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What changed in Sempra's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sempra's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+764 added−699 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in Sempra's 2024 10-K

764 paragraphs added · 699 removed · 555 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

144 edited+48 added−35 removed93 unchanged
Biggest changeFolkmann 56 President August 2020 to present Chief Financial Officer March 2015 to present Senior Vice President August 2019 to July 2020 Controller, Chief Accounting Officer and Treasurer March 2015 to August 2020 Vice President March 2015 to August 2019 Vice President, Controller, Chief Financial Officer, Chief Accounting Officer and Treasurer, SoCalGas March 2015 to June 2019 Kevin Geraghty 58 Chief Operating Officer June 2022 to present Chief Safety Officer January 2021 to present Senior Vice President - Electric Operations July 2020 to June 2022 Chief Operating Officer and Senior Vice President, Operations, Nevada Energy, an electric and natural gas public utility in Nevada October 2017 to May 2020 Valerie A.
Biggest changeGeraghty 59 Chief Operating Officer June 2022 to present Chief Safety Officer January 2021 to present Senior Vice President, Electric Operations July 2020 to June 2022 Chief Operating Officer and Senior Vice President, Operations, Nevada Energy, an electric and natural gas public utility in Nevada October 2017 to May 2020 Erbin B.
The FERC regulates SDG&E’s and SoCalGas’ interstate sale and transportation of natural gas. The FERC also regulates SDG&E’s transmission and wholesale sales of electricity in interstate commerce, transmission access, rates of return on transmission investment, rates of depreciation, electric rates involving sales for resale and the application of the uniform system of accounts. The U.S.
The FERC regulates SDG&E’s and SoCalGas’ interstate sale and transportation of natural gas. The FERC also regulates SDG&E’s transmission and wholesale sales of electricity in interstate commerce, transmission access, rates of return and rates of depreciation on transmission investment, electric rates involving sales for resale and the application of the uniform system of accounts. The U.S.
COMPANY WEBSITES Our Registrants’ website addresses are: ▪ Sempra – www.sempra.com ▪ SDG&E – www.sdge.com ▪ SoCalGas – www.socalgas.com We make available free of charge on the Sempra website, and for SDG&E and SoCalGas, via a hyperlink on their websites, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
COMPANY WEBSITES The Registrants’ website addresses are: ▪ Sempra – www.sempra.com ▪ SDG&E – www.sdge.com ▪ SoCalGas – www.socalgas.com We make available free of charge on the Sempra website, and for SDG&E and SoCalGas, via a hyperlink on their websites, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
Other external factors such as weather, the price of, demand for, and supply sources of electricity, the use of and further development of renewable energy resources and energy storage, development of or requirements for new natural gas supply sources, demand for natural gas outside California, storage levels, transport capacity and availability of supply into California and general economic conditions can also result in significant shifts in the market price of natural gas, which may in turn impact demand.
Other external factors such as weather, the price of, demand for, and supply sources of electricity, the use of and further development of renewable energy sources and energy storage, development of or requirements for new natural gas supply sources, demand for natural gas outside California, storage levels, transport capacity and availability of supply into California and general economic conditions can also result in significant shifts in the market price of natural gas, which may in turn impact demand.
Authorized costs are recovered as the commodity or service is delivered. To the extent authorized amounts collected vary from actual costs, the differences are generally recovered or refunded in a subsequent period based on the nature of the balancing account mechanism. Generally, the revenue recognition criteria for balanced costs billed to customers are met when the costs are incurred.
Authorized costs are recovered as the commodity or service is delivered. To the extent authorized amounts collected vary from actual costs, the differences are generally recovered or refunded in a subsequent period based on the nature of the balancing account mechanism. In general, the revenue recognition criteria for balanced costs billed to customers are met when the costs are incurred.
Ecogas faces competition from other distributors of natural gas in each of its three distribution zones in Mexicali, Chihuahua and La Laguna-Durango, Mexico as other distributors of natural gas build or consider building natural gas distribution systems. Sempra Infrastructure’s pipeline and storage facilities businesses compete with other regulated and unregulated pipeline and storage facilities.
Demand and Competition. Ecogas faces competition from other distributors of natural gas in each of its three distribution zones in Mexicali, Chihuahua and La Laguna-Durango, Mexico as other distributors of natural gas build or consider building natural gas distribution systems. Sempra Infrastructure’s pipeline and storage facilities businesses compete with other regulated and unregulated pipeline and storage facilities.
We are primarily focused on transmission and distribution investments, among other areas, that we believe are capable of producing stable cash flows and earnings visibility, with the goals of delivering safe, reliable and increasingly clean forms of energy to customers and increasing shareholder value.
We are primarily focused on transmission and distribution investments, among other areas, that we believe are capable of producing stable cash flows and earnings visibility, with the goals of delivering safe, reliable and increasingly clean forms of energy affordably to customers and increasing shareholder value.
Distribution revenues from residential and small business users are based on actual monthly consumption (kWh) and distribution revenues from large commercial and industrial users are based on, depending on size and annual load factor, either actual monthly demand (kW) or the greater of actual monthly demand (kW) or 80% of peak monthly demand during the prior eleven months.
Distribution revenues from residential and small business users are generally based on actual monthly consumption (kWh) and distribution revenues from large commercial and industrial users are based on, depending on size and annual load factor, either actual monthly demand (kW) or the greater of actual monthly demand (kW) or 80% of peak monthly demand during the prior eleven months.
Sempra Infrastructure is evaluating the following development opportunities: ▪ Cameron LNG Phase 2 project, an expansion of the Cameron LNG Phase 1 facility that would add one liquefaction train and debottlenecking capacity from the existing three trains ▪ ECA LNG Phase 2 project, a large-scale natural gas liquefaction project to be located at the site of Sempra Infrastructure’s existing ECA Regas Facility in Baja California, Mexico ▪ PA LNG Phase 2 project, a large-scale natural gas liquefaction project and associated infrastructure to be located adjacent to the PA LNG Phase 1 project in the vicinity of Port Arthur, Texas ▪ Vista Pacifico LNG project, a mid-scale natural gas liquefaction project and associated infrastructure in the vicinity of Topolobampo in Sinaloa, Mexico No final investment decision has been reached for any of these potential projects.
Sempra Infrastructure is pursuing or evaluating the following development opportunities: ▪ Cameron LNG Phase 2 project, an expansion of the Cameron LNG Phase 1 facility that would add one liquefaction train and debottlenecking capacity from the existing three trains ▪ ECA LNG Phase 2 project, a large-scale natural gas liquefaction project to be located at the site of Sempra Infrastructure’s existing ECA Regas Facility in Baja California, Mexico ▪ PA LNG Phase 2 project, a large-scale natural gas liquefaction project and associated infrastructure to be located adjacent to the PA LNG Phase 1 project in the vicinity of Port Arthur, Texas ▪ Vista Pacifico LNG project, a mid-scale natural gas liquefaction project and associated infrastructure in the vicinity of Topolobampo in Sinaloa, Mexico No final investment decision has been reached for any of these potential projects.
Cost of Capital Proceedings A CPUC cost of capital proceeding every three years determines a utility’s authorized capital structure and return on rate base, which is a weighted-average of the authorized returns on debt, preferred equity and common equity (referred to as return on equity or ROE), weighted on a basis consistent with the authorized capital structure.
Cost of Capital Proceedings A CPUC cost of capital proceeding every three years determines a utility’s authorized capital structure and return on rate base, which is a weighted average of the authorized returns on debt, preferred equity and common equity (referred to as ROE), weighted on a basis consistent with the authorized capital structure.
The portfolio of resources includes renewable energy infrastructure, a natural gas-fired power plant, as well as hydrogen fuel production and advanced carbon capture, usage and storage technologies that are under development. Renewable Power Generation.
The portfolio of resources includes renewable energy infrastructure, a natural gas-fired power plant, as well as potential hydrogen fuel production and advanced carbon capture, usage and storage technologies that are under development. Renewable Power Generation.
Oncor Holdings is an indirect, wholly owned entity of Sempra that owns an 80.25% interest in Oncor. TTI owns the remaining 19.75% interest in Oncor. Sempra owns an indirect 50% interest in Sharyland Holdings, which owns a 100% interest in Sharyland Utilities.
Oncor Holdings is a wholly owned entity of Sempra that owns an 80.25% interest in Oncor. TTI owns the remaining 19.75% interest in Oncor. Sempra owns a 50% interest in Sharyland Holdings, which owns a 100% interest in Sharyland Utilities.
Other external factors, such as the price of purchased power, the use of hydroelectric power, the use of and further development of renewable energy resources and energy storage, the development of or requirements for new natural gas supply sources, demand for and supply of natural gas and general economic conditions, can also result in significant shifts in the market price of electricity, which may in turn impact demand.
Other external factors, such as the price of purchased power, the use and further development of renewable energy sources and energy storage, the development of or requirements for new natural gas supply sources, demand for and supply of natural gas and general economic conditions, can also result in significant shifts in the market price of electricity, which may in turn impact demand.
These franchise agreements have been challenged in two lawsuits that we discuss in Note 16 of the Notes to Consolidated Financial Statements. SoCalGas has natural gas franchise agreements with the 12 counties and the 232 cities in its service territory. These franchise agreements allow SoCalGas to locate, operate and maintain facilities for the transmission and distribution of natural gas.
These franchise agreements have been challenged in two lawsuits that we discuss in Note 15 of the Notes to Consolidated Financial Statements. SoCalGas has natural gas franchise agreements with the 12 counties and the 232 cities in its service territory. These franchise agreements allow SoCalGas to locate, operate and maintain facilities for the transmission and distribution of natural gas.
The authorized return on rate base approved by the CPUC is the rate that SDG&E and SoCalGas use to establish customer rates to finance investments in CPUC-regulated electric distribution and generation, natural gas distribution, transmission and storage assets, as well as general plant and information technology systems investments to support operations.
The authorized return on rate base approved by the CPUC is the rate that SDG&E and SoCalGas use to establish customer rates to finance investments in CPUC-regulated electric distribution and generation, natural gas distribution, transmission and storage assets, as well as general PP&E and information technology systems investments to support operations.
SoCalGas owns four natural gas storage facilities with a combined working gas capacity of 137 Bcf and 128 injection, withdrawal and observation wells that provide natural gas storage service. SoCalGas’ and SDG&E’s core customers, along with certain third-party market participants, are allocated a portion of SoCalGas’ storage capacity.
SoCalGas owns four natural gas storage facilities with a combined working gas capacity of 137 Bcf and 126 injection, withdrawal and observation wells that provide natural gas storage service. SoCalGas’ and SDG&E’s core customers, along with certain third-party market participants, are allocated a portion of SoCalGas’ storage capacity.
ENVIRONMENTAL MATTERS We discuss environmental issues affecting us in Note 16 of the Notes to Consolidated Financial Statements and “Part I – Item 1A. Risk Factors.” You should read the following additional information in conjunction with those discussions.
ENVIRONMENTAL MATTERS We discuss environmental issues affecting us in Note 15 of the Notes to Consolidated Financial Statements and “Part I – Item 1A. Risk Factors.” You should read the following additional information in conjunction with those discussions.
Sempra Infrastructure develops, builds, invests in and operates renewable energy generation facilities that have long-term PPAs to sell the electricity they generate to their customers, which are generally load serving entities, as well as industrial and other customers.
Sempra Infrastructure develops, builds and operates renewable energy generation facilities that have long-term PPAs to sell the electricity they generate to their customers, which are generally load-serving entities, as well as industrial and other customers.
The NRC and various state regulations require extensive review of these facilities’ safety, radiological and environmental aspects. We provide further discussion of SONGS matters, including the closure and decommissioning of the facility, in Note 15 of the Notes to Consolidated Financial Statements.
The NRC and various state regulations require extensive review of these facilities’ safety, radiological and environmental aspects. We provide further discussion of SONGS matters, including the closure and decommissioning of the facility, in Note 14 of the Notes to Consolidated Financial Statements.
Electricity demand is dependent on the health and expansion of the Southern California economy, prices of alternative energy products, consumer preference, environmental regulations, legislation, renewable power generation, the effectiveness of energy efficiency programs, demand-side management impact and distributed generation resources. California’s energy policy supports increased electrification, particularly electrification of vehicles, which could significantly increase sales volumes in the coming years.
Electricity demand is dependent on the health and expansion of the Southern California economy, prices of alternative energy products, consumer preference, environmental regulations, legislation, renewable power generation, the effectiveness of energy efficiency programs, demand-side management impact and DER. California’s energy policy supports increased electrification, particularly electrification of vehicles, which could significantly increase sales volumes in the coming years.
Certain FERC transmission development projects are open to competition, allowing independent developers to compete with incumbent utilities for the construction and operation of transmission facilities. 2023 Form 10-K | 14 Table of Contents SoCalGas SoCalGas is a regulated public utility that owns and operates a natural gas distribution, transmission and storage system that delivers natural gas to a population of, at December 31, 2023, approximately 21 million, covering an approximate 24,000 square mile service territory that encompasses Southern California and portions of central California (excluding San Diego County, the City of Long Beach and the desert area of San Bernardino County).
Certain FERC transmission development projects are open to competition, allowing independent developers to compete with incumbent utilities for the construction and operation of transmission facilities. 2024 Form 10-K | 15 Table of Contents SoCalGas SoCalGas is a regulated public utility that owns and operates a natural gas distribution, transmission and storage system that delivers natural gas to a population of, at December 31, 2024, approximately 21.1 million, covering an approximate 24,000 square mile service territory that encompasses Southern California and portions of central California (excluding San Diego County, the City of Long Beach and the desert area of San Bernardino County).
These transmission line projects are necessary to meet reliability needs, support energy production and increase bulk power transfer capability. 2023 Form 10-K | 26 Table of Contents Oncor and Sharyland Utilities are subject to reliability standards adopted and enforced by the Texas Reliability Entity, Inc., an independent organization that develops reliability standards for the ERCOT region and monitors and enforces compliance with the standards of the North American Electric Reliability Corporation, including critical infrastructure protection, and ERCOT protocols.
These transmission line projects are necessary to meet reliability needs, support energy production and increase bulk power transfer capability. 2024 Form 10-K | 28 Table of Contents Oncor and Sharyland Utilities are subject to reliability standards adopted and enforced by the Texas Reliability Entity, Inc., an independent organization that develops reliability standards for the ERCOT region and monitors and enforces compliance with the standards of the North American Electric Reliability Corporation, including critical infrastructure protection, and ERCOT protocols.
One of the larger sources for natural gas demand is electric generation. Natural gas-fired electric generation within Southern California (and demand for natural gas supplied to such plants) competes with electric power generated throughout the western U.S.
One of the larger drivers of natural gas demand is electric generation. Natural gas-fired electric generation within Southern California (and demand for natural gas supplied to such plants) competes with electric power generated throughout the western U.S.
The demand for natural gas may also fluctuate due to volatility in the demand for electricity due to seasonality, weather conditions and other impacts, and the availability of competing supplies of electricity, such as hydroelectric generation and other renewable energy sources.
The demand for natural gas may also fluctuate due to volatility in the demand for electricity due to seasonality, weather conditions and other impacts, and the availability of competing supplies of electricity, such as renewable energy sources.
Electricity demand is also impacted by seasonal weather patterns (or “seasonality”), tending to increase in the summer months to meet the cooling load and in the winter months to meet the heating load. Competition. SDG&E faces competition to serve its customer load from distributed and local power generation growth, including solar installations.
Electricity demand is also impacted by seasonal weather patterns (or “seasonality”), tending to increase in the summer months to meet the cooling load and in the winter months to meet the heating load. Competition. SDG&E faces competition to serve its customer load from distributed and local power generation growth, including DER.
The references to our websites in this report are not active hyperlinks and the information contained on, or that can be accessed through, the websites of Sempra, SDG&E and SoCalGas or any other website referenced herein is not a part of or incorporated by reference in this report or any other document that we file with or furnish to the SEC. 2023 Form 10-K | 33 Table of Contents
The references to our websites in this report are not active hyperlinks and the information contained on, or that can be accessed through, the websites of Sempra, SDG&E and SoCalGas or any other website referenced herein is not a part of or incorporated by reference in this report or any other document that we file with or furnish to the SEC. 2024 Form 10-K | 37 Table of Contents
As is prevalent in the industry, subject to regulatory limitations, SoCalGas typically injects natural gas into storage during the months of April through October, and usually withdraws natural gas from storage during the months of November through March. 2023 Form 10-K | 17 Table of Contents Sempra Texas Utilities Sempra Texas Utilities is comprised of our equity method investments in Oncor Holdings and Sharyland Holdings.
As is prevalent in the industry, subject to regulatory limitations, SoCalGas typically injects natural gas into storage during the months of April through October and usually withdraws natural gas from storage during the months of November through March. 2024 Form 10-K | 18 Table of Contents Sempra Texas Utilities Sempra Texas Utilities is comprised of our equity method investments in Oncor Holdings and Sharyland Holdings.
To a small degree related to limited interconnections to other markets, Oncor’s electric transmission revenues are provided under tariffs approved by the FERC. The NRC oversees the licensing, construction, operation and decommissioning of nuclear facilities in the U.S., including SONGS, in which SDG&E owns a 20% interest and which was permanently retired in 2013.
To a small degree related to limited interconnections to other markets, Oncor’s electric transmission revenues are provided under tariffs approved by the FERC. The NRC oversees the licensing, construction, operation and decommissioning of nuclear facilities in the U.S., including SONGS, in which SDG&E owns a 20% interest, and which permanently ceased operations in 2013.
Federal;” ▪ has jurisdiction over the proposed construction of major new electric generation, transmission and distribution, and natural gas storage, transmission and distribution facilities in California; ▪ conducts reviews and audits of utility performance and compliance with regulatory guidelines and conducts investigations related to various matters, such as safety, reliability and planning, deregulation, competition and the environment; and ▪ regulates the interactions and transactions of SDG&E and SoCalGas with Sempra and its other affiliates.
Federal;” ▪ has jurisdiction over the proposed construction of major new electric generation, transmission and distribution, and natural gas storage, transmission and distribution facilities in California; ▪ conducts reviews and audits of utility performance and compliance with regulatory guidelines and conducts investigations related to various matters, such as safety, reliability and planning, deregulation, competition and the environment; and ▪ regulates the interactions and transactions of SDG&E and SoCalGas with Sempra and other affiliates, including their marketing functions.
These responsibilities consist of the ownership, management, construction, maintenance and operation of the electricity distribution system within its certificated service area. Oncor’s distribution system receives electricity from the transmission system through substations and distributes electricity to end-users and wholesale customers through 3,722 distribution feeders at December 31, 2023.
These responsibilities consist of the ownership, management, construction, maintenance and operation of the electricity distribution system within its certificated service area. Oncor’s distribution system receives electricity from the transmission system through substations and distributes electricity to end-users and wholesale customers through 3,757 distribution feeders at December 31, 2024.
Oncor operates in certificated areas designated by the PUCT. The majority of Oncor’s service territory is single certificated, with Oncor as the only certificated electric transmission and distribution provider. However, in multi-certificated areas of Texas, Oncor competes with certain other utilities and rural electric cooperatives for the right to serve end-use customers.
The majority of Oncor’s service territory is single certificated, with Oncor as the only certificated electric transmission and distribution provider. However, in multi-certificated areas of Texas, Oncor competes with certain other utilities and rural electric cooperatives for the right to serve end-use customers.
MD&A – Capital Resources and Liquidity – Sempra Infrastructure.” 2023 Form 10-K | 23 Table of Contents RENEWABLE POWER GENERATION Location Contract expiration date Nameplate capacity (MW) Wind power generation facilities: ESJ – first phase Tecate, Baja California 2035 155 ESJ – second phase Tecate, Baja California 2042 108 Ventika Nuevo León, Mexico 2036 252 Solar power generation facilities: Border Solar Ciudad Juarez, Chihuahua 2032 and 2037 150 Don Diego Solar Benjamin Hill, Sonora 2034 and 2037 125 Pima Solar Caborca, Sonora 2038 110 Rumorosa Solar Tecate, Baja California 2034 44 Tepezalá Solar Aguascalientes 2034 100 Total 1,044 Natural Gas-Fired Generation.
MD&A – Capital Resources and Liquidity – Sempra Infrastructure.” RENEWABLE POWER GENERATION Location Contract expiration date Nameplate capacity (MW) Wind power generation facilities: ESJ – first phase Tecate, Baja California 2035 155 ESJ – second phase Tecate, Baja California 2042 108 Ventika Nuevo León, Mexico 2036 252 Solar power generation facilities: Border Solar Ciudad Juarez, Chihuahua 2032 and 2037 150 Don Diego Solar Benjamin Hill, Sonora 2034 and 2037 125 Pima Solar Caborca, Sonora 2038 110 Rumorosa Solar Tecate, Baja California 2034 44 Tepezalá Solar Aguascalientes 2034 100 Total 1,044 Natural Gas-Fired Generation.
Sempra Infrastructure owns and operates the ECA Regas Facility in Baja California, Mexico, which is capable of processing one Bcf of natural gas per day and has a storage capacity of 320,000 cubic meters in two tanks of 160,000 cubic meters each.
SI Partners owns and operates the ECA Regas Facility in Baja California, Mexico, which is capable of processing one Bcf of natural gas per day and has a storage capacity of 320,000 cubic meters in two tanks of 160,000 cubic meters each.
We did not experience any major work stoppages in 2023 and we maintain constructive relations with our labor unions.
We did not experience any major work stoppages in 2024, and we maintain constructive relations with our labor unions.
There are also several in-state gas interconnections allowing for delivery of California-produced gas, including a number of direct connections from renewable natural gas producers. 2023 Form 10-K | 15 Table of Contents SoCalGas purchases natural gas under short-term and long-term contracts and on the spot market for SDG&E’s and SoCalGas’ core customers.
There are also several in-state gas interconnections allowing for delivery of California-produced gas, including a number of direct connections from biomethane producers. 2024 Form 10-K | 16 Table of Contents SoCalGas purchases natural gas under short-term and long-term contracts and on the spot market for SDG&E’s and SoCalGas’ core customers.
The service and distribution fees charged by Ecogas are regulated by the CRE, which performs a review of rates every five years and monitors prices charged to end-users. In the fourth quarter of 2020, Ecogas filed its rate case for 2021 through 2025, which was approved by the CRE in December 2023. The tariffs operate under a return-on-asset-base model.
The service and distribution fees charged by Ecogas are regulated by the CRE, which performs a review of rates every five years and monitors prices charged to end-users. Ecogas’ rate case for 2021 through 2025 was approved by the CRE in December 2023. The tariffs operate under a return-on-asset-base model.
Winn 60 Chief Executive Officer August 2020 to present Chief Operating Officer January 2017 to July 2020 Bruce A.
Winn 61 Chief Executive Officer August 2020 to present Chief Operating Officer January 2017 to July 2020 Bruce A.
