SEMPRA ENERGY FORM 10-Q TABLE OF CONTENTS
		Page
Information Regarding Forward-Looking Statements		4
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	66
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	86
Item 4.	Controls and Procedures	87
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	88
Item 1A.	Risk Factors	88
Item 5.	Exhibits	89
Signatures		91

This combined Form 10-Q is separately filed by Sempra Energy, San Diego Gas & Electric Company, Pacific Enterprises and Southern California Gas Company. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company provides information only as to itself and its consolidated entities and not as to any other company.

You should read this report in its entirety as it pertains to each respective reporting company. No one section of the report deals with all aspects of the subject matter. Separate Part I - Item 1 sections are provided for each reporting company, except for the Notes to Condensed Consolidated Financial Statements. The Notes to Condensed Consolidated Financial Statements for all of the reporting companies are combined. All Items other than Part I – Item 1 are combined for the reporting companies.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

We make statements in this report that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are necessarily based upon assumptions with respect to the future, involve risks and uncertainties, and are not guarantees of performance. These forward-looking statements represent our estimates and assumptions only as of the date of this report.

In this report, when we use words such as "believes," "expects," "anticipates," "plans," "estimates," "projects," "contemplates," "intends," "depends," "should," "could," "would," "may," "potential," "target," "goals," or similar expressions, or when we discuss our strategy, plans or intentions, we are making forward-looking statements.

Factors, among others, that could cause our actual results and future actions to differ materially from those described in forward-looking statements include

§

local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments;

§

actions by the California Public Utilities Commission, the California State Legislature, the California Department of Water Resources, the Federal Energy Regulatory Commission, the Federal Reserve Board, and other regulatory and governmental bodies in the United States and other countries in which we operate;

§

capital markets conditions and inflation, interest and exchange rates;

§

energy and trading markets, including the timing and extent of changes and volatility in commodity prices;

§

the availability of electric power, natural gas and liquefied natural gas;

§

weather conditions and conservation efforts;

§

war and terrorist attacks;

§

business, regulatory, environmental and legal decisions and requirements;

§

the status of deregulation of retail natural gas and electricity delivery;

§

the timing and success of business development efforts;

§

the resolution of litigation; and

§

other uncertainties, all of which are difficult to predict and many of which are beyond our control.

We caution you not to rely unduly on any forward-looking statements. You should review and consider carefully the risks, uncertainties and other factors that affect our business as described in this report and other reports that we file with the Securities and Exchange Commission.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share amounts)
	Three months ended March 31,
	2010		2009
	(unaudited)
REVENUES
Sempra Utilities	$	1,912	$	1,642
Sempra Global and parent		622		466
Total revenues		2,534		2,108
EXPENSES AND OTHER INCOME
Sempra Utilities:
Cost of natural gas		(758)		(540)
Cost of electric fuel and purchased power		(148)		(171)
Sempra Global and parent:
Cost of natural gas, electric fuel and purchased power		(338)		(268)
Other cost of sales		(25)		(17)
Litigation expense		(168)		7
Other operation and maintenance		(576)		(523)
Depreciation and amortization		(210)		(183)
Franchise fees and other taxes		(90)		(82)
Equity earnings:
RBS Sempra Commodities LLP		7		153
Other		8		7
Other income, net		8		3
Interest income		4		6
Interest expense		(109)		(82)
Income before income taxes and equity earnings
of certain unconsolidated subsidiaries		139		418
Income tax expense		(58)		(109)
Equity earnings, net of income tax		19		16
Net income		100		325
Losses (earnings) attributable to noncontrolling interests		8		(7)
Preferred dividends of subsidiaries		(2)		(2)
Earnings	$	106	$	316
Basic earnings per common share	$	0.43	$	1.31
Weighted-average number of shares outstanding, basic (thousands)		246,083		241,766
Diluted earnings per common share	$	0.42	$	1.29
Weighted-average number of shares outstanding, diluted (thousands)		250,373		245,017
Dividends declared per share of common stock	$	0.39	$	0.39
See Notes to Condensed Consolidated Financial Statements.

SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	March 31,		December 31,
	2010		2009
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	222	$	110
Restricted cash		44		35
Trade accounts receivable, net		848		971
Other accounts and notes receivable, net		130		159
Due from unconsolidated affiliates		29		41
Income taxes receivable		156		221
Deferred income taxes		5		10
Inventories		160		197
Regulatory assets		90		54
Fixed-price contracts and other derivatives		85		77
Insurance receivable related to wildfire litigation (Note 10)		194		273
Other		144		147
Total current assets		2,107		2,295
Investments and other assets:
Regulatory assets arising from fixed-price contracts and other derivatives		251		241
Regulatory assets arising from pension and other postretirement
benefit obligations		978		959
Other regulatory assets		739		603
Nuclear decommissioning trusts		706		678
Investment in RBS Sempra Commodities LLP		2,178		2,172
Other investments		2,202		2,151
Goodwill and other intangible assets		523		524
Sundry		598		608
Total investments and other assets		8,175		7,936
Property, plant and equipment:
Property, plant and equipment		25,391		25,034
Less accumulated depreciation and amortization		(6,901)		(6,753)
Property, plant and equipment, net ($645 at March 31, 2010 related to VIEs)		18,490		18,281
Total assets	$	28,772	$	28,512
See Notes to Condensed Consolidated Financial Statements.

SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	March 31,		December 31,
	2010		2009
	(unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	912	$	618
Accounts payable - trade		554		522
Accounts payable - other		115		171
Due to unconsolidated affiliates		6		29
Dividends and interest payable		223		190
Accrued compensation and benefits		162		264
Regulatory balancing accounts, net		517		382
Current portion of long-term debt		327		573
Fixed-price contracts and other derivatives		108		95
Customer deposits		144		145
Reserve for wildfire litigation (Note 10)		300		270
Other		870		629
Total current liabilities		4,238		3,888
Long-term debt ($421 at March 31, 2010 related to VIEs)		7,198		7,460
Deferred credits and other liabilities:
Due to unconsolidated affiliate		-		2
Customer advances for construction		147		146
Pension and other postretirement benefit obligations, net of plan assets		1,268		1,252
Deferred income taxes		1,419		1,318
Deferred investment tax credits		53		54
Regulatory liabilities arising from removal obligations		2,598		2,557
Asset retirement obligations		1,298		1,277
Other regulatory liabilities		172		181
Fixed-price contracts and other derivatives		309		312
Deferred credits and other		698		735
Total deferred credits and other liabilities		7,962		7,834
Contingently redeemable preferred stock of subsidiary		79		79
Commitments and contingencies (Note 10)
Equity:
Preferred stock (50 million shares authorized; none issued)		-		-
Common stock (750 million shares authorized; 247 million
shares outstanding at March 31, 2010 and December 31, 2009, no par value)		2,462		2,418
Retained earnings		6,981		6,971
Deferred compensation		(11)		(13)
Accumulated other comprehensive income (loss)		(372)		(369)
Total Sempra Energy shareholders' equity		9,060		9,007
Preferred stock of subsidiaries		100		100
Other noncontrolling interests		135		144
Total equity		9,295		9,251
Total liabilities and equity	$	28,772	$	28,512
See Notes to Condensed Consolidated Financial Statements.

SEMPRA ENERGY
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)
	Three months ended March 31,
	2010		2009
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	100	$	325
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization		210		183
Deferred income taxes and investment tax credits		61		(29)
Equity earnings		(34)		(176)
Other		7		49
Net change in other working capital components		534		491
Distribution from RBS Sempra Commodities LLP		-		305
Changes in other assets		18		10
Changes in other liabilities		(8)		(19)
Net cash provided by operating activities		888		1,139
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment		(446)		(492)
Expenditures for investments		(74)		(25)
Distributions from investments		24		5
Purchases of nuclear decommissioning and other trust assets		(44)		(45)
Proceeds from sales by nuclear decommissioning and other trusts		46		42
Other		(2)		(7)
Net cash used in investing activities		(496)		(522)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid		(86)		(86)
Preferred dividends paid by subsidiaries		(2)		(2)
Issuances of common stock		14		10
Repurchases of common stock		(2)		-
Increase (decrease) in short-term debt, net		294		(77)
Issuances of debt (maturities greater than 90 days)		12		22
Payments on debt (maturities greater than 90 days)		(507)		(6)
Purchase of noncontrolling interest		-		(94)
Other		(3)		5
Net cash used in financing activities		(280)		(228)
Increase in cash and cash equivalents		112		389
Cash and cash equivalents, January 1		110		331
Cash and cash equivalents, March 31	$	222	$	720
See Notes to Condensed Consolidated Financial Statements.

SEMPRA ENERGY
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)
	Three months ended March 31,
	2010		2009
	(unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	71	$	56
Income tax refunds, net		73		52
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Dividends declared but not paid	$	99	$	98
See Notes to Condensed Consolidated Financial Statements.

SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
	Three months ended March 31,
	2010		2009
	(unaudited)
Operating revenues
Electric	$	563	$	553
Natural gas		179		179
Total operating revenues		742		732
Operating expenses
Cost of electric fuel and purchased power		148		171
Cost of natural gas		89		87
Operation and maintenance		232		181
Depreciation and amortization		92		77
Franchise fees and other taxes		43		41
Total operating expenses		604		557
Operating income		138		175
Other income, net		-		17
Interest expense		(31)		(25)
Income before income taxes		107		167
Income tax expense		(31)		(60)
Net income		76		107
Losses (earnings) attributable to noncontrolling interests		8		(7)
Earnings		84		100
Preferred dividend requirements		(1)		(1)
Earnings attributable to common shares	$	83	$	99
See Notes to Condensed Consolidated Financial Statements.

SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	March 31,		December 31,
	2010		2009
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	14	$	13
Restricted cash		17		8
Accounts receivable - trade		228		229
Accounts receivable - other		63		85
Due from unconsolidated affiliates		1		8
Income taxes receivable		13		59
Deferred income taxes		44		41
Inventories		62		61
Regulatory assets arising from fixed-price contracts and other derivatives		65		30
Other regulatory assets		4		4
Fixed-price contracts and other derivatives		34		40
Insurance receivable related to wildfire litigation (Note 10)		194		273
Other		26		35
Total current assets		765		886
Other assets:
Due from unconsolidated affiliate		1		2
Deferred taxes recoverable in rates		449		415
Regulatory assets arising from fixed-price contracts and other derivatives		250		241
Regulatory assets arising from pension and other postretirement
benefit obligations		349		342
Other regulatory assets		158		53
Nuclear decommissioning trusts		706		678
Sundry		42		43
Total other assets		1,955		1,774
Property, plant and equipment:
Property, plant and equipment		10,359		10,156
Less accumulated depreciation and amortization		(2,644)		(2,587)
Property, plant and equipment, net ($645 at March 31, 2010 related to VIEs)		7,715		7,569
Total assets	$	10,435	$	10,229
See Notes to Condensed Consolidated Financial Statements.

SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	March 31,		December 31,
	2010		2009
	(unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	60	$	33
Accounts payable		174		249
Due to unconsolidated affiliate		29		-
Regulatory balancing accounts, net		195		159
Customer deposits		57		56
Fixed-price contracts and other derivatives		52		51
Accrued compensation and benefits		53		104
Current portion of long-term debt		46		45
Reserve for wildfire litigation (Note 10)		300		270
Other		205		157
Total current liabilities		1,171		1,124
Long-term debt ($421 at March 31, 2010 related to VIEs)		2,622		2,623
Deferred credits and other liabilities:
Customer advances for construction		22		23
Pension and other postretirement benefit obligations, net of plan assets		373		370
Deferred income taxes		821		774
Deferred investment tax credits		26		26
Regulatory liabilities arising from removal obligations		1,363		1,330
Asset retirement obligations		595		585
Fixed-price contracts and other derivatives		263		265
Deferred credits and other		140		145
Total deferred credits and other liabilities		3,603		3,518
Contingently redeemable preferred stock		79		79
Commitments and contingencies (Note 10)
Equity:
Common stock (255 million shares authorized; 117 million shares outstanding;
no par value)		1,138		1,138
Retained earnings		1,694		1,611
Accumulated other comprehensive income (loss)		(10)		(10)
Total SDG&E shareholders' equity		2,822		2,739
Noncontrolling interests		138		146
Total equity		2,960		2,885
Total liabilities and equity	$	10,435	$	10,229
See Notes to Condensed Consolidated Financial Statements.

SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)
	Three months ended
	March 31,
	2010		2009
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	76	$	107
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		92		77
Deferred income taxes and investment tax credits		9		5
Other		-		(12)
Net change in other working capital components		101		77
Changes in other assets		5		7
Changes in other liabilities		(8)		(16)
Net cash provided by operating activities		275		245
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment		(290)		(229)
Purchases of nuclear decommissioning trust assets		(43)		(43)
Proceeds from sales by nuclear decommissioning trusts		40		42
Decrease in loans to affiliates, net		2		33
Net increase in restricted cash		(9)		-
Net cash used in investing activities		(300)		(197)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid		-		(150)
Preferred dividends paid		(1)		(1)
Issuances of long-term debt		3		22
Payments on long-term debt		(3)		-
Increase in short-term debt, net		27		98
Capital contribution received by Otay Mesa VIE		-		4
Net cash provided by (used in) financing activities		26		(27)
Increase in cash and cash equivalents		1		21
Cash and cash equivalents, January 1		13		19
Cash and cash equivalents, March 31	$	14	$	40
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	10	$	14
Income tax payments (refunds), net		(26)		1
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Dividends declared but not paid	$	1	$	1
See Notes to Condensed Consolidated Financial Statements.

PACIFIC ENTERPRISES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
	Three months ended March 31,
	2010		2009
	(unaudited)
Operating revenues	$	1,182	$	920
Operating expenses
Cost of natural gas		674		455
Operation and maintenance		261		251
Depreciation		75		72
Franchise fees and other taxes		37		32
Total operating expenses		1,047		810
Operating income		135		110
Other income, net		4		1
Interest income		-		1
Interest expense		(17)		(17)
Income before income taxes		122		95
Income tax expense		(57)		(36)
Net income/Earnings		65		59
Preferred dividend requirements		(1)		(1)
Earnings attributable to common shares	$	64	$	58
See Notes to Condensed Consolidated Financial Statements.

PACIFIC ENTERPRISES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	March 31,		December 31,
	2010		2009
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	180	$	49
Accounts receivable - trade		491		567
Accounts receivable - other		30		44
Due from unconsolidated affiliates		155		12
Income taxes receivable		-		36
Inventories		47		93
Other regulatory assets		9		9
Other		40		39
Total current assets		952		849
Other assets:
Due from unconsolidated affiliate		507		513
Regulatory assets arising from pension and other postretirement
benefit obligations		629		617
Other regulatory assets		131		131
Sundry		39		40
Total other assets		1,306		1,301
Property, plant and equipment:
Property, plant and equipment		9,381		9,299
Less accumulated depreciation and amortization		(3,666)		(3,615)
Property, plant and equipment, net		5,715		5,684
Total assets	$	7,973	$	7,834
See Notes to Condensed Consolidated Financial Statements.

PACIFIC ENTERPRISES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	March 31,		December 31,
	2010		2009
	(unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable - trade	$	244	$	207
Accounts payable - other		68		120
Due to unconsolidated affiliates		84		87
Income taxes payable		23		-
Deferred income taxes		9		5
Regulatory balancing accounts, net		321		223
Customer deposits		85		87
Accrued compensation and benefits		67		86
Current portion of long-term debt		266		11
Other		215		162
Total current liabilities		1,382		988
Long-term debt		1,024		1,283
Deferred credits and other liabilities:
Customer advances for construction		125		123
Pension and other postretirement benefit obligations, net of plan assets		656		644
Deferred income taxes		294		273
Deferred investment tax credits		27		28
Regulatory liabilities arising from removal obligations		1,235		1,227
Asset retirement obligations		671		662
Deferred taxes refundable in rates		168		175
Deferred credits and other		199		203
Total deferred credits and other liabilities		3,375		3,335
Commitments and contingencies (Note 10)
Equity:
Preferred stock		80		80
Common stock (600 million shares authorized; 84 million shares outstanding;
no par value)		1,462		1,462
Retained earnings		655		691
Accumulated other comprehensive income (loss)		(25)		(25)
Total Pacific Enterprises shareholders' equity		2,172		2,208
Preferred stock of subsidiary		20		20
Total equity		2,192		2,228
Total liabilities and equity	$	7,973	$	7,834
See Notes to Condensed Consolidated Financial Statements.

PACIFIC ENTERPRISES AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)
	Three months ended March 31,
	2010		2009
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	65	$	59
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation		75		72
Deferred income taxes and investment tax credits		16		6
Other		(1)		2
Net change in other working capital components		339		357
Changes in other assets		1		7
Changes in other liabilities		(3)		(6)
Net cash provided by operating activities		492		497
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment		(114)		(112)
Decrease (increase) in loans to affiliates, net		(146)		3
Net cash used in investing activities		(260)		(109)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid		(100)		-
Preferred dividends paid		(1)		(1)
Net cash used in financing activities		(101)		(1)
Increase in cash and cash equivalents		131		387
Cash and cash equivalents, January 1		49		206
Cash and cash equivalents, March 31	$	180	$	593
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	9	$	9
Income tax refunds, net		23		23
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Dividends declared but not paid	$	1	$	1
See Notes to Condensed Consolidated Financial Statements.

SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
	Three months ended March 31,
	2010		2009
	(unaudited)
Operating revenues	$	1,182	$	920
Operating expenses
Cost of natural gas		674		455
Operation and maintenance		262		251
Depreciation		75		72
Franchise fees and other taxes		37		32
Total operating expenses		1,048		810
Operating income		134		110
Other income, net		4		1
Interest income		-		1
Interest expense		(17)		(17)
Income before income taxes		121		95
Income tax expense		(56)		(36)
Net income/Earnings attributable to common shares	$	65	$	59
See Notes to Condensed Consolidated Financial Statements.

SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	March 31,		December 31,
	2010		2009
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	180	$	49
Accounts receivable - trade		491		567
Accounts receivable - other		30		44
Due from unconsolidated affiliate		150		6
Income taxes receivable		-		35
Inventories		47		93
Other regulatory assets		9		9
Other		40		40
Total current assets		947		843
Other assets:
Regulatory assets arising from pension and other postretirement
benefit obligations		629		617
Other regulatory assets		131		131
Sundry		11		14
Total other assets		771		762
Property, plant and equipment:
Property, plant and equipment		9,380		9,297
Less accumulated depreciation and amortization		(3,666)		(3,615)
Property, plant and equipment, net		5,714		5,682
Total assets	$	7,432	$	7,287
See Notes to Condensed Consolidated Financial Statements.

SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	March 31,		December 31,
	2010		2009
	(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade	$	244	$	207
Accounts payable - other		68		120
Due to unconsolidated affiliate		-		3
Income taxes payable		27		-
Deferred income taxes		11		6
Regulatory balancing accounts, net		321		223
Customer deposits		85		87
Accrued compensation and benefits		67		86
Current portion of long-term debt		266		11
Other		210		158
Total current liabilities		1,299		901
Long-term debt		1,024		1,283
Deferred credits and other liabilities:
Customer advances for construction		125		123
Pension and other postretirement benefit obligations, net of plan assets		656		644
Deferred income taxes		300		280
Deferred investment tax credits		27		28
Regulatory liabilities arising from removal obligations		1,235		1,227
Asset retirement obligations		671		662
Deferred taxes refundable in rates		168		175
Deferred credits and other		196		198
Total deferred credits and other liabilities		3,378		3,337
Commitments and contingencies (Note 10)
Shareholders' equity:
Preferred stock		22		22
Common stock (100 million shares authorized; 91 million shares outstanding;
no par value)		866		866
Retained earnings		868		903
Accumulated other comprehensive income (loss)		(25)		(25)
Total shareholders' equity		1,731		1,766
Total liabilities and shareholders' equity	$	7,432	$	7,287
See Notes to Condensed Consolidated Financial Statements.

SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)
	Three months ended March 31,
	2010		2009
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	65	$	59
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation		75		72
Deferred income taxes and investment tax credits		16		6
Other		(1)		2
Net change in other working capital components		346		357
Changes in other assets		1		7
Changes in other liabilities		(1)		(4)
Net cash provided by operating activities		501		499
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment		(114)		(112)
Increase in loans to affiliates, net		(156)		-
Net cash used in investing activities		(270)		(112)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid		(100)		-
Net cash used in financing activities		(100)		-
Increase in cash and cash equivalents		131		387
Cash and cash equivalents, January 1		49		206
Cash and cash equivalents, March 31	$	180	$	593
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	9	$	8
Income tax refunds, net		23		23
See Notes to Condensed Consolidated Financial Statements.

SEMPRA ENERGY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. GENERAL  

PRINCIPLES OF CONSOLIDATION

Sempra Energy

Sempra Energy's Condensed Consolidated Financial Statements include the accounts of Sempra Energy, a California-based Fortune 500 holding company, its consolidated subsidiaries, and variable interest entities. Sempra Energy’s principal subsidiaries are

§

San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas), which we collectively refer to as the Sempra Utilities; and

§

Sempra Global, which is the holding company for Sempra Commodities, Sempra Generation, Sempra Pipelines & Storage, Sempra LNG and other, smaller businesses.  

Sempra Energy uses the equity method to account for investments in affiliated companies over which we have the ability to exercise significant influence, but not control.  We discuss our investments in unconsolidated subsidiaries in Note 4 below and Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.

SDG&E

SDG&E's Condensed Consolidated Financial Statements include its accounts and the accounts of Otay Mesa Energy Center LLC (Otay Mesa VIE) and Orange Grove Energy L.P. (Orange Grove VIE), which are variable interest entities of which SDG&E is the primary beneficiary, as we discuss in Note 5 under "Variable Interest Entities."  SDG&E’s common stock is wholly owned by Enova Corporation, which is a wholly owned subsidiary of Sempra Energy.

Pacific Enterprises and SoCalGas

The Condensed Consolidated Financial Statements of Pacific Enterprises include the accounts of Pacific Enterprises (PE) and its subsidiary, SoCalGas.  Sempra Energy owns all of PE’s common stock and PE owns all of SoCalGas’ common stock. SoCalGas’ Condensed Consolidated Financial Statements include its subsidiaries, which comprise less than one percent of its consolidated financial position and results of operations.

PE's operations consist solely of those of SoCalGas and additional items (e.g., cash, intercompany accounts and equity) attributable to serving as a holding company for SoCalGas.

