2.2.0.7 false COMMITMENTS AND CONTINGENCIES 011000 - Disclosure - COMMITMENTS AND CONTINGENCIES true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Notes to Condensed Consolidated Financial Statements 0 sre_NotesToConsolidatedFinancialStatementsAbstract sre false na duration No definition available. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string No definition available. false 3 Commitments and Contingencies 1 us-gaap_CommitmentsAndContingenciesDisclosureTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false false 1 false false false false 0 0 NOTE 10. COMMITMENTS AND CONTINGENCIESLEGAL PROCEEDINGSWe 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, may exceed applicable insurance coverages and could materially adversely affect our business, cash flows, results of operations, and financial condition.At June 30, 2010, Sempra Energy's reserves for material legal proceedings, on a consolidated basis, were $527 million, of which $150 million is offset by an insurance receivable for wildfire litigation and $117 million is for previously resolved matters. At June 30, 2010, these reserves for SDG&E and SoCalGas were $242 million (also offset by the $150 million insurance receivable) and $13 million, respectively. We provide additional information about previously resolved matters in Note 17 of the Notes to Consolidated Financial Statements in the Annual Report. SDG&E 2007 Wildfire LitigationIn 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&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&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.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&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&E's payment of $14.75 million. Numerous parties have sued SDG&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&E has filed cross-complaints against Cox Communications seeking indemnification for any liability that SDG&E may incur that relates to the Guejito fire, as well as cross-complaints against two SDG&E contractors seeking indemnification in connection with the Witch fire. The court has scheduled a Guejito fire trial for three individual plaintiffs and Cal Fire to begin in March 2011.SDG&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&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' claims against Cox Communications and other parties potentially responsible for the fires. 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&E has settled the claims of approximately 350 of these plaintiffs. Of the approximately 2,100 remaining plaintiffs, approximately 1,050 have thus far submitted settlement demands or damage information. Individual and business claims total approximately $570 million and government entity claims total approximately $170 million. SDG&E expects to receive additional settlement demands and damage estimates as settlement negotiations continue.SDG&E has established reserves for its estimated cost of resolving the claims for economic damages of approximately 1,300 plaintiffs. It expects that its wildfire reserves and amounts paid to resolve wildfire claims will continue to increase as it obtains additional information. SDG&E is unable to reasonably estimate the amount or timing of recoveries from other potentially responsible parties.SDG&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&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&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 June 30, 2010, the amount of the regulatory asset was $191 million.Consequently, Sempra Energy and SDG&E expect no significant earnings impact from the resolution of the remaining wildfire claims. However, SDG&E'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&E's cash flows and results of operations.SDG&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.Sempra LNG Sempra LNG has been engaged in a long-running land dispute relating to property adjacent to its Energía Costa Azul LNG terminal near Ensenada, Mexico. The adjacent property is not required by environmental or other regulatory permits for the operation of the terminal. A claimant to the adjacent property has nonetheless asserted that his health and safety are endangered by the operation of the facility. In June 2010, a Mexican federal appeals court revoked a district court order, issued at the behest of the claimant, directing Mexican regulatory authorities to provisionally suspend authorizations for the operation of the LNG terminal. No terminal permits were affected as a result of these proceedings and the terminal has continued to operate normally. The Mexican district court is expected to conduct additional proceedings regarding the claimant's assertions and whether the terminal's permits should be modified or revoked. The property claimant has also filed a lawsuit in U.S. district court in San Diego seeking compensatory and punitive damages and earnings from the Energía Costa Azul LNG terminal based on his allegations that he was wrongfully evicted from the adjacent property and that he has been harmed by other allegedly improper actions. Energy Crisis Litigation 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 California Department of Water Resources (DWR) and other parties with respect to the validity, pricing and operation of Sempra Generation'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.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.DWR ContractIn 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.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.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.FERC Refund ProceedingsThe 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. 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.