SEMPRA ENERGY : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

You should read the following discussion in conjunction with the Condensed
Consolidated Financial Statements and the Notes thereto and "Item 1A. Risk
Factors" contained in this report, and the Consolidated Financial Statements and
the Notes thereto, "Item 7. MD&A" and "Item 1A. Risk Factors" contained in the
Annual Report.
OVERVIEW
Sempra Energy is a California-based energy-services holding company whose
businesses invest in, develop and operate energy infrastructure, and provide
electric and gas services to customers in North America. As we discuss in Note
12 of the Notes to Condensed Consolidated Financial Statements, our businesses
consist of five separately managed reportable segments.

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In January 2019, our board of directors approved a plan to sell our South
American businesses, which were previously included in our Sempra South American
Utilities segment. Our South American businesses and certain activities
associated with those businesses have been presented as discontinued operations
for all periods presented. Nominal activities that are not classified as
discontinued operations have been subsumed into Parent and other. Our
discussions below exclude discontinued operations, unless otherwise noted.
We provide additional information about discontinued operations in Note 5 of the
Notes to Condensed Consolidated Financial Statements and about our reportable
segments in Note 12 of the Notes to Condensed Consolidated Financial Statements
in this report and in "Item 1. Business" in the Annual Report.
This report includes information for the following separate registrants:
? Sempra Energy and its consolidated entities

? SDG&E and its consolidated VIE (until deconsolidation of Otay Mesa VIE in

August 2019)


? SoCalGas


References to "we," "us," "our" 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 our Texas utilities or the utility in our Sempra
Mexico segment. It also does not include utilities within our South American
businesses that have been presented as discontinued operations. All references
in this MD&A to our reportable segments are not intended to refer to any legal
entity with the same or similar name.
Throughout this report, we refer to the following as Condensed Consolidated
Financial Statements and Notes to Condensed Consolidated Financial Statements
when discussed together or collectively:
? the Condensed Consolidated Financial Statements and related Notes of Sempra

Energy and its subsidiaries and VIEs;

? the Condensed Consolidated Financial Statements and related Notes of SDG&E and

its VIE (until deconsolidation of Otay Mesa VIE in August 2019); and

? the Condensed Financial Statements and related Notes of SoCalGas.

RESULTS OF OPERATIONS We discuss the following in Results of Operations: ? Overall results of operations of Sempra Energy

? Segment results

? Significant changes in revenues, costs and earnings

? Impact of foreign currency and inflation rates on our results of operations

OVERALL RESULTS OF OPERATIONS OF SEMPRA ENERGY
In the three months ended March 31, 2020, we reported earnings of $760 million
and diluted EPS of $2.53 compared to earnings of $441 million and diluted EPS of
$1.59 for the same period in 2019. The change in diluted EPS in the three months
ended March 31, 2020 included a decrease of $(0.34) due to an increase in
weighted-average common shares outstanding. Our results and diluted EPS were
impacted by variances discussed in "Segment Results" below.
SEGMENT RESULTS
This section presents earnings (losses) by Sempra Energy segment, as well as
Parent and other, in the three months ended March 31, 2020 and 2019, and the
related discussion of the changes in segment earnings (losses) between these
periods. Throughout the MD&A, our reference to earnings represents earnings
attributable to common shares. Variance amounts presented are the after-tax
earnings impact (based on applicable statutory tax rates), unless otherwise
noted, and before NCI, where applicable.

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SEMPRA ENERGY EARNINGS (LOSSES) BY SEGMENT
(Dollars in millions)
                                              Three months ended March 31,
                                                 2020                2019
SDG&E                                      $        262         $        176
SoCalGas                                            303                  264
Sempra Texas Utilities                              105                   94
Sempra Mexico                                       191                   57
Sempra Renewables                                     -                   13
Sempra LNG                                           75                    5
Parent and other(1)                                (248 )               (117 )
Discontinued operations                              72                 

(51 ) Earnings attributable to common shares $ 760 $ 441

(1) Includes intercompany eliminations recorded in consolidation and certain

     corporate costs.



Due to the delay in the issuance of the CPUC's final decision in the California
Utilities' 2019 GRC, the California Utilities recorded revenues in the first
quarter of 2019 based on levels authorized for 2018 under the 2016 GRC. The 2019
GRC FD, which was issued by the CPUC in September 2019, was effective
retroactively to January 1, 2019. The California Utilities' CPUC-authorized base
revenues for the first quarter of 2020 are based on the revenues authorized for
the 2019 test year plus the amount authorized for attrition for 2020. Had the
2019 GRC FD been in effect in the first quarter of 2019, SDG&E's and SoCalGas'
earnings for the first quarter of 2019 would have been higher by $36 million and
$84 million, respectively. These amounts were recorded in earnings in the third
quarter of 2019. We provide additional information on the 2019 GRC FD in Note 4
of the Notes to Condensed Consolidated Financial Statements in this report and
in Note 4 of the Notes to Consolidated Financial Statements in the Annual
Report.
SDG&E
The increase in earnings of $86 million (49%) in the three months ended March
31, 2020 was primarily due to:
? $65 million higher CPUC base operating margin, net of operating expenses,

including $36 million lower CPUC base operating margin in 2019 due to the delay

in the issuance of the 2019 GRC FD;

? $38 million higher electric transmission margin, including the following

impacts from the March 2020 FERC-approved TO5 settlement proceeding:

• $18 million to conclude a rate base matter, and

• $9 million favorable impact from the retroactive application of the final TO5

settlement for 2019. The settlement proceeding increased SDG&E's authorized

ROE from 10.05% to 10.60%, effective June 1, 2019; and

? $9 million higher AFUDC equity; offset by

? $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; and

? $6 million amortization of Wildfire Fund asset.

SoCalGas

The increase in earnings of $39 million (15%) in the three months ended March
31, 2020 was primarily due to:
? $109 million higher CPUC base operating margin, net of operating expenses,

including $84 million lower CPUC base operating margin in 2019 due to the delay

in the issuance of the 2019 GRC FD;

? $21 million higher income tax benefits from flow-through items; and

? $8 million penalties in 2019 related to the SoCalGas billing practices OII;

offset by

? $72 million from impacts associated with Aliso Canyon natural gas storage

facility litigation; and

? $35 million income tax benefit in 2019 from the impact of the January 2019 CPUC

decision allocating certain excess deferred income tax balances to

shareholders.

Sempra Texas Utilities
The increase in earnings of $11 million (12%) in the three months ended March
31, 2020 was primarily due to higher equity earnings from Oncor Holdings in
2020, driven mainly by the impact of Oncor's acquisition of InfraREIT, Inc. in
May 2019 and higher revenues due to rate updates to reflect increases in
invested transmission capital, partially offset by higher operating costs and
lower consumption due to weather.

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Sempra Mexico
The increase in earnings of $134 million in the three months ended March 31,
2020 was primarily due to:
? $253 million favorable impact from foreign currency and inflation effects net

of foreign currency derivatives effects, comprised of:

• in 2020, $326 million favorable foreign currency and inflation effects,

offset by a $91 million loss from foreign currency derivatives, and

• in 2019, $25 million unfavorable foreign currency and inflation effects,

offset by a $7 million gain from foreign currency derivatives; and

? $8 million primarily due to the start of commercial operations of the Sur de

Texas-Tuxpan marine pipeline at IMG JV in the third quarter of 2019; offset by

? $144 million earnings attributable to NCI at IEnova in 2020 compared to $28

million earnings in 2019; and

? $9 million lower earnings at the Guaymas-El Oro segment of the Sonora pipeline

primarily from force majeure payments that ended in August 2019.

Sempra Renewables
As we discuss in Note 5 of the Notes to Consolidated Financial Statements in the
Annual Report, Sempra Renewables sold its remaining wind assets and investments
in April 2019, upon which date the segment ceased to exist.
Sempra LNG
The increase in earnings of $70 million in the three months ended March 31, 2020
was primarily due to:
? $43 million higher equity earnings from Cameron LNG JV primarily due to Train 1

and Train 2 commencing commercial operations under their tolling agreements in

August 2019 and February 2020, respectively; and

? $42 million higher earnings from Sempra LNG's marketing operations primarily

driven by changes in natural gas prices; offset by

? $5 million higher liquefaction project development costs.

Parent and Other
The increase in losses of $131 million in the three months ended March 31, 2020
was primarily due to:
? $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 11

of the Notes to Condensed Consolidated Financial Statements; and

? $19 million net investment losses in 2020 compared to $15 million net

investment gains in 2019 on dedicated assets in support of our employee

nonqualified benefit plan and deferred compensation obligations.

Discontinued Operations
Discontinued operations that were previously in our Sempra South American
Utilities segment include our 100% interest in Chilquinta Energía in Chile, our
83.6% interest in Luz del Sur in Peru and our interests in two energy-services
companies, Tecnored and Tecsur, which provide electric construction and
infrastructure services to Chilquinta Energía and Luz del Sur, respectively, as
well as third parties. Discontinued operations also include activities, mainly
income taxes related to the South American businesses, that were previously
included in the holding company of the South American businesses at Parent and
other.
Earnings of $72 million in the three months ended March 31, 2020 compared to
losses of $51 million for the same period in 2019 was primarily due to the
following income tax impacts resulting from changes in outside basis differences
in our South American businesses:
? $103 million income tax expense in 2019 related to outside basis differences

existing as of the January 25, 2019 approval of our plan to sell our South

American businesses; and

? $7 million income tax benefit in 2020 compared to $13 million income tax

expense in 2019 related to changes in outside basis differences from earnings

  and foreign currency effects since January 25, 2019.



