Item 16. FORM 10-K SUMMARY

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Item 16. FORM 10-K SUMMARY

Not applicable.

2022 Form 10-K | 112


Sempra Energy:
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			SEMPRA ENERGY, (Registrant)
			By: /s/ J. Walker Martin
			J. Walker Martin Chairman, Chief Executive Officer and President

			Date: February 28, 2023

POWER OF ATTORNEY
Each of the undersigned officers and directors of the registrant hereby severally constitutes and appoints each individual who, at the time of acting under this power of attorney, is the Principal Executive Officer (however designated), the Principal Financial Officer (however designated) or the Principal Accounting Officer (however designated) of Sempra Energy, and each of them singly (with full power to each of them to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution in each of them, for him or her and in his or her name, place and stead, and in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This power of attorney shall be governed by and construed in accordance with the laws of the State of California and applicable federal securities laws. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.


Name/Title	Signature	Date
Principal Executive Officer: J. Walker Martin Chief Executive Officer and President	/s/ J. Walker Martin	February 28, 2023

Principal Financial Officer: Trevor I. Mihalik Executive Vice President and Chief Financial Officer	/s/ Trevor I. Mihalik	February 28, 2023

Principal Accounting Officer: Peter R. Wall Senior Vice President, Controller and Chief Accounting Officer	/s/ Peter R. Wall	February 28, 2023

2022 Form 10-K | 113

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Directors:	Signature	Date
J. Walker Martin, Chairman	/s/ J. Walker Martin	February 28, 2023

Alan L. Boeckmann, Director	/s/ Alan L. Boeckmann	February 28, 2023

Andrés Conesa, Director	/s/ Andrés Conesa	February 28, 2023

Maria Contreras-Sweet, Director	/s/ Maria Contreras-Sweet	February 28, 2023

Pablo A. Ferrero, Director	/s/ Pablo A. Ferrero	February 28, 2023

Bethany J. Mayer, Director	/s/ Bethany J. Mayer	February 28, 2023

Michael N. Mears, Director	/s/ Michael N. Mears	February 28, 2023

Jack T. Taylor, Director	/s/ Jack T. Taylor	February 28, 2023

Cynthia L. Walker, Director	/s/ Cynthia L. Walker	February 28, 2023

Cynthia J. Warner, Director	/s/ Cynthia J. Warner	February 28, 2023

James C. Yardley, Director	/s/ James C. Yardley	February 28, 2023

2022 Form 10-K | 114

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San Diego Gas & Electric Company:
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			SAN DIEGO GAS & ELECTRIC COMPANY, (Registrant)
			By: /s/ Caroline A. Winn
			Caroline A. Winn Chief Executive Officer

			Date: February 28, 2023

POWER OF ATTORNEY
Each of the undersigned officers and directors of the registrant hereby severally constitutes and appoints each individual who, at the time of acting under this power of attorney, is the Principal Executive Officer (however designated), the Principal Financial Officer (however designated) or the Principal Accounting Officer (however designated) of San Diego Gas & Electric Company, and each of them singly (with full power to each of them to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution in each of them, for him or her and in his or her name, place and stead, and in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This power of attorney shall be governed by and construed in accordance with the laws of the State of California and applicable federal securities laws. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.


Name/Title	Signature	Date
Principal Executive Officer: Caroline A. Winn Chief Executive Officer	/s/ Caroline A. Winn	February 28, 2023

Principal Financial Officer: Bruce A. Folkmann President and Chief Financial Officer	/s/ Bruce A. Folkmann	February 28, 2023

Principal Accounting Officer: Valerie A. Bille Vice President, Controller and Chief Accounting Officer	/s/ Valerie A. Bille	February 28, 2023
Directors:
Kevin C. Sagara, Non-Executive Chairman	/s/ Kevin C. Sagara	February 28, 2023

Robert J. Borthwick, Director	/s/ Robert J. Borthwick	February 28, 2023

Karen L. Sedgwick, Director	/s/ Karen L. Sedgwick	February 28, 2023

Caroline A. Winn, Director	/s/ Caroline A. Winn	February 28, 2023

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT:

No annual report to security holders covering the registrant’s last fiscal year and no proxy statement, form of proxy or other proxy soliciting material with respect to any annual or other meeting of security holders has been sent to security holders during the period covered by this annual report on Form 10-K, and no such materials are to be furnished to security holders subsequent to the filing of this annual report on Form 10-K.

2022 Form 10-K | 115

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Southern California Gas Company:
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			SOUTHERN CALIFORNIA GAS COMPANY, (Registrant)
			By: /s/ Scott D. Drury
			Scott D. Drury Chief Executive Officer

			Date: February 28, 2023

POWER OF ATTORNEY
Each of the undersigned officers and directors of the registrant hereby severally constitutes and appoints each individual who, at the time of acting under this power of attorney, is the Principal Executive Officer (however designated), the Principal Financial Officer (however designated) or the Principal Accounting Officer (however designated) of Southern California Gas Company, and each of them singly (with full power to each of them to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution in each of them, for him or her and in his or her name, place and stead, and in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This power of attorney shall be governed by and construed in accordance with the laws of the State of California and applicable federal securities laws. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.


Name/Title	Signature	Date
Principal Executive Officer: Scott D. Drury Chief Executive Officer	/s/ Scott D. Drury	February 28, 2023

Principal Financial and Accounting Officer: Mia L. DeMontigny Senior Vice President, Chief Financial Officer and Chief Accounting Officer	/s/ Mia L. DeMontigny	February 28, 2023
Directors:
Kevin C. Sagara, Non-Executive Chairman	/s/ Kevin C. Sagara	February 28, 2023

Diana L. Day, Director	/s/ Diana L. Day	February 28, 2023

Scott D. Drury, Director	/s/ Scott D. Drury	February 28, 2023

Lisa Larroque Alexander, Director	/s/ Lisa Larroque Alexander	February 28, 2023

2022 Form 10-K | 116

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm (PCAOB ID 34)			F-2

Consolidated Financial Statements:	Sempra	San Diego Gas & Electric Company	Southern California Gas Company
Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020	F-8	F-16	F-22

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022, 2021 and 2020	F-9	F-17	F-23

Consolidated Balance Sheets at December 31, 2022 and 2021	F-10	F-18	F-24

Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020	F-12	F-20	F-26

Consolidated Statements of Changes in Equity for the years ended December 31, 2022, 2021 and 2020	F-14	N/A	N/A

Statements of Changes in Shareholders Equity for the years ended December 31, 2022, 2021 and 2020	N/A	F-21	F-27

Notes to Consolidated Financial Statements
Note 1. Significant Accounting Policies and Other Financial Data			F-28
Note 2. New Accounting Standards			F-52
Note 3. Revenues			F-53
Note 4. Regulatory Matters			F-58
Note 5. Acquisitions, Divestitures and Discontinued Operations			F-62
Note 6. Investments in Unconsolidated Entities			F-63
Note 7. Debt and Credit Facilities			F-68
Note 8. Income Taxes			F-75
Note 9. Employee Benefit Plans			F-82
Note 10. Share-Based Compensation			F-100
Note 11. Derivative Financial Instruments			F-103
Note 12. Fair Value Measurements			F-109
Note 13. Preferred Stock			F-115
Note 14. Sempra – Shareholders’ Equity and Earnings Per Common Share			F-117
Note 15. San Onofre Nuclear Generating Station			F-120
Note 16. Commitments and Contingencies			F-123
Note 17. Segment Information			F-139

2022 Form 10-K | F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Sempra Energy:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sempra Energy and subsidiaries (“Sempra”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the three years in the period ended December 31, 2022, the related notes, and the schedule listed in Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Sempra as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), Sempra’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2023, expressed an unqualified opinion on Sempra’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of Sempra’s management. Our responsibility is to express an opinion on Sempra’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Sempra in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Accounting – Impact of Rate Regulation on the Financial Statements – Refer to Note 1 of the Notes to Consolidated Financial Statements

Critical Audit Matter Description

Sempra is subject to rate regulation by regulators and commissions in various jurisdictions (collectively, the “Commissions”) that have jurisdiction with respect to the rates of electric and gas transmission and distribution companies in those jurisdictions. Management has determined it meets the requirements under U.S. GAAP to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant and equipment; regulatory assets and liabilities; operating revenues; operation and maintenance expense; depreciation expense; and taxes.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management’s judgments include assessing the likelihood of (1) the recovery in future rates of incurred costs and (2) potential refunds to customers. Auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

2022 Form 10-K | F-2

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the application of specialized rules to account for the effects of cost-based rate regulation and the uncertainty of future decisions by the Commissions included the following, among others:

▪We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.

▪We read relevant regulatory orders issued by the Commissions for Sempra and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.

▪We evaluated Sempra’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

/s/ DELOITTE & TOUCHE LLP

San Diego, California

February 28, 2023

We have served as Sempra’s auditor since 1935.

2022 Form 10-K | F-3

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholder and Board of Directors of San Diego Gas & Electric Company:

Opinion on the Financial Statements

We have audited the accompanying balance sheets of San Diego Gas & Electric Company (“SDG&E”) as of December 31, 2022 and 2021, the related statements of operations, comprehensive income (loss), changes in shareholder’s equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of SDG&E as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), SDG&E’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2023, expressed an unqualified opinion on SDG&E’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of SDG&E’s management. Our responsibility is to express an opinion on SDG&E’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to SDG&E in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Critical Audit Matter

Regulatory Accounting – Impact of Rate Regulation on the Financial Statements – Refer to Note 1 of the Notes to Consolidated Financial Statements

Critical Audit Matter Description

SDG&E is subject to rate regulation by regulators and commissions in various jurisdictions (collectively, the “Commissions”) that have jurisdiction with respect to the rates of electric and gas transmission and distribution companies in those jurisdictions. Management has determined it meets the requirements under U.S. GAAP to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant and equipment; regulatory assets and liabilities; operating revenues; operation and maintenance expense; depreciation expense; and taxes.

2022 Form 10-K | F-4

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How the Critical Audit Matter Was Addressed in the Audit

▪We read relevant regulatory orders issued by the Commissions for SDG&E and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.

▪We evaluated SDG&E’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

/s/ DELOITTE & TOUCHE LLP

San Diego, California

February 28, 2023

We have served as SDG&E’s auditor since 1935.

2022 Form 10-K | F-5

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Southern California Gas Company:

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Southern California Gas Company (“SoCalGas”) as of December 31, 2022 and 2021, the related statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of SoCalGas as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), SoCalGas’ internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2023, expressed an unqualified opinion on SoCalGas’ internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of SoCalGas’ management. Our responsibility is to express an opinion on SoCalGas’ financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to SoCalGas in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Critical Audit Matter

Regulatory Accounting – Impact of Rate Regulation on the Financial Statements – Refer to Note 1 of the Notes to Financial Statements

Critical Audit Matter Description

SoCalGas is subject to rate regulation by regulators and commissions in various jurisdictions (collectively, the “Commissions”) that have jurisdiction with respect to the rates of gas transmission and distribution companies in those jurisdictions. Management has determined it meets the requirements under U.S. GAAP to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant and equipment; regulatory assets and liabilities; operating revenues; operation and maintenance expense; depreciation expense; and taxes.

2022 Form 10-K | F-6

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How the Critical Audit Matter Was Addressed in the Audit

▪We read relevant regulatory orders issued by the Commissions for SoCalGas and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.

▪We evaluated SoCalGas’ disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

/s/ DELOITTE & TOUCHE LLP

San Diego, California

February 28, 2023

We have served as SoCalGas’ auditor since 1937.

2022 Form 10-K | F-7

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SEMPRA ENERGY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share amounts; shares in thousands)
	Years ended December 31,
	2022		2021		2020
REVENUES
Utilities:
Natural gas	$	7,868	$	6,333	$	5,411
Electric	4,783		4,658		4,614
Energy-related businesses	1,788		1,866		1,345
Total revenues	14,439		12,857		11,370

EXPENSES AND OTHER INCOME
Utilities:
Cost of natural gas	(2,603)		(1,597)		(925)
Cost of electric fuel and purchased power	(937)		(1,010)		(1,187)
Energy-related businesses cost of sales	(942)		(611)		(276)
Operation and maintenance	(4,746)		(4,341)		(3,941)
Aliso Canyon litigation and regulatory matters	(259)		(1,593)		(307)
Depreciation and amortization	(2,019)		(1,855)		(1,666)
Franchise fees and other taxes	(635)		(596)		(543)
Gain (loss) on sale of assets	—		36		(3)
Other income (expense), net	24		58		(48)
Interest income	75		69		96
Interest expense	(1,054)		(1,198)		(1,081)
Income from continuing operations before income taxes and equity earnings	1,343		219		1,489
Income tax expense	(556)		(99)		(249)
Equity earnings	1,498		1,343		1,015
Income from continuing operations, net of income tax	2,285		1,463		2,255
Income from discontinued operations, net of income tax	—		—		1,850
Net income	2,285		1,463		4,105
Earnings attributable to noncontrolling interests	(146)		(145)		(172)
Preferred dividends	(44)		(63)		(168)
Preferred dividends of subsidiary	(1)		(1)		(1)
Earnings attributable to common shares	$	2,094	$	1,254	$	3,764

Basic EPS:
Earnings from continuing operations	$	6.65	$	4.03	$	6.61
Earnings from discontinued operations	$	—	$	—	$	6.32
Earnings	$	6.65	$	4.03	$	12.93
Weighted-average common shares outstanding	315,159		311,755		291,077

Diluted EPS:
Earnings from continuing operations	$	6.62	$	4.01	$	6.58
Earnings from discontinued operations	$	—	$	—	$	6.30
Earnings	$	6.62	$	4.01	$	12.88
Weighted-average common shares outstanding	316,378		313,036		292,252

See Notes to Consolidated Financial Statements.

2022 Form 10-K | F-8

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SEMPRA ENERGY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Years ended December 31, 2022, 2021 and 2020
	Sempra Energy shareholders’ equity
	Pretax amount		Income tax (expense) benefit		Net-of-tax amount		Noncontrolling interests (after tax)		Total
2022:
Net income	$	2,695	$	(556)	$	2,139	$	146	$	2,285
Other comprehensive income (loss):
Foreign currency translation adjustments	11		—		11		4		15
Financial instruments	221		(55)		166		50		216
Pension and other postretirement benefits	3		(6)		(3)		—		(3)
Total other comprehensive income	235		(61)		174		54		228
Comprehensive income	2,930		(617)		2,313		200		2,513
Preferred dividends of subsidiary	(1)		—		(1)		—		(1)
Comprehensive income, after preferred dividends of subsidiary	$	2,929	$	(617)	$	2,312	$	200	$	2,512
2021:
Net income	$	1,417	$	(99)	$	1,318	$	145	$	1,463
Other comprehensive income (loss):
Foreign currency translation adjustments	(6)		—		(6)		(3)		(9)
Financial instruments	191		(47)		144		14		158
Pension and other postretirement benefits	28		(6)		22		—		22
Total other comprehensive income	213		(53)		160		11		171
Comprehensive income	1,630		(152)		1,478		156		1,634
Preferred dividends of subsidiary	(1)		—		(1)		—		(1)
Comprehensive income, after preferred dividends of subsidiary	$	1,629	$	(152)	$	1,477	$	156	$	1,633
2020:
Net income	$	5,368	$	(1,435)	$	3,933	$	172	$	4,105
Other comprehensive income (loss):
Foreign currency translation adjustments	547		—		547		(12)		535
Financial instruments	(146)		33		(113)		(12)		(125)
Pension and other postretirement benefits	11		1		12		—		12
Total other comprehensive income (loss)	412		34		446		(24)		422
Comprehensive income	5,780		(1,401)		4,379		148		4,527
Preferred dividends of subsidiary	(1)		—		(1)		—		(1)
Comprehensive income, after preferred dividends of subsidiary	$	5,779	$	(1,401)	$	4,378	$	148	$	4,526

See Notes to Consolidated Financial Statements.

2022 Form 10-K | F-9

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SEMPRA ENERGY
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	370	$	559
Restricted cash	40		19
Accounts receivable – trade, net	2,635		2,071
Accounts receivable – other, net	685		398
Due from unconsolidated affiliates	54		23
Income taxes receivable	113		79
Inventories	403		389
Prepaid expenses	268		260
Regulatory assets	351		271
Fixed-price contracts and other derivatives	803		179
Greenhouse gas allowances	141		97
Other current assets	49		30
Total current assets	5,912		4,375

Other assets:
Restricted cash	52		3
Due from unconsolidated affiliates	—		637
Regulatory assets	2,588		2,011
Insurance receivable for Aliso Canyon costs	—		360
Greenhouse gas allowances	796		422
Nuclear decommissioning trusts	841		1,012
Dedicated assets in support of certain benefit plans	505		567
Deferred income taxes	135		151
Right-of-use assets – operating leases	655		594
Investment in Oncor Holdings	13,665		12,947
Other investments	2,012		1,525
Goodwill	1,602		1,602
Other intangible assets	344		370
Wildfire fund	303		331
Other long-term assets	1,382		1,244
Total other assets	24,880		23,776

Property, plant and equipment:
Property, plant and equipment	63,893		58,940
Less accumulated depreciation and amortization	(16,111)		(15,046)
Property, plant and equipment, net	47,782		43,894
Total assets	$	78,574	$	72,045

See Notes to Consolidated Financial Statements.

2022 Form 10-K | F-10

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SEMPRA ENERGY
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in millions)
	December 31,
	2022		2021
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	3,352	$	3,471
Accounts payable – trade	1,994		1,671
Accounts payable – other	275		178
Dividends and interest payable	621		563
Accrued compensation and benefits	484		479
Regulatory liabilities	504		359
Current portion of long-term debt and finance leases	1,019		106
Reserve for Aliso Canyon costs	129		1,980
Greenhouse gas obligations	141		97
Other current liabilities	1,380		1,131
Total current liabilities	9,899		10,035

Long-term debt and finance leases	24,548		21,068

Deferred credits and other liabilities:
Due to unconsolidated affiliates	301		287
Regulatory liabilities	3,341		3,402
Greenhouse gas obligations	565		225
Pension and other postretirement benefit plan obligations, net of plan assets	410		687
Deferred income taxes	4,591		3,477
Asset retirement obligations	3,546		3,375
Deferred credits and other	2,117		2,070
Total deferred credits and other liabilities	14,871		13,523

Commitments and contingencies (Note 16)

Equity:
Preferred stock (50 million shares authorized):
Preferred stock, series C (0.9 million shares outstanding)	889		889
Common stock (750 million shares authorized; 314 million and 317 million shares outstanding at December 31, 2022 and 2021, respectively; no par value)	12,160		11,862
Retained earnings	14,201		13,548
Accumulated other comprehensive income (loss)	(135)		(318)
Total Sempra Energy shareholders’ equity	27,115		25,981
Preferred stock of subsidiary	20		20
Other noncontrolling interests	2,121		1,418
Total equity	29,256		27,419
Total liabilities and equity	$	78,574	$	72,045

See Notes to Consolidated Financial Statements.

2022 Form 10-K | F-11

Table of Contents


SEMPRA ENERGY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,285	$	1,463	$	4,105
Less: Income from discontinued operations, net of income tax	—		—		(1,850)
Income from continuing operations, net of income tax	2,285		1,463		2,255
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,019		1,855		1,666
Deferred income taxes and investment tax credits	392		(78)		159
(Gain) loss on sale of assets	—		(36)		3
Equity earnings	(1,498)		(1,343)		(1,015)
Foreign currency transaction losses, net	24		18		25
Share-based compensation expense	71		63		71
Fixed-price contracts and other derivatives	863		206		(7)
Other	154		170		140
Net change in other working capital components:
Accounts receivable	(976)		(599)		(328)
Due to/from unconsolidated affiliates, net	(31)		(1)		12
Income taxes receivable/payable, net	(29)		(38)		(94)
Inventories	(17)		(87)		(35)
Other current assets	(1,608)		(220)		38
Accounts payable	430		263		74
Regulatory balancing accounts, net	36		249		(231)
Reserve for Aliso Canyon costs	(1,851)		1,532		141
Other current liabilities	228		(105)		(127)
Insurance receivable for Aliso Canyon costs	360		85		(106)
Distributions from investments	854		941		651
Reserve for Aliso Canyon costs, noncurrent	1		—		294
Changes in other noncurrent assets and liabilities, net	(565)		(496)		56
Net cash provided by continuing operations	1,142		3,842		3,642
Net cash used in discontinued operations	—		—		(1,051)
Net cash provided by operating activities	1,142		3,842		2,591

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(5,357)		(5,015)		(4,676)
Expenditures for investments and acquisitions	(376)		(633)		(652)
Proceeds from sale of assets	—		38		19
Distributions from investments	—		366		761
Purchases of nuclear decommissioning and other trust assets	(700)		(961)		(1,439)
Proceeds from sales of nuclear decommissioning and other trust assets	762		961		1,439
Advances to unconsolidated affiliates	—		(8)		(92)
Repayments of advances to unconsolidated affiliates	626		38		7
Disbursement for note receivable	—		(305)		—
Other	6		11		15
Net cash used in continuing operations	(5,039)		(5,508)		(4,618)
Net cash provided by discontinued operations	—		—		5,171
Net cash (used in) provided by investing activities	(5,039)		(5,508)		553

See Notes to Consolidated Financial Statements.

2022 Form 10-K | F-12

Table of Contents


SEMPRA ENERGY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid	$	(1,430)	$	(1,331)	$	(1,174)
Preferred dividends paid	(44)		(99)		(157)
Issuances of preferred stock, net	—		—		891
Issuances of common stock, net	4		5		11
Repurchases of common stock	(478)		(339)		(566)
Issuances of debt (maturities greater than 90 days)	9,984		3,773		6,051
Payments on debt (maturities greater than 90 days) and finance leases	(4,510)		(5,489)		(5,864)
(Decrease) increase in short-term debt, net	(1,266)		1,913		(1,759)
Advances from unconsolidated affiliates	28		40		64
Proceeds from sales of noncontrolling interests, net	1,732		3,206		26
Purchases of noncontrolling interests	—		(224)		(248)
Distributions to noncontrolling interests	(237)		—		—
Contributions from noncontrolling interests	31		4		1
Other	(35)		(199)		(50)
Net cash provided by (used in) continuing operations	3,779		1,260		(2,774)
Net cash provided by discontinued operations	—		—		401
Net cash provided by (used in) financing activities	3,779		1,260		(2,373)

Effect of exchange rate changes in continuing operations	(1)		2		—
Effect of exchange rate changes in discontinued operations	—		—		(3)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1)		2		(3)

(Decrease) increase in cash, cash equivalents and restricted cash, including discontinued operations	(119)		(404)		768
Cash, cash equivalents and restricted cash, including discontinued operations, January 1	581		985		217
Cash, cash equivalents and restricted cash, including discontinued operations, December 31	$	462	$	581	$	985

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	1,014	$	1,163	$	1,046
Income tax payments, including discontinued operations, net of refunds	284		230		1,385

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Contribution to Cameron LNG JV	$	—	$	—	$	50
Distribution from Cameron LNG JV	—		—		50
Increase in Cameron LNG JV investment for guarantee	—		22		—
Repayment of advances from unconsolidated affiliate in lieu of distribution	32		45		—
Accrued capital expenditures	590		591		535
Increase in finance lease obligations for investment in PP&E	57		43		77
Derecognized PP&E for net investment in sales-type lease	—		44		—
Increase in ARO for investment in PP&E	91		153		142
Equitization of long-term debt for deficit held by NCI	—		—		22
Accrued purchase price adjustment for sale of NCI	—		13		—
Issuance of common stock in exchange for NCI and related AOCI	—		1,373		—
Common dividends issued in stock	—		—		22
Common dividends declared but not paid	360		349		301
Conversion of mandatory convertible preferred stock	—		2,258		—
Preferred dividends declared but not paid	11		11		47

See Notes to Consolidated Financial Statements.

2022 Form 10-K | F-13

Table of Contents


SEMPRA ENERGY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Dollars in millions)
	Years ended December 31, 2022, 2021 and 2020
	Preferred stock		Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Sempra Energy shareholders' equity		Non- controlling interests		Total equity
Balance at December 31, 2019	$	2,258	$	7,480	$	11,130	$	(939)	$	19,929	$	1,876	$	21,805
Adoption of ASU 2016-13					(7)				(7)		(2)		(9)
Adjusted balance at December 31, 2019	2,258		7,480		11,123		(939)		19,922		1,874		21,796

Net income					3,933				3,933		172		4,105
Other comprehensive income (loss)							446		446		(24)		422

Share-based compensation expense			71						71				71
Dividends declared:
Series A preferred stock ($6.00/share)					(104)				(104)				(104)
Series B preferred stock ($6.75/share)					(39)				(39)				(39)
Series C preferred stock ($27.90/share)					(25)				(25)				(25)
Common stock ($4.18/share)					(1,214)				(1,214)				(1,214)
Preferred dividends of subsidiary					(1)				(1)				(1)
Issuance of series C preferred stock	889								889				889
Issuances of common stock			33						33				33
Repurchases of common stock			(566)						(566)				(566)
Noncontrolling interest activities:
Contributions											1		1
Distributions											(1)		(1)
Purchases			34				(7)		27		(275)		(248)
Sale			1						1		27		28
Acquisition											1		1
Equitization of long-term debt for deficit held by NCI											22		22
Deconsolidation											(236)		(236)
Balance at December 31, 2020	3,147		7,053		13,673		(500)		23,373		1,561		24,934

Net income					1,318				1,318		145		1,463
Other comprehensive income							160		160		11		171

Share-based compensation expense			63						63				63
Dividends declared:
Series B preferred stock ($3.38/share)					(19)				(19)				(19)
Series C preferred stock ($48.75/share)					(44)				(44)				(44)
Common stock ($4.40/share)					(1,379)				(1,379)				(1,379)
Preferred dividends of subsidiary					(1)				(1)				(1)
Conversion of series A preferred stock	(1,693)		1,693						—				—
Conversion of series B preferred stock	(565)		565						—				—
Issuances of common stock			5						5				5
Repurchases of common stock			(339)						(339)				(339)
Noncontrolling interest activities:
Contributions											4		4
Purchases			1,459				(44)		1,415		(1,567)		(152)
Sales			1,363				66		1,429		1,283		2,712
Deconsolidation											1		1
Balance at December 31, 2021	$	889	$	11,862	$	13,548	$	(318)	$	25,981	$	1,438	$	27,419

See Notes to Consolidated Financial Statements.

2022 Form 10-K | F-14

Table of Contents


SEMPRA ENERGY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
(Dollars in millions)
	Years ended December 31, 2022, 2021 and 2020
	Preferred stock		Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Sempra Energy shareholders' equity		Non- controlling interests		Total equity
Balance at December 31, 2021	$	889	$	11,862	$	13,548	$	(318)	$	25,981	$	1,438	$	27,419

Net income					2,139				2,139		146		2,285
Other comprehensive income							174		174		54		228

Share-based compensation expense			71						71				71
Dividends declared:
Series C preferred stock ($48.75/share)					(44)				(44)				(44)
Common stock ($4.58/share)					(1,441)				(1,441)				(1,441)
Preferred dividends of subsidiary					(1)				(1)				(1)
Issuances of common stock			4						4				4
Repurchases of common stock			(478)						(478)				(478)
Noncontrolling interest activities:
Contributions											31		31
Distributions											(237)		(237)
Sale			701				9		710		709		1,419
Balance at December 31, 2022	$	889	$	12,160	$	14,201	$	(135)	$	27,115	$	2,141	$	29,256

See Notes to Consolidated Financial Statements.

2022 Form 10-K | F-15

Table of Contents


SAN DIEGO GAS & ELECTRIC COMPANY
STATEMENTS OF OPERATIONS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Operating revenues:
Electric	$	4,795	$	4,666	$	4,619
Natural gas	1,043		838		694
Total operating revenues	5,838		5,504		5,313
Operating expenses:
Cost of electric fuel and purchased power	994		1,069		1,191
Cost of natural gas	363		242		162
Operation and maintenance	1,677		1,587		1,455
Depreciation and amortization	982		889		801
Franchise fees and other taxes	373		350		331
Total operating expenses	4,389		4,137		3,940
Operating income	1,449		1,367		1,373
Other income, net	92		64		52
Interest income	5		1		2
Interest expense	(449)		(412)		(413)
Income before income taxes	1,097		1,020		1,014
Income tax expense	(182)		(201)		(190)
Net income/Earnings attributable to common shares	$	915	$	819	$	824

See Notes to Financial Statements.

2022 Form 10-K | F-16

Table of Contents


SAN DIEGO GAS & ELECTRIC COMPANY
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Years ended December 31, 2022, 2021 and 2020
	Pretax amount		Income tax expense		Net-of-tax amount
2022:
Net income	$	1,097	$	(182)	$	915
Other comprehensive income (loss):
Pension and other postretirement benefits	4		(1)		3
Total other comprehensive income	4		(1)		3
Comprehensive income	$	1,101	$	(183)	$	918
2021:
Net income/Comprehensive income	$	1,020	$	(201)	$	819
2020:
Net income	$	1,014	$	(190)	$	824
Other comprehensive income (loss):
Pension and other postretirement benefits	8		(2)		6
Total other comprehensive income	8		(2)		6
Comprehensive income	$	1,022	$	(192)	$	830

See Notes to Financial Statements.

2022 Form 10-K | F-17

Table of Contents


SAN DIEGO GAS & ELECTRIC COMPANY
BALANCE SHEETS
(Dollars in millions)
	December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	7	$	25
Accounts receivable – trade, net	799		715
Accounts receivable – other, net	110		78
Income taxes receivable, net	—		9
Inventories	134		123
Prepaid expenses	179		174
Regulatory assets	247		231
Fixed-price contracts and other derivatives	113		58
Greenhouse gas allowances	22		13
Other current assets	19		5
Total current assets	1,630		1,431

Other assets:
Regulatory assets	1,219		786
Greenhouse gas allowances	196		111
Nuclear decommissioning trusts	841		1,012
Right-of-use assets – operating leases	281		185
Wildfire fund	303		331
Other long-term assets	146		154
Total other assets	2,986		2,579

Property, plant and equipment:
Property, plant and equipment	28,574		26,456
Less accumulated depreciation and amortization	(6,768)		(6,408)
Property, plant and equipment, net	21,806		20,048
Total assets	$	26,422	$	24,058

See Notes to Financial Statements.

2022 Form 10-K | F-18

Table of Contents


SAN DIEGO GAS & ELECTRIC COMPANY
BALANCE SHEETS (CONTINUED)
(Dollars in millions)
	December 31,
	2022		2021
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Short-term debt	$	205	$	776
Accounts payable	744		588
Due to unconsolidated affiliates	135		97
Interest payable	63		50
Accrued compensation and benefits	140		148
Accrued franchise fees	120		74
Regulatory liabilities	110		14
Current portion of long-term debt and finance leases	489		49
Greenhouse gas obligations	22		13
Asset retirement obligations	98		86
Other current liabilities	193		216
Total current liabilities	2,319		2,111

Long-term debt and finance leases	8,497		7,581

Deferred credits and other liabilities:
Regulatory liabilities	2,298		2,302
Greenhouse gas obligations	81		31
Pension obligation, net of plan assets	42		25
Deferred income taxes	2,540		2,275
Asset retirement obligations	789		804
Deferred credits and other	789		680
Total deferred credits and other liabilities	6,539		6,117

Commitments and contingencies (Note 16)

Shareholder’s equity:
Preferred stock (45 million shares authorized; none issued)	—		—
Common stock (255 million shares authorized; 117 million shares outstanding; no par value)	1,660		1,660
Retained earnings	7,414		6,599
Accumulated other comprehensive income (loss)	(7)		(10)
Total shareholder’s equity	9,067		8,249
Total liabilities and shareholder’s equity	$	26,422	$	24,058

See Notes to Financial Statements.

2022 Form 10-K | F-19

Table of Contents


SAN DIEGO GAS & ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	915	$	819	$	824
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	982		889		801
Deferred income taxes and investment tax credits	93		153		35
Other	12		(14)		27
Net change in other working capital components:
Accounts receivable	(163)		(105)		(134)
Due to/from unconsolidated affiliates, net	38		33		11
Income taxes receivable/payable, net	9		(20)		129
Inventories	(11)		(19)		(10)
Other current assets	(80)		—		4
Accounts payable	153		7		31
Regulatory balancing accounts, net	(10)		(57)		(71)
Other current liabilities	62		(92)		(100)
Changes in other noncurrent assets and liabilities, net	(271)		(218)		(158)
Net cash provided by operating activities	1,729		1,376		1,389

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(2,473)		(2,220)		(1,942)
Purchases of nuclear decommissioning trust assets	(586)		(961)		(1,439)
Proceeds from sales of nuclear decommissioning trust assets	639		961		1,439
Other	8		7		8
Net cash used in investing activities	(2,412)		(2,213)		(1,934)

CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid	(100)		(300)		(200)
Issuances of debt (maturities greater than 90 days)	1,395		1,120		1,598
Payments on debt (maturities greater than 90 days) and finance leases	(425)		(613)		(510)
(Decrease) increase in short-term debt, net	(196)		401		(80)
Debt issuance costs	(9)		(8)		(11)
Net cash provided by financing activities	665		600		797

(Decrease) increase in cash and cash equivalents	(18)		(237)		252
Cash and cash equivalents, January 1	25		262		10
Cash and cash equivalents, December 31	$	7	$	25	$	262

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	431	$	402	$	404
Income tax payments, net of refunds	79		67		25

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures	$	231	$	228	$	199
Increase in finance lease obligations for investment in PP&E	16		24		30
Increase in ARO for investment in PP&E	15		14		31

See Notes to Financial Statements.

2022 Form 10-K | F-20

Table of Contents


SAN DIEGO GAS & ELECTRIC COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY
(Dollars in millions)
	Years ended December 31, 2022, 2021 and 2020
	Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Total shareholder's equity
Balance at December 31, 2019	$	1,660	$	5,456	$	(16)	$	7,100

Net income			824				824
Other comprehensive income					6		6

Common stock dividends declared ($1.72/share)			(200)				(200)
Balance at December 31, 2020	1,660		6,080		(10)		7,730

Net income			819				819

Common stock dividends declared ($2.57/share)			(300)				(300)
Balance at December 31, 2021	1,660		6,599		(10)		8,249

Net income			915				915
Other comprehensive income					3		3

Common stock dividends declared ($0.86/share)			(100)				(100)
Balance at December 31, 2022	$	1,660	$	7,414	$	(7)	$	9,067

See Notes to Financial Statements.

