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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)
 9 Months Ended
Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Commodity Derivative Volumes Table We summarize net energy derivative volumes at September 30, 2017 and December 31, 2016 as follows:
NET ENERGY DERIVATIVE VOLUMES
(Quantities in millions)
Commodity
Unit of measure
 
September 30,
2017
 
December 31,
2016
California Utilities:
 
 
 
 
 
SDG&E:
 
 
 
 
 
Natural gas
MMBtu
 
43

 
48

Electricity
MWh
 
3

 
4

Congestion revenue rights
MWh
 
60

 
48

SoCalGas – natural gas
MMBtu
 
1

 
1

 
 
 
 
 
 
Energy-Related Businesses:
 
 
 
 
 
Sempra LNG & Midstream – natural gas
MMBtu
 
4

 
31

Sempra Mexico – natural gas
MMBtu
 
4

 
—
Notional Amounts of Interest Rate Derivatives Table At September 30, 2017 and December 31, 2016, the net notional amounts of our interest rate derivatives, excluding joint ventures, were:
INTEREST RATE DERIVATIVES
(Dollars in millions)
 
September 30, 2017
 
December 31, 2016
 
Notional debt
 
Maturities
 
Notional debt
 
Maturities
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Cash flow hedges(1)
$
880

 
2017-2032
 
$
924

 
2017-2032
SDG&E:
 
 
 
 
 
 
 
Cash flow hedges(1)
297

 
2017-2019
 
305

 
2017-2019
(1)
Includes Otay Mesa VIE. All of SDG&E’s interest rate derivatives relate to Otay Mesa VIE.
At September 30, 2017 and December 31, 2016, the net notional amounts of our foreign currency derivatives, excluding joint ventures, were:
FOREIGN CURRENCY DERIVATIVES
(Dollars in millions)
 
September 30, 2017
 
December 31, 2016
 
Notional amount
 
Maturities
 
Notional amount
 
Maturities
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Cross-currency swaps
$
408

 
2017-2023
 
$
408

 
2017-2023
Other foreign currency derivatives(1)
965

 
2017-2019
 
86

 
2017-2018
(1)
In the first quarter of 2017, we entered into foreign currency derivatives with notional amounts totaling $850 million that expire in December 2017.
Derivative Instruments on the Condensed Consolidated Balance Sheets Table The following tables provide the fair values of derivative instruments on the Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016, including the amount of cash collateral receivables that were not offset, as the cash collateral is in excess of liability positions.
DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
September 30, 2017
 
Current
assets:
Fixed-price
contracts
and other
derivatives(1)
 
Other
assets:
Sundry
 
Current liabilities:
Fixed-price
contracts
and other
derivatives(2)
 
Deferred
credits
and other
liabilities:
Fixed-price
contracts
and other
derivatives
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate and foreign exchange instruments(3)
$
—

 
$
1

 
$
(51
)
 
$
(143
)
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange instruments
134

 
—

 
—

 
—

Commodity contracts not subject to rate recovery
41

 
6

 
(29
)
 
(4
)
Associated offsetting commodity contracts
(26
)
 
(3
)
 
26

 
3

Commodity contracts subject to rate recovery
8

 
118

 
(63
)
 
(128
)
Associated offsetting commodity contracts
(1
)
 
(1
)
 
1

 
1

Associated offsetting cash collateral
—

 
—

 
17

 
6

Net amounts presented on the balance sheet
156

 
121

 
(99
)
 
(265
)
Additional cash collateral for commodity contracts
not subject to rate recovery
2

 
—

 
—

 
—

Additional cash collateral for commodity contracts
subject to rate recovery
16

 
—

 
—

 
—

Total(4)
$
174

 
$
121

 
$
(99
)
 
$
(265
)
SDG&E:
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate instruments(3)
$
—

 
$
—

 
$
(12
)
 
$
(5
)
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Commodity contracts subject to rate recovery
6

 
118

 
(61
)
 
(128
)
Associated offsetting commodity contracts
(1
)
 
(1
)
 
1

 
1

Associated offsetting cash collateral
—

 
—

 
17

 
6

Net amounts presented on the balance sheet
5

 
117

 
(55
)
 
(126
)
Additional cash collateral for commodity contracts
subject to rate recovery
15

 
—

 
—

 
—

Total(4)
$
20

 
$
117


$
(55
)

$
(126
)
SoCalGas:
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Commodity contracts subject to rate recovery
$
2

 
$
—

 
$
(2
)
 
$
—

Net amounts presented on the balance sheet
2

 
—

 
(2
)
 
—

Additional cash collateral for commodity contracts
subject to rate recovery
1

 
—

 
—

 
—

Total
$
3

 
$
—

 
$
(2
)
 
