We consolidate a VIE if we are the primary beneficiary of the VIE. Our determination of whether we are the primary beneficiary is based upon qualitative and quantitative analyses, which assess

SDG&E has agreements under which it purchases power generated by facilities for which it supplies all of the natural gas to fuel the power plant (i.e., tolling agreements). SDG&E's obligation to absorb natural gas costs may be a significant variable interest. In addition, SDG&E has the power to direct the dispatch of electricity generated by these facilities. Based upon our analysis, the ability to direct the dispatch of electricity may have the most significant impacts on the economic performance of the entity owning the generating facility because of the associated exposure to the cost of natural gas, which fuels the plants, and the value of electricity produced. To the extent that SDG&E (1) is obligated to purchase and provide fuel to operate the facility, (2) has the power to direct the dispatch, and (3) purchases all of the output from the facility for a substantial portion of the facility's useful life, SDG&E may be the primary beneficiary of the entity owning the generating facility. SDG&E determines if it is the primary beneficiary in these cases based on the operational characteristics of the facility, including its expected power generation output relative to its capacity to generate and the financial structure of the entity, among other factors. If we determine that SDG&E is the primary beneficiary, Sempra Energy and SDG&E consolidate the entity that owns the facility as a VIE, as we discuss below.

SDG&E has a 10-year agreement to purchase power generated at the Otay Mesa Energy Center (OMEC), a 605-megawatt (MW) generating facility. In addition to tolling, the agreement provides SDG&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&E does not exercise its option it may be required, under certain circumstances, to purchase the power plant at a predetermined price.

The facility owner, Otay Mesa Energy Center LLC (OMEC LLC), is a VIE (Otay Mesa VIE), of which SDG&E is the primary beneficiary. SDG&E has no OMEC LLC voting rights and does not operate OMEC. In addition to the risks absorbed under the tolling agreement, SDG&E absorbs separately through the put option a significant portion of the risk that the value of Otay Mesa VIE could decline. Otay Mesa VIE's equity of $89 million at June 30, 2011 and $113 million at December 31, 2010 is included on the Condensed Consolidated Balance Sheets in Other Noncontrolling Interests for Sempra Energy and in Noncontrolling Interest for SDG&E.

OMEC LLC has a loan outstanding of $360 million at June 30, 2011, 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&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 fully matures in April 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.

SDG&E's power procurement is subject to reliability requirements that may require SDG&E to enter into various power purchase arrangements which include variable interests. SDG&E evaluates the respective entities to determine if variable interest entities exist and, based on the qualitative and quantitative analyses described above, if SDG&E, and thereby Sempra Energy, is the primary beneficiary. SDG&E has determined that no contracts, other than that relating to Otay Mesa VIE mentioned above, result in SDG&E being the primary beneficiary as of June 30, 2011. In addition to the tolling agreements described above, 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 these cases, the expectation of variability is not substantial, and SDG&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&E becomes the primary beneficiary and consolidation by SDG&E becomes necessary, the effects are not expected to significantly affect the financial position, results of operations, or liquidity of SDG&E. SDG&E is not exposed to losses or gains as a result of these other VIEs, because all such variability would be recovered in rates.

Sempra Energy's other business units also enter into arrangements which could include variable interests. We evaluate these arrangements and applicable entities based upon the qualitative and quantitative analyses described above. Certain of these entities are service companies that are VIEs. As the primary beneficiary of these service companies, we consolidate them. In all other cases, we have determined that the contracts are not variable interests in a VIE and therefore are not subject to the requirements of GAAP concerning the consolidation of VIEs.

Goodwill is the excess of the purchase price over the fair value of the net assets of acquired companies. Goodwill is not amortized but is tested annually on October 1 for impairment. Impairment of goodwill occurs when the carrying amount (book value) of goodwill exceeds its implied fair value. If the book value of goodwill is greater than the fair value on the test date, an impairment loss is recorded.

Sempra Pipelines & Storage recorded goodwill of $959 million in the second quarter of 2011 in connection with the acquisition of AEI's interests in Chilquinta Energía and Luz del Sur, which we discuss in Note 3.

