filings.toolsSempra (SRE) 10-K risk factor changes: FY2020 vs FY2019
The 2020-12-31 10-K against the 2019-12-31 one, compared heading by heading and sentence by sentence.
Item 1A366 rewritten280 added358 removed95 unchanged
All filing items5,104 rewritten3,207 added4,328 removed2,294 unchanged
Summary
counted, not written
- Item 1A lists 74 risk factor headings: 39 new, 17 reworded and 18 unchanged since FY2019. 17 headings from FY2019 no longer appear.
- Sentence by sentence, 3,207 added, 4,328 removed, 5,104 rewritten and 2,294 unchanged across 18 items that differ.
New Item 1A headings (39)
- The economic interest, voting rights and market value of our outstanding common and preferred stock may be adversely affected by any additional equity securities we may issue and, with respect to our common stock, by our outstanding preferred stock.
- Our businesses face risks related to the COVID-19 pandemic.
- natural gas, propane and ethane pipelines, storage and compressor facilities electric transmission, distribution and battery storage equipment power generation plants, including renewable energy and natural gas-fired generation marine and inland ethane and liquid fuels, LNG and LPG facilities, terminals and storage nuclear power facilities and nuclear fuel and nuclear waste storage facilities (through SDG&E’s minority interest in SONGS, which is currently being decommissioned)
- The substantial debt service obligations of Sempra Energy, SDG&E and SoCalGas could have a material adverse effect on our results of operations, cash flows, financial condition and/or prospects, and with respect to Sempra Energy, could require additional equity securities issuances.
- making it more difficult and costly for each of these companies to service, pay or refinance its debts as they become due, particularly during adverse economic or industry conditions limiting flexibility to pursue other strategic opportunities or react to changes in each of our businesses and the industry sectors in which they operate requiring a substantial portion of available cash to be used for debt service payments, including interest and potential redemptions, thereby reducing the availability of cash to fund working capital, capital expenditures, development projects, acquisitions, dividend payments and other general corporate purposes causing lenders to require additional materially adverse terms, conditions or covenants in the debt instruments for new debt, which might include restrictions on uses of proceeds or other assets or limitations on the ability to incur additional debt, create liens, pay dividends, redeem or repurchase stock, make investments or receive distributions from subsidiaries or equity method investments
- The availability and cost of debt or equity financing could be adversely affected by conditions in the financial markets and economic conditions generally, as well as other factors, and any such negative effects could materially adversely affect us.
- adverse changes to economic and financial market conditions and laws and regulations in the jurisdictions in which we operate or do business the overall health of the energy industry volatility in natural gas or electricity prices for Sempra Energy and SDG&E, risks related to California wildfires and any failure by the State of California to adequately address the financial and operational wildfire-related risks facing California electric IOUs the deterioration of or uncertainty in the political or regulatory environment for local natural gas distribution companies operating in California credit ratings downgrades
- Sempra Energy’s failure to meet certain financial credit metrics investing disproportionally in unregulated or uncontracted business and the impact on business mix and financial credit metrics over time catastrophic wildfires caused by SDG&E, or catastrophic wildfires caused by any California electric IOUs that participate in the Wildfire Fund, which could exhaust the fund considerably earlier than expected a ratings downgrade at SDG&E and/or SoCalGas continuing to acquire shares under a share repurchase program
- SDG&E’s failure to meet certain financial credit metrics the CPUC does not effectively implement the more supportive prudency standard for determining wildfire liability associated with the Wildfire Legislation catastrophic wildfires caused by SDG&E, or catastrophic wildfires caused by any California electric IOUs that participate in the Wildfire Fund, which could exhaust the fund considerably earlier than expected
- SoCalGas’ failure to meet certain financial credit metrics the conclusion of the CPUC’s pending regulatory proceedings where key elements of SoCalGas’ credit profile are negatively impacted deterioration of, or uncertainty in, the political or regulatory environment for local natural gas distribution companies operating in California a ratings downgrade at Sempra Energy
- failure to meet customer demand for natural gas and/or electricity, curtailments, controlled or uncontrolled gas outages, or gas surges back into homes that could cause serious personal injury or loss of life a prolonged widespread electrical black-out that results in damage to the California Utilities’ equipment or damage to property owned by customers or other third parties the release of hazardous or toxic substances into the air, water or soil, including gas leaks severe weather events or natural disasters, pandemics, or attacks by third parties such as cyber-attacks, acts of terrorism, vandalism or war, the effects of which we discuss above under “Risks Related to All Sempra Energy Businesses – Operational Risks” inadequate emergency preparedness plans and the failure to respond effectively to catastrophic events that could lead to public or employee harm or extended outagesCybersecurity
- Wildfires in California pose a significant risk to the California Utilities’ (particularly SDG&E’s) and Sempra Energy’s business, financial condition, results of operations and/or cash flows.
- Potential for Increased and More Severe Wildfires
- Cost Recovery Through Insurance or Rates
- the potential release of a radioactive material, including from a natural disaster, that could cause catastrophic harm to human health and the environment the potential harmful effects on the environment and human health resulting from the prior operation of nuclear facilities and the storage, handling and disposal of radioactive materials limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with operations and the decommissioning of the facility uncertainties with respect to the technological and financial aspects of decommissioning the facility
- Rates and Other Capital-Related Matters conditions of service sales of securities rates of return capital structure rates of depreciation long-term resource procurement delays by the CPUC on decisions regarding recovery the results of after-the-fact reasonableness reviews with unclear standards finalization of legislative and regulatory requirements and initiatives in an unexpected manner rejection of settlements with third parties decisions denying recovery or authorizing less than full recovery on the basis that costs were not reasonably or prudently incurred or for other reasons actual capital expenditures or operating costs exceeding the amounts approved by the CPUC
- CPUC Authority Over Operational Matters
- Influence of Other Organizations and Potential Regulatory Changes
- SoCalGas has incurred and may continue to incur significant costs, expenses and other liabilities related to the Leak, a substantial portion of which may not be recoverable through insurance.
- seven members of Oncor’s 13-person board of directors will be independent directors in all material respects under the rules of the NYSE in relation to Sempra Energy and its subsidiaries and affiliated entities and any other direct or indirect owners of Oncor, and also will have no material relationship with Sempra Energy and its subsidiaries and affiliated entities or any other direct or indirect owners of Oncor currently or within the previous 10 years. With respect to the six remaining directors, two will be designated by Sempra Energy, two will be designated by Oncor’s minority owner, TTI, and two will be current or former Oncor officers
- Oncor will not pay any dividends or other distributions (except for contractual tax payments) if a majority of its independent directors or any of the directors appointed by TTI determines that it is in the best interests of Oncor to retain such amounts to meet expected future requirements
- Oncor will not pay dividends or other distributions (except for contractual tax payments) if that payment would cause its debt-to-equity ratio to exceed the debt-to-equity ratio approved by the PUCT if Oncor’s senior secured debt credit rating by any of the three major rating agencies falls below BBB (or Baa2 for Moody’s), Oncor will suspend dividends and other distributions (except for contractual tax payments), unless otherwise allowed by the PUCT there must be maintained certain “separateness measures” that reinforce the legal and financial separation of Oncor from Sempra Energy, including a requirement that dealings between Oncor and Sempra Energy or Sempra Energy’s affiliates (other than Oncor Holdings and its subsidiaries) must be on an arm’s-length basis, limitations on affiliate transactions and a prohibition on pledging Oncor assets or stock for any entity other than Oncor a majority of Oncor’s independent directors and the directors designated by TTI that are present and voting (of which at least one must be present and voting) must approve any annual or multi-year budget if the aggregate amount of capital expenditures or O&M in such budget is more than a 10% increase or decrease from the corresponding amounts of such expenditures in the budget for the preceding fiscal year or multi-year period, as applicable
- Sempra Energy will continue to hold indirectly at least 51% of the ownership interests in Oncor Holdings and Oncor until at least March 9, 2023, unless otherwise specifically authorized by the PUCT
- Changes in the electric utility industry, including changes in regulation of ERCOT, could materially adversely affect Oncor’s results of operations, cash flows, financial condition and/or prospects, which could materially adversely affect us.
- All Energy Infrastructure Projects our ability to reach a final investment decision or otherwise make progress with respect to any project, which may be dependent on our financial condition and cash flows and may be influenced by a number of external factors outside our control, including the global economy and global energy and financial markets negotiation of satisfactory EPC agreements, including any renegotiation of total contract price and other terms that may be required in the event of delays in final investment decisions or other failures to meet specified deadlines with respect to a project if we intend to have equity partners in the project, identification of suitable partners and negotiation of satisfactory equity agreements identification of suitable customers and negotiation of satisfactory LNG offtake or other customer agreements negotiation of satisfactory supply, natural gas and LNG sales agreements or firm capacity service agreements and PPAs timely receipt of required governmental permits, licenses and other authorizations that do not impose material conditions and are otherwise granted under terms we find reasonable, as well as maintenance of these authorizations our project partners’ willingness and financial or other ability to make their required investments on a timely basis our contractors and other counterparties’ willingness and financial or other ability to fulfill their contractual commitments timely, satisfactory and on-budget completion of construction, which could be negatively affected by engineering problems, adverse weather conditions or other natural disasters, pandemics, cyber- or other attacks by third parties, work stoppages, equipment unavailability, contractor performance shortfalls and a variety of other factors, many of which we discuss above under “Risks Related to All Sempra Energy Businesses – Operational Risks” and in this risk factor below obtaining adequate and reasonably priced financing for the project the absence of hidden defects or inherited environmental liabilities for any brownfield project construction fast and cost-effective resolution of any litigation or unsettled property rights affecting a projectCybersecurity
- Our Port Arthur, Texas project is a greenfield site, and therefore it does not have some of the advantages often associated with brownfield sites. Some of these disadvantages include increased costs and time to construct, which could materially adversely affect the development of this project.
- The proposed expansion of the Cameron LNG JV facility (Phase 2) is subject to certain restrictions and conditions under the project financing agreements for Phase 1 of the project, including, among others, timing restrictions unless appropriate prior consent is obtained from the project lenders, and requires unanimous consent of all JV partners, including with respect to the equity investment obligations of each partner. There is no assurance that these conditions and requirements can be satisfied, in which case our ability to develop the Phase 2 project would be jeopardized.
- We may not be able to enter into, maintain, extend or replace expiring long-term supply and sales agreements or long-term firm capacity agreements for our projects.
- Our businesses depend on the performance of counterparties, including with respect to long-term supply, sales and capacity agreements, and any failure by these parties to perform could result in substantial expenses and business disruptions and exposure to commodity price risk and volatility, any of which could materially adversely affect our businesses, financial condition, cash flows, results of operations and/or prospects.
- deliver the natural gas and electricity and LPG we sell to wholesale markets or that we use for our natural gas liquefaction export facilities supply natural gas to our gas storage and electric generation facilities provide retail energy services to customers
- Our international businesses and operations expose us to legal, tax, economic, geopolitical, management oversight, foreign currency and inflation risks and challenges.
- changes in foreign laws and regulations, including tax, trade and environmental laws and regulations, and U.S. laws and regulations that are related to foreign operations or doing business internationally, including U.S. trade and related policies as we discuss below actions by local regulatory bodies, including setting of rates and tariffs that may be earned by our businesses adverse changes in economic or market conditions, limitations on ownership in foreign countries and inadequate enforcement of regulations risks related to currency exchange and convertibility, including vulnerability to appreciation and depreciation of foreign currencies against the U.S. dollar, as we discuss below permitting and regulatory compliance adverse rulings by foreign courts or tribunals, challenges to or difficulty obtaining permits or approvals, difficulty enforcing contractual and property rights, differing legal standards for lawsuits or other proceedings, and unsettled property rights and titles in Mexico energy policy reform, including that which may result in adverse changes to and/or difficulty enforcing existing contracts or challenges completing and operating our renewable energy facilities in Mexico, as we discuss below expropriation or theft of assets adverse changes in the stability of the governments or the economies in the countries in which we operate or do business violence, criminality, or social or political instability compliance with the U.S. Foreign Corrupt Practices Act and similar laws with respect to our non-utility international business activities, changes in the priorities and budgets of international customers, which may be driven by many of the factors listed above, among othersTariffs
- Mexican Government Influence on Economic and Energy Matters
- U.S. Foreign Policy, including Trade and Related Matters
- Our ability to complete our proposed IEnova exchange offer is subject to various conditions and other risks and uncertainties that could cause the transaction to be abandoned, delayed or restructured, which could materially adversely affect us.
- The proposed exchange offer, if completed, may not have the positive effects we anticipate, which may negatively affect the market price of our common stock, preferred stock and debt securities.
- We expect to issue shares of our common stock in the proposed exchange offer, which would dilute the voting interests and could dilute the economic interests of our current shareholders and may adversely affect the market value of our common stock and preferred stock.
- The proposed exchange offer, if completed, would subject us to additional regulation and liability in Mexico.
- Our proposed transaction related to Sempra Infrastructure Partners is subject to a number of risks and uncertainties.
Removed Item 1A headings (17)
- Conditions in the financial markets and economic conditions generally may materially adversely affect us.
- Sempra Energy has substantial investments in Mexico and South America that expose us to foreign currency, inflation, legal, tax, economic, geopolitical and management oversight risk.
- We may be unable to realize the anticipated benefits from our plan to divest certain of our assets and businesses as part of our capital rotation plan.
- The TCJA may materially adversely affect our financial condition, results of operations and cash flows, the value of investments in our common stock, preferred stock and debt securities.
- Our mandatory convertible preferred stock, as well as any additional equity securities we may sell to raise funds, may dilute the economic and voting interests of our common shareholders and may adversely affect the market value of our common stock.
- Our level of indebtedness may make it more difficult for us to pay or refinance our debts or take other actions, and we may need to divert cash to fund debt service payments or issue additional equity that may materially dilute the voting rights and economic interest of holders of our common stock.
- The Wildfire Legislation may not adequately protect SDG&E from liability from catastrophic wildfires in its service territory and we may be unable to obtain sufficient insurance coverage at a reasonable cost or at all.
- Extreme weather conditions, changing weather patterns and population growth in areas of the State of California in environments with historically higher risk of wildfires could materially affect the California Utilities’ and Sempra Energy’s business, financial condition, results of operations, liquidity, and cash flows.
- SoCalGas has incurred and may continue to incur significant costs, expenses and other liabilities related to the natural gas leak at its Aliso Canyon natural gas storage facility and mitigating local community environmental impacts from the Leak, some or a substantial portion of which may not be recoverable through insurance, and SoCalGas also may incur significant liabilities for damages, restitution, fines, penalties and other costs, and emissions mitigation activities as a result of this incident, some or a significant portion of which may not be recoverable through insurance or may exceed insurance coverage.
- Natural gas pipeline safety assessments may not be fully or adequately recovered in rates.
- The California Utilities are subject to increasingly stringent safety standards and the potential for significant penalties if regulators deem either SDG&E or SoCalGas to be out of compliance.
- If Oncor fails to respond to challenges in the electric utility industry, including changes in regulation, its results of operations and financial condition could be adversely affected, and this could materially adversely affect us.
- The design, development and construction of the Cameron LNG liquefaction facility involves numerous risks and uncertainties.
- We face many challenges to develop and complete our contemplated LNG export facilities.
- We may elect not to, or may not be able to, enter into, extend or replace expiring long-term supply and sales agreements or long-term firm capacity agreements for our projects, which would subject our revenues to increased volatility and our businesses to increased competition. Such long-term contracts, once entered into, increase our credit risk if our counterparties fail to perform or become unable to meet their contractual obligations on a timely basis due to bankruptcy, insolvency, or otherwise.
- Our businesses depend on counterparties, business partners, customers and suppliers performing in accordance with their agreements. If they fail to perform, we could incur substantial expenses and business disruptions and be exposed to commodity price risk and volatility, which could materially adversely affect our businesses, financial condition, cash flows, results of operations and/or prospects.
- Our international businesses are exposed to different local, regulatory and business risks and challenges.
Reworded Item 1A headings (17)
- Sempra Energy’s cash flows, ability to pay dividends and ability to meet its debt obligations largely depend on the performance of its subsidiaries and entities that are accounted for as equity method investments, such as Oncor
[removed: Holdings, and the ability to utilize the cash flows from those subsidiaries][added: Holdings] and[removed: equity method investments.][added: Cameron LNG JV.] [removed: Impairment][added: Any impairment] of[removed: goodwill would][added: our assets could] negatively impact our consolidated results of operations and net worth.- Dividend requirements associated with our
[removed: mandatory convertible]preferred stock subject us to certain risks. - In addition to general information [added: risks] and cyber risks that all large corporations face (e.g. malware, [added: general cyber- or phishing-attacks by outsiders,] malicious intent by insiders and inadvertent disclosure of sensitive information), we face evolving cybersecurity risks associated with protecting sensitive and confidential customer [added: and employee] information, smart grid infrastructure, and natural gas pipeline and storage infrastructure.
