SRE
#Okay.
See if you can explain it better than I did.
No.
You explained it well.
I think that the proposal suggested that we took the 2011 to 2014 savings.
That added up to $185 million on a Sempra-wide basis, roughly split between the two utilities.
That would be what they suggested should be reduced from rate base going forward.
So you can do the math and figure out what that would mean to a revenue requirement.
Again, we don't believe that's going to be sustained.
The memorandum account really dealt with 2015.
They treated that separately.
They are trying to get around retroactive rate making, as <UNK> suggested.
So the sum of the two numbers that she gave you and they were in my remarks as well, totaled $80 million on a pretax basis through September, less than $50 million after-tax.
That would be a 2015 impact that wouldn't go to rate base.
It would just be a direct impact that they were requesting.
This is what they requested as a way to get around the retroactive rate making.
We don't think they will be able to sustain it.
But that's the way it would work.
So the rate base is only that $92 million and $93 million.
Yes.
Let me further say though who the they is, because what I want to stress is that we don't have a proposed decision that does this.
The they is [TURN], one of the interveners in the case.
This is their proposal in the case.
So we have not yet received a proposed decision.
We will make a very strong case that the record was closed ---+ officially closed by the ALJ before we even filed with the IRS to make these changes.
So I just want to be sure that the facts are really clear on this.
No.
That was ---+ it was a good question.
I'm glad you clarified.
Yes.
I'll start a little bit and then I'm going to ask <UNK> to add to that.
I think that one of the things that became apparent was that there's limited liquidity in that market and that the effects were great when people needed to change portfolios and clear out of that market.
That creates a sense of discomfort for us because that's not what we see in the Sempra stock.
So what we want to be able to see is that there's the ability to have ---+ and that you can differentiate.
I think you still do see that in a market.
You can differentiate quality from things that are not quality.
Quality continues to trade well even if that whole market segment is not trading as well.
Because ---+ that's always been what we've been after is, if we're going to do this, it's going to be all about quality.
That, if we can't get the value for that quality then it doesn't make sense for us to go forward.
So <UNK>, do you want to add.
Yes.
I guess my only add to that would be is, I think when we looked at this, we ---+ in the beginning, we ---+ I think, we had some skepticism.
Then as we watched these things progress over the last few years, it was clear to us that there was a cost to capital advantage to these entities.
That was worth taking advantage of.
We had ideal assets and we still do have ideal assets for that kind of vehicle, that was valuing cash flows at very high multiples or very low yields.
But I think to your point, <UNK>, and it's a very good one, which is, does this disruption in the market give us some pause to think that this was something like a passing fad.
I think at the end of the day, I think there's a high probability that these long, sustainable cash flows will continue to garner a yield that makes the capital look really ---+ that makes the capital ---+ the cost of the capital look really attractive.
But I do think that we have to kind of think ---+ make sure that we're in a market that supports that for the long haul and that there's enough liquidity in that market that, as <UNK> said, the ones that have that truly aren't tainted by underlying commodity prices can shine and can still garner that low cost.
We haven't ---+ that's got to be proven.
Whether that can happen in the next six months or a year, we don't know.
But I think we're going to keep our options open and look at it and take advantage of it if it makes sense.
If it doesn't, we're perfectly okay to keep ---+ just to do the course that we're on, which is just as a C Corp.
We have ---+ I think we can be very competitive with cost to capital.
We've got a great business here.
So it's ---+ the good news is our underlying assets and business are super ---+ are just really sound.
We don't have to do, we don't have to do ---+ avail ourselves of any one particular mechanism to raise capital.
We have lots of opportunities for that.
We can meet our capital needs without any ---+ really problem.
Let me just add-on one more thing.
<UNK> just alluded to it.
But you guys may or may not have seen this, but in the last several months including last week, we got an affirmation of our credit ratings.
S&P just moved us to a stronger business risk profile from strong to excellent.
We have a very strong business.
We can finance our growth.
This was an opportunity to maybe do something that was really cheap and good.
So to everything <UNK> and <UNK> said, I just want to add that.
We have very strong credit ratings.
We don't need it.
Thank you, <UNK>.
<UNK>, do you want to take that.
Or <UNK>.
Yes.
I'll speak first.
Then I'll let <UNK> go through all of the numbers of the net exposure and so forth.
But as you know, we have kind of a natural hedge here because we have ---+ when the dollar strengthens on all three of the currencies in Chile and Peru, we have a reduction of our growth because of the translation of the two currencies in South America to the dollar.
But offsetting that is the fact that we do have dollar functional currency in Mexico, because fundamentally most of the business is all in dollars.
But we pay our taxes in Pesos.
We have some other adjustments in the income tax expense as a function of their income tax rules that impact us in the opposite direction when all three currencies decline.
So that's what we've seen over time.
So I'll let <UNK> walk through what the numbers were for the quarter and year-to-date maybe.
<UNK>, let me just add to, that in South America, you're on-pointe.
In fact, we do get adjustments in our tariff, primarily from inflation but also FX too.
But what we have seen in South America this year, which is a little bit unusual.
We've seen currency devaluation without underlying inflation in those countries.
So we're not getting the inflation adjustment to our tariff.
So it's not ---+ it's really not putting as much rate pressure on as you might expect.
I'm not sure that's a good thing.
We would like to get the adjustment, but we're not ---+ we're just not seeing high inflation in those countries.
What we are seeing is just strengthening of the dollar.
It's probably more has to do with more US policy and the strength of the dollar worldwide than it has to do with really underlying weakness in those economies.
Yes.
What we will do and why we don't give you numbers until February is, we look at the forwards at that time for currency and natural gas prices and we adjust our plans for those things, as well as the additional growth that we've had in our businesses, outcomes like the GRC and all.
So that's why we wait to give you our 2016 forecast in February.
Then at the analyst meeting in March, we'll give you additional information for the next five years.
Well, we wouldn't ---+ based upon what we see in currencies now, we wouldn't see that.
Then gas prices are so low now, they've already been reflected to a great degree in this year's performance.
So I guess they can always go lower.
You can never say they won't go lower, but we have pretty low gas prices now.
So ---+
Thanks, <UNK>.
Sure.
No, you heard it correctly, that with the ORA, the Office of Rate Payer Advocates, we have a settlement for a fourth year that would give us a 4.3% attrition for that fourth year.
That will be looked at by the Commission separate from our other settlement.
So we have a settlement with eight parties for the three years and then we have a settlement with one party for the fourth year.
That party being the Office of Rate Payer Advocates.
Thank you.
Well, thank you all for your great questions.
You kept us really busy this morning.
We appreciate that.
If you have any follow-up, please contact our Investor Relations team.
Have a great day.
