桑普拉能源 (SRE) 2012 Q2 法說會逐字稿

Good day, everyone, and welcome to the Sempra Energy second-quarter earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Rick Vaccari. Please go ahead.

Good morning and thank you for joining us. I'm Rick Vaccari, Vice President of Investor Relations. This morning, we'll be discussing Sempra Energy's second quarter 2012 financial results. A live webcast of this teleconference and slide presentation is available on our website under the Investor section.

With us today in San Diego are several members of our Management team -- Debbie Reed, Chief Executive Officer; Mark Snell, President; Joe Householder, Executive Vice President and CFO; Trevor Mihalik, Controller and Chief Accounting Officer; and Bruce Folkmann, Assistant Controller.

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 reports filed with the SEC. 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 second-quarter 2012 earnings release for a reconciliation to GAAP measures.

I would also like to note that the forward-looking statements contained in this presentation speak only as of today, August 2, 2012, and the company does not assume any obligation to update or revise any of these forward-looking statements in the future.

With that, I will turn it over to Debbie.

Thanks, Rick, and thanks to all of you for joining us today. You may have noticed a new name in the list of introductions Rick just made. So let me introduce Trevor Mihalik, our new Controller and Chief Accounting Officer. Trevor has extensive industry experience in the energy business and also a strong accounting background, and he is going to make a great addition to the already strong Management team that we have here at Sempra.

I would also like to mention that Bruce Folkmann, who has been our acting Controller since October of last year, will become the Vice President and Controller of our US Gas & Power business starting next week.

On today's call, we'll review our second quarter financial results and then we'll give you a regulatory and operational update on our businesses. Let's begin with our financial results.

Earlier this morning, we reported second quarter earnings of $62 million, or $0.25 per share, excluding a $179 million non-cash charge related to our investment in the Rockies Express Pipeline, or REX. Adjusted earnings for the second quarter of 2012 were $241 million, or $0.98 per share. In the second quarter of 2011, we reported adjusted earnings of $226 million, or $0.94 per share, which excluded the $277 million remeasurement gain we booked when we completed our acquisition of South American Utilities.

As many of you are aware, Kinder Morgan, a 50% owner of REX, is in the process of selling its interest in the pipeline as a result of its merger with El Paso. The REX pipeline is contracted through late 2019, but current market conditions for the pipeline are weak due to low gas prices and low basis differential. The sale by Kinder Morgan, coupled with the weak market conditions, led us to determine it was appropriate to record an impairment at this time. Joe will provide more details on this a little later in the call.

After adjusting for the REX impairment, our businesses are performing well and consistent with the plans we shared with you at our Analyst Conference. Given our performance through the first six months of the year, we continue to expect to meet our earnings guidance for 2012, which is $4 to $4.30 per share. This full-year guidance excludes both the charge related to the REX and a tax benefit related to a change we've made in the holding period for the life insurance contracts we own. Joe will also discuss this change in more detail, and in fact, let me just hand things over to him now to take you through details of the financial results, beginning with Slide 4.

Thanks, Debbie, and thank you all for joining us again.

At San Diego Gas & Electric, earnings for the second quarter were $95 million, up from $71 million in the year-ago quarter. This increase was primarily due to higher earnings from Sunrise Powerlink, which was put into service in June of this year. In addition, the earnings comparison was impacted by the timing of wildfire insurance premium recovery. During 2011, insurance premiums expensed in the second quarter were not recovered in revenues until the fourth quarter, when the CPUC issued a decision approving the recovery.

Moving to Southern California Gas, second quarter 2012 earnings were $53 million compared to $59 million in the second quarter of 2011. The decrease was primarily attributable to higher operating expenses and depreciation, without the usual revenue increase, due to the delay in our GRC decision. The majority of the increased expenses are costs which we expect to recover in full once the rate case decision is final. Please keep in mind that until we receive final decisions in the SDG&E and SoCalGas general rate cases, we will be recording revenues based upon 2011 authorized levels, plus an adjustment for recovery of incremental wildfire insurance premiums at SDG&E, based upon recent CPUC decisions for prior year's premiums.

Once those general rate cases are decided, which we now expect to occur in the fourth quarter of this year, we'll record the cumulative impact of the decision from January 1, 2012. In addition to the retroactive impact resulting from the change in authorized revenue, we also expect certain pipeline inspection expenses that are unrelated to our pipeline safety enhancement plan to be fully recovered.

