With its latest liquefied natural gas (LNG) permits in hand for projects in Mexico and Louisiana, San Diego-based Sempra Energy appeared to have “first mover advantage” among the four or five serious proposals to site LNG receiving terminals along the Pacific Coast of North Baja California, according to report released Tuesday by Credit Suisse First Boston (CSFB). Success of the LNG ventures could allow a major merchant energy part of Sempra to eventually raise its share of Sempra’s earnings to 15% in a company still dominated by two cash-cow utility companies.

CSFB’s rosy appraisal, however, is tempered with the reminder that Sempra still needs to resolve the lack of deliverability of the Baja gas into U.S. markets due to pipeline constraints. “Discussion with the CSFB Mexico research team suggests need for natural gas in Mexico, although the U.S. is a more liquid market to achieve a contract and financing,” said CSFB analyst Curt Launer.

Separately, Sempra’s two utilities, San Diego Gas and Electric Co. and Southern California Gas Co., got a negative response late last week to their pending cost-of-service rate increase requests from the state regulatory commission’s independent consumer unit, the Office of Ratepayer Advocates (ORA), which recommended slashing more than $200 million of proposed rake hikes into collective decreases of about $190 million.

While coming back to its favorable projections for Sempra’s earnings range and stock price the next 12 to 18 months, CSFB downplayed what it called “the large divergence” between the utilities’ rate increase requests and the ORA recommendation, noting that recent “behavior” by the California Public Utilities Commission, point toward the Sempra utilities getting a more “balanced” decision. In the recent past, the Sempra utilities have recovered about 20% to 70% of their rate increase requests, CSFB said.

Although CSFB said it weighed both the risks and opportunities in Sempra’s actions, the opportunities seem to definitely outweigh the risks, according to the Wall Street investment banking firm.

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