# SEMPRA (SRE) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from SEMPRA's 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/1032208/000103220825000012/sre-20241231.htm Accession: 0001032208-25-000012 Filing date: 2025-02-25 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/SRE/ All MD&A years: /company/SRE/mda/ Previous year: /company/SRE/mda/fy2023/ (FY 2023) Next year: /company/SRE/mda/fy2025/ (FY 2025) ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS [[GREPCENT_TABLE]] [["","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"]] [[/GREPCENT_TABLE]] 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. Our businesses invest in, develop and operate energy infrastructure, and provide electric and gas services to customers. ▪SDG&E is a regulated public utility that provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County. ▪SoCalGas is a regulated public natural gas distribution utility, serving customers throughout most of Southern California and part of central California. Sempra has the following three reportable segments which reflect how the CODM oversees operational and financial performance: ▪Sempra California ▪Sempra Texas Utilities ▪Sempra Infrastructure SDG&E and SoCalGas each has one reportable segment. Below are significant events, including major project updates, that affected our business in 2024 and may continue to affect our future results: ▪In December 2024, we received net proceeds of $1.2 billion from the issuance of 17,142,858 shares of Sempra common stock from the settlement of forward sale agreements entered into in November 2023 ▪We established an ATM program providing for the offer and sale of shares of Sempra common stock having an aggregate gross sales price of up to $3.0 billion, and entered into a forward sale agreement under the ATM program for the sale of 2,909,274 shares with net proceeds expected to be approximately $268 million ▪The CPUC approved an FD in the GRC for SDG&E’s and SoCalGas’ revenue requirements for 2024 and attrition year adjustments for 2025 through 2027 ▪The CPUC approved an FD to modify the CCM and update SDG&E’s and SoCalGas’ cost of capital effective January 1, 2025 ▪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 (subject to future CPUC biennial reviews and potential additional proceedings) ▪The FERC issued an order, which SDG&E has appealed, 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 ▪SDG&E submitted its TO6 filing to the FERC, which the FERC accepted but suspended the effective date to June 1, 2025 and disallowed inclusion of the California ISO adder, which SDG&E has appealed ▪The PUCT approved approximately $2.9 billion of capital expenditures and approximately $520 million of O&M under Oncor’s inaugural system resiliency plan ▪Sempra Infrastructure advanced construction of the ECA LNG Phase 1 project and PA LNG Phase 1 project and entered into an EPC contract with Bechtel for the proposed PA LNG Phase 2 project ▪Sempra Infrastructure commenced commercial operations at its refined products terminal in Topolobampo 2024 Form 10-K | 66 Table of Contents ▪Sempra Infrastructure made a positive final investment decision on and began construction of the Cimarrón Wind project ▪We resolved all VAT and legal matters related to and substantially completed liquidation of our equity method investment in RBS Sempra Commodities LLP RESULTS OF OPERATIONS BY REGISTRANT Throughout the MD&A, our references to earnings represent earnings attributable to common shares. Variance amounts presented are the after-tax earnings impact (based on applicable statutory tax rates unless otherwise noted) and after NCI but before foreign currency and inflation effects, where applicable. We discuss herein Sempra’s results of operations and significant changes in earnings, revenues and costs by segment, as well as Parent and other, for the year ended December 31, 2024 compared to the year ended December 31, 2023. For a discussion of our results of operations and significant changes in earnings, revenues and costs for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to “Part II – Item 7. MD&A – Results of Operations” in our 2023 annual report on Form 10-K filed with the SEC on February 27, 2024. We also discuss herein the impact of foreign currency and inflation rates on Sempra’s results of operations. RESULTS OF OPERATIONS [[GREPCENT_TABLE]] [["RESULTS OF OPERATIONS"],["(Dollars and shares in millions, except per share amounts)"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["EARNINGS BY SEGMENT"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["Sempra:"],["Sempra California","$","1,846","","","$","1,747","","","$","1,514"],["Sempra Texas Utilities","781","","","694","","","736"],["Sempra Infrastructure","911","","","877","","","310"],["Segment earnings attributable to common shares","3,538","","","3,318","","","2,560"],["Parent and other","(721)","","","(288)","","","(466)"],["Earnings attributable to common shares","$","2,817","","","$","3,030","","","$","2,094"]] [[/GREPCENT_TABLE]] 2024 Form 10-K | 67 Table of Contents Sempra California Sempra California’s earnings are comprised of SDG&E and SoCalGas. Because changes in SDG&E’s and SoCalGas’ cost of natural gas and/or electricity are recovered in rates, changes in these costs are offset in the changes in revenues and therefore do not impact earnings, other than potential impacts related to the GCIM for SoCalGas that we describe below. In addition to the changes in cost or market prices, natural gas or electric revenues recorded during a period are impacted by the difference between customer billings and recorded or CPUC-authorized amounts. These differences are required to be balanced over time, resulting in over- and undercollected regulatory balancing accounts. We discuss balancing accounts and their effects further in Note 4 of the Notes to Consolidated Financial Statements. In 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 ▪$5 million related to settlement charges from our non-qualified pension plan in 2024 SIGNIFICANT CHANGES IN REVENUES AND COSTS The regulatory framework permits SDG&E and SoCalGas to recover certain program expenditures and other costs authorized by the CPUC (referred to as “refundable programs”). Utilities: Natural Gas Revenues and Cost of Natural Gas Our utilities revenues include natural gas revenues at Sempra California and Sempra Infrastructure, which includes Ecogas. Intercompany revenues are eliminated in Sempra’s Consolidated Statements of Operations. SDG&E and SoCalGas operate under a regulatory framework that permits the cost of natural gas purchased for core customers to be passed through to customers in rates substantially as incurred and without markup. The GCIM provides for SoCalGas to share in the savings and/or costs from buying natural gas for its core customers at prices below or above monthly market-based benchmarks. This mechanism permits full recovery of costs incurred when average purchase costs are within a price range around the benchmark price. Any higher costs incurred or savings realized outside this range are shared between SoCalGas and its core customers. We provide further discussion in Note 3 of the Notes to Consolidated Financial Statements. 2024 Form 10-K | 69 Table of Contents [[GREPCENT_TABLE]] [["UTILITIES: NATURAL GAS REVENUES AND COST OF NATURAL GAS"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["Sempra:"],["Natural gas revenues:"],["Sempra California","$","7,083","","","$","9,425","","","$","7,792"],["Sempra Infrastructure","78","","","87","","","89"],["Segment totals","7,161","","","9,512","","","7,881"],["Eliminations and adjustments","(20)","","","(17)","","","(13)"],["Total","$","7,141","","","$","9,495","","","$","7,868"],["Cost of natural gas(1):"],["Sempra California","$","1,118","","","$","3,747","","","$","2,562"],["Sempra Infrastructure","22","","","8","","","37"],["Segment totals","1,140","","","3,755","","","2,599"],["Eliminations and adjustments","(8)","","","(36)","","","4"],["Total","$","1,132","","","$","3,719","","","$","2,603"]] [[/GREPCENT_TABLE]] (1)    Excludes depreciation and amortization, which are presented separately on Sempra’s Consolidated Statements of Operations. In 2024 compared to 2023, Sempra’s natural gas revenues decreased by $2.4 billion (25%) to $7.1 billion driven by Sempra California, which included: ▪$2.6 billion decrease in cost of natural gas sold, which we discuss below ▪$268 million lower revenues from incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD, offset by higher authorized cost of capital ▪$79 million lower revenues associated with refundable programs, which are fully offset in O&M ▪$31 million lower franchise fee revenues ▪$7 million lower regulatory awards approved by the CPUC Offset by: ▪$372 million higher CPUC-authorized revenues in 2024, including certain incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD and higher authorized cost of capital ▪$310 million higher regulatory revenues primarily from the release of a tax regulatory liability for gas repairs expenditures as a result of the 2024 GRC FD ▪$26 million lower regulatory revenues in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures, which are offset in income tax expense In 2024 compared to 2023, Sempra’s cost of natural gas decreased by $2.6 billion to $1.1 billion driven by Sempra California, which included: ▪$2.4 billion lower average natural gas prices ▪$239 million lower volumes driven by weather Utilities: Electric Revenues and Cost of Electric Fuel and Purchased Power Our utilities revenues include electric revenues at Sempra California, substantially all of which is at SDG&E. Intercompany revenues are eliminated in Sempra’s Consolidated Statements of Operations. SDG&E operates under a regulatory framework that permits it to recover the actual cost incurred to generate or procure electricity based on annual estimates of the cost of electricity supplied to customers. The differences in cost between estimates and actual are recovered or refunded in subsequent periods through rates. 2024 Form 10-K | 70 Table of Contents Utility cost of electric fuel and purchased power includes utility-owned generation, power purchased from third parties, and net power purchases and sales to/from the California ISO. [[GREPCENT_TABLE]] [["UTILITIES: ELECTRIC REVENUES AND COST OF ELECTRIC FUEL AND PURCHASED POWER"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["Sempra:"],["Electric revenues:"],["Sempra California","$","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"]] [[/GREPCENT_TABLE]] (1)    Excludes depreciation and amortization, which are presented separately on Sempra’s Consolidated Statements of Operations. In 2024 compared to 2023, Sempra’s electric revenues decreased by $38 million (1%) remaining at $4.3 billion driven by Sempra California, which included: ▪$176 million lower revenues associated with refundable programs, which are fully offset in O&M ▪$137 million lower cost of electric fuel and purchased power, which we discuss below ▪$94 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 ▪$18 million lower revenues from a $5 million credit in 2024 compared to a $13 million cost in 2023 for the non-service components of net periodic benefit cost, which fully offsets in other income, net ▪$9 million lower franchise fee revenues Offset by: ▪$178 million lower ITCs from standalone energy storage projects, which are offset in income tax expense ▪$110 million higher CPUC-authorized revenues in 2024, including certain incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD and higher authorized cost of capital ▪$82 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital, offset by certain projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD ▪$42 million higher revenues from transmission operations In 2024 compared to 2023, Sempra’s cost of electric fuel and purchased power decreased by $130 million (35%) to $245 million driven by Sempra California, which included: ▪$276 million lower purchased power primarily due to change in excess capacity sales ▪$242 million lower purchased power from the California ISO due to lower market prices ▪$105 million lower utility-owned generation costs Offset by: ▪$331 million lower sales to the California ISO due to lower market prices ▪$129 million from realized losses in 2024 compared to realized gains in 2023 on derivative contracts for fixed-price natural gas, which are entered into to hedge the cost of electric fuel 2024 Form 10-K | 71 Table of Contents Energy-Related Businesses: Revenues and Cost of Sales [[GREPCENT_TABLE]] [["ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["Sempra:"],["Revenues:"],["Sempra Infrastructure","$","1,804","","","$","2,984","","","$","1,830"],["Parent and other(1)","(56)","","","(93)","","","(42)"],["Total","$","1,748","","","$","2,891","","","$","1,788"],["Cost of sales(2):"],["Sempra Infrastructure","$","380","","","$","548","","","$","942"],["Total","$","380","","","$","548","","","$","942"]] [[/GREPCENT_TABLE]] (1)    Includes eliminations of intercompany activity. (2)    Excludes depreciation and amortization, which are presented separately on Sempra’s Consolidated Statements of Operations. In 2024 compared to 2023, Sempra’s revenues from energy-related businesses decreased by $1.1 billion (40%) to $1.7 billion primarily due to: ▪$1.0 billion from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including: ◦$896 million primarily driven by $51 million unrealized losses in 2024 compared to $710 million unrealized gains in 2023 on commodity derivatives and $177 million primarily from lower natural gas prices offset by higher volumes ◦$115 million primarily from lower diversion fees due to lower natural gas prices ▪$55 million lower pipeline transportation revenues primarily from a customer’s early termination of firm transportation agreements in the first quarter of 2023 and lower rates ▪$45 million lower transportation revenues ▪$45 million from TdM mainly due to $78 million from lower power prices offset by $26 million from higher volumes ▪$25 million from lower volumes from wind power generation assets In 2024 compared to 2023, Sempra’s cost of sales from energy-related businesses decreased by $168 million (31%) to $380 million primarily due to: ▪$99 million at TdM driven by $111 million from lower natural gas prices offset by $11 million from higher volumes ▪$69 million driven by lower natural gas purchases related to asset and supply optimization Operation and Maintenance [[GREPCENT_TABLE]] [["OPERATION AND MAINTENANCE"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["Sempra:"],["Sempra California","$","4,398","","","$","4,591","","","$","4,012"],["Sempra Texas Utilities","5","","","5","","","6"],["Sempra Infrastructure","858","","","793","","","656"],["Segment totals","5,261","","","5,389","","","4,674"],["Parent and other(1)","75","","","69","","","72"],["Total","$","5,336","","","$","5,458","","","$","4,746"]] [[/GREPCENT_TABLE]] (1)    Includes eliminations of intercompany activity. 