2022 Form 10-K | F-21

Table of Contents


SOUTHERN CALIFORNIA GAS COMPANY
STATEMENTS OF OPERATIONS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Operating revenues	$	6,840	$	5,515	$	4,748
Operating expenses:
Cost of natural gas	2,233		1,369		783
Operation and maintenance	2,402		2,180		2,029
Aliso Canyon litigation and regulatory matters	259		1,593		307
Depreciation and amortization	761		716		654
Franchise fees and other taxes	247		223		190
Total operating expenses	5,902		6,081		3,963
Operating income (loss)	938		(566)		785
Other expense, net	(8)		(14)		(28)
Interest income	6		1		2
Interest expense	(198)		(157)		(158)
Income (loss) before income taxes	738		(736)		601
Income tax (expense) benefit	(138)		310		(96)
Net income (loss)	600		(426)		505
Preferred dividends	(1)		(1)		(1)
Earnings (losses) attributable to common shares	$	599	$	(427)	$	504

See Notes to Financial Statements.

2022 Form 10-K | F-22

Table of Contents


SOUTHERN CALIFORNIA GAS COMPANY
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Years ended December 31, 2022, 2021 and 2020
	Pretax amount		Income tax (expense) benefit		Net-of-tax amount
2022:
Net income	$	738	$	(138)	$	600
Other comprehensive income (loss):
Financial instruments	1		—		1
Pension and other postretirement benefits	8		(2)		6
Total other comprehensive income	9		(2)		7
Comprehensive income	$	747	$	(140)	$	607
2021:
Net loss/Comprehensive loss	$	(736)	$	310	$	(426)
2020:
Net income	$	601	$	(96)	$	505
Other comprehensive income (loss):
Pension and other postretirement benefits	(12)		4		(8)
Total other comprehensive loss	(12)		4		(8)
Comprehensive income	$	589	$	(92)	$	497

See Notes to Financial Statements.

2022 Form 10-K | F-23

Table of Contents


SOUTHERN CALIFORNIA GAS COMPANY
BALANCE SHEETS
(Dollars in millions)
	December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	21	$	37
Accounts receivable – trade, net	1,295		1,084
Accounts receivable – other, net	293		58
Due from unconsolidated affiliates	77		49
Income taxes receivable, net	—		23
Inventories	159		172
Regulatory assets	104		40
Greenhouse gas allowances	111		75
Other current assets	69		61
Total current assets	2,129		1,599

Other assets:
Regulatory assets	1,291		1,148
Insurance receivable for Aliso Canyon costs	—		360
Greenhouse gas allowances	551		290
Right-of-use assets – operating leases	42		57
Other long-term assets	583		627
Total other assets	2,467		2,482

Property, plant and equipment:
Property, plant and equipment	25,058		23,104
Less accumulated depreciation and amortization	(7,308)		(6,861)
Property, plant and equipment, net	17,750		16,243
Total assets	$	22,346	$	20,324

See Notes to Financial Statements.

2022 Form 10-K | F-24

Table of Contents


SOUTHERN CALIFORNIA GAS COMPANY
BALANCE SHEETS (CONTINUED)
(Dollars in millions)
	December 31,
	2022		2021
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	900	$	385
Accounts payable – trade	953		775
Accounts payable – other	176		142
Due to unconsolidated affiliates	36		36
Accrued compensation and benefits	209		202
Regulatory liabilities	394		345
Current portion of long-term debt and finance leases	318		11
Reserve for Aliso Canyon costs	129		1,980
Greenhouse gas obligations	111		75
Asset retirement obligations	68		77
Other current liabilities	429		284
Total current liabilities	3,723		4,312

Long-term debt and finance leases	5,780		4,773

Deferred credits and other liabilities:
Regulatory liabilities	1,043		1,100
Greenhouse gas obligations	443		174
Pension obligation, net of plan assets	277		551
Deferred income taxes	1,306		1,039
Asset retirement obligations	2,675		2,505
Deferred credits and other	401		428
Total deferred credits and other liabilities	6,145		5,797

Commitments and contingencies (Note 16)

Shareholders’ equity:
Preferred stock (11 million shares authorized; 1 million shares outstanding)	22		22
Common stock (100 million shares authorized; 91 million shares outstanding; no par value)	2,316		1,666
Retained earnings	4,384		3,785
Accumulated other comprehensive income (loss)	(24)		(31)
Total shareholders’ equity	6,698		5,442
Total liabilities and shareholders’ equity	$	22,346	$	20,324

See Notes to Financial Statements.

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SOUTHERN CALIFORNIA GAS COMPANY
STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	600	$	(426)	$	505
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	761		716		654
Deferred income taxes and investment tax credits	146		(494)		(112)
Other	58		19		59
Net change in working capital components:
Accounts receivable	(512)		(383)		(101)
Due to/from unconsolidated affiliates, net	(28)		(25)		(27)
Income taxes receivable/payable, net	23		(43)		189
Inventories	13		(18)		(19)
Other current assets	(139)		(21)		(12)
Accounts payable	191		181		64
Regulatory balancing accounts, net	46		306		(160)
Reserve for Aliso Canyon costs	(1,851)		1,532		141
Other current liabilities	185		(92)		(21)
Insurance receivable for Aliso Canyon costs	360		85		(106)
Reserve for Aliso Canyon costs, noncurrent	1		—		294
Changes in other noncurrent assets and liabilities, net	(308)		(304)		178
Net cash (used in) provided by operating activities	(454)		1,033		1,526

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(1,993)		(1,984)		(1,843)
Net cash used in investing activities	(1,993)		(1,984)		(1,843)

CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid	—		(75)		(100)
Preferred dividends paid	(1)		(1)		(1)
Equity contributions from Sempra Energy	650		800		—
Issuances of debt (maturities greater than 90 days)	2,094		—		949
Payments on finance leases	(15)		(12)		(12)
(Decrease) increase in short-term debt, net	(285)		272		(517)
Debt issuance costs	(12)		—		(8)
Net cash provided by financing activities	2,431		984		311

(Decrease) increase in cash and cash equivalents	(16)		33		(6)
Cash and cash equivalents, January 1	37		4		10
Cash and cash equivalents, December 31	$	21	$	37	$	4

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	173	$	151	$	146
Income tax (refunds) payments, net	(31)		227		19

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures	$	245	$	222	$	208
Increase in finance lease obligations for investment in PP&E	41		19		47
Increase in ARO for investment in PP&E	63		125		107

See Notes to Financial Statements.

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SOUTHERN CALIFORNIA GAS COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in millions)
	Years ended December 31, 2022, 2021 and 2020
	Preferred stock		Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Total shareholders’ equity
Balance at December 31, 2019	$	22	$	866	$	3,883	$	(23)	$	4,748

Net income					505				505
Other comprehensive loss							(8)		(8)

Dividends declared:
Preferred stock ($1.50/share)					(1)				(1)
Common stock ($1.10/share)					(100)				(100)
Balance at December 31, 2020	22		866		4,287		(31)		5,144

Net loss					(426)				(426)

Dividends declared:
Preferred stock ($1.50/share)					(1)				(1)
Common stock ($0.82/share)					(75)				(75)
Equity contribution from Sempra Energy			800						800
Balance at December 31, 2021	22		1,666		3,785		(31)		5,442

Net income					600				600
Other comprehensive income							7		7

Dividends declared:
Preferred stock ($1.50/share)					(1)				(1)
Equity contributions from Sempra Energy			650						650
Balance at December 31, 2022	$	22	$	2,316	$	4,384	$	(24)	$	6,698

See Notes to Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER FINANCIAL DATA

PRINCIPLES OF CONSOLIDATION

Sempra

Sempra’s Consolidated Financial Statements include the accounts of Sempra Energy, a California-based holding company doing business as Sempra, and its consolidated entities. We have four separate reportable segments, which we discuss in Note 17. All references in these Notes to our reportable segments are not intended to refer to any legal entity with the same or similar name.

SDG&E

SDG&E’s common stock is wholly owned by Enova, which is a wholly owned subsidiary of Sempra.

SoCalGas

SoCalGas’ common stock is wholly owned by PE, which is a wholly owned subsidiary of Sempra.

BASIS OF PRESENTATION

This is a combined report of Sempra, SDG&E and SoCalGas. We provide separate information for SDG&E and SoCalGas as required. We have eliminated intercompany accounts and transactions within the consolidated financial statements of each reporting entity.

Use of Estimates in the Preparation of the Financial Statements

We have prepared our Consolidated Financial Statements in conformity with U.S. GAAP. This requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including the disclosure of contingent assets and liabilities at the date of the financial statements. Although we believe the estimates and assumptions are reasonable, actual amounts ultimately may differ significantly from those estimates.

Discontinued Operations

We completed the sales of our equity interests in our Peruvian businesses in April 2020 and our Chilean businesses in June 2020. We determined that these businesses, which previously constituted the Sempra South American Utilities segment, and certain activities associated with these businesses, met the held-for-sale criteria upon our decision to sell them in January 2019. These businesses are presented as discontinued operations, which we discuss further in Note 5. Our discussions in the Notes below relate only to our continuing operations unless otherwise noted.

Subsequent Events

We evaluated events and transactions that occurred after December 31, 2022 through the date the financial statements were issued, and in the opinion of management, the accompanying statements reflect all adjustments and disclosures necessary for a fair presentation.

REGULATED OPERATIONS

SDG&E’s and SoCalGas’ accounting policies and financial statements reflect the application of U.S. GAAP provisions governing rate-regulated operations and the policies of the CPUC and the FERC. Under these provisions, a regulated utility records regulatory assets, which are generally costs that would otherwise be charged to expense, if it is probable that, through the ratemaking process, the utility will recover those assets from customers. To the extent that recovery is no longer probable, the related regulatory assets are written off. Regulatory liabilities generally represent amounts collected from customers in advance of the actual expenditure by the utility. If the actual expenditures are less than amounts previously collected from ratepayers, the excess would be refunded to customers, generally by reducing future rates. Regulatory liabilities may also arise from other transactions such as unrealized gains on fixed price contracts and other derivatives or certain deferred income tax benefits that are passed through to customers in future rates. In addition, SDG&E and SoCalGas record regulatory liabilities when the CPUC or, in

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the case of SDG&E, the FERC, requires a refund to be made to customers or has required that a gain or other transaction of net allowable costs be given to customers over future periods.

Determining probability of recovery of regulatory assets requires judgment by management and may include, but is not limited to, consideration of:

▪the nature of the event giving rise to the assessment

▪existing statutes and regulatory code

▪legal precedents

▪regulatory principles and analogous regulatory actions

▪testimony presented in regulatory hearings

▪regulatory orders

▪a commission-authorized mechanism established for the accumulation of costs

▪status of applications for rehearings or state court appeals

▪specific approval from a commission

▪historical experience

Sempra Infrastructure’s natural gas distribution utility, Ecogas, also applies U.S. GAAP provisions for rate-regulated operations, including the same evaluation of probability of recovery of regulatory assets described above.

Our Sempra Texas Utilities segment is comprised of our equity method investments in Oncor Holdings, which owns an 80.25% interest in Oncor, and Sharyland Holdings, which owns 100% of Sharyland Utilities. Oncor and Sharyland Utilities are regulated electric transmission and distribution utilities in Texas and their rates are regulated by the PUCT and, in the case of Oncor, certain cities and are subject to regulatory rate-setting processes and earnings oversight. Oncor and Sharyland Utilities prepare their financial statements in accordance with the provisions of U.S. GAAP governing rate-regulated operations.

Our Sempra Infrastructure segment includes the operating companies of our subsidiary, IEnova, as well as certain holding companies and risk management activity. Certain business activities at IEnova are regulated by the CRE and meet the regulatory accounting requirements of U.S. GAAP. Pipeline projects currently under construction at IEnova that meet the regulatory accounting requirements of U.S. GAAP record the impact of AFUDC related to equity. We discuss AFUDC below in “Property, Plant and Equipment.”

FAIR VALUE MEASUREMENTS

We measure certain assets and liabilities at fair value on a recurring basis, primarily NDT and benefit plan trust assets and derivatives. We also measure certain assets at fair value on a non-recurring basis in certain circumstances.

A fair value measurement reflects the assumptions market participants would use in pricing an asset or liability based on the best available information. These assumptions include the risk inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model. Also, we consider an issuer’s credit standing when measuring its liabilities at fair value.

We establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1 – Pricing inputs are unadjusted quoted prices available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Our Level 1 financial instruments primarily consist of listed equities, short-term investments, and U.S. government treasury securities, primarily in the NDT and benefit plan trusts, and exchange-traded derivatives.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including:

▪quoted forward prices for commodities

▪time value

▪current market and contractual prices for the underlying instruments

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▪volatility factors

▪other relevant economic measures

Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument and can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Our financial instruments in this category include listed equities, domestic corporate bonds, municipal bonds and other foreign bonds, primarily in the NDT and benefit plan trusts, and non-exchange-traded derivatives such as interest rate instruments and over-the-counter forwards and options.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant. Our Level 3 financial instruments consist of CRRs and fixed-price electricity positions at SDG&E and the Support Agreement at Sempra Infrastructure.

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Cash equivalents are highly liquid investments with original maturities of three months or less at the date of purchase.

Restricted cash includes:

▪for Sempra Infrastructure, funds fully drawn against Gazprom’s letters of credit, including draws associated with its LNG storage and regasification agreement that we discuss in Note 16, and funds denominated in Mexican pesos to pay for rights-of-way, license fees, permits, topographic surveys and other costs pursuant to trust and debt agreements related to pipeline projects

▪for Parent and other, funds held in a delisting trust for the purpose of purchasing the remaining publicly owned IEnova shares

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on Sempra’s Consolidated Balance Sheets to the sum of such amounts reported on Sempra’s Consolidated Statements of Cash Flows.


RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(Dollars in millions)
	December 31,
	2022		2021
Cash and cash equivalents	$	370	$	559
Restricted cash, current	40		19
Restricted cash, noncurrent	52		3
Total cash, cash equivalents and restricted cash on the Consolidated Statements of Cash Flows	$	462	$	581

CREDIT LOSSES

We are exposed to credit losses from financial assets measured at amortized cost, including trade and other accounts receivable, amounts due from unconsolidated affiliates, our net investment in a sales-type lease and a note receivable. We are also exposed to credit losses from off-balance sheet arrangements through Sempra’s guarantee related to Cameron LNG JV’s SDSRA, which we discuss in Note 6.

We regularly monitor and evaluate credit losses and record allowances for expected credit losses, if necessary, for trade and other accounts receivable using a combination of factors, including past-due status based on contractual terms, trends in write-offs, the age of the receivables and customer payment patterns, historical and industry trends, counterparty creditworthiness, economic conditions and specific events, such as bankruptcies, pandemics and other factors. We write off financial assets measured at amortized cost in the period in which we determine they are not recoverable. We record recoveries of amounts previously written off when it is known that they will be recovered.

In 2021, SDG&E and SoCalGas applied, on behalf of their customers, for financial assistance from the California Department of Community Services and Development under the 2021 California Arrearage Payment Program, which provided funds of $63 million and $79 million for SDG&E and SoCalGas, respectively. In the first quarter of 2022, SDG&E and SoCalGas received and applied the amounts directly to eligible customer accounts to reduce past due balances. In June 2022, AB 205 was approved establishing, among other things, the 2022 California Arrearage Payment Program. In December 2022, SDG&E and SoCalGas received funding of $51 million and $59 million, respectively, related to this program and, in January 2023, applied the amounts directly to eligible customer accounts to reduce past due balances.

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We provide below the changes in allowances for credit losses for trade receivables and other receivables. SDG&E and SoCalGas record changes in the allowances for credit losses related to Accounts Receivable – Trade in regulatory accounts.


CHANGES IN ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
	2022		2021		2020
Sempra:
Allowances for credit losses at January 1	$	136	$	138	$	29
Incremental allowance upon adoption of ASU 2016-13	—		—		1
Provisions for expected credit losses	123		45		124
Write-offs	(78)		(47)		(16)
Allowances for credit losses at December 31	$	181	$	136	$	138
SDG&E:
Allowances for credit losses at January 1	$	66	$	69	$	14
Provisions for expected credit losses	54		23		65
Write-offs	(42)		(26)		(10)
Allowances for credit losses at December 31	$	78	$	66	$	69
SoCalGas:
Allowances for credit losses at January 1	$	69	$	68	$	15
Provisions for expected credit losses	65		22		59
Write-offs	(36)		(21)		(6)
Allowances for credit losses at December 31	$	98	$	69	$	68

Allowances for credit losses related to trade receivables and other receivables are included in the Consolidated Balance Sheets as follows:


ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
	December 31,
	2022		2021
Sempra:
Accounts receivable – trade, net	$	140	$	94
Accounts receivable – other, net	40		39
Other long-term assets	1		3
Total allowances for credit losses	$	181	$	136
SDG&E:
Accounts receivable – trade, net	$	52	$	42
Accounts receivable – other, net	25		22
Other long-term assets	1		2
Total allowances for credit losses	$	78	$	66
SoCalGas:
Accounts receivable – trade, net	$	83	$	51
Accounts receivable – other, net	15		17
Other long-term assets	—		1
Total allowances for credit losses	$	98	$	69

As we discuss below in “Transactions with Affiliates,” we had a loan due from an unconsolidated affiliate that was paid in full in July 2022. At December 31, 2021, $1 million of expected credit losses are included in noncurrent Due From Unconsolidated Affiliates on Sempra’s Consolidated Balance Sheet.

As we discuss below in “Note Receivable,” we have an interest-bearing promissory note due from KKR. On a quarterly basis, we evaluate credit losses and record allowances for expected credit losses on this note receivable, including compounded interest and unamortized transaction costs, based on published default rate studies, the maturity date of the instrument and an internally developed credit rating. At December 31, 2022 and 2021, $7 million and $8 million, respectively, of expected credit losses is included in Other Long-Term Assets on Sempra’s Consolidated Balance Sheets.

As we discuss below in Note 6, Sempra provided a guarantee for the benefit of Cameron LNG JV related to amounts withdrawn by Sempra Infrastructure from the SDSRA. On a quarterly basis, we evaluate credit losses and record liabilities for expected credit losses on this off-balance sheet arrangement based on external credit ratings, published default rate studies and the maturity

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date of the arrangement. At December 31, 2022 and 2021, $6 million and $7 million, respectively, of expected credit losses are included in Deferred Credits and Other on Sempra’s Consolidated Balance Sheets.

CONCENTRATION OF CREDIT RISK

Credit risk is the risk of loss that would be incurred as a result of nonperformance by our counterparties on their contractual obligations. We have policies governing the management of credit risk that are administered by the respective credit departments at each of our segments and overseen by their separate risk management committees.

This oversight includes calculating current and potential credit risk on a regular basis and monitoring actual balances in comparison to approved limits. We establish credit limits based on risk and return considerations under terms customarily available in the industry. We avoid concentration of counterparties whenever possible, and we believe our credit policies significantly reduce overall credit risk. These policies include an evaluation of:

▪prospective counterparties’ financial condition (including credit ratings)

▪collateral requirements

▪the use of standardized agreements that allow for the netting of positive and negative exposures associated with a single counterparty

▪downgrade triggers

We believe that we have provided adequate reserves for counterparty nonperformance in our allowances for credit losses.

When our development projects become operational, we rely significantly on the ability of suppliers to perform under long-term agreements and on our ability to enforce contract terms in the event of nonperformance. Also, the factors that we consider in evaluating a development project include negotiating customer and supplier agreements and, therefore, we rely on these agreements for future performance. We also may condition our decision to go forward on development projects on first obtaining these customer and supplier agreements.

INVENTORIES

SDG&E and SoCalGas value natural gas inventory using the last-in first-out method. As inventories are sold, differences between the last-in first-out valuation and the estimated replacement cost are reflected in customer rates. These differences are generally temporary, but may become permanent if the natural gas inventory withdrawn from storage during the year is not replaced by year end. SDG&E and SoCalGas generally value materials and supplies at the lower of average cost or net realizable value.

Sempra Infrastructure values natural gas inventory and materials and supplies at the lower of average cost or net realizable value, and LNG inventory using the first-in first-out method.

The components of inventories are as follows:


INVENTORY BALANCES AT DECEMBER 31
(Dollars in millions)
	Sempra				SDG&E				SoCalGas
	2022		2021		2022		2021		2022		2021
Natural gas	$	106	$	164	$	1	$	—	$	74	$	114
LNG	62		27		—		—		—		—
Materials and supplies	235		198		133		123		85		58
Total	$	403	$	389	$	134	$	123	$	159	$	172

NOTE RECEIVABLE

In November 2021, Sempra loaned $300 million to KKR in exchange for an interest-bearing promissory note that is due in full no later than October 2029 and bears compound interest at 5% per annum, which may be paid quarterly or added to the outstanding principal at the election of KKR. At December 31, 2022 and 2021, Other Long-Term Assets includes $316 million and $297 million, respectively, of outstanding principal, compounded interest and unamortized transaction costs, net of allowance for credit losses, and at December 31, 2021, Other Current Assets includes $3 million of interest receivable on Sempra’s Consolidated Balance Sheets.

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WILDFIRE FUND

In July 2019, the Wildfire Legislation was signed into law to address certain issues related to catastrophic wildfires in California and their impact on electric IOUs. Investor-owned gas distribution utilities such as SoCalGas are not covered by this legislation. The issues addressed include wildfire mitigation, cost recovery standards and requirements, a wildfire fund, a cap on liability, and the establishment of a wildfire safety board.

The Wildfire Legislation established a revised legal standard for the recovery of wildfire costs (Revised Prudent Manager Standard) and established a fund (the Wildfire Fund) designed to provide liquidity to SDG&E, PG&E and Edison to pay IOU wildfire-related claims in the event that the governmental agency responsible for determining causation determines the applicable IOU’s equipment caused the ignition of a wildfire, primary insurance coverage is exceeded and certain other conditions are satisfied. A primary purpose of the Wildfire Fund is to pool resources provided by shareholders and ratepayers of the IOUs and make those resources available to reimburse the IOUs for third-party wildfire claims incurred after July 12, 2019, the effective date of the Wildfire Legislation, subject to certain limitations.

An IOU may seek payment from the Wildfire Fund for settled or adjudicated third-party damage claims arising from certain wildfires that exceed, in aggregate in a calendar year, the greater of $1.0 billion or the IOU’s required amount of insurance coverage as recommended by the Wildfire Fund’s administrator. Wildfire claims approved by the Wildfire Fund’s administrator will be paid by the Wildfire Fund to the IOU to the extent funds are available. These utilized funds will be subject to review by the CPUC, which will make a determination as to the degree an IOU’s conduct related to an ignition of a wildfire was prudent or imprudent. The Revised Prudent Manager Standard requires that the CPUC apply clear standards when reviewing wildfire liability losses paid when determining the reasonableness of an IOU’s conduct related to an ignition. Under this standard, the conduct under review related to the ignition may include factors within and beyond the IOU’s control, including humidity, temperature and winds. Costs and expenses may be allocated for cost recovery in full or in part. Also, under this standard, an IOU’s conduct will be deemed reasonable if a valid annual safety certification is in place at the time of the ignition, unless a serious doubt is raised, in which case the burden shifts to the utility to dispel that doubt. The IOUs will receive an annual safety certification from OEIS if they meet various requirements.

If an IOU has maintained a valid annual safety certification, to the extent it is found to be imprudent, claims will be reimbursable by the IOU to the Wildfire Fund up to a cap based on the IOU’s rate base. The aggregate requirement to reimburse the Wildfire Fund over a trailing three calendar year period is capped at 20% of the equity portion of an IOU’s electric transmission and distribution rate base in the year of the prudency determination. Based on its 2022 rate base, the liability cap for SDG&E is approximately $1.2 billion, which is adjusted annually. The liability cap will apply on a rolling three-year basis so long as future annual safety certifications are received and the Wildfire Fund has not been terminated, which could occur if funds are exhausted. Amounts in excess of the liability cap and amounts that are determined to be prudently incurred do not need to be reimbursed by an IOU to the Wildfire Fund. The Wildfire Fund does not have a specified term and coverage will continue until the assets of the Wildfire Fund are exhausted and the Wildfire Fund is terminated, in which case, the remaining funds, if any, will be transferred to California’s general fund to be used for fire risk mitigation programs.

In August 2022, the OEIS approved SDG&E’s 2022 Wildfire Mitigation Plan, which is effective until the OEIS approves a new plan. SDG&E received its annual wildfire safety certification from the OEIS in December 2022.

The Wildfire Fund was initially funded up to $10.5 billion by a loan from the California Surplus Money Investment Fund. The loan is financed through a DWR bond, which was put in place in October 2020 and is securitized through a dedicated surcharge on ratepayers’ bills attributable to the DWR. In October 2019, the CPUC adopted a decision authorizing a non-bypassable charge to be collected by the IOUs to support the anticipated DWR bond issuance authorized by AB 1054. The CPUC decision also determined that ratepayers of non-participating electrical corporations shall not pay the non-bypassable charge.

The Wildfire Fund was also funded by initial shareholder contributions from the IOUs totaling $7.5 billion. SDG&E’s share was $322.5 million. The IOUs are also required to make annual shareholder contributions to the Wildfire Fund with an aggregate value of $3 billion over a 10-year period starting in 2019. SDG&E’s share is $129 million. The contributions are not subject to rate recovery.

Wildfire Fund Asset and Obligation

In 2019, SDG&E recorded both a Wildfire Fund asset and a related obligation for its commitment to make shareholder contributions of $451.5 million to the Wildfire Fund, measured at present value as of July 25, 2019 (the date by which both Edison and SDG&E opted to contribute to the Wildfire Fund). SDG&E paid its initial shareholder contribution of $322.5 million to the Wildfire Fund in September 2019. SDG&E funded this contribution with proceeds from an equity contribution from

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Sempra. SDG&E expects to continue to make annual shareholder contributions of $12.9 million through December 31, 2028. SDG&E is accreting the present value of the Wildfire Fund obligation until the liability is settled.

SDG&E is amortizing the Wildfire Fund asset on a straight-line basis over the estimated period of benefit, as adjusted for utilization by the IOUs. The estimated period of benefit of the Wildfire Fund asset is 15 years and is based on several assumptions, including, but not limited to:

▪historical wildfire experience of each IOU in California, including frequency and severity of the wildfires

▪the value of property potentially damaged by wildfires

▪the effectiveness of wildfire risk mitigation efforts by each IOU

▪liability cap of each IOU

▪IOU prudency determination levels

▪FERC jurisdictional allocation levels

▪insurance coverage levels

The use of different assumptions, or changes to the assumptions used, could have a significant impact on the estimated period of benefit of the Wildfire Fund asset. SDG&E periodically evaluates the estimated period of benefit of the Wildfire Fund asset based on actual experience and changes in these assumptions. SDG&E recognizes a reduction of its Wildfire Fund asset and records a charge against earnings in the period when there is a reduction of the available coverage due to recoverable claims from any of the participating IOUs. Wildfire claims that are recoverable from the Wildfire Fund, net of anticipated or actual reimbursement to the Wildfire Fund by the responsible IOU, decrease the Wildfire Fund asset and remaining available coverage.

The following table summarizes the location of balances related to the Wildfire Fund on Sempra’s and SDG&E’s Consolidated Balance Sheets and Consolidated Statements of Operations.


WILDFIRE FUND
(Dollars in millions)
				December 31,
	Location			2022		2021
Wildfire Fund asset:
Current	Prepaid Expenses			$	29	$	29
Noncurrent	Wildfire Fund			303		331
Wildfire Fund obligation:
Current	Other Current Liabilities			$	13	$	13
Noncurrent	Deferred Credits and Other			53		64

		Years ended December 31,
		2022		2021		2020
Amortization of Wildfire Fund asset	Operation and Maintenance	$	29	$	29	$	29
Impairment of Wildfire Fund asset	Operation and Maintenance	—		3		—
Accretion of Wildfire Fund obligation	Operation and Maintenance	2		2		2

INCOME TAXES

Income tax expense includes current and deferred income taxes. We record deferred income taxes for temporary differences between the book and the tax basis of assets and liabilities. Investment tax credits from prior years are amortized to income by SDG&E and SoCalGas over the estimated service lives of the properties as required by the CPUC.

Under the regulatory accounting treatment required for flow-through temporary differences, SDG&E, SoCalGas and Sempra Infrastructure recognize:

▪regulatory assets to offset deferred income tax liabilities if it is probable that the amounts will be recovered from customers; and

▪regulatory liabilities to offset deferred income tax assets if it is probable that the amounts will be returned to customers.

When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position we take has to have at least a more-likely-than-not chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more-likely-than-not” means a likelihood of more than 50%. Otherwise, we may not recognize

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any of the potential tax benefit associated with the position. We recognize a benefit for a tax position that meets the more-likely-than-not criterion at the largest amount of tax benefit that is greater than 50% likely of being realized upon its effective resolution.

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 ETR.

We accrue income tax to the extent we intend to repatriate cash to the U.S. from our continuing international operations. We currently do not record deferred income taxes for other basis differences between financial statement and income tax investment amounts in non-U.S. subsidiaries because they are indefinitely reinvested. We recognize income tax expense for basis differences related to global intangible low-taxed income as a period cost if and when incurred.

We provide additional information about income taxes in Note 8.

GREENHOUSE GAS ALLOWANCES AND OBLIGATIONS

SDG&E, SoCalGas and Sempra Infrastructure are required by AB 32 to acquire GHG allowances for every metric ton of carbon dioxide equivalent emitted into the atmosphere during electric generation and natural gas consumption. At SDG&E and SoCalGas, many GHG allowances are allocated to us on behalf of our customers at no cost and we purchase any additional allowances required. We record purchased and allocated GHG allowances at the lower of weighted-average cost or market. We measure the compliance obligation, which is based on emissions, at the carrying value of allowances held plus the fair value of additional allowances necessary to satisfy the obligation. SDG&E and SoCalGas balance costs and revenues associated with the GHG program through regulatory balancing accounts. Sempra Infrastructure records the cost of GHG obligations in cost of sales. We remove the assets and liabilities from the balance sheets as the allowances are surrendered.

RENEWABLE ENERGY CERTIFICATES

RECs are energy rights established by governmental agencies for the environmental and social promotion of renewable electricity generation. A REC, and its associated attributes and benefits, can be sold separately from the underlying physical electricity associated with a renewable-based generation source in certain markets.

Retail sellers of electricity obtain RECs through renewable energy PPAs, internal generation or separate purchases in the market to comply with the RPS Program established by the governmental agencies. RECs provide documentation for the generation of a unit of renewable energy that is used to verify compliance with the RPS Program. The cost of RECs at SDG&E, which is recoverable in rates, is recorded in Cost of Electric Fuel and Purchased Power on the Statements of Operations.

PROPERTY, PLANT AND EQUIPMENT

PP&E is recorded at cost and primarily represents the buildings, equipment and other facilities used by SDG&E and SoCalGas to provide natural gas and electric utility services, and by the Sempra Infrastructure businesses in their operations, including construction work in progress. PP&E also includes lease improvements and other equipment at Parent and other. Our plant costs include labor, materials and contract services and expenditures for replacement parts incurred during a major maintenance outage of a plant. In addition, the cost of utility plant at our rate-regulated businesses and PP&E under regulated projects that meet the regulatory accounting requirements of U.S. GAAP includes AFUDC. The cost of PP&E for our non-regulated projects includes capitalized interest. Maintenance costs are expensed as incurred. The cost of most retired depreciable utility plant assets less salvage value is charged to accumulated depreciation. We discuss assets collateralized as security for certain indebtedness in Note 7.

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PROPERTY, PLANT AND EQUIPMENT BY MAJOR FUNCTIONAL CATEGORY
(Dollars in millions)
	December 31,				Depreciation rates for years ended December 31,
	2022		2021		2022		2021			2020
SDG&E:
Natural gas operations	$	3,707	$	3,200	2.57	%	2.55	%		2.51	%
Electric distribution	10,271		9,471		3.94		3.93			3.90
Electric transmission(1)	8,061		7,577		3.03		3.02			3.10
Electric generation	2,461		2,446		5.11		4.74			4.56
Other electric	2,211		2,100		7.03		7.23			6.92
Construction work in progress(1)	1,863		1,662		N/A		N/A			N/A
Total SDG&E	28,574		26,456
SoCalGas:
Natural gas operations	23,646		21,894		3.57		3.65			3.63
Other non-utility	50		50		1.54		2.23			3.80
Construction work in progress	1,362		1,160		N/A		N/A			N/A
Total SoCalGas	25,058		23,104

Sempra Infrastructure and parent(2):					Estimated useful lives				Weighted-average useful life
Land and land rights	476		291		16 to 44 years(3)					37
Machinery and equipment:
Pipelines and storage	3,813		3,698		41 to 49 years					42
Generating plants	1,803		1,659		11 to 28 years					26
LNG terminals	1,138		1,138		43 years					43
Refined products terminals	643		420		38 years					38
Other	344		370		1 to 22 years					3
Construction work in progress	1,757		1,494		N/A					N/A
Other	287		310		4 to 34 years					16
	10,261		9,380
Total Sempra	$	63,893	$	58,940

(1) At December 31, 2022, includes $554 in electric transmission assets and $7 in construction work in progress related to SDG&E’s 86% interest in the Southwest Powerlink transmission line, jointly owned by SDG&E with other utilities. SDG&E, and each of the other owners, holds its undivided interest as a tenant in common in the property. Each owner is responsible for its share of the project and participates in decisions concerning operations and capital expenditures. SDG&E’s share of operating expenses is included in Sempra’s and SDG&E’s Consolidated Statements of Operations.

(2) Includes $246 and $211 at December 31, 2022 and 2021, respectively, of utility plant, primarily pipelines and other distribution assets at Ecogas.

(3) Estimated useful lives are for land rights.

Depreciation expense is computed using the straight-line method over the asset’s estimated composite useful life, the CPUC-prescribed period for SDG&E and SoCalGas, or the remaining term of the site leases, whichever is shortest.


