sempra Energy, RBS and the partnership (Seller Parties) entered into an agreement (the Purchase Agreement) with J.P. Morgan Ventures Energy Corporation (J.P. Morgan Ventures), whereby J.P. Morgan Ventures will purchase the following businesses from the joint venture: <br /></p><ul><li>the global oil, metals, coal, emissions (other than emissions related to the partnership&#8217;s North American power business), plastics, agricultural commodities and concentrates commodities trading and marketing business<br /></li><li>the European power and gas business<br /></li><li>the investor products business <br /></li></ul><p>The Purchase Agreement does not include RBS Sempra Commodities' North American power and natural gas trading businesses and its retail energy solutions business. These businesses have historically generated 40 to 60 percent of total earnings of the businesses in the partnership, and have averaged more than 50 percent. RBS and Sempra Energy are actively soliciting offers for the sale of these remaining businesses.<br />The transaction is expected to close in summer 2010. J.P. Morgan Ventures will pay an aggregate purchase price equal to the estimated tangible book value at closing of the businesses purchased, generally computed on the basis of IFRS as adopted by the European Union, plus $468 million. Sempra Energy will be entitled to 53-1/3 percent of the aggregate purchase price, and RBS will be entitled to 46-2/3 percent of the aggregate purchase price. We are currently evaluating the effect of the proposed transaction on our investment and share of equity method earnings, which will be impacted by the joint venture&#8217;s allocation of goodwill to the transaction, differences between GAAP and IFRS, the application of equity method accounting, and the amendments to the partnership agreement described below.<br />In conjunction with the transaction, JPMorgan Chase &amp; Co. has delivered a guarantee in favor of the Seller Parties to guarantee certain obligations, including the payment obligations, of J.P. Morgan Ventures under the Purchase Agreement.<br />The closing is subject to several conditions, including the following:<br /></p><ul><li>governmental approvals from the U.K. Financial Services Authority and the U.S. Department of Justice or Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (which approval was received in March 2010), and antitrust approvals from regulators in Canada and in a limited number of other jurisdictions, including the European Union <br /></li><li>if necessary, the obtaining of a license from the Swiss Federal Market Supervisory Authority <br /></li><li>a condition to the obligation of the Seller Parties to close the transaction that JPMorgan Chase &amp; Co. not experience a ratings downgrade below the level specified in the Purchase Agreement <br /></li><li>entering into certain related agreements, including an agreement pursuant to which the partnership will provide transition services to the purchased businesses following the closing<br /></li></ul><p>In connection with the transaction under the Purchase Agreement, we and RBS entered into a letter agreement to negotiate, prior to closing of the transaction, definitive documentation to amend certain provisions of the Limited Liability Partnership Agreement dated April 1, 2008 between Sempra Energy and RBS (Partnership Agreement) to, among other things:<br /></p><ul><li>consider the distribution of excess cash of the partnership to us and RBS<br /></li><li>eliminate each partner&#8217;s preferred return (currently 15 percent per year) and to move to a 50/50 sharing of net income, if and when our invested capital is reduced to $950 million or less by the return of capital to the partners<br /></li><li>terminate the restrictions on the partners&#8217; ability to transfer their partnership interests prior to April 2012 (but not the partners&#8217; right of first offer and other rights, including our tag-along right with respect to the transfer of that interest or the requirement that any transferee be reasonably acceptable to us)<br /></li></ul><p>The letter agreement also provides for negotiating the framework for the entertaining of bids for the remaining part of the partnership&#8217;s business. <br />The following table shows summarized financial information for RBS Sempra Commodities (on a GAAP basis):</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="14" width="235" align="left">&#160;</td><td width="208" align="center" colspan="4" style="border-bottom: 1px solid #000000;" height="14">Three months ended March 31,</td></tr><tr><td height="14" style="border-bottom: 1px solid #000000;" align="left" width="235"><i>(Dollars in millions)</i></td><td width="95" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2010&#160;</td><td width="113" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2009&#160;</td></tr><tr><td height="16" style="border-top: 1px solid #000000;" align="left" width="235">Gross revenues and fee income</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="26">$</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="69">&#160;206&#160;</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">&#160;509&#160;</td></tr><tr><td height="16" width="235" align="left">Gross profit</td><td height="16" width="26" align="left">&#160;</td><td height="16" width="69" align="right">&#160;198&#160;</td><td height="16" width="26" align="left">&#160;</td><td height="16" width="87" align="right">&#160;486&#160;</td></tr><tr><td height="16" width="235" align="left">Income from continuing operations</td><td height="16" width="26" align="left">&#160;</td><td height="16" width="69" align="right">&#160;10&#160;</td><td height="16" width="26" align="left">&#160;</td><td height="16" width="87" align="right">&#160;236&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="235">Partnership net income </td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="26">&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="69">&#160;10&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="26">&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="87">&#160;236&#160;</td></tr></table><p>We provide information regarding the Sempra Commodities segment in Note 11.</p><p>SEMPRA PIPELINES &amp; STORAGE<br />In the three months ended March 31, 2010, Sempra Pipelines &amp; Storage contributed $65 million to Rockies Express, a joint venture to own and operate the Rockies Express Pipeline, which was the last contribution required for the construction phase of the project. Sempra Pipelines &amp; Storage contributed $25 million in the first quarter of 2009. We discuss this investment in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.<br /></p></div> <div style="font-size:12pt"><p>NOTE 5. OTHER FINANCIAL DATA</p><p>VARIABLE INTEREST ENTITIES<br />We consolidate a variable interest entity (VIE) if we are the primary beneficiary of the VIE&#8217;s activities. Our determination of whether we are the primary beneficiary is based upon qualitative and quantitative analyses, which assess<br /></p><ul><li>the purpose and design of the VIE;<br /></li><li>the nature of the VIE's risks and the risks we absorb; <br /></li><li>the power to direct activities that most significantly impact the economic performance of the VIE; and<br /></li><li>the obligation to absorb losses or right to receive benefits that could be significant to the VIE. <br /></li></ul><p>Otay Mesa VIE<br />SDG&amp;E has a 10-year agreement to purchase power generated at the Otay Mesa Energy Center (OMEC), a 573-megawatt (MW) generating facility that began commercial operations in October 2009. SDG&amp;E supplies all of the natural gas to fuel the power plant and purchases its electric generation output (i.e., tolling). The agreement provides SDG&amp;E with the option to purchase the power plant at the end of the contract term in 2019, or upon earlier termination of the purchased-power agreement, at a predetermined price subject to adjustments based on performance of the facility. If SDG&amp;E does not exercise its option, under certain circumstances, it may be required to purchase the power plant at a predetermined price. <br />The facility owner, Otay Mesa Energy Center LLC (OMEC LLC), is a VIE (Otay Mesa VIE), of which SDG&amp;E is the primary beneficiary. SDG&amp;E has no OMEC LLC voting rights and does not operate OMEC.<br />SDG&amp;E has the power to direct the dispatch of OMEC's electrical production. Based upon our analysis, this power most significantly impacts the economic performance of Otay Mesa VIE because of the associated exposure to the cost of natural gas, which fuels the plant, and the value of electricity produced. In addition, SDG&amp;E absorbs significant risks of Otay Mesa VIE under the tolling agreement, whereby SDG&amp;E is obligated to purchase and provide fuel to Otay Mesa VIE and purchase all output for the term of the agreement. Separately, through the put option, SDG&amp;E absorbs a significant portion of the risk that the value of Otay Mesa VIE could decline. Accordingly, Sempra Energy and SDG&amp;E have consolidated Otay Mesa VIE since the second quarter of 2007, and have continued to consolidate it in the first quarter of 2010. Otay Mesa VIE's equity of $138 million and $146 million is included on the Condensed Consolidated Balance Sheets in Other Noncontrolling Interests for Sempra Energy and in Noncontrolling Interests for SDG&amp;E at March 31, 2010 and December 31, 2009, respectively. <br />OMEC LLC has a loan outstanding of $372 million at March 31, 2010, the proceeds of which were used for the construction of OMEC. The loan is with third party lenders and is secured by OMEC's property, plant and equipment. SDG&amp;E is not a party to the loan agreement and does not have any additional implicit or explicit financial responsibility to OMEC LLC. The loan matures in April&#160;2019 and bears interest at rates varying with market rates. In addition, OMEC LLC has entered into interest rate swap agreements to moderate its exposure to interest rate changes. We provide additional information concerning the interest rate swaps in Note 7. </p><p>Orange Grove VIE<br />SDG&amp;E has a 25-year tolling agreement to purchase power generated by Orange Grove Energy L.P. (Orange Grove), at its 94-MW generating facility located in San Diego County, California. We expect the facility to be available for commercial operation during the second quarter of 2010. Orange Grove is a VIE (Orange Grove VIE) of which SDG&amp;E is the primary beneficiary. SDG&amp;E has the power to direct the dispatch of electrical production of Orange Grove VIE. Based on our analysis, this power most significantly impacts the economic performance of Orange Grove VIE because of the corresponding exposure to the cost of natural gas, which fuels the plant, and the value of electricity produced. In addition, SDG&amp;E absorbs significant risks of Orange Grove VIE under the tolling arrangement, whereby SDG&amp;E is obligated to purchase and provide fuel to Orange Grove VIE and purchase all output for the term of the agreement. Sempra Energy and SDG&amp;E consolidated Orange Grove VIE beginning with the third quarter of 2009, when all of the conditions precedent in the purchased-power agreement were satisfied, and continued to do so in the first quarter of 2010.<br />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&amp;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 March 31, 2010, Orange Grove had $90 million of outstanding borrowings under the credit facilities and $3 million of letters of credit supported by the facilities. In addition, Orange Grove has a short-term loan outstanding of $36 million.<br />We provide additional information about Otay Mesa VIE and Orange Grove VIE in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.<br />Other Variable Interest Entities<br />SDG&amp;E's power procurement is subject to reliability requirements that may require SDG&amp;E to enter into various power purchase arrangements which include variable interests. SDG&amp;E evaluates these contracts to determine if variable interests exist and, based on the qualitative and quantitative analyses described above, if SDG&amp;E, and thereby Sempra Energy, is the primary beneficiary. SDG&amp;E has determined that no contracts other than those relating to Otay Mesa VIE and Orange Grove VIE result in SDG&amp;E being the primary beneficiary. Other variable interests involve various elements of fuel and power costs, including certain construction costs, tax credits, and other components of cash flow expected to be paid to or received by our counterparties. In most of theses cases, the expectation of variability is not substantial, and SDG&amp;E generally does not have the power to direct activities that most significantly impact the economic performance of the other VIEs. If our ongoing evaluation of these VIEs were to conclude that SDG&amp;E becomes the primary beneficiary and consolidation by SDG&amp;E becomes necessary, the effects are not expected to significantly affect the financial position, results of operations, or liquidity of SDG&amp;E. SDG&amp;E is not exposed to losses or gains as a result of these other VIEs, because all such variability would be recovered in rates. <br />Sempra Energy&#8217;s other business units also enter into arrangements which could include variable interests.&#160; We evaluate these contracts based upon the qualitative and quantitative analyses described above.&#160; We have determined that these contracts are not variable interests in a VIE and therefore are not subject to the requirements of ASU 2009-17. </p><p>PENSION AND OTHER POSTRETIREMENT BENEFITS<br />Net Periodic Benefit Cost<br />The following three tables provide the components of net periodic benefit cost:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="626" align="left" colspan="9" style="border-top: 1px solid #000000;" height="19"><b>NET PERIODIC BENEFIT COST -- SEMPRA ENERGY CONSOLIDATED</b></td></tr><tr><td width="626" align="left" height="19" colspan="9"><i>(Dollars in 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Under this method, proceeds based on the exercise price plus unearned compensation and windfall tax benefits or minus tax shortfalls related to the options are assumed to be used to repurchase shares on the open market at the average market price for the period. The windfall tax benefits are tax deductions we would receive upon the assumed exercise of stock options in excess of the deferred income taxes we recorded related to the compensation expense on the stock options. Tax shortfalls occur when the assumed tax deductions are less than recorded deferred income taxes. The calculation excludes options for which the exercise price on common stock was greater than the average market price during the period. We had 2,180,900 and 3,153,534 such stock options outstanding during the three months ended March 31, 2010 and 2009, respectively. <br />During the three months ended March 31, 2010, we had 9,900 stock options outstanding that were antidilutive because of the unearned compensation and windfall tax benefits included in the assumed proceeds under the treasury stock method. We had no such antidilutive stock options outstanding during the three months ended March 31, 2009.<br />The dilution from unvested restricted stock awards and units is also based on the treasury stock method. Assumed proceeds equal to the unearned compensation and windfall tax benefits or minus tax shortfalls related to the awards and units are assumed to be used to repurchase shares on the open market at the average market price for the period. The windfall tax benefits or tax shortfalls are the difference between tax deductions we would receive upon the assumed vesting of restricted stock awards and units and the deferred income taxes we recorded related to the compensation expense on the restricted stock awards and units. There were no such anti-dilutive restricted stock awards or units during the three months ended March 31, 2010 or 2009.<br /><br /></p><p>SHARE-BASED COMPENSATION<br />We discuss our share-based compensation plans in Note 10 of the Notes to Consolidated Financial Statements in the Annual Report. We recorded share-based compensation expense, net of income taxes, of $7 million and $6 million for the three months ended March 31, 2010 and 2009, respectively. 