2024 Form 10-K | 72 Table of Contents In 2024 compared to 2023, Sempra’s O&M decreased by $122 million (2%) to $5.3 billion primarily due to: ▪$193 million decrease at Sempra California due to: ◦$255 million lower expenses associated with refundable programs, which costs are recovered in revenue Offset by: ◦$45 million higher non-refundable operating costs ◦$20 million impairment from disallowed capital costs in the 2024 GRC FD Offset by: ▪$65 million increase at Sempra Infrastructure due to: ◦$33 million higher development costs and certain non-capitalized expenses from projects under construction ◦$18 million higher purchased services ◦$6 million from a provision for expected credit losses on a customer’s past due receivable balance Other Income, Net In 2024 compared to 2023, Sempra’s other income, net, increased by $5 million (4%) to $136 million primarily due to: ▪$17 million higher AFUDC equity, including $12 million at Sempra California ▪$15 million higher net interest income on regulatory balancing accounts at Sempra California ▪$8 million higher net investment gains on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation plan at Parent and other ▪$5 million lower non-service components of net periodic benefit cost, including $17 million at Sempra California Offset by: ▪$26 million charge in 2024, comprised of $7 million of AFUDC equity and $19 million of net regulatory interest, 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 ▪$20 million decrease from $14 million losses in 2024 compared to $6 million gains in 2023 from impacts associated with interest rate and foreign exchange instruments and foreign currency transactions primarily at Sempra Infrastructure, including: ◦$18 million lower from $16 million losses in 2024 compared to $2 million gains in 2023 on other foreign currency transactional effects ◦$6 million gains in 2023 on cross-currency swaps as a result of fluctuation of the Mexican peso We provide further details of the components of other income, net, in Note 1 of the Notes to Consolidated Financial Statements. Interest Expense In 2024 compared to 2023, Sempra’s interest expense decreased by $260 million (20%) to $1.0 billion primarily due to: ▪$372 million at Sempra Infrastructure from: ◦$288 million favorable impact in interest expense from interest rate swaps related to the PA LNG Phase 1 project comprised of: •$245 million from $212 million unrealized gains in 2024 compared to $33 million unrealized losses in 2023 •$43 million from a $29 million settlement in 2024 from the termination of interest rate swaps compared to $14 million settlement losses in 2023 on a contingent interest rate swap ◦$56 million lower interest expense due to higher capitalization of interest expense on projects under construction Offset by: ▪$66 million at Sempra California from higher debt balances from debt issuances ▪$46 million at Parent and other from higher debt balances from debt issuances, offset by capitalization of interest expense in 2024 on projects under construction at Sempra Infrastructure 2024 Form 10-K | 73 Table of Contents Income Taxes [[GREPCENT_TABLE]] [["INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["Sempra:"],["Income tax expense","$","219","","","$","490","","","$","556"],["Income from continuing operations before income taxes and equity earnings","$","2,110","","","$","2,627","","","$","1,343"],["Equity earnings, before income tax(1)","603","","","633","","","666"],["Pretax income","$","2,713","","","$","3,260","","","$","2,009"],["Effective income tax rate","8","%","","15","%","","28","%"]] [[/GREPCENT_TABLE]] (1)    We discuss how we recognize equity earnings in Note 5 of the Notes to Consolidated Financial Statements. We report as part of our pretax results the income or loss attributable to NCI. However, we do not record income taxes for a portion of this income or loss, as some of our entities with NCI are currently treated as partnerships for U.S. income tax purposes, and thus we are only liable for income taxes on the portion of the earnings that are allocated to us. Our pretax income, however, includes 100% of these entities. If our entities with NCI grow, and if we continue to invest in such entities, the impact on our ETR may become more significant. In April 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting for gas repairs expenditures. Sempra elected this change in tax accounting method in its consolidated 2023 income tax return filing. Sempra records regulatory liabilities for benefits that will be flowed through to customers in the future. In 2024 compared to 2023, Sempra’s income tax expense decreased by $271 million primarily due to: ▪$619 million from $336 million income tax benefit in 2024 compared to $283 million income tax expense in 2023 from foreign currency and inflation effects on our monetary positions in Mexico ▪lower pretax income ▪$30 million income tax benefit in 2024 from an outside basis difference in a domestic partnership investment ▪$26 million higher income tax benefit from the resolution of prior year income tax items ▪higher income tax benefits from flow-through items, including higher gas repairs tax benefits, offset by $43 million income tax benefit in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures Offset by: ▪$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 ▪lower income tax benefit in 2024 from lower ITCs from standalone energy storage projects under the IRA We discuss the impact of foreign currency exchange rates and inflation on income taxes below in “Impact of Foreign Currency and Inflation Rates on Results of Operations.” See Notes 1 and 7 of the Notes to Consolidated Financial Statements for further details about our accounting for income taxes and items subject to flow-through treatment. 2024 Form 10-K | 74 Table of Contents Equity Earnings In 2024 compared to 2023, Sempra’s equity earnings increased by $128 million (9%) to $1.6 billion primarily due to: ▪$96 million at IMG due to income tax benefit in 2024 compared to an income tax expense in 2023 primarily from foreign currency and inflation effects ▪$86 million at 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 Offset by: ▪$24 million at TAG Norte primarily from the cumulative impact of new tariffs going into effect in June 2023 offset by lower income tax expense primarily from foreign currency and inflation effects ▪$21 million related to our investment in RBS Sempra Commodities LLP due to $19 million in 2024 from the substantial dissolution of the partnership and $40 million in 2023 related to a legal settlement Earnings Attributable to Noncontrolling Interests In 2024 compared to 2023, Sempra’s earnings attributable to NCI increased by $95 million (17%) to $638 million primarily due to an increase in SI Partners’ net income. IMPACT OF FOREIGN CURRENCY AND INFLATION RATES ON RESULTS OF OPERATIONS Because our natural gas distribution utility in Mexico, Ecogas, uses its local currency as its functional currency, its revenues and expenses are translated into U.S. dollars at average exchange rates for the period for consolidation in Sempra’s results of operations. Foreign Currency Translation Any difference in average exchange rates used for the translation of income statement activity from year to year can cause a variance in Sempra’s comparative results of operations. In 2024 compared to 2023, the change in our earnings as a result of foreign currency translation rates was negligible. Transactional Impacts Although the financial statements of most of our Mexican subsidiaries and JVs have the U.S. dollar as the functional currency, some transactions may be denominated in the local currency; such transactions are remeasured into U.S. dollars. This remeasurement creates transactional gains and losses that are included in other income, net, for our consolidated entities and in equity earnings for our JVs. We may utilize cross-currency swaps that exchange our Mexican peso-denominated principal and interest payments into the U.S. dollar and swap Mexican fixed interest rates for U.S. fixed interest rates. 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 resultant gains and losses from remeasuring the local currency amounts into U.S. dollars and the offsetting settlement of foreign currency forwards and swaps related to these contracts are included in revenues: energy-related businesses or equity earnings. 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: [[GREPCENT_TABLE]] [["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)"]] [[/GREPCENT_TABLE]] 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. They also have significant deferred income tax assets and liabilities denominated in the Mexican peso that must be translated to U.S. dollars for financial reporting purposes. In addition, monetary assets and liabilities and certain nonmonetary assets and liabilities are adjusted for Mexican inflation for Mexican income tax purposes. As a result, fluctuations in both the currency exchange rate for the Mexican peso against the U.S. dollar and Mexican inflation may expose us to fluctuations in income tax expense, other income, net, and equity earnings. We may use foreign currency derivatives as a means to help manage exposure to the currency exchange rate on our monetary assets and liabilities, and this derivative activity impacts other income, net. 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. 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. MD&A – Results of Operations” in our 2023 annual report on Form 10-K filed with the SEC on February 27, 2024. RESULTS OF OPERATIONS [[GREPCENT_TABLE]] [["RESULTS OF OPERATIONS"],["(Dollars in millions)"]] [[/GREPCENT_TABLE]] In 2024 compared to 2023, the decrease in SDG&E’s earnings of $45 million (5%) to $891 million was primarily due to: ▪$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 ▪$32 million higher net interest expense ▪$6 million lower AFUDC equity Offset by: ▪$33 million higher income tax benefits primarily from flow through items, including higher gas repairs tax benefits ▪$27 million higher CPUC base operating margin authorized for 2024, net of operating expenses, including higher authorized cost of capital ▪$12 million higher electric transmission margin ▪$10 million lower Wildfire Fund amortization 2024 Form 10-K | 77 Table of Contents SIGNIFICANT CHANGES IN REVENUES AND COSTS Electric Revenues and Cost of Electric Fuel and Purchased Power In 2024 compared to 2023, SDG&E’s electric revenues decreased by $36 million (1%) remaining at $4.3 billion primarily due to: ▪$176 million lower revenues associated with refundable programs, which are fully offset in O&M ▪$137 million lower cost of electric fuel and purchased power, which we discuss below ▪$94 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 ▪$18 million lower revenues from a $5 million credit in 2024 compared to a $13 million cost in 2023 for the non-service components of net periodic benefit cost, which fully offsets in other income, net ▪$9 million lower franchise fee revenues Offset by: ▪$178 million lower ITCs from standalone energy storage projects, which are offset in income tax (expense) benefit ▪$110 million higher CPUC-authorized revenues in 2024, including certain incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD and higher authorized cost of capital ▪$82 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital, offset by certain projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD ▪$42 million higher revenues from transmission operations In 2024 compared to 2023, SDG&E’s cost of electric fuel and purchased power decreased by $137 million (31%) to $308 million primarily due to: ▪$276 million lower purchased power primarily due to change in excess capacity sales ▪$242 million lower purchased power from the California ISO due to lower market prices ▪$105 million lower utility-owned generation costs Offset by: ▪$331 million lower sales to the California ISO due to lower market prices ▪$129 million from realized losses in 2024 compared to realized gains in 2023 on derivative contracts for fixed-price natural gas, which are entered into to hedge the cost of electric fuel Natural Gas Revenues and Cost of Natural Gas SDG&E’s average cost of natural gas per thousand cubic feet was $5.41 in 2024 and $11.05 in 2023. The average cost of natural gas sold at SDG&E is impacted by market prices, as well as transportation, tariff and other charges. In 2024 compared to 2023, SDG&E’s natural gas revenues decreased by $220 million (18%) to $1.0 billion primarily due to: ▪$290 million decrease in cost of natural gas sold, which we discuss below ▪$38 million lower revenues from incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD, offset by higher authorized cost of capital ▪$7 million lower franchise fee revenues Offset by: ▪$57 million higher regulatory revenues primarily from the release of a tax regulatory liability for gas repairs expenditures as a result of the 2024 GRC FD ▪$55 million higher CPUC-authorized revenues in 2024, including certain incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD and higher authorized cost of capital ▪$11 million higher revenues associated with refundable programs, which are fully offset in O&M In 2024 compared to 2023, SDG&E’s cost of natural gas decreased by $290 million to $242 million primarily due to: ▪$252 million lower average natural gas prices ▪$38 million lower volumes driven by weather 2024 Form 10-K | 78 Table of Contents Operation and Maintenance In 2024 compared to 2023, SDG&E’s O&M decreased by $154 million (8%) to $1.7 billion due to: ▪$165 million lower expenses associated with refundable programs, which costs are recovered in revenue Offset by: ▪$14 million higher non-refundable operating costs Other Income, Net In 2024 compared to 2023, SDG&E’s other income, net, decreased by $7 million (7%) to $90 million primarily due to: ▪$26 million charge in 2024, comprised of $7 million of AFUDC equity and $19 million of net regulatory interest, 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 ▪$6 million lower AFUDC equity Offset by: ▪$23 million increase from a $4 million credit in 2024 compared to $19 million cost in 2023 for the non-service components of net periodic benefit cost Interest Expense In 2024 compared to 2023, SDG&E’s interest expense increased by $28 million (6%) to $525 million from higher debt balances from debt issuances. Income Taxes [[GREPCENT_TABLE]] [["INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["SDG&E:"],["Income tax expense (benefit)","$","153","","","$","(26)","","","$","182"],["Income before income taxes","$","1,044","","","$","910","","","$","1,097"],["Effective income tax rate","15","%","","(3)","%","","17","%"]] [[/GREPCENT_TABLE]] In April 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting for gas repairs expenditures. SDG&E elected this change in tax accounting method in Sempra’s consolidated 2023 income tax return filing. SDG&E records regulatory liabilities for benefits that will be flowed through to customers in the future. In 2024 compared to 2023, SDG&E had an income tax expense in 2024 compared to income tax benefit in 2023 primarily due to lower income tax benefit in 2024 from lower ITCs from standalone energy storage projects under the IRA and higher pretax income. 2024 Form 10-K | 79 Table of Contents We discuss herein SoCalGas’ 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. 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. MD&A – Results of Operations” in our 2023 annual report on Form 10-K filed with the SEC on February 27, 2024. RESULTS OF OPERATIONS [[GREPCENT_TABLE]] [["RESULTS OF OPERATIONS"],["(Dollars in millions)"]] [[/GREPCENT_TABLE]] In 2024 compared to 2023, the increase in SoCalGas’ earnings of $144 million (18%) to $955 million was primarily due to: ▪$184 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 ▪$18 million higher AFUDC equity ▪$11 million higher net regulatory interest income Offset by: ▪$28 million higher net interest expense ▪$18 million lower CPUC base operating margin authorized for 2024, net of operating expenses, offset by higher authorized cost of capital ▪$15 million impairment from disallowed capital costs in the 2024 GRC FD ▪$5 million lower regulatory awards approved by the CPUC 2024 Form 10-K | 80 Table of Contents SIGNIFICANT CHANGES IN REVENUES AND COSTS Natural Gas Revenues and Cost of Natural Gas SoCalGas’ average cost of natural gas per thousand cubic feet was $3.28 in 2024 and $10.47 in 2023. The average cost of natural gas sold at SoCalGas is impacted by market prices, as well as transportation and other charges. In 2024 compared to 2023, SoCalGas’ natural gas revenues decreased by $2.1 billion (25%) to $6.2 billion primarily due to: ▪$2.3 billion decrease in cost of natural gas sold, which we discuss below ▪$230 million lower revenues from incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD, offset by higher authorized cost of capital ▪$90 million lower revenues associated with refundable programs, which are fully offset in O&M ▪$24 million lower franchise fee revenues ▪$7 million lower regulatory awards approved by the CPUC Offset by: ▪$317 million higher CPUC-authorized revenues in 2024, including certain incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD and higher authorized cost of capital ▪$253 million higher regulatory revenues primarily from the release of a tax regulatory liability for gas repairs expenditures as a result of the 2024 GRC FD ▪$26 million lower regulatory revenues in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures, which are offset in income tax (expense) benefit ▪$6 million higher revenues from higher non-service components of net periodic benefit cost, which fully offsets in other income (expense), net In 2024 compared to 2023, SoCalGas’ cost of natural gas decreased by $2.3 billion to $959 million primarily due to: ▪$2.1 billion lower average natural gas prices ▪$201 million lower volumes driven by weather Operation and Maintenance In 2024 compared to 2023, SoCalGas’ O&M decreased by $30 million (1%) remaining at $2.8 billion due to: ▪$90 million lower expenses associated with refundable programs, which costs are recovered in revenue Offset by: ▪$40 million higher non-refundable operating costs ▪$20 million impairment from disallowed capital costs in the 2024 GRC FD Other Income (Expense), Net In 2024 compared to 2023, SoCalGas’ other income, net, was $25 million compared to other expense, net, of $4 million primarily due to: ▪$18 million higher AFUDC equity ▪$15 million higher net interest income on regulatory balancing accounts Offset by: ▪$6 million higher non-service components of net periodic benefit cost Interest Expense In 2024 compared to 2023, SoCalGas’ interest expense increased by $38 million (13%) to $323 million from higher debt balances from debt issuances. 2024 Form 10-K | 81 Table of Contents Income Taxes [[GREPCENT_TABLE]] [["INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["SoCalGas:"],["Income tax expense (benefit)","$","31","","","$","(5)","","","$","138"],["Income before income taxes","$","987","","","$","807","","","$","738"],["Effective income tax rate","3","%","","(1)","%","","19","%"]] [[/GREPCENT_TABLE]] In April 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting for gas repairs expenditures. SoCalGas elected this change in tax accounting method in Sempra’s consolidated 2023 income tax return filing. SoCalGas records regulatory liabilities for benefits that will be flowed through to customers in the future. In 2024 compared to 2023, SoCalGas had an income tax expense in 2024 compared to income tax benefit in 2023 primarily due to: ▪higher pretax income Offset by: ▪$40 million higher income tax benefit from the resolution of prior year income tax items ▪higher income tax benefits from flow-through items, including higher gas repairs tax benefits, offset by $43 million income tax benefit in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures CAPITAL RESOURCES AND LIQUIDITY OVERVIEW Sempra Liquidity We expect to meet our cash requirements through cash flows from operations, unrestricted cash and cash equivalents, borrowings under or supported by our credit facilities, other incurrences of debt which may include issuing debt securities and obtaining term loans, issuing equity securities under our ATM program or other offerings, and other financing transactions which may include, distributions from our equity method investments, project financing and funding from NCI owners. 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. However, our ability to access these markets or obtain credit from commercial banks outside of our committed revolving credit facilities could become materially constrained if economic conditions worsen or disruptions to or volatility in these markets increase. In addition, our financing activities, actions by credit rating agencies and prevailing interest rates, as well as many other factors, could negatively affect the availability and cost of both short-term and long-term debt and equity financing. In January 2025, S&P revised Sempra’s outlook to negative from stable and downgraded SoCalGas’ issuer credit rating to A- from A. Also, cash flows 2024 Form 10-K | 82 Table of Contents from operations may be impacted by the timing and outcomes of regulatory proceedings, commencement and completion of, and potential cost overruns for, large projects and other material events. If cash flows from operations were to be significantly reduced or we were unable to borrow or obtain other financing under acceptable terms, we would likely first reduce or postpone discretionary capital expenditures (not related to safety/reliability) and investments in new businesses. We monitor our ability to finance the needs of our operating, investing and financing activities in a manner consistent with our goal to maintain our investment-grade credit ratings. Common Stock Offering and ATM Program In December 2024, upon full physical settlement of forward sale agreements entered into in connection with our November 2023 common stock offering, we received net proceeds of $1.2 billion from the issuance of 17,142,858 shares of Sempra common stock. In November 2024, we established an ATM program providing for the offer and sale of shares of Sempra common stock having an aggregate gross sales price of up to $3.0 billion through agents acting as our sales agents or as forward sellers or directly to the agents as principals. The shares may be offered and sold in amounts and at times to be determined by us from time to time. At December 31, 2024, approximately $2.7 billion of common stock remained available for sale under the ATM program, which reflects the forward sale agreement that we describe below. In November 2024, we entered into a forward sale agreement under the ATM program for the sale of 2,909,274 shares of Sempra common stock. We did not initially receive any proceeds from the sale of shares pursuant to this forward sale agreement. At December 31, 2024, a total of 2,909,274 shares of Sempra common stock remain subject to future settlement under this forward sale agreement, which may be settled on one or more dates specified by us occurring no later than June 30, 2026, which is the final settlement date under the agreement. At the initial forward price of $92.1546 per share, we expect that the net proceeds from the full physical settlement of the forward sale agreement would be approximately $268 million (net of sales commissions of approximately $2 million, but before deducting equity issuance costs, and subject to certain adjustments pursuant to the forward sale agreements). Although we expect to settle the forward sale agreement entirely by the physical delivery of shares of our common stock in exchange for cash proceeds, we may, subject to certain conditions, elect cash settlement or net share settlement for all or a portion of our obligations under the forward sale agreement. The forward sale agreement is also subject to acceleration by the forward purchaser upon the occurrence of certain events. We further discuss these activities, including the use of proceeds, in Note 12 of the Notes to Consolidated Financial Statements. Available Funds Our committed lines of credit provide liquidity and support commercial paper. Sempra, SDG&E and SoCalGas each has a committed line of credit expiring in 2029 and Sempra Infrastructure has four committed lines of credit expiring on various dates from 2025 through 2030, and an uncommitted line of credit expiring in 2026. [[GREPCENT_TABLE]] [["AVAILABLE FUNDS AT DECEMBER 31, 2024"],["(Dollars in millions)"],["","Sempra","","SDG&E","","SoCalGas"],["Unrestricted cash and cash equivalents(1)","$","1,565","","","$","\u2014","","","$","12"],["Available unused credit(2)","8,620","","","1,083","","","863"]] [[/GREPCENT_TABLE]] (1)    Amounts at Sempra include $70 held in