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REVENUES (Notes) | 3 Months Ended
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Mar. 31, 2018
Revenue from Contract with Customer [Abstract] |
REVENUES | REVENUES The following table disaggregates our revenues from contracts with customers by major service line, market and timing of recognition and provides a reconciliation to total revenues by segment for the three months ended March 31, 2018.
DISAGGREGATED REVENUES
(Dollars in millions)
| Three months ended March 31, 2018
| SDG&E |  | SoCalGas |  | Sempra South American Utilities |  | Sempra Mexico |  | Sempra Renewables |  | Sempra LNG & Midstream |  | Consolidating adjustments |  | Sempra Energy Consolidated
By major service line: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Utilities | $ | 1,131 |  |  | $ | 1,081 |  |  | $ | 408 |  |  | $ | 28 |  |  | $ | — |  |  | $ | — |  |  | $ | (19 | ) |  | $ | 2,629 |
Midstream | — |  |  | — |  |  | — |  |  | 143 |  |  | — |  |  | 54 |  |  | (21 | ) |  | 176 |
Renewables | — |  |  | — |  |  | — |  |  | 22 |  |  | 11 |  |  | 1 |  |  | (1 | ) |  | 33 |
Other | — |  |  | — |  |  | 17 |  |  | 41 |  |  | — |  |  | 2 |  |  | (2 | ) |  | 58 |
Revenues from contracts with customers | $ | 1,131 |  |  | $ | 1,081 |  |  | $ | 425 |  |  | $ | 234 |  |  | $ | 11 |  |  | $ | 57 |  |  | $ | (43 | ) |  | $ | 2,896 |
By market: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Electric | $ | 963 |  |  | $ | — |  |  | $ | 425 |  |  | $ | 62 |  |  | $ | 11 |  |  | $ | 2 |  |  | $ | (4 | ) |  | $ | 1,459 |
Gas | 168 |  |  | 1,081 |  |  | — |  |  | 172 |  |  | — |  |  | 55 |  |  | (39 | ) |  | 1,437 |
Revenues from contracts with customers | $ | 1,131 |  |  | $ | 1,081 |  |  | $ | 425 |  |  | $ | 234 |  |  | $ | 11 |  |  | $ | 57 |  |  | $ | (43 | ) |  | $ | 2,896 |
By timing of recognition: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Over time | $ | 1,104 |  |  | $ | 1,051 |  |  | $ | 420 |  |  | $ | 234 |  |  | $ | 11 |  |  | $ | 40 |  |  | $ | (37 | ) |  | $ | 2,823 |
Point in time | 27 |  |  | 30 |  |  | 5 |  |  | — |  |  | — |  |  | 17 |  |  | (6 | ) |  | 73 |
Revenues from contracts with customers | $ | 1,131 |  |  | $ | 1,081 |  |  | $ | 425 |  |  | $ | 234 |  |  | $ | 11 |  |  | $ | 57 |  |  | $ | (43 | ) |  | $ | 2,896 |
Revenues from contracts with customers | $ | 1,131 |  |  | $ | 1,081 |  |  | $ | 425 |  |  | $ | 234 |  |  | $ | 11 |  |  | $ | 57 |  |  | $ | (43 | ) |  | $ | 2,896 |
Utilities regulatory revenues | (76 | ) |  | 45 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (31 | )
Other revenues | — |  |  | — |  |  | 1 |  |  | 74 |  |  | 14 |  |  | 47 |  |  | (39 | ) |  | 97 |
Total revenues | $ | 1,055 |  |  | $ | 1,126 |  |  | $ | 426 |  |  | $ | 308 |  |  | $ | 25 |  |  | $ | 104 |  |  | $ | (82 | ) |  | $ | 2,962 |
REVENUES FROM CONTRACTS WITH CUSTOMERS Our revenues from contracts with customers are primarily related to the generation, transmission and distribution of electricity and transmission, distribution and storage of natural gas through our regulated utilities. We also provide other midstream and renewable energy-related services. We assess our revenues on a contract-by-contract as well as a portfolio basis to determine the nature, amount, timing and uncertainty, if any, of revenues being recognized. We generally recognize revenues when performance of the promised commodity service is provided to our customers and invoice our customers for an amount that reflects the consideration we are entitled to in exchange for those services. We consider the delivery and transmission of electricity and natural gas and providing of natural gas storage services as ongoing and integrated services. Generally, electricity or natural gas services are received and consumed by the customer simultaneously. Our performance obligations related to these services are satisfied over time and represent a series of distinct services that are substantially the same and that have the same pattern of transfer to the customers. We recognize revenue based on units delivered, as the satisfaction of our performance obligations can be directly measured by the amount of electricity or natural gas delivered to the customer. In most cases, the right to consideration from the customer directly corresponds to the value transferred to the customer and we recognize revenue in the amount that we have the right to invoice. We provide further details of our revenue streams below. The payment terms in our customer contracts vary. Typically, we have an unconditional right to customer payments, which are due after the performance obligation to the customer is satisfied. The term between invoicing and when payment is due is typically between 10 and 90 days. We have elected the practical expedient to exclude sales and usage-based taxes from revenues. In addition, the California Utilities pay franchise fees to operate in various municipalities. The California Utilities bill these franchise fees to their customers based on a CPUC-authorized rate. These franchise fees, which are required to be paid regardless of the California Utilities’ ability to collect from the customer, are accounted for on a gross basis and reflected in utilities revenues from contracts with customers and operating expense. Utilities Revenues Utilities revenues represent the majority of our consolidated revenues from contracts with customers and include: The generation, transmission and distribution of electricity at:
▪ | SDG&E
▪ | Sempra South American Utilities’ Chilquinta Energía and Luz del Sur
The distribution, transportation and storage of natural gas at:
▪ | SDG&E
▪ | SoCalGas
▪ | Sempra Mexico’s Ecogas
Utilities revenues are derived from and recognized upon the delivery of electricity or natural gas services to customers. Amounts that we bill our customers are based on tariffs set by regulators within the respective state or country. For SDG&E and SoCalGas, which follow the provisions of U.S. GAAP governing rate-regulated operations as we discuss in Note 1, amounts that we bill to customers also include adjustments for previously recognized regulatory revenues. The California Utilities and Ecogas recognize revenues based on regulator-approved revenue requirements, which allows the utilities to recover their reasonable cost of O&M and provides the opportunity to realize their authorized rates of return on their investments. While the California Utilities’ revenues are not affected by actual sales volumes, the pattern of their revenue recognition during the year is affected by seasonality. 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. SDG&E has an arrangement to provide the California ISO with the ability to control its high voltage transmission lines for prices approved by a regulator. Revenue is recognized over time as access is provided to the California ISO. Chilquinta Energía and Luz del Sur, our electric distribution utilities in South America, recognize revenues based on tariffs designed to provide for a pass-through to customers of transmission and energy costs, recovery of reasonable O&M based on an efficient model distribution company, incentives to reduce costs and make needed capital investments and a regulated rate of return on the distributor’s regulated asset base. Factors that can affect the amount, timing and uncertainty of revenues and cash flows include weather, seasonality and timing of customer billings, which may result in unbilled revenues that can vary significantly from month to month and generally approximate one-half month’s deliveries. The California Utilities recognize revenues from the sale of allocated California GHG emissions allowances at quarterly auctions administered by CARB. GHG allowances are delivered to CARB in advance of the quarterly auctions, and the California Utilities have the right to payment when the GHG allowances are sold at auction. GHG revenue is recognized on a point in time basis within the quarter the auction is held. The California Utilities balance costs and revenues associated with the GHG program through regulatory balancing accounts. Midstream Revenues Midstream revenues at Sempra Mexico and Sempra LNG & Midstream typically represent revenues from long-term, U.S. dollar-based contracts with customers for the sale of natural gas and LNG, as well as storage and transportation of natural gas. Invoiced amounts are based on the volume of natural gas delivered and contracted prices. Sempra Mexico’s marketing operations sell natural gas to the CFE and other customers under supply agreements. Sempra Mexico recognizes the revenue from the sale of natural gas upon transfer of the natural gas via pipelines to customers at the agreed upon delivery points, and in the case of the CFE, at its thermoelectric power plants. Through its marketing operations, Sempra LNG & Midstream has contracts to sell natural gas and LNG to Sempra Mexico that allow Sempra Mexico to satisfy its obligations under supply agreements with the CFE and other customers, and to supply Sempra Mexico’s TdM power plant. Because Sempra Mexico either immediately delivers the natural gas to its customers or consumes the benefits simultaneously (by using the gas to supply TdM), revenues from Sempra LNG & Midstream’s sale of natural gas to Sempra Mexico are generally recognized over time as delivered. Revenues from LNG sales are recognized at the point when the cargo is delivered to Sempra Mexico. Revenues from the sale of LNG and natural gas by Sempra LNG & Midstream to Sempra Mexico are adjusted for indemnity payments and profit sharing. We consider these adjustments to be forms of variable consideration that are associated with the sale of LNG and natural gas to Sempra Mexico, and therefore, the related costs have been recorded as an offset to revenues. We recognize storage revenue from firm capacity reservation agreements, under which we collect a fee for reserving storage capacity for customers in our underground storage facilities. Under these firm agreements, customers pay a monthly fixed reservation fee based on the storage capacity reserved rather than the actual volumes stored. For the fixed-fee component, revenue is recognized on a straight-line basis over the term of the contract. We bill customers for any capacity used in excess of the contracted capacity and such revenues are recognized in the month of occurrence. We also recognize revenue for interruptible storage