v3.4.0.3

OTHER FINANCIAL DATA | 3 Months Ended
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Mar. 31, 2016
Disclosure Text Block [Abstract] |
Other Financial Data | INVENTORIES The components of inventories by segment are as follows:
INVENTORY BALANCES
(Dollars in millions)
|  | Natural gas | Liquefied natural gas | Materials and supplies | Total
|  | March 31, 2016 |  | December 31, 2015 | March 31, 2016 | December 31, 2015 | March 31, 2016 | December 31, 2015 | March 31, 2016 | December 31, 2015
SDG&E | $ | 3 |  | $ | 6 | $ | ― | $ | ― | $ | 69 | $ | 69 | $ | 72 | $ | 75
SoCalGas(1) |  | ― |  |  | 49 |  | ― |  | ― |  | 33 |  | 30 |  | 33 |  | 79
Sempra South American |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Utilities |  | ― |  |  | ― |  | ― |  | ― |  | 37 |  | 30 |  | 37 |  | 30
Sempra Mexico |  | ― |  |  | ― |  | 6 |  | 3 |  | 2 |  | 10 |  | 8 |  | 13
Sempra Renewables |  | ― |  |  | ― |  | ― |  | ― |  | 3 |  | 3 |  | 3 |  | 3
Sempra Natural Gas |  | 74 |  |  | 94 |  | 3 |  | 3 |  | 1 |  | 1 |  | 78 |  | 98
Sempra Energy |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated | $ | 77 |  | $ | 149 | $ | 9 | $ | 6 | $ | 145 | $ | 143 | $ | 231 | $ | 298
(1) | At both March 31, 2016 and December 31, 2015, SoCalGas' natural gas inventory for core customers is net of the estimated inventory loss related to the Aliso Canyon natural gas leak, which we discuss in Note 11.
GOODWILL We discuss goodwill in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. The increase in goodwill from $819 million at December 31, 2015 to $849 million at March 31, 2016 is due to foreign currency translation at Sempra South American Utilities. We record the offset of this fluctuation in Other Comprehensive Income (Loss). VARIABLE INTEREST ENTITIES We consolidate a VIE if we are the primary beneficiary of the VIE. Our determination of whether we are the primary beneficiary is based upon qualitative and quantitative analyses, which assess the purpose and design of the VIE; the nature of the VIE’s risks and the risks we absorb; the power to direct activities that most significantly impact the economic performance of the VIE; and the obligation to absorb losses or right to receive benefits that could be significant to the VIE. SDG&E SDG&E’s power procurement is subject to reliability requirements that may require SDG&E to enter into various power purchase arrangements which include variable interests. SDG&E evaluates the respective entities to determine if variable interests exist and, based on the qualitative and quantitative analyses described above, if SDG&E, and thereby Sempra Energy, is the primary beneficiary. Tolling Agreements SDG&E has agreements under which it purchases power generated by facilities for which it sup plies all of the natural gas to fuel the power plant (i.e., tolling agreements). SDG&E’s obligation to absorb natural gas costs may be a significant variable interest. In addition, SDG&E has the power to direct the dispatch of electricity generated by thes e facilities. Based upon our analysis, the ability to direct the dispatch of electricity may have the most significant impact on the economic performance of the entity owning the generating facility because of the associated exposure to the cost of natural gas, which fuels the plants, and the value of electricity produced. To the extent that SDG&E (1) is obligated to purchase and provide fuel to operate the facility, (2) has the power to direct the dispatch, and (3) purchases all of the output from the faci lity for a substantial portion of the facility’s useful life, SDG&E may be the primary beneficiary of the entity owning the generating facility. SDG&E determines if it is the primary beneficiary in these cases based on a qualitative approach in which we co nsider the operational characteristics of the facility, including its expected power generation output relative to its capacity to generate and the financial structure of the entity, among other factors. If we determine that SDG&E is the primary beneficiar y, SDG&E and Sempra Energy consolidate the entity that owns the facility as a VIE. Otay Mesa VIE SDG&E has an agreement to purchase power generated at the Otay Mesa Energy Center (OMEC), a 605-MW generating facility. In addition to tolling, the agreement provides SDG&E with the option to purchase OMEC at the end of the contract term in 2019, or upon earlier termination of the purchased-power agreement, at a predetermined price subject to adjustments based on performance of the facility. If SDG&E does not e xercise its option, under certain circumstances, it may be required to purchase the power plant at a predetermined price, which we refer to as the put option. The facility owner, Otay Mesa Energy Center LLC (OMEC LLC), is a VIE (Otay Mesa VIE), of which SDG&E is the primary beneficiary. SDG&E has no OMEC LLC voting rights, holds no equity in OMEC LLC and does not operate OMEC. In addition to the risks absorbed under the tolling agreement, SDG&E absorbs separately through the put option a significant porti on of the risk that the value of Otay Mesa VIE could decline. Accordingly, SDG&E and Sempra Energy have consolidated Otay Mesa VIE. Otay Mesa VIE’s equity of $51 million at March 31, 2016 and $53 million at December 31, 2015 is included on the Condensed Co nsolidated Balance Sheets in Other Noncontrolling Interests for Sempra Energy and in Noncontrolling Interest for SDG&E. OMEC LLC has a loan outstanding of $312 million at March 31, 2016, the proceeds of which were used for the construction of OMEC. The lo an is with third party lenders and is secured by OMEC’s property, plant and equipment. SDG&E is not a party to the loan agreement and does not have any additional implicit or explicit financial responsibility to OMEC LLC. The loan fully matures in April 20 19 and bears interest at rates varying with market rates. In addition, OMEC LLC has entered into interest rate swap agreements to moderate its exposure to interest rate changes. We provide additional information concerning the interest rate swaps in Note 7. The Condensed Consolidated Statements of Operations of Sempra Energy and SDG&E include the following amounts associated with Otay Mesa VIE. The amounts are net of eliminations of transactions between SDG&E and Otay Mesa VIE. The captions in the table be low generally correspond to SDG&E’s Condensed Consolidated Statements of Operations.