- We are subject to additional
[removed: risk][added: risks] due to uncertainty relating to the calculation of LIBOR and its[removed: potential][added: scheduled] discontinuance. - We cannot and do not attempt to fully hedge our assets or contract positions against changes in commodity
[removed: prices. In addition,][added: prices, and] for those contract positions that are hedged, our hedging procedures may not mitigate our risk as planned. - Market performance or changes in other assumptions could require
[removed: Sempra Energy, SDG&E and/or SoCalGas to make]significant unplanned contributions to[removed: their]pension and other postretirement benefit plans. - Our businesses are subject to
[removed: complex government][added: governmental] regulations and tax [added: and accounting] requirements and may be materially adversely affected by these regulations or requirements or [added: any] changes[removed: thereto.][added: to them.] - Our businesses require numerous permits, licenses,
[removed: agreements][added: franchises,] and other approvals [added: and agreements] from various federal, state, local and foreign governmental agencies, and[removed: any][added: the] failure to obtain or maintain [added: any of] them could materially adversely affect our businesses, cash flows, financial condition, results of operations and/or prospects. - Our businesses, results of operations, financial condition and/or cash flows may be materially adversely affected by the outcome of litigation
[removed: against us.][added: or other proceedings in which we are involved.] - The California Utilities are subject to risks arising from the operation, maintenance and
[removed: upgrades][added: upgrade] of their natural gas and electricity infrastructure and information technology systems, which, if they materialize, could [added: materially and] adversely affect Sempra Energy’s and the California Utilities’ financial results. - Natural gas and natural gas storage
[removed: has][added: have] increasingly been the subject of political and public scrutiny, including a desire by some to[removed: further limit][added: substantially reduce] or eliminate reliance on natural gas as an energy source. - The failure by the CPUC to
[removed: continue reforms of][added: adequately reform] SDG&E’s rate structure, including the implementation of charges independent of consumption volume and[removed: reforms][added: measures] to reduce NEM rate subsidies, could have a material adverse effect on SDG&E’s [added: and Sempra Energy’s] business, cash flows, financial condition, results of operations and/or prospects. - Oncor’s operations are capital intensive and it could have liquidity needs that
[removed: may require us to make][added: necessitate] additional investments in Oncor. [removed: Business][added: Project] development activities may not be successful and projects under construction may not commence operation as scheduled, be completed within budget or operate at expected levels, which could have a material adverse effect on our businesses, financial condition, cash flows, results of operations and/or prospects.- Increased competition
[removed: and changes in trade policies]could materially adversely affect us. - Our businesses are subject to various legal actions challenging our property rights and
[removed: permits.][added: permits, and our properties in Mexico could be subject to expropriation by the Mexican government.]
A heading is new when no FY2019 heading matches it after ignoring case and punctuation, and reworded when it shares at least 60 percent of its words with one that went away. All current risk factor headings.
Sentences by item
22 items, with every count and a link to each item that changed
Underlined words on a shaded ground are new in FY2020; struck-through words were in FY2019. Sentences that are wholly new or wholly gone are labelled rather than marked.
Item 1A. RISK FACTORS
366 rewritten, 280 added, 358 removed, 95 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
*When evaluating our company and its [removed: subsidiaries,] [added: subsidiaries and any investment in our or their securities,] you should consider carefully the following risk factors and all other information contained in this [added: report and in the other documents we file with the SEC, including in documents we file subsequent to this] report.
[removed: If] [added: The occurrence of] any of [removed: the following occurs,] [added: these events could materially adversely affect] our [removed: businesses, cash flows,] [added: businesses financial condition,] results of operations, [removed: financial condition] [added: cash flows] and/or [removed: prospects could be materially adversely affected.][added: prospects.]
These risk factors should be read in conjunction with the other [removed: detailed] information concerning our company set forth [removed: in,] [added: in] or attached as an exhibit [removed: to,] [added: to] this [removed: annual report on Form 10-K,] [added: report,] including, [removed: without limitation,] [added: among other things,] the information set forth in the [removed: Notes to] Consolidated Financial Statements and in [removed: “Item] [added: “Part II – Item] 7.
Sempra Energy’s cash flows, ability to pay dividends and ability to meet its debt obligations largely depend on the performance of its subsidiaries and entities that are accounted for as equity method investments, such as Oncor [removed: Holdings, and the ability to utilize the cash flows from those subsidiaries] [added: Holdings] and [removed: equity method investments.][added: Cameron LNG JV.]
We are a holding company and substantially all our assets are owned by our subsidiaries [removed: and in] [added: or] entities [removed: accounted for as] [added: we do not control, which include] equity method [removed: investments,] [added: investments] such as Oncor [removed: Holdings.][added: Holdings and Cameron LNG JV.]
Our ability to pay dividends and to meet our debt and other obligations [added: largely] depends [removed: almost entirely] on cash flows from our subsidiaries and equity method [removed: investments and, in the short term, our ability to raise capital from external sources.][added: investments.]
[removed: In the long term, cash] [added: Cash] flows from our subsidiaries and equity method investments depend on their ability to successfully execute their business strategies and generate [removed: positive] cash [removed: flows.][added: flows in excess of their own expenditures, common and preferred dividends (if any), and debt and other obligations.]
In addition, the [removed: subsidiaries and other] entities accounted for as equity method [removed: investments] [added: investments, which we do not control, and our subsidiaries] are [added: all] separate and distinct legal entities that are not obligated to pay dividends or make loans or distributions to us and could be precluded from paying any such dividends or making any such loans or distributions under certain circumstances, including, [removed: without limitation,] [added: among other things,] as a result of legislation, regulation, court [removed: order,] [added: order or] contractual restrictions or in times of financial distress.
The inability to access capital from our subsidiaries and entities accounted for as equity method investments [removed: as well from the capital markets] could have a material adverse effect on our cash flows, financial condition [removed: and] [added: and/or] prospects.
Our businesses are capital intensive and we rely [removed: significantly] on long-term debt to fund a [added: significant] portion of our capital expenditures and repay outstanding debt, and on short-term borrowings to fund a [added: significant] portion of day-to-day business operations.
Limitations on the availability of [removed: credit and] [added: credit,] increases in interest rates or credit spreads [added: or other negative effects on the terms of any debt or equity financing we] may [added: pursue could] materially adversely affect our businesses, cash flows, results of operations, financial condition and/or prospects, as well as our ability to meet contractual and other commitments.
In difficult [removed: credit] market environments, we may find it necessary to fund our operations and capital expenditures at a higher cost or we may be unable to raise as much funding as we need to support new or ongoing business activities.
Other factors can affect the availability and cost of [removed: credit] [added: capital] for our businesses [removed: as well as] [added: in addition to] the terms of [removed: equity and] debt [added: and equity] financing, [removed: including:][added: including, among others:]
[removed: | ▪ | adverse] [added: ▪adverse] changes to [added: economic and financial market conditions and] laws and regulations in the [removed: states and countries] [added: jurisdictions] in which we operate [removed: |][added: or do business]
[removed: | ▪ | the] [added: ▪the] overall health of the energy industry [removed: |]
[removed: | ▪ | volatility] [added: ▪volatility] in natural gas or electricity prices [removed: |]
[removed: | ▪ | credit] [added: ▪credit] ratings downgrades [removed: |]
We are subject to additional [removed: risk] [added: risks] due to uncertainty relating to the calculation of LIBOR and its [removed: potential] [added: scheduled] discontinuance.
[removed: In an announcement on July 12, 2018, the] [added: The] Financial Conduct Authority [added: (FCA)] in the United Kingdom, which regulates LIBOR, [added: has] emphasized the need for market participants to transition away from [removed: LIBOR before the end of 2021.][added: LIBOR.]
[removed: Any] [added: The adoption] of [removed: these alternatives] [added: the Secured Overnight Financing Rate (SOFR), which has been identified as the replacement benchmark rate for LIBOR,] may result in interest payments that are higher than expected or that do not otherwise correlate over time with the payments that would have been made on such indebtedness [removed: for the interest periods] if the applicable LIBOR rate was available in its current form.
[removed: More generally, any of the foregoing changes, any other changes] [added: Changes] to [removed: LIBOR as a result of national, international and other regulatory guidance and proposals for reform] or [removed: other initiatives, or] [added: the discontinuance of LIBOR,] any further uncertainty [removed: surrounding] [added: regarding] the implementation of such [removed: changes,] [added: changes or discontinuance, and uncertainties regarding the performance and characteristics of alternative benchmark rates,] could have a material adverse effect on [removed: the cost of] our [added: existing and future] variable rate indebtedness and/or borrowings, [removed: the effectiveness of] our [removed: cash flow] [added: existing and future interest rate] hedges and the cost of doing business under our commercial agreements that incorporate [removed: LIBOR.][added: LIBOR, and could require us to seek to amend the terms of the relevant indebtedness or agreements, which may be on terms materially worse than existing terms.]
[removed: Sempra Energy has substantial investments in Mexico] [added: Our international businesses] and [removed: South America that] [added: operations] expose us to [removed: foreign currency, inflation,] legal, tax, economic, [removed: geopolitical and] [added: geopolitical,] management [removed: oversight risk.][added: oversight, foreign currency and inflation risks and challenges.]
We have significant foreign operations in [removed: Mexico] [added: Mexico, which pose material foreign currency] and [removed: South America.][added: inflation risks.]
[removed: Foreign currency exchange] [added: Exchange] and inflation rates [added: with respect to the Mexican peso] and fluctuations in those rates may have an impact on our revenue, costs or cash flows from our international operations, which could materially adversely affect our financial [removed: performance.][added: condition, results of operations and/or cash flows.]
[removed: They] [added: It] also [removed: have] [added: has] significant deferred income tax assets and liabilities, which are denominated in the Mexican peso and must be translated to U.S. dollars for financial reporting purposes.
We may attempt to hedge material cross-currency transactions and earnings exposure through various means, including financial instruments and short-term [removed: investments.][added: investments, but these hedges may not successfully achieve our objectives of mitigating earnings volatility that would otherwise occur due to exchange rate fluctuations.]
Because we do not hedge our net investments in foreign countries, we are susceptible to volatility in OCI caused by exchange rate [removed: fluctuations, primarily related to our South American subsidiaries,] [added: fluctuations for entities] whose functional currencies are not the U.S. [added: dollar.]
We discuss our foreign currency exposure at our Mexican subsidiaries in [removed: “Item] [added: “Part II – Item] 7.
MD&A” and [removed: “Item] [added: “Part II – Item] 7A.
The [added: last] U.S. [removed: administration has] [added: Administration] also implemented changes to U.S. immigration policy and other policies that [removed: could] impact trade, including increasing [removed: tariffs.][added: tariffs, and the current U.S. Administration has taken steps to reverse some of these changes and could take other material action with respect to these matters.]
[removed: Such actions could result in changes in the Mexican, U.S. and other markets that] [added: Any such circumstance] could materially adversely affect our business, financial condition, [removed: results of operations,] cash [removed: flows or] [added: flows, result of operations and/or] prospects.
[removed: In addition, if the U.S. withdraws from NAFTA, the Mexican government could implement retaliatory actions, such as the imposition of restrictions or import fees on Mexican imports of natural gas from the U.S.] [added: Such policy changes] or [removed: imports and exports of electricity to and from the U.S. Any of these] [added: other] actions [removed: by either or both governments] could adversely affect imports and exports between Mexico and the U.S. and negatively impact the [removed: U.S. and] [added: U.S.,] Mexican [added: and other] economies and the companies with whom we conduct [removed: business in Mexico,] [added: business,] which could materially adversely affect our business, financial condition, results of operations, cash [removed: flows, or] [added: flows and/or] prospects.
[removed: The TCJA may] [added: Any such occurrence could] materially adversely affect our [added: businesses,] financial condition, [removed: results of operations and] cash flows, [removed: the value] [added: results] of [removed: investments in our common stock, preferred stock and debt securities.][added: operations and/or prospects.]
We discuss [removed: the effects of the TCJA] [added: SONGS] further in Note [removed: 8] [added: 15] of the Notes to Consolidated Financial [removed: Statements and in “Item 7.][added: Statements.]
[removed: Our mandatory convertible] [added: The economic interest, voting rights and market value of our outstanding common and] preferred [removed: stock, as well as] [added: stock may be adversely affected by] any additional equity securities we may [removed: sell] [added: issue and, with respect] to [removed: raise funds, may dilute the economic and voting interests of] our common [removed: shareholders and may adversely affect the market value of] [added: stock, by] our [removed: common] [added: outstanding preferred] stock.
[removed: In January 2018,] [added: At February 25, 2021,] we [removed: issued 17,250,000] [added: have 6,650,000] shares of [removed: our series A] preferred [removed: stock, and in July 2018, we issued] [added: stock outstanding,] 5,750,000 [removed: shares] of [added: which constitute] our series B preferred [removed: stock, which] [added: stock and] are scheduled to convert into [added: shares of our] common stock on [removed: January 15, 2021 and] July 15, 2021, [removed: respectively.][added: and the remaining 900,000 of which constitute our series C preferred stock and are not convertible.]
[removed: We] [added: To maintain these credit ratings, we] may [removed: seek to] reduce [added: the amount of] our [added: outstanding] indebtedness with the proceeds from the issuance of additional shares of common [removed: stock and, possibly,][added: or preferred stock.]
[removed: other equity securities,] [added: We may seek to raise capital by issuing additional shares of common or preferred stock,] which, together with the conversion of the series [removed: A preferred stock and series] B preferred [added: stock into our common] stock, may materially dilute the voting rights and economic interests of holders of our [added: outstanding] common [added: and preferred] stock and materially adversely affect the trading price of our common [added: and preferred] stock.
[removed: Our] [added: The] substantial debt service obligations [removed: due to our aggregate indebtedness] [added: of Sempra Energy, SDG&E and SoCalGas] could have a material adverse effect on [removed: Sempra Energy’s] [added: our] results of operations, cash flows, financial condition [removed: and] [added: and/or] prospects by, among other things:
[removed: | ▪ | making] [added: ▪making] it more difficult [removed: and/or] [added: and] costly for [removed: us] [added: each of these companies] to [removed: service our debt or] [added: service,] pay or refinance [removed: our] [added: its] debts as they become due, particularly during adverse economic or industry [removed: conditions; |][added: conditions]
If any of these risks occurs, our businesses, cash flows, results of operations, financial condition and/or prospects could be materially adversely affected, and the trading prices of our securities and those of our subsidiaries could substantially decline.
Operational and Structural Risks
Sempra Energy’s rights to the assets of its subsidiaries and equity method investments are structurally subordinated to the claims of that entity’s creditors, including trade creditors.
In addition, to the extent Sempra Energy is a creditor of any such entity, its rights as a creditor would be effectively subordinated to any security interest in the assets of that entity and any indebtedness of the entity senior to that held by Sempra Energy.
We have and make investments in entities that we do not control or manage or in which we share control, which include Sempra Energy’s direct or indirect interest in Oncor, Cameron LNG JV and RBS Sempra Commodities; SDG&E’s interest in SONGS; and IEnova’s indirect interest in the Sur de Texas-Tuxpan natural gas marine pipeline in Mexico, among others.
In some cases, we engage in other arrangements with or for these entities that could expose us to risks in addition to our investment.
Where we share control with other equity owners, any disagreements among the owners of these businesses with respect to material issues, including strategy, financial, operational or transactional matters, could have a material adverse effect on the ability of that business to move forward with key initiatives or projects or take other actions, and could also negatively affect the long-term relationships among the business owners and the ability of the entity to function efficiently and effectively.
With respect to ventures and other businesses over which we do not exercise control, we could be responsible for significant liabilities or losses related to these businesses, such as our investment in RBS Sempra Commodities where we recorded $100 million in equity losses representing our estimated obligations to settle outstanding tax matters and related legal costs, and where we could be subject to further losses upon final resolution of these matters.
In taking these steps, activist shareholders could seek to acquire significant amounts of our capital stock, which could threaten our ability to use some or all our NOL carryforwards if any such attempt were to result in our corporation undergoing an “ownership change” under applicable tax rules.