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width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;1&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="229">Comprehensive income (loss)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;105&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;(6)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;99&#160;</td><td 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style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="54">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="28">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td></tr><tr><td height="16" width="229" align="left">Net income (loss)</td><td height="16" width="22" align="left">$</td><td height="16" width="54" align="right">&#160;84&#160;</td><td height="16" width="22" align="left">$</td><td height="16" width="54" align="right">&#160;(8)</td><td height="16" width="22" align="left">$</td><td height="16" width="54" align="right">&#160;76&#160;</td><td height="16" width="28" align="left">&#160;</td><td height="16" width="22" align="left">$</td><td height="16" width="54" align="right">&#160;100&#160;</td><td height="16" width="22" align="left">$</td><td height="16" width="54" align="right">&#160;7&#160;</td><td height="16" width="22" align="left">$</td><td height="16" width="54" align="right">&#160;107&#160;</td></tr><tr><td height="16" width="229" align="left">Financial instruments</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;2&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;2&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="28">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;2&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;(4)</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;(2)</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="229">Comprehensive income (loss)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;84&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;(6)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;78&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="28">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;102&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;3&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;105&#160;</td></tr><tr><td height="18" style="border-top: 3px solid #000000;" align="left" width="229"><b>PE:</b></td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="28">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td></tr><tr><td height="17" width="229" align="left">Net income(2)</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;65&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;-&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;65&#160;</td><td height="17" width="28" align="left">&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;59&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;-&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;59&#160;</td></tr><tr><td height="17" width="229" align="left">Financial instruments</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="28">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;1&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;1&#160;</td></tr><tr><td height="18" style="border-bottom: 3px solid #000000;" align="left" width="229">Comprehensive income</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;65&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;65&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="28">&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;60&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="54">&#160;60&#160;</td></tr><tr><td height="18" style="border-top: 3px solid #000000;" align="left" width="229"><b>SoCalGas:</b></td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="28">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td><td height="18" style="border-top: 1px solid #000000;" align="center" width="22">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="54">&#160;</td></tr><tr><td height="17" width="229" align="left">Net income</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;65&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;-&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;65&#160;</td><td height="17" width="28" align="left">&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;59&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;-&#160;</td><td height="17" width="22" align="left">$</td><td height="17" width="54" align="right">&#160;59&#160;</td></tr><tr><td height="17" width="229" align="left">Financial instruments</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="22">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="54">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="28">&#160;</td><td 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#C0C0C0;" align="left" width="22">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="54">&#160;-&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="26">&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="22">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="54">&#160;1&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="22">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="54">&#160;-&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="22">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="54">&#160;1&#160;</td></tr><tr><td height="18" style="border-top: 3px solid #C0C0C0;" align="left" width="244"><b>PE:</b></td><td height="18" style="border-top: 3px solid #C0C0C0;" align="center" width="22">&#160;</td><td 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style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="80">&#160;137&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="22">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="73">&#160;2,630&#160;</td></tr></table><p>TRANSACTIONS WITH AFFILIATES <br />Loans to Unconsolidated Affiliates <br />Sempra Pipelines &amp; Storage has a U.S. dollar-denominated loan to Camuzzi Gas del Sur S.A., an affiliate of Sempra Pipelines &amp; Storage&#8217;s Argentine investments, which we discuss in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. The loan to Camuzzi Gas del Sur S.A has a $27 million balance outstanding at a variable interest rate (7.29 percent as of March 31, 2010). The loan is due in June 2010 and is fully reserved at March 31, 2010. <br />Investments<br />In November 2009, Sempra Pipelines &amp; Storage purchased $50 million of 2.75-percent bonds issued by Chilquinta Energ&#237;a S.A., an unconsolidated affiliate, that are denominated in Chilean Unidades de Fomento. The bonds mature on October 30, 2014. The carrying value of the bonds after the effect of foreign currency translation was $50 million at March 31, 2010. We discuss this investment in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.<br /></p><p>Other Affiliate Transactions<br />Sempra Energy, SDG&amp;E and SoCalGas provide certain services to each other and are charged an allocable share of the cost of such services. 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Consolidated<br />For the three months ended March 31, 2010, the increase in effective tax rate was primarily due to:<br /></p><ul><li>lower pretax income in countries with lower statutory rates;<br /></li><li>$12 million tax expense in 2010 compared to a $9 million tax benefit in 2009 due to Mexican currency translation and inflation adjustments; and<br /></li><li>a $16 million write-down of deferred tax assets related to other post employment benefits, as a result of a change in U.S. tax law that eliminates a future deduction, starting in 2013, for retiree healthcare funded by the Medicare Part D subsidy; offset by<br /></li><li>higher tax deductions for self-developed software costs; <br /></li><li>higher favorable impact from the resolution of prior years' income tax issues; and<br /></li><li>higher planned investment tax credits.<br /></li></ul><p>SDG&amp;E<br />For the three months ended March 31, 2010, the decrease in SDG&amp;E's effective tax rate was primarily due to:<br /></p><ul><li>higher favorable impact from the resolution of prior years' income tax issues; <br /></li><li>higher deductions for self-developed software costs; and<br /></li><li>lower state and local tax expense; offset by<br /></li><li>a $3 million write-down of deferred tax assets related to other post employment benefits, as a result of a change in U.S. tax law, as we discuss above.<br /></li></ul><p>PE and SoCalGas<br />For the three months ended March 31, 2010, the increase in PE&#8217;s and SoCalGas&#8217; effective tax rate was primarily due to:<br /></p><ul><li>a $13 million write-down of deferred tax assets related to other post employment benefits, as a result of a change in U.S. tax law, as we discuss above; offset by<br /></li><li>higher deductions for self-developed software costs; and<br /></li><li>lower state and local tax expense.</li></ul><p></p></div> <div style="font-size:12pt"><p>NOTE 6. DEBT AND CREDIT FACILITIES <br />Committed Lines of Credit<br />At March 31, 2010, Sempra Energy Consolidated had $4.3 billion in committed lines of credit to provide liquidity and to support commercial paper and variable-rate demand notes, the major components of which are detailed below. Available unused credit on these lines at March 31, 2010 was $3.3 billion. We discuss the terms of our credit agreements in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.<br />These amounts exclude lines of credit associated with Sempra Commodities, one of which we continue to guarantee, as we discuss below in "RBS Sempra Commodities." RBS has replaced Sempra Energy as guarantor on all uncommitted lines of credit associated with Sempra Commodities. To the extent that Sempra Energy's credit support arrangements, including Sempra Commodities' committed facilities, have not been terminated or replaced, RBS has indemnified Sempra Energy for any claims or losses arising in connection with those arrangements. <br />Sempra Energy<br />Sempra Energy has a $1 billion, three-year syndicated revolving credit agreement expiring in 2011. <br />Borrowings bear interest at benchmark rates plus a margin that varies with market index rates and Sempra Energy's credit ratings. At March 31, 2010, Sempra Energy had no outstanding borrowings under the facility. <br />Sempra Global<br />Sempra Global has a $2.5 billion, three-year syndicated revolving credit agreement expiring in 2011. The facility also provides for issuance of up to $300 million of letters of credit on behalf of Sempra Global with the amount of borrowings otherwise available under the facility reduced by the amount of outstanding letters of credit. <br />Sempra Energy guarantees Sempra Global&#8217;s obligations under the credit facility. Borrowings bear interest at benchmark rates plus a margin that varies with market index rates and Sempra Energy&#8217;s credit ratings. At March 31, 2010, Sempra Global had letters of credit of $7 million outstanding and no outstanding borrowings under the facility. The facility provides support for $727 million of commercial paper outstanding at March 31, 2010. <br />Sempra Utilities<br />SDG&amp;E and SoCalGas have a combined $800 million, three-year syndicated revolving credit agreement expiring in 2011. The agreement permits each utility to individually borrow up to $600 million, subject to a combined limit of $800 million for both utilities. It also provides for the issuance of letters of credit on behalf of each utility subject to a combined letter of credit commitment of $200 million for both utilities. The amount of borrowings otherwise available under the facility is reduced by the amount of outstanding letters of credit. <br />Borrowings under the facility bear interest at benchmark rates plus a margin that varies with market index rates and the borrowing utility's credit rating. Each utility&#8217;s obligations under the agreement are individual obligations, and a default by one utility would not constitute a default by the other utility or preclude borrowings by, or the issuance of letters of credit on behalf of, the other utility.<br />At March 31, 2010, SDG&amp;E and SoCalGas had no outstanding borrowings under this facility. SDG&amp;E had $25 million of outstanding letters of credit and $237 million of variable-rate demand notes outstanding supported by this facility at March 31, 2010. The facility also provides support for $24 million of commercial paper outstanding at SDG&amp;E at March 31, 2010. Available unused credit on these lines at March 31, 2010 was $314 million at SDG&amp;E and $514 million at SoCalGas; SoCalGas' availability reflects the impact of SDG&amp;E's use of the combined credit available on the line. <br /><br /><br /></p><p>GUARANTEES<br />RBS Sempra Commodities<br />RBS is obligated to provide RBS Sempra Commodities with all growth capital, working-capital requirements and credit support. However, as a transitional measure, we continue to provide back-up guarantees for a portion of RBS Sempra Commodities&#8217; trading obligations and for a credit facility with third party lenders pending novation (legal transfer) of the remaining trading obligations to RBS or, after the closing of the transaction we discuss in Note 4, to J.P. Morgan Ventures. Some of these back-up guarantees may continue for a prolonged period of time. RBS, which is controlled by the government of the United Kingdom, has fully indemnified us for any claims or losses in connection with these arrangements. <br />RBS Sempra Commodities&#8217; net trading liabilities supported by Sempra Energy&#8217;s guarantees at March 31, 2010 were $745 million, consisting of guaranteed trading obligations net of collateral. The amount of guaranteed net trading liabilities varies from day to day with the value of the trading obligations and related collateral.<br />Sempra Energy also has guaranteed $344 million of $1.72 billion of RBS Sempra Commodities' commitments under a credit facility expiring September 29, 2010. Extensions of credit under the committed facility, which total $853 million at March 31, 2010, are limited to and secured by a borrowing base consisting of receivables, inventories and other joint venture assets that are valued at varying percentages of current market value. At March 31, 2010, the gross market value of the borrowing base assets was $2.26 billion. The facility will be reduced and end as the borrowing base assets are transferred to RBS as established by the joint venture agreement. <br />On February 16, 2010, Sempra Energy, RBS and the partnership entered into an agreement to sell certain businesses within the partnership. We discuss this transaction and related agreements affecting the partnership in Note 4.<br />Other Guarantees <br />Sempra Energy, Conoco Phillips (Conoco) and Kinder Morgan Energy Partners, L.P. (KMP) currently hold 25-percent, 25-percent and 50-percent ownership interests, respectively, in Rockies Express. Rockies Express operates a natural gas pipeline linking natural gas producing areas in the Rocky Mountain region to the upper Midwest and the eastern United States. Rockies Express had a $2 billion, five-year credit facility expiring in 2011 that provided for revolving extensions of credit that were guaranteed by Sempra Energy, Conoco and KMP in proportion to their respective ownership percentages. In April 2010, this credit facility was reduced to $200 million, and Sempra Energy, Conoco and KMP were released from their respective guarantor obligations. Rockies Express had no outstanding borrowings under this facility at March 31, 2010. Long-term debt of $1.7 billion issued in March 2010 was used to pay down the credit facility; this new debt is not separately guaranteed by the partners.<br /><br /></p><p>WEIGHTED AVERAGE INTEREST RATES<br />At March 31, 2010, the weighted average interest rate on the total short-term debt outstanding at Sempra Energy was 0.67 percent. At March 31, 2010, the weighted average interest rate on the total short-term debt outstanding at SDG&amp;E was 0.17 percent. The weighted average interest rate on the total short-term debt outstanding at Sempra Energy was 0.79 percent at December 31, 2009.<br />INTEREST RATE SWAPS<br />We discuss our fair value interest rate swaps and interest rate swaps to hedge cash flows in Note 7.</p></div> <div style="font-size:12pt"><p>NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS<br />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. <br />We record all derivatives at fair value on the Condensed Consolidated Balance Sheets. We designate each derivative as 1) a cash flow hedge, 2) a fair value hedge, or 3) undesignated.