Goodwill included on the Sempra Energy Condensed Consolidated Balance Sheets is recorded as follows:

GOODWILL
(Dollars in millions)
		June 30,		December 31,
		2011		2010
Sempra Pipelines & Storage(1)		$	1,053	$	81
Parent and Other			6		6
		$	1,059	$	87
(1)	Includes $972 million at June 30, 2011 related to Chilquinta Energía and Luz del Sur, whose functional currencies are their local currencies. This causes the goodwill amount to fluctuate from period-to-period from the translation to U.S. dollars. We record the offset of this fluctuation to other comprehensive income.

We provide additional information concerning goodwill in Notes 1 and 3 of the Notes to Consolidated Financial Statements in the Annual Report.

NET PERIODIC BENEFIT COST -- SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
	Three months ended June 30,				Three months ended June 30,
	2011		2010		2011		2010
Service cost	$	21	$	20	$	8	$	8
Interest cost		42		41		16		14
Expected return on assets		(36)		(36)		(12)		(11)
Amortization of:
Prior service cost (credit)		1		1		―		(1)
Actuarial loss		9		7		5		2
Settlement		10		―		―		―
Regulatory adjustment		4		10		2		2
Total net periodic benefit cost	$	51	$	43	$	19	$	14
	Six months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Service cost	$	43	$	42	$	15	$	15
Interest cost		85		84		33		29
Expected return on assets		(73)		(72)		(24)		(23)
Amortization of:
Prior service cost (credit)		2		2		―		(1)
Actuarial loss		18		15		9		4
Settlement		10		―		―		―
Regulatory adjustment		(25)		(19)		4		4
Total net periodic benefit cost	$	60	$	52	$	37	$	28

NET PERIODIC BENEFIT COST -- SDG&E
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
	Three months ended June 30,				Three months ended June 30,
	2011		2010		2011		2010
Service cost	$	8	$	7	$	2	$	1
Interest cost		12		12		3		3
Expected return on assets		(13)		(11)		(2)		(1)
Amortization of:
Prior service cost		―		―		1		1
Actuarial loss		3		3		―		―
Settlement		1		―		―		―
Regulatory adjustment		7		7		―		―
Total net periodic benefit cost	$	18	$	18	$	4	$	4
	Six months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Service cost	$	15	$	14	$	4	$	3
Interest cost		25		24		5		5
Expected return on assets		(25)		(21)		(4)		(3)
Amortization of:
Prior service cost		1		1		2		2
Actuarial loss		5		6		―		―
Settlement		1		―		―		―
Regulatory adjustment		(2)		(5)		1		1
Total net periodic benefit cost	$	20	$	19	$	8	$	8

NET PERIODIC BENEFIT COST -- SOCALGAS
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
	Three months ended June 30,				Three months ended June 30,
	2011		2010		2011		2010
Service cost	$	12	$	11	$	5	$	5
Interest cost		25		24		14		11
Expected return on assets		(21)		(22)		(10)		(10)
Amortization of:
Prior service credit		―		―		(1)		(1)
Actuarial loss		4		2		4		2
Settlement		1		―		―		―
Regulatory adjustment		(3)		3		2		2
Total net periodic benefit cost	$	18	$	18	$	14	$	9
	Six months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Service cost	$	24	$	23	$	10	$	10
Interest cost		50		49		27		23
Expected return on assets		(43)		(45)		(20)		(20)
Amortization of:
Prior service cost (credit)		1		1		(2)		(2)
Actuarial loss		8		5		9		4
Settlement		1		―		―		―
Regulatory adjustment		(23)		(14)		3		3
Total net periodic benefit cost	$	18	$	19	$	27	$	18

The following table shows our year-to-date contributions to pension and other postretirement benefit plans and the amounts we expect to contribute in 2011:

	Sempra Energy
(Dollars in millions)	Consolidated		SDG&E		SoCalGas
Contributions through June 30, 2011:
Pension plans	$	70	$	17	$	22
Other postretirement benefit plans		37		8		28
Total expected contributions in 2011:
Pension plans	$	249	$	81	$	120
Other postretirement benefit plans		76		16		55