Responding to activist shareholders would require us to incur significant legal and advisory fees, proxy solicitation expenses (in
Financial and Capital Stock-Related Risks
We could experience a reduction in the fair value of our assets, including our long-lived assets, intangible assets or goodwill, upon the occurrence of many of the risks discussed in these risk factors.
We also issued 13,781,025 shares of our common stock on January 15, 2021 upon the mandatory conversion of our former series A preferred stock in accordance with the terms of those securities.
Operational Risks
Our businesses face risks related to the COVID-19 pandemic.
The COVID-19 pandemic is materially impacting communities, supply chains and markets around the world.
The U.S. economy is experiencing a significant slowdown and claims for unemployment have substantially increased.
To date, the COVID-19 pandemic has not had a material impact on our results of operations.
However, we are conducting business with substantial modifications to employee travel, employee work locations, and virtualization or cancellation of certain business activities, among other modifications.
If these or other similar measures were to increase or continue for an extended period, we could experience employee absenteeism, decreased efficiency and productivity by our workforce and other similar impacts that could jeopardize our ability to sustain operations and satisfy compliance requirements and could result in higher operating costs.
We also have observed other companies, including our current and prospective counterparties, customers and partners, as well as many governments, including our regulators and other governing bodies that affect our businesses, taking precautionary, preemptive and responsive actions to address the effects of the COVID-19 pandemic, and they may take further actions that alter their normal operations.
These actions by third parties could materially impact our operations, results, liquidity and ability to pursue capital projects and strategic initiatives.
For example, the CPUC has required that all energy companies under its jurisdiction take action to implement several emergency customer protection measures to support California customers.
The measures currently apply to all residential and small business customers affected by the COVID-19 pandemic and include suspending service disconnections due to nonpayment, waiving late payment fees, and offering flexible payment plans to customers experiencing difficulty paying their electric or gas bills.
These actions have resulted in a reduction in payments received from our customers and an increase in uncollectible accounts, which could become material, and any inability or delay in recovering all or a substantial portion of these costs could have a material adverse effect on the cash flows, financial condition and results of operations for Sempra Energy, SDG&E and SoCalGas.
As an additional example, we reached a final investment decision with respect to ECA LNG Phase 1 in November 2020, the timing of which was delayed in part by the COVID-19 pandemic.
If this or other projects under development are further delayed due to continuing or worsening conditions caused by the COVID-19 pandemic or other related factors, the performance and prospects of our LNG export business could be materially adversely affected.
Although Sempra Energy, SDG&E and SoCalGas are not currently constrained in their ability to borrow money at reasonable rates, these circumstances could change if the COVID-19 pandemic worsens or continues for an extended period and adversely affects conditions in the capital markets, which could have a material negative effect on our liquidity, results of operations, strategic initiatives and prospects.
The COVID-19 pandemic could result in an increased slowdown of certain of our capital spending if conditions deteriorate or fail to improve in the near term, which could have a material adverse effect on Sempra Energy’s, SDG&E’s and SoCalGas’ results of operations and prospects.
We will continue to actively monitor the effects of the COVID-19 pandemic and may take further actions that alter our business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees, customers, partners and suppliers.
However, we cannot at this time predict the extent to which the COVID-19 pandemic will further impact our liquidity, financial condition, results of operations and prospects.
fines, penalties and disallowances.
Moreover, weather-related incidents have become more prevalent, unpredictable and severe as a result of climate change or other factors, and we are currently in the midst of a severe global pandemic, any of which could have a greater impact on our businesses than is currently anticipated and, for our regulated utilities, rates may not be adequately or timely adjusted to reflect any such increased impact.
In particular, various private and public entities have noted that cyber- and other attacks targeting utility systems and other energy infrastructures are increasing in sophistication, magnitude, and frequency.
Additionally, the California Utilities are increasingly required to disclose large amounts of data (including customer energy usage and personal information regarding customers) to support changes to California’s electricity market related to grid modernization and customer choice, increasing the risks of inadvertent disclosure or other unauthorized access of sensitive information.
Further, the virtualization of many business activities as a result of the COVID-19 pandemic increases cyber risk, and there generally has been an associated increase in targeted cyber-attacks.
Moreover, all of our businesses operating in California are subject to enhanced state privacy laws that have recently taken effect, which require companies that collect information on California residents to, among other things, make new disclosures to consumers about their data collection, use and sharing practices, allow consumers to opt out of certain data sharing with third parties and provide a new cause of action for breaches of certain highly sensitive categories of personal information resulting from a failure to reasonably secure them, and other states in which we do business could adopt similar laws in the future.
In addition, we often rely on third-party vendors to deploy new business
Financial Risks
The substantial debt service obligations of Sempra Energy, SDG&E and SoCalGas could have a material adverse effect on our results of operations, cash flows, financial condition and/or prospects, and with respect to Sempra Energy, could require additional equity securities issuances.
In addition, the trading prices of our securities and those of our subsidiaries could substantially decline due to the occurrence of any of these risks.
Conditions in the financial markets and economic conditions generally may materially adversely affect us.
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| ▪ | general economic and financial market conditions |
In addition, over the past several years, California IOUs have suffered from the potential catastrophic losses resulting from the impact of the multiple wildfires that spread through Northern and Southern California (the California Wildfires).
While the California Wildfires occurred in counties outside of SDG&E’s electric service territory, the uncertainty about the outcomes of these matters, the possibility of catastrophic wildfires in the future and the failure of the State of California to adequately address the financial and operational risks facing California IOUs could materially and adversely impact Sempra Energy’s and the California Utilities’ ability to access the capital markets at rates that we believe are commercially reasonable.
LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform, including discontinuation or replacement.
These reforms, if implemented, will cause this benchmark to perform differently than it has performed in the past or to be discontinued entirely or may have other consequences that cannot be predicted, which could have a material adverse effect on our financial condition or results of operations or require us to seek to amend the terms of the relevant indebtedness or agreements, which may require significant additional time, effort and/or money in the form of consent payments or otherwise, and may not be possible on comparable terms or at all.
It appears likely that LIBOR will be discontinued or replaced with a different benchmark rate by 2021.
A number of alternatives to LIBOR have been proposed or are being developed, but it is not clear which, if any, will be adopted at this time.
Our foreign operations pose complex management, foreign currency, inflation, legal, tax and economic risks.
Certain of these risks differ from and potentially may be greater than those associated with our domestic businesses.
All our international businesses are sensitive to geo-political uncertainties and our non-utility international businesses are sensitive to changes in the priorities and budgets of international customers, all of which may be driven by changes in their environments and potentially volatile worldwide economic conditions, and various regional and local economic and political factors, risks and uncertainties, as well as U.S. foreign policy.
Our currency exposures are to the Mexican, Peruvian and Chilean currencies.
Our primary objective when we attempt to reduce foreign currency risk is to preserve the economic value of our foreign investments and to reduce earnings volatility that would otherwise occur due to exchange rate fluctuations.
We generally do not hedge our deferred income tax assets and liabilities.
dollar.
The current U.S. administration has called for substantial changes to trade agreements.
For example, in November 2018, President Trump signed the USMCA, which, if approved by the legislatures of the U.S., Mexico and Canada, would replace NAFTA.
The U.S. and Mexico approved the USMCA in January 2020 and June 2019, respectively, but Canada has yet to provide its approval.
We may be unable to realize the anticipated benefits from our plan to divest certain of our assets and businesses as part of our capital rotation plan.
In 2019, we completed the divestiture of all our U.S. solar and wind assets and certain non-utility natural gas storage assets in the southeast U.S. Additionally, we entered into agreements to sell our South American businesses, which we expect to close in the first half of 2020, subject to a number of closing conditions.
There can be no assurance that the pending sales will be completed.
If we do not successfully manage our current capital rotation plan, any expected efficiencies and benefits might be delayed or not realized, and our results of operations and business could be materially adversely affected.
The TCJA significantly changed the IRC, including taxation of U.S. corporations by, among other things, reducing the U.S. corporate income tax rate, altering the expensing of capital expenditures, limiting interest deductions, adopting elements of a territorial tax system, assessing a one-time deemed repatriation tax on cumulative undistributed earnings of U.S.-owned foreign entities at the time of enactment and introducing certain anti-base erosion provisions.
While the U.S Department of the Treasury has issued final regulations for various sections of the IRC, certain aspects of the legislation are still subject to interpretation and will require implementing regulations by the U.S. Department of the Treasury, as well as state tax authorities, which could lessen or increase adverse impacts.
In addition, the regulatory treatment of the impacts of this legislation may be subject to the discretion of the FERC and state public utility commissions.
Although it is unclear when or how capital markets, the FERC or state public utility commissions may respond to the TCJA, we expect that certain financial metrics used by credit rating agencies, such as our funds from operations-to-debt percentage, will be negatively impacted as a result of an anticipated decrease in required income tax reimbursement payments to us from our domestic utility subsidiaries due to the decrease in the U.S. statutory corporate income tax rate.
Certain provisions of the TCJA, such as 100% expensing of certain capital expenditures and impacts on utilization of our NOLs, may influence how we fund capital expenditures, the timing of capital expenditures and possible redeployment of capital through sales or monetization of assets, the timing of repatriation of foreign earnings and the use of equity financing to reduce our future use of debt, although there can be no assurance that these strategies will reduce any potential adverse impact from these provisions of the TCJA.
In addition, although the deductibility of our interest cost is not limited for the current year, future earnings may be affected based on our method of allocation across our businesses.
It is also uncertain whether additional avenues will evolve for companies to manage the adverse aspects of this legislation.
An excerpt. Shown here: 40 of 366 rewritten, 40 of 280 added and 40 of 358 removed. The counts are complete. For every sentence, read Item 1A. RISK FACTORS in the FY2020 filing and the FY2019 filing.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
673 rewritten, 484 added, 974 removed, 254 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
In 2018, we set out to simplify Sempra Energy’s business model and sharpen our focus on [removed: building] [added: our mission to be] North America’s premier energy infrastructure company.
Our [removed: 2019] [added: 2020] operational and financial results reflect our focus on executing this strategy:
Our South American businesses and certain activities associated with those businesses [removed: have been reclassified to] [added: are presented as] discontinued operations for all periods presented.
[removed: | ▪ | Overall] [added: ▪Overall] results of operations of Sempra Energy [removed: |][added: Consolidated;]
[removed: | ▪ | Segment results |][added: ▪Segment results;]
[removed: | ▪ | Significant] [added: ▪Significant] changes in revenues, costs and [removed: earnings |][added: earnings; and]
[removed: | ▪ | Impact] [added: ▪Impact] of foreign currency and inflation rates on [added: our] results of [removed: operations |][added: operations.]
OVERALL RESULTS OF OPERATIONS OF SEMPRA [removed: ENERGY][added: ENERGY CONSOLIDATED]
In [removed: 2019,] [added: 2019 compared to 2018,] our earnings increased by [removed: approximately] $1,131 million to $2,055 million and our diluted EPS increased by $3.87 to $7.29.
In [removed: 2018] [added: 2020] compared to [removed: 2017,] [added: 2019,] our earnings increased by [removed: $668] [added: $1,709] million to [removed: $924] [added: $3,764] million and our diluted EPS increased by [removed: $2.41] [added: $5.59] to [removed: $3.42.][added: $12.88.]
The change in diluted EPS for [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] included decreases of [removed: $(0.33)] [added: $(0.46)] and [removed: $(0.24),] [added: $(0.33),] respectively, attributable to an increase in weighted-average common shares outstanding.
[removed: The following] [added: This] section presents earnings (losses) by Sempra Energy segment, as well as Parent and [removed: other,] [added: other] and [removed: the] [added: discontinued operations, and a] related discussion of the changes in segment earnings (losses).
| SEMPRA ENERGY EARNINGS (LOSSES) BY SEGMENT | | | | | | | | | | | | [added: | | | | | |]
| *(Dollars in millions)* | | | | | | | | | | | | [added: | | | | | |]
| | [added: | |] Years ended December 31, | | | | | | | | | | | [added: | | | |]
| | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [removed: 2017] [added: 2019] | | | [added: | | | 2018 | | |]
| SDG&E | [added: | |] $ | [removed: 767] [added: 824] | | | [added: | |] $ | [removed: 669] [added: 767] | | | [added: | |] $ | [removed: 407] [added: 669] | |
| SoCalGas | [removed: 641] | | [added: 504] | | [removed: 400] | | | | [removed: 396] [added: 641] | | | [added: | | | 400 | | |]
| Sempra Texas Utilities | [removed: 528] | | [added: 579] | | [removed: 371] | | | | [removed: —] [added: 528] | | | [added: | | | 371 | | |]
| Sempra Mexico | [removed: 253] | | [added: 259] | | [removed: 237] | | | | [removed: 169] [added: 253] | | | [added: | | | 237 | | |]
| Sempra Renewables | [removed: 59] | | [added: —] | | [removed: 328] | | | | [removed: 252] [added: 59] | | | [added: | | | 328 | | |]
| Sempra LNG | [removed: (6] | | [removed: )] [added: 320] | | [removed: (617] | | [removed: )] | | [removed: 150] [added: (6)] | | | [added: | | | (617) | | |]
| Parent and other(1) | [removed: (515] | | [removed: )] [added: (562)] | | [removed: (620] | | [removed: )] | | [removed: (1,060] [added: (515)] | | [removed: )] | [added: | | | (620) | | |]
| Discontinued operations | [removed: 328] | | [added: 1,840] | | [removed: 156] | | | | [removed: (58] [added: 328] | | [removed: )] | [added: | | | 156 | | |]
| Earnings attributable to common shares | [added: | |] $ | [removed: 2,055] [added: 3,764] | | | [added: | |] $ | [removed: 924] [added: 2,055] | | | [added: | |] $ | [removed: 256] [added: 924] | |
[removed: |] *(1)* [removed: |] *Includes [removed: $914 million income tax expense from the effects of the TCJA in 2017,] intercompany eliminations recorded in consolidation and certain corporate [removed: costs*. |][added: costs.*]
The increase in earnings of $98 million (15%) in 2019 [added: compared to 2018] was primarily due to:
[removed: | ▪ | $71] [added: ▪$71] million higher CPUC base operating margin authorized for 2019, net of operating expenses; [removed: |]
[removed: | ▪ | $31] [added: ▪$31] million income tax benefit from the release of a regulatory liability established in connection with 2017 tax reform for excess deferred income tax balances that the CPUC directed to be allocated to shareholders in a January 2019 decision; and [removed: |]
[removed: | ▪ | $11] [added: ▪$11] million higher margin from electric transmission operations, net of a FERC formulaic rate adjustment benefit in 2018; offset by [removed: |]
[removed: | ▪ | $10] [added: ▪$10] million amortization of [added: the] Wildfire Fund asset. [removed: |]
The increase in earnings of [removed: $262] [added: $241] million in [removed: 2018] [added: 2019] compared to [removed: 2017] [added: 2018] was primarily due to:
[removed: | ▪ | $65] [added: ▪$40] million higher [removed: margin] [added: revenues] from [removed: electric] transmission [removed: operations in 2018, including the annual] [added: operations, net of a] FERC formulaic rate [removed: adjustment; |][added: adjustment benefit in 2018;]
The increase in earnings of [removed: $241] [added: $6] million [added: (2%)] in [added: 2020 compared to] 2019 was primarily due to:
[removed: | ▪ | $216] [added: ▪$216] million higher CPUC base operating margin authorized for 2019, net of operating expenses; [removed: |]
[removed: | ▪ | $38] [added: ▪$38] million income tax benefit from the impact of the January 2019 CPUC decision allocating certain excess deferred income tax balances to shareholders; [removed: |]
[removed: | ▪ | $22] [added: ▪$22] million from impacts associated with Aliso Canyon natural gas storage facility litigation in 2018; and [removed: |]
[removed: | ▪ | $14] [added: ▪$14] million higher income tax benefits from flow-through items; offset by [removed: |]
[removed: | ▪ | $21] [added: ▪$21] million impairment of non-utility native gas assets in 2019; [removed: |]
[removed: | ▪ | $18] [added: ▪$18] million higher net interest expense; and [removed: |]
▪We completed the sales of our South American businesses
▪We achieved full commercial operations at Cameron LNG JV Phase 1
▪We reached a final investment decision for ECA LNG Phase 1
▪We executed well on our planned capital expenditures
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▪$62 million due to the release of a regulatory liability in 2020 related to 2016-2018 forecasting differences that are not subject to tracking in the income tax expense memorandum account, which we discuss in Note 4 of the Notes to Consolidated Financial Statements;
▪$52 million higher electric transmission margin, including an increase in authorized ROE and the following impacts from the March 2020 FERC-approved TO5 settlement:
◦$18 million to conclude a rate base matter, and
◦$9 million favorable impact from the retroactive application of the final TO5 settlement for 2019;
▪$23 million higher AFUDC equity; and
▪$44 million expected to be refunded to customers and a fine related to the Energy Efficiency Program inquiry, which we discuss in Note 4 of the Notes to Consolidated Financial Statements;
▪$31 million income tax benefit in 2019 from the release of a regulatory liability established in connection with 2017 tax reform for excess deferred income tax balances that the CPUC directed to be allocated to shareholders in a January 2019 decision;
▪$13 million higher amortization and accretion of the Wildfire Fund asset and liability, respectively; and
▪$12 million higher net interest expense.