DEPRECIATION EXPENSE
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra	$	1,995	$	1,833	$	1,646
SDG&E	977		884		797
SoCalGas	755		711		649

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ACCUMULATED DEPRECIATION AND AMORTIZATION
(Dollars in millions)
	December 31,
	2022		2021
SDG&E:
Accumulated depreciation:
Natural gas operations	$	979	$	919
Electric transmission, distribution and generation(1)	5,789		5,489
Total SDG&E	6,768		6,408
SoCalGas:
Accumulated depreciation:
Natural gas operations	7,291		6,845
Other non-utility	17		16
Total SoCalGas	7,308		6,861
Sempra Infrastructure and parent:
Accumulated depreciation – other(2)	2,035		1,777
Total Sempra	$	16,111	$	15,046

(1) Includes $307 at December 31, 2022 related to SDG&E’s 86% interest in the Southwest Powerlink transmission line, jointly owned by SDG&E and other utilities.

(2) Includes $65 and $55 at December 31, 2022 and 2021, respectively, of accumulated depreciation for utility plant at Ecogas.

SDG&E and SoCalGas finance construction projects with debt and equity funds. The CPUC and the FERC allow the recovery of the cost of these funds by the capitalization of AFUDC, calculated using rates authorized by the CPUC and the FERC, as a cost component of PP&E. SDG&E and SoCalGas earn a return on the capitalized AFUDC after the utility property is placed in service and recover the AFUDC from their customers over the expected useful lives of the assets.

Pipeline projects under construction by Sempra Infrastructure that are both subject to certain regulation and meet U.S. GAAP regulatory accounting requirements record the impact of AFUDC.

We capitalize interest costs incurred to finance capital projects and interest at equity method investments that have not commenced planned principal operations.

The table below summarizes capitalized financing costs, comprised of AFUDC and capitalized interest.


CAPITALIZED FINANCING COSTS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra	$	255	$	217	$	202
SDG&E	116		106		104
SoCalGas	73		64		55

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill is the excess of the purchase price over the fair value of the identifiable net assets of acquired companies measured at the time of acquisition. Goodwill is not amortized, but we test it for impairment annually on October 1 or whenever events or changes in circumstances necessitate an evaluation. If the carrying value of the reporting unit, including goodwill, exceeds its fair value, we record a goodwill impairment loss as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill.

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For our annual goodwill impairment testing, we have the option to first make a qualitative assessment of whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount before applying the quantitative goodwill impairment test. If we elect to perform the qualitative assessment, we evaluate relevant events and circumstances, including but not limited to, macroeconomic conditions, industry and market considerations, cost factors and the overall financial performance of the reporting unit. If, after assessing these qualitative factors, we determine that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then we perform the quantitative goodwill impairment test. If, after performing the quantitative goodwill impairment test, we determine that goodwill is impaired, we record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill.

Goodwill of $1,602 million at December 31, 2022 and 2021 relates to the 2016 acquisitions of IEnova Pipelines and the Ventika wind power generation facilities at Sempra Infrastructure.

Other Intangible Assets

Other Intangible Assets included on Sempra’s Consolidated Balance Sheets are as follows:


OTHER INTANGIBLE ASSETS
(Dollars in millions)
	Amortization period (years)		December 31,
		2022			2021
Renewable energy transmission and consumption permits	15 to 19		$	169		$	169
O&M agreement	23		66			66
ESJ PPA	14		190			190
Other	10 to indefinite		15			15
			440			440
Less accumulated amortization:
Renewable energy transmission and consumption permits			(50)			(40)
O&M agreement			(15)			(12)
ESJ PPA			(23)			(10)
Other			(8)			(8)
			(96)			(70)
			$	344		$	370

Other Intangible Assets at December 31, 2022 primarily include:

▪renewable energy transmission and consumption permits previously granted by the CRE at the Ventika wind power generation facilities, Don Diego Solar and Border Solar;

▪a favorable O&M agreement acquired in connection with the acquisition of DEN; and

▪the relative fair value of the PPA that was acquired in connection with the acquisition of ESJ.

Intangible assets subject to amortization are amortized over their estimated useful lives. Amortization expense for intangible assets was $26 million (including $13 million recorded against revenues) in 2022, $22 million (including $10 million recorded against revenues) in 2021, and $11 million in 2020. We estimate amortization expense for the next five years to be $26 million per year (including $13 million per year recorded against revenues).

LONG-LIVED ASSETS

We test long-lived assets for recoverability whenever events or changes in circumstances have occurred that may affect the recoverability or the estimated useful lives of long-lived assets. Long-lived assets include intangible assets subject to amortization, but do not include investments in unconsolidated entities. A long-lived asset may be impaired when the estimated future undiscounted cash flows are less than the carrying amount of the asset. If that comparison indicates that the asset’s carrying value may not be recoverable, the impairment is measured based on the difference between the carrying amount and the fair value of the asset. This evaluation is performed at the lowest level for which separately identifiable cash flows exist.

VARIABLE INTEREST ENTITIES

We consolidate a VIE if we are the primary beneficiary of the VIE. Our determination of whether we are the primary beneficiary is based on qualitative and quantitative analyses, which assess:

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▪the purpose and design of the VIE;

▪the nature of the VIE’s risks and the risks we absorb;

▪the power to direct activities that most significantly impact the economic performance of the VIE; and

▪the obligation to absorb losses or the right to receive benefits that could be significant to the VIE.

We will continue to evaluate our VIEs for any changes that may impact our determination of whether an entity is a VIE and if we are the primary beneficiary.

SDG&E

SDG&E’s power procurement is subject to reliability requirements that may require SDG&E to enter into various PPAs that include variable interests. SDG&E evaluates the respective entities to determine if variable interests exist and, based on the qualitative and quantitative analyses described above, if SDG&E, and indirectly Sempra, is the primary beneficiary.

SDG&E has agreements under which it purchases power generated by facilities for which it supplies all of the natural gas to fuel the power plant (i.e., tolling agreements). SDG&E’s obligation to absorb natural gas costs may be a significant variable interest. In addition, SDG&E has the power to direct the dispatch of electricity generated by these facilities. Based on our analysis, the ability to direct the dispatch of electricity may have the most significant impact on the economic performance of the entity owning the generating facility because of the associated exposure to the cost of natural gas, which fuels the plants, and the value of electricity produced. To the extent that SDG&E (1) is obligated to purchase and provide fuel to operate the facility, (2) has the power to direct the dispatch, and (3) purchases all of the output from the facility for a substantial portion of the facility’s useful life, SDG&E may be the primary beneficiary of the entity owning the generating facility. SDG&E determines if it is the primary beneficiary in these cases based on a qualitative approach in which it considers the operational characteristics of the facility, including its expected power generation output relative to its capacity to generate and the financial structure of the entity, among other factors. If SDG&E determines that it is the primary beneficiary, SDG&E and Sempra consolidate the entity that owns the facility as a VIE.

In addition to tolling agreements, other variable interests involve various elements of fuel and power costs, and other components of cash flows expected to be paid to or received by our counterparties. In most of these cases, the expectation of variability is not substantial, and SDG&E generally does not have the power to direct activities, including the operation and maintenance activities of the generating facility, that most significantly impact the economic performance of the other VIEs. If our ongoing evaluation of these VIEs were to conclude that SDG&E becomes the primary beneficiary and consolidation by SDG&E becomes necessary, the effects could be significant to the financial position and liquidity of SDG&E and Sempra.

SDG&E determined that none of its PPAs and tolling agreements resulted in SDG&E being the primary beneficiary of a VIE at December 31, 2022 and 2021. PPAs and tolling agreements that relate to SDG&E’s involvement with VIEs are primarily accounted for as finance leases. The carrying amounts of the assets and liabilities under these contracts are included in PP&E, net, and finance lease liabilities with balances of $1,194 million and $1,217 million at December 31, 2022 and 2021, respectively. SDG&E recovers costs incurred on PPAs, tolling agreements and other variable interests through CPUC-approved long-term power procurement plans. SDG&E has no residual interest in the respective entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees or other commitments associated with these contracts other than the purchase commitments described in Note 16. As a result, SDG&E’s potential exposure to loss from its variable interest in these VIEs is not significant.

Sempra Texas Utilities

Oncor Holdings is a VIE. Sempra is not the primary beneficiary of this VIE because of the structural and operational ring-fencing and governance measures in place that prevent us from having the power to direct the significant activities of Oncor Holdings. As a result, we do not consolidate Oncor Holdings and instead account for our ownership interest as an equity method investment. See Note 6 for additional information about our equity method investment in Oncor Holdings and restrictions on our ability to influence its activities. Our maximum exposure to loss, which fluctuates over time, from our interest in Oncor Holdings does not exceed the carrying value of our investment, which was $13,665 million and $12,947 million at December 31, 2022 and 2021, respectively.

Sempra Infrastructure

Cameron LNG JV

Cameron LNG JV is a VIE principally due to contractual provisions that transfer certain risks to customers. Sempra is not the primary beneficiary of this VIE because we do not have the power to direct the most significant activities of Cameron LNG JV,

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including LNG production and operation and maintenance activities at the liquefaction facility. Therefore, we account for our investment in Cameron LNG JV under the equity method. The carrying value of our investment, including amounts recognized in AOCI related to interest-rate cash flow hedges at Cameron LNG JV, was $886 million and $514 million at December 31, 2022 and 2021, respectively. Our maximum exposure to loss, which fluctuates over time, includes the carrying value of our investment and our obligation under the SDSRA, which we discuss in Note 6.

CFIN

As we discuss in Note 6, in July 2020, Sempra entered into a Support Agreement for the benefit of CFIN, which is a VIE. Sempra is not the primary beneficiary of this VIE because we do not have the power to direct the most significant activities of CFIN, including modification, prepayment, and refinance decisions related to the financing arrangement with external lenders and Cameron LNG JV’s four project owners as well as the ability to determine and enforce remedies in the event of default. The conditional obligations of the Support Agreement represent a variable interest that we measure at fair value on a recurring basis (see Note 12). Sempra’s maximum exposure to loss under the terms of the Support Agreement is $979 million.

ECA LNG Phase 1

ECA LNG Phase 1 is a VIE because its total equity at risk is not sufficient to finance its activities without additional subordinated financial support. We expect that ECA LNG Phase 1 will require future capital contributions or other financial support to finance the construction of the facility. Sempra is the primary beneficiary of this VIE because we have the power to direct the development activities related to the construction of the liquefaction facility, which we consider to be the most significant activities of ECA LNG Phase 1 during the construction phase of its natural gas liquefaction project. As a result, we consolidate ECA LNG Phase 1. Sempra consolidated $1,099 million and $632 million of assets at December 31, 2022 and 2021, respectively, consisting primarily of PP&E, net, and Accounts Receivable – Other attributable to ECA LNG Phase 1 that could be used only to settle obligations of this VIE and that are not available to settle obligations of Sempra, and $685 million and $455 million of liabilities at December 31, 2022 and 2021, respectively, consisting primarily of long-term debt, short-term debt and accounts payable attributable to ECA LNG Phase 1 for which creditors do not have recourse to the general credit of Sempra. Additionally, as we discuss in Note 7, IEnova and TotalEnergies SE have provided guarantees for 83.4% and 16.6%, respectively, of the loan facility supporting construction of the liquefaction facility.

ASSET RETIREMENT OBLIGATIONS

For tangible long-lived assets, we record AROs for the present value of liabilities of future costs expected to be incurred when assets are retired from service, if the retirement process is legally required and if a reasonable estimate of fair value can be made. We also record a liability if a legal obligation to perform an asset retirement exists and can be reasonably estimated, but performance is conditional upon a future event. We record the estimated retirement cost using the present value of the obligation at the time the asset is placed into service, and recognize that cost over the life of the related asset by depreciating the asset retirement cost and accreting the obligation until the liability is settled. Our rate-regulated entities record regulatory assets or liabilities as a result of the timing difference between the recognition of costs in accordance with U.S. GAAP and costs recovered through the rate-making process.

We have recorded AROs related to various assets, including:

SDG&E and SoCalGas

▪fuel and storage tanks

▪natural gas transmission and distribution systems

▪hazardous waste storage facilities

▪asbestos-containing construction materials

SDG&E

▪nuclear power facilities

▪electric transmission and distribution systems

▪energy storage systems

▪power generation plants

SoCalGas

▪underground natural gas storage facilities and wells

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Sempra Infrastructure

▪LNG facility

▪natural gas transportation and distribution systems

▪LPG terminal

▪refined products terminals

▪power generation plants

The changes in AROs are as follows:


CHANGES IN ASSET RETIREMENT OBLIGATIONS
(Dollars in millions)
	Sempra						SDG&E						SoCalGas
	2022		2021		2020		2022		2021		2020		2022		2021		2020
Balance as of January 1(1)	$	3,538	$	3,289	$	3,083	$	890	$	876	$	866	$	2,582	$	2,368	$	2,177
Accretion expense	141		133		127		37		38		39		101		92		86
Liabilities incurred and acquired	21		20		2		6		2		—		—		—		—
Payments	(57)		(63)		(63)		(54)		(60)		(60)		(3)		(3)		(2)
Revisions(2)	69		159		140		8		34		31		63		125		107
Balance at December 31(1)	$	3,712	$	3,538	$	3,289	$	887	$	890	$	876	$	2,743	$	2,582	$	2,368

(1) Current portion of the ARO for Sempra is included in Other Current Liabilities on the Consolidated Balance Sheets.

(2) SDG&E’s change in ARO in 2022 and 2021 includes $1 and $22, respectively, due to a revised estimate that is offset in noncurrent Regulatory Liabilities and Regulatory Assets, respectively, on the Consolidated Balance Sheets.

CONTINGENCIES

We accrue losses for the estimated impacts of various conditions, situations or circumstances involving uncertain outcomes. For loss contingencies, we accrue the loss if an event has occurred on or before the balance sheet date and if:

▪information available through the date we file our financial statements indicates it is probable that a loss has been incurred, given the likelihood of uncertain future events; and

▪the amount of the loss or a range of possible losses can be reasonably estimated.

We do not accrue contingencies that might result in gains. We continuously assess contingencies for litigation claims, environmental remediation and other events.

LEGAL FEES

Legal fees that are associated with a past event for which a liability has been recorded are accrued when it is probable that fees also will be incurred and amounts are estimable.

COMPREHENSIVE INCOME

Comprehensive income includes all changes in the equity of a business enterprise (except those resulting from investments by owners and distributions to owners), including:

▪foreign currency translation adjustments

▪certain hedging activities

▪changes in unamortized net actuarial gain or loss and prior service cost related to pension and PBOP plans

The Consolidated Statements of Comprehensive Income (Loss) show the changes in the components of OCI, including the amounts attributable to NCI. The following tables present the changes in AOCI by component and amounts reclassified out of AOCI to net income, excluding amounts attributable to NCI.

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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1)
(Dollars in millions)
	Foreign currency translation adjustments		Financial instruments		Pension and PBOP		Total AOCI
Sempra(2):
Balance as of December 31, 2019	$	(607)	$	(215)	$	(117)	$	(939)
OCI before reclassifications(3)(4)	(102)		(163)		(26)		(291)
Amounts reclassified from AOCI(3)	645		47		38		730
Net OCI(4)	543		(116)		12		439
Balance as of December 31, 2020	(64)		(331)		(105)		(500)
OCI before reclassifications(4)	(34)		62		8		36
Amounts reclassified from AOCI(5)	19		113		14		146
Net OCI(4)(5)	(15)		175		22		182
Balance as of December 31, 2021	(79)		(156)		(83)		(318)
OCI before reclassifications	10		147		(11)		146
Amounts reclassified from AOCI(6)	10		19		8		37
Net OCI(6)	20		166		(3)		183
Balance as of December 31, 2022	$	(59)	$	10	$	(86)	$	(135)
SDG&E:
Balance as of December 31, 2019					$	(16)	$	(16)
OCI before reclassifications(3)					(4)		(4)
Amounts reclassified from AOCI(3)					10		10
Net OCI					6		6
Balance as of December 31, 2020					(10)		(10)
OCI before reclassifications					(1)		(1)
Amounts reclassified from AOCI					1		1
Net OCI					—		—
Balance as of December 31, 2021					(10)		(10)
OCI before reclassifications					2		2
Amounts reclassified from AOCI					1		1
Net OCI					3		3
Balance as of December 31, 2022					$	(7)	$	(7)
SoCalGas:
Balance as of December 31, 2019			$	(13)	$	(10)	$	(23)
OCI before reclassifications(3)			—		(10)		(10)
Amounts reclassified from AOCI(3)			—		2		2
Net OCI			—		(8)		(8)
Balance as of December 31, 2020			(13)		(18)		(31)
OCI before reclassifications			—		(2)		(2)
Amounts reclassified from AOCI			—		2		2
Net OCI			—		—		—
Balance as of December 31, 2021			(13)		(18)		(31)
OCI before reclassifications			—		4		4
Amounts reclassified from AOCI			1		2		3
Net OCI			1		6		7
Balance as of December 31, 2022			$	(12)	$	(12)	$	(24)

(1) All amounts are net of income tax, if subject to tax, and after NCI.

(2) Includes discontinued operations in 2020.

(3) Pension and PBOP and Total AOCI include $6 in transfers of liabilities from SDG&E to SoCalGas and $3 in transfers of liabilities from SDG&E to Sempra in 2020.

(4) Total AOCI includes $(28) of foreign currency translation adjustments and $(16) of financial instruments associated with the IEnova exchange and cash tender offers in 2021. Total AOCI includes $(4) of foreign currency translation adjustments and $(3) of financial instruments associated with IEnova’s repurchases of NCI in 2020. We discuss these transactions below in “Other Noncontrolling Interests – Sempra Infrastructure.” These transactions do not impact the Consolidated Statements of Comprehensive Income (Loss).

(5) Total AOCI includes $19 of foreign currency translation adjustments and $47 of financial instruments associated with the sale of NCI to KKR in 2021. We discuss this transaction below in “Other Noncontrolling Interests – Sempra Infrastructure.” This transaction does not impact the Consolidated Statement of Comprehensive Income (Loss).

(6) Total AOCI includes $9 of foreign currency translation adjustments associated with the sale of NCI to ADIA in 2022. We discuss this transaction below in “Other Noncontrolling Interests – Sempra Infrastructure.” This transaction does not impact the Consolidated Statement of Comprehensive Income (Loss).

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
Details about accumulated other comprehensive income (loss) components	Amounts reclassified from accumulated other comprehensive income (loss)						Affected line item on Consolidated Statements of Operations
	Years ended December 31,
	2022		2021		2020
Sempra:
Foreign currency translation adjustments	$	1	$	—	$	—	Operation and Maintenance
Foreign currency translation adjustments	—		—		645		Income from Discontinued Operations, Net of Income Tax
Total, net of income tax	$	1	$	—	$	645

Financial instruments:
Interest rate instruments	$	1	$	11	$	10	Interest Expense
Interest rate instruments	29		73		46		Equity Earnings(1)
Foreign exchange instruments	(1)		1		(1)		Revenues: Energy-Related Businesses
	1		—		—		Other Income (Expense), Net
Interest rate and foreign exchange instruments	(2)		1		1		Interest Expense
	(12)		6		11		Other Income (Expense), Net
Total, before income tax	16		92		67
	(6)		(24)		(19)		Income Tax Expense
Total, net of income tax	10		68		48
	9		(2)		(1)		Earnings Attributable to Noncontrolling Interests
Total, net of income tax and after NCI	$	19	$	66	$	47

Pension and PBOP(2):
Amortization of actuarial loss	$	7	$	8	$	8	Other Income (Expense), Net
Amortization of actuarial loss	—		—		6		Income from Discontinued Operations, Net of Income Tax
Amortization of prior service cost	4		4		4		Other Income (Expense), Net
Settlement charges	—		7		22		Other Income (Expense), Net
Total, before income tax	11		19		40
	—		—		(2)		Income from Discontinued Operations, Net of Income Tax
	(3)		(5)		(9)		Income Tax Expense
Total, net of income tax	$	8	$	14	$	29

Total reclassifications for the period, net of income tax and after NCI	$	28	$	80	$	721
SDG&E:
Pension and PBOP(2):
Amortization of actuarial loss	$	1	$	—	$	1	Other Income, Net
Amortization of prior service cost	—		1		1		Other Income, Net
Total, before income tax	1		1		2
	—		—		(1)		Income Tax Expense
Total reclassifications for the period, net of income tax	$	1	$	1	$	1
SoCalGas:
Financial instruments:
Interest rate instruments	$	1	$	—	$	—	Interest Expense
Pension and PBOP(2):
Amortization of actuarial loss	$	2	$	1	$	1	Other Expense, Net
Amortization of prior service cost	1		1		1		Other Expense, Net
Total, before income tax	3		2		2
	(1)		—		—		Income Tax Expense
Total, net of income tax	$	2	$	2	$	2

Total reclassifications for the period, net of income tax	$	3	$	2	$	2

(1) Equity earnings at our foreign equity method investees are recognized after tax.

(2) Amounts are included in the computation of net periodic benefit cost (see “Net Periodic Benefit Cost” in Note 9).

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NONCONTROLLING INTERESTS

Ownership interests in a consolidated entity that are held by unconsolidated owners are accounted for and reported as NCI.

SoCalGas Preferred Stock

The preferred stock at SoCalGas is presented at Sempra as NCI. Sempra records charges against income related to NCI for preferred dividends declared by SoCalGas. We provide additional information regarding SoCalGas’ preferred stock in Note 13.

Other Noncontrolling Interests

The following table provides information about NCI held by others in subsidiaries or entities consolidated by us and recorded in Other Noncontrolling Interests in Total Equity on Sempra’s Consolidated Balance Sheets.


OTHER NONCONTROLLING INTERESTS
(Dollars in millions)
	Percent ownership held by noncontrolling interests				Equity held by noncontrolling interests
	December 31,				December 31,
	2022		2021		2022		2021
Sempra Infrastructure:
SI Partners	30.0	%	20.0	%	$	2,060	$	1,384
SI Partners subsidiaries(1)	0.1 - 16.6		0.1 - 16.6		61		34
Total Sempra					$	2,121	$	1,418

(1) SI Partners has subsidiaries with NCI held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries.

Sempra Infrastructure

Sale of NCI in SI Partners to KKR. On October 1, 2021, Sempra, its wholly owned subsidiary, SI Partners (formerly Sempra Global), and KKR consummated the transactions contemplated under a purchase and contribution agreement dated April 4, 2021 (as amended prior to closing, the KKR Purchase Agreement). Pursuant to the KKR Purchase Agreement, KKR acquired newly designated Class A Units representing a 20% NCI in SI Partners for a purchase price of $3.4 billion, including post-closing adjustments. As a result of this sale, we recorded a $1.3 billion increase in equity held by NCI and an increase in Sempra’s shareholders’ equity of $1.4 billion, net of $173 million in transaction costs and $490 million in tax impacts, including the tax effect of the sale and changes to a deferred income tax liability related to outside basis differences in SI Partners. Transaction costs include $149 million paid to KKR for reimbursement of certain expenses that KKR incurred in connection with closing the transaction.

Prior to the closing of the transactions contemplated under the KKR Purchase Agreement on October 1, 2021, we completed an internal legal reorganization to consolidate the assets of Sempra LNG Holding, LP and our ownership of IEnova under Sempra Global, which was renamed SI Partners.

Pursuant to the KKR Purchase Agreement, we have agreed to indemnify SI Partners for, among other things, certain losses arising from liabilities of SI Partners and its subsidiaries to the extent not primarily relating to the undertaking of the business of SI Partners, and we have agreed to indemnify KKR for losses attributable to pre-closing taxes.

SI Partners has two authorized classes of units, designated as “Class A Units” (which are common voting units) and “Sole Risk Interests.” If KKR approves our request that a project not be pursued jointly, or if KKR decides not to participate in any proposed project for which we nevertheless desire to make a positive final investment decision, we may proceed with such project either independently through a different investment vehicle or as a “Sole Risk Project” within SI Partners and receive Sole Risk Interests in respect thereof. Sole Risk Projects are separated from other SI Partners projects and are conducted at our sole cost, expense and liability and we receive, through the acquisition of Sole Risk Interests, any economic and other benefits from such projects. KKR is not entitled to any benefits or rights in respect of any Sole Risk Project. The Guaymas-El Oro segment of the Sonora pipeline currently constitutes a Sole Risk Project. Until a specified date, KKR has certain discretionary rights to cause the Guaymas-El Oro segment of the Sonora pipeline to cease to be a Sole Risk Project and be pursued jointly within SI Partners.

At the closing of the sale of NCI in SI Partners to KKR, Sempra and KKR entered into a limited partnership agreement (the LP Agreement), which governs our and their respective rights and obligations in respect of our ownership interests in SI Partners. The LP Agreement contains certain default remedies if we or KKR fails to fund any amounts required to be funded under the LP Agreement. The LP Agreement also requires that SI Partners distribute to us and to KKR at least 85% of distributable cash of SI Partners and its subsidiaries on a quarterly basis, subject to certain exceptions and reserves. Generally, distributions from SI

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Partners are made to us and KKR on a pro rata basis in accordance with our and their respective ownership interests in SI Partners. However, KKR is entitled to certain priority distributions in the event of material deviations between certain specified projected cash flows and actual cash flows. Additionally, KKR is entitled to certain priority distributions in the event a specified project that reaches a positive final investment decision does not have projected internal rates of return over a specified threshold or in the event we have not made a positive final investment decision by a certain date on specified LNG projects that are currently in development.

In addition, under the LP Agreement, both parties are granted customary registration rights in the event of an initial public offering of SI Partners, which is subject to certain consent rights of KKR.

At the closing of the transactions contemplated under the KKR Purchase Agreement, SI Partners entered into a management agreement with Sempra to engage Sempra for certain staffing and general and administrative services. The management agreement governs the services that Sempra provides to SI Partners and the charges associated with those services.

Sale of NCI in SI Partners to ADIA. On June 1, 2022, Sempra and ADIA consummated the transaction contemplated under a purchase and sale agreement dated December 21, 2021 (the ADIA Purchase Agreement). Pursuant to the ADIA Purchase Agreement, ADIA acquired Class A Units representing a 10% NCI in SI Partners for a purchase price of $1.7 billion. Following the closing of the transaction, Sempra, KKR and ADIA directly or indirectly own 70%, 20%, and 10%, respectively, of the outstanding Class A Units of SI Partners, which excludes the non-voting Sole Risk Interests held only by Sempra. As a result of this sale to ADIA, we recorded a $709 million increase in equity held by NCI and an increase in Sempra’s shareholders’ equity of $710 million, net of $12 million in transaction costs and $300 million in tax impacts. Transaction costs include $10 million paid to ADIA for reimbursement of certain expenses that ADIA incurred in connection with closing the transaction.

At the closing of the sales of NCI in SI Partners to KKR and ADIA, SI Partners indirectly owned 99.9% of the outstanding shares of IEnova. To the extent we acquire additional shares of IEnova after each respective closing, such additional shares will be acquired by SI Partners, and KKR and ADIA will provide 20% and 10%, respectively, of the funding.

At the closing, KKR and ADIA (the Minority Partners) and Sempra entered into a second amended and restated agreement of limited partnership of SI Partners (the Amended LP Agreement), which governs their respective rights and obligations in respect of their ownership of SI Partners. Under the Amended LP Agreement, matters are decided generally by majority vote and the managers designated by Sempra, KKR and ADIA each, as a group, have voting power equivalent to the ownership percentage of their respective designating limited partner. Sempra maintains control of SI Partners. However, SI Partners and its controlled subsidiaries are prohibited from taking certain limited actions without the prior written approval of the Minority Partners (subject to each Minority Partner maintaining certain ownership thresholds in SI Partners). The minority protections held by ADIA constitute a subset of the minority protections granted to KKR.

The terms of the Amended LP Agreement applicable to ADIA in relation to capital contributions and distributions are generally consistent with those granted to KKR, with adjustments and limitations to take into account ADIA’s relative ownership percentage, including limiting ADIA’s priority distribution rights to the failure of certain proposed projects to receive a positive final investment decision by a certain date or to achieve specified thresholds of projected internal rates of return or leverage. The transfer rights and restrictions and registration rights in the Amended LP Agreement applicable to ADIA are also generally consistent with those granted to KKR, with adjustments and limitations to take into account ADIA’s relative ownership percentage, including a general restriction on ADIA transferring its interests in SI Partners to third parties (other than pursuant to certain specified permitted transfers) for a specified period following its entry into the Amended LP Agreement.

SI Partners Subsidiaries. In May 2021, we acquired 381,015,194 publicly owned shares of IEnova in exchange for 12,306,777 newly issued shares of our common stock upon completion of our exchange offer launched in the U.S. and Mexico, which increased our ownership interest in IEnova from 70.2% to 96.4%. Upon completing the exchange offer, Sempra’s common stock became listed on the Mexican Stock Exchange under the trading symbol SRE.MX. We acquired the IEnova shares at an exchange ratio of 0.0323 shares of our common stock for each one IEnova share. In connection with the exchange offer, we recorded a $1.4 billion decrease in equity held by NCI and an increase in Sempra’s shareholders’ equity of $1.4 billion, net of $12 million in transactions costs.

In September 2021, we acquired 51,014,545 publicly owned shares of IEnova for 4.0 billion Mexican pesos (approximately $202 million in U.S. dollars) in cash upon completion of our tender offer launched in the U.S. and Mexico in August 2021, which increased our ownership interest in IEnova from 96.4% to 99.9%. We acquired these IEnova shares at a price of 78.97 Mexican pesos per share (approximately $3.95 per share in U.S. dollars). In connection with the cash tender offer, we recorded a $188 million decrease in equity held by NCI and a decrease in Sempra’s shareholders’ equity of $17 million, including $4 million in transaction costs.

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As a result of the increase in our ownership interest in IEnova, we recorded an increase in Sempra’s shareholders’ equity of $72 million offset by a deferred income tax asset related to the outside basis difference in IEnova’s shares. Upon completing the sale of a 20% NCI in SI Partners to KKR in October 2021, which we discuss above, we recorded $72 million in net income tax expense related to the utilization of this deferred income tax asset.

Following the exchange offer and the cash tender offer, IEnova’s shares were delisted from the Mexican Stock Exchange effective October 15, 2021. In connection with the delisting, we are maintaining a trust for the purpose of purchasing the 1,212,981 IEnova shares that remained publicly owned as of the completion of the cash tender offer for 78.97 Mexican pesos per share, the same price per share that was offered in our cash tender offer. The trust was to be in place through the earlier of April 14, 2022 or the date on which we acquired all the remaining publicly owned IEnova shares. On April 13, 2022, the term of the trust was amended so that it will remain in place until we terminate it, subject to any maximum term under applicable Mexican law. As of February 21, 2023, an aggregate of 890,170 of the remaining publicly owned IEnova shares had been acquired by such trust.

In 2020, IEnova repurchased 77,122,780 shares of its outstanding common stock held by NCI for approximately $231 million, resulting in an increase in Sempra’s ownership interest in IEnova from 66.6% to 70.2%.

In 2020, Sempra Infrastructure purchased additional shares in ICM Ventures Holdings B.V. for $9 million, increasing its ownership interest from 53.7% to 82.5%. ICM Ventures Holdings B.V. owns certain permits and land where Sempra Infrastructure is developing a terminal in the vicinity of Manzanillo for the receipt, storage and delivery of refined products. In July 2021, Sempra Infrastructure acquired the remaining 17.5% interest held by NCI in ICM Ventures Holdings B.V. for $7 million.

In 2020, an affiliate of TotalEnergies SE acquired a 16.6% ownership interest in ECA LNG Phase 1.

In 2020, Sempra Infrastructure purchased for $7 million the 24.6% minority interest in Liberty Gas Storage LLC, increasing Sempra Infrastructure’s ownership in Liberty Gas Storage LLC to 100%. Prior to the purchase, the minority partner converted $22 million in notes payable due from Sempra Infrastructure to equity. As a result of the purchase, we recorded an increase in Sempra’s shareholders’ equity of $2 million for the difference between the carrying value and fair value related to the change in ownership.

Parent and Other

As we discuss in Note 5, in December 2021, Parent and other sold its equity interest in PXiSE.

Discontinued Operations

As we discuss in Note 5, we completed the sales of our equity interests in our Peruvian and Chilean businesses in 2020. The minority interests in Luz del Sur and Tecsur were deconsolidated upon the sale of our Peruvian businesses in April 2020, and the minority interests in Chilquinta Energía and its subsidiaries were deconsolidated upon the sale of our Chilean businesses in June 2020.

REVENUES

See Note 3 for a description of significant accounting policies for revenues.

OPERATION AND MAINTENANCE EXPENSES

Operation and Maintenance includes O&M and general and administrative costs, consisting primarily of personnel costs, purchased materials and services, insurance, rent and litigation expense (except for litigation expense included in Aliso Canyon Litigation and Regulatory Matters).

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

Our natural gas distribution utility in Mexico, Ecogas, and the majority of our former operations in South America (until our sale of these operations in 2020) use their local currency as their functional currency. The assets and liabilities of their foreign operations are translated into U.S. dollars at current exchange rates at the end of the reporting period, and revenues and expenses are translated at average exchange rates for the year. The resulting noncash translation adjustments do not enter into the calculation of earnings or retained earnings, but are reflected in OCI and in AOCI.

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Cash flows of these consolidated foreign subsidiaries are translated into U.S. dollars using average exchange rates for the period. We report the effect of exchange rate changes on cash balances held in foreign currencies in Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash on Sempra’s Consolidated Statements of Cash Flows.

Foreign currency transaction losses in a currency other than Sempra Infrastructure’s functional currency were $24 million, $18 million and $25 million for the years ended December 31, 2022, 2021 and 2020, respectively, and are included in Other Income (Expense), Net, on Sempra’s Consolidated Statements of Operations. Foreign currency transaction gains (losses) in a currency other than the functional currencies of our operations in South America are included in discontinued operations.

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TRANSACTIONS WITH AFFILIATES

We summarize amounts due from and to unconsolidated affiliates at Sempra, SDG&E and SoCalGas in the following table.


AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES
(Dollars in millions)
	December 31,
	2022		2021
Sempra:
Tax sharing arrangement with Oncor Holdings	$	41	$	18
Various affiliates	13		5
Total due from unconsolidated affiliates – current	$	54	$	23

Sempra Infrastructure – IMG – Note due March 15, 2022, net of allowance for credit losses of $1 at December 31, 2021(1)	$	—	$	637
Total due from unconsolidated affiliates – noncurrent	$	—	$	637



Sempra Infrastructure(2):
TAG Pipelines Norte, S. de R.L. de C.V.:
5.5% Note due January 9, 2024	$	(40)	$	(69)
5.5% Note due January 14, 2025	(23)		(21)
5.5% Note due July 16, 2025	(21)		(20)
5.5% Note due January 14, 2026	(19)		—
5.5% Note due July 14, 2026	(11)		—
TAG – 5.74% Note due December 17, 2029	(187)		(177)
Total due to unconsolidated affiliates – noncurrent	$	(301)	$	(287)
SDG&E:


Sempra	$	(49)	$	(40)
SoCalGas	(72)		(48)
Various affiliates	(14)		(9)
Total due to unconsolidated affiliates – current	$	(135)	$	(97)

Income taxes due from Sempra(3)	$	10	$	19
SoCalGas:
SDG&E	$	72	$	48
Various affiliates	5		1
Total due from unconsolidated affiliates – current	$	77	$	49

Sempra	$	(36)	$	(36)


Total due to unconsolidated affiliates – current	$	(36)	$	(36)

Income taxes due (to) from Sempra(3)	$	(16)	$	6

(1) At December 31, 2021, represents a Mexican peso-denominated revolving line of credit for up to 14.2 billion Mexican pesos or approximately $691 U.S. dollar-equivalent at a variable interest rate based on the 91-day Interbank Equilibrium Interest Rate plus 220 bps (8.06% at December 31, 2021). At December 31, 2021, $2 of accrued interest receivable is included in Due from Unconsolidated Affiliates – Current. In March 2022, Sempra Infrastructure amended and restated the revolving line of credit to a U.S. dollar-denominated note in the amount of $625 at a variable interest rate based on the adjusted 1-month SOFR plus 180 bps and extended the maturity date to March 15, 2023. In July 2022, this note receivable was paid in full.

(2) U.S. dollar-denominated loans at fixed interest rates. Amounts include principal balances plus accumulated interest outstanding.

(3) SDG&E and SoCalGas are included in the consolidated income tax return of Sempra, and their respective income tax expense is computed as an amount equal to that which would result from each company having always filed a separate return. Amounts include current and noncurrent income taxes due to/from Sempra.

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The following table summarizes income statement information from unconsolidated affiliates.


INCOME STATEMENT IMPACT FROM UNCONSOLIDATED AFFILIATES
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra:
Revenues	$	41	$	31	$	37
Cost of sales	—		11		45
Interest income	16		50		56
Interest expense	15		15		14
SDG&E:
Revenues	$	16	$	11	$	6
Cost of sales	92		103		79
SoCalGas:
Revenues	$	100	$	98	$	88
Cost of sales(1)	(9)		1		—

(1) Includes net commodity costs from natural gas transactions with unconsolidated affiliates.

Sempra California

Sempra, SDG&E and SoCalGas provide certain services to each other and are charged an allocable share of the cost of such services. Also, from time-to-time, SDG&E and SoCalGas may make short-term advances of surplus cash to Sempra at interest rates based on the federal funds effective rate plus a margin of 13 to 20 bps, depending on the loan balance.

SoCalGas provides natural gas transportation and storage services to SDG&E and charges SDG&E for such services monthly. SoCalGas records revenues and SDG&E records a corresponding amount to cost of sales.

SDG&E and SoCalGas charge one another, as well as other Sempra affiliates, for shared asset depreciation. SoCalGas and SDG&E record revenues and the affiliates record corresponding amounts to O&M.

The natural gas supply for SDG&E’s and SoCalGas’ core natural gas customers is purchased by SoCalGas as a combined procurement portfolio managed by SoCalGas. Core customers are primarily residential and small commercial and industrial customers. This core gas procurement function is considered a shared service; therefore, revenues and costs related to SDG&E are presented net in SoCalGas’ Statements of Operations.

SDG&E has a 20-year contract for up to 155 MW of renewable power supplied from the ESJ wind power generation facility. Prior to March 2021, ESJ was a 50% owned and unconsolidated JV of Sempra Infrastructure. In March 2021, Sempra Infrastructure completed the acquisition of the remaining 50% interest in ESJ and ESJ became a consolidated subsidiary of Sempra. A second 20-year contract between SDG&E and ESJ for up to 108 MW of renewable power supplied from the same facility commenced in January 2022.

Sempra Infrastructure

Sempra Infrastructure provides maintenance and administrative services to TAG Pipelines Norte, S. de. R.L. de C.V. Additionally, Sempra Infrastructure subleases office space for personnel to TAG Pipelines Norte, S. de. R.L. de C.V. and TAG.

Sempra Infrastructure has agreements with Cameron LNG JV to provide certain business services and project development services related to the Cameron LNG Phase 2 project. Sempra Infrastructure had an agreement to provide transportation services to Cameron LNG JV for capacity on the Cameron Interstate Pipeline through August 2020, when Cameron LNG JV achieved commercial operations of Train 3 of its Phase 1 project.

Sempra provided guarantees related to Cameron LNG JV’s construction-period debt that were terminated in March 2021, as well as guarantees related to Cameron LNG JV’s SDSRA and CFIN’s Support Agreement that remain outstanding. We discuss these guarantees in Note 6.

RESTRICTED NET ASSETS

Sempra

As we discuss below, SDG&E, SoCalGas and certain other Sempra subsidiaries have restrictions on the amount of funds that can be transferred to Sempra by dividend, advance or loan as a result of conditions imposed by various regulators. Additionally,

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certain other Sempra subsidiaries are subject to various financial and other covenants and other restrictions contained in debt and credit agreements (described in Note 7) and in other agreements that limit the amount of funds that can be transferred to Sempra. At December 31, 2022, Sempra was in compliance with all covenants related to its debt agreements.

At December 31, 2022, the amount of restricted net assets of consolidated entities of Sempra, including SDG&E and SoCalGas discussed below, that may not be distributed to Sempra in the form of a loan or dividend is $15.3 billion. Additionally, the amount of restricted net assets of our unconsolidated entities is $14.0 billion. Although the restrictions cap the amount of funding that the various operating subsidiaries can provide to Sempra, we do not believe these restrictions will have a significant impact on our ability to access cash to pay dividends and fund operating needs.

As we discuss in Note 6, $2.0 billion of Sempra’s retained earnings represents undistributed earnings of equity method investments at December 31, 2022.

Sempra California

The CPUC’s regulation of SDG&E’s and SoCalGas’ capital structures limits the amounts available for dividends and loans to Sempra. At December 31, 2022, Sempra could have received combined loans and dividends of approximately $504 million from SDG&E and approximately $347 million from SoCalGas.

The payment and amount of future dividends by SDG&E and SoCalGas are at the discretion of their respective boards of directors. The following restrictions limit the amount of retained earnings that may be paid as common stock dividends or loaned to Sempra from either utility:

▪The CPUC requires that SDG&E’s and SoCalGas’ common equity ratios be no lower than one percentage point below the CPUC-authorized percentage of each entity’s authorized capital structure. The authorized percentage at December 31, 2022 is 52% at both SDG&E and SoCalGas.

▪SDG&E and SoCalGas each have a revolving credit line that requires it to maintain a ratio of consolidated indebtedness to consolidated capitalization (as defined in the agreements) of no more than 65%, as we discuss in Note 7.

Based on these restrictions, at December 31, 2022, SDG&E’s restricted net assets were $8.6 billion and SoCalGas’ restricted net assets were $6.4 billion, which could not be transferred to Sempra.

Sempra Texas Utilities

Sempra owns an indirect, 100% interest in Oncor Holdings, which owns an 80.25% interest in Oncor. As we discuss in Note 6, we account for our investment in Oncor Holdings under the equity method. Significant restrictions at Oncor that limit the amount that may be paid as dividends to Sempra include:

▪In connection with ring-fencing measures, governance mechanisms and commitments, Oncor may not pay any dividends or make any other distributions (except for contractual tax payments) if a majority of its independent directors or a minority member director determines that it is in the best interests of Oncor to retain such amounts to meet expected future requirements.

▪Oncor must remain in compliance with its debt-to-equity ratio established by the PUCT for ratemaking purposes and may not pay dividends or other distributions (except for contractual tax payments) if that payment would cause it to exceed its PUCT authorized debt-to-equity ratio. Oncor’s authorized regulatory capital structure is 57.5% debt to 42.5% equity at December 31, 2022.

▪If the credit rating on 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. At December 31, 2022, all of Oncor’s senior secured ratings were above BBB.

▪Oncor’s revolving credit line and certain of its other debt agreements require it to maintain a consolidated senior debt-to-capitalization ratio of no more than 65% and observe certain affirmative covenants. At December 31, 2022, Oncor was in compliance with these covenants.

Based on these restrictions, at December 31, 2022, Oncor’s restricted net assets were $13.5 billion, which could not be transferred to its owners.

Sempra owns an indirect, 50% interest in Sharyland Holdings, which owns a 100% interest in Sharyland Utilities. Significant restrictions related to this equity method investment include:

▪Sharyland Utilities may not pay dividends or make other distributions (except for contractual payments) without the consent of the JV partner.

▪Sharyland Utilities must remain in compliance with the capital structure established by the PUCT for ratemaking purposes and may not pay dividends or other distributions (except for contractual tax payments) if that payment would cause its debt to exceed 60% of its capital structure.

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▪Sharyland Utilities has a revolving credit line and a term loan credit agreement that require it to maintain a consolidated debt-to-capitalization ratio of no more than 70% and observe certain customary reporting requirements and other affirmative covenants. At December 31, 2022, Sharyland Utilities was in compliance with these and all other covenants.

Based on these restrictions, at December 31, 2022, Sharyland Utilities’ restricted net assets were $105 million, which could not be transferred to its owners.

Sempra Infrastructure

Significant restrictions at Sempra Infrastructure include:

▪Partnerships and JVs at Sempra Infrastructure may not pay dividends or make other distributions (except for contractual payments) without the consent of the partners.

▪Sempra Infrastructure has an equity method investment in Cameron LNG JV, which has debt agreements that require the establishment and funding of project accounts to which the proceeds of loans, project revenues and other amounts are deposited and applied in accordance with the debt agreements. The debt agreements require the JV to maintain reserve accounts in order to pay the project debt service, and also contain restrictions related to the payment of dividends and other distributions to the members of the JV.

Pursuant to the transfer restriction agreement under the debt agreements, Sempra must retain at least 10% of the indirect fully diluted economic and beneficial ownership interest in Cameron LNG JV. In addition, at all times, a Sempra controlled (but not necessarily wholly owned) subsidiary must directly own 50.2% of the membership interests of Cameron LNG JV.

To support Cameron LNG JV’s obligations under its debt agreements, Cameron LNG JV has granted security over all of its assets, subject to customary exceptions, and all equity interests in Cameron LNG JV were pledged to HSBC Bank USA, National Association, as security trustee for the benefit of all of Cameron LNG JV’s creditors. As a result, an enforcement action by the lenders taken in accordance with the finance documents could result in the exercise of such security interests by the lenders and the loss of ownership interests in Cameron LNG JV by Sempra and the other project partners.

Under these restrictions, net assets of Cameron LNG JV of approximately $396 million are restricted at December 31, 2022.

▪Mexico requires domestic corporations to maintain minimum legal reserves as a percentage of capital stock, resulting in restricted net assets of $239 million at Sempra Infrastructure’s consolidated Mexican subsidiaries at December 31, 2022.

▪IEnova has restrictions under trust and debt agreements related to pipeline projects to pay for rights-of-way, license fees, permits, topographic surveys and other costs. Under these restrictions, net assets totaling $2 million are restricted at December 31, 2022.

▪TAG, a 50% owned and unconsolidated JV of Sempra Infrastructure, has a long-term debt agreement that requires it to maintain a reserve account to pay the projects’ debt. Under these restrictions, net assets totaling $64 million are restricted at December 31, 2022.

▪As we discuss in Note 16, Sempra Infrastructure drew against and fully exhausted Gazprom’s letters of credit in April 2022 due to Gazprom’s non-renewal of such letters of credit as required under its LNG storage and regasification agreement. As a result, Sempra Infrastructure has restricted cash for funds drawn from the letters of credit. Under these restrictions, net assets totaling $89 million are restricted at December 31, 2022.

Based on these restrictions, at December 31, 2022, Sempra Infrastructure’s restricted net assets of its consolidated and unconsolidated entities were $330 million and $460 million, respectively, which could not be transferred to its owners.

OTHER INCOME (EXPENSE), NET

Other Income (Expense), Net on the Consolidated Statements of Operations consists of the following:

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OTHER INCOME (EXPENSE), NET
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra:
Allowance for equity funds used during construction	$	143	$	133	$	128
Investment (losses) gains, net(1)	(42)		50		41
Gains (losses) on interest rate and foreign exchange instruments, net	11		(28)		(67)
Foreign currency transaction losses, net(2)	(24)		(18)		(25)
Non-service component of net periodic benefit cost	(59)		(67)		(102)
Interest on regulatory balancing accounts, net	26		6		14
Sundry, net	(31)		(18)		(37)
Total	$	24	$	58	$	(48)
SDG&E:
Allowance for equity funds used during construction	$	88	$	81	$	79
Non-service component of net periodic benefit cost	(11)		(13)		(20)
Interest on regulatory balancing accounts, net	18		6		9
Sundry, net	(3)		(10)		(16)
Total	$	92	$	64	$	52
SoCalGas:
Allowance for equity funds used during construction	$	55	$	48	$	41
Non-service component of net periodic benefit cost	(42)		(40)		(54)
Interest on regulatory balancing accounts, net	8		—		5
Sundry, net	(29)		(22)		(20)
Total	$	(8)	$	(14)	$	(28)

(1) Represents net investment (losses) gains on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are offset by corresponding changes in compensation expense related to the plans, recorded in O&M on the Consolidated Statements of Operations.

(2) Includes losses of $11, $23 and $42 in 2022, 2021 and 2020, respectively, from translation to U.S. dollars of a Mexican peso-denominated loan to IMG, which are offset by corresponding amounts included in Equity Earnings on the Consolidated Statements of Operations.

NOTE 2. NEW ACCOUNTING STANDARDS

We describe below recent accounting pronouncements that have had or may have a significant effect on our results of operations, financial condition, cash flows or disclosures.

ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”: ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. In addition to other changes, this standard amends ASC 470-20, “Debt with Conversion and Other Options,” by removing the accounting models for instruments with beneficial and cash conversion features. The standard also amends certain guidance in ASC 260, “Earnings Per Share,” for the computation of EPS for convertible instruments and contracts on an entity’s own equity. For public entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. An entity can use either a full or modified retrospective approach to adopt ASU 2020-06 and must disclose, in the period of adoption, EPS transition information about the effect of the change on affected per-share amounts. We adopted the standard on January 1, 2022 using a modified retrospective approach and the adoption did not materially impact our financial statements or per-share amounts.

ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU 2022-06, “Deferral of the Sunset Date of Topic 848”: ASU 2022-06 extends the time when entities can utilize the reference rate reform relief provided by ASU 2020-04 from December 31, 2022 to December 31, 2024. Under ASU 2020-04, we elected to apply certain optional expedients for contract modifications to financial instruments that were impacted by the discontinuance of LIBOR. We will continue to apply various optional expedients for contract modifications for our financial instruments affected by the reference rate reform through December 31, 2024 as extended by ASU 2022-06. The application of these practical expedients does not impact our financial statements.

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NOTE 3. REVENUES

The following table disaggregates our revenues from contracts with customers by major service line and market and provides a reconciliation to total revenues by segment. The majority of our revenue is recognized over time.


DISAGGREGATED REVENUES
(Dollars in millions)
	SDG&E		SoCalGas		Sempra Infrastructure		Consolidating adjustments and Parent and other		Sempra
	Year ended December 31, 2022
By major service line:
Utilities	$	5,586	$	6,459	$	89	$	(116)	$	12,018
Energy-related businesses	—		—		1,760		(56)		1,704
Revenues from contracts with customers	$	5,586	$	6,459	$	1,849	$	(172)	$	13,722
By market:
Gas	$	899	$	6,459	$	1,270	$	(103)	$	8,525
Electric	4,687		—		579		(69)		5,197
Revenues from contracts with customers	$	5,586	$	6,459	$	1,849	$	(172)	$	13,722

Revenues from contracts with customers	$	5,586	$	6,459	$	1,849	$	(172)	$	13,722
Utilities regulatory revenues	252		381		—		—		633
Other revenues	—		—		70		14		84
Total revenues	$	5,838	$	6,840	$	1,919	$	(158)	$	14,439

	Year ended December 31, 2021
By major service line:
Utilities	$	5,144	$	5,424	$	81	$	(109)	$	10,540
Energy-related businesses	—		—		1,165		(29)		1,136
Revenues from contracts with customers	$	5,144	$	5,424	$	1,246	$	(138)	$	11,676
By market:
Gas	$	790	$	5,424	$	856	$	(101)	$	6,969
Electric	4,354		—		390		(37)		4,707
Revenues from contracts with customers	$	5,144	$	5,424	$	1,246	$	(138)	$	11,676

Revenues from contracts with customers	$	5,144	$	5,424	$	1,246	$	(138)	$	11,676
Utilities regulatory revenues	360		91		—		—		451
Other revenues	—		—		751		(21)		730
Total revenues	$	5,504	$	5,515	$	1,997	$	(159)	$	12,857

	Year ended December 31, 2020
By major service line:
Utilities	$	4,920	$	4,571	$	58	$	(94)	$	9,455
Energy-related businesses	—		—		854		1		855
Revenues from contracts with customers	$	4,920	$	4,571	$	912	$	(93)	$	10,310
By market:
Gas	$	692	$	4,571	$	623	$	(90)	$	5,796
Electric	4,228		—		289		(3)		4,514
Revenues from contracts with customers	$	4,920	$	4,571	$	912	$	(93)	$	10,310

Revenues from contracts with customers	$	4,920	$	4,571	$	912	$	(93)	$	10,310
Utilities regulatory revenues	393		177		—		—		570
Other revenues	—		—		488		2		490
Total revenues	$	5,313	$	4,748	$	1,400	$	(91)	$	11,370

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REVENUES FROM CONTRACTS WITH CUSTOMERS

Revenues from contracts with customers are primarily related to the transmission, distribution and storage of natural gas and the generation, transmission and distribution of electricity through our regulated utilities. We also provide other midstream and renewable energy-related services. We assess our revenues on a contract-by-contract basis as well as a portfolio basis to determine the nature, amount, timing and uncertainty, if any, of revenues being recognized.

We generally recognize revenues when performance of the promised commodity service is provided to customers and invoices are issued for an amount that reflects the consideration we are entitled to in exchange for those services. We consider the delivery and transmission of natural gas and electricity and providing of natural gas storage services as ongoing and integrated services. Generally, natural gas or electricity services are received and consumed by the customer simultaneously. Performance obligations related to these services are satisfied over time and represent a series of distinct services that are substantially the same and that have the same pattern of transfer to the customers. We recognize revenue based on units delivered, as the satisfaction of respective performance obligations can be directly measured by the amount of natural gas or electricity delivered to the customer. In most cases, the right to consideration from the customer directly corresponds to the value transferred to the customer and we recognize revenue in the amount that we have the right to invoice.

The payment terms in customer contracts vary. Typically, we have an unconditional right to customer payments, which are due after the performance obligation to the customer is satisfied. The term between invoicing and when payment is due is typically between 10 and 90 days.

We exclude sales and usage-based taxes from revenues. In addition, SDG&E and SoCalGas pay franchise fees to operate in various municipalities. SDG&E and SoCalGas bill these franchise fees to their customers based on a CPUC-authorized rate. These franchise fees, which are required to be paid regardless of SDG&E’s and SoCalGas’ ability to collect from the customer, are accounted for on a gross basis and reflected in utilities revenues from contracts with customers and operating expense.

Utilities Revenues

Utilities revenues represent the majority of our consolidated revenues from contracts with customers and include:

▪The transmission, distribution and storage of natural gas at:

◦SDG&E

◦SoCalGas

◦Sempra Infrastructure’s Ecogas

▪The generation, transmission and distribution of electricity at SDG&E.

Utilities revenues are derived from and recognized upon the delivery of natural gas or electricity services to customers. Amounts that we bill customers are based on tariffs set by regulators within the respective state or country. For SDG&E and SoCalGas, which follow the provisions of U.S. GAAP governing rate-regulated operations as we discuss in Note 1, amounts that we bill to customers also include adjustments for previously recognized regulatory revenues.

SDG&E, SoCalGas and Ecogas recognize revenues based on regulator-approved revenue requirements, which allow the utilities to recover their reasonable operating costs and provides the opportunity to realize their authorized rates of return on their investments. While SDG&E’s and SoCalGas’ revenues are not affected by actual sales volumes, the pattern of their revenue recognition during the year is affected by seasonality. SDG&E and SoCalGas recognize annual authorized revenue for customers using seasonal factors established in applicable proceedings. This generally results in a significant portion of operating revenues being recognized in the third quarter of each year for SDG&E and in the first and fourth quarters of each year for SoCalGas.

SDG&E has an arrangement to provide the California ISO with the ability to control its high-voltage transmission lines for prices approved by the FERC. Revenue is recognized over time as access is provided to the California ISO.

Factors that can affect the amount, timing and uncertainty of revenues and cash flows include weather, seasonality and timing of customer billings, which may result in unbilled revenues that can vary significantly from month to month and generally approximate one-half month’s deliveries.

SDG&E and SoCalGas recognize revenues from the sale of allocated California GHG emission allowances at quarterly auctions administered by CARB. GHG allowances are delivered to CARB in advance of the quarterly auctions, and SDG&E and SoCalGas have the right to payment when the GHG allowances are sold at auction. GHG revenue is recognized on a point in time basis within the quarter the auction is held. SDG&E and SoCalGas balance costs and revenues associated with the GHG program through regulatory balancing accounts.

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Energy-Related Businesses Revenues

Revenues at Sempra Infrastructure typically represent revenues from long-term, U.S. dollar-based contracts with customers for the sale of natural gas and LNG, as well as storage and transportation of natural gas. Invoiced amounts are based on the volume of natural gas delivered and contracted prices.

We recognize storage revenue from firm capacity reservation agreements, under which we collect a fee for reserving storage capacity for customers in our storage facilities. Under these firm agreements, customers pay a monthly fixed reservation fee based on the storage capacity reserved rather than the actual volumes stored. For the fixed-fee component, revenue is recognized on a straight-line basis over the term of the contract. We bill customers for any capacity used in excess of the contracted capacity and such revenues are recognized in the month of occurrence. We also recognize revenue for interruptible storage services.

We generate pipeline transportation revenues from firm agreements, under which customers pay a fee for reserving transportation capacity. Revenue is recognized when the volumes are delivered to the customers’ agreed upon delivery point. We recognize revenues for our stand-ready obligation to provide capacity and transportation services throughout the contractual delivery period, as the benefits are received and consumed simultaneously as customers utilize pipeline capacity for the transport and receipt of natural gas and LPG. Invoiced amounts are based on a variable usage fee and a fixed capacity charge, adjusted for the Consumer Price Index, the effects of any foreign currency impacts and the actual quantity of commodity transported.

Sempra Infrastructure develops, invests in and operates solar and wind facilities that have long-term PPAs to sell the electricity and the related green energy attributes they generate to customers, generally load serving entities, industrial and other customers. Load serving entities will sell electric service to their end-users and wholesale customers immediately upon receipt of our power delivery, and industrial and other customers immediately consume the electricity to run their facilities, and thus, we recognize the revenue under the PPAs as the electricity is generated and delivered. We invoice customers based on the volume of energy delivered at rates pursuant to the PPAs.

TdM is a natural gas-fired power plant that generates revenues from selling electricity and/or resource adequacy to the California ISO and to governmental, public utility and wholesale power marketing entities, as the power is delivered at the interconnection point.

Sempra Infrastructure sells natural gas to the CFE and other customers under supply agreements. Sempra Infrastructure recognizes the revenue from the sale of natural gas upon transfer of the natural gas via pipelines to customers at the agreed upon delivery points, and in the case of the CFE, at its thermoelectric power plants.

Remaining Performance Obligations

We do not disclose information about remaining performance obligations for (a) contracts with an original expected length of one year or less, (b) variable consideration recognized at the amount at which we have the right to invoice for services performed, or (c) variable consideration allocated to wholly unsatisfied performance obligations.

For contracts greater than one year, at December 31, 2022, we expect to recognize revenue related to the fixed fee component of the consideration as shown below. Sempra’s remaining performance obligations primarily relate to capacity agreements for natural gas storage and transportation at Sempra Infrastructure and transmission line projects at SDG&E. SoCalGas did not have any remaining performance obligations at December 31, 2022.


REMAINING PERFORMANCE OBLIGATIONS(1)
(Dollars in millions)
	Sempra		SDG&E
2023	$	396	$	4
2024	361		4
2025	359		4
2026	358		4
2027	355		4
Thereafter	4,134		60
Total revenues to be recognized	$	5,963	$	80

(1) Excludes intercompany transactions.

Contract Liabilities from Revenues from Contracts with Customers

From time to time, we receive payments in advance of satisfying the performance obligations associated with customer contracts. We defer such revenues as contract liabilities and recognize them in earnings as the performance obligations are satisfied.

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Activities within Sempra’s and SDG&E’s contract liabilities are presented below. There were no contract liabilities at SoCalGas in 2022, 2021 or 2020. As we discuss in Note 16, Sempra Infrastructure drew against and fully exhausted Gazprom’s letters of credit in April 2022 due to Gazprom’s non-renewal of such letters of credit as required under its LNG storage and regasification agreement. Sempra Infrastructure recorded a contract liability for the funds drawn from the letters of credit as payments received in advance. Gazprom did not pay its invoices from March 2022 through July 2022, so funds drawn from the letters of credit were used to fully offset such nonpayment, which have been reflected as revenue from performance obligations satisfied during the reporting period.


CONTRACT LIABILITIES
(Dollars in millions)
	2022		2021		2020
Sempra:
Contract liabilities at January 1	$	(278)	$	(207)	$	(163)
Revenue from performance obligations satisfied during reporting period	131		52		4
Payments received in advance	(105)		(123)		(48)
Contract liabilities at December 31(1)	$	(252)	$	(278)	$	(207)
SDG&E:
Contract liabilities at January 1	$	(83)	$	(87)	$	(91)
Revenue from performance obligations satisfied during reporting period	4		4		4
Contract liabilities at December 31(2)	$	(79)	$	(83)	$	(87)

(1) Balances at December 31, 2022, 2021 and 2020 include $45, $116 and $52, respectively, in Other Current Liabilities and $207, $162 and $155, respectively, in Deferred Credits and Other.

(2) Balances at December 31, 2022, 2021 and 2020 include $4 in Other Current Liabilities and $75, $79 and $83, respectively, in Deferred Credits and Other.

Receivables from Revenues from Contracts with Customers

The table below shows receivable balances associated with revenues from contracts with customers on the Consolidated Balance Sheets.


RECEIVABLES FROM REVENUES FROM CONTRACTS WITH CUSTOMERS
(Dollars in millions)
	December 31,
	2022		2021
Sempra:
Accounts receivable – trade, net(1)	$	2,291	$	1,886
Accounts receivable – other, net	25		19
Due from unconsolidated affiliates – current(2)	9		2
Other long-term assets(3)	9		70
Total	$	2,334	$	1,977
SDG&E:
Accounts receivable – trade, net(1)	$	799	$	715
Accounts receivable – other, net	12		9
Due from unconsolidated affiliates – current(2)	2		2
Other long-term assets(3)	6		25
Total	$	819	$	751
SoCalGas:
Accounts receivable – trade, net	$	1,295	$	1,084
Accounts receivable – other, net	13		10
Other long-term assets(3)	3		45
Total	$	1,311	$	1,139

(1) At December 31, 2022 and 2021, includes $72 and $24, respectively, of receivables due from customers that were billed on behalf of CCAs, which are not included in revenues.

(2) Amount is presented net of amounts due to unconsolidated affiliates on the Consolidated Balance Sheets, when right of offset exists.

(3) In connection with the COVID-19 pandemic and at the direction of the CPUC, SDG&E and SoCalGas enrolled residential and small business customers with past-due balances in long-term repayment plans.

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REVENUES FROM SOURCES OTHER THAN CONTRACTS WITH CUSTOMERS

Certain of our revenues are derived from sources other than contracts with customers and are accounted for under other accounting standards outside the scope of ASC 606.

Utilities Regulatory Revenues

Alternative Revenue Programs

We recognize revenues from alternative revenue programs when the regulator-specified conditions for recognition have been met and adjust these revenues as they are recovered or refunded through future utility service.

Decoupled Revenues. As we discuss above, the regulatory framework requires SDG&E and SoCalGas to recover authorized revenue based on estimated annual demand forecasts approved in regular proceedings before the CPUC. However, actual demand for natural gas and electricity will generally vary from CPUC-approved forecasted demand due to the impacts from weather volatility, energy efficiency programs, rooftop solar and other factors affecting consumption. The CPUC regulatory framework provides for SDG&E and SoCalGas to use a “decoupling” mechanism, which allows SDG&E and SoCalGas to record revenue shortfalls or excess revenues resulting from any difference between actual and forecasted demand to be recovered or refunded in authorized revenue in a subsequent period based on the nature of the account.

Incentive Mechanisms. The CPUC applies performance-based measures and incentive mechanisms to all California IOUs, under which SDG&E and SoCalGas have earnings potential above authorized base margins if they achieve or exceed specific performance and operating goals. Generally, for performance-based awards, if performance is above or below specific benchmarks, the utility is eligible for financial awards or subject to financial penalties.

Incentive awards are included in revenues when we receive required CPUC approval of the award, the timing of which may not be consistent from year to year. We would record penalties for results below the specified benchmarks against revenues when we believe it is probable that the CPUC would assess a penalty.

Other Cost-Based Regulatory Recovery

The CPUC, and the FERC as it relates to SDG&E, authorize SDG&E and SoCalGas to collect revenue requirements for operating costs and capital related costs (depreciation, taxes and return on rate base) from customers, including:

▪costs to purchase natural gas and electricity;

▪costs associated with administering public purpose, demand response, and customer energy efficiency programs;

▪other programmatic activities, such as gas distribution, gas transmission, gas storage integrity management and wildfire mitigation; and

▪costs associated with third party liability insurance premiums.

Authorized costs are recovered as the commodity service is delivered. To the extent authorized amounts collected vary from actual costs, the differences are generally recovered or refunded in a subsequent period based on the nature of the balancing account mechanism. In general, the revenue recognition criteria for balanced costs billed to customers are met at the time the costs are incurred. Because these costs are substantially recovered in rates through a balancing account mechanism, changes in these costs are reflected as changes in revenues. The CPUC and the FERC may impose various review procedures before authorizing recovery or refund of amounts accumulated for authorized programs, including limitations on the program’s total cost, revenue requirement limits or reviews of costs for reasonableness. These procedures could result in disallowances of recovery from ratepayers.

We discuss balancing accounts and their effects further in Note 4.

Other Revenues

Sempra Infrastructure generates lease revenues from certain of its natural gas and ethane pipelines, compressor stations, LPG storage facilities, a rail facility and refined products terminals. We discuss the recognition of lease income in Note 16.

Sempra Infrastructure has an agreement with Tangguh PSC to supply LNG to the ECA Regas Facility. Under the terms of the agreement, Tangguh PSC must either deliver the contracted number of cargoes or pay a diversion fee for non-delivery of LNG cargoes.

Sempra Infrastructure also recognizes other revenues associated with derivatives related to the sales of natural gas and electricity under short-term and long-term contracts and into the spot market and other competitive markets. Revenues include the net

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realized gains and losses on physical and derivative settlements and net unrealized gains and losses from the change in fair values of these derivatives.

NOTE 4. REGULATORY MATTERS

REGULATORY ASSETS AND LIABILITIES

We show the details of regulatory assets and liabilities in the following table and discuss them below. With the exception of regulatory balancing accounts, we generally do not earn a return on our regulatory assets until such time as a related cash expenditure has been made. Upon the occurrence of a cash expenditure associated with a regulatory asset, the related amounts are recoverable through a regulatory account mechanism for which we earn a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate. The periods during which we recognize a regulatory asset while we do not earn a return vary by regulatory asset.


REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	December 31,
	2022		2021
SDG&E:
Fixed-price contracts and other derivatives	$	(110)	$	(50)
Deferred income taxes recoverable in rates	296		125
Pension and PBOP plan obligations	11		(7)
Removal obligations	(2,248)		(2,251)
Environmental costs	107		62
Sunrise Powerlink fire mitigation	123		122
Regulatory balancing accounts(1)(2)
Commodity – electric	220		77
Gas transportation	60		49
Safety and reliability	107		67
Public purpose programs	(69)		(107)
Wildfire mitigation plan	375		178
Liability insurance premium	99		110
Other balancing accounts	(50)		207
Other regulatory assets, net(2)	137		119
Total SDG&E	(942)		(1,299)
SoCalGas:
Deferred income taxes recoverable in rates	161		44
Pension and PBOP plan obligations	(170)		51
Employee benefit costs	24		31
Removal obligations	(616)		(627)
Environmental costs	38		34
Regulatory balancing accounts(1)(2)
Commodity – gas, including transportation	(257)		(146)
Safety and reliability	575		339
Public purpose programs	(158)		(183)
Liability insurance premium	23		16
Other balancing accounts	115		42
Other regulatory assets, net(2)	223		142
Total SoCalGas	(42)		(257)
Sempra Infrastructure:
Deferred income taxes recoverable in rates	78		77
Total Sempra	$	(906)	$	(1,479)

(1) At December 31, 2022 and 2021, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $562 and $358, respectively, and for SoCalGas was $692 and $410, respectively.

(2) Includes regulatory assets earning a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate.

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Regulatory Assets Not Earning a Return

▪Regulatory assets arising from fixed-price contracts and other derivatives are offset by corresponding liabilities arising from purchased power and natural gas commodity and transportation contracts. The regulatory asset is increased/decreased based on changes in the fair market value of the contracts. It is also reduced as payments are made for commodities and services under these contracts. The related amounts are recovered in rates once these contracts are settled, generally within three years.