The following table provides the per share computations for our earnings for the three months and six months ended June 30, 2011 and 2010. Basic earnings per common share (EPS) is calculated by dividing earnings attributable to common stock by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

EARNINGS PER SHARE COMPUTATIONS
(Dollars in millions, except per share amounts; shares in thousands)
	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Numerator:
Earnings/Income attributable to common shareholders	$	511	$	222	$	769	$	328

Denominator:
Weighted-average common shares outstanding for basic EPS		239,415		246,784		239,769		246,435
Dilutive effect of stock options, restricted stock awards and restricted stock units		1,346		2,943		1,385		3,400
Weighted-average common shares outstanding for diluted EPS		240,761		249,727		241,154		249,835

Earnings per share:
Basic	$	2.14	$	0.90	$	3.21	$	1.33
Diluted	$	2.12	$	0.89	$	3.19	$	1.31

The dilution from common stock options is based on the treasury stock method. Under this method, proceeds based on the exercise price plus unearned compensation and windfall tax benefits and minus tax shortfalls 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 (out-of-the-money options). We had 2,118,042 and 2,119,677 such stock options outstanding during the three months and six months ended June 30, 2011, respectively. We had 2,177,855 and 2,171,016 such stock options outstanding during the three months and six months ended June 30, 2010, respectively.

We had 900 stock options outstanding during both the three months and six months ended June 30, 2011 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 during the three months or six months ended June 30, 2010.

The dilution from unvested restricted stock awards (RSAs) and restricted stock units (RSUs) is also based on the treasury stock method. Assumed proceeds equal to the unearned compensation and windfall tax benefits and 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 RSAs or RSUs and the deferred income taxes we recorded related to the compensation expense on such awards and units.

Each performance based restricted stock unit represents the right to receive between zero and 1.5 shares of Sempra Energy common stock based on Sempra Energy's four-year cumulative total shareholder return compared to the S&P 500 Utilities Index, as follows:

Four-Year Cumulative Total Shareholder Return Ranking versus S&P 500 Utilities Index(1)	Number of Sempra Energy Common Shares Received for Each Restricted Stock Unit
75th Percentile or Above	1.5
50th Percentile	1
35th Percentile or Below	―
(1) If Sempra Energy ranks at or above the 50th percentile compared to the S&P 500 Utilities Index, participants will receive a maximum of 1.0 share for each restricted stock unit.

RSAs have a maximum potential of 100% vesting. We include our performance based RSAs and RSUs in potential dilutive shares at zero to 100 percent and zero to 150 percent, respectively, to the extent that they currently meet the performance requirements for vesting, subject to the application of the treasury stock method. Due to market fluctuations of both our company stock and the comparative index, dilutive RSA and RSU shares may vary widely from period-to-period. We include our RSAs, which are service based, in potential dilutive shares at 100 percent.

RSUs and RSAs may be excluded from potential dilutive shares by the application of unearned compensation in the treasury stock method or because performance goals are currently not met. The maximum excluded RSUs and RSAs, assuming performance goals were met at maximum levels, were 4,434,795 and 4,450,495 for the three months and six months ended June 30, 2011, respectively, and 2,203,973 and 1,801,758 for the three months and six months ended June 30, 2010, respectively.

In September 2010, we entered into a share repurchase program under which we prepaid $500 million to repurchase shares of our common stock in a share forward transaction. The program was completed in March 2011 with a total of 9,574,435 shares repurchased at an average price of $52.22 per share. Our outstanding shares used to calculate earnings per share were reduced by the number of shares repurchased when they were delivered to us, and the $500 million purchase price was recorded as a reduction in shareholders' equity upon its prepayment. We received 5,670,006 shares during the quarter ended September 30, 2010; 2,407,994 shares on October 4, 2010 and 1,496,435 shares on March 22, 2011. We discuss the repurchase program further in Note 13 of the Notes to Consolidated Financial Statements in the Annual Report.