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SIGNIFICANT CHANGES IN REVENUES, COSTS AND EARNINGS
This section contains a discussion of the differences between periods in the
specific line items of the Condensed Consolidated Statements of Operations for
Sempra Energy, SDG&E and SoCalGas.
Utilities Revenues
Our utilities revenues include natural gas revenues at our California Utilities
and Sempra Mexico's Ecogas and electric revenues at SDG&E. Intercompany revenues
included in the separate revenues of each utility are eliminated in the Sempra
Energy Condensed Consolidated Statements of Operations.
SoCalGas and SDG&E currently operate under a regulatory framework that permits:
? The cost of natural gas purchased for core customers (primarily residential and

small commercial and industrial customers) to be passed through to customers in

rates substantially as incurred. However, SoCalGas' GCIM provides SoCalGas the

opportunity to share in the savings and/or costs from buying natural gas for

its core customers at prices below or above monthly market-based benchmarks.

This mechanism permits full recovery of costs incurred when average purchase

costs are within a price range around the benchmark price. Any higher costs

incurred or savings realized outside this range are shared between the core

customers and SoCalGas. We provide further discussion in Note 3 of the Notes to

Consolidated Financial Statements and in "Item 1. Business - Ratemaking

Mechanisms" in the Annual Report.

? SDG&E to recover the actual cost incurred to generate or procure electricity

based on annual estimates of the cost of electricity supplied to customers. The

differences in cost between estimates and actual are recovered or refunded in

subsequent periods through rates.

? The California Utilities to recover certain expenses for programs authorized by

the CPUC, or "refundable programs."

Because changes in SoCalGas' and SDG&E's cost of natural gas and/or electricity
are recovered in rates, changes in these costs are offset in the changes in
revenues, and therefore do not impact earnings. In addition to the changes in
cost or market prices, natural gas or electric revenues recorded during a period
are impacted by customer billing cycles causing a difference between customer
billings and recorded or authorized costs. These differences are required to be
balanced over time, resulting in over- and undercollected regulatory balancing
accounts. We discuss balancing accounts and their effects further in Note 4 of
the Notes to Condensed Consolidated Financial Statements in this report and in
Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.
The California Utilities' revenues are decoupled from, or not tied to, actual
sales volumes. SoCalGas recognizes annual authorized revenue for core natural
gas customers using seasonal factors established in the Triennial Cost
Allocation Proceeding. Accordingly, a significant portion of SoCalGas' annual
earnings are recognized in the first and fourth quarters of each year. SDG&E's
authorized revenue recognition is also impacted by seasonal factors, resulting
in higher earnings in the third quarter when electric loads are typically higher
than in the other three quarters of the year. We discuss this decoupling
mechanism and its effects further in Note 3 of the Notes to Consolidated
Financial Statements in the Annual Report.

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The table below summarizes revenues and cost of sales for our consolidated
utilities.
UTILITIES REVENUES AND COST OF SALES
(Dollars in millions)
                                              Three months ended March 31,
                                                 2020               2019
Natural gas revenues:
SoCalGas                                   $       1,395       $       1,361
SDG&E                                                219                 205
Sempra Mexico                                         20                  27
Eliminations and adjustments                         (17 )               (17 )
Total                                              1,617               1,576
Electric revenues:
SDG&E                                              1,050                 940
Eliminations and adjustments                          (2 )                (1 )
Total                                              1,048                 939
Total utilities revenues                   $       2,665       $       2,515
Cost of natural gas:
SoCalGas                                   $         278       $         455
SDG&E                                                 60                  79
Sempra Mexico                                          3                   5
Eliminations and adjustments                          (4 )                (8 )
Total                                      $         337       $         531
Cost of electric fuel and purchased power:
SDG&E                                      $         231       $         

258

Eliminations and adjustments                          (2 )                (2 )
Total                                      $         229       $         256



Natural Gas Revenues and Cost of Natural Gas
The table below summarizes the average cost of natural gas sold by the
California Utilities and included in Cost of Natural Gas. The average cost of
natural gas sold at each utility is impacted by market prices, as well as
transportation, tariff and other charges.
CALIFORNIA UTILITIES AVERAGE COST OF NATURAL GAS
(Dollars per thousand cubic feet)
                                                           Three months ended March 31,
                                                              2020               2019
SoCalGas                                                $          2.54     $       3.85
SDG&E                                                              3.75             4.60

In the three months ended March 31, 2020, Sempra Energy's natural gas revenues increased by $41 million (3%) remaining at $1.6 billion primarily due to: ? $34 million increase at SoCalGas, which included:

• $181 million higher CPUC-authorized revenues, including $116 million lower

revenues in 2019 due to the delay in the issuance of the 2019 GRC FD, and

• $36 million higher recovery of costs associated with CPUC-authorized

refundable programs, which revenues are offset in O&M, offset by

• $177 million decrease in cost of natural gas sold, which we discuss below; and

? $14 million increase at SDG&E, which included:

• $29 million higher CPUC-authorized revenues, including $23 million lower

revenues in 2019 due to the delay in the issuance of the 2019 GRC FD, offset

by

• $19 million decrease in the cost of natural gas sold, which we discuss below.

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In the three months ended March 31, 2020, our cost of natural gas decreased by $194 million (37%) to $337 million primarily due to: ? $177 million decrease at SoCalGas due to $143 million from lower average

natural gas prices and $34 million from lower volumes driven by weather; and

? $19 million decrease at SDG&E due to lower average natural gas prices and lower

volumes driven by weather.

Electric Revenues and Cost of Electric Fuel and Purchased Power
In the three months ended March 31, 2020, our electric revenues, substantially
all of which are at SDG&E, increased by $109 million (12%) to $1.0 billion,
including:
? $67 million increase in transmission operations, including the following

impacts related to the March 2020 FERC-approved TO5 settlement proceeding:

• $26 million to settle a rate base matter, and

• $12 million favorable impact from the retroactive application of the final

TO5 settlement for 2019; and

? $55 million higher recovery of costs associated with CPUC-authorized refundable

programs, which revenues are offset in O&M; offset by

? $27 million lower cost of electric fuel and purchased power, which we discuss

below.

Our utility cost of electric fuel and purchased power, substantially all of
which is at SDG&E, decreased by $27 million (11%) to $229 million in the three
months ended March 31, 2020, primarily due to a decrease in residential demand
primarily from an increase in rooftop solar adoption.
Energy-Related Businesses: Revenues and Cost of Sales
The table below shows revenues and cost of sales for our energy-related
businesses.
ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES
(Dollars in millions)
                                      Three months ended March 31,
                                         2020                2019
REVENUES
Sempra Mexico                      $        289         $        356
Sempra Renewables                             -                    7
Sempra LNG                                  123                  141
Parent and other(1)                         (48 )               (121 )
Total revenues                     $        364         $        383
COST OF SALES(2)
Sempra Mexico                      $         69         $        121
Sempra LNG                                   39                  103
Parent and other(1)                         (49 )               (116 )
Total cost of sales                $         59         $        108


(1)  Includes eliminations of intercompany activity.

(2) Excludes depreciation and amortization, which are presented separately on

the Sempra Energy Condensed Consolidated Statements of Operations.

In the three months ended March 31, 2020, revenues from our energy-related businesses decreased by $19 million (5%) to $364 million primarily due to: ? $67 million decrease at Sempra Mexico primarily due to:

• $49 million from the marketing business primarily from lower natural gas

prices and volumes,

• $26 million lower revenues at TdM primarily due to lower natural gas prices

and volumes, and

• $10 million lower revenues primarily from force majeure payments that ended

in August 2019 with respect to the Guaymas-El Oro segment of the Sonora

pipeline, offset by

• $14 million increase primarily due to higher volumes at the Ventika wind

    power generation facilities and from renewable assets placed in service in
    2019; and

? $18 million decrease at Sempra LNG primarily due to:

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• $55 million lower natural gas sales to Sempra Mexico due to lower natural gas

prices and volumes and from fewer LNG cargoes sold, offset by

• $44 million increase from natural gas marketing operations primarily due to

changes in natural gas prices; offset by

? $73 million increase primarily from lower intercompany eliminations associated

with sales between Sempra LNG and Sempra Mexico.

In the three months ended March 31, 2020, the cost of sales for our energy-related businesses decreased by $49 million (45%) to $59 million primarily due to: ? $64 million decrease at Sempra LNG mainly from natural gas marketing activities

primarily from lower natural gas purchases; and

? $52 million decrease at Sempra Mexico mainly associated with lower revenues

from the marketing business and TdM as a result of lower natural gas prices and

volumes; offset by

? $67 million increase primarily from lower intercompany eliminations associated

with sales between Sempra LNG and Sempra Mexico.

Operation and Maintenance
Our O&M increased by $119 million (14%) to $951 million in the three months
ended March 31, 2020 primarily due to:
? $133 million increase at SoCalGas primarily due to:

• $100 million from impacts associated with Aliso Canyon natural gas storage

facility litigation, and

• $36 million higher expenses associated with CPUC-authorized refundable

programs for which costs incurred are recovered in revenue; and

? $24 million increase at SDG&E primarily due to:

• $57 million higher expenses associated with CPUC-authorized refundable

programs, offset by

• $31 million lower non-refundable operating costs, including liability

insurance premium costs for 2019 that were not balanced due to the delay in

the 2019 GRC FD; offset by

? $36 million decrease at Parent and other primarily from lower deferred

compensation expense.