&#160;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 Condensed Statements of Consolidated Cash Flows. <br />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. <br /></p><p>HEDGE ACCOUNTING<br />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.<br />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.<br /></p><p>ENERGY DERIVATIVES<br />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.<br /></p><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 California Public Utilities Commission (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 Condensed Consolidated Statements of Operations are reflected in Cost of Electric Fuel and Purchased Power or in Cost of Natural Gas. <br /></li><li>SDG&amp;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 Condensed Consolidated Statements of Operations. <br /></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 Condensed Consolidated Statements of Operations. <br /></li><li>Sempra LNG and Sempra Pipelines &amp; Storage use natural gas derivatives to market and optimize the earnings of the liquefied natural gas business and Sempra Pipelines &amp; Storage's natural gas storage and transportation assets. Sempra Pipelines &amp; 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 &amp; Storage&#8217;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&#8217;s derivatives are undesignated and their impact on earnings is recorded in Sempra Global and Parent Revenues on the Condensed 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 Condensed Consolidated Statements of Operations.<br /></li></ul><p>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. 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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. <br />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. 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width="286" align="left">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="82">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="82">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="82">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="82">Deferred</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td height="14" width="19" align="center">&#160;</td><td height="14" width="82" align="center">&#160;</td><td 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align="right">&#160;</td><td height="14" width="82" align="center">assets:</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">&#160;</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">liabilities:</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">liabilities:</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Fixed-price</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Investments</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Fixed-price</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Fixed-price</td></tr><tr><td height="14" width="17" 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style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;-&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="17">&#160;</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="82">&#160;6&#160;</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 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width="82" align="right">&#160;(45)</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">&#160;&#160;&#160;&#160;Associated offsetting commodity contracts</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(55)</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(10)</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;55&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;10&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Commodity contracts subject to rate recovery</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;21&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;5&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(55)</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(25)</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">&#160;&#160;&#160;&#160;Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(47)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(22)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;47&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;22&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="17">&#160;</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="82">&#160;36&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;25&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid 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height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Interest rate instruments(3)</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;(17)</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;(30)</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Commodity contracts subject to rate recovery</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;15&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;5&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(44)</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(23)</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">&#160;&#160;&#160;&#160;Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(44)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(22)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;44&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;22&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="17">&#160;</td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="286">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(29)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(17)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(17)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(31)</td></tr><tr><td width="303" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16"><b>SoCalGas:</b></td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Commodity contracts subject to rate recovery</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;6&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;(4)</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">&#160;&#160;&#160;&#160;Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(3)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;3&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;-&#160;</td></tr><tr><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="17">&#160;</td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="286">Total</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;3&#160;</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;-&#160;</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(1)</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;-&#160;</td></tr><tr><td height="18" style="border-top: 3px solid #000000;" align="left" width="17">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="286">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="82">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="82">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="82">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="82">&#160;</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td width="404" align="center" colspan="8" style="border-bottom: 1px solid #000000;" height="14">December 31, 2009</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="82">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="82">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="82">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="19">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="82">Deferred</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td height="14" width="19" align="center">&#160;</td><td height="14" width="82" align="center">&#160;</td><td height="14" width="19" align="center">&#160;</td><td height="14" width="82" align="center">&#160;</td><td height="14" width="19" align="center">&#160;</td><td height="14" width="82" align="center">&#160;</td><td height="14" width="19" align="center">&#160;</td><td height="14" width="82" align="center">credits</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Current</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">&#160;</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Current</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">and other</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">assets:</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">&#160;</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">liabilities:</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">liabilities:</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Fixed-price</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Investments</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Fixed-price</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">Fixed-price</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">contracts</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">and other</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">contracts</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">contracts</td></tr><tr><td height="14" width="17" align="left">&#160;</td><td height="14" width="286" align="left">&#160;</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">and other</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">assets:</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">and other</td><td height="14" width="19" align="right">&#160;</td><td height="14" width="82" align="center">and other</td></tr><tr><td width="303" 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">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="82">derivatives(1)</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="14" style="border-bottom: 1px solid 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align="right" width="19">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="82">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="82">&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Interest rate instruments</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;12&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;2&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Commodity contracts not subject 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width="82">&#160;-&#160;</td></tr><tr><td width="303" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16"><b>SoCalGas:</b></td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="17">&#160;</td><td height="16" 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#000000;" align="left" width="286">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td></tr><tr><td width="303" 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">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;</td></tr><tr><td width="303" align="left" colspan="2" style="border-top: 1px solid #000000;" height="16"><b>Sempra Energy Consolidated:</b></td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="82">&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</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="82" align="right">&#160;9&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;15&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;(25)</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;(33)</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Commodity contracts not subject to rate recovery</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;74&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;30&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(64)</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(42)</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">&#160;&#160;&#160;&#160;Associated offsetting commodity contracts</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(34)</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(6)</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;34&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;6&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Commodity contracts subject to rate recovery</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;20&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;7&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(20)</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(13)</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">&#160;&#160;&#160;&#160;Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(14)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(9)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;14&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;9&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="17">&#160;</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="82">&#160;55&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;37&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(61)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(73)</td></tr><tr><td width="303" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16"><b>SDG&amp;E:</b></td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Interest rate instruments(3)</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;(17)</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;(26)</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Commodity contracts subject to rate recovery</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;18&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;7&#160;</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(13)</td><td height="16" width="19" align="right">&#160;</td><td height="16" width="82" align="right">&#160;(9)</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">&#160;&#160;&#160;&#160;Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(13)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(9)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;13&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;9&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="17">&#160;</td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="286">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;5&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(2)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(17)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;(26)</td></tr><tr><td width="303" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16"><b>SoCalGas:</b></td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="82">&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">Commodity contracts subject to rate recovery</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;2&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;(1)</td><td height="16" width="19" align="right">$</td><td height="16" width="82" align="right">&#160;-&#160;</td></tr><tr><td height="16" width="17" align="left">&#160;</td><td height="16" width="286" align="left">&#160;&#160;&#160;&#160;Associated offsetting commodity contracts</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;(1)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;1&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="82">&#160;-&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="17">&#160;</td><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="286">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;1&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="82">&#160;-&#160;</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="82">&#160;-&#160;</td></tr><tr><td width="707" align="left" colspan="10" style="border-top: 3px solid #000000;" height="18"><i>(1) Included in Current assets: Other for SoCalGas.</i></td></tr><tr><td width="707" align="left" height="17" colspan="10"><i>(2) Included in Current liabilities: Other for SoCalGas.</i></td></tr><tr><td width="707" align="left" height="17" colspan="10"><i>(3) Includes Otay Mesa VIE. All of SDG&amp;E's amounts relate to Otay Mesa VIE.