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COMMITMENTS AND CONTINGENCIES | 12 Months Ended
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Dec. 31, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES LEGAL PROCEEDINGS We accrue losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued, may exceed, and in some cases have exceeded, applicable insurance coverage and could materially adversely affect our business, results of operations, financial condition, cash flows and/or prospects. Unless otherwise indicated, we are unable to reasonably estimate possible losses or a range of losses in excess of any amounts accrued. At December 31, 2024, loss contingency accruals for legal matters that are probable and estimable were $41 million for Sempra, including $26 million for SoCalGas. We discuss our policy regarding accrual of legal fees in Note 1. SDG&E City of San Diego Franchise Agreement In 2021, two lawsuits were filed in the California Superior Court challenging various aspects of the natural gas and electric franchise agreements granted by the City of San Diego to SDG&E. Both lawsuits ultimately sought to void the franchise agreements. In one of the cases, judgment was granted in favor of SDG&E and the City of San Diego. In November 2024, the Court of Appeal affirmed the trial court judgment in favor of SDG&E and the City of San Diego. The plaintiff in that case has further appealed. In the second case, the court ruled in favor of SDG&E and the City of San Diego, upholding all terms of the franchise agreements, except for the two-thirds City Council vote requirement for termination if the City decides to terminate under certain circumstances. Under the court’s ruling, the City can instead terminate on a majority vote, so long as it satisfies repayment provisions under the franchise agreements. Both sides have appealed the ruling. SoCalGas Aliso Canyon Natural Gas Storage Facility Gas Leak From October 23, 2015 through February 11, 2016, SoCalGas experienced a natural gas leak from one of the injection-and-withdrawal wells, SS25, at its Aliso Canyon natural gas storage facility in Los Angeles County. 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. Over 99% of the Individual Plaintiffs participated and submitted valid releases, and SoCalGas paid $1.79 billion in 2022 under the agreement. The Individual Plaintiffs who did not participate in the settlement (the Non-Settling Individual Plaintiffs) are able to continue to pursue their claims. As of February 19, 2025, there are approximately 520 plaintiffs who are either new plaintiffs or Non-Settling Individual Plaintiffs. The new plaintiffs’ cases and Non-Settling Individual Plaintiffs’ cases are coordinated before a single court in the Los Angeles County Superior Court for pretrial management under a consolidated master complaint filed in November 2017, with one plaintiff’s case proceeding under a separate complaint. Both the consolidated master complaint and the separate complaint assert negligence, negligence per se, strict liability, negligent and intentional infliction of emotional distress and fraudulent concealment. The consolidated master complaint asserts additional causes of action for private and public nuisance (continuing and permanent), trespass, inverse condemnation, loss of consortium and wrongful death against SoCalGas and Sempra. The separate complaint asserts an additional cause of action for assault and battery. Both complaints seek compensatory and punitive damages for personal injuries, lost wages and/or lost profits, costs of future medical monitoring, and attorneys’ fees. The consolidated master complaint also seeks property damage and diminution in property value, injunctive relief and civil penalties. SoCalGas recorded total charges of $259 million ($199 million after tax) in the year ended December 31, 2022 in Aliso Canyon Litigation and Regulatory Matters on the SoCalGas and Sempra Consolidated Statements of Operations related to the litigation and regulatory proceedings associated with the Leak. Aliso Canyon Natural Gas Storage Facility Regulatory Proceeding – Resolved In February 2017, the CPUC opened proceeding SB 380 OII to determine the feasibility of minimizing or eliminating the use of the Aliso Canyon natural gas storage facility while still maintaining energy and electric reliability for the region, but excluding issues with respect to air quality, public health, causation, culpability or cost responsibility regarding the Leak. The first phase of the proceeding established a framework for the hydraulic, production cost and economic modeling assumptions for the potential reduction in usage or elimination of the Aliso Canyon natural gas storage facility, as well as evaluating the impacts of reducing or eliminating the Aliso Canyon natural gas storage facility using the established framework and models. The next phase of the proceeding included engaging a consultant to analyze alternative means for meeting or avoiding the demand for the facility’s services if it were eliminated in either the 2027 or 2035 timeframe, and to address potential implementation of alternatives to the Aliso Canyon natural gas storage facility if the CPUC determines that the Aliso Canyon natural gas storage facility should be permanently closed. The CPUC also added all California IOUs as parties to the proceeding and encouraged all load-serving entities in the Los Angeles Basin to join the proceeding. In December 2024, the CPUC approved an FD in the SB 380 OII finding that the Aliso Canyon natural gas storage facility is currently necessary for natural gas and electric reliability and affordable rates and closed the OII. Among other things, and subject to future CPUC biennial reviews and potential additional proceedings, the FD authorizes the Aliso Canyon natural gas storage facility to continue operating and sets the maximum working natural gas storage level at 68.6 bcf. Other Sempra Energía Costa Azul We describe below certain land disputes and permit challenges affecting our ECA Regas