On June 30, 2011, PE redeemed all five series of its outstanding preferred stock for $81 million. Each series was redeemed for cash at redemption prices ranging from $100 to $101.50 per share, plus accrued dividends up to the redemption date of an aggregate of $1 million. The redeemed shares are no longer outstanding and represent only the right to receive the applicable redemption price, to the extent the shares have not yet been presented for payment. We provide more detail concerning PE's preferred stock in Note 12 of the Notes to Consolidated Financial Statements in the Annual Report.

We discuss our share-based compensation plans in Note 9 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 June 30, 2011 and 2010, respectively, and $13 million for both the six months ended June 30, 2011 and 2010. Pursuant to our share-based compensation plans, we granted 1,045,821 RSUs and 11,876 RSAs during the six months ended June 30, 2011, primarily in January.

Capitalized financing costs include capitalized interest costs and, at the Sempra Utilities, an allowance for funds used during construction (AFUDC) related to both debt and equity financing of construction projects. The following table shows capitalized financing costs for the three months and six months ended June 30, 2011 and 2010.

CAPITALIZED FINANCING COSTS
(Dollars in millions)
	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Sempra Energy Consolidated:
AFUDC related to debt	$	9	$	5	$	17	$	10
AFUDC related to equity		22		14		41		27
Other capitalized financing costs		8		11		14		18
Total Sempra Energy Consolidated	$	39	$	30	$	72	$	55
SDG&E:
AFUDC related to debt	$	8	$	4	$	14	$	7
AFUDC related to equity		18		10		33		19
Total SDG&E	$	26	$	14	$	47	$	26
SoCalGas:
AFUDC related to debt	$	1	$	1	$	3	$	3
AFUDC related to equity		4		4		8		8
Total SoCalGas	$	5	$	5	$	11	$	11

The following tables provide a reconciliation of net income to comprehensive income.

COMPREHENSIVE INCOME
(Dollars in millions)
		Three months ended June 30,
		2011						2010
		Share-		Non-				Share-		Non-
		holders'		controlling		Total		holders'		controlling		Total
		Equity(1)		Interests		Equity		Equity(1)		Interests		Equity
Sempra Energy Consolidated:
	Net income (loss)(2)	$	514	$	(12)	$	502	$	225	$	(20)	$	205
	Foreign currency translation
	adjustments		29		6		35		(17)		―		(17)
	Reclassification to net income of
	foreign currency translation
	adjustment related to equity
	method investments(3)		(54)		―		(54)		―		―		―
	Financial instruments		(6)		(10)		(16)		(9)		2		(7)
	Available-for-sale securities		―		―		―		(3)		―		(3)
	Net actuarial gain		5		―		5		2		―		2
	Comprehensive income (loss)	$	488	$	(16)	$	472	$	198	$	(18)	$	180
SDG&E:
	Net income (loss)	$	72	$	(19)	$	53	$	76	$	(21)	$	55
	Financial instruments		―		(10)		(10)		―		2		2
	Net actuarial gain		―		―		―		1		―		1
	Comprehensive income (loss)	$	72	$	(29)	$	43	$	77	$	(19)	$	58
SoCalGas:
	Net income	$	60	$	―	$	60	$	70	$	―	$	70
	Financial instruments		1		―		1		1		―		1
	Comprehensive income	$	61	$	―	$	61	$	71	$	―	$	71
(1)	Shareholders' equity of Sempra Energy Consolidated, SDG&E or SoCalGas as indicated in left margin.
(2)	Before preferred dividends of subsidiaries.
(3)	Related to the acquisition of Chilquinta Energía and Luz del Sur.