non-U.S. jurisdictions. We discuss repatriation in Note 7 of the Notes to Consolidated Financial Statements. (2)    Available unused credit is the total available on committed and uncommitted lines of credit that we discuss in Note 6 of the Notes to Consolidated Financial Statements. Because our commercial paper programs are supported by these lines, we reflect the amount of commercial paper outstanding and any letters of credit outstanding as a reduction to the available unused credit. Short-Term Borrowings We use short-term debt primarily to meet liquidity requirements, fund shareholder dividends, and temporarily finance capital expenditures or acquisitions. SDG&E and SoCalGas use short-term debt primarily to meet working capital needs or to help fund event-specific costs. Commercial paper, a term loan and lines of credit were our primary sources of short-term debt funding in 2024. We discuss our short-term debt activities in Note 6 of the Notes to Consolidated Financial Statements and below in “Sources and Uses of Cash.” 2024 Form 10-K | 83 Table of Contents The following table shows selected statistics for our commercial paper borrowings. [[GREPCENT_TABLE]] [["COMMERCIAL PAPER STATISTICS"],["(Dollars in millions)"],["","Sempra","","SDG&E","","SoCalGas"],["","December 31,"],["","2024","2023","","2024","2023","","2024","2023"],["Amount outstanding at period end","$","754","","$","1,313","","","$","417","","$","\u2014","","","$","337","","$","947"],["Weighted-average interest rate at period end","4.67","%","5.48","%","","4.76","%","\u2014","%","","4.56","%","5.44","%"],["Daily weighted-average outstanding balance","$","1,320","","$","1,329","","","$","161","","$","48","","","$","313","","$","301"],["Daily weighted-average yield","4.74","%","5.02","%","","2.46","%","1.00","%","","4.98","%","4.24","%"],["Maximum daily amount outstanding","$","2,503","","$","2,119","","","$","696","","$","408","","","$","966","","$","982"]] [[/GREPCENT_TABLE]] Long-Term Debt Activities Significant issuances of and payments on long-term debt in 2024 included the following: [[GREPCENT_TABLE]] [["LONG-TERM DEBT ISSUANCES AND PAYMENTS"],["(Dollars in millions)"],["Issuances:","","Amount at issuance","","Maturity"],["Sempra 6.40% junior subordinated notes","","$","1,250","","","2054"],["Sempra 6.875% junior subordinated notes","","600","","","2054"],["Sempra 6.875% junior subordinated notes","","500","","","2054"],["Sempra 6.55% junior subordinated notes","","600","","","2055"],["Sempra 6.625% junior subordinated notes","","400","","","2055"],["SDG&E 5.55% first mortgage bonds","","600","","","2054"],["SoCalGas 5.05% first mortgage bonds","","600","","","2034"],["SoCalGas 5.60% first mortgage bonds","","500","","","2054"],["Sempra Infrastructure variable rate notes (ECA LNG Phase 1 project)","","231","","","2025"],["Sempra Infrastructure variable rate notes (PA LNG Phase 1 project)","","832","","","2030"],["Payments:","","Payments","","Maturity"],["SDG&E variable rate term loan","","$","400","","","2024"],["SoCalGas 3.15% first mortgage bonds","","500","","","2024"]] [[/GREPCENT_TABLE]] At December 31, 2024, Sempra expects to make interest payments on long-term debt totaling $27.2 billion, of which $1.5 billion is expected to be paid in 2025 and $25.7 billion is expected to be paid in subsequent years through 2079. 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. 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. 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. Credit Ratings The issuer credit ratings of Sempra, SDG&E and SoCalGas remained at investment grade levels in 2024. [[GREPCENT_TABLE]] [["ISSUER CREDIT RATINGS AT DECEMBER 31, 2024"],["","Sempra","","SDG&E","","SoCalGas"],["Moody\u2019s","Baa2 with a stable outlook","","A3 with a stable outlook","","A2 with a stable outlook"],["S&P","BBB+ with a stable outlook","","BBB+ with a stable outlook","","A with a negative outlook"],["Fitch","BBB+ with a stable outlook","","BBB+ with a stable outlook","","A with a stable outlook"]] [[/GREPCENT_TABLE]] On January 9, 2025, S&P affirmed Sempra’s issuer credit rating and revised Sempra’s outlook to negative from stable. At the same time, S&P downgraded SoCalGas’ issuer credit rating to A- from A and revised SoCalGas’ outlook to stable from negative. 2024 Form 10-K | 84 Table of Contents Downgrades of or other negative actions with respect to Sempra’s or any of its subsidiaries’ credit ratings or rating outlooks may, depending on the severity, result in the imposition of financial or other burdensome covenants or a requirement for collateral to be posted in the case of certain financing arrangements and may materially and adversely affect the market prices of their equity and debt securities, the rates at which borrowings are made and commercial paper is issued, and the various fees on their outstanding credit facilities. 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. Risk Factors.” Sempra has agreed that, if the credit rating of Oncor’s senior secured debt by any of the Rating Agencies falls below BBB (or the equivalent), Oncor will suspend dividends and other distributions (except for contractual tax payments), unless otherwise allowed by the PUCT. Oncor’s senior secured debt was rated A2, A+ and A at Moody’s, S&P and Fitch, respectively, at December 31, 2024. Sempra, SDG&E and SoCalGas have committed lines of credit to provide liquidity and to support commercial paper. Borrowings under these facilities bear interest at benchmark rates plus a margin that varies with market index rates and each borrower’s credit rating. Each facility also requires a commitment fee on available unused credit that may be impacted by each borrower’s credit rating. For example, assuming a one-notch downgrade: ▪If Sempra were to experience a ratings downgrade from its current level, the rate at which borrowings bear interest would increase by 25 bps. The commitment fee on available unused credit would also increase 5 bps. ▪If SDG&E were to experience a ratings downgrade from its current level, the rate at which borrowings bear interest would increase by 12.5 bps. The commitment fee on available unused credit would also increase 5 bps. ▪If SoCalGas were to experience a ratings downgrade from its current level, the rate at which borrowings bear interest would increase by 12.5 bps. The commitment fee on available unused credit would also increase 2.5 bps. 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. Postretirement Benefits Sempra, SDG&E and SoCalGas have significant investments in several trusts to provide for future payments of pensions and PBOP. The trusts’ ability to make ongoing required benefit payments has not been materially adversely affected by changes in asset values, which are dependent on market fluctuations, contributions and withdrawals. However, changes in asset values or other factors in future periods (such as changes to discount rates, assumed rates of return, mortality tables and regulations) may impact funding requirements for pension and PBOP plans. Additionally, contributions to our plans are based on our funding policy, which generally limits payments from exceeding plan assets of 110% of the projected benefit obligation, which are subject to maximum income tax deduction limitations. Sempra, SDG&E and SoCalGas expect to contribute $283 million, $55 million and $189 million, respectively, to pension and PBOP plans in 2025 and $1.5 billion, $480 million and $768 million, respectively, in the nine years thereafter. At SDG&E and SoCalGas, funding requirements are generally recoverable in rates. We discuss our employee benefit plans and our expected contributions to those plans in Note 8 of the Notes to Consolidated Financial Statements. Pillar Two The Organization for Economic Cooperation and Development has introduced a framework known as “Pillar Two” to implement a global minimum effective tax rate of 15% in every jurisdiction (generally, every country) in which a company does business. Many aspects of the Pillar Two framework became effective beginning in 2024. 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. Sempra California SDG&E’s and SoCalGas’ operations have historically provided relatively stable earnings and liquidity. Their future performance and liquidity will depend primarily on the ratemaking and regulatory process, environmental regulations, economic conditions, actions by legislatures, litigation and the changing energy marketplace, as well as other matters described in this report. 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. 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. 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. As we discuss in Note 4 of the Notes to Consolidated Financial Statements, changes in regulatory balancing accounts for significant costs at SDG&E and SoCalGas, particularly a change between over and undercollected status, may have a significant impact on cash flows. These changes generally represent the difference between when costs are incurred and when they are ultimately recovered or refunded in rates through billings to customers. CPUC GRC 2024 Revenue Requirements and Attrition Year Revenues. 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), which represents an increase of $189 million (7.5%) over its authorized 2023 combined revenue requirement. 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, all of which will be updated to implement a previously authorized change in the cost of capital that we describe below that adjusted SDG&E’s rate of return to 7.45%. The GRC FD adopts a 2024 revenue requirement of $3,806 million for SoCalGas, which represents an increase of $324 million (9.3%) over its authorized 2023 revenue requirement. 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, all of which will be updated to implement a previously authorized change in the cost of capital that we describe below that adjusted SoCalGas’ rate of return to 7.49%. Since the GRC FD is effective retroactive to January 1, 2024, SDG&E and SoCalGas recorded the retroactive impacts in the fourth quarter of 2024. The incremental revenue requirements associated with the period from January 1, 2024 through January 31, 2025 are being recovered in rates over an 18-month period that began on February 1, 2025. Existing and Anticipated Requests for Recovery of Specified Safety, Maintenance and Reliability Investments. The GRC also 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. These projects and programs include (i) the Track 2 and Track 3 requests related to SDG&E’s wildfire mitigation plan costs that we describe below, as well as review of SoCalGas’ and SDG&E’s Pipeline Safety Enhancement Plan costs incurred from 2015 to 2020, inclusively, which the GRC FD added to the Track 3 request, (ii) the ability to file advice letters to implement the revenue requirements associated with the costs of SDG&E’s Moreno compressor station project and SoCalGas’ Honor Rancho compressor station and customer information system replacement projects, which projects were all approved by the CPUC subject to applicable cost caps, and (iii) the opportunity to file separate applications for cost recovery of mobile home park and gas integrity management programs at both SDG&E and SoCalGas, advanced metering infrastructure replacements at SDG&E, and other projects and programs. CCM 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 (CCM benchmark rate) for each 12-month period ending September 30 (the measurement period). Alternatively, each of SDG&E and SoCalGas is 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. In October 2024, the CPUC 2024 Form 10-K | 86 Table of Contents issued an FD to modify the CCM. The FD updates the upward or downward adjustment to authorized ROE, if the CCM is triggered, from 50% to 20% of the change in the benchmark rate during the measurement period. The FD adopted this change effective January 1, 2025, reducing both SDG&E’s and SoCalGas’ ROE by 42 bps to 10.23% and 10.08%, respectively, and allowing SDG&E and SoCalGas to update their respective costs of preferred equity and debt for 2025. SDG&E Wildfire Fund The carrying value of SDG&E’s Wildfire Fund asset totaled $276 million at December 31, 2024. We describe the Wildfire Legislation and SDG&E’s commitment to make annual shareholder contributions to the Wildfire Fund through 2028 in Note 1 of the Notes to Consolidated Financial Statements. SDG&E is exposed to the risk that the participating California electric IOUs may incur third-party wildfire costs for which they will seek recovery from the Wildfire Fund with respect to wildfires that have occurred since enactment of the Wildfire Legislation in July 2019. In such a situation, SDG&E may recognize a reduction of its Wildfire Fund asset and record accelerated amortization against earnings when available coverage is reduced due to recoverable claims from any of the participating IOUs. PG&E is seeking reimbursement from the Wildfire Fund for losses associated with the Dixie Fire, which burned from July 2021 through October 2021. In the case of the recent LA fires, the causes of these fires have not been determined and therefore these fires may not impact the Wildfire Fund. If any California electric IOUs’ assets are determined to be a cause of fires, including fires of the size and scope of the recent LA Fires, payments of claims associated with those events could have a material adverse effect on the Wildfire Fund and on SDG&E’s and Sempra’s financial condition and results of operations up to the carrying value of our Wildfire Fund asset, with additional potential material exposure if SDG&E’s equipment is determined to be a cause of a fire. In addition, the Wildfire Fund could be completely exhausted due to fires in the other California electric IOUs’ service territories, by fires in SDG&E’s service territory or by a combination thereof. In the event that the Wildfire Fund is materially diminished, exhausted or terminated, SDG&E will lose the protection afforded by the Wildfire Fund, and as a consequence, a fire in SDG&E’s service territory could have a material adverse effect on SDG&E’s and Sempra’s results of operations, financial condition, cash flows and/or prospects. Wildfire Mitigation Cost Recovery Mechanism 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 first 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. SDG&E expects to submit in the first half of 2025 an additional request to the CPUC in its 2024 GRC, known as a Track 3 request, for review and recovery of wildfire mitigation plan costs incurred in 2023. 