AMOUNTS ASSOCIATED WITH OTAY MESA VIE
(Dollars in millions)
| Three months ended March 31,
| 2016 | 2015
Operating expenses |  |  |  |
Cost of electric fuel and purchased power | $ | (17) | $ | (18)
Operation and maintenance |  | 4 |  | 4
Depreciation and amortization |  | 7 |  | 6
Total operating expenses |  | (6) |  | (8)
Operating income |  | 6 |  | 8
Interest expense |  | (5) |  | (4)
Income before income taxes/Net income |  | 1 |  | 4
Earnings attributable to noncontrolling interest |  | (1) |  | (4)
Earnings attributable to common shares | $ | ― | $ | ―
SDG&E has determined that no contracts, other than the one relating to Otay Mesa VIE mentioned above, result in SDG&E being the primary beneficiary at March 31, 2016. In addition to the tolling agreements described above, other variable interests involve various elements of fuel and power costs, including certain construction costs, tax credits, and other components of cash flow expected to be paid to or received by our counterparties. In most of these cases, the expectation of variability is not substanti al, and SDG&E generally does not have the power to direct activities that most significantly impact the economic performance of the other VIEs. If our ongoing evaluation of these VIEs were to conclude that SDG&E becomes the primary beneficiary and consolid ation by SDG&E becomes necessary, the effects are not expected to significantly affect the financial position, results of operations, or liquidity of SDG&E. In addition, SDG&E is not exposed to losses or gains as a result of these other VIEs, because all s uch variability would be recovered in rates. We provide additional information about power purchase agreements with peaker plant facilities that are VIEs of which SDG&E is not the primary beneficiary in Note 15 of the Notes to Consolidated Financial Statem ents in the Annual Report. We provide additional information regarding Otay Mesa VIE in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. Sempra Natural Gas Sempra Energy’s equity method investment in Cameron LNG JV is consider ed to be a VIE generally due to contractual provisions that transfer certain risks to customers. Sempra Energy is not the primary beneficiary because we do not have the power to direct the most significant activities of Cameron LNG JV. We will continue to evaluate Cameron LNG JV for any changes that may impact our determination of the primary beneficiary. The carrying value of our investment in Cameron LNG JV, including amounts recognized in Accumulated Other Comprehensive Income (Loss) (AOCI), was $872 mill ion at March 31, 2016 and $983 million at December 31, 2015. Our maximum exposure to loss includes the carrying value of our investment and the guarantees discussed above in Note 4 and in Note 4 of the Notes to Consolidated Financial Statem ents in the Annu al Report. Other Variable Interest Entities Sempra Energy’s other operating units also enter into arrangements which could include variable interests. We evaluate these arrangements and applicable entities based upon the qualitative and quantitative analys es described above. Certain of these entities are service companies that are VIEs. As the primary beneficiary of these service companies, we consolidate them; however, their financial statements are not material to the financial statements of Sempra Energy. In all other cases, we have determined that these contracts are not variable interests in a VIE and therefore are not subject to the U.S. GAAP requirements concerning the consolidation of VIEs. PENSION AND OTHER POSTRETIREMENT BENEFITS Net Periodic Benefit Cost The following three tables provide the components of net periodic benefit cost:
NET PERIODIC BENEFIT COST – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
| Pension benefits | Other postretirement benefits
