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Sempra Reports 34% Jump in Second Quarter Earnings

Sempra Reports 34% Jump in Second Quarter Earnings

Citing increased profits from energy trading and international projects, San Diego-based Sempra Energy Thursday reported unaudited consolidated net income of $110 million, a 34% increase over earnings in last year's second quarter. Second-quarter revenues were $1.5 billion, or equal to the revenues in the same period last year.

Earnings from Sempra's two major California-based utilities-San Diego Gas and Electric Co. and Southern California Gas Co.-were either reduced or flat for the second quarter. SDG&E is currently struggling with remnants of the state's electric industry restructuring with supply and price crunches that have caused electric rate shock among San Diego electricity customers this summer.

But Sempra's unregulated businesses accounted almost entirely for the second quarter earnings growth, fueled principally by oil and natural gas transactions by Sempra Energy Trading outside of California. Sempra reported that "more than 90 percent" of the trading unit's earnings came from operations in the eastern half of the United States and in Europe.

"We are now seeing significant contributions from new lines of business outside our California utilities," said Stephen Baum, Sempra's CEO. "These unregulated businesses provided 21% of our consolidated net income for the quarter, and we are well on our way to achieving our goal to derive one-third of our annual earnings from them by 2003."

Baum also noted "continued concern" regarding the summer electric rate situation. He said Sempra is urging state regulators to spread the use of real-time, hourly meters to customers statewide and the imposition of a wholesale price cap throughout the Western region to bring more price stability. "In the long term, California needs an infusion of new power generation and transmission to meet growing energy demand in the state," he said.

Richard Nemec, Los Angeles

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