Now, please go to Slide 5. At our South American Utilities, earnings were $38 million in the second quarter of 2012, roughly equal to last year's results, after excluding the remeasurement gain Debbie mentioned earlier. Second quarter earnings for the Sempra Mexico segment were $43 million, compared with $35 million in the same period last year. The increase here was primarily due to tax benefits related to currency and inflation adjustments that were booked in the quarter. This benefit effectively just reverses a tax expense for the same items that we recorded in the first quarter of this year.

Now, please turn to Slide 6. Moving on to Sempra US Gas & Power, the natural gas segment lost $193 million in the second quarter of 2012. Excluding the $179 million charge related to REX, the segment lost $14 million. This decrease of $61 million in adjusted earnings was attributable to lower natural gas and power prices, including the impact from the expiration of the CDWR contract at the end of the third quarter of last year.

I would like to spend a few minutes on our decision to impair REX. As Debbie mentioned, current market conditions are different than when we originally decided to invest in this pipeline, and the current market value suggests that the current book value will not be recovered in full on a present value basis. Accordingly, we have taken a $179 million after-tax charge to reflect our estimate of the current value of REX, based on a set of assumptions using current market data, forecast of future pipeline capacity, and various pipeline flow scenarios. I think it's important to point out that we expect to effectively recover our original investment in REX on a cash basis through a combination of distributions and tax benefits prior to the end of the existing contracts.

The renewables segment generated earnings of $24 million in the second quarter of 2012, up from $4 million in the same period last year. The increase was driven by the addition of solar and wind assets. As you'll recall, we now use the deferral method of accounting for investment tax credits. This change in accounting method reduced originally reported second quarter 2011 earnings by $8 million, or about $0.03 per share.

Now, please go to Slide 7. For the second quarter, Parent and Other had earnings of $2 million, as compared to a loss of $27 million in the same period last year. This quarter's results included a $54 million tax benefit associated with our decision to hold life insurance contracts that we keep in support of certain benefit plans to term. Proceeds from death benefits under those contracts will be tax-free. Previously, we took the position that we might surrender these contracts before maturity, and those transactions would have been taxable. As such, we had recorded taxes on the unrealized gains on investments held within the insurance contracts.

This tax benefit was partially offset in the quarter by an $11 million consolidated tax expense, which we expect to reverse by year end. The year-to-date tax benefit related to the life insurance contracts is $47 million, net of a $7 million income tax expense recorded in the first quarter of 2012. Excluding both the non-cash charge related to REX and the $43 million net tax benefit recorded at the Parent this quarter, we are pleased with our business unit performance for the quarter and remain on track to meet our targets.

With that, please turn to Slide 8 and I will hand the call back to Debbie.

Thanks, Joe.

Now, I would like to update you on some of the key activities within our Businesses, starting with our three major regulatory proceedings at the California utilities -- the general rate cases, the cost of capital, and the pipeline safety enhancement proceedings. As we mentioned earlier, we are awaiting a final decision on our general rate cases. We now expect to receive a decision in the fourth quarter of this year.

Turning to our cost of capital filings at SDG&E and SoCalGas, the commission issued a schedule for this proceeding, which calls for intervenor testimony on August 6, hearings in September, and a final decision by December 20. The new rates set in this proceeding will be effective January 1, 2013. As you'll recall, for SDG&E, this cost of capital filing only covers CPUC jurisdictional assets. SDG&E's electric transmission assets are regulated by the FERC, which currently has an authorized return on equity of 11.35% on the actual equity held. The currently authorized FERC return on equity is effective until September 2013.

Our pipeline safety enhancement proceeding is progressing. All intervenor and rebuttal testimony has now been filed and evidentiary hearings are scheduled to take place later this month. We still expect a final decision on our plan by the first quarter of next year.

Let's move to Slide 9. On the operational side, this is a very significant quarter for us, as SDG&E energized the Sunrise Powerlink in mid-June. The 117-mile, 500 kV transmission line is a key resource that will bolster our region's electric reliability, particularly this summer during the extended outage at San Onofre. Sunrise will also deliver a significant amount of renewable energy to San Diego, plus provide over $100 million annually in regional economic benefits. From a financial perspective, Sunrise will now move out of our construction work in progress account and into rate base. By year end, we expect our rate base investment in Sunrise to be about $1.4 billion, which reflects the impact of bonus depreciation. As with all transmission and substation investments, Sunrise will earn at the FERC-authorized rate of return on equity.