</i></td></tr></table><p>The effects of derivative instruments designated as hedges on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009 were:<br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="697" align="left" colspan="7" style="border-top: 1px solid #000000;" height="19"><b>FAIR VALUE HEDGE IMPACT ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</b></td></tr><tr><td width="697" align="left" height="19" colspan="7"><i>(Dollars in millions)</i></td></tr><tr><td height="14" width="16" align="left">&#160;</td><td height="14" width="180" align="left">&#160;</td><td width="501" align="center" colspan="5" style="border-bottom: 1px solid #000000;" height="14">Gain (loss) on derivative recognized in earnings</td></tr><tr><td height="16" width="16" align="left">&#160;</td><td height="16" width="180" align="left">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="184">&#160;</td><td width="317" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="16">Three months ended March 31,</td></tr><tr><td width="196" align="left" colspan="2" style="border-bottom: 1px solid #000000;" height="14">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="184">Location</td><td width="159" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2010</td><td width="158" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="14">2009</td></tr><tr><td width="196" align="left" colspan="2" style="border-top: 1px solid #000000;" height="16"><b>Sempra Energy Consolidated:</b></td><td height="16" style="border-top: 1px solid #000000;" align="center" width="184">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="24">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="135">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="25">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="133">&#160;</td></tr><tr><td height="16" width="16" align="left"><b>&#160;</b></td><td height="16" width="180" align="left">Interest rate instruments(1)</td><td height="16" width="184" align="left">Interest Expense</td><td height="16" width="24" align="right">$</td><td height="16" width="135" align="right">&#160;2&#160;</td><td height="16" width="25" align="right">$</td><td height="16" width="133" align="right">&#160;-&#160;</td></tr><tr><td height="16" width="16" align="left"><b>&#160;</b></td><td height="16" width="180" align="left">Interest rate instruments</td><td height="16" width="184" align="left">Other Income, Net</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="24">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="135">&#160;(2)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="25">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="133">&#160;(6)</td></tr><tr><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="16">&#160;</td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="180">Total</td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="184">&#160;</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="24">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="135">&#160;-&#160;</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="25">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="133">&#160;(6)</td></tr><tr><td width="196" align="left" colspan="2" style="border-top: 3px solid #000000;" height="16"><b>SoCalGas:</b></td><td height="16" style="border-top: 3px solid #000000;" align="left" width="184">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="24">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="center" width="135">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="25">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="center" width="133">&#160;</td></tr><tr><td height="16" width="16" align="left"><b>&#160;</b></td><td height="16" width="180" align="left">Interest rate instrument(1)</td><td height="16" width="184" align="left">Interest Expense</td><td height="16" width="24" align="right">$</td><td height="16" width="135" 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style="border-top: 3px solid #000000;" align="center" width="19">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="center" width="187">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="21">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="79">&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="12">&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="201">Interest rate instruments</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="21">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="103">&#160;-&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="19">&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="187">Interest Expense</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="21">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="79">&#160;(2)</td></tr><tr><td width="213" align="left" colspan="2" style="border-top: 3px solid #C0C0C0;" height="16"><b>SoCalGas:</b></td><td height="16" style="border-top: 3px solid #C0C0C0;" align="right" width="21">&#160;</td><td height="16" style="border-top: 3px solid #C0C0C0;" align="right" width="103">&#160;</td><td height="16" style="border-top: 3px solid #C0C0C0;" align="center" width="19">&#160;</td><td height="16" style="border-top: 3px solid #C0C0C0;" align="left" width="187">&#160;</td><td height="16" style="border-top: 3px solid #C0C0C0;" align="right" width="21">&#160;</td><td height="16" style="border-top: 3px solid #C0C0C0;" align="right" width="79">&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="12">&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" 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Sempra Energy Consolidated also includes additional instruments.</i></td></tr></table><p>CONTINGENT FEATURES <br />For Sempra Energy and SDG&amp;E, certain of our derivative instruments contain&#160;credit&#160;limits&#160;which vary depending upon our credit rating.&#160; Generally, these provisions, if applicable, may reduce&#160;our credit limit if a&#160;specified&#160;credit rating agency reduces our&#160;rating.&#160;In certain cases, if our&#160;credit rating were to fall below investment grade, the&#160;counterparty to&#160;these&#160;derivative liability&#160;instruments could request immediate payment or demand immediate and ongoing full collateralization.&#160;<br />For Sempra Energy, the total fair value of&#160;this group of derivative instruments in a net liability position at March 31, 2010 is $5&#160;million.&#160;As of March 31, 2010, if&#160;the credit rating of Sempra Energy were reduced below investment grade, $5 million of additional assets could be required to be posted as collateral for these derivative contracts.<br />For Sempra Energy, SDG&amp;E, PE and SoCalGas, some of our derivative contracts contain a provision that would permit the counterparty, in certain circumstances, to request adequate assurance of our performance under the contract. Such additional assurance, if needed, is&#160;not material and is not included in the amounts above.</p></div> <div style="font-size:12pt"><p>NOTE 8. FAIR VALUE MEASUREMENTS<br />Fair Value of Financial Instruments<br />The fair values of certain of our financial instruments (cash, temporary investments, accounts and notes receivable, dividends and accounts payable, short-term debt and customer deposits) approximate their carrying amounts. 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align="right" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td></tr><tr><td width="320" align="left" height="16" colspan="2">PE:</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td></tr><tr><td width="320" align="left" height="16" colspan="2">&#160;&#160;&#160;&#160;Preferred stock</td><td height="16" width="22" align="right">$</td><td height="16" width="61" 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solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td></tr><tr><td width="320" align="left" colspan="2" style="border-bottom: 3px solid #C0C0C0;" height="16">&#160;&#160;&#160;&#160;Preferred stock</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="22">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="61">&#160;22&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="22">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="61">&#160;21&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="22">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="61">&#160;22&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="22">$</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="61">&#160;20&#160;</td></tr><tr><td height="18" style="border-top: 3px solid #C0C0C0;" align="center" width="38"><i>(1)</i></td><td width="614" align="left" colspan="9" style="border-top: 3px solid #C0C0C0;" height="18"><i>We discuss our investments in affordable housing partnerships in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.</i></td></tr><tr><td height="17" width="38" align="center"><i>(2)</i></td><td width="614" align="left" height="17" colspan="9"><i>Before reductions for unamortized discount of $17 million at March 31, 2010 and December 31, 2009.</i></td></tr><tr><td height="17" width="38" align="center"><i>(3)</i></td><td width="614" align="left" height="17" colspan="9"><i>Before reductions for unamortized discount of $4 million at March 31, 2010 and December 31, 2009.</i></td></tr><tr><td height="17" width="38" align="center"><i>(4)</i></td><td width="614" align="left" height="17" colspan="9"><i>Before 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All entities based the fair values of the long-term debt and preferred stock on their quoted market prices or quoted market prices for similar securities.</p><p>Nuclear Decommissioning Trusts <br />We discuss SDG&amp;E's investments in nuclear decommissioning trust funds in Note 7 of the Notes to Consolidated Financial Statements in the Annual Report. 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align="right" width="22">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="61">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="61">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="61">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="61">&#160;</td></tr><tr><td width="318" align="left" height="16" colspan="2">Debt securities</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td></tr><tr><td width="318" align="left" height="16" colspan="2">&#160;&#160;&#160;&#160;U.S. government(1)</td><td height="16" width="22" align="right">$</td><td height="16" width="61" align="right">&#160;138&#160;</td><td height="16" width="22" align="right">$</td><td height="16" width="61" align="right">&#160;12&#160;</td><td height="16" width="22" align="right">$</td><td height="16" width="61" align="right">&#160;(2)</td><td height="16" width="22" align="right">$</td><td height="16" width="61" align="right">&#160;148&#160;</td></tr><tr><td width="318" align="left" height="16" colspan="2">&#160;&#160;&#160;&#160;Municipal bonds(2)</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="right">&#160;76&#160;</td><td height="16" width="22" align="right">&#160;</td><td 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style="border-bottom: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="61">&#160;29&#160;</td></tr><tr><td width="318" align="left" height="16" colspan="2">Total debt securities</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="61">&#160;241&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="61">&#160;16&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="61">&#160;(4)</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" 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align="right" width="61">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="61">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="61">&#160;10&#160;</td></tr><tr><td width="318" align="left" colspan="2" style="border-bottom: 3px solid #000000;" height="16">Total available-for-sale securities</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="22">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="61">&#160;493&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="22">$</td><td height="16" style="border-top: 1px solid 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height="16" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="22">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td></tr><tr><td width="318" align="left" height="16" colspan="2">Debt securities</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td><td height="16" width="22" align="right">&#160;</td><td height="16" width="61" align="left">&#160;</td></tr><tr><td width="318" align="left" height="16" 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We do not consider these investments to be other than temporarily impaired as of March 31, 2010.<br />Derivative Positions Net of Cash Collateral<br />Each Condensed Consolidated Balance Sheet reflects the offsetting of net derivative positions with fair value amounts for cash collateral with the same counterparty when management believes a legal right of offset exists.<br />The following table provides the amount of fair value of cash collateral receivables that were not offset in the Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="14" width="320" align="left"><b>&#160;</b></td><td width="97" align="center" height="14" colspan="2">March 31,</td><td width="97" align="center" height="14" colspan="2">December 31,</td></tr><tr><td height="14" style="border-bottom: 1px solid #000000;" align="left" width="320"><i>(Dollars in millions)</i></td><td width="97" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="14">2010&#160;</td><td width="97" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="14">2009&#160;</td></tr><tr><td height="16" style="border-top: 1px solid #000000;" align="left" width="320">Sempra Energy Consolidated</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">&#160;32&#160;</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">&#160;36&#160;</td></tr><tr><td height="16" width="320" align="left">SDG&amp;E</td><td height="16" width="22" align="left">&#160;</td><td height="16" width="75" align="right">&#160;26&#160;</td><td height="16" width="22" align="left">&#160;</td><td height="16" width="75" align="right">&#160;30&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="320">SoCalGas</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="22">&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="75">&#160;4&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="left" width="22">&#160;</td><td height="16" style="border-bottom: 3px solid #C0C0C0;" align="right" width="75">&#160;5&#160;</td></tr></table><p>Fair Value Hierarchy<br />We discuss the valuation techniques and inputs we use to measure fair value and the definition of the three levels of the fair value hierarchy in Notes 1 and 2 of the Notes to Consolidated Financial Statements in the Annual Report. We have not changed the valuation techniques or inputs we use to measure fair value during the three months ended March 31, 2010.<br />The three tables below, by level within the fair value hierarchy, set forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2010 and December 31, 2009. We classify financial assets and liabilities in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities, and their placement within the fair value hierarchy levels. <br />The fair value of commodity derivative assets and liabilities is determined in accordance with our netting policy, as discussed above under "Derivative Positions Net of Cash Collateral." <br />The determination of fair values, shown in the tables below, incorporates various factors, including but not limited to, the credit standing of the counterparties involved and the impact of credit enhancements (such as cash deposits, letters of credit and priority interests).<br />We discuss our financial assets and liabilities that were accounted for at fair value on a recurring basis further in Note 12 of the Notes to Consolidated Financial Statements in the Annual Report.