Facility. Certain of these land disputes involve land on which portions of the ECA LNG liquefaction facilities under construction and in development are expected to be situated or on which portions of the ECA Regas Facility that would be necessary for the operation of such ECA LNG liquefaction facilities are situated. One or more unfavorable final decisions on these disputes or 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. Land Disputes. Sempra Infrastructure has been engaged in a long-running land dispute with a claimant relating to property adjacent to its ECA Regas Facility that allegedly overlaps with land owned by the ECA Regas Facility (the facility, however, is not situated on the land that is the subject of this dispute), as follows: ▪The claimant to the adjacent property filed complaints in the federal Agrarian Court challenging the refusal of SEDATU in 2006 to issue title to him for the disputed property. In November 2013, the federal Agrarian Court ordered that SEDATU issue the requested title to the claimant and cause it to be registered. Both SEDATU and Sempra Infrastructure challenged the ruling due to lack of notification of the underlying process. In May 2019, a federal court in Mexico reversed the ruling and ordered a retrial. In November 2024, the plaintiff withdrew the lawsuit and the case was dismissed, definitively resolving this matter. ▪In a separate proceeding, the claimant filed suit to reinitiate an administrative procedure at SEDATU to obtain the property title that, as described above, had previously been issued in a ruling by the federal Agrarian Court and subsequently reversed by a federal court in Mexico. In April 2021, the proceeding in the Agrarian Court concluded with the court ordering that the administrative procedure be restarted. The administrative procedure at SEDATU may continue if SEDATU decides to reopen the matter. In addition, a plaintiff filed a claim in the federal Agrarian Court that seeks to annul the property title for a portion of the land on which the ECA Regas Facility is situated and to obtain possession of a different parcel that allegedly overlaps with the site of the ECA Regas Facility. The proceeding, which seeks an order that SEDATU annul the ECA Regas Facility’s competing property title, was initiated in 2006 and, in July 2021, a decision was issued in favor of the ECA Regas Facility. The plaintiff appealed and, in February 2022, the appellate court confirmed the ruling in favor of the ECA Regas Facility and dismissed the appeal. The plaintiff filed a federal appeal against the appellate court ruling. In August 2024, the Federal Collegiate Circuit Court ruled in favor of the ECA Regas Facility. In November 2024, the plaintiff filed an appeal with the Mexican Supreme Court. Environmental and Social Impact Permits. Several administrative challenges are pending before Mexico’s Secretariat of Environment and Natural Resources (the Mexican environmental protection agency) and Federal Tax and Administrative Courts, seeking revocation of the environmental impact authorization issued to the ECA Regas Facility in 2003. These cases generally allege that the conditions and mitigation measures in the environmental impact authorization are inadequate and challenge findings that the activities of the terminal are consistent with regional development guidelines. In 2018 and 2021, three related claimants filed separate challenges in the federal district court in Ensenada, Baja California seeking revocation of the environmental and social impact permits issued by each of ASEA and SENER to ECA LNG authorizing natural gas liquefaction activities at the ECA Regas Facility, as follows: ▪In the first case, the court issued a provisional injunction against the permits in September 2018. In December 2018, ASEA approved modifications to the environmental permit that facilitate the development of the proposed natural gas liquefaction facility in two phases. In May 2019, the court canceled the provisional injunction. The claimant appealed the court’s decision to cancel the injunction but was not successful. The lower court’s ruling was favorable to the ECA Regas Facility, as the court determined that no harm has been caused to the plaintiff and dismissed the lawsuit. The claimant appealed and the appellate court’s ruling is pending. ▪In the second case, the initial request for a provisional injunction against the permits was denied. That decision was reversed on appeal in January 2020, resulting in the issuance of a new injunction against the permits that were issued by ASEA and SENER. This injunction has uncertain application absent clarification by the court. The claimants petitioned the court to rule that construction of natural gas liquefaction facilities violated the injunction and, in February 2022, the court ruled in favor of the ECA Regas Facility, holding that the natural gas liquefaction construction activities did not violate the injunction. The claimants appealed this ruling but were not successful. The lower court’s ruling was favorable to the ECA Regas Facility, as the court determined that no harm has been caused to the plaintiffs and dismissed the lawsuit. The claimants appealed and the appellate court’s ruling is pending. ▪In the third case, a group of residents filed a complaint in June 2021 against various federal and state authorities alleging deficiencies in the public consultation process for the issuance of the permits. The request for an initial injunction was denied. The claimants appealed this ruling but were not successful. The lower court’s ruling was favorable to the ECA Regas Facility, as the court determined that no harm has been caused to the plaintiffs and dismissed the lawsuit. The claimants appealed and the appellate court’s ruling is pending. Port Arthur LNG The PA LNG Phase 1 project holds two Clean Air Act Prevention of Significant Deterioration permits issued by the TCEQ, which we refer to as the “2016 Permit” and the “2022 Permit.” The 2022 Permit also governs emissions for the proposed PA LNG Phase 2 project. In November 2023, a panel of the U.S. 