2.2.0.7 false INVESTMENTS IN UNCONSOLIDATED ENTITIES 010400 - Disclosure - INVESTMENTS IN UNCONSOLIDATED ENTITIES 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 Investments in Unconsolidated Entities 1 us-gaap_EquityMethodInvestmentsDisclosureTextBlock 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 4. INVESTMENTS IN UNCONSOLIDATED ENTITIESSEMPRA ENERGY AND SDG&EAvailable-for-Sale SecuritiesIn June 2009, SDG&E remarketed $176 million of its industrial development bonds at a fixed rate of 5.875 percent, maturing in 2034. Prior to SDG&E's remarketing, SDG&E purchased $152 million of the bonds from Sempra Energy. We discuss these bonds further in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.SEMPRA COMMODITIESRBS 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. For the three months and six months ended June 30, 2010, we recorded pretax equity losses of $16 million and $9 million, respectively, from RBS Sempra Commodities. Pretax equity earnings from RBS Sempra Commodities were $126 million and $279 million for the three months and six months ended June 30, 2009, respectively. The partnership income that is distributable to us on an annual basis is computed on the partnership's basis of accounting, International Financial Reporting Standards (IFRS), as adopted by the European Union. For the three months and six months ended June 30, 2010, our share of distributable income, on an IFRS basis, was $32 million and $31 million, respectively. In the three months and six months ended June 30, 2009, our share of distributable income, on an IFRS basis, was $102 million and $216 million, respectively. In the second quarter of 2010, we received the remaining distribution of 2009 partnership income of $198 million. In the first six months of 2009, we received cash distributions from the partnership of $375 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. 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. 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. In February 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), for J.P. Morgan Ventures to purchase the following businesses from the joint venture: <ul><li style="margin-left:9.35px;list-style:square;">the global oil, metals, coal, emissions (other than emissions related to the partnership's North American power business), plastics, agricultural commodities and concentrates commodities trading and marketing business</li><li style="margin-left:9.35px;list-style:square;">the European power and gas business</li></ul><ul><li style="margin-left:9.35px;list-style:square;">the investor products business </li></ul>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.The transaction with J.P. Morgan Ventures was completed on July 1, 2010 and we received the majority of the proceeds in early July 2010. The purchase price was $1.6 billion, and our share of the proceeds is approximately $1 billion, including distributions of 2009 partnership income attributable to the businesses sold, which were $134 million of the $198 million in distributions we received in April 2010. We and RBS continue to engage in an active sales process for the remaining partnership businesses. Based on preliminary indications of value from potential buyers and discussions with our partner with respect to the ultimate allocation of proceeds, we currently believe that our share of the proceeds from the partnership for the sale to J.P. Morgan Ventures and proceeds from the sale or ultimate disposition of the remaining joint venture assets will be sufficient such that their application to our equity method investment will not have a material effect on our earnings. We and RBS are also continuing to discuss amending various provisions to our partnership agreement in light of the sale to J.P. Morgan Ventures and the sales process for the remaining businesses.The following table shows summarized financial information for RBS Sempra Commodities (on a GAAP basis):<div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 14px"><td style="width: 235px; text-align:left;border-color:#000000;min-width:235px;"> </td><td colspan="4" style="width: 208px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:208px;">Three months ended June 30,</td><td colspan="4" style="width: 201px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:201px;">Six months ended June 30,</td></tr><tr style="height: 14px"><td style="width: 235px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:235px;">(Dollars in millions)</td><td colspan="2" style="width: 95px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:95px;">2010</td><td colspan="2" style="width: 113px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:113px;">2009</td><td colspan="2" style="width: 98px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:98px;">2010</td><td colspan="2" style="width: 103px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:103px;">2009</td></tr><tr style="height: 16px"><td style="width: 235px; text-align:left;border-color:#000000;min-width:235px;">Gross revenues and fee income</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">$</td><td