EXHIBIT 10.9

SEMPRA ENERGY
SEVERANCE PAY AGREEMENT

THIS AGREEMENT

(this "Agreement"), dated as of August 17, 2004 (the "Effective Date") is made
by and between SEMPRA ENERGY, a California corporation, and DONALD E. FELSINGER
(the "Executive").

WHEREAS

, the Executive is currently employed by Sempra Energy or a subsidiary of Sempra
Energy (Sempra Energy and its subsidiaries are hereinafter collectively referred
to as the "Company") as President and Chief Operating Officer; and

WHEREAS

, the Board of Directors of Sempra Energy (the "Board") has determined that it
is in the best interests of the Company to institute formalized severance
arrangements for certain of the executives of the Company, including the
Executive.

NOW, THEREFORE

, in consideration of the premises and mutual covenants herein contained, the
Company and the Executive hereby agree as follows:

    Definitions

    . For purposes of this Agreement, the following capitalized terms have the
    meanings set forth below:

    "Accounting Firm" has the meaning assigned thereto in Section 9(b) hereof.

    "Act" has the meaning assigned thereto in Section 2(b) hereof.

    "Affiliate" has the meaning set forth in Rule 12b-2 promulgated under the
    Exchange Act.

    "Annual Base Salary" has the meaning assigned thereto in Section 2(a)
    hereof.

    "Beneficial Owner" has the meaning set forth in Rule 13d-3 promulgated under
    the Exchange Act.

    "Buyer" has the meaning assigned thereto in Section 17(i) hereof.

    "Cause" means (i) the willful and continued failure by the Executive to
    substantially perform the Executive's duties with the Company (other than
    any such failure resulting from the Executive's incapacity due to physical
    or mental illness or any such actual or anticipated failure after the
    issuance of a Notice of Termination for Good Reason by the Executive
    pursuant to Section 3 hereof), (ii) the Executive's commission of one or
    more acts of moral turpitude that constitute a violation of applicable law
    (including but not limited to a felony) which have or result in an adverse
    effect on the Company, monetarily or otherwise, or one or more significant
    acts of dishonesty or (iii) the Executive's refusal to abstain from voting
    as a member of the Board, if applicable, on any of the following matters:
    (A) executive compensation, (B) assignments to committees of the Board or
    (C) nomination, appointment or election of directors. For purposes of clause
    (i) of this definition, no act, or failure to act, on the Executive's part
    shall be deemed "willful" unless done, or omitted to be done, by the
    Executive not in good faith and without reasonable belief that the
    Executive's act, or failure to act, was in the best interests of the
    Company. Notwithstanding the foregoing, the Executive shall not be deemed
    terminated for Cause pursuant to clause (i) of this definition unless and
    until the Executive shall have been provided with reasonable notice of and,
    if possible, a reasonable opportunity to cure the facts and circumstances
    claimed to provide a basis for termination of the Executive's employment for
    Cause.

    "Change in Control" shall be deemed to have occurred when:

     a. Any Person is or becomes the Beneficial Owner, directly or indirectly,
        of securities of the Company (not including in the securities
        beneficially owned by such Person any securities acquired directly from
        the Company or its Affiliates other than in connection with the
        acquisition by the Company or its Affiliates of a business) representing
        twenty percent (20%) or more of the combined voting power of the
        Company's then outstanding securities; or
     b. The following individuals cease for any reason to constitute a majority
        of the number of directors then serving: individuals who, on the
        Effective Date, constitute the Board and any new director (other than a
        director whose initial assumption of office is in connection with an
        actual or threatened election contest, including, but not limited to, a
        consent solicitation relating to the election of directors of the
        Company) whose appointment or election by the Board or nomination for
        election by the Company's shareholders was approved or recommended by a
        vote of at least two-thirds (2/3) of the directors then still in office
        who either were directors on the date hereof or whose appointment,
        election or nomination for election was previously so approved or
        recommended; or
     c. There is consummated a merger or consolidation of the Company or any
        direct or indirect subsidiary of the Company with any other corporation,
        other than (A) a merger or consolidation which would result in the
        voting securities of the Company outstanding immediately prior to such
        merger or consolidation continuing to represent (either by remaining
        outstanding or by being converted into voting securities of the
        surviving entity or any parent thereof), in combination with the
        ownership of any trustee or other fiduciary holding securities under an
        employee benefit plan of the Company, at least sixty percent (60%) of
        the combined voting power of the securities of the Company or such
        surviving entity or any parent thereof outstanding immediately after
        such merger or consolidation, or (B) a merger or consolidation effected
        to implement a recapitalization of the Company (or similar transaction)
        in which no Person is or becomes the Beneficial Owner, directly or
        indirectly, of securities of the Company (not including in the
        securities beneficially owned by such Person any securities acquired
        directly from the Company or its Affiliates other than in connection
        with the acquisition by the Company or its Affiliates of a business)
        representing twenty percent (20%) or more of the combined voting power
        of the Company's then outstanding securities; or
     d. The shareholders of the Company approve a plan of complete liquidation
        or dissolution of the Company or there is consummated an agreement for
        the sale or disposition by the Company of all or substantially all of
        the Company's assets, other than a sale or disposition by the Company of
        all or substantially all of the Company's assets to an entity, at least
        sixty percent (60%) of the combined voting power of the voting
        securities of which are owned by shareholders of the Company in
        substantially the same proportions as their ownership of the Company
        immediately prior to such sale.
    
        "Change in Control Date" means the date on which a Change in Control
        occurs.
    
        "Code" means the Internal Revenue Code of 1986, as amended.
    
        "Compensation Committee" means the compensation committee of the Board.
    
        "Consulting Period" has the meaning assigned thereto in Section 13(e)
        hereof.
    
        "Date of Termination" has the meaning assigned thereto in Section 3(b)
        hereof.
    
        "Disability" has the meaning set forth in the Company's long-term
        disability plan or its successor; provided, however, that the Board may
        not terminate the Executive's employment hereunder by reason of
        Disability unless (i) at the time of such termination there is no
        reasonable expectation that the Executive will return to work within the
        next ninety (90) day period and (ii) such termination is permitted by
        all applicable disability laws.
    
        "Exchange Act" means the Securities Exchange Act of 1934, as amended,
        and the applicable rulings and regulations thereunder.
    
        "Excise Tax" has the meaning assigned thereto in Section 9(a) hereof.
    
        "Good Reason" means the occurrence without the written consent of the
        Executive of any one of the following acts by the Company, or failures
        by the Company to act, unless such act or failure to act is corrected
        (or denied in the event of clause (i) below) by the Company within 30
        days after the Company receives the Notice of Termination given in
        respect thereof:
    
     e. a material diminution in the Executive's title, authority, duties,
        responsibilities or reporting lines;
     f. a reduction by the Company in (A) the Executive's Annual Base Salary as
        in effect on the date hereof or as the same may be increased from time
        to time or (B) the Executive's aggregate annualized compensation and
        benefits opportunities, except, in the case of both (A) and (B), for
        across-the-board reductions similarly affecting all executive officers
        (both of the Company and of any Person then in control of the Company)
        whose compensation is directly determined by the Compensation Committee
        (and the compensation committee of the board of directors of any Person
        then in control of the Company); provided that, the exception for
        across-the-board reductions shall not apply following a Change in
        Control;
     g. the relocation of the Executive's principal place of employment to a
        location away from the Company's headquarters or a relocation of the
        Company's headquarters to a location further away which is both further
        away from the Executive's residence and more than thirty (30) miles from
        such headquarters or a substantial increase in the Executive's business
        travel obligations outside of the Southern California area as of the
        Effective Date other than any such increase that (A) arises in
        connection with extraordinary business activities of the Company of
        limited duration and (B) is understood not to be part of the Executive's
        regular duties with the Company; provided, however, that any such
        relocation prior to a Change in Control shall not constitute Good Reason
        hereunder;
     h. the failure by the Company to pay to the Executive any portion of the
        Executive's current compensation and benefits or to pay to the Executive
        any portion of an installment of deferred compensation under any
        deferred compensation program of the Company within thirty (30) days of
        the date such compensation is due;
     i. any purported termination of the Executive's employment that is not
        effected pursuant to a Notice of Termination satisfying the requirements
        of Section 3(a) hereof; for purposes of this Agreement, no such
        purported termination shall be effective;
     j. the failure by the Company to obtain a satisfactory agreement from any
        successor of the Company requiring such successor to assume and agree to
        perform the Company's obligations under this Agreement, as contemplated
        in Section 15 hereof;
     k. the failure by the Company to provide the indemnification and D&O
        insurance protection Section 10 of this Agreement requires it to
        provide;
     l. the failure by the Company to comply with any material provision of this
        Agreement; or
     m. the announcement of the Company's intent to take one of the actions or
        omissions to act, as applicable, described in clauses (a) through (h)
        above.