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. In February 2025, the Supreme Court of Texas adopted Port Arthur LNG’s interpretation of the standard. Port Arthur LNG continues to litigate this matter before the U.S. Court of Appeals for the Fifth Circuit, which will apply the standard adopted by the Supreme Court of Texas. The 2022 Permit is effective during the pending litigation. The 2016 Permit was not the subject of, and is unaffected by, the pending litigation of the 2022 Permit. Construction of the PA LNG Phase 1 project is proceeding uninterrupted under existing permits, and we do not currently anticipate the pending litigation to materially impact the PA LNG Phase 1 project cost, schedule or expected commercial operations at this stage. Litigation Related to Regulatory and Other Actions by the Mexican Government Amendments to Mexico’s Electricity Industry Law. In March 2021, the Mexican government published a decree with amendments to Mexico’s Electricity Industry Law that include some public policy changes, including establishing priority of dispatch for CFE plants over privately owned plants. The decree further purports to permit the CRE to revoke self-supply permits granted under the former electricity law, which were grandfathered when the new Electricity Industry Law was enacted, if it considers them to have been obtained improperly. According to the decree, these amendments were to become effective in March 2021, and SENER, the CRE and Centro Nacional de Control de Energía (Mexico’s National Center for Energy Control) were to have 180 calendar days to modify, as necessary, all resolutions, policies, criteria, manuals and other regulations applicable to the power industry to conform with this decree. Numerous legal actions were taken against the decree, which resulted in Mexican courts issuing a suspension of the decree later in March 2021. In April 2022, the Mexican Supreme Court resolved an action of unconstitutionality filed by a group of senators against the amended Electricity Industry Law. The super majority needed to find the amendment unconstitutional was not reached and the proceeding was therefore dismissed, leaving the amended Electricity Industry Law in place. However, the Court nevertheless found certain of the amendments, including the priority of dispatch for the CFE and other provisions that granted preference to the CFE over private companies, were invalid. In January 2024, the Second Chamber of the Mexican Supreme Court definitively resolved an amparo in a separate case brought by a third party and ruled that certain provisions of the amendments of the Electricity Industry Law are unconstitutional, including the priority of dispatch for the CFE and other provisions that granted preference to the CFE over private companies. The Court also dismissed an amparo relating to the provision of the decree applicable to self-supply permits granted under the former electricity law, and established that its decision applies generally over all participants. Sempra Infrastructure filed three lawsuits challenging the amendments to the Electricity Industry Law, including one concerning the provision permitting revocation of self-supply permits deemed improperly obtained. In each of them, Sempra Infrastructure obtained a favorable judgment in the lower court, all of which were challenged by the CRE. Following the criteria established by the Mexican Supreme Court, in July 2024, the Second Collegiate Court reversed the lower court’s decision and definitively dismissed one of the lawsuits filed by Sempra Infrastructure regarding the provision permitting revocation of self-supply permits. Consequently, the CRE may be required to seek to revoke such self-supply permits, under a legal standard that is ambiguous and not well defined under the law. Sempra Infrastructure supplies power pursuant to self-supply permits, and would be permitted to file amparos challenging the constitutionality of any such action. If such self-supply permits are revoked, it may result in increased costs for Sempra Infrastructure and for its power consumers, adversely affect our ability to develop new projects, result in decreased revenues and cash flows, and negatively impact our ability to recover the carrying values of our investments in Mexico, any of which could have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects. Final resolution regarding the two remaining lawsuits is still pending. RBS Sempra Commodities LLP – Resolved As we discuss in Note 5, Sempra held an equity method investment in RBS Sempra Commodities LLP, a limited liability partnership that was substantially liquidated in 2024. In 2015, liquidators filed a claim in the High Court of Justice against The Royal Bank of Scotland plc (now NatWest Markets plc, our partner in the JV) and Mercuria Energy Europe Trading Limited (the Defendants) on behalf of 10 companies (the Liquidating Companies) that engaged in carbon credit trading via chains that included a company that traded directly with RBS Sempra Energy Europe, a subsidiary of RBS Sempra Commodities LLP. The claim alleged that the Defendants’ participation in the purchase and sale of carbon credits resulted in the Liquidating Companies’ carbon credit trading transactions creating a VAT liability they were unable to pay, and that the Defendants were liable to provide for equitable compensation due to dishonest assistance and compensation under the U.K. Insolvency Act of 1986. Trial on the matter was held in 2018. In March 2020, the High Court of Justice rendered its judgment mostly in favor of the Liquidating Companies. The Defendants appealed and, in May 2021, the Court of Appeal set aside the High Court of Justice’s decision and ordered a retrial. In July 2022, the Supreme Court of the U.K. denied the Liquidating Companies application for permission to appeal the Court of Appeal’s decision. In January 2024, the parties settled the Liquidating Companies’ claim against the