$
—

 
(1)
Included in Current Assets: Other for SoCalGas.
(2)
Included in Current Liabilities: Other for SoCalGas.
(3)
Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE.
(4)
Normal purchase contracts previously measured at fair value are excluded.
DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
December 31, 2016
 
Current
assets:
Fixed-price
contracts
and other
derivatives(1)
 
Other
assets:
Sundry
 
Current liabilities:
Fixed-price
contracts
and other
derivatives(2)
 
Deferred
credits
and other
liabilities:
Fixed-price
contracts
and other
derivatives
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate and foreign exchange instruments(3)
$
7

 
$
2

 
$
(24
)
 
$
(228
)
Commodity contracts not subject to rate recovery
—

 
—

 
(14
)
 
—

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Commodity contracts not subject to rate recovery
248

 
36

 
(254
)
 
(28
)
Associated offsetting commodity contracts
(242
)
 
(27
)
 
242

 
27

Associated offsetting cash collateral
—

 
(1
)
 
16

 
1

Commodity contracts subject to rate recovery
37

 
73

 
(57
)
 
(150
)
Associated offsetting commodity contracts
(9
)
 
(1
)
 
9

 
1

Associated offsetting cash collateral
—

 
—

 
5

 
13

Net amounts presented on the balance sheet
41

 
82

 
(77
)
 
(364
)
Additional cash collateral for commodity contracts
not subject to rate recovery
10

 
—

 
—

 
—

Additional cash collateral for commodity contracts
subject to rate recovery
32

 
—

 
—

 
—

Total(4)
$
83

 
$
82

 
$
(77
)
 
$
(364
)
SDG&E:
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate instruments(3)
$
—

 
$
—

 
$
(13
)
 
$
(12
)
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Commodity contracts subject to rate recovery
33

 
73

 
(51
)
 
(150
)
Associated offsetting commodity contracts
(6
)
 
(1
)
 
6

 
1

Associated offsetting cash collateral
—

 
—

 
3

 
13

Net amounts presented on the balance sheet
27

 
72

 
(55
)
 
(148
)
Additional cash collateral for commodity contracts
not subject to rate recovery
1

 
—

 
—

 
—

Additional cash collateral for commodity contracts
subject to rate recovery
30

 
—

 
—

 
—

Total(4)
$
58

 
$
72

 
$
(55
)
 
$
(148
)
SoCalGas:
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Commodity contracts subject to rate recovery
$
4

 
$
—

 
$
(6
)
 
$
—

Associated offsetting commodity contracts
(3
)
 
—

 
3

 
—

Associated offsetting cash collateral
—

 
—

 
2

 
—

Net amounts presented on the balance sheet
1

 
—

 
(1
)
 
—

Additional cash collateral for commodity contracts
not subject to rate recovery
1

 
—

 
—

 
—

Additional cash collateral for commodity contracts
subject to rate recovery
2

 
—

 
—

 
—

Total
$
4

 
$
—

 
$
(1
)
 
$
—

(1) Included in Current Assets: Other for SoCalGas.
(2) Included in Current Liabilities: Other for SoCalGas.
(3) Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE.
(4) Normal purchase contracts previously measured at fair value are excluded.
Cash Flow Hedge Impact on the Condensed Consolidated Statements of Comprehensive Income Table The table below includes the effects of derivative instruments designated as cash flow hedges on the Condensed Consolidated Statements of Operations and in OCI and AOCI for the three months and nine months ended September 30:
CASH FLOW HEDGE IMPACTS
(Dollars in millions)
 
Pretax gain (loss)
recognized in OCI
 
 
 
Pretax (loss) gain reclassified
from AOCI into earnings
 
Three months ended September 30,
 
 
 
Three months ended September 30,
 
2017
 
2016
 
Location
 
2017
 
2016
Sempra Energy Consolidated:
 
 
 
 
 
 
 
 
 
Interest rate and foreign
exchange instruments(1)
$
14

 
$
(16
)
 
Interest Expense
 
$
—

 
$
(4
)
Interest rate instruments
(9
)
 
17

 
Equity Earnings,
Before Income Tax
 
(2
)
 
(3
)
Interest rate and foreign
exchange instruments
—

 
—

 
Remeasurement of Equity
Method Investment
 
—

 
(7
)
Interest rate and foreign
exchange instruments
7

 
13

 
Equity Earnings (Losses),
Net of Income Tax
 
2

 
2

Foreign exchange instruments
5

 
—

 
Revenues: Energy-
Related Businesses
 
2

 
—

Commodity contracts not subject
to rate recovery
—

 
2

 
Revenues: Energy-
Related Businesses
 
—

 
—

Total(2)
$
17

 
$
16

 
 
 
$
2

 
$
(12
)
SDG&E:
 
 
 
 
 
 
 
 
 