<br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="730" 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align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Nuclear decommissioning trusts(1)</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" 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style="border-top: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;31&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Commodity contracts subject to rate recovery</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;27&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;3&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;9&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;39&#160;</td></tr><tr><td height="16" width="290" 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align="right" width="65">&#160;605&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;255&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;9&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;(26)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;843&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="16" width="290" align="left">Liabilities:</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Interest rate instruments</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;65&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;65&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Commodity contracts subject to rate recovery</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;57&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;11&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;(57)</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;11&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Commodity contracts not subject to rate recovery</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;74&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;74&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="290">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;57&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;150&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;(57)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;150&#160;</td></tr><tr><td height="16" style="border-top: 3px solid #000000;" align="left" width="290">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;</td><td width="440" align="center" colspan="10" style="border-bottom: 1px solid #000000;" height="16">At fair value as of December 31, 2009</td></tr><tr><td height="16" width="290" align="left">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">Collateral</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 1</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 2</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 3</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="center" width="65">Netted</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="center" width="65">Total</td></tr><tr><td height="16" width="290" align="left">Assets:</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Nuclear decommissioning trusts(1)</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Equity securities</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;421&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;421&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Debt securities</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;111&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;137&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;248&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Total nuclear decommissioning trusts(1)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;532&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;137&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;669&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Interest rate instruments</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;38&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;38&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Commodity contracts subject to rate recovery</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;32&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;3&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;10&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="right">&#160;45&#160;</td></tr><tr><td height="17" width="290" align="left">&#160;&#160;&#160;&#160;Commodity contracts not subject to rate recovery</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;7&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;62&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;-&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;(40)</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;29&#160;</td></tr><tr><td height="17" width="290" align="left">&#160;&#160;&#160;&#160;Investments</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;1&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;1&#160;</td></tr><tr><td height="18" width="290" align="left">Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;572&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;240&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;10&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;(40)</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;782&#160;</td></tr><tr><td height="18" width="290" align="left">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="17" width="290" align="left">Liabilities:</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td></tr><tr><td height="17" width="290" align="left">&#160;&#160;&#160;&#160;Interest rate instruments</td><td height="17" width="23" align="right">$</td><td height="17" width="65" align="right">&#160;-&#160;</td><td height="17" width="23" align="right">$</td><td height="17" width="65" align="right">&#160;59&#160;</td><td height="17" width="23" align="right">$</td><td height="17" width="65" align="right">&#160;-&#160;</td><td height="17" width="23" align="right">$</td><td height="17" width="65" align="right">&#160;-&#160;</td><td height="17" width="23" align="right">$</td><td height="17" width="65" align="right">&#160;59&#160;</td></tr><tr><td height="17" width="290" align="left">&#160;&#160;&#160;&#160;Commodity contracts subject to rate recovery</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;9&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;9&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;-&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;(9)</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="right">&#160;9&#160;</td></tr><tr><td height="17" width="290" align="left">&#160;&#160;&#160;&#160;Commodity contracts not subject to rate recovery</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;65&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;65&#160;</td></tr><tr><td height="18" style="border-bottom: 3px solid #000000;" align="left" width="290">Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;9&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;133&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;(9)</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;133&#160;</td></tr><tr><td height="18" style="border-top: 3px solid #000000;" align="left" width="290"><i>(1) Excludes cash balances and cash equivalents.</i></td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td></tr></table><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="747" align="left" colspan="11" style="border-top: 1px solid #000000;" height="19"><b>RECURRING FAIR VALUE MEASURES -- 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width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">Collateral</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td></tr><tr><td height="14" width="307" align="left">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 1</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 2</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 3</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Netted</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Total</td></tr><tr><td height="16" width="307" align="left">Assets:</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Nuclear decommissioning trusts(1)</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Equity securities</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;443&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;443&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Debt securities</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;112&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;141&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;253&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Total nuclear decommissioning trusts(1)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;555&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;141&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;696&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Commodity contracts subject to rate recovery</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;24&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;2&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;9&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;35&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Commodity contracts not subject to rate recovery</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;2&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;2&#160;</td></tr><tr><td height="16" width="307" align="left">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;581&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;143&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;9&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;733&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="16" width="307" align="left">Liabilities:</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Interest rate instruments</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;47&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;47&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Commodity contracts subject to rate recovery</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;57&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;1&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;(57)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;1&#160;</td></tr><tr><td height="16" style="border-bottom: 3px solid #000000;" align="left" width="307">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;57&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;48&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid 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style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;</td><td width="440" align="center" colspan="10" style="border-bottom: 1px solid #000000;" height="16">At fair value as of December 31, 2009</td></tr><tr><td height="16" width="307" align="left">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">Collateral</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 1</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 2</td><td height="16" 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style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Nuclear decommissioning trusts(1)</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td><td height="16" width="23" align="right">&#160;</td><td height="16" width="65" align="left">&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Equity securities</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;421&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;421&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Debt securities</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;111&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;137&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;248&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Total nuclear decommissioning trusts(1)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;532&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;137&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="65">&#160;669&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Commodity contracts subject to rate recovery</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;29&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;2&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;10&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-top: 1px solid #000000;" align="right" width="65">&#160;41&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Commodity contracts not subject to rate recovery</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;1&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;1&#160;</td></tr><tr><td height="16" width="307" align="left">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;562&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;139&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;10&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;711&#160;</td></tr><tr><td height="18" width="307" align="left">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td></tr><tr><td height="17" width="307" align="left">Liabilities:</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="65" align="left">&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Interest rate instruments</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;43&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;-&#160;</td><td height="16" width="23" align="right">$</td><td height="16" width="65" align="right">&#160;43&#160;</td></tr><tr><td height="16" width="307" align="left">&#160;&#160;&#160;&#160;Commodity contracts subject to rate recovery</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;9&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;(9)</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td></tr><tr><td height="18" style="border-bottom: 3px solid #000000;" align="left" width="307">Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;9&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;43&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid 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width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="65">&#160;</td></tr></table><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width="730" align="left" colspan="11" style="border-top: 1px solid #000000;" height="19"><b>RECURRING FAIR VALUE MEASURES -- SOCALGAS</b></td></tr><tr><td width="730" align="left" height="19" colspan="11"><i>(Dollars in millions)</i></td></tr><tr><td height="14" width="290" align="left">&#160;</td><td width="440" align="center" colspan="10" style="border-bottom: 1px solid #000000;" height="14">At fair value as of March 31, 2010</td></tr><tr><td height="14" width="290" align="left">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">Collateral</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td></tr><tr><td height="14" width="290" align="left">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 1</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 2</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Level 3</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Netted</td><td height="14" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-bottom: 1px solid #000000;" align="center" width="65">Total</td></tr><tr><td height="14" width="290" align="left">Assets:</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="right" width="23">&#160;</td><td height="14" style="border-top: 1px solid #000000;" align="center" width="65">&#160;</td></tr><tr><td height="14" width="290" align="left">&#160;&#160;&#160;&#160;Interest rate instruments</td><td height="14" width="23" align="right">$</td><td height="14" width="65" align="right">&#160;-&#160;</td><td height="14" width="23" align="right">$</td><td height="14" width="65" align="right">&#160;5&#160;</td><td height="14" width="23" align="right">$</td><td height="14" width="65" align="right">&#160;-&#160;</td><td height="14" width="23" align="right">$</td><td height="14" width="65" align="right">&#160;-&#160;</td><td height="14" width="23" align="right">$</td><td height="14" width="65" align="right">&#160;5&#160;</td></tr><tr><td height="14" width="290" align="left">&#160;&#160;&#160;&#160;Commodity contracts subject to rate recovery</td><td height="14" width="23" align="right">&#160;</td><td height="14" width="65" align="right">&#160;3&#160;</td><td height="14" width="23" align="right">&#160;</td><td height="14" width="65" align="right">&#160;1&#160;</td><td height="14" width="23" align="right">&#160;</td><td height="14" width="65" align="right">&#160;-&#160;</td><td height="14" width="23" align="right">&#160;</td><td height="14" width="65" align="right">&#160;-&#160;</td><td height="14" width="23" align="right">&#160;</td><td height="14" width="65" align="right">&#160;4&#160;</td></tr><tr><td height="16" width="290" align="left">&#160;&#160;&#160;&#160;Commodity contracts not subject to rate recovery</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;3&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;-&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="23">&#160;</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="65">&#160;3&#160;</td></tr><tr><td height="16" width="290" align="left">Total</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="65">&#160;6&#160;</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px solid 