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Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">2012 Business Segment Realignment</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Effective January 1, 2012</font><font style="font-family:Times New Roman;font-size:10pt;">, management realigned some of the company's major subsidiaries to better fit its strategic direction and to enhance the management and integration of our assets. This realignment resulted in a change in reportable segments in 2012. In accordance with accounting principles </font><font style="font-family:Times New Roman;font-size:10pt;">generally accepted </font><font style="font-family:Times New Roman;font-size:10pt;">in the United States (GAAP), historical information </font><font style="font-family:Times New Roman;font-size:10pt;">for Sempra Energy </font><font style="font-family:Times New Roman;font-size:10pt;">has been restated in </font><font style="font-family:Times New Roman;font-size:10pt;">its Condensed Consolidated Financial Statements and </font><font style="font-family:Times New Roman;font-size:10pt;">these Notes to reflect the effect of this change. All discussions of our operating units and reportable segments in these Notes reflect the new segments and operating structure.</font></p><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">Sempra Energy</font></p><p style='margin-top:0pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Sempra Energy's </font><font style="font-family:Times New Roman;font-size:10pt;">Condensed</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">Consolidated Financial Statements include the accounts of Sempra Energy, a California-based Fortune 500 holding company, and its consolidated subsidiaries and a variable interest entity (VIE). Sempra Energy's principal </font><font style="font-family:Times New Roman;font-size:10pt;">operating</font><font style="font-family:Times New Roman;font-size:10pt;"> units</font><font style="font-family:Times New Roman;font-size:10pt;"> are</font></p><p style='margin-top:0pt; margin-bottom:3pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">San Diego Gas &amp; Electric Company (SDG&amp;E) and Southern California Gas Company (SoCalGas);</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">Sempra International, which includes our </font><font style="font-family:Times New Roman;font-size:10pt;">Sempra </font><font style="font-family:Times New Roman;font-size:10pt;">South American Utilities and Sempra Mexico reportable segments; and</font></li></ul><p style='margin-top:0pt; margin-bottom:9pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">Sempra U.S. Gas &amp; Power, which includes our Sempra Renewables and Sempra Natural Gas reportable segment</font><font style="font-family:Times New Roman;font-size:10pt;">s</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></li></ul><p style='margin-top:0pt; margin-bottom:9pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We provide descriptions of each of our segments in Note 11.</font></p><p style='margin-top:0pt; margin-bottom:9pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We refer to SDG&amp;E and SoCalGas collectively as the California Utilities, which do not include the utilities in our Sempra International and Sempra U.S. Gas &amp; Power operating units. 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We discuss our investments in unconsolidated</font><font style="font-family:Times New Roman;font-size:10pt;"> subsidiaries in Note 4 </font><font style="font-family:Times New Roman;font-size:10pt;">herein</font><font style="font-family:Times New Roman;font-size:10pt;"> and Note 4 of the Notes to Consolid</font><font style="font-family:Times New Roman;font-size:10pt;">ated Financial Statements in our</font><font style="font-family:Times New Roman;font-size:10pt;"> Annual Report</font><font style="font-family:Times New Roman;font-size:10pt;"> on Form 10-K for the year ended December 31, 201</font><font style="font-family:Times New Roman;font-size:10pt;">1</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">SDG&amp;E</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">SDG&amp;E</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;">s </font><font style="font-family:Times New Roman;font-size:10pt;">Condensed Consolidated</font><font style="font-family:Times New Roman;font-size:10pt;"> Financial Statements include its accounts and the accounts of a VIE of which SDG&amp;E is the primary beneficiary, as we discuss </font><font style="font-family:Times New Roman;font-size:10pt;">in Note 5</font><font style="font-family:Times New Roman;font-size:10pt;"> under </font><font style="font-family:Times New Roman;font-size:10pt;">&#8220;</font><font style="font-family:Times New Roman;font-size:10pt;">Variable Interest Entities</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;">&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;"> SDG&amp;E's common stock is wholly owned by Enova Corporation, which is a wholly owned subsidiary of Sempra Energy. </font></p><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">SoCalGas</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">SoCalGas' </font><font style="font-family:Times New Roman;font-size:10pt;">Condensed </font><font style="font-family:Times New Roman;font-size:10pt;">Consolidated Financial Statements include its subsidiaries, which comprise less than one percent of its consolidated financial position and results of operations. </font><font style="font-family:Times New Roman;font-size:10pt;">SoCalGas' common stock is wholly owned by Pacific Enterprises (PE), which is a wholly owned subsidiary of Sempra Energy.</font></p><p style='margin-top:0pt; margin-bottom:3pt'>&#160;</p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">BASIS OF PRESENTATION</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">This is a combined</font><font style="font-family:Times New Roman;font-size:10pt;"> report of Sempra Energy, SDG&amp;E</font><font style="font-family:Times New Roman;font-size:10pt;"> and SoCalGas. We provide separate information for SDG&amp;E and SoCalGas as required</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">References in this report to </font><font style="font-family:Times New Roman;font-size:10pt;">&#8220;</font><font style="font-family:Times New Roman;font-size:10pt;">we</font><font style="font-family:Times New Roman;font-size:10pt;">,&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">&#8220;</font><font style="font-family:Times New Roman;font-size:10pt;">our</font><font style="font-family:Times New Roman;font-size:10pt;">&#8221; and &#8220;Sempra Energy Consolidated&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;"> are to Sempra Energy and its consolidated entities, unless otherwise indicated by the context. We have eliminated intercompany accounts and transactions within </font><font style="font-family:Times New Roman;font-size:10pt;">the </font><font style="font-family:Times New Roman;font-size:10pt;">consolidated financial statements</font><font style="font-family:Times New Roman;font-size:10pt;"> of each reporting entity</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We have prepared the</font><font style="font-family:Times New Roman;font-size:10pt;"> Condensed Consolidated Financial Statements in conformity with </font><font style="font-family:Times New Roman;font-size:10pt;">GAAP</font><font style="font-family:Times New Roman;font-size:10pt;"> and in accordance with the interim-period-reporting requirements of Form 10-Q. Results of operations for interim periods are not necessarily indicative of results for the en</font><font style="font-family:Times New Roman;font-size:10pt;">tire year. </font><font style="font-family:Times New Roman;font-size:10pt;">We evaluated events and transactions that occurred after </font><font style="font-family:Times New Roman;font-size:10pt;">March</font><font style="font-family:Times New Roman;font-size:10pt;"> 3</font><font style="font-family:Times New Roman;font-size:10pt;">1</font><font style="font-family:Times New Roman;font-size:10pt;">, 201</font><font style="font-family:Times New Roman;font-size:10pt;">2</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">through the date </font><font style="font-family:Times New Roman;font-size:10pt;">the</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">financial </font><font style="font-family:Times New Roman;font-size:10pt;">statements</font><font style="font-family:Times New Roman;font-size:10pt;"> were issu</font><font style="font-family:Times New Roman;font-size:10pt;">e</font><font style="font-family:Times New Roman;font-size:10pt;">d</font><font style="font-family:Times New Roman;font-size:10pt;"> and</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">i</font><font style="font-family:Times New Roman;font-size:10pt;">n the opinion of </font><font style="font-family:Times New Roman;font-size:10pt;">management, the accompanying statements reflect all adjustments necessary for a fair presentation.</font><font style="font-family:Times New Roman;font-size:10pt;"> These adjustments are only of a normal, recurring nature</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">As we discuss</font><font style="font-family:Times New Roman;font-size:10pt;"> in Note 3, in April 2011, Sempra South American Utilities acquired </font><font style="font-family:Times New Roman;font-size:10pt;">controlling interests in </font><font style="font-family:Times New Roman;font-size:10pt;">two electric distribution utilities in South America. Sempra Natural Gas owns Mobile Gas Service Corporation (Mobile Gas) in southwest Alabama and Sempra Mexico owns Ecogas Mexico, S de RL de CV (Ecogas) in Northern Mexico, both natural gas distribution utilities. Previous to the quarterly report for the quarter ended June 30, 2011, we provided separate revenue and cost of revenue information on our consolidated statements of operations for the California Utilities only, as the amounts for Mobile Gas and Ecogas were immaterial. Due to the addition of the South American utilities, beginning with the quarterly report for the quarter ended June 30, 2011, we have provided separate revenue and cost of revenue information on the Condensed Consolidated Statements of Operations on a combined basis for all </font><font style="font-family:Times New Roman;font-size:10pt;">of </font><font style="font-family:Times New Roman;font-size:10pt;">our utilities. Accordingly, amounts in the </font><font style="font-family:Times New Roman;font-size:10pt;">quarterly period ended March 31, 2011</font><font style="font-family:Times New Roman;font-size:10pt;"> have been reclassified to conform with the current year presentation.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">All December 31, 2011</font><font style="font-family:Times New Roman;font-size:10pt;"> balance sheet information in the Condensed Consolidated Financial Statements has been derived from </font><font style="font-family:Times New Roman;font-size:10pt;">our</font><font style="font-family:Times New Roman;font-size:10pt;"> audited 201</font><font style="font-family:Times New Roman;font-size:10pt;">1</font><font style="font-family:Times New Roman;font-size:10pt;"> consolidated financial statements. Certain information and note disclosures normally included in </font><font style="font-family:Times New Roman;font-size:10pt;">annual </font><font style="font-family:Times New Roman;font-size:10pt;">financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the interim-period-reporting </font><font style="font-family:Times New Roman;font-size:10pt;">provisions</font><font style="font-family:Times New Roman;font-size:10pt;"> of</font><font style="font-family:Times New Roman;font-size:10pt;"> GAAP and</font><font style="font-family:Times New Roman;font-size:10pt;"> the Securities and Exchange Commission.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">You should read the information in this Quarterly Report in conjunction with our Annual Report on Form 10-K</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">for the year ended Decembe</font><font style="font-family:Times New Roman;font-size:10pt;">r</font><font style="font-family:Times New Roman;font-size:10pt;"> 31, 20</font><font style="font-family:Times New Roman;font-size:10pt;">11</font><font style="font-family:Times New Roman;font-size:10pt;"> (the Annual Report</font><font style="font-family:Times New Roman;font-size:10pt;">)</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">which is a</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">combined report for</font><font style="font-family:Times New Roman;font-size:10pt;"> Sempra Energy,</font><font style="font-family:Times New Roman;font-size:10pt;"> SDG&amp;E and SoCalGas.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We describe o</font><font style="font-family:Times New Roman;font-size:10pt;">ur significant a</font><font style="font-family:Times New Roman;font-size:10pt;">ccounting policies in</font><font style="font-family:Times New Roman;font-size:10pt;"> Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. We follow the same accounting policies for interim reporting purposes</font><font style="font-family:Times New Roman;font-size:10pt;">, except for </font><font style="font-family:Times New Roman;font-size:10pt;">the change in acco</font><font style="font-family:Times New Roman;font-size:10pt;">unting principle discussed below</font><font style="font-family:Times New Roman;font-size:10pt;"> and </font><font style="font-family:Times New Roman;font-size:10pt;">the adoption of new accounting standards as we discuss in Note 2</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The </font><font style="font-family:Times New Roman;font-size:10pt;">California</font><font style="font-family:Times New Roman;font-size:10pt;"> Utilitie</font><font style="font-family:Times New Roman;font-size:10pt;">s, </font><font style="font-family:Times New Roman;font-size:10pt;">Sempra </font><font style="font-family:Times New Roman;font-size:10pt;">Natural Gas'</font><font style="font-family:Times New Roman;font-size:10pt;"> Mobile Gas</font><font style="font-family:Times New Roman;font-size:10pt;"> and </font><font style="font-family:Times New Roman;font-size:10pt;">Sempra Mexico's </font><font style="font-family:Times New Roman;font-size:10pt;">Ecoga</font><font style="font-family:Times New Roman;font-size:10pt;">s </font><font style="font-family:Times New Roman;font-size:10pt;">prepare their financial statements </font><font style="font-family:Times New Roman;font-size:10pt;">in accordance with GAAP provisions</font><font style="font-family:Times New Roman;font-size:10pt;"> governing regu</font><font style="font-family:Times New Roman;font-size:10pt;">lated operations, as we discus</font><font style="font-family:Times New Roman;font-size:10pt;">s</font><font style="font-family:Times New Roman;font-size:10pt;"> in Note 1 </font><font style="font-family:Times New Roman;font-size:10pt;">of the Notes to Consolidated Financial Statements in the Annual Report.</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">Change in Accounting Principle</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Effective January 1, 2012, we changed our method of accounting for investment tax credits (ITC) from the flow-through method to the deferral method </font><font style="font-family:Times New Roman;font-size:10pt;">for </font><font style="font-family:Times New Roman;font-size:10pt;">Sempra Energy</font><font style="font-family:Times New Roman;font-size:10pt;">. Under the flow-through method, we reduced our income tax expense by the amount of ITC in the year in which </font><font style="font-family:Times New Roman;font-size:10pt;">the qualifying assets</font><font style="font-family:Times New Roman;font-size:10pt;"> w</font><font style="font-family:Times New Roman;font-size:10pt;">ere</font><font style="font-family:Times New Roman;font-size:10pt;"> placed in service. Under the deferral method, we record ITC in the year when </font><font style="font-family:Times New Roman;font-size:10pt;">the qualifying assets</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">are</font><font style="font-family:Times New Roman;font-size:10pt;"> placed in service as a reduction to the cost of the asset that generated the ITC. This results in lower book depreciation over the life of the asset.