Defendants, which fully resolved these matters. Ordinary Course Litigation We are also defendants in ordinary routine litigation incidental to our businesses, including personal injury, employment litigation, product liability, property damage and other claims. Juries have demonstrated an increasing willingness to grant large awards, including punitive damages, in these types of cases. LEASES A lease exists when a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. We determine if an arrangement is or contains a lease at inception of the contract. Some of our lease agreements contain nonlease components, which represent activities that transfer a separate good or service to the lessee. As the lessee for both operating and finance leases, we have elected to combine lease and nonlease components as a single lease component for real estate, fleet vehicles, aircraft, power generating facilities and pipelines, whereby fixed or in-substance fixed payments allocable to the nonlease component are accounted for as part of the related lease liability and ROU asset. As the lessor, we have elected to combine lease and nonlease components as a single lease component for refined products terminals if the timing and pattern of transfer of the lease and nonlease components are the same and the lease component would be classified as an operating lease if accounted for separately. Lessee Accounting We have operating and finance leases for real and personal property (including office space, land, fleet vehicles, aircraft, tugboats, machinery and equipment, warehouses and other operational facilities) and PPAs with renewable energy, energy storage and peaker plant facilities. Some of our leases include options to extend the lease terms for up to 25 years, or to terminate the lease within one year. Our lease liabilities and ROU assets are based on lease terms that may include such options when it is reasonably certain that we will exercise the option. Certain of our contracts are short-term leases, which have a lease term of 12 months or less at lease commencement. We do not recognize a lease liability or ROU asset arising from short-term leases for all existing classes of underlying assets. In such cases, we recognize short-term lease costs on a straight-line basis over the lease term. Our short-term lease costs for the period reasonably reflect our short-term lease commitments. Certain of our leases contain escalation clauses requiring annual increases in rent ranging from 2% to 5% or based on the Consumer Price Index. The rentals payable under these leases may increase by a fixed amount each year or by a percentage of a base year. Variable lease payments that are based on an index or rate are included in the initial measurement of our lease liability and ROU asset based on the index or rate at lease commencement and are not remeasured because of changes to the index or rate. Rather, changes to the index or rate are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. Similarly, PPAs for the purchase of renewable energy at SDG&E require lease payments based on a stated rate per MWh produced by the facilities, and we are required to purchase substantially all the output from the facilities. SDG&E is required to pay additional amounts for capacity charges and actual purchases of energy that exceed the minimum energy commitments. Under these contracts, we do not recognize a lease liability or ROU asset for leases for which there are no fixed lease payments. Rather, these variable lease payments are recognized separately as variable lease costs. SDG&E estimates these variable lease payments to be $296 million in 2025, $290 million in 2026, $289 million in 2027, $290 million in 2028, $289 million in 2029 and $1.9 billion thereafter. As of the lease commencement date, we recognize a lease liability for our obligation to make future lease payments, which we initially measure at present value using our incremental borrowing rate at the date of lease commencement, unless the rate implicit in the lease is readily determinable. We determine our incremental borrowing rate based on the rate of interest that we would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. We also record a corresponding ROU asset, initially equal to the lease liability and adjusted for lease payments made at or before lease commencement, lease incentives, and any initial direct costs. We test ROU assets for recoverability whenever events or changes in circumstances have occurred that may affect the recoverability or the estimated useful lives of the ROU assets. For our operating leases, our non-regulated entities recognize a single lease cost on a straight-line basis over the lease term in operating expenses. SDG&E and SoCalGas recognize this single lease cost on a basis that is consistent with the recovery of such costs in accordance with U.S. GAAP governing rate-regulated operations. For our finance leases, the interest expense on the lease liability and amortization of the ROU asset are accounted for separately. Our non-regulated entities use the effective interest rate method to account for the imputed interest on the lease liability and amortize the ROU asset on a straight-line basis over the lease term. SDG&E and SoCalGas recognize amortization of the ROU asset on a basis that is consistent with the recovery of such costs in accordance with U.S. GAAP governing rate-regulated operations. Our leases do not contain any material residual value guarantees, restrictions or covenants. Classification of ROU assets and lease liabilities and the weighted-average remaining lease term and discount rate associated with operating and finance leases are summarized in the table below.
LESSEE INFORMATION ON THE CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
| Sempra |  | SDG&E |  | SoCalGas
| December 31,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
ROU assets: |  |  |  |  |  |  |  |  |  |  |
Operating leases: |  |  |  |  |  |  |  |  |  |  |
ROU assets | $ | 1,177 |  | $ | 723 |  | $ | 795 |  | $ | 368 |  | $ | 18 |  | $ | 29
