Please stand by. Good day and welcome to the Sempra Energy Third Quarter Earnings Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Rick Vaccari. Please go ahead.

Welcome to Sempra Energy's third quarter 2015 financial presentation. A webcast to this teleconference and slide presentation is available on our website under the Investors section. Here in San Diego are several members of our management team: Debbie Reed, Chairman and Chief Executive Officer; Mark Snell, President; Joe Householder, Chief Financial Officer; Martha Wyrsch, General Counsel; Trevor Mihalik, Chief Accounting Officer; Dennis Arriola, Chief Executive Officer of Southern California Gas; and Jeff Martin, Chief Executive Officer of San Diego Gas & Electric. Before starting, I would like to remind everyone that we'll be discussing forward-looking statements on this call within the meaning of the Private Securities Litigation Reform Act. 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 most recent 10-K and 10-Q. It's 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 third quarter 2015 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, November 3, and the company does not assume any obligation to update or revise any of these forward-looking statements in the future. Please turn to slide 4, and I'll hand the call over to Debbie.

Thanks, Rick. During the third quarter, our solid operating and financial performance across the company continued. With strong year-to-date results, we are now raising our 2015 adjusted earnings guidance range to $4.95 per share to $5.15 per share. In addition, we continue to execute on our five-year base plan and are on track to meet or exceed our approximate 11% adjusted base plan EPS CAGR for 2015 to 2019. Since providing those projections at our March Analyst Conference, we have announced more than $2 billion of investment opportunities that are incremental to our base plan. We have also filed for commission approval of our GRC settlement agreement for SDG&E and SoCalGas. I am very pleased with our progress this year and I'm optimistic as we move into 2016. Let's begin with an operational update and then Joe will provide more detail on our financial results. Please turn to slide 5. With regard to our base plan, I would like to first revisit the visibility of our 11% adjusted EPS CAGR. On this slide, we provide key base plan assumption. I will mention just a few points. First, the almost $20 billion of investments included in our five-year base plan reflect projects that were essentially approved, contracted, or under construction as of March 2015. For earnings associated with these projects, we have risk mitigation strategies in place that limit our exposure to changes in interest rates, foreign currency rates, or commodity prices. We provide additional information in the appendix to this presentation. Second, our base plan projections do not include impacts from the proposed GRC settlement, the $2 billion of new projects or acquisitions announced since March 2015 or any earnings from our three potential LNG development projects. Third, we do not need to issue Sempra equity nor any potential MLP…

Thanks, Debbie. Earlier this morning, we reported third quarter earnings of $248 million or $0.99 per share. On an adjusted basis, we reported third quarter earnings of $250 million or $1 per share. Third quarter earnings in 2014 were $348 million or $1.39 per share. Adjusted earnings this quarter exclude expenses related to the development of our three proposed LNG liquefaction projects. Similar to last quarter, we only recorded $2 million of after-tax expense. This number reflects the fact that a substantial portion of the costs are either being capitalized or shared with our Cameron joint venture partners and PEMEX. Earnings this quarter include reduced tax expense associated with repatriation. As I mentioned on last quarter's call, we intend to participate in the planned IEnova equity offering, and now expect to use about two years' worth of dividends from Mexico that we had originally planned to repatriate. As a result, we expect an approximate $0.10 per share benefit in both 2015 and 2016 from lower than expected tax expense. Our current plan is to resume repatriation from Mexico in 2017 and 2018. I also want to reiterate that third quarter earnings continue to reflect the impact of seasonality in SoCalGas's revenues. This impact resulted in $113 million of lower earnings this quarter and $48 million of lower earnings year-to-date. Applying seasonality will have no impact on full year earnings. We will see a $48 million after-tax benefit in the fourth quarter due to seasonality. You can refer to the appendix for additional detail where we illustrate 2014 SoCalGas earnings had seasonality in revenues being applied. Excluding the impact of seasonality in SoCalGas revenues, Sempra's third quarter adjusted earnings increased by $15 million compared to the same period last year. Looking forward, we are now raising our 2015 adjusted earnings guidance…

Thank you. We'll now take our first question from Neel Mitra with Tudor, Pickering. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: Hey, good afternoon.

Hi, Neel. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: How are you?

Great. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: First question was on the pipeline award expected this week. There has been some articles with some bids submitted or published. And it looks like you guys are a close second. Are those apples-to-apples comparisons and does that reflect how the ultimate auction will come out or is that – or is the CFE still ruling on it?

Well, first, let me say that they just changed the date when we will be notified on the bid to November 10, which is next Tuesday. And if you've looked at any of these bids before, the capital costs are not really reflective of who wins the bid, it's one component of the total bid. The real bid decision is based upon the tariff amount that you are agreeing to provide over the 20 years or 25 years of the contract in all of these pipeline bids, and that's what will be analyzed and looked at next week and announced. Capital is a component, your return is a component, what your gas costs for operating the facilities is a component, what you think in terms of additional capacity sales that you might get off of the pipeline, those all factor into the creation of a tariff rate and that's what they will be announcing next week. So, we feel good that we're in a close second, only $4 million behind the low capital, but there is a lot of other factors that will come into the final decision. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay, great. And second question on Cameron Train 4. Has the timeline been pushed out as far as negotiating customer contracts or MoUs, because I think previously you guys mentioned end of the year and I think in your prepared remarks, you said you'd have something maybe by Q1 2016. Can you just remind us of the timeline going forward and the market conditions for additional LNG?

Sure. I'll start and then I'll have maybe Mark add some additional color to it. But I've been saying in meetings with the investors for some time that we were looking at the end of the first quarter of next year. And that was because we really cannot – could not even begin negotiating MoUs until we have the EPC contract and we just got that this month. And so now we have the information that we can get a firm price. And we're very pleased that knowing that and getting a firm price, we think Cameron will be one of the, if not the lowest cost facility in the United States for LNG export. And so that allows us to really negotiate a firm MoU. And we followed the same process when we did Trains 1-3. We really needed to know what the cost was going to be in order to have a firm MoU negotiated. Mark, do you want to add anything?