    Following a Change in Control, the Executive's determination that an act or
    failure to act constitutes Good Reason shall be presumed to be valid unless
    such determination is deemed to be unreasonable by an arbitrator pursuant to
    the procedure described in Section 12 hereof. The Executive's right to
    terminate the Executive's employment for Good Reason shall not be affected
    by the Executive's incapacity due to physical or mental illness. The
    Executive's continued employment shall not constitute consent to, or a
    waiver of rights with respect to, any act or failure to act constituting
    Good Reason hereunder.

    "Gross-Up Payment" has the meaning assigned thereto in Section 9(a) hereof.

    "Incentive Compensation Awards" means awards granted under Incentive
    Compensation Plans providing the Executive with the opportunity to earn, on
    a year-by-year basis, annual and long-term incentive compensation.

    "Incentive Compensation Plans" means annual incentive compensation plans and
    long-term incentive compensation plans of the Company, which long-term
    incentive compensation plans may include plans offering stock options,
    restricted stock and other long-term incentive compensation.

    "Involuntary Termination" means (a) a termination of employment by the
    Company other than for Cause, death, or Disability, or (b) the Executive's
    resignation of employment with the Company for Good Reason; provided,
    however, that except as provided in the last paragraph of Section 6 hereof,
    a termination of the Executive's employment by reason of his or her
    retirement prior to a Change in Control shall not constitute an Involuntary
    Termination hereunder.

    "JAMS Rules" has the meaning assigned thereto in Section 12 hereof.

    "Notice of Termination" has the meaning assigned thereto in Section 3(a)
    hereof.

    "Payment" has the meaning assigned thereto in Section 9(a) hereof.

    "Person" has the meaning set forth in section 3(a)(9) of the Exchange Act,
    as modified and used in sections 13(d) and 14(d) thereof, except that such
    term shall not include (i) the Company or any of its Affiliates, (ii) a
    trustee or other fiduciary holding securities under an employee benefit plan
    of the Company or any of its Affiliates, (iii) an underwriter temporarily
    holding securities pursuant to an offering of such securities, (iv) a
    corporation owned, directly or indirectly, by the shareholders of the
    Company in substantially the same proportions as their ownership of stock of
    the Company, or (v) a person or group as used in Rule 13d-1(b) promulgated
    under the Exchange Act.

    "Post-Change in Control Accrued Obligations" has the meaning assigned
    thereto in Section 6(b) hereof.

    "Post-Change in Control Severance Payments" has the meaning assigned thereto
    in Section 6 hereof.

    "Pre-Age 65 Benefit" has the meaning assigned thereto in Section 5(e)
    hereof.

    "Pre-Change in Control Accrued Obligations" has the meaning assigned thereto
    in Section 5(b) hereof.

    "Pre-Change in Control Severance Payments" has the meaning assigned thereto
    in Section 5 hereof.

    "Proprietary Information" has the meaning assigned thereto in Section 13(a)
    hereof.

    "Release" has the meaning assigned thereto in Section 13(d) hereof.

    "SERP" has the meaning assigned thereto in Section 5(c) hereof.

    "Underpayment" has the meaning assigned thereto in Section 9(b) hereof.

    Compensation
    .
    Base Salary
    . The Executive's annual base salary (the "
    Annual Base Salary
    ") shall in no event be less than $750,000 and shall be payable in
    accordance with the Company's general payroll practices. Subject to clause
    (b) of the definition of "Good Reason" in Section 1 hereof, the Board in its
    discretion may from time to time direct such upward adjustments in the
    Executive's Annual Base Salary as the Board deems to be necessary or
    desirable, including, without limitation, adjustments in order to reflect
    increases in the cost of living and the Executive's performance. Any
    increase in the Annual Base Salary shall not serve to limit or reduce any
    other obligation of the Company under this Agreement. For purposes of clause
    (b) of the definition of "Good Reason" in Section 1 hereof, and Sections
    5(a), 5(b), 5(e), 6(a), 6(b), 6(e), and 13(d) hereof, reference to the
    Annual Base Salary shall mean the highest Annual Base Salary payable to the
    Executive at any time during the term of this Agreement.
    Sarbanes-Oxley Act of 2002
    . Notwithstanding anything herein to the contrary, if the Company
    determines, in its good faith judgment, that any provision of this Agreement
    is likely to be interpreted as a personal loan prohibited by the
    Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated
    thereunder (the "
    Act
    "), then such provision shall be modified as necessary or appropriate so as
    to not violate the Act; and if this cannot be accomplished, then the Company
    shall use its reasonable efforts to provide the Executive with similar, but
    lawful, substitute benefit(s) at a cost to the Company not to significantly
    exceed the amount the Company would have otherwise paid to provide such
    benefit(s) to the Executive. In addition, if the Executive is required to
    forfeit or to make any repayment of any compensation or benefit(s) to the
    Company under the Act or any other law, such forfeiture or repayment shall
    not constitute Good Reason.

    Notice and Date of Termination
 1. Any purported termination of the Executive's employment (other than by
    reason of death) shall be communicated by written Notice of Termination from
    one party hereto to the other party hereto in accordance with Section 17(b)
    hereof. For purposes of this Agreement, a "Notice of Termination" shall mean
    a notice that shall indicate the specific termination provision in this
    Agreement relied upon, if any, and shall set forth in reasonable detail the
    facts and circumstances claimed to provide a basis for termination of the
    Executive's employment under the provision so indicated. Further, a Notice
    of Termination for Cause is required to include a copy of a resolution duly
    adopted by the affirmative vote of not less than three-fourths (3/4) of the
    independent directors of the Board at a meeting of the Board that was called
    and held no more than ninety (90) days after the date the Board had
    knowledge of the most recent act or omission giving rise to such breach for
    the purpose of considering such termination (after reasonable notice to the
    Executive and an opportunity for the Executive, together with the
    Executive's counsel, to be heard before the Board and, if possible with
    respect to clause (i) of the definition of Cause in Section 1 hereof, to
    cure the breach that was the basis for the Notice of Termination for Cause
    within a reasonable period) finding that, in the good faith opinion of the
    Board, the Executive was guilty of conduct set forth in clause (i) or (ii)
    of the definition of Cause in Section 1 hereof, and specifying the
    particulars thereof in detail. Unless the Board determines otherwise, a
    Notice of Termination by the Executive alleging a termination for Good
    Reason must be made within 180 days of the act or failure to act that the
    Executive alleges to constitute Good Reason.
 2. "Date of Termination," with respect to any purported termination of the
    Executive's employment, shall mean the date specified in the Notice of
    Termination (which, in the case of a termination by the Company, shall not
    be less than thirty (30) days for reasons other than Cause and, in the case
    of a termination by the Executive, shall not be less than fifteen (15) days
    (thirty (30) days if the termination is with Good Reason) nor more than
    sixty (60) days from the date such Notice of Termination is given).

Termination from the Board. Upon the termination of the Executive's employment
for any reason, the Executive's membership on the Board, the board of directors
of any of the Company's Affiliates, any committees of the Board and any
committees of the board of directors of any of the Company's Affiliates, if
applicable, shall be automatically terminated. Severance Benefits upon
Involuntary Termination Prior to Change in Control

. Notwithstanding any other provision of this Agreement, the Company may
terminate the Executive's employment other than by a termination for Cause, but
only upon the affirmative vote of three-fourths (3/4) of the independent
directors of the Board. Except as provided in Section 6 and Section 17(i)
hereof, in the event of the Involuntary Termination of the Executive prior to a
Change in Control, the Company shall pay to the Executive the amounts, and
provide the Executive with the benefits, described in this Section 5
(hereinafter referred to as the "Pre-Change in Control Severance Payments") and
any amounts or benefits described in Section 10 hereof. The amounts specified in
this Section 5 shall be paid within thirty (30) days after the Date of
Termination.