▪Deferred income taxes recoverable/refundable in rates are based on current regulatory ratemaking and income tax laws. SDG&E, SoCalGas and Sempra Infrastructure expect to recover/refund net regulatory assets/liabilities related to deferred income taxes over the lives of the assets, ranging from 5 to 69 years, that give rise to the related accumulated deferred income tax balances. Regulatory assets and liabilities include excess deferred income taxes resulting from statutory income tax rate changes and certain income tax benefits and expenses associated with flow-through items, which we discuss in Note 8.

▪Regulatory assets/liabilities related to pension and PBOP plan obligations are offset by corresponding liabilities/assets. The assets are recovered in rates as the plans are funded.

▪The regulatory asset related to employee benefit costs represents our liability associated with long-term disability insurance that will be recovered from customers in future rates as expenditures are made.

▪Regulatory liabilities from removal obligations represent cumulative amounts collected in rates for future asset removal costs in excess of cumulative amounts incurred (or paid).

▪Regulatory assets related to environmental costs represent the portion of our environmental liability recognized at the end of the period in excess of the amount that has been recovered through rates charged to customers. We expect this amount to be recovered in future rates as expenditures are made.

▪The regulatory asset related to Sunrise Powerlink fire mitigation is offset by a corresponding liability for the funding of a trust to cover the mitigation costs. SDG&E expects to recover the regulatory asset in rates as the trust is funded over a remaining 47-year period.

Regulatory Assets Earning a Return

▪Over- and undercollected regulatory balancing accounts and other regulatory assets, net, reflect the difference between customer billings and recorded or CPUC-authorized amounts. Depreciation, taxes and return on rate base may also be included in certain accounts. Amounts in the balancing accounts are recoverable (receivable) or refundable (payable) in future rates, subject to CPUC approval. SDG&E and SoCalGas periodically make requests to the CPUC to true up their revenue requirement for amounts accumulated in the regulatory balancing accounts and in other regulatory assets, net. The CPUC may impose various review procedures before authorizing recovery or refund of amounts accumulated for authorized programs, including limitations on the program’s total cost, revenue requirement limits or reviews of costs for reasonableness. These procedures could result in delays or disallowances of recovery from ratepayers.

Amortization expense on certain regulatory assets for the years ended December 31, 2022, 2021 and 2020 was $11 million, $10 million and $9 million, respectively, at Sempra, $5 million, $5 million and $4 million, respectively, at SDG&E, and $6 million, $5 million and $5 million, respectively, at SoCalGas.

SEMPRA CALIFORNIA

COVID-19 Pandemic Protections

In connection with the COVID-19 pandemic and at the direction of the CPUC, SDG&E and SoCalGas implemented certain measures to assist customers, including suspending service disconnections due to nonpayment for all customers (except for SoCalGas’ noncore customers), waiving late payment fees, and offering flexible payment plans. At the CPUC’s direction, SDG&E and SoCalGas enrolled residential and small business customers with past-due balances in long-term repayment plans.

SDG&E and SoCalGas have been authorized to track and request recovery of incremental costs associated with complying with customer protection measures implemented by the CPUC related to the COVID-19 pandemic, including costs associated with suspending service disconnections and uncollectible expenses that arise from customers’ failure to pay. SDG&E and SoCalGas expect to pursue recovery of small and medium-large commercial and industrial customers’ tracked costs in rates in future CPUC

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proceedings, which recovery is not assured. SDG&E and SoCalGas have each established a two-way balancing account to record the uncollectible expenses associated with residential customers’ inability to pay their electric or gas bills, including as a result of the relief from outstanding utility bill amounts provided under the Arrearage Management Payment Plan.

CPUC GRC

The CPUC uses GRCs to set revenues to allow SDG&E and SoCalGas to recover their reasonable operating costs and to provide the opportunity to realize their authorized rates of return on their investments.

In September 2019, the CPUC issued a final decision in the 2019 GRC approving SDG&E’s and SoCalGas’ test year revenues for 2019 and attrition year adjustments for 2020 and 2021, which was effective retroactively to January 1, 2019. This is the first GRC that includes revenues authorized for risk assessment mitigation phase activities. In January 2020, the CPUC issued a final decision implementing a four-year GRC cycle for California IOUs. SDG&E and SoCalGas were directed to file a petition for modification to revise their 2019 GRC to add two additional attrition years, resulting in a transitional five-year GRC period (2019-2023). In May 2021, the CPUC issued a final decision approving SDG&E’s and SoCalGas’ request to continue their authorized post-test year mechanisms for 2022 and 2023. For SDG&E, the decision authorizes revenue requirement increases of $87 million (3.92%) for 2022 and $86 million (3.70%) for 2023. For SoCalGas, the decision authorizes revenue requirement increases of $142 million (4.53%) for 2022 and $130 million (3.97%) for 2023.

In May 2022, SDG&E and SoCalGas filed their 2024 GRC applications requesting CPUC approval of test year revenue requirements for 2024 and attrition year adjustments for 2025 through 2027. SDG&E and SoCalGas requested revenue requirements for 2024 of $3.0 billion and $4.4 billion, respectively. SDG&E and SoCalGas are proposing post-test year revenue requirement changes using various mechanisms that are estimated to result in annual increases of approximately 8% to 11% at SDG&E and approximately 6% to 8% at SoCalGas. In October 2022, the CPUC issued a scoping ruling that set a schedule for the proceeding, including the expected issuance of a proposed decision in the second quarter of 2024. SDG&E and SoCalGas expect the final decision will be effective retroactive to January 1, 2024. SDG&E expects to submit separate requests in its GRC for review and recovery of its wildfire mitigation plan costs in mid-2023 for costs incurred from 2019 through 2022 and in mid-2024 for costs incurred in 2023.

CPUC Cost of Capital

A CPUC cost of capital proceeding determines a utility’s authorized capital structure and authorized return on rate base. The CCM applies in the interim years between required cost of capital applications and considers changes in the cost of capital based on changes in interest rates based on the applicable utility bond index published by Moody’s (the CCM benchmark rate) for each 12-month period ending September 30 (the measurement period). The index applicable to SDG&E and SoCalGas is based on each utility’s credit rating. The CCM benchmark rate is the basis of comparison to determine if the CCM is triggered in each measurement period, which occurs if the change in the applicable Moody’s utility bond index relative to the CCM benchmark rate is larger than plus or minus 1.000% at the end of the measurement period. The CCM, if triggered, would automatically update the authorized cost of debt based on actual costs and update the authorized ROE upward or downward by one-half of the difference between the CCM benchmark rate and the applicable Moody’s utility bond index. Alternatively, each of SDG&E and SoCalGas are permitted to file a cost of capital application 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 to have its cost of capital determined in lieu of the CCM.

In December 2019, the CPUC approved the following cost of capital for SDG&E and SoCalGas that became effective on January 1, 2020 and remained in effect through December 31, 2022, subject to the CCM.


CPUC AUTHORIZED COST OF CAPITAL FOR 2020 – 2022

SDG&E							SoCalGas
Authorized weighting		Return on rate base		Weighted return on rate base			Authorized weighting		Return on rate base		Weighted return on rate base
45.25	%	4.59	%	2.08	%	Long-Term Debt	45.60	%	4.23	%	1.93	%
2.75		6.22		0.17		Preferred Equity	2.40		6.00		0.14
52.00		10.20		5.30		Common Equity	52.00		10.05		5.23
100.00	%			7.55	%		100.00	%			7.30	%

For the measurement period that ended September 30, 2021, SDG&E’s CCM benchmark rate was 4.498% based on Moody’s Baa- utility bond index and SoCalGas’ CCM benchmark rate was 4.029% based on Moody’s A- utility bond index. For this

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measurement period, the CCM would have triggered for SDG&E if the CPUC determined that the CCM should be implemented because the average Moody’s Baa- utility bond index between October 1, 2020 and September 30, 2021 was 1.17% below SDG&E’s CCM benchmark rate of 4.498%. In August 2021, SDG&E filed an application with the CPUC to update its cost of capital for 2022 due to the ongoing effects of the COVID-19 pandemic rather than have the CCM apply. In November 2022, the CPUC issued a final decision that found there was an extraordinary event, the CCM will be suspended for 2022 and SDG&E’s current authorized cost of capital for 2022 will be preserved.

In December 2022, the CPUC approved the following cost of capital for SDG&E and SoCalGas that became effective on January 1, 2023 and will remain in effect through December 31, 2025, subject to the CCM. The CPUC will open a second phase of this cost of capital proceeding to evaluate the CCM. For the measurement period that ends on September 30, 2023, SDG&E’s CCM benchmark rate is 4.367% based on Moody’s Baa- utility bond index and SoCalGas’ CCM benchmark rate is 4.074% based on Moody’s A- utility bond index. SDG&E did not propose a 2023 cost of preferred equity in this proceeding. In January 2023, SDG&E filed an advice letter to continue the cost of preferred equity for test year 2023 at 6.22%, which the CPUC approved in February 2023.


CPUC AUTHORIZED COST OF CAPITAL FOR 2023 – 2025

SDG&E							SoCalGas
Authorized weighting		Return on rate base		Weighted return on rate base(1)			Authorized weighting		Return on rate base		Weighted return on rate base
45.25	%	4.05	%	1.83	%	Long-Term Debt	45.60	%	4.07	%	1.86	%
2.75		6.22		0.17		Preferred Equity	2.40		6.00		0.14
52.00		9.95		5.17		Common Equity	52.00		9.80		5.10
100.00	%			7.18	%		100.00	%			7.10	%

(1) Total weighted return on rate base does not sum due to rounding differences.

SDG&E

FERC Rate Matters

SDG&E files separately with the FERC for its authorized ROE on FERC-regulated electric transmission operations and assets. SDG&E’s currently effective TO5 settlement provides for a ROE of 10.60%, consisting of a base ROE of 10.10% plus an additional 50 bps for participation in the California ISO (the California ISO adder). If the FERC issues an order ruling that California IOUs are no longer eligible for the California ISO adder, SDG&E would refund the California ISO adder as of the refund effective date (June 1, 2019) if such a refund is determined to be required by the terms of the TO5 settlement. The TO5 term is effective June 1, 2019 and shall remain in effect until terminated by a notice provided at least six months before the end of the calendar year. Following such notice, SDG&E would file an updated rate request with an effective date of January 1 of the following year.

SOCALGAS

OSCs – Energy Efficiency and Advocacy

In October 2019, the CPUC issued an OSC to determine whether SoCalGas should be sanctioned for violation of certain CPUC code sections and orders relating to energy efficiency (EE) codes and standards advocacy activities, which were undertaken by SoCalGas following a CPUC decision disallowing SoCalGas’ future engagement in advocacy around such EE codes and standards. In March 2022, the CPUC issued a final decision that found that SoCalGas did undertake prohibited EE codes and standards advocacy activities using ratepayer funds. The final decision imposed on SoCalGas a financial penalty of $10 million; customer refunds for certain ratepayer expenditures and shareholder incentives that SoCalGas estimates will be negligible; and a prohibition from recovering from ratepayers costs of proposed codes and standards advocacy activities until SoCalGas demonstrates policies, practices and procedures that adhere to the CPUC’s intent for codes and standards advocacy.

In December 2019, the CPUC issued a second OSC to determine whether SoCalGas is entitled to the EE program’s shareholder incentives for codes and standards advocacy activities in 2016 and 2017 (later expanded to include 2014 and 2015), whether its shareholders should bear the costs of those advocacy activities, and to address whether any other remedies are appropriate. In April 2022, the CPUC issued a final decision that found there were violations of certain legal principles and imposed a financial penalty of $150,000.

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NOTE 5. ACQUISITIONS, DIVESTITURES AND DISCONTINUED OPERATIONS

ACQUISITION

Sempra Infrastructure

ESJ

In March 2021, Sempra Infrastructure completed the acquisition of Saavi Energía S. de R.L. de C.V.’s 50% equity interest in ESJ for a purchase price of $65 million (net of $14 million of acquired cash and cash equivalents) plus the assumption of $277 million in debt (including $94 million owed from ESJ to Sempra Infrastructure that eliminates upon consolidation). Sempra Infrastructure previously accounted for its 50% interest in ESJ as an equity method investment. This acquisition increased Sempra Infrastructure’s ownership interest in ESJ from 50% to 100%. We accounted for this asset acquisition using a cost accumulation model whereby the cost of the acquisition and carrying value of our previously held interest in ESJ ($34 million) were allocated to assets acquired ($458 million) and liabilities assumed ($345 million) based on their relative fair values. ESJ owns a fully operating wind power generation facility with a nameplate capacity of 155 MW that is fully contracted by SDG&E under a long-term PPA. Sempra Infrastructure recorded a $190 million intangible asset for the relative fair value of the PPA that will be amortized over a period of 14 years against revenues. On January 15, 2022, ESJ completed construction and began commercial operation of a second wind power generation facility with a nameplate capacity of 108 MW that is also fully contracted by SDG&E under a long-term PPA.

DIVESTITURE

Parent and Other

PXiSE

In December 2021, Parent and other completed the sale of its 80% interest in PXiSE for total cash proceeds of $38 million, net of transaction costs totaling $4 million, and recorded a $36 million ($26 million after tax) gain, which is included in Gain (Loss) on Sale of Assets on Sempra’s Consolidated Statement of Operations.

DISCONTINUED OPERATIONS

In January 2019, our board of directors approved a plan to sell our South American businesses. We present these businesses, which previously constituted the Sempra South American Utilities segment, and certain activities associated with those businesses as discontinued operations.

In April 2020, we completed the sale of our equity interests in our Peruvian businesses, including our 83.6% interest in Luz del Sur and our interest in Tecsur, to an affiliate of China Yangtze Power International (Hongkong) Co., Limited for cash proceeds of $3,549 million, net of transaction costs and as adjusted for post-closing adjustments, and recorded a pretax gain of $2,271 million ($1,499 million after tax).

In June 2020, we completed the sale of our equity interests in our Chilean businesses, including our 100% interest in Chilquinta Energía and Tecnored and our 50% interest in Eletrans, to State Grid International Development Limited for cash proceeds of $2,216 million, net of transaction costs and as adjusted for post-closing adjustments, and recorded a pretax gain of $628 million ($248 million after tax).

In the year ended December 31, 2020, the pretax gains from the sales of our South American businesses are included in Gain on Sale of Discontinued Operations in the table below and the after-tax gains are included in Income from Discontinued Operations, Net of Income Tax, on Sempra’s Consolidated Statement of Operations.

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Summarized results from discontinued operations were as follows:


DISCONTINUED OPERATIONS
(Dollars in millions)
	Year ended
	December 31, 2020(1)
Revenues	$	570
Cost of sales	(364)
Gain on sale of discontinued operations	2,899
Operating expenses	(66)
Interest and other	(3)
Income before income taxes and equity earnings	3,036
Income tax expense	(1,186)
Equity earnings	—
Income from discontinued operations, net of income tax	1,850
Earnings attributable to noncontrolling interests	(10)
Earnings from discontinued operations attributable to common shares	$	1,840

(1) Results include activity until deconsolidation of our Peruvian businesses on April 24, 2020 and Chilean businesses on June 24, 2020 and post-closing adjustments related to the sales of these businesses.

As a result of the sales of our South American businesses, in 2020, we reclassified $645 million of cumulative foreign currency translation losses from AOCI to Gain on Sale of Discontinued Operations, which is included in Income from Discontinued Operations, Net of Income Tax, on Sempra’s Consolidated Statement of Operations.

NOTE 6. INVESTMENTS IN UNCONSOLIDATED ENTITIES

We generally account for investments under the equity method when we have significant influence over, but do not have control of, these entities. Equity earnings and losses, both before and net of income tax, are combined and presented as Equity Earnings on the Consolidated Statements of Operations.

Our equity method investments include various domestic and foreign entities. Our domestic equity method investees are typically partnerships that are pass-through entities for income tax purposes and therefore they do not record income tax. Sempra’s income tax on earnings from these equity method investees, other than Oncor Holdings as we discuss below, is included in Income Tax Expense on the Consolidated Statements of Operations. Our foreign equity method investees are generally corporations whose operations are taxable on a standalone basis in the countries in which they operate, and we recognize our equity in such income or loss net of investee income tax. See Note 8 for information on how equity earnings and losses before income taxes are factored into the calculations of our pretax income or loss and ETR.

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We provide the carrying values of our investments and earnings (losses) on these investments in the following tables.


EQUITY METHOD AND OTHER INVESTMENT BALANCES(1)
(Dollars in millions)
	Percent ownership
	December 31,				December 31,
	2022		2021		2022		2021
Sempra Texas Utilities:
Oncor Holdings(2)	100	%	100	%	$	13,665	$	12,947
Sempra Texas Utilities:
Sharyland Holdings(3)	50	%	50	%	$	107	$	100
Sempra Infrastructure:
Cameron LNG JV(4)	50.2		50.2		886		514
IMG(5)	40		40		591		523
TAG(6)	50		50		428		388
Total other investments					$	2,012	$	1,525

(1) All amounts are before NCI, where applicable.

(2) The carrying value of our equity method investment is $2,856 and $2,844 higher than the underlying equity in the net assets of the investee at December 31, 2022 and 2021, respectively, due to $2,868 of equity method goodwill and $69 in basis differences in AOCI, offset by $81 and $93 at December 31, 2022 and 2021, respectively, due to a tax sharing liability to TTI under a tax sharing agreement.

(3) The carrying value of our equity method investment is $41 higher than the underlying equity in the net assets of the investee due to equity method goodwill.

(4) The carrying value of our equity method investment is $270 and $276 higher than the underlying equity in the net assets of the investee at December 31, 2022 and 2021, respectively, primarily due to guarantees, which we discuss below, interest capitalized on the investment prior to the JV commencing its planned principal operations in August 2019 and amortization of guarantee fees and capitalized interest thereafter.

(5) The carrying value of our equity method investment is $5 higher than the underlying equity in the net assets of the investee due to guarantees.

(6) The carrying value of our equity method investment is $130 higher than the underlying equity in the net assets of the investee due to equity method goodwill.


EARNINGS (LOSSES) FROM EQUITY METHOD INVESTMENTS(1)
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
EARNINGS (LOSSES) RECORDED BEFORE INCOME TAX(2):
Sempra Texas Utilities:
Sharyland Holdings	$	7	$	5	$	3
Sempra Infrastructure:
Cameron LNG JV(3)	659		559		391
Parent and other:
RBS Sempra Commodities	—		50		(100)
	666		614		294
EARNINGS RECORDED NET OF INCOME TAX:
Sempra Texas Utilities:
Oncor Holdings	735		617		577
Sempra Infrastructure:
ESJ	—		2		5
IMG	68		83		103
TAG	29		27		36
	832		729		721
Total	$	1,498	$	1,343	$	1,015

(1) All amounts are before NCI, where applicable.

(2) We provide our ETR calculation in Note 8.

(3) Includes $12 and $3 of basis differences in equity earnings related to AOCI in 2022 and 2021, respectively.

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We disclose distributions received from our investments, by segment, in the table below.


DISTRIBUTIONS FROM INVESTMENTS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra Texas Utilities	$	345	$	688	$	286
Sempra Infrastructure	541		672		1,176
Total	$	886	$	1,360	$	1,462

At December 31, 2022 and 2021 our share of the undistributed earnings of equity method investments was $2.0 billion and $1.5 billion, respectively, including $386 million at December 31, 2022 in undistributed earnings from investments for which we have less than 50% equity interests.

SEMPRA TEXAS UTILITIES

Oncor Holdings

We account for our 100% ownership interest in Oncor Holdings, which owns an 80.25% interest in Oncor, as an equity method investment. Sempra does not control Oncor Holdings or Oncor, and the ring-fencing measures, governance mechanisms and commitments in effect limit our ability to direct the management, policies and operations of Oncor Holdings and Oncor, including the deployment or disposition of their assets, declarations of dividends, strategic planning and other important corporate issues and actions. We also have limited representation on the Oncor Holdings and Oncor boards of directors.

Oncor is a domestic partnership for U.S. federal income tax purposes and is not included in the consolidated income tax return of Sempra. Rather, only our pretax equity earnings from our investment in Oncor Holdings (a disregarded entity for tax purposes) are included in our consolidated income tax return. A tax sharing agreement with TTI, Oncor Holdings and Oncor provides for the calculation of an income tax liability substantially as if Oncor Holdings and Oncor were taxed as corporations and requires tax payments determined on that basis. While partnerships are not subject to income taxes, in consideration of the tax sharing agreement and Oncor being subject to the provisions of U.S. GAAP governing rate-regulated operations, Oncor recognizes amounts determined under cost-based regulatory rate-setting processes (with such costs including income taxes), as if it were taxed as a corporation. As a result, since Oncor Holdings consolidates Oncor, we recognize equity earnings from our investment in Oncor Holdings net of its recorded income tax.

In 2022, 2021 and 2020, Sempra contributed $341 million, $566 million and $632 million, respectively, to Oncor Holdings.

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We provide summarized income statement and balance sheet information for Oncor Holdings in the following table.


SUMMARIZED FINANCIAL INFORMATION – ONCOR HOLDINGS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Operating revenues	$	5,243	$	4,764	$	4,511
Operating expense	(3,682)		(3,397)		(3,224)
Income from operations	1,561		1,367		1,287
Interest expense	(445)		(413)		(405)
Income tax expense	(203)		(163)		(146)
Net income	893		760		703
Noncontrolling interest held by TTI	(179)		(152)		(141)
Earnings attributable to Sempra(1)	714		608		562

			December 31,
			2022		2021
Current assets			$	1,223	$	1,039
Noncurrent assets			31,703		29,481
Current liabilities			1,579		2,220
Noncurrent liabilities			17,405		15,281
Noncontrolling interest held by TTI			3,141		2,916

(1) Excludes adjustments to equity earnings related to amortization of a tax sharing liability associated with a tax sharing arrangement and changes in basis differences in AOCI within the carrying value of our equity method investment.

Sharyland Holdings

We account for our 50% ownership interest in Sharyland Holdings, a JV with SU Investment Partners, L.P. that owns a 100% interest in Sharyland Utilities, as an equity method investment. In 2022, Sempra contributed $5 million to Sharyland Holdings.

SEMPRA INFRASTRUCTURE

Cameron LNG JV

Cameron LNG JV is a JV between Sempra and three project partners, TotalEnergies SE, Mitsui & Co., Ltd., and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha. We account for our 50.2% investment in Cameron LNG JV under the equity method.

In 2022, 2021 and 2020, Sempra Infrastructure contributed $30 million, $2 million and $54 million, respectively, to Cameron LNG JV.

Sempra Promissory Note for SDSRA Distribution

Cameron LNG JV’s debt agreements require Cameron LNG JV to maintain the SDSRA, which is an additional reserve account beyond the Senior Debt Service Accrual Account, where funds accumulate from operations to satisfy senior debt obligations due and payable on the next payment date. Both accounts can be funded with cash or authorized investments. In June 2021, Sempra Infrastructure received a distribution of $165 million based on its proportionate share of the SDSRA, for which Sempra provided a promissory note and letters of credit to secure a proportionate share of Cameron LNG JV’s obligation to fund the SDSRA. Sempra’s maximum exposure to loss is replenishment of the amount withdrawn by Sempra Infrastructure from the SDSRA, or $165 million. We recorded a guarantee liability of $22 million in June 2021, with an associated carrying value of $20 million at December 31, 2022, for the fair value of the promissory note, which is being reduced over the duration of the guarantee through Sempra Infrastructure’s investment in Cameron LNG JV. 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.

Sempra Support Agreement for CFIN

In July 2020, CFIN entered into a financing arrangement with Cameron LNG JV’s four project owners and received aggregate proceeds of $1.5 billion from two project owners and from external lenders on behalf of the other two project owners (collectively, the affiliate loans), based on their proportionate ownership interest in Cameron LNG JV. CFIN used the proceeds from the affiliate loans to provide a loan to Cameron LNG JV. The affiliate loans mature in 2039. Principal and interest will be

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paid from Cameron LNG JV’s project cash flows from its three-train natural gas liquefaction facility. Cameron LNG JV used the proceeds from its loan to return equity to its project owners. Sempra used its $753 million share of the proceeds for working capital and other general corporate purposes, including the repayment of indebtedness.

Sempra Infrastructure’s $753 million proportionate share of the affiliate loans, based on SI Partners’ 50.2% ownership interest in Cameron LNG JV, was funded by external lenders comprised of a syndicate of eight banks (the bank debt) to whom Sempra has provided a guarantee pursuant to a Support Agreement under which:

▪Sempra has severally guaranteed repayment of the bank debt plus accrued and unpaid interest if CFIN fails to pay the external lenders;

▪the external lenders may exercise an option to put the bank debt to Sempra Infrastructure upon the occurrence of certain events, including a failure by CFIN to meet its payment obligations under the bank debt;

▪the external lenders will put some or all of the bank debt to Sempra Infrastructure on the fifth, tenth, or fifteenth anniversary date of the affiliate loans, except the portion of the debt owed to any external lender that has elected not to participate in the put option six months prior to the respective anniversary date;

▪Sempra Infrastructure also has a right to call the bank debt back from, or to refinance the bank debt with, the external lenders at any time; and

▪the Support Agreement will terminate upon full repayment of the bank debt, including repayment following an event in which the bank debt is put to Sempra Infrastructure.

In exchange for this guarantee, the external lenders will pay a guarantee fee that is based on the credit rating of Sempra’s long-term senior unsecured non-credit enhanced debt rating, which guarantee fee Sempra Infrastructure will recognize as interest income as earned. Sempra’s maximum exposure to loss is the bank debt plus any accrued and unpaid interest and related fees, subject to a liability cap of 130% of the bank debt, or $979 million. We measure the Support Agreement at fair value, net of related guarantee fees, on a recurring basis (see Note 12). At December 31, 2022, the fair value of the Support Agreement was $17 million, of which $7 million is included in Other Current Assets and $10 million is included in Other Long-Term Assets on Sempra’s Consolidated Balance Sheet.

ESJ

As we discuss in Note 5, in March 2021, Sempra Infrastructure completed the acquisition of the remaining 50% equity interest in ESJ and ESJ became a consolidated subsidiary. Prior to the acquisition date, Sempra Infrastructure owned 50% of ESJ and accounted for its interest as an equity method investment.

IMG

Sempra Infrastructure has a 40% interest in IMG, a JV with a subsidiary of TC Energy Corporation, and accounts for its interest as an equity method investment. IMG owns and operates the Sur de Texas-Tuxpan natural gas marine pipeline, which is fully contracted under a 35-year natural gas transportation service contract with the CFE.

TAG

Sempra Infrastructure has a 50% beneficial ownership interest in TAG, a JV with TETL JV Mexico Norte, S. de R.L. de C.V. and Bravo N Mergeco, S. de R.L. de C.V. that holds a 50% interest in the Los Ramones Norte pipeline. Sempra Infrastructure accounts for its 50% interest in TAG as an equity method investment.

PARENT AND OTHER

RBS Sempra Commodities

RBS Sempra Commodities is a United Kingdom limited liability partnership formed by Sempra and RBS in 2008 to own and operate the commodities-marketing businesses previously operated through wholly owned subsidiaries of Sempra. We and RBS sold substantially all of the partnership’s businesses and assets in four separate transactions completed in 2010 and 2011. Since 2011, our investment balance has reflected our share of the remaining partnership assets, including amounts retained by the partnership to help offset unanticipated future general and administrative costs necessary to complete the dissolution of the partnership and the distribution of the partnership’s remaining assets, if any. We account for our investment in RBS Sempra Commodities under the equity method.

In 2018, we fully impaired our remaining equity method investment in RBS Sempra Commodities. In 2020, we recorded a charge of $100 million in Equity Earnings on Sempra’s Consolidated Statement of Operations for losses from our investment in RBS

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Sempra Commodities. In 2021, we reduced this charge by $50 million based on the favorable outcome of a settlement with HMRC and revised assumptions on the High Court of Justice case. We discuss matters related to RBS Sempra Commodities further in “Other Litigation” in Note 16.

SUMMARIZED FINANCIAL INFORMATION

We present summarized financial information below, aggregated for all other equity method investments (excluding Oncor Holdings and RBS Sempra Commodities) for the periods in which we were invested in the entities. The amounts below represent the results of operations and aggregate financial position of 100% of each of Sempra’s other equity method investments.


SUMMARIZED FINANCIAL INFORMATION – OTHER EQUITY METHOD INVESTMENTS
(Dollars in millions)
	Years ended December 31,
	2022		2021(1)		2020
Gross revenues	$	2,959	$	2,721	$	2,341
Operating expense	(772)		(719)		(706)
Income from operations	2,187		2,002		1,635
Interest expense	(505)		(548)		(514)
Net income/Earnings(2)(3)	1,537		1,388		1,132


	December 31,
	2022		2021(1)
Current assets	$	1,008	$	788
Noncurrent assets	14,786		14,686
Current liabilities	1,147		1,230
Noncurrent liabilities	11,130		11,807

(1) In March 2021, Sempra Infrastructure completed the acquisition of the remaining 50% equity interest in ESJ and ESJ became a consolidated subsidiary.

(2) Except for our investments in Mexico, there was no income tax recorded by the entities, as they are primarily domestic partnerships.

(3) Amounts for Cameron LNG JV exclude adjustments to equity earnings related to amortization of capitalized interest and guarantee fees within the carrying value of our equity method investment and changes in basis differences in equity earnings related to AOCI.

NOTE 7. DEBT AND CREDIT FACILITIES

SHORT-TERM DEBT

Committed Lines of Credit

At December 31, 2022, Sempra had an aggregate capacity of $9.7 billion under seven primary committed lines of credit, which provide liquidity and support our commercial paper programs. Because our commercial paper programs are supported by some of these lines of credit, we reflect the amount of commercial paper outstanding, before reductions of any unamortized discounts, and any letters of credit outstanding as a reduction to the available unused credit capacity in the following table.

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COMMITTED LINES OF CREDIT
(Dollars in millions)
		December 31, 2022
Borrower	Expiration date of facility	Total facility		Commercial paper outstanding		Amounts outstanding		Available unused credit
Sempra	October 2027	$	4,000	$	(454)	$	—	$	3,546
SDG&E	October 2027	1,500		(205)		—		1,295
SoCalGas	October 2027	1,200		(100)		—		1,100
SI Partners	November 2024	1,000		—		(510)		490
IEnova and SI Partners	September 2023	350		—		(264)		86
IEnova and SI Partners	December 2023	150		—		—		150
IEnova and SI Partners	February 2024	1,500		—		(970)		530
Total		$	9,700	$	(759)	$	(1,744)	$	7,197

The principal terms of Sempra’s, SDG&E’s and SoCalGas’ lines of credit reflected in the table above include the following:

▪Each facility has a syndicate of 23 lenders. No single lender has greater than a 6% share in any facility.

▪Sempra’s, SDG&E’s and SoCalGas’ facilities provide for the issuance of $200 million, $100 million and $150 million, respectively, of letters of credit. Subject to obtaining commitments from existing or new lenders and satisfaction of other specified conditions, Sempra, SDG&E and SoCalGas each has the right to increase its letter of credit commitment to up to $500 million, $250 million and $250 million, respectively.

▪Borrowings bear interest at a benchmark rate plus a margin that varies with the borrower’s credit rating.

▪Each borrower must maintain a ratio of indebtedness to total capitalization (as defined in each of the applicable credit facilities) of no more than 65% at the end of each quarter. At December 31, 2022, each entity was in compliance with this ratio under its respective credit facility.

The principal terms of SI Partners’ line of credit reflected in the table above include the following:

▪A syndication of 12 lenders each having an 8.33% share in the facility.

▪The facility provides for issuance of $200 million of letters of credit.

▪The facility includes a $100 million swingline loan sub-limit, whereby any outstanding amounts would reduce available unused credit. No swingline loan borrowings were outstanding at December 31, 2022.

▪Borrowings are issued in U.S. dollars and letters of credit can be issued in U.S. dollars or Mexican pesos.

▪Borrowings bear interest at a benchmark rate plus a margin that varies with SI Partners’ credit rating.

▪SI Partners must maintain a ratio of consolidated adjusted net indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (as defined in its credit facility) of no more than 5.25 to 1.00 as of the end of each quarter. At December 31, 2022, SI Partners was in compliance with this ratio.

The principal terms of the three lines of credit reflected in the table above that are shared by IEnova and SI Partners include the following:

▪The $350 million revolving credit facility has a single lender and borrowings bear interest at a per annum rate equal to 3-month LIBOR plus 54 bps through December 29, 2022. On December 30, 2022, the facility was amended to replace the interest rate to Term SOFR plus 64 bps.

▪The $150 million revolving credit facility has a single lender and borrowings bear interest at a per annum rate equal to Term SOFR plus 70 bps.

▪The $1.5 billion revolving credit facility has a syndicate of 10 lenders and borrowings bear interest at a per annum rate equal to 3-month LIBOR plus 80 bps through December 29, 2022. On December 30, 2022, the facility was amended to replace the interest rate to Term SOFR plus 90 bps.

▪Borrowings can be issued in U.S. dollars only.

Uncommitted Line of Credit

ECA LNG Phase 1 has an uncommitted line of credit, which is generally used for working capital requirements, with an aggregate capacity of $200 million of which $49 million was outstanding at December 31, 2022. The amount outstanding is before reductions of any unamortized discounts. The facility expires in August 2023 and borrowings can be in U.S. dollars or Mexican pesos. At December 31, 2022, outstanding amounts were borrowed in Mexican pesos and bear interest at a variable rate based on the 28-day Interbank Equilibrium Interest Rate plus 105 bps. Borrowings made in U.S. dollars bear interest at a variable rate based on the 1-month or 3-month LIBOR plus 105 bps.

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Uncommitted Letters of Credit

Outside of our domestic and foreign credit facilities, we have bilateral unsecured standby letter of credit capacity with select lenders that is uncommitted and supported by reimbursement agreements. At December 31, 2022, we had $594 million in standby letters of credit outstanding under these agreements.