</font><font style="font-family:Times New Roman;font-size:10pt;"> This change has no historical or prospective impact on the California Utilities because ITC is effectively deferred as a result of the application of regulatory accounting required under GAAP.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The flow-through method and the deferral method are both acceptable under GAAP, but the deferral method is the preferred method. We believe that the deferral method is preferable for the ITC we receive because it recognizes ITC benefits over the same periods as the associated costs for which </font><font style="font-family:Times New Roman;font-size:10pt;">the </font><font style="font-family:Times New Roman;font-size:10pt;">ITC are intended to compensate</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We applied this change in accounting principle by retrospectively adjusting the </font><font style="font-family:Times New Roman;font-size:10pt;">historical </font><font style="font-family:Times New Roman;font-size:10pt;">financial statement amounts for all periods presented. Upon adopting the deferral method, we recorded an adjustment for the cumulative effect of the change in accounting principle to reduce Sempra Energy Consolidated retained earnings as of January 1, 201</font><font style="font-family:Times New Roman;font-size:10pt;">1</font><font style="font-family:Times New Roman;font-size:10pt;"> by $</font><font style="font-family:Times New Roman;font-size:10pt;">37</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">million.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">For certain solar generating assets being placed into service during 2012, w</font><font style="font-family:Times New Roman;font-size:10pt;">e have elected to seek cash grants rather than ITC for which </font><font style="font-family:Times New Roman;font-size:10pt;">the </font><font style="font-family:Times New Roman;font-size:10pt;">projects also qualify. 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margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">PRINCIPLES OF CONSOLIDATION</font></p><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">2012 Business Segment Realignment</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Effective January 1, 2012</font><font style="font-family:Times New Roman;font-size:10pt;">, management realigned some of the company's major subsidiaries to better fit its strategic direction and to enhance the management and integration of our assets. This realignment resulted in a change in reportable segments in 2012. In accordance with accounting principles </font><font style="font-family:Times New Roman;font-size:10pt;">generally accepted </font><font style="font-family:Times New Roman;font-size:10pt;">in the United States (GAAP), historical information </font><font style="font-family:Times New Roman;font-size:10pt;">for Sempra Energy </font><font style="font-family:Times New Roman;font-size:10pt;">has been restated in </font><font style="font-family:Times New Roman;font-size:10pt;">its Condensed Consolidated Financial Statements and </font><font style="font-family:Times New Roman;font-size:10pt;">these Notes to reflect the effect of this change. 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margin-bottom:6pt'><font style="font-family:Arial;font-size:11pt;margin-left:0px;">N</font><font style="font-family:Arial;font-size:11pt;">OTE 2. NEW ACCOUNTING STANDARDS</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We describe below recent pronouncements that have had or may have a significant effect on our financial statements. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our financial condition, results of operations, </font><font style="font-family:Times New Roman;font-size:10pt;">cash flows </font><font style="font-family:Times New Roman;font-size:10pt;">or disclosures. </font></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">SEMPRA ENERGY, SDG&amp;E </font><font style="font-family:Arial;font-size:10pt;font-weight:bold;">AND SOCALGAS</font><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;"> </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;margin-left:0px;">Accounting S</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">tandards Update (ASU) 2011-04, &#8220;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International F</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">inancial Reporting Standards (</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">IFRSs)</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> (ASU 2011-04): </font><font style="font-family:Times New Roman;font-size:10pt;">ASU 2011-04 amends Accounting Standards Codification (ASC) Topic 820, </font><font style="font-family:Times New Roman;font-size:10pt;font-style:italic;">Fair Value Measurements and Disclosures,</font><font style="font-family:Times New Roman;font-size:10pt;"> and provides changes in the wording used to describe the requirements for measuring </font><font style="font-family:Times New Roman;font-size:10pt;">fair value </font><font style="font-family:Times New Roman;font-size:10pt;">and disclosing information about fair value measurement. ASU 2011-04 results in common fair value measurement and disclosu</font><font style="font-family:Times New Roman;font-size:10pt;">re requirements under both </font><font style="font-family:Times New Roman;font-size:10pt;">GAAP and IFRSs. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">ASU 2011-04 expands fair value measurement disclosures </font><font style="font-family:Times New Roman;font-size:10pt;">for Level 3 instruments </font><font style="font-family:Times New Roman;font-size:10pt;">to require</font></p><p style='margin-top:0pt; margin-bottom:3pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">quantitative information about the unobservable inputs</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">a description of the valuation process</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">a qualitative discussion about the sensitivity of the measurements </font></li></ul><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We adopt</font><font style="font-family:Times New Roman;font-size:10pt;">ed</font><font style="font-family:Times New Roman;font-size:10pt;"> ASU 2011-04 on January 1, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">and </font><font style="font-family:Times New Roman;font-size:10pt;">it</font><font style="font-family:Times New Roman;font-size:10pt;"> did not</font><font style="font-family:Times New Roman;font-size:10pt;"> affect our financial position</font><font style="font-family:Times New Roman;font-size:10pt;">, </font><font style="font-family:Times New Roman;font-size:10pt;">results of operations</font><font style="font-family:Times New Roman;font-size:10pt;"> or cash flows</font><font style="font-family:Times New Roman;font-size:10pt;">. </font><font style="font-family:Times New Roman;font-size:10pt;">T</font><font style="font-family:Times New Roman;font-size:10pt;">he </font><font style="font-family:Times New Roman;font-size:10pt;">required </font><font style="font-family:Times New Roman;font-size:10pt;">disclosure</font><font style="font-family:Times New Roman;font-size:10pt;"> is provided in Note 8.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;margin-left:0px;">ASU 2011-05, </font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8220;Presentation of Comprehensive Income</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> (ASU 2011-05) and ASU 2011-12, </font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8220;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> (ASU 2011-12):</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> </font><font style="font-family:Times New Roman;font-size:10pt;">ASU 2011-05 amends ASC Topic 220, </font><font style="font-family:Times New Roman;font-size:10pt;font-style:italic;">Comprehensive Income, </font><font style="font-family:Times New Roman;font-size:10pt;">and eliminates the option to report other comprehensive income and its components in the statement of changes in equity. The ASU allows an entity an option to present the components of net income and other </font><font style="font-family:Times New Roman;font-size:10pt;">comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive, statements. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">ASU 2011-05 does not change the items that must be reported in other comprehensive income, when an item of other comprehensive income must be reclassified to net income, or the earnings per share computation. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">ASU 2011-12 defers the requirement to separately present on the face of the </font><font style="font-family:Times New Roman;font-size:10pt;">statement of operations or statement of comprehensive income</font><font style="font-family:Times New Roman;font-size:10pt;"> reclassification adjustments for items that are reclassified from other comprehensive income to net income.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We adopt</font><font style="font-family:Times New Roman;font-size:10pt;">ed</font><font style="font-family:Times New Roman;font-size:10pt;"> ASU 2011-05 on January 1, 2012 and </font><font style="font-family:Times New Roman;font-size:10pt;">have elected to present the components of net income and other comprehensive income in two separate, but consecutive</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> statements. </font><font style="font-family:Times New Roman;font-size:10pt;"> </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;margin-left:0px;">ASU 2011-11, &#8220;Disclosures about Offsetting Assets and Liabilities</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> (ASU 2011-11): </font><font style="font-family:Times New Roman;font-size:10pt;">In order to allow for balance sheet comparison between GAAP and IFRSs, ASU 2011-11 requires enhanced disclosures related to financial assets and liabilities eligible for offsetting in the statement of financial position. An entity will have to disclose both gross and net information about financial instruments and transactions subject to a master netting arrangement and eligible for offset, including cash collateral received and posted. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We will adopt ASU 2011-11 on January 1, 2013 as required and do not expect it to affect our financial position, results of operations or cash flows. We will provide the additional disclosure in our 2013 interim financial statements.</font></p> <p style='margin-top:24pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:11pt;margin-left:0px;">N</font><font style="font-family:Arial;font-size:11pt;">OTE 2. NEW ACCOUNTING STANDARDS</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We describe below recent pronouncements that have had or may have a significant effect on our financial statements. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our financial condition, results of operations, </font><font style="font-family:Times New Roman;font-size:10pt;">cash flows </font><font style="font-family:Times New Roman;font-size:10pt;">or disclosures. </font></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">SEMPRA ENERGY, SDG&amp;E </font><font style="font-family:Arial;font-size:10pt;font-weight:bold;">AND SOCALGAS</font><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;"> </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;margin-left:0px;">Accounting S</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">tandards Update (ASU) 2011-04, &#8220;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International F</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">inancial Reporting Standards (</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">IFRSs)</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> (ASU 2011-04): </font><font style="font-family:Times New Roman;font-size:10pt;">ASU 2011-04 amends Accounting Standards Codification (ASC) Topic 820, </font><font style="font-family:Times New Roman;font-size:10pt;font-style:italic;">Fair Value Measurements and Disclosures,</font><font style="font-family:Times New Roman;font-size:10pt;"> and provides changes in the wording used to describe the requirements for measuring </font><font style="font-family:Times New Roman;font-size:10pt;">fair value </font><font style="font-family:Times New Roman;font-size:10pt;">and disclosing information about fair value measurement. ASU 2011-04 results in common fair value measurement and disclosu</font><font style="font-family:Times New Roman;font-size:10pt;">re requirements under both </font><font style="font-family:Times New Roman;font-size:10pt;">GAAP and IFRSs. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">ASU 2011-04 expands fair value measurement disclosures </font><font style="font-family:Times New Roman;font-size:10pt;">for Level 3 instruments </font><font style="font-family:Times New Roman;font-size:10pt;">to require</font></p><p style='margin-top:0pt; margin-bottom:3pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">quantitative information about the unobservable inputs</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">a description of the valuation process</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">a qualitative discussion about the sensitivity of the measurements </font></li></ul><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We adopt</font><font style="font-family:Times New Roman;font-size:10pt;">ed</font><font style="font-family:Times New Roman;font-size:10pt;"> ASU 2011-04 on January 1, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">and </font><font style="font-family:Times New Roman;font-size:10pt;">it</font><font style="font-family:Times New Roman;font-size:10pt;"> did not</font><font style="font-family:Times New Roman;font-size:10pt;"> affect our financial position</font><font style="font-family:Times New Roman;font-size:10pt;">, </font><font style="font-family:Times New Roman;font-size:10pt;">results of operations</font><font style="font-family:Times New Roman;font-size:10pt;"> or cash flows</font><font style="font-family:Times New Roman;font-size:10pt;">. </font><font style="font-family:Times New Roman;font-size:10pt;">T</font><font style="font-family:Times New Roman;font-size:10pt;">he </font><font style="font-family:Times New Roman;font-size:10pt;">required </font><font style="font-family:Times New Roman;font-size:10pt;">disclosure</font><font style="font-family:Times New Roman;font-size:10pt;"> is provided in Note 8.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;margin-left:0px;">ASU 2011-05, </font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8220;Presentation of Comprehensive Income</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> (ASU 2011-05) and ASU 2011-12, </font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8220;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> (ASU 2011-12):</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> </font><font style="font-family:Times New Roman;font-size:10pt;">ASU 2011-05 amends ASC Topic 220, </font><font style="font-family:Times New Roman;font-size:10pt;font-style:italic;">Comprehensive Income, </font><font style="font-family:Times New Roman;font-size:10pt;">and eliminates the option to report other comprehensive income and its components in the statement of changes in equity. The ASU allows an entity an option to present the components of net income and other </font><font style="font-family:Times New Roman;font-size:10pt;">comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive, statements. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">ASU 2011-05 does not change the items that must be reported in other comprehensive income, when an item of other comprehensive income must be reclassified to net income, or the earnings per share computation. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">ASU 2011-12 defers the requirement to separately present on the face of the </font><font style="font-family:Times New Roman;font-size:10pt;">statement of operations or statement of comprehensive income</font><font style="font-family:Times New Roman;font-size:10pt;"> reclassification adjustments for items that are reclassified from other comprehensive income to net income.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We adopt</font><font style="font-family:Times New Roman;font-size:10pt;">ed</font><font style="font-family:Times New Roman;font-size:10pt;"> ASU 2011-05 on January 1, 2012 and </font><font style="font-family:Times New Roman;font-size:10pt;">have elected to present the components of net income and other comprehensive income in two separate, but consecutive</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> statements. </font><font style="font-family:Times New Roman;font-size:10pt;"> </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;margin-left:0px;">ASU 2011-11, &#8220;Disclosures about Offsetting Assets and Liabilities</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;">&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;font-style:italic;"> (ASU 2011-11): </font><font style="font-family:Times New Roman;font-size:10pt;">In order to allow for balance sheet comparison between GAAP and IFRSs, ASU 2011-11 requires enhanced disclosures related to financial assets and liabilities eligible for offsetting in the statement of financial position. An entity will have to disclose both gross and net information about financial instruments and transactions subject to a master netting arrangement and eligible for offset, including cash collateral received and posted. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We will adopt ASU 2011-11 on January 1, 2013 as required and do not expect it to affect our financial position, results of operations or cash flows. We will provide the additional disclosure in our 2013 interim financial statements.</font></p> <p style='margin-top:24pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:11pt;margin-left:0px;">NOTE 3. </font><font style="font-family:Arial;font-size:11pt;">ACQUISITION AND INVESTMENT</font><font style="font-family:Arial;font-size:11pt;"> ACTIVITY</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We discu</font><font style="font-family:Times New Roman;font-size:10pt;">ss our investments in unconsolidated entities in Note 4.</font></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;margin-left:0px;">Sempra South American Utilities</font></p><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">Chilquinta Energ&#237;a S.A. (Chilquinta Energ&#237;a) and Luz del Sur S.A.A. (Luz del Sur)</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">On April 6, 2011, Sempra South American Utilities acquired from AEI its interests in Chilquinta Energ&#237;a in Chile and Luz del Sur in Peru, and their subsidiaries. Prior to the acquisition, Sempra South American Utilities and AEI each owned 50 percent of Chilquinta Energ&#237;a and approximately 38 percent of Luz del Sur and </font><font style="font-family:Times New Roman;font-size:10pt;">accounted for the investments under the equity method</font><font style="font-family:Times New Roman;font-size:10pt;">.&#160;Upon completion of the acquisition and </font><font style="font-family:Times New Roman;font-size:10pt;">a </font><font style="font-family:Times New Roman;font-size:10pt;">public tender offer to the minor</font><font style="font-family:Times New Roman;font-size:10pt;">ity shareholders of Luz del Sur</font><font style="font-family:Times New Roman;font-size:10pt;">, Sempra South American Utilities owned 100 percent of Chilquinta Energ&#237;a and approximately 80 percent of Luz del Sur, with the remaining shares of Luz del Sur held by institutional investors and the general public. As part of the transaction, Sempra </font><font style="font-family:Times New Roman;font-size:10pt;">South American Utilities</font><font style="font-family:Times New Roman;font-size:10pt;"> also acquired AEI's interests in two energy-services companies, Tecnored S.A. </font><font style="font-family:Times New Roman;font-size:10pt;">(Tecnored) </font><font style="font-family:Times New Roman;font-size:10pt;">and Tecsur S.A.</font><font style="font-family:Times New Roman;font-size:10pt;"> (Tecsur).</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">We provide additional information about Sempra South American Utilities</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;"> acquisition of Chilquinta Energ</font><font style="font-family:Times New Roman;font-size:10pt;">&#237;a and Luz del Sur </font><font style="font-family:Times New Roman;font-size:10pt;">and the </font><font style="font-family:Times New Roman;font-size:10pt;">public </font><font style="font-family:Times New Roman;font-size:10pt;">tender offer </font><font style="font-family:Times New Roman;font-size:10pt;">in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report.</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:12pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Our Condensed Consolidated Statements of Operations</font><font style="font-family:Times New Roman;font-size:10pt;"> for the three months ended March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> include 100 percent of the acquired companies' revenues, net income and earnings of $</font><font style="font-family:Times New Roman;font-size:10pt;">357</font><font style="font-family:Times New Roman;font-size:10pt;"> million, $</font><font style="font-family:Times New Roman;font-size:10pt;">49</font><font style="font-family:Times New Roman;font-size:10pt;"> million and $</font><font style="font-family:Times New Roman;font-size:10pt;">43</font><font style="font-family:Times New Roman;font-size:10pt;"> million</font><font style="font-family:Times New Roman;font-size:10pt;">, respectively</font><font style="font-family:Times New Roman;font-size:10pt;">. </font><font style="font-family:Times New Roman;font-size:10pt;">Net income and earnings include holding companies reported in Parent </font><font style="font-family:Times New Roman;font-size:10pt;">and</font><font style="font-family:Times New Roman;font-size:10pt;"> Other.</font><font style="font-family:Times New Roman;font-size:12pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">For the three months ended March 31, 2011, the acquired companies were accounted for as equity method investments and equity earnings </font><font style="font-family:Times New Roman;font-size:10pt;">were $12 million for each of Chilquinta Energ&#237;a and Luz del Sur</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Following are</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">p</font><font style="font-family:Times New Roman;font-size:10pt;">ro</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">forma</font><font style="font-family:Times New Roman;font-size:10pt;"> revenues and earnings for Sempra Energy had the acquisi</font><font style="font-family:Times New Roman;font-size:10pt;">tion occurred at the beginning of the year prior to </font><font style="font-family:Times New Roman;font-size:10pt;">the</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">year of acquisition</font><font style="font-family:Times New Roman;font-size:10pt;">, which primarily reflect the incremental increase to revenues and earnings from our increased ownership and consolidation of the entities acquired. Although some short-term debt borrowings may have resulted from the actual acquisition in 2011, we have not assumed any additional interest expense in the pro forma impact on earnings</font><font style="font-family:Times New Roman;font-size:10pt;"> below</font><font style="font-family:Times New Roman;font-size:10pt;">, as the amounts would be immaterial due to the low interest rates available to us on commercial paper</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;"> The pro</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">forma amounts do not include the impact of the increased ownership in Luz del Sur resulting from the tender offer completed in September 2011 discussed</font><font style="font-family:Times New Roman;font-size:10pt;"> above and</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top:0pt; margin-bottom:10pt'>&#160;</p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 17px"><td style="width: 33px; text-align:left;border-color:#000000;min-width:33px;">&#160;</td><td style="width: 263px; text-align:left;border-color:#000000;min-width:263px;">&#160;</td><td colspan="2" style="width: 114px; text-align:center;border-color:#000000;min-width:114px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Three months ended</font></td></tr><tr style="height: 17px"><td colspan="2" style="width: 296px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:296px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">(Dollars in millions)</font></td><td colspan="2" style="width: 114px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:114px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">March 31, 2011</font></td></tr><tr style="height: 17px"><td colspan="2" style="width: 296px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:296px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Revenues</font></td><td style="width: 16px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:16px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: right;">$</font></td><td style="width: 98px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:98px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 2,777</font></td></tr><tr style="height: 18px"><td colspan="2" style="width: 296px; border-bottom-style:solid;border-bottom-width:2px;text-align:left;border-color:#000000;min-width:296px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Earnings</font></td><td style="width: 16px; border-bottom-style:solid;border-bottom-width:2px;text-align:right;border-color:#000000;min-width:16px;">&#160;</td><td style="width: 98px; border-bottom-style:solid;border-bottom-width:2px;text-align:right;border-color:#000000;min-width:98px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 279</font></td></tr></table></div> 2777000000 279000000 <div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 17px"><td style="width: 33px; text-align:left;border-color:#000000;min-width:33px;">&#160;</td><td style="width: 263px; text-align:left;border-color:#000000;min-width:263px;">&#160;</td><td colspan="2" style="width: 114px; text-align:center;border-color:#000000;min-width:114px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Three months ended</font></td></tr><tr style="height: 17px"><td colspan="2" style="width: 296px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:296px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">(Dollars in millions)</font></td><td colspan="2" style="width: 114px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:114px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">March 31, 2011</font></td></tr><tr style="height: 17px"><td colspan="2" style="width: 296px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:296px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Revenues</font></td><td style="width: 16px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:16px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: right;">$</font></td><td style="width: 98px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:98px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 2,777</font></td></tr><tr style="height: 18px"><td colspan="2" style="width: 296px; border-bottom-style:solid;border-bottom-width:2px;text-align:left;border-color:#000000;min-width:296px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Earnings</font></td><td style="width: 16px; border-bottom-style:solid;border-bottom-width:2px;text-align:right;border-color:#000000;min-width:16px;">&#160;</td><td style="width: 98px; border-bottom-style:solid;border-bottom-width:2px;text-align:right;border-color:#000000;min-width:98px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 279</font></td></tr></table></div> 357000000 49000000 43000000 0.5 0.38 1 0.8 12000000 12000000 <p style='margin-top:24pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:11pt;margin-left:0px;">NOTE 4. INVESTMENTS IN UNCONSOLIDATED ENTITIES</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:12pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We provide additional information concerning </font><font style="font-family:Times New Roman;font-size:10pt;">all of our equity method</font><font style="font-family:Times New Roman;font-size:10pt;"> investments in Note 4 of the Notes to Consolidated Financial St</font><font style="font-family:Times New Roman;font-size:10pt;">atements in the Annual Report.</font></p><p style='margin-top:0pt; margin-bottom:6pt'>&#160;</p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">Sempra Renewables</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">For the three months ended March 31, 2012, Sempra Renewables invested $50 million in </font><font style="font-family:Times New Roman;font-size:10pt;">its </font><font style="font-family:Times New Roman;font-size:10pt;">renewable wind generation joint ventures, of which $43 million was invested in the Flat Ridge 2 Wind Farm project.</font></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">Sempra Natural Gas</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Sempra Natural Gas owns a 25-percent interest in Rockies Express</font><font style="font-family:Times New Roman;font-size:10pt;"> Pipeline LLC (Rockies Express)</font><font style="font-family:Times New Roman;font-size:10pt;">, a partnership that operates a natural gas pipeline, the Rockies Express Pipeline (REX), that links producing areas in the Rocky Mountains region to the upper Midwest and the eastern United States. Kinder Morgan Energy Partners L.P. (KMP) and ConocoPhillips (Conoco) own the remaining interests of 50</font><font style="font-family:Times New Roman;font-size:10pt;"> percent</font><font style="font-family:Times New Roman;font-size:10pt;"> and 25</font><font style="font-family:Times New Roman;font-size:10pt;"> percent</font><font style="font-family:Times New Roman;font-size:10pt;">, respectively. Our total investment in Rockies Express is accounted for as an equity method investment. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">KMP has announced its intention to sell certain assets, including its interest in REX. KMP is proposing to divest these assets in order for KMP's general partner, Kinder Morgan, Inc., to obtain approval for a proposed acquisition. We believe that this sales process could result in an indication of fair value for KMP's interest in REX. If so, we would consider what, if any, impacts this information could have on our recorded value for REX.