▪$38 million income tax benefit in 2019 from the impact of the January 2019 CPUC decision allocating certain excess deferred income tax balances to shareholders; and
▪$12 million higher net interest expense; offset by
▪$64 million due to the release of a regulatory liability in 2020 related to 2016-2018 income tax expense forecasting differences;
▪$29 million higher CPUC base operating margin authorized for 2020, net of operating expenses;
▪$10 million higher income tax benefits from flow-through items; and
▪$21 million impairment of non-utility native gas assets in 2019;
▪$8 million penalties in 2019 related to the SoCalGas billing practices OII.
The increase in earnings of $51 million (10%) in 2020 compared to 2019 was primarily due to higher equity earnings from Oncor Holdings driven by:
▪increased revenues from rate updates to reflect increases in invested capital and customer growth;
▪the impact of Oncor’s acquisition of InfraREIT in May 2019; and
▪higher AFUDC equity; offset by
▪unfavorable weather and increased operating costs and expenses attributable to invested capital.
Because Ecogas, our natural gas distribution utility in Mexico, uses the local currency as its functional currency, its revenues and expenses are translated into U.S. dollars at average exchange rates for the period for consolidation in Sempra Energy’s results of operations.
Prior year amounts used in the variances discussed below are as adjusted for the difference in foreign currency translation rates between years.
We discuss these and other foreign currency effects below in “Impact of Foreign Currency and Inflation Rates on Results of Operations.”
▪$33 million higher earnings primarily due to the start of commercial operations of the Sur de Texas-Tuxpan marine pipeline at IMG JV in September 2019; offset by
▪$22 million higher net interest expense;
▪$21 million lower earnings at the Guaymas-El Oro segment of the Sonora pipeline primarily from force majeure payments that ended in August 2019; and
▪$13 million lower earnings at TdM primarily due to scheduled major maintenance in the fourth quarter of 2020.
▪$284 million higher equity earnings from Cameron LNG JV primarily due to commencement of Phase 1 commercial operations; and
▪$41 million higher earnings from Sempra LNG’s marketing operations primarily driven by changes in natural gas prices.
▪$100 million equity losses from our investment in RBS Sempra Commodities to settle pending tax matters and related legal costs, which we discuss in Note 16 of the Notes to Consolidated Financial Statements;
▪$26 million higher preferred dividends due to the issuance of series C preferred stock in June 2020;
▪$36 million lower net interest expense;
▪$18 million higher income tax benefit primarily due to:
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| ▪ | The California Utilities received a constructive final GRC decision for the 2019 revenue requirement and attrition year adjustments for 2020 and 2021, and a final decision in the 2020 cost of capital proceeding. |
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| ▪ | SDG&E contributed to the Wildfire Fund that was created through the Wildfire Legislation that addresses certain issues related to catastrophic wildfires in California. |
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| ▪ | We supported Oncor’s acquisition of InfraREIT and acquired an indirect 50% interest in Sharyland Holdings in Texas. |
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| ▪ | Cameron LNG JV’s Train 1 commenced commercial operation. |
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| ▪ | We sold our non-utility natural gas storage assets in the southeast U.S. (comprised of Mississippi Hub and Bay Gas) and our remaining U.S. wind assets and investments. In April 2019, our Sempra Renewables segment ceased to exist. |
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| ▪ | We entered into agreements to sell our equity interests in our South American businesses, which were previously included in our Sempra South American Utilities segment, and expect those sales to close in the first half of 2020. |
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As we discuss below in “Significant Changes in Revenues, Costs and Earnings – Income Taxes,” in December 2017, the TCJA was signed into law.
The TCJA reduced the U.S. statutory corporate federal income tax rate from 35% to 21%, effective January 1, 2018.
After-tax variances between 2018 and 2017 assume that amounts in both years were taxed at the 2017 statutory rate.
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An excerpt. Shown here: 40 of 673 rewritten, 40 of 484 added and 40 of 974 removed. The counts are complete. For every sentence, read Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in the FY2020 filing and the FY2019 filing.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
43 rewritten, 9 added, 16 removed, 29 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
Market risk is the risk of erosion of our cash flows, earnings, asset values [removed: and] [added: or] equity due to adverse changes in [added: commodity] market prices, interest rates and foreign currency [added: and inflation] rates.
The committees consist of senior officers who establish policy, oversee energy risk management activities, and monitor the results of trading and other activities to [added: help] ensure compliance with our stated energy risk management and trading policies.
The respective oversight organizations and committees are independent from [removed: the] energy procurement departments.
Along with other tools, we use VaR and liquidity metrics to measure our exposure to market risk associated with [removed: the] commodity portfolios.
VaR and liquidity risk metrics are [removed: calculated] independently [added: verified] by the respective risk management oversight organizations.
The California Utilities use power and natural gas derivatives to manage [added: electric and] natural gas [removed: and electric] price risk associated with servicing load requirements.
We discuss revenue recognition in Note 3 and [removed: the] additional market-risk information regarding derivative instruments in Note 11 of the Notes to Consolidated Financial Statements.
We have exposure to changes in commodity prices, interest rates and foreign currency [added: and inflation] rates.
The following discussion of these primary market-risk exposures as of December 31, [removed: 2019] [added: 2020] includes a discussion of how these exposures are managed.
Our various subsidiaries are exposed, in varying degrees, to [added: commodity] price risk, primarily to prices in the natural gas and electricity markets.
Our policy is to manage this risk within a framework that considers the [removed: unique] [added: specific] markets and operating and regulatory environments of each subsidiary.
These segments may utilize commodity transactions in [removed: the course of optimizing] [added: an effort to optimize] these assets.
A hypothetical 10% unfavorable change in commodity prices would not have resulted in a material change in the fair value of our commodity-based derivatives for these segments at December 31, [removed: 2019 and 2018.][added: 2020 or 2019.]
As of and for the year ended December 31, [removed: 2019,] [added: 2020,] the total VaR of the California Utilities’ natural gas and electric positions was not material, and [removed: the] [added: SDG&E’s power] procurement activities were in compliance with the procurement plans filed with and approved by the CPUC.
The table below shows the nominal amount of [added: our] debt:
| NOMINAL AMOUNT OF DEBT(1) | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]
| *(Dollars in millions)* | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]
| | [added: | |] December 31, [removed: 2019] [added: 2020] | | | | | | | | | | | | [added: | | | | | |] December 31, [removed: 2018] [added: 2019] | | | | | | | | | | | [added: | | | |]
| | [added: | |] Sempra Energy Consolidated | | | | [added: | |] SDG&E | | | | [added: | |] SoCalGas | | | | [added: | |] Sempra Energy Consolidated | | | | [added: | |] SDG&E | | | | [added: | |] SoCalGas | | |
| Short-term: | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]
| California Utilities | [added: | |] $ | [removed: 710] [added: 113] | | | [added: | |] $ | [removed: 80] [added: —] | | | [added: | |] $ | [removed: 630] [added: 113] | | | [added: | |] $ | [removed: 547] [added: 710] | | | [added: | |] $ | [removed: 291] [added: 80] | | | [added: | |] $ | [removed: 256] [added: 630] | |
| Other | [removed: 2,798] | | [added: 772] | | [added: | | | |] — | | | | [added: | |] — | | | | [removed: 1,477] | | [added: 2,798] | | [added: | | | |] — | | | | [added: | |] — | | |
| Long-term: | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]
| California Utilities fixed-rate | [added: | |] $ | [removed: 8,949] [added: 10,512] | | | [added: | |] $ | [removed: 5,140] [added: 6,053] | | | [added: | |] $ | [removed: 3,809] [added: 4,459] | | | [added: | |] $ | [removed: 8,377] [added: 8,949] | | | [added: | |] $ | [removed: 4,918] [added: 5,140] | | | [added: | |] $ | [removed: 3,459] [added: 3,809] | |
| California Utilities variable-rate | [removed: —] | | [added: 500] | | [removed: —] | | | | [added: 200 | | | | | | 300 | | | | | |] — | | | | [removed: 78] | | [added: —] | | [removed: 78] | | | | — | | |
| Other fixed-rate | [removed: 11,561] | | [added: 11,204] | | [added: | | | |] — | | | | [added: | |] — | | | | [removed: 10,804] | | [added: 11,561] | | [added: | | | |] — | | | | [added: | |] — | | |
| Other variable-rate | [removed: 746] | | [added: 51] | | [added: | | | |] — | | | | [added: | |] — | | | | [removed: 2,091] | | [added: 746] | | [added: | | | |] — | | | | [added: | |] — | | |
[removed: | *(1)* | *After* *the effects of interest rate swaps.] Before the effects of acquisition-related fair value adjustments and reductions for unamortized discount and debt issuance costs, and excluding finance lease [removed: obligations and build-to-suit arrangement.* |][added: obligations.*]
[removed: Interest] [added: An interest] rate risk sensitivity analysis measures interest rate risk by calculating the estimated changes in earnings that would result from a hypothetical change in market interest rates.
Earnings are affected by changes in interest rates on short-term debt and [removed: variable] [added: variable-rate] long-term debt.
If weighted-average interest rates on short-term debt outstanding at December 31, [removed: 2019] [added: 2020] increased or decreased by 10%, the change in earnings over the 12-month period [removed: ended] [added: ending] December 31, [removed: 2020] [added: 2021] would be [removed: approximately $8 million.][added: negligible.]
If interest rates increased or decreased by 10% on all variable-rate long-term debt at December 31, [removed: 2019,] [added: 2020,] after [added: considering the effects of interest rate swaps, the change in earnings over the 12-month period ending December 31, 2021 would be negligible.]
We discuss [removed: the impact of] [added: our] foreign currency and inflation [removed: rates] [added: exposures] in [removed: “Item] [added: “Part II – Item] 7.
| HYPOTHETICAL EFFECTS FROM 10% STRENGTHENING OF U.S. DOLLAR [added: (1)] | | | | [added: | |]
| *(Dollars in millions)* | | | | [added: | |]
| | [added: | |] Hypothetical effects | | |
| Translation of [removed: 2019] [added: 2020] earnings to U.S. [removed: dollars(1)] [added: dollars(2)] | [added: | |] $ | [removed: (3] [added: (2)] | [removed: )] |
| Translation of net assets of foreign subsidiaries and investment in foreign [removed: entities(3)] [added: entities(4)] | [removed: (17] | | [removed: )] [added: (17)] | [added: | |]
[removed: | *(1)* |] [added: *(2)*] *Amount represents the impact to earnings for a change in the average exchange rate throughout the reporting period.* [removed: |]
[removed: | *(2)* |] [added: *(3)*] *Amount primarily represents the effects of currency exchange rate movement [removed: from* *December] [added: from December] 31, [removed: 2019* *on] [added: 2020 on] monetary assets and liabilities and translation of non-U.S. deferred income tax balances at our Mexican subsidiaries.* [removed: |]
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*(1)* *After the effects of interest rate swaps.
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| Transactional exposure(3) | | | 115 | | |
*(1)* *After the effects of foreign currency derivatives.*
approximately $90 million lower earnings as a result of higher income tax expense for our consolidated subsidiaries, as well as lower equity earnings for our JVs.
We completed the sales of our South American businesses in 2020 and are no longer exposed to changes in foreign currency and inflation rates in Peru and Chile.
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| --- | --- |
considering the effects of interest rate swaps, the change in earnings over the 12-month period ended December 31, 2020 would be approximately $1 million.
| | | | |
| --- | --- | --- | --- |
| | | | |
| Transactional exposure, before the effects of foreign currency derivatives(2) | 102 | | |
| | |
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An excerpt. Shown here: 40 of 43 rewritten, all 9 added and all 16 removed. The counts are complete. For every sentence, read Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK in the FY2020 filing and the FY2019 filing.
Item 1. BUSINESS
288 rewritten, 182 added, 270 removed, 198 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
[removed: | ▪ |] [added: Safety is foundational at] Sempra Energy and its [removed: consolidated entities |][added: subsidiaries.]
[removed: | ▪ | SoCalGas |][added: ▪SoCalGas]
Our businesses invest in, develop and operate energy infrastructure, and provide electric and gas services to customers [removed: in North America.][added: through regulated public utilities.]
We have since expanded our regulated public utility presence into Texas through our [removed: 2018 and 2020 acquisitions of an aggregate indirect 80.45%] [added: 80.25%] interest in Oncor [removed: and, in 2019, Oncor’s acquisition of InfraREIT] and [removed: our acquisition of an indirect] 50% interest in Sharyland Utilities.
IEnova has a diverse portfolio of [added: energy infrastructure] projects and assets serving Mexico’s growing energy needs.
We have since executed on that initiative by completing the sales of our renewables businesses and our non-utility natural gas storage assets in the U.S., and by [removed: entering into agreements to sell] [added: completing the sales of] our [added: businesses in] South [removed: American businesses.][added: America.]
We are [added: primarily] focused on [removed: generating stable, predictable earnings] [added: transmission] and [added: distribution investments among other areas that we believe are capable of producing stable] cash flows [removed: by investing in, developing] and [removed: operating electric and gas infrastructure] [added: improved earnings visibility,] with the goal of delivering safe and reliable energy to our customers and increasing shareholder value.
[removed: We operate our] [added: Our] business [removed: through] [added: activities are organized under] the following reportable segments:
[removed: | ▪ | SDG&E |][added: ▪SDG&E]
[removed: | ▪ |] SoCalGas [removed: |]
[removed: | ▪ | Sempra] [added: ▪Sempra] Texas Utilities [removed: |]
[removed: | ▪ | Sempra] [added: ▪Sempra] Mexico [removed: |]
[removed: | ▪ | Sempra] [added: ▪Sempra] LNG [removed: |]
SDG&E is a regulated public utility that provides electric services to a population [removed: of] [added: of, at December 31, 2020,] approximately 3.7 million and natural gas services to approximately 3.4 million of that population, covering a 4,100 square mile service territory in Southern California that encompasses San Diego County and an adjacent portion of [removed: southern] Orange County.
These electric facilities are primarily in [added: the] San Diego, Imperial and Orange counties of California, and in Arizona and Nevada and [removed: consist] [added: consisted] of [removed: 2,099] [added: 2,129] miles of transmission lines, [removed: 23,562] [added: 23,926] miles of distribution lines and [removed: 161] [added: 183] substations [removed: as of] [added: at] December 31, [removed: 2019.][added: 2020.]
Periodically, various areas of the service territory require expansion to accommodate customer [removed: growth,] [added: growth and maintain] reliability and safety.
Mexico’s Baja California transmission system is connected to SDG&E’s system via two 230-kV interconnections with combined capacity of up to [removed: 408] [added: 600] MW in the north-to-south direction and 800 MW in the south-to-north direction, although it can be less under certain system conditions.
