Good day, ladies and gentlemen, and welcome to the Sempra Energy Second Quarter Earnings Results Conference Call. Today's conference is being recorded. At this time, for opening remarks, I'd like to turn the conference over to Mr. Rick Vaccari. Please go ahead, sir.

Good morning, and thank you for joining us. This morning, we'll be discussing Sempra Energy's second quarter 2013 financial results. A live webcast of this teleconference and slide presentation is available on our website under the Investors section. With us today in San Diego are several members of our management team: Debbie Reed, Chairman and Chief Executive Officer; Mark Snell, President; Joe Householder, Executive Vice President and Chief Financial Officer; and Trevor Mihalik, Controller and Chief Accounting Officer. Before starting, I would like to remind everyone that we will be discussing forward-looking statements on this call within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in the company's 10-K and most recent 10-Q, which will be filed with the SEC later today. Important to note that all of the earnings per share amounts in our presentation are shown on a diluted basis and that we will be discussing certain non-GAAP financial measures. Please refer to the presentation slides that accompany this call and to Table A in our second quarter 2013 earnings press release for a reconciliation to GAAP measures. I'd also like to note that the forward-looking statements contained in this presentation speak only as of today, August 6, 2013, and the company does not assume any obligation to update or revise any of these forward-looking statements in the future. With that, please turn to Slide 3, and let me hand it over to Debbie.

Thanks, Rick, and thanks to all of you for joining us today. The second quarter was an important one for Sempra, as we received the final decision in our General Rate Case for SDG&E and SoCalGas. This decision provides us with a sufficient level of revenues to maintain a safe and reliable system for our customers and provides regulatory clarity for the company through our current rate case cycle, which runs through 2015. Additionally, we continue to move forward on many infrastructure projects during the quarter, and I will give updates on some of these projects a little later in the call. Now let's move to Slide 4. Our consolidated financial performance this quarter was strong, and that performance, coupled with our efforts to control costs within the revenue structure we were granted in our GRC, allows us to remain on track to meet our full year EPS guidance. This guidance of $4.30 to $4.60 per share is updated to exclude a $119 million loss of the San Onofre Nuclear Generating Station or SONGS. This guidance also includes the 2012 retroactive benefit from the GRC of $77 million. We remain committed to achieving the 6% to 8% long-term compound annual growth projections we laid out at our analyst conference in May. This growth rate is based off of our 2013 adjusted EPS guidance of $4 to $4.30 per share, which excludes both the 2012 retroactive GRC benefit and the $119 million loss at SONGS. Annual earnings from SONGS were between $15 million and $20 million, but that has now ceased as of the date Edison decided to retire to facility. Our guidance for the year reflects our view that we will overcome the loss of these earnings through better performance across our business. Now let me hand things to Joe to discuss the financial results in more detail, starting with Slide 5. Joe?

Thanks, Debbie. Earlier this morning, we reported second quarter earnings of $245 million or $0.98 per share. This compares to earnings of $62 million or $0.25 per share in the same quarter last year, which included a $179 million impairment charge on our investment in the Rockies Express Pipeline. This quarter, we reported a loss of $119 million related to SoCal Edison's decision to permanently retire SONGS. We estimated this loss using California utility regulatory precedent to determine the expected recovery of SONGS rate base assets, replacement power cost and O&M during the time of the outage. The loss is slightly higher than the top of our previously disclosed range as additional analysis and the most current information was taken into account since the date we filed our 8-K on the topic. After excluding the SONGS loss, second quarter 2013 earnings for guidance comparison purposes were $364 million or $1.46 per share. As Debbie indicated, our year-to-date performance was strong and allows us to remain on track to meet our guidance of $4.30 to $4.60. Additionally, this quarter's results include $106 million for the retroactive benefits from our final General Rate Case decision. $77 million of this benefit is associated with 2012, and $29 million is associated with the first quarter of 2013. Without those benefits and the loss at SONGS, adjusted earnings for the period were $258 million or $1.04 per share. Keep in mind that our results for the first half of 2013 include the $63 million planned annual repatriation tax expense, which we recorded in its entirety in the first quarter. Additionally, first half results include the dilutive effect of our highly successful IEnova IPO. Now let's go through the results for each of our segments in detail, beginning with San Diego Gas & Electric on Slide…