Other Cost-Based Recovery The CPUC, and the FERC as it relates to SDG&E, authorize SDG&E and SoCalGas to collect revenue requirements from customers for operating and capital-related costs (depreciation, taxes and return on rate base), including: ▪ costs to purchase natural gas and electricity; ▪ costs associated with administering public purpose, demand response, environmental compliance, and customer energy efficiency programs; ▪ other programmatic activities, such as gas distribution, gas transmission, gas storage integrity management, and wildfire mitigation; and ▪ costs associated with third-party liability insurance premiums.
Other Cost-Based Regulatory Recovery The CPUC, and the FERC as it relates to SDG&E, authorize SDG&E and SoCalGas to collect, or in the case of CPUC programmatic activities, to apply for additional, revenue requirements beyond base rates from customers for certain operating and capital related costs (depreciation, taxes and return on rate base), including for: ▪ costs to purchase natural gas and electricity; ▪ costs associated with administering public purpose, demand response, environmental compliance, and customer energy efficiency programs; ▪ other programmatic activities, such as gas distribution, gas transmission, gas storage integrity management and wildfire mitigation; and ▪ costs associated with third party liability insurance premiums.
The CCM benchmark rate is the basis of comparison to determine if the CCM is triggered in each measurement period, which occurs if the change in the applicable Moody’s utility bond index relative to the CCM benchmark rate is larger than plus or minus 1.000% at the end of the measurement period.
The CCM benchmark rate is the basis of comparison to determine if the CCM is triggered in each measurement period, which occurs if the change in the applicable Moody’s utility bond index relative to the CCM benchmark rate is larger than plus or minus 1.00% for the measurement period.
At December 31, 2023, 2022 and 2021, the residential and commercial rooftop solar capacity in SDG&E’s territory totaled 2,154 MW, 1,864 MW and 1,620 MW, respectively.
At December 31, 2024, 2023 and 2022, the residential and commercial rooftop solar capacity in SDG&E’s territory totaled 2,318 MW, 2,154 MW and 1,864 MW, respectively.
The CCM, if triggered, would automatically update the authorized cost of debt based on actual costs and update the authorized ROE upward or downward by one-half of the difference between the CCM benchmark rate and the applicable Moody’s utility bond index, subject to regulatory approval.
The CCM, if triggered, would automatically update the authorized cost of debt based on actual costs and update the authorized ROE upward or downward by 20% of the difference between the CCM benchmark rate and the applicable Moody’s utility bond index during the measurement period, subject to regulatory approval.
Oncor’s transmission and distribution assets are located in over 120 counties and more than 400 incorporated municipalities, including the cities of Dallas and Fort Worth and surrounding suburbs, as well as Waco, Wichita Falls, Odessa, Midland, Tyler, Temple, Killeen and Round Rock, among others.
Oncor’s transmission and distribution assets are located in over 120 counties and more than 400 incorporated municipalities, including the 2024 Form 10-K | 19 Table of Contents cities of Dallas and Fort Worth and surrounding suburbs, as well as Waco, Wichita Falls, Odessa, Midland, Tyler, Temple, Killeen and Round Rock, among others.
Sedgwick 57 Executive Vice President and Chief Financial Officer January 2024 to present Chief Administrative Officer December 2021 to December 2023 Chief Human Resources Officer September 2020 to December 2023 Senior Vice President September 2020 to December 2021 Chief Human Resources Officer and Chief Administrative Officer, SDG&E April 2019 to September 2020 Vice President and Treasurer August 2018 to April 2019 Justin C.
Sedgwick 58 Executive Vice President and Chief Financial Officer January 2024 to present Chief Administrative Officer December 2021 to December 2023 Chief Human Resources Officer September 2020 to December 2023 Senior Vice President September 2020 to December 2021 Chief Human Resources Officer and Chief Administrative Officer, SDG&E April 2019 to September 2020 Justin C.
California requires certain electric retail sellers, including SDG&E, to deliver a significant percentage of their retail energy sales from renewable energy sources. The rules governing this requirement, administered by the CPUC and the CEC, are generally known as the RPS Program.
Sempra Infrastructure is also subject to the rules and regulations of CARB. California requires certain electric retail sellers, including SDG&E, to deliver a significant percentage of their retail energy sales from renewable energy sources. The rules governing this requirement, administered by the CPUC and the CEC, are generally known as the RPS Program.
Other U.S. State and Local Territories Regulation The South Coast Air Quality Management District is the air pollution control agency responsible for regulating stationary sources of air pollution in the South Coast Air Basin in Southern California. The district’s territory covers all of Orange County and the urban portions of Los Angeles, San Bernardino and Riverside counties.
The South Coast Air Quality Management District is the air pollution control agency responsible for regulating stationary sources of air pollution in the South Coast Air Basin in Southern California. The district’s territory covers all of Orange County and the urban portions of Los Angeles, San Bernardino and Riverside counties.
The purpose of the framework is to help ensure SDG&E’s procurement cost obligations are more equitably shared among customers served by SDG&E and customers now served by CCA and DA. San Diego’s mild climate and SDG&E’s robust energy efficiency programs contribute to lower consumption by our customers. Rooftop solar installations continue to reduce residential and commercial volumes sold by SDG&E.
The framework is intended to more equitably allocate SDG&E’s procurement cost obligations among customers served by SDG&E and customers now served by CCA and DA. San Diego’s mild climate and SDG&E’s robust energy efficiency programs contribute to lower consumption by our customers. Rooftop solar installations continue to reduce residential and commercial volumes sold by SDG&E.
Oncor operates the largest transmission and distribution system in Texas based on the number of end-use customers and miles of transmission and distribution lines, delivering electricity to nearly 4.0 million homes and businesses, operating more than 143,000 circuit miles of transmission and distribution lines as of December 31, 2023 in a territory with an estimated population of approximately 13 million.
Oncor operates the largest transmission and distribution system in Texas based on the number of end-use customers and miles of transmission and distribution lines, delivering electricity to more than four million homes and businesses, operating more than 144,000 circuit miles of transmission and distribution lines as of December 31, 2024 in a territory with an estimated population of approximately 13 million.
We invest in recruiting, developing and retaining high-potential employees who represent the communities we serve, and we provide a range of programs to advance those objectives, including internal and external mentoring and leadership training and workshops, employee resource groups, and a benefits package including wellness benefits and a tuition reimbursement program.
We invest in recruiting, developing and retaining high-performing employees who represent the communities we serve, and we provide a range of programs for employees, including internal and external mentoring and leadership training and workshops, employee resource groups, and a benefits package including wellness benefits and a tuition reimbursement program.
TdM generates revenue from selling electricity and resource adequacy to the California ISO and to governmental, public utility and wholesale power marketing entities. Low Carbon Solutions Projects Under Development. Sempra Infrastructure is developing the Cimarrón Wind project, an approximately 300-MW wind generation facility in Baja California, Mexico.
TdM generates revenue from selling electricity and resource adequacy to the California ISO for delivery to governmental, public utility and wholesale power marketing entities. Low Carbon Solutions Projects. Sempra Infrastructure is constructing the Cimarrón Wind project, an approximately 320 MW wind generation facility in Baja California, Mexico.
SI Partners, KKR Denali and an affiliate of ConocoPhillips directly or indirectly own a 28%, 42% and 30%, respectively, interest in the PA LNG Phase 1 project under construction on a greenfield site in the vicinity of Port Arthur, Texas, located along the Sabine-Neches waterway.
SI Partners, KKR Denali and an affiliate of ConocoPhillips own a 28%, 42% and 30% interest, respectively, in the PA LNG Phase 1 project under construction on a greenfield site in the vicinity of Port Arthur, Texas, located along the Sabine-Neches waterway. Sempra Infrastructure holds a 19.6% interest in the project.
These responsibilities consist of the construction, maintenance and security of transmission facilities and substations and the monitoring, controlling and dispatching of high-voltage electricity over its transmission facilities in coordination with ERCOT, which we discuss below in “Regulation – Utility Regulation – ERCOT Market.” At December 31, 2023, Oncor’s transmission system included approximately 18,298 circuit miles of transmission lines, a total of 1,257 transmission and distribution substations, and interconnection to 173 third-party generation facilities totaling 54,277 MW.
These responsibilities consist of the construction, maintenance and security of transmission facilities and substations and the monitoring, controlling and dispatching of high-voltage electricity over its transmission facilities in coordination with ERCOT, which we discuss below in “Regulation – Utility Regulation – ERCOT Market.” At December 31, 2024, Oncor’s transmission system included approximately 18,324 circuit miles of transmission lines, a total of 1,288 transmission and distribution substations, and interconnection to 192 third-party generation facilities totaling 58,597 MW.
If LNG volumes received from Tangguh 2023 Form 10-K | 21 Table of Contents PSC are not sufficient to satisfy the commitment to the CFE, Sempra Infrastructure may purchase natural gas in the market to satisfy such commitment. Sempra Infrastructure purchases, transports and sells natural gas, and has customers in both the U.S. and Mexico, including the CFE.
If LNG volumes received from Tangguh PSC are not sufficient to satisfy the commitment to the CFE, Sempra Infrastructure may purchase natural gas in the market to satisfy such commitment. Sempra Infrastructure purchases, transports and sells natural gas and LNG, and has customers in both the U.S. and Mexico, including the CFE.
While core customers are permitted to purchase their natural gas supplies from producers, marketers or brokers, SoCalGas and SDG&E are obligated to maintain adequate delivery capacity to serve the requirements of all their core customers. 2023 Form 10-K | 16 Table of Contents Noncore customers at SoCalGas consist primarily of electric generation, wholesale, and large commercial and industrial customers.
While core customers are permitted to purchase their natural gas supplies from producers, marketers or brokers, SoCalGas and SDG&E are obligated to maintain adequate delivery capacity to serve the requirements of all their core customers. SoCalGas’ noncore customers consist primarily of electric generation, wholesale, and large commercial and industrial customers.
Our customer contracts for our refined products storage business are structured as long-term, U.S. dollar-denominated, firm capacity storage agreements with counterparties including Marathon Petroleum Corporation and Valero Energy Corporation. The contracted rate under these contracts is independent from each terminal’s regulated rate as determined by the CRE.
The Topolobampo marine terminal commenced commercial operations in June 2024. Our customer contracts for our refined products storage business are structured as long-term, U.S. dollar-denominated, firm capacity storage agreements with counterparties including Marathon Petroleum Corporation, Valero Energy Corporation and PEMEX. The contracted rate under these contracts is independent from each terminal’s regulated rate as determined by the CRE.
We embrace diversity in our workforce and strive to create a high-performing, inclusive and supportive workplace where employees of all backgrounds and experiences feel valued and respected.
In addition, we strive to create a high-performing, inclusive and supportive workplace where employees of all backgrounds and experiences feel valued and respected.
Sempra Infrastructure’s refined products storage business develops, constructs and operates systems for the receipt, storage and delivery of refined products, principally gasoline, diesel and jet fuel, throughout the Mexican states of Baja California, Colima, Puebla, Sinaloa, Veracruz and Valle de México for private companies, with a combined storage capacity of 4.6 million barrels fully operating or under construction/commissioning as of December 31, 2023.
Sempra Infrastructure’s refined products storage business develops, constructs and operates systems for the receipt, storage and delivery of refined products, principally gasoline, diesel and jet fuel, throughout the Mexican states of Baja California, Colima, Estado de Mexico, Puebla, Sinaloa and Veracruz for private companies, with a combined storage capacity of 4.6 million barrels fully operating as of December 31, 2024.
These electric facilities are primarily in the San Diego, Imperial and Orange counties of California, and in Arizona and Nevada and consisted of 1,925 miles of transmission lines, 24,023 miles of distribution lines and 157 substations at December 31, 2023. Occasionally, various areas of the service territory require expansion to accommodate customer growth and maintain reliability and safety.
These electric facilities are primarily in the San Diego, Imperial and Orange counties of California, and in Arizona and Nevada and consisted of 2,021 miles of transmission lines, 24,149 miles of distribution lines and 159 substations at December 31, 2024. Occasionally, various areas of the service territory require expansion to accommodate customer growth and maintain reliability and safety.
A portion of SoCalGas’ noncore customers are non-end-users, which include wholesale customers consisting primarily of other utilities, including SDG&E, or municipally owned natural gas distribution systems. Noncore customers at SDG&E consist primarily of electric generation and large commercial customers.
A portion of SoCalGas’ noncore customers are non-end-users, which include wholesale customers consisting primarily of other utilities, including SDG&E, or municipally owned natural gas distribution systems.
SDG&E makes annual information filings with the FERC in December to update rates for the following calendar year. SDG&E may also file for ROE incentives that might apply under FERC rules. SDG&E’s debt-to-equity ratio is set annually based on the actual ratio at the end of each year.
SDG&E makes annual filings with the FERC to update rates for the following calendar year. SDG&E may also file for ROE incentives that might apply under FERC rules. SDG&E’s debt-to-equity ratio is set annually based on the actual ratio at the end of each year. We discuss the latest FERC rate matters in “Part I – Item 1A.
We account for our ownership interest in Cameron LNG JV under the equity method. No single owner controls or can unilaterally direct significant activities of Cameron LNG JV. Cameron LNG JV owns and operates the Cameron LNG Phase 1 facility, a natural gas liquefaction, export, regasification and import facility with three natural gas pre-treatment, processing and liquefaction trains.
No single owner controls or can unilaterally direct significant activities of Cameron LNG JV. Cameron LNG JV owns and operates the Cameron LNG Phase 1 facility, a natural gas liquefaction, export, regasification and import facility with three natural gas pre-treatment, processing and liquefaction trains.
A cost of capital proceeding also addresses the CCM, which applies in the interim years between required cost of capital applications and considers changes in the cost of capital based on changes in interest rates based on the applicable utility bond index published by Moody’s (the CCM benchmark rate) for each 12-month period ending September 30 (the measurement period).
The CPUC established the CCM to apply in the interim years between required cost of capital applications and considers changes in the cost of capital based on changes in interest rates based on the applicable utility bond index published by Moody’s (the CCM benchmark) for each 12-month period ending September 30 (the measurement period).
The SST Committee assists the board in overseeing the corporation’s oversight programs and performance related to safety, and our executives’ annual incentive compensation is based in part on safety metrics established by the Compensation and Talent Development Committee of the Sempra board of directors. Our overall culture is another important aspect of our ability to advance our mission.
The SST Committee assists the Sempra board of directors in overseeing the company’s oversight programs and performance related to safety, and our executives’ annual incentive compensation is based in part on safety metrics established by the Compensation and Talent Development Committee of the board.
SDG&E and SoCalGas each has one reportable segment. 2023 Form 10-K | 11 Table of Contents Sempra California SDG&E SDG&E is a regulated public utility that provides electric services to a population of, at December 31, 2023, approximately 3.6 million and natural gas services to approximately 3.3 million of that population, covering an approximate 4,100 square mile service territory in Southern California that encompasses San Diego County and an adjacent portion of Orange County.
DESCRIPTION OF BUSINESS BY SEGMENT Sempra’s business activities are organized under the following reportable segments: ▪ Sempra California ▪ Sempra Texas Utilities ▪ Sempra Infrastructure SDG&E and SoCalGas each has one reportable segment. 2024 Form 10-K | 12 Table of Contents Sempra California SDG&E SDG&E is a regulated public utility that provides electric services to a population of, at December 31, 2024, approximately 3.6 million and natural gas services to approximately 3.3 million of that population, covering an approximate 4,100 square mile service territory in Southern California that encompasses San Diego County and an adjacent portion of Orange County.
Bille 45 Vice President, Controller, Chief Accounting Officer and Treasurer August 2020 to present Assistant Controller, Sempra June 2019 to August 2020 Assistant Controller June 2018 to June 2019 Erbin B.
Bille (3) 46 Vice President, Controller, Chief Accounting Officer and Treasurer August 2020 to present Assistant Controller, Sempra June 2019 to August 2020 Scott B.
The ECA Regas Facility generates revenues from firm storage service fees under firm storage service agreements and nitrogen injection service agreements with Shell México Gas Natural, S. de R.L. de C.V. and SEFE that expire in 2028, which permit them to collectively use 50% of the terminal’s capacity, with the remaining 50% of the capacity available for Sempra Infrastructure’s use.
The ECA Regas Facility generates revenues from firm storage service fees under firm storage service agreements and nitrogen injection service agreements with Shell and SEFE that expire in May 2028 and December 2025, respectively, which permit them to collectively use 50% of the terminal’s capacity, with the remaining 50% of the capacity available for Sempra Infrastructure’s use.
SDG&E, SoCalGas and Sempra Infrastructure are also subject to regulation by the U.S. Commodity Futures Trading Commission.
PHMSA also regulates the safety of onshore LNG facilities. SDG&E, SoCalGas and Sempra Infrastructure are also subject to regulation by the U.S. Commodity Futures Trading Commission.
Edison’s transmission system is connected to SDG&E’s system via five 230-kV transmission lines. 2023 Form 10-K | 12 Table of Contents Electric Resources. SDG&E supplies power from its own electric generation facilities and procures power on a long-term basis from other suppliers for resale through CPUC-approved PPAs or purchases on the spot market.
However, it can be less under certain system conditions. SDG&E’s system is connected to Edison’s transmission system via five 230-kV transmission lines. Electric Resources. SDG&E supplies power from its own electric generation facilities and procures power on a long-term basis from other suppliers for resale through CPUC-approved PPAs or purchases on the spot market.
SDG&E’s electric resources at December 31, 2023 were as follows: ELECTRIC RESOURCES (1) Contract expiration date Net operating capacity (MW) % of total SDG&E: Owned generation facilities, natural gas (2) 1,204 24 % PPAs: Renewables: Wind 2024 to 2042 1,025 20 Solar 2030 to 2042 1,526 30 Other 2024 and thereafter 157 3 Tolling and other 2024 to 2042 1,167 23 Total 5,079 100 % (1) Excludes approximately 367 MW of energy storage owned and approximately 585 MW of energy storage contracted.
SDG&E’s electric resources at December 31, 2024 were as follows: ELECTRIC RESOURCES (1) Contract expiration date Net operating capacity (MW) % of total SDG&E: Owned generation facilities, natural gas (2) 1,204 24 % PPAs: Renewable energy: Wind 2025 to 2042 918 19 Solar 2030 to 2042 1,526 31 Other 2025 and thereafter 155 3 Tolling and other 2025 to 2042 1,113 23 Total 4,916 100 % (1) Excludes approximately 367 MW of energy storage owned and approximately 632 MW of energy storage contracted.
Given the significant quantity of natural gas-fired generation, we believe natural gas is a dispatchable fuel that can continue to help provide electric reliability in our California service territories. The natural gas distribution business is subject to seasonality. Demand tends to increase in the winter months to meet the heating load.
Given the significant level and availability of natural gas-fired generation, we believe natural gas is a dispatchable fuel that can continue to help provide electric reliability in our California service territories. The natural gas distribution business is subject to seasonality.
Risk Factors,” are in effect and are intended to enhance Oncor Holdings’ and Oncor’s separateness from their owners and to mitigate the risk that these entities would be negatively impacted by the bankruptcy of, or other adverse financial developments affecting, their owners.
Certain ring-fencing measures, governance mechanisms and commitments, which we describe in “Part I – Item 1A. Risk Factors,” are in effect and are intended to enhance Oncor Holdings’ and Oncor’s separateness from their owners and to mitigate the risk that these entities would be negatively impacted by the bankruptcy of, or other adverse financial developments affecting, their owners.
We expect the ECA LNG Phase 1 project to commence commercial operations in the summer of 2025. ECA LNG Phase 1 has definitive 20-year SPAs with an affiliate of TotalEnergies SE for approximately 1.7 Mtpa of LNG and Mitsui & Co., Ltd. for approximately 0.8 Mtpa of LNG.
ECA LNG Phase 1 has definitive 20-year SPAs with an affiliate of TotalEnergies SE for approximately 1.7 Mtpa of LNG and Mitsui & Co., Ltd. for approximately 0.8 Mtpa of LNG. PA LNG Phase 1 Project.
Federal Power Act and Natural Gas Act, which provide for FERC jurisdiction over, among other things, sales of wholesale power in interstate commerce, transportation of natural gas in interstate commerce, and siting and permitting of LNG facilities.
Regulation The FERC regulates certain Sempra Infrastructure assets pursuant to the U.S. Federal Power Act and Natural Gas Act, which provide for FERC jurisdiction over, among other things, sales of wholesale power in interstate commerce, transportation of natural gas in interstate commerce, and siting and permitting of LNG facilities.
There can also be no assurance that the PUCT will approve any other items requested in any rate proceeding or that the regulatory process in which rates are determined will necessarily result in rates that produce full recovery of the Texas utilities’ actual post-test year costs and/or the full return on invested capital allowed by the PUCT, particularly during periods of increased capital spending, high inflation or increases in interest rates resulting in increased costs relative to the utility’s most recent base rate review.
There can also be no assurance that the PUCT will approve any other items requested in any rate proceeding or that the regulatory process in which rates are determined will necessarily result in rates that produce full recovery of the Texas utilities’ actual post-test year costs and/or the full return on invested capital allowed by the PUCT, particularly during periods of increased capital spending, high inflation or increases in interest rates resulting in increased costs relative to the utility’s most recent base rate review. 2024 Form 10-K | 31 Table of Contents PUCT rules provide that a transmission and distribution utility must file a comprehensive base rate review within four years of the last order in its most recent comprehensive rate proceeding unless an extension is otherwise approved by the PUCT.
Capacity on Sempra Infrastructure’s pipelines and related assets is substantially contracted under long-term, U.S. dollar-based agreements with major industry participants such as the CFE, Centro Nacional de Control de Gas, PEMEX, SEFE and other similar counterparties.
Capacity on Sempra Infrastructure’s pipelines and related assets is substantially contracted under long-term, U.S. dollar-based agreements with major industry participants such as the CFE, Centro Nacional de Control de Gas, PEMEX and other similar counterparties. See “Part II – Item 7. MD&A – Capital Resources and Liquidity – Sempra Infrastructure” for a discussion about Sempra Infrastructure’s Sonora pipeline.
At December 31, 2023, SoCalGas’ natural gas facilities included 3,043 miles of transmission and storage pipelines, 52,404 miles of distribution pipelines, 48,983 miles of service pipelines and nine transmission compressor stations, and SDG&E’s natural gas facilities consisted of 197 miles of transmission pipelines, 9,135 miles of distribution pipelines, 6,737 miles of service pipelines and one compressor station.
At December 31, 2024, SoCalGas’ natural gas facilities included 3,037 miles of transmission and storage pipelines, 52,567 miles of distribution pipelines, 48,999 miles of service pipelines and nine transmission compressor stations, and SDG&E’s natural gas facilities consisted of 188 miles of transmission pipelines, 9,201 miles of distribution pipelines, 6,794 miles of service pipelines and one compressor station.
At December 31, 2023, the TDF pipeline system consisted of approximately 118 miles of 12-inch diameter LPG pipeline with a design capacity of 34,000 barrels per day and associated storage and dispatch facilities.
LPG Storage and Associated Systems. Sempra Infrastructure owns and operates the TDF, S. de R. L. de C. V. (TDF) pipeline system and the Guadalajara LPG terminal. At December 31, 2024, the TDF pipeline system consisted of approximately 118 miles of 12-inch diameter LPG pipeline with a design capacity of 34,000 barrels per day and associated storage and dispatch facilities.