SDG&E’s supply [removed: as of] [added: at] December 31, [removed: 2019] [added: 2020] was as follows:
| SDG&E – ELECTRIC RESOURCES(1) | | | | | | [added: | | | | | |]
| | [added: | |] Contract | [added: | |] Net operating | | | | [added: | |]
| | [added: | |] expiration date | [added: | |] capacity (MW) | | [added: |] % of total | | [added: |]
| Owned generation facilities, natural gas(2) | | [removed: 1,193] | | [added: | | 1,204 | | |] 23 | [added: |] % |
| Purchased-power contracts: | | | | | | [added: | | | | | |]
| Renewables: | | | | | | [added: | | | | | |]
| Wind | [added: | |] 2023 to 2035 | [removed: 948] | | [removed: 18] [added: 1,131] | | [added: | 22 | | |]
| Solar | [added: | |] 2030 to 2041 | [removed: 1,348] | | [added: 1,326 | | |] 26 | | [added: |]
| Other | [removed: 2020] [added: | | 2022] and thereafter | [removed: 340] | | [removed: 7] [added: 203] | | [added: | 4 | | |]
| Tolling and other | [added: | |] 2022 to 2042 | [removed: 1,170] | | [removed: 23] [added: 1,292] | | [added: | 25 | | |]
| Total | | [removed: 5,131] | | [added: | | 5,156 | | |] 100 | [added: |] % |
[removed: |] *(1)* [removed: |] *Excludes approximately 107.5 MW of battery storage owned and approximately [removed: 9.5] [added: 174] MW of battery storage contracted.* [removed: |]
[removed: |] *(2)* [removed: |] *SDG&E owns and operates four natural gas-fired power plants, three of which are in California and one of which is in Nevada.* [removed: |]
Charges under [removed: the] contracts with [removed: other] suppliers are [removed: for firm and as-generated energy and are] based on the amount of energy received or are tolls based on available capacity.
| [removed: SDG&E – ELECTRIC] [added: SDG&E – ELECTRIC] CUSTOMER METERS AND VOLUMES | | | | | | | | | | [added: | | | | | | | |]
| | [added: | |] Customer meter count | | | [added: | | |] Volumes(1) (millions of kWh) | | | | | | [added: | | |]
| | [added: | |] December 31, | | | [added: | | |] Years ended December 31, | | | | | | [added: | | |]
| | [removed: 2019] | | [added: 2020] | [added: | | | | | 2020 | | |] 2019 | | [removed: 2018] | [added: 2018] | [removed: 2017] | |
| Commercial | [removed: 151,100] | | [added: 151,210] | [added: | | | | | 5,873 | | |] 6,295 | | [removed: 6,539] | [added: 6,539] | [removed: 6,763] | |
| Industrial | [removed: 410] | | [added: 370] | [added: | | | | | 1,842 | | |] 2,044 | | [removed: 2,169] | [added: 2,169] | [removed: 2,198] | |
| Street and highway lighting | [removed: 2,080] | | [added: 2,090] | [added: | | | | | 77 | | |] 76 | | [removed: 81] | [added: 81] | [removed: 79] | |
| CCA and DA | [removed: 12,330] | | [added: 12,480] | [added: | | | | | 3,482 | | |] 3,549 | | [removed: 3,628] | [added: 3,628] | [removed: 3,394] | |
We are a California-based holding company with energy infrastructure investments in North America.
We have had a strong and growing presence in Mexico through IEnova.
Our energy infrastructure footprint includes our 50.2% interest in Cameron LNG JV, which is a natural gas liquefaction export facility operating in Louisiana, and construction and development of LNG projects and assets on the Gulf Coast and Pacific Coast of North America.
SDG&E’s assets at December 31, 2020 covered the following territory:
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| Residential | | | 1,317,080 | | | | | | 6,606 | | | 5,982 | | | 6,336 | | |
| | | | 1,470,750 | | | | | | 14,398 | | | 14,397 | | | 15,125 | | |
| Total | | | 1,483,230 | | | | | | 17,880 | | | 17,946 | | | 18,753 | | |
California’s energy policy supports
DA is currently limited by a cap based on gigawatt hours and CCA is only available if the customer’s local jurisdiction (city) offers such a program.
SoCalGas’ assets at December 31, 2020 covered the following territory:
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| Residential | | | 869,520 | | | | | | | | | | | | | | |
| Commercial | | | 28,690 | | | | | | | | | | | | | | |
| Total | | | 901,080 | | | | | | 83 | | | 71 | | | 68 | | |
| Residential | | | 5,792,600 | | | | | | | | | | | | | | |
| Industrial | | | 24,880 | | | | | | | | | | | | | | |
| Total | | | 6,066,240 | | | | | | 884 | | | 876 | | | 850 | | |
California, and general economic conditions can also result in significant shifts in market price, which may in turn impact demand.
Cash provided by operating activities during the winter months generally increases, when customer demand is higher.
Sempra Texas Utilities’ assets at December 31, 2020 covered the following territory:
IEnova’s storage business includes refined products storage, its LPG storage and pipeline systems, and its ECA Regas Facility.
On December 2, 2020, we announced a non-binding offer to acquire all outstanding publicly held shares of IEnova in exchange for shares of our common stock at a rate of 0.0313 shares of our common stock for each one IEnova ordinary share, which exchange ratio remains subject to approval by the Sempra Energy board of directors and, if successful, would increase Sempra Energy’s ownership interest in IEnova to 100% assuming that all IEnova public shareholders tender their shares.
On December 1, 2020, we filed an application with the CNBV and on January 12, 2021, we filed a registration statement with the SEC, in each case in connection with the exchange offer.
As part of the exchange offer, Sempra Energy intends to list its common stock on the Mexican Stock Exchange.
We expect to complete this transaction in the second quarter of 2021, subject to authorization by the SEC, CNBV and Mexican Stock Exchange and other closing conditions.
The proposed exchange offer is subject to a number of risks that are discussed in “Part I – Item 1A.
At December 31, 2020, Sempra Mexico’s assets covered the following territory:
Natural Gas Marketing. IEnova’s natural gas marketing business, IEnova Marketing, S. de R.L. de C.V. (IEnova Marketing), purchases LNG for storage and regasification at the ECA Regas Facility and sells natural gas to affiliates and third-party customers.
This report on Form 10-K includes information for the following separate registrants:
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| ▪ | SDG&E and its consolidated VIE (until deconsolidation of the VIE on August 23, 2019) |
| | |
| --- | --- |
References in this report to “we,” “our,” “us,” “our company” and “Sempra Energy Consolidated” are to Sempra Energy and its consolidated entities, collectively, unless otherwise indicated by the context.
We refer to SDG&E and SoCalGas collectively as the California Utilities, which do not include Sempra Texas Utilities or the utility in our Sempra Mexico segment.
We are a California-based energy-services holding company.
Since 1995, we have had a strong and growing presence in Mexico through IEnova, the first energy infrastructure company to be listed on the Mexican Stock Exchange.
Our energy infrastructure footprint continues to expand across North America, through LNG development projects and assets in Louisiana, Texas and Mexico, including our indirect 50.2% interest in Cameron LNG JV, which commenced commercial operation of the first of three liquefaction trains in August 2019.
We expect to complete the sales of our South American businesses in the first half of 2020.
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| ▪ | Sempra Renewables (until April 2019) |
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| Qualifying facilities | 2024 to 2026 | 132 | | 3 | |
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SDG&E is required to interconnect with and purchase power from QFs, a class of generating facilities established by the Public Utility Regulatory Policies Act of 1978, at rates that do not exceed SDG&E’s avoided cost.
SDG&E’s QFs include cogeneration facilities, which produce electricity and another form of useful thermal energy (such as heat or steam) used for industrial, commercial, residential or institutional purposes.
Charges under most of the contracts with QFs are based on what it would incrementally cost SDG&E to produce the power or procure it from other sources.
The prices under these contracts include 125 MW at prices that are based on the market value at the time the contracts were negotiated.
An excerpt. Shown here: 40 of 288 rewritten, 40 of 182 added and 40 of 270 removed. The counts are complete. For every sentence, read Item 1. BUSINESS in the FY2020 filing and the FY2019 filing.
Item 3. LEGAL PROCEEDINGS
2 rewritten, 0 added, 0 removed, 1 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
We are not party to, and our property is not the subject of, any material pending legal proceedings (other than ordinary routine litigation incidental to our businesses) except for the matters described in Notes 15 and 16 of the Notes to Consolidated Financial Statements, [removed: “Item] [added: “Part I – Item] 1A.
Risk Factors” and [removed: “Item] [added: “Part II – Item] 7.
Cover and table of contents
300 rewritten, 125 added, 131 removed, 36 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
| UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | [added: | |]
[removed: FORM 10-K][added: FORM 10-K]
| (Mark One) | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | |]
| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | |]
| | [added: | |] For the fiscal year ended | | | | | | [added: | | | | | | | | | | | |] December 31, [removed: 2019] [added: 2020] | | | | | | [added: | | | | | | | | | | | |]
| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | |]
| | [added: | |] For the transition period from | | | | | | | [added: | | | | | | | | | | | | | |] to | | | | | [added: | | | | | | | | | |]
| Commission File No. | | [added: |] Exact Name of Registrants as Specified in their Charters, Address and Telephone Number | | | | | [added: | | | | | | |] State of Incorporation | | [added: |] I.R.S. Employer Identification Nos. | | [added: |]
| [removed: 1-14201 | |] SEMPRA [removed: ENERGY] [added: ENERGY:] | | | | | [removed: California] | | [removed: 33-0732627] | |
| | | [added: |] 488 8th Avenue | | | | | | | | | [added: | | | | | | | | |]
| | | [added: |] San Diego, [added: California 92101] | | [removed: California] | | [removed: 92101] | | | | | [added: | | | | | | | | |]
| | | [removed: (619)] | [added: (619)] 696-2000 | | | | | | | | [added: | | | | | | | | | |]
| [removed: 1-03779 | |] SAN DIEGO GAS & ELECTRIC [removed: COMPANY] [added: COMPANY:] | | | | | [removed: California] | | [removed: 95-1184800] | |
| | | [added: |] 8326 Century Park Court | | | | | | | | | [added: | | | | | | | | |]
| | | [added: |] San Diego, [added: California 92123] | | [removed: California] | | [removed: 92123] | | | | | [added: | | | | | | | | |]
| | | [removed: (619)] | [added: (619)] 696-2000 | | | | | | | | [added: | | | | | | | | | |]
| [removed: 1-01402 | |] SOUTHERN CALIFORNIA GAS [removed: COMPANY] [added: COMPANY:] | | | | | [removed: California] | | [removed: 95-1240705] | |
| | | [added: |] 555 West Fifth Street | | | | | | | | | [added: | | | | | | | | |]
| | | [added: |] Los Angeles, [added: California 90013] | | [removed: California] | | [removed: 90013] | | | | | [added: | | | | | | | | |]
| | | [removed: (213)] | [added: (213)] 244-1200 | | | | | | | | [added: | | | | | | | | | |]
| SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: | | | | | | | | | [removed: | | | | | |]
| Title of Each Class | | | [removed: | | | | | | |] Trading Symbol | [added: | |] Name of Each Exchange on Which Registered | | | [removed: |]
| SEMPRA ENERGY: | | | [removed: | | | | | | | | | | | |]
| Common Stock, without par value | | | [removed: | | | | | | |] SRE | [removed: NYSE] | | [added: New York Stock Exchange] | | [added: |]
| [removed: 6%] [added: 6.75%] Mandatory Convertible Preferred Stock, Series [removed: A,] [added: B,] $100 liquidation preference | | | [removed: | | | | | |] [added: SREPRB] | [removed: SREPRA] | [removed: NYSE] | [added: New York Stock Exchange] | | |
| [removed: 6.75% Mandatory Convertible Preferred Stock, Series B, $100 liquidation preference | | | | | | | | |] [added: series B preferred stock] | [removed: SREPRB] | [removed: NYSE] | [added: 6.75% mandatory convertible preferred stock, series B] | | |
| 5.75% Junior Subordinated Notes Due 2079, $25 par value | | | [removed: | | | | | | |] SREA | [removed: NYSE] | | [added: New York Stock Exchange] | | [added: |]
| SAN DIEGO GAS & ELECTRIC COMPANY: | | | [removed: | | | | | | | | | | | |]
| None | | | | | | | | | [removed: | | | | | |]
| SOUTHERN CALIFORNIA GAS COMPANY: | | | [removed: | | | | | | | | | | | |]
| None | | | | | | | | | [removed: | | | | | |]
| SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: | | | [removed: | | | | | | | | | | | |]
| Title of Each Class | | | [removed: | | | | | | | | | | | |]
| None | | | [removed: | | | | | | | | | | | |]
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| 6% Preferred Stock, $25 par value | | | [removed: | | | | | | | | | | | |]
| 6% Preferred Stock, Series A, $25 par value | | | [removed: | | | | | | | | | | | |]
| Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | | | | | | | | | | | [added: | | | | | | |]
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| 1-14201 | | | SEMPRA ENERGY | | | | | |  | | | | | | California | | | 33-0732627 | | |
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| 1-03779 | | | SAN DIEGO GAS & ELECTRIC COMPANY | | | | | |  | | | | | | California | | | 95-1184800 | | |
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| 1-01402 | | | SOUTHERN CALIFORNIA GAS COMPANY | | | | | |  | | | | | | California | | | 95-1240705 | | |
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An excerpt. Shown here: 40 of 300 rewritten, 40 of 125 added and 40 of 131 removed. The counts are complete. For every sentence, read Cover and table of contents in the FY2020 filing and the FY2019 filing.
Item 2. PROPERTIES
1 rewritten, 0 added, 0 removed, 3 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
We discuss properties related to our electric, natural gas and energy infrastructure operations in [removed: “Item] [added: “Part I – Item] 1.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
5 rewritten, 1 added, 6 removed, 5 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
Our common stock is traded on the [removed: New York Stock Exchange] [added: NYSE] under the ticker symbol SRE.
At February [removed: 21, 2020,] [added: 22, 2021,] there were approximately [removed: 24,151] [added: 23,345] record holders of our common stock.
On [removed: September 11, 2007, the Sempra Energy] [added: July 6, 2020, our] board of directors authorized the repurchase of [removed: Sempra Energy] [added: shares of our] common stock [removed: provided that the amounts spent for such purpose do] [added: at any time and from time to time in an aggregate amount] not [added: to] exceed the [removed: greater] [added: lesser] of $2 billion or amounts spent to purchase no more than [removed: 40] [added: 25] million shares.
No shares have been repurchased under this [removed: authorization since 2011.][added: authorization.]
We [removed: also may,] [added: may also,] from time to time, purchase shares of our common stock to which participants would otherwise be entitled from LTIP participants who elect to sell a sufficient number of shares in connection with the vesting of RSUs and stock options in order to satisfy minimum statutory tax withholding requirements.
This repurchase authorization was publicly announced on August 5, 2020 and has no expiration date.
Dividend Restrictions
The payment and the amount of future dividends for Sempra Energy, SDG&E, and SoCalGas are within the discretion of their boards of directors.
The CPUC’s regulation of the California Utilities’ capital structures limits the amounts that the California Utilities can pay Sempra Energy in the form of loans and dividends.
We discuss these matters in Note 1 of the Notes to Consolidated Financial Statements in “Restricted Net Assets” and in “Item 7.
MD&A – Capital Resources and Liquidity – Dividends.”
Approximately $500 million remains authorized by our board of directors for the purchase of additional shares, not to exceed approximately 12 million shares.
Item 6. SELECTED FINANCIAL DATA
75 rewritten, 22 added, 20 removed, 14 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
The following tables present selected financial data of Sempra Energy, SDG&E and SoCalGas for the five years ended December 31, [removed: 2019.][added: 2020.]