Yeah. I would just say that we've been having substantive discussions with a lot of potential customers and now we've been able to give them some hard data to work with, and we do expect to show some results. They won't all come at once, and so we expect to have some towards the end of the year and in the first part of next year. But our firm decision to move forward on this would be late in the first quarter.

You might also comment, Mark, on what we see in the contracting area there because I know that there has been a lot of articles and all, and what we've seen is that there are still a lot of parties out there contracting.

Yeah. I think there's always – there's speculation in the press and rightfully so, picking up that LNG is oversupplied up through 2018, but when you start looking at the needs beyond that, when you get into 2020 and 2021, there's definitely a need for additional capacity and we're seeing that. And just to remind the audience, just in 2015 alone, we had 27 contracts signed. And 17 of those were 20-year contracts, four were 10-year and the rest were shorter term contracts. So there is plenty of activity going on, and we are certainly seeing that and we remain very confident that we'll move forward on Train 4. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: And, Mark, just to quickly follow up on the comment that off takers will need LNG in 2021. How late can they wait before they sign contracts in order to procure that supply? Do they have another year or is it necessary to make that decision in 2016?

I think they really got to start making those decisions in 2016, especially for new projects because otherwise they just won't be online in time. We are probably the – as far as a new train goes, Train 4 can probably come online as probably as quickly or quicker than any other train in the market that's starting anew, and you've got to really kind of make that decision in 2016. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: Got it. Thank you very much.

Yeah.

Thank you.

We'll take our next question from Julien Dumoulin-Smith with UBS.

Hi. Good afternoon. Can you hear me?

Yes.

Yes, Julien. We can hear you.

Excellent.

Good afternoon.

Yes. Indeed. So, perhaps firstly on Mexico, can you elaborate a little bit on opportunities down there, and I suppose principally focusing on non-oil and gas, but obviously this transmission, there's talk of electric capacity market like procurements, et cetera. What are you guys ranging to do down there at present?

Yeah. I mean, that's a great thing about Mexico. I think, it's one of our wonderful growth platforms where we see layers of opportunities for our company there. And certainly, there is more bids coming out on pipeline, we'll see $6 billion worth of pipeline bids occur over the next several months and we will be actively involved in that. Following that, they are finalizing the market rules for electric transmission and in our slides we showed you some of the projects that would be up for competition and probably within the first half of next year. And we're very interested in participating in that market. Further, now some of the oil properties are beginning to be taken over as it is and we see some great opportunities to the liquids pipelines that will take how – take away capacity from some of those PEMEX properties that are now being developed. And also, potentially gathering and processing in those areas. And then the generation market we'll be opening and we have, as you know, the ESJ lands, property that could – we could add about another 1,000 megawatts or more to that area to do wind production. And so we see some great opportunities there. We also see some opportunities to really get some greater value add of our TDM plant. So, I think that and I would also add, I should say, that looking at our existing assets and a great pipeline backbone that we have, we can also add capacity with industrial customers to that and we're working on that right now. So we just see a great worth of opportunities, wealth of opportunities in Mexico and are very excited about it.

Perhaps just a quick follow-up there. TDM, obviously, you've been looking for contracts a while. Is there an opportunity to re-contract that back into Mexico now because of the opening up of this market, I mean is this quote finally going to happen?

Yeah. Those are the things that we're working on right now and we think that that those rules are getting put in place that would allow us to do it. Mark, do you want to...

Yeah. I was just going to say that the procurement for electricity along the Baja border haven't been let out yet, and so the CFE is working on that, but we fully expect that there'll be opportunities to contract that plant into Mexico. And you will have to weigh that against the opportunities on the U.S. side.

Great. And then lastly bigger picture, if you would, in terms of the U.S. obviously we just talked about Mexico and the range of opportunities, but you all have been pretty active both on gas pipelines and renewables in the U.S. As you think about CPP, California's own 50% RPS, is there anything bigger picture we should be paying attention to, any observation?

Well, I mean there are two sides of opportunity that we certainly see there. As you know, we do the renewable development and we have the potential to add additional solar project that can sell into the California market. And as you know, since our Analyst Conference, we already got two additional solar projects sold into the California market, and that was before the 50% was adopted. So, we see great opportunities to expand our existing solar facilities. And then in terms of our utilities that the integration of 50% renewables is going to require both gas and electric investment and the reason it requires gas investment is the type of generation that's going to be needed to support renewables in the area is different, and the location of that may be different. And so we're looking at major investments to our gas system to support the future. The North South Pipeline which we have before the commission right now would not only reinforce the system for reliability, but also help provide for that 50% renewable future. And then of course on our utility side, we're going to have to make investments, so it will allow us to integrate all of the additional renewables in. So, I think there are some investments that are not part of our current plan right now, North South Pipeline is not part of our base plan nor are additional solar projects, nor are any of the distributed energy resource planning on it. None of that is part of our base 11% growth plan. So, we see that as all potential upside.

Great. Thank you.

Our next question will come from Stephen Byrd with Morgan Stanley. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Hi, good morning/afternoon.

Hi, Stephen, how are you? Stephen Calder Byrd - Morgan Stanley & Co. LLC: Very well, thanks. Thanks for taking my questions. I just wanted to talk about dividends from Mexico. It makes perfect sense to use that cash to further invest in the business. As you look out longer term, do you think it's likely you're going to want to think about trying to keep more of that cash within Mexico rather than bring it back in the U.S. It sounds like it's efficient in some ways to do that. I'm just wondering whether you think this is more of a near-term phenomenon or something that we could see you extending out and trying given the excellent growth opportunities in a country.