BASIS OF PRESENTATION

This is a combined report of Sempra Energy, SDG&E, PE and SoCalGas. We provide separate information for SDG&E, PE and SoCalGas as required. In the Notes to Condensed Consolidated Financial Statements (except in Note 11), when only information for SoCalGas is provided, it is the same for PE. References in this report to "we," "our" and "Sempra Energy Consolidated" are to Sempra Energy and its consolidated entities, unless otherwise indicated by the context. We have eliminated intercompany accounts and transactions within each set of consolidated financial statements.

We have prepared the Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) and in accordance with the interim-period-reporting requirements of Form 10-Q. Results of operations for interim periods are not necessarily indicative of results for the entire year. We evaluated events and transactions that occurred after March 31, 2010 through the date the financial statements were issued, and in the opinion of management, the accompanying statements reflect all adjustments necessary for a fair presentation.  These adjustments are only of a normal, recurring nature.

You should read the information in this Quarterly Report in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2009 (the Annual Report), which is a combined report for Sempra Energy, SDG&E, PE and SoCalGas.

Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. We follow the same accounting policies for interim reporting purposes, except for the adoption of new accounting standards as we discuss in Note 2.

The Sempra Utilities and Sempra Pipelines & Storage's Mobile Gas Service Corporation (Mobile Gas) and Ecogas Mexico, S de RL de CV (Ecogas) prepare their financial statements in accordance with GAAP provisions governing regulated operations, as we discuss in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

NOTE 2. NEW ACCOUNTING STANDARDS

We describe below recent pronouncements that have had or may have a significant effect on our financial statements. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our financial condition, results of operations, or disclosures.  

SEMPRA ENERGY, SDG&E, PE AND SOCALGAS

Accounting Standards Update (ASU) 2009-17, "Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" (ASU 2009-17): ASU 2009-17 amends Financial Accounting Standards Board (FASB) Interpretation No. 46(R), Consolidation of Variable Interest Entities – an interpretation of ARB No. 51 (FIN 46(R)), which provides consolidation guidance related to variable interest entities.  

ASU 2009-17 amends FASB Accounting Standards Codification (ASC) Topic 810, Consolidations, and requires

§

a qualitative approach for identifying the primary beneficiary of a variable interest entity based on 1) the power to direct activities that most significantly impact the economic performance of the entity, and 2) the obligation to absorb losses or right to receive benefits that could be significant to the entity;

§

ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; and

§

separate disclosure by the primary beneficiary on the face of the balance sheet to identify 1) assets that can only be used to settle obligations of the variable interest entity, and 2) liabilities for which creditors do not have recourse to the primary beneficiary.

We adopted ASU 2009-17 on January 1, 2010 and it did not have a material effect on earnings, nor on presentation on the interim Condensed Consolidated Balance Sheets for Sempra Energy and SDG&E. We provide the required additional disclosure in Note 5.

ASU 2010-06, "Improving Disclosures About Fair Value Measurements" (ASU 2010-06): ASU 2010-06 amends ASC Topic 820, Fair Value Measurements and Disclosures, and requires the following additional fair value measurement disclosures:

§

transfers into and out of Levels 1 and 2

§

segregation of classes of assets and liabilities measured at fair value

§

valuation techniques and inputs used for Level 2 and Level 3 instruments

§

detailed activity for Level 3 instruments, including separate presentation of purchases, sales, issuances and settlements

We adopted ASU 2010-06 on January 1, 2010, and we provide the additional disclosure in Note 8.

NOTE 3. RECENT INVESTMENT ACTIVITY

SEMPRA PIPELINES & STORAGE

Sempra Pipelines & Storage’s Sempra Midstream is the general partner and 91-percent owner of Bay Gas Storage Company (Bay Gas) and owned 60 percent of Mississippi Hub, LLC (Mississippi Hub) through December 31, 2008.  On January 16, 2009, Sempra Midstream purchased the remaining 40-percent ownership interest of Mississippi Hub for $94 million in cash.

On April 30, 2010, Sempra Pipelines & Storage completed the acquisition of the Mexican pipeline and natural gas infrastructure assets of El Paso Corporation for $300 million ($260 million, net of cash acquired and debt assumed).

The acquisition involves El Paso Corporation’s wholly owned natural gas pipeline and compression assets in the Mexican border state of Sonora.  It also includes El Paso Corporation’s 50-percent interest in a joint venture with PEMEX, the Mexican state-owned oil company.  The joint venture operates two natural gas pipelines and a propane system in northern Mexico.

NOTE 4. INVESTMENTS IN UNCONSOLIDATED ENTITIES

SEMPRA COMMODITIES

RBS Sempra Commodities LLP (RBS Sempra Commodities) is a limited liability partnership formed in the United Kingdom to own and operate the commodities-marketing businesses previously operated through wholly owned subsidiaries of Sempra Energy. We account for our investment in RBS Sempra Commodities under the equity method, and report our share of partnership earnings in the Sempra Commodities segment.

For the three months ended March 31, 2010 and 2009, we had $7 million and $153 million, respectively, of pretax equity earnings from RBS Sempra Commodities. The partnership income that is distributable to us on an annual basis is computed on the partnership's basis of accounting, International Financial Reporting Standards (IFRS), as adopted by the European Union. For the three months ended March 31, 2010, the partnership recorded a loss, on an IFRS basis, of $1 million. In the three months ended March 31, 2009, the distributable income, on an IFRS basis, was $114 million. On April 30, 2010, the partnership made a cash distribution to us of $197 million. In the first quarter 2009, we received cash distributions from the partnership of $305 million. We discuss the equity method investment in RBS Sempra Commodities further in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.

We have indemnified the partnership for certain litigation and tax liabilities related to the businesses purchased by the partnership. We recorded these obligations at a fair value of $5 million on April 1, 2008, the date we formed the partnership. This liability is being amortized over its expected life.  

