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Sempra Energy (NYSE:SRE)

Q2 2012 Earnings Call

August 02, 2012 1:00 pm ET

Executives

Richard A. Vaccari - Vice President of Investor Relations

Debra L. Reed - Chief Executive Officer, Director and Chairman of Executive Committee

Joseph A. Householder - Chief Financial Officer and Executive Vice President

Mark A. Snell - President

Analysts

Naaz Khumawala - BofA Merrill Lynch, Research Division

Michael J. Lapides - Goldman Sachs Group Inc., Research Division

Leslie Rich - J.P. Morgan Asset Management, Inc.

Paul Patterson - Glenrock Associates LLC

Kit Konolige

Operator

Good day, everyone, and welcome to the Sempra Energy Second Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Rick Vaccari. Please go ahead.

Richard A. Vaccari

Good morning, and thank you for joining us. I'm Rick Vaccari, Vice President of Investor Relations. This morning, we'll be discussing Sempra Energy's second quarter 2012 financial results. Live webcast of this teleconference and slide presentation is available on our website under the Investors section.

With us today in San Diego are several members of our management team, Debbie Reed, Chief Executive Officer; Mark Snell, President; Joe Householder, Executive Vice President and CFO; Trevor Mihalik, Controller and Chief Accounting Officer; and Bruce Folkmann, Assistant Controller.

Before starting, I'd like to remind everyone that we will be discussing forward-looking statements on this call within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. Factors that could cause our actual result to differ materially are discussed in the company's reports filed with the SEC. It's important to note that all of the earnings per share amounts in our presentation are shown on a diluted basis and that we will be discussing certain non-GAAP financial measures. Please refer to the presentation slides that accompany this call and to Table A in our second quarter 2012 earnings release for a reconciliation to GAAP measures. I'd also like to note that the forward-looking statements contained in this presentation speak only as of today, August 2, 2012, and the company does not assume any obligation to update or revise any of these forward-looking statements in the future.

With that, I will turn it over to Debbie.

Debra L. Reed

Thanks, Rick, and thanks to all of you for joining us today. You may have noticed a new name in the list of introductions Rick just made, so let me introduce Trevor Mihalik, our new Controller and Chief Accounting Officer. He has extensive industry experience in the energy business and also a strong accounting background, and he is going to make a great addition to the already strong management team that we have here at Sempra. I'd also like to mention that Bruce Folkmann, who has been our Acting Controller since October of last year, will become the Vice President and Controller of our U.S. Gas & Power business starting next week.

On today's call, we'll review our second quarter financial results and then we'll give you a regulatory and operational update on our businesses.

Let's begin with our financial results. Earlier this morning, we recorded second quarter earnings of $62 million or $0.25 per share, excluding a $179 million non-cash charge related to our investment in the Rockies Express Pipeline, or REX. Adjusted earnings for the second quarter of 2012 were $241 million or $0.98 per share. In the second quarter of 2011, we recorded adjusted earnings of $226 million or $0.94 per share, which excluded the $277 million remeasurement gain we booked when we completed our acquisition of South American Utilities.

As many of you are aware, Kinder Morgan, a 50% owner of REX, is in the process of selling its interest in the pipeline as a result of its merger with El Paso. The REX pipeline is contracted through late 2019. The current market conditions for the pipeline are weak due to low gas prices and low basis differential. The sale by Kinder Morgan, coupled with the weak market conditions, led us to determine it was appropriate to record an impairment at this time. Joe will provide more details on this a little later in the call.

After adjusting for the REX impairment, our businesses are performing well and consistent with the plans we shared with you at our Analyst Conference. Given our performance through the first 6 months of the year, we continue to expect to meet our earnings guidance for 2012, which is $4 to $4.30 per share. The full-year guidance excludes both the charge related to the REX and a tax benefit related to a change we've made in the holding period for the life insurance contracts we own. Joe will also discuss this change in more detail and in fact, let me just hand things over to him now to take you through details of the financial results, beginning with Slide 4.