You should read this information in conjunction with [removed: “Item] [added: “Part II – Item] 7.
| FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA *–* SEMPRA ENERGY CONSOLIDATED | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| *(In millions, except per share amounts)* | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| | [added: | |] At December 31 or for the years then ended | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]
| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |
| Revenues: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| Utilities | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| Natural gas | [added: | |] $ | [removed: 5,185] [added: 5,411] | | | [added: | |] $ | [removed: 4,540] [added: 5,185] | | | [added: | |] $ | [removed: 4,361] [added: 4,540] | | | [added: | |] $ | [removed: 4,050] [added: 4,361] | | | [added: | |] $ | [removed: 4,096] [added: 4,050] | |
| Electric | [added: | | 4,614 | | | | | |] 4,263 | | | | [added: | |] 3,999 | | | | [removed: 3,929] | | [added: 3,929] | | [removed: 3,748] | | | | [removed: 3,711] [added: 3,748] | | |
| Energy-related businesses | [added: | | 1,345 | | | | | |] 1,381 | | | | [added: | |] 1,563 | | | | [removed: 1,350] | | [added: 1,350] | | [removed: 829] | | | | [removed: 880] [added: 829] | | |
| Total revenues | [added: | |] $ | [removed: 10,829] [added: 11,370] | | | [added: | |] $ | [removed: 10,102] [added: 10,829] | | | [added: | |] $ | [removed: 9,640] [added: 10,102] | | | [added: | |] $ | [removed: 8,627] [added: 9,640] | | | [added: | |] $ | [removed: 8,687] [added: 8,627] | |
| Income from continuing operations, net of income tax | [added: | |] $ | [removed: 1,999] [added: 2,255] | | | [added: | |] $ | [removed: 938] [added: 1,999] | | | [added: | |] $ | [removed: 382] [added: 938] | | | [added: | |] $ | [removed: 1,292] [added: 382] | | | [added: | |] $ | [removed: 1,256] [added: 1,292] | |
| Income (loss) from discontinued operations, net of income tax | [added: | | 1,850 | | | | | |] 363 | | | | [added: | |] 188 | | | | [removed: (31] | | [removed: )] [added: (31)] | | [removed: 227] | | | | [removed: 192] [added: 227] | | |
| Net income | [added: | | 4,105 | | | | | |] 2,362 | | | | [added: | |] 1,126 | | | | [removed: 351] | | [added: 351] | | [removed: 1,519] | | | | [removed: 1,448] [added: 1,519] | | |
| Earnings attributable to noncontrolling interests | [removed: (164] | | [removed: )] [added: (172)] | | [removed: (76] | | [removed: )] | | [removed: (94] [added: (164)] | | [removed: )] | | [removed: (148] | | [removed: )] [added: (76)] | | [removed: (98] | | [removed: )] | [added: | (94) | | | | | | (148) | | |]
| [removed: Mandatory convertible preferred stock] [added: Preferred] dividends | [removed: (142] | | [removed: )] [added: (168)] | | [removed: (125] | | [removed: )] | | [removed: —] [added: (142)] | | | | [added: | | (125) | | | | | |] — | | | | [added: | |] — | | |
| Preferred dividends of subsidiary | [removed: (1] | | [removed: )] [added: (1)] | | [removed: (1] | | [removed: )] | | [removed: (1] [added: (1)] | | [removed: )] | | [removed: (1] | | [removed: )] [added: (1)] | | [removed: (1] | | [removed: )] | [added: | (1) | | | | | | (1) | | |]
| Earnings attributable to common shares | [added: | |] $ | [removed: 2,055] [added: 3,764] | | | [added: | |] $ | [removed: 924] [added: 2,055] | | | [added: | |] $ | [removed: 256] [added: 924] | | | [added: | |] $ | [removed: 1,370] [added: 256] | | | [added: | |] $ | [removed: 1,349] [added: 1,370] | |
| Basic EPS: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| Earnings from continuing operations | [added: | |] $ | [removed: 6.22] [added: 6.61] | | | [added: | |] $ | [removed: 2.86] [added: 6.22] | | | [added: | |] $ | [removed: 1.25] [added: 2.86] | | | [added: | |] $ | [removed: 4.66] [added: 1.25] | | | [added: | |] $ | [removed: 4.77] [added: 4.66] | |
| Earnings (losses) from discontinued operations | [added: | |] $ | [removed: 1.18] [added: 6.32] | | | [added: | |] $ | [removed: 0.59] [added: 1.18] | | | [added: | |] $ | [removed: (0.23] [added: 0.59] | [removed: )] | | [added: | |] $ | [removed: 0.82] [added: (0.23)] | | | [added: | |] $ | [removed: 0.66] [added: 0.82] | |
| Earnings | [added: | |] $ | [removed: 7.40] [added: 12.93] | | | [added: | |] $ | [removed: 3.45] [added: 7.40] | | | [added: | |] $ | [removed: 1.02] [added: 3.45] | | | [added: | |] $ | [removed: 5.48] [added: 1.02] | | | [added: | |] $ | [removed: 5.43] [added: 5.48] | |
| Diluted EPS: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| Earnings from continuing operations | [added: | |] $ | [removed: 6.13] [added: 6.58] | | | [added: | |] $ | [removed: 2.84] [added: 6.13] | | | [added: | |] $ | [removed: 1.24] [added: 2.84] | | | [added: | |] $ | [removed: 4.65] [added: 1.24] | | | [added: | |] $ | [removed: 4.71] [added: 4.65] | |
| Earnings (losses) from discontinued operations | [added: | |] $ | [removed: 1.16] [added: 6.30] | | | [added: | |] $ | [removed: 0.58] [added: 1.16] | | | [added: | |] $ | [removed: (0.23] [added: 0.58] | [removed: )] | | [added: | |] $ | [removed: 0.81] [added: (0.23)] | | | [added: | |] $ | [removed: 0.66] [added: 0.81] | |
| Earnings | [added: | |] $ | [removed: 7.29] [added: 12.88] | | | [added: | |] $ | [removed: 3.42] [added: 7.29] | | | [added: | |] $ | [removed: 1.01] [added: 3.42] | | | [added: | |] $ | [removed: 5.46] [added: 1.01] | | | [added: | |] $ | [removed: 5.37] [added: 5.46] | |
| Dividends declared per common share | [added: | |] $ | [removed: 3.87] [added: 4.18] | | | [added: | |] $ | [removed: 3.58] [added: 3.87] | | | [added: | |] $ | [removed: 3.29] [added: 3.58] | | | [added: | |] $ | [removed: 3.02] [added: 3.29] | | | [added: | |] $ | [removed: 2.80] [added: 3.02] | |
| Effective income tax rate | [removed: 18] | | [added: 14 | |] % | | [removed: (10] | | [removed: )%] [added: 18] | | [removed: 73] [added: %] | | [added: | | (10) | |] % | | [removed: 22] | | [added: 73 | |] % | | [removed: 17] | | [added: 22 | |] % |
| Weighted-average rate base: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| SDG&E | [added: | |] $ | [removed: 10,467] [added: 11,109] | | | [added: | |] $ | [removed: 9,619] [added: 10,467] | | | [added: | |] $ | [removed: 8,549] [added: 9,619] | | | [added: | |] $ | [removed: 8,019] [added: 8,549] | | | [added: | |] $ | [removed: 7,671] [added: 8,019] | |
| SoCalGas | [added: | |] $ | [removed: 7,401] [added: 8,228] | | | [added: | |] $ | [removed: 6,413] [added: 7,401] | | | [added: | |] $ | [removed: 5,493] [added: 6,413] | | | [added: | |] $ | [removed: 4,775] [added: 5,493] | | | [added: | |] $ | [removed: 4,269] [added: 4,775] | |
| AT DECEMBER 31 | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| Current assets | [added: | |] $ | [removed: 3,339] [added: 4,511] | | | [added: | |] $ | [removed: 3,645] [added: 3,339] | | | [added: | |] $ | [removed: 3,341] [added: 3,645] | | | [added: | |] $ | [removed: 3,110] [added: 3,341] | | | [added: | |] $ | [removed: 2,891] [added: 3,110] | |
| Total assets | [added: | |] $ | [removed: 65,665] [added: 66,623] | | | [added: | |] $ | [removed: 60,638] [added: 65,665] | | | [added: | |] $ | [removed: 50,454] [added: 60,638] | | | [added: | |] $ | [removed: 47,786] [added: 50,454] | | | [added: | |] $ | [removed: 41,150] [added: 47,786] | |
| Current liabilities | [added: | |] $ | [removed: 9,150] [added: 6,839] | | | [added: | |] $ | [removed: 7,523] [added: 9,150] | | | [added: | |] $ | [removed: 6,635] [added: 7,523] | | | [added: | |] $ | [removed: 5,927] [added: 6,635] | | | [added: | |] $ | [removed: 4,612] [added: 5,927] | |
| Long-term debt and finance leases (excludes current [removed: portion)(1)] [added: portion)(2)] | [added: | |] $ | [removed: 20,785] [added: 21,781] | | | [added: | |] $ | [removed: 20,903] [added: 20,785] | | | [added: | |] $ | [removed: 15,829] [added: 20,903] | | | [added: | |] $ | [removed: 13,865] [added: 15,829] | | | [added: | |] $ | [removed: 12,582] [added: 13,865] | |
| Short-term [removed: debt(2)] [added: debt(1)] | [added: | |] $ | [removed: 5,031] [added: 2,425] | | | [added: | |] $ | [removed: 3,668] [added: 5,031] | | | [added: | |] $ | [removed: 2,790] [added: 3,668] | | | [added: | |] $ | [removed: 2,542] [added: 2,790] | | | [added: | |] $ | [removed: 1,437] [added: 2,542] | |
| Sempra Energy shareholders’ equity | [added: | |] $ | [removed: 19,929] [added: 23,373] | | | [added: | |] $ | [removed: 17,138] [added: 19,929] | | | [added: | |] $ | [removed: 12,670] [added: 17,138] | | | [added: | |] $ | [removed: 12,951] [added: 12,670] | | | [added: | |] $ | [removed: 11,809] [added: 12,951] | |
| Common shares outstanding | [added: | | 288.5 | | | | | |] 291.7 | | | | [added: | |] 273.8 | | | | [removed: 251.4] | | [added: 251.4] | | [removed: 250.2] | | | | [removed: 248.3] [added: 250.2] | | |
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In 2020, SoCalGas recorded charges of $307 million ($233 million after tax) in Aliso Canyon Litigation and Regulatory Matters on the SoCalGas and Sempra Energy Consolidated Statements of Operations related to settlement discussions in connection with civil litigation and regulatory matters.
In 2020, we completed the sale of our equity interests in our Peruvian businesses for cash proceeds of $3,549 million, net of transaction costs and as adjusted for post-closing adjustments, and recorded a pretax gain of $2,271 million ($1,499 million after tax) in discontinued operations.
Also in 2020, we completed the sale of our equity interests in our Chilean businesses for cash proceeds of $2,216 million, net of transaction costs and as adjusted for post-closing adjustments, and recorded a pretax gain of $628 million ($248 million after tax) in discontinued operations.
We discuss discontinued operations in Note 5 of the Notes to Consolidated Financial Statements.
In 2020, we recorded a charge of $100 million in Equity Earnings on Sempra Energy’s Consolidated Statement of Operations for losses from our investment in RBS Sempra Commodities.
We discuss the charge further in Note 16 of the Notes to Consolidated Financial Statements.
In 2020, Sempra Energy completed a registered public offering of our series C preferred stock.
This offering provided net proceeds of $889 million.
We used the net proceeds for working capital and other general corporate purposes, including the repayment of indebtedness.
In 2020, Sempra Energy entered into and completed an ASR program under which we paid $500 million to repurchase 4,089,375 shares of our common stock at an average price of $122.27 per share.
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MD&A *–* Income Taxes” and “Item 7.
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An excerpt. Shown here: 40 of 75 rewritten, all 22 added and all 20 removed. The counts are complete. For every sentence, read Item 6. SELECTED FINANCIAL DATA in the FY2020 filing and the FY2019 filing.
Item 9A. CONTROLS AND PROCEDURES
19 rewritten, 3 added, 3 removed, 57 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
Sempra Energy, SDG&E and SoCalGas [removed: have designed and] maintain disclosure controls and procedures [added: designed] to ensure that information required to be disclosed in their respective reports [added: filed or submitted under the Exchange Act] is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to the management of each company, including each respective principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
In designing and evaluating these controls and procedures, the management of each company recognizes that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives; therefore, the management of each company applies judgment in evaluating the cost-benefit relationship of [removed: other] possible controls and procedures.
Under the supervision and with the participation of [removed: management, including] the principal executive officers and principal financial officers of Sempra Energy, SDG&E and SoCalGas, each [removed: company] [added: such company’s management] evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of December 31, [removed: 2019,] [added: 2020,] the end of the period covered by this report.
Based on these evaluations, the principal executive officers and principal financial officers of Sempra Energy, SDG&E and SoCalGas concluded that their respective company’s disclosure controls and procedures were effective at the reasonable assurance [removed: level.][added: level as of such date.]
The respective management of [removed: each company] [added: Sempra Energy, SDG&E and SoCalGas] is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f).
Under the supervision and with the participation of the [removed: management of each company, including each company’s] principal executive [removed: officer] [added: officers] and principal financial [removed: officer, the effectiveness] [added: officers] of [added: Sempra Energy, SDG&E and SoCalGas,] each [added: such] company’s [added: management evaluated the effectiveness of its] internal control over financial reporting [removed: was evaluated] based on the framework in *Internal Control* – *Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on [removed: the] [added: these] evaluations, each [removed: company] [added: company’s management] concluded that its internal control over financial reporting was effective as of December 31, [removed: 2019.][added: 2020.]
Deloitte & Touche LLP audited the effectiveness of each company’s internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] as stated in their reports, which are included in this annual report on Form 10-K.
There have been no changes in [removed: the companies’] [added: any such company’s] internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, [removed: the companies’] [added: such company’s] internal control over financial reporting.
We have audited the internal control over financial reporting of Sempra Energy and subsidiaries (“Sempra Energy”) as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in [removed: *Internal] [added: Internal] Control [removed: –] [added: *–*] Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
In our opinion, Sempra Energy maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in [removed: *Internal] [added: Internal] Control – Integrated Framework [removed: (2013)*] [added: (2013)] issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements as of and for the year ended December 31, [removed: 2019,] [added: 2020] of Sempra Energy and our report dated February [removed: 27, 2020,] [added: 25, 2021] expressed an unqualified opinion on those financial statements.
We have audited the internal control over financial reporting of San Diego Gas & Electric Company (“SDG&E”) as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
In our opinion, SDG&E maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements as of and for the year ended December 31, [removed: 2019,] [added: 2020] of SDG&E and our report dated February [removed: 27, 2020,] [added: 25, 2021] expressed an unqualified opinion on those financial statements.
We have audited the internal control over financial reporting of Southern California Gas Company (“SoCalGas”) as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
In our opinion, SoCalGas maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the financial statements as of and for the year ended December 31, [removed: 2019,] [added: 2020] of SoCalGas and our report dated February [removed: 27, 2020,] [added: 25, 2021] expressed an unqualified opinion on those financial statements.
Our responsibility is to express an opinion on [removed: the] SoCalGas’ internal control over financial reporting based on our audit.
February 25, 2021
February 25, 2021
February 25, 2021
February 27, 2020
February 27, 2020
February 27, 2020
Item 9B. OTHER INFORMATION
2 rewritten, 0 added, 0 removed, 3 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
Because SDG&E meets the conditions of General Instructions I(1)(a) and (b) of Form 10-K and is therefore filing this report with a reduced disclosure format as permitted by General Instruction I(2), the information required by [added: Part III –] Items 10, 11, 12 and 13 below is not required for SDG&E.
We have, however, provided the information required by [added: Part III –] Item 10 with respect to SDG&E’s executive officers in [removed: “Item] [added: “Part I – Item] 1.
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
3 rewritten, 0 added, 0 removed, 1 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
We provide the information required by [added: Part III –] Item 10 with respect to executive officers for Sempra Energy [added: (other than information required by Item 405 of SEC Regulation S-K)] and SoCalGas in [removed: “Item] [added: “Part I – Item] 1.
Business – Other Matters – Information About Our Executive Officers.” For Sempra Energy, all other information required by [added: Part III –] Item 10 is incorporated by reference from “Corporate [removed: Governance” and] [added: Governance,”] “Share Ownership” [added: and “Proposal 1: Election of Directors”] in the [removed: Proxy Statement] [added: proxy statement] to be filed for its May [removed: 2020] [added: 2021] annual meeting of shareholders.
For SoCalGas, all other information required by [added: Part III –] Item 10 is incorporated by reference from its [removed: Information Statement] [added: information statement] to be filed for its [removed: May 2020] [added: June 2021] annual meeting of shareholders.
Item 11. EXECUTIVE COMPENSATION
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Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
The information required by [added: Part III –] Item 11 is incorporated by reference from “Corporate Governance” and “Executive Compensation,” including “Compensation Discussion and Analysis,” “Compensation [added: and Talent] Committee Report” and “Compensation Tables” in the [removed: Proxy Statement] [added: proxy statement] to be filed for the May [removed: 2020] [added: 2021] annual meeting of shareholders for Sempra Energy and from the [removed: Information Statement] [added: information statement] to be filed for the [removed: May 2020] [added: June 2021] annual meeting of shareholders for SoCalGas.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
8 rewritten, 9 added, 12 removed, 5 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
At December 31, [removed: 2019,] [added: 2020,] outstanding awards consisted of stock options and RSUs held by [removed: 429] [added: 460] employees.