Thanks, Joe. As you know, in June, Southern California Edison, the majority owner and operator at SONGS, made the decision to shut down the plant. As a result of this decision, SDG&E established a new regulatory asset in the amount of $322 million, which reflects management's assessment of the amount probable but not certain of recovery in rates for SDG&E's investment in SONGS. Additionally, SDG&E recorded a loss of $119 million after tax due to the plant closure. Due to the outage of SONGS from January 1, 2012 through June 6, 2013, which is the date Edison announced the plant was to close, SDG&E has spent approximately $166 million on replacement power. The CPUC has opened a multi-phased OII to determine the ultimate recovery of the investment in SONGS and the cost incurred since the start of the outage, including the cost of purchasing replacement power. I can assure you that as a minority owner of SONGS, SDG&E will do all it can to protect the interest of its customers and shareholders as these proceedings move forward. Now please turn to Slide 11. Last quarter, FERC issued an order on SDG&E's transmission rate case filing, which conditionally accepted our filing, including the methodology we used to calculate our requested ROE of 11.3% and approved the 50-basis-point adder for SDG&E's membership in the California ISO. Last week, FERC issued an order making the 11.3% ROE effective September 1, 2013, subject to refund pending an approved settlement or final decision. Settlement discussions with the key parties have already begun. Since many of you have asked me what happens in a rising interest rate environment, I wanted to remind you that both our utilities have a trigger mechanism, which allows our CPUC-authorized ROEs to be reset if the annual average Moody's A utility…

[Operator Instructions] We'll take our first question from Faisel Khan, Citigroup.

Just a couple of questions. There's an recent sort of news about the potential to change the foreign tax rate for repatriation of overseas earnings. Just wondering if you can just remind us if we're going to move to more of a quasi-territorial system as what might be outlined in some of these tax trade publications? What will be the earnings impact or benefit to you guys? And then I have a follow-up.

Let me first remind you of what we've committed to do under the current tax situation, and then I'll have Joe kind of talk about what's happening in Washington right now and what the impacts might be with that. What we committed to do under our -- under the current tax situation is that we're repatriating about $200 million this year and then about $300 million over the next 5 years back and that we're doing that by using the net operating losses that we have as a result of some of the bonus depreciation we had at the utilities. And so that is the plan that we're working currently. As you know, under the tax laws, they looked at changes that may change the overall corporate tax rate, and with doing that, then we would get a benefit. And I think the number was something around $30 million. But Joe, let me ask you to go into more details.

Sure. Yes. It sort of depends on where they land here. As Debbie mentioned, if they were to drop the rate such -- to like 28%, something that the President suggested the other day, Debbie's right. Instead of about $60 million a year of expense, we'd have roughly $30 million. But if they were to go to a more territorial system, which we've been advocating, perhaps, they might do something that would have no tax, although they might actually impose some kind of a onetime tax to bring back some of this money that's sitting offshore in many companies. So they might impose sort of a 5% tax or something like they have done previously. And in that case, certainly, it would lower the earnings impact that we have in our plan today. So it would be very beneficial to us.

Okay, understood. And then just you guys ended the quarter with about $1 billion in cash on the books. It looks like you had a number of asset sales, including the IPO of IEnova. What's the plan with the $1 billion in cash? Is it to pay down debt? Or is it -- is that how you're going to reinvest that cash or give it back to shareholders?

Yes. Faisel, this is Joe. Let me talk about that most of that cash that's sitting on the balance sheet right now is either in Mexico or in Chile. As we've talked about before, we are not repatriating any of the funds from Chile because we would have an incremental Chilean tax, and we're looking for investment opportunities for that sum, which is around $300 million. The other $500 million about is sitting in Mexico, and that's money that was raised in the IPO and is going to fund the Sonora pipeline project.

We'll take our next question from Naaz Khumawala with Wolfe Research.

Just had a couple of quick questions for you guys. First of all, if you exclude Argentina from South America, can you discuss how Chile and Peru are doing year-over-year?

Yes. If you take Argentina out, Chile and Peru are right on track to what we would be anticipating and kind of what we laid out for you at May at the Analyst Meeting. We're having good performance from both of those companies. The growth rates are very positive, and the ranges that we've talked about before, we're seeing customer growth of 2% to 3.5% and load growth of 5% to 6% in both of those utilities.