Yeah, I'll start and then I'm going to turn it over to Joe. I mean I think when we were looking at doing the dividending, it was because we had the net operating losses that we could benefit from. So when we look at the PEMEX deal, it made a lot more sense for us to keep the cash in Mexico for that major project. And so, I think to the degree that we continue to have major projects in Mexico, that would drive some of our decisions there. But why don't you talk about our plans, Joe, and...

Sure. Thanks, Debbie. Hey, Stephen. It's a great question and I'll just go back. I will remind you all that, we essentially built all the equity in Mexico from profits from international operations over the last decade or more and basically doubled the value of that as we took IEnova public. So, it's been a really good investment for Sempra and we will continue to want to invest in it. We do have public shareholders now, so we will pay a good dividend from IEnova and Sempra will receive some of that cash. We don't need to bring it all the way to the U.S. Our current repatriation plan has us doing that through 2018 but as we just said, we're going to hold off on that for two years so we can use that money effectively in this offering. I expect IEnova to keep growing and I would expect us to want to continue to participate in offerings as we go along so that we don't dilute our ownership so much. And so I think what you're suggesting is probably the way it will play out over time and that's been a really good thing for us. Stephen Calder Byrd - Morgan Stanley & Co. LLC: That makes sense. Great. Thank you. And just on your DRP overall. Shifting gears, any feedback or reaction that you had to the different elements. It sounds like obviously the grid overall needs to change, which you mentioned just a minute ago, but just curious that any color and the kind of feedback that you've received so far.

I'm sorry. I wasn't quite sure, you're talking about...

Distributed resource plan.

The distributed resource plan. Okay. I'm going to ask... Stephen Calder Byrd - Morgan Stanley & Co. LLC: That's right.

Yeah, I'm going to ask Jeff talk about that. Jeff, do you want to... Jeffrey Walker Martin - San Diego Gas & Electric Co.: Sure. Good morning, Stephen. You recall the kind of focus that program is really intended to make sure that all the investor owned utilities are making the investments, which are necessary to make sure that distributed resources like solar and other resources continue to penetrate the system. And when you kind of compare that to some of the other things we talked about like SB 350; that's designed to make sure there's a lot more central station renewable. So as you have more participation on the central clean energy side and the on the distributed side, it really sets up pretty interesting dynamic for the electric utilities to make more investments around transmission and distribution to accommodate those resources and particularly the unique characteristics of the fact that they're so intermediate – intermittent. But I think that the – one of the things we keep falling back on is we've got about a $5.8 billion capital program through 2019, and we continue to think of the DRP opportunities, Stephen, it's kind of a longer term opportunity. Part of this maybe definitional in the way some of the different utilities in the state talk about it. But for us, anything that comes out of the DRP, whether it's greater use of batteries, synchronous condensers, more solid state switches, more investments around electric vehicle charging, all of that we would view as being an additive to the plan that we already have from a capital program standpoint. Stephen Calder Byrd - Morgan Stanley & Co. LLC: That's great. Thank you very much.

Our next question will come from Greg Gordon with Evercore ISI.

Hi, Greg.

Hi, guys. Just a couple questions on clarification and I apologize if I missed it. But what was the assumed annual repatriation from Mexico for 2015 through 2018 in the last five-year plan?

Joe, cover that.

We basically said back in 2012 when we started, Greg, that we were going to do approximately $300 million a year. We didn't break it down between Mexico and Peru, but we set a roughly $300 million a year for that period, 2012 through 2018. And so, we're pulling back on the Mexico piece for this two-year period. So, you can see we're talking roughly around $300 million investment in the IEnova, $300 million to $325 million maybe, something like that. So, if you think about that, cut that in half and you see what the Mexico piece was for a year.

Okay. So, you're going to basically keep – so, you're telling us that $325 million is the amount that you're now not going to repatriate and instead use to help finance...

In the two – yeah, over the two-year period 2015 and 2016. We already have the 2015 dividend. It's already in a Mexican holding company above IEnova, we'll use that and then we'll borrow some money for a short-term until we get the dividend next year usually in the summer time.

Okay. Okay. So, you answered my question without me having to try to figure out on my own $325 million. Thank you.

Roughly, right around that.

And then the second question and it might entail a longer answer is, I know, you told us in the five-year plan what your assumptions were with regard to the general rate case outcome in terms of attrition, it was 2.75% and the repair allowance benefits would be flowed through to customers beginning in 2016. If this deal was approved, I know the attrition adjustments are modestly better. But can you explain the repair allowance – the prospective repair allowance framework and then also go back – maybe explain a little bit more what your exposure is perhaps the retroactive look at repair allowance goes against you?

Sure. Let me start this because having been in this business for 37 years, I can't help, but make comments on how flawed I think the proposal is. And it was only raised in our case by one of the interveners and what they're basically trying to do is re-coup what had been decided in the last rate case. So, we think it's legal case retroactive rate making and I – we will fight it as a legal case that retroactive rate making. What in our case is, I just want to talk about our set of facts. Because I think our set of facts is really important. A record in our case was officially closed in July and we did not even file with the IRS for any consideration of a change of tax treatment until after the record had been closed and in the case of SoCalGas, it was more than a year after the record had been closed. So, we think that to try to re-trade this and to go back and recoup those dollars is fully inappropriate. And so we think we have a very good legal standing in our case with our set of facts and we will fight that. As Joe mentioned in his prepared remarks, the dollars that we're talking about or the SDG&E for 2011 to 2014 is $93 million, and for SD – or SoCalGas is $92 million. And a memo account for 2015 because they were all concerned about the retroactive rate making effect and so they tried to cover it with a memo account. There is SDG&E $46 million pre-tax and SoCalGas $34 million pre-tax through September. We will fight all of this because the history has been very, very clear that it's to the benefit of the customers to have utilities pursue efficiencies and tax benefits and everything. And that the shareholders have to pay for all the research and work that was done to accumulate these benefits. And that the shareholder has always been able to keep those benefits in between rate cases, and then the customer gets them at the next rate case. And when we did our 2016 plan and beyond, we did incorporate in that $40 million reduction at SoCalGas and $19 million reduction at SDG&E starting in 2016 forward for that now going to the customer, which has been the regulatory history of how these things have been dealt with for decades at least since I've been here. So, we think that we will prevail on this issue with our good set of facts and we will continue to fight this, because we think it is a retroactive rate making situation.