| Three months ended March 31,
| 2016 | 2015 | 2016 | 2015
Service cost | $ | 28 | $ | 30 | $ | 5 | $ | 7
Interest cost |  | 40 |  | 39 |  | 11 |  | 12
Expected return on assets |  | (42) |  | (44) |  | (17) |  | (17)
Amortization of: |  |  |  |  |  |  |  |
Prior service cost (credit) |  | 3 |  | 3 |  | ― |  | (1)
Actuarial loss |  | 6 |  | 8 |  | ― |  | ―
Regulatory adjustment |  | (28) |  | (29) |  | 2 |  | ―
Total net periodic benefit cost | $ | 7 | $ | 7 | $ | 1 | $ | 1
NET PERIODIC BENEFIT COST – SDG&E
(Dollars in millions)
| Pension benefits | Other postretirement benefits
| Three months ended March 31,
| 2016 | 2015 | 2016 | 2015
Service cost | $ | 7 | $ | 8 | $ | 1 | $ | 2
Interest cost |  | 10 |  | 10 |  | 2 |  | 2
Expected return on assets |  | (12) |  | (14) |  | (3) |  | (3)
Amortization of: |  |  |  |  |  |  |  |
Prior service cost |  | ― |  | ― |  | 1 |  | 1
Actuarial loss |  | 3 |  | 2 |  | ― |  | ―
Regulatory adjustment |  | (7) |  | (5) |  | (1) |  | (2)
Total net periodic benefit cost | $ | 1 | $ | 1 | $ | ― | $ | ―
NET PERIODIC BENEFIT COST – SOCALGAS
(Dollars in millions)
| Pension benefits | Other postretirement benefits
| Three months ended March 31,
| 2016 | 2015 | 2016 | 2015
Service cost | $ | 17 | $ | 19 | $ | 4 | $ | 5
Interest cost |  | 25 |  | 25 |  | 8 |  | 9
Expected return on assets |  | (25) |  | (27) |  | (14) |  | (14)
Amortization of: |  |  |  |  |  |  |  |
Prior service cost (credit) |  | 2 |  | 2 |  | (1) |  | (2)
Actuarial loss |  | 3 |  | 5 |  | ― |  | ―
Regulatory adjustment |  | (21) |  | (24) |  | 3 |  | 2
Total net periodic benefit cost | $ | 1 | $ | ― | $ | ― | $ | ―
Benefit Plan Contributions The following table shows our year-to-date contributions to pension and other postretirement benefit plans and the amounts w e expect to contribute in 20 16:
BENEFIT PLAN CONTRIBUTIONS
(Dollars in millions)
| Sempra Energy |  |
| Consolidated | SDG&E | SoCalGas
Contributions through March 31, 2016: |  |  |  |  |  |
Pension plans | $ | 15 | $ | 2 | $ | ―
Other postretirement benefit plans |  | 1 |  | ― |  | ―
Total expected contributions in 2016: |  |  |  |  |  |
Pension plans | $ | 123 | $ | 4 | $ | 77
Other postretirement benefit plans |  | 6 |  | 2 |  | 1
RABBI TRUST In support of its Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans, Sempra Energy maintains dedicated assets, including a Rabbi Trust and investments in life insurance contracts, which totaled $432 million and $464 million at March 31, 2016 and December 31, 2015, respectively. EARNINGS PER SHARE The following table provides earnings per share (EPS) computations for the three months ended March 31, 2016 and 2015. Basic EPS is calculated by dividing earnings attributable to common stock by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
EARNINGS PER SHARE COMPUTATIONS
(Dollars in millions, except per share amounts; shares in thousands)
|  | Three months ended March 31,
|  | 2016 | 2015
Numerator: |  |  |  |
Earnings/Income attributable to common shares | $ | 319 | $ | 437
Denominator: |  |  |  |
Weighted-average common shares |  |  |  |
| outstanding for basic EPS(1) |  | 249,734 |  | 247,722
Dilutive effect of stock options, restricted |  |  |  |
| stock awards and restricted stock units |  | 1,678 |  | 3,484
Weighted-average common shares |  |  |  |
| outstanding for diluted EPS |  | 251,412 |  | 251,206
Earnings per share: |  |  |  |
Basic | $ | 1.28 | $ | 1.76
Diluted | $ | 1.27 | $ | 1.74
(1) | Includes 555 and 452 average fully vested restricted stock units held in our Deferred Compensation Plan for the three months ended March 31, 2016 and 2015, respectively. These fully vested restricted stock units are included in weighted-average common shares outstanding for basic EPS because there are no conditions under which the corresponding shares will not be issued.