We also received CPUC approval in the second quarter on the East County, or ECO substation. This is a $435 million project that will boost electric reliability in the region and help in increasing the delivery of renewable power to utility customers. Construction should begin later this year, with the project being placed in service by 2014. When placed in service, this investment will be included in SDG&E's FERC rate base.

We continue to find attractive growth opportunities in our international businesses and in Chile, we formed a joint venture with SAESA, a similarly-sized distribution company, to develop electric transmission projects. The Chilean government has awarded our joint venture two projects as part of a competitive bidding process. These projects, which we expect to complete in 2017, will require a total investment of $160 million by the JV, and our share can be funded by local debt and cash. The Chilean government has also announced a bid due later this year for five additional transmission projects, which provides further opportunity to expand our presence in the transmission sector in Chile.

Finally, let me provide you with an update on our progress at Cameron LNG to develop a liquefaction facility. We continue to work closely with our partners, Mitsui, Mitsubishi, and GDF Suez, on the design and development of the project, and expect to complete the front-end engineering and design work by the end of this year. We are working with these same partners on completing the definitive holding agreement, and those negotiations should be complete late this year or early next year. We are also working with our partners on the project financing and the joint venture agreement.

On the regulatory front, we remain optimistic that we will receive the DOE non-FTA permit late this year or early next year. We have also begun the FERC permit process, and we expect to obtain that permit in the second half of next year.

Now let's go to the final slide. I'm pleased that we had a solid quarter both financially and operationally across our Businesses. While we are disappointed to have to take the non-cash charge related to REX this quarter, we do remain focused on executing on our plans to derive the highest value from all of our operations and assets. We remain on track to meet our operating goals, and our long-term growth prospects continue to be strong.

With that, I will stop and open up the call to take any of your questions.

(Operator Instructions)

Naaz Khumawala, Bank of America Merrill Lynch.

Just a couple of quick questions. Joe, do you mind letting me know how much was the Mexico tax gain in the quarter?

Yes, hi, Naaz, this is Joe. It was about $8 million and prior quarter it was $7 million, so it's virtually -- less than $0.5 million year to date.

Okay, thank you. And then just can you guys talk about -- I know you impaired REX based on projected cash flow going forward. Once the contracts expire what do you expect to do with REX and how do you see the pipe progressing? Is there back haul opportunity and what can you do?

Let me make a couple comments and then I'm going to turn it over to Mark to go through some of our thinking on this, because we have done a great deal of modeling looking at what we think may happen to gas markets post 2019 when the contracts expire. And to look at how we felt about REX, but the one thing that I want to make clear is because Kinder is in the process of this sale, the way that you value REX for the purpose of assessing whether it's an impaired asset or not is different because they are in the process of the sale.

And it is not the net present value of the future cash flows -- you use the net present value of the future cash flows versus actual future cash flow. So a lot of what we were looking at is what is the timing of some of the changes that will occur in REX, and we do believe that there will be change flows on that pipeline over time with the development of Marcellus and Utica. It's just a matter of when those occur and what it does to that asset over time. So, Mark, do you want to talk about that?

Yes, a couple things. Look, this is still an important asset and it's a good system, bringing gas now to the Rockies East. But of course, with the development of the Marcellus in particular, as Debbie mentioned, we do think over time after our contracts expire that flow could reverse and gas will flow from both directions, then go up to Chicago and into the Midwest.

But couple things to keep in mind. One, as Joe said in his notes, and I think it's important, is that we're going to -- before the end of the contract period, we will have recouped all of our investment in either cash distributions or tax benefits, and from an accounting perspective, we'll still have basis left. But economically, we'll have gotten our money back. And I think that's an important thing to remember.

And, two, I don't think anybody can -- we don't know with 100% certainty exactly where -- what the revenues will be beyond the contract period, but we know that there is interesting in going from both directions and we know that we'll have significant revenues. Now, they might not be as good as we have now and that's what we've indicated by our writedown, but I think we do think this will be a significant asset going forward.

Thanks. And then once Kinder does, you know, if they decide to and then once they complete the sale, is there -- would you guys reassess the value based on market conditions? This is my accounting failing me.

Yes, let me ask Joe to talk about how we looked at that.