Finance leases: |  |  |  |  |  |  |  |  |  |  |
PP&E | 1,626 |  | 1,585 |  | 1,426 |  | 1,412 |  | 200 |  | 173
Accumulated depreciation | (311) |  | (246) |  | (221) |  | (179) |  | (90) |  | (66)
PP&E, net | 1,315 |  | 1,339 |  | 1,205 |  | 1,233 |  | 110 |  | 107
Total ROU assets | $ | 2,492 |  | $ | 2,062 |  | $ | 2,000 |  | $ | 1,601 |  | $ | 128 |  | $ | 136
Lease liabilities: |  |  |  |  |  |  |  |  |  |  |
Operating leases: |  |  |  |  |  |  |  |  |  |  |
Other current liabilities(1) | $ | 91 |  | $ | 70 |  | $ | 68 |  | $ | 50 |  | $ | 8 |  | $ | 10
Deferred credits and other(2) | 1,019 |  | 599 |  | 734 |  | 325 |  | 9 |  | 18
| 1,110 |  | 669 |  | 802 |  | 375 |  | 17 |  | 28
Finance leases: |  |  |  |  |  |  |  |  |  |  |
Current portion of long-term debt and finance leases | 65 |  | 64 |  | 42 |  | 41 |  | 23 |  | 23
Long-term debt and finance leases | 1,250 |  | 1,276 |  | 1,163 |  | 1,192 |  | 87 |  | 84
| 1,315 |  | 1,340 |  | 1,205 |  | 1,233 |  | 110 |  | 107
Total lease liabilities | $ | 2,425 |  | $ | 2,009 |  | $ | 2,007 |  | $ | 1,608 |  | $ | 127 |  | $ | 135
Weighted-average remaining lease term (in years): |  |  |  |  |  |  |  |  |  |  |
Operating leases | 13 |  | 13 |  | 12 |  | 10 |  | 2 |  | 3
Finance leases | 14 |  | 15 |  | 15 |  | 16 |  | 6 |  | 6
Weighted-average discount rate: |  |  |  |  |  |  |  |  |  |  |
Operating leases(3) | 6.10 | % |  | 6.64 | % |  | 5.06 | % |  | 4.52 | % |  | 4.70 | % |  | 4.54 | %
Finance leases | 13.71 | % |  | 13.80 | % |  | 14.11 | % |  | 14.18 | % |  | 5.35 | % |  | 4.94 | %
(1) Includes $43 and $18 related to PPAs at December 31, 2024 and 2023, respectively, at both Sempra and SDG&E. (2) Includes $627 and $208 related to PPAs at December 31, 2024 and 2023, respectively, at both Sempra and SDG&E. (3) Weighted-average discount rate related to PPAs at December 31, 2024 and 2023 is 5.04% and 4.19%, respectively, at both Sempra and SDG&E. Weighted-average discount rate related to all other operating leases at December 31, 2024 and 2023 is 7.41% and 7.57%, respectively, at Sempra and 5.23% and 5.06%, respectively, at SDG&E. The components of lease costs were as follows:
LESSEE INFORMATION ON THE CONSOLIDATED STATEMENTS OF OPERATIONS(1)
(Dollars in millions)
| Sempra |  | SDG&E |  | SoCalGas
| Years ended December 31,
| 2024 |  | 2023 |  | 2022 |  | 2024 |  | 2023 |  | 2022 |  | 2024 |  | 2023 |  | 2022
Operating lease costs(2) | $ | 118 |  |  | $ | 99 |  |  | $ | 83 |  |  | $ | 71 |  |  | $ | 53 |  |  | $ | 45 |  |  | $ | 12 |  |  | $ | 13 |  |  | $ | 18 |
Finance lease costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of ROU assets(3) | 65 |  |  | 60 |  |  | 48 |  |  | 42 |  |  | 40 |  |  | 33 |  |  | 23 |  |  | 20 |  |  | 15 |
Interest on lease liabilities | 178 |  |  | 182 |  |  | 184 |  |  | 173 |  |  | 177 |  |  | 181 |  |  | 6 |  |  | 5 |  |  | 2 |
Total finance lease costs | 243 |  |  | 242 |  |  | 232 |  |  | 215 |  |  | 217 |  |  | 214 |  |  | 29 |  |  | 25 |  |  | 17 |
Short-term lease costs(4) | 9 |  |  | 9 |  |  | 3 |  |  | 8 |  |  | 8 |  |  | 2 |  |  | — |  |  | — |  |  | — |
Variable lease costs(4) | 472 |  |  | 458 |  |  | 411 |  |  | 460 |  |  | 447 |  |  | 399 |  |  | 10 |  |  | 10 |  |  | 11 |
Total lease costs | $ | 842 |  |  | $ | 808 |  |  | $ | 729 |  |  | $ | 754 |  |  | $ | 725 |  |  | $ | 660 |  |  | $ | 51 |  |  | $ | 48 |  |  | $ | 46 |
(1) Includes costs capitalized in PP&E. (2) Includes $37, $21, and $10 related to PPAs in 2024, 2023 and 2022, respectively, at both Sempra and SDG&E. (3) Included in O&M, except for $30, $29 and $25 at Sempra and $29, $28 and $24 at SDG&E in 2024, 2023 and 2022, respectively, and $1 at SoCalGas in each of 2024, 2023 and 2022, which is included in Depreciation and Amortization Expense. (4) Short-term leases with variable lease costs are recorded and presented as variable lease costs. Cash paid for amounts included in the measurement of lease liabilities and supplemental noncash information were as follows:
LESSEE INFORMATION ON THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
| Sempra |  | SDG&E |  | SoCalGas
| Years ended December 31,
| 2024 |  | 2023 |  | 2022 |  | 2024 |  | 2023 |  | 2022 |  | 2024 |  | 2023 |  | 2022
Operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash paid for operating leases | $ | 112 |  |  | $ | 85 |  |  | $ | 88 |  |  | $ | 70 |  |  | $ | 46 |  |  | $ | 45 |  |  | $ | 12 |  |  | $ | 13 |  |  | $ | 18 |
Cash paid for finance leases | 163 |  |  | 167 |  |  | 169 |  |  | 158 |  |  | 162 |  |  | 166 |  |  | 6 |  |  | 5 |  |  | 2 |
Financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash paid for finance leases | 66 |  |  | 60 |  |  | 48 |  |  | 42 |  |  | 40 |  |  | 33 |  |  | 24 |  |  | 20 |  |  | 15 |
Increase in operating lease obligations for ROU assets | 520 |  |  | 143 |  |  | 142 |  |  | 474 |  |  | 134 |  |  | 134 |  |  | — |  |  | — |  |  | 1 |
Increase in finance lease obligations for investment in PP&E | 41 |  |  | 57 |  |  | 57 |  |  | 14 |  |  | 17 |  |  | 16 |  |  | 27 |  |  | 40 |  |  | 41 |
The table below presents the maturity analysis of our lease liabilities and reconciliation to the present value of lease liabilities at December 31, 2024:
LESSEE MATURITY ANALYSIS OF LIABILITIES
(Dollars in millions)
| Sempra |  | SDG&E |  | SoCalGas
| Operating leases(1) |  | Finance leases |  | Operating leases(1) |  | Finance leases(2) |  | Operating leases |  | Finance leases
2025 | $ | 142 |  |  | $ | 224 |  |  | $ | 97 |  |  | $ | 196 |  |  | $ | 10 |  |  | $ | 28 |
2026 | 142 |  |  | 220 |  |  | 98 |  |  | 195 |  |  | 7 |  |  | 25 |
2027 | 134 |  |  | 218 |  |  | 97 |  |  | 194 |  |  | — |  |  | 24 |
2028 | 128 |  |  | 212 |  |  | 92 |  |  | 193 |  |  | — |  |  | 19 |
2029 | 124 |  |  | 204 |  |  | 89 |  |  | 190 |  |  | — |  |  | 14 |
Thereafter | 966 |  |  | 1,745 |  |  | 571 |  |  | 1,727 |  |  | — |  |  | 18 |
Total undiscounted lease payments | 1,636 |  |  | 2,823 |  |  | 1,044 |  |  | 2,695 |  |  | 17 |  |  | 128 |
Less: imputed interest | (526) |  |  | (1,508) |  |  | (242) |  |  | (1,490) |  |  | — |  |  | (18) |
