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REGULATORY MATTERS (Tables) | 12 Months Ended
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Dec. 31, 2018
Regulated Operations [Abstract] |
Schedule of Regulatory Assets | We show the details of regulatory assets and liabilities in the following table and discuss them below.
REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
| December 31,
| 2018 |  | 2017
SDG&E: |  |  |
Fixed-price contracts and other derivatives | $ | (150 | ) |  | $ | 96 |
Deferred income taxes refundable in rates | (236 | ) |  | (281 | )
Pension and other postretirement benefit plan obligations | 186 |  |  | 153 |
Removal obligations | (1,848 | ) |  | (1,846 | )
Unamortized loss on reacquired debt | 7 |  |  | 9 |
Environmental costs | 28 |  |  | 29 |
Sunrise Powerlink fire mitigation | 120 |  |  | 119 |
Regulatory balancing accounts(1) |  |  |
Commodity – electric | (8 | ) |  | 82 |
Gas transportation | 45 |  |  | 22 |
Safety and reliability | 70 |  |  | 48 |
Public purpose programs | (62 | ) |  | (70 | )
Other balancing accounts | 145 |  |  | 233 |
Other regulatory liabilities, net(2) | (177 | ) |  | (70 | )
Total SDG&E | (1,880 | ) |  | (1,476 | )
SoCalGas: |  |  |  |  |
Pension and other postretirement benefit plan obligations | 470 |  |  | 513 |
Employee benefit costs | 49 |  |  | 45 |
Removal obligations | (833 | ) |  | (924 | )
Deferred income taxes refundable in rates | (336 | ) |  | (437 | )
Unamortized loss on reacquired debt | 7 |  |  | 8 |
Environmental costs | 28 |  |  | 22 |
Workers’ compensation | 9 |  |  | 12 |
Regulatory balancing accounts(1) |  |  |
Commodity – gas, including transportation | 196 |  |  | 151 |
Safety and reliability | 332 |  |  | 266 |
Public purpose programs | (325 | ) |  | (274 | )
Other balancing accounts | (68 | ) |  | (114 | )
Other regulatory liabilities, net(2) | (130 | ) |  | (64 | )
Total SoCalGas | (601 | ) |  | (796 | )
Sempra Mexico: |  |  |
Deferred income taxes recoverable in rates | 81 |  |  | 83 |
Other regulatory assets | 6 |  |  | — |
Total Sempra Energy Consolidated | $ | (2,394 | ) |  | $ | (2,189 | )
(1) | At December 31, 2018 and 2017, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $78 million and $63 million, respectively. At December 31, 2018 and 2017, the noncurrent portion of regulatory balancing accounts – net undercollected for SoCalGas was $185 million and $118 million, respectively.
(2) | Includes regulatory assets earning a rate of return.
Schedule of Regulatory Liabilities | We show the details of regulatory assets and liabilities in the following table and discuss them below.
REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
| December 31,
| 2018 |  | 2017
SDG&E: |  |  |
Fixed-price contracts and other derivatives | $ | (150 | ) |  | $ | 96 |
Deferred income taxes refundable in rates | (236 | ) |  | (281 | )
Pension and other postretirement benefit plan obligations | 186 |  |  | 153 |
Removal obligations | (1,848 | ) |  | (1,846 | )
Unamortized loss on reacquired debt | 7 |  |  | 9 |
Environmental costs | 28 |  |  | 29 |
Sunrise Powerlink fire mitigation | 120 |  |  | 119 |
Regulatory balancing accounts(1) |  |  |
Commodity – electric | (8 | ) |  | 82 |
Gas transportation | 45 |  |  | 22 |
Safety and reliability | 70 |  |  | 48 |
Public purpose programs | (62 | ) |  | (70 | )
Other balancing accounts | 145 |  |  | 233 |
Other regulatory liabilities, net(2) | (177 | ) |  | (70 | )
Total SDG&E | (1,880 | ) |  | (1,476 | )
SoCalGas: |  |  |  |  |
Pension and other postretirement benefit plan obligations | 470 |  |  | 513 |
Employee benefit costs | 49 |  |  | 45 |
Removal obligations | (833 | ) |  | (924 | )
Deferred income taxes refundable in rates | (336 | ) |  | (437 | )
Unamortized loss on reacquired debt | 7 |  |  | 8 |
Environmental costs | 28 |  |  | 22 |
Workers’ compensation | 9 |  |  | 12 |
Regulatory balancing accounts(1) |  |  |
Commodity – gas, including transportation | 196 |  |  | 151 |
Safety and reliability | 332 |  |  | 266 |
Public purpose programs | (325 | ) |  | (274 | )
Other balancing accounts | (68 | ) |  | (114 | )
Other regulatory liabilities, net(2) | (130 | ) |  | (64 | )
Total SoCalGas | (601 | ) |  | (796 | )
Sempra Mexico: |  |  |
Deferred income taxes recoverable in rates | 81 |  |  | 83 |
Other regulatory assets | 6 |  |  | — |
Total Sempra Energy Consolidated | $ | (2,394 | ) |  | $ | (2,189 | )
(1) | At December 31, 2018 and 2017, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $78 million and $63 million, respectively. At December 31, 2018 and 2017, the noncurrent portion of regulatory balancing accounts – net undercollected for SoCalGas was $185 million and $118 million, respectively.
(2) | Includes regulatory assets earning a rate of return.
Proposed Revenue Requirements | In October 2017, the CPUC approved the embedded cost of debt presented in advice letters filed by SDG&E and SoCalGas, resulting in a revised return on rate base for SDG&E of 7.55 percent and for SoCalGas of 7.34 percent, effective January 1, 2018, as depicted in the table below:
AUTHORIZED COST OF CAPITAL AND RATE STRUCTURE – CPUC
SDG&E |  | SoCalGas
Authorized weighting | Return on rate base | Weighted return on rate base |  | Authorized weighting | Return on rate base | Weighted return on rate base
45.25 | % | 4.59 | % | 2.08 | % | Long-Term Debt | 45.60 | % | 4.33 | % | 1.97 | %
2.75 |  | 6.22 |  | 0.17 |  | Preferred Stock | 2.40 |  | 6.00 |  | 0.14 |
52.00 |  | 10.20 |  | 5.30 |  | Common Equity | 52.00 |  | 10.05 |  | 5.23 |
100.00 | % |  |  | 7.55 | % |  | 100.00 | % |  |  | 7.34 | %
The changes to the embedded cost of debt and return on rate base resulting from the updates included in the filed advice letters are summarized below:
CHANGES TO THE EMBEDDED COST OF DEBT |
| SDG&E |  | SoCalGas
| Cost of debt | Return on rate base |  | Cost of debt | Return on rate base
Previously | 5.00 |  | % | 7.79 |  | % |  | 5.77 |  | % | 8.02 |  | %
Authorized, effective January 1, 2018 | 4.59 |  | % | 7.55 |  | % |  | 4.33 |  | % | 7.34 |  | %
Differences | (41 | ) | bps | (24 | ) | bps |  | (144 | ) | bps | (68 | ) | bps
Schedule Of FERC Cost Of Capital Table | SDG&E’s current estimated FERC return on rate base under the TO4 formula rate request filing is 7.51 percent based on its capital structure as follows:
SDG&E COST OF CAPITAL AND RATE STRUCTURE – FERC
|  | Weighting |  |  | Return on rate base |  |  | Weighted return on rate base |
Long-Term Debt |  | 43.44 | % |  | 4.21 | % |  | 1.83 | %
Common Equity |  | 56.56 |  |  | 10.05 |  |  | 5.68 |
|  | 100.00 | % |  |  |  |  | 7.51 | %

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