Lump Sum Payment
. In lieu of any further payments of the Annual Base Salary or annual Incentive
Compensation Awards to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum amount in cash
equal to the sum of (A) the Executive's Annual Base Salary and (B) the greater
of the Executive's target bonus for the year of termination under the Company's
Executive Incentive Plan (or any successor plan) or the average of the three (3)
years' highest gross annual bonus awards, not necessarily consecutive, paid by
the Company (or its predecessor) to the Executive under the Company's Executive
Incentive Plan (or any predecessor or successor plan) in the five (5) years
preceding the year of termination.
Accrued Obligations
. The Company shall pay the Executive a lump sum amount in cash equal to the sum
of (A) the Executive's Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (B) an amount equal to any annual Incentive
Compensation Awards earned with respect to fiscal years ended prior to the year
that includes the Date of Termination to the extent not theretofore paid, (C)
any accrued and unpaid vacation, if any, (D) reimbursement for unreimbursed
business expenses, if any, properly incurred by the Executive in the performance
of his duties in accordance with policies established from time to time by the
Board, and (E) an amount equal to the target amount payable under any annual
Incentive Compensation Awards for the fiscal year that includes the Date of
Termination or, if greater, the average of the three (3) years' highest gross
annual bonus awards, not necessarily consecutive, paid by the Company (or its
predecessor) to the Executive under the Company's Executive Incentive Plan (or
any predecessor or successor plan) in the five (5) years preceding the year of
Termination multiplied by a fraction the numerator of which shall be the number
of days from the beginning of such fiscal year to and including the Date of
Termination and the denominator of which shall be 365, in each case to the
extent not theretofore paid. (The amounts specified in clauses (A), (B), (C),
(D) and (E) shall be hereinafter referred to as the "
Pre-Change in Control Accrued Obligations
").
Pension Supplement
. The Company shall pay the Executive's benefits under Section 3.1 of the Sempra
Energy Supplemental Executive Retirement Plan (the "
SERP
") in the form of a lump sum;
provided, however
, that (A) the Company shall provide the Executive with such additional years of
age and service credit for purposes of the calculation of retirement benefits
under the SERP as if he had remained employed for no less than two (2) years,
and (B) the applicable early retirement factor determined in accordance with
Appendix A of the SERP shall be applied to the Executive's age and years of
service only after he is credited with the additional age and service described
above; and the Executive's termination shall be a "Qualifying Termination" as
defined in the Split Dollar Life Insurance Agreement entered into between the
Executive and the Company.
Accelerated Vesting and Payment of Long-Term Incentive Awards
. Notwithstanding the provisions of any applicable equity-based compensation
plan or award agreement to the contrary,
a
ll equity-based Incentive Compensation Awards (including, without limitation,
stock options, stock appreciation rights, restricted stock awards, restricted
stock units, performance share awards, awards covered under Section 162(m) of
the Code, and dividend equivalents) held by the Executive shall immediately vest
and become exercisable or payable, as the case may be, as of the Date of
Termination, to be exercised or paid, as the case may be, in accordance with the
terms of the applicable Incentive Compensation Plan and Incentive Compensation
Award agreement, and any restrictions on any such Incentive Compensation Awards
shall automatically lapse;
provided, however
, that any stock options granted on or after June 26, 1998 shall remain
outstanding and exercisable until the earlier of (A) the later of sixty months
(60) months following the Date of Termination or the period specified in the
applicable Incentive Compensation Award agreements or (B) the expiration of the
original term of such Incentive Compensation Award (it being understood that all
Incentive Compensation Awards granted prior to or after June 26, 1998 shall
remain outstanding and exercisable for a period that is no less than that
provided for in the applicable agreement in effect as of the date of grant). Any
such equity-based Incentive Compensation Awards tied to performance criteria
shall be assumed to have been achieved at target levels. The Company shall pay
to the Executive, with respect to all cash-based, long-term Incentive
Compensation Awards (excluding those awards which constitute an equity award as
described above) made to the Executive that are outstanding under any long-term
Incentive Compensation Plan maintained by the Company or any Affiliate an amount
equal to the target amount payable under such long-term Incentive Compensation
Awards multiplied by a fraction, the numerator of which shall be the number of
days from the beginning of the award cycle to and including the Date of
Termination, and the denominator of which shall be the number of days in the
cycle as originally granted.
Continuation of Welfare Benefits
. For a period of two (2) years (and an additional one (1) year if the Executive
provides consulting services under Section 13(e) hereof) or until the Executive
is eligible for retiree medical benefits, whichever is longer, immediately
following the Date of Termination, the Company shall arrange to provide the
Executive and his dependents with life, disability, accident and health
insurance benefits substantially similar to those provided to the Executive and
his dependents immediately prior to the Date of Termination;
provided, however
, that if the Executive becomes employed with another employer and is eligible
to receive life, disability, accident and health insurance benefits under
another employer-provided plan, the benefits under the Company's plans shall be
secondary to those provided under such other plan during such applicable period
of eligibility. In the event the Executive is ineligible under the terms of such
benefit plans to continue to be so covered, the Company shall provide the
Executive with substantially equivalent coverage through other sources or shall
provide the Executive with a lump sum payment in such amount that, after all
taxes on that amount, shall be equal to the cost to the Executive of providing
the Executive such benefit coverage. Following the Date of Termination, the
Company shall continue to pay sufficient premiums under the Sempra Energy
Executive Life Insurance Plan to provide (1) a death benefit equal to two (2)
times the sum of (A) the Annual Base Salary plus (B) the average of the three
(3) highest bonuses paid under the Company's Executive Incentive Plan (or any
predecessor or successor plan) during the preceding ten years (the "
Pre-Age 65 Benefit
"), and (2) a cash value at age 65 sufficient to maintain that insurance in
effect thereafter without any further premiums and with a death benefit of
one-half (1/2) the Pre-Age 65 Benefit. All premiums will be grossed up for taxes
using the maximum marginal federal and state income tax rates.
Outplacement Services
. The Executive shall receive outplacement services suitable to his position for
a period of twenty-four (24) months following the Date of Termination, in the
aggregate amount not to exceed $50,000. Notwithstanding the foregoing, the
Executive shall cease to receive outplacement services on the date the Executive
accepts employment with a subsequent employer.
Financial Planning Services
. The Executive shall receive financial planning services for a period of
twenty-four (24) months following the Date of Termination, at a level consistent
with the benefits provided under the Company's financial planning program for
the Executive as in effect immediately prior to the Date of Termination.
Deferral of Payments
. The Executive shall have the right to elect to defer any lump sum payments
received by the Executive pursuant to this Section 5 under the terms and
conditions of the Company's nonqualified deferred compensation plan.

Severance Benefits upon Involuntary Termination in Connection with and after
Change in Control

. Notwithstanding any other provision of this Agreement, the Company may
terminate the Executive's employment other than by a termination for Cause, but
only upon the affirmative vote of three-fourths (3/4) of the independent
directors of the Board. Notwithstanding the provisions of Section 5 above, in
the event of the Involuntary Termination of the Executive within two (2) years
following a Change in Control, in lieu of the payments described in Section 5
above, the Company shall pay the Executive the amounts, and provide the
Executive with the benefits, described in this Section 6 (hereinafter referred
to as the "Post-Change in Control Severance Payments") and any amounts or
benefits described in Section 10 hereof. The amounts specified in this Section 6
shall be paid within thirty (30) days after the Date of Termination.

Lump Sum Payment
. In lieu of any further payments of the Annual Base Salary or annual Incentive
Compensation Awards to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum amount in cash
equal to two (2) times the sum of (A) the Executive's Annual Base Salary and (B)
the greater of the Executive's target bonus for the year of termination under
the Company's Executive Incentive Plan (or any successor plan) or the average of
the three (3) years' highest gross annual bonus awards, not necessarily
consecutive, paid by the Company (or its predecessor) to the Executive under the
Company's Executive Incentive Plan (or any predecessor or successor plan) in the
five (5) years preceding the year of termination.
Accrued Obligations
. The Company shall pay the Executive a lump sum amount in cash equal to the sum
of (A) the Executive's Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (B) an amount equal to any annual Incentive
Compensation Awards earned with respect to fiscal years ended prior to the year
that includes the Date of Termination to the extent not theretofore paid, (C)
any accrued and unpaid vacation, if any, (D) reimbursement for unreimbursed
business expenses, if any, properly incurred by the Executive in the performance
of his duties in accordance with policies established from time to time by the
Board, and (E) an amount equal to the target amount payable under any annual
Incentive Compensation Awards for the fiscal year that includes the Date of
Termination or, if greater, the average of the three (3) years' highest gross
annual bonus awards, not necessarily consecutive, paid by the Company (or its
predecessor) to the Executive under the Company's Executive Incentive Plan (or
any predecessor or successor plan) in the five (5) years preceding the year of
Termination multiplied by a fraction the numerator of which shall be the number
of days from the beginning of such fiscal year to and including the Date of
Termination and the denominator of which shall be 365, in each case to the
extent not theretofore paid. (The amounts specified in clauses (A), (B), (C),
(D) and (E) shall be hereinafter referred to as the "
Post-Change in Control Accrued Obligations
").
Pension Supplement
. The Company shall pay the Executive's benefits under Section 3.1 of the SERP
in the form of a lump sum;
provided, however
, that (A) the Company shall provide the Executive with such additional years of
age and service credit for purposes of the calculation of retirement benefits
under the SERP as if he had remained employed for no less than three (3) years,
and (B) the applicable early retirement factor determined in accordance with
Appendix A of the SERP shall be applied to the Executive's age and years of
service only after he is credited with the additional age and service described
above; and the Executive's termination shall be a "Qualifying Termination" as
defined in the Split Dollar Life Insurance Agreement entered into between the
Executive and the Company.
Accelerated Vesting and Payment of Long-Term Incentive Awards
. Notwithstanding the provisions of any applicable equity-based compensation
plan or award agreement to the contrary,
a
ll equity-based Incentive Compensation Awards (including, without limitation,
stock options, stock appreciation rights, restricted stock awards, restricted
stock units, performance share awards, awards covered under Section 162(m) of
the Code, and dividend equivalents) held by the Executive shall immediately vest
and become exercisable or payable, as the case may be, as of the Date of
Termination, to be exercised or paid, as the case may be, in accordance with the
terms of the applicable Incentive Compensation Plan and Incentive Compensation
Award agreement, and any restrictions on any such Incentive Compensation Awards
shall automatically lapse;
provided, however
, that any stock options granted on or after June 26, 1998 shall remain
outstanding and exercisable until the earlier of (A) the later of sixty months
(60) months following the Date of Termination or the period specified in the
applicable Incentive Compensation Award agreements or (B) the expiration of the
original term of such Incentive Compensation Award (it being understood that all
Incentive Compensation Awards granted prior to or after June 26, 1998 shall
remain outstanding and exercisable for a period that is no less than that
provided for in the applicable agreement in effect as of the date of grant). Any
such equity-based Incentive Compensation Awards tied to performance criteria
shall be assumed to have been achieved at target levels. The Company shall pay
to the Executive, with respect to all cash-based, long-term Incentive
Compensation Awards (excluding those awards which constitute an equity award as
described above) made to the Executive that are outstanding under any long-term
Incentive Compensation Plan maintained by the Company or any Affiliate an amount
equal to the target amount payable under such long-term Incentive Compensation
Awards multiplied by a fraction, the numerator of which shall be the number of
days from the beginning of the award cycle to and including the Date of
Termination, and the denominator of which shall be the number of days in the
cycle as originally granted.
Continuation of Welfare Benefits
. For a period of two (2) years (and an additional one (1) year if the Executive
provides consulting services under Section 13(e) hereof) or until the Executive
is eligible for retiree medical benefits, whichever is longer, immediately
following the Date of Termination, the Company shall arrange to provide the
Executive and his dependents with life, disability, accident and health
insurance benefits substantially similar to those provided to the Executive and
his dependents immediately prior to the Date of Termination;
provided, however
, that if the Executive becomes employed with another employer and is eligible
to receive life, disability, accident and health insurance benefits under
another employer-provided plan, the benefits under the Company's plans shall be
secondary to those provided under such other plan during such applicable period
of eligibility; and
further provided, however
, that in the event of a termination following a Change in Control, such period
shall not be less than the number of years until the Executive reaches normal
retirement age as defined under the Company's tax-qualified plans. In the event
the Executive is ineligible under the terms of such benefit plans to continue to
be so covered, the Company shall provide the Executive with substantially
equivalent coverage through other sources or shall provide the Executive with a
lump sum payment in such amount that, after all taxes on that amount, shall be
equal to the cost to the Executive of providing the Executive such benefit
coverage. Following the Date of Termination, the Company shall continue to pay
sufficient premiums under the Sempra Energy Executive Life Insurance Plan to
provide (1) a death benefit equal to two (2) times the sum of (A) the Annual
Base Salary plus (B) the Pre-Age 65 Benefit, and (2) a cash value at age 65
sufficient to maintain that insurance in effect thereafter without any further
premiums and with a death benefit of one-half (1/2) the Pre-Age 65 Benefit. All
premiums will be grossed up for taxes using the maximum marginal federal and
state income tax rates.
Outplacement Services
. The Executive shall receive outplacement services suitable to his position for
a period of thirty-six (36) months following the Date of Termination, in the
aggregate amount not to exceed $50,000. Notwithstanding the foregoing, the
Executive shall cease to receive outplacement services on the date the Executive
accepts employment with a subsequent employer.
Financial Planning Services
. The Executive shall receive financial planning services for a period of
thirty-six (36) months following the Date of Termination, at a level consistent
with the benefits provided under the Company's financial planning program for
the Executive as in effect immediately prior to the Date of Termination.
Deferral of Payments
. The Executive shall have the right to elect to defer any lump sum payments
received by the Executive pursuant to this Section 6 under the terms and
conditions of the Company's nonqualified deferred compensation plan.

Notwithstanding anything contained herein, if a Change in Control occurs and the
Executive's employment with the Company is terminated by reason of an
Involuntary Termination prior to the Change in Control Date, and if such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect the Change in Control or (ii) otherwise
arose in connection with or in anticipation of the Change in Control, then the
Executive shall, in lieu of the Pre-Change in Control Severance Payments, be
entitled to the Post-Change in Control Severance Payments as if such Involuntary
Termination had occurred within two (2) years following the Change in Control.