The dilution from common stock options is based on the treasury stock method. Under this method, proceeds based on the exercise price plus unearned compensation and windfall tax benefits recognized, minus tax shortfalls recognized, are assumed to be used to repurchase shares on the open market at the average market price for the period. The windfall tax benefits are tax deductions we would receive upon the assumed exercise of stock options in excess of the deferred income taxes we recorded related to the c ompensation expense on the stock options. Tax shortfalls occur when the assumed tax deductions are less than recorded deferred income taxes. The calculation of dilutive common stock equivalents excludes options for which the exercise price on common stock was greater than the average market price during the period (out-of-the-money options). For the three months ended March 31, 2016 and 2015, we had no such antidilutive stock options outstanding. For the three months ended March 31, 201 6 and 2015, we had no stock options outstanding that were antidilutive because of the unearned compensation and windfall tax benefits included in the assumed proceeds u nder the treasury stock method. The dilution from unvested restricted stock awards (RSAs) and restricted stoc k units (RSUs) is also based on the treasury stock method. Proceeds equal to the unearned compensation and windfall tax benefits recognized, minus tax shortfalls recognized, related to the awards and units are assumed to be used to repurchase shares on the open market at the average market price for the period. The windfall tax benefits or tax shortfalls recognized are the difference between tax deductions we would receive upon the assumed vesting of RSAs or RSUs and the deferred income taxes we recorded re lated to the compensation expense on such awards and units. There were no antidilutive RSAs or antidilutive RSUs from the application of unearned compensation in the treasury stock method for the three months ended March 31, 2016. There were no such antidi lutive RSAs and 614 antidilutive RSUs for the three months ended March 31, 2015. Our performance-based RSUs include awards that vest at the end of three-year (for awards granted during or after 2015) or four-year performance periods based on Sempra Energy’s total return to shareholders relative to that of specified market indices (Total Shareholder Return or TSR RSUs) or based on the compound annual growth rate of Sempra Energy’s EPS (EPS RSUs). The comparative market indices for the TSR RSUs are the Standard & Poor’s (S&P) 500 Utilities Index and the S&P 500 Index. We primarily use long-term analyst consensus growth estimates for S&P 500 Utilities Index peer companies to develop our EPS RSU targ ets. TSR RSUs represent the right to receive from zero to 1.5 shares (2.0 shares for awards granted during or after 2014) of Sempra Energy common stock if performance targets are met. EPS RSUs represent the right to receive from zero to 2.0 shares of Sempr a Energy common stock if performance targets are met. If performance falls between the targets specified for each performance metric, we calculate the payout using linear interpolation. Participants also receive additional shares for dividend equivalents o n shares subject to RSUs, which are deemed reinvested to purchase additional units that become subject to the same vesting conditions as the RSUs to which the dividends relate. We discuss performance-based RSU awards further in Note 8 of the Notes to Conso lidated Financial Statements in our Annual Report. Our RSAs, which are solely service-based, and those RSUs that are service-based or issued in connection with certain other performance goals represent the right to receive up to 1.0 share if the service requirements or certain other vesting conditions are met. These RSAs and RSUs have the same dividend equivalent rights as the performance-based RSUs described above. We include RSAs and these RSUs in potential dilutive shares at 100 percent, subject to the application of the treasury stock method. We includ e our TSR RSUs and EPS RSUs in potential dilutive shares at zero to up to 200 percent to the extent that they currently meet the performance requirements for vesting, subject to the application of the treasury stock method. Due to market fluctuations of bo th Sempra Energy stock and the comparative indices, dilutive TSR RSU shares may vary widely from period-to-period. If it were assumed that performance goals for all performance-based RSUs were met at maximum levels and if the treasury stock method were not applied to any of our RSAs or RSUs, the incremental potential dilutive shares would be 2,616,084 and 1,285,193 for the three months ended March 31, 2016 and 2015, respectively. SHARE-BASED COMPENSATION We discuss our share-based compensation plans in Note 8 of the Notes to Consolidated Financial Statements in the Annual Report. We recorded share-based compensation expense, net of income taxes, of $7 million and $8 million for the three months ended March 31, 2016 and 2015, respectively. Pursuant to our Sempra Energy share-based compensation plans, Sempra Energy’s compensation committee granted 372,270 TSR RSUs, 94,550 EPS RSUs and 93,256 service-base d RSUs during the three months ended March 31, 2016, primarily in January. During the three months ended March 31, 2016, IEnova issued 183,970 RSUs from the IEnova 2013 Long-Term Incentive Plan, under which awards are cash settled at vesting based on the p rice of IEnova common stock. CAPITALIZED FINANCING COSTS Capitalized financing costs include capitalized interest costs and AFUDC related to both debt and equity financing of construction projects. We capitalize interest costs incurred to finance capital projects and interest on equity method investments that have not commenced planned principal operations. The following table shows capitalized financing costs for the three months ended March 31, 2016 and 2015.