Total lease liabilities | 1,110 |  |  | 1,315 |  |  | 802 |  |  | 1,205 |  |  | 17 |  |  | 110 |
Less: current lease liabilities | (91) |  |  | (65) |  |  | (68) |  |  | (42) |  |  | (8) |  |  | (23) |
Long-term lease liabilities | $ | 1,019 |  |  | $ | 1,250 |  |  | $ | 734 |  |  | $ | 1,163 |  |  | $ | 9 |  |  | $ | 87 |
(1) Includes $76 in 2025, $75 in 2026, $76 in 2027, $75 in each of 2028 and 2029, and $525 thereafter related to PPAs. (2) Substantially all amounts are related to PPAs. Leases That Have Not Yet Commenced SDG&E has entered into four PPAs, of which SDG&E expects two will commence in 2025 and two will commence in 2026. SDG&E expects the future minimum lease payments to be $16 million in 2025, $41 million in 2026, $43 million each of 2027 through 2029 and $459 million thereafter (through expiration in 2041). SoCalGas has entered into a lease agreement for a new headquarters office space in Los Angeles that it expects will commence in 2026. In 2024, SoCalGas prepaid $1 million and expects the future minimum lease payments to be $8 million in 2028, $9 million in 2029 and $134 million thereafter (through expiration in 2041). Sempra Infrastructure has entered into a lease agreement for tugboat services for the PA LNG Phase 1 project that it expects will commence in 2027. Sempra Infrastructure expects the future minimum lease payments to be $10 million in 2027, $12 million, in each of 2028 and 2029 and $198 million thereafter (through expiration in 2047, exclusive of certain renewal options) and total future minimum fixed payments for operation and maintenance services to be $184 million. Lessor Accounting Sempra Infrastructure is a lessor for certain of its natural gas and ethane pipelines, compressor stations, LPG storage facilities, a rail facility and refined products terminals, which we account for as operating or sales-type leases. These leases expire at various dates from 2025 through 2042. Over the lease term, we monitor the underlying assets in operating leases for impairment, and we evaluate the net investment in sales-type leases for expected credit losses. Sempra Infrastructure expects to continue to derive value from the underlying assets associated with its pipelines following the end of their respective lease terms based on the expected remaining useful life, expected market conditions and plans to re-market and re-contract the underlying assets. Generally, we recognize operating lease income on a straight-line basis over the lease term, and sales-type lease income based on the effective interest method over the lease term. Certain of our leases contain rate adjustments or are based on foreign currency exchange rates that may result in lease payments received that vary in amount from one period to the next. In addition to minimum fixed payments, our refined products terminals receive variable lease payments for barrels delivered that exceed minimum delivery requirements.
LESSOR INFORMATION
(Dollars in millions)
| December 31,
| 2024 |  | 2023
Sempra – Assets subject to operating leases: |  |  |
Property, plant and equipment: |  |  |
Pipelines and storage | $ | 1,313 |  |  | $ | 1,304 |
Refined products terminals | 623 |  |  | 621 |
Other | 77 |  |  | 77 |
Total | 2,013 |  |  | 2,002 |
Accumulated depreciation | (605) |  |  | (539) |
Property, plant and equipment, net | $ | 1,408 |  |  | $ | 1,463 |
| December 31, 2024
Sempra – Maturity analysis of lease payments: | Operating leases |  | Sales-type leases
2025 | $ | 318 |  |  | $ | 17 |
2026 | 272 |  |  | 9 |
2027 | 269 |  |  | — |
2028 | 268 |  |  | — |
2029 | 246 |  |  | — |
Thereafter | 2,324 |  |  | — |
Total undiscounted cash flows | $ | 3,697 |  |  | 26 |
Less: present value of lease payments (recognized as lease receivable)(1) |  |  | (23) |
Difference between undiscounted cash flows and discounted cash flows |  |  | $ | 3 |
(1) Includes $15 in Other Current Assets and $8 in Other Long-Term Assets on the Consolidated Balance Sheet.
LESSOR INFORMATION ON THE CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
| Years ended December 31,
| 2024 |  | 2023 |  | 2022
Sempra – Sales-type leases: |  |  |  |  |
Interest income | $ | 5 |  |  | $ | 6 |  |  | $ | 8 |
Total revenues from sales-type leases(1) | $ | 5 |  |  | $ | 6 |  |  | $ | 8 |
Sempra – Operating leases: |  |  |  |  |
Fixed lease payments | $ | 340 |  |  | $ | 321 |  |  | $ | 290 |
Variable lease payments | 38 |  |  | 34 |  |  | 10 |
Total revenues from operating leases(1) | $ | 378 |  |  | $ | 355 |  |  | $ | 300 |
Depreciation expense | $ | 73 |  |  | $ | 62 |  |  | $ | 54 |
(1) Included in Revenues: Energy-Related Businesses on the Consolidated Statements of Operations. CONTRACTUAL COMMITMENTS Natural Gas Contracts SoCalGas procures natural gas for both SDG&E’s and SoCalGas’ core customers in a combined portfolio. SoCalGas buys natural gas under short-term and long-term contracts for this portfolio from various producing regions in the southwestern U.S., U.S. Rockies and Canada. SoCalGas transports natural gas primarily under long-term firm interstate pipeline capacity agreements that provide for annual reservation charges, which are recovered in rates. SoCalGas has commitments with interstate pipeline companies for firm pipeline capacity under contracts that expire at various dates through 2032. Sempra has various capacity agreements for natural gas storage and transportation that expire at various dates through 2059. Transportation costs on these agreements vary based on pipeline capacity. Payments on our natural gas contracts could exceed the minimum commitment based on portfolio needs. At December 31, 2024, the future minimum payments under existing natural gas contracts and natural gas storage and transportation contracts are as follows:
FUTURE MINIMUM PAYMENTS |  |  |  |
(Dollars in millions) |  |  |  |
| Sempra |  | SoCalGas |  |  |  |
| Storage and transportation |  | Natural gas(1) |  | Total(1) |  | Transportation |  | Natural gas |  | Total |  |  |  |