services. We generate pipeline transportation revenues from firm agreements, under which customers pay a fee for reserving transportation capacity. Revenue is recognized when the volumes are delivered to the customers’ agreed upon delivery point. We recognize revenues for our stand-ready obligation to provide capacity and transportation services throughout the contractual delivery period, as the benefits are received and consumed simultaneously as customers utilize pipeline capacity for the transport and receipt of natural gas and LPG. Invoiced amounts are based on a variable usage fee and a fixed capacity charge, adjusted for CPI, the effects of any foreign currency translation and the actual quantity of commodity transported. Renewables Revenues Sempra Renewables and Sempra Mexico develop, invest in and operate solar and wind facilities that have long-term PPAs to sell the electricity and the related green energy attributes they generate to customers, generally load serving entities, and also for Sempra Mexico, industrial and other customers. Load serving entities will sell electric service to their end-users and wholesale customers immediately upon receipt of our power delivery, and industrial and other customers immediately consume the electricity to run their facilities, and thus, we recognize the revenue under the PPAs as the electricity is generated. We invoice customers based on the volume of energy delivered at rates pursuant to the PPAs. Sempra LNG & Midstream has a contractual agreement to provide scheduling and marketing of renewable power for Sempra Renewables. Invoiced amounts are based on a fixed fee per MWh scheduled. Other Revenues from Contracts with Customers Tecnored and Tecsur, our energy services companies in South America, generate revenues from the retail sale of electric materials and providing electric construction and infrastructure services to their customers. TdM is a natural gas-fired power plant that generates revenues from selling electricity and/or resource adequacy to the California ISO and to governmental, public utility and wholesale power marketing entities, as the power is delivered at the interconnection point. TdM is currently held for sale, as we discuss in Note 5. Remaining Performance Obligations We do not disclose information about remaining performance obligations for (a) contracts with an original expected length of one year or less, (b) revenues recognized at the amount at which we have the right to invoice for services performed, or (c) variable consideration allocated to wholly unsatisfied performance obligations. For contracts greater than one year, at March 31, 2018, we expect to recognize revenue related to the fixed fee component of the consideration as shown below. SoCalGas did not have any such remaining performance obligations at March 31, 2018.
REMAINING PERFORMANCE OBLIGATIONS(1) |  |
(Dollars in millions) |  |
| Sempra Energy Consolidated | SDG&E
2018 | $ | 531 |  | $ | 2 |
2019 | 533 |  | 3 |
2020 | 532 |  | 3 |
2021 | 528 |  | 3 |
2022 | 531 |  | 3 |
Thereafter | 3,384 |  | 55 |
Total revenues to be recognized | $ | 6,039 |  | $ | 69 |
(1) | Excludes intercompany transactions.
Contract Balances from Revenues from Contracts with Customers From time to time, we receive payments in advance of satisfying the performance obligations associated with customer contracts. We defer such revenues as contract liabilities and recognize them in earnings as the performance obligations are satisfied. Activities within Sempra Energy’s contract liabilities for the three months ended March 31, 2018 are presented below. There were no contract liabilities at SDG&E or SoCalGas at March 31, 2018.
CONTRACT LIABILITIES |
(Dollars in millions) |
Opening balance, January 1, 2018 | $ | — |
Adoption of ASC 606 adjustment | (68 | )
Revenue from performance obligations satisfied during reporting period | 12 |
Payments received in advance | (15 | )
Closing balance, March 31, 2018(1) | $ | (71 | )
(1) | I ncludes $9 million in Other Current Liabilities and $62 million in Deferred Credits and Other on the Sempra Energy Condensed Consolidated Balance Sheet.
Receivables from Revenues from Contracts with Customers The table below shows receivable balances associated with revenues from contracts with customers on our Condensed Consolidated Balance Sheets.
RECEIVABLES FROM REVENUES FROM CONTRACTS WITH CUSTOMERS |  |
(Dollars in millions) |  |  |
| March 31, 2018 |  | January 1, 2018
Sempra Energy Consolidated: |  |  |
Accounts receivable – trade, net | $ | 1,226 |  |  | $ | 1,194 |
Accounts receivable – other, net | 11 |  |  | 10 |
Due from unconsolidated affiliates – current | 9 |  |  | 8 |
Total | $ | 1,246 |  |  | $ | 1,212 |
SDG&E: |  |  |
Accounts receivable – trade, net | $ | 376 |  |  | $ | 362 |
Accounts receivable – other, net | 6 |  |  | 3 |
Due from unconsolidated affiliates – current(1) | 3 |  |  | 3 |
Total | $ | 385 |  |  | $ | 368 |
SoCalGas: |  |  |
Accounts receivable – trade, net | $ | 509 |  |  | $ | 517 |
Accounts receivable – other, net | 3 |  |  | 7 |
Total | $ | 512 |  |  | $ | 524 |
(1) | This amount is netted against current amounts due to unconsolidated affiliates on the SDG&E Condensed Consolidated Balance Sheet.