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. 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 has been triggered, requiring SDG&E to refund customers the California ISO adder retroactively from June 1, 2019. In June 2024, SDG&E exercised its right to terminate the TO5 settlement. Accordingly, in October 2024, SDG&E submitted its TO6 filing to the FERC, requested to be effective January 1, 2025, and subject to refund. 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 but suspended the effective date to June 1, 2025 and disallowed the inclusion of the California ISO adder, which SDG&E has appealed. 2024 Form 10-K | 87 Table of Contents SONGS Decommissioning SDG&E has significant investments in the SONGS NDT to provide for future payments of nuclear decommissioning. The NDT’s ability to make ongoing required payments has not been materially or adversely affected by changes in asset values, which are dependent on market fluctuations, contributions and withdrawals. 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. 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. SoCalGas LA Fires The LA Fires burned in SoCalGas’ service territory. As of February 6, 2025, the California Department of Forestry and Fire Protection estimated that the Palisades and Eaton fires damaged approximately 2,000 structures and destroyed approximately 16,200 structures. The potential costs to SoCalGas will depend on various factors, including the number of customers impacted and the nature and extent of damage to SoCalGas’ facilities. Due to the limited amount of time that has elapsed since the start of the LA Fires and the limited available information, including continued uncertainty as to the magnitude of their impacts on customers and utility facilities, SoCalGas cannot reasonably estimate the amount or range of such potential costs at this time. SoCalGas has mechanisms available for potential recovery of costs associated with declared disasters, such as the LA Fires, including through insurance and customer rates. Failure by SoCalGas to timely recover all or a substantial portion of its costs related to the LA Fires or any conclusion that such recovery is no longer probable could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects. Aliso Canyon Natural Gas Storage Facility Litigation. 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 and in “Part I – Item 1A. Risk Factors.” As of February 19, 2025, there are approximately 520 plaintiffs who have filed lawsuits related to the Leak or who declined to participate in a previous settlement related to the Leak and are able to continue to pursue their claims. SoCalGas’ loss contingency accruals do not include any amounts in excess of what has been reasonably estimated to resolve these matters, nor any amounts that may be necessary to resolve threatened litigation, other potential litigation or other costs. 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. Natural gas withdrawn from storage is important to help maintain service reliability during peak demand periods, including consumer heating needs in the winter and peak electric generation needs in the summer. The Aliso Canyon natural gas storage facility is the largest SoCalGas storage facility and an important component of SoCalGas’ delivery system. 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. At December 31, 2024, the Aliso Canyon natural gas storage facility had a net book value of $1.0 billion. 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. 2024 Form 10-K | 88 Table of Contents Los Angeles County Franchise Agreement In December 2024, the Los Angeles County Board of Supervisors granted SoCalGas a new, 20-year gas pipeline franchise. The franchise consists of an initial 10-year term beginning on January 9, 2025, followed by a 10-year term that Los Angeles County has the option to terminate. Prior to the granting of the new franchise, SoCalGas continued to serve customers in the unincorporated territory of Los Angeles County in accordance with its prior franchise. Labor Relations Field, technical and most clerical employees at SoCalGas are represented by the Utility Workers Union of America or the International Chemical Workers Union Council. The collective bargaining agreement for these employees covering wages, hours, working conditions, and medical and other benefit plans was due to expire on September 30, 2024, but was extended by mutual agreement through February 7, 2025, while SoCalGas and the unions continued negotiations. Two ratification votes in late 2024 were not successful. SoCalGas is currently operating under the terms of the expired agreement while the parties continue to negotiate revised terms and seek a positive ratification vote from union members. Until a new collective bargaining agreement is ratified by employees, there could be labor disruptions, though we do not anticipate that such labor disruptions would have a material impact on service. Sempra Texas Utilities Oncor relies on external financing as a significant source of liquidity for its capital requirements. In the event that Oncor fails to meet its capital requirements, access sufficient capital, or raise capital on favorable terms to finance its ongoing needs, we may elect to make additional capital contributions to Oncor (as our commitments to the PUCT prohibit us from making loans to Oncor), which could be substantial and reduce the cash available to us for other purposes, increase our indebtedness and ultimately materially adversely affect our results of operations, financial condition, cash flows and/or prospects. Oncor’s ability to make distributions may be limited by factors such as its credit ratings, regulatory capital requirements, increases in its capital plan, debt-to-equity ratio approved by the PUCT and other restrictions and considerations. In addition, Oncor will not make distributions if a majority of Oncor’s independent directors or any minority member director determines it is in the best interests of Oncor to retain such amounts to meet expected future requirements. Rates and Cost Recovery The PUCT issued a final order in Oncor’s most recent comprehensive base rate proceeding in April 2023, and rates implementing that order went into effect on May 1, 2023. In June 2023, the PUCT issued an order on rehearing in response to the motions for rehearing filed by Oncor and certain intervenor parties in the proceeding. The order on rehearing made certain technical and typographical corrections to the final order but otherwise affirmed the material provisions of the final order and did not require modification of the rates that went into effect on May 1, 2023. 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. In March 2024, Oncor appealed the court’s dismissal, which is currently with the Fifteenth Court of Appeals in Texas. Off-Balance Sheet Arrangement Our investment in Oncor Holdings is a variable interest in an unconsolidated entity. We discuss variable interests in Note 1 of the Notes to Consolidated Financial Statements. 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 expect Sempra Infrastructure will require additional funding for the development and expansion of its portfolio of projects, which may be financed through a combination of funding from the parent and NCI owners, bank financing, issuances of debt, project financing, partnering in JVs and asset sales. In 2024, 2023 and 2022, Sempra Infrastructure distributed $297 million, $730 million and $237 million, respectively, to its NCI owners, and NCI owners contributed $1,235 million, $1,770 million and $31 million, respectively, to Sempra Infrastructure. Sempra Infrastructure is in various stages of development or construction of natural gas liquefaction projects, pipeline and terminal projects, and renewable power generation and sequestration projects, which we describe below. 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. An unfavorable outcome with respect to any of these factors could have a material adverse effect on (i) the development and construction of the applicable project, including a potential impairment of all or a substantial portion of the capital costs invested in the project to date, which could be material, and (ii) for any project that has reached a positive final investment decision, Sempra’s results of operations, financial condition, cash flows and/or prospects. For a further discussion of these risks, see “Part I – Item 1A. Risk Factors.” The descriptions below discuss several HOAs, MOUs and other non-binding development agreements with respect to Sempra Infrastructure’s various development projects. 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. 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 Cameron LNG JV site can accommodate additional trains beyond the proposed Cameron LNG Phase 2 project. Cameron LNG JV has received major permits, which have been amended to allow the use of electric drives for a one-train electric drive expansion along with other design enhancements, and FTA and non-FTA approvals associated with the potential expansion. The non-FTA approval for the proposed Cameron LNG Phase 2 project includes, among other things, a May 2026 deadline to commence commercial exports, for which we expect to request an extension. Sempra Infrastructure and the other Cameron LNG JV members, namely affiliates of TotalEnergies SE, Mitsui & Co., Ltd. and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha, have entered into a non-binding HOA for the potential development of the Cameron LNG Phase 2 project. The non-binding HOA provides a commercial framework for the proposed project, including the contemplated allocation to SI Partners of 50.2% of the fourth train production capacity and 25% of the debottlenecking capacity from the project under tolling agreements. The non-binding HOA contemplates the remaining capacity to be allocated equally to the existing Cameron LNG Phase 1 facility customers. Cameron LNG JV concluded additional value engineering work on the proposed project in December 2024, which improved the overall value of the project and enabled evaluation of another potential EPC contractor. In collaboration with our partners, we continue to evaluate these materials as well as the timeframe to make a final investment decision, which remains subject to satisfactory conclusion on the EPC process as well as negotiation and finalization of definitive offtake agreements and completion of all related financing and permitting activities. 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. Expansion of the Cameron LNG Phase 1 facility beyond the first three trains is subject to certain restrictions and conditions under the JV project financing agreements, including among others, scope restrictions on expansion of the project unless appropriate prior consent is obtained from the existing project lenders. 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. ECA LNG Phase 1 is constructing a one-train natural gas liquefaction facility at the site of Sempra Infrastructure’s existing ECA Regas Facility with a nameplate capacity of 3.25 Mtpa and an initial offtake capacity of 2.5 Mtpa. We do not expect the construction or operation of the ECA LNG Phase 1 project to disrupt operations at the ECA Regas Facility. We received authorizations from the DOE to export U.S.-produced natural gas to Mexico and to re-export LNG to non-FTA countries from the ECA LNG Phase 1 project. ECA LNG Phase 1 has definitive 20-year SPAs with an affiliate of TotalEnergies SE for approximately 1.7 Mtpa of LNG and with Mitsui & Co., Ltd. for approximately 0.8 Mtpa of LNG. The customers have a termination right if the ECA LNG Phase 1 project does not commence commercial operations under the SPAs by February 24, 2026, subject to certain additional conditions, for which we expect to request an extension if necessary. 