2025 | $ | 229 |  |  | $ | 65 |  |  | $ | 294 |  |  | $ | 130 |  |  | $ | 61 |  |  | $ | 191 |  |  |  |  |
2026 | 225 |  |  | 175 |  |  | 400 |  |  | 125 |  |  | 108 |  |  | 233 |  |  |  |  |
2027 | 203 |  |  | 271 |  |  | 474 |  |  | 104 |  |  | 124 |  |  | 228 |  |  |  |  |
2028 | 155 |  |  | 242 |  |  | 397 |  |  | 71 |  |  | 83 |  |  | 154 |  |  |  |  |
2029 | 140 |  |  | 152 |  |  | 292 |  |  | 59 |  |  | — |  |  | 59 |  |  |  |  |
Thereafter | 1,283 |  |  | 212 |  |  | 1,495 |  |  | 118 |  |  | — |  |  | 118 |  |  |  |  |
Total minimum payments | $ | 2,235 |  |  | $ | 1,117 |  |  | $ | 3,352 |  |  | $ | 607 |  |  | $ | 376 |  |  | $ | 983 |  |  |  |  |
(1) Excludes amounts related to the LNG purchase agreement that we discuss below. Total payments under natural gas contracts and natural gas storage and transportation contracts as well as payments to meet additional portfolio needs at Sempra and SoCalGas were as follows:
PAYMENTS UNDER NATURAL GAS CONTRACTS
(Dollars in millions)
| Years ended December 31,
| 2024 |  | 2023 |  | 2022
Sempra | $ | 1,185 |  |  | $ | 4,030 |  |  | $ | 2,536 |
SoCalGas | 1,088 |  |  | 3,857 |  |  | 2,492 |
LNG Purchase Agreement Sempra Infrastructure has an SPA for the supply of LNG to the ECA Regas Facility. The commitment amount is calculated using a predetermined formula based on estimated forward prices of the index applicable from 2025 to 2029. Although this agreement specifies a number of cargoes to be delivered, under its terms, the supplier may divert certain cargoes, which would reduce amounts paid under the agreement by Sempra Infrastructure. At December 31, 2024, the following LNG commitment amounts are based on the assumption that all LNG cargoes under the agreement are delivered, less those already confirmed to be diverted as of December 31, 2024.
LNG COMMITMENT AMOUNTS |
(Dollars in millions) |
Sempra: |
2025 | $ | 355 |
2026 | 640 |
2027 | 657 |
2028 | 646 |
2029 | 402 |
Total | $ | 2,700 |
Actual LNG purchases were approximately $23 million in 2024, $30 million in 2023 and $108 million in 2022 due to the supplier electing to divert cargoes as allowed by the agreement. PPAs Not Accounted for as Leases Payments on SDG&E’s PPAs could exceed the minimum commitments based on energy needs. These PPAs expire on various dates through 2041. At December 31, 2024, the future minimum payments under long-term PPAs for Sempra and SDG&E are as follows:
FUTURE MINIMUM PAYMENTS(1)
(Dollars in millions)
2025 | $ | 97 |
2026 | 116 |
2027 | 114 |
2028 | 114 |
2029 | 114 |
Thereafter | 746 |
Total minimum payments | $ | 1,301 |
(1) Excludes PPAs accounted for as operating leases and finance leases. Payments on these contracts represent capacity charges and minimum energy and transmission purchases that exceed the minimum commitment. SDG&E is required to pay additional amounts for actual purchases of energy that exceed the minimum energy commitments. SDG&E estimates these variable payments to be $79 million in each of 2025 and 2026, $80 million in each of 2027 through 2029 and $440 million thereafter. Total fixed and variable payments under PPAs not accounted for as leases for Sempra and SDG&E were $326 million in 2024, $325 million in 2023 and $297 million in 2022. Construction and Development Projects SDG&E At December 31, 2024, SDG&E has commitments to make future payments of $133 million for construction projects that include: ▪$100 million related to construction supply agreements; ▪$19 million related to spent fuel management at SONGS; and ▪$14 million for infrastructure improvements for electric transmission and distribution systems. SDG&E expects future payments under these contractual commitments to be $115 million in 2025, $1 million in each of 2026 through 2028, $2 million in 2029 and $13 million thereafter. OTHER COMMITMENTS SDG&E We discuss nuclear insurance and nuclear fuel disposal related to SONGS in Note 14. Fire Mitigation Fund In connection with the completion of the Sunrise Powerlink project in 2012, the CPUC required that SDG&E establish a fire mitigation fund to minimize the risk of fire as well as reduce the potential wildfire impact on residences and structures near the Sunrise Powerlink. The future payments for these contractual commitments, for which a liability has been recorded, are expected to be $4 million per year in 2025 through 2029 and $264 million thereafter, subject to escalation of 2% per year, ending in 2069. At December 31, 2024, the present value of these future payments of $124 million has been recorded as a regulatory asset as the amounts represent a cost that we expect will be recovered from customers in the future. Franchise Agreements In July 2021, SDG&E’s natural gas and electric franchise agreements for the City of San Diego went into effect. These franchise agreements provide SDG&E the opportunity to serve the City of San Diego for a period of 20 years, consisting of 10-year agreements that will automatically renew for an additional 10 years unless the City Council voids the automatic renewals. At December 31, 2024, SDG&E has commitments to make future principal and interest payments as consideration for the franchise agreements of $14 million in 2025, $4 million in 2026, $2 million in each of 2027 through 2029 and $45 million thereafter. The consideration paid will not be recovered from customers and will be amortized over 20 years. Other Sempra Additional consideration for a 2006 comprehensive legal settlement with California to resolve the Continental Forge litigation included an agreement that, for a period of 18 years beginning in 2011, Sempra Infrastructure would sell to SDG&E and SoCalGas, subject to annual CPUC approval, up to 500 MMcf per day of regasified LNG from Sempra Infrastructure’s ECA Regas Facility that is not delivered or sold in Mexico at the price indexed to the California border minus $0.02 per MMBtu. There are no specified minimums required, and to date, Sempra Infrastructure has not been required to deliver any natural gas pursuant to this agreement. ENVIRONMENTAL ISSUES Our