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.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.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.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.FERC Manipulation InvestigationThe 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. 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.Other LitigationSempra 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. A mediation occurred in June 2010, after which the plaintiffs' counsel agreed to recommend a settlement of the lawsuits as to Sempra Energy and its subsidiaries for an amount that is not significant. Any such settlement will require approval by each of the plaintiffs. If approval is obtained, finalization of the settlement is expected to occur within six months.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. 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.Wildfire Reserves and Insurance ReceivablesIn 2009 and 2010, as liabilities for wildfire litigation have become reasonably estimable, SDG&E has recorded related reserves as a current liability. The impact of this liability is offset by a current receivable resulting from SDG&E'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&E's or Sempra Energy's 2009 earnings and no significant effect on their 2010 earnings from the recording of the reserves. At June 30, 2010, wildfire litigation reserves were $241 million and the receivable from SDG&E's insurers was $150 million. NUCLEAR INSURANCESDG&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&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&E could be subject to an additional assessment.The SONGS owners, including SDG&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&E could be assessed up to $8.5 million.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.CONTRACTUAL COMMITMENTSSempra Energy ConsolidatedIn the first six months of 2010, significant increases in commitments at Sempra Energy were<ul><li style="margin-left:9.35px;list-style:square;">the issuance of $250 million of 5.35-percent mortgage bonds maturing in 2040 at SDG&E;</li><li style="margin-left:9.35px;list-style:square;">$431 million for purchased-power contracts at SDG&E;</li><li style="margin-left:9.35px;list-style:square;">$223 million for the costs associated with nuclear fuel fabrication at SONGS;</li><li style="margin-left:9.35px;list-style:square;">$78 million at SDG&E for the engineering, material procurement and construction costs associated with the Sunrise Powerlink project;</li><li style="margin-left:9.35px;list-style:square;">$45 million for construction and infrastructure improvements for gas transmission and distribution operations at SoCalGas; and</li></ul><ul><li style="margin-left:9.35px;list-style:square;">$38 million at Sempra Pipelines & Storage for natural gas contracts.</li></ul>The future payments for the contractual commitments listed above are expected to be $166 million for 2010, $114 million for 2011, $89 million for 2012, $83 million for 2013, $69 million for 2014 and $945 million thereafter. These amounts include expected interest payments on the mortgage bonds using the stated interest rate. Reserves for Sempra Energy and SDG&E wildfire litigation are discussed above in "SDG&E 2007 Wildfire Litigation." Reserves for Sempra Energy related to the FERC and DWR contract settlement litigation are discussed above in "Energy Crisis Litigation." Changes to SoCalGas' natural gas purchase and pipeline capacity commitments and Sempra LNG's natural gas purchase commitments are discussed below.At December 31, 2009, Sempra LNG had LNG purchase agreements with Tangguh PSC Contractors and Ras Laffan Liquefied Natural Gas Company. We discuss these agreements further in Note 17 of the Notes to Consolidated Financial Statements in the Annual Report. In April 2010, Sempra LNG entered into an LNG supply option agreement with Gazprom Global LNG Limited (GGLNG), a subsidiary of OAO Gazprom. The multi-year agreement, which commenced in June 2010, will allow GGLNG to deliver and sell up to two LNG cargoes per month to Sempra LNG at its Cameron receipt terminal. GGLNG pays Sempra LNG a fee for the right to deliver and sell the LNG cargoes using a predetermined pricing formula based on a market index.Sempra LNG's commitments under all LNG purchase agreements, reflecting the additional recent agreement with GGLNG, changes in forward prices since December 31, 2009, and actual transactions for the first six months of 2010, are expected to decrease by $854 million in 2010, increase by $212 million in 2011, $268 million in 2012 and $43 million in 2013, and decrease by $137 million in 2014 and $474 million thereafter compared to December 31, 2009.The LNG commitment amounts above are based on Sempra LNG's commitment to accept the maximum possible delivery of cargoes under the agreements. Actual LNG purchases for the six months ended June 30, 2010 have been significantly lower than the maximum amounts possible.SDG&EIn the first six months of 2010, significant increases to contractual commitments at SDG&E were the issuance of $250 million of 5.35-percent mortgage bonds maturing in 2040, $431 million for purchased-power contracts, $223 million for the costs associated with nuclear fuel fabrication at SONGS and $78 million for the engineering, material procurement and construction costs associated with the Sunrise Powerlink project.The future payments for these contractual commitments are expected to be $96 million for 2010, $101 million for 2011, $89 million for 2012, $83 million for 2013, $69 million for 2014 and $945 million thereafter. These amounts include expected interest payments on the mortgage bonds using the stated interest