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REGULATORY MATTERS | 6 Months Ended
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Jun. 30, 2025
Regulated Operations [Abstract] |
REGULATORY MATTERS | REGULATORY MATTERS REGULATORY ASSETS AND LIABILITIES We discuss regulatory matters in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report and provide updates to those discussions and information about new regulatory matters below. With the exception of regulatory balancing accounts, we generally do not earn a return on our regulatory assets until a related cash expenditure has been made. Upon the occurrence of a cash expenditure associated with a regulatory asset, the related amounts are recoverable through a regulatory account mechanism for which we earn a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate. The periods during which we recognize a regulatory asset while we do not earn a return vary by regulatory asset.
REGULATORY ASSETS (LIABILITIES) |  |  |  |  |  |  |  |
(Dollars in millions) |  |  |  |  |  |  |  |
| Sempra |  | SDG&E |  | SoCalGas
| June 30, 2025 |  | December 31, 2024 |  | June 30, 2025 |  | December 31, 2024 |  | June 30, 2025 |  | December 31, 2024
Fixed-price contracts and other derivatives | $ | 34 |  |  | $ | 53 |  |  | $ | 3 |  |  | $ | 11 |  |  | $ | 31 |  |  | $ | 42 |
Deferred income taxes recoverable in rates | 1,972 |  |  | 1,689 |  |  | 929 |  |  | 802 |  |  | 974 |  |  | 817 |
Pension and PBOP plan obligations | (431) |  |  | (458) |  |  | 19 |  |  | (2) |  |  | (450) |  |  | (456) |
Employee benefit costs | 19 |  |  | 19 |  |  | 3 |  |  | 3 |  |  | 16 |  |  | 16 |
Removal obligations | (3,400) |  |  | (3,295) |  |  | (2,794) |  |  | (2,676) |  |  | (606) |  |  | (619) |
Environmental costs | 148 |  |  | 149 |  |  | 114 |  |  | 115 |  |  | 34 |  |  | 34 |
Sunrise Powerlink fire mitigation | 123 |  |  | 124 |  |  | 123 |  |  | 124 |  |  | — |  |  | — |
Regulatory balancing accounts(1)(2): |  |  |  |  |  |  |  |  |  |  |
Commodity – electric | (40) |  |  | (313) |  |  | (40) |  |  | (313) |  |  | — |  |  | — |
Commodity – gas, including transportation | (48) |  |  | (47) |  |  | 2 |  |  | 86 |  |  | (50) |  |  | (133) |
Safety and reliability | 819 |  |  | 820 |  |  | 277 |  |  | 227 |  |  | 542 |  |  | 593 |
Public purpose programs | (462) |  |  | (439) |  |  | (212) |  |  | (219) |  |  | (250) |  |  | (220) |
2024 GRC retroactive impacts | 539 |  |  | 631 |  |  | 229 |  |  | 277 |  |  | 310 |  |  | 354 |
Wildfire mitigation plan | 912 |  |  | 808 |  |  | 912 |  |  | 808 |  |  | — |  |  | — |
Liability insurance premium | (43) |  |  | (24) |  |  | (32) |  |  | (15) |  |  | (11) |  |  | (9) |
Other balancing accounts | 272 |  |  | 158 |  |  | (102) |  |  | (51) |  |  | 374 |  |  | 209 |
Other regulatory (liabilities) assets, net(2) | 165 |  |  | 164 |  |  | 86 |  |  | 87 |  |  | 80 |  |  | 79 |
Total | $ | 579 |  |  | $ | 39 |  |  | $ | (483) |  |  | $ | (736) |  |  | $ | 994 |  |  | $ | 707 |
(1) At June 30, 2025 and December 31, 2024, the noncurrent portion of regulatory balancing accounts – net undercollected for Sempra was $1,696 and $1,731, respectively, for SDG&E was $921 and $873, respectively, and for SoCalGas was $775 and $858, respectively. (2) Includes regulatory assets earning a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate. In July 2025, the CPUC issued an FD that authorizes partial recovery of costs recorded in SoCalGas’ Catastrophic Event Memorandum Account. The FD authorizes the recovery of $19 million out of the requested $55 million, denying recovery of COVID-19 costs included in the Catastrophic Event Memorandum Account. In the three months and six months ended June 30, 2025, SoCalGas recorded a write-off of $36 million ($25 million after tax) in disallowed costs, comprising a $29 million reduction in Utilities: Natural Gas Revenues and a $7 million reduction in regulatory interest in Other (Expense) Income, Net. CPUC GRC The CPUC uses GRCs to set base revenues to allow SDG&E and SoCalGas to recover their reasonable operating costs and to provide the opportunity to realize their authorized rates of return on their investments. In December 2024, the CPUC approved an FD in the 2024 GRC for SDG&E and SoCalGas that authorizes SDG&E’s and SoCalGas’ revenue requirements for 2024 and attrition year adjustments for 2025 through 2027, inclusively. The GRC FD adopts a 2024 revenue requirement of $2,699 million for SDG&E’s combined operations ($2,193 million for its electric operations and $506 million for its natural gas operations). SDG&E’s authorized 2024 combined revenue requirement represents an increase of $189 million (7.5%) over its authorized 2023 combined revenue requirement. In connection with SDG&E’s election to change its tax accounting method for gas repairs expenditures, the 