In November 2009, RBS announced its intention to divest its interest in RBS Sempra Commodities in connection with a directive from the European Commission to dispose of certain assets. On February 16, 2010, Sempra Energy, RBS and the partnership (Seller Parties) entered into an agreement (the Purchase Agreement) with J.P. Morgan Ventures Energy Corporation (J.P. Morgan Ventures), whereby J.P. Morgan Ventures will purchase the following businesses from the joint venture:

§

the global oil, metals, coal, emissions (other than emissions related to the partnership’s North American power business), plastics, agricultural commodities and concentrates commodities trading and marketing business

§

the European power and gas business

§

the investor products business

The Purchase Agreement does not include RBS Sempra Commodities' North American power and natural gas trading businesses and its retail energy solutions business.  These businesses have historically generated 40 to 60 percent of total earnings of the businesses in the partnership, and have averaged more than 50 percent. RBS and Sempra Energy are actively soliciting offers for the sale of these remaining businesses.

The transaction is expected to close in summer 2010. J.P. Morgan Ventures will pay an aggregate purchase price equal to the estimated tangible book value at closing of the businesses purchased, generally computed on the basis of IFRS as adopted by the European Union, plus $468 million. Sempra Energy will be entitled to 53-1/3 percent of the aggregate purchase price, and RBS will be entitled to 46-2/3 percent of the aggregate purchase price.  We are currently evaluating the effect of the proposed transaction on our investment and share of equity method earnings, which will be impacted by the joint venture’s allocation of goodwill to the transaction, differences between GAAP and IFRS, the application of equity method accounting, and the amendments to the partnership agreement described below.

In conjunction with the transaction, JPMorgan Chase & Co. has delivered a guarantee in favor of the Seller Parties to guarantee certain obligations, including the payment obligations, of J.P. Morgan Ventures under the Purchase Agreement.

The closing is subject to several conditions, including the following:

§

governmental approvals from the U.K. Financial Services Authority and the U.S. Department of Justice or Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (which approval was received in March 2010), and antitrust approvals from regulators in Canada and in a limited number of other jurisdictions, including the European Union  

§

if necessary, the obtaining of a license from the Swiss Federal Market Supervisory Authority

§

a condition to the obligation of the Seller Parties to close the transaction that JPMorgan Chase & Co. not experience a ratings downgrade below the level specified in the Purchase Agreement

§

entering into certain related agreements, including an agreement pursuant to which the partnership will provide transition services to the purchased businesses following the closing

In connection with the transaction under the Purchase Agreement, we and RBS entered into a letter agreement to negotiate, prior to closing of the transaction, definitive documentation to amend certain provisions of the Limited Liability Partnership Agreement dated April 1, 2008 between Sempra Energy and RBS (Partnership Agreement) to, among other things:

§

consider the distribution of excess cash of the partnership to us and RBS

§

eliminate each partner’s preferred return (currently 15 percent per year) and to move to a 50/50 sharing of net income, if and when our invested capital is reduced to $950 million or less by the return of capital to the partners

§

terminate the restrictions on the partners’ ability to transfer their partnership interests prior to April 2012 (but not the partners’ right of first offer and other rights, including our tag-along right with respect to the transfer of that interest or the requirement that any transferee be reasonably acceptable to us)

The letter agreement also provides for negotiating the framework for the entertaining of bids for the remaining part of the partnership’s business.

The following table shows summarized financial information for RBS Sempra Commodities (on a GAAP basis):

	Three months ended March 31,
(Dollars in millions)	2010		2009
Gross revenues and fee income	$	206	$	509
Gross profit		198		486
Income from continuing operations		10		236
Partnership net income		10		236

We provide information regarding the Sempra Commodities segment in Note 11.

SEMPRA PIPELINES & STORAGE

In the three months ended March 31, 2010, Sempra Pipelines & Storage contributed $65 million to Rockies Express, a joint venture to own and operate the Rockies Express Pipeline, which was the last contribution required for the construction phase of the project. Sempra Pipelines & Storage contributed $25 million in the first quarter of 2009. We discuss this investment in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.

NOTE 5. OTHER FINANCIAL DATA

VARIABLE INTEREST ENTITIES

We consolidate a variable interest entity (VIE) if we are the primary beneficiary of the VIE’s activities. Our determination of whether we are the primary beneficiary is based upon qualitative and quantitative analyses, which assess

§

the purpose and design of the VIE;

§

the nature of the VIE's risks and the risks we absorb;

§

the power to direct activities that most significantly impact the economic performance of the VIE; and

§

the obligation to absorb losses or right to receive benefits that could be significant to the VIE.  

Otay Mesa VIE

SDG&E has a 10-year agreement to purchase power generated at the Otay Mesa Energy Center (OMEC), a 573-megawatt (MW) generating facility that began commercial operations in October 2009. SDG&E supplies all of the natural gas to fuel the power plant and purchases its electric generation output (i.e., tolling). The agreement provides SDG&E with the option to purchase the power plant at the end of the contract term in 2019, or upon earlier termination of the purchased-power agreement, at a predetermined price subject to adjustments based on performance of the facility. If SDG&E does not exercise its option, under certain circumstances, it may be required to purchase the power plant at a predetermined price.  

The facility owner, Otay Mesa Energy Center LLC (OMEC LLC), is a VIE (Otay Mesa VIE), of which SDG&E is the primary beneficiary.  SDG&E has no OMEC LLC voting rights and does not operate OMEC.

SDG&E has the power to direct the dispatch of OMEC's electrical production. Based upon our analysis, this power most significantly impacts the economic performance of Otay Mesa VIE because of the associated exposure to the cost of natural gas, which fuels the plant, and the value of electricity produced. In addition, SDG&E absorbs significant risks of Otay Mesa VIE under the tolling agreement, whereby SDG&E is obligated to purchase and provide fuel to Otay Mesa VIE and purchase all output for the term of the agreement. Separately, through the put option, SDG&E absorbs a significant portion of the risk that the value of Otay Mesa VIE could decline. Accordingly, Sempra Energy and SDG&E have consolidated Otay Mesa VIE since the second quarter of 2007, and have continued to consolidate it in the first quarter of 2010. Otay Mesa VIE's equity of $138 million and $146 million is included on the Condensed Consolidated Balance Sheets in Other Noncontrolling Interests for Sempra Energy and in Noncontrolling Interests for SDG&E at March 31, 2010 and December 31, 2009, respectively.