Okay. Hi, Naaz. You know, the Kinder sales process, as Debbie and Mark said, led us to evaluate the REX investment, but our analysis is based on several scenarios that resulted in the fair value assessment that we put on REX. So we would not expect that the eventual sale will really reveal any information that would cause us to change any of our assumptions within these scenarios. But we would--

That's helpful.

-- not expect any change in our assessment. Of course over time new information could come to light. We just don't expect that to occur in the next several years.

Okay, thanks. That's very helpful.

Thanks, Naaz.

Michael Lapides, Goldman Sachs.

Can you just give a little bit of an update on renewable projects put in place during the course of 2012 and also what you're seeing in terms of output or capacity factor levels for some of your gas power plants in the US, meaning your nonregulated gas plants?

Sure. Michael, I'll mention some of the renewables and kind of go through what we have in operation and then what we have under development right now. Right now in operation, we have Fowler Ridge, which is 100-megawatt, our share. We have Copper Mountain Solar 1 and El Dorado Solar 58-megawatts, and then we have 125-megawatts at Cedar Creek 2 Wind, which is our share of that. We own 50% of that. Right now under development, that's contracted and under construction, we have the Flat Ridge wind project, which our share is 235-megawatts. And that is to be put in service this year.

We have the Mehoopany Wind project, which was just dedicated this week, and our share of that is 71-megawatts, and that's to be completed this year. We're in the process right now on Mesquite Solar of building that out to a total of 150-megawatts. And we have 98-megawatts energized thus far, and that will be finally complete in 2013. We have Auwahi Wind, which is under construction right now, and that is an 11-megawatt wind project, which will be done this year. And then we have also under contract that we're working on construction, the Copper Mountain Solar project, and that will be 92-megawatts. And then the ESJ project, which will begin later this year, which will be our share of 78-megawatts.

Got it.

Bottom line, we have a lot of construction going on, a massive amount of construction going on on these projects. All the wind projects are scheduled to be done in 2012, before any issues with PTC go away. So they are all scheduled to be done in 2012, with the exception of ESJ, which is not dependent upon PTC because as you know, it's being constructed in Mexico and we just get an accelerated depreciation on that. And then I'll have Mark talk about the capacity factors and maybe a little bit of information on what's happening in the generation front.

Yes, on the generation front, on the gas-fired generation front here in Southern California and the West where our plants are located, I think through the quarter, we saw continued weak gas prices and weak power prices. Unlike the rest of the country, we still have had fairly mild temperatures in Southern California. So we really haven't seen much of an uptick or pressure on prices. We are expecting in August and September for that to change. We are seeing an uptick in both spark spreads, higher heat rates and better pricing. It's not significantly better, but it is better than it's been and we would expect to be a little bit stronger in the next quarter.

Got it. And finally, I know you gave a little bit of an update of this at the analyst day, but any further thoughts on natural gas storage development or any changes since the analyst day?

Yes, no real changes since the analyst day. I mean, I think the prospects for additional development on the storage side really is going to come in relation to the LNG projects that are in the Gulf. And we are uniquely situated with one of our projects, the Louisiana storage facility, which would be ideal to serve both our facility there and also the Chenier facility, so we think that eventually that will get developed and will be a good asset.

And that facility would be about 19 Bcf when fully developed. Also, as Mark mentioned in that area, we have the Cameron pipeline that serves that LNG facility and we would anticipate the development of both the storage and the pipeline disturb our facility and Chenier's.

Got it. Thank you Debbie; thank you Mark.

Leslie Rich, JPMorgan.

Hi. I wondered if you could just give an update on the cash that you are expecting to repatriate from Latin America. Is that likely to be in the fourth quarter?

So we had indicated that we were planning on having the repatriation begin next year, at the end of next year. And I'll have Joe go through that. One of the reasons that we feel that it's good to wait till next year is it gives us the opportunity to see what happens with all the tax law changes after the election and then we can really assess if anything's changing that would in any way modify how we would do our repatriation. Joe, do you want--

Yes, hi, Leslie. Debbie is right. Everything she said was consistent with what we had at the analyst conference. In addition to that, we also still had some intercompany debt that we could move cash from those countries up to the holding company. So we were going to pay off these intercompany loans during this year, so we didn't need to actually pay the dividend this year.