Joseph A. Householder

Thanks, Debbie, and thank you, all, for joining us again. At San Diego Gas & Electric, earnings for the second quarter were $95 million, up from $71 million in the year-ago quarter. This increase was primarily due to higher earnings from Sunrise Powerlink, which was put into service in June of this year. In addition, the earnings comparison was impacted by the timing of wildfire insurance premium recovery. During 2011, insurance premiums expensed in the second quarter were not recovered in revenues until the fourth quarter when the CPUC issued a decision approving the recovery.

Moving to Southern California Gas. Second quarter 2012 earnings were $53 million compared to $59 million in the second quarter of 2011. A decrease was primarily attributable to higher operating expenses and depreciation without the usual revenue increase due to the delay in our GRC decision. Majority of the increased expenses are costs which we expect to recover in full once the rate case decision is final. Please keep in mind that until we receive final decisions in the SDG&E and SoCalGas general rate cases, we will be recording revenues based upon 2011 authorized levels, plus an adjustment for recovery of incremental wildfire insurance premiums at SDG&E based upon recent CPUC decisions for prior year's premiums.

Once those general rate cases are decided, which we now expect to occur in the fourth quarter of this year, we'll record the cumulative impact of the decision from January 1, 2012. In addition to the retroactive impact resulting from the change in authorized revenue, we also expect certain pipeline inspection expenses that are unrelated to our Pipeline Safety Enhancement Plan to be fully recovered.

Now please go to Slide 5. For our South American Utilities, earnings were $38 million in the second quarter of 2012, roughly equal to last year's results after excluding the remeasurement gain Debbie mentioned earlier. Second quarter earnings for the Sempra Mexico segment were $43 million compared with $35 million in the same period last year. The increase here was primarily due to tax benefits related to currency and inflation adjustments that were booked in the quarter. This benefit effectively just reverses the tax expense for the same items that we recorded in the first quarter of this year.

Now please turn to Slide 6. Moving on to Sempra U.S. Gas & Power, the natural gas segment lost $193 million in the second quarter of 2012. Excluding the $179 million charge related to REX, the segment lost $14 million. This decrease of $61 million in adjusted earnings was attributable to lower natural gas and power prices, including the impact from the exploration of the CDWR contract at the end of the third quarter of last year.

I'd like to spend a few minutes on our decision to impair REX. As Debbie mentioned, current market conditions are different than when we originally decided to invest in this pipeline, and the current market value suggests that the current book value will not be recovered in full on a present-value basis. Accordingly, we have taken a $179 million after-tax charge to reflect our estimate of the currant value of REX based on a set of assumptions using current market data, forecast of future pipeline capacity and various pipeline flow scenarios. I think it's important to point out that we expect to effectively recover our original investment in REX on a cash basis through a combination of distributions and tax benefits prior to the end of the existing contracts.

Renewables segment generated earnings of $24 million in the second quarter of 2012, up from $4 million in the same period last year. The increase was driven by the addition of solar and wind assets. As you'll recall, we now use the deferral method of accounting for investment tax credits. The change in accounting method reduced the originally reported second quarter 2011 earnings by $8 million or about $0.03 per share.

Now please go to Slide 7. For the second quarter, Parent & Other had earnings of $2 million as compared to a loss of $27 million in the same period last year. This quarter's results included a $54 million tax benefit associated with our decision to hold life insurance contracts that we keep in support of certain benefit plans to term. Proceeds from death benefits under those contracts will be tax-free. Previously, we took the position that we might surrender these contracts before maturity and those transactions would have been taxable. As such, we had recorded taxes on the unrealized gains on investments held within the insurance contracts.

This tax benefit was partially offset in the quarter by an $11 million tax -- consolidated tax expense, which we expect to reverse by year-end. Year-to-date tax benefit related to the life insurance contracts is $47 million, net of a $7 million income tax expense recorded in the first quarter of 2012. Excluding both the noncash charge related to REX and the $43 million net tax benefit recorded at the Parent this quarter, we are pleased with our business unit performance for the quarter and remain on track to meet our targets.

With that, please turn to Slide 8 and I will hand the call back to Debbie.