COMPREHENSIVE INCOME
(Dollars in millions)
		Six months ended June 30,
		2011						2010
		Share-		Non-				Share-		Non-
		holders'		controlling		Total		holders'		controlling		Total
		Equity(1)		Interests		Equity		Equity(1)		Interests		Equity
Sempra Energy Consolidated:
Net income (loss)(2)		$	774	$	(8)	$	766	$	333	$	(28)	$	305
Foreign currency translation
adjustments			23		6		29		(21)		―		(21)
Reclassification to net income of
foreign currency translation
adjustment related to equity
method investments(3)			(54)		―		(54)		―		―		―
Financial instruments			(4)		(9)		(13)		(9)		4		(5)
Available-for-sale securities			―		―		―		(3)		―		(3)
Net actuarial gain			7		―		7		3		―		3
Comprehensive income (loss)		$	746	$	(11)	$	735	$	303	$	(24)	$	279
SDG&E:
Net income (loss)		$	162	$	(15)	$	147	$	160	$	(29)	$	131
Financial instruments			―		(9)		(9)		―		4		4
Net actuarial gain			―		―		―		1		―		1
Comprehensive income (loss)		$	162	$	(24)	$	138	$	161	$	(25)	$	136
SoCalGas:
Net income		$	128	$	―	$	128	$	135	$	―	$	135
Financial instruments			1		―		1		1		―		1
Comprehensive income		$	129	$	―	$	129	$	136	$	―	$	136
(1)	Shareholders' equity of Sempra Energy Consolidated, SDG&E or SoCalGas as indicated in left margin.
(2)	Before preferred dividends of subsidiaries.
(3)	Related to the acquisition of Chilquinta Energía and Luz del Sur.

The amounts for comprehensive income in the tables above are net of income tax expense (benefit) as follows:

INCOME TAX EXPENSE (BENEFIT) ASSOCIATED WITH OTHER COMPREHENSIVE INCOME
(Dollars in millions)
		Three months ended June 30,
		2011						2010
		Share-		Non-				Share-		Non-
		holders'		controlling		Total		holders'		controlling		Total
		Equity(1)		Interests		Equity		Equity(1)		Interests		Equity
Sempra Energy Consolidated:
Financial instruments		$	(1)	$	―	$	(1)	$	(6)	$	―	$	(6)
Available-for-sale securities			―		―		―		(1)		―		(1)
Net actuarial gain			3		―		3		1		―		1
SoCalGas:
Financial instruments		$	1	$	―	$	1	$	1	$	―	$	1

		Six months ended June 30,
		2011						2010
		Share-		Non-				Share-		Non-
		holders'		controlling		Total		holders'		controlling		Total
		Equity(1)		Interests		Equity		Equity(1)		Interests		Equity
Sempra Energy Consolidated:
Financial instruments		$	―	$	―	$	―	$	(6)	$	―	$	(6)
Available-for-sale securities			―		―		―		(1)		―		(1)
Net actuarial gain			4		―		4		2		―		2
SoCalGas:
Financial instruments		$	1	$	―	$	1	$	1	$	―	$	1
(1)	Shareholders' equity of Sempra Energy Consolidated or SoCalGas as indicated in left margin.

Income tax amounts associated with other comprehensive income during the three months and six months ended June 30, 2011 and 2010 at SDG&E were negligible.

The following two tables provide a reconciliation of Sempra Energy's and SDG&E's shareholders' equity and noncontrolling interests for the six months ended June 30, 2011 and 2010.

SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
(Dollars in millions)
		Sempra
		Energy		Non-
		Shareholders'		controlling		Total
		Equity		Interests		Equity
Balance at December 31, 2010	$	9,027	$	211	$	9,238
Comprehensive income (loss)		746		(11)		735
Share-based compensation expense		24		―		24
Common stock dividends declared		(230)		―		(230)
Preferred dividends of subsidiaries		(5)		―		(5)
Issuance of common stock		19		―		19
Tax benefit related to share-based compensation		5		―		5
Repurchase of common stock		(18)		―		(18)
Common stock released from ESOP		11		―		11
Distributions to noncontrolling interests		―		(6)		(6)
Acquisition of South American entities		―		279		279
Redemption of preferred stock of subsidiary		―		(80)		(80)
Balance at June 30, 2011	$	9,579	$	393	$	9,972
Balance at December 31, 2009	$	9,007	$	244	$	9,251
Comprehensive income (loss)		303		(24)		279
Share-based compensation expense		22		―		22
Common stock dividends declared		(193)		―		(193)
Preferred dividends of subsidiaries		(5)		―		(5)
Issuance of common stock		46		―		46
Tax benefit related to share-based compensation		1		―		1
Repurchase of common stock		(2)		―		(2)
Common stock released from ESOP		11		―		11
Balance at June 30, 2010	$	9,190	$	220	$	9,410

