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Sempra Energy reported second-quarter 2013 earnings of $245 million, or $0.98 per diluted share, compared with second-quarter 2012 earnings of $62 million, or $0.25 per diluted share.
On May 9, the California Public Utilities Commission (CPUC) issued a final General Rate Case decision for San Diego Gas & Electric (SDG&E) and Southern California Gas Co. (SoCalGas) that included a revenue increase for the full year 2012 and the first quarter 2013. Due to the rate case decision, second-quarter 2013 earnings included:
- $77 million, or $0.31 per diluted share, for the 2012 operations of SDG&E and SoCalGas; and
- $29 million, or $0.11 per diluted share, for the first-quarter 2013 operations of SDG&E and SoCalGas.
Sempra Energy's second-quarter 2013 earnings also included a $119 million, or $0.48 per diluted share, charge related to Southern California Edison's decision in June to permanently retire the San Onofre Nuclear Generating Station (SONGS). SDG&E owns a 20-percent stake in SONGS. Last year's second-quarter earnings included a $179 million, or $0.73 per diluted share, non-cash charge related to a write-down on the company's investment in the Rockies Express Pipeline. Excluding the charges in both years and the benefits from the General Rate Case related to 2012 and first-quarter 2013 operations, Sempra Energy's adjusted earnings increased to $258 million, or $1.04 per diluted share, in the second quarter 2013, from $241 million, or $0.98 per diluted share, in last year's second quarter.
Debra L. Reed, chairman and CEO of Sempra Energy, commented: "We are pleased with our solid second-quarter operating results. With our California utilities' rate case now behind us and the strong performance across all of our businesses, we remain on-track to meet our updated earnings guidance for the year."
Sempra Energy's earnings for the first six months of 2013 were $423 million, or $1.70 per diluted share, up from $298 million, or $1.21 per diluted share. Excluding the charges in both years and the $77 million benefit from the General Rate Case related to 2012 operations, Sempra Energy's adjusted earnings for the first six months of 2013 were $465 million, or $1.87 per diluted share, compared with $477 million, or $1.94 per diluted share, in the first half of 2012. Adjusted earnings in the first six months of 2013 were lower due primarily to the dilutive effect and first-quarter tax impact of the IEnova initial public offering that occurred in March.
California Utilities
San Diego Gas & Electric
Earnings for SDG&E were $65 million in the second quarter 2013, compared with $95 million in last year's second quarter. The decrease was due primarily to the $119 million charge taken in the second quarter 2013 associated with the announced closure of SONGS. This decrease was partially offset by:
- a $52 million benefit from the General Rate Case for 2012 operations;
- a $17 million benefit from the General Rate Case for first-quarter 2013 operations; and
- higher base margin and a reduction in 2013 tax expense.
Excluding the charge related to SONGS and the benefits from the General Rate Case for 2012 and first-quarter 2013 operations, SDG&E's adjusted second-quarter 2013 earnings were $115 million.
SDG&E's earnings for the first six months of 2013 were $156 million, compared with $200 million in the same period last year. Excluding the charge related to SONGS and the benefit from the General Rate Case related to 2012 operations, SDG&E's adjusted earnings for the first six months of 2013 were $223 million.
Southern California Gas Co.
Second-quarter earnings for SoCalGas rose to $118 million in 2013 from $53 million in 2012. The increase in the quarter was primarily due to:
- a $25 million benefit from the General Rate Case for 2012 operations;
- a $12 million benefit from the General Rate Case for first-quarter 2013 operations; and
- higher base margin, higher earnings created by the full recovery of pipeline integrity program costs and increased income-tax benefits.
Excluding the benefits from the General Rate Case for 2012 and first-quarter 2013 operations, SoCalGas' adjusted second-quarter 2013 earnings were $81 million.
In the first half of 2013, SoCalGas' earnings increased to $164 million from $119 million in the first half of 2012. Excluding the benefit from the General Rate Case related to 2012 operations, SoCalGas' adjusted earnings in the first six months of 2013 were $139 million.
Sempra International
Sempra South American Utilities
In the second quarter 2013, Sempra South American Utilities had earnings of $34 million, compared with $38 million in the second quarter 2012.
For the first six months of 2013, earnings for Sempra South American Utilities were $71 million, compared with $78 million in the first half of 2012.
In June, Sempra International completed the sale of its stake in two Argentine natural gas utility holding companies for $13 million in cash. The company took after-tax write-downs of the Argentine assets of $7 million and $4 million, respectively, in the first and second quarters of 2013.
Sempra Mexico
Sempra Mexico recorded second-quarter earnings of $26 million in 2013, compared with $47 million in 2012. Earnings in the most recent quarter were lower, due primarily to higher income-tax expense, reduced ownership in IEnova and reduced operating earnings because of planned maintenance at the Mexicali power plant.
For the first six months of 2013, Sempra Mexico had earnings of $57 million, compared with $80 million during the first six months of 2012.
As part of an ongoing joint venture, IEnova recently signed a contract to jointly develop with PEMEX the first phase of the Los Ramones natural gas pipeline project. Construction on the 70-mile leg of the pipeline, which originates at the U.S.-Mexico border in south Texas, is expected to begin in the fourth quarter 2013 and be completed in the second half of next year.
Sempra U.S. Gas & Power
Sempra Natural Gas
Sempra Natural Gas had earnings of $9 million in the second quarter 2013, compared with a loss of $193 million in the second quarter 2012, which included a $179 million impairment charge on the Rockies Express Pipeline. The increase in 2013 was due primarily to improved earnings from liquefied natural gas and gas storage operations because of changes in natural gas prices.
For the first six months of 2013, Sempra Natural Gas had earnings of $62 million, compared with a loss of $192 million in the first half of 2012, which included last year's impairment charge on the Rockies Express Pipeline. Earnings in the first six months of 2013 included a $44 million first-quarter gain on the sale of half of the Mesquite Power plant.
Earnings Guidance
Earlier this year, Sempra Energy set 2013 earnings-per-share guidance of $4.30 to $4.60, which included the anticipated retroactive impacts from the California utilities' General Rate Case. Today, the company said its updated 2013 guidance of $4.30 to $4.60 continues to include the $0.31-per-share benefit for the retroactive impacts from the General Rate Case, but excludes the $0.48-per-share charge related to the announced closure of SONGS.