Debra L. Reed

Thanks, Joe. Now I'd like to update you on some of the key activities within our businesses, starting with our 3 major regulatory proceedings at the California utility: the general rate cases, the cost of capital and the Pipeline Safety Enhancement proceedings. As we mentioned earlier, we are awaiting a final decision on our general rate cases. We now expect to receive a decision in the fourth quarter of this year.

Turning to our cost of capital filings at SDG&E SoCalGas, the commission issued a schedule for this proceedings which calls for intervenor testimony on August 6, hearings in September and then final decision by December 20. The new rate set in this proceeding will be effective January 1, 2013. As you'll recall, for SDG&E, this cost of capital filing only covers CPUC jurisdictional assets. SDG&E's electric transmission assets are regulated by the FERC, which currently has an authorized return on equity of 11.35% on the actual equity held. Currently authorized FERC return on equity is effective until September 2013.

Our Pipeline Safety Enhancement proceeding is progressing. All intervenor and rebuttal testimony has now been filed and evidentiary hearings are scheduled to take place later this month. We'd still expect the final decision on our plan by the first quarter of next year.

Let's move to Slide 9. On the operational side, this was a very significant quarter for us as SDG&E energized the Sunrise Powerlink in mid-June. 117-mile, 500-kV transmission line is a key resource that will bolster our region's electric reliability, particularly the summer during the extended outage at San Onofre. Sunrise will also deliver a significant amount of renewable energy to San Diego, plus provide over $100 million annually in regional economic benefit. From a financial perspective, Sunrise will now move out of our construction work-in-progress account and into rate base. At year-end, we expect our rate base investment in Sunrise to be about $1.4 billion, which reflects the impact of bonus depreciation. As with all transmission and substation investments, Sunrise will earn at the FERC-authorized rate of return on equity.

We also receive CPUC approval in the second quarter on the East County, or ECO Substation. This is a $435 million project that will boost electric reliability in the region and help in increasing the delivery of renewable power to utility customers. Construction should begin later this year and the project being placed in service by 2014. When placed in service, this investment will be included in SDG&E's FERC rate base.

We continue to find attractive growth opportunities in our international businesses. And in Chile, we formed a joint venture with SAESA, a similarly sized distribution company, to develop electric transmission projects. The Chilean government has awarded our joint venture 2 projects as part of a competitive bidding process. These projects, which we expect to complete in 2017, will require a total investment of $160 million by the JV, and our share can be funded by local debt and cash. The Chilean government has also announced a bid due later this year for 5 additional transmission projects, which provides further opportunities to expand our presence in the transmission sector in Chile.

Finally, let me provide you with an update on our progress at Cameron LNG to develop a liquefaction facility. We continue to work closely with our partners, Mitsui, Mitsubishi and GDF SUEZ, on the design and development of the project, and expect to complete the front-end engineering and design work by the end of this year. We are working with these same partners on completing the definitive tolling agreements, and those negotiations should be complete late this year or early next year. We are also working with our partners on the project financing and the joint venture agreement.

On the regulatory front, we remain optimistic that we will receive the DOE non-FTA permit late this year or early next year. We've also begun the FERC permit process and we expect to obtain that permit in the second half of next year.

Now let's go to final slide. I'm pleased that we had a solid quarter, both financially and operationally, across our businesses. While we are disappointed to have to take the noncash charge related to REX this quarter, we do remain focused on executing on our plans to derive the highest value from all of our operations and assets. We remain on track to meet our operating goals, and our long-term growth prospects continue to be strong.

With that, I will stop and open up the call to take any of your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will come from Naaz Khumawala from Bank of America Merrill Lynch.

Naaz Khumawala - BofA Merrill Lynch, Research Division

Just a couple of quick questions. Joe, do you mind letting me know how much was the Mexico tax gain in the quarter?

Joseph A. Householder

Yes, Naaz, this is Joe. It was about $8 million and prior quarter, it was $7 million. So it's virtually -- it's less than $0.5 million year-to-date.

Naaz Khumawala - BofA Merrill Lynch, Research Division

Okay. And then just can you guys talk about -- I know you impaired REX based on projected cash flow going forward, kind of once the contracts expire, what do you expect to do with REX? And kind of how do you see the pipe progressing, is there a back haul opportunity? And what can you do?