OMEC LLC has a loan outstanding of $372 million at March 31, 2010, the proceeds of which were used for the construction of OMEC. The loan is with third party lenders and is secured by OMEC's property, plant and equipment. SDG&E is not a party to the loan agreement and does not have any additional implicit or explicit financial responsibility to OMEC LLC. The loan matures in April 2019 and bears interest at rates varying with market rates. In addition, OMEC LLC has entered into interest rate swap agreements to moderate its exposure to interest rate changes. We provide additional information concerning the interest rate swaps in Note 7.

Orange Grove VIE

SDG&E has a 25-year tolling agreement to purchase power generated by Orange Grove Energy L.P. (Orange Grove), at its 94-MW generating facility located in San Diego County, California. We expect the facility to be available for commercial operation during the second quarter of 2010. Orange Grove is a VIE (Orange Grove VIE) of which SDG&E is the primary beneficiary. SDG&E has the power to direct the dispatch of electrical production of Orange Grove VIE. Based on our analysis, this power most significantly impacts the economic performance of Orange Grove VIE because of the corresponding exposure to the cost of natural gas, which fuels the plant, and the value of electricity produced. In addition, SDG&E absorbs significant risks of Orange Grove VIE under the tolling arrangement, whereby SDG&E is obligated to purchase and provide fuel to Orange Grove VIE and purchase all output for the term of the agreement. Sempra Energy and SDG&E consolidated Orange Grove VIE beginning with the third quarter of 2009, when all of the conditions precedent in the purchased-power agreement were satisfied, and continued to do so in the first quarter of 2010.

Orange Grove has credit facilities that provide for a total of $100 million for construction of the generating facility. These credit agreements are with a third party lender and are secured by Orange Grove's assets. SDG&E is not a party to the credit agreements and does not have any additional implicit or explicit financial responsibility to Orange Grove. When Orange Grove completes construction of the generating facility, or on June 30, 2010 if construction is not completed by that date, the credit facilities will convert to a term loan that matures in June 2035. Borrowings under the credit facilities bear interest at rates varying with market rates. At March 31, 2010, Orange Grove had $90 million of outstanding borrowings under the credit facilities and $3 million of letters of credit supported by the facilities. In addition, Orange Grove has a short-term loan outstanding of $36 million.

We provide additional information about Otay Mesa VIE and Orange Grove VIE in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

Other Variable Interest Entities

SDG&E's power procurement is subject to reliability requirements that may require SDG&E to enter into various power purchase arrangements which include variable interests. SDG&E evaluates these contracts to determine if variable interests exist and, based on the qualitative and quantitative analyses described above, if SDG&E, and thereby Sempra Energy, is the primary beneficiary. SDG&E has determined that no contracts other than those relating to Otay Mesa VIE and Orange Grove VIE result in SDG&E being the primary beneficiary. Other variable interests involve various elements of fuel and power costs, including certain construction costs, tax credits, and other components of cash flow expected to be paid to or received by our counterparties. In most of theses cases, the expectation of variability is not substantial, and SDG&E generally does not have the power to direct activities that most significantly impact the economic performance of the other VIEs. If our ongoing evaluation of these VIEs were to conclude that SDG&E becomes the primary beneficiary and consolidation by SDG&E becomes necessary, the effects are not expected to significantly affect the financial position, results of operations, or liquidity of SDG&E. SDG&E is not exposed to losses or gains as a result of these other VIEs, because all such variability would be recovered in rates.

Sempra Energy’s other business units also enter into arrangements which could include variable interests.  We evaluate these contracts based upon the qualitative and quantitative analyses described above.  We have determined that these contracts are not variable interests in a VIE and therefore are not subject to the requirements of ASU 2009-17.

PENSION AND OTHER POSTRETIREMENT BENEFITS

Net Periodic Benefit Cost

The following three tables provide the components of net periodic benefit cost:

NET PERIODIC BENEFIT COST -- SEMPRA ENERGY CONSOLIDATED
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
	Three months ended March 31,				Three months ended March 31,
	2010		2009		2010		2009
Service cost	$	22	$	19	$	7	$	7
Interest cost		43		43		15		14
Expected return on assets		(36)		(35)		(12)		(12)
Amortization of:
Prior service cost		1		1		-		-
Actuarial loss		8		6		2		1
Regulatory adjustment		(29)		(26)		2		(1)
Total net periodic benefit cost	$	9	$	8	$	14	$	9

NET PERIODIC BENEFIT COST -- SDG&E
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
	Three months ended March 31,				Three months ended March 31,
	2010		2009		2010		2009
Service cost	$	7	$	6	$	2	$	2
Interest cost		12		12		2		2
Expected return on assets		(10)		(8)		(2)		(1)
Amortization of:
Prior service cost		1		1		1		1
Actuarial loss		3		4		-		-
Regulatory adjustment		(12)		(14)		1		-
Total net periodic benefit cost	$	1	$	1	$	4	$	4

NET PERIODIC BENEFIT COST -- SOCALGAS
(Dollars in millions)
	Pension Benefits				Other Postretirement Benefits
	Three months ended March 31,				Three months ended March 31,
	2010		2009		2010		2009
Service cost	$	12	$	11	$	5	$	5
Interest cost		25		25		12		11
Expected return on assets		(23)		(24)		(10)		(11)
Amortization of:
Prior service cost (credit)		1		1		(1)		(1)
Actuarial loss		3		-		2		1
Regulatory adjustment		(17)		(12)		1		(1)
Total net periodic benefit cost	$	1	$	1	$	9	$	4

