v3.6.0.2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables)
 12 Months Ended
Dec. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Commodity Derivative Volumes Table
We summarize net energy derivative volumes at December 31, 2016 and 2015 as follows:
NET ENERGY DERIVATIVE VOLUMES
(Quantities in millions)
 
 
 
December 31,
Commodity
Unit of measure
 
2016
 
2015
California Utilities:
 
 
 
 
 
SDG&E:
 
 
 
 
 
Natural gas
MMBtu(1)
 
48

 
70

Electricity
MWh(2)
 
4

 
1

Congestion revenue rights
MWh
 
48

 
36

SoCalGas – natural gas
MMBtu
 
1

 
1

 
 
 
 
 
 
Energy-Related Businesses:
 
 
 

 
 

Sempra LNG & Midstream – natural gas
MMBtu
 
31

 
43

(1)
Million British thermal units
(2)
Megawatt hours
Notional Amounts Of Interest Rate Derivatives Table
At December 31, 2016 and 2015, the net notional amounts of our foreign currency derivatives, excluding joint ventures, were:
FOREIGN CURRENCY DERIVATIVES
(Dollars in millions)
 
December 31, 2016
 
December 31, 2015
 
Notional amount
 
Maturities
 
Notional amount
 
Maturities
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Cross-currency swaps
$
408

 
2017-2023
 
$
408

 
2016-2023

Other foreign currency derivatives(1)
86

 
2017-2018
 
—

 
—

(1)
At December 31, 2016, includes GdC, which was previously a joint venture and excluded from this table until we acquired the remaining 50-percent interest in September 2016.
At December 31, 2016 and 2015, the net notional amounts of our interest rate derivatives, excluding joint ventures, were:
INTEREST RATE DERIVATIVES
(Dollars in millions)
 
December 31, 2016
 
December 31, 2015
 
Notional debt
 
Maturities
 
Notional debt
 
Maturities
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Cash flow hedges(1)(2)
$
924

 
2017-2032

 
$
384

 
2016-2028
Fair value hedges
—

 
—

 
300

 
2016
SDG&E:
 
 
 

 
 

 
 
Cash flow hedge(1)
305

 
2017-2019

 
315

 
2016-2019
(1)
Includes Otay Mesa VIE. All of SDG&E’s interest rate derivatives relate to Otay Mesa VIE.
(2)
At December 31, 2016, includes GdC, which was previously a joint venture and excluded from this table until we acquired the remaining 50-percent interest in September 2016.
Derivative Instruments on the Consolidated Balance Sheet Table
The following tables provide the fair values of derivative instruments on the Consolidated Balance Sheets at December 31, 2016 and 2015, including the amount of cash collateral receivables that were not offset, as the cash collateral is in excess of liability positions.
DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
December 31, 2016
 
Current
assets:
Fixed-price
contracts
and other
derivatives(1)
 
Other
assets:
Sundry
 
Current
liabilities:
Fixed-price
contracts
and other
derivatives(2)
 
Deferred
credits
and other
liabilities:
Fixed-price
contracts
and other
derivatives
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate and foreign exchange instruments(3)
$
7

 
$
2

 
$
(24
)
 
$
(228
)
Commodity contracts not subject to rate recovery
—

 
—

 
(14
)
 
—

Derivatives not designated as hedging instruments:
 

 
 

 
 

 
 

Commodity contracts not subject to rate recovery
248

 
36

 
(254
)
 
(28
)
Associated offsetting commodity contracts
(242
)
 
(27
)
 
242

 
27

Associated offsetting cash collateral
—

 
(1
)
 
16

 
1

Commodity contracts subject to rate recovery
37

 
73

 
(57
)
 
(150
)
Associated offsetting commodity contracts
(9
)
 
(1
)
 
9

 
1

Associated offsetting cash collateral
—

 
—

 
5

 
13

Net amounts presented on the balance sheet
41

 
82

 
(77
)
 
(364
)
Additional cash collateral for commodity contracts
not subject to rate recovery
10

 
—

 
—

 
—

Additional cash collateral for commodity contracts
subject to rate recovery
32

 
—

 
—

 
—

Total(4)
$
83

 
$
82

 
$
(77
)
 
$
(364
)
SDG&E:
 

 
 

 
 

 
 

Derivatives designated as hedging instruments:
 

 
 

 
 

 
 

Interest rate instruments(3)
$
—

 
$
—

 
$
(13
)
 
$
(12
)
Derivatives not designated as hedging instruments:
 

 
 

 
 

 
 

Commodity contracts subject to rate recovery
33

 
73

 
(51
)
 
(150
)
Associated offsetting commodity contracts
(6
)
 
(1
)
 
6

 
1

Associated offsetting cash collateral
—

 
—

 
3

 
13

Net amounts presented on the balance sheet
27

 
72

 
(55
)
 
(148
)
Additional cash collateral for commodity contracts
not subject to rate recovery
1

 
—

 
—

 
—

Additional cash collateral for commodity contracts
subject to rate recovery
30

 
—

 
—

 
—

Total(4)
$
58

 
$
72


$
(55
)
 