REVENUES FROM SOURCES OTHER THAN CONTRACTS WITH CUSTOMERS Certain of our revenues are derived from sources other than contracts with customers and are accounted for under other accounting standards outside the scope of ASC 606. Utilities Regulatory Revenues Alternative Revenue Programs We recognize revenues from alternative revenue programs when the regulator-specified conditions for recognition have been met and adjust these revenues as they are recovered or refunded through incorporation in future utility service. Decoupled revenues. As discussed earlier, the regulatory framework requires the California Utilities to recover authorized revenue based on estimated annual demand forecasts approved in regular proceedings before the CPUC. However, actual demand for electricity and natural gas will generally vary from CPUC-approved forecasted demand due to the impacts from weather volatility, energy efficiency programs, rooftop solar and other factors affecting consumption. The CPUC regulatory framework provides for the California Utilities to use a “decoupling” mechanism, which allows the California Utilities to record revenue shortfalls or excess revenues resulting from any difference between actual and forecasted demand to be recovered or refunded in authorized revenue in a subsequent period based on the nature of the account. Incentive mechanisms. The CPUC applies performance-based measures and incentive mechanisms to all California IOUs, under which the California Utilities have earnings potential above authorized base margins if they achieve or exceed specific performance and operating goals. Generally, for performance-based awards, if performance is above or below specific benchmarks, the utility is eligible for financial awards or subject to financial penalties. Incentive awards are included in revenues when we receive required CPUC approval of the award, the timing of which may not be consistent from year to year. We would record penalties for results below the specified benchmarks against revenues when we believe it is probable that the CPUC would assess a penalty. Other Cost-Based Regulatory Recovery The CPUC authorizes the California Utilities to collect revenue requirements for costs that they have been authorized to recover from customers, including the costs to purchase electricity and natural gas, costs associated with administering public purpose, demand response, and customer energy efficiency programs and other programmatic activities authorized as part of the GRC or separately from the GRC. Actual costs are recovered as the commodity or service is delivered, or to the extent actual amounts vary from forecasts, generally recovered or refunded within a subsequent period based on the nature of the account through a balancing account mechanism. In general, the revenue recognition criteria for pass-through costs billed to customers are met at the time the costs are incurred. Because SDG&E’s and SoCalGas’ cost of electricity and/or natural gas is substantially recovered in rates through a balancing account mechanism, changes in these costs are reflected in the changes in revenues, and therefore do not impact earnings. The CPUC authorizes balancing accounts for certain programmatic activities. Amounts billed to customers, if any, are recorded in these accounts, as well as actual O&M and applicable capital-related costs (such as depreciation, taxes and ROE). Differences between actual and authorized expenditures are tracked and may be recovered or refunded within a GRC cycle or as part of the subsequent GRC request. Examples of these types of programs include, but are not limited to, gas distribution, gas transmission, and gas storage integrity management. The CPUC may impose various review procedures before authorizing recovery or refund for programs authorized separately from the GRC, including limitations on the total cost of the program, revenue requirement limits or reviews of costs for reasonableness. These procedures could result in disallowances of recovery from ratepayers. Examples of programs with reasonableness review procedures include, but are not limited to, PSEP. We discuss balancing accounts and their effects further in Note 4 below and in Note 14 of the Notes to Consolidated Financial Statements in the Annual Report. Other Revenues Sempra LNG & Midstream has an agreement to supply LNG to Sempra Mexico’s ECA LNG terminal. Although the LNG supplier purchase agreement specifies a number of cargoes to be delivered annually, actual cargoes delivered by the supplier have traditionally been significantly lower than the maximum specified under the agreement. As a result, Sempra LNG & Midstream is contractually required to make monthly indemnity payments to Sempra Mexico for failure to deliver the contracted LNG. The revenue from the indemnity payments, along with an amount for profit sharing, allows Sempra Mexico to recover the costs of operating the ECA terminal. Sempra Mexico generates lease revenue from operating lease agreements with PEMEX for the use of natural gas and ethane pipelines and LPG storage facilities. Certain PPAs at Sempra Renewables are also accounted for as operating leases. The operating leases have terms ranging from 15 to 25 years. Sempra LNG & Midstream recognizes other revenues from:
▪ | fees related to contractual counterparty obligations for non-delivery of LNG cargoes, as described above.
▪ sales of electricity and natural gas under short-term and long-term contracts and into the spot market and other competitive markets. Revenues include the net realized gains and losses on physical and derivative settlements and net unrealized gains and losses from the change in fair values of the derivatives.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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