SHAREHOLDER'S EQUITY AND NONCONTROLLING INTEREST
(Dollars in millions)
		SDG&E		Non-
		Shareholder's		controlling		Total
		Equity		Interest		Equity
Balance at December 31, 2010	$	3,108	$	113	$	3,221
Comprehensive income		162		(24)		138
Preferred stock dividends declared		(2)		―		(2)
Capital contribution		200		―		200
Balance at June 30, 2011	$	3,468	$	89	$	3,557
Balance at December 31, 2009	$	2,739	$	146	$	2,885
Comprehensive income (loss)		161		(25)		136
Preferred stock dividends declared		(2)		―		(2)
Balance at June 30, 2010	$	2,898	$	121	$	3,019

Sempra Pipelines & Storage has a U.S. dollar-denominated loan to Camuzzi Gas del Sur S.A., an affiliate of Sempra Pipelines & Storage's Argentine investments, which we discuss in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report. The loan has a $24 million balance outstanding at a variable interest rate (7.3 percent as of June 30, 2011). In June 2011, the maturity date of the loan was extended from June 2011 to June 30, 2012. The loan is fully reserved at June 30, 2011.

Sempra Energy, SDG&E and SoCalGas provide certain services to each other and are charged an allocable share of the cost of such services. Amounts due to/from affiliates are as follows:

AMOUNTS DUE TO AND FROM AFFILIATES AT SDG&E AND SOCALGAS
(Dollars in millions)
		June 30,		December 31,
		2011		2010
SDG&E
Current:
Due from SoCalGas		$	―	$	11
Due from various affiliates			1		1
		$	1	$	12

Due to Sempra Energy		$	28	$	16
Due to SoCalGas			5		―
		$	33	$	16

Income taxes due from Sempra Energy(1)		$	55	$	25

SoCalGas
Current:
Due from Sempra Energy		$	282	$	60
Due from SDG&E			5		―
Due from various affiliates			―		3
		$	287	$	63

Due to SDG&E		$	―	$	11

Income taxes due to Sempra Energy(1)		$	(7)	$	(3)
(1)	SDG&E and SoCalGas are included in the consolidated income tax return of Sempra Energy and are allocated income tax expense from Sempra Energy in an amount equal to that which would result from the companies' having always filed a separate return.

Several of our business units have engaged in transactions with RBS Sempra Commodities. As a result of the divestiture of substantially all of RBS Sempra Commodities' businesses, transactions between our business units and RBS Sempra Commodities were assigned over time to the buyers of the joint venture businesses. The assignments of the related contracts were substantially completed by May 1, 2011. Amounts in our Condensed Consolidated Financial Statements related to these transactions are as follows:

AMOUNTS RECORDED FOR TRANSACTIONS WITH RBS SEMPRA COMMODITIES
(Dollars in millions)

		Three months ended June 30,				Six months ended June 30,
		2011(1)		2010		2011(1)		2010
Revenues:
SoCalGas		$	―	$	3	$	―	$	7
Sempra Generation(2)			(5)		―		4		9
Sempra LNG			4		66		40		139
Total revenues		$	(1)	$	69	$	44	$	155

Cost of natural gas:
SDG&E		$	―	$	―	$	―	$	1
SoCalGas			―		11		―		23
Sempra Generation			4		12		30		28
Sempra Pipelines & Storage			7		7		14		16
Sempra LNG			2		78		30		145
Total cost of natural gas		$	13	$	108	$	74	$	213
(1)	With the exception of Sempra Pipelines & Storage, whose contract with RBS Sempra Commodities expired in July 2011, amounts only include activities prior to May 1, 2011, the date by which substantially all the contracts with RBS Sempra Commodities were assigned to buyers of the joint venture businesses.
(2)	Includes amounts in 2010 for Sempra Rockies Marketing, previously reported in our former Sempra Commodities segment as we discuss in Note 11.