Okay, great. And then for SONGS, what's the ongoing impact to earnings from pulling SONGS at a rate base?

The ongoing impact, what -- well, what I can say is what, historically, we've had is about $15 million to $20 million a year of net income from SONGS. And as I mentioned in my comments, certainly, for this year through looking at cost efficiencies and in some of the improvements in our operations due to advancements of technology that we're deploying and all, we feel that we can offset that for this year. And so we were able to include that in our updated earnings guidance that we would still be in the $4.60 -- $4.30 to $4.60 range, including covering off that loss of SONGS income for this year.

Right. Now I mean, I appreciate that but just sort of thinking about next year and forever or are they cost efficiencies, stuff that you guys can keep?

Well, we'll look at -- we'll update our guidance as we always do in February. I mean, what we will certainly look at continuing to look for ways that we can improve the operations of our business as we always do and look at some opportunities to offset that. One of the things that hasn't been factored in and will be factoring in when we do our guidance is what is needed to replace SONGS and what that would mean in terms of additional investment. And so all those things we'll be looking at the before we give updated 2014 guidance in February.

We'll take our next question from Mark Barnett with Morningstar Equity Research.

Just a couple of just quick questions on some of the international projects. The number, I think, on the Los Ramones looks roughly the same. I was just wondering, with the Chilean project that you won and the announcements that you highlighted, are these projects all already fully included in your planned CapEx as of the Analyst Day?

Yes. The -- on the Analyst Day, we had the Los Ramones Phase 1 that we talked about, and then we had the Chilean first 2 transmission lines in Chile. The second 2, that I mentioned today that we had just bid were not in the capital plan. But as Joe mentioned, we have plenty of cash in Chile to fund those projects.

Okay, okay. And you had mentioned for one of the projects, I believe, Mexico, the second phase, you had mentioned a potential partner. Would that be a domestic partner you'd be looking at or maybe another multinational?

Well, we're still looking at that right now. The bid hasn't even come out. We're looking at -- September time frame is what they've said for the bidding on that. And so we're, of course, pursuing all possible options and looking at how we would want to handle it. We haven't made any decisions.

Okay. Just last one, I guess, that, as you said, it's a little too early with the bid not out yet, but is there kind of a, would you say, a greater interest in bidding on these projects, maybe a little bit more competition circling the market? Or it's a little bit too early to comment?

Mark, why don't you just talk about that?

Yes, I would say that it -- there's certainly interest in Mexico. I think there's -- the people recognize that there's good growth there and that these are good projects. But I do think that the companies that have historically been successful in Mexico, of which, obviously, we're one of the leaders in, are the ones that are -- continue to be successful. And I think it's just a knowledge of the market and knowing how to get things done there. But it is attracting more international investment, but I think the companies that have been doing business in Mexico for a long time still have some advantage.

We'll take our next question from Rajeev Lalwani with Morgan Stanley.

Just a question on Cameron. In the event that the DOE doesn't issue the non-FTA approval until, say, next year, how does that impact the overall timeline and construction of the project?

Well, first of all, we expect that to come this year. And that's -- every indication that we received and most recently a key person that works with Moniz, his energy counselor, Melanie Kenderdine, commented that he had completed his review of the data. He had completed his review of the analysis to ensure that the public interest analysis was done appropriately. And he had affirmed that no further modeling was required. And so we would anticipate having him now completed that we will start seeing these projects roll forward. It's not on a critical path for us yet because the FERC permit comes after our expectations on the non-FTA. And so as long as we have both of our permits in the first quarter of next year, then we're pretty much on path.

Okay, great. And in terms of the incremental investment opportunities above the 6% to 8% growth that you laid out at the Analyst Day, can you talk you about -- and you talked about Latin America and some of the opportunities there, but where do you stand with the opportunities in California and under, I guess, the shale gas revolution?