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SEMPRA UTILITIES' REGULATORY MATTERS</p><p>POWER PROCUREMENT AND RESOURCE PLANNING</p><p>Sunrise Powerlink Electric Transmission Line<br />In December 2008, the CPUC issued a final decision authorizing SDG&amp;E to construct a 500-kilovolt (kV) electric transmission line between the Imperial Valley and the San Diego region (Sunrise Powerlink). This line is designed to provide 1,000 MW of increased import capability into the San Diego area. The decision allows SDG&amp;E to construct the Sunrise Powerlink along a route that would generally run south of the Anza-Borrego Desert State Park. The decision also approves the environmental impact review conducted jointly by the CPUC and the Bureau of Land Management (BLM) and establishes a total project cost cap of $1.9 billion, including approximately $190 million for environmental mitigation costs. In January 2009, the BLM issued its decision approving the project, route and environmental review. <br />After the issuance of the CPUC final decision, applications for rehearing before the CPUC were filed by the Utility Consumers Action Network (UCAN) and the Center for Biological Diversity/Sierra Club (CBD). The CPUC issued a final decision in July 2009 denying the requests for rehearing. UCAN and CBD jointly filed a petition with the California Supreme Court in August 2009 challenging the CPUC's decision with regard to implementation of the California Environmental Quality Act (CEQA). UCAN also filed a petition with the California Court of Appeal (Court of Appeal) challenging the decision on other legal grounds, which the Court of Appeal procedurally granted in March 2010. The UCAN/CBD appeal will be addressed by the California Supreme Court after the Court of Appeal rules on the first petition. <br />Three appeals of the BLM decision approving the segment of the route within its jurisdiction were filed by individuals, a community organization, and the Viejas Indian tribe in March 2009. A request to stay the BLM decision was also filed. The Interior Board of Land Appeals (IBLA) dismissed the appeal filed by the individuals and issued a ruling in July 2009 denying the request for a stay. In addition, the Viejas Indian tribe withdrew its appeal in July 2009. The IBLA is still reviewing the one remaining appeal. <br />The same project opponents who filed the BLM appeal also filed a lawsuit in Federal District Court in Sacramento, California, for Declaratory and Injunctive Relief regarding Sunrise Powerlink. The complaint alleges that the BLM failed to properly assess the environmental impacts of the approved Sunrise Powerlink route and the related potential development of renewable resources in east San Diego County and Imperial County. The complaint requests a declaration that the BLM violated Federal law in approving Sunrise Powerlink and an injunction against any construction activities.&#160;<br />The Sunrise Powerlink also requires approval from the United States Forest Service (USFS). SDG&amp;E expects the USFS to issue a Record of Decision (ROD) approving the segment of the route within its jurisdiction in the first half of 2010. The USFS decision is also subject to administrative and judicial review.<br />Sunrise Powerlink costs will be recovered in SDG&amp;E's Electric Transmission Formula Rate, where SDG&amp;E must demonstrate to the Federal Energy Regulatory Commission (FERC) that such costs were prudently incurred. <br />The CPUC decision requires SDG&amp;E to adhere to certain commitments it made during the application process, as follows:<br /></p><ul><li>not to contract, for any length of term, with conventional coal generators to deliver power via the Sunrise Powerlink;<br /></li><li>if any currently approved renewable energy contract that is deliverable via the Sunrise Powerlink fails, to replace it with a viable contract with a renewable generator located in the Imperial Valley region; and<br /></li><li>voluntarily raise SDG&amp;E's Renewables Portfolio Standard Program goal (discussed below under "Renewable Energy") to 33 percent by 2020.<br /></li></ul><p>SDG&amp;E commenced procurement activities for the project in 2009, but before construction can begin, additional agency permits, including the ROD, must be obtained. The total amount invested by SDG&amp;E in the Sunrise Powerlink project as of March 31, 2010 was $289 million, which is included in Property, Plant and Equipment on the Condensed Consolidated Balance Sheets of Sempra Energy and SDG&amp;E. SDG&amp;E expects the Sunrise Powerlink to be in commercial operation in 2012. <br />We provide additional information concerning Sunrise Powerlink in Note 15 of the Notes to Consolidated Financial Statements in the Annual Report.</p><p>Renewable Energy<br />Certain California electric retail sellers, including SDG&amp;E, are required to deliver 20 percent of their retail energy sales from renewable energy sources beginning in 2010. The rules governing this requirement, administered by both the CPUC and the California Energy Commission (CEC), are generally known as the Renewables Portfolio Standard (RPS) Program. In September 2009, the Governor of California issued an Executive Order which set a target for each California utility to procure 33 percent of their annual electric energy requirements from renewable energy sources starting no later than 2020. This Executive Order designates the California Air Resources Board (CARB) as the agency responsible for establishing the compliance rules and regulations.<br />In 2008, the CPUC issued a decision defining flexible compliance mechanisms that can be used to defer compliance with or meet the RPS Program mandates in 2010 and beyond. The decision established that a finding by the CPUC of insufficient transmission is a permissible reason to defer compliance with the RPS Program mandates. This decision also confirmed that any renewable energy procured in excess of the established targets for prior years, currently and in the future, could be applied to any shortfalls in the years 2010 and beyond.<br />SDG&amp;E continues to aggressively secure renewable energy supplies to achieve the RPS Program goals. A substantial number of these supply contracts, however, are contingent upon many factors, including: <br /></p><ul><li>access to electric transmission infrastructure (including SDG&amp;E's Sunrise Powerlink transmission line); <br /></li><li>timely regulatory approval of contracted renewable energy projects; <br /></li><li>the renewable energy project developers' ability to obtain project financing and permitting; and <br /></li><li>successful development and implementation of the renewable energy technologies. <br /></li></ul><p>SDG&amp;E believes it will be able to comply with the RPS Program requirements based on its contracting activity and application of the flexible compliance mechanisms. SDG&amp;E's failure to comply with the RPS Program requirements in 2010, or in any subsequent years, could subject it to a CPUC-imposed penalty of 5 cents per kilowatt hour of renewable energy under-delivery up to a maximum penalty of $25 million per year.</p><p>General Rate Case (GRC)<br />The CPUC uses a general rate case proceeding to prospectively set rates sufficient to allow the Sempra Utilities to recover their reasonable cost of operations and to provide the opportunity to realize an acceptable rate of return on their investment. The Sempra Utilities are scheduled to file their next rate case with the CPUC with a 2012 test year in the third quarter of 2010. </p><p>In November 2009, SDG&amp;E and SoCalGas, jointly with the Division of Ratepayer Advocates (DRA), a division of the CPUC representing the interests of customers, filed a petition with the CPUC to delay the filing of SDG&amp;E's and SoCalGas' next GRC applications by one year. In April 2010, the CPUC issued a decision denying the joint petition and directing SDG&amp;E and SoCalGas to follow their original GRC schedules. </p><p>Utility Incentive Mechanisms <br />The CPUC applies performance-based measures and incentive mechanisms to all California utilities, under which the Sempra Utilities have earnings potential above authorized base margins if they achieve or exceed specific performance and operating goals. <br />We provide additional information regarding these incentive mechanisms in Note 15 of the Notes to Consolidated Financial Statements in the Annual Report, and updates below.<br />Energy Efficiency <br />In December 2009, the CPUC awarded $0.3 million and $2.1 million to SDG&amp;E and SoCalGas, respectively, for their performance during the 2006 &#8211; 2008 program period, and held back 35 percent of the awards pending a final true-up in 2010. In February 2010, the Sempra Utilities filed a petition with the CPUC to correct errors in the computation of the awards. If adopted, the changes would increase the awards by $426,000 for SDG&amp;E and $1.3 million for SoCalGas, net of the 35% holdback.<br />The December 2009 decision also established a schedule for the 2010 incentive true-up. The schedule provides for the issuance of a draft verification report in second quarter 2010 and a final decision in third quarter 2010.<br />Natural Gas Procurement<br />In January 2010, the CPUC approved a Gas Cost Incentive Mechanism award of $12 million for SoCalGas&#8217; procurement activities during the 12-month period ending March 31, 2009. </p><p>Cost of Capital<br />A cost of capital proceeding determines the Sempra Utilities' authorized capital structure and the authorized rate of return that the Sempra Utilities may earn on their electric and natural gas distribution and electric generation assets.</p><p>In January 2010, the CPUC approved SDG&amp;E's and the DRA's joint petition to delay SDG&amp;E's next scheduled cost of capital application for two years. With this approval, SDG&amp;E's next cost of capital application is scheduled to be filed in April 2012 for a 2013 test year, consistent with the schedule for cost of capital applications for each of Southern California Edison (Edison) and Pacific Gas and Electric (PG&amp;E).</p><p>Advanced Metering Infrastructure </p><p>In April 2010, the CPUC issued a decision approving SoCalGas' application to upgrade approximately six million natural gas meters with an advanced metering infrastructure (AMI), subject to certain safeguards to better ensure its cost effectiveness for ratepayers. With these safeguards, the approved cost of the project is $1.05 billion (including approximately $900 million in capital investment), and SoCalGas will be subject to risk/reward sharing for costs above or below this amount. Installation of the meters is expected to begin in 2012 and continue through 2017. </p><p>2007 wildfires Cost Recovery <br />SDG&amp;E filed an application with the CPUC in March 2009 seeking to recover the incremental cost incurred to replace and repair company facilities under CPUC jurisdiction damaged by the October 2007 wildfires. This application was filed in accordance with the CPUC rules governing incremental costs incurred as a result of a declared emergency or catastrophic event. The DRA filed a protest to SDG&amp;E's request for recovery of the incremental costs, requesting that the CPUC stay the proceeding until completion of the fire investigations, which we describe in Note 10. SDG&amp;E and the DRA have reached an agreement in principle regarding the cost recovery request which, if approved by the CPUC, would result in SDG&amp;E recovering $43 million. A formal settlement agreement is being finalized, but no specific filing date has been established. <br />SDG&amp;E also incurred $30.1 million of incremental costs for the replacement and repair of company facilities under FERC jurisdiction, which are currently being recovered in SDG&amp;E's electric transmission rates.<br />We discuss recovery of 2007 wildfire litigation costs in Note 10.</p><p>INSURANCE COST RECOVERY<br />SDG&amp;E filed an application with the CPUC in August 2009 seeking authorization to recover higher liability insurance premiums and losses due to higher deductibles which SDG&amp;E began incurring on July 1, 2009. Evidentiary hearings were held in April 2010 and a final CPUC decision is expected by the end of 2010. SDG&amp;E made the filing under the CPUC&#8217;s rules allowing utilities to seek recovery of significant cost increases incurred between GRC filings resulting from unforeseen circumstances. SDG&amp;E is requesting a $29 million revenue requirement for the 2009/2010 policy period for the incremental increase in its liability and wildfire insurance premium costs above what is currently authorized in rates. The CPUC's rules allow a utility to recover costs that meet certain criteria, subject to a $5 million deductible per event. In the three months ended March 31, 2010, SDG&amp;E has expensed $8 million (pretax) of incremental insurance premiums associated with its wildfire coverage. </p></div> <div style="font-size:12pt"><p>NOTE 10. COMMITMENTS AND CONTINGENCIES<br />Legal Proceedings<br />We record loss reserves for legal proceedings when it is probable that a loss has been incurred and the amounts of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to estimate with reasonable certainty the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from reserved amounts or exceed applicable insurance coverages and could materially adversely affect our business, cash flows, results of operations, and financial condition.<br />At March 31, 2010, Sempra Energy&#8217;s reserves for legal proceedings, on a consolidated basis, were $636 million, of which $194 million is offset by an insurance receivable for wildfire litigation and $139 million is for previously resolved matters. At March 31, 2010, SDG&amp;E and SoCalGas had reserves of $322 million (including the $194 million offset) and $12 million, respectively. We provide additional information about previously resolved matters in Note 17 of the Notes to Consolidated Financial Statements in the Annual Report. </p><p>SDG&amp;E 2007 Wildfire Litigation<br />In October 2007, San Diego County experienced several catastrophic wildfires. Reports issued by the California Department of Forestry and Fire Protection (Cal Fire) concluded that two of these fires (the Witch and Rice fires) were SDG&amp;E "power line caused" and that a third fire (the Guejito fire) occurred when a wire securing a Cox Communications' fiber optic cable came into contact with an SDG&amp;E power line "causing an arc and starting the fire." Cal Fire reported that the Rice fire burned approximately 9,500 acres and damaged 206 homes and two commercial properties, and the Witch and Guejito fires merged and eventually burned approximately 198,000 acres, resulting in two fatalities, approximately 40 firefighters injured and approximately 1,141 homes destroyed.<br />A September 2008 staff report issued by the CPUC's Consumer Protection and Safety Division reached substantially the same conclusions as the Cal Fire reports, but also contended that the power lines involved in the Witch and Rice fires and the lashing wire involved in the Guejito fire were not properly designed, constructed and maintained. In November 2008, the CPUC initiated proceedings to determine if any of its rules were violated and in October 2009, SDG&amp;E and the Consumer Protection and Safety Division entered into a settlement agreement, approved by the CPUC in April 2010, that resolves these proceedings by SDG&amp;E's payment of $14.75 million. <br />Numerous parties have sued SDG&amp;E and Sempra Energy in San Diego County Superior Court seeking recovery of unspecified amounts of damages, including punitive damages, from the three fires. These include owners and insurers of properties that were destroyed or damaged in the fires and public entities seeking recovery of firefighting, emergency response, and environmental costs. They assert various bases for recovery, including inverse condemnation based upon a California Court of Appeal decision finding that another California investor-owned utility was subject to strict liability, without regard to foreseeability or negligence, for property damages resulting from a wildfire ignited by power lines. In June 2009, the trial court ruled that these claims must be pursued in individual lawsuits (rather than as class actions on behalf of all persons who incurred wildfire damages), and the plaintiffs have appealed that ruling. SDG&amp;E has filed cross-complaints against Cox Communications seeking indemnification for any liability that SDG&amp;E may incur that relates to the Guejito fire and may file additional actions against other parties relating to the Witch and Rice fires.