Okay. So that sums it up, the worst case scenario would be you lose your – on your legal position and that goes as a reduction to rate base, but prospectively, you worked out how you're going to pull back the benefits?

Right. I mean that's the way it's always been, is that the customer gets the benefits flow through to them at the next rate case and we assume that in our base plan and Dennis and Jeff went through that in March, because we've always had that assumption that come 2016, those will become benefits that will go to the customer.

Okay, great. And then, a final question amongst the many things you guys have talked about, some – two of the biggest building blocks for earnings as we go into next year that were not in the base plan are the $0.05 of accretion from the PEMEX, which rises to $0.10 in 2019. And then also the continuation of this $0.10 benefit from not having repatriated cash from Mexico. And then you've got all these other things on the checklist that you've won that weren't in the plan that you delineated earlier as well. Correct?

Yeah. And some of those don't happen next year that they begin construction but they are not in service next year, so...

Got it. Thank you, guys.

Thank you.

Yep.

Our next question will come from Chris Turnure with JPMorgan.

Hi, Chris.

Hey, guys. How are you? I wanted to just follow up back on Trains 4 and 5 here. Could you maybe give a little bit more color to the extent if there's anything different from what you said earlier in the call about the potential for getting a Train 5 contract signed in addition to just Train 4. And then, could you comment on whether the EPC contract preliminary agreements there were not just good but better than your expectations at all?

Sure. I'm going to ask Mark to comment on that as he's smiling. So...

Well, I would say that I'll answer the second question first, which is with respect to the EPC contracts. I think we were pleased with the way the numbers came out. I won't say we were terribly surprised, we suspected that continual construction would lead to a very low cost and we were – and I think we're proven correct. So, we do believe that it will be beneficial to continue the construction into Train 4 and that will actually reduce the costs for all of the trains in the facility. So, I think it will make Cameron a very competitive facility. With respect to any change in the way that we're looking at it – as to Trains 4 and 5, I think we've said numerous times in the past that the decision to go forward with Train 4 is really a Sempra decision that we've made in conjunction with our partners. And for Train 5, that will be a decision that's made by our partners and they're still contemplating that and whether they go forward at the same time or not is really not – is their call and really not ours, and frankly not that relevant to our investment decision or our financial outcome.

Okay. That's helpful. And then, shifting gears to the total return vehicle. You mentioned you're going to revisit the idea in the middle of the next year. Is there a reason for that timing specifically, and maybe you can give a little bit more color as to what you would view as a constructive MLP environment out there for you guys to have a low cost of capital?

Yeah, let me just say that the middle of next year is arbitrary, it's more that we want to see sustained markets that can make us feel that the cost of capital that we would receive by doing it is better than what we would receive at Sempra. And so, we did not want to give you a view that we're going to look at it again next month, and the month after, it's going to be – we're going to have to see really sustained improvements in the market that cause us to want to launch something on the basis of allowing our growth, this wonderful growth that we have to occur at a lower cost of capital. And if it doesn't deliver that value proposition, then it doesn't make a lot of sense for us to go forward. So, that's how we're looking at.

Okay, great. Thanks.

Our next question will come from Steve Fleishman with Wolfe Research.

Yeah, hi. Just first, to follow up on that, so is the registration still live for the MLP in the meantime, or is it no longer kind of live?

Yeah, the registration can stay live for a period of time, and what we did is we wanted to have full optionality. So, we did this with IEnova, we did a lot of pre-work to be ready to launch if the markets were right. And we ended up actually launching IEnova faster than we thought we would have, because we saw Mexican reform coming, we'd won some pipeline bids and it made sense for us as a way to raise both debt and equity. But we would have to see the same kind of thing for the MLP, and so that's kind of how we're looking at it.

Okay. And then, apologize to move back to the repair issue, but just to kind of clarify, if we looked at the forward revenue requirement of the utilities, what would be the impact to that beyond what's currently in your plan if this is upheld?

Well, all I can...

Is it just the lost return on that rate base or...

Yeah.

Well, there hasn't been a decision in our case. So it's hard to say what it would be. And I will say our set of facts is not exactly the same as another utility's set of facts. So, I wouldn't want to speculate, I told you the amounts of what the tax was over the period of time, but how it ultimately gets treated and everything, that will be litigated in our case. So, I couldn't really speculate on that.

Okay. And then finally, the $2 billion of upsides – investment upsides to the plan, which I guess that's also separate on top of the rate settlement separately, but just the $2 billion of investments. Could we just go through those one more time? I know we have – PEMEX investment is a big one.

Right.

Is it the two...

The PEMEX...

...renewables projects?

Yeah. There's three renewable projects and then the PEMEX, the PEMEX was about a little over $1.3 billion and then the three renewable projects equate to the remainder. So, I mean that's...

They are in the slides, Steve, on page 19.

Yeah.

Okay. And just at a high level, has anything gotten worse than when you gave the plan, any key drivers or is generally the rest the same?

I would say the only thing that is down from the original plans is natural gas prices are down. So, that's a factor in – and you're looking at 2016, is that what we're talking about?

No, the whole five-year plan, the 11% growth...