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 $1.6 billion, with capital expenditures approximating $2.5 billion including capitalized interest at the project level and project contingency. The actual cost of the EPC contract and the actual amount of these capital expenditures may differ substantially from our estimates. We expect the ECA LNG Phase 1 project to commence commercial operations in the spring of 2026. ECA LNG Phase 1 has a five-year loan agreement with a syndicate of seven external lenders that matures in December 2025, which we expect to extend, for an aggregate principal amount of up to $1.3 billion, of which $1.1 billion was outstanding at December 31, 2024. Proceeds from the loan are being used to finance the cost of construction of the ECA LNG Phase 1 project. 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. ECA LNG Phase 2 Project. Sempra Infrastructure is developing a second, large-scale natural gas liquefaction project at the site of its existing ECA Regas Facility. We expect the proposed ECA LNG Phase 2 project to be comprised of two trains and one LNG storage tank and produce approximately 12 Mtpa of export capacity. We expect that construction of the proposed ECA LNG Phase 2 project would conflict with the current operations at the ECA Regas Facility, which currently has firm storage service agreements and nitrogen injection service agreements with Shell and SEFE that expire in May 2028 and December 2025, respectively. We received authorizations from the DOE to export U.S.-produced natural gas to Mexico and to re-export LNG to non-FTA countries from the proposed ECA LNG Phase 2 project. We have non-binding MOUs and/or HOAs with Mitsui & Co., Ltd., an affiliate of TotalEnergies SE, and ConocoPhillips that provide a framework for their potential offtake of LNG from the proposed ECA LNG Phase 2 project and potential acquisition of an equity interest in ECA LNG Phase 2. PA LNG Phase 1 Project. 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. The PA LNG Phase 1 project will consist of two liquefaction trains, two LNG storage tanks, a marine berth and associated loading facilities and related infrastructure necessary to provide liquefaction services with a nameplate capacity of approximately 13 Mtpa and an initial offtake capacity of approximately 10.5 Mtpa. Sempra Infrastructure has received authorizations from the DOE that permit the LNG to be produced from the PA LNG Phase 1 project to be exported to all current and future FTA and non-FTA countries. In April 2019, the FERC approved the siting, construction and operation of the PA LNG Phase 1 project. Port Arthur LNG has received authorization from the FERC to increase its work force and implement a 24-hours-per-day construction schedule to further enhance construction efficiency while reducing temporal impacts to the community and environment in the vicinity of the project. The authorization provides the EPC contractor with more optionality to meet or exceed the project’s construction schedule. 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 2024 Form 10-K | 91 Table of Contents 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. Sempra Infrastructure has definitive SPAs for LNG offtake from the PA LNG Phase 1 project with: ▪an affiliate of ConocoPhillips for a 20-year term for 5 Mtpa of LNG, as well as a natural gas supply management agreement whereby an affiliate of ConocoPhillips will manage the feed gas supply requirements for the PA LNG Phase 1 project. ▪RWE Supply & Trading GmbH, a subsidiary of RWE AG, for a 15-year term for 2.25 Mtpa of LNG. ▪INEOS for a 20-year term for approximately 1.4 Mtpa of LNG. ▪ORLEN for a 20-year term for approximately 1 Mtpa of LNG. ▪ENGIE S.A. for a 15-year term for approximately 0.875 Mtpa of LNG. We have an EPC contract with Bechtel to construct the PA LNG Phase 1 project, which has an estimated price of approximately $10.7 billion. We estimate the capital expenditures for the PA LNG Phase 1 project will be approximately $13 billion including capitalized interest at the project level and project contingency. The actual cost of the EPC contract and the actual amount of these capital expenditures may differ substantially from our estimates. We expect the first and second trains of the PA LNG Phase 1 project to commence commercial operations in 2027 and 2028, respectively. As we discuss in Note 12 of the Notes to the Consolidated Financial Statements, SI Partners and ConocoPhillips have provided guarantees relating to their respective affiliate’s commitment to make its pro rata equity share of capital contributions to fund 110% of the development budget of the PA LNG Phase 1 project, in an aggregate amount of up to $9.0 billion. SI Partners’ guarantee covers 70% of this amount plus enforcement costs of its guarantee. As of December 31, 2024, an aggregate amount of $2.7 billion has been paid by SI Partners’ subsidiary in satisfaction of its commitment to fund its portion of the development budget of the PA LNG Phase 1 project. Port Arthur LNG has a seven-year term loan facility for an aggregate principal amount of approximately $6.8 billion and an initial working capital facility for up to $200 million, each of which matures in March 2030. At December 31, 2024, $1.1 billion of borrowings were outstanding under the term loan facility agreement. Proceeds from the loan are being used to finance the cost of construction of the PA LNG Phase 1 project. In November 2024, Port Arthur LNG signed an agreement to issue senior secured notes in January 2025 for $750 million and April 2025 for $250 million. The net proceeds from the January 2025 issuance and the expected net proceeds from the April 2025 issuance were or will be used to pay transaction fees and repay borrowings under the existing Port Arthur LNG term loan facility. The senior secured notes mature in December 2042 and the January 2025 and April 2025 issuances bear interest at the rate of 6.27% and 6.32% per annum, respectively. PA LNG Phase 2 Project. Sempra Infrastructure is developing a second phase of the Port Arthur natural gas liquefaction project that we expect will be a similar size to the PA LNG Phase 1 project. We are progressing the development of the proposed PA LNG Phase 2 project, while continuing to evaluate overall opportunities to develop the entirety of the Port Arthur site. In September 2023, the FERC approved the siting, construction and operation of the proposed PA LNG Phase 2 project, including the potential addition of up to two liquefaction trains. 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. As we discuss above, a U.S. federal court previously issued and subsequently withdrew a decision that would have vacated and remanded the 2022 Permit authorizing emissions from the PA LNG Phase 1 and Phase 2 projects to the TCEQ for additional explanation of the agency’s permit decision. The U.S. Court of Appeals for the Fifth Circuit 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. Sempra Infrastructure has entered into a non-binding HOA for a 20-year SPA with Aramco for 5 Mtpa of LNG offtake from the proposed PA LNG Phase 2 project. The HOA further contemplates Aramco’s 25% participation in the project-level equity of the PA LNG Phase 2 project. In July 2024, Sempra Infrastructure entered into an $8.2 billion EPC contract with Bechtel for the proposed PA LNG Phase 2 project. The EPC contract contemplates the construction of two liquefaction trains capable of producing approximately 13 Mtpa, an additional LNG storage tank and marine berth and associated loading facilities and related infrastructure necessary to provide liquefaction services. We have no obligation to move forward on the EPC contract, and we may release Bechtel to perform 2024 Form 10-K | 92 Table of Contents portions of the work pursuant to limited notices to proceed. The price is subject to increase if certain limited notices to proceed and the full notice to proceed are not issued, each by specified dates. We expect to work with Bechtel with respect to such changes based on the ultimate timeline for the project and plan to fully release Bechtel to perform all the work to construct the PA LNG Phase 2 project only after we reach a final investment decision, which we are targeting in 2025, and after certain other conditions are met, including obtaining permits, executing definitive agreements for LNG offtake and equity investments, and securing project financing. Vista Pacifico LNG Liquefaction Project. Sempra Infrastructure is developing the Vista Pacifico LNG project, a mid-scale natural gas liquefaction export facility proposed to be located in the vicinity of the Port of Topolobampo in Sinaloa, Mexico. In June 2024, we extended the non-binding development agreement with the CFE through December 2025. We continue to progress with the CFE on the negotiation of definitive agreements, including a natural gas supply agreement. 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 received authorization from the DOE to permit the export of U.S.-produced natural gas to Mexico and for LNG produced from the proposed Vista Pacifico LNG facility to be re-exported to all current and future FTA countries and non-FTA countries. 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. 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. Some of these derivatives that we use as economic hedges do not meet the requirements for hedge accounting, or hedge accounting is not elected, and as a result, the changes in fair value of these derivatives are recorded in earnings. Consequently, significant changes in commodity prices have in the past and could in the future result in earnings volatility, which may be material, as the economic offset of these derivatives may not be recorded at fair value. Off-Balance Sheet Arrangements. Our investment in Cameron LNG JV is a variable interest in an unconsolidated entity. We discuss variable interests in Note 1 of the Notes to Consolidated Financial Statements. In June 2021, Sempra provided a promissory note, which constitutes a guarantee, for the benefit of Cameron LNG JV with a maximum exposure to loss of $165 million. 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. In July 2020, Sempra entered into a Support Agreement, which contains a guarantee and represents a variable interest, for the benefit of CFIN with a maximum exposure to loss of $979 million. The guarantee will terminate upon full repayment of the guaranteed debt by 2039, including repayment following an event in which the guaranteed debt is put to Sempra. 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. Following the start of commercial operations of the Guaymas-El Oro segment, Sempra Infrastructure reported damage to the pipeline in the Yaqui territory that has made that section inoperable since August 2017 because it was not able to be repaired due to legal challenges, which were resolved in March 2023, by some members of the Yaqui tribe. In September 2019, Sempra Infrastructure and the CFE reached an agreement to modify the tariff structure and extend the term of the contract by 10 years. Under the revised agreement, the CFE will resume making payments only when the damaged section of the Guaymas-El Oro segment of the Sonora pipeline is back in service. 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. This amendment will terminate if certain conditions are not met, and Sempra Infrastructure retains the right to terminate the transportation services agreement and seek to recover its reasonable and documented costs and lost profit. Sempra Infrastructure continues to acquire and pursue the necessary rights-of-way and permits for the portion of the pipeline that needs to be re-routed. 2024 Form 10-K | 93 Table of Contents The Guaymas-El Oro segment of the Sonora pipeline currently constitutes a Sole Risk Project under the terms of the SI Partners limited partnership agreement, which means that Sempra Infrastructure holds a 100% interest in the project. Sole Risk Projects are separated from other SI Partners projects and are conducted at Sempra’s sole cost, expense and liability and Sempra Infrastructure receives, through the acquisition of Sole Risk Interests, any economic and other benefits from such projects. 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. Refined Products Terminals. Sempra Infrastructure owns and operates terminals for the receipt, storage, and delivery of refined products; one such terminal located in Topolobampo commenced commercial operations in June 2024. Sempra Infrastructure is also developing terminals for the receipt, storage, and delivery of refined products in the vicinity of Manzanillo and Ensenada. Port Arthur Pipeline Louisiana Connector. 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. Sempra Infrastructure received FERC approval to implement construction process enhancements and minor modifications to several discrete sections of the Port Arthur Pipeline Louisiana Connector. These modifications are intended to decrease environmental impacts, accommodate landowner routing requests and enhance construction procedures. We expect the Port Arthur Pipeline Louisiana Connector to be ready for service ahead of the PA LNG Phase 1 project’s gas requirements. We estimate the capital expenditures for the project will be approximately $1 billion, including capitalized interest at the project level and project contingency. The actual amount of these capital expenditures may differ substantially from our estimates. Louisiana Storage. Sempra Infrastructure is constructing Louisiana Storage, a 12.5-Bcf salt dome natural gas storage facility to support the PA LNG Phase 1 project. The construction includes an 11-mile pipeline that will connect to the Port Arthur Pipeline Louisiana Connector. In September 2022, the FERC approved the development of the project. We expect Louisiana Storage to be ready for service in time to support the needs of the PA LNG Phase 1 project. We estimate the capital expenditures for the project will be approximately $300 million, including capitalized interest at the project level and project contingency. The actual amount of these capital expenditures may differ substantially from our estimates. Low Carbon Solutions Cimarrón Wind. Sempra Infrastructure has made a positive final investment decision on and begun constructing the Cimarrón Wind project, an approximately 320 MW wind generation facility in Baja California, Mexico. Sempra Infrastructure has a 20-year PPA with Silicon Valley Power for the long-term supply of renewable energy to the City of Santa Clara, California. Cimarrón Wind will utilize Sempra Infrastructure’s existing cross-border high voltage transmission line to interconnect and deliver clean energy to the East County substation in San Diego County. We estimate the capital expenditures for the project will be approximately $550 million, including capitalized interest at the project level and project contingency. The actual amount of these capital expenditures may differ substantially from our estimates. We expect the Cimarrón Wind project to begin generating energy in late 2025 and commence commercial operations in the first half of 2026. Hackberry Carbon Sequestration Project. Sempra Infrastructure is developing the potential Hackberry Carbon Sequestration project near Hackberry, Louisiana, together with TotalEnergies SE, Mitsui & Co., Ltd. and Mitsubishi Corporation. This proposed project is designed to permanently sequester carbon dioxide from the Cameron LNG Phase 1 facility, the proposed Cameron LNG Phase 2 project and potentially other sources. In 2021, Sempra Infrastructure filed an application with the EPA for a Class VI carbon injection well permit, which is under review by the State of Louisiana. Legal and Regulatory Matters See Note 15 of the Notes to Consolidated Financial Statements and “Part I – Item 1A. 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. Regulatory and Other Actions by the Mexican Government ▪Amendments to Mexico’s Hydrocarbons Law ▪Amendments to Mexico’s Electricity Industry Law Sempra Infrastructure and other parties affected by these amendments to Mexican law have challenged them by filing amparo and other claims, some of which remain pending. In particular, Sempra Infrastructure filed one lawsuit concerning the provision of Mexico’s Electricity Industry Law permitting revocation of self-supply permits deemed improperly obtained that was dismissed by the court. 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. 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. Subsequent to the federal elections in Mexico in 2024 and, as noted above, the Mexican government has begun to introduce significant changes to the Mexican Constitution, which will require changes in laws, policies, and regulations in order to be implemented. These changes have included Mexican Constitutional reforms affecting the judiciary and the for-profit status of certain state-owned enterprises. The changes to the judiciary include a requirement that all judges be elected rather than appointed. The energy reforms have the potential to increase government control and participation in the energy sector and to create novel challenges for infrastructure development and operations. Additionally, a set of six energy-related laws, including modifications to the Hydrocarbons Law and Electricity Industry Law, were submitted to Mexico’s Congress in January 2025. The legislative session runs from February 1 to April 30, and the government is targeting approval by the end of March 2025. These reforms and any further Mexican Constitutional, legal or regulatory changes could affect the Mexican economy, energy sector and our businesses, the extent of which we currently are unable to predict. 2024 Form 10-K | 95 Table of Contents SOURCES AND USES OF CASH We discuss herein our sources and uses of cash for the year ended December 31, 2024 compared to the year ended December 31, 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. The following tables include only significant changes in cash flow activities for each of the Registrants. [[GREPCENT_TABLE]] [["CASH FLOWS FROM OPERATING ACTIVITIES"],["(Dollars in millions)"],["Years ended December 31,","Sempra","SDG&E","","SoCalGas"],["2024","","$","4,907","","","$","2,073","","","$","1,791"],["2023","","6,218","","","1,936","","","1,389"],["Change","","$","(1,311)","","","$","137","","","$","402"],["Change in net margin posted, current and noncurrent","","$","(1,142)"],["Change in fixed-price contracts and other derivatives, current and noncurrent","","(432)","","","$","(127)","","","$","(305)"],["Change in qualified pension liability","","(211)","","","(83)","","","(130)"],["Change in income taxes receivable/payable, net","","(191)","","","445"],["Change in GHG allowances, current and noncurrent","","(73)","","","40","","","(155)"],["Change in accounts receivable(1)","","(50)","","","305","","","(220)"],["(Lower) higher net income, adjusted for noncash items included in earnings","","(45)","","","78","","","40"],["Change in legal reserve, current and noncurrent","","82","","","","","82"],["Lower net decrease in Reserve for Aliso Canyon costs, current and noncurrent, due to $94 lower payments offset by $6 lower accruals","","88","","","","","88"],["Change in GHG obligations, current and noncurrent","","99","","","39","","","55"],["Change in accounts payable(2)","","139","","","(63)","","","76"],["Higher distributions from Oncor Holdings","","162"],["Change in regulatory accounts, current and noncurrent","","249","","","(456)","","","704"],["Change in customer deposits","","","","(47)"],["Change in inventories, current and noncurrent(3)","","","","","","117"],["Other","","14","","","6","","","50"],["","","$","(1,311)","","","$","137","","","$","402"]] [[/GREPCENT_TABLE]] (1)    Change primarily due to a decrease in natural gas consumption and lower gas rates at SoCalGas offset by timing of customer payments. (2)    Change primarily due to a decrease in payments to suppliers at Sempra Infrastructure and a decrease in payments for gas purchases at SoCalGas, offset by an increase in payments to CCAs at SDG&E. (3)    Change primarily due to a decrease in purchases of materials and supplies and a decrease in natural gas inventory. [[GREPCENT_TABLE]] [["CASH FLOWS FROM INVESTING ACTIVITIES"],["(Dollars in millions)"],["Years ended December 31,","Sempra","SDG&E","","SoCalGas"],["2024","","$","(9,118)","","","$","(2,461)","","","$","(2,231)"],["2023","","(8,716)","","","(2,472)","","","(2,020)"],["Change","","$","(402)","","","$","11","","","$","(211)"],["Higher contributions to Oncor Holdings","","$","(609)"],["Decrease (increase) in capital expenditures","","182","","","$","18","","","$","(211)"],["Other","","25","","","(7)"],["","","$","(402)","","","$","11","","","$","(211)"]] [[/GREPCENT_TABLE]] 2024 Form 10-K | 96 Table of Contents [[GREPCENT_TABLE]] [["CASH FLOWS FROM FINANCING ACTIVITIES"],["(Dollars in millions)"],["Years ended December 31,","Sempra","SDG&E","","SoCalGas"],["2024","","$","5,424","","","$","338","","","$","450"],["2023","","2,419","","","579","","","612"],["Change","","$","3,005","","","$","(241)","","","$","(162)"],["Lower payments on short-term debt with maturities greater than 90 days","","$","2,923","","","","","$","800"],["Higher (lower) issuances of long-term debt","","2,124","","","$","(795)","","","97"],["Higher issuances of common stock","","1,074"],["Lower distributions to NCI","","433"],["Termination of interest rate and settlement of cross-currency swaps","","145"],["Higher advances from unconsolidated affiliates","","54"],["Lower contributions from NCI","","(335)"],["Change in borrowings and repayments of short-term debt, net","","(1,109)","","","622","","","(1,455)"],["(Lower) higher issuances of short-term debt with maturities greater than 90 days","","(1,119)","","","","","700"],["Net proceeds from sales of NCI in 2023","","(1,219)"],["Lower (higher) payments on long-term debt and finance leases","","","","48","","","(204)"],["Higher common dividends paid","","","","(125)","","","(100)"],["Other","","34","","","9"],["","","$","3,005","","","$","(241)","","","$","(162)"]] [[/GREPCENT_TABLE]] Capital Expenditures for PP&E We invest the majority of our capital expenditures in Sempra California, primarily for transmission and distribution improvements, including pipeline and wildfire safety. The following table summarizes, by segment, capital expenditures for PP&E for the last three years. [[GREPCENT_TABLE]] [["CAPITAL EXPENDITURES FOR PP&E"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["Sempra:"],["Sempra California(1)","$","4,753","","","$","4,560","","","$","4,466"],["Sempra Infrastructure","3,459","","","3,832","","","884"],["Segment totals","8,212","","","8,392","","","5,350"],["Parent and other","3","","","5","","","7"],["Total Sempra","$","8,215","","","$","8,397","","","$","5,357"]] [[/GREPCENT_TABLE]] (1)    Includes capital expenditures for PP&E of $2,522, $2,540, and $2,473 at SDG&E and $2,231, $2,020, and $1,993 at SoCalGas for 2024, 2023, and 2022, respectively. Capital Expenditures for Investments The following table summarizes, by segment, capital expenditures for investments in entities that we account for under the equity method for the last three years. [[GREPCENT_TABLE]] [["CAPITAL EXPENDITURES FOR INVESTMENTS"],["(Dollars in millions)"],["","Years ended December 31,"],["","2024","","2023","","2022"],["Sempra:"],["Sempra Texas Utilities","$","976","","","$","367","","","$","346"],["Sempra Infrastructure","12","","","15","","","30"],["Total Sempra","$","988","","","$","382","","","$","376"]] [[/GREPCENT_TABLE]] 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. Risk Factors.” In 2025, we expect to make capital expenditures for PP&E and investments of approximately $12.5 billion, as summarized by segment in the following table. [[GREPCENT_TABLE]] [["FUTURE CAPITAL EXPENDITURES FOR PP&E AND INVESTMENTS"],["(Dollars in millions)"],["","Year ending December 31, 2025"],["Sempra:"],["Sempra California(1)","$","4,740"],["Sempra Texas Utilities","1,935"],["Sempra Infrastructure","5,777"],["Segment totals","12,452"],["Parent and other","2"],["Total Sempra","$","12,454"]] [[/GREPCENT_TABLE]] (1)    Includes expected future capital expenditures of $2,632 and $2,108 at SDG&E and SoCalGas, respectively. 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. From 2025 through 2029, and subject to the factors described below, which could cause these estimates to vary substantially, Sempra expects to make aggregate capital expenditures for PP&E and investments of approximately $41.4 billion, as follows: $22.4 billion at Sempra California (which includes $12.7 billion at SDG&E and $9.7 billion at SoCalGas), $8.1 billion at Sempra Texas Utilities, and $10.9 billion at Sempra Infrastructure. Capital expenditure amounts for PP&E include capitalized interest and AFUDC related to debt. 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. Oncor currently anticipates that its five-year capital expenditures plan could grow by approximately $12 billion over the 2025 through 2029 period due to potential additions to its system resiliency plan expected to occur in 2028 and 2029, potential projects that are pending regulatory action and customer projects that are in Oncor’s transmission interconnection queue but do not yet have signed agreements. Significant changes in Oncor’s capital expenditures plan could result in significant changes to our capital expenditures plan. To the extent Oncor’s five-year capital expenditures plan grows, Sempra expects that its five-year plan for capital expenditures for PP&E and investments, as well as its plan when including its proportionate ownership interest in Oncor’s capital expenditures and excluding Sempra’s expected capital contributions to Oncor, would each grow by Sempra’s 80.25% interest in Oncor’s incremental capital expenditures. Periodically, we review our construction, investment and financing programs and revise them in response to changes in regulation, economic conditions, competition, customer growth, inflation, customer rates, the cost and availability of capital, and safety and environmental requirements. 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. Risk Factors.” We aim to finance our capital expenditures for PP&E and investments in a manner that will maintain our investment-grade credit ratings and capital structure, but there is no guarantee that we will be able to do so. 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 following table summarizes the weighted-average rate base for SDG&E and SoCalGas for the last three years. 