Other (Expense) Income, Net
As part of our central risk management function, we enter into foreign currency
derivatives to hedge Sempra Mexico parent's exposure to movements in the Mexican
peso from its controlling interest in IEnova. The gains/losses associated with
these derivatives are included in Other (Expense) Income, Net, as described
below, and partially mitigate the transactional effects of foreign currency and
inflation included in Income Tax Benefit (Expense) for Sempra Mexico's
consolidated entities and in Equity Earnings for Sempra Mexico's equity method
investments. We also utilize foreign currency derivatives to hedge exposure to
fluctuations in the Peruvian sol and Chilean peso related to the sale of our
operations in Peru and Chile, respectively. We discuss policies governing our
risk management in "Item 7A. Quantitative and Qualitative Disclosures About
Market Risk" in the Annual Report.
Other expense, net, in the three months ended March 31, 2020 was $254 million
compared to other income, net, of $82 million in the same period in 2019. The
change was primarily due to:
? $276 million net losses in 2020 from interest rate and foreign exchange

instruments and foreign currency transactions compared to net gains of $20

million for the same period in 2019 primarily due to:

• $149 million foreign currency losses in 2020 compared to $10 million foreign

currency gains in 2019 on a Mexican peso-denominated loan to IMG JV, which is

offset in Equity Earnings, and

• $125 million losses in 2020 compared to $10 million gains in 2019 on foreign

currency derivatives as a result of fluctuation of the Mexican peso, offset

by

• $11 million net gains in 2020 of foreign currency derivatives used to hedge

exposure to fluctuations in the Peruvian sol and Chilean peso related to the

sale of our operations in Peru and Chile; and

? $37 million investment losses in 2020 compared to $26 million investment gains

in 2019 on dedicated assets in support of our executive retirement and deferred

compensation plans; offset by

? $8 million in penalties in 2019 related to the SoCalGas billing practices OII.

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Income Taxes
The table below shows the income tax expense and ETRs for Sempra Energy
Consolidated, SDG&E and SoCalGas.
INCOME TAX (BENEFIT) EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
                                                                  Three months ended March 31,
                                                                     2020                 2019

Sempra Energy Consolidated: Income tax (benefit) expense from continuing operations $ (207 ) $ 42

Income from continuing operations before income taxes and equity earnings

                                               $         397           $       501
Equity (losses) earnings, before income tax(1)                          (43 )                   5
Pretax income                                                 $         354           $       506

Effective income tax rate                                               (58 )%                  8 %
SDG&E:
Income tax expense                                            $          58           $         5
Income before income taxes                                    $         320           $       182
Effective income tax rate                                                18  %                  3 %
SoCalGas:
Income tax expense                                            $          52           $        19
Income before income taxes                                    $         355           $       283
Effective income tax rate                                                15  %                  7 %


(1)  We discuss how we recognize equity earnings in Note 6 of the Notes to
     Consolidated Financial Statements in the Annual Report.


Sempra Energy Consolidated
Income tax benefit in the three months ended March 31, 2020 compared to an
income tax expense in the same period in 2019 was due to a lower ETR and lower
pretax income. The change in ETR was primarily due to:
? $308 million income tax benefit in 2020 compared to $23 million income tax

expense in 2019 from foreign currency and inflation effects primarily as a

result of fluctuation of the Mexican peso; and

? $19 million income tax benefit in 2020 compared to $8 million income tax

expense in 2019 related to share-based compensation; offset by

? $66 million total income tax benefits in 2019 from the release of regulatory

liabilities at SDG&E and SoCalGas established in connection with 2017 tax

reform for excess deferred income tax balances that the CPUC directed be

allocated to shareholders in a January 2019 decision; and

? $10 million income tax benefit in 2019 from a reduction in a valuation

allowance against certain NOL carryforwards as a result of our decision to sell

our South American businesses.

We discuss the impact of foreign currency exchange rates and inflation on income
taxes below in "Impact of Foreign Currency and Inflation Rates on Results of
Operations." See Note 1 of the Notes to Condensed Consolidated Financial
Statements in this report and Notes 1 and 8 of the Notes to Consolidated
Financial Statements in the Annual Report for further details about our
accounting for income taxes and items subject to flow-through treatment.
SDG&E
The increase in SDG&E's income tax expense in the three months ended March 31,
2020 was due to a higher ETR and higher pretax income. The change in ETR was
primarily due to $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 be allocated to shareholders
in a January 2019 decision.
SoCalGas
The increase in SoCalGas' income tax expense in the three months ended March 31,
2020 was due to a higher ETR and higher pretax income. The change in ETR was
primarily due to $35 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 be allocated to shareholders
in a January 2019 decision.

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Equity Earnings
In the three months ended March 31, 2020, equity earnings increased by $162
million to $263 million primarily due to:
? $171 million higher equity earnings at IMG JV, primarily due to foreign

currency effects, including $149 million foreign currency gains in 2020

compared to $10 million foreign currency losses in 2019 on IMG JV's Mexican

peso-denominated loans from its JV owners, which is fully offset in Other

(Expense) Income, Net, and the start of commercial operations of the Sur de

Texas-Tuxpan marine pipeline;

? $55 million higher equity earnings at Cameron LNG JV primarily due to Train 1

and Train 2 commencing commercial operations under their tolling agreements in

August 2019 and February 2020, respectively; and

? $21 million higher equity earnings at TAG JV primarily due to higher income tax

benefits in 2020; offset by

? $100 million equity losses at RBS Sempra Commodities in 2020, which represents

an estimate of our obligations to settle pending tax matters and related legal

costs at our equity method investment.

Earnings Attributable to Noncontrolling Interests
Earnings attributable to NCI increased by $110 million to $151 million in the
three months ended March 31, 2020 primarily due to an increase in earnings
attributable to NCI at Sempra Mexico primarily from foreign currency effects as
a result of fluctuation of the Mexico peso.
IMPACT OF FOREIGN CURRENCY AND INFLATION RATES ON RESULTS OF OPERATIONS
Because operations in South America and our natural gas distribution utility in
Mexico use their local currency as their functional currency, revenues and
expenses are translated into U.S. dollars at average exchange rates for the
period for consolidation in Sempra Energy Consolidated's results of operations.
We discuss further the impact of foreign currency and inflation rates on results
of operations, including impacts on income taxes and related hedging activity,
in "Item 7. MD&A - Impact of Foreign Currency and Inflation Rates on Results of
Operations" in the Annual Report.
Foreign Currency Translation
Any difference in average exchange rates used for the translation of income
statement activity from year to year can cause a variance in Sempra Energy
Consolidated's comparative results of operations. Changes in foreign currency
translation rates between periods resulted in $4 million lower earnings within
discontinued operations in the first three months of 2020 compared to the same
period in 2019.
Transactional Impacts
Income statement activities at our foreign operations and their JVs are also
impacted by transactional gains and losses, a summary of which is shown in the
table below:
TRANSACTIONAL (LOSSES) GAINS FROM FOREIGN CURRENCY AND INFLATION
(Dollars in millions)
                                                                            

Transactional (losses) gains included

                                           Total reported amounts                    in reported amounts
                                                              Three months ended March 31,
                                           2020              2019                 2020                  2019
Other (expense) income, net           $      (254 )     $        82        $        (276 )         $          20
Income tax benefit (expense)                  207               (42 )                308                     (23 )
Equity earnings                               263               101                  181                     (12 )
Income from continuing operations,
net of income tax                             867               560                  242                     (18 )
Income (loss) from discontinued
operations, net of income tax                  80               (42 )                 16                       -
Earnings attributable to common
shares                                        760               441                  150                     (10 )



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CAPITAL RESOURCES AND LIQUIDITY
OVERVIEW
The COVID-19 Pandemic
On March 11, 2020, the World Health Organization declared the COVID-19 outbreak
to be a pandemic. President Donald Trump officially declared a national
emergency on March 13, 2020. The COVID-19 pandemic is causing a significant
impact on the economy and people's livelihoods, including substantial volatility
and erosion of value in financial markets and a historic surge in unemployment
claims while individuals adhere to shelter-in-place mandates and practice social
distancing, and has resulted in sweeping action by governments and other
authorities to help address these effects. The following describes some of these
government actions and their current and anticipated impact on our businesses:
? On March 4, 2020, Governor Gavin Newsom proclaimed a State of Emergency in

California as a result of the threat of COVID-19, and on March 19, 2020, the

Governor imposed a California-wide shelter-in-place directive via an Executive

Order that will remain in place indefinitely. The Governor's Executive Order

requires all individuals living in California to stay home or at their place of

residence except as needed to maintain the continuity of 16 critical

infrastructure sectors. Our businesses that invest in, develop and operate

energy infrastructure and provide electric and gas services to customers in

California have been identified as critical infrastructure under the Executive

Order.

? On March 13, 2020, the California Utilities announced that they were

voluntarily instituting a suspension of all customer disconnections for

nonpayment of customer bills until further notice.