CAPITALIZED FINANCING COSTS
(Dollars in millions)
|  | Three months ended March 31,
|  | 2016 | 2015
Sempra Energy Consolidated: |  |  |  |
AFUDC related to debt | $ | 7 | $ | 6
AFUDC related to equity |  | 27 |  | 27
Other capitalized interest |  | 18 |  | 17
Total Sempra Energy Consolidated | $ | 52 | $ | 50
SDG&E: |  |  |  |
AFUDC related to debt | $ | 4 | $ | 3
AFUDC related to equity |  | 11 |  | 8
Total SDG&E | $ | 15 | $ | 11
SoCalGas: |  |  |  |
AFUDC related to debt | $ | 3 | $ | 3
AFUDC related to equity |  | 10 |  | 9
Total SoCalGas | $ | 13 | $ | 12
COMPREHENSIVE INCOME The following tables present the changes in AOCI by component and amounts reclassified out of AOCI to net income, excluding amounts attributable to noncontrolling interests:
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1)
SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
|  | Three months ended March 31, 2016 and 2015
|  | Foreign |  |  |  |  | Total
|  | currency |  | Pension and other | accumulated other
|  | translation | Financial | postretirement | comprehensive
|  | adjustments | instruments | benefits | income (loss)
2016: |  |  |  |  |  |  |  |
Balance as of December 31, 2015 | $ | (582) | $ | (137) | $ | (87) | $ | (806)
Other comprehensive income (loss) before |  |  |  |  |  |  |  |
reclassifications |  | 68 |  | (82) |  | ― |  | (14)
Amounts reclassified from accumulated other |  |  |  |  |  |  |  |
comprehensive income |  | ― |  | (2) |  | 1 |  | (1)
Net other comprehensive income (loss) |  | 68 |  | (84) |  | 1 |  | (15)
Balance as of March 31, 2016 | $ | (514) | $ | (221) | $ | (86) | $ | (821)
2015: |  |  |  |  |  |  |  |
Balance as of December 31, 2014 | $ | (322) | $ | (90) | $ | (85) | $ | (497)
Other comprehensive loss before |  |  |  |  |  |  |  |
reclassifications |  | (62) |  | (54) |  | ― |  | (116)
Amounts reclassified from accumulated other |  |  |  |  |  |  |  |
comprehensive income |  | ― |  | (1) |  | 1 |  | ―
Net other comprehensive (loss) income |  | (62) |  | (55) |  | 1 |  | (116)
Balance as of March 31, 2015 | $ | (384) | $ | (145) | $ | (84) | $ | (613)
(1) | All amounts are net of income tax, if subject to tax, and exclude noncontrolling interests.
RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
| Amounts reclassified |  |
Details about accumulated | from accumulated other |  | Affected line item on Condensed
other comprehensive income (loss) components | comprehensive income (loss) |  | Consolidated Statements of Operations
|  |  | Three months ended March 31, |  |  |  |  |
|  |  | 2016 |  | 2015 |  |  |  |  |
Sempra Energy Consolidated: |  |  |  |  |  |  |  |  |  |
Financial instruments: |  |  |  |  |  |  |  |  |  |
Interest rate and foreign exchange instruments | $ | 4 |  | $ | 6 |  | Interest Expense
Interest rate instruments |  | 3 |  |  | 3 |  | Equity (Losses) Earnings, Before Income Tax
Interest rate and foreign exchange instruments |  | 1 |  |  | ― |  | Equity Earnings, Net of Income Tax
Commodity contracts not subject |  |  |  |  |  |  |
| to rate recovery |  | (7) |  |  | (7) |  | Revenues: Energy-Related Businesses
Total before income tax |  | 1 |  |  | 2 |  |
|  |  |  | ― |  |  | 1 |  | Income Tax Expense
Net of income tax |  | 1 |  |  | 3 |  |
|  |  |  | (3) |  |  | (4) |  | Earnings Attributable to Noncontrolling Interests
|  |  | $ | (2) |  | $ | (1) |  |  |  |  |
Pension and other postretirement benefits: |  |  |  |  |  |  |  |  |  |
Amortization of actuarial loss | $ | 2 |  | $ | 2 |  | See note (1) below
|  |  |  | (1) |  |  | (1) |  | Income Tax Expense
Net of income tax | $ | 1 |  | $ | 1 |  |
Total reclassifications for the period, net of tax | $ | (1) |  | $ | ― |  |  |  |  |
SDG&E: |  |  |  |  |  |  |  |  |  |
Financial instruments: |  |  |  |  |  |  |  |  |  |
Interest rate instruments | $ | 3 |  | $ | 3 |  | Interest Expense
|  |  |  | (3) |  |  | (3) |  | Earnings Attributable to Noncontrolling Interest
Total reclassifications for the period | $ | ― |  | $ | ― |  |  |  |  |
(1) | Amounts are included in the computation of net periodic benefit cost (see "Pension and Other Postretirement Benefits" above).