$
(148
)
SoCalGas:
 

 
 

 
 

 
 

Derivatives not designated as hedging instruments:
 

 
 

 
 

 
 

Commodity contracts subject to rate recovery
$
4

 
$
—

 
$
(6
)
 
$
—

Associated offsetting commodity contracts
(3
)
 
—

 
3

 
—

Associated offsetting cash collateral
—

 
—

 
2

 
—

Net amounts presented on the balance sheet
1

 
—

 
(1
)
 
—

Additional cash collateral for commodity contracts
not subject to rate recovery
1

 
—

 
—

 
—

Additional cash collateral for commodity contracts
subject to rate recovery
2

 
—

 
—

 
—

Total
$
4

 
$
—

 
$
(1
)
 
$
—

(1)
Included in Current Assets: Other for SoCalGas.
(2)
Included in Current Liabilities: Other for SoCalGas.
(3)
Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE.
(4)
Normal purchase contracts previously measured at fair value are excluded.

 
DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
December 31, 2015
 
Current
assets:
Fixed-price
contracts
and other
derivatives(1)
 
Other
assets:
Sundry
 
Current
liabilities:
Fixed-price
contracts
and other
derivatives(2)
 
Deferred
credits
and other
liabilities:
Fixed-price
contracts
and other
derivatives
Sempra Energy Consolidated:
 
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate and foreign exchange instruments(3)
$
4

 
$
1

 
$
(15
)
 
$
(156
)
Commodity contracts not subject to rate recovery
13

 
—

 
—

 
—

Derivatives not designated as hedging instruments:
 

 
 

 
 

 
 

Commodity contracts not subject to rate recovery
245

 
32

 
(239
)
 
(21
)
Associated offsetting commodity contracts
(232
)
 
(20
)
 
232

 
20

Associated offsetting cash collateral
(6
)
 
—

 
4

 
—

Commodity contracts subject to rate recovery
28

 
49

 
(61
)
 
(64
)
Associated offsetting commodity contracts
(2
)
 
(2
)
 
2

 
2

Associated offsetting cash collateral
—

 
—

 
28

 
26

Net amounts presented on the balance sheet
50

 
60

 
(49
)
 
(193
)
Additional cash collateral for commodity contracts
not subject to rate recovery
2

 
—

 
—

 
—

Additional cash collateral for commodity contracts
subject to rate recovery
28

 
—

 
—

 
—

Total(4)
$
80

 
$
60

 
$
(49
)
 
$
(193
)
SDG&E:
 

 
 

 
 

 
 

Derivatives designated as hedging instruments:
 

 
 

 
 

 
 

Interest rate instruments(3)
$
—

 
$
—

 
$
(14
)
 
$
(23
)
Derivatives not designated as hedging instruments:
 

 
 

 
 

 
 

Commodity contracts not subject to rate recovery
—

 
—

 
(1
)
 
—

Associated offsetting cash collateral
—

 
—

 
1

 
—

Commodity contracts subject to rate recovery
27

 
49

 
(60
)
 
(64
)
Associated offsetting commodity contracts
(2
)
 
(2
)
 
2

 
2

Associated offsetting cash collateral
—

 
—

 
28

 
26

Net amounts presented on the balance sheet
25

 
47

 
(44
)
 
(59
)
Additional cash collateral for commodity contracts
not subject to rate recovery
1

 
—

 
—

 
—

Additional cash collateral for commodity contracts
subject to rate recovery
27

 
—

 
—

 
—

Total(4)
$
53

 
$
47

 
$
(44
)
 
$
(59
)
SoCalGas:
 

 
 

 
 

 
 

Derivatives not designated as hedging instruments:
 

 
 

 
 

 
 

Commodity contracts not subject to rate recovery
$
—

 
$
—

 
$
(1
)
 
$
—

Associated offsetting cash collateral
—

 
—

 
1

 
—

Commodity contracts subject to rate recovery
1

 
—

 
(1
)
 
—

Net amounts presented on the balance sheet
1

 
—

 
(1
)
 
—

Additional cash collateral for commodity contracts
subject to rate recovery
1

 
—

 
—

 
—

Total
$
2

 
$
—

 
$
(1
)
 
$
—

(1)
Included in Current Assets: Other for SoCalGas.
(2)
Included in Current Liabilities: Other for SoCalGas.
(3)
Includes Otay Mesa VIE. All of SDG&E’s amounts relate to Otay Mesa VIE.
(4)
Normal purchase contracts previously measured at fair value are excluded.
Fair Value Hedge Impact on the Consolidated Statement of Operations Table
The effects of derivative instruments designated as hedges on the Consolidated Statements of Operations and in OCI and AOCI for the years ended December 31 were:
FAIR VALUE HEDGE IMPACTS
(Dollars in millions)
 
 
Pretax gain (loss) on derivatives recognized in earnings
 
 
Years ended December 31,
 
Location
2016
 
2015
 
2014
Sempra Energy Consolidated:
 
 
 
 
 