The proceeding generally establishes the test year revenue requirements, which authorize how much SDG&E and SoCalGas can collect from their customers, and provides for attrition, or annual increases in revenue requirements, for each year following the test year. We discuss the GRC in Note 4 of the Notes to Consolidated Financial Statements.
The proceeding generally establishes the test year revenue requirements and provides for attrition, or annual increases in revenue requirements, for each year following the test year. Both the test year revenue requirements and attrition authorize how much SDG&E and SoCalGas can collect from their customers in base rates. We discuss the GRC in “Part I – Item 1A.
North America benefits from numerous competitive advantages as a potential supplier of LNG to world markets, including the following: ▪ high levels of developed and undeveloped natural gas resources, including unconventional natural gas and tight oil relative to domestic consumption levels ▪ flexible and mature oil and gas markets resulting in efficient unit costs of gas production ▪ availability of extensive natural gas pipeline transmission systems and natural gas storage capacity with proximity to production locations Brownfield liquefaction projects also benefit from the particular competitive advantage of the proximity of pre-existing infrastructure, such as LNG tankage and berths.
North America benefits from numerous competitive advantages as a potential supplier of LNG to world markets, including the following: ▪ high levels of developed and undeveloped natural gas resources, including unconventional natural gas and oil relative to domestic consumption levels ▪ flexible and mature oil and gas markets resulting in efficient unit costs of gas production ▪ availability of extensive natural gas pipeline transmission systems and natural gas storage capacity with proximity to production locations Global LNG demand and competition may limit North American LNG exports, as international liquefaction projects attempt to match North American LNG production costs and customer contractual rights such as volume and destination flexibility.
SDG&E currently provides procurement service for a portion of its customer load. Most customers receive procurement service from a load-serving entity other than SDG&E through programs such as CCA and DA. In such cases, SDG&E no longer procures energy for this departing load.
Most customers receive electric procurement service from a load-serving entity other than SDG&E through programs such as CCA and DA. In such cases, SDG&E no longer procures energy for this departed load. Accordingly, SDG&E’s CCA and DA customers receive primarily transportation and distribution services from SDG&E.
Noncore customers are responsible for procuring their natural gas requirements, as the regulatory framework does not allow SoCalGas and SDG&E to recover the cost of natural gas procured and delivered to noncore customers.
Noncore customers at SDG&E consist primarily of electric generation and large commercial customers. 2024 Form 10-K | 17 Table of Contents Noncore customers are responsible for procuring their natural gas requirements, as the regulatory framework does not allow SoCalGas and SDG&E to recover the cost of natural gas procured and delivered to noncore customers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe counterparties to the November 2023 forward sale agreements Sempra entered into in connection with its common stock offering that we discuss in Note 14 of the Notes to Consolidated Financial Statements (collectively, the forward purchasers) have the right to accelerate their respective forward sale agreements (or, in certain cases, the portion thereof that they determine is affected by the relevant event) and require us to physically settle such forward sale agreements on a date specified by the forward purchasers if, among other things and subject to a prior notice requirement: ▪ they are unable to establish, maintain or unwind their hedge position with respect to the forward sale agreements; ▪ they determine that they are unable to continue to borrow in a commercially reasonable manner a sufficient number of shares of our common stock or that they would incur a rate that is greater than the cost to borrow shares specified in the forward sale agreements; ▪ we declare or pay cash dividends on shares of our common stock before or in an amount that exceeds those prescribed by the forward sale agreements; ▪ announcement of certain extraordinary events such as certain mergers and tender offers, insolvency and the delisting of our common stock, or an event occurs that would constitute a hedging disruption or change in law; The forward purchasers’ decision to exercise their right to accelerate the forward sale agreements (or, in certain cases, the portion thereof that they determine is affected by the relevant event) and to require us to settle the forward sale agreements will be made irrespective of our interests, including our need for capital.
Biggest changeWe are permitted to sell shares of our common stock in the ATM program pursuant to forward sale agreements, which grant each counterparty (each a forward purchaser) the right to accelerate its forward sale agreement (or, in certain cases, the portion thereof that the forward purchaser determines is affected by the relevant event) and require us to physically settle the forward sale agreement on a date specified by the forward purchaser if, subject to a prior notice requirement: ▪ the forward purchaser determines in its commercially reasonable judgment that it is unable to hedge in a commercially reasonable manner its exposure to the applicable forward sale agreement because insufficient shares of our common stock are made available for borrowing by securities lenders or that, with respect to borrowing such number of shares of our common stock, it would incur a rate that is greater than the borrow cost specified in the forward sale agreement; ▪ we declare any dividend, issue or distribution to existing holders of shares of our common stock that constitutes an extraordinary dividend under the forward sale agreement or is payable in (i) cash in excess of specified amounts (unless it is an extraordinary dividend), (ii) securities of another company that we acquire or own (directly or indirectly) as a result of a spin-off or similar transaction or (iii) any other type of securities (other than our common stock), rights, warrants or other assets for payment at less than the prevailing market price; ▪ an event (i) is announced that, if consummated, would result in an extraordinary event (including certain mergers and tender offers, our nationalization, our insolvency and the delisting of the shares of our common stock) or (ii) occurs that would constitute a hedging disruption or change in law; ▪ an ownership event (as such term is defined in the forward sale agreement) occurs; or ▪ certain other events of default, termination events or other specified events occur, including, among other things, a change in law.
Any success by any of these groups in directly or indirectly influencing legislators and regulators could have a material adverse effect on SDG&E’s, SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects. SoCalGas has incurred and may continue to incur significant costs, expenses and other liabilities related to the Leak.
Success by any of these groups in directly or indirectly influencing legislators and regulators could have a material adverse effect on SDG&E’s, SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects. SoCalGas has incurred and may continue to incur significant costs, expenses and other liabilities related to the Leak.
Further, the approved levels of recovery could be significantly less than the requested levels, and the approved timing for recovery could differ from proposed timelines. In addition to requests to recover its costs, Oncor’s rate proceedings may contain other requests.
Further, the approved levels of recovery could be significantly less than requested levels, and the approved timing for recovery could differ from proposed timelines. In addition to requests to recover its costs, Oncor’s rate proceedings may contain other requests.
We depend on electric transmission lines, natural gas pipelines and other transportation facilities and services owned and operated by third parties to, among other things: ▪ deliver the natural gas, LNG, electricity and LPG we sell to customers or use for our LNG export facilities ▪ supply natural gas to our gas storage and electric generation facilities ▪ provide retail energy services to customers If transportation is disrupted, the construction of necessary interconnecting infrastructure is not completed on schedule or at all or capacity is inadequate, we may be delayed in completing projects under development and/or unable to meet our contractual obligations to customers of those projects or existing projects, in which case we may be responsible for damages they incur, such as the cost of acquiring alternative supplies at then-current spot market rates, and we could lose customers that may be difficult to replace.
We depend on electric transmission lines, natural gas pipelines and other transportation facilities and services owned and operated by third parties to, among other things: ▪ deliver the natural gas, LNG, electricity and LPG we sell to customers or use for our LNG facilities ▪ supply natural gas to our gas storage and electric generation facilities ▪ provide retail energy services to customers If transportation is disrupted, the construction of necessary interconnecting infrastructure is not completed on schedule or at all or capacity is inadequate, we may be delayed in completing projects under development and/or unable to meet our contractual obligations to customers of those projects or existing projects, in which case we may be responsible for damages they incur, such as the cost of acquiring alternative supplies at then-current spot market rates, and we could lose customers that may be difficult to replace.
We discuss these risks below and under “Risks Related to Sempra Infrastructure – Legal and Regulatory Risks.” In addition, the Mexican regulatory process and overlay of U.S. regulation for natural gas exports to LNG facilities in Mexico are not well developed, which, among other factors, contributed to delays in obtaining a necessary permit from the Mexican government for the ECA LNG Phase 1 project and could cause similar delays or other hurdles in the future and lead to difficulties finding or maintaining suitable partners, customers and financing arrangements.
We discuss these risks under “Risks Related to Sempra Infrastructure – Legal and Regulatory Risks.” In addition, the Mexican regulatory process and overlay of U.S. regulation for natural gas exports to LNG facilities in Mexico are not well developed, which, among other factors, contributed to delays in obtaining a necessary permit from the Mexican government for the ECA LNG Phase 1 project and could cause similar delays or other hurdles in the future and lead to difficulties finding or maintaining suitable partners, customers and financing arrangements.
To comply with these requirements, we must expend significant capital and employee resources on environmental monitoring, surveillance and other measures to track performance; acquisition and installation of pollution control equipment; mitigation efforts; and emissions fees, which could increase as a result of various factors we may not control, including changing laws and regulations, increased enforcement activities, delays in the renewal and issuance of permits, and changes to the mix of energy we transmit and distribute.
To comply with these requirements, we must expend significant capital and employee resources on environmental monitoring, surveillance and other measures to track performance; acquisition and installation of pollution control equipment; mitigation efforts; and emissions fees, which could increase as a result of various factors we may not control, including changing laws and regulations, increased readiness and enforcement activities, delays in the renewal and issuance of permits, and changes to the mix of energy we transmit and distribute.
If the Aliso Canyon natural gas storage facility were to be permanently closed or if future cash flows from its operation were otherwise insufficient to recover its carrying value, we may record an impairment of the facility, which could be material, incur materially higher than expected operating costs and/or be required to make material additional capital expenditures (any or all of which may not be recoverable in rates), and natural gas reliability and electric generation could be jeopardized.
If the Aliso Canyon natural gas storage facility were to be permanently closed or if future cash flows from its operation were otherwise insufficient to recover its carrying value, we would record an impairment of the facility, which could be material, we could incur materially higher than expected operating costs and/or be required to make material additional capital expenditures (any or all of which may not be recoverable in rates), and natural gas reliability and electric generation could be jeopardized.
MD&A – Capital Resources and Liquidity.” For Sempra, the Rating Agencies have noted that the following events, among others, could lead to negative ratings actions: ▪ expansion of natural gas liquefaction projects or other unregulated businesses in a manner inconsistent with its present level of credit quality ▪ the PA LNG Phase 1 project experiences higher construction costs ▪ Sempra’s consolidated financial measures consistently weaken, or it fails to meet certain financial credit metrics ▪ catastrophic wildfires caused by SDG&E or by any California electric IOUs that participate in the Wildfire Fund, which could exhaust the fund considerably earlier than expected ▪ a ratings downgrade at SDG&E, SoCalGas, Oncor and/or SI Partners For SDG&E, the Rating Agencies have noted that the following events, among others, could lead to negative ratings actions: ▪ catastrophic wildfires caused by SDG&E or by any California electric IOUs that participate in the Wildfire Fund, which could exhaust the fund considerably earlier than expected ▪ a consistent weakening of SDG&E’s financial metrics, or it fails to meet certain financial credit metrics ▪ a deterioration in the regulatory environment, including credit negative outcomes of its pending regulatory proceedings ▪ a ratings downgrade at Sempra For SoCalGas, the Rating Agencies have noted that the following events, among others, could lead to negative ratings actions: ▪ SoCalGas’ financial measures consistently weaken, or it fails to meet certain financial credit metrics ▪ SoCalGas experiences increased business risk due to a deterioration in the regulatory environment, including credit negative outcomes of its pending regulatory proceedings or elevated risk concerning its natural gas utility business ▪ a ratings downgrade at Sempra For SI Partners, the Rating Agencies have noted that the following events, among others, could lead to negative ratings actions: ▪ SI Partners’ failure to meet certain financial credit metrics ▪ a deterioration in SI Partners’ business risk profile, including incremental construction risk or adverse changes in the operating environment in Mexico ▪ the PA LNG Phase 1 project experiences challenges or delays in construction that have an adverse financial impact on SI Partners ▪ a ratings downgrade at Sempra, IEnova and/or Cameron LNG, LLC A downgrade of any of our businesses’ credit ratings or ratings outlooks, as well as the reasons for such downgrades, could materially adversely affect the interest rates at which borrowings can be made and debt securities issued and the various fees on our credit facilities.
MD&A – Capital Resources and Liquidity.” For Sempra, the Rating Agencies have noted that the following events, among others, could lead to negative ratings actions: ▪ expansion of natural gas liquefaction projects or other unregulated businesses in a manner inconsistent with its present level of credit quality ▪ the PA LNG Phase 1 project experiences higher construction costs ▪ Sempra’s consolidated financial measures consistently weaken, or it fails to meet certain financial credit metrics ▪ catastrophic wildfires caused by SDG&E or by any California electric IOUs that participate in the Wildfire Fund, which could exhaust the fund earlier than expected ▪ a ratings downgrade at SDG&E, SoCalGas, Oncor and/or SI Partners For SDG&E, the Rating Agencies have noted that the following events, among others, could lead to negative ratings actions: ▪ catastrophic wildfires caused by SDG&E or by any California electric IOUs that participate in the Wildfire Fund, which could exhaust the fund earlier than expected ▪ a consistent weakening of SDG&E’s financial metrics, or it fails to meet certain financial credit metrics ▪ a deterioration in the regulatory environment, including credit negative outcomes of its pending regulatory proceedings ▪ a ratings downgrade at Sempra For SoCalGas, the Rating Agencies have noted that the following events, among others, could lead to negative ratings actions: ▪ SoCalGas’ financial measures consistently weaken, or it fails to meet certain financial credit metrics ▪ SoCalGas experiences increased business risk due to a deterioration in the regulatory environment, including credit negative outcomes of its pending regulatory proceedings or elevated risk concerning its natural gas utility business ▪ a ratings downgrade at Sempra For SI Partners, the Rating Agencies have noted that the following events, among others, could lead to negative ratings actions: ▪ SI Partners’ failure to meet certain financial credit metrics ▪ a deterioration in SI Partners’ business risk profile, including incremental construction risk or adverse changes in the operating environment in Mexico ▪ the PA LNG Phase 1 project experiences challenges or delays in construction that have an adverse financial impact on SI Partners ▪ a ratings downgrade at Sempra, IEnova, Cameron LNG, LLC and/or Port Arthur LNG, LLC A downgrade of any of our businesses’ credit ratings or ratings outlooks, as well as the reasons for such downgrades, could materially adversely affect the interest rates at which borrowings can be made and debt securities issued and the various fees on our credit facilities.
We may not be able to complete any such equity sales on terms we consider acceptable or at all, and any new equity issued by Sempra may dilute the voting rights and economic interests of Sempra’s existing equity holders. Any such outcome could have a material adverse effect on Sempra’s results of operations, financial condition, cash flows and/or prospects.
We may not be able to complete any such equity sales on acceptable terms or at all, and any new equity issued by Sempra may dilute the voting rights and economic interests of Sempra’s existing equity holders. Any such outcome could have a material adverse effect on Sempra’s results of operations, financial condition, cash flows and/or prospects.
The occurrence of any of these risks could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. We may be negatively impacted by the outcome of litigation or other proceedings in which we are involved. Our businesses are involved in a number of lawsuits, binding arbitrations, regulatory investigations and other proceedings.
The occurrence of any of these risks could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. We may be negatively impacted by the outcome of litigation or other proceedings in which we are involved. Our businesses are involved in a number of lawsuits, appeals, binding arbitrations, regulatory investigations and other proceedings.
Legal and Regulatory Risks Our international businesses and operations expose us to increased legal, regulatory, tax, economic, geopolitical and management oversight risks and challenges. We own or have interests in a variety of energy infrastructure assets in Mexico, and we do business with companies based in foreign markets, including particularly our LNG export operations.
Legal and Regulatory Risks Our international businesses and operations expose us to increased legal, regulatory, tax, economic, geopolitical, credit and management oversight risks and challenges. We own or have interests in a variety of energy infrastructure assets in Mexico, and we do business with companies based in foreign markets, including particularly our LNG export operations.
We may attempt to hedge cross-currency transactions and earnings exposure through various means, including financial instruments and short-term investments, but these hedges may not fully achieve our objectives of mitigating earnings volatility that would otherwise occur due to exchange rate fluctuations.
We sometimes attempt to hedge cross-currency transactions and earnings exposure through various means, including financial instruments and short-term investments, but these hedges may not fully achieve our objectives of mitigating earnings volatility that would otherwise occur due to exchange rate fluctuations.
In addition, Cameron LNG JV has long-term liquefaction and regasification tolling agreements with three counterparties that collectively subscribe for the full nameplate capacity of the Cameron LNG Phase 1 facility, and long-term sale and purchase agreements are in place for the expected capacity at the ECA LNG Phase 1 and PA LNG Phase 1 projects under construction.
Cameron LNG JV has long-term liquefaction and regasification tolling agreements with three counterparties that collectively subscribe for the full nameplate capacity of the Cameron LNG Phase 1 facility, and long-term sale and purchase agreements are in place for the expected capacity at the ECA LNG Phase 1 and PA LNG Phase 1 projects under construction.
As part of its ongoing bankruptcy proceedings, in 2016, EFH distributed all the outstanding shares of common stock of its subsidiary Vistra Energy Corp. (formerly TCEH Corp. and referred to herein as Vistra) to certain creditors of TCEH LLC (the spin-off), and Vistra became an independent, publicly traded company.
As part of its bankruptcy proceedings, in 2016, EFH distributed all the outstanding shares of common stock of its subsidiary Vistra Corp. (formerly Vistra Energy Corp. and referred to herein as Vistra) to certain creditors of TCEH LLC (the spin-off), and Vistra became an independent, publicly traded company.
Litigation In September 2021, SoCalGas and Sempra entered into an agreement with counsel to resolve approximately 390 lawsuits including approximately 36,000 plaintiffs (the Individual Plaintiffs) then pending against SoCalGas and Sempra related to the Leak for a payment of up to $1.8 billion.
In September 2021, SoCalGas and Sempra entered into an agreement with counsel to resolve approximately 390 lawsuits including approximately 36,000 plaintiffs (the Individual Plaintiffs) then pending against SoCalGas and Sempra related to the Leak for a payment of up to $1.8 billion.
Additionally, in response to California legislation adopted in 2022, the CPUC has initiated a rulemaking to broadly restructure the way fixed costs are collected, moving away from volumetric only charges and incorporating an income-graduated fixed charge for default residential rates.
Additionally, in response to California legislation adopted in 2022, the CPUC initiated a rulemaking to broadly restructure the way fixed costs are collected, moving away from volumetric only charges and incorporating an income-graduated fixed charge for default residential rates.
These rules, as well as any changes to these rules or their interpretations or additional more restrictive CPUC or FERC rules related to transactions with affiliates, could materially adversely affect our operations and, in turn, our results of operations, financial condition, cash flows and/or prospects.
Noncompliance with these rules, as well as any changes to these rules or their interpretations or additional more restrictive CPUC or FERC rules related to transactions with affiliates, could materially adversely affect our operations and, in turn, our results of operations, financial condition, cash flows and/or prospects.
In the past, Oncor has financed much of its cash needs from operations and with proceeds from indebtedness, but these sources of capital may not be adequate or available at reasonable prices or on other reasonable terms in the future.
In the past, Oncor has financed much of its cash needs from operations and with proceeds from indebtedness, but these sources of capital may not be adequate or available at reasonable prices or on other reasonable terms in the future, or at all.
The occurrence of any of these events could materially adversely affect our results of operations, financial condition, cash flows and/or prospects. From time to time, we invest funds in capital projects prior to receiving all regulatory approvals.
The occurrence of any of these events could materially adversely affect our results of operations, financial condition, cash flows and/or prospects. From time to time, we invest funds in projects prior to receiving all regulatory approvals.
We often rely on third parties, including contractors, to perform work related to these projects and other maintenance activities, which may subject us to liability for safety issues and the quality of work performed by these third parties.
We often rely on third parties, including contractors, to perform work related to these projects and other maintenance activities, which may subject us to liability for safety issues and the quality of work performed.
Energy Transition Risks The energy transition in California and elsewhere, including decarbonization goals, has introduced uncertainty in long-term investor support, leading some to reduce investment in or divest from our sector.
Other Energy Transition Risks The energy transition in California and elsewhere, including decarbonization goals, has introduced uncertainty in long-term investor support, leading some to reduce investment in or divest from our sector.
This growth of DER will require further modernization of the electric grid to, among other things, accommodate increasing two-way flows of electricity and increase the grid’s capacity to interconnect these resources.
This growth will require further modernization of the electric grid to, among other things, accommodate increasing two-way flows of electricity and increase the grid’s capacity to interconnect these resources.
We have been and may be in the future required to pay environmental remediation costs at former facilities and off-site waste disposal sites where any of our businesses is identified as a PRP under federal, state and local environmental laws. For our regulated utilities, some of these costs may not be recoverable in rates.
We have been and may in the future be required to pay environmental remediation costs at former facilities and off-site waste disposal sites where any of our businesses is identified as a PRP under federal, state and local environmental laws. For our regulated utilities, some or all of these costs may not be recoverable in rates.
These requirements may undergo changes at the federal, state, local and foreign levels, including in response to economic or political conditions. Compliance with these requirements, including in the event of changes to them or how they are implemented, interpreted or enforced, could increase our operating costs and materially adversely affect how we conduct our business.
These requirements may undergo changes at the federal, state, local and foreign levels, including in response to economic or political conditions. Compliance with these requirements, including changes to them or how they are implemented, interpreted or enforced, could increase our operating costs and materially adversely affect how we conduct our business.
The intent of such a fixed charge is to establish a rate structure that allows the utility to collect a greater portion of its fixed costs on a non-volumetric basis, achieve the state’s climate goals through end-use electrification and provide a more affordable rate design on average for lower-income customers.
The intent of such a fixed charge is to establish a rate structure that allows the utility to collect a greater portion of its fixed costs on a non-volumetric basis, advance the state’s climate goals through end-use electrification and provide a more affordable rate design on average for lower-income customers.
Any failure by the CPUC to adequately reform SDG&E’s electric rate structure could negatively impact SDG&E and Sempra. The NEM program is an electric billing tariff mechanism designed to promote the installation of on-site renewable generation (primarily solar installations) for residential and business customers.
Failure by the CPUC to adequately reform SDG&E’s electric rate structure could negatively impact SDG&E and Sempra. The NEM program is an electric billing tariff mechanism designed to promote the installation of on-site renewable energy generation (primarily solar installations) for residential and business customers.