Interest rate instruments(1)(3)
$
—

 
$
2

 
Interest Expense
 
$
(3
)
 
$
(3
)
SoCalGas:
 
 
 
 
 
 
 
 
 
Interest rate instruments
$
—

 
$
—

 
Interest Expense
 
$
—

 
$
(1
)
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30,
 
 
 
Nine months ended September 30,
 
2017
 
2016
 
Location
 
2017
 
2016
Sempra Energy Consolidated:
 
 
 
 
 
 
 
 
 
Interest rate and foreign
exchange instruments(1)
$
22

 
$
(26
)
 
Interest Expense
 
$
4

 
$
(11
)
Interest rate instruments
(46
)
 
(190
)
 
Equity Earnings,
Before Income Tax
 
(6
)
 
(8
)
Interest rate and foreign
exchange instruments
—

 
—

 
Remeasurement of Equity
Method Investment
 
—

 
(7
)
Interest rate and foreign
exchange instruments
(11
)
 
(20
)
 
Equity Earnings (Losses),
Net of Income Tax
 
(3
)
 
(4
)
Foreign exchange instruments
(5
)
 
—

 
Revenues: Energy-
Related Businesses
 
1

 
—

Commodity contracts not subject
to rate recovery
3

 
(2
)
 
Revenues: Energy-
Related Businesses
 
(9
)
 
7

Total(2)
$
(37
)
 
$
(238
)
 
 
 
$
(13
)
 
$
(23
)
SDG&E:
 
 
 
 
 
 
 
 
 
Interest rate instruments(1)(3)
$
(2
)
 
$
(5
)
 
Interest Expense
 
$
(9
)
 
$
(9
)
SoCalGas:
 
 
 
 
 
 
 
 
 
Interest rate instruments
$
—

 
$
—

 
Interest Expense
 
$
—

 
$
(1
)
(1)
Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE.
(2)
There was $2 million and $4 million of losses from hedge ineffectiveness related to these cash flow hedges in the three months and nine months ended September 30, 2017, respectively, and negligible amounts for the same periods in 2016.
(3)
There was negligible hedge ineffectiveness related to these cash flow hedges in the three months and nine months ended September 30, 2017 and 2016.
Fair Value Hedge Impact on the Condensed Consolidated Statements of Operations Table The table below includes the effects of derivative instruments designated as fair value hedges on the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2016. There were no fair value hedges outstanding during the three months ended September 30, 2016 or the three months and nine months ended September 30, 2017.
FAIR VALUE HEDGE IMPACTS
(Dollars in millions)
 
 
 
Pretax gain (loss) on derivatives recognized in earnings
 
 
 
Nine months ended
 
 
Location
September 30, 2016
Sempra Energy Consolidated:
 
 
Interest rate instruments
Interest Expense
$
3

Interest rate instruments
Other Income, Net
(2
)
Total(1)
 
$
1

 
 
 
 
(1)
There was no hedge ineffectiveness in the nine months ended September 30, 2016. All other changes in the fair value of the interest rate swap agreements are exactly offset by changes in the fair value of the underlying long-term debt and recorded in Other Income, Net.
The effects of derivative instruments not designated as hedging instruments on the Condensed Consolidated Statements of Operations for the three months and nine months ended September 30 were:
UNDESIGNATED DERIVATIVE IMPACTS
(Dollars in millions)
 
 
Pretax gain (loss) on derivatives recognized in earnings
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
Location
2017
 
2016
 
2017
 
2016
Sempra Energy Consolidated:
 
 
 
 
 
 
 
 
Foreign exchange instruments
Other Income, Net
$
4

 
$
(11
)
 
$
101

 
$
(23
)
Foreign exchange instruments
Equity Earnings (Losses),
Net of Income Tax
1

 
1

 
1

 
3

Commodity contracts not subject
to rate recovery
Revenues: Energy-Related
Businesses
(3
)
 
3

 
27

 
(26
)
Commodity contracts not subject
to rate recovery
Operation and Maintenance
—

 
—

 
(1
)
 
1

Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
59

 
(118
)
 
36

 
(90
)
Commodity contracts subject
to rate recovery
Cost of Natural Gas
(1
)
 
—

 
(1
)
 
(2
)
Total
 
$
60

 
$
(125
)
 
$
163

 
$
(137
)
SDG&E:
 
 
 
 
 
 
 
 
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
$
59

 
$
(118
)
 
$
36

 
$
(90
)
SoCalGas:
 
 
 
 
 
 
 
 
Commodity contracts not subject
to rate recovery
Operation and Maintenance
$
1

 
$
—

 
$
—

 
$
—

Commodity contracts subject
to rate recovery
Cost of Natural Gas
(1
)
 
—

 
(1
)
 
(2
)
Total
 
$
—

 
$
—

 
$
(1
)
 
$
(2
)