Year in review
People, whether they are our employees, customers or shareholders, influence our priorities as a company. These priorities – which include ensuring employee and public safety; maintaining energy reliability; developing lower-carbon sources of energy; and many others – impact our performance.
In 2015, Sempra Energy® met key objectives while achieving earnings of $1.35 billion on revenues of $10.2 billion.
Sempra Energy subsidiaries made progress on expanding natural gas liquefaction capabilities. Cameron LNG, Sempra Energy’s liquefaction joint venture project, requested authorization from the Federal Energy Regulatory Commission (FERC) to construct and operate two additional liquefaction trains (LNG purification and liquefaction facilities), which would bring the total to five (three are already under construction) if the company is able to successfully contract the proposed facilities, obtain necessary approvals, obtain necessary financing, and reach a final investment decision with its partners, among other things. (Authorization was received in May 2016.) Sempra LNG & Midstream (part of our Sempra U.S. Gas & Power subsidiary) and IEnova (Sempra Energy’s subsidiary in Mexico) entered into a project development agreement with a subsidiary of PEMEX, Mexico’s state-owned petroleum company, to explore the development of a potential natural gas liquefaction project at the Energía Costa Azul regasification terminal facility in Mexico. Sempra LNG & Midstream signed a memorandum of understanding with Woodside Petroleum, an Australian petroleum exploration and production company, for the proposed development of a natural gas liquefaction facility in Port Arthur, Texas. A project development agreement was signed in February 2016. These projects build on our expertise in LNG permitting and operations – and position us to meet anticipated international demand for LNG in 2020 and beyond. Development of these LNG projects is subject to a number of risks and uncertainties. See “Risk Factors” in our most recent Annual Report on Form 10-K.
In Mexico, the Energía Sierra Juarez wind farm, a joint venture between IEnova and Intergen, began commercial operation. The facility delivers 155 megawatts of power to the U.S. via a cross-border transmission line. IEnova began construction on the Guaymas – El Oro pipeline in Sonora; the Ojinaga – El Encino pipeline in Chihuahua; and the San Ysidro – Samalayuca pipeline in Chihuahua. IEnova also announced its intention to acquire PEMEX’s 50-percent interest in the Gasoductos de Chihuahua joint venture, and is working to structure the transaction to meet regulatory requirements.
In South America, Sempra International utility Luz del Sur began commercial operation of its 100-megawatt Santa Teresa hydroelectric plant in the Cusco region of Peru. The facility will help power 235,000 homes. Chilquinta Energía brought a new 100-mile electric transmission line into service ahead of schedule in northern Chile. The transmission project is one of three transmission lines the subsidiary was developing in 2015.
Sempra U.S. Gas & Power’s year was full of milestones. The subsidiary sold its remaining stake in the Mesquite natural gas-fired power plant near Phoenix, Ariz.; acquired the 78-megawatt Black Oak Getty wind project in Minnesota; and announced the completion of its largest solar energy project to date, the jointly owned 250-megawatt Copper Mountain Solar 3 project in Boulder City, Nev. The company also started construction on two expansion phases of its Mesquite Solar complex in Arlington, Ariz.: a 100-megawatt expansion (Mesquite Solar 2) and a 150-megawatt expansion (Mesquite Solar 3); as well as a 94-megawatt expansion of its Copper Mountain Solar complex (Copper Mountain Solar 4). By year-end 2016, Sempra U.S. Gas & Power’s goal is to be operating, along with partners, 1,235 megawatts of wind and 1,062 megawatts of solar, for a total of nearly 2,300 megawatts of renewable energy.
Our SoCalGas subsidiary launched the first power-to-gas pilot project in the United States in collaboration with the U.S. Department of Energy. The utility also continued to develop natural gas transportation infrastructure, launching a compressed natural gas (CNG) fueling station in Monterey Park, Calif., and introducing a program that provides free, short-term rentals of CNG-powered truck tractors to fleet operators.