Future Payments

The following table shows our year-to-date contributions to our pension and other postretirement benefit plans and the amounts we expect to contribute in 2010:

	Sempra Energy
(Dollars in millions)	Consolidated		SDG&E		SoCalGas
Contributions through March 31, 2010:
Pension plans	$	13	$	4	$	1
Other postretirement benefit plans		14		4		9
Total expected contributions in 2010:
Pension plans	$	175	$	62	$	82
Other postretirement benefit plans		55		16		36

EARNINGS PER SHARE

The following table provides the per share computations for our earnings for the three months ended March 31, 2010 and 2009. Basic earnings per common share (EPS) is calculated by dividing earnings attributable to common stock by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

EARNINGS PER SHARE COMPUTATIONS
(Dollars in millions, except per share amounts; shares in thousands)
	Three months ended March 31,
	2010		2009
Numerator:
Earnings	$	106	$	316
Denominator:
Weighted-average common shares outstanding for basic EPS		246,083		241,766
Dilutive effect of stock options, restricted stock awards and restricted stock units		4,290		3,251
Weighted-average common shares outstanding for diluted EPS		250,373		245,017
Earnings per share:
Basic	$	0.43	$	1.31
Diluted	$	0.42	$	1.29

The dilution from common stock options is based on the treasury stock method. Under this method, proceeds based on the exercise price plus unearned compensation and windfall tax benefits or minus tax shortfalls related to the options are assumed to be used to repurchase shares on the open market at the average market price for the period. The windfall tax benefits are tax deductions we would receive upon the assumed exercise of stock options in excess of the deferred income taxes we recorded related to the compensation expense on the stock options. Tax shortfalls occur when the assumed tax deductions are less than recorded deferred income taxes. The calculation excludes options for which the exercise price on common stock was greater than the average market price during the period. We had 2,180,900 and 3,153,534 such stock options outstanding during the three months ended March 31, 2010 and 2009, respectively.

During the three months ended March 31, 2010, we had 9,900 stock options outstanding that were antidilutive because of the unearned compensation and windfall tax benefits included in the assumed proceeds under the treasury stock method. We had no such antidilutive stock options outstanding during the three months ended March 31, 2009.

The dilution from unvested restricted stock awards and units is also based on the treasury stock method. Assumed proceeds equal to the unearned compensation and windfall tax benefits or minus tax shortfalls related to the awards and units are assumed to be used to repurchase shares on the open market at the average market price for the period. The windfall tax benefits or tax shortfalls are the difference between tax deductions we would receive upon the assumed vesting of restricted stock awards and units and the deferred income taxes we recorded related to the compensation expense on the restricted stock awards and units. There were no such anti-dilutive restricted stock awards or units during the three months ended March 31, 2010 or 2009.

SHARE-BASED COMPENSATION

We discuss our share-based compensation plans in Note 10 of the Notes to Consolidated Financial Statements in the Annual Report. We recorded share-based compensation expense, net of income taxes, of $7 million and $6 million for the three months ended March 31, 2010 and 2009, respectively. Pursuant to our share-based compensation plans, we granted 687,600 non-qualified stock options and 769,800 restricted stock units during the three months ended March 31, 2010, primarily in January 2010.

CAPITALIZED FINANCING COSTS

Capitalized financing costs include capitalized interest costs and, at the Sempra Utilities, an allowance for funds used during construction (AFUDC) related to both debt and equity financing of construction projects.  The following table shows capitalized financing costs for the three months ended March 31, 2010 and 2009.

CAPITALIZED FINANCING COSTS
(Dollars in millions)
	Three months ended March 31,
	2010		2009
SDG&E:
AFUDC related to debt	$	3	$	2
AFUDC related to equity		9		6
Total SDG&E		12		8
SoCalGas:
AFUDC related to debt		2		1
AFUDC related to equity		4		2
Total SoCalGas		6		3
Sempra Global:
Capitalized financing costs		7		22
Total Sempra Energy Consolidated	$	25	$	33

COMPREHENSIVE INCOME

The following tables provide a reconciliation of net income to comprehensive income.

COMPREHENSIVE INCOME
(Dollars in millions)
	Three months ended March 31,
	2010							2009
	Share-		Non-					Share-		Non-
	holders'		controlling		Total			holders'		controlling		Total
	Equity(1)		Interests		Equity			Equity(1)		Interests		Equity
Sempra Energy Consolidated:
Net income (loss)(2)	$	108	$	(8)	$	100		$	318	$	7	$	325
Foreign currency translation
adjustments		(4)		-		(4)			26		-		26
Financial instruments		-		2		2			3		(3)		-
Available-for-sale securities		-		-		-			9		-		9
Net actuarial gain		1		-		1			1		-		1
Comprehensive income (loss)	$	105	$	(6)	$	99		$	357	$	4	$	361
SDG&E:
Net income (loss)	$	84	$	(8)	$	76		$	100	$	7	$	107
Financial instruments		-		2		2			2		(4)		(2)
Comprehensive income (loss)	$	84	$	(6)	$	78		$	102	$	3	$	105
PE:
Net income(2)	$	65	$	-	$	65		$	59	$	-	$	59
Financial instruments		-		-		-			1		-		1
Comprehensive income	$	65	$	-	$	65		$	60	$	-	$	60
SoCalGas:
Net income	$	65	$	-	$	65		$	59	$	-	$	59
Financial instruments		-		-		-			1		-		1
Comprehensive income	$	65	$	-	$	65		$	60	$	-	$	60
(1) Shareholders' equity of Sempra Energy Consolidated, SDG&E, PE or SoCalGas as indicated in left margin.
(2) Before preferred dividends of subsidiaries.

The amounts for comprehensive income in the tables above are net of income tax expense (benefit) as follows: