Cash flow stability from regulated operations Supportive (but historically uneven) regulatory environment in California Management's approach at the parent company to unregulated businesses emphasizes contractual cash flows and minimizes commodity price exposure Less leverage than at the parent, but the parent's policies indirectly affect the utility High capital expenditures at the California utilities The stable outlook reflects our view that Southern California Gas's (SoCalGas) funds from operations (FFO) to total adjusted debt will be in the 17%-18% range in the near term and that cash flows will be highly predictable. Ratings stability is also based on our expectation that the parent company's strategic growth plans will continue to focus on the regulated utilities. We could lower the rating if the