? On March 17, 2020, the CPUC announced that, retroactive to March 4, 2020, all

energy companies under its jurisdiction, including the California Utilities,

should take action to implement several emergency customer protection measures

to support California customers. The measures 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 for all customers experiencing difficulty

paying their electric or gas bills. Similarly, on March 26, 2020, the PUCT

issued orders that require retail electric providers to offer a deferred

payment plan to customers, upon request, and authorized customer assistance

programs for certain residential customers of electric service. The

continuation of these circumstances could result in a material reduction in

payments received from our customers and a material increase in uncollectible

accounts that we may not be able to recover in rates, which could have a

material adverse effect on the cash flows, financial condition and results of

operations for Sempra Energy, SDG&E and SoCalGas.

? On March 30, 2020, the Mexican government announced a national state of

sanitary emergency, suspending all non-essential activities and urging people

in Mexico to stay at home until April 30, 2020, which was subsequently extended

to May 30, 2020 and may be extended further. Essential business activities that

may continue to operate during the health emergency include the conservation,

maintenance and repair of critical infrastructure that ensures the production

and distribution of electric and gas services.

? On April 16, 2020, the CPUC approved a resolution authorizing each of the

California Utilities to establish a CPPMA to track and request recovery of

incremental costs associated with complying with measures implemented by the

CPUC related to the COVID-19 pandemic. Although we are tracking these costs,

which will include incremental amounts associated with customer nonpayments,

CPUC approval is required to collect all or any portion of the balance of the

CPPMA, which is not assured. Similarly, the PUCT has provided for the use of a

regulatory asset accounting mechanism and a subsequent process through which

regulated utility companies may seek future recovery of expenses resulting from

the effects of the COVID-19 pandemic, as well as the creation of a COVID-19

Electricity Relief Program fund through which transmission and distribution

utilities and retail electric providers may seek to recover a reasonable

portion of the cost of providing uninterrupted services to customers facing

financial hardship due to the effects of the COVID-19 pandemic. There can be no

assurance, however, that our Texas utilities will be able to recover any of the

costs they incur from their response to the COVID-19 pandemic through these

programs or otherwise.

? On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act

(CARES Act) was enacted and signed into law in response to the COVID-19

pandemic. The CARES Act contains significant business tax provisions, including

a delay of payment of employer payroll taxes and an acceleration of refunds of

corporate alternative minimum tax (AMT) credits. Sempra Energy, SDG&E and

SoCalGas expect to benefit from deferring payment of the employer's share of

payroll taxes through the end of 2020, with half of such taxes to be paid by

the end of 2021 and the other half to be paid by the end of 2022. Sempra Energy

has filed a refund claim for its corporate AMT credits and expects to receive

approximately $56 million in 2020 rather than in installments through 2021.

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In addition, we and other companies, including our partners, are taking steps to
try to protect the health and well-being of our employees and other
stakeholders. As our businesses continue to operate, our priority is the safety
of our employees, customers, partners and the communities we serve. For example,
we have activated our business continuity plans and continue to work closely
with local, state and federal authorities to provide essential services with
minimum interruption to customers and in accordance with applicable
shelter-in-place orders. We have implemented precautionary measures across our
businesses, including requiring employees to work remotely when possible,
restricting non-essential business travel, increasing facility sanitization and
communicating proper health and safety protocols to employees. Additionally,
SDG&E announced that it is postponing all noncritical planned outages, while
continuing with those related to public safety, emergencies and wildfire
mitigation, to try to protect employees and maintain service to customers as
seamlessly as possible. We also have engaged an infectious disease expert to
advise us during this public health crisis. Through the end of the first quarter
of 2020, these actions have not required significant outlays of capital and have
not had a material impact on our results of operations, but these or other
measures that we may implement in the future could have a substantial effect on
our liquidity, cash flows, financial position and results of operations if
circumstances related to the COVID-19 pandemic worsen or continue for an
extended period of time.
The COVID-19 pandemic and its widespread effects may also impact our capital
plans, liquidity and asset values. For example:
? Our capital projects and planned expenditures could experience delays due to

the COVID-19 pandemic, either because we decide to postpone certain activities

in an effort to preserve cash or other resources or for other reasons related

to the pandemic that are beyond our control, including supply chain and

contractor performance delays or delays in the issuance of required permits.

Any such delay could have a material effect on our capital plans and results of

operations. We discuss the potential for these delays in further detail with

respect to each of our segments below.

? The decline and volatility in the financial markets has had a significant

impact on certain of the markets that we typically access for working capital

and other liquidity requirements. See the discussion in "Liquidity" below for

more information.

? We have significant investments in several trusts to provide for future

payments of pensions and other postretirement benefits and nuclear

decommissioning. Although all of our trust funds' investments are diversified

and managed in compliance with applicable laws and regulations, the value of

the investments in these trusts declined significantly in the second half of

the first quarter of 2020 due to a decline in the equity markets and volatility

in the fixed income market triggered by the COVID-19 pandemic. These markets

continue to be volatile. The decrease in asset values has not affected the

funds' ability to make their required payments; however, this could change if

conditions worsen or continue for an extended period. Moreover, if asset values

do not recover, our funding requirements for pension and other postretirement

benefit plans in 2021 may increase. Other factors may also impact funding

requirements for pension and other postretirement benefit plans, including

changes to discount rates, assumed rates of return, mortality tables and

regulations. Funding requirements for SDG&E's NDT could be impacted by the

value of the assets as well as the timing and amount of SONGS decommissioning

costs. At the California Utilities, funding requirements are generally

recoverable in rates. We discuss our employee benefit plans and SDG&E's NDT,

including our investment allocation strategies for assets in these trusts, in

Notes 9 and 15, respectively, of the Notes to Consolidated Financial Statements

in the Annual Report.

? We perform recovery testing of our recorded asset values when market conditions

indicate that such values may not be recoverable. Given the current economic

environment, including the significant decline in the price of our common

stock, market volatility and potential reduction in customer collections, we

considered whether these events or changes in circumstances triggered the need

for an interim impairment analysis for our long-lived assets, intangible assets

and goodwill. We determined that, given the existing headroom in our prior

quantitative tests and assessment of the impact of these conditions on our

businesses, there was no triggering event as of March 31, 2020. However, as the

effects of the COVID-19 pandemic continue to evolve, we will continue to assess

the need to perform an interim impairment test. To the extent the recorded

(carrying) value is in excess of the fair value, we would record a noncash

impairment charge. A significant impairment charge related to our long-lived

assets, intangible assets or goodwill would have a material adverse effect on

our results of operations in the period in which it is recorded.

For a further discussion of risks and uncertainties related to the COVID-19
pandemic, see below in "Item 1A. Risk Factors."
Liquidity
We expect to meet our cash requirements through cash flows from operations,
unrestricted cash and cash equivalents, proceeds from recent and planned asset
sales, borrowings under our credit facilities, distributions from our equity
method investments, issuances of debt, project financing and partnering in JVs.
We believe that these cash flow sources, combined with available funds, will be
adequate to fund our current operations, including to:
? finance capital expenditures

? meet liquidity requirements

? fund dividends

? fund new business or asset acquisitions or start-ups

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? fund capital contribution requirements

? repay maturing long-term debt

? fund expenditures related to the natural gas leak at SoCalGas' Aliso Canyon

natural gas storage facility

Sempra Energy and the California Utilities currently have reasonable access to
the long-term debt markets and are not currently constrained in any significant
way in their ability to borrow money at reasonable rates from commercial banks,
under existing revolving credit facilities or through public offerings
registered with the SEC. There have been, however, substantial disruptions
caused by the COVID-19 pandemic in the commercial paper markets during the
second half of the first quarter of 2020, which have historically been a primary
source of working capital for Sempra Energy and the California Utilities. In
addition, the capital markets in general and the availability of financing from
commercial banks also have shown periods of significant distress in the second
half of the first quarter of 2020 due to the COVID-19 pandemic, and our ability
to access the capital markets or obtain credit from commercial banks outside of
our committed revolving credit facilities could become materially constrained,
especially if these conditions worsen or continue for an extended period. In
addition, our financing activities and actions by credit rating agencies, as
well as many other factors, could negatively affect the availability and cost of
both short-term and long-term financing. Also, cash flows from operations may be
impacted by the timing of commencement and completion, and potentially cost
overruns, of large projects. If cash flows from operations were to be
significantly reduced or we were unable to borrow under acceptable terms, we
would likely first reduce or postpone discretionary capital expenditures (not
related to safety) and investments in new businesses. We monitor our ability to
finance the needs of our operating, investing and financing activities in a
manner consistent with our intention to maintain our investment-grade credit
ratings and capital structure.
Available Funds
Our committed lines of credit provide liquidity and support commercial paper. As
we discuss in Note 7 of the Notes to Condensed Consolidated Financial
Statements, Sempra Energy, Sempra Global, SDG&E and SoCalGas each have five-year
credit agreements expiring in 2024. The table below shows the amount of
available funds at March 31, 2020, including available unused credit on these
primary U.S. credit facilities. In addition, IEnova has $1.9 billion in lines of
credit, with approximately $136 million available unused credit at March 31,
2020.
AVAILABLE FUNDS AT MARCH 31, 2020
(Dollars in millions)
                                           Sempra Energy
                                            Consolidated      SDG&E     

SoCalGas

Unrestricted cash and cash equivalents(1) $ 2,247 $ 203 $

389

Available unused credit(2)(3)                       4,010     1,300         

750

(1) Amounts at Sempra Energy Consolidated include $542 million held in non-U.S.

jurisdictions. We discuss repatriation in Note 1 of the Notes to Condensed

Consolidated Financial Statements.