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">If such information indicated an impairment of our investment</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> we would also need to evaluate </font><font style="font-family:Times New Roman;font-size:10pt;">whether</font><font style="font-family:Times New Roman;font-size:10pt;"> such impairment, if any, was other than temporary, in accordance with applicable accounting standards for equity method investments</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">RBS </font><font style="font-family:Arial;font-size:10pt;font-weight:bold;">SEMPRA COMMODITIES</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">RBS Sempra Commodities LLP (RBS Sempra Commodities) is a United Kingdom limited liability partnership that owned and operated commodities-marketing businesses</font><font style="font-family:Times New Roman;font-size:10pt;"> previously owned by us</font><font style="font-family:Times New Roman;font-size:10pt;">. </font><font style="font-family:Times New Roman;font-size:10pt;"> We and our partner in the joint venture, The Royal Bank of Scotland </font><font style="font-family:Times New Roman;font-size:10pt;">plc </font><font style="font-family:Times New Roman;font-size:10pt;">(RBS), sold substantially all of the partnership's businesses and assets in four separate transactions completed in July, November and December of 2010 and February of 2011. </font><font style="font-family:Times New Roman;font-size:10pt;">We account for our investment in RBS Sempra Commodities under the equity method, and report our share of partnership earnings </font><font style="font-family:Times New Roman;font-size:10pt;">and other associated costs </font><font style="font-family:Times New Roman;font-size:10pt;">in Parent and Other. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">I</font><font style="font-family:Times New Roman;font-size:10pt;">n April 2011, we and RBS entered into a letter agreement (Letter Agreement) which amended certain provisions of the agreements that formed RBS Sempra Commodities. The Letter Agreement addresses the wind-down of the partnership and the distribution of the partnership's remaining assets. </font><font style="font-family:Times New Roman;font-size:10pt;">The investment balance of $</font><font style="font-family:Times New Roman;font-size:10pt;">126</font><font style="font-family:Times New Roman;font-size:10pt;"> million at March 31, 2012 reflects remaining distributions expected to be received</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">from the partnership in accor</font><font style="font-family:Times New Roman;font-size:10pt;">dance with the Letter Agreement. The timing and amount of distributions </font><font style="font-family:Times New Roman;font-size:10pt;">may</font><font style="font-family:Times New Roman;font-size:10pt;"> be impacted by</font><font style="font-family:Times New Roman;font-size:10pt;"> the</font><font style="font-family:Times New Roman;font-size:10pt;"> matters we discuss related to RBS Sempra Commodities in N</font><font style="font-family:Times New Roman;font-size:10pt;">ote 10 under &#8220;Other Litigation.&#8221;</font><font style="font-family:Times New Roman;font-size:10pt;"> In addition,</font><font style="font-family:Times New Roman;font-size:10pt;"> amounts may be retained by the partnership </font><font style="font-family:Times New Roman;font-size:10pt;">for an extended period of time</font><font style="font-family:Times New Roman;font-size:10pt;"> to help offset unanticipated future general and administrative costs necessary to complete the</font><font style="font-family:Times New Roman;font-size:10pt;"> dissolution of the partnership</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">In connection with the Letter Agreement described above, we also released RBS from its indemnification obligations with respect to the items for which J</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;">P</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> Morgan</font><font style="font-family:Times New Roman;font-size:10pt;"> Chase &amp; Co. (JP Morgan)</font><font style="font-family:Times New Roman;font-size:10pt;">, one of the buyers of the partnership's businesses, </font><font style="font-family:Times New Roman;font-size:10pt;">has agreed to indemnify us.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Pretax </font><font style="font-family:Times New Roman;font-size:10pt;">equity </font><font style="font-family:Times New Roman;font-size:10pt;">losses</font><font style="font-family:Times New Roman;font-size:10pt;"> fr</font><font style="font-family:Times New Roman;font-size:10pt;">om RBS Sempra Commodities were</font><font style="font-family:Times New Roman;font-size:10pt;"> $</font><font style="font-family:Times New Roman;font-size:10pt;">8</font><font style="font-family:Times New Roman;font-size:10pt;"> million for the three months ended </font><font style="font-family:Times New Roman;font-size:10pt;">March</font><font style="font-family:Times New Roman;font-size:10pt;"> 3</font><font style="font-family:Times New Roman;font-size:10pt;">1, 201</font><font style="font-family:Times New Roman;font-size:10pt;">1</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">We recorded no equity earnings or loss related to the partnership in the first quarter of 2012</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">T</font><font style="font-family:Times New Roman;font-size:10pt;">he fair value </font><font style="font-family:Times New Roman;font-size:10pt;">measurement </font><font style="font-family:Times New Roman;font-size:10pt;">of our investment in RBS Sempra Commodities was significantly impacted by unobservable inputs (i.e.</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> Level 3 inputs) as defined by the accounting guidance for fair value measurements</font><font style="font-family:Times New Roman;font-size:10pt;"> which we discuss in Note </font><font style="font-family:Times New Roman;font-size:10pt;">11 in the Notes to Consolidated Financial Statements in the Annual Report</font><font style="font-family:Times New Roman;font-size:10pt;">. The inputs included estimated future cash distributions e</font><font style="font-family:Times New Roman;font-size:10pt;">xpected from the partnership.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We discuss the RBS Sempra Commodities sales transactions</font><font style="font-family:Times New Roman;font-size:10pt;">, the Letter Agreement</font><font style="font-family:Times New Roman;font-size:10pt;"> and other matters concerning the partnership in Note 4 of </font><font style="font-family:Times New Roman;font-size:10pt;">the</font><font style="font-family:Times New Roman;font-size:10pt;"> Notes to Consolidated Financial Statements in the Annual Report.</font></p> -8000000 126000000 43000000 50000000 0.25 0.25 0.5 <p style='margin-top:24pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:11pt;margin-left:0px;">NOTE 5. OTHER FINANCIAL DATA</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">TEMPORARY LIFO LIQUIDATION</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">SoCalGas</font><font style="font-family:Times New Roman;font-size:10pt;"> value</font><font style="font-family:Times New Roman;font-size:10pt;">s</font><font style="font-family:Times New Roman;font-size:10pt;"> natural gas inventory by the last-in first-out (LIFO) method. As inventories are sold, differences between the LIFO valuation and the estimated replacement cost are reflected in customer rates.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">Temporary LIFO liquidation represents the difference between the carrying value of natural gas inventory withdrawn during the period for delivery to customers and the projected cost of the replacement of that inventory during summer months.</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">VARIABLE INTEREST ENTITIES (VIE)</font></p><p style='margin-top:0pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">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</font></p><p style='margin-top:0pt; margin-bottom:3pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">the purpose and design of the VIE;</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">the nature of the VIE</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;">s risks and the risks we absorb; </font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">the power to direct activities that most significantly impact the economic performance of the VIE; and</font></li></ul><p style='margin-top:0pt; margin-bottom:9pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">the obligation to absorb losses or right to receive benefits that could be significant to the VIE. </font><font style="font-family:Times New Roman;font-size:10pt;"> </font></li></ul><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">SDG&amp;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).&#160; SDG&amp;E</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;">s obligation to absorb natural gas costs may be a significant variable interest.&#160; In addition, SDG&amp;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&amp;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</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;">s useful life, SDG&amp;E may be the primary beneficiary of the entity owning the generating facility. SDG&amp;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&amp;E is the primary beneficiary, Sempra Energy and SDG&amp;E consolidate the entity that owns the facility as a VIE, as we discuss below.</font><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;"> </font></p><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">Otay Mesa VIE</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">SDG&amp;E has a 10-year agreement to purchase power generated at the Otay Mesa En</font><font style="font-family:Times New Roman;font-size:10pt;">er</font><font style="font-family:Times New Roman;font-size:10pt;">gy Center (OMEC), a 605-</font><font style="font-family:Times New Roman;font-size:10pt;">megawatt (</font><font style="font-family:Times New Roman;font-size:10pt;">MW</font><font style="font-family:Times New Roman;font-size:10pt;">)</font><font style="font-family:Times New Roman;font-size:10pt;"> generating facility</font><font style="font-family:Times New Roman;font-size:10pt;"> that began operations in October 2009</font><font style="font-family:Times New Roman;font-size:10pt;">. In addition to tolling, the agreement provides SDG&amp;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</font><font style="font-family:Times New Roman;font-size:10pt;">&amp;E does not exercise its option, under certain circumstances,</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">it may be required </font><font style="font-family:Times New Roman;font-size:10pt;">to purchase the power plant at a predetermined price</font><font style="font-family:Times New Roman;font-size:10pt;">, which we refer to as the put option</font><font style="font-family:Times New Roman;font-size:10pt;">. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The facility owner, Otay Mesa Energy Center LLC (OMEC LLC), is a VIE (Otay Mesa VIE), of which SDG&amp;E is the primary beneficiary. SDG&amp;E has no OMEC LLC voting rights and does not operate OMEC. In addition to the risks absorbed under the tolling agreement, SDG&amp;E absorbs separately through the put option a significant portion of the risk that the value of Otay Mesa VIE could decline. </font><font style="font-family:Times New Roman;font-size:10pt;">Sempra Energy and SDG&amp;E have consolidated </font><font style="font-family:Times New Roman;font-size:10pt;">Otay Mesa VIE</font><font style="font-family:Times New Roman;font-size:10pt;"> since the second quarter of 2007. Otay Mesa VIE's</font><font style="font-family:Times New Roman;font-size:10pt;"> equity of $</font><font style="font-family:Times New Roman;font-size:10pt;">108</font><font style="font-family:Times New Roman;font-size:10pt;"> million at </font><font style="font-family:Times New Roman;font-size:10pt;">March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> and $</font><font style="font-family:Times New Roman;font-size:10pt;">102</font><font style="font-family:Times New Roman;font-size:10pt;"> million at </font><font style="font-family:Times New Roman;font-size:10pt;">December 31, 2011</font><font style="font-family:Times New Roman;font-size:10pt;"> is included on the </font><font style="font-family:Times New Roman;font-size:10pt;">Condensed </font><font style="font-family:Times New Roman;font-size:10pt;">Consolidated Balance Sheets in Other Noncontrolling Interests for Sempra Energy and in Noncontrolling Interest for SDG&amp;E. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">OMEC LLC has a loan outstanding of $</font><font style="font-family:Times New Roman;font-size:10pt;">352</font><font style="font-family:Times New Roman;font-size:10pt;"> million at </font><font style="font-family:Times New Roman;font-size:10pt;">March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;">, the proceeds of which were used for the construction of OMEC. The loan is with third party lenders and is secured by OMEC</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;">s property, plant and equipment. SDG&amp;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&#160;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 </font><font style="font-family:Times New Roman;font-size:10pt;">7</font><font style="font-family:Times New Roman;font-size:10pt;">. </font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">Other Variable Interest Entities</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">SDG&amp;E</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;">s power procurement is subject to reliability requirements that may require SDG&amp;E to enter into various power purchase arrangements which include variable interests.</font><font style="font-family:Times New Roman;font-size:10pt;"> SDG&amp;E evaluates the respective entities</font><font style="font-family:Times New Roman;font-size:10pt;"> to determine if var</font><font style="font-family:Times New Roman;font-size:10pt;">iable interest</font><font style="font-family:Times New Roman;font-size:10pt;">s </font><font style="font-family:Times New Roman;font-size:10pt;">exist and, based on the qualitative and quantitative analyses described above, if SDG&amp;E, and thereby Sempra Energy, is the primary beneficiary. SDG&amp;E has determined that no contracts</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> other than the one</font><font style="font-family:Times New Roman;font-size:10pt;"> relating to Otay Mesa VIE mentioned above</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> result in SDG&amp;E being the primary beneficiary</font><font style="font-family:Times New Roman;font-size:10pt;"> as of </font><font style="font-family:Times New Roman;font-size:10pt;">March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;">. 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&amp;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&amp;E becomes the primary beneficiary and consolidation by SDG&amp;E becomes necessary, the effects are not expected to significantly affect the financial position, results of operations, or liquidity of SDG&amp;E. SDG&amp;E is not exposed to losses or gains as a result of these other </font><font style="font-family:Times New Roman;font-size:10pt;">VIEs</font><font style="font-family:Times New Roman;font-size:10pt;">, because all such variability would be recovered in rates. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Sempra Energy</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;">s other business units also enter into arrangements which could include variable interes</font><font style="font-family:Times New Roman;font-size:10pt;">ts.&#160;</font><font style="font-family:Times New Roman;font-size:10pt;">We evaluate these arrangements and applicable entities</font><font style="font-family:Times New Roman;font-size:10pt;"> based upon the qualitative and quantita</font><font style="font-family:Times New Roman;font-size:10pt;">tive analyses described above.