The following table sets forth information regarding our equity compensation [removed: plan] [added: plans] at December 31, [removed: 2019.][added: 2020.]
| EQUITY COMPENSATION PLANS | | | | | | | | | | [added: | | | | | | | |]
| Equity compensation [removed: plan] [added: plans] approved by shareholders | [added: | |] Number of shares to be issued upon exercise of outstanding options, warrants and rights(1) | | | [added: | | |] Weighted-average exercise price of outstanding options, warrants and rights(2) | | | | [added: | |] Number of additional shares remaining available for future issuance(3) | | [added: |]
[removed: |] *(1)* [removed: |] *The 2013 LTIP consists [removed: of* *247,577* *options] [added: of 243,177 options] to purchase shares of our common stock, all of which were granted at an exercise price equal to 100% of the grant date fair market value of the shares subject to the [removed: option,* *1,086,981* *performance-based] [added: option, 658,574 performance-based] RSUs [removed: and* *378,139* *service-based] [added: and 186,213 service-based] RSUs. [removed: Each performance-based RSU represents the right to receive from zero to 2.0 shares of our common stock if applicable performance conditions are satisfied. No new awards may be granted under the 2013 LTIP. The 2019 LTIP* *consists of* *37,648* *service-based RSUs.* |]
[removed: |] *(2)* [removed: |] *Represents [removed: only] the weighted-average exercise price of [removed: the* *247,577* *outstanding] [added: the 243,177 and 122,218 outstanding] options to purchase shares of our common stock under the 2013 [removed: LTIP. No options have been issued under] [added: LTIP and] the 2019 [removed: LTIP.* |][added: LTIP, respectively.*]
[removed: |] *(3)* [removed: |] *The number of shares available for future issuance is increased by the number of shares to which [removed: the] [added: each] participant would otherwise be entitled that are withheld or surrendered to satisfy the exercise price or to satisfy tax withholding obligations relating to any plan awards, and is also increased by the number of shares subject to awards that expire or are forfeited, canceled or otherwise terminated without the issuance of shares. [removed: No new awards may be granted under the 2013 LTIP or other previous shareholder-approved LTIPs.* |]
The security ownership information required by [added: Part III –] Item 12 is incorporated by reference from “Share Ownership” in the [removed: Proxy Statement] [added: proxy statement] to be filed for the May [removed: 2020] [added: 2021] annual meeting of shareholders for Sempra Energy and [removed: in] [added: from] the [removed: Information Statement] [added: information statement] to be filed for the [removed: May 2020] [added: June 2021] annual meeting of shareholders for SoCalGas.
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| 2013 LTIP | | | 1,087,964 | | | | | | $ | 106.76 | | | | | — | | |
| 2019 LTIP | | | 514,969 | | | | | | $ | 149.12 | | | | | 6,927,284 | | |
The 2019 LTIP consists of 122,218 options to purchase shares of our common stock, all of which were granted at an exercise price equal to 100% of the grant date fair market value of the shares subject to the option, 235,387 performance-based RSUs and 157,364 service-based RSUs.
Each performance-based RSU granted under the 2013 LTIP and the 2019 LTIP represents the right to receive from zero to 2.0 shares of our common stock if applicable performance conditions are satisfied.
For purposes of this table, the number of shares of common stock shown to be subject to each performance-based RSU is 1.0 share, which assumes performance conditions are satisfied at the target level.*
No new awards may be granted under the 2013 LTIP.*
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| 2013 LTIP | 1,712,697 | | | $ | 105.86 | | | — | |
| 2019 LTIP | 37,648 | | | $ | — | | | 7,662,352 | |
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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
1 rewritten, 0 added, 0 removed, 1 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
The information required by [added: Part III –] Item 13 is incorporated by reference from “Corporate Governance” in the [removed: Proxy Statement] [added: proxy statement] to be filed for the May [removed: 2020] [added: 2021] annual meeting of shareholders for Sempra Energy and from the [removed: Information Statement] [added: information statement] to be filed for the [removed: May 2020] [added: June 2021] annual meeting of shareholders for SoCalGas.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
32 rewritten, 11 added, 5 removed, 5 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
The following table shows the fees paid to Deloitte & Touche LLP, the independent registered public accounting firm for Sempra Energy, SDG&E and SoCalGas, for services provided for [removed: 2019] [added: 2020] and [removed: 2018.][added: 2019.]
| PRINCIPAL ACCOUNTANT FEES | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | |]
| *(Dollars in thousands)* | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | |]
| | [added: | |] Sempra Energy Consolidated | | | | | | | | [added: | | | | | | |] SDG&E | | | | | | | | [added: | | | | | | |] SoCalGas | | | | | | [added: | | |]
| | [added: | |] Fees | | | | [added: | |] Percent of total | | | | [added: | | | | |] Fees | | | | [added: | |] Percent of total | | | | [added: | | | | |] Fees | | | | [added: | |] Percent of total | | [added: |]
| 2019: | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | |]
| Audit fees: | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | |]
| Consolidated financial statements, internal controls audits and subsidiary audits | [added: | |] $ | 10,568 | | | | | | | [added: | | | | | | |] $ | 2,804 | | | | | | | [added: | | | | | | |] $ | 2,789 | | | | | [added: | | |]
| Regulatory filings and related services | [added: | |] 466 | | | | | | | | [added: | | | | | | |] 45 | | | | | | | | [added: | | | | | | |] 45 | | | | | | [added: | | |]
| Total audit fees | [added: | |] 11,034 | | | | [added: | |] 87 | [added: |] % | | | [added: | | | |] 2,849 | | | | [added: | |] 89 | [added: |] % | | | [added: | | | |] 2,834 | | | | [added: | |] 91 | [added: |] % |
| Audit-related fees: | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | |]
| Employee benefit plan audits | [added: | |] 517 | | | | | | | | [added: | | | | | | |] 162 | | | | | | | | [added: | | | | | | |] 286 | | | | | | [added: | | |]
| Other audit-related [removed: services] [added: services(1)] | [added: | |] 883 | | | | | | | | [added: | | | | | | |] 99 | | | | | | | | [added: | | | | | | |] 10 | | | | | | [added: | | |]
| Total audit-related fees | [added: | |] 1,400 | | | | [added: | |] 11 | | | | [added: | | | | |] 261 | | | | [added: | |] 8 | | | | [added: | | | | |] 296 | | | | [added: | |] 9 | | [added: |]
| Tax [removed: fees] [added: fees(2)] | [added: | |] 74 | | | | [added: | |] 1 | | | | [added: | | | | |] 73 | | | | [added: | |] 3 | | | | [added: | | | | |] — | | | | [added: | |] — | | [added: |]
| All other [removed: fees] [added: fees(3)] | [removed: 74] | | [added: 22] | | [removed: 1] | | | | [removed: 15] [added: —] | | | | [added: | | | | |] — | | | | [added: | |] — | | | | [added: | | | | |] — | | [added: | | | | — | | |]
| Total fees | [added: | |] $ | 12,582 | | | [added: | |] 100 | [added: |] % | | | [added: | | | |] $ | 3,198 | | | [added: | |] 100 | [added: |] % | | | [added: | | | |] $ | 3,130 | | | [added: | |] 100 | [added: |] % |
| Audit fees: | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | |]
| Consolidated financial statements, internal controls audits and subsidiary audits | [added: | |] $ | [removed: 10,842] [added: 9,145] | | | | | | | [added: | | | | | | |] $ | [removed: 2,413] [added: 2,469] | | | | | | | [added: | | | | | | |] $ | [removed: 2,782] [added: 3,023] | | | | | [added: | | |]
| Regulatory filings and related services | [removed: 598] | | [added: 827] | | | | | | [removed: 80] | | | | | | | | [removed: 101] | [added: 100] | | | | | [added: | | | | | | | | | | 55 | | | | | | | | |]
| Audit-related fees: | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | |]
| Employee benefit plan audits | [removed: 460] | | [added: 505] | | | | | | [removed: 143] | | | | | | | | [removed: 257] | [added: 183] | | | | | [added: | | | | | | | | | | 307 | | | | | | | | |]
| Other audit-related [removed: services] [added: services(1)] | [removed: 900] | | [added: 1,494] | | | | | | [removed: 95] | | | | | | | | [removed: 8] | [added: 137] | | | | | [added: | | | | | | | | | | — | | | | | | | | |]
| Total audit-related fees | [removed: 1,360] | | [added: 1,999] | | [removed: 10] | | | | [removed: 238] [added: 17] | | | | [removed: 8] | | | | [removed: 265] | [added: 320] | | | [removed: 8] | | [added: | 11 | | | | | | | | | 307 | | | | | | 9 | | |]
| Tax [removed: fees] [added: fees(2)] | [removed: 97] | | [added: 156] | | [added: | | | |] 1 | | | | [removed: 73] | | | | [added: | 111 | | | | | |] 3 | | | | [removed: —] | | | | [removed: —] | [added: 32] | [added: | | | | | 1 | | |]
| All other [removed: fees] [added: fees(3)] | [removed: 20] | | [added: 74] | | [removed: —] | | | | [removed: 2] [added: 1] | | | | [added: | | | | | 15 | | | | | |] — | | | | [removed: 1] | | | | [added: |] — | | [added: | | | | — | | |]
| Total fees | [added: | |] $ | [removed: 12,917] [added: 12,149] | | | [added: | |] 100 | [added: |] % | | | [added: | | | |] $ | [removed: 2,806] [added: 3,000] | | | [added: | |] 100 | [added: |] % | | | [added: | | | |] $ | [removed: 3,149] [added: 3,417] | | | [added: | |] 100 | [added: |] % |
Sempra Energy’s board of directors has determined that each member of its Audit Committee is an independent director and is financially literate, and that Mr. [removed: Taylor, the chair of the committee, is an audit committee financial expert as defined by the rules of the SEC.][added: Jack T.]
Except where pre-approval is not required by SEC rules, Sempra Energy’s Audit Committee pre-approves all audit, audit-related and permissible non-audit services provided by Deloitte & Touche LLP for Sempra Energy and its subsidiaries, including all services provided by Deloitte & Touche LLP for Sempra Energy, SDG&E and SoCalGas in [removed: 2019] [added: 2020] and [removed: 2018.][added: 2019.]
The committee’s pre-approval policies and procedures provide for the general pre-approval of specific types of services and give detailed guidance to [removed: management as to the services that are eligible for general pre-approval.]
[removed: They] [added: management as to the services that are eligible for general pre-approval, and they] require specific pre-approval of all other permitted services.
The [added: committee’s] policies and procedures also delegate authority to the chair of the committee to address any requests for pre-approval of services between committee meetings, with any pre-approval decisions to be reported to the committee at its next scheduled meeting.
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| 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total audit fees | | | 9,972 | | | | | | 82 | | % | | | | | | | 2,569 | | | | | | 86 | | % | | | | | | | 3,078 | | | | | | 90 | | % |
*(1)* *Other audit-related services in 2020 primarily relate to statutory audits, agreed upon procedures and permitted internal control advisory services.
Other audit-related services in 2019 primarily relate to statutory audits and agreed upon procedures.*
*(2)* *Tax fees in 2020 relate to tax consulting and compliance services.
Tax fees in 2019 relate to tax consulting services.*
*(3)* *All other fees relate to training and conferences.*
Taylor, who chairs the committee, and Ms. Cynthia L.
Walker, who is a member of the committee, are audit committee financial experts as defined by the rules of the SEC.
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| 2018: | | | | | | | | | | | | | | | | | | | | | | |
| Total audit fees | 11,440 | | | | 89 | % | | | 2,493 | | | | 89 | % | | | 2,883 | | | | 92 | % |
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
190 rewritten, 315 added, 210 removed, 16 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
Any other schedule for which provision is made in [added: SEC] Regulation S-X is not required under the instructions contained therein, is inapplicable or the information is included in the Consolidated Financial Statements and Notes thereto in this annual report on Form 10-K.
| | | | | | [added: | | | | | | |] Incorporated by Reference | | | [added: | | | | | |]
| Exhibit Number | | | [added: | | |] Exhibit Description | [added: | |] Filed [added: or Furnished] Herewith | [added: | |] Form or Registration Statement No. | [added: | |] Exhibit or Appendix | [added: | |] Filing Date | [added: | |]
| EXHIBIT 2 -- PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION | | | | | | | | [added: | | | | | | | | | | | | |]
| Sempra Energy | | | | | | | | [added: | | | | | | | | | | | | |]
| [removed: 2.5] [added: 2.1] | | | [added: | | |] [Purchase and Sale Agreement, dated as of September 20, 2018, by and between Sempra Solar Portfolio Holdings, LLC and CED Southwest Holdings, Inc.](http://www.sec.gov/Archives/edgar/data/1032208/000008652118000072/ex2psa20180920.htm) | | [added: | | | |] 8-K | [added: | |] 2 | [added: | |] 09/20/18 | [added: | |]
| [removed: 2.6] [added: 2.2] | | | [added: | | |] [Purchase and Sale Agreement, dated as of September 27, 2019, by and between Sempra International Holdings N.V. and China Yangtze Power International (Hongkong) Co., Limited.](http://www.sec.gov/Archives/edgar/data/1032208/000103220819000026/ex21psa20190927.htm) | | [added: | | | |] 8-K | [added: | |] 2.1 | [added: | |] 09/30/19 | [added: | |]
| [removed: 2.7] [added: 2.3] | | | [added: | | |] [Letter of Undertaking, dated as of September 27, 2019, by and between Sempra Energy International Holdings N.V., China Three Gorges Corporation and Ching Three Gorges Construction Management Co., Ltd.](http://www.sec.gov/Archives/edgar/data/1032208/000103220819000026/ex22letterofundertakin.htm) | | [added: | | | |] 8-K | [added: | |] 2.2 | [added: | |] 09/30/19 | [added: | |]
| [removed: 2.8] [added: 2.4] | | | [added: | | |] [Purchase and Sale Agreement, dated as of October 12, 2019, by and between Sempra Energy International Holdings N.V. and State Grid International Development Limited.](http://www.sec.gov/Archives/edgar/data/1032208/000103220819000029/ex21psa20191012.htm) | | [added: | | | |] 8-K | [added: | |] 2.1 | [added: | |] 10/15/19 | [added: | |]
| EXHIBIT 3 -- BYLAWS AND ARTICLES OF INCORPORATION | | | | | | | | [added: | | | | | | | | | | | | |]
| Sempra Energy | | | | | | | | [added: | | | | | | | | | | | | |]
| 3.1 | | | [added: | | |] [Amended and Restated Articles of Incorporation of Sempra Energy effective May 23, [removed: 2008.](https://www.sec.gov/Archives/edgar/data/1032208/000103220820000006/sempra-123119xex31.htm)] [added: 2008.](http://www.sec.gov/Archives/edgar/data/86521/000103220820000006/sempra-123119xex31.htm)] | [removed: X] | | | | [added: | 10-K | | | 3.1 | | | 02/27/20 | | |]
| 3.2 | | | [added: | | |] [Bylaws of Sempra Energy (as amended [removed: through December 15, 2015).](http://www.sec.gov/Archives/edgar/data/1032208/000008652115000075/ex3_1.htm)] [added: through](http://www.sec.gov/Archives/edgar/data/1032208/000103220820000014/exhibit31.htm) [April 14, 2020](http://www.sec.gov/Archives/edgar/data/1032208/000103220820000014/exhibit31.htm)[).](http://www.sec.gov/Archives/edgar/data/1032208/000103220820000014/exhibit31.htm)] | | [added: | | | |] 8-K | [added: | |] 3.1 | [removed: 12/17/15] | [added: | 04/14/20 | | |]
| 3.3 | | | [added: | | |] [Certificate of Determination of [added: Preferences of] the 6% Mandatory Convertible Preferred Stock, Series A, of Sempra Energy (including the form of certificate representing the 6% Mandatory Convertible Preferred Stock, Series A), filed with the Secretary of State of the State of California and effective January 5, 2018.](http://www.sec.gov/Archives/edgar/data/1032208/000119312518006486/d517690dex31.htm) | | [added: | | | |] 8-K | [added: | |] 3.1 | [added: | |] 01/09/18 | [added: | |]
| 3.4 | | | [added: | | |] [Certificate of Determination of [added: Preferences of] the 6.75% Mandatory Convertible Preferred Stock, Series B, of Sempra Energy (including the form of certificate representing the 6.75% Mandatory Convertible Preferred Stock, Series B), filed with the Secretary of State of the State of California and effective July 11, 2018.](http://www.sec.gov/Archives/edgar/data/1032208/000119312518217274/d478757dex31.htm) | | [added: | | | |] 8-K | [added: | |] 3.1 | [added: | |] 07/13/18 | [added: | |]
| | | | | | [added: | | | | | | |] Incorporated by Reference | | | [added: | | | | | |]