Success in developing each project depends on, among other things: ▪ our financial condition and cash flows and other factors that impact our ability to invest sufficient funds in the project, including for preliminary activities conducted before we determine whether the project is feasible or economically attractive ▪ project assessment and design and our ability to foresee and incorporate new and developing trends and technologies in the energy industry, such as our pursuit of projects and design solutions to help enable our and our customers’ climate goals ▪ our ability to reach a final investment decision or meet other milestones, which may be influenced by external factors outside our control, including the global economy and energy and financial markets, actions by regulators, achieving necessary internal and external approvals, and many of the other factors described in this risk factor ▪ negotiation of satisfactory EPC agreements and renegotiation in the event of delays in final investment decisions or failures to meet other specified deadlines ▪ identification of suitable partners, customers, suppliers and other necessary counterparties ▪ progressing relationships from MOUs, HOAs or similar arrangements, which are non-binding, to execution of binding, definitive agreements and participation in the project ▪ negotiation and maintenance of satisfactory equity, purchase, sale, supply, transportation and other appropriate commercial agreements, and satisfaction of any conditions to effectiveness of such agreements, including reaching a positive final investment decision within agreed timelines ▪ timely receipt and maintenance of required governmental permits, licenses and other authorizations under terms we find reasonable ▪ our project partners’, contractors’, equipment providers’ and other vendors’ and counterparties’ willingness and financial or other ability to make their required investments or fulfill their contractual commitments on a timely basis ▪ timely, satisfactory and on-budget completion of construction, which could be negatively affected by engineering problems, work stoppages, unavailability or increased costs of materials, equipment, labor and commodities due to inflation or supply chain or other issues, and a variety of other factors, many of which we discuss above under “Risks Related to All Sempra Businesses – Operational Risks” and elsewhere in this risk factor ▪ implementation of new or changes to existing laws or regulations that impact our infrastructure or the energy sector generally ▪ obtaining satisfactory financing for the project, particularly when inflation and interest rates are rising ▪ the absence of hidden defects on or inherited environmental liabilities for the site of the project ▪ fast and cost-effective resolution of any litigation or unsettled property rights affecting the project ▪ geopolitical events and other uncertainties Any failures with respect to the above factors or other factors material to any particular project could involve additional costs, otherwise negatively affect our ability to successfully complete the project and force us to impair or write off amounts we have invested in the project.
Success in developing each project depends on, among other things: ▪ our financial condition and cash flows and other factors that impact our ability to invest sufficient funds in the project, including for preliminary activities conducted before we determine whether the project is feasible or economically attractive ▪ project assessment and design and our ability to foresee and incorporate new and developing trends and technologies in the energy industry, such as projects and design solutions to help enable our and our customers’ climate goals ▪ our ability to reach a final investment decision or meet other milestones, which may be influenced by external factors outside our control, including the global economy and energy and financial markets, actions by regulators, achieving necessary internal and external approvals, and many of the other factors described in this risk factor ▪ negotiation of satisfactory EPC agreements and renegotiation in the event of delays in final investment decisions or failures to meet other specified deadlines ▪ identification of suitable partners, customers, contractors, suppliers and other necessary counterparties ▪ progressing relationships from MOUs, HOAs or similar arrangements, which are non-binding, to execution of binding, definitive agreements and participation in the project ▪ negotiation and maintenance of satisfactory equity, purchase, sale, supply, transportation and other appropriate commercial agreements, and satisfaction of any conditions to effectiveness of such agreements, including reaching a positive final investment decision within agreed timelines ▪ timely receipt and maintenance of required governmental permits, licenses and other authorizations under terms we find reasonable ▪ our project partners’, contractors’, equipment providers’ and other vendors’ and counterparties’ willingness and financial or other ability to make their required investments or fulfill their contractual commitments on a timely basis ▪ timely, satisfactory and on-budget completion of construction, which could be negatively affected by engineering problems, work stoppages, unavailability or increased costs of materials, equipment, labor and commodities due to inflation or supply chain or other issues, and a variety of other factors, many of which we discuss above under “Risks Related to All Sempra Businesses – Operational Risks” and elsewhere in this risk factor ▪ implementation of new or changes to existing laws or regulations that impact our infrastructure or the energy sector generally ▪ obtaining satisfactory financing for the project, particularly when inflation and interest rates are volatile ▪ the absence of hidden defects on or inherited environmental liabilities for the site of the project ▪ timely and cost-effective resolution of any litigation or unsettled property rights affecting the project ▪ geopolitical events and other uncertainties 2024 Form 10-K | 57 Table of Contents Any failures with respect to the above factors or other factors material to any particular project could involve additional costs, otherwise negatively affect our ability to successfully complete the project and force us to impair or write off amounts we have invested in the project.
In some cases, we engage in arrangements with or for these businesses that could expose us to risks in addition to our investment, including guarantees, indemnities and loans. For businesses we do not control, we are subject to the decisions of others, which may be adverse to our interest.
In some cases, we engage in arrangements with or for these businesses that could expose us to risks in addition to our investment, including guarantees, indemnities and loans. For businesses we do not control, we are subject to the decisions of others, which may be adverse to our interests.
We face risks related to unsettled property rights and titles in Mexico. We are engaged in disputes regarding our title to the property in Mexico where our ECA Regas Facility is situated and our ECA LNG projects are expected to be situated, which we discuss in Note 16 of the Notes to Consolidated Financial Statements.
We face risks related to unsettled property rights and titles in Mexico. We are engaged in disputes regarding our title to the property in Mexico where our ECA Regas Facility is situated and our ECA LNG projects are expected to be situated, which we discuss in Note 15 of the Notes to Consolidated Financial Statements.
We try to mitigate these risks by, among other things, using variable pricing tied to market indices, anticipating and providing for cost escalation when bidding on projects, contracting for direct pass-through of operating costs and/or entering into hedges.
We aim to mitigate these risks by, among other things, using variable pricing tied to market indices, anticipating and providing for cost escalation when bidding on projects, contracting for direct pass-through of operating costs and/or entering into hedges.
The regional and other markets in which we purchase these commodities are competitive and can be subject to significant pricing volatility as a result of many factors, including inflation, adverse weather conditions, supply and demand changes, availability of competitively priced alternative energy sources, commodity production levels and storage capacity, energy and environmental legislation and regulations, and economic and financial market conditions.
The regional and other markets in which we purchase these commodities are competitive and can be subject to significant pricing volatility as a result of many factors, including inflation, adverse weather conditions, supply and demand changes, availability of competitively priced alternative energy sources, political and geopolitical instability, commodity production levels and storage capacity, energy and environmental legislation and regulations, and economic and financial market conditions.
SDG&E may incur significant costs and liabilities from its partial ownership of a nuclear facility being decommissioned . SDG&E has a 20% ownership interest in SONGS, which we discuss in Note 15 of the Notes to Consolidated Financial Statements.
SDG&E may incur significant costs and liabilities from its partial ownership of a nuclear facility being decommissioned . SDG&E has a 20% ownership interest in SONGS, which we discuss in Note 14 of the Notes to Consolidated Financial Statements.
The operation of existing facilities and any future projects we complete involves many risks, including the potential for unforeseen design flaws, engineering challenges, or the breakdown for other reasons of facilities, equipment or processes; labor disputes; fuel interruption; environmental contamination; increasing regulatory requirements, including from regulations aiming to reduce GHG emissions; and the other operational risks that we discuss above under “Risks Related to All Sempra Businesses – Operational Risks.” Any of these events could lead to our facilities being idle for an extended period of time or operating below expected levels, which may result in lost revenues or increased expenses, including higher maintenance costs and penalties.
The operation of existing facilities and any future projects we complete involves many risks, including the potential for unforeseen design flaws, engineering challenges, or the breakdown for other reasons of facilities, equipment or processes; labor disputes or shortages; fuel interruption; environmental contamination; increasing regulatory requirements, including from regulations aiming to reduce GHG emissions; and the other operational risks that we discuss above under “Risks Related to All Sempra Businesses – Operational Risks.” Any of these events could lead to our facilities being idle or operating below expected levels, which may result in lost revenues or increased expenses, including higher maintenance costs and penalties.
Although our businesses undertake capital investment projects to construct, replace, operate, maintain and upgrade facilities and systems, such projects may not be completed or effective at managing these risks and involve significant costs that may not be recoverable.
Our businesses undertake capital investment projects to construct, replace, operate, maintain and upgrade facilities and systems, but such projects may not be completed or effective at managing these risks and involve significant costs that may not be recoverable.
We discuss these investments in Note 6 of the Notes to Consolidated Financial Statements. Our business could be negatively affected by activist shareholders. We have been and may in the future be subject to activist shareholder attention.
We discuss these investments in Note 5 of the Notes to Consolidated Financial Statements. Our business could be negatively affected by activist shareholders. We have been and may in the future be subject to activist shareholder attention.
Because some of our facilities are interconnected with those of third parties, including third-party natural gas pipelines and power generation facilities that produce most of the power we distribute, the operation of our facilities could also be materially adversely affected by these or similar risks to such third-party systems, which may be unanticipated or uncontrollable by us.
Because some of our facilities are interconnected with those of third parties, including customer-side-of-meter facilities, natural gas pipelines and power generation facilities that produce most of the power we distribute, the operation of our facilities could also be materially adversely affected by these or similar risks to such third-party systems, which may be unanticipated or uncontrollable by us.
These rules primarily impact market transactions and marketing activities involving transmission supply and capacity, including sales or other trades of natural gas or electricity between or among SDG&E and SoCalGas and Sempra and its covered affiliates.
These rules primarily impact market transactions and marketing activities involving transmission supply and capacity, including sales or other trades of natural gas or electricity within or among SDG&E and SoCalGas and Sempra and its covered affiliates.
Regulatory Changes and Influence of Other Organizations SDG&E, SoCalGas and Sempra may be materially adversely affected by revisions or reinterpretations of existing or new legislation, regulations, decisions, orders or interpretations of the CPUC, the FERC or other regulatory bodies, any of which could change how SDG&E and SoCalGas operate, affect their ability to recover various costs through rates or adjustment mechanisms, require them to incur additional expenses or otherwise materially adversely affect their and Sempra’s results of operations, financial condition, cash flows and/or prospects.
SDG&E, SoCalGas and Sempra may be materially adversely affected by revisions or reinterpretations of existing or new legislation, regulations, decisions, orders or interpretations of the CPUC, the FERC or other regulatory bodies, any of which could change how SDG&E and SoCalGas operate, affect their ability to recover various costs through rates or adjustment mechanisms, require them to incur additional expenses and compliance costs or otherwise materially adversely affect their and Sempra’s results of operations, financial condition, cash flows and/or prospects.
Insurance coverage for these costs may continue to increase or become prohibitively expensive, be disputed by insurers, or become unavailable for certain of these risks or at adequate levels, and any insurance proceeds may be insufficient to cover our losses or liabilities due to limitations, exclusions, high deductibles, failure to comply with procedural requirements or other factors.
Insurance coverage for these costs may continue to increase or become prohibitively expensive, be disputed by insurers, or become unavailable for certain of these risks or at adequate levels or in certain geographic locations, and any insurance proceeds may be insufficient to cover our losses or liabilities due to limitations, exclusions, high deductibles, failure to comply with procedural requirements or other factors.
Any such labor disruption or negotiated wage or benefit increases, whether due to union activities, employee turnover, labor shortages or otherwise, could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. Our businesses depend on the performance of counterparties.
Any labor disruption, negotiated wage or benefit increases or other challenges, whether due to union activities, employee turnover, labor shortages or otherwise, could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. Our businesses depend on the performance of counterparties.
The CPUC periodically approves SDG&E’s and SoCalGas’ customer rates based on authorized capital expenditures, operating costs, including income taxes, and an authorized rate of return on investments while incorporating a risk-based decision-making framework, as well as certain settlements with third parties.
The CPUC periodically approves SDG&E’s and SoCalGas’ customer rates based on authorized capital expenditures, operating costs, including income taxes, and an authorized rate of return on investments while incorporating a risk-based decision-making framework, as well as certain settlements with third parties and mandatory social programs.
These actions, as well as other market factors such as oil prices, could delay or hamper the development of U.S. LNG export facilities and make LNG projects in other parts of the world more feasible and competitive with LNG projects in North America, thus increasing supply and competition for global LNG demand.
These changes and other market factors such as oil prices could delay or hamper the development of U.S. LNG export facilities and make LNG projects in other parts of the world more feasible and competitive with LNG projects in North America, thus increasing supply and competition for global LNG demand.
In particular, ransomware and other forms of cyber-attacks targeting utility systems and other energy infrastructure are continuously increasing in sophistication, magnitude and frequency, may not be recognized until launched against a target and may further escalate during periods of heightened geopolitical tensions.
Viruses, ransomware, malware and other forms of cyber-attacks targeting utility systems and other energy infrastructure are continuously increasing in sophistication, magnitude and frequency, may not be recognized until launched against a target and may further escalate during periods of heightened geopolitical tensions.
From October 23, 2015 through February 11, 2016, SoCalGas experienced the Leak, which we describe in Note 16 of the Notes to Consolidated Financial Statements.
From October 23, 2015 through February 11, 2016, SoCalGas experienced the Leak, which we describe in Note 15 of the Notes to Consolidated Financial Statements.
Although demand for natural gas is currently strong due to increased recognition of the importance of energy security and climate aims, a reduction in natural gas demand could also occur from higher penetration of alternative fuels in new power generation, reduced economic activity in general, or as a result of calls by some to limit or eliminate global reliance on natural gas.
Although demand for natural gas is currently strong due to increased focus on energy security and climate aims, a reduction in natural gas demand could also occur from higher penetration of alternative fuels in new power generation, reduced economic activity in general, or as a result of calls by some to limit or eliminate global reliance on natural gas.
These or other similar new laws and rules may materially restrict our operations, negatively impact demand for our services and/or the energy we transmit and distribute, limit development opportunities, force costly or otherwise burdensome changes to our operations or otherwise materially adversely affect us.
These or other similar laws and rules may materially restrict our operations, negatively impact demand for our services and/or the energy we transmit and distribute, limit development opportunities, force costly or otherwise burdensome changes to our operations, negatively impact customer affordability, or otherwise materially adversely affect us.
In some cases, we may be liable for damages even though we are not at fault, such as when the doctrine of inverse condemnation applies, which we discuss below under “Risks Related to Sempra California – Operational Risks.” For our regulated utilities, these costs may not be recoverable in rates.
In some cases, we may be liable for damages even though we are not at fault, such as when the doctrine of inverse condemnation applies, which we discuss below under “Risks Related to Sempra California – Operational Risks.” For our regulated utilities, these costs may not be recoverable in rates or recovery may be insufficient or delayed.
Certain of California’s local land use policies and forestry management practices have been relaxed to allow for the construction and development of residential and commercial projects in high-risk fire areas, which could lead to increased third-party claims and greater losses related to fires for which SDG&E or SoCalGas may be liable.
Certain of California’s local land use policies and forestry management practices have allowed for the construction and development of residential and commercial projects in high-risk fire areas, which could lead to increased third-party claims and greater losses related to fires for which SDG&E or SoCalGas may be liable.
The CPUC is conducting various proceedings regarding DER, including the evaluation of special programs and pilots; changes to the planning and operation of the electric grid to prepare for higher penetration of DER; future grid modernization investments; the deferral of traditional grid investments by DER; and the role of the electric grid operator.
The CPUC is conducting various proceedings regarding DER, including the evaluation of special programs and pilot projects; changes to the planning and operation of the electric grid to prepare for higher penetration of DER; future grid modernization investments; the deferral of traditional grid investments by DER; and the role of the electric grid operator.
The inability to access capital from our subsidiaries and entities accounted for as equity method investments could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. Sempra’s rights to the assets of its subsidiaries and equity method investments are structurally subordinated to the claims of each entity’s trade and other creditors.
The inability to access capital from our subsidiaries and equity method investments could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. Sempra’s rights to the assets of its subsidiaries and equity method investments are structurally subordinated to the claims of each entity’s trade and other creditors.
Any such rate change due to a downward trigger of the CCM or the denial by the CPUC of an automatic upward trigger of the CCM could have a material adverse effect on Sempra’s and the applicable utility’s results of operations, financial condition, cash flows and/or prospects. We discuss the CCM in “Part I – Item 1.
Any further rate changes due to a downward trigger of the CCM or the denial by the CPUC of an automatic upward trigger of the CCM could have a material adverse effect on Sempra’s and the applicable utility’s results of operations, financial condition, cash flows and/or prospects. We discuss the CCM in “Part I – Item 1.
Mexican governmental actions in the past several years in the electricity market include resolutions, orders, decrees, regulations and proposed and adopted amendments to Mexican law that could, among other things, threaten the prospects for private-party renewable energy generation in the country, limit the ability to dispatch renewable energy and receive or maintain operational permits, and increase costs of electricity for legacy renewables and cogeneration energy contract holders.
Mexican governmental actions in the past several years in the electricity market include resolutions, orders, decrees, regulations and proposed and adopted amendments to Mexican law that could, among other things, threaten the prospects for private-party renewable energy generation in the country, limit the ability to dispatch renewable energy and receive or maintain operational permits, increase costs of electricity for legacy renewable and cogeneration energy contract holders, and limit ownership of energy assets by private companies.
In addition, we may have or seek to obtain long-term leases or rights-of-way from governmental agencies or other third parties to operate our energy infrastructure on land we do not own.
In addition, we have and may in the future seek to obtain long-term leases or rights-of-way from governmental agencies or other third parties to operate our energy infrastructure on land we do not own.
Even if such costs are recoverable, these costs, coupled with necessary safety and reliability investments, may negatively impact the affordability of SDG&E’s and SoCalGas’ customer rates and, for our non-regulated-utility businesses, may cause costs to increase to levels that reduce customer demand and growth.
Even if such costs are recoverable, these costs, coupled with necessary safety and reliability investments, may negatively impact the affordability of SDG&E’s and SoCalGas’ customer rates and, for our businesses that are not regulated utilities, may cause costs to increase to levels that reduce customer demand and growth.
However, these measures may not fully or substantially offset any increases in operating expenses or financing costs caused by inflationary pressures and their use could introduce additional risks, any of which could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. We face risks from increased competition.
However, these measures may not fully or substantially offset any increases in operating expenses or financing costs caused by inflationary pressures and their use could introduce additional risks, any of which could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects.
In addition, if we are unable to defend and retain title to the properties we own or obtain or retain rights to construct and operate on the properties we do not own in a timely manner, on 2023 Form 10-K | 36 Table of Contents reasonable terms or at all, we could lose our rights to occupy and use these properties and the related facilities, which could prevent, limit or delay existing or proposed operations or projects, increase our costs, and result in breaches of permits or contracts and related legal costs, impairments, fines or penalties.
In addition, if we are unable to defend and retain title to the properties we own or obtain or retain rights to construct and operate on the properties we do not own in a timely manner, on reasonable terms or at all, we could lose our rights to occupy and use these properties and related facilities, which could prevent, limit or delay existing or proposed operations or projects, increase our costs, and result in breaches of permits or contracts and related legal costs, impairments, fines or penalties.
Conducting these activities in foreign jurisdictions subjects us to complex management, security, political, legal, economic and financial risks that vary by country, many of which may differ from and potentially be greater than those associated with our wholly domestic businesses, and the occurrence of any of these risks could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects.
Conducting these activities in foreign jurisdictions subjects us to complex management, security, political, legal, economic and financial risks that vary by country, many of which may differ from and potentially be greater than those associated with our wholly domestic businesses, and the occurrence of any of these 2024 Form 10-K | 60 Table of Contents risks could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects.
To the extent we have unhedged positions, or if any hedging counterparty fails to fulfill its contractual obligations or if our hedging strategies do not work as intended, fluctuating commodity prices and interest rates could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. 2023 Form 10-K | 40 Table of Contents Risk management procedures may not prevent or mitigate losses.
To the extent we have unhedged positions, or if any hedging counterparty fails to fulfill its contractual obligations or if our hedging strategies do not work as intended, fluctuating commodity prices and interest rates could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. Risk management procedures may not prevent or mitigate losses.
Electric utilities in California are experiencing increasing deployment of DER, such as solar generation, energy storage and energy efficiency and demand management technologies, and California’s environmental policy objectives are accelerating the pace and scope of these changes.
Electric utilities in California are experiencing increasing deployment of solar and wind generation, including DER, energy storage and energy efficiency and demand management technologies, and California’s environmental policy objectives are accelerating the pace and scope of these changes.
Any of these outcomes could have a material adverse effect on SDG&E’s and Sempra’s results of operations, financial condition, cash flows and/or prospects. Natural gas has increasingly been the subject of political and public debate, including a desire by some to eventually reduce or eliminate reliance on natural gas as an energy source .
Any of these outcomes could have a material adverse effect on SDG&E’s and Sempra’s results of operations, financial condition, cash flows and/or prospects. Natural gas continues to be the subject of political and public debate, including a desire by some to reduce or eliminate reliance on natural gas as an energy source .
Certain California legislators and other stakeholders have expressed a desire to limit or eliminate reliance on natural gas as an energy source by advocating increased use of renewable electricity and electrification.
Certain California legislators, regulators and other stakeholders have expressed a desire to limit or eliminate reliance on natural gas as an energy source through increased use of renewable electricity and electrification.
The long-term nature of these agreements and the small number of customers at each of these facilities exposes us to risks, including increased risk if these counterparties fail to meet their contractual obligations on a timely basis, increased credit risks, and risks associated with our relationships with these counterparties, including increased impacts of disputes or other similar issues which we have experienced in the past.
The long-term nature of these agreements and the small number of customers at each of these facilities exposes us to risks, including increased risk if these counterparties fail to meet their contractual obligations on a timely basis, increased credit risks, and risks associated with our relationships with these counterparties, including increased impacts of disputes or other similar 2024 Form 10-K | 43 Table of Contents issues which we have experienced in the past.
Additionally, the City of San Diego is studying the feasibility of municipalization as a potential alternative to SDG&E’s existing electric franchise agreement, and various aspects of the natural gas and electric franchise agreements granted by the City of San Diego to SDG&E have also been challenged in two lawsuits that we discuss in Note 16 of the Notes to the Consolidated Financial Statements.
The City of San Diego is studying the feasibility of municipalization as a potential alternative to SDG&E’s existing electric franchise agreement, and various aspects of SDG&E’s natural gas and electric franchise agreements have also been challenged in two lawsuits that we discuss in Note 15 of the Notes to the Consolidated Financial Statements.
Any such wildfires in SDG&E’s and SoCalGas’ territories (or outside of these territories in the event the Wildfire Fund is materially diminished) could materially adversely affect SDG&E’s, SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects, which we discuss further in this risk factor below and above under “Risks Related to All Sempra Businesses – Operational Risks.” 2023 Form 10-K | 43 Table of Contents The Wildfire Legislation In July 2019, the Wildfire Legislation was signed into law, which we discuss in Note 1 of the Notes to Consolidated Financial Statements.
Any such wildfires in SDG&E’s and SoCalGas’ territories (or outside of SDG&E’s territory in the event the Wildfire Fund is materially diminished) could materially adversely affect SDG&E’s, SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects, which we discuss further in this risk factor below and above under “Risks Related to All Sempra Businesses – Operational Risks.” The Wildfire Legislation In July 2019, the Wildfire Legislation was signed into law, which we discuss in Note 1 of the Notes to Consolidated Financial Statements.
Even if recoverable, investing to support the regulatory requirements and demand for lower carbon, reliable energy in California and in necessary safety and reliability at the same time may negatively impact the affordability of SDG&E’s and SoCalGas’ customer rates and their and Sempra’s results of operations, financial condition, cash flows and/or prospects.
Even if recoverable, simultaneously investing in support of necessary safety and reliability and the regulatory requirements and demand for reliable lower-carbon energy may negatively impact the affordability of SDG&E’s and SoCalGas’ customer rates and their and Sempra’s results of operations, financial condition, cash flows and/or prospects.