Severance Benefits upon Termination by the Company for Cause or by the Executive
Other than for Good Reason. If the Executive's employment shall be terminated
for Cause, or if the Executive terminates employment other than for Good Reason,
the Company shall have no further obligations to the Executive under this
Agreement other than the Pre-Change in Control Accrued Obligations and any
amounts or benefits described in Section 10 hereof. Severance Benefits upon
Termination due to Death or Disability. If the Executive's employment shall
terminate by reason of death or Disability, the Company shall pay the Executive
or his estate, as the case may be, the Post-Change in Control Accrued
Obligations and, solely in the case of termination by reason of Disability, the
Pension Supplement described in Section 5(c) hereof, and any amounts or benefits
described in Section 10 hereof. Such payments shall be in addition to those
rights and benefits to which the Executive or his estate may be entitled under
the relevant Company plans or programs. Certain Additional Payments by the
Company.
 a. Anything in this Agreement to the contrary notwithstanding and except as set
    forth below, in the event it shall be determined that any payment or
    distribution in the nature of compensation (within the meaning of Section
    280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid
    or payable pursuant to this Agreement or otherwise (the "Payment") would be
    subject (in whole or in part) to the excise tax imposed by Section 4999 of
    the Code, together with any interest or penalties imposed with respect to
    such excise tax (collectively, the "Excise Tax"), then the Executive shall
    be entitled to receive an additional payment (the "Gross-Up Payment") in an
    amount such that, after payment by the Executive of all taxes (and any
    interest or penalties imposed with respect to such taxes), including,
    without limitation, any income taxes (and any interest and penalties imposed
    with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
    Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
    imposed upon the Payment. The Company's obligation to make Gross-Up Payments
    under this Section 9 shall not be conditioned upon the Executive's
    termination of employment. For purposes of determining the amount of any
    Gross-Up Payment, the Executive shall be deemed to pay federal income tax at
    the highest marginal rate of federal income taxation in the calendar year in
    which the Gross-Up Payment is to be made and state and local income taxes at
    the highest marginal rate of taxation in the state and locality of the
    Executive's residence on the date on which the Gross-Up Payment is
    calculated for purposes of this Section 9, net of the maximum reduction in
    federal income taxes which could be obtained from deduction of such state
    and local taxes, and taking into consideration the phase-out of the
    Executive's itemized deductions under federal income tax law.
 b. Subject to the provisions of Section 9(c) below, all determinations required
    to be made under this Section 9, including whether and when a Gross-Up
    Payment is required, the amount of such Gross-Up Payment and the assumptions
    to be utilized in arriving at such determination, shall be made by a
    nationally recognized accounting firm as may be agreed by the Company and
    the Executive (the "Accounting Firm"); provided, that the Accounting Firm's
    determination shall be made based upon "substantial authority" within the
    meaning of Section 6662 of the Code. The Accounting Firm shall provide
    detailed supporting calculations to both the Company and the Executive
    within fifteen (15) business days of the receipt of notice from the
    Executive that there has been a Payment or such earlier time as is requested
    by the Company. All fees and expenses of the Accounting Firm shall be borne
    solely by the Company. Any Gross-Up Payment, as determined pursuant to this
    Section 9, shall be paid by the Company to the Executive within five (5)
    days of the receipt of the Accounting Firm's determination. Any
    determination by the Accounting Firm shall be binding upon the Company and
    the Executive. As a result of the uncertainty in the application of Section
    4999 of the Code at the time of the initial determination by the Accounting
    Firm hereunder, it is possible that Gross-Up Payments that will not have
    been made by the Company should have been made (the "Underpayment"),
    consistent with the calculations required to be made hereunder. In the event
    the Company exhausts its remedies pursuant to Section 9(c) below and the
    Executive thereafter is required to make a payment of any Excise Tax, the
    Accounting Firm shall determine the amount of the Underpayment that has
    occurred, and any such Underpayment shall be promptly paid by the Company to
    or for the benefit of the Executive.
 c. The Executive shall notify the Company in writing of any claim by the
    Internal Revenue Service that, if successful, would require the payment by
    the Company of the Gross-Up Payment. Such notification shall be given as
    soon as practicable, but no later than ten (10) business days after the
    Executive is informed in writing of such claim. The Executive shall apprise
    the Company of the nature of such claim and the date on which such claim is
    requested to be paid. The Executive shall not pay such claim prior to the
    expiration of the thirty (30) day period following the date on which the
    Executive gives such notice to the Company (or such shorter period ending on
    the date that any payment of taxes with respect to such claim is due). If
    the Company notifies the Executive in writing prior to the expiration of
    such period that the Company desires to contest such claim, the Executive
    shall:
     i.   give the Company any information reasonably requested by the Company
          relating to such claim,
     ii.  take such action in connection with contesting such claim as the
          Company shall reasonably request in writing from time to time,
          including, without limitation, accepting legal representation with
          respect to such claim by an attorney reasonably selected by the
          Company,
     iii. cooperate with the Company in good faith in order effectively to
          contest such claim, and
     iv.  permit the Company to participate in any proceedings relating to such
          claim;

    provided, however

    , that the Company shall bear and pay directly all costs and expenses
    (including additional interest and penalties) incurred in connection with
    such contest, and shall indemnify and hold the Executive harmless, on an
    after-tax basis, for any Excise Tax, income tax or any other taxes
    (including interest and penalties) imposed as a result of such
    representation and payment of costs and expenses. Without limitation on the
    foregoing provisions of this Section 9(c), the Company shall control all
    proceedings taken in connection with such contest, and, at its sole
    discretion, may pursue or forgo any and all administrative appeals,
    proceedings, hearings and conferences with the applicable taxing authority
    in respect of such claim and may, at its sole discretion, either direct the
    Executive to pay the tax claimed and sue for a refund or contest the claim
    in any permissible manner, and the Executive agrees to prosecute such
    contest to a determination before any administrative tribunal, in a court of
    initial jurisdiction and in one or more appellate courts, as the Company
    shall determine;
    provided, however
    , that if the Company directs the Executive to pay such claim and sue for a
    refund, the Company shall advance the amount of such payment to the
    Executive, on an interest-free basis, and shall indemnify and hold the
    Executive harmless, on an after-tax basis, from any Excise Tax, income tax
    or any other taxes (including interest or penalties) imposed with respect to
    such advance or with respect to any imputed income in connection with such
    advance; and
    provided, further
    , that any extension of the statute of limitations relating to payment of
    taxes for the taxable year of the Executive with respect to which such
    contested amount is claimed to be due is limited solely to such contested
    amount. Furthermore, the Company's control of the contest shall be limited
    to issues with respect to which the Gross-Up Payment would be payable
    hereunder, and the Executive shall be entitled to settle or contest, as the
    case may be, any other issue raised by the Internal Revenue Service or any
    other taxing authority.

    

 d. If, after the receipt by the Executive of a Gross-Up Payment or an amount
    advanced by the Company pursuant to Section 9(c) above, the Executive
    becomes entitled to receive any refund with respect to the Excise Tax to
    which such Gross-Up Payment relates or with respect to such claim, the
    Executive shall (subject to the Company's complying with the requirements of
    Section 9(c) above, if applicable) promptly pay to the Company the amount of
    such refund (together with any interest paid or credited thereon after taxes
    applicable thereto). If, after the receipt by the Executive of an amount
    advanced by the Company pursuant to Section 9(c) above, a determination is
    made that the Executive shall not be entitled to any refund with respect to
    such claim and the Company does not notify the Executive in writing of its
    intent to contest such denial of refund prior to the expiration of thirty
    (30) days after such determination, then such advance shall be forgiven and
    shall not be required to be repaid, and the amount of such advance shall
    offset, to the extent thereof, the amount of Gross-Up Payment required to be
    paid.
 e. Notwithstanding any other provision of this Section 9, the Company may, in
    its sole discretion, withhold and pay over to the Internal Revenue Service
    or any other applicable taxing authority, for the benefit of the Executive,
    all or any portion of any Gross-Up Payment, and the Executive hereby
    consents to such withholding. If such payment is made by the Company to the
    Internal Revenue Service or other applicable taxing authority, then the
    Executive shall not be entitled to payment pursuant to Section 9(b) above.
 f. Any other liability for unpaid or unwithheld Excise Taxes shall be borne
    exclusively by the Company, in accordance with Section 3403 of the Code. The
    foregoing sentence shall not in any manner relieve the Company of any of its
    obligations under this Agreement.

Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, plan, program,
policy or practice provided by the Company and for which the Executive may
qualify (except with respect to any benefit to which the Executive has waived
his rights in writing), including, without limitation, any and all
indemnification arrangements in favor of the Executive (whether under agreements
or under the Company's charter documents or otherwise), and insurance policies
covering the Executive, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any other contract or agreement entered
into after the Effective Date with the Company. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
benefit, plan, policy, practice or program of, or any contract or agreement
entered into with, the Company shall be payable in accordance with such benefit,
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. At all times during the Executive's employment with
the Company and thereafter, the Company shall provide the Executive with
indemnification and D&O insurance insuring the Executive against insurable
events which occur or have occurred while the Executive was a director or
executive officer of the Company, on terms and conditions that are at least as
generous as that then provided to any other current or former director or
executive officer of the Company or any Affiliate. Full Settlement; Mitigation.
The Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others, provided that nothing
herein shall preclude the Company from separately pursuing recovery from the
Executive based on any such claim. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts (including amounts for damages for breach) payable to the Executive
under any of the provisions of this Agreement, and such amounts shall not be
reduced whether or not the Executive obtains other employment. Dispute
Resolution.

Any disagreement, dispute, controversy or claim arising out of or relating to
this Agreement or the interpretation of this Agreement or any arrangements
relating to this Agreement or contemplated in this Agreement or the breach,
termination or invalidity thereof shall be settled by final and binding
arbitration administered by JAMS in San Diego, California in accordance with the
then existing JAMS arbitration rules applicable to employment disputes (the
"JAMS Rules"); provided that, notwithstanding any provision in such rules to the
contrary, in all cases the parties shall be entitled to reasonable discovery. In
the event of such an arbitration proceeding, the Executive and the Company shall
select a mutually acceptable neutral arbitrator from among the JAMS panel of
arbitrators. In the event the Executive and the Company cannot agree on an
arbitrator, the arbitrator shall be selected in accordance with the then
existing JAMS Rules. Neither the Executive nor the Company nor the arbitrator
shall disclose the existence, content or results of any arbitration hereunder
without the prior written consent of all parties, except to the extent necessary
to enforce any arbitration award in a court of competent jurisdiction. Except as
provided herein, the Federal Arbitration Act shall govern the interpretation of,
enforcement of and all proceedings under this agreement to arbitrate. The
arbitrator shall apply the substantive law (and the law of remedies, if
applicable) of the state of California, or federal law, or both, as applicable,
and the arbitrator is without jurisdiction to apply any different substantive
law. The arbitrator shall have the authority to entertain a motion to dismiss
and/or a motion for summary judgment by any party and shall apply the standards
governing such motions under the Federal Rules of Civil Procedure. The
arbitrator shall render an award and a written, reasoned opinion in support
thereof. Judgment upon the award may be entered in any court having jurisdiction
thereof. The Executive shall not be required to pay any arbitration fee or cost
that is unique to arbitration or greater than any amount he would be required to
pay to pursue his claims in a court of competent jurisdiction.

Executive's Covenants.
Confidentiality
. The Executive acknowledges that in the course of his employment with the
Company, he has acquired non-public privileged or confidential information and
trade secrets concerning the operations, future plans and methods of doing
business ("
Proprietary Information
") of the Company and its Affiliates; and the Executive agrees that it would be
extremely damaging to the Company and its Affiliates if such Proprietary
Information were disclosed to a competitor of the Company and its Affiliates or
to any other person or corporation. The Executive understands and agrees that
all Proprietary Information has been divulged to the Executive in confidence and
further understands and agrees to keep all Proprietary Information secret and
confidential (except for such information which is or becomes publicly available
other than as a result of a breach by the Executive of this provision or
information the Executive is required by any governmental, administrative or
court order to disclose) without limitation in time. In view of the nature of
the Executive's employment and the Proprietary Information the Executive has
acquired during the course of such employment, the Executive likewise agrees
that the Company and its Affiliates would be irreparably harmed by any
disclosure of Proprietary Information in violation of the terms of this
paragraph and that the Company and its Affiliates shall therefore be entitled to
preliminary and/or permanent injunctive relief prohibiting the Executive from
engaging in any activity or threatened activity in violation of the terms of
this paragraph and to any other relief available to them. Inquiries regarding
whether specific information constitutes Proprietary Information shall be
directed to the Company's Senior Vice President, Public Policy (or, if such
position is vacant, the Company's then Chief Executive Officer);
provided
, that the Company shall not unreasonably classify information as Proprietary
Information.
Non-Solicitation of Employees
. The Executive recognizes that he possesses and will possess confidential
information about other employees of the Company and its Affiliates relating to
their education, experience, skills, abilities, compensation and benefits, and
inter-personal relationships with customers of the Company and its Affiliates.
The Executive recognizes that the information he possesses and will possess
about these other employees is not generally known, is of substantial value to
the Company and its Affiliates in developing their business and in securing and
retaining customers, and has been and will be acquired by him because of his
business position with the Company and its Affiliates. The Executive agrees that
at all times during the Executive's employment with the Company and for a period
of one (1) year thereafter, he will not, directly or indirectly, solicit or
recruit any employee of the Company or its Affiliates for the purpose of being
employed by him or by any competitor of the Company or its Affiliates on whose
behalf he is acting as an agent, representative or employee and that he will not
convey any such confidential information or trade secrets about other employees
of the Company and its Affiliates to any other person;
provided, however
, that it shall not constitute a solicitation or recruitment of employment in
violation of this paragraph to discuss employment opportunities with any
employee of the Company or its Affiliates who has either first contacted the
Executive or regarding whose employment the Executive has discussed with and
received the written approval of the Company's Vice President, Human Resources
(or, if such position is vacant, the Company's then Chief Executive Officer),
prior to making such solicitation or recruitment. In view of the nature of the
Executive's employment with the Company, the Executive likewise agrees that the
Company and its Affiliates would be irreparably harmed by any solicitation or
recruitment in violation of the terms of this paragraph and that the Company and
its Affiliates shall therefore be entitled to preliminary and/or permanent
injunctive relief prohibiting the Executive from engaging in any activity or
threatened activity in violation of the terms of this paragraph and to any other
relief available to them.
Survival of Provisions
. The obligations contained in Section 13(a) and Section 13(b) above shall
survive the termination of the Executive's employment within the Company and
shall be fully enforceable thereafter. If it is determined by a court of
competent jurisdiction in any state that any restriction in Section 13(a) or
Section 13(b) above is excessive in duration or scope or is unreasonable or
unenforceable under the laws of that state, it is the intention of the parties
that such restriction may be modified or amended by the court to render it
enforceable to the maximum extent permitted by the law of that state.
Release; Lump Sum Payment
. In the event the Executive's employment is terminated by the Company other
than for Cause, death or Disability or the Executive shall terminate his
employment for Good Reason, if the Executive agrees (i) to the covenants
described in Section 13(a) and Section 13(b) above, (ii) to execute a release
(the "
Release
") of all claims substantially in the form attached hereto as Exhibit A within
forty-five (45) days after the applicable Date of Termination and does not
revoke such release in accordance with the terms thereof, and (iii) to provide
the consulting services described in Section 13(e) below, then in consideration
for such covenants, the Company shall pay the Executive a lump sum amount in
cash equal to the sum of (A) the Executive's Annual Base Salary and (B) the
greater of the Executive's target bonus for the year of termination under the
Company's Executive Incentive Plan (or any successor plan) or the average of the
three (3) years' highest gross annual bonus awards, not necessarily consecutive,
paid by the Company (or its predecessor) to the Executive under the Company's
Executive Incentive Plan (or any predecessor or successor plan) in the five (5)
years preceding the year of termination. The amount specified in this Section
13(d) shall be paid as soon as practicable following the Executive's execution
of the Release, and the Executive shall have the right to elect to defer such
payment under the terms and conditions of the Company's nonqualified deferred
compensation plan.
Consulting
. If the Executive agrees to the covenants described in Section 13(d) above,
then the Executive shall have the obligation to provide consulting services to
the Company as an independent contractor, commencing on the Date of Termination
and ending on the second anniversary of the Date of Termination (the "
Consulting Period
"). The Executive shall hold himself available at reasonable times and on
reasonable notice to render such consulting services as may be so assigned to
him by the Board or the Company's then Chief Executive Officer;
provided, however
, that unless the parties otherwise agree, the consulting services rendered by
the Executive during the Consulting Period shall not exceed twenty (20) hours
each month. The Company agrees to use its best efforts during the Consulting
Period to secure the benefit of the Executive's consulting services so as to
minimize the interference with the Executive's other activities, including
requiring the performance of consulting services at the Company's offices only
when such services may not be reasonably performed off-site by the Executive.

Legal Fees. The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive in disputing in good faith any issue arising under
this Agreement relating to the termination of the Executive's employment or in
seeking in good faith to obtain or enforce any benefit or right provided by this
Agreement, but in each case only to the extent the arbitrator or court
determines that the Executive had a reasonable basis for such claim. Successors.
Assignment by Executive
. This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal representatives.
Successors and Assigns of Company
. This Agreement shall inure to the benefit of and be binding upon the Company,
its successors and assigns. The Company may not assign this Agreement to any
person or entity (except for a successor described in Section 15(c) below)
without the Executive's written consent.
Assumption
. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its businesses and/or assets as aforesaid that assumes and agrees
to perform this Agreement by operation of law or otherwise.

Administration Prior to Change in Control. Prior to a Change in Control, the
Compensation Committee shall have full and complete authority to construe and
interpret the provisions of this Agreement, to determine an individual's
entitlement to benefits under this Agreement, to make in its sole and absolute
discretion all determinations contemplated under this Agreement, to investigate
and make factual determinations necessary or advisable to administer or
implement this Agreement, and to adopt such rules and procedures as it deems
necessary or advisable for the administration or implementation of this
Agreement. All determinations made under this Agreement by the Compensation
Committee shall be final and binding on all interested persons. Prior to a
Change in Control, the Compensation Committee may delegate responsibilities for
the operation and administration of this Agreement to one or more officers or
employees of the Company. The provisions of this Section 16 shall terminate and
be of no further force and effect upon the occurrence of a Change in Control.
Miscellaneous.
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws
of the State of California, without reference to its principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended, modified,
repealed, waived, extended or discharged except by an agreement in writing
signed by the party against whom enforcement of such amendment, modification,
repeal, waiver, extension or discharge is sought. No person, other than pursuant
to a resolution of the Board or a committee thereof, shall have authority on
behalf of the Company to agree to amend, modify, repeal, waive, extend or
discharge any provision of this Agreement or anything in reference thereto.
Notices
. All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed, in either case, to the
Company's headquarters or to such other address as either party shall have
furnished to the other in writing in accordance herewith. Notices and
communications shall be effective when actually received by the addressee.
Severability
. The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
Taxes
. The Company may withhold from any amounts payable under this Agreement such
federal, state or local taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
No Waiver
. The Executive's or the Company's failure to insist upon strict compliance with
any provision hereof or any other provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 1 hereof, or the right of the Company to terminate
the Executive's employment for Cause pursuant to Section 1 hereof shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
Entire Agreement
;
Exclusive Benefit
. This instrument contains the entire agreement of the Executive, the Company or
any predecessor or subsidiary thereof with respect to any severance or
termination pay. The Pre-Change in Control Severance Payments, the Post-Change
in Control Severance Payments and all other benefits provided hereunder shall be
in lieu of any other severance payments to which the Executive is entitled under
any other severance plan or program or arrangement sponsored by the Company, as
well as pursuant to any individual employment or severance agreement that was
entered into by the Executive and the Company, and, upon the Effective Date of
this Agreement, all such plans, programs, arrangements and agreements are hereby
automatically superseded and terminated.
No Right of Employment
. Nothing in this Agreement shall be construed as giving the Executive any right
to be retained in the employ of the Company or shall interfere in any way with
the right of the Company to terminate the Executive's employment at any time,
with or without Cause.
Unfunded Obligation
. The obligations under this Agreement shall be unfunded. Benefits payable under
this Agreement shall be paid from the general assets of the Company. The Company
shall have no obligation to establish any fund or to set aside any assets to
provide benefits under this Agreement.
Termination
. Notwithstanding anything contained herein, this Agreement shall automatically
terminate and be of no further force and effect and no benefits shall be payable
hereunder in the event that the Company sells or otherwise disposes of any part
of the business or assets of the Company (other than such a sale or disposition
which is part of a transaction or series of transactions which would result in a
Change in Control) and as a result of such transaction, (i) the Executive
becomes an employee of the buyer of such business or assets (the "
Buyer
") or (ii) the Executive is offered employment by the Buyer in an executive
position with reasonably comparable status, compensation, benefits and severance
agreement and which is consistent with the Executive's experience and education,
but the Executive declines to accept such offer.
Term
. The term of this Agreement shall commence on the Effective Date and shall
continue until the third (3rd) anniversary of the Effective Date;
provided, however
, that commencing on the second (2nd) anniversary of the Effective Date (and
each anniversary of the Effective Date thereafter), the term of this Agreement
shall automatically be extended for one (1) additional year, unless at least
ninety (90) days prior to such date, the Company or the Executive shall give
written notice to the other party that it or he, as the case may be, does not
wish to so extend this Agreement. Notwithstanding the foregoing, if the Company
gives such written notice to the Executive less than two (2) years after a
Change in Control, the term of this Agreement shall be automatically extended
until the later of (A) the date that is one (1) year after the anniversary of
the Effective Date that follows such written notice or (B) the second (2nd)
anniversary of the Change in Control Date.
Counterparts
. This Agreement may be executed in several counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and the
same instrument.
Legal Fees
. The Company agrees to reimburse the Executive for the reasonable attorneys'
fees and costs incurred by the Executive in negotiating and documenting this
Agreement.

IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from its
Board of Directors, the Company have caused this Agreement to be executed as of
the day and year first above written.

SEMPRA ENERGY

/S/ G. JOYCE ROWLAND

G. Joyce Rowland

Senior Vice President, Human Resources

 

August 17, 2004

_____________________________________

Date

 

 

 

EXECUTIVE

 

/S/ DONALD E. FELSINGER

Donald E. Felsinger

 

August 17, 2004

_____________________________________

Date

EXHIBIT A

GENERAL RELEASE

This GENERAL RELEASE (the "Agreement"), dated ___________, is made by and
between ______________________________, a California corporation (the "Company")
and ___________________________ ("you" or "your").

WHEREAS, you and the Company have previously entered into that certain Severance
Pay Agreement dated ____________, 2006 (the "Severance Pay Agreement"); and

WHEREAS, Section 13(d) of the Severance Pay Agreement provides for the payment
of a benefit to you by the Company in consideration for certain covenants,
including your execution and non-revocation of a general release of claims by
you against the Company and its subsidiaries and affiliates.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, you and the Company hereby agree as follows:

ONE: Your signing of this Agreement confirms that your employment with the
Company shall terminate at the close of business on ____________, or earlier
upon our mutual agreement.

TWO: As a material inducement for the payment of the benefit under Section 13 of
that certain Severance Pay Agreement between you and the Company, and except as
otherwise provided in this Agreement, you and the Company hereby irrevocably and
unconditionally release, acquit and forever discharge the other from any and all
Claims either may have against the other. For purposes of this Agreement and the
preceding sentence, the words "Releasee" or "Releasees" and "Claim" or "Claims"
shall have the meanings set forth below:

(a) The words "Releasee" or "Releasees" shall refer to you and to the Company
and each of the Company's owners, stockholders, predecessors, successors,
assigns, agents, directors, officers, employees, representatives, attorneys,
advisors, parent companies, divisions, subsidiaries, affiliates (and agents,
directors, officers, employees, representatives, attorneys and advisors of such
parent companies, divisions, subsidiaries and affiliates) and all persons acting
by, through, under or in concert with any of them.

(b) The words "Claim" or "Claims" shall refer to any charges, complaints,
claims, liabilities, obligations, promises, agreements, controversies, damages,
actions, causes of action, suits, rights, demands, costs, losses, debts and
expenses (including attorneys' fees and costs actually incurred) of any nature
whatsoever, known or unknown, suspected or unsuspected, which you or the Company
now, in the past or, except as limited by law or regulation such as the Age
Discrimination in Employment Act (ADEA), in the future may have, own or hold
against any of the Releasees; provided, however, that the word "Claim" or
"Claims" shall not refer to any charges, complaints, claims, liabilities,
obligations, promises, agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses (including
attorneys' fees and costs actually incurred) arising under [identify severance,
employee benefits, stock option, indemnification and D&O and other agreements
containing duties, rights obligations etc. of either party that are to remain
operative]. Claims released pursuant to this Agreement by you and the Company
include, but are not limited to, rights arising out of alleged violations of any
contracts, express or implied, any tort, any claim that you failed to perform or
negligently performed or breached your duties during employment at the Company,
any legal restrictions on the Company's right to terminate employees or any
federal, state or other governmental statute, regulation, or ordinance,
including, without limitation: (1) Title VII of the Civil Rights Act of 1964
(race, color, religion, sex and national origin discrimination); (2) 42 U.S.C.
Sec. 1981 (discrimination); (3) 29 U.S.C. Sec. 621 634 (age discrimination); (4)
29 U.S.C. Sec. 206(d)(l) (equal pay); (5) 42 U.S.C. Sec. 12101, et seq.
(disability); (6) the California Constitution, Article I, Section 8
(discrimination); (7) the California Fair Employment and Housing Act
(discrimination, including race, color, national origin, ancestry, physical
handicap, medical condition, marital status, religion, sex or age); (8)
California Labor Code Section 1102.1 (sexual orientation discrimination); (9)
Executive Order 11246 (race, color, religion, sex and national origin
discrimination); (10) Executive Order 11141 (age discrimination); (11) Sec. 503
and 504 of the Rehabilitation Act of 1973 (handicap discrimination); (12) The
Worker Adjustment and Retraining Act (WARN Act); (13) the California Labor Code
(wages, hours, working conditions, benefits and other matters); (14) the Fair
Labor Standards Act (wages, hours, working conditions and other matters); the
Federal Employee Polygraph Protection Act (prohibits employer from requiring
employee to take polygraph test as condition of employment); and (15) any
federal, state or other governmental statute, regulation or ordinance which is
similar to any of the statutes described in clauses (1) through (14).

THREE: You and the Company expressly waive and relinquish all rights and
benefits afforded by any statute (including but not limited to Section 1542 of
the Civil Code of the State of California) which limits the effect of a release
with respect to unknown claims. You and the Company do so understanding and
acknowledging the significance of the release of unknown claims and the waiver
of statutory protection against a release of unknown claims (including but not
limited to Section 1542). Section 1542 of the Civil Code of the State of
California states as follows:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

Thus, notwithstanding the provisions of Section 1542 or of any similar statute,
and for the purpose of implementing a full and complete release and discharge of
the Releasees, you and the Company expressly acknowledge that this Agreement is
intended to include in its effect, without limitation, all Claims which are
known and all Claims which you or the Company do not know or suspect to exist in
your or the Company's favor at the time of execution of this Agreement and that
this Agreement contemplates the extinguishment of all such Claims.