				December 31,
				2010
Fixed-price contracts and other derivatives - Net Asset (Liability):
Sempra Generation				$	17
Sempra LNG					(35)
Total				$	(18)

Due to unconsolidated affiliates:
Sempra Generation				$	11
Sempra LNG					13
Parent and other					11
Total				$	35

Due from unconsolidated affiliates:
SoCalGas				$	3
Sempra Generation					13
Sempra LNG					13
Parent and other					5
Total				$	34

Other Income (Expense), Net on the Condensed Consolidated Statements of Operations consists of the following:

OTHER INCOME (EXPENSE), NET
(Dollars in millions)
		Three months ended June 30,				Six months ended June 30,
		2011		2010		2011		2010
Sempra Energy Consolidated:
Allowance for equity funds used during construction		$	22	$	14	$	41	$	27
Investment gains(1)			11		2		19		5
Gains (losses) on interest rate and foreign exchange instruments(2)			2		(14)		12		(23)
Regulatory interest, net			1		―		1		(1)
Sundry, net			(5)		6		1		8
Total		$	31	$	8	$	74	$	16
SDG&E:
Allowance for equity funds used during construction		$	18	$	10	$	33	$	19
Losses on interest rate instruments(3)			―		(25)		―		(34)
Regulatory interest, net			1		1		1		―
Sundry, net			(6)		(2)		(5)		(1)
Total		$	13	$	(16)	$	29	$	(16)
SoCalGas:
Allowance for equity funds used during construction		$	4	$	4	$	8	$	8
Sundry, net			(1)		(2)		(2)		(2)
Total		$	3	$	2	$	6	$	6
(1)	Represents investment gains on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are partially offset by corresponding changes in compensation expense related to the plans.
(2)	Sempra Energy Consolidated includes Otay Mesa VIE and additional instruments.
(3)	Related to Otay Mesa VIE.

INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
		Three months ended June 30,
		2011				2010
		Income Tax	Effective Income			Income Tax	Effective Income
		Expense	Tax Rate			Expense	Tax Rate
Sempra Energy Consolidated	$	92	16	%	$	59	25	%
SDG&E		42	44			44	44
SoCalGas		28	32			34	33
		Six months ended June 30,
		2011				2010
		Income Tax	Effective Income			Income Tax	Effective Income
		Expense	Tax Rate			Expense	Tax Rate
Sempra Energy Consolidated	$	201	22	%	$	117	31	%
SDG&E		91	38			75	36
SoCalGas		65	34			90	40

The decrease in the effective income tax rate for the three months ended June 30, 2011 was primarily due to:

For the six months ended June 30, 2011, the decrease in the effective income tax rate was primarily due to:

As we discuss in Note 3, we recorded a $277 million gain in connection with our acquisition of AEI's interests in Chilquinta Energía in Chile and Luz del Sur in Peru. However, we recorded no corresponding income tax expense because, for the foreseeable future, our investments in Chile and Peru are considered permanent in nature (i.e., will not be held out for sale). In addition, we continue to expect to reinvest indefinitely all cumulative undistributed earnings, for the foreseeable future, for all non-U.S. subsidiaries, including our subsidiaries in Chile and Peru. Deferred income tax expense related to all, or a part, of the $277 million gain would need to be recorded if either, or both, of these investments were to be held out for sale. Deferred income tax expense would also need to be recorded if all, or part, of the cumulative undistributed earnings in either Chile or Peru, or both, were no longer considered to be reinvested indefinitely.

Although the effective tax rate for the three months ended June 30, 2011 remained constant compared to the same period in 2010, it was impacted by:

SDG&E's effective tax rate increased for the six months ended June 30, 2011 primarily due to:

Results for Sempra Energy Consolidated and SDG&E include Otay Mesa VIE, which is consolidated, and therefore, their effective income tax rates are impacted by the VIE's stand-alone effective income tax rate.

The decrease in SoCalGas' effective income tax rate for the three months ended June 30, 2011 was due to:

The decrease in SoCalGas' effective income tax rate for the six months ended June 30, 2011 was due to: