FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2017



RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
	Fair value at December 31, 2017
	Level 1			Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	491		$	5	$	—	$	496
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	45			9		—		54
Municipal bonds	—			250		—		250
Other securities	—			217		—		217
Total debt securities	45			476		—		521
Total nuclear decommissioning trusts⁽¹⁾	536			481		—		1,017
Interest rate and foreign exchange instruments	—			7		—		7
Commodity contracts not subject to rate recovery	5			12		—		17
Effect of netting and allocation of collateral⁽²⁾	2			—		—		2
Commodity contracts subject to rate recovery	—			2		126		128
Effect of netting and allocation of collateral⁽²⁾	12			—		5		17
Total	$	555		$	502	$	131	$	1,188

Liabilities:
Interest rate and foreign exchange instruments	$	—		$	217	$	—	$	217
Commodity contracts not subject to rate recovery	—			6		—		6
Commodity contracts subject to rate recovery	23			7		154		184
Effect of netting and allocation of collateral⁽²⁾	(23		)	—		—		(23		)
Total	$	—		$	230	$	154	$	384

	Fair value at December 31, 2016
	Level 1			Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	508		$	—	$	—	$	508
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	36			16		—		52
Municipal bonds	—			206		—		206
Other securities	—			141		—		141
Total debt securities	36			363		—		399
Total nuclear decommissioning trusts⁽¹⁾	544			363		—		907
Interest rate and foreign exchange instruments	—			9		—		9
Commodity contracts not subject to rate recovery	—			15		—		15
Effect of netting and allocation of collateral⁽²⁾	2			7		—		9
Commodity contracts subject to rate recovery	1			3		96		100
Effect of netting and allocation of collateral⁽²⁾	27			—		5		32
Total	$	574		$	397	$	101	$	1,072

Liabilities:
Interest rate and foreign exchange instruments	$	—		$	252	$	—	$	252
Commodity contracts not subject to rate recovery	16			11		—		27
Effect of netting and allocation of collateral⁽²⁾	(17		)	—		—		(17		)
Commodity contracts subject to rate recovery	19			8		170		197
Effect of netting and allocation of collateral⁽²⁾	(18		)	—		—		(18		)
Total	$	—		$	271	$	170	$	441


⁽¹⁾	Excludes cash balances and cash equivalents.


⁽²⁾	Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.



RECURRING FAIR VALUE MEASURES – SDG&E
(Dollars in millions)
	Fair value at December 31, 2017
	Level 1			Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	491		$	5	$	—	$	496
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	45			9		—		54
Municipal bonds	—			250		—		250
Other securities	—			217		—		217
Total debt securities	45			476		—		521
Total nuclear decommissioning trusts⁽¹⁾	536			481		—		1,017
Commodity contracts subject to rate recovery	—			—		126		126
Effect of netting and allocation of collateral⁽²⁾	11			—		5		16
Total	$	547		$	481	$	131	$	1,159

Liabilities:
Interest rate instruments	$	—		$	13	$	—	$	13
Commodity contracts subject to rate recovery	23			5		154		182
Effect of netting and allocation of collateral⁽²⁾	(23		)	—		—		(23		)
Total	$	—		$	18	$	154	$	172

	Fair value at December 31, 2016
	Level 1			Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Equity securities	$	508		$	—	$	—	$	508
Debt securities:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies	36			16		—		52
Municipal bonds	—			206		—		206
Other securities	—			141		—		141
Total debt securities	36			363		—		399
Total nuclear decommissioning trusts⁽¹⁾	544			363		—		907
Commodity contracts not subject to rate recovery	—			—		—		—
Effect of netting and allocation of collateral⁽²⁾	1			—		—		1
Commodity contracts subject to rate recovery	1			2		96		99
Effect of netting and allocation of collateral⁽²⁾	25			—		5		30
Total	$	571		$	365	$	101	$	1,037

Liabilities:
Interest rate instruments	$	—		$	25	$	—	$	25
Commodity contracts subject to rate recovery	17			7		170		194
Effect of netting and allocation of collateral⁽²⁾	(16		)	—		—		(16		)
Total	$	1		$	32	$	170	$	203


⁽¹⁾	Excludes cash balances and cash equivalents.


⁽²⁾	Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.



RECURRING FAIR VALUE MEASURES – SOCALGAS
(Dollars in millions)
	Fair value at December 31, 2017
	Level 1			Level 2		Level 3			Total
Assets:
Commodity contracts subject to rate recovery	$	—		$	2	$	—		$	2
Effect of netting and allocation of collateral⁽¹⁾	1			—		—			1
Total	$	1		$	2	$	—		$	3
Liabilities:
Commodity contracts subject to rate recovery	$	—		$	2	$	—		$	2
Total	$	—		$	2	$	—		$	2

	Fair value at December 31, 2016
	Level 1			Level 2		Level 3			Total
Assets:
Commodity contracts not subject to rate recovery	$	—		$	—	$	—		$	—
Effect of netting and allocation of collateral⁽¹⁾	1			—		—			1
Commodity contracts subject to rate recovery	—			1		—			1
Effect of netting and allocation of collateral⁽¹⁾	2			—		—			2
Total	$	3		$	1	$	—		$	4
Liabilities:
Commodity contracts subject to rate recovery	$	2		$	1	$	—		$	3
Effect of netting and allocation of collateral⁽¹⁾	(2		)	—		—		—	(2		)
Total	$	—		$	1	$	—		$	1


⁽¹⁾	Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.

Recurring Fair Value Measures Level 3 Rollforward Table

The following table sets forth reconciliations of changes in the fair value of CRRs and long-term, fixed-price electricity positions classified as Level 3 in the fair value hierarchy for Sempra Energy Consolidated and SDG&E:



LEVEL 3 RECONCILIATIONS⁽¹⁾
(Dollars in millions)
	Years ended December 31,
	2017			2016			2015
Balance at January 1	$	(74	)	$	19		$	107
Realized and unrealized gains (losses)	34			(120		)	(134		)
Allocated transmission instruments	6			8			12
Settlements	6			19			34
Balance at December 31	$	(28	)	$	(74	)	$	19
Change in unrealized gains (losses) relating to
instruments still held at December 31	$	30		$	(101	)	$	(27	)

⁽¹⁾ Excludes the effect of contractual ability to settle contracts under master netting agreements.

Schedule of Auction Price Inputs

For the CRRs settling from January 1 to December 31, the auction price inputs, at a given location, are in the following ranges:



CONGESTION REVENUE RIGHTS AUCTION PRICE INPUTS

Settlement year		Price per MWh
2018	$	(7.25	)	to	$	11.99
2017		(11.88	)	to		6.93
2016		(23.81	)	to		10.23

Fair Value of Financial Instruments Table

The following table provides the carrying amounts and fair values of certain other financial instruments that are not recorded at fair value on the Consolidated Balance Sheets at December 31, 2017 and 2016:



FAIR VALUE OF FINANCIAL INSTRUMENTS
(Dollars in millions)
	December 31, 2017
	Carrying		Fair value
	amount		Level 1		Level 2		Level 3		Total
Sempra Energy Consolidated:
Long-term amounts due from unconsolidated affiliates⁽¹⁾	$	604	$	—	$	528	$	96	$	624
Long-term amounts due to unconsolidated affiliates	35		—		32		—		32
Total long-term debt⁽²⁾⁽³⁾	17,138		817		17,134		458		18,409
SDG&E:
Total long-term debt⁽³⁾⁽⁴⁾	$	4,868	$	—	$	5,073	$	295	$	5,368
SoCalGas:
Total long-term debt⁽⁵⁾	$	3,009	$	—	$	3,192	$	—	$	3,192

	December 31, 2016
	Carrying		Fair value
	amount		Level 1		Level 2		Level 3		Total
Sempra Energy Consolidated:
Long-term amounts due from unconsolidated affiliates⁽¹⁾	$	184	$	—	$	91	$	84	$	175
Total long-term debt⁽²⁾⁽³⁾	15,068		—		15,455		492		15,947
SDG&E:
Total long-term debt⁽³⁾⁽⁴⁾	$	4,654	$	—	$	4,727	$	305	$	5,032
SoCalGas:
Total long-term debt⁽⁵⁾	$	3,009	$	—	$	3,131	$	—	$	3,131


⁽¹⁾	Excluding accumulated interest outstanding of $29 million and $17 million at December 31, 2017 and 2016, respectively, and excluding foreign currency translation of $35 million on a Mexican peso-denominated loan at December 31, 2017.


⁽²⁾	Before reductions for unamortized discount (net of premium) and debt issuance costs of $143 million and $109 million at December 31, 2017

and 2016, respectively, and excluding build-to-suit and capital lease obligations of $877 million and $383 million at December 31, 2017 and 2016, respectively. We discuss our long-term debt in Note 5.


⁽³⁾	Level 3 instruments include $295 million and $305 million at December 31, 2017 and 2016, respectively, related to Otay Mesa VIE.


⁽⁴⁾	Before reductions for unamortized discount and debt issuance costs of $45 million at December 31, 2017 and 2016, respectively, and excluding capital lease obligations of $732 million and $240 million at December 31, 2017 and 2016, respectively.


⁽⁵⁾	Before reductions for unamortized discount and debt issuance costs of $24 million and $27 million at December 31, 2017 and 2016, respectively, and excluding capital lease obligations of $1 million at December 31, 2017.

Fair Value Measurements, Nonrecurring Table

The following table summarizes significant inputs impacting our non-recurring fair value measures:

NON-RECURRING FAIR VALUE MEASURES – SEMPRA ENERGY CONSOLIDATED

(Dollars in millions)

Estimated

fair

value

Valuation technique

Fair

value

hierarchy

% of

fair value

measurement

Inputs used to

develop

measurement

Range of

inputs

Investment in IEnova Pipelines

1,144

⁽¹⁾

Market approach

Level 2

100%

Equity sale price

100%

TdM

145

⁽²⁾

Market approach

Level 2

100%

Purchase price offers

100%

TdM

⁽³⁾

Market approach

Level 2

100%

Purchase price offer

100%

Investment in
Rockies Express

440

⁽⁴⁾

Market approach

Level 2

100%

Equity sale price

100%


⁽¹⁾	At measurement date of September 26, 2016, immediately prior to acquiring a 100-percent ownership interest in IEnova Pipelines.


⁽²⁾	At measurement date of September 29, 2016.


⁽³⁾	At measurement date of June 30, 2017. At December 31, 2017, TdM has a carrying value of $78 million, reflecting subsequent business activity, and is classified as held for sale.


⁽⁴⁾	At measurement date of March 29, 2016. On May 9, 2016, Sempra LNG & Midstream sold its equity interest in Rockies Express.