Citing increased profits from energy trading and internationalprojects, San Diego-based Sempra Energy Thursday reported unauditedconsolidated net income of $110 million, a 34% increase overearnings in last year’s second quarter. Second-quarter revenueswere $1.5 billion, or equal to the revenues in the same period lastyear.

Earnings from Sempra’s two major California-based utilities-SanDiego Gas and Electric Co. and Southern California Gas Co.-wereeither reduced or flat for the second quarter. SDG&E iscurrently struggling with remnants of the state’s electric industryrestructuring with supply and price crunches that have causedelectric rate shock among San Diego electricity customers thissummer.

But Sempra’s unregulated businesses accounted almost entirelyfor the second quarter earnings growth, fueled principally by oiland natural gas transactions by Sempra Energy Trading outside ofCalifornia. Sempra reported that “more than 90 percent” of thetrading unit’s earnings came from operations in the eastern half ofthe United States and in Europe.

“We are now seeing significant contributions from new lines ofbusiness outside our California utilities,” said Stephen Baum,Sempra’s CEO. “These unregulated businesses provided 21% of ourconsolidated net income for the quarter, and we are well on our wayto achieving our goal to derive one-third of our annual earningsfrom them by 2003.”

Baum also noted “continued concern” regarding the summerelectric rate situation. He said Sempra is urging state regulatorsto spread the use of real-time, hourly meters to customersstatewide and the imposition of a wholesale price cap throughoutthe Western region to bring more price stability. “In the longterm, California needs an infusion of new power generation andtransmission to meet growing energy demand in the state,” he said.

Richard Nemec, Los Angeles

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