Yeah, so really – oh, the whole five-year plan. I mean natural gas prices are clearly down almost $2 from when that plan was put together a year ago. And FX, clearly, the dollar has strengthened against all the currencies, that has actually been in our favor right now because the Mexico effect is bigger than the South American effect. So, it's a little bit hard to see how that will play out over the five-year plan period because it depends on what the U.S. dollar does against those three currencies. And I think those are really the two main factors. Everything else is very consistent. We have a very long-term contracted business with a good regulatory model and we just got this proposed decision that – or I'm sorry, the settlement – proposed settlement, so feels pretty good.

Yeah. The only other thing that I would mention that I didn't mention in terms of the upsides to the plan is that we did get the additional pipeline in Mexico, that's about $110 million. So, they're all listed on slide 19.

Thank you.

Thank you.

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

Hi. Good afternoon.

Hi, Faisel.

Hi.

Hi. Can you remind us also just what the dividend growth rate is along with the base plan for 11% EPS growth 2015 to 2019?

Yeah. Well, we had talked about a dividend growth rate that was around 5% to 6%. But that – and our board considers that every February and the great thing that we have is that we have all of these projects that are long-term contracted and then we will get our GRC decision by February, we will see the progress on construction of Cameron, which is going really well. And we will see if we're getting some contracts on Cameron 4 at that time and so there will be a lot of visibility to things that may cause our board to reconsider, is that the appropriate growth rate over the time through 2019. And so that happens in the February timeframe and we had targeted a 45% to 55% payout ratio at 2019 – and that, I think there's been no change in that type of a thought process, but what we do in the interim, I think, we're going to be looking at again in February.

Okay. And any change in your thought process around M&A? Certainly the midstream and MLP sector has been hit pretty hard, I'm not sure if that changes your calculus around how you look at assets and opportunities?

Well, we always look at – we've looked at a lot of the MLPs and we looked at – I think our interests would lie as, we haven't seen anything that is greatly attractive to us in terms of the composite in an MLP. But there are some assets there that if they need the cash and they need to start liquidating some assets that we may be very interested in. And so we've identified things that would be of interest to us and we continue to monitor those and have discussions as appropriate.

Okay.

See, let me just add – if I could just add to that. I see this transaction and the wonderful thing that we have at Sempra is that we have such high organic growth that we don't have to do those kinds of transactions to get our growth. And so I would just tell you all we're really picky about what we would acquire because we've had such success in doing greenfield projects that – and our returns tend to be higher on all the greenfield projects and the acquisitions. So we're very disciplined when we make acquisitions and I think hopefully you'll see from the PEMEX acquisition. We think it's a very good acquisition for us. It's accretive. It allows us to have a more robust pipeline system that we can grow from. So that's what we really look at.

Okay, understood. And then just on the potential assets in Mexico, I was wondering have you guys looked at exporting LPG, propane and butane out of Mexico. I know a number of people have been trying to figure out how to export LPG out of the West Coast and it's been a difficult process. So I'm just trying to see if you guys have looked at that opportunity and if you think it's a viable option out of the West Coast.

Yeah. I will have Mark talk about that. I mean, what we have – we have the ethane pipeline and that we look at all opportunities. We also have the joint venture that we'll continue with PEMEX. And so these are some of the kinds of things that we would see as being potential out of that JV. Mark?

Yeah. I would say both in the U.S. and in Mexico we've studied opportunities to export various kinds of natural gas liquids and we haven't put a project together or announced anything, but it's something that we study all the time and I do think there's some interesting opportunities. So it's definitely top of mind. There is a real need to move some of these liquids out of the producing areas, and to the extent that we find an opportunity that works for us, I think we'd be willing to capitalize on it.

Okay, last question from me. Any impact from the hurricane on the West Coast of Mexico to your operations or assets?

No.

No, no.

Okay, got it. Thanks.

Thank you.

We'll now go next to Michael Lapides with Goldman Sachs. Michael Jay Lapides - Goldman Sachs & Co.: Hi, guys, real quick...

Hi, Michael. Michael Jay Lapides - Goldman Sachs & Co.: Hi, guys, real quick question.

Hi, Michael. Michael Jay Lapides - Goldman Sachs & Co.: ...on the U.S. renewable business. Can you talk about how much incremental room you have for the development of solar projects whether it's Mesquite, Copper Mountain. Really can you just talk about it fleet-wide like almost how much excess room do you have in the backyard, how many megawatts would that potentially create over a long period of time?

So, I'm going to have Mark address that.

Yeah. Hi, Michael. Yeah, we've got about 420 megawatts under construction and with respect to solar, we have about 280 megawatts of property that's still available for development. And then, we're actually in the process of trying to acquire a little bit more to increase that. And then, with respect on the wind side, we have just a flat rate, we have over 200 megawatts that's potentially developable there. And then, of course, at ESJ, we have, I won't say unlimited, but it's a very, very large amount of capacity that's potentially over 1,000 megawatts.

And that can sell both into the U.S. or into Mexico.

Correct. Yeah. So, we do have – we currently have developable properties that we can and then, obviously, we're looking at new ones all the time. Michael Jay Lapides - Goldman Sachs & Co.: And how should we think about contract prices and the economics of the projects you announced at the second quarter call versus ones you started development on three years or four years ago?

I would say that the economics are very similar or sort of within 75 basis points of each other. Our returns, we don't really announce what the returns are, but the prices are cheaper because of the cost of this – of the product of both in wind and solar has dropped dramatically and that's made a big difference. Michael Jay Lapides - Goldman Sachs & Co.: Got it. Thanks, Mark. Much appreciated.

All right.

Thank you.

And we'll go now to Mark Barnett with Morningstar.

Hey. Good afternoon/good morning.

Hi, Mark.

Thanks for all of the details today. It's been a really helpful call. A couple of just quick questions, just one clarification for the $0.10 – extra $0.10 in guidance that was assuming approval of the PEMEX buyout this year?

You want me to answer it?

Yeah. I'll have Joe answer that. Yeah. Go ahead, Joe.