(2) Available unused credit is the total available on Sempra Energy's, Sempra

Global's, SDG&E's and SoCalGas' credit facilities that we discuss in Note 7

of the Notes to Condensed Consolidated Financial Statements.

(3) Because the commercial paper programs are supported by these lines, we

reflect the amount of commercial paper outstanding as a reduction to the

     available unused credit.


Short-Term Borrowings
We use short-term debt primarily to meet liquidity requirements, fund
shareholder dividends, and temporarily finance capital expenditures,
acquisitions or start-ups. Our California Utilities use short-term debt
primarily to meet working capital needs. Commercial paper, revolving lines of
credit and term loans were our primary sources of short-term debt funding in the
first quarter of 2020. In an effort to protect our liquidity in light of the
COVID-19 pandemic, Sempra Energy, Sempra Global, SDG&E, SoCalGas and IEnova each
drew amounts under their respective credit facilities in the first quarter of
2020, a substantial portion of which were repaid through terms loans obtained in
the first quarter of 2020 by Sempra Energy and SDG&E. As we discuss in Note 7 of
the Notes to Condensed Consolidated Financial Statements, Sempra Energy and
SDG&E obtained 364-day term loans with aggregate principal amounts outstanding
at March 31, 2020, of $1,525 million and $200 million, respectively. At March
31, 2020, SDG&E classified a total of $400 million of its then outstanding
revolving line of credit and term loan as long-term debt based on management's
intent and ability to maintain this level of borrowing on a long-term basis. In
April 2020, SDG&E completed a $400 million public offering of first mortgage
bonds maturing in 2050 and repaid the amounts borrowed under its revolving line
of credit. On April 1, 2020, Sempra Energy borrowed an additional $75 million
under its term loan.

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Credit Ratings
We provide additional information about the credit ratings of Sempra Energy,
SDG&E and SoCalGas in "Item 1A. Risk Factors" and "Item 2. MD&A - Capital
Resources and Liquidity" in the Annual Report.
The credit ratings of Sempra Energy, SDG&E and SoCalGas remained at investment
grade levels in the first three months of 2020.
CREDIT RATINGS AT MARCH 31, 2020

                      Sempra Energy              SDG&E                 SoCalGas
                   Baa1 with a negative   Baa1 with a positive    A1 with a negative
Moody's                  outlook                outlook                outlook
                   BBB+ with a negative    BBB+ with a stable     A with a negative
S&P                      outlook                outlook                outlook
                    BBB+ with a stable     BBB+ with a stable      A with a stable
Fitch                    outlook                outlook                outlook


Our credit ratings may affect the rates at which borrowings bear interest and
the commitment fees on available unused credit. A downgrade of Sempra Energy's
or any of its subsidiaries' credit ratings or rating outlooks may result in a
requirement for collateral to be posted in the case of certain financing
arrangements and may materially and adversely affect the market prices of their
equity and debt securities, the rates at which borrowings are made and
commercial paper is issued, and the various fees on their outstanding credit
facilities. This could make it more costly for Sempra Energy, SDG&E, SoCalGas
and Sempra Energy's other subsidiaries to issue debt securities, to borrow under
credit facilities and to raise certain other types of financing.
Sempra Energy has agreed that, if the credit rating of Oncor's senior secured
debt by any of the three major rating agencies falls below BBB (or the
equivalent), Oncor will suspend dividends and other distributions (except for
contractual tax payments), unless otherwise allowed by the PUCT. Oncor's senior
secured debt was rated A2, A+ and A at Moody's, S&P and Fitch, respectively, at
March 31, 2020.
On April 15, 2020, Moody's placed Sempra Energy on review for downgrade.
Loans to/from Affiliates
At March 31, 2020, Sempra Energy had $615 million in loans to unconsolidated
affiliates and $263 million in loans from unconsolidated affiliates.
California Utilities
SDG&E's and SoCalGas' operations have historically provided relatively stable
earnings and liquidity. Their future performance will depend primarily on the
ratemaking and regulatory process, environmental regulations, economic
conditions, actions by the California legislature and the changing energy
marketplace, as well as the other matters described in this report.
SDG&E and SoCalGas expect that the available unused credit from their credit
facilities described above, cash flows from operations, and debt issuances will
continue to be adequate to fund their respective current operations and planned
capital expenditures. The California Utilities are continuing to monitor the
impacts of the COVID-19 pandemic on cash flows and results of operations. Some
of our customers will likely experience diminished ability to pay their electric
or gas bills, leading to slower payments and higher levels of nonpayment than
has been the case historically. These impacts could be significant and could
require modifications to our financing plans. The California Utilities manage
their capital structure and pay dividends when appropriate and as approved by
their respective boards of directors.
As we discuss in Note 4 of the Notes to Condensed Consolidated Financial
Statements in this report and in Note 4 of the Notes to Consolidated Financial
Statements in the Annual Report, changes in balancing accounts for significant
costs at SDG&E and SoCalGas, particularly a change between over- and
undercollected status, including commodity and transportation balancing
accounts, may have a significant impact on cash flows. These changes generally
represent the difference between when costs are incurred and when they are
ultimately recovered in rates through billings to customers.

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SDG&E

Wildfire Fund
In 2019, SDG&E recorded a Wildfire Fund asset for committed shareholder
contributions to the Wildfire Fund. We describe the Wildfire Legislation and
related accounting treatment in Note 1 of the Notes to Consolidated Financial
Statements in the Annual Report.
SDG&E is exposed to the risk that the participating California electric IOUs may
incur third-party wildfire claims for which they will seek recovery from the
Wildfire Fund. In such a situation, SDG&E may recognize a reduction of its
Wildfire Fund asset and record a charge against earnings in the period when
there is a reduction of the available coverage due to recoverable claims from
the IOUs. As a result, if any California electric IOU's equipment is determined
to be a cause of a fire, it could have a material adverse effect on SDG&E's and
Sempra Energy's financial condition and results of operations up to the carrying
value of our Wildfire Fund asset. In addition, the Wildfire Fund could be
completely exhausted due to fires in the other California electric IOUs' service
territories, by fires in SDG&E's service territory or by a combination thereof.
In the event that the Wildfire Fund is materially diminished, exhausted or
terminated, SDG&E will lose the protection afforded by the Wildfire Fund, and as
a consequence, a fire in SDG&E's service territory could cause a material
adverse effect on SDG&E's and Sempra Energy's cash flows, results of operations
and financial condition.
SoCalGas
SoCalGas' performance will also depend on the resolution of legal, regulatory
and other matters concerning the Leak at the Aliso Canyon natural gas storage
facility, which we discuss further in Note 11 of the Notes to Condensed
Consolidated Financial Statements in this report, and in "Item 1A. Risk Factors"
in the Annual Report.
Aliso Canyon Natural Gas Storage Facility Gas Leak
From October 23, 2015, through February 11, 2016, SoCalGas experienced a natural
gas leak from one of the injection-and-withdrawal wells, SS25, at its Aliso
Canyon natural gas storage facility located in Los Angeles County. In February
2016, CalGEM confirmed that the well was permanently sealed.
Cost Estimates, Accounting Impact and Insurance. At March 31, 2020, SoCalGas
estimates the costs related to the Leak are $1,408 million (the cost estimate).
This cost estimate may increase significantly as more information becomes
available. A substantial portion of the cost estimate has been paid, and $284
million is accrued as Reserve for Aliso Canyon Costs and $6 million is accrued
in Deferred Credits and Other as of March 31, 2020 on SoCalGas' and Sempra
Energy's Condensed Consolidated Balance Sheets.
Except for the amounts paid or estimated to settle certain actions, the cost
estimate does not include all litigation or regulatory costs to the extent it is
not possible to predict at this time the outcome of these actions or reasonably
estimate the costs to defend or resolve the actions or the amount of damages,
restitution, or civil, administrative or criminal fines, sanctions, penalties or
other costs or remedies that may be imposed or incurred. The cost estimate also
does not include certain other costs incurred by Sempra Energy associated with
defending against shareholder derivative lawsuits and other potential costs that
we currently do not anticipate incurring or that we cannot reasonably estimate.
These costs not included in the cost estimate could be significant and could
have a material adverse effect on SoCalGas' and Sempra Energy's cash flows,
financial condition and results of operations.
We have received insurance payments for many of the costs included in the cost
estimate, including temporary relocation and associated processing costs,
control-of-well expenses, costs of the government-ordered response to the Leak,
certain legal costs and lost gas. We intend to pursue the full extent of our
insurance coverage for the costs we have incurred. Other than directors' and
officers' liability insurance, after taking into consideration the additional
accrual related to litigation matters described in Note 11 of the Notes to
Condensed Consolidated Financial Statements, we have effectively exhausted all
of our insurance in this matter, except as to certain defense costs we may incur
in the future, including those related to the shareholder derivative lawsuits.
We continue to pursue other sources of insurance coverage for costs related to
this matter, but we may not be successful in obtaining additional insurance
recovery for any of these costs. If we are not able to secure additional
insurance recovery for all or a substantial portion of these costs, if any costs
we have recorded as an insurance receivable are not collected, if there are
delays in receiving insurance recoveries, or if the insurance recoveries are
subject to income taxes while the associated costs are not tax deductible, such
amounts, which could be significant, could have a material adverse effect on
SoCalGas' and Sempra Energy's cash flows, financial condition and results of
operations.