Debra L. Reed

Let me make a couple of comments on it and I'll turn it over to Mark to go through some of our thinking on this because we have done a great deal of modeling, looking at what we think may happen to gas markets post-2019 when the contracts expire. And if you look at how we felt about REX, the one thing that I want to make clear is because the Kinder is in the process of this sale, the way that you value REX for the purpose of assessing whether it's an impaired asset is different because they're in the process of the sale, and it's not the net present value of the future cash flows. You use net present value of the future cash flows versus actual future cash flows. So a lot of what we were looking at is, what is the timing of some of the changes that will all occur in REX, and we do believe that there will be changed flows on that pipeline over time with the development of Marcellus and Utica. It's just a matter of when those occur and what it does to that asset over time. So Mark do you want to talk about that?

Mark A. Snell

Yes, a couple of things. Look, we -- this is still an important asset. And it's a good system to bringing gas now to the Rockies East. But of course, with the development of the Marcellus in particular, as Debbie mentioned, we do think over time after our contracts expire, that flow could reverse and gas for -- will flow from both directions, then go up to Chicago and then to the Midwest, but a couple of things. Just keep in mind, one, as Joe said in his notes and I think it's important, is that we're going to be, by -- before the end of the contract period, we will have recouped all of our investment in either cash distributions or tax benefits. And from an accounting perspective, we'll still have bases left. But economically, we'll have gotten our money back, I think that's important thing to remember. And two, I don't think anybody can -- we don't know with 100% certainty exactly where -- what the revenues will be beyond the contract period but we know that there is interest in going from both directions, and we know that we'll have significant revenues. Now they may not be as good as we have now and that's what we've indicated by our write-down, but I think -- we do think this will be a significant asset going forward.

Naaz Khumawala - BofA Merrill Lynch, Research Division

And then just in -- once Kinder does -- if they decide to, and then once they complete the sale, is there -- would you guys reassess the value based on market conditions, as this is my accounting failing me?

Debra L. Reed

Yes. Let me ask Joe to talk about how we look at that.

Joseph A. Householder

Okay. Naaz, the Kinder sales process, as Debbie and Mark said, led us to evaluate the REX investment. But our analysis is based on several scenarios that resulted in the fair value assessment that we put on REX. So we would not expect that the eventual sale will really reveal any information that would cause us to change any of our assumptions within these scenarios. So we would not expect any change in our assessment. Of course, over time new information could come to light, we just don't expect that to occur in the next several years.

Operator

Moving on, we'll hear from Michael Lapides from Goldman Sachs.

Michael J. Lapides - Goldman Sachs Group Inc., Research Division

Can you just give a little bit of an update on renewable projects put in place during the course of 2012? And also what you're seeing in terms of output or capacity factor levels for some of your gas power plants in the U.S., meaning you're nonregulated gas plants?

Debra L. Reed

Yes, sure. Michael, I'll mention some of the renewables and kind of go through what we have in operation, and then what we have under development right now. Right now in operation, we have Fowler Ridge which is a 100 megawatt, our share. We have Copper Mountain Solar 1 and El Dorado Solar, 58 megawatts, and then we have 125 megawatts at Cedar Creek II Wind, which is our share of that, we own 50% of that. Right now, under development, that's contracted and under construction, we have the Flat Ridge Wind project, which our share is 235 megawatts, and that is to be put in service this year. We have the Mahogany wind project, which was just dedicated this week and our share of that is 71 megawatts, and that's to be completed this year. We're in the process right now of -- on Mesquite Solar, of building that out to a total of 150 megawatts, and we had 98 megawatts energized thus far. And that will be finally complete in 2013. And then we have Auwahi Wind, which is under construction right now, and that is a 11-megawatt wind project which will be done this year. And then we have also under contracts that we're working on construction, the Copper Mountain Solar project and that will be 92 megawatts. And then the ESJ project, which will begin later this year, which will be -- our share is 78 megawatts. And we have a lot of -- bottom line, we have a lot of construction going on. I mean massive amount of construction going on these projects. All the wind projects are scheduled to be done in 2012 before any issues of PTC go away. So they're all scheduled to be done in 2012, with the exception of ESJ, which is not dependent upon PTC because as you know, it's being constructed in Mexico and we just get accelerated depreciation on that. And then I'll have Mark talk about kind of the capacity factors, and maybe a little bit of information on what's happening in the generation front.