2024 Form 10-K | 98 Table of Contents [[GREPCENT_TABLE]] [["WEIGHTED-AVERAGE RATE BASE"],["(Dollars in millions)"],["","2024","","2023","","2022"],["SDG&E","$","16,842","","","$","15,220","","","$","13,780"],["SoCalGas","12,446","","","11,671","","","10,494"]] [[/GREPCENT_TABLE]] The increase in weighted-average rate base reflects the significant capital investments that SDG&E and SoCalGas have made in transmission and distribution safety and reliability. We expect the weighted-average rate base to continue to increase in 2025 based on our expected capital investments. For Oncor, rate base represents the total invested capital, as adjusted in accordance with PUCT rules, at the end of the previous calendar year as reported in the Earnings Monitoring Report filed with the PUCT on an annual basis. Oncor’s regulatory rate base as reported in these filings as of December 31, 2023 and 2022 was $23.1 billion and $20.7 billion, respectively. As calculated on a similar basis, its estimated regulatory rate base at December 31, 2024 was $26.6 billion. The increase in rate base reflects the significant capital investments that Oncor has made in its transmission and distribution system, and we expect rate base to continue to increase in 2025 based on Oncor’s expected capital investments. Capital Stock Transactions Sempra Cash provided by issuances of common stock was: ▪$1,219 million in 2024  ▪$145 million in 2023 ▪$4 million in 2022 Cash used for repurchases of common stock was: ▪$43 million in 2024  ▪$32 million in 2023 ▪$478 million in 2022 We discuss the issuances and repurchases of common stock in Note 12 of the Notes to Consolidated Financial Statements. 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 [[GREPCENT_TABLE]] [["DIVIDENDS PER SHARE ON SEMPRA COMMON STOCK"],["(As approved by our board of directors)"]] [[/GREPCENT_TABLE]] 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. All declarations of dividends on our common stock and preferred stock are made at the discretion of the board of directors. While we view dividends as an integral component of shareholder return, the amount of future dividends will depend on earnings, cash flows, financial and legal requirements, and other relevant factors at that time. As a result, Sempra’s dividends on common stock and preferred stock declared on a historical basis may not be indicative of future declarations. SDG&E In 2024, 2023 and 2022, SDG&E paid common stock dividends to Enova Corporation and Enova Corporation paid corresponding dividends to Sempra of $225 million, $100 million and $100 million, respectively. SDG&E’s dividends on common stock declared on an annual historical basis may not be indicative of future declarations. Rather, SDG&E’s common stock dividends in the next few years may be impacted as available cash is used to maintain its authorized capital structure while supporting its capital investment program. Enova Corporation, a wholly owned subsidiary of Sempra, owns all of SDG&E’s outstanding common stock. Accordingly, dividends paid by SDG&E to Enova Corporation and dividends paid by Enova Corporation to Sempra are eliminated in Sempra’s consolidated financial statements. SoCalGas In 2024 and 2023, SoCalGas paid common stock dividends to Pacific Enterprises and Pacific Enterprises paid corresponding dividends to Sempra of $200 million and $100 million, respectively. SoCalGas did not declare or pay common stock dividends in 2022. SoCalGas’ dividends on common stock declared on an annual historical basis may not be indicative of future declarations. Rather, SoCalGas’ common stock dividends in the next few years may be impacted as available cash is used to maintain its authorized capital structure while supporting its capital investment program. Pacific Enterprises, a wholly owned subsidiary of Sempra, owns all of SoCalGas’ outstanding common stock. 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. 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 $457 million from SoCalGas. In addition, the terms of Sempra’s series C preferred stock limit Sempra’s ability to declare dividends on its common stock under certain circumstances. We provide additional information about dividend restrictions in “Restricted Net Assets” in Note 1 of the Notes to Consolidated Financial Statements and in Note 11 of the Notes to Consolidated Financial Statements. Capitalization Our total capitalization, which is the sum of total debt and equity, and our debt-to-capitalization ratio, which is calculated as total debt as a percentage of total capitalization, was as follows: [[GREPCENT_TABLE]] [["TOTAL CAPITALIZATION AND DEBT-TO-CAPITALIZATION RATIO"],["(Dollars in millions)"],["","Total capitalization","","Debt-to-capitalization ratio"],["","December 31,"],["","2024","","2023","","2024","","2023"],["Sempra","$","73,636","","","$","64,730","","","49","%","","48","%"],["SDG&E","21,041","","","19,796","","","50","","","50"],["SoCalGas","16,602","","","15,167","","","51","","","51"]] [[/GREPCENT_TABLE]] In 2024 compared to 2023, Sempra’s total capitalization increased by $8.9 billion (14%) due to: ▪increase in long-term debt ▪increase in equity primarily from comprehensive income exceeding dividends, issuances of common stock and contributions from NCI Offset by: ▪decrease in short-term debt ▪distributions to NCI In 2024 compared to 2023, SDG&E’s and SoCalGas’ total capitalization increased by $1.2 billion (6%) and $1.4 billion (9%), respectively, due to increases in equity from comprehensive income exceeding dividends and increases in debt. CRITICAL ACCOUNTING ESTIMATES Management views the accounting estimates that we describe below as critical because their application is the most relevant, judgmental and/or material to our financial position and results of operations, and/or because they require the use of material judgments and estimates. We discuss critical accounting estimates that are material to our financial statements with the Audit Committee of Sempra’s board of directors. REGULATORY ACCOUNTING Sempra, SDG&E, SoCalGas As regulated entities, SDG&E’s and SoCalGas’ customer rates, as set and monitored by regulators, are designed to recover the cost of providing service and to provide the opportunity to realize their authorized rates of return on their investments. 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. Significant management judgment is required to evaluate the anticipated recovery of regulatory assets and revenues subject to refund, as well as the existence and amount of regulatory liabilities. Adverse regulatory or legislative actions could materially impact the amounts of our regulatory assets and liabilities and could materially adversely impact our results of operations and financial condition. 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 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. Amounts of deferred income tax assets and liabilities, as well as current and noncurrent accruals, involve judgments and estimates of the timing and probability of recognition of income and deductions by taxing authorities. When we evaluate the anticipated resolution of income tax issues, we consider: ▪ past resolutions of the same issue or similar issues ▪ the status of any income tax examination in progress ▪ positions taken by taxing authorities with other taxpayers with similar issues The likelihood of deferred income tax recovery is based on analyses of the deferred income tax assets and our expectation of future taxable income, based on our strategic planning. Should a change in facts or circumstances lead to a change in judgment about the ultimate realizability of a deferred tax asset, we would record or adjust the related valuation allowance in the period that the change in facts and circumstances occurs, along with a corresponding increase or decrease in the provision for income taxes. 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. 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. PENSION AND PBOP PLANS Sempra, SDG&E, SoCalGas To measure our pension and PBOP obligations, costs and liabilities, we rely on several assumptions. We consider current market conditions, including interest rates, in making these assumptions. We review these assumptions annually and update when appropriate.  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. 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%. [[GREPCENT_TABLE]] [["IMPACT DUE TO INCREASE/DECREASE IN DISCOUNT RATE"],["(Dollars in millions)"],["","Sempra","","SDG&E","","SoCalGas"],["","Increase","Decrease","","Increase","Decrease","","Increase","Decrease"],["Pension:"],["(Decrease) increase to projected benefit obligation,net","$","(292)","","$","(379)","","","$","(38)","","$","59","","","$","(241)","","$","304"],["(Decrease) increase to net periodic benefit cost","(1)","","16","","","2","","(1)","","","(4)","","17"],["PBOP:"],["(Decrease) increase to accumulated benefitobligation, net","(67)","","94","","","(9)","","22","","","(56)","","69"],["(Decrease) increase to net periodic benefit cost","(6)","","7","","","(1)","","1","","","(4)","","5"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["IMPACT DUE TO INCREASE/DECREASE IN RETURN ON PLAN ASSETS"],["(Dollars in millions)"],["","Sempra","","SDG&E","","SoCalGas"],["","Increase","Decrease","","Increase","Decrease","","Increase","Decrease"],["Pension:"],["(Decrease) increase to net periodic benefit cost","$","(39)","","$","39","","","$","(9)","","$","9","","","$","(28)","","$","28"],["PBOP:"],["(Decrease) increase to net periodic benefit cost","(12)","","12","","","(1)","","1","","","(10)","","10"]] [[/GREPCENT_TABLE]] For SDG&E and SoCalGas plans, the effects of the assumptions on earnings are expected to be recovered in rates and therefore are offset in regulatory accounts. 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. 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. 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 $471 million as of December 31, 2024, based on the decommissioning cost study prepared in 2024. Changes in the estimated costs, execution strategy or timing of decommissioning, or in the assumptions and judgments by management underlying these estimates, could cause material revisions to the estimated total cost to decommission this facility, which could have a material effect on the recorded liability. The following table illustrates the increase to SDG&E’s and Sempra’s ARO liability if the cost escalation rate was adjusted while leaving all other assumptions constant: [[GREPCENT_TABLE]] [["INCREASE TO ARO AND REGULATORY ASSET"],["(Dollars in millions)"],["","December 31, 2024"],["Uniform increase in escalation percentage of 1%","$","62"]] [[/GREPCENT_TABLE]] 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. 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. If so, we estimate the fair value of the asset to determine the extent to which carrying value exceeds fair value. For such an estimate, we may consider data from multiple valuation methods, including data from market participants. We exercise judgment to estimate the future cash flows and the useful life of a long-lived asset and to determine our intent to use the asset. Our intent to use or dispose of a long-lived asset is subject to re-evaluation and can change over time. If such an impairment test is required, the fair value of a long-lived asset can vary if differing estimates and assumptions are used in the valuation techniques applied as indicated by changing market or other conditions. Critical assumptions that affect our estimates of fair value may include: ▪consideration of market transactions ▪future cash flows ▪the appropriate risk-adjusted discount rate, including the impacts of country risk and entity risk We discuss impairment of long-lived assets in Note 1 of the Notes to Consolidated Financial Statements. IMPAIRMENT TESTING OF GOODWILL Sempra When determining if goodwill is impaired, the fair value of the reporting unit can vary if differing estimates and assumptions are used in the valuation techniques applied as indicated by changing market or other conditions. As a result, recognizing a goodwill impairment may or may not be required. When we perform a quantitative goodwill impairment test, we exercise judgment to develop estimates of the fair value of the reporting unit and compare that to its carrying value. Our fair value estimates are developed from the perspective of a knowledgeable market participant. We consider observable transactions in the marketplace for similar investments, if available, as well as an income-based approach such as a discounted cash flow analysis. A discounted cash flow analysis may be based directly on anticipated future revenues and expenses and may be performed based on free cash flows generated within the reporting unit. 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. 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. Changes in the business (such as loss of future cash flows from customer disputes, renegotiation of customer contracts or the macroeconomic environment, including rising interest rates) may result in us having to perform an interim goodwill impairment test, which could result in an impairment of our goodwill. NEW ACCOUNTING STANDARDS We discuss the recent accounting pronouncements that have had or may have a significant effect on our financial statements and/or disclosures in Note 2 of the Notes to Consolidated Financial Statements.