In addition, Sempra may elect to make capital contributions to its subsidiaries, which are not required to be repaid and are structurally subordinated to claims by creditors of the applicable subsidiary. Sempra’s investments in businesses it does not control exposes us to risks. We have investments in businesses we do not control or manage or in which we share control.
In addition, Sempra may elect to make capital contributions to its subsidiaries, which are not required to be repaid and are structurally subordinated to claims by creditors of the applicable subsidiary. Our investments in businesses we do not control expose us to risks. We have investments in businesses we do not control or manage or in which we share control.
The CPUC conducts reviews and audits of the matters under its authority and may launch investigations or open proceedings at its discretion, the results of which could include citations, disallowances, fines and penalties, as well as corrective or mitigation actions to address any noncompliance, any of which may not be sufficiently funded by customer rates or at all.
The CPUC conducts reviews and audits of the matters under its authority and may launch 2024 Form 10-K | 53 Table of Contents investigations or open proceedings at its discretion, the results of which could include citations, disallowances, fines and penalties, as well as corrective or mitigation actions to address any noncompliance, any of which may not be sufficiently funded by customer rates or at all.
The growth of third-party energy storage alternatives and other technologies also may increasingly compete with SDG&E’s traditional transmission and distribution infrastructure in delivering electricity to consumers. Certain FERC transmission development projects are open to competition, allowing independent developers to 2023 Form 10-K | 44 Table of Contents compete with incumbent utilities for the construction and operation of transmission facilities.
The growth of third-party energy storage alternatives and other technologies also may increasingly compete with SDG&E’s traditional transmission and distribution infrastructure in delivering electricity to consumers. Certain FERC transmission development projects are open to competition, allowing independent developers to compete with incumbent utilities for the construction and operation of transmission facilities.
To the extent the directors approve or Oncor otherwise pursues actions that are not in our interest, our results of operations, financial condition, cash flows and/or prospects may be materially adversely affected. Industry-Related Risks Changes in the regulation of Oncor or the regulation or operation of the electric utility industry and/or the ERCOT market could negatively affect Oncor.
To the extent the directors approve or Oncor otherwise pursues actions that are not in our interest, our results of operations, financial condition, cash flows and/or prospects may be materially adversely affected. 2024 Form 10-K | 55 Table of Contents Industry-Related Risks Changes in the regulation of Oncor or the regulation or operation of the electric utility industry and/or the ERCOT market could negatively affect Oncor.
Additional risks associated with our ability to safely and reliably construct, replace, operate, maintain and upgrade facilities and systems, which may be beyond our control, include: ▪ failure to meet customer demand for electricity and/or natural gas, including electrical blackouts or curtailments or gas outages ▪ natural gas surges into homes or other properties ▪ the release of hazardous or toxic substances, including gas leaks ▪ the failure to respond effectively to catastrophic events The occurrence of any of these events could affect supply and demand for electricity, natural gas or other forms of energy, cause unplanned outages, damage our assets and/or operations or those of third parties on which our businesses rely, damage property owned by customers or others, and cause personal injury or death.
Additional risks associated with our ability to safely and reliably construct, replace, operate, maintain and upgrade facilities and systems, which may be beyond our control, include: ▪ failure to meet customer demand for electricity and/or natural gas, including electric or gas outages ▪ gas surges into homes or other properties ▪ release of hazardous or toxic substances, including gas leaks ▪ other incidents impacting the health, safety, or security of employees, contractors, the public or our infrastructure ▪ failure to respond effectively to catastrophic events The occurrence of any of these events could affect supply and demand for electricity, natural gas or other forms of energy, cause unplanned outages, damage our assets and/or operations or those of third parties on which our businesses rely, damage property owned by customers or others, and cause personal injury or death.
Any actual or perceived noncompliance with applicable data privacy and security laws or any 2023 Form 10-K | 37 Table of Contents incidents targeting our or our vendors’ information systems; the integrity of the energy grid, our pipelines or our distribution, storage and other infrastructure; or our confidential information could result in disruptions to our business operations, regulatory compliance failures, inability to produce accurate and timely financial statements, energy delivery failures, financial and reputational loss, litigation, violations of applicable laws and fines or penalties, any of which could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects.
Any actual or perceived noncompliance with applicable data privacy and security laws or any incidents impacting our or our vendors’ information systems; the integrity of the energy grid, our pipelines or our distribution, storage and other infrastructure; or our personal, sensitive and confidential information could result in disruptions to our business operations, regulatory compliance failures, inability to produce accurate and timely financial statements, energy delivery failures, financial and reputational loss, litigation, violations of applicable laws and fines or penalties, any of which could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects.
Any of these outcomes could materially adversely affect our results of operations, financial condition, cash flows and/or prospects. Increasing activities and projects intended to advance new energy technologies could introduce us to new risks.
Any of these outcomes could materially adversely affect our results of operations, financial condition, cash flows and/or prospects. We face risks related to increasing activities and projects intended to advance new energy technologies.
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, making it impossible for us to entirely eliminate this risk.
Accordingly, we may be unable to anticipate these techniques or to implement adequate preventative measures, making it impossible for us to eliminate this risk.
Any efforts to enforce the terms of these arrangements through legal or other means could involve significant time and costs and would be unpredictable and subject to failure. In addition, many of these arrangements, including our relationships with the applicable counterparties, are important for the conduct and growth of our businesses.
Any efforts to enforce the terms of these arrangements through legal or other means could involve significant time and costs and would be unpredictable and subject to failure. In addition, many of these arrangements and relationships with counterparties are important for the development, construction and operation of our projects and growth of our businesses.
Reducing methane emissions also has become a major focus of certain local, state and federal agencies, resulting in passed or proposed legislation, regulation, policies and ordinances to prohibit or restrict the use of natural gas in new buildings, appliances and other applications. These actions could have the effect of reducing natural gas use over time.
Reducing methane emissions also has become a major focus of certain local, state and federal agencies, resulting in passed or proposed legislation, regulation, policies and ordinances to prohibit or restrict the use of natural gas in new buildings, appliances and other applications.
Sempra Infrastructure’s ability to enter into new or replace existing long-term capacity agreements for its natural gas pipeline operations depends on, among other factors, demand for and supply of LNG and/or natural gas from its transportation customers, which may include our LNG export facilities.
Sempra Infrastructure’s ability to secure new or maintain, extend or replace existing long-term sales or capacity agreements for its natural gas pipeline operations depends on, among other factors, demand for and supply of LNG and/or natural gas from its transportation customers, which may include our LNG facilities.
Increasing international, national, regional, state and local environmental concerns and related changes to the legal and regulatory framework, such as requirements for increased monitoring and surveillance, disclosures on environmental performance, pollution monitoring and control equipment, safety practices, emissions fees, taxes, penalties or other obligations or restrictions, may have material negative effects on our operations, costs, corporate planning, and the scope and economics of proposed infrastructure projects or other capital expenditures.
Moreover, increasing international, national, regional, state and local environmental concerns and related changes to applicable legal and regulatory frameworks, such as requirements for increased monitoring and surveillance, disclosures on environmental performance, pollution monitoring and control equipment, safety 2024 Form 10-K | 47 Table of Contents practices, emissions fees, taxes, penalties or other obligations or restrictions, may have material negative effects on our operations, costs, corporate planning, and the scope and economics of proposed infrastructure projects or other capital expenditures.
These risks include the following and the other risks discussed in this risk factor below: ▪ compliance with tax, trade, environmental and other foreign laws and regulations, including legal limitations on ownership in some foreign countries and inadequate or inconsistent enforcement of regulations ▪ actions by local regulatory bodies, including setting rates and tariffs that may be earned by or charged to our businesses 2023 Form 10-K | 54 Table of Contents ▪ adverse changes in social, political, economic or market conditions or the stability of foreign governments ▪ adverse rulings by foreign courts or tribunals; challenges obtaining, maintaining and complying with permits or approvals; difficulty enforcing contractual and property rights; and differing legal standards ▪ expropriation or theft of assets ▪ demand for hydrocarbon fuels, such as natural gas imported from the U.S., may be impacted by geopolitical factors ▪ with respect to our non-utility international business activities, changes in the priorities and budgets of international customers, which may be driven by many of the factors listed above, among others Mexican Government Influence on Economic and Energy Matters The Mexican government exercises significant and increasing influence over the Mexican energy sector and has adopted or proposed additional changes that, in each case, could impact private investment in this sector.
These risks include the following and the other risks discussed in this risk factor below: ▪ compliance with tax, trade, environmental and other foreign laws and regulations, including legal limitations on ownership in some foreign countries and inadequate or inconsistent enforcement of regulations ▪ actions by local regulatory bodies, such as the CRE, including setting rates and tariffs that may be earned by or charged to our businesses ▪ the timing and outcome of ratemaking proceedings can be affected by various factors, many of which are not in our control and recovery may be delayed and/or insufficient to recover our costs ▪ adverse changes in social, political, economic or market conditions or the stability of foreign governments or such foreign governments’ relations with the U.S. government ▪ adverse rulings by or instability in foreign courts or tribunals ▪ challenges obtaining, maintaining and complying with permits or approvals ▪ difficulty enforcing contractual and property rights and differing legal standards ▪ expropriation or theft of assets ▪ demand for hydrocarbon fuels, such as natural gas imported from the U.S., may be impacted by geopolitical factors ▪ with respect to our non-utility international business activities, changes in the priorities and budgets of international customers, which may be driven by many of the factors listed above, among others Mexican Government Influence on Economic and Energy Matters The Mexican government exercises significant and increasing influence over the Mexican energy sector and has adopted or proposed additional changes that, in each case, could impact private investment in this sector.
Foreign Corrupt Practices Act, the Mexican Federal Anticorruption Law in Public Contracting (Ley Federal Anticorrupción en Contrataciones Públicas) and similar laws, and are sensitive to U.S. and Mexican foreign policy, trade policy and other geopolitical factors. The current and the last U.S.
Foreign Corrupt Practices Act, the Mexican Federal Anticorruption Law in Public Contracting (Ley Federal Anticorrupción en Contrataciones Públicas) and similar laws, and are sensitive to foreign policy, trade policy and other geopolitical factors related to or applicable in each of these countries. The current and the last U.S.
If they fail to perform their obligations in accordance with these arrangements, we may be unable to meet our obligations and we may be required to enter into alternative arrangements or honor our underlying commitments at then-current market prices, which may result in losses to us or delays or other disruptions to our operations.
If they fail to perform their obligations in accordance with these arrangements or elect to exercise their early termination rights, we may be unable to meet our obligations and may be required to enter into alternative arrangements or honor our underlying commitments at then-current market prices, which may result in losses or delays or other operational disruptions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe SDG&E and SoCalGas boards of directors receive briefings from SDG&E’s and SoCalGas’ chief information officer and internal information security staff.
Biggest changeThe SDG&E and SoCalGas boards of directors receive briefings from SDG&E’s and SoCalGas’ chief information officer and internal information security staff. SDG&E’s and SoCalGas’ boards of directors also have safety committees that, at times, may oversee the matters described above on behalf of those companies’ respective boards of directors.
Our cybersecurity management teams supervise efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal information security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by information security tools deployed in the information technology environment.
Our cybersecurity management teams supervise efforts designed to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal information security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by information security tools deployed in the information technology environment.
Our cybersecurity risk management processes include: ▪ risk assessments performed by internal personnel and third-party advisors designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise information technology environments ▪ information security teams principally responsible for developing and implementing (1) cybersecurity risk assessment processes, (2) information security controls, and (3) response plans to cybersecurity incidents ▪ the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our information security controls ▪ cybersecurity awareness training and policies designed to address social engineering attacks targeting employees and contractors ▪ cybersecurity incident response plans that include procedures for responding to certain cybersecurity incidents ▪ risk management processes for third-party service providers, suppliers, and vendors We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect our results of operations, financial condition, cash flows and/or prospects.
Our cybersecurity risk management processes include: 2024 Form 10-K | 62 Table of Contents ▪ risk assessments performed by internal personnel and third-party advisors designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise information technology environments ▪ information security teams principally responsible for developing and implementing (1) cybersecurity risk assessment processes, (2) information security controls, and (3) response plans to cybersecurity incidents ▪ the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our information security controls ▪ cybersecurity awareness training and policies designed to address social engineering attacks targeting employees and contractors ▪ cybersecurity incident response plans that include procedures for responding to and reporting, if applicable, certain cybersecurity incidents ▪ risk management processes for third-party service providers, suppliers, and vendors We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect our results of operations, financial condition, cash flows and/or prospects.
ITEM 1C. CYBERSECURITY CYBERSECURITY RISK MANAGEMENT Sempra, SDG&E and SoCalGas have developed and implemented cybersecurity risk management processes intended to protect the confidentiality, integrity, and availability of our critical infrastructure, systems and information. These cybersecurity risk management processes include cybersecurity incident response plans that are integrated into each entity’s respective enterprise risk management and emergency management programs.
ITEM 1C. CYBERSECURITY CYBERSECURITY RISK MANAGEMENT Sempra, SDG&E and SoCalGas have cybersecurity risk management processes in place that are intended to protect the confidentiality, integrity, and availability of our critical infrastructure, systems and information. These cybersecurity risk management processes include cybersecurity incident response plans that are integrated into each entity’s respective enterprise risk management and emergency management programs.
Some of these members hold degrees and certifications that we believe enhance our ability to manage and respond to cybersecurity risks, including, among others, bachelor’s and/or master’s degrees in cybersecurity and computer science as well as certified information systems security professional, certified incident handler, and certified information security manager certifications.
Some of these members hold relevant degrees and certifications that we believe enhance our ability to manage and respond to cybersecurity risks, including, among others, bachelor’s and/or master’s degrees in cybersecurity and computer science as well as certified information systems security professional, certified incident handler, and certified information security manager certifications. 2024 Form 10-K | 63 Table of Contents
We have also formed materiality assessment teams, which include chief information security officers, chief information officers, chief risk officers, chief accounting officers or chief financial officers, and general counsels, to help assess the materiality of certain cybersecurity incidents.
Our cybersecurity materiality assessment teams, which include chief information security officers, chief information officers, chief risk officers, chief accounting officers or chief financial officers, and general counsels, help assess the materiality of certain cybersecurity incidents.
The cybersecurity councils meet regularly to receive updates on cybersecurity developments at Sempra and our consolidated entities from their cybersecurity management teams.
We have formed cybersecurity councils to provide overall corporate oversight for managing material risks from cybersecurity threats. The cybersecurity councils meet regularly to receive updates on cybersecurity developments at Sempra and our consolidated entities from their cybersecurity management teams.
Removed
SDG&E’s and SoCalGas’ boards of directors also have formed safety committees that, at times, may oversee the matters described above on behalf of those companies’ respective boards of directors. 2023 Form 10-K | 56 Table of Contents We have formed cybersecurity councils to provide overall corporate oversight for managing material risks from cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We own or lease land, warehouses, offices, operating and maintenance centers, shops and service facilities necessary to conduct our businesses. Each of our Registrants currently has adequate space and, if we need more space, we believe it is readily available.
Biggest changeITEM 2. PROPERTIES We own or lease land, warehouses, offices, operating and maintenance centers, shops and service facilities necessary to conduct our businesses. Each of the Registrants currently has adequate space and, if we need more space, we believe it is readily available.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLEGAL PROCEEDINGS We are not party to, and our property is not the subject of, any material pending legal proceedings (other than ordinary routine litigation incidental to our businesses) or environmental proceedings described in Item 103(c)(3) of SEC Regulation S-K except for the matters described in Note 16 of the Notes to Consolidated Financial Statements, “Part I – Item 1A.
Biggest changeLEGAL PROCEEDINGS We are not party to, and our property is not the subject of, any material pending legal proceedings (other than ordinary routine litigation incidental to our businesses), including environmental proceedings described in Item 103(c)(3) of SEC Regulation S-K, except for the matters described in Note 15 of the Notes to Consolidated Financial Statements or referred to in “Part I – Item 1A.
Risk Factors” and “Part II – Item 7. MD&A.”
Risk Factors” or “Part II – Item 7. MD&A.”

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of February 27, 2024, a maximum of $1.25 billion and no more than 19,632,529 shares may yet be purchased under this repurchase authorization. 2023 Form 10-K | 58 Table of Contents ITEM 6. (RESERVED) Not applicable.
Biggest changeThis repurchase authorization was publicly announced on August 5, 2020 and has no expiration date. As of February 25, 2025, a maximum of $1.25 billion and no more than 19,632,529 shares may yet be purchased under this repurchase authorization.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Sempra Common Stock Our common stock is traded on the NYSE under the trading symbol SRE and the Mexican Stock Exchange under the trading symbol SRE.MX. At February 20, 2024, there were approximately 20,353 record holders of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Sempra Common Stock Our common stock is traded on the NYSE under the trading symbol SRE. At February 19, 2025, there were approximately 19,241 record holders of our common stock.
Removed
Information concerning dividend declarations for Sempra is included in “Part II – Item 7. MD&A – Capital Resources and Liquidity – Sources and Uses of Cash – Dividends.” We file annual, quarterly and current reports, proxy statements and other information with the SEC. These reports are also publicly filed with the CNBV and Mexican Stock Exchange.
Added
Information concerning dividend declarations for Sempra is included in “Part II – Item 7.
Removed
We have filed these reports with these regulators in a complete and timely manner during the last three years (or, with respect to the regulators in Mexico, for the shorter period in which our common stock has been registered in Mexico).
Added
MD&A – Capital Resources and Liquidity – Sources and Uses of Cash – Dividends.” Market for Sempra’s Common Stock Sempra’s common stock began trading on the Mexican Stock Exchange under the trading symbol SRE.MX in May 2021 following an exchange offer launched in the U.S. and Mexico to acquire the then publicly owned shares of IEnova for newly issued shares of our common stock.
Removed
The financial information included in our annual and quarterly reports generally covers the most recently completed fiscal year or quarter, as applicable, as well as the most recently completed year-to-date period in our quarterly reports, in each case compared to the same period from the prior year, and the compensation information included in our proxy statements generally covers the most recently completed fiscal year.
Added
In November 2024, the CNBV approved our application to cross-list our common stock on the International Quotation System (SIC) of the Mexican Stock Exchange and delist our common stock from the general listing of the Mexican Stock Exchange.
Removed
Our address and telephone number for the offices of our attorney-in-fact in Mexico are as follows: White & Case, S.C. Torre del Bosque - PH Blvd. Manuel Ávila Camacho #24 Col. Lomas de Chapultepec 11000 Ciudad de México +52 55 5540 9691 Exchange Controls and Other Limitations Affecting the Holders of Securities.
Added
Our common stock is no longer quoted or traded on the general listing of the Mexican Stock Exchange or subject to applicable reporting requirements as of December 13, 2024, but remains eligible for trading by Mexican investors on the SIC effective December 16, 2024.
Removed
U.S. federal laws do not currently impose any currency exchange controls that could affect the ability of holders of Sempra’s shares of common stock to transfer funds from the U.S. to Mexico in connection with a potential sale or other divestiture of Sempra’s shares of common stock.
Removed
This repurchase authorization was publicly announced on August 5, 2020 and has no expiration date.
Removed
The board of directors did not adjust the 25,000,000 aggregate number of shares that could be repurchased or the number of shares remaining authorized to be repurchased under this repurchase authorization in connection with the two-for-one split of Sempra’s common stock in the form of a 100% stock dividend effected in August 2023 that we discuss in Note 14 of the Notes to Consolidated Financial Statements.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn 2023 compared to 2022, the increase in earnings of $233 million (15%) was primarily due to: • $199 million charge in 2022 relating to litigation and regulatory matters pertaining to the Leak • $39 million higher net regulatory interest income • $37 million higher income tax benefits primarily from flow-through items, which includes $25 million related to income tax benefits in 2023 for previously unrecognized income tax benefits pertaining to gas repairs expenditures • $30 million higher CPUC base operating margin, net of operating expenses and $46 million from lower authorized cost of capital ▪ $21 million higher electric transmission margin ▪ $13 million higher regulatory awards approved by the CPUC ▪ $10 million in penalties in 2022 related to energy efficiency and advocacy OSCs Offset by: ▪ $90 million higher net interest expense ▪ $16 million lower income tax benefit from the resolution of prior year income tax items In 2022 compared to 2021, the increase in earnings of $1.1 billion was primarily due to: ▪ $949 million decrease in charges relating to litigation and regulatory matters pertaining to the Leak comprised of a $199 million charge in 2022 compared to $1,148 million in 2021 ▪ $161 million higher CPUC base operating margin, net of operating expenses ▪ $21 million lower net income tax expense primarily from flow-through items, net of lower associated regulatory revenues ▪ $20 million higher income tax benefit from the resolution of prior year income tax items ▪ $15 million higher net regulatory interest income ▪ $14 million higher AFUDC equity Offset by: ▪ $52 million higher net interest expense ▪ $10 million in penalties in 2022 related to energy efficiency and advocacy OSCs Sempra Texas Utilities In 2023 compared to 2022, the decrease in earnings of $42 million (6%) was primarily due to lower equity earnings from Oncor Holdings driven by: ▪ higher interest expense and depreciation expense attributable to invested capital ▪ higher O&M ▪ write-off of rate base disallowances in 2023 resulting from the PUCT’s final order in Oncor’s comprehensive base rate review Offset by: ▪ higher revenues attributable to: ◦ rate updates to reflect increases in invested capital ◦ increases in transmission billing units ◦ new base rates implemented in May 2023 ◦ customer growth Offset by: ◦ lower customer consumption primarily attributable to weather 2023 Form 10-K | 61 Table of Contents In 2022 compared to 2021, the increase in earnings of $120 million (19%) was primarily due to higher equity earnings from Oncor Holdings driven by: ▪ higher revenues attributable to: ◦ rate updates to reflect increases in invested capital ◦ higher customer consumption attributable primarily to weather ◦ customer growth Offset by: ▪ higher depreciation expense and interest expense attributable to invested capital ▪ higher O&M Sempra Infrastructure In 2023 compared to 2022, the increase in earnings of $567 million was primarily due to: ▪ $1.1 billion from asset and supply optimization driven by unrealized gains in 2023 compared to unrealized losses in 2022 on commodity derivatives due to changes in natural gas prices ▪ $112 million lower income tax expense in 2023 attributable to NCI’s share of higher U.S. partnerships’ pretax income ▪ $99 million from the transportation business driven by higher equity earnings and revenues, including the cumulative impact of new tariffs going into effect in June 2023 for certain pipelines in Mexico Offset by: ▪ $397 million decrease from $543 million earnings attributable to NCI in 2023 compared to $146 million earnings attributable to NCI in 2022 primarily due to an increase in SI Partners net income and from the sale of a 10% NCI in SI Partners to ADIA in June 2022 ▪ $127 million unfavorable impact from foreign currency and inflation effects on our monetary positions in Mexico, comprised of a $346 million unfavorable impact in 2023 compared to a $219 million unfavorable impact in 2022 ▪ $61 million lower net income tax benefit primarily from the remeasurement of certain deferred income taxes and outside basis differences in a JV investment ▪ $58 million lower equity earnings from Cameron LNG JV driven by lower revenues from excess LNG and higher interest expense ▪ $37 million higher O&M from a provision for expected credit losses on a customer’s past due receivable balance ▪ $21 million from the LNG business driven by higher development costs and certain non-capitalized expenses from projects under construction ▪ $19 million higher net interest expense due to $27 million net unrealized losses in 2023 compared to $27 million net unrealized gains in 2022 on a contingent interest rate swap related to the PA LNG Phase 1 project and higher interest rates and borrowings on committed lines of credit, offset by higher capitalization of interest expense on projects under construction In 2022 compared to 2021, the decrease in earnings of $372 million was primarily due to: ▪ $431 million from asset and supply optimization driven by $283 million losses in 2022 compared to $148 million earnings in 2021 driven by higher unrealized losses on commodity derivatives due to changes in natural gas prices, offset by higher diversion fees ▪ $169 million unfavorable impact from foreign currency and inflation effects on our monetary positions in Mexico, net of foreign currency derivative effects, comprised of a $216 million unfavorable impact in 2022 compared to a $47 million unfavorable impact in 2021 Offset by: ▪ $79 million higher equity earnings from Cameron LNG JV primarily from higher revenues from excess LNG production and maintenance revenues ▪ $50 million higher net income tax benefit primarily from the remeasurement of certain deferred income taxes and outside basis differences in JV investments ▪ $50 million lower net interest expense, including $37 million in charges associated with hedge termination costs and a write-off of unamortized debt issuance costs from the early redemptions of debt in October 2021 and $27 million net unrealized gains in 2022 on a contingent interest rate swap related to the proposed PA LNG Phase 1 project ▪ $42 million from the transportation business in Mexico driven by higher rates and higher equity earnings at IMG excluding unfavorable impact from foreign currency and inflation 2023 Form 10-K | 62 Table of Contents Parent and Other In 2023 compared to 2022, the decrease in losses of $178 million (38%) was primarily due to: ▪ $120 million deferred income tax expense in 2022 associated with the change in our indefinite reinvestment assertion related to our foreign subsidiaries ▪ $63 million from $13 million net investment gains in 2023 compared to $50 million net investment losses in 2022 on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation plan ▪ $40 million equity earnings in 2023 from our investment in RBS Sempra Commodities based on a legal settlement, which we discuss in Note 16 of the Notes to Consolidated Financial Statements ▪ $23 million income tax benefit in 2023 from the remeasurement of certain deferred income taxes Offset by: ▪ $68 million higher net interest expense ▪ $41 million lower income tax benefit from changes to a valuation allowance against certain tax credit carryforwards In 2022 compared to 2021, the increase in losses of $30 million (7%) was primarily due to: ▪ $120 million deferred income tax expense associated with the change in our indefinite reinvestment assertion related to our foreign subsidiaries ▪ $79 million from $50 million net investment losses in 2022 compared to $29 million net investment gains in 2021 on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation plan ▪ $50 million equity earnings in 2021 related to our investment in RBS Sempra Commodities to settle pending VAT matters and related legal costs ▪ $26 million gain on the sale of PXiSE in December 2021 Offset by: ▪ $92 million in charges associated with make-whole premiums and a write-off of unamortized discount and debt issuance costs from the early redemptions of debt in December 2021 ▪ $72 million net income tax expense related to the utilization of a deferred income tax asset upon completing the sale of a 20% NCI in SI Partners to KKR Pinnacle in October 2021 ▪ $58 million decrease from $49 million income tax benefit in 2022 compared to $9 million income tax expense in 2021 from changes to a valuation allowance against certain tax credit carryforwards ▪ $19 million lower preferred dividends due to the mandatory conversion of all series B preferred stock in July 2021 SIGNIFICANT CHANGES IN REVENUES AND COSTS The regulatory framework permits SoCalGas and SDG&E to recover certain program expenditures and other costs authorized by the CPUC (referred to as “refundable programs”).