Okay, and then separately, on CapEx, are you tracking in line with the breakout that you gave at the analyst day? Year to date I see you've spent about $1.8 billion. But looks like it's distributed a little bit differently, so just wondered if your CapEx plans are the same or different?

Yes, our CapEx for Sempra is right on track to the numbers that we gave at the analyst presentation. There's a little bit of differences between one business unit to another. There's maybe more solar, and then some, like a few-month delay in some of the things that are at SDG&E for project, but basically they wash and the CapEx is right on track.

And also, SDG&E is higher in the first six months because of Sunrise, and then it will slow off a little.

Okay, great. Thank you.

Paul Patterson, Glenrock Associates.

A lot of questions have been answered, but the impact of the REX write-off going forward, it sounds like you guys are contracted. I'm just wondering how it might possibly benefit you guys from lower depreciation or something.

Yes, I mean, there would be benefits from lower depreciations, but it's very small in terms of the earnings impact from that. I think that probably in looking at REX, that the biggest potential upside is what happens in the market post 2019 when the contracts expire. And really, how gas flows change in that region, what happens with the LNG export, what happens with Canadian gas export, and we see some real opportunities there. In terms of the writedown having an impact on earnings, it's quite small.

Okay.

Joe, do you want to add anything?

No, that's right. If you think about the total amount we wrote off and then the pipeline is a 40-year asset, it's not going to be that much per year. It's something, but not --

Okay, great. And then the other thing I was sort of wondering was the, just to clarify on the insurance contract, that was associated with some benefit program, it sounded like. I was just wondering if you could just elaborate a little bit more on that, what caused you to change your mind in terms of how you were going to be treating that and stuff. Just nothing tremendous. Just a little bit more clarification on that.

Yes, sure. I'll ask Joe to run through that because this really came up as part of our pension investment committee work and Joe heads the group.

Hi, Paul. What we really did was we were studying the benefit plans and what it really relates to is how we fund within the Company deferred compensation and supplemental executive retirement plans and we have a trust fund that's set up to do that. And inside that fund, we have a lot of these licensing terms contracts and there are investments within those. And when this got set up, it was 10 or 12 years ago, just after the merger. And at that time, people weren't sure how all this was going to work and felt that maybe we'll have to cash these in at sometime.

But when I came into the job, I started looking at all of that and determined there was plenty of liquidity, there was lots of cash flow. We could even access these life insurance policies to get cash when we needed it. And so it, it didn't appear reasonable to think that we actually would collapse these policies or cash them in sooner and pay the tax on the income that was earned in there, and so we reversed that tax that we had been incurring. So, we had taken the tax expense the last 10 years on this. It was just reversing what we had booked. It's all a noncash issue.

Okay. Thanks so much.

Kit Konolige, BGC Financial.

Question on SONGS. Obviously you're a part owner there. The commission, I think, is on the verge of deciding whether to consider what they should do about a non-operating generating asset. What's your view of, I don't know, just your perspective on the operational outlook, when and if it might run, and any regulatory overhang and how you expect that to play out?

Well, let me try to kind of put our position in light relative to Edison's position on this first and then go through what we know about that and what our expectations are for the future. First off, just to remind you, SDG&E is a 20% owner in SONGS and we are not the operator. We're not, we've never been the operator, and our Company had no involvement in designing the steam generator replacement or any of that. We basically get the energy out of the plant and we have a long-term contract with Edison to own 20% of the plant and we get 440-megawatts. Because we're not the operator, when we went through, when they wanted to build the steam generator, rebuild that, we were very concerned about us taking risk on long-term.

And our agreement that was approved by the commission is that all of our O&M is balanced for the plant so that if Edison asked to spend more than is in their plan for O&M, SDG&E recovers its actual O&M expenditures for the plant. We also have an account for the purchased power and the cost of the excess power that we're purchasing now goes into that account to be reviewed by the commission, but it is also a balancing account. And our expectation would be that we would be able to recover that and our costs so far during the course of the outage have been about $25 million for that.

In terms of looking at the future operation of the plant -- we can understand Edison's position, and Edison's position is that they have an agreement with a Nuclear Regulatory Commission where they have to make a filing for restart and it's our understanding that they are moving towards making the filing for Unit 2 and then later Unit 3. But Edison cannot determine how long it would take for the NRC to act on that once they make that filing for restart. And so, the best that we can tell you is exactly what Edison says on their call and that they are hoping to get the unit started, but that they cannot give a specific date when the restart will occur because it's dependent on the NRC approval.