rate. SoCalGasIn the first six months of 2010, significant increases to contractual commitments at SoCalGas were $45 million for construction and infrastructure improvements for gas transmission and distribution operations. The future payments for these contractual commitments are expected to be $32 million for 2010 and $13 million for 2011. SoCalGas' natural gas purchase and pipeline capacity commitments have decreased by $516 million since December 31, 2009. The decrease, primarily due to a reduction of $816 million based on lower natural gas forward prices and actual transactions for the first six months of 2010, is offset by new natural gas purchase and pipeline capacity contracts of $300 million. Net future payments are therefore expected to decrease by $617 million for 2010 and increase by $64 million for 2011, $12 million for 2012, $11 million for 2013, $10 million for 2014 and $4 million thereafter compared to December 31, 2009. CAPITAL LEASESSDG&E has two power purchase agreements with peaker plant facilities that went into commercial operation in June 2010 and are accounted for as capital leases. As of June 30, 2010, capital lease obligations for these leases, both with a 25-year term, were $183 million. At June 30, 2010, the future minimum lease payments and present value of the net minimum lease payments under capital leases for both Sempra Energy Consolidated and SDG&E were as follows:<div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 16px"><td colspan="2" style="width: 360px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:360px;">(Dollars in millions)</td><td colspan="2" style="width: 83px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:83px;"> </td></tr><tr style="height: 16px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; border-color:#000000;min-width:327px;">2010</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">$</td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 12</td></tr><tr style="height: 16px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; border-color:#000000;min-width:327px;">2011</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 24</td></tr><tr style="height: 16px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; border-color:#000000;min-width:327px;">2012</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 24</td></tr><tr style="height: 16px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; border-color:#000000;min-width:327px;">2013</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 24</td></tr><tr style="height: 16px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; border-color:#000000;min-width:327px;">2014</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 24</td></tr><tr style="height: 16px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; text-align:left;border-color:#000000;min-width:327px;">Thereafter</td><td style="width: 19px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:19px;"> </td><td style="width: 64px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:64px;"> 489</td></tr><tr style="height: 16px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; text-align:left;border-color:#000000;min-width:327px;">Total minimum lease payments(1)</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 597</td></tr><tr style="height: 20px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; text-align:left;border-color:#000000;min-width:327px;">Less: estimated executory costs</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> (98)</td></tr><tr style="height: 20px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; text-align:left;border-color:#000000;min-width:327px;">Less: interest(2)</td><td style="width: 19px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:19px;"> </td><td style="width: 64px; border-bottom-style:solid;border-bottom-width:1px;border-color:#000000;min-width:64px;"> (316)</td></tr><tr style="height: 21px"><td style="width: 33px; border-bottom-style:solid;border-bottom-width:2px;text-align:center;border-color:#000000;min-width:33px;"> </td><td style="width: 327px; border-bottom-style:solid;border-bottom-width:2px;text-align:left;border-color:#000000;min-width:327px;">Present value of net minimum lease payments(3) </td><td style="width: 19px; border-bottom-style:solid;border-bottom-width:2px;text-align:left;border-color:#000000;min-width:19px;">$</td><td style="width: 64px; border-bottom-style:solid;border-bottom-width:2px;border-color:#000000;min-width:64px;"> 183</td></tr><tr style="height: 21px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;">(1)</td><td colspan="3" style="width: 410px; border-top-style:solid;border-top-width:2px;text-align:left;border-color:#000000;min-width:410px;">This amount will be recorded over the lives of the leases as Cost of Electric Fuel and Purchased Power on Sempra Energy's and SDG&E's Condensed Consolidated Statements of Operations. This expense will receive ratemaking treatment consistent with purchased-power costs.</td></tr><tr style="height: 21px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;">(2)</td><td colspan="3" style="width: 410px; text-align:left;border-color:#000000;min-width:410px;">Amount necessary to reduce net minimum lease payments to present value at the inception of the leases. </td></tr><tr style="height: 20px"><td style="width: 33px; text-align:center;border-color:#000000;min-width:33px;">(3)</td><td colspan="3" style="width: 410px; text-align:left;border-color:#000000;min-width:410px;">Includes $7 million in Current Portion of Long-term Debt and $176 million in Long-term Debt on Sempra Energy's and SDG&E's Condensed Consolidated Balance Sheets at June 30, 2010.</td></tr></table></div> NOTE 10. 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