Biggest changeIn 2024 compared to 2023, the increase in earnings of $99 million (6%) to $1.8 billion was primarily due to: ▪ $217 million higher income tax benefits primarily from flow-through items, including higher gas repairs tax benefits, offset by $25 million related to income tax benefits in 2023 from previously unrecognized income tax benefits pertaining to gas repairs expenditures ▪ $12 million higher electric transmission margin ▪ $12 million higher AFUDC equity ▪ $11 million higher net regulatory interest income ▪ $9 million higher CPUC base operating margin authorized for 2024, net of operating expenses, including higher authorized cost of capital Offset by: ▪ $89 million charge in 2024 for amounts relating to the FERC order finding that the TO5 adder refund provision has been triggered, requiring SDG&E to refund customers the California ISO adder retroactively from June 1, 2019, which we discuss in Note 4 of the Notes to Consolidated Financial Statements ▪ $60 million higher net interest expense ▪ $15 million impairment from disallowed capital costs in the 2024 GRC FD Sempra Texas Utilities In 2024 compared to 2023, the increase in earnings of $87 million (13%) to $781 million was primarily due to higher equity earnings from Oncor Holdings driven by: ▪ overall higher revenues primarily attributable to: ◦ rate updates to reflect increases in invested capital ◦ updates to transmission billing units ◦ customer growth ◦ base rates implemented in May 2023 Offset by: ◦ lower customer consumption primarily attributable to weather ▪ write-off of rate base disallowances in 2023 resulting from the PUCT’s final order in Oncor’s comprehensive base rate review Offset by: ▪ higher interest expense and depreciation expense attributable to increases in invested capital ▪ higher O&M 2024 Form 10-K | 68 Table of Contents Sempra Infrastructure In 2024 compared to 2023, the increase in earnings of $34 million (4%) to $911 million was primarily due to: ▪ $499 million favorable impact from foreign currency and inflation effects on our monetary positions in Mexico, comprised of a $263 million favorable impact in 2024 compared to a $236 million unfavorable impact in 2023 ▪ $61 million favorable impact from $19 million net interest income in 2024 compared to $42 million net interest expense in 2023 primarily due to higher capitalization of interest expense in 2024 from projects under construction ▪ $47 million favorable impact in interest expense from $30 million unrealized gains in 2024 compared to $17 million unrealized losses in 2023 on interest rate swaps related to the PA LNG Phase 1 project ▪ $21 million favorable impact from $20 million income tax benefit in 2024 compared to $1 million income tax expense in 2023 primarily from outside basis differences and remeasurement of deferred taxes Offset by: ▪ $463 million from asset and supply optimization driven by unrealized losses in 2024 compared to unrealized gains in 2023 on commodity derivatives due to changes in natural gas prices and lower LNG diversion fees ▪ $79 million from the transportation business driven by lower equity earnings and revenues, including the cumulative impact of new tariffs going into effect in June 2023 for certain pipelines in Mexico and a customer’s early termination of firm transportation agreements in 2023 ▪ $15 million from the renewables business driven by lower volumes from wind power generation assets ▪ $14 million from lower revenues in 2024 offset by higher O&M in 2023 from a provision for expected credit losses on a customer’s past due receivable balance Parent and Other In 2024 compared to 2023, the increase in losses of $433 million to $721 million was primarily due to: ▪ $330 million income tax expense in 2024 from changes to a valuation allowance against foreign tax credits that were carried forward from the implementation of the Tax Cuts and Jobs Act of 2017 ▪ $32 million from higher net interest expense ▪ $24 million decrease in equity earnings related to our investment in RBS Sempra Commodities LLP due to $16 million in 2024 from the substantial dissolution of the partnership and $40 million in 2023 related to a legal settlement, which we discuss in Notes 5 and 15 of the Notes to Consolidated Financial Statements ▪ $23 million income tax benefit in 2023 from the remeasurement of certain deferred income taxes ▪ $5 million related to settlement charges from our non-qualified pension plan in 2024 SIGNIFICANT CHANGES IN REVENUES AND COSTS The regulatory framework permits SDG&E and SoCalGas to recover certain program expenditures and other costs authorized by the CPUC (referred to as “refundable programs”).
Actual income taxes could vary from estimated amounts because of: ▪ future impacts of various items, including changes in tax laws, regulations, interpretations and rulings ▪ our financial condition in future periods ▪ the resolution of various income tax issues between us and taxing and regulatory authorities Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained.
Actual income taxes could vary from estimated amounts because of: ▪ future impacts of various items, including changes in tax laws, regulations, interpretations and rulings ▪ our financial condition in future periods ▪ the resolution of various income tax issues between us and taxing and regulatory authorities Unrecognized income tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained.
Weighted-Average Rate Base Rate base is the value of assets on which SDG&E and SoCalGas are permitted to earn a specified rate of return in accordance with rules set by regulatory agencies, including the CPUC and the FERC (for SDG&E), which is calculated using a 13-month average in accordance with CPUC methodology as adopted in rate-setting proceedings.
Rate Base For SDG&E and SoCalGas, rate base is the value of assets on which SDG&E and SoCalGas are permitted to earn a specified rate of return in accordance with rules set by regulatory agencies, including the CPUC and the FERC (for SDG&E), which is calculated using a 13-month average in accordance with CPUC methodology as adopted in rate-setting proceedings.
The proposed LNG export terminal would be supplied with U.S. natural gas and would use excess natural gas and pipeline capacity on existing pipelines in Mexico with the intent of helping to meet growing demand for natural gas and LNG in the Mexican and Pacific markets.
The proposed LNG export terminal would be supplied with U.S. natural gas and would use excess capacity on existing pipelines in Mexico with the intent of helping to meet growing demand for natural gas and LNG in the Mexican and Pacific markets.
Sempra Infrastructure Sempra Infrastructure expects to fund capital expenditures, investments and operations in part with available funds, including existing credit facilities, and cash flows from operations of the Sempra Infrastructure businesses.
Sempra Infrastructure Sempra Infrastructure expects to fund capital expenditures, investments and operations in part with available funds, including existing credit facilities, and cash flows from operations from the Sempra Infrastructure businesses.
We provide additional detail in Note 15 of the Notes to Consolidated Financial Statements. IMPAIRMENT TESTING OF LONG-LIVED ASSETS Sempra Whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable, we consider if the estimated future undiscounted cash flows are less than the carrying amount of the asset.
We provide additional detail in Note 14 of the Notes to Consolidated Financial Statements. IMPAIRMENT TESTING OF LONG-LIVED ASSETS Sempra Whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable, we consider if the estimated future undiscounted cash flows are less than the carrying amount of the asset.
We provide details of our pension and PBOP plans in Note 9 of the Notes to Consolidated Financial Statements. SONGS ASSET RETIREMENT OBLIGATIONS Sempra, SDG&E SDG&E’s legal AROs related to the decommissioning of SONGS are estimated based on a site-specific study performed no less than every three years.
We provide details of our pension and PBOP plans in Note 8 of the Notes to Consolidated Financial Statements. SONGS ASSET RETIREMENT OBLIGATIONS Sempra, SDG&E SDG&E’s legal AROs related to the decommissioning of SONGS are estimated based on a site-specific study performed no less than every three years.
We believe that these cash flow sources, combined with available funds, will be adequate to fund our operations in both the short-term and long-term, including to: ▪ finance capital expenditures ▪ repay debt ▪ fund dividends ▪ fund contractual and other obligations and otherwise meet liquidity requirements ▪ fund capital contribution requirements ▪ fund new business or asset acquisitions or start-ups Sempra, SDG&E and SoCalGas currently have reasonable access to the money markets and capital markets and are not currently constrained in their ability to borrow or otherwise raise money at market rates from commercial banks, under existing revolving credit facilities, through public offerings of debt or equity securities, or through private placements of debt supported by our revolving credit facilities in the case of commercial paper.
We believe that these cash flow sources, combined with available funds, will be adequate to fund our operations in both the short-term and long-term, including to: ▪ finance capital expenditures ▪ repay debt ▪ fund dividends ▪ fund contractual and other obligations and otherwise meet liquidity requirements ▪ fund capital contribution requirements ▪ fund new business or asset acquisitions Sempra, SDG&E and SoCalGas currently have reasonable access to the money markets and capital markets and are not currently constrained in their ability to borrow or otherwise raise money at market rates from commercial banks, under existing revolving credit facilities, through public offerings of debt or equity securities (including under our ATM program or other offerings), or through private placements of debt supported by our revolving credit facilities in the case of commercial paper.
Cameron LNG JV is developing a proposed expansion project that would add one liquefaction train with an expected maximum production capacity of approximately 6.75 Mtpa and would increase the production capacity of the existing three trains at the Cameron LNG Phase 1 facility by up to approximately 1 Mtpa through debottlenecking activities.
Cameron LNG JV is developing a proposed expansion project that would add one electric drive liquefaction train with an expected maximum production capacity of approximately 6.75 Mtpa and would increase the production capacity of the existing three trains at the Cameron LNG Phase 1 facility by up to approximately 1 Mtpa through debottlenecking activities.
The critical assumptions used to develop the required estimates include the following key factors: ▪ discount rates ▪ expected return on plan assets ▪ health care cost trend rates ▪ interest crediting rate on cash balance accounts ▪ mortality rate 2023 Form 10-K | 96 Table of Contents ▪ rate of compensation increases ▪ termination and retirement rates ▪ utilization of postretirement welfare benefits ▪ payout elections (lump sum or annuity) ▪ lump sum interest rates The actuarial assumptions we use may differ materially from actual results due to: ▪ return on plan assets ▪ changing market and economic conditions ▪ higher or lower withdrawal rates ▪ longer or shorter participant life spans ▪ more or fewer lump sum versus annuity payout elections made by plan participants ▪ higher or lower retirement rates Changes in the estimated costs or timing of pension and PBOP, or the assumptions and judgments used by management underlying these estimates (primarily the discount rate and assumed rate of return on plan assets), as well as changes in the circumstances associated with rate recovery, could have a material effect on the recorded expenses and liabilities.
The critical assumptions used to develop the required estimates include the following key factors: ▪ discount rates ▪ expected return on plan assets ▪ health care cost trend rates ▪ interest crediting rate on cash balance accounts ▪ mortality rate ▪ rate of compensation increases ▪ termination and retirement rates 2024 Form 10-K | 102 Table of Contents ▪ utilization of postretirement welfare benefits ▪ payout elections (lump sum or annuity) ▪ lump sum interest rates The actuarial assumptions we use may differ materially from actual results due to: ▪ return on plan assets ▪ changing market and economic conditions ▪ higher or lower withdrawal rates ▪ longer or shorter participant life spans ▪ more or fewer lump sum versus annuity payout elections made by plan participants ▪ higher or lower retirement rates Changes in the estimated costs or timing of pension and PBOP, or the assumptions and judgments used by management underlying these estimates (primarily the discount rate and expected return on plan assets), as well as changes in the circumstances associated with rate recovery, could have a material effect on the recorded expenses and liabilities.
This could make it more costly for Sempra, SDG&E, SoCalGas and Sempra’s other subsidiaries to issue debt securities, to borrow under credit facilities and to raise certain other types of financing. We provide additional information about our credit ratings at Sempra, SDG&E and SoCalGas in “Part I – Item 1A.
This could make it more costly for Sempra, SDG&E, SoCalGas and Sempra’s other subsidiaries to issue debt or equity securities, to borrow under credit facilities and to raise certain other types of financing. We provide additional information about our credit ratings at Sempra, SDG&E and SoCalGas in “Part I – Item 1A.
The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial condition and cash flows. We discuss these matters and additional information related to accounting for income taxes, including uncertainty in income taxes, in Note 8 of the Notes to Consolidated Financial Statements.
The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial condition and cash flows. We discuss these matters and additional information related to accounting for income taxes, including uncertainty in income taxes, in Note 7 of the Notes to Consolidated Financial Statements.
Upon performing a qualitative analysis as of October 1, 2023, we determined that it was not more likely than not that the fair value of such reporting units was less than their respective carrying values. Our goodwill impairment test is determined based on assumptions existing as of that point in time.
Upon performing a qualitative analysis as of October 1, 2024, we determined that it was not more likely than not that the fair value of such reporting units was less than their respective carrying values. Our goodwill impairment test is determined based on assumptions existing as of that point in time.
(2) Available unused credit is the total available on committed and uncommitted lines of credit that we discuss in Note 7 of the Notes to Consolidated Financial Statements. Because our commercial paper programs are supported by these lines, we reflect the amount of commercial paper outstanding and any letters of credit outstanding as a reduction to the available unused credit.
(2) Available unused credit is the total available on committed and uncommitted lines of credit that we discuss in Note 6 of the Notes to Consolidated Financial Statements. Because our commercial paper programs are supported by these lines, we reflect the amount of commercial paper outstanding and any letters of credit outstanding as a reduction to the available unused credit.
In addition, the terms of Sempra’s series C preferred stock limit Sempra’s ability to declare dividends on its common stock under certain circumstances. We provide additional information about dividend restrictions in “Restricted Net Assets” in Note 1 of the Notes to Consolidated Financial Statements and in Note 13 of the Notes to Consolidated Financial Statements.
In addition, the terms of Sempra’s series C preferred stock limit Sempra’s ability to declare dividends on its common stock under certain circumstances. We provide additional information about dividend restrictions in “Restricted Net Assets” in Note 1 of the Notes to Consolidated Financial Statements and in Note 11 of the Notes to Consolidated Financial Statements.
The impacts of these cross-currency swaps are offset in OCI and are reclassified from AOCI into earnings through other income, net, and interest expense as settlements occur. 2023 Form 10-K | 72 Table of Contents Certain of our Mexican pipelines (namely Los Ramones I and San Fernando at IEnova Pipelines and Los Ramones Norte at TAG Pipelines) generate revenue based on tariffs that are set by government agencies in Mexico, with contracts denominated in Mexican pesos that are indexed to the U.S. dollar, adjusted annually for inflation and fluctuation in the exchange rate.
The impacts of these cross-currency swaps are offset in OCI and are reclassified from AOCI into earnings through other income, net, and interest expense as settlements occur. 2024 Form 10-K | 75 Table of Contents Certain of our Mexican pipelines (namely Los Ramones I and San Fernando at IEnova Pipelines and Los Ramones Norte at TAG Pipelines) generate revenue based on tariffs that are set by government agencies in Mexico, with contracts denominated in Mexican pesos that are indexed to the U.S. dollar, adjusted annually for inflation and fluctuation in the exchange rate.
The guarantee will terminate upon full repayment of Cameron LNG JV’s debt, scheduled to occur in 2039, or replenishment of the amount withdrawn by Sempra Infrastructure from the SDSRA. We discuss this guarantee in Note 6 of the Notes to Consolidated Financial Statements.
The guarantee will terminate upon full repayment of Cameron LNG JV’s debt, scheduled to occur in 2039, or replenishment of the amount withdrawn by Sempra Infrastructure from the SDSRA. We discuss this guarantee in Note 5 of the Notes to Consolidated Financial Statements.
The following tables include only significant changes in cash flow activities for each of our Registrants.
The following tables include only significant changes in cash flow activities for each of the Registrants.
For a discussion of SDG&E’s results of operations and significant changes in earnings, revenues and costs for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to “ Part II – Item 7.
For a discussion of SDG&E’s results of operations and significant changes in earnings, revenues and costs for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to “ Part II – Item 7.
For a discussion of SoCalGas’ results of operations and significant changes in earnings, revenues and costs for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to “ Part II – Item 7.
For a discussion of SoCalGas’ results of operations and significant changes in earnings, revenues and costs for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to “ Part II – Item 7.
At December 31, 2023, Sempra Infrastructure had $411 million in PP&E, net, related to the Guaymas-El Oro segment of the Sonora pipeline, which could be subject to impairment if Sempra Infrastructure is unable to re-route a portion of the pipeline and resume operations or if Sempra Infrastructure terminates the contract and is unable to obtain recovery, which in each case could have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
At December 31, 2024, Sempra Infrastructure had $401 million in PP&E, net, related to the Guaymas-El Oro segment of the Sonora pipeline, which could be subject to impairment if Sempra Infrastructure is unable to re-route a portion of the pipeline and resume operations or if Sempra Infrastructure terminates the contract and is unable to obtain recovery, which in each case could have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
The estimate of the obligations includes: ▪ estimated decommissioning costs, including labor, equipment, material and other disposal costs ▪ inflation adjustment applied to estimated cash flows ▪ discount rate based on a credit-adjusted risk-free rate 2023 Form 10-K | 97 Table of Contents ▪ actual decommissioning costs, progress to date and expected duration of decommissioning activities SDG&E’s nuclear decommissioning expenses are subject to rate recovery and, therefore, rate-making accounting treatment is applied to SDG&E’s nuclear decommissioning activities.
The estimate of the obligations includes: ▪ estimated decommissioning costs, including labor, equipment, material and other disposal costs ▪ inflation adjustment applied to estimated cash flows ▪ discount rate based on a credit-adjusted risk-free rate ▪ actual decommissioning costs, progress to date and expected duration of decommissioning activities 2024 Form 10-K | 103 Table of Contents SDG&E’s nuclear decommissioning expenses are subject to rate recovery and, therefore, rate-making accounting treatment is applied to SDG&E’s nuclear decommissioning activities.
However, we generally do not hedge our deferred income tax assets and liabilities, which makes us susceptible to volatility in income tax expense caused by exchange rate fluctuations and inflation. 2023 Form 10-K | 73 Table of Contents We discuss herein SDG&E’s results of operations and significant changes in earnings, revenues and costs for the year ended December 31, 2023 compared to the year ended December 31, 2022.
However, we generally do not hedge our deferred income tax assets and liabilities, which makes us susceptible to volatility in income tax expense caused by exchange rate fluctuations and inflation. 2024 Form 10-K | 76 Table of Contents We discuss herein SDG&E’s results of operations and significant changes in earnings, revenues and costs for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We are not able to reasonably estimate the possible loss or a range of possible losses in excess of the amounts accrued, which could be significant and could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects. Natural Gas Storage Operations and Reliability.
We are not able to reasonably estimate the possible loss or a range of possible losses in excess of the amounts accrued, which could be significant and could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects. Operations and Reliability.
An unfavorable decision on one or more of these amparo or other challenges, the impact of the amendments that have become effective (due to unsuccessful amparo challenges or otherwise), or the possibility of future reforms to the energy industry through additional amendments to Mexican laws, regulations or rules (including through amendments to the constitution) may impact our ability to operate our facilities at existing levels or at all, may result in increased costs for Sempra Infrastructure and its customers, may adversely affect our ability to develop new projects, may result in 2023 Form 10-K | 89 Table of Contents decreased revenues and cash flows, and may negatively impact our ability to recover the carrying values of our investments in Mexico, any of which may have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
An unfavorable decision on one or more of these amparo or other challenges, the impact of the amendments that have become effective (due to unsuccessful amparo challenges or otherwise), or the possibility of future reforms to the energy industry through additional amendments to Mexican laws, regulations or rules (including through amendments to the Mexican Constitution) may impact our ability to operate our facilities at existing levels or at all, may result in increased costs for Sempra Infrastructure and its customers, may adversely affect our ability to develop new projects, may result in decreased revenues and cash flows, and may negatively impact our ability to recover the carrying values of our investments in Mexico, any of which may have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
SDG&E and SoCalGas have regulatory mechanisms to recover credit losses and thus record changes in the allowances for credit losses related to Accounts Receivable – Trade that are probable of recovery in regulatory accounts. Although SDG&E and SoCalGas have regulatory mechanisms to recover credit losses, delay in payments by customers impact the timing of cash flows.
SDG&E and SoCalGas have regulatory mechanisms to recover credit losses and thus record changes in the allowances for credit losses related to Accounts Receivable – Trade that are probable of recovery in regulatory accounts. Although SDG&E and SoCalGas have regulatory mechanisms to recover credit losses, delay in payments by customers impacts the timing of their cash flows.
Specifically, if future recovery of costs ceases to be probable, all or part of the associated regulatory assets and/or plant investments would need to be written off against current period earnings, or adverse regulatory or legislative actions could give rise to material new or higher regulatory liabilities.
Specifically, if future recovery of costs ceases to be probable, all or part of the associated regulatory assets would need to be written off against current period earnings, or adverse regulatory or legislative actions could give rise to material new or higher regulatory liabilities.
We discuss this guarantee in Notes 1, 6 and 12 of the Notes to Consolidated Financial Statements. Energy Networks Sonora Pipeline. Sempra Infrastructure’s Sonora natural gas pipeline consists of two segments, the Sasabe-Puerto Libertad-Guaymas segment and the Guaymas-El Oro segment. Each segment has its own service agreement with the CFE.
We discuss this guarantee in Notes 1, 5 and 10 of the Notes to Consolidated Financial Statements. Energy Networks Sonora Pipeline. Sempra Infrastructure’s Sonora natural gas pipeline consists of two pipeline segments, the Sasabe-Puerto Libertad-Guaymas segment and the Guaymas-El Oro segment. Each segment has its own service agreement with the CFE.
We calculate expected interest payments for variable-rate obligations based on forecasted rates in effect at December 31, 2023. We discuss our long-term debt activities, including the use of proceeds on long-term debt issuances, and maturities in Note 7 of the Notes to Consolidated Financial Statements.
We calculate expected interest payments for variable-rate obligations based on forecasted rates in effect at December 31, 2024. We discuss our long-term debt activities, including the use of proceeds on long-term debt issuances, and maturities in Note 6 of the Notes to Consolidated Financial Statements.
The following table illustrates the increase to SDG&E’s and Sempra’s ARO liability if the cost escalation rate was adjusted while leaving all other assumptions constant: INCREASE TO ARO AND REGULATORY ASSET (Dollars in millions) December 31, 2023 Uniform increase in escalation percentage of 1 percentage point $ 65 The increase in the ARO liability driven by an increase in the cost escalation rate would result in a decrease in the regulatory liability for recoveries in excess of ARO liabilities.
The following table illustrates the increase to SDG&E’s and Sempra’s ARO liability if the cost escalation rate was adjusted while leaving all other assumptions constant: INCREASE TO ARO AND REGULATORY ASSET (Dollars in millions) December 31, 2024 Uniform increase in escalation percentage of 1% $ 62 The increase in the ARO liability driven by an increase in the cost escalation rate would result in a decrease in the regulatory liability for recoveries in excess of ARO liabilities.
For a discussion of our sources and uses of cash for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to “ Part II – Item 7. MD&A – Sources and Uses of Cash ” in our 2022 annual report on Form 10-K filed with the SEC on February 28, 2023.
For a discussion of our sources and uses of cash for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to “ Part II – Item 7. MD&A – Sources and Uses of Cash ” in our 2023 annual report on Form 10-K filed with the SEC on February 27, 2024.
SDG&E recognizes a regulatory asset, or liability, to the extent that its SONGS ARO exceeds, or is less than, the amount collected from customers and the amount earned in SDG&E’s NDT. SDG&E’s ARO related to the decommissioning of SONGS was $504 million as of December 31, 2023, based on the decommissioning cost study prepared in 2020.
SDG&E recognizes a regulatory asset, or liability, to the extent that its SONGS ARO exceeds, or is less than, the amount collected from customers and the amount earned in SDG&E’s NDT. SDG&E’s ARO related to the decommissioning of SONGS was $471 million as of December 31, 2024, based on the decommissioning cost study prepared in 2024.
In February 2020, Sempra Infrastructure filed an application with the DOE to permit LNG produced from the proposed PA LNG Phase 2 project to be exported to all current and future FTA and non-FTA countries.
In February 2020, Sempra Infrastructure filed an application with the DOE to permit LNG produced from the proposed PA LNG Phase 2 project to be exported to all current and future non-FTA countries. We received FTA authorization from the DOE in July 2020.
SDG&E and SoCalGas assess probabilities of future rate recovery associated with regulatory account balances at the end of each reporting period and whenever new and/or unusual events occur, such as: ▪ changes in the regulatory and political environment or the utility’s competitive position ▪ issuance of a regulatory commission order ▪ passage of new legislation To the extent that circumstances associated with regulatory balances change, the regulatory balances are evaluated and adjusted if appropriate.
SDG&E and SoCalGas assess probabilities of future rate recovery associated with regulatory account balances at the end of each reporting period and whenever new and/or unusual events occur, such as: ▪ changes in the regulatory and political environment or the utility’s competitive position ▪ issuance of a regulatory commission order ▪ passage of new legislation 2024 Form 10-K | 101 Table of Contents To the extent that circumstances associated with regulatory balances change, the regulatory balances are evaluated and adjusted if appropriate.
We discuss herein Sempra’s results of operations and significant changes in earnings (losses), revenues and costs by segment, as well as Parent and other, for the year ended December 31, 2023 compared to the year ended December 31, 2022 and the year ended December 31, 2022 compared to the year ended December 31, 2021.
We discuss herein Sempra’s results of operations and significant changes in earnings, revenues and costs by segment, as well as Parent and other, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Short-Term Borrowings We use short-term debt primarily to meet liquidity requirements, fund shareholder dividends, and temporarily finance capital expenditures, acquisitions or start-ups. SDG&E and SoCalGas use short-term debt primarily to meet working capital needs or to help fund event-specific costs. Commercial paper and lines of credit were our primary sources of short-term debt funding in 2023.
Short-Term Borrowings We use short-term debt primarily to meet liquidity requirements, fund shareholder dividends, and temporarily finance capital expenditures or acquisitions. SDG&E and SoCalGas use short-term debt primarily to meet working capital needs or to help fund event-specific costs. Commercial paper, a term loan and lines of credit were our primary sources of short-term debt funding in 2024.
SDG&E and SoCalGas expect that the available unused funds from their credit facilities described above, which also supports their commercial paper programs, cash flows from operations, and other incurrences of debt including issuing debt securities and obtaining term loans will continue to be adequate to fund their respective current operations and planned capital expenditures.
SDG&E and SoCalGas expect that the available unused funds from their credit facilities described above, which also supports their commercial paper programs, cash flows from operations, and other incurrences of debt including issuing debt securities and 2024 Form 10-K | 85 Table of Contents obtaining term loans will continue to be adequate to fund their respective current operations and planned capital expenditures.
Sempra’s, SDG&E’s and SoCalGas’ credit ratings also may affect their respective credit limits related to derivative instruments, as we discuss in Note 11 of the Notes to Consolidated Financial Statements. Loans to/from Affiliates At December 31, 2023, Sempra had $312 million in loans due to unconsolidated affiliates.
Sempra’s, SDG&E’s and SoCalGas’ credit ratings also may affect their respective credit limits related to derivative instruments, as we discuss in Note 9 of the Notes to Consolidated Financial Statements. Loans due to/from Affiliates At December 31, 2024, Sempra had $352 million in loans due to unconsolidated affiliates.
While it is uncertain whether the U.S. will enact legislation to adopt the minimum tax directive, other countries are in the process of introducing and enacting legislation to implement the minimum tax directive. We do not currently expect the minimum tax directive to have a material effect on Sempra’s, SDG&E’s or SoCalGas’ results of operations, financial condition and/or cash flows.
While it is uncertain whether the U.S. or Mexico will enact legislation to adopt the Pillar Two framework, other countries are in the process of introducing and enacting legislation to implement Pillar Two. We do not currently expect the Pillar Two framework to have a material effect on Sempra’s, SDG&E’s or SoCalGas’ results of operations, financial condition and/or cash flows.
The following table summarizes by segment capital expenditures for the last three years.
The following table summarizes, by segment, capital expenditures for PP&E for the last three years.
The CPUC’s regulation of SDG&E’s and SoCalGas’ capital structures limits the amounts that are available for loans and dividends to Sempra. At December 31, 2023, based on these regulations, Sempra could have received combined loans and dividends of approximately $442 million from SDG&E and $330 million from SoCalGas.
The CPUC’s regulation of SDG&E’s and SoCalGas’ capital structures limits the amounts that are available for loans and dividends to Sempra. At December 31, 2024, based on these regulations, Sempra could have received combined loans and dividends of approximately $672 million from SDG&E and $457 million from SoCalGas.
Critical assumptions that affect our estimates of fair value may include: ▪ consideration of market transactions ▪ future cash flows ▪ projected revenue and expense growth rates ▪ the appropriate risk-adjusted discount rate, including the impacts of country risk and entity risk 2023 Form 10-K | 98 Table of Contents In 2022, we performed a quantitative goodwill impairment test and determined that the estimated fair values of our reporting units in Mexico to which goodwill was allocated were substantially above their respective carrying values as of October 1, our goodwill impairment testing date.
Critical assumptions that affect our estimates of fair value may include: ▪ consideration of market transactions ▪ future cash flows ▪ projected revenue and expense growth rates ▪ the appropriate risk-adjusted discount rate, including the impacts of country risk, customer creditworthiness and entity risk 2024 Form 10-K | 104 Table of Contents Historically, we determined based on a quantitative goodwill impairment test that the estimated fair values of our reporting units in Mexico, to which goodwill was allocated, were substantially above their respective carrying values as of October 1, our annual goodwill impairment testing date.
Funding requirements are generally recoverable in rates. We discuss SDG&E’s NDT and its expected SONGS decommissioning payments in Note 15 of the Notes to Consolidated Financial Statements. Off-Balance Sheet Arrangements SDG&E has entered into PPAs and tolling agreements that are variable interests in unconsolidated entities. We discuss variable interests in Note 1 of the Notes to Consolidated Financial Statements.
We discuss SDG&E’s NDT and its expected SONGS decommissioning payments in Note 14 of the Notes to Consolidated Financial Statements. Off-Balance Sheet Arrangements SDG&E has entered into PPAs and tolling agreements that are variable interests in unconsolidated entities. We discuss variable interests in Note 1 of the Notes to Consolidated Financial Statements.
With respect to the ECA LNG Phase 1 and Phase 2 projects, recent and proposed changes to the law in Mexico and the unfavorable resolution of land disputes and permit challenges, in each case that we discuss in Note 16 of the Notes to Consolidated Financial Statements, could have a material adverse effect on the development and construction of these projects.
With respect to the ECA LNG Phase 1 and Phase 2 projects, recent and proposed changes to the Mexican Constitution and certain laws in Mexico and an unfavorable resolution of land disputes and permit challenges, in each case that we discuss in Note 15 of the Notes to Consolidated Financial Statements, could have a material adverse effect on the development and construction of these projects.
We discuss details of SDG&E’s and SoCalGas’ regulatory assets and liabilities and additional factors that management considers when assessing probabilities associated with regulatory balances in Notes 1, 4, 15 and 16 of the Notes to Consolidated Financial Statements. 2023 Form 10-K | 95 Table of Contents INCOME TAXES Sempra, SDG&E, SoCalGas Our income tax expense and related balance sheet amounts involve significant management judgments and estimates.
We discuss details of SDG&E’s and SoCalGas’ regulatory assets and liabilities and additional factors that management considers when assessing probabilities associated with regulatory balances in Notes 1, 4, 14 and 15 of the Notes to Consolidated Financial Statements. INCOME TAXES Sempra, SDG&E, SoCalGas Our income tax expense and related balance sheet amounts involve significant management judgments and estimates.
SoCalGas and SDG&E operate under a regulatory framework that permits the cost of natural gas purchased for customers (residential and small commercial and industrial customers, also referred to as core customers for SoCalGas) to be passed through to customers in rates substantially as incurred and without markup.
SDG&E and SoCalGas operate under a regulatory framework that permits the cost of natural gas purchased for core customers to be passed through to customers in rates substantially as incurred and without markup.
These arrangements do not commit any party to enter into definitive agreements or otherwise participate in the applicable project, and the ultimate participation by the parties remains subject to negotiation and finalization of definitive agreements, among other factors. 2023 Form 10-K | 84 Table of Contents LNG Cameron LNG Phase 2 Project.
These arrangements do not commit any party to enter into definitive agreements or otherwise participate in the applicable project, and the ultimate participation by the parties remains subject to negotiation and finalization of definitive agreements, among other factors. LNG Cameron LNG Phase 2 Project.
MD&A – Results of Operations ” in our 2022 annual report on Form 10-K filed with the SEC on February 28, 2023.
MD&A – Results of Operations ” in our 2023 annual report on Form 10-K filed with the SEC on February 27, 2024.
MD&A – Results of Operations ” in our 2022 annual report on Form 10-K filed with the SEC on February 28, 2023.
MD&A – Results of Operations ” in our 2023 annual report on Form 10-K filed with the SEC on February 27, 2024.
Credit Ratings The credit ratings of Sempra, SDG&E and SoCalGas remained at investment grade levels in 2023.
Credit Ratings The issuer credit ratings of Sempra, SDG&E and SoCalGas remained at investment grade levels in 2024.
In September 2023, Oncor filed an appeal in Travis County District Court seeking judicial review of certain rate base disallowances and related expense effects of those disallowances in the PUCT’s order on rehearing. On February 22, 2024, the court dismissed the appeal for lack of jurisdiction. Oncor is evaluating whether to appeal that ruling.
In September 2023, Oncor filed an appeal in Travis County District Court seeking judicial review of certain rate base disallowances and related expense effects of those disallowances in the PUCT’s order on rehearing. In February 2024, the court dismissed the appeal for lack of jurisdiction.
EXPENDITURES FOR INVESTMENTS AND ACQUISITIONS (Dollars in millions) Years ended December 31, 2023 2022 2021 Sempra Texas Utilities $ 367 $ 346 $ 566 Sempra Infrastructure 15 30 67 Total $ 382 $ 376 $ 633 2023 Form 10-K | 91 Table of Contents Future Capital Expenditures and Investments The amounts and timing of capital expenditures and certain investments are generally subject to approvals by various regulatory and other governmental and environmental bodies, including the CPUC, the FERC and the PUCT, and various other factors described in this MD&A and in “Part I – Item 1A.
CAPITAL EXPENDITURES FOR INVESTMENTS (Dollars in millions) Years ended December 31, 2024 2023 2022 Sempra: Sempra Texas Utilities $ 976 $ 367 $ 346 Sempra Infrastructure 12 15 30 Total Sempra $ 988 $ 382 $ 376 2024 Form 10-K | 97 Table of Contents Future Capital Expenditures for PP&E and Investments The amounts and timing of capital expenditures for PP&E and certain investments are generally subject to approvals by various regulatory and other governmental and environmental bodies, including the CPUC, the FERC and the PUCT, and various other factors described in this MD&A and in “Part I – Item 1A.
Income statement activities at our foreign operations and their JVs are also impacted by transactional gains and losses, a summary of which is shown in the table below: TRANSACTIONAL GAINS (LOSSES) FROM FOREIGN CURRENCY AND INFLATION EFFECTS (Dollars in millions) Total reported amounts Transactional gains (losses) included in reported amounts Years ended December 31, 2023 2022 2021 2023 2022 2021 Sempra: Other income, net $ 131 $ 24 $ 58 $ 6 $ (13) $ (46) Income tax expense (490) (556) (99) (283) (169) (4) Equity earnings 1,481 1,498 1,343 (68) (36) 2 Net income 3,618 2,285 1,463 (345) (218) (48) Earnings attributable to noncontrolling interests (543) (146) (145) 110 54 4 Earnings attributable to common shares 3,030 2,094 1,254 (235) (164) (44) Foreign Currency Exchange Rate and Inflation Impacts on Income Taxes and Related Hedging Activity Our Mexican subsidiaries have U.S. dollar-denominated cash balances, receivables, payables and debt (monetary assets and liabilities) that are affected by Mexican currency exchange rate movements for Mexican income tax purposes.
Income statement activities at our foreign operations and their JVs are also impacted by transactional gains and losses, a summary of which is shown in the table below: TRANSACTIONAL GAINS (LOSSES) FROM FOREIGN CURRENCY AND INFLATION EFFECTS (Dollars in millions) Total reported amounts Transactional (losses) gains included in reported amounts Years ended December 31, 2024 2023 2022 2024 2023 2022 Sempra: Other income, net $ 136 $ 131 $ 24 $ (14) $ 6 $ (13) Income tax expense (219) (490) (556) 336 (283) (169) Equity earnings 1,609 1,481 1,498 64 (68) (36) Net income 3,500 3,618 2,285 386 (345) (218) Earnings attributable to noncontrolling interests (638) (543) (146) (124) 110 54 Earnings attributable to common shares 2,817 3,030 2,094 262 (235) (164) Foreign Currency Exchange Rate and Inflation Impacts on Income Taxes and Related Hedging Activity Our Mexican subsidiaries have U.S. dollar-denominated cash balances, receivables, payables and debt (monetary assets and liabilities) that are affected by Mexican currency exchange rate movements for Mexican income tax purposes.
The following tables summarize the impact to our projected benefit obligation for pension and accumulated benefit obligation for PBOP at December 31, 2023, and 2023 net periodic benefit costs, in each case if the discount rate or assumed rate of return on plan assets were changed by 100 bps.
The following tables summarize the impact to our projected benefit obligation for pension and accumulated benefit obligation for PBOP at December 31, 2024, and 2024 net periodic benefit costs, in each case if the discount rate or expected return on plan assets were changed by 1%.
We have an EPC contract with TP Oil & Gas Mexico, S. De R.L. De C.V., an affiliate of Technip Energies N.V., to construct the ECA LNG Phase 1 project. We estimate the total price of the EPC contract to be approximately $1.5 billion, with capital expenditures approximating $2 billion including capitalized interest at the project level and project contingency.
De C.V., an affiliate of Technip Energies N.V., to construct the ECA LNG Phase 1 project. We estimate the total price of the EPC contract to be approximately $1.6 billion, with capital expenditures approximating $2.5 billion including capitalized interest at the project level and project contingency.
Risk Factors” for discussions of the following legal and regulatory matters affecting our operations in Mexico: Energía Costa Azul ▪ Land Disputes ▪ Environmental and Social Impact Permits One or more unfavorable final decisions on these land disputes or environmental and social impact permit challenges could materially adversely affect our existing natural gas regasification operations and proposed natural gas liquefaction projects at the site of the ECA Regas Facility and have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
Risk Factors” for discussions of the following legal and regulatory matters affecting our operations in Mexico and risks associated with Mexican laws, policies and government influence: Energía Costa Azul ▪ Land Disputes ▪ Environmental and Social Impact Permits One or more unfavorable final decisions on these land disputes or environmental and social impact permit challenges could materially adversely affect our existing natural gas regasification operations and proposed natural gas liquefaction projects at the 2024 Form 10-K | 94 Table of Contents site of the ECA Regas Facility and have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
In December 2023, Entergy Louisiana, LLC, a subsidiary of Entergy Corporation, and Cameron LNG JV signed a new electricity service agreement (and related ancillary agreements) for the supply to Cameron LNG JV of up to 950 MW of renewable power from new renewable resources in Louisiana.
Entergy Louisiana, LLC, a subsidiary of Entergy Corporation, and Cameron LNG JV have an electricity service agreement (and related ancillary agreements) for the supply to Cameron LNG JV of up to 950 MW of power from new renewable sources in Louisiana.
At December 31, 2023, SoCalGas expects to make interest payments on long-term debt totaling $4.7 billion, of which $278 million is expected to be paid in 2024 and $4.5 billion is expected to be paid in subsequent years through 2053. We calculate expected interest payments using the stated interest rate for fixed-rate obligations, including floating-to-fixed interest rate swaps.
At December 31, 2024, SoCalGas expects to make interest payments on long-term debt totaling $5.6 billion, of which $300 million is expected to be paid in 2025 and $5.3 billion is expected to be paid in subsequent years through 2054. We calculate expected interest payments using the stated interest rate for fixed-rate obligations, including floating-to-fixed interest rate swaps.
Intercompany revenues are eliminated in Sempra’s Consolidated Statements of Operations. SDG&E operates under a regulatory framework that permits it to recover the actual cost incurred to generate or procure electricity based on annual estimates of the cost of electricity supplied to customers. The differences in cost between estimates and actual are recovered or refunded in subsequent periods through rates.
Intercompany revenues are eliminated in Sempra’s Consolidated Statements of Operations. SDG&E operates under a regulatory framework that permits it to recover the actual cost incurred to generate or procure electricity based on annual estimates of the cost of electricity supplied to customers.
As we discuss in “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk,” Sempra Infrastructure enters into hedging transactions to help mitigate commodity price risk and optimize the value of its LNG, natural gas pipelines and storage, and power-generating assets.
Quantitative and Qualitative Disclosures About Market Risk,” Sempra Infrastructure enters into hedging transactions to help mitigate commodity price risk and optimize the value of its LNG, natural gas pipelines and storage, and power-generating assets.
We expect the majority of our capital expenditures and investments in 2024 will relate to transmission and distribution improvements at our regulated public utilities and construction of the PA LNG Phase 1 project, ECA LNG Phase 1 project and natural gas pipelines at Sempra Infrastructure.
We expect the majority of our capital expenditures for PP&E and investments in 2025 will relate to investments in transmission and distribution safety and reliability at our regulated public utilities and construction of the PA LNG Phase 1 project, ECA LNG Phase 1 project and natural gas pipelines at Sempra Infrastructure.
Our level of capital expenditures and investments in the next few years may vary substantially and will depend on, among other things, the cost and availability of financing, regulatory approvals, changes in tax law and business opportunities providing desirable rates of return. See “Part I – Item 1A.
Our level of capital expenditures for PP&E and investments in the next few years may vary substantially and will depend on, among other things, the cost and availability of financing, regulatory approvals, changes in tax law and business opportunities providing desirable rates of return, among various other factors described in this MD&A and in “Part I – Item 1A.
We discuss our short-term debt activities in Note 7 of the Notes to Consolidated Financial Statements and below in “Sources and Uses of Cash.” The following table shows selected statistics for our commercial paper borrowings.
We discuss our short-term debt activities in Note 6 of the Notes to Consolidated Financial Statements and below in “Sources and Uses of Cash.” 2024 Form 10-K | 83 Table of Contents The following table shows selected statistics for our commercial paper borrowings.
Sempra Infrastructure and the CFE have agreed to an amendment to their transportation services agreement and to proceed with re-routing a portion of the pipeline, whereby the CFE would pay for the re-routing with a new tariff.
Sempra Infrastructure and the CFE have agreed to an amendment to their transportation services agreement and to re-route the portion of the pipeline that is in the Yaqui territory, whereby the CFE would pay for the re-routing with a new tariff.