We also have claim to the warranties for our 20% share that Edison has with Mitsubishi, the manufacturer. And we are also an additional insured on the policy that Edison has, and they indicated on their call that they were going to be filing a claim with NEIL, or putting the Nuclear Electric Insurance Limited group that insures the plant on notice. And so we're an additional insured in that policy.

So I think at a high level, our position is different. We do have the balancing account on O&M. We're not the operator. But we pay a lot of attention to this, because we get 440-megawatts of power from that plant, and we would like to see it come back online, because it ends up being very economical power for our customers

So just to be clear, is the plant -- is your 20% share in SDG&E's rate base?

Yes, our rate base for SONGS right now is $228 million right now, as our rate base right now -- as of 6-30, our rate base is $228 million. And that does not include the CWEP and nuclear fuel and all of that. It's just our 6-30 ending rate base for SONGS.

Again, we're a little different than Edison because if you will remember, during deregulation, we had to take all these assets out of our rate base, so we basically wrote them down to zero, and so all we have is kind of rate base buildup in SONGS coming from 2001 forward, contrary to any kind of historical rate base.

So that, obviously then that rate base figure, the $228 million, would be your theoretical exposure if there were some kind of proceeding at the commission that resulted in exclusion from rate base?

Yes, if there's a requirement that the commission after a unit has been out for more than nine months continuously, for the commission to do an assessment, and they would certainly look at what the circumstances were around this. I mean, certainly the information we're getting is that the commission is paying attention to this, but they delayed today the OII that they were going to have.

And so we would anticipate that they are going to wait and see what the outcome is on this. And then they will look at it and they will look at the reasonableness of the actions of the parties in the case. And again, being not the operator, not in any one engaged in design of the facility, I think our position is slightly different than Edison's on this plant.

Very good. Okay. One other area. Debbie, you sounded pretty optimistic about DOE approval of the export license for Cameron. Is that any different from your thinking at the analyst day? What's new there as far as your read on DOE's action?

Well, we've heard from many parties in Washington that the administration is actually supportive of going forward with LNG export and that we've heard that they would anticipate having a decision, or the report coming out on the impacts of LNG export coming out in the end of summer timeframe period, and that after that report comes out, which I've told many of you -- we have two reports that pretty much say the same thing, that they don't see a significant impact. It would be hard to believe that this third report would be substantially different than that. And I think after that report comes out, the thought is that there would be the approval going forward of projects.

I would also say that it's very interesting when you look at the actual DOE language, the DOE language presumes approval and it's the burden of proof to show that there would be an adverse effect. So the language is presumptive that export is good and that you're going to have an open market for gas and that they actually have to prove why it shouldn't be done. I think what we're hearing would lead us to believe that this will be moving forward. The issue is will it be the end of this year or first part of next year.

Thank you very much.

(Operator Instructions)

John Ali, Decade Capital.

Just a clarification on Kit's question and one other. When you said year end, did you mean formal DOE approval or just the DOE report?

No, we're expecting the non-STA approval by the end of this year, first of next year.

And then their study on the impacts of exports, when would you expect that?

Everything we've heard is the end of summer. A few weeks ago, we were expecting it to be coming out sooner, but by the end of summer is the official word we get.

Got it. And then on the Chilean JV, how large would you expect that to grow and over what time period?

I'll ask Mark to cover that. As I mentioned, we have the two projects that are in total $160 million. We're bidding on five more. These are relatively small projects and the projects we bid on are generally $80 million to $100 million a project. So, I don't see that getting gigantic, but we do have some good opportunities. We have a good partner to develop with. Mark?

Everything you said is exactly right. The only thing I would add to that, as Debbie said, they are reasonably small and manageable sized projects. It will add to our growth down there, but they will be completely funded by earnings that was generated down there and in the local debt market. So there isn't any capital coming from Sempra in the US down to South America to fund these projects. They will be completely self funded. So it's the best of all kinds of growth in our foreign entities.

Great. Thanks a lot.

And that does conclude our time for question and answers today. Ms. Reed, I'll turn the conference back to you for any additional or closing remarks.

Well, thank you all for joining us today. And, again, if there's any follow-up questions that you have, Rick Vaccari and our team are there to respond to any questions. Please give them a call. And thank you very much for being with us today.

And that does conclude our conference for today. Thank you all for your participation.