10-KPeriod: FY2010

SEMPRA Annual Report, Year Ended Dec 31, 2010

Filed February 24, 2011For Securities:SRESREA

Summary

Sempra Energy's 2010 Form 10-K details a complex corporate structure with multiple registrants, including Sempra Energy itself, San Diego Gas & Electric Company (SDG&E), Pacific Enterprises (PE), and Southern California Gas Company (SoCalGas). The report highlights the regulated nature of SDG&E and SoCalGas under state and federal bodies like the CPUC and FERC, which significantly impacts their operations, rates, and growth. Sempra Energy's non-utility segments, grouped under Sempra Global, are involved in generation, pipelines, storage, and LNG, operating in more competitive markets with different risk profiles. Key operational aspects include steady customer growth for the utilities, ongoing compliance with environmental regulations, and significant capital expenditures for infrastructure. The company also faces substantial risks, including regulatory changes, market volatility in its non-utility segments, potential litigation outcomes (notably from the 2007 wildfires), and the complexities of managing diverse energy assets across different jurisdictions. Investors should pay close attention to the performance of the regulated utilities and the risk factors associated with Sempra Global's competitive businesses.

Financial Highlights

47 data points
Beta

Revenue

$9.00B

Net Income

$709.00M

7.9% Net Margin

EPS (Diluted)

$1.43

Total Assets

$30.23B

Cash & Equivalents

$912.00M

Free Cash Flow

$2.15B

Financial Statements
Beta
Revenue$9.00B
Interest Expense$436.00M
Net Income$709.00M
EPS (Basic)$1.45
EPS (Diluted)$1.43
Shares Outstanding (Basic)489.47M
Shares Outstanding (Diluted)495.88M

Key Highlights

  • 1The filing is a combined 10-K for Sempra Energy and its key subsidiaries: SDG&E, Pacific Enterprises, and Southern California Gas Company, indicating a diversified energy utility and services company.
  • 2Sempra Utilities (SDG&E and SoCalGas) are heavily regulated by the California Public Utilities Commission (CPUC) and Federal Energy Regulatory Commission (FERC), impacting rates, service, and capital expenditures.
  • 3Sempra Global, comprising non-utility segments like Sempra Generation, Pipelines & Storage, and LNG, operates in more competitive markets with different risk exposures.
  • 4Customer growth for both natural gas and electric utility operations remained steady in 2010, with comparable growth expected in 2011.
  • 5Significant risks include regulatory changes, environmental compliance costs, potential litigation outcomes (especially related to 2007 wildfires for SDG&E), and market volatility in non-utility segments.
  • 6The company is actively managing its commodity price exposure through various hedging strategies but notes that these may not fully mitigate all risks.
  • 7SDG&E has a 20% ownership in the San Onofre Nuclear Generating Station (SONGS), exposing it to nuclear-related risks and decommissioning liabilities.

Frequently Asked Questions

Sempra Energy operates through several segments, including regulated utilities (San Diego Gas & Electric Company and Southern California Gas Company) focused on natural gas and electricity distribution, and non-utility businesses under Sempra Global, which include power generation (Sempra Generation), natural gas storage and pipelines (Sempra Pipelines & Storage), and liquefied natural gas (Sempra LNG).

SDG&E and SoCalGas are primarily regulated by the California Public Utilities Commission (CPUC) for rates, service, capital structure, and resource procurement. SDG&E also has transmission rates regulated by the Federal Energy Regulatory Commission (FERC). They are also subject to various environmental regulations from agencies like the California Air Resources Board (CARB) and the U.S. Environmental Protection Agency (EPA).

Key risks include adverse changes in government regulations, economic conditions affecting financial markets and liquidity, environmental compliance costs, potential outcomes of ongoing litigation (particularly the 2007 wildfires), market price volatility in commodity and energy markets for its non-utility businesses, and operational risks associated with its diverse energy infrastructure.

Sempra Energy utilizes various hedging strategies, including forward contracts, futures, financial swaps, and options, to mitigate financial exposure related to commodity price fluctuations for its energy-related businesses. However, the company acknowledges that it does not hedge its entire exposure and that these strategies may not always work as planned.