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As of March 31, 2020, we recorded the expected recovery of the cost estimate
related to the Leak of $511 million as Insurance Receivable for Aliso Canyon
Costs on SoCalGas' and Sempra Energy's Condensed Consolidated Balance Sheets.
This amount is exclusive of insurance retentions and $766 million of insurance
proceeds we received through March 31, 2020. If we were to conclude that this
receivable or a portion of it is no longer probable of recovery from insurers,
some or all of this receivable would be charged against earnings, which could
have a material adverse effect on SoCalGas' and Sempra Energy's cash flows,
financial condition and results of operations.
Natural Gas Storage Operations and Reliability. Natural gas withdrawn from
storage is important for service reliability during peak demand periods,
including peak electric generation needs in the summer and heating needs in the
winter. The Aliso Canyon natural gas storage facility is the largest SoCalGas
storage facility and an important element of SoCalGas' delivery system. As a
result of the Leak, SoCalGas suspended injection of natural gas into the Aliso
Canyon natural gas storage facility beginning in October 2015 and, following a
comprehensive safety review and authorization by CalGEM and the CPUC's Executive
Director, resumed limited injection operations in July 2017.
During the suspension period, SoCalGas advised the California ISO, California
Energy Commission, CPUC and Pipeline and Hazardous Materials Safety
Administration of its concerns that the inability to inject natural gas into the
Aliso Canyon natural gas storage facility posed a risk to energy reliability in
Southern California. The CPUC has issued a series of directives to SoCalGas
specifying the range of working gas to be maintained in the Aliso Canyon natural
gas storage facility as well as protocols for the withdrawal of gas, to help
ensure safe and reliable natural gas service, while helping to maintain stable
energy prices in Southern California. Limited withdrawals of natural gas from
the facility were made in 2018, 2019 and 2020 to augment natural gas supplies
during critical demand periods.
In February 2017, the CPUC opened a proceeding pursuant to SB 380 to determine
the feasibility of minimizing or eliminating the use of the Aliso Canyon natural
gas storage facility. If the Aliso Canyon natural gas storage facility were to
be permanently closed, or if future cash flows from its operation were otherwise
insufficient to recover its carrying value, it could result in an impairment of
the facility and significantly higher than expected operating costs and/or
additional capital expenditures, and natural gas reliability and electric
generation could be jeopardized. At March 31, 2020, the Aliso Canyon natural gas
storage facility had a net book value of $771 million. Any significant
impairment of this asset, or higher operating costs and additional capital
expenditures incurred by SoCalGas that may not be recoverable in customer rates,
could have a material adverse effect on SoCalGas' and Sempra Energy's results of
operations, financial condition and cash flows.
Sempra Texas Utilities
Oncor's business is capital intensive, and it relies on external financing as a
significant source of liquidity for its capital requirements. In the past, Oncor
has financed a substantial portion of its cash needs from operations and with
proceeds from indebtedness. In the event that Oncor fails to meet its capital
requirements, we may be required to make additional capital contributions to
Oncor, or if Oncor is unable to access sufficient capital to finance its ongoing
needs, we may elect to make additional capital contributions to Oncor which
could be substantial and which would reduce the cash available to us for other
purposes, could increase our indebtedness and could ultimately materially
adversely affect our results of operations, financial condition and prospects.
In that regard, our commitments to the PUCT prohibit us from making loans to
Oncor. As a result, if Oncor requires additional financing and cannot obtain it
from other sources, we may elect to make a capital contribution to Oncor.
Oncor's ability to pay dividends may be limited by factors such as its credit
ratings, regulatory capital requirements, debt-to-equity ratio approved by the
PUCT and other restrictions. In addition, Oncor will not pay dividends if a
majority of Oncor's independent directors or any minority member director
determines it is in the best interests of Oncor to retain such amounts to meet
expected future requirements.

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Sempra Mexico
Sempra Mexico is currently building or developing terminals for the receipt,
storage, and delivery of liquid fuels in the new port of Veracruz and vicinity
of Mexico City, Puebla, Topolobampo, Manzanillo, and Ensenada. Sempra Mexico is
also developing new solar facilities in Juárez, Chihuahua, and Benjamin Hill,
Sonora, through which it will supply renewable energy to several private
companies. We expect the projects to commence commercial operations on various
dates in 2020 and 2021, but these expected commencement dates could be delayed
by worsening or extended disruptions of project construction or development
caused by the COVID-19 pandemic. See "Item 1A. Risk Factors" below. We expect to
fund these capital expenditures and investments, operations and dividends at
IEnova with available funds, including credit facilities, and funds internally
generated by the Sempra Mexico businesses, as well as funds from project
financing, sales of securities, interim funding from the parent or affiliates,
and partnering in JVs. Sempra Mexico is continuing to monitor the impacts of the
COVID-19 pandemic on cash flows and results of operations.
As we discuss in Note 11 of the Notes to Condensed Consolidated Financial
Statements, IEnova received force majeure payments for the Guaymas-El Oro
segment of the Sonora pipeline from August 2017 to August 2019. Under an
agreement between IEnova and the CFE, the CFE will resume making payments only
when the damaged section of the Guaymas-El Oro segment of the Sonora pipeline is
repaired. If the pipeline is not repaired by May 15, 2020 and the parties do not
agree on a new service start date, IEnova retains the right to terminate the
contract and seek to recover its reasonable and documented costs and lost
profits. The parties are currently discussing a new service start date in the
event the pipeline is not repaired by May 15, 2020, but there can be no
assurance that the parties will have agreed on a new service start date if the
pipeline is not repaired by that date. If IEnova is unable to make such repairs
(which have not commenced) and resume operations in the Guaymas-El Oro segment
of the Sonora pipeline or if IEnova terminates the contract and is unable to
obtain recovery, there may be a material adverse impact on Sempra Energy's
results of operations and cash flows and our ability to recover the carrying
value of our investment.
The ability to successfully complete major construction projects is subject to a
number of risks and uncertainties. For a discussion of these risks and
uncertainties, see "Item 1A. Risk Factors" in the Annual Report.
Sempra LNG
Sempra LNG develops and builds natural gas liquefaction facilities and is
pursuing the development of five strategically located LNG projects in North
America with a long-term goal of enabling the delivery of natural gas to the
largest world markets. We expect Sempra LNG to require funding for the
development and expansion of its portfolio of projects, which may be financed
through a combination of operating cash flows, funding from the parent, project
financing and participating in JVs, including ECA LNG JV with IEnova.
North American natural gas prices, when in decline, negatively affect
profitability at Sempra LNG. Also, a reduction in projected global demand for
LNG could result in increased competition among those developing projects in an
environment of declining LNG demand, such as the Sempra Energy-sponsored LNG
export initiatives. Our LNG projects currently under development could be
delayed by the worldwide economic slowdown as a result of the COVID-19 pandemic,
by the current uncertainty in the global oil and gas markets as a result of the
unprecedented decline in oil prices or by a combination of these factors. For a
discussion of these risks and other risks involving changing commodity prices,
see "Item 1A. Risk Factors" in the Annual Report and in "Item 1A. Risk Factors"
below.
Cameron LNG JV Three-Train Liquefaction Project (Phase 1)
Sempra LNG, through its interest in Cameron LNG JV, is constructing a
three-train natural gas liquefaction export facility with an expected export
capability of 12 Mtpa of LNG. Construction on the three-train liquefaction
project began in the second half of 2014 under an EPC contract with a JV between
CB&I, LLC (as assignee of CB&I Shaw Constructors, Inc.), a wholly owned
subsidiary of McDermott International, Inc., and Chiyoda International
Corporation, a wholly owned subsidiary of Chiyoda Corporation. The majority of
the construction is project-financed at the JV, with most or all of the
remainder of the capital requirements provided by the project partners,
including Sempra Energy, through equity contributions under the project equity
agreements. We expect that our remaining equity requirements to complete the
project will be met by a combination of our share of cash generated from the
first two liquefaction trains that have commenced operations and, if required,
additional cash contributions. Sempra Energy signed guarantees for 50.2% of
Cameron LNG JV's financing obligations for a maximum amount of up to $4.0
billion. The guarantees will terminate upon satisfaction of certain conditions,
including all three trains achieving financial completion by September 30, 2021
(with up to an additional 365-day extension beyond such date permitted in cases
of force majeure). However, if Cameron LNG JV fails to satisfy the financial
completion criteria, a demand could be made under the guarantee for Sempra
Energy's 50.2% share of Cameron LNG JV's obligations under the financing
arrangements then due and payable, which could have a material adverse impact on
Sempra Energy's liquidity.