&#160;</font><font style="font-family:Times New Roman;font-size:10pt;">Certain of the</font><font style="font-family:Times New Roman;font-size:10pt;">se</font><font style="font-family:Times New Roman;font-size:10pt;"> entities are service companies</font><font style="font-family:Times New Roman;font-size:10pt;"> that are VIEs</font><font style="font-family:Times New Roman;font-size:10pt;">. As the primary beneficiary of these service companies, we consolidate them. In all other cases, w</font><font style="font-family:Times New Roman;font-size:10pt;">e have determined that</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">the</font><font style="font-family:Times New Roman;font-size:10pt;">se</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">contracts are not variable interests in a VIE and therefore are not subject to the requirements of GAAP concerning the consolidation of VIEs.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The </font><font style="font-family:Times New Roman;font-size:10pt;">Condensed </font><font style="font-family:Times New Roman;font-size:10pt;">Consolidated</font><font style="font-family:Times New Roman;font-size:10pt;"> Statements</font><font style="font-family:Times New Roman;font-size:10pt;"> of Operations</font><font style="font-family:Times New Roman;font-size:10pt;"> of Sempra Energy and SDG&amp;E include the following amounts associated with Otay Mesa VIE. The amounts are net of eliminations of transactions between SDG&amp;E and Otay Mesa VIE. The financial statements of other consolidated VIEs are not material to the financial statements of Sempra Energy. 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margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">Re</font><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;">measurement</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">SoCalGas union collec</font><font style="font-family:Times New Roman;font-size:10pt;">tive bargain</font><font style="font-family:Times New Roman;font-size:10pt;">ing agreement (CBA) covering wages, hours, working conditions and medical and other benefit plans was </font><font style="font-family:Times New Roman;font-size:10pt;">ratified on March 1, </font><font style="font-family:Times New Roman;font-size:10pt;">2012 and is </font><font style="font-family:Times New Roman;font-size:10pt;">effective January 1, 2012 through September 30, 2015. The</font><font style="font-family:Times New Roman;font-size:10pt;"> new</font><font style="font-family:Times New Roman;font-size:10pt;"> CBA includes</font><font style="font-family:Times New Roman;font-size:10pt;"> a change in plans offered for post-65 medical benefits</font><font style="font-family:Times New Roman;font-size:10pt;">. A</font><font style="font-family:Times New Roman;font-size:10pt;">s a result, </font><font style="font-family:Times New Roman;font-size:10pt;">SoCalGas</font><font style="font-family:Times New Roman;font-size:10pt;"> changed the option for administering the Medicare Part D benefit to</font><font style="font-family:Times New Roman;font-size:10pt;"> an</font><font style="font-family:Times New Roman;font-size:10pt;"> Empl</font><font style="font-family:Times New Roman;font-size:10pt;">oyer Group Waiver Plan (EGWP). </font><font style="font-family:Times New Roman;font-size:10pt;">The EGWP allows a plan sponsor to contract with a Medicare Part D sponsor to receive the benefit of the subsidy through reduced premiums</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">Because this change in benefits is a significant event under GAAP</font><font style="font-family:Times New Roman;font-size:10pt;">, SoCalGas</font><font style="font-family:Times New Roman;font-size:10pt;"> was required</font><font style="font-family:Times New Roman;font-size:10pt;"> to remeasure the bene</font><font style="font-family:Times New Roman;font-size:10pt;">fit obligations for this</font><font style="font-family:Times New Roman;font-size:10pt;"> postretirement welfare plan as </font><font style="font-family:Times New Roman;font-size:10pt;">of February</font><font style="font-family:Times New Roman;font-size:10pt;"> 29, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> and</font><font style="font-family:Times New Roman;font-size:10pt;"> selected a di</font><font style="font-family:Times New Roman;font-size:10pt;">scount rate of 4.65% for the re</font><font style="font-family:Times New Roman;font-size:10pt;">measurement. </font><font style="font-family:Times New Roman;font-size:10pt;">The effect of the re</font><font style="font-family:Times New Roman;font-size:10pt;">measurement was a $66 million decrease in the recorded liability for other postretirement benefits as of March 31, 2012 at SoCalGas and Sempra</font><font style="font-family:Times New Roman;font-size:10pt;"> Energy</font><font style="font-family:Times New Roman;font-size:10pt;"> Consolidated</font><font style="font-family:Times New Roman;font-size:10pt;">. 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text-align:left;border-color:#000000;min-width:250px;">&#160;</td><td colspan="4" style="width: 188px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:188px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Three months ended March 31,</font></td><td colspan="4" style="width: 188px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:188px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Three months ended March 31,</font></td></tr><tr style="height: 14px"><td style="width: 250px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:250px;">&#160;</td><td colspan="2" style="width: 94px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:94px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">2012</font></td><td colspan="2" style="width: 94px; 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border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 8</font></td><td style="width: 26px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:26px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 68px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 9</font></td><td style="width: 26px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:26px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 68px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 15</font></td><td style="width: 26px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:26px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 68px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 18</font></td></tr><tr style="height: 14px"><td style="width: 250px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:250px;">&#160;</td><td colspan="2" style="width: 94px; border-top-style:solid;border-top-width:3px;text-align:center;border-color:#000000;min-width:94px;">&#160;</td><td colspan="2" style="width: 94px; border-top-style:solid;border-top-width:3px;text-align:center;border-color:#000000;min-width:94px;">&#160;</td><td colspan="2" style="width: 94px; border-top-style:solid;border-top-width:3px;text-align:center;border-color:#000000;min-width:94px;">&#160;</td><td colspan="2" style="width: 94px; border-top-style:solid;border-top-width:3px;text-align:center;border-color:#000000;min-width:94px;">&#160;</td></tr></table></div><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 19px"><td colspan="9" style="width: 626px; border-top-style:solid;border-top-width:1px;text-align:left;background-color:#C0C0C0;border-color:#000000;min-width:626px;"><font style="FONT-WEIGHT: bold;FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">NET PERIODIC BENEFIT COST &#8211; SDG&amp;E</font></td></tr><tr style="height: 19px"><td colspan="9" style="width: 626px; text-align:left;background-color:#C0C0C0;border-color:#000000;min-width:626px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">(Dollars in millions)</font></td></tr><tr style="height: 14px"><td style="width: 250px; text-align:left;border-color:#000000;min-width:250px;">&#160;</td><td colspan="4" style="width: 188px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:188px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Pension Benefits</font></td><td colspan="4" style="width: 188px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:188px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Other Postretirement Benefits</font></td></tr><tr style="height: 14px"><td style="width: 250px; text-align:left;border-color:#000000;min-width:250px;">&#160;</td><td colspan="4" style="width: 188px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:188px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Three months ended March 31,</font></td><td colspan="4" style="width: 188px; 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text-align:left;border-color:#000000;min-width:250px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Expected return on assets</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (12)</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (12)</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (1)</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; 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text-align:left;border-color:#000000;min-width:250px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Prior service cost </font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td></tr><tr style="height: 16px"><td style="width: 250px; text-align:left;border-color:#000000;min-width:250px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Actuarial loss</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">4</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 2</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td></tr><tr style="height: 16px"><td style="width: 250px; text-align:left;border-color:#000000;min-width:250px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Regulatory adjustment</font></td><td style="width: 26px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (10)</font></td><td style="width: 26px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (9)</font></td><td style="width: 26px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 26px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td></tr><tr style="height: 16px"><td style="width: 250px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:250px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Total net periodic benefit cost</font></td><td style="width: 26px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:26px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 68px; 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text-align:right;border-color:#000000;min-width:69px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 69px; text-align:right;border-color:#000000;min-width:69px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 69px; text-align:right;border-color:#000000;min-width:69px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (1)</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 69px; text-align:right;border-color:#000000;min-width:69px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (1)</font></td></tr><tr style="height: 16px"><td style="width: 250px; text-align:left;border-color:#000000;min-width:250px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Actuarial loss</font></td><td style="width: 26px; 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border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:69px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 3</font></td><td style="width: 26px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 69px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:69px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td></tr><tr style="height: 16px"><td style="width: 250px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:250px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Total net periodic benefit cost</font></td><td style="width: 26px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:26px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 69px; 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margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We had </font><font style="font-family:Times New Roman;font-size:10pt;">no stock options outstanding during the three months ended March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">and 10,800 </font><font style="font-family:Times New Roman;font-size:10pt;">stock options outstanding during the three months </font><font style="font-family:Times New Roman;font-size:10pt;">ended </font><font style="font-family:Times New Roman;font-size:10pt;">March</font><font style="font-family:Times New Roman;font-size:10pt;"> 3</font><font style="font-family:Times New Roman;font-size:10pt;">1, 2011</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">that were anti</font><font style="font-family:Times New Roman;font-size:10pt;">dilutive because of the unearned compensation and windfall tax benefits included in the assumed proceeds under the treasury st</font><font style="font-family:Times New Roman;font-size:10pt;">ock method. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The dilution from unvested restricted stock awards (RSAs) and restricted stock units (RSUs) is also based on the treasury stock method. </font><font style="font-family:Times New Roman;font-size:10pt;">P</font><font style="font-family:Times New Roman;font-size:10pt;">roceeds equal to the unearned compensation and windfall tax benefits </font><font style="font-family:Times New Roman;font-size:10pt;">recognized </font><font style="font-family:Times New Roman;font-size:10pt;">and minus tax shortfalls </font><font style="font-family:Times New Roman;font-size:10pt;">recognized </font><font style="font-family:Times New Roman;font-size:10pt;">related to the awards and units are assumed to be used to repurchase shares on the open market at the avera</font><font style="font-family:Times New Roman;font-size:10pt;">ge market price for the period. </font><font style="font-family:Times New Roman;font-size:10pt;">The windfall tax benefits </font><font style="font-family:Times New Roman;font-size:10pt;">recognized </font><font style="font-family:Times New Roman;font-size:10pt;">or tax shortfalls</font><font style="font-family:Times New Roman;font-size:10pt;"> recognized</font><font style="font-family:Times New Roman;font-size:10pt;"> 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.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">There were </font><font style="font-family:Times New Roman;font-size:10pt;">no antidilutive RSUs from the application of unearned compensation in the treasury stock method for the three months ended March 31, 2012 and</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">997,609</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">such </font><font style="font-family:Times New Roman;font-size:10pt;">antidilutive </font><font style="font-family:Times New Roman;font-size:10pt;">RSUs</font><font style="font-family:Times New Roman;font-size:10pt;"> for th</font><font style="font-family:Times New Roman;font-size:10pt;">e three months ended March 31</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> 2011</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> There were </font><font style="font-family:Times New Roman;font-size:10pt;">15,932</font><font style="font-family:Times New Roman;font-size:10pt;"> such antidilutive RSAs for the three months ended March 31, 2012 </font><font style="font-family:Times New Roman;font-size:10pt;">and none for the three months ended March 31,</font><font style="font-family:Times New Roman;font-size:10pt;"> 2011.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Each performance based </font><font style="font-family:Times New Roman;font-size:10pt;">RSU</font><font style="font-family:Times New Roman;font-size:10pt;"> represents the right to receive between zero and 1.5 shares of Sempra Energy common stock based on </font><font style="font-family:Times New Roman;font-size:10pt;">Sempra Energy's</font><font style="font-family:Times New Roman;font-size:10pt;"> four-year cumulative total shareholder return compared to the S</font><font style="font-family:Times New Roman;font-size:10pt;">tandard </font><font style="font-family:Times New Roman;font-size:10pt;">&amp;</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">P</font><font style="font-family:Times New Roman;font-size:10pt;">oor</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;">s</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">(S&amp;P) </font><font style="font-family:Times New Roman;font-size:10pt;">500 Utilities Index, as follows:</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 55px"><td style="width: 253px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:253px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">Four-Year Cumulative Total Shareholder Return Ranking versus S&amp;P 500 Utilities Index(1)</font></td><td style="width: 169px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:169px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">Number of Sempra Energy Common Shares Received for Each Restricted Stock Unit(2)</font></td></tr><tr style="height: 20px"><td style="width: 253px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:253px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">75th Percentile or Above</font></td><td style="width: 169px; border-top-style:solid;border-top-width:1px;text-align:center;border-color:#000000;min-width:169px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: center;">1.5</font></td></tr><tr style="height: 20px"><td style="width: 253px; text-align:left;border-color:#000000;min-width:253px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">50th Percentile </font></td><td style="width: 169px; text-align:center;border-color:#000000;min-width:169px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: center;">1</font></td></tr><tr style="height: 22px"><td style="width: 253px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:253px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">35th Percentile or Below</font></td><td style="width: 169px; border-bottom-style:solid;border-bottom-width:3px;text-align:center;border-color:#000000;min-width:169px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: center;">&#8213;</font></td></tr><tr style="height: 23px"><td colspan="2" style="width: 422px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#A5A5A5;min-width:422px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">(1) If Sempra Energy ranks at or above the 50th percentile compared to the S&amp;P 500 Index, participants will receive a minimum of 1.0 share for each restricted stock unit.</font></td></tr><tr style="height: 46px"><td colspan="2" style="width: 422px; text-align:left;border-color:#000000;min-width:422px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">(2) Participants may also receive additional shares for dividend equivalents on shares subject to restricted stock units, which are reinvested to purchase additional shares that become subject to the same vesting conditions as the restricted stock units to which the dividends relate.</font></td></tr></table></div><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:12pt; margin-bottom:6pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">RSAs</font><font style="font-family:Times New Roman;font-size:10pt;"> have</font><font style="font-family:Times New Roman;font-size:10pt;"> a maximum potential of 100</font><font style="font-family:Times New Roman;font-size:10pt;"> percent</font><font style="font-family:Times New Roman;font-size:10pt;"> vesting. </font><font style="font-family:Times New Roman;font-size:10pt;">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 tr</font><font style="font-family:Times New Roman;font-size:10pt;">easury stock method. </font><font style="font-family:Times New Roman;font-size:10pt;">Due to market fluctuations of both </font><font style="font-family:Times New Roman;font-size:10pt;">Sempra Energy</font><font style="font-family:Times New Roman;font-size:10pt;"> stock and the comparative index, dilutive RSA and RSU shares may vary widely from period-to-period. We</font><font style="font-family:Times New Roman;font-size:10pt;"> include our RSAs, which are service based, in </font><font style="font-family:Times New Roman;font-size:10pt;">potential dilutive shares at 100 percent. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">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 curre</font><font style="font-family:Times New Roman;font-size:10pt;">ntly not met. The maximum </font><font style="font-family:Times New Roman;font-size:10pt;">excl</font><font style="font-family:Times New Roman;font-size:10pt;">uded </font><font style="font-family:Times New Roman;font-size:10pt;">RSUs and RSAs</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> assuming performance goals were met at maximum levels, were </font><font style="font-family:Times New Roman;font-size:10pt;">3,191,073</font><font style="font-family:Times New Roman;font-size:10pt;"> and </font><font style="font-family:Times New Roman;font-size:10pt;">3,959,911</font><font style="font-family:Times New Roman;font-size:10pt;"> for the</font><font style="font-family:Times New Roman;font-size:10pt;"> three months </font><font style="font-family:Times New Roman;font-size:10pt;">end</font><font style="font-family:Times New Roman;font-size:10pt;">ed </font><font style="font-family:Times New Roman;font-size:10pt;">March</font><font style="font-family:Times New Roman;font-size:10pt;"> 3</font><font style="font-family:Times New Roman;font-size:10pt;">1</font><font style="font-family:Times New Roman;font-size:10pt;">, 201</font><font style="font-family:Times New Roman;font-size:10pt;">2 and 2011</font><font style="font-family:Times New Roman;font-size:10pt;">, respectively</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">COMMON STOCK REPURCHASE PROGRAM</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">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.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">We discuss the repurchase program further in Note 13 of the Notes to Consolidated Financial Statements in the Annual Report.</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">SHARE-BASED COMPENSATION</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">We discuss our share-based compensation plans in Note </font><font style="font-family:Times New Roman;font-size:10pt;">9</font><font style="font-family:Times New Roman;font-size:10pt;"> of the Notes to Consolidated Financial Statements in the</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">Annual Report. We recorded share-based compensation exp</font><font style="font-family:Times New Roman;font-size:10pt;">e</font><font style="font-family:Times New Roman;font-size:10pt;">nse, net of income taxes, of $</font><font style="font-family:Times New Roman;font-size:10pt;">5</font><font style="font-family:Times New Roman;font-size:10pt;"> million and $</font><font style="font-family:Times New Roman;font-size:10pt;">6</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">million</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">for the three months ended </font><font style="font-family:Times New Roman;font-size:10pt;">March</font><font style="font-family:Times New Roman;font-size:10pt;"> 3</font><font style="font-family:Times New Roman;font-size:10pt;">1</font><font style="font-family:Times New Roman;font-size:10pt;">, 201</font><font style="font-family:Times New Roman;font-size:10pt;">2</font><font style="font-family:Times New Roman;font-size:10pt;"> and 201</font><font style="font-family:Times New Roman;font-size:10pt;">1</font><font style="font-family:Times New Roman;font-size:10pt;">, respectively</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> Pursuant to our share-based</font><font style="font-family:Times New Roman;font-size:10pt;"> compen</font><font style="font-family:Times New Roman;font-size:10pt;">sation plans, we granted </font><font style="font-family:Times New Roman;font-size:10pt;">905,868</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">RSUs </font><font style="font-family:Times New Roman;font-size:10pt;">and </font><font style="font-family:Times New Roman;font-size:10pt;">15,932</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">RSAs</font><font style="font-family:Times New Roman;font-size:10pt;"> during the </font><font style="font-family:Times New Roman;font-size:10pt;">three</font><font style="font-family:Times New Roman;font-size:10pt;"> months ended </font><font style="font-family:Times New Roman;font-size:10pt;">March</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">31</font><font style="font-family:Times New Roman;font-size:10pt;">, 201</font><font style="font-family:Times New Roman;font-size:10pt;">2</font><font style="font-family:Times New Roman;font-size:10pt;">, primarily in</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">January</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">CAPITALIZED FINANCING COSTS</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Capitalized financing costs include capitalized i</font><font style="font-family:Times New Roman;font-size:10pt;">nterest costs and, </font><font style="font-family:Times New Roman;font-size:10pt;">primarily </font><font style="font-family:Times New Roman;font-size:10pt;">at the California</font><font style="font-family:Times New Roman;font-size:10pt;"> Utilities, </font><font style="font-family:Times New Roman;font-size:10pt;">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</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">ended </font><font style="font-family:Times New Roman;font-size:10pt;">March 31</font><font style="font-family:Times New Roman;font-size:10pt;">, 201</font><font style="font-family:Times New Roman;font-size:10pt;">2</font><font style="font-family:Times New Roman;font-size:10pt;"> and 20</font><font style="font-family:Times New Roman;font-size:10pt;">11</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 19px"><td colspan="5" style="width: 361px; border-top-style:solid;border-top-width:1px;text-align:left;background-color:#C0C0C0;border-color:#000000;min-width:361px;"><font style="FONT-WEIGHT: bold;FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">CAPITALIZED FINANCING COSTS</font></td></tr><tr style="height: 19px"><td colspan="5" style="width: 361px; text-align:left;background-color:#C0C0C0;border-color:#000000;min-width:361px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">(Dollars in millions)</font></td></tr><tr style="height: 31px"><td style="width: 229px; text-align:left;border-color:#000000;min-width:229px;">&#160;</td><td colspan="4" style="width: 132px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:132px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Three months ended March 31,</font></td></tr><tr style="height: 14px"><td style="width: 229px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:229px;">&#160;</td><td colspan="2" style="width: 66px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:66px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">2012</font></td><td colspan="2" style="width: 66px; 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text-align:left;border-color:#000000;min-width:229px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> AFUDC related to debt</font></td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 47px; text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 14</font></td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 47px; text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 8</font></td></tr><tr style="height: 16px"><td style="width: 229px; text-align:left;border-color:#000000;min-width:229px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> AFUDC related to equity</font></td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 47px; text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 35</font></td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 47px; text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 19</font></td></tr><tr style="height: 16px"><td style="width: 229px; text-align:left;border-color:#000000;min-width:229px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Other capitalized financing costs</font></td><td style="width: 19px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 47px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 11</font></td><td style="width: 19px; 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border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: right;"> (2)</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 61px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: right;"> (2)</font></td></tr><tr style="height: 16px"><td style="width: 288px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:288px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Balance at March 31, 2012</font></td><td style="width: 22px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 83px; 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border-top-style:solid;border-top-width:3px;text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 211</font></td><td style="width: 22px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; border-top-style:solid;border-top-width:3px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 9,201</font></td></tr><tr style="height: 16px"><td style="width: 288px; text-align:left;border-color:#000000;min-width:288px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Comprehensive income</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 83px; text-align:right;border-color:#000000;min-width:83px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 254</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 5</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 61px; text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 259</font></td></tr><tr style="height: 16px"><td style="width: 288px; text-align:left;border-color:#000000;min-width:288px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Preferred dividends of subsidiaries</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 83px; text-align:right;border-color:#000000;min-width:83px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (2)</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 61px; text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (2)</font></td></tr><tr style="height: 17px"><td style="width: 288px; text-align:left;border-color:#000000;min-width:288px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Share-based compensation expense</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 83px; text-align:right;border-color:#000000;min-width:83px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 11</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 61px; text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 11</font></td></tr><tr style="height: 17px"><td style="width: 288px; text-align:left;border-color:#000000;min-width:288px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Common stock dividends declared</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 83px; text-align:right;border-color:#000000;min-width:83px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (115)</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 61px; 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text-align:left;border-color:#000000;min-width:288px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Tax benefit related to share-based compensation</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 83px; text-align:right;border-color:#000000;min-width:83px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 2</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 61px; text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 2</font></td></tr><tr style="height: 17px"><td style="width: 288px; text-align:left;border-color:#000000;min-width:288px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Repurchase of common stock</font></td><td