UNCOMMITTED LETTERS OF CREDIT
(Dollars in millions)
		December 31, 2022
	Expiration date range	Uncommitted letters of credit outstanding
SDG&E	May 2023 - January 2024	$	15
SoCalGas	March 2023 - November 2023	20
Sempra Infrastructure	January 2023 - October 2043	391
Parent and other	March 2023 - November 2023	168
Total		$	594

Term Loan

In July 2022, SoCalGas entered into an $800 million, 364-day term loan agreement with a maturity date of July 6, 2023. In August 2022, SoCalGas borrowed $800 million, net of negligible debt issuance costs, under the term loan agreement. The borrowing bears interest at benchmark rates plus 70 bps and is due in full upon maturity. SoCalGas used the proceeds for payment of a portion of the costs relating to litigation pertaining to the Leak.

Weighted-Average Interest Rates

The weighted-average interest rates on all short-term debt were as follows:


WEIGHTED-AVERAGE INTEREST RATES

	December 31,
	2022		2021
Sempra	5.57	%	0.60	%
SDG&E	4.76		0.65
SoCalGas	4.71		0.21

2022 Form 10-K | F-70

Table of Contents

LONG-TERM DEBT

The following tables show the detail and maturities of long-term debt outstanding.


LONG-TERM DEBT AND FINANCE LEASES
(Dollars in millions)
	December 31,
	2022		2021
SDG&E:
First mortgage bonds (collateralized by plant assets):
1.914% payable 2015 through February 2022	$	—	$	17
3.6% September 1, 2023	450		450
2.5% May 15, 2026	500		500
6% June 1, 2026	250		250
1.7% October 1, 2030	800		800
3% March 15, 2032	500		—
5.35% May 15, 2035	250		250
6.125% September 15, 2037	250		250
6% June 1, 2039	300		300
5.35% May 15, 2040	250		250
4.5% August 15, 2040	500		500
3.95% November 15, 2041	250		250
4.3% April 1, 2042	250		250
3.75% June 1, 2047	400		400
4.15% May 15, 2048	400		400
4.1% June 15, 2049	400		400
3.32% April 15, 2050	400		400
2.95% August 15, 2051	750		750
3.7% March 15, 2052	500		—
	7,400		6,417
Other long-term debt (uncollateralized):
Notes at variable rates (5.17% at December 31, 2022) February 18, 2024(1)	400		—
Finance lease obligations:
Purchased-power contracts	1,194		1,217
Other	62		57
	1,656		1,274
	9,056		7,691
Current portion of long-term debt	(489)		(49)
Unamortized discount on long-term debt	(20)		(17)
Unamortized debt issuance costs	(50)		(44)
Total SDG&E	$	8,497	$	7,581

SoCalGas:
First mortgage bonds (collateralized by plant assets):
3.15% September 15, 2024	$	500	$	500
3.2% June 15, 2025	350		350
2.6% June 15, 2026	500		500
2.55% February 1, 2030	650		650
5.75% November 15, 2035	250		250
5.125% November 15, 2040	300		300
3.75% September 15, 2042	350		350
4.45% March 15, 2044	250		250
4.125% June 1, 2048	400		400
4.3% January 15, 2049	550		550
3.95% February 15, 2050	350		350
6.35% November 15, 2052	600		—
	5,050		4,450
Other long-term debt (uncollateralized):
Notes at variable rates (5.10% at December 31, 2022) September 14, 2023(1)	300		300
1.875% Notes May 14, 2026(1)	4		4
2.95% Notes April 15, 2027	700		—
5.67% Notes January 18, 2028(2)	5		5
Finance lease obligations	87		61
	1,096		370
	6,146		4,820
Current portion of long-term debt	(318)		(11)
Unamortized discount on long-term debt	(12)		(7)
Unamortized debt issuance costs	(36)		(29)
Total SoCalGas	$	5,780	$	4,773

2022 Form 10-K | F-71

Table of Contents


LONG-TERM DEBT AND FINANCE LEASES (CONTINUED)
(Dollars in millions)
	December 31,
	2022		2021
Sempra:
Other long-term debt (uncollateralized):
3.3% Notes April 1, 2025	$	750	$	—
3.25% Notes June 15, 2027	750		750
3.4% Notes February 1, 2028	1,000		1,000
3.7% Notes April 1, 2029	500		—
3.8% Notes February 1, 2038	1,000		1,000
6% Notes October 15, 2039	750		750
4% Notes February 1, 2048	800		800
4.125% Junior Subordinated Notes April 1, 2052(1)	1,000		1,000
5.75% Junior Subordinated Notes July 1, 2079(1)	758		758

Sempra Infrastructure:
Other long-term debt (uncollateralized unless otherwise noted):
6.3% Notes (4.124% after cross-currency swap effective 2013) February 2, 2023	201		189
Loan at variable rates (7.54% at December 31, 2022) December 9, 2025	575		341
Notes at variable rates (5.13% after floating-to-fixed rate swaps effective 2014), payable December 15, 2016 through December 15, 2026, collateralized by plant assets(2)	—		154
3.75% Notes January 14, 2028	300		300
3.25% Notes January 15, 2032	400		—
Loan at variable rates (4.0275% after floating-to-fixed rate swap effective 2019) payable June 15, 2022 through November 19, 2034(1)	196		200
2.9% Loan payable June 15, 2022 through November 19, 2034(1)	236		241
Loan at variable rates (2.38% after floating-to-fixed rate swap effective 2020) payable June 15, 2022 through November 19, 2034(1)	98		100
4.875% Notes January 14, 2048	540		540
4.75% Notes January 15, 2051	800		800
	10,654		8,923
Current portion of long-term debt	(212)		(46)
Unamortized discount on long-term debt	(62)		(65)
Unamortized debt issuance costs	(109)		(98)
Total other Sempra	10,271		8,714
Total Sempra	$	24,548	$	21,068

(1) Callable long-term debt not subject to make-whole provisions.

(2) Debt is not callable.

At December 31, 2022, scheduled maturities of long-term debt are as follows:


MATURITIES OF LONG-TERM DEBT(1)
(Dollars in millions)
	SDG&E		SoCalGas		Other Sempra		Total Sempra
2023	$	450	$	300	$	212	$	962
2024	400		500		30		930
2025	—		350		1,374		1,724
2026	750		504		49		1,303
2027	—		700		799		1,499
Thereafter	6,200		3,705		8,190		18,095
Total	$	7,800	$	6,059	$	10,654	$	24,513

(1) Excludes finance lease obligations, discounts, and debt issuance costs.

Various long-term obligations totaling $12.1 billion at Sempra at December 31, 2022 are unsecured. This includes unsecured long-term obligations totaling $400 million at SDG&E and $1.0 billion at SoCalGas.

2022 Form 10-K | F-72

Table of Contents

Callable Long-Term Debt

At the option of Sempra, SDG&E and SoCalGas, certain debt at December 31, 2022 is callable subject to premiums:


CALLABLE LONG-TERM DEBT
(Dollars in millions)
	SDG&E		SoCalGas		Other Sempra		Total Sempra
Not subject to make-whole provisions	$	400	$	304	$	2,288	$	2,992
Subject to make-whole provisions	7,400		5,750		8,366		21,516

First Mortgage Bonds

SDG&E and SoCalGas issue first mortgage bonds secured by liens on their respective utility plant assets. SDG&E and SoCalGas may issue additional first mortgage bonds if in compliance with the provisions of their bond agreements (indentures). These indentures require, among other things, the satisfaction of pro forma earnings-coverage tests on first mortgage bond interest and the availability of sufficient mortgaged property to support the additional bonds, after giving effect to prior bond redemptions. The most restrictive of these tests (the property test) would permit the issuance, subject to CPUC authorization, of additional first mortgage bonds of $7.8 billion at SDG&E and $1.9 billion at SoCalGas at December 31, 2022.

SDG&E

In March 2022, SDG&E issued $500 million aggregate principal amount of 3.00% first mortgage bonds due in full upon maturity on March 15, 2032 and received proceeds of $494 million (net of debt discount, underwriting discounts and debt issuance costs of $6 million), and $500 million aggregate principal amount of 3.70% first mortgage bonds due in full upon maturity on March 15, 2052 and received proceeds of $492 million (net of debt discount, underwriting discounts and debt issuance costs of $8 million). Each series of first mortgage bonds is redeemable prior to maturity, subject to its terms, and in certain circumstances subject to make-whole provisions. SDG&E used the net proceeds for repayment of commercial paper and its 364-day term loan and for capital expenditures and other general corporate purposes.

SoCalGas

In November 2022, SoCalGas issued $600 million aggregate principal amount of 6.35% green first mortgage bonds due in full upon maturity on November 15, 2052 and received proceeds of $592 million (net of debt discount, underwriting discounts and debt issuance costs of $8 million). The first mortgage bonds are redeemable prior to maturity, subject to their terms, and in certain circumstances subject to make-whole provisions. SoCalGas intends to use the net proceeds to finance or refinance eligible projects that fall into one or more of the following categories: pollution prevention and control, green buildings and clean transportation.

Other Long-Term Debt

Sempra

In March 2022, we issued $750 million aggregate principal amount of 3.30% senior unsecured notes due in full upon maturity on April 1, 2025 and received proceeds of $745 million (net of debt discount, underwriting discounts and debt issuance costs of $5 million), and $500 million of 3.70% senior unsecured notes due in full upon maturity on April 1, 2029 and received proceeds of $494 million (net of debt discount, underwriting discounts and debt issuance costs of $6 million). Each series of notes is redeemable prior to maturity, subject to its terms, and in certain circumstances subject to make-whole provisions. We used the net proceeds for general corporate purposes and repayment of commercial paper.

SDG&E

In February 2022, SDG&E entered into a $400 million, two-year term loan with a maturity date of February 18, 2024. SDG&E borrowed $200 million in the three months ended March 31, 2022 and an additional $200 million in the three months ended June 30, 2022. The borrowings bear interest at benchmark rates plus 62.5 bps and are due in full upon maturity. The margin is based on SDG&E’s long-term senior unsecured credit rating. SDG&E used the net proceeds for repayment of commercial paper and for general corporate purposes.

2022 Form 10-K | F-73

Table of Contents

SoCalGas

In March 2022, SoCalGas issued $700 million aggregate principal amount of 2.95% senior unsecured notes due in full upon maturity on April 15, 2027 and received proceeds of $691 million (net of debt discount, underwriting discounts and debt issuance costs of $9 million). The notes are redeemable prior to maturity, subject to their terms, and in certain circumstances subject to make-whole provisions. SoCalGas used the net proceeds for repayment of commercial paper and general corporate purposes.

Sempra Infrastructure

SI Partners. In January 2022, SI Partners completed a private offering of $400 million in aggregate principal of 3.25% senior unsecured notes due in full upon maturity on January 15, 2032 to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and non-U.S. persons outside the U.S. under Regulation S under the Securities Act. The notes are redeemable prior to maturity, subject to their terms, and in certain circumstances subject to make-whole provisions, and holders of the notes have the right to require SI Partners to offer to purchase some or all of the notes at a premium upon the occurrence of specific kinds of change of control events that result in a downgrade of SI Partners’ credit ratings. Sempra Infrastructure received proceeds of $390 million (net of debt discount, underwriting discounts and debt issuance costs of $10 million). Sempra Infrastructure used the net proceeds for general corporate purposes, including the repayment of certain indebtedness of its subsidiaries.

ECA LNG Phase 1. In December 2020, ECA LNG Phase 1 entered into a five-year loan agreement with a syndicate of nine external lenders for an aggregate principal amount of up to $1.5 billion. Sempra, IEnova and TotalEnergies SE provided guarantees for repayment of the loans plus accrued and unpaid interest based on their proportionate ownership interest in ECA LNG Phase 1 of 41.7%, 41.7% and 16.6%, respectively. At issuance, borrowings under the loan agreement bore interest at a weighted-average blended rate of 2.70% plus a benchmark interest rate per annum equal to (a) the LIBOR for such interest period, divided by (b) one minus the Eurodollar Reserve Percentage, provided that in no event shall the benchmark interest rate at any time be less than 0% per annum. In July 2022, ECA LNG Phase 1 replaced Sempra with IEnova as the guarantor and replaced two of the nine external lenders and their combined principal commitment of $203 million (of which $64 million was outstanding and repaid) with a shareholder loan from IEnova, thereby reducing the syndicate to seven external lenders, increasing the weighted-average blended rate to 2.86% and reducing the aggregate principal amount of borrowing capacity from external lenders to $1.3 billion. In December 2022, the loan agreement was amended to change the benchmark interest rate per annum to (a) the Term SOFR based on a tenor comparable to the applicable interest period, plus (b) a 0.10% margin per annum, for any interest period beginning on or after December 30, 2022. At December 31, 2022 and December 31, 2021, $575 million and $341 million, respectively, of borrowings from external lenders were outstanding under the loan agreement, with a weighted-average interest rate of 7.54% and 2.93%, respectively.

IEnova Pipelines. In September 2022, Sempra Infrastructure used proceeds from borrowings against IEnova’s committed and uncommitted lines of credit to fully repay $141 million of outstanding principal plus accrued and unpaid interest on the IEnova Pipelines variable-rate loans prior to scheduled maturity dates through 2026, and recognized approximately $2 million ($1 million after tax and NCI) in charges associated with the write-off of acquisition-related fair value adjustments offset by a hedge termination benefit.

2022 Form 10-K | F-74

Table of Contents

NOTE 8. INCOME TAXES

We provide our calculations of ETRs in the following table.


INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
	Years ended December 31,
	2022			2021			2020
Sempra:
Income tax expense from continuing operations	$	556		$	99		$	249

Income from continuing operations before income taxes and equity earnings	$	1,343		$	219		$	1,489
Equity earnings, before income tax(1)	666			614			294
Pretax income	$	2,009		$	833		$	1,783

Effective income tax rate	28		%	12		%	14		%
SDG&E:
Income tax expense	$	182		$	201		$	190
Income before income taxes	$	1,097		$	1,020		$	1,014
Effective income tax rate	17		%	20		%	19		%
SoCalGas:
Income tax expense (benefit)	$	138		$	(310)		$	96
Income (loss) before income taxes	$	738		$	(736)		$	601
Effective income tax rate	19		%	42		%	16		%

(1) We discuss how we recognize equity earnings in Note 6.

For SDG&E and SoCalGas, the CPUC requires flow-through rate-making treatment for the current income tax benefit or expense arising from certain property-related and other temporary differences between the treatment for financial reporting and income tax, which will reverse over time. Under the regulatory accounting treatment required for these flow-through temporary differences, deferred income tax assets and liabilities are not recorded to deferred income tax expense, but rather to a regulatory asset or liability, which impacts the ETR. As a result, changes in the relative size of these items compared to pretax income, from period to period, can cause variations in the ETR. The following items are subject to flow-through treatment:

▪repairs expenditures related to a certain portion of utility plant fixed assets

▪the equity portion of AFUDC, which is non-taxable

▪a portion of the cost of removal of utility plant assets

▪utility self-developed software expenditures

▪depreciation on a certain portion of utility plant assets

▪state income taxes

The AFUDC related to equity recorded for regulated construction projects at Sempra Infrastructure has similar flow-through treatment.

2022 Form 10-K | F-75

Table of Contents

We present in the table below reconciliations of net U.S. statutory federal income tax rates to our ETRs.


RECONCILIATION OF FEDERAL INCOME TAX RATES TO EFFECTIVE INCOME TAX RATES

	Years ended December 31,
	2022		2021		2020
Sempra:
U.S. federal statutory income tax rate	21	%	21	%	21	%
Foreign exchange and inflation effects(1)	9		1		(3)
Outside basis differences	6		9		—
Utility depreciation	4		8		3
Non-U.S. earnings taxed at rates different from the U.S. statutory income tax rate(2)	3		5		2
State income taxes, net of federal income tax benefit	1		(4)		1
Compensation-related items	—		(1)		(1)
Impairment losses	—		(1)		1
Noncontrolling interests	—		(2)		—
Utility self-developed software expenditures	—		(5)		(3)
Allowance for equity funds used during construction	(1)		(3)		(1)
Tax credits	(1)		—		(1)
Amortization of excess deferred income taxes	(2)		(3)		(1)
Resolution of prior years’ income tax items	(2)		—		—
Valuation allowances	(2)		1		(1)
Remeasurement of deferred taxes	(3)		(4)		—
Utility repairs expenditures	(5)		(9)		(4)
Other, net	—		(1)		1
Effective income tax rate	28	%	12	%	14	%
SDG&E:
U.S. federal statutory income tax rate	21	%	21	%	21	%
State income taxes, net of federal income tax benefit	4		5		5
Depreciation	3		3		3
Self-developed software expenditures	—		(1)		(4)
Amortization of excess deferred income taxes	(2)		(2)		(1)
Allowance for equity funds used during construction	(2)		(2)		(2)
Resolution of prior years’ income tax items	(2)		—		—
Repairs expenditures	(5)		(4)		(3)
Effective income tax rate	17	%	20	%	19	%
SoCalGas:
U.S. federal statutory income tax rate	21	%	21	%	21	%
Depreciation	5		(5)		5
State income taxes, net of federal income tax benefit	2		11		2
Nondeductible expenditures	2		—		2
Self-developed software expenditures	—		5		(4)
Amortization of excess deferred income taxes	(2)		2		(1)
Allowance for equity funds used during construction	(2)		1		(1)
Repairs expenditures	(6)		5		(7)
Other, net	(1)		2		(1)
Effective income tax rate	19	%	42	%	16	%

(1) Due to fluctuation of the Mexican peso against the U.S. dollar. We record income tax expense (benefit) from the transactional effects of foreign currency and inflation because of appreciation (depreciation) of the Mexican peso. In 2021 and 2020, we also recognized gains (losses) in Other Income (Expense), Net, on the Consolidated Statements of Operations from foreign currency derivatives that were partially hedging Sempra Infrastructure’s exposure to movements in the Mexican peso from its controlling interest in IEnova.

(2) Related to operations in Mexico.

We expect to repatriate approximately $2.1 billion of foreign undistributed earnings in the foreseeable future, and have accrued $65 million of U.S. state deferred income tax liability at December 31, 2022. We repatriated approximately $38 million to the U.S. in 2021.

2022 Form 10-K | F-76

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In the year ended December 31, 2022, we recognized income tax expense of $120 million for a deferred income tax liability related to outside basis differences in our foreign subsidiaries that we had previously considered to be indefinitely reinvested. We have not recorded deferred income taxes with respect to remaining basis differences of approximately $600 million between financial statement and income tax investment amounts in our non-U.S. subsidiaries because we consider them to be indefinitely reinvested as of December 31, 2022. The remaining basis differences are calculated pursuant to U.S. federal tax law, which may differ from tax law in California and foreign jurisdictions. It is currently not practicable to determine the hypothetical amount of tax that might be payable if the underlying basis differences were realized.

The table below presents the geographic components of pretax income.


PRETAX INCOME – SEMPRA
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
By geographic components:
U.S.	$	1,449	$	346	$	1,461
Non-U.S.	560		487		322
Total(1)	$	2,009	$	833	$	1,783

(1) See the Income Tax Expense (Benefit) and Effective Income Tax Rates table above for the calculation of pretax income.

U.S. pretax income was lower in 2021 compared to 2022 and 2020 primarily due to the 2021 charges at SoCalGas related to civil litigation pertaining to the Leak, which we describe in Note 16.

2022 Form 10-K | F-77

Table of Contents

The components of income tax expense are as follows.


INCOME TAX EXPENSE (BENEFIT)
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra:
Current:
U.S. state	$	(1)	$	(6)	$	(22)
Non-U.S.	165		183		112
Total	164		177		90
Deferred:
U.S. federal	248		(9)		157
U.S. state	50		(37)		36
Non-U.S.	94		(31)		(34)
Total	392		(77)		159
Deferred investment tax credits	—		(1)		—
Total income tax expense	$	556	$	99	$	249
SDG&E:
Current:
U.S. federal	$	76	$	35	$	121
U.S. state	13		13		34
Total	89		48		155
Deferred:
U.S. federal	54		99		11
U.S. state	38		54		25
Total	92		153		36
Deferred investment tax credits	1		—		(1)
Total income tax expense	$	182	$	201	$	190
SoCalGas:
Current:
U.S. federal	$	(5)	$	134	$	163
U.S. state	(3)		50		45
Total	(8)		184		208
Deferred:
U.S. federal	125		(334)		(85)
U.S. state	22		(159)		(28)
Total	147		(493)		(113)
Deferred investment tax credits	(1)		(1)		1
Total income tax expense (benefit)	$	138	$	(310)	$	96

2022 Form 10-K | F-78

Table of Contents

The tables below present the components of deferred income taxes:


DEFERRED INCOME TAXES
(Dollars in millions)
	December 31,
	2022		2021
Sempra:
Deferred income tax liabilities:
Differences in financial and tax bases of fixed assets, investments and other assets(1)	$	5,533	$	5,230
U.S. state and non-U.S. withholding tax on repatriation of foreign earnings	53		47
Regulatory balancing accounts	632		538
Right-of-use assets – operating leases	177		160
Property taxes	60		52
Postretirement benefits	31		—
Other deferred income tax liabilities	55		50
Total deferred income tax liabilities	6,541		6,077
Deferred income tax assets:
Tax credits	1,210		1,135
Net operating losses	579		706
Postretirement benefits	—		30
Compensation-related items	144		164
Operating lease liabilities	164		140
Other deferred income tax assets	40		130
State income taxes	—		21
Bad debt allowance	48		33
Accrued expenses not yet deductible	92		575
Deferred income tax assets before valuation allowances	2,277		2,934
Less: valuation allowances	192		183
Total deferred income tax assets	2,085		2,751
Net deferred income tax liability(2)	$	4,456	$	3,326

(1) In addition to the financial over tax basis differences in fixed assets, the amount also includes financial over tax basis differences in various interests in partnerships and certain subsidiaries.

(2) At December 31, 2022 and 2021, includes $135 and $151, respectively, recorded as a noncurrent asset and $4,591 and $3,477, respectively, recorded as a noncurrent liability on the Consolidated Balance Sheets.

2022 Form 10-K | F-79

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DEFERRED INCOME TAXES
(Dollars in millions)
	SDG&E				SoCalGas
	December 31,				December 31,
	2022		2021		2022		2021
Deferred income tax liabilities:
Differences in financial and tax bases of utility plant and other assets	$	2,157	$	1,970	$	1,568	$	1,444
Regulatory balancing accounts	397		323		236		215
Right-of-use assets – operating leases	79		52		12		16
Property taxes	38		35		21		17
Postretirement benefits	—		—		45		—
Other	—		1		—		1
Total deferred income tax liabilities	2,671		2,381		1,882		1,693
Deferred income tax assets:
Tax credits	5		5		2		3
Postretirement benefits	—		—		—		18
Compensation-related items	9		12		27		33
Operating lease liabilities	79		52		12		16
Bad debt allowance	19		16		23		15
State income taxes	5		4		—		12
Accrued expenses not yet deductible	10		16		59		539
Net operating losses	—		—		441		—
Other	4		1		12		18
Total deferred income tax assets	131		106		576		654
Net deferred income tax liability	$	2,540	$	2,275	$	1,306	$	1,039

The following table summarizes our unused NOLs and tax credit carryforwards.


NET OPERATING LOSSES AND TAX CREDIT CARRYFORWARDS
(Dollars in millions)
	Unused amount at December 31, 2022		Year expiration begins
Sempra:
U.S. federal:
NOLs(1)	$	2,192	Indefinite
General business tax credits(1)	450		2032
Foreign tax credits(2)	766		2024
U.S. state(2):
NOLs	3,662		2023
General business tax credits	35		2023
Non-U.S. NOLs(2)	164		2023
SoCalGas:
U.S. federal NOLs(1)	$	1,540	Indefinite
U.S. state NOLs(1)	1,729		2042

(1) We have recorded deferred income tax benefits on these NOLs and tax credits, in total, because we currently believe they will be realized on a more-likely-than-not-basis.

(2) We have not recorded deferred income tax benefits on a portion of these NOLs and tax credits because we currently believe they will not be realized on a more-likely-than-not-basis, as discussed below.

A valuation allowance is recorded when, based on more-likely-than-not criteria, negative evidence outweighs positive evidence with regard to our ability to realize a deferred income tax asset in the future. Of the valuation allowances recorded to date, the negative evidence outweighs the positive evidence primarily due to cumulative pretax losses in various U.S. state and non-U.S. jurisdictions resulting in deferred income tax assets that we currently do not believe will be realized on a more-likely-than-not basis. The following table provides the valuation allowances that we recorded against a portion of our total deferred income tax assets shown above in the “Deferred Income Taxes – Sempra” table.

2022 Form 10-K | F-80

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VALUATION ALLOWANCES
(Dollars in millions)
	December 31,
	2022		2021
Sempra:
U.S. federal	$	115	$	128
U.S. state	51		31
Non-U.S.	26		24
	$	192	$	183

Following is a reconciliation of the changes in unrecognized income tax benefits and the potential effect on our ETR for the years ended December 31:


RECONCILIATION OF UNRECOGNIZED INCOME TAX BENEFITS
(Dollars in millions)
	2022		2021		2020
Sempra:
Balance at January 1	$	304	$	99	$	93
Increase in prior period tax positions	16		3		3
Decrease in prior period tax positions	(2)		(2)		(1)
Settlements with tax authorities	(43)		—		—
Expiration of statutes of limitations	(1)		—		—
Increase in current period tax positions	4		204		4
Balance at December 31	$	278	$	304	$	99
Of December 31 balance, amounts related to tax positions that if recognized in future years would
decrease the effective tax rate(1)	(117)		$	(105)	$	(87)
increase the effective tax rate(1)	38		34		31
SDG&E:
Balance at January 1	$	14	$	13	$	12
Increase in prior period tax positions	—		1		1
Balance at December 31	$	14	$	14	$	13
Of December 31 balance, amounts related to tax positions that if recognized in future years would
decrease the effective tax rate(1)	$	(11)	$	(11)	$	(10)
increase the effective tax rate(1)	1		1		1
SoCalGas:
Balance at January 1	$	72	$	68	$	64
Increase in prior period tax positions	1		1		1
Increase in current period tax positions	4		3		3
Balance at December 31	$	77	$	72	$	68
Of December 31 balance, amounts related to tax positions that if recognized in future years would
decrease the effective tax rate(1)	$	(67)	$	(63)	$	(59)
increase the effective tax rate(1)	37		33		30

(1) Includes temporary book and tax differences that are treated as flow-through for ratemaking purposes, as discussed above.

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It is reasonably possible that within the next 12 months, unrecognized income tax benefits could decrease due to the following:


POSSIBLE DECREASES IN UNRECOGNIZED INCOME TAX BENEFITS WITHIN 12 MONTHS
(Dollars in millions)
	December 31,
	2022		2021		2020
Sempra:
Potential resolution of audit issues with various U.S. federal, state and local and non-U.S. taxing authorities	$	8	$	8	$	8
SDG&E:
Potential resolution of audit issues with various U.S. federal, state and local taxing authorities	$	6	$	6	$	6
SoCalGas:
Potential resolution of audit issues with various U.S. federal, state and local taxing authorities	$	2	$	2	$	2

Amounts accrued for interest and penalties associated with unrecognized income tax benefits are included in Income Tax Expense (Benefit) on the Consolidated Statements of Operations. Sempra, SDG&E and SoCalGas each accrued negligible amounts for interest expense and penalties at December 31, 2022 and 2021 on the Consolidated Balance Sheets, and recorded negligible amounts for interest expense and penalties on the Consolidated Statements of Operations for all periods presented.

INCOME TAX AUDITS

Sempra is subject to U.S. federal income tax as well as income tax of multiple state and non-U.S. jurisdictions. We remain subject to examination for U.S. federal tax years after 2018. We are subject to examination by major state tax jurisdictions for tax years after 2012. Certain major non-U.S. income tax returns for tax years 2013 through the present are open to examination.

SDG&E and SoCalGas are subject to U.S. federal income tax and state income tax. They remain subject to examination for U.S. federal tax years after 2018 and state tax years after 2012.

In addition, Sempra has filed protests to contest proposed state audit adjustments for tax years 2009 through 2012. The pre-2013 tax years for our major state tax jurisdictions are closed to new issues; therefore, no additional tax may be assessed by the taxing authorities for these tax years.

NOTE 9. EMPLOYEE BENEFIT PLANS

For our employee benefit plans, we:

▪recognize an asset for a plan’s overfunded status or a liability for a plan’s underfunded status in the balance sheet;

▪measure a plan’s assets and its obligations that determine its funded status as of the end of the fiscal year; and

▪recognize changes in the funded status of pension and PBOP plans in the year in which the changes occur. Generally, those changes are reported in OCI and as a separate component of shareholders’ equity.

The detailed information presented below covers the employee benefit plans of primarily Sempra and its consolidated entities.

Sempra has funded and unfunded noncontributory traditional defined benefit and cash balance plans, including separate plans for SDG&E and SoCalGas, which collectively cover all eligible employees. Pension benefits under the traditional defined benefit plans are based on service and final average earnings, while the cash balance plans provide benefits using a career average earnings methodology.

IEnova has an unfunded noncontributory defined benefit plan covering all employees that provides defined benefits to retirees based on date of hire, years of service and final average earnings.

Sempra also has PBOP plans, including separate plans for SDG&E and SoCalGas, which collectively cover all domestic and certain foreign employees. The life insurance plans are both contributory and noncontributory, and the health care plans are contributory. Participants’ contributions are adjusted annually. PBOP plans include medical benefits.

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Pension and PBOP costs and obligations are dependent on assumptions used in calculating such amounts. We review these assumptions on an annual basis and update them as appropriate. We consider current market conditions, including interest rates, in making these assumptions. We use a December 31 measurement date for all of our plans.

DEDICATED ASSETS IN SUPPORT OF CERTAIN BENEFITS PLANS

In support of its Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans, Sempra maintains dedicated assets, including a Rabbi Trust and investments in life insurance contracts, which totaled $505 million and $567 million at December 31, 2022 and 2021, respectively.

PENSION AND PBOP PLANS

Oncor

In 2022 and 2021, we had $26 million and $7 million, respectively, in AOCI representing an actuarial loss related to Oncor’s pension plans.

Benefit Obligations and Assets

The following three tables provide a reconciliation of the changes in the plans’ projected benefit obligations and the fair value of assets during 2022 and 2021, and a statement of the funded status at December 31, 2022 and 2021.


PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS
(Dollars in millions)
	Pension(1)				PBOP
	2022		2021		2022		2021
Sempra:
CHANGE IN PROJECTED BENEFIT OBLIGATION
Net obligation at January 1	$	3,857	$	4,077	$	940	$	989
Service cost	146		145		23		23
Interest cost	118		112		28		28
Contributions from plan participants	—		—		23		21
Actuarial gain	(925)		(76)		(282)		(53)
Benefit payments	(89)		(98)		(69)		(68)
Settlements	(301)		(303)		—		—
Net obligation at December 31	2,806		3,857		663		940

CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	3,182		3,002		1,408		1,399
Actual return on plan assets	(625)		340		(271)		51
Employer contributions	223		241		5		5
Contributions from plan participants	—		—		23		21
Benefit payments	(89)		(98)		(69)		(68)
Settlements	(301)		(303)		—		—
Fair value of plan assets at December 31	2,390		3,182		1,096		1,408
Funded status at December 31	$	(416)	$	(675)	$	433	$	468
Net recorded (liability) asset at December 31	$	(416)	$	(675)	$	433	$	468

(1) The accumulated benefit obligation was $2,574 and $3,419 at December 31, 2022 and 2021, respectively.

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PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS
(Dollars in millions)
	Pension(1)				PBOP
	2022		2021		2022		2021
SDG&E:
CHANGE IN PROJECTED BENEFIT OBLIGATION
Net obligation at January 1	$	885	$	913	$	188	$	193
Service cost	37		35		5		5
Interest cost	26		25		6		5
Contributions from plan participants	—		—		8		7
Actuarial gain	(135)		(2)		(54)		(3)
Benefit payments	(17)		(17)		(19)		(19)
Settlements	(82)		(69)		—		—
Net obligation at December 31	714		885		134		188

CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	859		819		197		213
Actual return on plan assets	(142)		73		(40)		(5)
Employer contributions	52		53		1		1
Contributions from plan participants	—		—		8		7
Benefit payments	(17)		(17)		(19)		(19)
Settlements	(82)		(69)		—		—
Fair value of plan assets at December 31	670		859		147		197
Funded status at December 31	$	(44)	$	(26)	$	13	$	9
Net recorded (liability) asset at December 31	$	(44)	$	(26)	$	13	$	9

(1) The accumulated benefit obligation was $678 and $824 at December 31, 2022 and 2021, respectively.


PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS
(Dollars in millions)
	Pension(1)				PBOP
(Dollars in millions)	2022		2021		2022		2021
SoCalGas:
CHANGE IN PROJECTED BENEFIT OBLIGATION
Net obligation at January 1	$	2,647	$	2,829	$	706	$	749
Service cost	96		97		17		17
Interest cost	81		78		21		22
Contributions from plan participants	—		—		14		13
Actuarial gain	(748)		(83)		(215)		(49)
Benefit payments	(58)		(63)		(46)		(46)
Settlements	(204)		(211)		—		—
Net obligation at December 31	1,814		2,647		497		706

CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	2,095		1,969		1,178		1,159
Actual return on plan assets	(449)		243		(224)		51
Employer contributions	151		157		1		1
Contributions from plan participants	—		—		14		13
Benefit payments	(58)		(63)		(46)		(46)
Settlements	(204)		(211)		—		—
Fair value of plan assets at December 31	1,535		2,095		923		1,178
Funded status at December 31	$	(279)	$	(552)	$	426	$	472
Net recorded (liability) asset at December 31	$	(279)	$	(552)	$	426	$	472

(1) The accumulated benefit obligation was $1,644 and $2,306 at December 31, 2022 and 2021, respectively.

Actuarial (gains) losses fluctuate based on changes in assumptions that we describe below in “Assumptions for Pension and PBOP Plans” and updates to census data. In 2021, the Society of Actuaries released updated mortality improvement projection scales, reflecting changes to projected observed longevity improvements in its mortality tables. There was no update in 2022. We

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have incorporated these assumptions, adjusted for the Sempra companies’ actual mortality experience, in our calculations for each of those years.