Mark A. Snell

Yes, on the generation front, on the gas fired generation front here in Southern California and the West where our plants are located, I think through the quarter we saw continued sort of weak gas prices and weak power prices. Unlike the rest of the country, we still have had fairly mild temperatures here in Southern California, so we really haven't seen much of an uptick or pressure on prices. We are expecting in August and September for that to change. We are seeing an uptick in both spark spreads or -- higher heat rates and better pricing. It's not significantly better, but it is better than it's been. We would expect to be a little bit stronger in the next quarter.

Michael J. Lapides - Goldman Sachs Group Inc., Research Division

Got it. And finally, I know you gave a little bit of an update of this at the Analyst Day, but any further thoughts on natural gas storage development? Or any changes since the Analyst Day?

Mark A. Snell

Yes. No real changes since the Analyst Day. I mean I think the prospects for additional development on the storage side really is going to come in relation to the LNG projects that are in the Gulf. And we are uniquely situated with one of our projects, the Louisiana storage facility, which is -- which would be ideal to serve both our facility there and also the Cheniere facility. So we think that eventually that will get developed and it will be a good asset.

Debra L. Reed

And that facility would be about 19 Bcf when fully developed. Also as Mark mentioned, in that area, we have the Cameron pipeline that serves that LNG facility. And we would anticipate the development of both the storage and that pipeline to serve our facility in Cheniere's.

Operator

Moving on, our next question is from Leslie Rich from JPMorgan.

Leslie Rich - J.P. Morgan Asset Management, Inc.

I wondered if you could just give an update on the cash that you are expecting to repatriate from Latin America? Is that likely to be in the fourth quarter?

Debra L. Reed

So we had indicated that we were planning on having the repatriation begin next year, at the end of next year. And I'll have Joe go through that. One of the reasons that we feel that it's good to wait until next year is that gives us the opportunity to see what happens with all the tax law changes after the election. And then we can really assess if anything is changing that would in anyway modify how we would do our repatriation. Joe, do you want to...

Joseph A. Householder

Leslie, Debbie's right. Everything she said was consistent with what we had at the Analyst Conference. In addition to that, we also still had some intercompany debt that we could move cash from those countries up to the holding company. So we were going to pay off these intercompany loans during this year, so we didn't need to actually pay the dividend this year.

Leslie Rich - J.P. Morgan Asset Management, Inc.

Okay. And then separately, on CapEx, are you tracking in line with the breakout that you gave at the Analyst Day? Year-to-date, I see you've spent about $1.8 billion but it looks like it's distributed a little bit differently. So I just wondered if your CapEx plans are the same, or different?

Debra L. Reed

Yes. Our CapEx for Sempra is right on track to the numbers that we gave at the Analyst Presentation. There's a little bit of differences between one business unit and others, there may be more solar and then some like Humala and some other things that are in -- at SDG&E for projects. But basically, they wash and the CapEx is right on track.

Joseph A. Householder

And also, that -- SDG&E is a little higher in the first because of Sunrise, and then it'll slow off a little.

Operator

And we'll move on to Paul Patterson from Glenrock Associates.

Paul Patterson - Glenrock Associates LLC

Just -- a lot of questions have been answered -- but the impact of the REX write-off going forward, I mean it sounds like you guys are contracted. I'm just wondering how it might possibly benefit you guys, a lower depreciation or something?

Debra L. Reed

Yes. I mean there would be benefits from lower depreciations but it's very small in terms of the earnings impact from that. I think that the -- probably, I'm looking at REX, that the biggest potential upside is what happens in the market post-2019 when the contracts expire. And really, how gas flows change in that region, what happens with LNG export, what happens with Canadian gas export and all of the -- and we see some real opportunities there. So -- but that's -- in terms of just the write-down having an impact on earnings, it's quite small. Joe, you want to add anything?

Joseph A. Householder

No, that's right. I mean if you think about the total amount that we rolled off and then the pipeline's a 40-year asset, it's not going to be that much per year. It's something but not significant.