<br />SDG&amp;E has settled substantially all of the 19,000 claims of homeowner insurers relating to the three fires, including claims for payment by the insurers to their policyholders for approximately 1,000 of the 1,300 houses, mobile homes, and apartment units identified in public records as having been destroyed. Under the settlement agreements, SDG&amp;E has paid or will pay 57.5 percent of the approximately $1.6 billion paid or reserved for payment by the insurers to their policyholders and received an assignment of the insurers&#8217; claims against Cox Communications and other parties potentially responsible for the fires. <br />The wildfire litigation also includes claims of non-insurer plaintiffs for damage to uninsured and underinsured structures, business interruption, evacuation expenses, agricultural damage, emotional harm, personal injuries and other losses. SDG&amp;E has settled the claims of approximately 330 of these plaintiffs. <br />Of the approximately 2,100 remaining plaintiffs in the wildfire litigation, approximately 600 have thus far submitted settlement demands and damage estimates. Individual and business claims total approximately $460 million and government entity claims total approximately $165 million. SDG&amp;E expects to receive additional settlement demands and damage estimates as settlement negotiations continue.<br />SDG&amp;E has established reserves for its estimated cost of resolving the claims for economic damages of 800 plaintiffs. SDG&amp;E does not currently have sufficient information to reasonably estimate the costs of resolving the claims of the other plaintiffs. SDG&amp;E expects that its wildfire reserves and amounts paid to resolve wildfire claims will continue to increase as it obtains additional information. SDG&amp;E is also unable to reasonably estimate the amount or timing of recoveries from other potentially responsible parties both in respect of the amounts that it has already expended to settle claims and amounts that it may expend in the future.<br />SDG&amp;E has concluded that it is probable that it will be permitted to recover from its utility customers substantially all reasonably incurred costs of resolving wildfire claims in excess of its $1.1 billion of liability insurance coverage and any amounts recovered from other potentially responsible parties. Accordingly, although recovery from utility customers will require future regulatory actions as we discuss in Note 9, SDG&amp;E has recorded a regulatory asset in an amount substantially equal to the aggregate amount it has paid or reserved for payment for the resolution of wildfire claims and related costs in excess of its liability insurance coverage. SDG&amp;E will increase the amount of the regulatory asset as additional amounts are paid or reserves are recorded and reduce it by any amounts recovered from other potentially responsible parties. As of March 31, 2010, the amount of the regulatory asset was $107 million.<br />Consequently, Sempra Energy and SDG&amp;E expect no significant earnings impact from the resolution of the remaining wildfire claims. However, SDG&amp;E&#8217;s cash flow will be adversely affected by timing differences between the resolution of claims and recoveries from other potentially responsible parties and utility customers, which may extend over a number of years. Also, recovery from customers will require future regulatory actions, and a failure to obtain recovery, or any negative assessment of the likelihood of recovery, would likely have a material adverse effect on Sempra Energy's and SDG&amp;E's cash flows and results of operations.<br />SDG&amp;E will continue to gather information to evaluate and assess the remaining wildfire claims and the likelihood, amount and timing of related recoveries from other potentially responsible parties and utility customers and will make appropriate adjustments to wildfire reserves and the related regulatory asset as additional information becomes available.</p><p>Energy Crisis Litigation <br />Sempra Energy, RBS Sempra Commodities and Sempra Generation have reached an agreement in principle for a comprehensive settlement to resolve substantially all of the energy crisis litigation described below for a total payment of $410 million. The matters to be resolved by the settlement would include the multiple actions brought by the DWR and other parties with respect to the validity, pricing and operation of Sempra Generation&#8217;s contract with the DWR and the FERC refund and manipulation proceedings against RBS Sempra Commodities. Any settlement agreements would be subject to the approval of the FERC.<br />We describe the matters to be resolved below under "DWR Contract," "FERC Refund Proceedings," and "FERC Manipulation Investigation." We expect the settlement of $410 million to be funded largely from previously recorded reserves and receivables at RBS Sempra Commodities. Sempra Energy has also recorded an additional pretax charge of $159 million in the first quarter of 2010 to provide for the remainder of the settlement, including $139 million at Sempra Generation and $20 million at Sempra Commodities.</p><p>DWR Contract<br />In February 2002, the California Energy Oversight Board (CEOB) and the CPUC filed challenges at the FERC to the DWR's contracts with Sempra Generation and other power suppliers. After the FERC upheld the contracts in 2003, the CEOB and CPUC appealed to the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit Court of Appeals) and challenged the FERC's application of the Mobile-Sierra doctrine's "public interest" standard of review to the contracts. In June 2008, the United States Supreme Court (Supreme Court) ruled that the FERC was correct to apply the Mobile-Sierra doctrine (which presumes that contract rates are just and reasonable) absent a demonstration that one of the contracting parties engaged in unlawful market manipulation that directly affected contract rates. The Supreme Court ruled that the FERC should clarify its findings on this issue and consider whether the contract rates seriously harm the public interest. The FERC has not yet acted.<br />At various times since the contract's inception, Sempra Generation and the DWR have also had disputes regarding the meaning of terms and performance of the agreement under which Sempra Generation sells electricity to the DWR. In 2002, in a state civil action, the DWR sought to terminate its contract with Sempra Generation claiming misrepresentation and breach of contract, and seeking rescission, damages, injunctive and declaratory relief, and $100 million in punitive damages. After various procedural decisions and appeals, on November 30, 2009, a San Diego jury returned a verdict denying all of the DWR's claims and requested relief, and granting all of Sempra Generation's requested relief. The DWR has appealed the judgment.<br />In September 2008, the DWR initiated an arbitration proceeding against Sempra Generation, alleging that Sempra Generation had breached the parties' agreement in various operational respects, and violated the order issued by an earlier arbitration panel relating to the amount refunded to the DWR and the manner in which Sempra Generation operates. The DWR seeks approximately $80 million in damages and an order terminating the contract. Arbitration hearings are scheduled for January 2011.</p><p>FERC Refund Proceedings<br />The FERC is investigating prices charged by various electric suppliers to buyers in the California Power Exchange (PX) and Independent System Operator (ISO) markets. In March 2003, the FERC ordered suppliers to pay refunds on certain sales made during the October 2, 2000 through June 20, 2001 time period. <br />Various parties, including Sempra Commodities, appealed the FERC's order to the Ninth Circuit Court of Appeals. In August 2006, the Ninth Circuit Court of Appeals held that the FERC had properly established October 2, 2000 through June 20, 2001 as the refund period and had properly excluded certain short-term bilateral transactions between sellers and the DWR from the refund proceedings. However, the court also held that the FERC erred in excluding certain multi-day transactions from the refund proceedings. Finally, while the court upheld the FERC's decision not to extend the refund proceedings to the summer period (prior to October 2, 2000), it found that the FERC should have considered other remedies for tariff violations that are alleged to have occurred prior to October 2, 2000. The FERC is in the process of addressing these issues on remand.<br />In August 2007, the Ninth Circuit Court of Appeals issued a decision reversing and remanding FERC orders declining to provide refunds in a related proceeding regarding short-term bilateral sales up to one month in the Pacific Northwest. The court found that some of the short-term sales between the DWR and various sellers (including Sempra Commodities) that had previously been excluded from the refund proceeding involving sales in the ISO and PX markets in California were within the scope of the Pacific Northwest refund proceeding. The FERC has not yet acted on the court's order.<br />In a separate complaint filed with the FERC in 2002, the California Attorney General contended that electricity sellers had failed to comply with the FERC's quarterly reporting requirements. The Attorney General requested that the FERC order refunds from suppliers. The FERC dismissed the complaint and instead ordered sellers to restate their reports. After an appeal by the California Attorney General, the Ninth Circuit Court of Appeals stated that failure to file transaction-specific quarterly reports gave the FERC authority to order refunds with respect to jurisdictional sellers. The FERC is in the process of addressing these issues on remand.<br />In May 2009, the California Attorney General filed another complaint at the FERC against various sellers, including Sempra Commodities. In this complaint, the Attorney General seeks to collect for alleged overcharges related to short-term bilateral transactions between sellers and the DWR from January 18, 2001 through June 20, 2001. These transactions also have been the subject of the Ninth Circuit Court of Appeals' orders in the proceedings described above. The FERC has not yet acted on the complaint.<br />In the cases described above, the FERC could order additional refunds or the disgorgement of profits. RBS Sempra Commodities has reserves for its estimate of the effect of the FERC's revision of the benchmark prices it will use to calculate refunds and other related developments. Pursuant to the agreements related to the formation of RBS Sempra Commodities, we have indemnified RBS related to these proceedings should the liability from the final resolution be greater than the reserves.</p><p>FERC Manipulation Investigation<br />The FERC has separately investigated whether there was manipulation of short-term energy markets in the western United States that would constitute violations of applicable tariffs and warrant disgorgement of associated profits. <br />In June 2003, the FERC ordered a number of entities, including Sempra Commodities, to show why they should not disgorge profits from certain transactions between January 1, 2000 and June 20, 2001 that are asserted to have constituted gaming and/or anomalous market behavior under the California ISO and/or PX tariffs. In October 2003, Sempra Commodities agreed to pay $7.2 million in full resolution of these investigations. That liability was recorded as of December 31, 2003. The Sempra Commodities settlement was approved by the FERC in August 2004 and reaffirmed in November 2008. The California parties have appealed the FERC's orders to the Ninth Circuit Court of Appeals.</p><p>Other Litigation<br />Sempra Energy and several subsidiaries, along with three oil and natural gas companies, the City of Beverly Hills, and the Beverly Hills Unified School District, are defendants in a toxic tort lawsuit filed in Los Angeles County Superior Court by approximately 1,000 plaintiffs. This lawsuit claims that various emissions resulted in cancer or fear of cancer. We have submitted the case to our insurers, who have reserved their rights with respect to coverage. In November 2006, the court granted the defendants' summary judgment motions based on lack of medical causation for the 12 initial plaintiffs scheduled to go to trial first. The court also granted summary judgment excluding punitive damages. The court has stayed the case as to the remaining plaintiffs pending the appeal of the rulings.<br />RBS Sempra Commodities assumed litigation reserves related to Sempra Commodities, however, we have indemnified RBS should the liabilities from the final resolution of these matters be greater than the reserves. <br />We are also defendants in ordinary routine litigation incidental to our businesses, including personal injury, product liability, property damage and other claims. California juries have demonstrated an increasing willingness to grant large awards, including punitive damages, in these cases.</p><p>Wildfire Reserves and Insurance Receivables<br />In 2009 and 2010, as liabilities for wildfire litigation have become reasonably estimable, SDG&amp;E has recorded related reserves as a current liability. The impact of this liability is offset by a current receivable resulting from SDG&amp;E&#8217;s $1.1 billion of liability insurance and, for reserves in excess of the insurance coverage, the recognition of a regulatory asset, as discussed above. There was no effect on SDG&amp;E's or Sempra Energy's 2009 earnings and no significant effect on their 2010 earnings from the recording of the reserves. At March 31, 2010, wildfire litigation reserves were $300 million and the receivable from SDG&amp;E's insurers was $194 million. </p><p>Nuclear Insurance<br />SDG&amp;E and the other owners of San Onofre Nuclear Generating Station (SONGS) have insurance to cover claims from nuclear liability incidents arising at SONGS. This insurance provides $375 million in coverage limits, the maximum amount available, including coverage for acts of terrorism. In addition, the Price-Anderson Act provides for up to $12.2 billion of secondary financial protection (SFP). If a nuclear liability loss occurring at any U.S. licensed/commercial reactor exceeds the $375 million insurance limit, all nuclear reactor owners could be required to contribute to the SFP. SDG&amp;E's contribution would be up to $47 million. This amount is subject to an annual maximum of $7 million, unless a default occurs by any other SONGS owner. If the SFP is insufficient to cover the liability loss, SDG&amp;E could be subject to an additional assessment.<br />The SONGS owners, including SDG&amp;E, also have $2.75 billion of nuclear property, decontamination, and debris removal insurance. In addition, the SONGS owners have up to $490 million insurance coverage for outage expenses and replacement power costs due to accidental property damage. This coverage is limited to $3.5 million per week for the first 52 weeks, then $2.8 million per week for up to 110 additional weeks. There is a 12-week waiting period deductible. These insurance coverages are provided through a mutual insurance company. Insured members are subject to retrospective premium assessments. SDG&amp;E could be assessed up to $8.5 million.<br />The nuclear property insurance program includes an industry aggregate loss limit for non-certified acts of terrorism (as defined by the Terrorism Risk Insurance Act). The industry aggregate loss limit for property claims arising from non-certified acts of terrorism is $3.24 billion. This is the maximum amount that will be paid to insured members who suffer losses or damages from these non-certified terrorist acts.</p><p>CONTRACTUAL COMMITMENTS<br />Sempra Energy Consolidated<br />In the first quarter of 2010, significant increases in commitments at Sempra Energy were<br /></p><ul><li>$258 million for purchased-power contracts at SDG&amp;E;<br /></li><li>$46 million at SDG&amp;E for the engineering, material procurement and construction costs associated with the Sunrise Powerlink project;<br /></li><li>$24 million at Sempra Pipelines &amp; Storage for natural gas contracts; and<br /></li><li>$18 million for construction and infrastructure improvements for gas transmission and distribution operations at SoCalGas.