Yeah, Mark. No, that was our reassessment of our desire to make the investment of the two years where the dividends, 2015 and 2016 dividends. And so we have recast our tax expense to assume that we will only repatriate this year and next year from Peru and not Mexico, so that's locked in, we are doing that.

Okay, okay. So that decision was certainly not then contingent on approval, okay.

It's not contingent on the closing, no. We're just not going to repatriate those monies for 2015 or 2016. We believe that the deal will close and we will fund it. And so there is no contingency there. We've already adjusted in the third quarter tax expense for that and so you'll see also lower tax expense in the fourth quarter combined that will be the $0.10.

Okay, great. Sorry, I was a little confused on that. And more of just a big picture question since it's a new development. With the transmission bids that will be beginning in 2016, how do you view your competitive position there given that your existing relationships in gas is sort of a different ball game, I guess, on the electric side? Can you maybe talk about sort of the competition and the clarity that you've seen around the bid structures, obviously something that took some time to develop with the gas?

Yeah. I think a couple of things. We have some outstanding experience building major transmission projects in difficult areas. Sunrise is probably one of the most difficult transmission projects to get done and it got done on time, on budget. So – and I think our company has shown our ability to work through regulatory agencies and get all of that done. When you go to Mexico then and you take some of those skills and you transfer that rights of way will be a key issue. It's very similar on the gas and electric side and in fact there may be cases where the transmission could use some existing rights of way that we've already acquired. And then, the siting of the line, the ability to work with the agencies, CFE would be the agency that would be bidding these out and we have good experience working with CFE. And I think having a workforce of several hundred people headquartered in Mexico City that know how to work through these processes, I think that we're in a really good place to enter that area of the business with the experience that we have in Sempra and do quite well in it.

Yeah. And I would just add to that we have developed transmissions lines outside of the U.S. as well. We've been one of the – we've done a good job of building transmission in Chile, we've built some things in Peru. And so it's not – we're not without experience outside of the U.S. as well. So, I think given the combination of experience that we have and our relationship with the CFE, I think we're in – we should be in very good standing to be competitive in that market.

All right. Thanks for your thoughts, guys.

Sure.

Thank you.

We'll take our next question from Michael Goldenberg with Luminus Management.

Good afternoon.

Hi, Michael.

Hi, Michael.

Hi. I wanted to get more understanding on the guidance and the $0.15. So, you increased the midpoint by $0.25 of which $0.10 is taxes. Can you maybe help me understand the other $0.15, since it's not PEMEX?

Well, I think if you look at the strength of our business so far this year, you look at how our performance is all of our businesses, and then you adjust for seasonality at SoCalGas, our utilities are having very strong years, our other businesses are having very strong years. So, we look at where we are today and where we think that we will be at the end of the year across all of our businesses. And I think everything is doing very well. So, there is not like one thing that's behind it. There is $0.10 for the tax, the repatriation issue, but the rest of it is across our businesses.

So, it's not one specific thing and it's not GRC and it's not PEMEX, right, it's just kind of spread out...

Well, the GRC doesn't take effect until next year. PEMEX will not close until later this year, so it won't be until 2016 earnings. So you won't see the GRC effect until 2016 nor will you see the effect of PEMEX until 2016. So it's neither of those, it's just the strength of our base operations across the board.

And then the other part that I'm trying to understand, since you were raised $0.15 but you kept CAGR as the same, is the starting point now high and thus the ending point will – and is the ending point also higher?

I'm not sure I understood it.

He is saying we're raising $0.15.

Yes.

But keeping the CAGR the same. I mean, we're not setting a new CAGR. Debbie was talking about our approximately 11% CAGR that was in the Analyst Conference. We're not telling you a new number yet. We'll give you a new guidance when we have the conference or what our 2016 to 2020 number is. But we've already said we already know that the numbers are all getting higher, because we have $2 billion more projects, we have a number of positive things going for us. So I think you can glean from that that it wasn't lifting up the front and keeping the end smaller, that's not our intent of this conversation.

Yeah. But I will also say that that's a 2015 to a 2019 CAGR. And one of the reasons that has some big effect is that the end of the period what's been great is that we've been able to produce strong results at the beginning of the period. So that Cameron adds a lot in 2018 and 2019 to that growth rate, but we're also growing our business in a lot of other areas and we've had exceptional performance in safety, reliability, customer and financial performance from our utilities as well as our other businesses.

So, what I'm hearing is both conceptually things are going great and mathematically as well, if we just crunch the numbers...

We just won't tell you what number to forecast, that's it.

Yeah.

Got it. Okay. Thank you.

Our next question will come from Vedula Murti with CDP Capital.

Good morning, good afternoon depending how – wherever you are.

Hello.

I'm fine. I'm wondering given the sales to the MLP market and everything, yeah, I'm sure – I would suspect you have this theory at least some inventory of very mature assets where the EBITDA and everything like that is on full run rate and everything like that and there are other entities that are going to be needing to big machines, so to speak. So, can you give me a sense as to what – and you guys have always been very, very good at recycling capital. So, can you give us unless I missed this earlier, I did show up a little bit late, I showed up in the Q&A. Can you give a sense as to what might be available in terms of either in some gross EBITDA value or something like that or certain types of assets that you think that it will recycle capital during this period, while you're waiting to see things stabilize if they're all on their optimal run rates?

Yeah. If your question is like what is our capital allocation methodology and our enterprise, is that what you're trying to get at?

Well, I'm trying to get at the fact is that you probably have certain plants or assets or whatever that already at regular run rates and they're contracted and the fact is that those – in theory would have probably been appropriate for holding on to for an MLP, but if the MLP is going to be pushed off and you have MLPs and YieldCos that are going to need to acquire in order to justify their own cost of capital, the question is whether you have a inventory of assets that you can recycle capital perhaps at better rates than sitting on them right now and just waiting for the MLP market or whatever to turn around?