2024 combined revenue requirement increase is net of $68 million of income tax benefits for 2023 and 2024 to be flowed through to customers. The GRC FD also specifies an increase in SDG&E’s 2025, 2026, and 2027 combined revenue requirements of $147 million (5.45%), $119 million (4.17%) and $122 million (4.11%), respectively, over the preceding year’s combined revenue requirement. The 2025, 2026 and 2027 revenue requirements will be updated to implement the applicable authorized changes in the cost of capital, which we describe below. The GRC FD adopts a 2024 revenue requirement of $3,806 million for SoCalGas. SoCalGas’ authorized 2024 revenue requirement represents an increase of $324 million (9.3%) over its authorized 2023 revenue requirement. In connection with SoCalGas’ election to change its tax accounting method for gas repairs expenditures, the 2024 revenue requirement increase is net of $202 million of income tax benefits for 2023 and 2024 to be flowed through to customers. The GRC FD also specifies an increase in SoCalGas’ 2025, 2026, and 2027 revenue requirements of $190 million (5.00%), $116 million (2.91%) and $120 million (2.92%), respectively, over the preceding year’s revenue requirement. The 2025, 2026 and 2027 revenue requirements will be updated to implement the applicable authorized changes in the cost of capital, which we describe below. Since the GRC FD was effective retroactive to January 1, 2024, SDG&E and SoCalGas recorded the retroactive impacts in the fourth quarter of 2024. The GRC provides SDG&E and SoCalGas with numerous mechanisms to seek cost recovery of specified projects and programs. We expect that the requests for cost recovery of these projects and programs, which remain subject to CPUC approval, will result in additional amounts of authorized revenue requirement that are not included in the amounts described above. 2024 GRC Track 2 In October 2023, SDG&E submitted a separate request to the CPUC in its 2024 GRC, known as a Track 2 request. This request seeks review and recovery of $1.5 billion of wildfire mitigation plan costs incurred from 2019 through 2022 that were in addition to amounts authorized in the 2019 GRC and not addressed in the 2024 GRC FD. SDG&E expects to receive a proposed decision for its Track 2 request in the second half of 2025. Revenue requirements associated with the Track 2 request have been recorded in a regulatory account. In February 2024, the CPUC approved an interim cost recovery mechanism that permits SDG&E to recover in rates $194 million and $96 million of this regulatory account balance in 2024 and 2025, respectively. Such recovery of SDG&E’s wildfire mitigation plan regulatory account balance will be subject to refund, contingent on the reasonableness review decision for its Track 2 request. 2024 GRC Track 3 In April 2025, SDG&E and SoCalGas each submitted additional requests to the CPUC in the 2024 GRC, known as Track 3 requests. SDG&E submitted a request seeking review and recovery of $417 million of its wildfire mitigation plan costs incurred in 2023 that were in addition to the amounts authorized in the 2019 GRC and not addressed in the 2024 GRC. Additionally, SDG&E and SoCalGas submitted a combined request seeking review and recovery of $240 million and $499 million, respectively, of PSEP costs incurred from 2014 through 2019 and 2015 through 2020, respectively. SDG&E and SoCalGas expect to receive proposed decisions for their Track 3 requests in the first half of 2026. Revenue requirements associated with the Track 3 requests have been recorded in regulatory accounts. SDG&E and SoCalGas are authorized interim rate recovery of up to 50% of the recorded PSEP regulatory account balance at the end of each year. Such interim rate recovery is subject to refund, contingent on the reasonableness review decision for their Track 3 requests. CPUC COST OF CAPITAL A CPUC cost of capital proceeding every three years determines a utility’s authorized capital structure and authorized return on rate base. The CCM applies in the interim years 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 index applicable to SDG&E and SoCalGas is based on each utility’s credit rating. 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. 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, subject to regulatory approval. Alternatively, SDG&E and SoCalGas are each permitted to file a cost of capital application to have its cost of capital determined in lieu of the CCM in an interim year in which an extraordinary or catastrophic event materially impacts its cost of capital and affects utilities differently than the market as a whole. The following table summarizes the CPUC-approved cost of capital for SDG&E and SoCalGas. The authorized weighting remained unchanged for each of the years presented.
AUTHORIZED COST OF CAPITAL
| Authorized weighting |  | 2024 | 2025 |  | 2024 | 2025
|  | Return on rate base |  | Weighted return on rate base
SDG&E: |  |  |  |  |  |  |
Long-Term Debt | 45.25 | % |  | 4.34 | % | 4.34 | % |  | 1.96 | % | 1.96 | %
Preferred Equity | 2.75 |  |  | 6.22 |  | 6.22 |  |  | 0.17 |  | 0.17 |
Common Equity | 52.00 |  |  | 10.65 |  | 10.23 |  |  | 5.54 |  | 5.32 |
| 100.00 | % |  |  |  |  | 7.67 | % | 7.45 | %
SoCalGas: |  |  |  |  |  |  |
Long-Term Debt | 45.60 | % |  | 4.54 | % | 4.63 | % |  | 2.07 | % | 2.11 | %
Preferred Equity | 2.40 |  |  | 6.00 |  | 6.00 |  |  | 0.14 |  | 0.14 |
Common Equity | 52.00 |  |  | 10.50 |  | 10.08 |  |  | 5.46 |  | 5.24 |
| 100.00 | % |  |  |  |  | 7.67 | % | 7.49 | %
In March 2025, SDG&E and SoCalGas each filed applications with the CPUC seeking to update their cost of capital for 2026 through 2028, subject to the CCM. SDG&E and SoCalGas expect to receive an FD by the end of 2025.
PROPOSED COST OF CAPITAL FOR 2026 - 2028
SDG&E |  | SoCalGas
Authorized weighting | Return on rate base | Weighted return on rate base |  | Authorized weighting | Return on rate base | Weighted return on rate base
46.00 | % | 4.62 | % | 2.13 | % | Long-Term Debt | 45.60 | % | 5.02 | % | 2.29 | %
— |  | 6.22 |  | — |  | Preferred Equity | 2.40 |  | 6.00 |  | 0.14 |
54.00 |  | 11.25 |  | 6.08 |  | Common Equity | 52.00 |  | 11.00 |  | 5.72 |
100.00 | % |  | 8.21 | % |  | 100.00 | % |  | 8.15 | %
FERC RATE MATTERS SDG&E files separately with the FERC for its authorized transmission revenue requirement and ROE on FERC-regulated electric transmission operations and assets. TO5 Settlement SDG&E’s authorized TO5 settlement provided for an ROE of 10.60%, consisting of a base ROE of 10.10% plus the California ISO adder. In December 2024, the FERC issued an order, which SDG&E has appealed, finding that SDG&E is not eligible for the California ISO adder and that the TO5 adder refund provision had been triggered, requiring SDG&E to refund customers the California ISO adder retroactively from June 1, 2019. TO6 Filing In October 2024, SDG&E submitted its TO6 filing to the FERC and requested it to be effective January 1, 2025. SDG&E’s TO6 filing proposes, among other items, an increase to SDG&E’s currently authorized base ROE from 10.10% to 11.75% plus the California ISO adder, for a total ROE of 12.25%. In December 2024, the FERC accepted SDG&E’s TO6 filing, subject to refund; suspended the effective date to June 1, 2025; established hearing and settlement judge procedures; and disallowed the inclusion of the California ISO adder, the last of which SDG&E has appealed. SAN ONOFRE NUCLEAR GENERATING STATION We provide below updates to ongoing matters related to SONGS, a nuclear generating facility near San Clemente, California that permanently ceased operations in June 2013, and in which SDG&E has a 20% ownership interest. We discuss SONGS further in Note 14 of the Notes to Consolidated Financial Statements in the Annual Report. NUCLEAR DECOMMISSIONING AND FUNDING As a result of Edison’s decision to permanently retire SONGS Units 2 and 3, Edison began the decommissioning phase of the plant. Major decommissioning work began in 2020. We expect the majority of the decommissioning work to be completed around 2030. Decommissioning of Unit 1, removed from service in 1992, is largely complete. The remaining work for Unit 1 will be completed once Units 2 and 3 are dismantled and the spent fuel is removed from the site. The spent fuel is currently being stored on-site, until the DOE identifies an independent spent fuel storage installation and puts in place a program for the fuel’s disposal. SDG&E is responsible for approximately 20% of the total decommissioning cost. In accordance with state and federal requirements and regulations, SDG&E has assets held in the NDT to fund its share of decommissioning costs for SONGS Units 1, 2 and 3. Amounts that were collected in rates for SONGS’ decommissioning are invested in the NDT, which is comprised of externally managed trust funds. Amounts held by the NDT are invested in accordance with CPUC regulations. SDG&E classifies debt and equity securities held in the NDT as available-for-sale. The NDT assets are presented on the Sempra and SDG&E Condensed Consolidated Balance Sheets at fair value with the offsetting credits recorded in noncurrent Regulatory Liabilities. Except for the use of funds for the planning of decommissioning activities or NDT administrative costs, CPUC approval is required for SDG&E to access the NDT assets to fund SONGS decommissioning costs for Units 2 and 3. In January 2025, the CPUC granted SDG&E authorization to access NDT funds of up to $66 million for forecasted 2025 costs. Nuclear Decommissioning Trusts The following table shows the fair values and gross unrealized gains and losses for the securities held in the NDT on the Sempra and SDG&E Condensed Consolidated Balance Sheets. We provide additional fair value disclosures for the NDT in Note 9.
NUCLEAR DECOMMISSIONING TRUSTS |  |  |  |  |  |  |
(Dollars in millions) |  |  |  |  |  |  |
| Cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Estimated fair value
| June 30, 2025
Short-term investments, primarily cash equivalents | $ | 16 |  |  | $ | — |  |  | $ | — |  |  | $ | 16 |
Equity securities | 69 |  |  | 218 |  |  | (2) |  |  | 285 |
Debt securities: |  |  |  |  |  |  |
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1) | 48 |  |  | 2 |  |  | (1) |  |  | 49 |
Municipal bonds(2) | 302 |  |  | 1 |  |  | (9) |  |  | 294 |
Other securities(3) | 246 |  |  | 4 |  |  | (4) |  |  | 246 |
Total debt securities | 596 |  |  | 7 |  |  | (14) |  |  | 589 |
Receivables (payables), net | (12) |  |  | — |  |  | — |  |  | (12) |
Total | $ | 669 |  |  | $ | 225 |  |  | $ | (16) |  |  | $ | 878 |
| December 31, 2024
Short-term investments, primarily cash equivalents | $ | 10 |  |  | $ | — |  |  | $ | — |  |  | $ | 10 |
Equity securities | 78 |  |  | 223 |  |  | (3) |  |  | 298 |
Debt securities: |  |  |  |  |  |  |
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies | 67 |  |  | 1 |  |  | (1) |  |  | 67 |
Municipal bonds | 295 |  |  | 1 |  |  | (9) |  |  | 287 |
Other securities | 234 |  |  | 2 |  |  | (8) |  |  | 228 |
Total debt securities | 596 |  |  | 4 |  |  | (18) |  |  | 582 |
Receivables (payables), net | (15) |  |  | — |  |  | — |  |  | (15) |
Total | $ | 669 |  |  | $ | 227 |  |  | $ | (21) |  |  | $ | 875 |
(1) Maturity dates are 2025-2055. (2) Maturity dates are 2025-2065. (3) Maturity dates are 2025-2070. The following table shows the proceeds from sales of securities in the NDT and gross realized gains and losses on those sales.
SALES OF SECURITIES IN THE NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
| Three months ended June 30, |  | Six months ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Proceeds from sales | $ | 225 |  |  | $ | 199 |  |  | $ | 499 |  |  | $ | 380 |
Gross realized gains | 21 |  |  | 10 |  |  | 31 |  |  | 24 |
Gross realized losses | 3 |  |  | 3 |  |  | 5 |  |  | 5 |
Net unrealized gains and losses, as well as realized gains and losses that are reinvested in the NDT, are included in noncurrent Regulatory Liabilities on Sempra’s and SDG&E’s Condensed Consolidated Balance Sheets. We determine the cost of securities in the trusts on the basis of specific identification. ASSET RETIREMENT OBLIGATION The present value of SDG&E’s ARO related to decommissioning costs for all three SONGS units was $451 million at June 30, 2025 and is based on a cost study prepared in 2024, which is pending CPUC approval.

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