Under the Cameron LNG JV equity agreements, the expansion of the project requires the unanimous consent of all the members, including with respect to the equity investment obligation of each member. ECA LNG Phase 1 Project.
Under the Cameron LNG JV equity agreements, the expansion of the project requires the unanimous consent of all the members, including with respect to the equity investment obligation of each member. 2024 Form 10-K | 90 Table of Contents ECA LNG Phase 1 Project.
UTILITIES: ELECTRIC REVENUES AND COST OF ELECTRIC FUEL AND PURCHASED POWER (Dollars in millions) Years ended December 31, 2023 2022 2021 Sempra: Electric revenues: Sempra California $ 4,336 $ 4,785 $ 4,660 Eliminations and adjustments (2) (2) (2) Total $ 4,334 $ 4,783 $ 4,658 Cost of electric fuel and purchased power (1) : Sempra California $ 445 $ 994 $ 1,069 Eliminations and adjustments (70) (57) (59) Total $ 375 $ 937 $ 1,010 (1) Excludes depreciation and amortization, which are presented separately on Sempra’s Consolidated Statements of Operations.
UTILITIES: ELECTRIC REVENUES AND COST OF ELECTRIC FUEL AND PURCHASED POWER (Dollars in millions) Years ended December 31, 2024 2023 2022 Sempra: Electric revenues: Sempra California $ 4,299 $ 4,336 $ 4,785 Eliminations and adjustments (3) (2) (2) Total $ 4,296 $ 4,334 $ 4,783 Cost of electric fuel and purchased power (1) : Sempra California $ 308 $ 445 $ 994 Eliminations and adjustments (63) (70) (57) Total $ 245 $ 375 $ 937 (1) Excludes depreciation and amortization, which are presented separately on Sempra’s Consolidated Statements of Operations.
Capital expenditure amounts include capitalized interest and AFUDC related to debt.
Capital expenditure amounts for PP&E include capitalized interest and AFUDC related to debt.
Accordingly, dividends paid by SoCalGas to PE and dividends paid by PE to Sempra are eliminated in Sempra’s consolidated financial statements. Dividend Restrictions The board of directors for each of Sempra, SDG&E and SoCalGas has the discretion to determine whether to declare and, if declared, the amount of any dividends by each such entity.
Accordingly, dividends paid by SoCalGas to Pacific Enterprises and dividends paid by Pacific Enterprises to Sempra are eliminated in Sempra’s consolidated financial statements. 2024 Form 10-K | 100 Table of Contents Dividend Restrictions The board of directors for each of Sempra, SDG&E and SoCalGas has the discretion to determine whether to declare and, if declared, the amount of any dividends by each such entity.
Court of Appeals for the Fifth Circuit issued a decision to vacate and remand the 2022 Permit to the TCEQ for additional explanation of the agency’s permit decision. In February 2024, the court withdrew its opinion pending a determination by the Supreme Court of Texas as to the proper standard to be applied by the TCEQ.
Court of Appeals for the Fifth Circuit issued a decision to vacate and remand the 2022 Permit to the TCEQ for additional explanation of the agency’s permit decision. In February 2024, the court withdrew its opinion and referred the case to the Supreme Court of Texas to resolve the question of the appropriate standard to be applied by the TCEQ.
At December 31, 2023, SDG&E expects to make interest payments on long-term debt totaling $6.0 billion, of which $340 million is expected to be paid in 2024 and $5.7 billion is expected to be paid in subsequent years through 2053.
At December 31, 2024, SDG&E expects to make interest payments on long-term debt totaling $6.7 billion, of which $400 million is expected to be paid in 2025 and $6.3 billion is expected to be paid in subsequent years through 2054.
Since making a positive final investment decision in March 2023, Sempra Infrastructure is constructing a natural gas liquefaction project on a greenfield site that it owns in the vicinity of Port Arthur, Texas, located along the Sabine-Neches waterway.
Sempra Infrastructure is constructing a natural gas liquefaction project on a greenfield site that it owns in the vicinity of Port Arthur, Texas, located along the Sabine-Neches waterway.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page Overview 59 Results of Operations by Registrant 60 Sempra 60 SDG&E 74 SoCalGas 76 Capital Resources and Liquidity 78 Critical Accounting Estimates 95 New Accounting Standards 99 OVERVIEW This combined MD&A includes the operational and financial results of the following three Registrants: ▪ Sempra is a California-based holding company with energy infrastructure investments in North America.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page Overview 66 Results of Operations by Registrant 67 Sempra 67 SDG&E 77 SoCalGas 80 Capital Resources and Liquidity 82 Critical Accounting Estimates 101 New Accounting Standards 105 OVERVIEW This combined MD&A includes the operational and financial results of the following three Registrants: ▪ Sempra is a California-based holding company with energy infrastructure investments in North America.
In April 2019, the FERC approved the siting, construction and operation of the Port Arthur Pipeline Louisiana Connector, which will be used to supply feed gas to the PA LNG Phase 1 project.
Sempra Infrastructure is constructing the Port Arthur Pipeline Louisiana Connector, a 72-mile pipeline connecting the PA LNG Phase 1 project to Gillis, Louisiana. In April 2019, the FERC approved the siting, construction and operation of the Port Arthur Pipeline Louisiana Connector, which will be used to supply feed gas to the PA LNG Phase 1 project.
Dividends Sempra Sempra paid cash dividends of: ▪ $1,483 million for common stock and $44 million for preferred stock in 2023 ▪ $1,430 million for common stock and $44 million for preferred stock in 2022 ▪ $1,331 million for common stock and $99 million for preferred stock in 2021 DIVIDENDS PER SHARE ON SEMPRA COMMON STOCK (As approved by our board of directors) On February 26, 2024, our board of directors declared a dividend of $0.62 per share on our common stock and a dividend of $24.375 per share on our series C preferred stock, both payable on April 15, 2024. 2023 Form 10-K | 93 Table of Contents All declarations of dividends on our common stock and preferred stock are made at the discretion of the board of directors.
Dividends Sempra Sempra paid cash dividends of: ▪ $1,499 million for common stock and $44 million for preferred stock in 2024 ▪ $1,483 million for common stock and $44 million for preferred stock in 2023 ▪ $1,430 million for common stock and $44 million for preferred stock in 2022 2024 Form 10-K | 99 Table of Contents DIVIDENDS PER SHARE ON SEMPRA COMMON STOCK (As approved by our board of directors) On February 24, 2025, our board of directors declared a dividend of $0.645 per share on our common stock and a dividend of $24.375 per share on our series C preferred stock, both payable on April 15, 2025.
When (i) including Sempra’s proportionate ownership interest in expected capital expenditures at unconsolidated equity method investees while excluding Sempra’s expected capital contributions to those unconsolidated equity method investees and (ii) excluding NCI’s proportionate ownership interest in expected capital expenditures at Sempra and at unconsolidated equity method investees, we expect capital expenditures from 2024 through 2028 to total $48 billion.
When (i) including Sempra’s proportionate ownership interest in expected capital expenditures for PP&E at unconsolidated equity method investees while excluding Sempra’s expected capital contributions to those unconsolidated equity method investees and (ii) excluding NCI’s proportionate ownership interest in expected capital expenditures for PP&E at Sempra and at unconsolidated equity method investees, we expect capital expenditures for PP&E from 2025 through 2029 to total $55.5 billion.
With respect to projects in development, these risks and uncertainties include, as applicable depending on the project, any failure to: ▪ secure binding customer commitments ▪ identify suitable project and equity partners ▪ obtain sufficient financing ▪ reach agreement with project partners or other applicable parties to proceed ▪ obtain, modify, and/or maintain permits and regulatory approvals, including LNG export applications to non-FTA countries in light of the current Administration’s temporary pause of such approvals while the DOE reviews the economic and environmental analyses it uses to evaluate such applications ▪ negotiate, complete and maintain suitable commercial agreements, which may include EPC, tolling, equity acquisition, governance, LNG sales, gas supply and transportation contracts ▪ reach a positive final investment decision With respect to projects under construction, these risks and uncertainties include, in addition to the risks described above as applicable to each project, construction delays and cost overruns.
The successful development and/or construction of these projects is subject to numerous risks and uncertainties. 2024 Form 10-K | 89 Table of Contents With respect to projects in development, these risks and uncertainties include, as applicable depending on the project, any failure to: ▪ secure binding customer commitments ▪ identify suitable project and equity partners ▪ obtain sufficient financing ▪ reach agreement with project partners or other applicable parties to proceed ▪ obtain, modify, and/or maintain permits and regulatory approvals, including LNG export applications to non-FTA countries ▪ negotiate, complete and maintain suitable commercial agreements, which may include EPC, tolling, equity acquisition, governance, LNG sales, gas supply and transportation contracts ▪ reach a positive final investment decision With respect to projects under construction, these risks and uncertainties include, in addition to the risks described above as applicable to each project, construction delays and cost overruns.
In March 2022, TotalEnergies SE and Sempra Infrastructure entered into a non-binding MOU that contemplates TotalEnergies SE potentially contracting approximately one-third of the long-term export production of the proposed Vista Pacifico LNG project and potentially participating as a minority partner in the project. 2023 Form 10-K | 87 Table of Contents Asset and Supply Optimization.
In March 2022, TotalEnergies SE and Sempra Infrastructure entered into a non-binding MOU that contemplates TotalEnergies SE potentially contracting approximately one-third of the long-term export production of the proposed Vista Pacifico LNG project and potentially participating as a minority partner in the project. Asset and Supply Optimization. As we discuss in “Part II – Item 7A.
SDG&E and SoCalGas manage their capital structures and pay dividends when appropriate and as approved by their respective boards of directors. 2023 Form 10-K | 81 Table of Contents The impact and duration of suspending collections processes during the COVID - 19 pandemic, the implementation of customer assistance programs, and higher 2023 winter season customer billings, have resulted in certain SDG&E and SoCalGas customers exhibiting slower payment and higher levels of nonpayment than has been the case historically.
SDG&E and SoCalGas manage their capital structures and pay dividends when appropriate and as approved by their respective boards of directors. The implementation of customer assistance programs and higher 2023 winter season customer billings have resulted in certain SDG&E and SoCalGas customers exhibiting slower payment and higher levels of nonpayment than has been the case historically.
AVAILABLE FUNDS AT DECEMBER 31, 2023 (Dollars in millions) Sempra SDG&E SoCalGas Unrestricted cash and cash equivalents (1) $ 236 $ 50 $ 2 Available unused credit (2) 7,731 1,500 253 (1) Amounts at Sempra include $124 held in non-U.S. jurisdictions. We discuss repatriation in Note 8 of the Notes to Consolidated Financial Statements .
AVAILABLE FUNDS AT DECEMBER 31, 2024 (Dollars in millions) Sempra SDG&E SoCalGas Unrestricted cash and cash equivalents (1) $ 1,565 $ — $ 12 Available unused credit (2) 8,620 1,083 863 (1) Amounts at Sempra include $70 held in non-U.S. jurisdictions. We discuss repatriation in Note 7 of the Notes to Consolidated Financial Statements.
However, asset values could be materially and adversely affected by future activity in the equity and fixed income markets, and changes in the estimated decommissioning costs, or in the assumptions and judgments made by management underlying these estimates, could cause revisions to the estimated total cost 2023 Form 10-K | 82 Table of Contents associated with retiring the assets.
However, asset values could be materially and adversely affected by future activity in the equity and fixed income markets, and changes in the estimated decommissioning costs, or in the assumptions and judgments made by management underlying these estimates, could cause revisions to the estimated total cost associated with retiring the assets. Funding requirements are generally recoverable in rates.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeHowever, SoCalGas may, at times, be exposed to market risk as a result of the GCIM, which rewards or penalizes the utility for commodity costs below or above certain benchmarks.
Biggest changeHowever, SoCalGas may, at times, be exposed to market risk as a result of the GCIM, which rewards or penalizes the utility for commodity costs below or above certain benchmarks. The one-day VaR for SDG&E’s and SoCalGas’ commodity positions were both $2 million at December 31, 2024 and $2 million and $4 million, respectively, at December 31, 2023.
If such costs were to continue to be subject to significant inflationary pressures and we are not able to fully recover such higher costs in rates or there is a delay in recovery, these increased costs may have a significant effect on Sempra’s, SDG&E’s and SoCalGas’ results of operations, financial condition, cash flows and/or prospects.
If such costs continue to be subject to significant inflationary pressures and we are not able to fully recover such higher costs in rates or there is a delay in recovery, these increased costs may have a significant effect on Sempra’s, SDG&E’s and SoCalGas’ results of operations, financial condition, cash flows and/or prospects.
Sempra, SDG&E, SoCalGas and Sempra Infrastructure maintain separate risk management committees, organizations and processes to provide oversight of these activities for their respective businesses. The committees consist of senior officers who establish policy, oversee energy risk management activities, and monitor the results of trading and other activities to help ensure compliance with our stated energy risk management and trading policies.
Sempra, SDG&E, SoCalGas and Sempra Infrastructure maintain separate risk management committees, organizations and processes to provide oversight of these activities for their respective businesses. The committees consist of senior officers who establish policy, oversee energy risk management activities, and monitor the results of trading and other activities to help ensure compliance with our energy risk management and trading policies.
If additional costs were to become subject to significant inflationary pressures, we may not be able to fully recover such higher costs through contractual adjustments for inflation, which may have a significant effect on Sempra’s results of operations, financial condition, cash flows and/or prospects.
If additional costs become subject to significant inflationary pressures, we may not be able to fully recover such higher costs through contractual adjustments for inflation, which may have a significant effect on Sempra’s results of operations, financial condition, cash flows and/or prospects.
Our various subsidiaries are exposed, in varying degrees, to commodity price risk, primarily to prices in the natural gas and electricity markets. Our policy is to manage this risk within a framework that considers the specific markets and operating and regulatory environments of each subsidiary.
Our various subsidiaries are exposed, in varying degrees, to commodity price risk, primarily in the natural gas and electricity markets. Our policy is to manage this risk within a framework that considers the specific markets and operating and regulatory environments of each subsidiary.
(2) Amount represents the impact to earnings for a change in the average exchange rate throughout the reporting period. (3) Amount primarily represents the effects of currency exchange rate movement from December 31, 2023 on monetary assets and liabilities and remeasurement of non-U.S. deferred income tax balances at our Mexican subsidiaries.
(2) Amount represents the impact to earnings for a change in the average exchange rate throughout the reporting period. (3) Amount primarily represents the effects of currency exchange rate movement from December 31, 2024 on monetary assets and liabilities and remeasurement of non-U.S. deferred income tax balances at our Mexican subsidiaries.
(4) Amount represents the effects of currency exchange rate movement from December 31, 2023 that would be recorded to OCI at the end of the reporting period. Monetary assets and liabilities at our Mexican subsidiaries and JVs that are denominated in U.S. dollars may fluctuate significantly throughout the year.
(4) Amount represents the effects of currency exchange rate movement from December 31, 2024 that would be recorded to OCI at the end of the reporting period. Monetary assets and liabilities at our Mexican subsidiaries and JVs that are denominated in U.S. dollars may fluctuate significantly throughout the year.
We discuss revenue recognition in Note 3 and additional market-risk information regarding derivative instruments in Note 11 of the Notes to Consolidated Financial Statements. We have exposure to changes in commodity prices, interest rates and foreign currency and inflation rates.
We discuss revenue recognition in Note 3 and additional market-risk information regarding derivative instruments in Note 9 of the Notes to Consolidated Financial Statements. We have exposure to changes in commodity prices, interest rates and foreign currency and inflation rates.
The following discussion of these primary market-risk exposures as of December 31, 2023 includes a discussion of how these exposures are managed. COMMODITY PRICE RISK Market risk related to physical commodities is created by volatility in the prices and basis of certain commodities.
The following discussion of these primary market-risk exposures as of December 31, 2024 includes a discussion of how these exposures are managed. COMMODITY PRICE RISK Market risk related to physical commodities is created by volatility in the prices and basis of certain commodities.
In 2023 and 2022, SDG&E and SoCalGas experienced inflationary pressures from increases in various costs, including the cost of natural gas, electric fuel and purchased power, labor, materials and supplies, as well as availability of labor and materials.
In 2024 and 2023, SDG&E and SoCalGas experienced inflationary pressures from increases in various costs, including the cost of natural gas, electric fuel and purchased power, labor, materials and supplies, as well as availability of labor and materials.
Based on a net monetary liability position of $4.5 billion, including those related to our investments in JVs, at December 31, 2023, the hypothetical effect of a 10% increase in the Mexican inflation rate is approximately $91 million lower earnings attributable to common shares as a result of higher income tax expense for our consolidated entities, as well as lower equity earnings for our JVs.
Based on a net monetary liability position of $4.5 billion, including those related to our investments in JVs, at December 31, 2024, the hypothetical effect of a 10% increase in the Mexican inflation rate is approximately $89 million lower earnings attributable to common shares as a result of higher income tax expense for our consolidated entities, as well as lower equity earnings for our JVs.
Sempra Infrastructure is exposed to commodity price risk indirectly through its LNG, natural gas pipelines and storage, and power-generating assets. Sempra Infrastructure has utilized and may continue to utilize commodity contracts, including physical 2023 Form 10-K | 99 Table of Contents and financial derivatives, in an effort to mitigate these risks and optimize the value of these assets.
Sempra Infrastructure is exposed to commodity price risk indirectly through its LNG, natural gas pipelines and storage, and power-generating assets. Sempra Infrastructure has utilized and may continue to utilize commodity contracts, including physical 2024 Form 10-K | 105 Table of Contents and financial derivatives, in an effort to mitigate these risks and optimize the value of these assets.
Earnings attributable to common shares are affected by changes in interest rates on short-term debt and variable-rate long-term debt. If weighted-average interest rates on short-term debt outstanding at December 31, 2023 increased or decreased by 10%, the change in earnings attributable to common shares over the 12-month period ending December 31, 2024 would be approximately $9 million.
Earnings attributable to common shares are affected by changes in interest rates on short-term debt and variable-rate long-term debt. If weighted-average interest rates on short-term debt outstanding at December 31, 2024 increased or decreased by 10%, the change in earnings attributable to common shares over the 12-month period ending December 31, 2025 would be approximately $7 million.
If interest rates increased or decreased by 10% on all variable-rate long-term debt at December 31, 2023, after considering the effects of interest rate swaps, the change in earnings attributable to common shares over the 12-month period ending December 31, 2024 would be approximately $5 million.
If interest rates increased or decreased by 10% on all variable-rate long-term debt at December 31, 2024, after considering the effects of interest rate swaps, the change in earnings attributable to common shares over the 12-month period ending December 31, 2025 would be approximately $3 million.
In 2023 and 2022, Sempra Infrastructure experienced inflationary pressures from increases in various costs, including the cost of labor, materials and supplies.
In 2024 and 2023, Sempra Infrastructure experienced inflationary pressures from increases in various costs, including the cost of labor, materials and supplies.
A hypothetical 10% change in commodity prices would have resulted in a change in the fair value of our commodity-based natural gas and electricity derivatives of $14 million and $24 million at December 31, 2023 and 2022, respectively.
A hypothetical 10% change in commodity prices would have resulted in a change in the fair value of our commodity-based natural gas and electricity derivatives of $13 million and $14 million at December 31, 2024 and 2023, respectively.
DOLLAR (1) (Dollars in millions) Hypothetical effects Sempra: Translation of 2023 earnings to U.S. dollars (2) $ (3) Transactional exposure (3) 126 Translation of net assets of foreign subsidiaries and investment in foreign entities (4) (23) (1) After the effects of foreign currency derivatives.
DOLLAR (1) (Dollars in millions) Hypothetical effects Sempra: Translation of 2024 earnings to U.S. dollars (2) $ (2) Transactional exposure (3) 151 Translation of net assets of foreign subsidiaries and investment in foreign entities (4) (18) (1) After the effects of foreign currency derivatives.
During this period, Sempra Texas Utilities experienced increased costs of labor and materials and does not have specific regulatory mechanisms that allow for recovery of higher costs due to inflation; rather, recovery is limited to rate updates through capital trackers and base rate reviews, which may result in partial non-recovery due to the regulatory lag.
During this period, Sempra Texas Utilities experienced increased costs, including labor and contractor-related costs as well as higher insurance premiums, and does not have specific regulatory mechanisms that allow for recovery of higher non-reconcilable costs due to inflation; rather, recovery is limited to rate updates through capital trackers and base rate reviews, which may result in partial non-recovery due to the regulatory lag.
We provide further information about debt and interest rate swap transactions in Notes 7 and 11, respectively, of the Notes to Consolidated Financial Statements. 2023 Form 10-K | 100 Table of Contents We also are subject to the effect of interest rate fluctuations on the assets of our pension plans, PBOP plans, and SDG&E’s NDT.
We provide further information about debt and interest rate swap transactions in Notes 6 and 9, respectively, of the Notes to Consolidated Financial Statements. 2024 Form 10-K | 106 Table of Contents We also are subject to the effect of interest rate fluctuations on the assets of our pension plans, PBOP plans, and SDG&E’s NDT.
Subject to regulatory constraints, we periodically enter into interest rate swap agreements to moderate our exposure to interest rate changes and to lower our overall cost of borrowing.
INTEREST RATE RISK We are exposed to fluctuations in interest rates primarily from our short- and long-term debt. Subject to regulatory constraints, we periodically enter into interest rate swap agreements to moderate our exposure to interest rate changes and to lower our overall cost of borrowing.
The table below shows the nominal amount of our debt: NOMINAL AMOUNT OF DEBT (1) (Dollars in millions) December 31, 2023 December 31, 2022 Sempra SDG&E SoCalGas Sempra SDG&E SoCalGas Short-term: Sempra California $ 947 $ — $ 947 $ 1,105 $ 205 $ 900 Other 1,397 — — 2,247 — — Long-term: Sempra California fixed-rate $ 15,109 $ 8,350 $ 6,759 $ 13,159 $ 7,400 $ 5,759 Sempra California variable-rate 400 400 — 700 400 300 Other fixed-rate 11,317 — — 10,079 — — Other variable-rate 890 — — 575 — — (1) After the effects of interest rate swaps.
The table below shows the nominal amount of our debt: NOMINAL AMOUNT OF DEBT (1) (Dollars in millions) December 31, 2024 December 31, 2023 Sempra SDG&E SoCalGas Sempra SDG&E SoCalGas Short-term: Sempra California $ 1,454 $ 417 $ 1,037 $ 947 $ — $ 947 Other 562 — — 1,397 — — Long-term: Sempra California fixed-rate $ 16,309 $ 8,950 $ 7,359 $ 15,109 $ 8,350 $ 6,759 Sempra California variable-rate — — — 400 400 — Other fixed-rate 15,527 — — 11,317 — — Other variable-rate 1,063 — — 890 — — (1) After the effects of interest rate swaps.
Removed
The one-day VaR for SDG&E’s and SoCalGas’ commodity positions were $2 million and $4 million, respectively, at December 31, 2023 and $25 million and $2 million, respectively, at December 31, 2022. INTEREST RATE RISK We are exposed to fluctuations in interest rates primarily from our short- and long-term debt.

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