In September 2015, SoCalGas submitted several settlements executed with parties in its General Rate Case, which was originally submitted in 2014, to the California Public Utilities Commission (CPUC) for approval. SoCalGas sought a revenue level sufficient to operate its business for 2016-2018, including its gas distribution, transmission and storage operations. SoCalGas also sought approval for projects to enhance system safety and reliability. For instance, SoCalGas submitted a proposal to the CPUC creating a “Storage Integrity Management Program” to provide an enhanced integrity assessment of its storage fields, to join its existing Transmission and Distribution Integrity Management programs. Although the program has yet to be approved, SoCalGas proceeded with a pilot of the program and is now in the early stages of full implementation. SDG&E and SoCalGas also asked the CPUC for a Certificate of Public Convenience and Necessity to install a new 36-inch, 47-mile natural gas transmission pipeline from southern Orange County to central San Diego County. If approved, the approximately $633 million project will improve reliability while also enabling SDG&E to convert an older natural gas transmission pipeline to lower-pressure distribution use.
In October, SoCalGas discovered a leak at one of its injection and withdrawal wells at its Aliso Canyon natural gas storage facility, located in the northern part of the San Fernando Valley in Los Angeles County. The leak was sealed in February 2016, and the company has acknowledged the disruption it caused to nearby communities and the impact it had on the environment. A detailed description of the Aliso Canyon leak can be found in the Environment section.
2015 by the numbers
|Adjusted earnings (millions)1||$1,308|
|Earnings per diluted share||$5.37|
|Adjusted earnings per diluted share1||$5.21|
|Total assets (millions)||$41,450|
|Total generating capacity (megawatts)2||2,957|
|Renewable capacity (megawatts)||1,046|
|Kilowatt-hour sales (millions of hours)3||40,153|
|Total natural gas throughput (billion cubic feet)||1,073|
|Electric transmission and distribution lines (miles)||49,348|
|Natural gas pipelines (miles)||124,440|
|LNG regasification capacity (billion cubic feet/day)||2.5|
|Natural gas storage capacity (billion cubic feet)||179|
|Philanthropic contributions (in millions)||$18.9|
1 Please see page A1 of the 2015 Annual Report for an explanation of these non-GAAP financial measures.
2 Sempra Natural Gas sold one 625-megawatt block of its 1,250-megawatt Mesquite Power natural gas-fired power plant in February 2013 and the remaining 625-megawatt block in April 2015. This number does include this facility.
3 Includes 50 percent of total power sold related to solar and wind projects in which Sempra Energy has 50-percent ownership.
SDG&E completed its ECO substation, a $435 million project designed to enhance electric reliability and facilitate the delivery of renewable energy to SDG&E customers. During planned grid maintenance, SDG&E used a solar-powered microgrid to keep the power on in Borrego Springs, Calif. In another pilot project, SDG&E offered the aggregated energy from a group of storage systems and electric fleet vehicles to California’s wholesale energy market. This set of assets responds to signals from the grid operator to reduce demand when electricity is scarce.
The Federal Aviation Administration gave SDG&E approval to use unmanned aircraft to conduct inspections, enabling the utility to respond to and locate the cause of power outages more quickly. The CPUC approved a new two-tiered rate structure that better aligns customers’ power consumption with the utility cost to provide service. But the CPUC denied SDG&E’s request to add a monthly grid access service fee. The CPUC also issued a proposed decision, finalized in January 2016, to continue its Net Energy Metering program, which allows owners of rooftop solar systems to receive a financial credit for power they generate and feed back to the utility’s grid. Nearly 85,000 customers have received approval to do this, as of April 1, 2016. SDG&E continues to express concern that the program impacts the electricity bills of customers who are unable to accommodate or afford rooftop solar.
The CPUC reopened review of the settlement resolving matters arising from the closing of the San Onofre Nuclear Generating Station. SDG&E is a 20-percent owner of the nuclear generating station, which was closed in 2012.
Regrettably, one employee and one contractor were fatally injured in separate incidents involving SDG&E projects. SDG&E and all our subsidiaries and suppliers continue efforts to improve workplace safety performance.
Sempra Energy released a set of policies and position statements describing its position on climate change, biodiversity, water, hydraulic fracturing and other issues. The company received multiple awards and honors, including Fortune’s “World’s Most Admired Companies” and the Human Rights Campaign Foundation’s “Best Place to Work.” Additional awards are listed on Sempra.com.
Sempra Energy moved into a new 16-story headquarters building in downtown San Diego’s thriving East Village neighborhood. The glass-and-steel structure is certified LEED-Gold and features access to natural light, full fitness facilities and sit-stand workstations. Energy efficiency and operational savings make the new building cost-neutral.
Finally, the company completed its biannual employee engagement survey and shared results with employees across all its subsidiaries.