style="width: 22px; 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text-align:right;border-color:#000000;min-width:83px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 7</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 61px; text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 7</font></td></tr><tr style="height: 17px"><td style="width: 288px; text-align:left;border-color:#000000;min-width:288px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Equity contributed by noncontrolling interests</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 83px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:83px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 61px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td></tr><tr style="height: 16px"><td style="width: 288px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:288px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Balance at March 31, 2011</font></td><td style="width: 22px; 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text-align:left;background-color:#C0C0C0;border-color:#000000;min-width:664px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">(Dollars in millions)</font></td></tr><tr style="height: 14px"><td style="width: 353px; text-align:left;border-color:#000000;min-width:353px;">&#160;</td><td style="width: 22px; text-align:center;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 92px; text-align:center;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">SDG&amp;E</font></td><td style="width: 22px; text-align:center;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 80px; text-align:center;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Non-</font></td><td style="width: 22px; text-align:center;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:center;border-color:#000000;min-width:73px;">&#160;</td></tr><tr style="height: 14px"><td style="width: 353px; text-align:left;border-color:#000000;min-width:353px;">&#160;</td><td style="width: 22px; text-align:center;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 92px; text-align:center;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Shareholder&#8217;s</font></td><td style="width: 22px; text-align:center;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 80px; text-align:center;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">controlling</font></td><td style="width: 22px; text-align:center;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:center;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Total</font></td></tr><tr style="height: 14px"><td style="width: 353px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:353px;">&#160;</td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 92px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Equity</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 80px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Interest</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Equity</font></td></tr><tr style="height: 17px"><td style="width: 353px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Balance at December 31, 2011</font></td><td style="width: 22px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 92px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 3,739</font></td><td style="width: 22px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 80px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 102</font></td><td style="width: 22px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 73px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 3,841</font></td></tr><tr style="height: 17px"><td style="width: 353px; text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Comprehensive income</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 92px; text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 106</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 80px; text-align:right;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 6</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 112</font></td></tr><tr style="height: 17px"><td style="width: 353px; text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Preferred stock dividends declared</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 92px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (1)</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 80px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (1)</font></td></tr><tr style="height: 18px"><td style="width: 353px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Balance at March 31, 2012</font></td><td style="width: 22px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 92px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 3,844</font></td><td style="width: 22px; 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border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Balance at December 31, 2010</font></td><td style="width: 22px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 92px; border-top-style:solid;border-top-width:3px;text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 3,108</font></td><td style="width: 22px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 80px; border-top-style:solid;border-top-width:3px;text-align:right;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 113</font></td><td style="width: 22px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 73px; border-top-style:solid;border-top-width:3px;text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 3,221</font></td></tr><tr style="height: 17px"><td style="width: 353px; text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Comprehensive income</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 92px; text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 90</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 80px; text-align:right;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 5</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 95</font></td></tr><tr style="height: 17px"><td style="width: 353px; text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Preferred stock dividends declared</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 92px; text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (1)</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 80px; text-align:right;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (1)</font></td></tr><tr style="height: 17px"><td style="width: 353px; text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Capital contribution</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 92px; text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 200</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 80px; text-align:right;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 200</font></td></tr><tr style="height: 17px"><td style="width: 353px; text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Equity contributed by noncontrolling interest</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 92px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 80px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 73px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td></tr><tr style="height: 18px"><td style="width: 353px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:353px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Balance at March 31, 2011</font></td><td style="width: 22px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 92px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 3,397</font></td><td style="width: 22px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 80px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:80px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 119</font></td><td style="width: 22px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 73px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:73px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 3,516</font></td></tr></table></div><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:12pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Ownership interests that are held by owners other than Sempra Energy and SDG&amp;E in subsidiaries or entities consolidated by them are accounted for and reported as noncontrolling interests. As a result, noncontrolling interests are reported as a separate component of equity on the </font><font style="font-family:Times New Roman;font-size:10pt;">Condensed </font><font style="font-family:Times New Roman;font-size:10pt;">Consolidated Balance Sheets</font><font style="font-family:Times New Roman;font-size:10pt;">. </font><font style="font-family:Times New Roman;font-size:10pt;">Net income or loss attributable to the noncontrolling interests is separately identified on the Condensed Consolidated Statements of </font><font style="font-family:Times New Roman;font-size:10pt;">Operations,</font><font style="font-family:Times New Roman;font-size:10pt;"> and c</font><font style="font-family:Times New Roman;font-size:10pt;">omprehensive income attributable to </font><font style="font-family:Times New Roman;font-size:10pt;">the </font><font style="font-family:Times New Roman;font-size:10pt;">noncontrolling interests is separately identified on the Condensed Consolidated Statement</font><font style="font-family:Times New Roman;font-size:10pt;">s</font><font style="font-family:Times New Roman;font-size:10pt;"> of Comprehensive Income</font><font style="font-family:Times New Roman;font-size:10pt;">.</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;"> </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The preferred stock of SoCalGas is presented at Sempra Energy as a noncontrolling interest at March 31, 2012 and December 31, 2011. The preferred stock of SDG&amp;E is contingently redeemable preferred stock. At Sempra Energy, the preferred stock dividends of both SDG&amp;E and SoCalGas are charges against income related to noncontrolling interests. 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border-top-style:solid;border-top-width:1px;text-align:left;background-color:#C0C0C0;border-color:#000000;min-width:110px;">&#160;</td></tr><tr style="height: 19px"><td colspan="6" style="width: 504px; text-align:left;background-color:#C0C0C0;border-color:#000000;min-width:504px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">(Dollars in millions)</font></td><td style="width: 22px; text-align:left;background-color:#C0C0C0;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 110px; text-align:left;background-color:#C0C0C0;border-color:#000000;min-width:110px;">&#160;</td></tr><tr style="height: 47px"><td style="width: 33px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:33px;">&#160;</td><td style="width: 224px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:224px;">&#160;</td><td style="width: 93px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:93px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Percent Ownership Held by Others</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 110px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:110px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">March 31, 2012</font></td><td style="width: 22px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:22px;">&#160;</td><td style="width: 110px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:110px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">December 31, 2011</font></td></tr><tr style="height: 16px"><td colspan="2" style="width: 257px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:257px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Bay Gas Storage, Ltd.(1)</font></td><td style="width: 93px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:93px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">9</font></td><td style="width: 22px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:22px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">%</font></td><td style="width: 22px; 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right;"> (1)</font></td><td colspan="7" style="width: 603px; border-top-style:solid;border-top-width:2px;text-align:left;border-color:#000000;min-width:603px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">Part of Sempra Natural Gas.</font></td></tr><tr style="height: 16px"><td style="width: 33px; text-align:right;border-color:#000000;min-width:33px;">&#160;</td><td colspan="7" style="width: 603px; text-align:left;border-color:#000000;min-width:603px;">&#160;</td></tr></table></div><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><p style='margin-top:21pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:10pt;font-weight:bold;margin-left:0px;">TRANSACTIONS WITH AFFILIATES</font><font style="font-family:Arial;font-size:10pt;font-weight:bold;"> </font></p><p style='margin-top:12pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:11pt;font-weight:bold;font-style:italic;margin-left:0px;">Loans to 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text-align:left;border-color:#000000;min-width:390px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:61px;">&#160;</td><td style="width: 14px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:61px;">&#160;</td></tr><tr style="height: 17px"><td colspan="2" style="width: 416px; text-align:left;border-color:#000000;min-width:416px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Due to Sempra Energy</font></td><td style="width: 23px; text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 25</font></td><td style="width: 14px; text-align:left;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 14</font></td></tr><tr style="height: 17px"><td colspan="2" style="width: 416px; text-align:left;border-color:#000000;min-width:416px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Due to SoCalGas</font></td><td style="width: 23px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: right;"> 11</font></td><td style="width: 14px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td></tr><tr style="height: 16px"><td colspan="2" style="width: 416px; text-align:left;border-color:#000000;min-width:416px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: right;"> 36</font></td><td style="width: 14px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 14</font></td></tr><tr style="height: 16px"><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 390px; text-align:left;border-color:#000000;min-width:390px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:61px;">&#160;</td><td style="width: 14px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:61px;">&#160;</td></tr><tr style="height: 22px"><td colspan="2" style="width: 416px; text-align:left;border-color:#000000;min-width:416px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Income taxes due from Sempra Energy(1)</font></td><td style="width: 23px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: right;"> 85</font></td><td style="width: 14px; border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 97</font></td></tr><tr style="height: 16px"><td colspan="2" style="width: 416px; text-align:left;border-color:#000000;min-width:416px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:61px;">&#160;</td><td style="width: 14px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:61px;">&#160;</td></tr><tr style="height: 16px"><td colspan="2" style="width: 416px; text-align:left;border-color:#000000;min-width:416px;"><font style="FONT-WEIGHT: bold;FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">SoCalGas</font></td><td style="width: 23px; text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; text-align:left;border-color:#000000;min-width:61px;">&#160;</td><td style="width: 14px; text-align:left;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; text-align:left;border-color:#000000;min-width:61px;">&#160;</td></tr><tr style="height: 14px"><td colspan="2" style="width: 416px; text-align:left;border-color:#000000;min-width:416px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">Current:</font></td><td