With two A-rated major California utilities and a long list of large natural gas supply and delivery projects, San Diego-based Sempra Energy carries the expectation of “consistent and predictable” financial performance in the months and years ahead, according to an analysis affirming its overall credit ratings and “stable” outlook by Standard & Poor’s Ratings Services, which was released Thursday. S&P San Francisco-based analyst Swami Venkataraman completed the analysis.

The utilities provide stability to balance Sempra’s large energy trading and other unregulated businesses, S&P said.

S&P gives Sempra an overall “BBB+” corporate credit rating and “A” ratings for Southern California Gas Co. and San Diego Gas and Electric Co. All individual debt issue ratings in the Sempra Energy family of companies were affirmed, too, S&P said.

Cash flow and debt coverage ratios that have been dampened in recent years during the developmental phases of several major liquefied natural gas (LNG) and interstate gas pipeline projects are expected to begin improving significantly in 2008 when some of the projects begin coming on line, S&P’s Venkataraman said.

“We expect consistent and predictable financial performance at the utilities and Sempra Generation, Venkataraman said. “Consolidated cash flow coverage ratios are expected to be somewhat weak for the rating in 2006 and 2007, given that Sempra is investing substantial sums in its LNG and pipeline[storage] businesses in these years without any cash flows. However, ratios are expected to improve significantly from 2008 once LNG and pipeline cash flows commence.”

S&P thinks that California regulation provides what Venkataraman called “sufficient insulation” to separate the corporate credit ratings on the utilities from the parent and unregulated subsidiaries. The California Public Utilities Commission (CPUC) requires a 48% equity ratio.

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