Yeah. I would say that we always look at our assets everyday as if we've just bought the company. And so everything we look at if it is – makes sense for us to sell it and to exit that, we're willing to do it and same thing in terms of looking at acquisitions. We're very disciplined on that. I will give you examples of what we've done in the past, I can't tell you what we might do in the future, it depends on what the market is, what kind of pricing we could get, but we decided to exit merchant generation because it didn't fit our model and we filled our power plants as an example. So those are the kinds of things that we do on a regular basis and a lot depends on what the market conditions are and what kind of premiums will be paid and whether or not it would make sense for us to exit that, and then redeploy capital into some future growth. And we always think that way, but I'm not going to list any kind of assets that are for sale.

And I guess I would just add to that too is that, all of our large assets that we expect to be – essentially fully contracted and moving forward, and if you look at our pipelines in Mexico, our LNG facilities, all of those we believe have expansion capability. And so it's not like – even though they're fully contracted for their current size, we think all of them can – especially in Mexico, we're in the process of expanding capacity on some of our existing pipelines and adding additional revenue. We're looking obviously at Train 4 to Cameron. We're looking at additional facilities. So I think we've got a lot of growth left in a lot of our major assets. So we really wouldn't be looking at that at this time. We want to be completely sure that we capture all of that growth and all of that additional revenue. But I think for more mature assets down the road, as Debbie said, we always look at that stuff.

Well, maybe the point I was trying to distinguish between kind of legacy, fully mature assets that are at their full EBITDA run rates or whatever where there is not – it's obviously contributing, but there is not necessarily – that's not the growth component. And I'm trying to distinguish that between Mexico expansions or Cameron or whatever. And I just don't know what your – what the pot might be that because you guys have been one of the best in our industry in terms of recycling capital. So I'm just curious if you can give a sense of what that. Assuming this is the way you're thinking about whether there is a part of recycle book capital that is sitting there that's depending on given the other market participants. That's what I'm trying to get a sense of.

Yeah, I think that when we look at what we've had, all I can tell you is what we've done historically and we did that with coal plants that we bought and we sold that when we thought the market was changing. We did that when our generation plants came off the DWR contracts and that they no longer fit our model because we go for long-term contracts. So we always look at the market and we always look at what's left in our contracts. What we think is a little chance of re-contracting, is there more value there to us that we could get out of the asset. I mean, that's the way we look at it and so I am not going to go through how we would look at specific assets, but I can tell you that's the methodology we use.

Well, one last question and I'll let someone else go. And given that history and the way you describe it, what starts bidding that type of thing to be examined, like for instance, gas storage, the Mid-South (67:20) or something like that. I'm just curious – I'm sure, not everything is perfect. So, the fact is – and you guys have always been very, very good at identifying that. So, I just want to get a sense of what might be available just to recycle and optimize?

Yeah. I just don't think I can answer what we would plan to look at selling. I think I can tell you what the methodology is. And when we look at an asset like storage, I can tell you it's at very low values right now in comparison to what it's been in the past, but you see what's happening in the gas market and you see what's happening relative to coal to gas conversion and the need for storage by utilities and then all of the LNG plants in the Gulf. So the way we would look at an asset like that is do we think it could have greater value to our shareholders in the future, and are there ways to optimize that, and how much could we get to sell it in the market, and that's the way we would always look at those kinds of assets. So, I really don't think I can give you a list of what we would be considering – that wouldn't even be a good thing to do for our shareholders in terms of any kind of negotiation. So, I think that's all I can really say.

Okay. Fair enough. I'll let other people ask questions. Thank you.

Thank you.

Our next question will come from Paul Patterson with Glenrock Associates.

Good afternoon.

Hi, Paul.

How are you doing? Just, I know you've been asked this by Greg and Steve, but I just want to make sure I have a better understanding. With respect to the repairs deduction rate base potential impact, you mentioned a couple of different numbers, you mentioned memorandum account numbers. And I just wasn't sure what – on a corporate wide basis, what kind of rate base is actually sort of being challenged here retroactively, which you guys don't plan on – I understand you guys don't feel a valid challenge. But I just wanted to know what we're quantitatively roughly speaking about?

Okay. Joe, I'm going to ask you to cover it...

Okay.

...and see if you can explain it better than I did.

Yeah, yeah. No, no, no, you explained it well. I think that the proposal suggested that we took the 2011 to 2014 savings and that added up to $185 million on a Sempra-wide basis, roughly split between the two utilities, and 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 and they treated that separately, they're trying to get around retroactive rate making, as Debbie 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 pre-tax 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.

Yeah. 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.

Right.

The "they" is TURN, one of the interveners in the case and this is their proposal in the case. And so we have not yet received a proposed decision and 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, absolutely, and I apologies for having – there were a few numbers running around that I wanted to make sure I understood them.

No. It was a good question. I am glad you clarified.

And then with respect to the master limited partnership vehicle and what have you, it seems to me that people – the Street and what have you sort of wanted you guys to move faster on this a while ago, and I don't know, you guys didn't, and the situation has changed and you guys are looking at what the opportunities might be on a sustained basis. I am just sort of wondering, I mean strategically when you see something like what's happened in the markets and what have you, whether or not it makes the bar higher or you think more about how you might want to unwind something, if it ends up that – I mean because obviously these are not really short-term financing plans. These are supposed to be vehicles that last for a period of time. And I am just wondering when you have something that we just recently experienced, what does that make you think about – I mean, in terms of – does it make the bar higher? I mean, what do you guys think about it, I guess, is what I am asking? I mean, sort of a little bit more elaboration in terms of obviously if it doesn't make sense, you're not going to do it, but not only that, if it "does make sense" for a period of time, does – what would give you – do need more confidence in terms of that or just how do you think about that, do you follow what I'm saying?

