Both its utilities and its unregulated global marketing and LNG business will be contributing to its future success and increased earnings, Sempra Energy executives told financial analysts last week.

For starters, the company bumped up its earnings guidance for 2004 to the $2.90 to $3.10/share range, as senior executives outlined a long list of positive financial projections, including their assessment that Sempra’s core utility business in California is likely to grow with the increased return to the vertically integrated utility model in the state.

Longer range earnings estimates are projected as high as $4/share by 2008 when Sempra expects to have new liquefied natural gas (LNG) receiving terminals in operation.

It was revealed that Sempra’s trading unit, which CEO Steve Baum described as the nation’s most successful marketing arm, is in the process of closing a two-year, committed financing facility with what it described as “major financial institutions” for “borrowing-base credits” of up to $1 billion, secured by certain trading company assets. Sempra said the added credit line will be used to help finance Sempra Energy Trading’s global operations.

Those operations include $1 billion and 2,600 MW of new power generation plants, put in place recently and what Sempra expects will be two of the first new LNG receiving terminals to come on line in North America by 2008. Sempra officials said the current supply negotiations for the terminals are proceeding positively.

Construction of the LNG facilities will not begin, however, until Sempra has firm supply contracts that guarantee a recovery of its terminal construction costs, said Baum, noting the supply deals are still expected to be completed before the end of this year.

The company also announced that its joint acquisition with Carlyle/Riverstone of the 632 MW coal-fired Coleto Creek Power Plant and nine other Texas generation plants from American Electric Power is expected to be completed by the end of this month.

Baum emphasized to analysts, however, that Sempra’s unregulated businesses will not grow any faster than the overall company in the years ahead.

In talking about Sempra’s two major utilities –San Diego Gas and Electric Co. and Southern California Gas Co. — Baum said the regulated energy businesses in California, particularly SDG&E, are “undergoing exciting change.” He said the “tide has shifted” away from the electric restructuring model of making them only pipes and wires businesses to return to being “in a fully vertically integrated mode in which they will be full-service providers.

“That’s very exciting for management, and it means that utilities that we once projected out to be flat and declining are now growing. Those are long-term, predictable cash streams that are very valuable to our business.”

Sempra’s CEO for its utilities, Ed Guiles, said Sempra utilities have the opportunity to spend $1.6 billion for utility built combined-cycle generation and new transmission in the next few years.

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