FOUR: The parties acknowledge that they might hereafter discover facts different
from, or in addition to, those they now know or believe to be true with respect
to a Claim or Claims released herein, and they expressly agree to assume the
risk of possible discovery of additional or different facts, and agree that this
Agreement shall be and remain effective, in all respects, regardless of such
additional or different discovered facts.

FIVE: You hereby represent and acknowledge that you have not filed any Claim of
any kind against the Company or others released in this Agreement. You further
hereby expressly agree never to initiate against the Company or others released
in this Agreement any administrative proceeding, lawsuit or any other legal or
equitable proceeding of any kind asserting any Claims that are released in this
Agreement.

The Company hereby represents and acknowledges that it has not filed any Claim
of any kind against you or others released in this Agreement. The Company
further hereby expressly agrees never to initiate against you or others released
in this Agreement any administrative proceeding, lawsuit or any other legal or
equitable proceeding of any kind asserting any Claims that are released in this
Agreement.

SIX: You hereby represent and agree that you have not assigned or transferred,
or attempted to have assigned or transfer, to any person or entity, any of the
Claims that you are releasing in this Agreement.

The Company hereby represents and agrees that it has not assigned or
transferred, or attempted to have assigned or transfer, to any person or entity,
any of the Claims that it is releasing in this Agreement.

SEVEN: As a further material inducement to the Company to enter into this
Agreement, you hereby agree to indemnify and hold each of the Releasees harmless
from all loss, costs, damages, or expenses, including without limitation,
attorneys' fees incurred by the Releasees, arising out of any breach of this
Agreement by you or the fact that any representation made in this Agreement by
you was false when made.

As a further material inducement to you to enter into this Agreement, the
Company hereby agrees to indemnify and hold each of the Releasees harmless from
all loss, costs, damages, or expenses, including without limitation, attorneys'
fees incurred by the Releasees, arising out of any breach of this Agreement by
it or the fact that any representation made in this Agreement by it was
knowingly false when made.

EIGHT: You and the Company represent and acknowledge that in executing this
Agreement, neither is relying upon any representation or statement not set forth
in this Agreement or the Severance Agreement.

NINE:

(a) This Agreement shall not in any way be construed as an admission by the
Company that it has acted wrongfully with respect to you or any other person, or
that you have any rights whatsoever against the Company, and the Company
specifically disclaims any liability to or wrongful acts against you or any
other person, on the part of itself, its employees or its agents. This Agreement
shall not in any way be construed as an admission by you that you have acted
wrongfully with respect to the Company, or that you failed to perform your
duties or negligently performed or breached your duties, or that the Company had
good cause to terminate your employment.

(b) If you are a party or are threatened to be made a party to any proceeding by
reason of the fact that you were an officer or director of the Company, the
Company shall indemnify you against any expenses (including reasonable
attorneys' fees; provided, that counsel has been approved by the Company prior
to retention, which approval shall not be unreasonably withheld), judgments,
fines, settlements and other amounts actually or reasonably incurred by you in
connection with that proceeding; provided, that you acted in good faith and in a
manner you reasonably believed to be in the best interest of the Company. The
limitations of California Corporations Code Section 317 shall apply to this
assurance of indemnification.

(c) You agree to cooperate with the Company and its designated attorneys,
representatives and agents in connection with any actual or threatened judicial,
administrative or other legal or equitable proceeding in which the Company is or
may become involved. Upon reasonable notice, you agree to meet with and provide
to the Company or its designated attorneys, representatives or agents all
information and knowledge you have relating to the subject matter of any such
proceeding. The Company agrees to reimburse you for any reasonable costs you
incur in providing such cooperation.

TEN: This Agreement is made and entered into in California. This Agreement shall
in all respects be interpreted, enforced and governed by and under the laws of
the State of California and applicable Federal law. Any dispute about the
validity, interpretation, effect or alleged violation of this Agreement (an
"arbitrable dispute") must be submitted to arbitration in San Diego, California.
Arbitration shall take place before an experienced employment arbitrator
licensed to practice law in such state and selected in accordance with the then
existing JAMS arbitration rules applicable to employment disputes; provided,
however, that in any event, the arbitrator shall allow reasonable discovery.
Arbitration shall be the exclusive remedy for any arbitrable dispute. The
arbitrator in any arbitrable dispute shall not have authority to modify or
change the Agreement in any respect. You and the Company shall each be
responsible for payment of one-half (1/2) the amount of the arbitrator's fee(s);
provided, however, that in no event shall you be required to pay any fee or cost
of arbitration that is unique to arbitration or exceeds the costs you would have
incurred had any arbitrable dispute been pursued in a court of competent
jurisdiction. The Company shall make up any shortfall. Should any party to this
Agreement institute any legal action or administrative proceeding against the
other with respect to any Claim waived by this Agreement or pursue any
arbitrable dispute by any method other than arbitration, the prevailing party
shall be entitled to recover from the non-prevailing party all damages, costs,
expenses and attorneys' fees incurred as a result of that action. The
arbitrator's decision and/or award shall be rendered in writing and will be
fully enforceable and subject to an entry of judgment by the Superior Court of
the State of California for the County of San Diego, or any other court of
competent jurisdiction.

ELEVEN: Both you and the Company understand that this Agreement is final and
binding eight (8) days after its execution and return. Should you nevertheless
attempt to challenge the enforceability of this Agreement as provided in
Paragraph TEN or, in violation of that Paragraph, through litigation, as a
further limitation on any right to make such a challenge, you shall initially
tender to the Company, by certified check delivered to the Company, all monies
received pursuant to Section 13(d) of the Severance Pay Agreement, plus
interest, and invite the Company to retain such monies and agree with you to
cancel this Agreement and void the Company's obligations under Section 13(d) of
the Severance Pay Agreement. In the event the Company accepts this offer, the
Company shall retain such monies and this Agreement shall be canceled and the
Company shall have no obligation under Section 13(d) of the Severance Pay
Agreement. In the event the Company does not accept such offer, the Company
shall so notify you and shall place such monies in an interest-bearing escrow
account pending resolution of the dispute between you and the Company as to
whether or not this Agreement and the Company's obligations under Section 13(d)
of the Severance Pay Agreement shall be set aside and/or otherwise rendered
voidable or unenforceable. Additionally, any consulting agreement then in effect
between you and the Company shall be immediately rescinded with no requirement
of notice.

TWELVE: Any notices required to be given under this Agreement shall be delivered
either personally or by first class United States mail, postage prepaid,
addressed to the respective parties as follows:

To Company: [TO COME]

Attn: [TO COME]

To You: _________________
_________________
_________________

THIRTEEN: You understand and acknowledge that you have been given a period of
forty-five (45) days to review and consider this Agreement (as well as
statistical data on the persons eligible for similar benefits) before signing it
and may use as much of this forty-five (45) day period as you wish prior to
signing. You are encouraged, at your personal expense, to consult with an
attorney before signing this Agreement. You understand and acknowledge that
whether or not you do so is your decision. You may revoke this Agreement within
seven (7) days of signing it. If you wish to revoke, the Company's Vice
President, Human Resources must receive written notice from you no later than
the close of business on the seventh (7th) day after you have signed the
Agreement. If revoked, this Agreement shall not be effective and enforceable,
and you will not receive payments or benefits under Section 13(d) of the
Severance Pay Agreement.

FOURTEEN: This Agreement constitutes the entire agreement of the parties hereto
and supersedes any and all other agreements (except the Severance Pay Agreement)
with respect to the subject matter of this Agreement, whether written or oral,
between you and the Company. All modifications and amendments to this Agreement
must be in writing and signed by the parties.

FIFTEEN: Each party agrees, without further consideration, to sign or cause to
be signed, and to deliver to the other party, any other documents and to take
any other action as may be necessary to fulfill the obligations under this
Agreement.

SIXTEEN: If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
application; and to this end the provisions of this Agreement are declared to be
severable.

SEVENTEEN: This Agreement may be executed in counterparts.

I have read the foregoing General Release, and I accept and agree to the
provisions it contains and hereby execute it voluntarily and with full
understanding of its consequences. I am aware it includes a release of all known
or unknown claims.

DATED: __________

__________________________________________

DATED: __________

__________________________________________

You acknowledge that you first received this Agreement on [date].

_________________________