For the three months ended March 31, 2016 and 2015, Other Comprehensive Income (Loss) (OCI), excluding amounts attributable to noncontrolling interests, at SDG&E and SoCalGas was negligible, and reclassifications out of AOCI to Net Income were also negligible for SoCalGas. SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS The following tables provide reconciliations of changes in Sempra Energy’s and SDG&E’s shareholders’ equity and noncontrolling interests for the three months ended March 31, 2016 and 2015. The only change in SoCalGas’ equity for the three months ended March 31, 2016 and 2015 was comprehensive income and a negligible amount of preferred stock dividends declared.
SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS – SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
|  |  | Sempra Energy |  | Non- |  |
|  |  | shareholders’ |  | controlling |  | Total
|  |  | equity |  | interests(1) |  | equity
Balance at December 31, 2015 | $ | 11,809 | $ | 770 | $ | 12,579
Comprehensive income |  | 304 |  | 11 |  | 315
Share-based compensation expense |  | 13 |  | ― |  | 13
Common stock dividends declared |  | (188) |  | ― |  | (188)
Issuances of common stock |  | 28 |  | ― |  | 28
Repurchases of common stock |  | (54) |  | ― |  | (54)
Tax benefit related to share-based compensation |  | 34 |  | ― |  | 34
Distributions to noncontrolling interests |  | ― |  | (3) |  | (3)
Balance at March 31, 2016 | $ | 11,946 | $ | 778 | $ | 12,724
Balance at December 31, 2014 | $ | 11,326 | $ | 774 | $ | 12,100
Comprehensive income |  | 321 |  | 8 |  | 329
Share-based compensation expense |  | 13 |  | ― |  | 13
Common stock dividends declared |  | (173) |  | ― |  | (173)
Issuances of common stock |  | 30 |  | ― |  | 30
Repurchases of common stock |  | (65) |  | ― |  | (65)
Tax benefit related to share-based compensation |  | 52 |  | ― |  | 52
Distributions to noncontrolling interests |  | ― |  | (5) |  | (5)
Balance at March 31, 2015 | $ | 11,504 | $ | 777 | $ | 12,281
(1) | Noncontrolling interests include the preferred stock of SoCalGas and other noncontrolling interests as listed in the table below under "Other Noncontrolling Interests."
SHAREHOLDER'S EQUITY AND NONCONTROLLING INTEREST – SDG&E
(Dollars in millions)
|  | SDG&E |  | Non- |  |
|  | shareholder’s |  | controlling |  | Total
|  | equity |  | interest |  | equity
Balance at December 31, 2015 | $ | 5,223 | $ | 53 | $ | 5,276
Comprehensive income (loss) |  | 129 |  | (1) |  | 128
Distributions to noncontrolling interest |  | ― |  | (1) |  | (1)
Balance at March 31, 2016 | $ | 5,352 | $ | 51 | $ | 5,403
Balance at December 31, 2014 | $ | 4,932 | $ | 60 | $ | 4,992
Comprehensive income |  | 147 |  | 2 |  | 149
Distributions to noncontrolling interest |  | ― |  | (3) |  | (3)
Balance at March 31, 2015 | $ | 5,079 | $ | 59 | $ | 5,138
Ownership interests that are held by owners other than Sempra Energy and SDG&E in subsidiaries or entities consolidated by them are accounted for and reported as noncontrolling interests. As a result, noncontrolling interests are reported as a separate component of equity on the Condensed Consolidated Balance Sheets. Earnings or losses attributable to noncontrolling interests are separately identified on the Condensed Consolidated Statements of Operations, and compre hensive income or loss attributable to noncontrolling interests is separately identified on the Condensed Consolidated Statements of Comprehensive Income (Loss). Preferred Stock At Sempra Energy, the preferred stock of SoCalGas is presented as a noncontro lling interest and preferred stock dividends are charges against income related to noncontrolling interests. We provide additional information concerning preferred stock in Note 11 of the Notes to Consolidated Financial Statements in the Annual Report. Oth er Noncontrolling Interests At March 31, 2016 and December 31, 2015, we reported the following noncontrolling ownership interests held by others (not including preferred shareholders) recorded in Other Noncontrolling Interests in Total Equity on Sempra Ene rgy’s Condensed Consolidated Balance Sheets:
OTHER NONCONTROLLING INTERESTS
(Dollars in millions) |  |
|  | Percent ownership held by others |  |  |  |
|  | March 31, | December 31, |  | March 31, |  | December 31,
|  | 2016 | 2015 |  | 2016 |  | 2015
SDG&E: |  |  |  |  |  |  |  |
Otay Mesa VIE | 100 | % | 100 | % | $ | 51 | $ | 53
Sempra South American Utilities: |  |  |  |  |  |  |  |
Chilquinta Energía subsidiaries(1) | 23.5 – 43.4 |  | 23.5 – 43.4 |  |  | 22 |  | 21
Luz del Sur | 16.4 |  | 16.4 |  |  | 171 |  | 164
Tecsur | 9.8 |  | 9.8 |  |  | 4 |  | 4
Sempra Mexico: |  |  |  |  |  |  |  |
IEnova | 18.9 |  | 18.9 |  |  | 470 |  | 468
Sempra Natural Gas: |  |  |  |  |  |  |  |
Bay Gas Storage Company, Ltd. | 9.1 |  | 9.1 |  |  | 25 |  | 25
Liberty Gas Storage, LLC | 23.2 |  | 23.2 |  |  | 14 |  | 14
Southern Gas Transmission Company | 49.0 |  | 49.0 |  |  | 1 |  | 1
Total Sempra Energy |  |  |  |  | $ | 758 | $ | 750
(1) | Chilquinta Energía has four subsidiaries with noncontrolling interests held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries.
TRANSACTIONS WITH AFFILIATES Amounts due from and to unconsolidated affiliates at Sempra Energy Consolidated, SDG&E and SoCalGas are as follows:
AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES
(Dollars in millions)
| March 31, 2016 | December 31, 2015
Sempra Energy Consolidated: |  |  |  |
Total due from various unconsolidated affiliates - current | $ | 7 | $ | 6
Sempra South American Utilities(1): |  |  |  |
Eletrans S.A. and Eletrans II S.A.: |  |  |  |
4% Note(2) | $ | 76 | $ | 72
Other related party receivables |  | 1 |  | ―
Sempra Mexico(1): |  |  |  |
Affiliate of joint venture with PEMEX: |  |  |  |
Note due November 13, 2017(3) |  | 3 |  | 3
Note due November 14, 2018(3) |  | 42 |  | 42
Note due November 14, 2018(3) |  | 34 |  | 34
Note due November 14, 2018(3) |  | 8 |  | 8
Energía Sierra Juárez: |  |  |  |
Note due June 15, 2018(4) |  | 17 |  | 24
Sempra Natural Gas: |  |  |  |
Cameron LNG JV |  | 5 |  | 3
Total due from unconsolidated affiliates - noncurrent | $ | 186 | $ | 186
Total due to various unconsolidated affiliates - current | $ | (13) | $ | (14)
SDG&E: |  |  |  |
Total due from various unconsolidated affiliates - current | $ | 1 | $ | 1
Sempra Energy | $ | (35) | $ | (34)
SoCalGas |  | (8) |  | (13)
Affiliate |  | (6) |  | (8)
Total due to unconsolidated affiliates - current | $ | (49) | $ | (55)
Income taxes due (to) from Sempra Energy(5) | $ | (32) | $ | 28
SoCalGas: |  |  |  |
Sempra Energy(6) | $ | ― | $ | 35
SDG&E |  | 8 |  | 13
Total due from unconsolidated affiliates - current | $ | 8 | $ | 48
Sempra Energy | $ | (34) | $ | ―
Total due to unconsolidated affiliate - current | $ | (34) | $ | ―
Income taxes due (to) from Sempra Energy(5) | $ | (23) | $ | 1
(1) | Amounts include principal balances plus accumulated interest outstanding.
(2) | U.S. dollar-denominated loan, at a fixed interest rate with no stated maturity date, to provide project financing for the construction of transmission lines at Eletrans S.A. and Eletrans II S.A., both of which are joint ventures at Chilquinta Energía.
(3) | U.S. dollar-denominated loan, at a variable interest rate based on a 30-day LIBOR plus 450 basis points (4.94 percent at March 31, 2016), to finance the Los Ramones Norte pipeline project.
(4) | U.S. dollar-denominated loan, at a variable interest rate based on a 30-day LIBOR plus 637.5 basis points (6.81 percent at March 31, 2016), to finance the first phase of the Energía Sierra Juárez wind project.
(5) | SDG&E and SoCalGas are included in the consolidated income tax return of Sempra Energy and are allocated income tax expense from Sempra Energy in an amount equal to that which would result from each company having always filed a separate return.