▪Actuarial gains in pension plans at Sempra in 2022 were driven primarily by an increase in discount rates at SoCalGas, SDG&E and Sempra, a change in the rates used to convert traditional pension benefits to lump-sums at SoCalGas, and administrative changes in the long-term disability plan at SoCalGas. These actuarial gains were partially offset by actuarial losses due to an increase in the interest crediting rate for the cash balance plans at SDG&E, SoCalGas and Sempra, changes in the rates used to convert cash balance accounts to traditional pension benefit distributions at SDG&E, and updated census data at SoCalGas and Sempra.

▪Actuarial gains in PBOP plans at Sempra in 2022 were driven primarily by an increase in discount rates at SoCalGas, SDG&E and Sempra.

Net Assets and Liabilities

The assets and liabilities of the pension and PBOP plans are affected by changing market conditions as well as when actual plan experience is different than assumed. Such events result in investment gains and losses, which we defer and recognize in pension and PBOP costs over a period of years. Our funded pension and PBOP plans use the asset smoothing method, except for those at SDG&E. This method develops an asset value that recognizes realized and unrealized investment gains and losses over a three-year period. This adjusted asset value, known as the market-related value of assets, is used in conjunction with an expected long-term rate of return to determine the expected return-on-assets component of net periodic benefit cost. SDG&E does not use the asset smoothing method, but rather recognizes realized and unrealized investment gains and losses during the current year.

The 10% corridor accounting method is used at Sempra, SDG&E and SoCalGas. Under the corridor accounting method, if as of the beginning of a year unrecognized net gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets, the excess is amortized over the average remaining service period of active participants (or, for plans where participants are substantially inactive employees, the average remaining lifetime of all participants or the period for which benefits will be paid, whichever is shorter). The asset smoothing and 10% corridor accounting methods help mitigate volatility of net periodic benefit costs from year to year.

Defined benefit pension and PBOP plans with an aggregated overfunded status are recognized as an asset and with an aggregated underfunded status are recognized as a liability; unrecognized changes in these assets and/or liabilities are normally recorded in AOCI on the balance sheet. SDG&E and SoCalGas record regulatory assets and liabilities that offset the funded pension and PBOP plans’ assets or liabilities, as these costs are expected to be recovered in future utility rates based on decisions by regulatory agencies.

SDG&E and SoCalGas record annual pension and PBOP net periodic benefit costs equal to the contributions to their qualified plans as authorized by the CPUC. The annual contributions to the pension plans are the greater of:

▪a minimum required funding amount as required by the IRS;

▪the amount required to maintain an 85% Adjusted Funding Target Attainment Percentage as defined by the Pension Protection Act of 2006, as amended; or

▪beginning January 1, 2019 and for the duration of the 2019 GRC cycle, a fixed amount equal to the estimated annual service cost as defined by U.S. GAAP plus one year of a 14-year amortization of the unfunded projected benefit obligation of the pension plan as of January 1, 2019, and limited to an annual amount that keeps the fair value of the pension plan assets from exceeding 110% of the pension benefit obligation of the plan.

The annual contributions to PBOP plans are equal to the lesser of the maximum tax deductible amount or the net periodic benefit cost calculated in accordance with U.S. GAAP for pension and PBOP plans. Any differences between booked net periodic benefit cost and amounts contributed to the pension and PBOP plans for SDG&E and SoCalGas are disclosed as regulatory adjustments in accordance with U.S. GAAP for rate-regulated entities.

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The net (liability) asset is included in the following categories on the Consolidated Balance Sheets.


PENSION AND PBOP OBLIGATIONS, NET OF PLAN ASSETS
(Dollars in millions)
	Pension				PBOP
	December 31,				December 31,
	2022		2021		2022		2021
Sempra:
Noncurrent assets	$	8	$	19	$	443	$	481
Current liabilities	(23)		(19)		(1)		(1)
Noncurrent liabilities	(401)		(675)		(9)		(12)
Net recorded (liability) asset	$	(416)	$	(675)	$	433	$	468
SDG&E:
Noncurrent assets	$	—	$	—	$	13	$	9
Current liabilities	(2)		(1)		—		—
Noncurrent liabilities	(42)		(25)		—		—
Net recorded (liability) asset	$	(44)	$	(26)	$	13	$	9
SoCalGas:
Noncurrent assets	$	—	$	—	$	426	$	472
Current liabilities	(2)		(1)		—		—
Noncurrent liabilities	(277)		(551)		—		—
Net recorded (liability) asset	$	(279)	$	(552)	$	426	$	472

Amounts recorded in AOCI, net of income tax effects and amounts recorded as regulatory assets, are as follows.


AMOUNTS IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Pension				PBOP
	December 31,				December 31,
	2022		2021		2022		2021
Sempra:
Net actuarial (loss) gain	$	(95)	$	(86)	$	14	$	11
Prior service cost	(5)		(8)		—		—
Total	$	(100)	$	(94)	$	14	$	11
SDG&E:
Net actuarial loss	$	(6)	$	(9)
Prior service cost	(1)		(1)
Total	$	(7)	$	(10)
SoCalGas:
Net actuarial loss	$	(9)	$	(15)
Prior service cost	(3)		(3)
Total	$	(12)	$	(18)

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Sempra, SDG&E and SoCalGas each have a funded pension plan. The following table shows the obligations of funded pension plans with benefit obligations in excess of plan assets.


OBLIGATIONS OF FUNDED PENSION PLANS
(Dollars in millions)
	December 31,
	2022		2021
Sempra:
Projected benefit obligation	$	2,476	$	2,612
Accumulated benefit obligation	2,277		2,277
Fair value of plan assets	2,205		2,095
SDG&E:
Projected benefit obligation	$	691
Accumulated benefit obligation	658
Fair value of plan assets	670
SoCalGas:
Projected benefit obligation	$	1,785	$	2,612
Accumulated benefit obligation	1,619		2,277
Fair value of plan assets	1,535		2,095

We also have unfunded pension plans at Sempra, SDG&E, SoCalGas and IEnova. The following table shows the obligations of unfunded pension plans.


OBLIGATIONS OF UNFUNDED PENSION PLANS
(Dollars in millions)
	December 31,
	2022		2021
Sempra:
Projected benefit obligation	$	153	$	178
Accumulated benefit obligation	124		139
SDG&E:
Projected benefit obligation	$	23	$	26
Accumulated benefit obligation	20		22
SoCalGas:
Projected benefit obligation	$	29	$	35
Accumulated benefit obligation	25		29

Sempra, SDG&E and SoCalGas each have a funded PBOP plan. The following table shows the obligations of funded PBOP plans with accumulated postretirement benefit obligations in excess of plan assets.


OBLIGATIONS OF FUNDED PBOP PLANS
(Dollars in millions)
	December 31, 2021
Sempra:
Accumulated postretirement benefit obligation	$	34
Fair value of plan assets	33

We also have unfunded PBOP plans at Sempra. The following table shows the obligations of unfunded PBOP plans.


OBLIGATIONS OF UNFUNDED PBOP PLANS
(Dollars in millions)
	December 31,
	2022		2021
Sempra:
Accumulated postretirement benefit obligation	$	10	$	12

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Net Periodic Benefit Cost

The following tables provide the components of net periodic benefit cost and pretax amounts recognized in OCI:


NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OCI
(Dollars in millions)
	Pension						PBOP
	Years ended December 31,						Years ended December 31,
	2022		2021		2020		2022		2021		2020
Sempra:
NET PERIODIC BENEFIT COST
Service cost	$	146	$	145	$	129	$	23	$	23	$	18
Interest cost	118		112		129		28		28		33
Expected return on assets	(183)		(173)		(169)		(64)		(61)		(55)
Amortization of:
Prior service cost (credit)	10		11		12		(2)		(2)		(2)
Actuarial loss (gain)	25		45		35		(15)		(9)		(10)
Settlement charges	28		38		22		—		—		—
Net periodic benefit cost (credit)	144		178		158		(30)		(21)		(16)
Regulatory adjustment	84		57		91		30		21		16
Total expense recognized	228		235		249		—		—		—

CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OCI (1)
Net loss (gain)	12		(5)		28		(4)		(4)		1
Amortization of actuarial loss	(8)		(8)		(14)		1		—		—
Amortization of prior service cost	(4)		(4)		(4)		—		—		—
Settlements	—		(7)		(22)		—		—		—
Total recognized in OCI	—		(24)		(12)		(3)		(4)		1
Total recognized in net periodic benefit cost and OCI	$	228	$	211	$	237	$	(3)	$	(4)	$	1

(1) Includes discontinued operations in 2020.


NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OCI
(Dollars in millions)
	Pension						PBOP
	Years ended December 31,						Years ended December 31,
	2022		2021		2020		2022		2021		2020
SDG&E:
NET PERIODIC BENEFIT COST
Service cost	$	37	$	35	$	31	$	5	$	5	$	4
Interest cost	26		25		30		6		5		6
Expected return on assets	(46)		(50)		(49)		(10)		(10)		(10)
Amortization of:
Prior service cost	1		1		2		—		—		—
Actuarial loss (gain)	1		2		3		(2)		(2)		(3)
Settlement charges	14		6		—		—		—		—
Net periodic benefit cost (credit)	33		19		17		(1)		(2)		(3)
Regulatory adjustment	20		34		38		1		2		3
Total expense recognized	53		53		55		$	—	$	—	$	—

CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OCI
Net (gain) loss	(3)		1		6
Transfer of actuarial gain	—		—		(7)
Transfer of prior service credit	—		—		(5)
Amortization of actuarial loss	(1)		—		(1)
Amortization of prior service cost	—		(1)		(1)
Total recognized in OCI	(4)		—		(8)
Total recognized in net periodic benefit cost and OCI	$	49	$	53	$	47

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NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OCI
(Dollars in millions)
	Pension						PBOP
	Years ended December 31,						Years ended December 31,
	2022		2021		2020		2022		2021		2020
SoCalGas:
NET PERIODIC BENEFIT COST
Service cost	$	96	$	97	$	86	$	17	$	17	$	14
Interest cost	81		78		88		21		22		25
Expected return on assets	(126)		(113)		(107)		(53)		(48)		(43)
Amortization of:
Prior service cost (credit)	8		8		8		(2)		(3)		(2)
Actuarial loss (gain)	18		36		26		(12)		(7)		(7)
Settlement charges	14		25		—		—		—		—
Net periodic benefit cost (credit)	91		131		101		(29)		(19)		(13)
Regulatory adjustment	64		23		53		29		19		13
Total expense recognized	155		154		154		$	—	$	—	$	—

CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OCI
Net (gain) loss	(5)		2		6
Transfer of actuarial loss	—		—		5
Transfer of prior service cost	—		—		3
Amortization of actuarial loss	(2)		(1)		(1)
Amortization of prior service cost	(1)		(1)		(1)
Total recognized in OCI	(8)		—		12
Total recognized in net periodic benefit cost and OCI	$	147	$	154	$	166

Assumptions for Pension and PBOP Plans

Benefit Obligation and Net Periodic Benefit Cost

Except for the IEnova plans, we develop the discount rate assumptions using a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high-quality corporate bonds that generate sufficient cash flows to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of corporate bonds with a Bloomberg Composite of AA or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plans’ projected benefit payments discounted at this rate with the market value of the bonds selected.

We develop the discount rate assumptions for the plans at IEnova by constructing a synthetic government zero coupon bond yield curve from the available market data, based on duration matching, and we add a risk spread to allow for the yields of high-quality corporate bonds. Such method is required when there is no deep market for high quality corporate bonds.

Long-term return on assets is based on the weighted average of the plans’ investment allocation as of the measurement date and the expected returns for those asset types.

Interest crediting rate is based on an average 30-year Treasury bond from the month of November of the preceding year.

We amortize prior service cost using straight line amortization over average future service (or average expected lifetime for plans where participants are substantially inactive employees), which is an alternative method allowed under U.S. GAAP.

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The significant assumptions affecting benefit obligation and net periodic benefit cost are as follows:


WEIGHTED-AVERAGE ASSUMPTIONS USED TO DETERMINE BENEFIT OBLIGATION

	Pension				PBOP
	December 31,				December 31,
	2022		2021		2022		2021
Sempra:
Discount rate	5.63	%	3.04	%	5.65	%	3.04	%
Interest crediting rate(1)(2)	3.99		1.94		3.99		1.94
Rate of compensation increase	2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00
SDG&E:
Discount rate	5.60	%	2.99	%	5.65	%	3.05	%
Interest crediting rate(1)(2)	3.99		1.94		3.99		1.94
Rate of compensation increase	3.50-10.00		3.50-10.00		3.50-10.00		3.50-10.00
SoCalGas:
Discount rate	5.60	%	3.04	%	5.65	%	3.05	%
Interest crediting rate(1)(2)	3.99		1.94		3.99		1.94
Rate of compensation increase	2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00

(1) Interest crediting rate for pension benefits applies only to funded cash balance plans.

(2) Interest crediting rate for PBOP applies only to interest bearing health retirement accounts at SDG&E and SoCalGas.


WEIGHTED-AVERAGE ASSUMPTIONS USED TO DETERMINE NET PERIODIC BENEFIT COST

	Pension						PBOP
	Years ended December 31,						Years ended December 31,
	2022		2021		2020		2022		2021		2020
Sempra:
Discount rate	3.04	%	2.78	%	3.49	%	3.04	%	2.88	%	3.54	%
Expected return on plan assets	6.27		6.47		7.00		4.77		4.76		4.64
Interest crediting rate(1)(2)	1.94		1.62		2.28		1.94		1.62		2.28
Rate of compensation increase	2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00
SDG&E:
Discount rate	2.99	%	2.73	%	3.44	%	3.05	%	2.85	%	3.55	%
Expected return on plan assets	5.50		6.25		7.00		4.80		4.81		5.51
Interest crediting rate(1)(2)	1.94		1.62		2.28		1.94		1.62		2.28
Rate of compensation increase	3.50-10.00		2.70-10.00		2.70-10.00		3.50-10.00		2.70-10.00		2.70-10.00
SoCalGas:
Discount rate	3.04	%	2.79	%	3.50	%	3.05	%	2.90	%	3.55	%
Expected return on plan assets	6.75		6.75		7.00		4.71		4.70		4.41
Interest crediting rate(1)(2)	1.94		1.62		2.28		1.94		1.62		2.28
Rate of compensation increase	2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00

(1) Interest crediting rate for pension benefits applies only to funded cash balance plans.

(2) Interest crediting rate for PBOP applies only to interest bearing health retirement accounts at SDG&E and SoCalGas.

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Health Care Cost Trend Rates

Assumed health care cost trend rates have a significant effect on the amounts that Sempra, SDG&E and SoCalGas report for the health care plan costs. Following are the health care cost trend rates applicable to our PBOP plans:


ASSUMED HEALTH CARE COST TREND RATES

	PBOP
	Pre-65 retirees						Retirees aged 65 years and older
	Years ended December 31,						Years ended December 31,
	2022		2021		2020		2022		2021		2020
Health care cost trend rate assumed for next year	6.00	%	6.00	%	6.00	%	4.50	%	4.75	%	4.75	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend)	4.75	%	4.75	%	4.75	%	4.50	%	4.50	%	4.50	%
Year the rate reaches the ultimate trend	2028		2025		2025		2022		2022		2022

Plan Assets

Investment Allocation Strategy for Sempra’s Pension Master Trust

Sempra’s pension master trust holds the investments for our pension plans and a portion of the investments for our PBOP plans. We maintain additional trusts, as we discuss below, for certain of SDGE’s and SoCalGas’ PBOP plans. Other than through indexing strategies, the trusts do not invest in securities of Sempra.

The current asset allocation objective for the pension master trust is to protect the funded status of the plans while generating sufficient returns to cover future benefit payments and accruals. A portion of the pension master trust is invested in accordance with plan specific de-risking glidepaths designed to reduce the assets’ exposure to risk as the plans become better funded. We assess the portfolio performance by comparing actual returns with relevant benchmarks. The target asset allocations for Sempra’s pension master trust are between return-seeking assets (i.e., generally, equity securities, high-yield fixed income securities and other instruments with a similar risk profile) and risk-mitigating assets (i.e., generally, government and corporate fixed income securities) as follows:


TARGET ASSET ALLOCATIONS FOR SEMPRA’S PENSION MASTER TRUST
(Dollars in millions)
	Sempra		SDG&E		SoCalGas
Return-seeking assets	34	%	42	%	65	%
Risk-mitigating assets	66	%	58	%	35	%

We maintain asset allocations at strategic levels within reasonable bands of variance. The asset allocations are reviewed by our Plan Funding Committee and our Pension and Benefits Investment Committee (the Committees) on a regular basis to help ensure that plan assets are positioned to meet plan obligations. When evaluating strategic asset allocations, the Committees consider many variables, including:

▪long-term cost

▪variability and level of contributions

▪funded status

▪a range of expected outcomes over varying confidence levels

In accordance with the Sempra pension investment guidelines, derivative financial instruments may be used by the pension master trust’s equity and fixed income portfolio investment managers to equitize cash, hedge certain exposures, and as substitutes for certain types of fixed income securities.

Rate of Return Assumption

The expected return on assets in our pension and PBOP plans is based on the weighted-average of the plans’ investment allocations to specific asset classes as of the measurement date. We expect a return of between 4% and 12% on return-seeking assets and between 1% and 4% for risk-mitigating assets. Certain trusts that hold assets for SDG&E’s and SoCalGas’ PBOP plans are subject to taxation, which impacts the expected after-tax return on assets in the plan.

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Concentration of Risk

Plan assets are diversified across global equity and bond markets, and concentration of risk in any one economic, industry, maturity or geographic sector is limited.

Investment Strategy for Sempra’s, SDG&E’s and SoCalGas’ PBOP Plans

Sempra’s PBOP plan is funded by cash contributions from Sempra. SDG&E’s and SoCalGas’ PBOP plans are funded by cash contributions from SDG&E and SoCalGas and their current retirees. The assets of these plans are placed into the pension master trust and other Voluntary Employee Beneficiary Association trusts and are invested in accordance with a de-risking glidepath designed to reduce the assets’ exposure to risk as the trusts become better funded. These specific allocations are periodically reviewed to help ensure that plan assets are positioned to meet plan obligations. The target asset allocations for the PBOP plans are between return-seeking assets and risk-mitigating assets as follows:


TARGET ASSET ALLOCATIONS FOR PBOP PLANS
(Dollars in millions)
	Sempra		SDG&E and SoCalGas
	Assets held in pension master trust		Assets held in pension master trust		Assets held in Voluntary Employee Beneficiary Association trusts
Return-seeking assets	74	%	38	%	30	%
Risk-mitigating assets	26	%	62	%	70	%

Fair Value of Pension and PBOP Plan Assets

We classify the investments in Sempra’s pension master trust and the trusts for SDG&E’s and SoCalGas’ PBOP plans based on the fair value hierarchy, except for certain investments measured at NAV.

The following are descriptions of the valuation methods and assumptions we use to estimate the fair values of investments held by pension and PBOP plan trusts.

Equity Securities – Equity securities are valued using quoted prices listed on nationally recognized securities exchanges.

Registered Investment Companies – Investments in mutual funds sponsored by a registered investment company are valued based on exchange listed prices. Where the value is a quoted price in an active market, the investment is classified within Level 1 of the fair value hierarchy. Other investments are valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks.

Fixed Income Securities – Certain fixed income securities are valued at the closing price reported in the active market in which the security is traded. Other fixed income securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar securities, the security is valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks. Certain high yield fixed-income securities are valued by applying a price adjustment to the bid side to calculate a mean and ask value. Adjustments can vary based on maturity, credit standing, and reported trade frequencies. The bid to ask spread is determined by the investment manager based on the review of the available market information.

Common/Collective Trusts – Investments in common/collective trust funds are valued based on the NAV of units owned, which is based on the current fair value of the funds’ underlying assets.

Derivative Financial Instruments – Futures contracts that are publicly traded in active markets are valued at closing prices as of the last business day of the year. Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies, and unrealized gain (loss) is recorded daily. Fixed income futures and options are marked to market daily. Equity index futures contracts are valued at the last sales price quoted on the exchange on which they primarily trade.

While management believes the valuation methods described above are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

We provide more discussion of fair value measurements in Notes 1 and 12. The following tables set forth by level within the fair value hierarchy a summary of the investments in our pension and PBOP plan trusts measured at fair value on a recurring basis.

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The fair values by asset category are as follows:


FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PENSION PLANS
(Dollars in millions)
	Fair value at December 31, 2022
	Level 1		Level 2		Total
SDG&E:
Cash and cash equivalents	$	3	$	—	3
Equity securities:
Domestic	79		1		80
International	40		—		40
Registered investment companies:
Domestic	35		2		37
International	5		—		5
Fixed income securities:
Domestic government and government agencies	224		3		227
International government bonds	—		2		2
Domestic corporate bonds	—		52		52
International corporate bonds	—		8		8
Other	(1)		—		(1)
Total investment assets in the fair value hierarchy	385		68		453
Accounts receivable/payable, net					(1)
Investments measured at NAV:
Common/collective trusts					210
Other					8
Total SDG&E investment assets					670
SoCalGas:
Cash and cash equivalents	6		—		6
Equity securities:
Domestic	311		2		313
International	158		—		158
Registered investment companies:
Domestic	137		7		144
International	20		—		20
Fixed income securities:
Domestic government and government agencies	261		17		278
International government bonds	—		6		6
Domestic corporate bonds	—		204		204
International corporate bonds	—		30		30
Other	(1)		1		—
Total investment assets in the fair value hierarchy	892		267		1,159
Accounts receivable/payable, net					(7)
Investments measured at NAV:
Common/collective trusts					355
Other					28
Total SoCalGas investment assets					$	1,535

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FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PENSION PLANS (CONTINUED)
(Dollars in millions)
	Fair value at December 31, 2022
	Level 1		Level 2		Total
Other Sempra:
Cash and cash equivalents	$	1	$	—	$	1
Equity securities:
Domestic	17		—		17
International	9		—		9
Registered investment companies:
Domestic	7		—		7
International	2		—		2
Fixed income securities:
Domestic government and government agencies	72		3		75
Domestic corporate bonds	—		11		11
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	108		15		123
Investments measured at NAV:
Common/collective trusts					60
Other					2
Total other Sempra investment assets					185

Total Sempra investment assets in the fair value hierarchy	$	1,385	$	350
Total Sempra investment assets					$	2,390

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FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PENSION PLANS
(Dollars in millions)
	Fair value at December 31, 2021
	Level 1		Level 2		Total
SDG&E:
Cash and cash equivalents	$	3	$	—	$	3
Equity securities:
Domestic	154		1		155
International	70		—		70
Registered investment companies:
Domestic	37		4		41
International	6		—		6
Fixed income securities:
Domestic government and government agencies	251		4		255
International government bonds	—		2		2
Domestic corporate bonds	—		75		75
International corporate bonds	—		12		12
Total investment assets in the fair value hierarchy	521		98		619
Accounts receivable/payable, net					(4)
Investments measured at NAV:
Common/collective trusts					233
Other					11
Total SDG&E investment assets					859
SoCalGas:
Cash and cash equivalents	14		—		14
Equity securities:
Domestic	656		4		660
International	299		1		300
Registered investment companies:
Domestic	158		17		175
International	26		—		26
Fixed income securities:
Domestic government and government agencies	136		19		155
International government bonds	—		8		8
Domestic corporate bonds	—		321		321
International corporate bonds	—		50		50
Total investment assets in the fair value hierarchy	1,289		420		1,709
Accounts receivable/payable, net					(15)
Investments measured at NAV:
Common/collective trusts					356
Other					45
Total SoCalGas investment assets					$	2,095

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FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PENSION PLANS (CONTINUED)
(Dollars in millions)
	Fair value at December 31, 2021
	Level 1		Level 2		Total
Other Sempra:
Cash and cash equivalents	$	1	$	—	$	1
Equity securities:
Domestic	34		—		34
International	15		—		15
Registered investment companies:
Domestic	9		—		9
International	1		—		1
Fixed income securities:
Domestic government and government agencies	76		1		77
International government bonds	—		1		1
Domestic corporate bonds	—		17		17
International corporate bonds	—		3		3
Other	1		—		1
Total investment assets in the fair value hierarchy	137		22		159
Accounts receivable/payable, net					(1)
Investments measured at NAV:
Common/collective trusts					68
Other					2
Total other Sempra investment assets					228

Total Sempra investment assets in the fair value hierarchy	$	1,947	$	540
Total Sempra investment assets					$	3,182

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The fair values by asset category of the PBOP plan assets held in the pension master trust and in the additional trusts for SoCalGas’ PBOP plans and SDG&E’s PBOP plan trusts are as follows:


FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PBOP PLANS
(Dollars in millions)
	Fair value at December 31, 2022
	Level 1		Level 2		Total
SDG&E:
Equity securities:
Domestic	$	10	$	—	$	10
International	5		—		5
Registered investment companies:
Domestic	65		—		65
International	7		—		7
Fixed income securities:
Domestic government and government agencies	9		2		11
Domestic corporate bonds	—		6		6
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	96		9		105
Investments measured at NAV – Common/collective trusts					42
Total SDG&E investment assets					147
SoCalGas:
Cash and cash equivalents	1		—		1
Equity securities:
Domestic	46		—		46
International	24		—		24
Registered investment companies:
Domestic	80		72		152
International	3		—		3
Fixed income securities:
Domestic government and government agencies	151		14		165
International government bonds	1		8		9
Domestic corporate bonds	—		269		269
International corporate bonds	—		37		37
Total investment assets in the fair value hierarchy	306		400		706
Accounts receivable/payable, net					(4)
Investments measured at NAV:
Common/collective trusts					218
Other					3
Total SoCalGas investment assets					923
Other Sempra:
Equity securities:
Domestic	6		—		6
International	3		—		3
Registered investment companies – Domestic	2		—		2
Fixed income securities:
Domestic government and government agencies	2		—		2
Domestic corporate bonds	—		4		4
Total investment assets in the fair value hierarchy	13		4		17
Investments measured at NAV:
Common/collective trusts					7
Other					2
Total other Sempra investment assets					26

Total Sempra investment assets in the fair value hierarchy	$	415	$	413
Total Sempra investment assets					$	1,096

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FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PBOP PLANS
(Dollars in millions)
	Fair value at December 31, 2021
	Level 1		Level 2		Total
SDG&E:
Equity securities:
Domestic	$	16	$	—	$	16
International	7		—		7
Registered investment companies:
Domestic	82		1		83
International	9		—		9
Fixed income securities:
Domestic government and government agencies	24		1		25
Domestic corporate bonds	—		8		8
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	138		11		149
Accounts receivable/payable, net					(1)
Investments measured at NAV – Common/collective trusts					49
Total SDG&E investment assets					197

SoCalGas:
Cash and cash equivalents	2		—		2
Equity securities:
Domestic	83		1		84
International	37		—		37
Registered investment companies:
Domestic	74		73		147
International	3		—		3
Fixed income securities:
Domestic government and government agencies	241		17		258
International government bonds	1		11		12
Domestic corporate bonds	—		337		337
International corporate bonds	—		49		49
Total investment assets in the fair value hierarchy	441		488		929
Accounts receivable/payable, net					(1)
Investments measured at NAV:
Common/collective trusts					244
Other					6
Total SoCalGas investment assets					1,178

Other Sempra:
Equity securities:
Domestic	9		—		9
International	6		—		6
Registered investment companies – Domestic	2		—		2
Fixed income securities:
Domestic government and government agencies	2		1		3
Domestic corporate bonds	—		4		4
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	19		6		25
Investments measured at NAV:
Common/collective trusts					7
Other					1
Total other Sempra investment assets					33

Total Sempra investment assets in the fair value hierarchy	$	598	$	505
Total Sempra investment assets					$	1,408

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Future Payments

We expect to contribute the following amounts to our pension and PBOP plans in 2023:


EXPECTED CONTRIBUTIONS
(Dollars in millions)
	Sempra		SDG&E		SoCalGas
Pension plans	$	233	$	53	$	153
PBOP plans	5		1		1

The following table shows the total benefits we expect to pay for the next 10 years to current employees and retirees from the plans or from company assets.


EXPECTED BENEFIT PAYMENTS
(Dollars in millions)
	Sempra				SDG&E				SoCalGas
	Pension		PBOP		Pension		PBOP		Pension		PBOP
2023	$	223	$	46	$	58	$	10	$	130	$	33
2024	220		45		58		10		129		33
2025	216		45		59		10		131		32
2026	220		47		57		10		132		32
2027	220		44		56		10		129		32
2028-2032	1,062		220		285		47		654		161

SAVINGS PLANS

Sempra, SDG&E and SoCalGas offer trusteed savings plans to all employees. Employee participation, employee contributions and employer matching contributions are subject to the provisions of the respective plans, and for employee contributions, limits imposed by the respective governmental authorities.

Employer contributions to the savings plans were as follows:


EMPLOYER CONTRIBUTIONS TO SAVINGS PLANS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra	$	64	$	52	$	47
SDG&E	19		18		16
SoCalGas	30		28		25

The market value of Sempra common stock held by the savings plans was $1.1 billion and $1.0 billion at December 31, 2022 and 2021, respectively.

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NOTE 10. SHARE-BASED COMPENSATION

SEMPRA EQUITY COMPENSATION PLANS

Sempra has share-based compensation plans intended to align employee and shareholder objectives related to the long-term growth of Sempra. The plans permit a wide variety of share-based awards, including:

▪nonqualified stock options

▪incentive stock options

▪restricted stock awards

▪restricted stock units

▪stock appreciation rights

▪performance awards

▪stock payments

▪dividend equivalents

Eligible employees, including those from SDG&E and SoCalGas, participate in Sempra’s share-based compensation plans as a component of their compensation package.

In the three years ended December 31, 2022, Sempra had the following types of equity awards outstanding:

▪Nonqualified Stock Options: Options to purchase common stock have an exercise price equal to the market price of the common stock at the date of grant, are service-based, become exercisable over a three-year period and expire 10 years from the date of grant. Unvested option awards are subject to forfeiture following a termination of employment, except where the retirement criteria under such awards have been met and subject to certain other exceptions described below.

▪Performance-Based Restricted Stock Units: These RSU awards generally vest in Sempra common stock at the end of three-year performance periods based on Sempra’s total return to shareholders relative to that of specified market indices or based on the compound annual growth rate of Sempra’s EPS. The comparative market indices for the awards that vest based on total return to shareholders are the S&P 500 Utilities Index (excluding water companies) and the S&P 500 Index. We use long-term analyst consensus growth estimates for S&P 500 Utilities Index peer companies (excluding water companies) to develop our targets for awards that vest based on EPS growth. These RSU awards are subject to forfeiture prior to vesting following a termination of employment, except where the retirement criteria under such awards have been met and subject to certain other exceptions described below.

◦If Sempra’s total return to shareholders or EPS growth is below the target levels but above threshold performance levels, shares are subject to partial vesting on a pro rata basis. If Sempra’s total return to shareholders or EPS growth exceeds target levels, up to an additional 100% of the granted RSUs may be issued.

◦For certain awards granted in 2018 that vest based on Sempra’s total return to shareholders, a modifier adds 20% to the award’s payout (as initially calculated based on total return to shareholders relative to that of specified market indices) for total shareholder return performance in the top quartile relative to historical benchmark data for Sempra and reduces the award’s payout by 20% for performance in the bottom quartile. However, in no event will more than an additional 100% of the granted RSUs be issued. If performance falls within the second or third quartiles, the modifier is not triggered, and the payout is based solely on total return to shareholders relative to that of specified market indices.

▪Service-Based Restricted Stock Units: RSUs may also be service-based; these generally vest ratably over three-year service periods (for awards granted after 2018), or at the end of three-year service periods (for awards granted during 2018). These awards are subject to earlier forfeiture upon termination of employment, subject to certain exceptions described below.

For awards that would otherwise be forfeited upon termination of employment, the Compensation and Talent Development Committee of Sempra’s board of directors may waive the forfeiture requirement and, with respect to options and service-based RSUs, may accelerate vesting. Awards are also subject to accelerated vesting under certain circumstances upon a change in control under the applicable LTIP, in accordance with severance pay agreements or to the extent otherwise required by the terms of the applicable award. Dividend equivalents on shares subject to RSUs are reinvested to purchase additional common shares that become subject to the same vesting conditions as the RSUs to which the dividends relate.

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SHARE-BASED AWARDS AND COMPENSATION EXPENSE

At December 31, 2022, 5,056,550 common shares were authorized and available for future grants of share-based awards. Our practice is to satisfy share-based awards by issuing new shares rather than by open-market purchases.

We measure and recognize compensation expense for all share-based payment awards made to our employees and directors based on estimated fair values on the date of grant. We recognize compensation costs net of an estimated forfeiture rate (based on historical experience) and recognize the compensation costs for nonqualified stock options and RSUs on a straight-line basis over the requisite service period of the award, which is generally three years. However, for awards granted to retirement-eligible participants, the expense is recognized over the initial year in which the award was granted as the award requires service through the end of the year in which it was granted. For awards granted to participants who become eligible for retirement during the requisite service period, the expense is recognized over the period between the date of grant and the later of the end of the year in which the award was granted or the date the participant first becomes eligible for retirement. Substantially all awards outstanding are classified as equity instruments; therefore, we recognize additional paid in capital as we recognize the compensation expense associated with the awards. We recognize in earnings the tax benefits (or deficiencies) resulting from tax deductions that are in excess of (or less than) tax benefits related to compensation cost recognized for share-based payments.

Sempra subsidiaries record an expense for the plans to the extent that subsidiary employees participate in the plans and/or the subsidiaries are allocated a portion of the Sempra plans’ corporate staff costs. Total share-based compensation expense for all of Sempra’s share-based awards was comprised as follows:


SHARE-BASED COMPENSATION EXPENSE
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra:
Share-based compensation expense, before income taxes(1)	$	61	$	58	$	62
Income tax benefit(1)	(17)		(16)		(17)
	$	44	$	42	$	45

Capitalized share-based compensation cost	$	11	$	9	$	11
Excess income tax (benefit) deficiency	$	(3)	$	(9)	$	(19)
SDG&E:
Share-based compensation expense, before income taxes	$	11	$	10	$	11
Income tax benefit	(3)		(3)		(3)
	$	8	$	7	$	8

Capitalized share-based compensation cost	$	6	$	5	$	7
Excess income tax (benefit) deficiency	$	—	$	(1)	$	(3)
SoCalGas:
Share-based compensation expense, before income taxes	$	17	$	14	$	14
Income tax benefit	(5)		(4)		(4)
	$	12	$	10	$	10

Capitalized share-based compensation cost	$	5	$	4	$	4
Excess income tax (benefit) deficiency	$	—	$	(1)	$	(3)

(1) Includes activity of awards issued from the IEnova 2013 LTIP, which settled in cash upon vesting based on the price of IEnova’s common stock.