operations are subject to federal, state and local environmental laws. We also are subject to regulations related to hazardous wastes, air and water quality, land use, solid waste disposal and the protection of wildlife. These laws and regulations require that we investigate and correct the effects of the release or disposal of materials at sites associated with our past and our present operations. These sites include those at which we have been identified as a PRP under the federal Superfund laws and similar state laws. In addition, we are required to obtain numerous governmental permits, licenses and other approvals to construct facilities and operate our businesses. The related costs of environmental monitoring, pollution control equipment, cleanup costs, and emissions fees are significant. Increasing national and international concerns regarding global warming and mercury, carbon dioxide, nitrogen oxide and sulfur dioxide emissions could result in requirements for additional pollution control equipment or significant emissions fees or taxes that could adversely affect Sempra Infrastructure. SDG&E’s and SoCalGas’ costs to operate their facilities in compliance with these laws and regulations generally have been recovered in customer rates. We disclose any proceeding under environmental laws to which a government authority is a party when the potential monetary sanctions, exclusive of interest and costs, exceed the lesser of $1 million or 1% of current assets, which was $53 million for Sempra, $13 million for SDG&E and $16 million for SoCalGas at December 31, 2024. Other Environmental Issues We generally capitalize the significant costs we incur to mitigate or prevent future environmental contamination or extend the life, increase the capacity, or improve the safety or efficiency of property used in current operations. The following table shows our capital expenditures (including construction work in progress) in order to comply with environmental laws and regulations:
CAPITAL EXPENDITURES FOR ENVIRONMENTAL ISSUES
(Dollars in millions)
| Years ended December 31,
| 2024 |  | 2023 |  | 2022
Sempra | $ | 65 |  |  | $ | 107 |  |  | $ | 87 |
SDG&E | 23 |  |  | 29 |  |  | 31 |
SoCalGas | 42 |  |  | 78 |  |  | 56 |
We have not identified any significant environmental issues outside the U.S. At SDG&E and SoCalGas, costs that relate to current operations or an existing condition caused by past operations are generally recorded as a regulatory asset due to the probability that these costs will be recovered in rates. The environmental issues currently facing us, except for those resolved during the last three years, include (1) investigation and remediation of SDG&E’s and SoCalGas’ manufactured-gas sites, (2) cleanup of third-party waste-disposal sites used by SDG&E and SoCalGas at which we have been identified as a PRP and (3) mitigation of damage to the marine environment caused by the cooling-water discharge from SONGS. The table below shows the status at December 31, 2024 of SDG&E’s and SoCalGas’ manufactured-gas sites and the third-party waste-disposal sites for which we have been identified as a PRP:
STATUS OF ENVIRONMENTAL SITES
| # Sites complete(1) |  | # Sites in process
SDG&E: |  |  |
Manufactured-gas sites | 3 |  |  | — |
Third-party waste-disposal sites | 2 |  |  | 1 |
SoCalGas: |  |  |
Manufactured-gas sites | 39 |  |  | 3 |
Third-party waste-disposal sites | 5 |  |  | 2 |
(1) There may be ongoing compliance obligations for completed sites, such as regular inspections, adherence to land use covenants and water quality monitoring. We record environmental liabilities when our liability is probable and the costs can be reasonably estimated. In many cases, however, investigations are not yet at a stage where we can determine whether we are liable or, if the liability is probable, to reasonably estimate the amount or range of amounts of the costs. Estimates of our liability are further subject to uncertainties such as the nature and extent of site contamination, evolving cleanup standards and imprecise engineering evaluations. We review our accruals periodically and, as investigations and cleanups proceed, we make adjustments as necessary. The following table shows our accrued liabilities for environmental matters at December 31, 2024. Of the total liability, $14 million at SoCalGas is recorded on a discounted basis, with a weighted-average discount rate of 2.45%.
ACCRUED LIABILITIES FOR ENVIRONMENTAL MATTERS
(Dollars in millions)
| Sempra(1) |  | SDG&E(1) |  | SoCalGas
Manufactured-gas sites | $ | 34 |  |  | $ | — |  |  | $ | 34 |
Waste disposal sites (PRP)(2) | 8 |  |  | 5 |  |  | 3 |
Other hazardous waste sites | 12 |  |  | 11 |  |  | 1 |
Total(3) | $ | 54 |  |  | $ | 16 |  |  | $ | 38 |
(1) Does not include SDG&E’s liability for SONGS marine environment mitigation. (2) Sites for which we have been identified as a PRP. (3) Includes $6, $1, $5 classified as current liabilities and $48, $15 and $33 classified as noncurrent liabilities on Sempra’s, SDG&E’s and SoCalGas’ Consolidated Balance Sheets, respectively. We expect future payments related to our environmental liabilities on an undiscounted basis to be $6 million in 2025, $4 million in 2026, $8 million in 2027, $24 million in 2028, $1 million in 2029 and $14 million thereafter. In connection with the issuance of operating permits, SDG&E and the other owners of SONGS previously reached an agreement with the California Coastal Commission to mitigate the damage to the marine environment caused by the cooling-water discharge from SONGS during its operation. SONGS’ early retirement, described in Note 14, does not reduce SDG&E’s mitigation obligation. SDG&E’s share of the estimated mitigation costs is $154 million, of which $56 million has been incurred through December 31, 2024 and $98 million is accrued for remaining costs through 2059, which is recoverable in rates and included in noncurrent Regulatory Assets on Sempra’s and SDG&E’s Consolidated Balance Sheets

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