style="width: 69px; border-color:#000000;min-width:69px;"> 188</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">$</td><td style="width: 87px; border-color:#000000;min-width:87px;"> 367</td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">$</td><td style="width: 76px; border-color:#000000;min-width:76px;"> 394</td><td style="width: 24px; text-align:left;border-color:#000000;min-width:24px;">$</td><td style="width: 79px; border-color:#000000;min-width:79px;"> 876</td></tr><tr style="height: 16px"><td style="width: 235px; text-align:left;border-color:#000000;min-width:235px;">Gross profit</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 69px; border-color:#000000;min-width:69px;"> 174</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 87px; border-color:#000000;min-width:87px;"> 342</td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;"> </td><td style="width: 76px; border-color:#000000;min-width:76px;"> 372</td><td style="width: 24px; text-align:left;border-color:#000000;min-width:24px;"> </td><td style="width: 79px; border-color:#000000;min-width:79px;"> 828</td></tr><tr style="height: 16px"><td style="width: 235px; text-align:left;border-color:#000000;min-width:235px;">Income (loss) from continuing operations</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 69px; border-color:#000000;min-width:69px;"> (23)</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 87px; border-color:#000000;min-width:87px;"> 153</td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;"> </td><td style="width: 76px; border-color:#000000;min-width:76px;"> (13)</td><td style="width: 24px; text-align:left;border-color:#000000;min-width:24px;"> </td><td style="width: 79px; border-color:#000000;min-width:79px;"> 389</td></tr><tr style="height: 16px"><td style="width: 235px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:235px;">Partnership net income (loss)</td><td style="width: 26px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 69px; border-bottom-style:solid;border-bottom-width:3px;border-color:#000000;min-width:69px;"> (23)</td><td style="width: 26px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 87px; border-bottom-style:solid;border-bottom-width:3px;border-color:#000000;min-width:87px;"> 153</td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:22px;"> </td><td style="width: 76px; border-bottom-style:solid;border-bottom-width:3px;border-color:#000000;min-width:76px;"> (13)</td><td style="width: 24px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:24px;"> </td><td style="width: 79px; border-bottom-style:solid;border-bottom-width:3px;border-color:#000000;min-width:79px;"> 389</td></tr></table></div>We provide information regarding the Sempra Commodities segment in Note 11.SEMPRA PIPELINES & STORAGEIn the first quarter 2010, Sempra Pipelines & Storage contributed $65 million to Rockies Express, a joint venture to own and operate the Rockies Express Pipeline, which contribution was the last required for the construction phase of the project. Sempra Pipelines & Storage contributed $188 million in the three months ended June 30, 2009 and $213 million in the six months ended June 30, 2009. We discuss this investment in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.Sempra Pipelines & Storage owns 43 percent of two Argentine natural gas utility holding companies, Sodigas Pampeana and Sodigas Sur. The Argentine economic decline and government responses (including Argentina's unilateral, retroactive abrogation of utility agreements early in 2002) continue to adversely affect the operations of these Argentine utilities. In 2002, Sempra Pipelines & Storage initiated arbitration proceedings at the International Center for the Settlement of Investment Disputes (ICSID) under the 1994 Bilateral Investment Treaty between the United States and Argentina for recovery of the diminution of the value of its investments that has resulted from Argentine governmental actions. In September 2007, the tribunal officially closed the arbitration proceedings and awarded us compensation of $172 million, which includes interest up to the award date. In January 2008, Argentina filed an action at the ICSID seeking to annul the award. In June 2010, the Annulment Committee granted Argentina's petition for annulment of the award. This action did not impact our earnings, as we did not record the original award pending assurance of collectability. We are currently evaluating our options, which include filing a new arbitration claim against the Government of Argentina.    NOTE 4. INVESTMENTS IN UNCONSOLIDATED ENTITIESSEMPRA ENERGY AND SDG&EAvailable-for-Sale SecuritiesIn June 2009, SDG&E remarketed $176 million of its false false false us-types:textBlockItemType textblock Equity investment disclosure, or group of investments for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20% of the voting stock and the investment is accounted for using the equity method, and the reasons why it is. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 18 -Paragraph 20 false 1 2 false UnKnown UnKnown UnKnown false true