Yes, we gave you the slide at the Analyst Meeting, and we broke it down into utilities and midstream and renewables. And just to give you a highlight of some of the things we're working on, as I mentioned in the utilities for San Onofre and what needs to be put in place with San Onofre retiring, there will most likely be some incremental transmission investments that would be necessary but also the gas system because to replace San Onofre is most likely a combination of renewables and natural gas will be necessary and that we will be looking at what type of investments will be necessary in the gas system. And so that is underway. In Latin America, we talked about Los Ramones Phase 2. We're looking at clearly moving forward with -- to the extent that we can on the Santa Teresa Hydro II project. And then we talked about the additional transmission in Chile, and then we'll continue to look at other things there. And then in the U.S. midstream area that we have made a filing to do some laterals on REX, that's a public filing and that we're also looking at the assets adjacent to Cameron, the LA Storage and then the Cameron pipeline and would expect to be developing those assets in the same kind of time frame as Cameron. And then on the Renewables space, we're certainly looking at any additional opportunities there, including if there's some to get -- some potential to get some wind projects done before the clock ticks away and that we no longer have the opportunity for the production tax credit. So those are all kind of underway right now in those areas.

We'll take our next question from Brandon Blossman with Tudor, Pickering, Holt & Co. Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: I guess, actually, following on a little bit on the REX comment on the laterals and I understand there's some sensitivity around this likely. But can you comment just generally REX's future as a bidirectional pipe and then also, how that fits into a drop-down MLP strategy on a go-forward basis?

Yes. Let me just say that this is something that we told you before we were looking at because we saw the flows out of the Marcellus and Utica and needing to get to market. And so this has been something that we've been quite interested in for a while now, and now we're pursuing it with a new partner. So let me have Mark kind of talk a little bit about that.

I think the future of REX, it will, over time, start to look a giant header system for the Midcon. And it'll take flows from both directions and probably feed into Chicago and other Midcon markets. I think that'll take some time. There are some tariff issues, and you've probably seen the news on some of the issues with existing shippers. All of that has to get worked out. But I think, over time, that's where this asset will go. We probably, as far as the MLP-able, it's obviously an MLP-able asset, but until a lot of these issues are resolved, there would be one that wouldn't drop into an MLP right away until we kind of had some long-term predictable cash flows out of it. But we have -- the good news is we have plenty of other MLP-able assets that are very strong. And obviously, with the Cameron facility, we'll have very good assets that we can look at developing that kind of infrastructure down the road. Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: And just to follow on, again, kind of midterm, are there incremental ideas that may be percolating around REX today?

Oh, there are, and we're pursuing them right now. And I think there's likely to be some near-term kind of things coming out of REX that's showing additional revenue possibility.

We'll take our next question from Faisel Khan with Citigroup.

Figured I'd follow up with a few more questions. On the LNG project, the, I think -- can you just clarify that you're expecting the construction permit in February of '14?

What, we're expecting in February 14 is the FERC permit, which basically allows us -- without the FERC permit, we cannot begin construction, and so that's what we're expecting in the February time frame.

So after that, you guys can start construction. So starting February -- assuming you get the permit in February '14, you'd start construction right away. There's no other permit that's required after that.

Well, yes, there's a few months between when you get the permit and when you can actually begin construction. But assuming that we get the permit in February as we expect, then we would be on our construction schedule that we've laid out to have the first train come on at the end of 2017.

Okay, got it. And just on this project queue that everyone keeps looking out for the -- for all these -- for all the liquefaction projects, it seems like the DOE is going in the project queue order. I mean, are there criteria that the DOE has to look at in order for a project to get the approval? Or is it simply having the application in place? I mean, how do you guys -- what's your opinion on how you see the DOE looking at each application? Is it -- you guys have talked about having to have the FERC application, the process and all those other things. Can you just remind us what the key criteria are to kind of get that FTA?

Sure. The FTA criteria is really that in order not to approve the permit, they have to show that the project is not in the public interest. So there's a presumption that these projects should get approved, and that's an important factor. And there's been nothing that has come out in any of the public studies that have been done, the EIA studies or any of the studies that have been done that have demonstrated that exporting is not in the public interest. And so what we think has happened is after the Freeport project was approved, Moniz stepped into his job. He had made a commitment to go through the data and to go through the determination of public interest that had been published earlier in the NIRA report. And as we understand, he has completed that work now and has affirmed that, that work is accurate and no further studies are necessary. So what really should happen is that these projects should move forward then in the queue because that report showed that the projects are in the public interest and to export LNG. And the projects actually -- the report actually showed that the more LNG you export, the more on the public interest it is. So we would anticipate seeing some projects start going through the queue now that he's completed his affirmation of the data. Mark, do you want to add to that?