style="width: 23px; text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; text-align:left;border-color:#000000;min-width:61px;">&#160;</td><td style="width: 14px; text-align:left;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; text-align:left;border-color:#000000;min-width:61px;">&#160;</td></tr><tr style="height: 18px"><td colspan="2" style="width: 416px; text-align:left;border-color:#000000;min-width:416px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Due from Sempra Energy</font></td><td style="width: 23px; text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 218</font></td><td style="width: 14px; text-align:left;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; 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text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 390px; text-align:left;border-color:#000000;min-width:390px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 229</font></td><td style="width: 14px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; 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text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 390px; text-align:left;border-color:#000000;min-width:390px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:61px;">&#160;</td><td style="width: 14px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:23px;">&#160;</td><td style="width: 61px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:61px;">&#160;</td></tr><tr style="height: 16px"><td colspan="2" style="width: 416px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:416px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Income taxes due (to) from Sempra Energy(1)</font></td><td style="width: 23px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: right;"> (9)</font></td><td style="width: 14px; border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:14px;">&#160;</td><td style="width: 23px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:23px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 61px; border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:61px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 17</font></td></tr><tr style="height: 52px"><td style="width: 26px; 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border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:282px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">SDG&amp;E</font></td><td style="width: 13px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:13px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 86px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:86px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 2</font></td><td style="width: 13px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:13px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 92px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:92px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 2</font></td></tr><tr style="height: 16px"><td style="width: 282px; 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text-align:left;border-color:#000000;min-width:419px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Allowance for equity funds used during construction</font></td><td style="width: 16px; text-align:left;border-color:#000000;min-width:16px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 47px; text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 29</font></td><td style="width: 17px; text-align:left;border-color:#000000;min-width:17px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 47px; text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 15</font></td></tr><tr style="height: 16px"><td colspan="2" style="width: 419px; text-align:left;border-color:#000000;min-width:419px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Regulatory interest, net(2)</font></td><td style="width: 16px; 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border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:17px;">&#160;</td><td style="width: 47px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td></tr><tr style="height: 16px"><td colspan="2" style="width: 419px; border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:419px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;"> Total</font></td><td style="width: 16px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:16px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 47px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 30</font></td><td style="width: 17px; 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border-top-style:solid;border-top-width:1px;text-align:center;border-color:#000000;min-width:17px;">&#160;</td><td style="width: 47px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:47px;">&#160;</td></tr><tr style="height: 16px"><td colspan="2" style="width: 419px; text-align:left;border-color:#000000;min-width:419px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Allowance for equity funds used during construction</font></td><td style="width: 16px; text-align:left;border-color:#000000;min-width:16px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 47px; text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 6</font></td><td style="width: 17px; text-align:left;border-color:#000000;min-width:17px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;">$</font></td><td style="width: 47px; text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 4</font></td></tr><tr style="height: 16px"><td colspan="2" style="width: 419px; text-align:left;border-color:#000000;min-width:419px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: left;">Sundry, net</font></td><td style="width: 16px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:16px;">&#160;</td><td style="width: 47px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (2)</font></td><td style="width: 17px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:17px;">&#160;</td><td style="width: 47px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:47px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> (1)</font></td></tr><tr style="height: 16px"><td colspan="2" style="width: 419px; 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margin-bottom:3pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">higher income tax expense in 2012 due to Mexican currency translation adjustments;</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">lower deductions for self-developed software costs</font><font style="font-family:Times New Roman;font-size:10pt;">; and</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">lower favorable adjustments related to prior years' income tax issues</font><font style="font-family:Times New Roman;font-size:10pt;">;</font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;"> offset by</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">lower book depreciation over income tax depreciation related to a certain portion </font><font style="font-family:Times New Roman;font-size:10pt;">of utility plant fixed assets;</font><font style="font-family:Times New Roman;font-size:10pt;"> and</font></li></ul><p style='margin-top:0pt; margin-bottom:9pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">higher planned renewable energy income tax credits and deferred income tax benefits related to renewable energy projects.</font></li></ul><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Sempra Energy, SDG&amp;E and SoCalGas record income taxes for interim periods utilizing a forecasted effective tax rate, as required by U.S. GAAP. The income tax effect of items that can be reliably forecasted are factored into the forecasted effective tax rate and their impact is spread evenly over the year. The forecasted items may include</font><font style="font-family:Times New Roman;font-size:10pt;">, among others, </font><font style="font-family:Times New Roman;font-size:10pt;">self-developed software, renewable</font><font style="font-family:Times New Roman;font-size:10pt;"> energy</font><font style="font-family:Times New Roman;font-size:10pt;"> income tax credits, exclusions from taxable income of the equity portion of AFUDC</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> and depreciation on a certain portion of utility plant assets. Items that cannot be reliably forecasted (e.g., adjustments related to prior years' income tax issues, Mexican currency translation and inflation adjustments, etc.) are recorded in the</font><font style="font-family:Times New Roman;font-size:10pt;"> interim </font><font style="font-family:Times New Roman;font-size:10pt;">period </font><font style="font-family:Times New Roman;font-size:10pt;">in which</font><font style="font-family:Times New Roman;font-size:10pt;"> they actually occur, which can result in variability to income tax expense. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Our plan for assets placed into service in 2012 includes assets that were under construction in 2011. We have used grant accounting for these assets in anticipation of applying for cash grants.</font><font style="font-family:Times New Roman;font-size:10pt;"> Grant accounting for cash grants is very similar to the deferral method of accounting for investment tax credits, the primary difference being the recording of a grant receivable instead of an income tax receivable.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Under the deferral method of accounting for ITC and under grant accounting for cash grants, a deferred income tax benefit, on day one, is reflected in income tax expense by recording a deferred tax asset when renewable energy assets are placed in service. This deferred tax asset results from the day-one difference in the income tax basis and financial statement basis of the renewable energy assets, referred to as the &#8220;day-one basis difference.&#8221; The financial statement basis of the assets is reduced by 100 percent of the ITC or grant expected; U.S. Federal income tax basis is reduced by only 50 percent for both ITC and grants; and state income tax basis is reduced 50 percent for grants and not at all for ITC.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:11pt;font-style:italic;margin-left:0px;">SDG&amp;E</font></p><p style='margin-top:0pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The increase in SDG&amp;E</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;">s effective income tax rate for the three months ended March 31, 201</font><font style="font-family:Times New Roman;font-size:10pt;">2</font><font style="font-family:Times New Roman;font-size:10pt;"> was primarily due to:</font></p><p style='margin-top:0pt; 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margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Results for Sempra Energy Consolidated and SDG&amp;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.</font></p><p style='margin-top:9pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:11pt;font-style:italic;margin-left:0px;">SoCalGas</font></p><p style='margin-top:0pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The increase</font><font style="font-family:Times New Roman;font-size:10pt;font-style:italic;"> </font><font style="font-family:Times New Roman;font-size:10pt;">in SoCalGas</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;"> effective income tax rate for the three months ended March 31, 2012 was primarily due to:</font></p><p style='margin-top:0pt; margin-bottom:3pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">lower deductions for self-developed software costs; and</font></li><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">un</font><font style="font-family:Times New Roman;font-size:10pt;">favorable adjustments related to prior years</font><font style="font-family:Times New Roman;font-size:10pt;">'</font><font style="font-family:Times New Roman;font-size:10pt;"> income tax issues in 201</font><font style="font-family:Times New Roman;font-size:10pt;">2</font><font style="font-family:Times New Roman;font-size:10pt;"> versus </font><font style="font-family:Times New Roman;font-size:10pt;">favorable adjustments in 2011; </font><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;">offset by</font></li></ul><p style='margin-top:0pt; margin-bottom:9pt'></p><ul><li style="margin-left:9.35px;list-style:square;"><font style="font-family:Times New Roman;font-size:10pt;">lower book depreciation over income tax depreciation related to a certain portion of utility plant fixed assets.</font></li></ul><p style='margin-top:0pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The Californ</font><font style="font-family:Times New Roman;font-size:10pt;">ia Public Utilities Commission </font><font style="font-family:Times New Roman;font-size:10pt;">(CPUC</font><font style="font-family:Times New Roman;font-size:10pt;">)</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">requires </font><font style="font-family:Times New Roman;font-size:10pt;">flow-through rate-making treatment for the current income tax benefit or expense arising from certain property-related and other temporary differences between the treatment for financial reporting and income tax, which will reverse over time. Under the regulatory accounting treatment required for these flow-through temporary differences, deferred income taxes are not recorded to deferred income tax expense, but rather to a regulatory asset or liability. 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border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:30px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">(1)</font></td><td colspan="7" style="width: 530px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:530px;"><font style="FONT-STYLE: italic;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: left;">We record the offset of this fluctuation to other comprehensive income.</font></td><td style="width: 25px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:25px;">&#160;</td><td style="width: 74px; border-top-style:solid;border-top-width:3px;text-align:left;border-color:#000000;min-width:74px;">&#160;</td></tr></table></div> 23000000 22000000 8000000 7000000 41000000 43000000 14000000 17000000 39000000 37000000 13000000 12000000 1000000 1000000 -12000000 -9000000 -3000000 -4000000 30000000 -3000000 -2000000 8000000 9000000 15000000 18000000 29000000 <div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 19px"><td colspan="9" style="width: 626px; 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text-align:left;border-color:#000000;min-width:250px;">&#160;</td><td colspan="4" style="width: 188px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:188px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Three months ended March 31,</font></td><td colspan="4" style="width: 188px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:188px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">Three months ended March 31,</font></td></tr><tr style="height: 14px"><td style="width: 250px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:250px;">&#160;</td><td colspan="2" style="width: 94px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:94px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: center;">2012</font></td><td colspan="2" style="width: 94px; 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text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> 1</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> &#8213;</font></td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;">&#160;</td><td style="width: 68px; text-align:right;border-color:#000000;min-width:68px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;TEXT-ALIGN: right;"> &#8213;</font></td></tr><tr style="height: 16px"><td style="width: 250px; text-align:left;border-color:#000000;min-width:250px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 9pt;COLOR: #000000;"> Actuarial loss</font></td><td style="width: 26px; 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