Yeah. I'll start a little bit and then I'm going to ask Mark to add to that. I think that one of the things that became apparent was that there is some limited liquidity in that market. And that the effects were great when people needed to change portfolios and clear out of that market, and that creates a sense of discomfort for us, because that's not what we see in the Sempra stock. And so what we want to be able to see is that there is the ability to have – and that you can differentiate, and I think you still do see that in the market. You can differentiate quality from things that are not quality, and quality continues to trade well even if that whole market segment is not trading as well. Because I mean 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, and that if we can't get the value for that quality, then it doesn't make sense for us to go forward. So, Mark, do you want to add?

Yeah, I guess my only add to that would be – I think when we looked at this, in the beginning I think we had some skepticism and then as we watched these things progress over the last few years, it was clear to us that there was a cost of capital advantage to these entities and that was worth taking advantage of and 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, Paul, and it's a very good one, which is does this disruption in the market give us some pause to think that this was more – something like a passing fad. And 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 cost of the capital look really attractive. But I do think that we have to kind of 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 Debbie said, the ones that have – that truly aren't tainted by underlying commodity prices can shine, and can still garner that low cost. And that's got to be proven and 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. And if it doesn't, we're perfectly okay to keep – to do the course that we are on, which is just as a C corp and I think we can be very competitive with cost of capital and we've got a great business here. So the good news is our underlying assets and business are super – are just really sound and we don't have to avail ourselves of any one particular mechanism to raise capital. We have lots of opportunities for that and we can meet our capital needs without any real problem.

Okay, great.

Yeah.

Let me just add on one more thing and Mark just alluded to it. But you guys may or may not have seen this, in the last several months including last week, we got a affirmation of our credit ratings and S&P just moved us to a stronger business risk profile from strong to excellent. We've a very strong business and we can finance our growth and this was an opportunity to maybe do something that was really cheap and good. And so to everything Mark and Debbie said, I just want to add that, we have a very strong credit ratings and we can finance our growth, we will need it.

Great. I appreciate it. Thanks so much.

Thank you, Paul.

We'll now go to Greg Gordon with Evercore ISI.

A quick follow-up question. Can you just go through in a little more detail what your net exposure is to currency with Mexico offsetting the exposure in Chile and Peru. And then sort of a secondary question on that is in the places where you're dollar denominated, I know that functionally inflates you, but if we continue to have a strong dollar, doesn't that put pressure on the regulatory construct and how do we think about risk in that framework?

Joe, do you want to take that or Trevor?

Yeah, I will speak first and then I'll let Trevor go through all the numbers of the net exposure and so forth. But as you know, we have 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 by offsetting that is the fact that we do have dollar functional currency in Mexico because fundamentally most of the businesses are in dollars. So we pay our taxes in pesos and 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. And so that's what we've seen over time. So I'll let Trevor walk through what the numbers were for the quarter...

Sure, Greg

...and year-to-date.

Yeah. So for the quarter, we had a total decline in earnings from translation of the earnings of about $6 million for the quarter between Chile and Peru and that is more than offset by a $17 million pickup in Mexico and as Joe said that, that's primarily from the revaluation of the taxes. So the net benefit in the quarter was $11 million. And then year-to-date, it's not much different, it's about $14 million of a benefit year-to-date and that was driven by $13 million of the P&L hurt that we took in the translation of the earnings from Chile and Peru offset by $27 million net of NCI for Mexico, giving us a net benefit year-to-date of $14 million.

And, Greg, let me just add to that. In South America, you're on point and say, we do get adjustments in our tariff primarily from inflation, but also FX too. But what we have seen in South America this year, it's a little bit unusual. We've seen currency devaluation without underlying inflation in those countries. So, we're not getting the inflation adjustments for our tariff. So, it's really not putting as much rate pressure on as you might expect. I'm not sure that's a good thing. I mean, we'd like to get the adjustment, but we're just not seeing high inflation in those countries. What we're seeing is just strengthening of the dollar and is probably more has to do with more U.S. policy and the strength of the dollar worldwide than it has to do with really underlying weakness in those economies.

Okay, so – sorry, go ahead.

Go ahead, Greg.

I was going to say you move into next year and you update your five-year plan to the extent that currencies have moved dramatically, that would be reflected in your update on expected earnings from those jurisdictions, right?

Yes.

Yeah. Yeah, what we'll do and why we don't give you numbers until February, as we look out 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 and then at the Analyst Meeting in March, we'll give you additional information for the next five years.

But in your opening comments, you didn't seem like you're too concerned that this one factor would knock you off the aspirations that you currently have?

Well, we wouldn't – based upon what we see in currencies now, we wouldn't see that and then gas prices are so low now, they've already been reflected to a great degree, and this is just pro forma. 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...

Okay. Thank you. Have a good afternoon.

Thanks, Greg.

Thank you.

And we'll now take a question from Feliks Kerman with Visium Asset Management.

Hi. This is Ashar Khan (81:30). How are you guys doing and great results? One thing...

Thank you.

...which I picked up on the remarks is that we have a settlement with the commission that we might get a fourth year of the rate case with an attrition mechanism if I heard that correctly. Could you just go over that I might have heard it wrongly?

Sure. No, you heard it correctly that with the ORA, the Office of Ratepayer Advocates, we have a settlement for fourth year that would give us a 4.3% attrition for that fourth year and that will be looked at by the commission separate from our other settlements. 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 Ratepayer Advocates.

Okay. Okay. I appreciate it. Thank you so much and great results.

Thank you.

Thank you.

And it appears there are no further questions at this time. Ms. Reed, I would like to turn the conference back to you for any additional or closing remarks

Well, thank you all for your great questions. You kept us really busy this morning and we appreciate that. And if you have any follow-up, please contact our Investor Relations team and have a great day.

This does conclude today's conference. Thank you for your participation.