Paul Patterson - Glenrock Associates LLC

Okay, great. And then the other thing I was sort of wondering was the -- just to clarify on maybe insurance contract, that was associated with some benefit program, it sound like. I was just wondering what a -- if you could just elaborate a little more and that, what caused you to just change your mind in terms of how you're going to be treating that stuff, just -- nothing tremendous, just a little more clarification on that?

Debra L. Reed

Yes, sure. I'll ask Joe to answer that because this really came up as part of our Pension Investment Committee working with the present group, so...

Joseph A. Householder

Yes. Paul, what we really did was we were studying the benefit plans, and what it really relates to is how we fund within the company, deferred compensation and Supplemental Executive Retirement Plans, and we have a trust fund that's set up to do that. And inside that fund, we have a lot of these light insurance contracts and there are investments within those. And when this got set up, it was 10 or 12 years ago when -- just after the merger, and at that time, people weren't sure how all this was going to work and felt that maybe we'll have to cash these in it sometime. But when I came into the job, I started looking at all that and determined there was plenty of liquidity, there was a lot of cash flow, we could even access these life insurance policies to get cash when we needed it. And so it didn't appear reasonable to think that we actually would collapse these policies or cash them in sooner and pay the tax on the income that was earned in there. And so we reversed that tax that we'd been incurring. We've taken the tax expense for the last 10 years on this. It was just reversing what we had booked, it's all a noncash issue.

Operator

And we'll take our next question from Kit Konolige from BGC Financial.

Kit Konolige

A question on SONGS. Obviously, you're a part owner there. The Commission, I think, is on the verge of deciding whether to consider what they should do about a nonoperating generating asset. What's your view of -- I don't know, just your perspective on the operational outlook, when and if it might run. And any regulatory overhang and how you expect that to play out.

Debra L. Reed

Well let me try to kind of put our position in light relative to Edison's position on this first. And then kind of go through what we know about that and what our expectations are for the future. First off, just to remind you, SDG&E is a 20% owner in SONGS and we are not the operator. We're not -- we've never been the operator. And our company had no involvement in designing the steam generator replacement or any of that, we basically get the energy out of the plant, then we have a long-term contract with Edison to own 20% of the plant and we get 440 megawatts. Because we're not the operator, when we went through -- when they wanted to build the steam generator, rebuild that. We were very concerned about us taking risk on long term. And our agreement that was approved by the Commission is that all of our O&M is balanced for the plant, so that if Edison asks to spend more than there is in their plant for O&M, SDG&E recovers its actual O&M expenditures for the plant. We also have an account for the purchase power, and the cost of the excess power that we're purchasing now goes into that account to be reviewed by the Commission, but it is also a balancing account. And our expectation would be that we would be able to recover that. And our costs so far during the course of the outage had been about $25 million for that. In terms of looking at the future operation of the plant -- I mean we can understand Edison's position and Edison's position is that they have an agreement with the Nuclear Regulatory Commission where they have to make a filing for restart. And it's our understanding that they're moving towards making the filing for Unit 2 and then later, Unit 3. But Edison cannot determine how long it would take for the NRC to act on that once they make that filing for restart. And so that -- the best that we can tell you is exactly what Edison says on their call and that they're hoping to get the unit started, but that they cannot give a specific date of when the restart will occur because it's dependent upon the NRC approval. We also have a claim to the warranties for our 20% share that Edison has with Mitsubishi, the manufacturer. And we are also an additional insured on the policy that Edison has. And they indicated on their call that they were going to be filing a claim with new NEIL, or putting -- the Nuclear Electric Insurance Limited group that ensures the plant on notice. And so we're an additional insured on that policy. So I think at a high level, our position is different, we do have the balancing account on O&M. We're not the operator. So we pay a lot of attention to this because we get 440 megawatts of power from that plant, and we would like to see it come back online because it ends up being very economical power for our customers.

Kit Konolige

So just to be clear, is the plant -- is your 20% share in SDG&E's rate base?

