Taking a page from its counterpart in the northern half of the state that is openly trying to avoid California regulation, San Diego-based Sempra Energy has updated its strategy to focus on a “Global Enterprises” group of businesses not regulated by their headquarters state, according to what Sempra senior executives have told financial and employee audiences in recent weeks.

A poster child for this strategy is found in Sempra’s recent partnership with Dearborn, MI-based CMS Energy to jointly pursue developing and operating a liquefied natural gas (LNG) receiving terminal in North Baja, about 60 miles south of the U.S.-Mexican border along the Pacific Coast. The current timeline is to have a LNG plant operating by 2005.

Sempra Energy unveiled its Global Enterprises group last month when it met in New York City with Wall Street financial analysts, and reinforced it in communications to its employees this month, citing the focus on businesses that don’t fall under California regulators, as do Sempra’s two principal subsidiaries–San Diego Gas and Electric and Southern California Gas Cos, which are merging under a California Public Utilities Commission-approved plan.

Sempra’s Global Enterprises have re-established a more aggressive goal for their contribution to Sempra’s earning, aiming at contributing 50% by 2004, compared to a previous goal of 30% by 2003. Sempra’s group president for the nonutility operations, Don Felsinger, has set the group’s mission as being a “growth engine,” developing and expanding Sempra’s energy-related businesses, which include trading, power plant development, natural gas interstate pipelines and Latin American investments, in addition to the proposed LNG business.

With $16 billion in assets, CMS Energy provides Sempra with a sizable partner and one with existing involvement in LNG, operating the receiving plant near Lake Charles, LA, which started up in the 1980s.

The Sempra-CMS partnership plans a 300-acre site north of Ensenada, Mexico, for its LNG plant that will re-covert the fuel back to its gaseous state for pipeline transport to markets in North Baja and the Southwestern United States. The plant is expected to have a maximum capacity of 1 Bcf/d.

In a related matter, Sempra CEO Stephen Baum has told both financial analysts and employees that the company is no longer anticipating a spin-off of its nonutility businesses into a separate company, because he is unhappy with the company stock price and the “financial advantage (of a spin-off) is not apparent” with the current price/earning multiples of independent power companies having dropped to what he called “the level of integrated utilities.”

For the past year, Baum has talked about “unlocking hidden shareholder value” through a spin-off.

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