(6) | At December 31, 2015, net receivable included outstanding advances to Sempra Energy of $50 million at an interest rate of 0.11 percent.
Revenues and cost of sales fr om unconsolidated affiliates are as follows:
REVENUES AND COST OF SALES FROM UNCONSOLIDATED AFFILIATES
(Dollars in millions)
| Three months ended March 31,
| 2016 | 2015
REVENUES |  |  |  |
Sempra Energy Consolidated | $ | 5 | $ | 8
SDG&E |  | 3 |  | 3
SoCalGas |  | 17 |  | 19
COST OF SALES |  |  |  |
Sempra Energy Consolidated | $ | 30 | $ | 19
SDG&E |  | 14 |  | 5
Guarantees Sempra Energy has provided guarantees to certain of its solar and wind farm joint ventures and entered into completion guarantees related to the financing of the Cameron LNG JV project, as we discuss above in Note 4 and in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.
OTHER INCOME, NET |  |
(Dollars in millions) |  |
|  | Three months ended March 31,
|  | 2016 | 2015
Sempra Energy Consolidated: |  |  |  |
Allowance for equity funds used during construction | $ | 27 | $ | 27
Investment gains(1) |  | 10 |  | 9
Electrical infrastructure relocation income(2) |  | 1 |  | ―
Gains on interest rate and foreign exchange instruments, net |  | 3 |  | ―
Sale of other investments |  | 1 |  | ―
Foreign currency transaction losses |  | (2) |  | (1)
Regulatory interest, net(3) |  | 2 |  | 1
Sundry, net |  | 7 |  | 3
Total | $ | 49 | $ | 39
SDG&E: |  |  |  |
Allowance for equity funds used during construction | $ | 11 | $ | 8
Regulatory interest, net(3) |  | 2 |  | 1
Sundry, net |  | 1 |  | ―
Total | $ | 14 | $ | 9
SoCalGas: |  |  |  |
Allowance for equity funds used during construction | $ | 10 | $ | 9
Sundry, net |  | ― |  | (1)
Total | $ | 10 | $ | 8
(1) | Represents investment gains on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are partially offset by corresponding changes in compensation expense related to the plans.
(2) | Income at Luz del Sur associated with the relocation of electrical infrastructure.
(3) | Interest on regulatory balancing accounts.
INCOME TAXES
INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
|  |  |  |  | Effective |  |  |  |  | Effective |
|  |  | Income tax |  | income |  |  | Income tax |  | income |
|  |  | expense |  | tax rate |  |  | expense |  | tax rate |
|  |  | Three months ended March 31,
|  |  | 2016 | 2015
Sempra Energy Consolidated | $ | 142 |  | 31 | % | $ | 163 |  | 27 | %
SDG&E |  | 72 |  | 36 |  |  | 88 |  | 37 |
SoCalGas |  | 87 |  | 31 |  |  | 95 |  | 31 |
Sempra Energy, SDG&E and SoCalGas record income taxes for interim periods utilizing a forecasted effective tax rate anticipated for the full year, as required by U.S. GAAP. The income tax effect of items that can be reliably forecasted is f actored into the forecasted effective tax rate, and the impact is recognized proportionately over the year. Items that cannot be reliably forecasted (e.g., resolution of prior years’ income tax items, remeasurement of deferred tax asset valuation allowances, Mexi can currency translation and inflation adjustments, and deferred income tax benefit associated with the impairment of a book investment) are recorded in the interim period in which they actually occur, which can result in variabili ty in income tax expense. Sempra Energy’s income tax expense in the three months ended March 31, 2016 includes deferred income tax expense related to Sempra Mexico’s power plant held for sale, as we discuss in Note 3. For SDG&E and SoCalGas, the California Public Utilities Commiss ion (CPUC) requires flow-through rate-making treatment for the current income tax benefit or expense arising from certain property-related and other temporary differences between the treatment for financial reporting and income tax, which will reverse over time. Under the regulatory accounting treatment required for these flow-through temporary differences, deferred income tax assets and liabilities are not recorded to deferred income tax expense, but rather to a regulatory asset or liability, which impacts the current effective income tax rate. As a result, changes in the relative size of these items compared to pretax income, from period to period, can cause variations in the effective income tax rate. The following items are subject to flow-through treatm ent: repairs expenditures related to a certain portion of utility plant assets the equity portion of AFUDC a portion of the cost of removal of utility plant assets utility self-developed software expenditures depreciation on a certain portion of utility pl ant assets state income taxes The AFUDC related to equity recorded for regulated construction projects at Sempra Mexico has similar flow-through treatment. We provide additional information about our accounting for income taxes in Notes 1 and 6 of the Not es to Consolidated Financial Statements in the Annual Report.

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