 
Interest rate instruments
Interest Expense
$
3

 
$
6

 
$
8

Interest rate instruments
Other Income, Net
(2
)
 
(5
)
 
(3
)
    Total(1)
 
$
1

 
$
1

 
$
5

(1)
There was no hedge ineffectiveness in 2016 or 2015. There were gains of $9 million from hedge ineffectiveness in 2014. All other changes in the fair value of the interest rate swap agreements are exactly offset by changes in the fair value of the underlying long-term debt and recorded in Other Income, Net.
Cash Flow Hedge Impact on the Consolidated Statements Of Operations Table
CASH FLOW HEDGE IMPACTS
(Dollars in millions)
 
Pretax (loss) gain
recognized in OCI
 
 
 
Pretax (loss) gain reclassified
from AOCI into earnings
 
Years ended December 31,
 
 
 
Years ended December 31,
 
2016
 
2015
 
2014
 
Location
 
2016
 
2015
 
2014
Sempra Energy Consolidated:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate and foreign
exchange instruments(1)
$
(8
)
 
$
(18
)
 
$
(24
)
 
Interest Expense
 
$
(17
)
 
$
(18
)
 
$
(21
)
Interest rate instruments
—

 
—

 
3

 
Gain on Sale of Assets
 
—

 
—

 
3

Interest rate instruments
(9
)
 
(80
)
 
(127
)
 
Equity Earnings,
Before Income Tax
 
(10
)
 
(12
)
 
(10
)
Interest rate and foreign
exchange instruments
—

 
—

 
—

 
Remeasurement of Equity
Method Investment
 
(7
)
 
—

 
—

Interest rate and foreign
exchange instruments
5

 
(20
)
 
—

 
Equity Earnings,
Net of Income Tax
 
(5
)
 
(13
)
 
—

Foreign exchange instruments
4

 
—

 
—

 
Revenues: Energy-
Related Businesses
 
—

 
—

 
—

Commodity contracts not subject
to rate recovery
(13
)
 
12

 
19

 
Revenues: Energy-
Related Businesses
 
6

 
14

 
8

Total(2)
$
(21
)
 
$
(106
)
 
$
(129
)
 
 
 
$
(33
)
 
$
(29
)
 
$
(20
)
SDG&E:
 

 
 

 
 

 
 
 
 

 
 

 
 

Interest rate instruments(1)(3)
$
(2
)
 
$
(6
)
 
$
(9
)
 
Interest Expense
 
$
(12
)
 
$
(12
)
 
$
(11
)
SoCalGas:
 

 
 

 
 

 
 
 
 

 
 

 
 

Interest rate instruments
$
—

 
$
—

 
$
—

 
Interest Expense
 
$
(1
)
 
$
(1
)
 
$
(1
)
(1)
Amounts include Otay Mesa VIE. All of SDG&E’s interest rate derivative activity relates to Otay Mesa VIE.
(2)
There was $4 million, $2 million and $1 million of losses from ineffectiveness related to these cash flow hedges in 2016, 2015 and 2014, respectively.
(3)
There was negligible hedge ineffectiveness related to these cash flow hedges at SDG&E in 2016, 2015 and 2014.
Undesignated Derivative Impact on the Consolidated Statements of Operations
The effects of derivative instruments not designated as hedging instruments on the Consolidated Statements of Operations for the years ended December 31 were:
UNDESIGNATED DERIVATIVE IMPACTS
(Dollars in millions)
 
 
Pretax (loss) gain on derivatives recognized in earnings
 
 
Years ended December 31,
 
Location
2016
 
2015
 
2014
Sempra Energy Consolidated:
 
 
 
 
 
 
Interest rate and foreign
exchange instruments
Other Income, Net
$
(32
)
 
$
(4
)
 
$
(24
)
Foreign exchange instruments
Equity Earnings,
Net of Income Tax
3

 
(4
)
 
(5
)
Commodity contracts not subject
to rate recovery
Revenues: Energy-Related
Businesses
(18
)
 
42

 
17

Commodity contracts not subject
to rate recovery
Cost of Natural Gas, Electric
Fuel and Purchased Power
—

 
—

 
3

Commodity contracts not subject
to rate recovery
Operation and Maintenance
1

 
(1
)
 
(4
)
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
(53
)
 
(126
)
 
(10
)
Commodity contracts subject
to rate recovery
Cost of Natural Gas
(4
)
 
1

 
—

Total
 
$
(103
)
 
$
(92
)
 
$
(23
)
SDG&E:
 
 

 
 

 
 

Commodity contracts not subject
to rate recovery
Operation and Maintenance
$
—

 
$
—

 
$
(1
)
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
(53
)
 
(126
)
 
(10
)
Total
 
$
(53
)

$
(126
)
 
$
(11
)
SoCalGas:
 
 

 
 

 
 

Commodity contracts not subject
to rate recovery
Operation and Maintenance
$
1

 
$
(1
)
 
$
(2
)
Commodity contracts subject
to rate recovery
Cost of Natural Gas
(4
)
 
1

 
—

Total
 
$
(3
)
 
$
—

 
$
(2
)