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Cameron LNG JV achieved commercial operations of Train 1 and Train 2 under its
tolling agreements in August 2019 and February 2020, respectively. We expect
Train 3 will commence commercial operations in the third quarter of 2020.
However, the expected commencement of Train 3's commercial operations could be
delayed by worsening or extended disruptions of project construction and
commissioning caused by the COVID-19 pandemic.
Large-scale construction projects such as the design, development and
construction of the Cameron LNG JV liquefaction facility involve numerous risks
and uncertainties, including among others, the potential for unforeseen
engineering challenges, severe weather events, global pandemics, substantial
construction delays and increased costs. In addition, once completed, the
facility may be subject to design flaws, equipment failures and other
operational issues, which could cause the facility to suspend operations or
operate at a reduced capacity.
Cameron LNG JV has a lump-sum, turnkey EPC contract, and if the contractor
becomes unwilling or unable to perform according to the terms and timetable of
the EPC contract, the project could face substantial construction delays and
potentially significantly increased costs. In January 2020, McDermott
International, Inc. filed for bankruptcy protection under Chapter 11 of the U.S.
bankruptcy code. McDermott International, Inc. has stated that it expects all of
its projects, including the three-train liquefaction project at Cameron LNG JV,
to continue on an uninterrupted basis. However, we cannot be certain the Cameron
LNG JV project will not be interrupted. If the contractor defaults under the EPC
contract due to the bankruptcy of McDermott International, Inc. or for any other
reason, such default could result in Cameron LNG JV's engagement of a substitute
contractor. The inability to complete the project in a timely manner or within
our current expectations, cost overruns, and the other risks described above
could have a material adverse effect on our business, results of operations,
cash flows, financial condition, credit ratings and/or prospects.
For a discussion of our investment in Cameron LNG JV, JV financing, Sempra
Energy guarantees, the risks discussed above and other risks relating to the
development of the Cameron LNG JV liquefaction project that could adversely
affect our future performance, see Note 6 of the Notes to Consolidated Financial
Statements and "Item 1A. Risk Factors" in the Annual Report.

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Proposed Cameron Liquefaction Expansion (Phase 2)
Cameron LNG JV has received the major permits and FTA and non-FTA approvals
necessary to expand the current configuration of the Cameron LNG JV liquefaction
project beyond Phase 1. The permits obtained for Phase 2 include up to two
additional liquefaction trains and up to two additional full containment LNG
storage tanks (one of which was permitted with the original three-train
project).
Expansion of the Cameron LNG liquefaction facility beyond the first three trains
is subject to certain restrictions and conditions under the JV project financing
agreements, including among others, timing restrictions on expansion of the
project unless appropriate prior consent is obtained from the project lenders.
Under the Cameron LNG JV equity agreements, the expansion of the project
requires the unanimous consent of all the partners, including with respect to
the equity investment obligation of each partner. Discussions among all the
Cameron LNG JV partners have been taking place regarding how an expansion may be
structured and we expect that discussions will continue. There can be no
assurance that the Cameron LNG JV members will unanimously agree on an expansion
structure, which, if not accomplished in a timely manner, could materially and
adversely impact the development of the expansion project. In light of this, we
are unable to predict whether or when Cameron LNG JV might be able to move
forward on expansion of the Cameron LNG liquefaction facility beyond the first
three trains.
In November 2018, Sempra Energy and TOTAL S.A. entered into an MOU that provides
a framework for cooperation for the development of the potential Cameron LNG JV
expansion project and the potential ECA LNG JV liquefaction-export project that
we describe below in "ECA LNG JV Liquefaction Export Project." The MOU
contemplates TOTAL S.A. potentially contracting for up to approximately 9 Mtpa
of LNG offtake across these two development projects and provides TOTAL S.A. the
option to acquire an equity interest in the proposed ECA LNG JV project. In
addition, in October 2019, Sempra Energy and Mitsui & Co., Ltd. entered into an
MOU that provides a framework for potential offtake by Mitsui & Co., Ltd. from
the potential Cameron LNG JV expansion project and the second phase of the
potential ECA LNG JV project, as well as Mitsui & Co., Ltd.'s potential
acquisition of an equity interest in the second phase of the potential ECA LNG
JV project. In May 2020, Sempra Energy and Mitsubishi Corporation entered into
an MOU that provides a framework for development of and potential offtake by
Mitsubishi Corporation from the potential Cameron LNG JV expansion project. The
ultimate participation of and offtake by TOTAL S.A., Mitsui & Co., Ltd. and
Mitsubishi Corporation remains subject to negotiation and finalization of
definitive agreements, among other factors, and TOTAL S.A., Mitsui & Co., Ltd.
and Mitsubishi Corporation have no commitment to participate in and offtake from
the projects.
The development of the potential Cameron LNG expansion project is subject to
numerous other risks and uncertainties, including securing binding customer
commitments; obtaining a number of permits and regulatory approvals; securing
financing; negotiating and completing suitable commercial agreements, including
a definitive EPC contract, equity acquisition and governance agreements;
reaching a final investment decision; and other factors associated with this
potential investment. For a discussion of these risks, see "Item 1A. Risk
Factors" in the Annual Report.

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ECA LNG JV Liquefaction Export Project
Through a JV agreement, Sempra LNG and IEnova are developing a proposed natural
gas liquefaction project at IEnova's existing ECA LNG Regasification facility.
The proposed liquefaction facility project, which is planned for development in
two phases (a mid-scale project referred to as ECA LNG JV Phase 1 and a
large-scale project referred to as ECA LNG JV Phase 2), is being developed to
provide buyers with direct access to west coast LNG supplies. The ECA LNG
Regasification facility currently has profitable long-term regasification
contracts for 100% of the regasification facility's capacity through 2028,
making the decisions on whether and how to pursue the ECA LNG JV Phase 2
liquefaction project dependent in part on whether the investment in a
large-scale liquefaction facility would, over the long term, be more beneficial
financially than continuing to supply regasification services under our existing
contracts. We do not believe that the development of ECA LNG JV Phase 1 will
disrupt operations at the ECA LNG Regasification facility.
In March 2019, ECA LNG JV received two authorizations from the DOE to export
U.S.-produced natural gas to Mexico and to re-export LNG to non-FTA countries
from its ECA LNG JV Phase 1 project, a one-train natural gas liquefaction export
facility with a nameplate capacity of 3.25 Mtpa and initial offtake capacity of
approximately 2.5 Mtpa, and its ECA LNG JV Phase 2 project, each of which is in
development.
On February 27, 2020, we entered into an EPC contract with TechnipFMC for the
engineering, procurement and construction of ECA LNG JV Phase 1. We have no
obligation to move forward on the EPC contract, and we may release TechnipFMC to
perform portions of the work pursuant to limited notices to proceed. We plan to
fully release TechnipFMC to perform all of the work to construct ECA LNG JV
Phase 1 only after we reach a final investment decision with respect to the
project and after certain other conditions are met. The total price of the EPC
contract for ECA LNG JV Phase 1 is estimated at approximately $1.5 billion. We
estimate that capital expenditures for ECA LNG JV Phase 1 will approximate $1.9
billion, including capitalized interest and project contingency. The actual cost
of the EPC contract and the actual amount of these capital expenditures may
differ, perhaps substantially, from our estimates.
In November 2018, Sempra LNG and IEnova signed Heads of Agreements with
affiliates of TOTAL S.A., Mitsui & Co., Ltd. and Tokyo Gas Co., Ltd. for ECA LNG
JV Phase 1 in respect of LNG sales of approximately 2.5 Mtpa in the aggregate.
In April 2020, ECA LNG JV executed definitive 20-year LNG sale and purchase
agreements with Mitsui & Co., Ltd. and an affiliate of TOTAL S.A. for
approximately 0.8 Mtpa of LNG and 1.7 Mtpa of LNG, respectively. Each agreement
remains subject to certain customary conditions of effectiveness, including our
final investment decision for the project.
We continue to work towards reaching a final investment decision for ECA LNG JV
Phase 1 in the second quarter of 2020. However, this project is contingent on
the receipt of an export permit from the Mexican government. The closure of
non-essential activities in Mexico in response to the COVID-19 pandemic has
added to the uncertainty of the timing of the receipt of this permit and could
delay our final investment decision beyond the second quarter of 2020.
The development of both the ECA LNG JV Phase 1 and ECA LNG JV Phase 2 projects
is subject to numerous risks and uncertainties, including obtaining binding
customer commitments for Phase 2; the receipt of a number of permits and
regulatory approvals; obtaining financing; negotiating and completing suitable
commercial agreements, including a definitive EPC contract for Phase 2, equity
acquisition and governance agreements, LNG sales agreements and gas supply and
transportation agreements; reaching a final investment decision; and other
factors associated with this potential investment. In addition, as we discuss in
Note 11 of the Notes to Condensed Consolidated Financial Statements, an
unfavorable decision on certain property disputes and permit challenges could
materially and adversely affect the development of these projects. For a
discussion of these risks, see "Item 1A. Risk Factors" in the Annual Report.