Debra L. Reed

Yes. Our rate base for SONGS right now is $228 million right now, it's our rate base right now. As of 6/30, our rate base is $228 million, and that does not include the CWIP and nuclear fuel and all of that, it's just our 6/30 ending rate base for SONGS. We -- again, we're a little different than Edison because if you will remember, during deregulation, we had to take all these assets out of our rate base, so we basically wrote them down to 0. And so all we have is kind of rate base buildup in SONGS coming from 2001 forward, contrary to any kind of historical rate base.

Kit Konolige

So that -- obviously then, that rate base figure, the $228 million, would be your theoretical exposure if there were some kind of proceeding at the Commission that resulted in exclusion from rate base?

Debra L. Reed

Yes. If -- there's a requirement that the Commission, after the unit has been out for more than 9 months continuously, for the Commission to do an assessment. And they would certainly look at what the circumstances were around this. I mean certainly, the information we're getting is that the Commission is paying attention to this but they delayed today, the OII that they're going to have. And so we would anticipate that they're going to wait and see kind of what the outcome is on this. And then they'll look at it and they'll look at the reasonableness of the actions of the parties in the case. And again, being not the operator, not any at one engaged in design of the facility, I think our position's slightly different than Edison's on this plant.

Kit Konolige

Very good, okay. One other area, it sounded Debbie, as -- you sounded pretty optimistic about DOE approval of the export license for Cameron. Is that any different from your thinking at the Analyst Day? I mean what's new there as far as your read on DOE's action?

Debra L. Reed

Well, we've heard from many parties in Washington that the administration is actually supportive of going forward with LNG export. And that we've heard that they would anticipate having a decision -- or the report coming out on the impacts of LNG export coming out in the end of summer timeframe period. And that after that report comes out, which I've told many of you -- I mean we have 2 reports that pretty much say the same thing, that they don't see a significant impact. It would be hard to believe that this third report would be substantially different than that. And I think after that report comes out, the answer's -- the thought is that there would be the approval of going forward of projects. I would also say that it's very interesting when you look at the actual DOE language, the DOE language presumes approval and it's the burden of proof to show that there would be an adverse effect. So the language is presumptive that export is good and that you're going to have an open market for gas, and that they actually have to prove why it shouldn't be done. And so I think what we're hearing would lead us to believe that this will be moving forward, the issues will -- it'd be the end of this year or first part of next year.

Operator

[Operator Instructions] Our next question comes from Don Alley [ph] from Decade Capital.

Unknown Analyst

Yes. Just a clarification on Kit's question and one other. When you said year-end, did you mean formal DOE approval, or just the DOE report?

Debra L. Reed

No. We're expecting the non-FTA approval by the end of this year, first of next year.

Unknown Analyst

And then the -- their study on the impacts of exports, when would you expect that?

Debra L. Reed

We would -- I mean whether -- everything we've heard is that the end of summer. And a few weeks ago, we were expecting it be coming out sooner, but by the end of summer is kind of the official word we get.

Unknown Analyst

Got it. And then on Chilean JV, how large would you expect that to grow and over what time period?

Debra L. Reed

I'll ask Mark to cover that. As I mentioned, we have the 2 projects that are in total $160 million. We're bidding on 5 more. I mean these are relatively small projects. They're generally -- and the projects we bid on are generally $80 million to $100 million of projects. So I don't see that getting gigantic. But we do have some good opportunities, we have a good partner to develop with. Mark, do you want to...

Mark A. Snell

Everything you said is exactly right. I -- the only thing I would add to that, as Debbie said, they're reasonably small and manageable-sized projects. It will add to our growth down there but they will be completely funded by earnings that was generated down there and in the local debt market. So there isn't any capital coming from Sempra in the U.S. down to South America to fund these projects. They'll be completely self-funded. So it's the best of all kinds of growth in our foreign entities.

Operator

And that does conclude our time for question and answers today. Ms. Reed, I'll turn the conference back to you for any additional or closing remarks.

Debra L. Reed

Well, thank you all for joining us today. And again, if there's any follow-up questions that you have, Rick Vaccari and our team are there to respond to any questions. Please give them a call, and thank you very much for being with us today.

Operator

And that does conclude our conference for today. Thank you all for your participation.

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