<br /></li></ul><p>The future payments for the contractual commitments listed above are expected to be $72 million for 2010, $52 million for 2011, $43 million for 2012, $36 million for 2013, $36 million for 2014 and $107 million thereafter. <br />Reserves for Sempra Energy and SDG&amp;E wildfire litigation are discussed above in &#8220;SDG&amp;E 2007 Wildfire Litigation.&#8221; Reserves for Sempra Energy related to the FERC and DWR contract settlement litigation are discussed above in &#8220;Energy Crisis Litigation.&#8221; <br />Changes to SoCalGas&#8217; natural gas purchase and pipeline capacity commitments and Sempra LNG&#8217;s natural gas purchase commitments are discussed below.<br />SDG&amp;E<br />In the first quarter of 2010, significant increases to contractual commitments at SDG&amp;E were $258 million for purchased-power contracts and $46 million for the engineering, material procurement and construction costs associated with the Sunrise Powerlink project.<br />The future payments for these contractual commitments are expected to be $36 million for 2010, $46 million for 2011, $43 million for 2012, $36 million for 2013, $36 million for 2014 and $107 million thereafter. <br />SoCalGas<br />In the first quarter of 2010, significant increases to contractual commitments at SoCalGas were $18 million for construction and infrastructure improvements for gas transmission and distribution operations. <br />The future payments for these contractual commitments are expected to be $12 million for 2010 and $6 million for 2011. <br />SoCalGas&#8217; natural gas purchase and pipeline capacity commitments have decreased by $480 million since December 31, 2009. The decrease was primarily due to a reduction of $627 million based on lower natural gas forward prices, offset by new natural gas purchase and pipeline capacity contracts of $147 million. Net future payments are therefore expected to decrease by $462 million for 2010 and $18 million for 2011. <br />LNG<br />In the first quarter of 2010, Sempra LNG&#8217;s commitments under the purchase agreements with Tangguh PSC Contractors and Ras Laffan Liquefied Natural Gas Company Limited decreased by $515 million and $378 million based on lower natural gas forward prices, respectively, since December 31, 2009. We discuss these agreements further in Note 17 of the Notes to Consolidated Financial Statements in the Annual Report. <br />The future payments under these agreements are expected to decrease by $714 million for 2010, $160 million for 2011, $117 million for 2012, $90 million for 2013, $65 million for 2014 and increase by $253 million thereafter.</p></div> <div style="font-size:12pt"><p>NOTE 11. SEGMENT INFORMATION<br />We have six separately managed reportable segments, as follows: <br /></p><ul><li>SDG&amp;E provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County.<br /></li></ul><p><br /></p><ul><li>SoCalGas is a natural gas distribution utility, serving customers throughout most of Southern California and part of central California.<br /></li></ul><p><br /></p><ul><li>Sempra Commodities holds our investment in RBS Sempra Commodities, a joint venture with RBS. The partnership was formed from our commodities-marketing businesses previously reported in this segment. The partnership's commodity trading businesses serve customers in natural gas, electricity, petroleum and petroleum products, and base metals. Sempra Commodities also includes the operating results of Sempra Rockies Marketing, which holds firm service capacity on the Rockies Express Pipeline. <br /></li></ul><p>On February 16, 2010, Sempra Energy, RBS and the partnership entered into an agreement to sell certain businesses within the partnership. We discuss this transaction and related agreements affecting the partnership in Note 4 above and in Notes 4 and 20 of the Notes to Consolidated Financial Statements in the Annual Report.<br /><br /></p><ul><li>Sempra Generation develops, owns and operates, or holds interests in, electric power plants and energy projects in Arizona, California, Nevada, Indiana, Hawaii and Mexico to serve wholesale electricity markets in the United States and Mexico.<br /></li></ul><p><br /></p><ul><li>Sempra Pipelines &amp; Storage develops, owns and operates, or holds interests in, natural gas pipelines and storage facilities in the United States and Mexico, and companies that provide natural gas or electricity services in Argentina, Chile, Mexico and Peru. We are currently pursuing the sale of our interests in the Argentine utilities, which we discuss further in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. Sempra Pipelines &amp; Storage also operates a small natural gas distribution utility in Southwest Alabama.<br /></li></ul><p><br /></p><ul><li>Sempra LNG develops, owns and operates receipt terminals for importing LNG, and has supply and marketing agreements to purchase LNG and sell natural gas. <br /></li></ul><p><br />We evaluate each segment's performance based on its contribution to Sempra Energy's reported earnings. The Sempra Utilities operate in essentially separate service territories, under separate regulatory frameworks and rate structures set by the CPUC. The Sempra Utilities' operations are based on rates set by the CPUC and the FERC. We describe the accounting policies of our segments in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.<br />In the first quarter of 2010, Sempra LNG became a reportable segment. We have revised segment disclosures for 2009 to reflect this.<br />The following tables show selected information by segment from our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets. <br />Amounts labeled as "all other" in the following tables consist primarily of parent organizations.</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="19" style="border-top: 1px solid #000000;" align="left" width="355"><b>SEGMENT INFORMATION</b></td><td height="19" style="border-top: 1px solid #000000;" align="left" width="23"><b>&#160;</b></td><td height="19" style="border-top: 1px solid #000000;" align="left" width="61"><b>&#160;</b></td><td height="19" style="border-top: 1px solid #000000;" align="left" width="47"><b>&#160;</b></td><td height="19" style="border-top: 1px solid #000000;" align="center" width="23"><b>&#160;</b></td><td height="19" style="border-top: 1px solid #000000;" align="left" width="23"><b>&#160;</b></td><td height="19" style="border-top: 1px solid #000000;" align="left" width="61"><b>&#160;</b></td><td height="19" style="border-top: 1px solid #000000;" align="left" width="47"><b>&#160;</b></td><td height="19" style="border-top: 1px solid #000000;" align="center" width="23"><b>&#160;</b></td></tr><tr><td height="19" width="355" align="left"><i>(Dollars in millions)</i></td><td height="19" width="23" align="left"><i>&#160;</i></td><td height="19" width="61" align="left"><i>&#160;</i></td><td height="19" width="47" align="left"><i>&#160;</i></td><td height="19" width="23" align="center"><i>&#160;</i></td><td height="19" width="23" align="left"><i>&#160;</i></td><td height="19" width="61" align="left"><i>&#160;</i></td><td height="19" width="47" align="left"><i>&#160;</i></td><td height="19" width="23" align="center"><i>&#160;</i></td></tr><tr><td height="14" width="355" align="left"><b>&#160;</b></td><td width="308" align="center" colspan="8" style="border-bottom: 1px solid #000000;" 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align="left">&#160;&#160;Sempra Pipelines &amp; Storage</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;9&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;7&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;Sempra LNG</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;12&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;2&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;All other</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;87&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;59&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;Intercompany eliminations</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="61">&#160;(52)</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="47">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="61">&#160;(35)</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="47">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="23">&#160;</td></tr><tr><td height="18" style="border-bottom: 3px solid #000000;" align="left" width="355">&#160;&#160;&#160;&#160;&#160;&#160;Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="61">&#160;109&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="center" width="23">&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="61">&#160;82&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="center" width="23">&#160;</td></tr><tr><td height="18" style="border-top: 3px solid #000000;" align="left" width="355">INTEREST INCOME</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="center" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="center" width="23">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;SoCalGas</td><td height="17" width="23" align="right">$</td><td height="17" width="61" align="right">&#160;-&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">$</td><td height="17" width="61" align="right">&#160;1&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;Sempra Generation</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;2&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;3&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;Sempra Pipelines &amp; Storage</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;4&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;4&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;All other</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;50&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;33&#160;</td><td height="17" width="47" align="left">&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;Intercompany eliminations</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="61">&#160;(52)</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="47">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="61">&#160;(35)</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="47">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="23">&#160;</td></tr><tr><td height="18" style="border-bottom: 3px solid #000000;" align="left" width="355">&#160;&#160;&#160;&#160;&#160;&#160;Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="61">&#160;4&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="center" width="23">&#160;</td><td height="18" style="border-top: 1px solid 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align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="center" width="23">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;SDG&amp;E</td><td height="17" width="23" align="right">$</td><td height="17" width="61" align="right">&#160;92&#160;</td><td height="17" width="47" align="right">&#160;44&#160;</td><td height="17" width="23" align="center">%</td><td height="17" width="23" align="right">$</td><td height="17" width="61" align="right">&#160;77&#160;</td><td height="17" width="47" align="right">&#160;42&#160;</td><td height="17" width="23" align="center">%</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;SoCalGas</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;75&#160;</td><td height="17" width="47" align="right">&#160;36&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;72&#160;</td><td height="17" width="47" align="right">&#160;39&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;Sempra Generation</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;15&#160;</td><td height="17" width="47" align="right">&#160;7&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;14&#160;</td><td height="17" width="47" align="right">&#160;8&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;Sempra Pipelines &amp; Storage</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;11&#160;</td><td height="17" width="47" align="right">&#160;5&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;10&#160;</td><td height="17" width="47" align="right">&#160;6&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;Sempra LNG</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;12&#160;</td><td height="17" width="47" align="right">&#160;6&#160;</td><td height="17" width="23" align="center">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;6&#160;</td><td height="17" width="47" align="right">&#160;3&#160;</td><td height="17" width="23" align="center">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;All other</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="61">&#160;5&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="47">&#160;2&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="23">&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="61">&#160;4&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="47">&#160;2&#160;</td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="23">&#160;</td></tr><tr><td height="18" style="border-bottom: 3px solid #000000;" align="left" width="355">&#160;&#160;&#160;&#160;&#160;&#160;Total</td><td height="18" 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solid #000000;" align="right" width="23">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="right" width="61">&#160;160&#160;</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="47">&#160;</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 3px solid #000000;" align="left" width="23">&#160;</td></tr><tr><td height="18" width="355" align="left">&#160;Earnings recorded net of tax:</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="23">&#160;</td></tr><tr><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="355">&#160;&#160;&#160;Sempra Pipelines &amp; Storage</td><td height="17" style="border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="17" style="border-bottom: 3px solid #000000;" align="right" width="61">&#160;19&#160;</td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="47">&#160;</td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="23">&#160;</td><td height="17" style="border-bottom: 3px solid #000000;" align="right" width="23">$</td><td height="17" style="border-bottom: 3px solid #000000;" align="right" width="61">&#160;16&#160;</td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="47">&#160;</td><td height="17" style="border-bottom: 3px solid #000000;" align="left" width="23">&#160;</td></tr><tr><td height="18" style="border-top: 3px solid #000000;" align="left" width="355">EARNINGS (LOSSES)</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="right" width="23">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="61">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" width="47">&#160;</td><td height="18" style="border-top: 3px solid #000000;" align="left" 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align="right">&#160;43&#160;</td><td height="17" width="47" align="right">&#160;13&#160;</td><td height="17" width="23" align="left">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;&#160;Sempra Pipelines &amp; Storage</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;38&#160;</td><td height="17" width="47" align="right">&#160;36&#160;</td><td height="17" width="23" align="left">&#160;</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;37&#160;</td><td height="17" width="47" align="right">&#160;12&#160;</td><td height="17" width="23" align="left">&#160;</td></tr><tr><td height="17" width="355" align="left">&#160;&#160;&#160;Sempra LNG</td><td height="17" width="23" align="right">&#160;</td><td height="17" width="61" align="right">&#160;32&#160;</td><td height="17" width="47" align="right">&#160;30&#160;</td><td height="17" width="23" 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width="47"><i>&#160;</i></td><td height="15" style="border-top: 3px solid #000000;" align="left" width="23"><i>&#160;</i></td><td height="15" style="border-top: 3px solid #000000;" align="left" width="23"><i>&#160;</i></td><td height="15" style="border-top: 3px solid #000000;" align="left" width="61"><i>&#160;</i></td><td height="15" style="border-top: 3px solid #000000;" align="left" width="47"><i>&#160;</i></td><td height="15" style="border-top: 3px solid #000000;" align="left" width="23"><i>&#160;</i></td></tr></table></div>