| Exhibit Number | | | [added: | | |] Exhibit Description | [added: | |] Filed [added: or Furnished] Herewith | [added: | |] Form or Registration Statement No. | [added: | |] Exhibit or Appendix | [added: | |] Filing Date | [added: | |]
| San Diego Gas & Electric Company | | | | | | | | [added: | | | | | | | | | | | | |]
| [removed: 3.5] [added: 3.6] | | | [added: | | |] [Amended and Restated Articles of Incorporation of San Diego Gas & Electric Company effective August 15, 2014.](http://www.sec.gov/Archives/edgar/data/86521/000008652115000011/ex3_4.htm) | | [added: | | | |] 10-K | [added: | |] 3.4 | [added: | |] 02/26/15 | [added: | |]
| [removed: 3.6] [added: 3.7] | | | [added: | | |] [Bylaws of San Diego Gas & Electric (as amended through October 26, 2016).](http://www.sec.gov/Archives/edgar/data/86521/000008652116000145/sempra-93016xex31.htm) | | [added: | | | |] 10-Q | [added: | |] 3.1 | [added: | |] 11/02/16 | [added: | |]
| Southern California Gas Company | | | | | | | | [added: | | | | | | | | | | | | |]
| [removed: 3.7] [added: 3.8] | | | [added: | | |] [Restated Articles of Incorporation of Southern California Gas Company effective October 7, 1996.](http://www.sec.gov/Archives/edgar/data/92108/0000912057-97-010558.txt) | | [added: | | | |] 10-K | [added: | |] 3.01 | [added: | |] 03/28/97 | [added: | |]
| [removed: 3.8] [added: 3.9] | | | [added: | | |] [Bylaws of Southern California Gas Company (as amended through January 30, 2017).](http://www.sec.gov/Archives/edgar/data/92108/000008652117000002/exhibit31.htm) | | [added: | | | |] 8-K | [added: | |] 3.1 | [added: | |] 01/31/17 | [added: | |]
| EXHIBIT 4 -- INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES | | | | | | | | [added: | | | | | | | | | | | | |]
| Certain instruments defining the rights of holders of long-term debt instruments are not required to be filed or incorporated by reference herein pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. Each registrant agrees to furnish a copy of such instruments to the SEC upon request. | | | | | | | | [added: | | | | | | | | | | | | |]
| Sempra Energy | | | | | | | | [added: | | | | | | | | | | | | |]
| 4.1 | | | [added: | | |] [Description of rights of Sempra Energy Common Stock (Amended and Restated Articles of Incorporation of Sempra Energy effective May 23, 2008) (included as Exhibit 3.1 [removed: above).](https://www.sec.gov/Archives/edgar/data/1032208/000103220820000006/sempra-123119xex31.htm)] [added: above).](http://www.sec.gov/Archives/edgar/data/86521/000103220820000006/sempra-123119xex31.htm)] | [removed: X] | | | | [added: | 10-K | | | 3.1 | | | 02/27/20 | | |]
| 4.2 | | | [added: | | |] [Description of [removed: Securities.](https://www.sec.gov/Archives/edgar/data/1032208/000103220820000006/sempra-123119xex42.htm)] [added: Securities.](https://www.sec.gov/Archives/edgar/data/1032208/000103220821000007/sempra-123120xex42.htm)] | [added: | |] X | | | | [added: | | | | | | | |]
| [removed: 4.3] [added: 4.6] | | | [added: | | |] [Indenture dated as of February 23, 2000, between Sempra Energy and U.S. Bank Trust National Association, as Trustee.](http://www.sec.gov/Archives/edgar/data/1032208/000119312508194604/dex41.htm) | | [added: | | | |] S-3ASR 333-153425 | [added: | |] 4.1 | [added: | |] 09/11/08 | [added: | |]
| [removed: 4.4] [added: 4.3] | | | [added: | | |] [Certificate of Determination of [added: Preferences of] the 6% Mandatory Convertible Preferred Stock, Series A, of Sempra Energy (including the form of certificate representing the 6% Mandatory Convertible Preferred Stock, Series A), filed with the Secretary of State of the State of California and effective January 5, 2018 (included as Exhibit 3.3 above).](http://www.sec.gov/Archives/edgar/data/1032208/000119312518006486/d517690dex31.htm) | | [added: | | | |] 8-K | [added: | |] 3.1 | [added: | |] 01/09/18 | [added: | |]
| [removed: 4.5] [added: 4.4] | | | [added: | | |] [Certificate of Determination of [added: Preferences of] the 6.75% Mandatory Convertible Preferred Stock, Series B, of Sempra Energy (including the form of certificate representing the 6.75% Mandatory Convertible Preferred Stock, Series [removed: B),] [added: B)] filed with the Secretary of State of [removed: the State of] California and effective July 11, 2018 (included as Exhibit 3.4 above).](http://www.sec.gov/Archives/edgar/data/1032208/000119312518217274/d478757dex31.htm) | | [added: | | | |] 8-K | [added: | |] 3.1 | [added: | |] 07/13/18 | [added: | |]
| [removed: 4.6] [added: 4.15] | | | [added: | | |] [Subordinated Indenture, [removed: date] [added: dated] as of June 26, 2019, between Sempra Energy and U.S. Bank National Association, as trustee.](http://www.sec.gov/Archives/edgar/data/1032208/000119312519182590/d771903dex42.htm) | | [added: | | | |] 8-K | [added: | |] 4.2 | [added: | |] 06/26/19 | [added: | |]
| [removed: 4.7] [added: 4.16] | | | [removed: [Officer’s] [added: | | | [Officers’] Certificate of Sempra Energy, including the form of [added: its] 5.750% Junior Subordinated [removed: Notes] [added: Note] due 2079.](http://www.sec.gov/Archives/edgar/data/1032208/000119312519182590/d771903dex41.htm) | | [added: | | | |] 8-K | [added: | |] 4.1 | [added: | |] 06/26/19 | [added: | |]
| Southern California Gas Company | | | | | | | | [added: | | | | | | | | | | | | |]
| [removed: 4.8] [added: 4.17] | | | [added: | | |] [Description of preferences of Preferred Stock, Preference Stock and Series Preferred Stock (Southern California Gas Company Restated Articles of Incorporation) (included as Exhibit [removed: 3.7] [added: 3.8] above).](http://www.sec.gov/Archives/edgar/data/92108/0000912057-97-010558.txt) | | [added: | | | |] 10-K | [added: | |] 3.01 | [added: | |] 03/28/97 | [added: | |]
| [removed: 4.9] [added: 4.18] | | | [added: | | |] [Description of [removed: Securities.](https://www.sec.gov/Archives/edgar/data/1032208/000103220820000006/sempra-123119xex49.htm)] [added: Securities.](http://www.sec.gov/Archives/edgar/data/86521/000103220820000006/sempra-123119xex49.htm)] | [removed: X] | | | | [added: | 10-K | | | 4.9 | | | 02/27/20 | | |]
| Sempra Energy / San Diego Gas & Electric Company | | | | | | | | [added: | | | | | | | | | | | | |]
| [removed: 4.10] [added: 4.19] | | | [added: | | |] Mortgage and Deed of Trust dated July 1, 1940. | | [added: | | | |] 2-4769 | [added: | |] B-3 | [added: | |] (1) | [added: | |]
| [removed: 4.11] [added: 4.20] | | | [added: | | |] Second Supplemental Indenture dated as of March 1, 1948. | | [added: | | | |] 2-7418 | [added: | |] B-5B | [added: | |] (1) | [added: | |]
| [removed: 4.12] [added: 4.21] | | | [added: | | |] Ninth Supplemental Indenture dated as of August 1, 1968. | | [added: | | | |] 333-52150 | [added: | |] 4.5 | [added: | |] (1) | [added: | |]
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| 3.5 | | | | | | [Certificate of Determination of Preferences of 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Stock, Series C, of Sempra Energy (including the form of certificate representing the 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C), filed with the Secretary of State of California and effective June 11, 2020.](http://www.sec.gov/Archives/edgar/data/1032208/000119312520169319/d944539dex31.htm) | | | | | | 8-K | | | 3.1 | | | 06/15/20 | | |
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| 4.5 | | | | | | [Certificate of Determination of Preferences of 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Stock, Series C, of Sempra Energy (including the form of certificate representing the 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C), filed with the Secretary of State of California and effective June 11, 2020 (included as Exhibit 3.5 above).](http://www.sec.gov/Archives/edgar/data/1032208/000119312520169319/d944539dex31.htm) | | | | | | 8-K | | | 3.1 | | | 06/15/20 | | |
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| 4.7 | | | | | | [Officers’ Certificate of Sempra Energy, including the form of its 6.00% Note due 2039.](http://www.sec.gov/Archives/edgar/data/1032208/000119312509205520/dex41.htm) | | | | | | 8-K | | | 4.1 | | | 10/08/09 | | |
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| 4.8 | | | | | | [Officers’ Certificate of Sempra Energy, including the form of its 2.875% Note due 2022.](http://www.sec.gov/Archives/edgar/data/1032208/000119312512401409/d415114dex41.htm) | | | | | | 8-K | | | 4.1 | | | 09/24/12 | | |
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| 4.9 | | | | | | [Officers’ Certificate of Sempra Energy, including the form of its 4.05% Note due 2023.](http://www.sec.gov/Archives/edgar/data/1032208/000119312513450815/d633267dex41.htm) | | | | | | 8-K | | | 4.1 | | | 11/22/13 | | |
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| 4.10 | | | | | | [Officers’ Certificate of Sempra Energy, including the form of its 3.55% Note due 2024.](http://www.sec.gov/Archives/edgar/data/1032208/000119312514235814/d743279dex41.htm) | | | | | | 8-K | | | 4.1 | | | 06/13/14 | | |
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| 2.1 | | | [Agreement and Plan of Merger, dated as of August 21, 2017, by and among Sempra Energy, Power Play Merger Sub I, Inc. (now known as Sempra Texas Merger Sub I, Inc.), Energy Future Intermediate Holding Company LLC and Energy Future Holdings Corp.](http://www.sec.gov/Archives/edgar/data/1032208/000008652117000064/ex2_1sempramergeragreement.htm) | | 8-K | 2.1 | 08/25/17 |
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| 2.2 | | | [First Amended Joint Plan of Reorganization of Energy Future Holdings Corp., et al., Pursuant to Chapter 11 of the Bankruptcy Code.](http://www.sec.gov/Archives/edgar/data/1032208/000008652117000064/ex2_2sempraplanofreorganiz.htm) | | 8-K | 2.2 | 08/25/17 |
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| 2.3 | | | [Waiver Agreement, dated as of October 3, 2017, by and among Sempra Energy, Sempra Texas Merger Sub I, Inc., Energy Future Intermediate Holding Company LLC and Energy Future Holdings Corp.](http://www.sec.gov/Archives/edgar/data/1032208/000008652117000073/ex2_1waiveragreement.htm) | | 8-K | 2.1 | 10/06/17 |
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| 2.4 | | | [Amendment No. 2 to the Agreement and Plan of Merger, dated as of February 15, 2018, by and among Sempra Energy, Sempra Texas Merger Sub I, Inc., Energy Future Intermediate Holding Company LLC and Energy Future Holdings Corp.](http://www.sec.gov/Archives/edgar/data/86521/000008652118000019/sempra-123117xex213.htm) | | 10-K | 2.1.3 | 02/27/18 |
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An excerpt. Shown here: 40 of 190 rewritten, 40 of 315 added and 40 of 210 removed. The counts are complete. For every sentence, read Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES in the FY2020 filing and the FY2019 filing.
Item 16. FORM 10-K SUMMARY
3,095 rewritten, 1,766 added, 2,323 removed, 1,565 unchanged
Read the full itemFY2020 item · filed February 25, 2021FY2019 item · filed February 27, 2020
| Sempra Energy: | | | | [added: | |]
| SIGNATURES | | | | [added: | |]
| Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. | | | | [added: | |]
| | | [added: |] SEMPRA ENERGY, (Registrant) | | [added: |]
| | | [added: |] By: /s/ J. Walker Martin | | [added: |]
| | | [added: |] J. Walker Martin [removed: Chairman and] [added: Chairman,] Chief Executive Officer [added: and President] | | [added: |]
| | | [added: |] Date: February [removed: 27, 2020] [added: 25, 2021] | | [added: |]
| Pursuant to the requirements of the Securities Exchange Act of [removed: 1934,] [added: 1934 (the Act),] this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. | | | | [added: | | | | |]
| Name/Title | [added: | |] Signature | | [added: |] Date | [added: | |]
| Principal Executive Officer: J. Walker Martin Chief Executive Officer [added: and President] | [added: | |] /s/ J. Walker Martin | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Principal Financial Officer: Trevor I. Mihalik Executive Vice President and Chief Financial Officer | [added: | |] /s/ Trevor I. Mihalik | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Principal Accounting Officer: Peter R. Wall [added: Senior] Vice President, Controller and Chief Accounting Officer | [added: | |] /s/ Peter R. Wall | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Directors: | | | | [added: | | | | |]
| J. Walker Martin, Chairman | [added: | |] /s/ J. Walker Martin | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Alan L. Boeckmann, Director | [added: | |] /s/ Alan L. Boeckmann | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Kathleen L. Brown, Director | [added: | |] /s/ Kathleen L. Brown | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Andrés Conesa, Director | [added: | |] /s/ Andrés Conesa | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Maria Contreras-Sweet, Director | [added: | |] /s/ Maria Contreras-Sweet | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Pablo A. Ferrero, Director | [added: | |] /s/ Pablo A. Ferrero | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| William D. Jones, Director | [added: | |] /s/ William D. Jones | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Bethany J. Mayer, Director | [added: | |] /s/ Bethany J. Mayer | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Michael N. Mears, Director | [added: | |] /s/ Michael N. Mears | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Jack T. Taylor, Director | [added: | |] /s/ Jack T. Taylor | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Cynthia L. Walker, Director | [added: | |] /s/ Cynthia L. Walker | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Cynthia J. Warner, Director | [added: | |] /s/ Cynthia J. Warner | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| James C. Yardley, Director | [added: | |] /s/ James C. Yardley | | [added: |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| San Diego Gas & Electric Company: | | [added: | | | |]
| SIGNATURES | | [added: | | | |]
| Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. | | [added: | | | |]
| | [added: | |] SAN DIEGO GAS & ELECTRIC COMPANY, (Registrant) | [added: | |]
| [added: Kevin C. Sagara, Non-Executive Chairman] | [added: | | /s/] Kevin C. Sagara [removed: Chairman and Chief Executive Officer] | [added: | | February 25, 2021 | | |]
| | [added: | |] Date: February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Pursuant to the requirements of the Securities Exchange Act of 1934 (the Act), this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. | | | [added: | | | | | |]
| Name/Title | [added: | |] Signature | [added: | |] Date | [added: | |]
| Principal Executive Officer: [removed: Kevin C. Sagara] [added: Caroline A. Winn] Chief Executive Officer | [added: | |] /s/ [removed: Kevin C. Sagara] [added: Caroline A. Winn] | [added: | |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Principal Financial [removed: and Accounting] Officer: Bruce A. Folkmann [removed: Senior Vice President, Controller, Chief Financial Officer] [added: President] and Chief [removed: Accounting] [added: Financial] Officer | [added: | |] /s/ Bruce A. Folkmann | [added: | |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Directors: | | | [added: | | | | | |]
| Kevin C. Sagara, [added: Non-Executive] Chairman | [added: | |] /s/ Kevin C. Sagara | [added: | |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Robert J. Borthwick, Director | [added: | |] /s/ Robert J. Borthwick | [added: | |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
| Erbin B. Keith, Director | [added: | |] /s/ Erbin B. Keith | [added: | |] February [removed: 27, 2020] [added: 25, 2021] | [added: | |]
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| | | | By: /s/ Caroline A. Winn | | |
| | | | Caroline A. Winn Chief Executive Officer | | |
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| Principal Accounting Officer: Valerie A. Bille Vice President, Controller and Chief Accounting Officer | | | /s/ Valerie A. Bille | | | February 25, 2021 | | |
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| Caroline A. Winn, Director | | | /s/ Caroline A. Winn | | | February 25, 2021 | | |
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| | | | By: /s/ Scott D. Drury | | |
| | | | Scott D. Drury Chief Executive Officer | | |
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| William C. Rusnack, Director | /s/ William C. Rusnack | | February 27, 2020 |
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| Lynn Schenk, Director | /s/ Lynn Schenk | | February 27, 2020 |
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| | By: /s/ Kevin C. Sagara |
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An excerpt. Shown here: 40 of 3,095 rewritten, 40 of 1,766 added and 40 of 2,323 removed. The counts are complete. For every sentence, read Item 16. FORM 10-K SUMMARY in the FY2020 filing and the FY2019 filing.