I [indiscernible]...

Sorry, go ahead, Mark.

No, go ahead, Faisel.

I was going to ask is it -- I mean, does it really have to be in order? I mean, is that -- is the DOE committed to reviewing each application in order? And so if they're going to do one application every few months, is that kind of -- does that put you guys on track to get the permit when you want? Or are they going to -- do you think they'll issue permits in kind of batches?

Let me try to answer that. I mean, we're all speculating on what we think the DOE is going to do, and so there's a high degree that we'll be incorrect. I think we all thought, a lot of us and, not just us at Sempra but other companies as well, Dominion and others, all thought that there may be some of this would come out in batches. It seemed reasonable to think that, that was going to happen. In hasn't happened yet. That doesn't mean that it won't happen. It could. But our belief is that even if we stay on the schedule that Moniz has laid out and he does do them one by one under some thoughtful process, we still believe we'll get ours by the end of the year. So I think we're -- we feel comfortable that we're on track to do this. As Debbie said earlier, it's not a -- it's an important permit obviously. We have to get it to secure our financing and all the other things. But as long as we get it this year or very early next year, we're still on track, and it doesn't really -- doesn't change our timing as long as it's within a reasonable time frame.

Okay, understood. And then I was also wondering if you guys had any opinion on the low carbon fuel standard and sort of the carbon prices we're kind of seeing in those forward markets now and if that has any sort of impact to you guys or if that's just a pass-through to the consumer?

Yes, I'll have Mark...

Well, let me tell you from a business perspective that we're looking at. I mean, we have talked a little bit in the past. We are looking at LNG and natural gas as a fuel, and a lot of the low carbon standards, especially in the shipping industry, is things that we're looking at, and we see opportunities there to provide infrastructure to that industry, both shipping and the railroad industry to use natural gas. And so we do -- we think that there's going to be some real benefits and growth opportunities in the future around those kinds of regulation.

Okay. And any sort of update on natural gas vehicles and transportation infrastructure for natural gas vehicles? I mean, you guys put a lot of stuff on your website related to this sort of topic and just wondering if something is sort of moving forward at SoCalGas or maybe outside of SoCalGas.

Yes, we've done a lot of work at SoCalGas on the fleet side, and we have a lot of fleets operational now. We also were able to put something in place at SoCalGas, which is a Compression Services Tariff where we can actually serve compressed natural gas directly from our pipeline system. So we're doing those kinds of things. But I think probably the more interesting things are some of the things that we're doing in our U.S. Gas & Power and looking at the potential to develop some market opportunities there. So Mark, you want to?

Yes. No, I just think, just as I said, I mean, I think the opportunities that look to have the best potential to really be significant in the near term, I think are on the commercial side, both on the maritime and railroads and large haul trucking and those kinds of things as opposed to passenger vehicles.

We'll take our next question from Greg Gordon with ISI.

It's actually Jon Cohen calling in for Greg. What is the earliest date that you could lock down financing for Cameron? And is there any way to hedge out your interest rate risk between now and when you close on your construction loans?

Yes. Let me have Joe talk about that because we were just talking about that this morning, and we've done some analysis on the interest rate impact. And also, Joe, do you want to?

Sure. What we're focused on is getting these commitments later in the year. We want to make sure that we do them in the right time frame so that commitments don't expire before we actually draw down the money. But it's progressing very well. There are more meetings going on all the time. And we're getting strong, very strong indications of interest. So the financing is going along well very well. We will look to do hedging when we have the commitments in place, and we're talking to our partners about that. Interest rates have moved some, but it's pretty modest. The impact is really pretty modest based on the numbers we have in our plan. So we will, in fact, do a significant amount of hedging. The timing will be probably closer to the end of the year or beginning of next year, depending on when we and the partners agree on the structure.

Ladies and gentlemen, this concludes today's question-and-answer session. At this time for closing remarks, I'd like to turn the conference over to Debbie Reed. Please go ahead.

Thank you. Well, thank you all for joining us today. And as always, we have Rick Vaccari and his team available to answer any follow-up questions you have from our call today, and thank you very much for being with us. Bye-bye.

Ladies and gentlemen, this concludes today's conference. We appreciate your participation.