Sempra Energy
Sempra Energy is a Fortune 500 energy services holding company. Its business units
provide a wide spectrum of value-added electric and natural gas products and services
to a diverse range of customers. The company has four separately managed reportable
segments comprised of Southern California Gas Company (SoCalGas), San Diego Gas
& Electric Company (SDG&E), Sempra Commodities and Sempra Generation.
SoCalGas and SDG&E are collectively referred to as "the California Utilities."
Global is a holding company for most of the subsidiaries of Sempra Energy that
are not subject to California utility regulation.
Global's principal subsidiaries provide the following energy-related products
and services:
Sempra Commodities is a wholesale trader of physical and financial energy products,
including natural gas, power, crude oil and other commodities, and a trader
and wholesaler of metals, serving a broad range of customers;
Sempra Generation acquires, develops and operates power plants for the competitive
market;
California Utility Operations
To understand the operations and financial results of the California Utilities,
it is important to understand the ratemaking procedures to which they are subject.
The California Utilities are subject to various regulatory bodies and rules
at the national, state and local levels. The primary California body is the
CPUC which regulates utility rates and operations. The primary national bodies
are the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory
Commission (NRC). The FERC regulates interstate transportation of natural gas
and electricity and various related matters. The NRC regulates nuclear generating
plants. Local regulators and municipalities govern the placement of utility
assets, including natural gas pipelines and electric lines. Other business units
are also subject to regulation including, as the case may be, the FERC, various
state commissions, local bodies, and various similar bodies in countries other
than the United States.
Customers
For regulatory purposes, customers are separated into core and noncore customers.
Core customers are primarily residential and small commercial and industrial
customers without alternative fuel capability. Noncore customers consist primarily
of electric generation (EG), wholesale, large commercial, industrial and enhanced
oil recovery customers.
The electric generation and wholesale power sales industries have become highly
competitive. As more plants are built and competitive pressures increase, the
wholesale pricing of electricity becomes more volatile.
Without the benefit of long-term power sales agreements, such as the 10- year
power sales agreement between SER and the DWR, Sempra Energy's sales will be
subject to increased price volatility, and it may be unable to sell the power
generated by SER's facilities or operate those facilities profitably.