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Port Arthur LNG Liquefaction Project
Sempra LNG is developing a proposed natural gas liquefaction project on a
greenfield site that it owns in the vicinity of Port Arthur, Texas, located
along the Sabine-Neches waterway. Sempra LNG received authorizations from the
DOE in August 2015 and May 2019 that collectively permit the LNG to be produced
from the proposed Port Arthur LNG project to be exported to all current and
future FTA and non-FTA countries.
In April 2019, the FERC approved the siting, construction and operation of the
proposed Port Arthur LNG liquefaction facility, along with certain natural gas
pipelines, including the Louisiana Connector Pipeline, that could be used to
supply feed gas to the liquefaction facility, assuming the project is completed.
On February 28, 2020, we entered into an EPC contract with Bechtel for the
proposed Port Arthur LNG liquefaction project. The EPC contract contemplates the
construction of two liquefaction trains with a nameplate capacity of
approximately 13.5 Mtpa, two LNG storage tanks, a marine berth and associated
loading facilities and related infrastructure necessary to provide liquefaction
services. We have no obligation to move forward on the EPC contract, and we may
release Bechtel to perform portions of the work pursuant to limited notices to
proceed. We plan to fully release Bechtel to perform all of the work to
construct the Port Arthur LNG liquefaction project only after we reach a final
investment decision with respect to the project and after certain other
conditions are met, including obtaining project financing. If we issue the full
notice to proceed by July 15, 2020, the price under the fixed-price EPC contract
is estimated to be approximately $8.9 billion. This does not include costs
associated with changes to the project's scope or the occurrence of certain
events that would entitle Bechtel to relief under the contract, including
customary events for similar agreements of this type such as force majeure
events, certain changes in law, the discovery of certain differing site
conditions, and certain delays to the work that we may cause. If we issue the
full notice to proceed after July 15, 2020, the price will be subject to price
escalations. If the full notice to proceed is not issued by October 15, 2020,
then the EPC contract, including the price, will be subject to renegotiation.
Any changes to the EPC contract will require the agreement of both parties,
which cannot be assured.
In December 2018, Polish Oil & Gas Company (PGNiG) and Port Arthur LNG entered
into a definitive 20-year agreement for the sale and purchase of 2 Mtpa of LNG
per year from the Port Arthur LNG liquefaction project. Under the agreement, LNG
purchases by PGNiG from Port Arthur LNG will be made on a free-on-board basis,
with PGNiG responsible for shipping the LNG from the Port Arthur facility to the
final destination. Port Arthur LNG will manage the gas pipeline transportation,
liquefaction processing and cargo loading. The agreement is subject to certain
conditions precedent, including Port Arthur LNG making a positive final
investment decision within certain agreed timelines. The failure of these
conditions precedent to be satisfied or waived within the agreed timelines could
result in the termination of the agreement.
In May 2019, Aramco Services Company and Sempra LNG signed a Heads of Agreement
for the negotiation and finalization of a definitive 20-year LNG sale and
purchase agreement for 5 Mtpa of LNG offtake. The Heads of Agreement also
includes the negotiation and finalization of a 25% equity investment in the
project. In January 2020, Aramco Services Company and Sempra LNG signed an
Interim Project Participation Agreement, which sets forth certain mechanisms for
the parties to work towards receipt of corporate approvals to enter into and
proceed with the transaction, execution of the transaction agreements and the
fulfillment or waiver of the conditions precedent contemplated by these
agreements, making a final investment decision and other pre-final investment
decision activities. The Heads of Agreement and Interim Project Participation
Agreement do not obligate the parties to ultimately execute any agreements or
participate in the project.
In February 2020, Sempra LNG filed a FERC application for the siting,
construction and operation of a second phase at the proposed Port Arthur LNG
facility, including the potential addition of two liquefaction trains.
In November 2019, Port Arthur LNG commenced the relocation and upgrade of
approximately three miles of highway where the Port Arthur LNG liquefaction
project would be located.
We continue to work on completing all necessary milestones so that we are
prepared to make a final investment decision for the proposed Port Arthur LNG
liquefaction project when appropriate. The impact of the COVID-19 pandemic on
the global economy and the current uncertainty in the financial and energy
markets has delayed the expected timing of our final investment decision from
2020 to 2021.
Development of the Port Arthur LNG liquefaction project is subject to a number
of risks and uncertainties, including obtaining additional customer commitments;
completing the required commercial agreements, such as equity acquisitions and
governance agreements, LNG sales agreements and gas supply and transportation
agreements; completing construction contracts; securing all necessary permits
and approvals; obtaining financing and incentives; reaching a final investment
decision; and other factors associated with the potential investment. For a
discussion of these risks, see "Item 1A. Risk Factors" in the Annual Report.

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Discontinued Operations
As we discuss in Note 5 of the Notes to Condensed Consolidated Financial
Statements, in January 2019, our board of directors approved a plan to sell our
South American businesses. On April 24, 2020, we completed the sale of our
equity interests in our Peruvian businesses for an aggregate base purchase price
of $3.59 billion, subject to post-closing adjustments. In October 2019, we
entered into an agreement to sell our equity interests in our Chilean businesses
for an aggregate base purchase price of $2.23 billion, subject to customary
adjustments for working capital and changes in net indebtedness and other
adjustments. We expect the sale to close in the second quarter of 2020, subject
to satisfaction of conditions to closing.
Our utilities in South America have historically provided relatively stable
earnings and liquidity. We intend to use the proceeds from the sales to focus on
capital investment in North America to support additional growth opportunities
and strengthen our balance sheet by reducing debt. We expect the cash provided
by earnings from our capital investment will exceed the absence of cash flows
from these discontinued operations. However, there can be no assurance that we
will derive these anticipated benefits. Further, there can be no assurance that
we will be able to redeploy the capital that we obtain from such sales, if
completed, in a way that would result in cash flows or earnings exceeding those
historically generated by these businesses.
SOURCES AND USES OF CASH
The following tables include only significant changes in cash flow activities
for each of our registrants.
CASH FLOWS FROM OPERATING ACTIVITIES
(Dollars in millions)
                                                        Sempra Energy
Three months ended March 31,                            Consolidated          SDG&E        SoCalGas
2020                                                 $        1,318        $     498     $      757
2019                                                            951              443            376
Change                                               $          367        $      55     $      381

Net increase in Reserve for Aliso Canyon Costs
primarily due to $276 higher accruals and $98
lower payments                                       $          375                      $      375
Higher net income, adjusted for noncash items
included in earnings                                            169        $     109            121
Change in long-term GHG obligations                              49                              42
Higher distributions of earnings from Oncor
Holdings                                                         19

Net increase in Insurance Receivable for Aliso Canyon Costs primarily due to $176 higher accruals offset by $19 insurance proceeds received

                      (156 )                          (156 )

Deferred revenue due to the TCJA at the California Utilities in 2019

                                               (43 )            (20 )          (23 )
Change in intercompany activities with
discontinued operations                                         (31 )
Change in net undercollected regulatory balancing
accounts (including long-term amounts in
regulatory assets)                                                               (46 )           47
Other                                                            10               12            (25 )
Change in net cash flows from discontinued
operations                                                      (25 )
                                                     $          367        $      55     $      381




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CASH FLOWS FROM INVESTING ACTIVITIES
(Dollars in millions)
                                                        Sempra Energy
Three months ended March 31,                            Consolidated          SDG&E        SoCalGas
2020                                                 $       (1,181 )      $    (402 )   $     (388 )
2019                                                           (610 )           (356 )         (324 )
Change                                               $         (571 )      $     (46 )   $      (64 )

Net proceeds from the February 2019 sale of Sempra LNG's non-utility natural gas storage assets $ (322 ) Increase in capital expenditures

                               (227 )      $     (46 )   $      (64 )
Other                                                           (27 )
Change in net cash flows from discontinued
operations                                                        5
                                                     $         (571 )      $     (46 )   $      (64 )



CASH FLOWS FROM FINANCING ACTIVITIES
(Dollars in millions)
                                                        Sempra Energy
Three months ended March 31,                            Consolidated          SDG&E        SoCalGas
2020                                                 $        2,114        $      97     $       10
2019                                                           (381 )            (75 )          (67 )
Change                                               $        2,495        $     172     $       77

Increase (decrease) in short-term debt, net $ 1,630 $ (27 ) $ (564 ) Higher issuances of long-term debt

                            1,048              400            649
Higher issuances of commercial paper and other
short-term debt with maturities greater than 90
days                                                            267
Higher payments on long-term debt and finance
leases                                                         (503 )
Higher payments for commercial paper and other
short-term debt with maturities greater than 90
days                                                            (93 )
Higher common dividends paid                                                    (200 )
Other                                                           (10 )             (1 )           (8 )
Change in net cash flows from discontinued
operations mainly due to a net increase in
short-term debt                                                 156
                                                     $        2,495        $     172     $       77



Capital Expenditures and Investments and Acquisitions
EXPENDITURES FOR PP&E AND INVESTMENTS AND ACQUISITIONS
(Dollars in millions)
                                            Three months ended March 31,
                                                    2020                   2019
SDG&E                                $        402                         $ 356
SoCalGas                                      388                           324
Sempra Texas Utilities                         86                            56
Sempra Mexico                                 170                            85
Sempra LNG                                     47                            56
Parent and other                                3                             -
Total                                $      1,096                         $ 877




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The amounts and timing of capital expenditures and certain investments are
generally subject to approvals by various regulatory and other governmental and
environmental bodies, including the CPUC, the FERC and the PUCT. Excluding
discontinued operations, in 2020, we expect to make capital expenditures and
investments of approximately $5.7 billion, a decrease from the $5.9 billion
summarized in "Item 7. MD&A - Capital Resources and Liquidity" in the Annual
Report. The decrease is primarily attributable to Phase 1 of the ECA LNG JV
liquefaction export project at Sempra LNG.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We view certain accounting policies as critical because their application is the
most relevant, judgmental, and/or material to our financial position and results
of operations, and/or because they require the use of material judgments and
estimates. We discuss these accounting policies in "Item 7. MD&A" in the Annual
Report.
We describe our significant accounting policies in Note 1 of the Notes to
Consolidated Financial Statements in the Annual Report. We follow the same
accounting policies for interim reporting purposes.



NEW ACCOUNTING STANDARDS
We discuss the relevant pronouncements that have recently been issued or become
effective and have had or may have an impact on our financial statements and/or
disclosures in Note 2 of the Notes to Condensed Consolidated Financial
Statements.

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