SEMPRA NONQUALIFIED STOCK OPTIONS

We use a Black-Scholes option-pricing model to estimate the fair value of each nonqualified stock option grant. The use of a valuation model requires us to make certain assumptions about selected model inputs. Expected volatility is calculated based on a blend of the historical and implied volatility of Sempra’s common stock price. The average expected term for options is based on the vesting schedule, contractual term of the option, expected employee exercise and post-termination behavior. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term estimated at the date of the grant. In 2022, 2021 and 2020, Sempra’s board of directors granted 219,898, 222,620 and 154,860 nonqualified stock options, respectively, that become exercisable over a three-year period. The weighted-average per-share fair value for options

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granted was $21.98, $19.07 and $19.76 in 2022, 2021 and 2020, respectively. To calculate this fair value, we used the Black-Scholes model with the following weighted-average assumptions:


KEY ASSUMPTIONS FOR STOCK OPTIONS GRANTED

	Years ended December 31,
	2022		2021		2020
Sempra:
Stock price volatility	26.08	%	26.57	%	18.78	%
Expected term	5.36 years		5.36 years		5.34 years
Risk-free rate of return	1.40	%	0.41	%	1.68	%
Annual dividend yield	3.33	%	3.38	%	2.60	%

The following table shows a summary of nonqualified stock options at December 31, 2022 and activity for the year then ended:


NONQUALIFIED STOCK OPTIONS

	Common shares under options	Weighted- average exercise price		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value (in millions)
Sempra:
Outstanding at January 1, 2022	537,344	$	123.45
Granted	219,898	$	131.99
Exercised	(40,630)	$	106.76

Outstanding at December 31, 2022	716,612	$	127.02	7.72	$	20

Vested or expected to vest at December 31, 2022	716,612	$	127.02	7.72	$	20
Exercisable at December 31, 2022	307,563	$	122.09	6.75	$	10

The aggregate intrinsic value at December 31, 2022 is the total of the difference between Sempra’s closing common stock price and the exercise price for all in-the-money options. The aggregate intrinsic value for nonqualified stock options exercised in the last three years was:

▪$1.7 million in 2022

▪$1.4 million in 2021

▪$0.4 million in 2020

All compensation cost related to stock options had been recognized as of December 31, 2022. The weighted-average exercise price for nonqualified stock options granted in 2021 and 2020 was $123.80 and $149.12, respectively.

We received cash of $4 million, $5 million and a negligible amount from stock option exercises in 2022, 2021 and 2020, respectively.

SEMPRA RESTRICTED STOCK UNITS

We use Sempra’s common stock price at the grant date to estimate the fair value of our service-based RSUs and our RSUs that vest based on the compound annual growth rate of Sempra’s EPS.

We use a Monte-Carlo simulation model to estimate the fair value of our RSUs that vest based on Sempra’s total return to shareholders. Our determination of fair value is affected by the historical volatility of the common stock price for Sempra and its peer group companies. The valuation also is affected by the risk-free rates of return and a number of other variables. Below are key assumptions for RSUs granted in the last three years:

2022 Form 10-K | F-102

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KEY ASSUMPTIONS FOR RSUs GRANTED

	Years ended December 31,
	2022		2021		2020
Sempra:
Stock price volatility	32.82	%	33.39	%	16.35	%
Risk-free rate of return	1.05	%	0.16	%	1.55	%

The following table shows a summary of RSUs at December 31, 2022 and activity for the year then ended:


RESTRICTED STOCK UNITS

	Performance-based restricted stock units			Service-based restricted stock units
	Units	Weighted- average grant-date fair value		Units	Weighted- average grant-date fair value
Sempra:
Nonvested at January 1, 2022	870,777	$	131.64	277,300	$	127.54
Granted	341,139	$	146.94	153,243	$	132.64
Vested	(317,956)	$	113.66	(139,020)	$	126.41
Forfeited	(54,165)	$	134.65	(15,886)	$	139.01
Nonvested at December 31, 2022(1)	839,795	$	144.39	275,637	$	130.86
Expected to vest at December 31, 2022	823,418	$	144.46	267,778	$	130.90

(1) Each RSU represents the right to receive one share of our common stock if applicable performance conditions are satisfied. For all performance-based RSUs, up to an additional 100% of the shares represented by the RSUs may be issued if Sempra exceeds target performance conditions.

In 2022, 2021 and 2020, the total fair value of RSU shares vested during the year was $54 million, $57 million and $70 million, respectively.

We expect $43 million of total compensation cost related to nonvested RSUs not yet recognized as of December 31, 2022 to be recognized over a weighted-average period of 1.6 years. The weighted-average per-share fair values for performance-based RSUs granted were $133.03 and $155.62 in 2021 and 2020, respectively. The weighted-average per-share fair values for service-based RSUs granted were $124.84 and $138.91 in 2021 and 2020, respectively.

NOTE 11. DERIVATIVE FINANCIAL INSTRUMENTS

We use derivative instruments primarily to manage exposures arising in the normal course of business. Our principal exposures are commodity market risk, benchmark interest rate risk and foreign exchange rate exposures. Our use of derivatives for these risks is integrated into the economic management of our anticipated revenues, anticipated expenses, assets and liabilities. Derivatives may be effective in mitigating these risks (1) that could lead to declines in anticipated revenues or increases in anticipated expenses, or (2) that could cause our asset values to fall or our liabilities to increase. Accordingly, our derivative activity summarized below generally represents an impact that is intended to offset associated revenues, expenses, assets or liabilities that are not included in the tables below.

In certain cases, we apply the normal purchase or sale exception to derivative instruments and have other commodity contracts that are not derivatives. These contracts are not recorded at fair value and are therefore excluded from the disclosures below.

In all other cases, we record derivatives at fair value on the Consolidated Balance Sheets. We may have derivatives that are (1) cash flow hedges, (2) fair value hedges, or (3) undesignated. Depending on the applicability of hedge accounting and, for SDG&E and SoCalGas and other operations subject to regulatory accounting, the requirement to pass impacts through to customers, the impact of derivative instruments may be offset in OCI (cash flow hedges), on the balance sheet (regulatory offsets), or recognized in earnings (fair value hedges and undesignated derivatives not subject to rate recovery). We classify cash flows from the principal settlements of cross-currency swaps that hedge exposure related to Mexican peso-denominated debt and hedge

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termination costs on interest rate swaps as financing activities and settlements of other derivative instruments as operating activities on the Consolidated Statements of Cash Flows.

HEDGE ACCOUNTING

We may designate a derivative as a cash flow hedging instrument if it effectively converts anticipated cash flows associated with revenues or expenses to a fixed dollar amount. We may utilize cash flow hedge accounting for derivative commodity instruments, foreign currency instruments and interest rate instruments. Designating cash flow hedges is dependent on the business context in which the instrument is being used, the effectiveness of the instrument in offsetting the risk that the future cash flows of a given revenue or expense item may vary, and other criteria.

ENERGY DERIVATIVES

Our market risk is primarily related to natural gas and electricity price volatility and the specific physical locations where we transact. We use energy derivatives to manage these risks. The use of energy derivatives in our various businesses depends on the particular energy market, and the operating and regulatory environments applicable to the business, as follows:

▪SDG&E and SoCalGas use natural gas derivatives and SDG&E uses electricity derivatives, for the benefit of customers, with the objective of managing price risk and basis risk, and stabilizing and lowering natural gas and electricity costs. These derivatives include fixed-price natural gas and electricity positions, options, and basis risk instruments, which are either exchange-traded or over-the-counter financial instruments, or bilateral physical transactions. This activity is governed by risk management and transacting activity plans limited by company policy. SDGE’s risk management and transacting activity plans for electricity derivatives are also required to be filed with, and have been approved by, the CPUC. SoCalGas is also subject to certain regulatory requirements and thresholds related to natural gas procurement under the GCIM. Natural gas and electricity derivative activities are recorded as commodity costs that are offset by regulatory account balances and are recovered in rates. Net commodity cost impacts on the Consolidated Statements of Operations are reflected in Cost of Natural Gas or in Cost of Electric Fuel and Purchased Power.

▪SDG&E is allocated and may purchase CRRs, which serve to reduce the regional electricity price volatility risk that may result from local transmission capacity constraints. Unrealized gains and losses do not impact earnings, as they are offset by regulatory account balances. Realized gains and losses associated with CRRs, which are recoverable in rates, are recorded in Cost of Electric Fuel and Purchased Power on the Consolidated Statements of Operations.

▪Sempra Infrastructure may use natural gas and electricity derivatives, as appropriate, in an effort to optimize the earnings of its assets which support the following businesses: LNG, natural gas pipelines and storage, and power generation. Gains and losses associated with undesignated derivatives are recognized in Energy-Related Businesses Revenues on the Consolidated Statements of Operations.

▪From time to time, our various businesses, including SDG&E and SoCalGas, may use other energy derivatives to hedge exposures such as GHG allowances.

The following table summarizes net energy derivative volumes.


NET ENERGY DERIVATIVE VOLUMES
(Quantities in millions)
		December 31,
Commodity	Unit of measure	2022	2021
Sempra:
Natural gas	MMBtu	254	184
Electricity	MWh	1	1
Congestion revenue rights	MWh	42	45
SDG&E:
Natural gas	MMBtu	15	7
Electricity	MWh	—	1
Congestion revenue rights	MWh	42	45
SoCalGas:
Natural gas	MMBtu	224	201

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INTEREST RATE DERIVATIVES

We are exposed to interest rates primarily as a result of our current and expected use of financing. SDG&E and SoCalGas, as well as Sempra and its other subsidiaries and JVs, periodically enter into interest rate derivative agreements intended to moderate our exposure to interest rates and to lower our overall costs of borrowing. In addition, we may utilize interest rate swaps, typically designated as cash flow hedges, to lock in interest rates on outstanding debt or in anticipation of future financings.

In December 2022, Sempra Infrastructure entered into an undesignated contingent interest rate swap to lock in interest rates on up to $3.5 billion of the variable rate indebtedness from anticipated future project-level debt financing that would be used to pay for construction costs of the proposed PA LNG Phase 1 project. The contingent interest rate swap has a 25-year tenor, and its settlement is conditional upon the closing of project-level debt financing with respect to the proposed PA LNG Phase 1 project. We may elect to (i) cash settle the contingent interest rate swap five days after reaching the closing of project-level debt financing, or (ii) terminate the contingent interest rate swap and enter into new long-term interest rate swaps that are adjusted for the termination value of the contingent interest rate swap. We expect to close the project-level debt financing in the first quarter of 2023.

The following table presents the net notional amounts of our interest rate derivatives, excluding those in our equity method investments and the contingent interest rate swap.


INTEREST RATE DERIVATIVES
(Dollars in millions)
	December 31, 2022			December 31, 2021
	Notional debt		Maturities	Notional debt		Maturities
Sempra:
Cash flow hedges	$	294	2023-2034	$	462	2022-2034

FOREIGN CURRENCY DERIVATIVES

We utilize cross-currency swaps to hedge exposure related to Mexican peso-denominated debt at our Mexican subsidiaries and JVs. These cash flow hedges 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. From time to time, Sempra Infrastructure and its JVs may use other foreign currency derivatives to hedge exposures related to cash flows associated with revenues from contracts denominated in Mexican pesos that are indexed to the U.S. dollar.

We are also exposed to exchange rate movements at our Mexican subsidiaries and JVs, which have U.S. dollar-denominated cash balances, receivables, payables and debt (monetary assets and liabilities) that give rise to Mexican currency exchange rate movements for Mexican income tax purposes. They also have deferred income tax assets and liabilities denominated in the Mexican peso, which 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. We may utilize foreign currency derivatives as a means to manage the risk of exposure to significant fluctuations in our income tax expense and equity earnings from these impacts; however, we generally do not hedge our deferred income tax assets and liabilities or for inflation.

We also utilized foreign currency derivatives in 2020 to hedge exposure to fluctuations in the Peruvian sol and Chilean peso related to the sales of our operations in Peru and Chile, respectively.

The following table presents the net notional amounts of our foreign currency derivatives, excluding those in our equity method investments.


FOREIGN CURRENCY DERIVATIVES
(Dollars in millions)
	December 31, 2022			December 31, 2021
	Notional amount		Maturities	Notional amount		Maturities
Sempra:
Cross-currency swaps	$	306	2023	$	306	2022-2023
Other foreign currency derivatives	111		2023-2024	106		2022-2023

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FINANCIAL STATEMENT PRESENTATION

The Consolidated Balance Sheets reflect the offsetting of net derivative positions and cash collateral with the same counterparty when a legal right of offset exists. The following tables provide the fair values of derivative instruments on the Consolidated Balance Sheets, including the amount of cash collateral receivables that were not offset because the cash collateral was in excess of liability positions.


DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	December 31, 2022
	Current assets: Fixed-price contracts and other derivatives(1)		Other long-term assets		Other current liabilities		Deferred credits and other
Sempra:
Derivatives designated as hedging instruments:
Interest rate instruments	$	10	$	33	$	—	$	—
Foreign exchange instruments	—		—		(7)		(1)
Interest rate and foreign exchange instruments	—		—		(105)		—
Derivatives not designated as hedging instruments:
Commodity contracts not subject to rate recovery	480		133		(399)		(132)
Associated offsetting commodity contracts	(301)		(39)		301		39
Commodity contracts subject to rate recovery	138		27		(97)		(2)
Associated offsetting commodity contracts	(27)		(2)		27		2
Interest rate instrument	33		—		—		—
Net amounts presented on the balance sheet	333		152		(280)		(94)
Additional cash collateral for commodity contracts not subject to rate recovery	451		—		—		—
Additional cash collateral for commodity contracts subject to rate recovery	18		—		—		—
Total(2)	$	802	$	152	$	(280)	$	(94)
SDG&E:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery	$	107	$	27	$	(13)	$	(2)
Associated offsetting commodity contracts	(12)		(2)		12		2
Net amounts presented on the balance sheet	95		25		(1)		—
Additional cash collateral for commodity contracts subject to rate recovery	17		—		—		—
Total(2)	$	112	$	25	$	(1)	$	—
SoCalGas:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery	$	31	$	—	$	(84)	$	—
Associated offsetting commodity contracts	(15)		—		15		—
Net amounts presented on the balance sheet	16		—		(69)		—
Additional cash collateral for commodity contracts subject to rate recovery	1		—		—		—
Total	$	17	$	—	$	(69)	$	—

(1) Included in Current Assets: Other for SoCalGas.

(2) Normal purchase contracts previously measured at fair value are excluded.

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DERIVATIVE INSTRUMENTS ON THE CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	December 31, 2021
	Current assets: Fixed-price contracts and other derivatives(1)		Other long-term assets		Other current liabilities		Deferred credits and other
Sempra:
Derivatives designated as hedging instruments:
Interest rate instruments	$	—	$	6	$	(6)	$	(2)
Foreign exchange instruments	1		1		(1)		—
Interest rate and foreign exchange instruments	—		—		(1)		(130)
Derivatives not designated as hedging instruments:
Commodity contracts not subject to rate recovery	136		11		(122)		(10)
Associated offsetting commodity contracts	(93)		(8)		93		8
Commodity contracts subject to rate recovery	38		52		(58)		—
Associated offsetting commodity contracts	(8)		—		8		—
Net amounts presented on the balance sheet	74		62		(87)		(134)
Additional cash collateral for commodity contracts not subject to rate recovery	58		—		—		—
Additional cash collateral for commodity contracts subject to rate recovery	46		—		—		—
Total(2)	$	178	$	62	$	(87)	$	(134)
SDG&E:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery	$	34	$	52	$	(20)	$	—
Associated offsetting commodity contracts	(5)		—		5		—
Net amounts presented on the balance sheet	29		52		(15)		—
Additional cash collateral for commodity contracts subject to rate recovery	28		—		—		—
Total(2)	$	57	$	52	$	(15)	$	—
SoCalGas:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery	$	4	$	—	$	(38)	$	—
Associated offsetting commodity contracts	(3)		—		3		—
Net amounts presented on the balance sheet	1		—		(35)		—
Additional cash collateral for commodity contracts subject to rate recovery	18		—		—		—
Total	$	19	$	—	$	(35)	$	—

(1) Included in Current Assets: Other for SoCalGas.

(2) Normal purchase contracts previously measured at fair value are excluded.

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The following table includes the effects of derivative instruments designated as cash flow hedges on the Consolidated Statements of Operations and in OCI and AOCI.


CASH FLOW HEDGE IMPACTS
(Dollars in millions)
	Pretax gain (loss) recognized in OCI							Pretax (loss) gain reclassified from AOCI into earnings
	Years ended December 31,							Years ended December 31,
	2022		2021		2020		Location	2022		2021		2020
Sempra:
Interest rate instruments	$	40	$	29	$	(34)	Interest Expense	$	(1)	$	(11)	$	(10)
Interest rate instruments	205		71		(185)		Equity Earnings(1)	(29)		(73)		(46)
Foreign exchange instruments	(8)		11		(4)		Revenues: Energy- Related Businesses	1		(1)		1
							Other Income (Expense), Net	(1)		—		—
Foreign exchange instruments	(5)		8		(3)		Equity Earnings(1)	—		—		—
Interest rate and foreign exchange instruments	25		(4)		(6)		Interest Expense	2		(1)		(1)
							Other Income (Expense), Net	12		(6)		(11)
Total	$	257	$	115	$	(232)		$	(16)	$	(92)	$	(67)
SoCalGas:
Interest rate instruments	$	—	$	—	$	—	Interest Expense	$	(1)	$	—	$	—

(1) Equity earnings at our foreign equity method investees are recognized after tax.

For Sempra, we expect that net gains before NCI of $31 million, which are net of income tax expense, that are currently recorded in AOCI (with net gains of $18 million attributable to NCI) related to cash flow hedges will be reclassified into earnings during the next 12 months as the hedged items affect earnings. SoCalGas expects that $1 million of losses, net of income tax benefit, that are currently recorded in AOCI related to cash flow hedges will be reclassified into earnings during the next 12 months as the hedged items affect earnings. Actual amounts ultimately reclassified into earnings depend on the interest rates in effect when derivative contracts mature.

For all forecasted transactions, the maximum remaining term over which we are hedging exposure to the variability of cash flows at December 31, 2022 is approximately 12 years for Sempra. The maximum remaining term for which we are hedging exposure to the variability of cash flows at our equity method investees is 17 years.

The following table summarizes the effects of derivative instruments not designated as hedging instruments on the Consolidated Statements of Operations.


UNDESIGNATED DERIVATIVE IMPACTS
(Dollars in millions)
		Pretax (loss) gain on derivatives recognized in earnings
		Years ended December 31,
	Location	2022		2021		2020
Sempra:
Commodity contracts not subject to rate recovery	Revenues: Energy-Related Businesses	$	(1,116)	$	(203)	$	17
Commodity contracts subject to rate recovery	Cost of Natural Gas	(56)		(25)		(7)
Commodity contracts subject to rate recovery	Cost of Electric Fuel and Purchased Power	202		31		88
Interest rate instrument	Interest Expense	33		—		—
Foreign exchange instruments	Other Income (Expense), Net	—		(22)		(56)
Total		$	(937)	$	(219)	$	42
SDG&E:
Commodity contracts subject to rate recovery	Cost of Electric Fuel and Purchased Power	$	202	$	31	$	88
SoCalGas:
Commodity contracts subject to rate recovery	Cost of Natural Gas	$	(56)	$	(25)	$	(7)

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CREDIT RISK RELATED CONTINGENT FEATURES

For Sempra, SDG&E and SoCalGas, certain of our derivative instruments contain credit limits which vary depending on our credit ratings. Generally, these provisions, if applicable, may reduce our credit limit if a specified credit rating agency reduces our ratings. In certain cases, if our credit ratings were to fall below investment grade, the counterparty to these derivative liability instruments could request immediate payment or demand immediate and ongoing full collateralization.

For Sempra, the total fair value of this group of derivative instruments in a liability position at December 31, 2022 and 2021 was $106 million and $88 million, respectively. For SoCalGas, the total fair value of this group of derivative instruments in a liability position at December 31, 2022 and 2021 was $69 million and $36 million, respectively. SDG&E did not have this group of derivative instruments in a liability position at December 31, 2022 or 2021. At December 31, 2022, if the credit ratings of Sempra or SoCalGas were reduced below investment grade, $106 million and $69 million, respectively, of additional assets could be required to be posted as collateral for these derivative contracts.

For Sempra, SDG&E and SoCalGas, some of our derivative contracts contain a provision that would permit the counterparty, in certain circumstances, to request adequate assurance of our performance under the contracts. Such additional assurance, if needed, is not material and is not included in the amounts above.

NOTE 12. FAIR VALUE MEASUREMENTS

RECURRING FAIR VALUE MEASURES

The three tables below, by level within the fair value hierarchy, set forth our financial assets and liabilities that were accounted for at fair value on a recurring basis at December 31, 2022 and 2021. We classify financial assets and liabilities in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair-valued assets and liabilities, and their placement within the fair value hierarchy.

The fair value of commodity derivative assets and liabilities is presented in accordance with our netting policy, as we discuss in Note 11 under “Financial Statement Presentation.”

The determination of fair values, shown in the tables below, incorporates various factors, including but not limited to, the credit standing of the counterparties involved and the impact of credit enhancements (such as cash deposits, letters of credit and priority interests).

Our financial assets and liabilities that were accounted for at fair value on a recurring basis in the tables below include the following:

▪Nuclear decommissioning trusts reflect the assets of SDG&E’s NDT, excluding accounts receivable and accounts payable. A third-party trustee values the trust assets using prices from a pricing service based on a market approach. We validate these prices by comparison to prices from other independent data sources. Securities are valued using quoted prices listed on nationally recognized securities exchanges or based on closing prices reported in the active market in which the identical security is traded (Level 1). Other securities are valued based on yields that are currently available for comparable securities of issuers with similar credit ratings (Level 2).

▪For commodity contracts, interest rate instruments and foreign exchange instruments, we primarily use a market or income approach with market participant assumptions to value these derivatives. Market participant assumptions include those about risk, and the risk inherent in the inputs to the valuation techniques. These inputs can be readily observable, market corroborated, or generally unobservable. We have exchange-traded derivatives that are valued based on quoted prices in active markets for the identical instruments (Level 1). We also may have other commodity derivatives that are valued using industry standard models that consider quoted forward prices for commodities, time value, current market and contractual prices for the underlying instruments, volatility factors, and other relevant economic measures (Level 2). Level 3 recurring items relate to CRRs and long-term, fixed-price electricity positions at SDG&E, as we discuss below in “Level 3 Information – SDG&E.”

▪Rabbi Trust investments include short-term investments that consist of money market and mutual funds that we value using a market approach based on closing prices reported in the active market in which the identical security is traded (Level 1).

▪As we discuss in Note 6, in July 2020, Sempra entered into a Support Agreement for the benefit of CFIN. We measure the Support Agreement, which includes a guarantee obligation, a put option and a call option, net of related guarantee fees, at fair value on a recurring basis. We use a discounted cash flow model to value the Support Agreement, net of related guarantee fees.

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Because some of the inputs that are significant to the valuation are less observable, the Support Agreement is classified as Level 3, as we describe below in “Level 3 Information – Sempra Infrastructure.”


RECURRING FAIR VALUE MEASURES – SEMPRA
(Dollars in millions)
	Fair value at December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Short-term investments, primarily cash equivalents	$	10	$	1	$	—	$	11
Equity securities	293		4		—		297
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	27		13		—		40
Municipal bonds	—		270		—		270
Other securities	—		227		—		227
Total debt securities	27		510		—		537
Total nuclear decommissioning trusts(1)	330		515		—		845
Short-term investments held in Rabbi Trust	55		—		—		55
Interest rate instruments	—		76		—		76
Commodity contracts not subject to rate recovery	—		273		—		273
Effect of netting and allocation of collateral(2)	451		—		—		451
Commodity contracts subject to rate recovery	82		19		35		136
Effect of netting and allocation of collateral(2)	12		—		6		18
Support Agreement, net of related guarantee fees	—		—		17		17
Total	$	930	$	883	$	58	$	1,871
Liabilities:
Foreign exchange instruments	$	—	$	8	$	—	$	8
Interest rate and foreign exchange instruments	—		105		—		105
Commodity contracts not subject to rate recovery	—		191		—		191
Commodity contracts subject to rate recovery	—		70		—		70
Total	$	—	$	374	$	—	$	374

(1) Excludes receivables (payables), net.

(2) Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.

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RECURRING FAIR VALUE MEASURES – SEMPRA (CONTINUED)
(Dollars in millions)
	Fair value at December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Short-term investments, primarily cash equivalents	$	13	$	(10)	$	—	$	3
Equity securities	358		6		—		364
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	48		8		—		56
Municipal bonds	—		321		—		321
Other securities	—		260		—		260
Total debt securities	48		589		—		637
Total nuclear decommissioning trusts(1)	419		585		—		1,004
Short-term investments held in Rabbi Trust	81		—		—		81
Interest rate instruments	—		6		—		6
Foreign exchange instruments	—		2		—		2
Commodity contracts not subject to rate recovery	—		46		—		46
Effect of netting and allocation of collateral(2)	58		—		—		58
Commodity contracts subject to rate recovery	12		1		69		82
Effect of netting and allocation of collateral(2)	31		9		6		46
Support Agreement, net of related guarantee fees	—		—		7		7
Total	$	601	$	649	$	82	$	1,332
Liabilities:
Interest rate instruments	$	—	$	8	$	—	$	8
Foreign exchange instruments	—		1		—		1
Interest rate and foreign exchange instruments	—		131		—		131
Commodity contracts not subject to rate recovery	—		31		—		31
Commodity contracts subject to rate recovery	—		35		15		50
Total	$	—	$	206	$	15	$	221

(1) Excludes receivables (payables), net.

(2) Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.

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RECURRING FAIR VALUE MEASURES – SDG&E
(Dollars in millions)
	Fair value at December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Short-term investments, primarily cash equivalents	$	10	$	1	$	—	$	11
Equity securities	293		4		—		297
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	27		13		—		40
Municipal bonds	—		270		—		270
Other securities	—		227		—		227
Total debt securities	27		510		—		537
Total nuclear decommissioning trusts(1)	330		515		—		845
Commodity contracts subject to rate recovery	82		3		35		120
Effect of netting and allocation of collateral(2)	11		—		6		17
Total	$	423	$	518	$	41	$	982
Liabilities:
Commodity contracts subject to rate recovery	$	—	$	1	$	—	$	1
Total	$	—	$	1	$	—	$	1

	Fair value at December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Nuclear decommissioning trusts:
Short-term investments, primarily cash equivalents	$	13	$	(10)	$	—	$	3
Equity securities	358		6		—		364
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	48		8		—		56
Municipal bonds	—		321		—		321
Other securities	—		260		—		260
Total debt securities	48		589		—		637
Total nuclear decommissioning trusts(1)	419		585		—		1,004
Commodity contracts subject to rate recovery	12		—		69		81
Effect of netting and allocation of collateral(2)	22		—		6		28
Total	$	453	$	585	$	75	$	1,113
Liabilities:
Commodity contracts subject to rate recovery	$	—	$	—	$	15	$	15
Total	$	—	$	—	$	15	$	15

(1) Excludes receivables (payables), net.

(2) Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.

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RECURRING FAIR VALUE MEASURES – SOCALGAS
(Dollars in millions)
	Fair value at December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Commodity contracts subject to rate recovery	$	—	$	16	$	—	$	16
Effect of netting and allocation of collateral(1)	1		—		—		1
Total	$	1	$	16	$	—	$	17
Liabilities:
Commodity contracts subject to rate recovery	$	—	$	69	$	—	$	69
Total	$	—	$	69	$	—	$	69

	Fair value at December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Commodity contracts subject to rate recovery	$	—	$	1	$	—	$	1
Effect of netting and allocation of collateral(1)	9		9		—		18
Total	$	9	$	10	$	—	$	19
Liabilities:
Commodity contracts subject to rate recovery	$	—	$	35	$	—	$	35
Total	$	—	$	35	$	—	$	35

(1) Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.

Level 3 Information

SDG&E

The table below sets forth reconciliations of changes in the fair value of CRRs and long-term, fixed-price electricity positions classified as Level 3 in the fair value hierarchy for Sempra and SDG&E.


LEVEL 3 RECONCILIATIONS(1)
(Dollars in millions)
	2022		2021		2020
Balance at January 1	$	54	$	69	$	28
Realized and unrealized (losses) gains	(56)		(50)		19
Allocated transmission instruments	(4)		3		6
Settlements	41		32		16
Balance at December 31	$	35	$	54	$	69
Change in unrealized (losses) gains relating to instruments still held at December 31	$	(10)	$	(16)	$	34

(1) Excludes the effect of the contractual ability to settle contracts under master netting agreements.

Inputs used to determine the fair value of CRRs and fixed-price electricity positions are reviewed and compared with market conditions to determine reasonableness. SDG&E expects all costs related to these instruments to be recoverable through customer rates. As such, there is no impact to earnings from changes in the fair value of these instruments.

CRRs are recorded at fair value based almost entirely on the most current auction prices published by the California ISO, an objective source. Annual auction prices are published once a year, typically in the middle of November, and are the basis for valuing CRRs settling in the following year. For the CRRs settling from January 1 to December 31, the auction price inputs, at a given location, were in the following ranges for the years indicated below:


CONGESTION REVENUE RIGHTS AUCTION PRICE INPUTS

Settlement year		Price per MWh					Median price per MWh
2023	$	(3.09)	to	$	10.71	$	(0.56)
2022		(3.67)	to		6.96		(0.70)
2021		(1.81)	to		14.11		(0.12)

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The impact associated with discounting is negligible. Because these auction prices are a less observable input, these instruments are classified as Level 3. The fair value of these instruments is derived from auction price differences between two locations. Positive values between two locations represent expected future reductions in congestion costs, whereas negative values between two locations represent expected future charges. Valuation of our CRRs is sensitive to a change in auction price. If auction prices at one location increase (decrease) relative to another location, this could result in a significantly higher (lower) fair value measurement. We summarize CRR volumes in Note 11.

Long-term, fixed-price electricity positions that are valued using significant unobservable data are classified as Level 3 because the contract terms relate to a delivery location or tenor for which observable market rate information is not available. The fair value of the net electricity positions classified as Level 3 is derived from a discounted cash flow model using market electricity forward price inputs. The range and weighted-average price of these inputs at December 31 were as follows:


LONG-TERM, FIXED-PRICE ELECTRICITY POSITIONS PRICE INPUTS

Settlement year		Price per MWh					Weighted-average price per MWh
2022	$	33.45	to	$	274.70	$	85.64
2021		24.10	to		105.00		53.57

A significant increase (decrease) in market electricity forward prices would result in a significantly higher (lower) fair value. We summarize long-term, fixed-price electricity position volumes in Note 11.

Realized gains and losses associated with CRRs and long-term, fixed-price electricity positions, which are recoverable in rates, are recorded in Cost of Electric Fuel and Purchased Power on the Consolidated Statements of Operations. Because unrealized gains and losses are recorded as regulatory assets and liabilities, they do not affect earnings.

Sempra Infrastructure

The table below sets forth reconciliations of changes in the fair value of Sempra’s Support Agreement for the benefit of CFIN classified as Level 3 in the fair value hierarchy for Sempra.


LEVEL 3 RECONCILIATIONS
(Dollars in millions)
	2022		2021		2020
Balance at January 1	$	7	$	3	$	—
Realized and unrealized gains(1)	19		11		6
Settlements	(9)		(7)		(3)
Balance at December 31(2)	$	17	$	7	$	3
Change in unrealized gains relating to instruments still held at December 31	$	18	$	11	$	3

(1) Net gains are included in Interest Income and net losses are included in Interest Expense on Sempra’s Consolidated Statements of Operations.

(2) Balance at December 31, 2022 includes $7 in Other Current Assets and $10 in Other Long-Term Assets. Balances at December 31, 2021 and 2020 include $7 in Other Current Assets, offset by a negligible amount and $4, respectively, in Deferred Credits and Other on Sempra’s Consolidated Balance Sheets.

The fair value of the Support Agreement, net of related guarantee fees, is based on a discounted cash flow model using a probability of default and survival methodology. Our estimate of fair value considers inputs such as third-party default rates, credit ratings, recovery rates, and risk-adjusted discount rates, which may be readily observable, market corroborated or generally unobservable inputs. Because CFIN’s credit rating and related default and survival rates are unobservable inputs that are significant to the valuation, the Support Agreement, net of related guarantee fees, is classified as Level 3. We assigned CFIN an internally developed credit rating of A3 and relied on default rate data published by Moody’s to assign a probability of default. A hypothetical change in the credit rating up or down one notch could result in a significant change in the fair value of the Support Agreement.

Fair Value of Financial Instruments

The fair values of certain of our financial instruments (cash, accounts receivable, amounts due to/from unconsolidated affiliates with original maturities of less than 90 days, dividends and accounts payable, short-term debt and customer deposits) approximate their carrying amounts because of the short-term nature of these instruments. Investments in life insurance contracts that we hold

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in support of our Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans are carried at cash surrender values, which represent the amount of cash that could be realized under the contracts. The following table provides the carrying amounts and fair values of certain other financial instruments that are not recorded at fair value on the Consolidated Balance Sheets.


FAIR VALUE OF FINANCIAL INSTRUMENTS
(Dollars in millions)
	Carrying		Fair value
	amount		Level 1		Level 2		Level 3		Total
	December 31, 2022
Sempra:
Long-term note receivable(1)	$	318	$	—	$	—	$	286	$	286
Long-term amounts due to unconsolidated affiliates	301		—		263		—		263
Total long-term debt(2)	24,513		—		21,549		—		21,549
SDG&E:
Total long-term debt(3)	$	7,800	$	—	$	6,726	$	—	$	6,726
SoCalGas:
Total long-term debt(4)	$	6,059	$	—	$	5,538	$	—	$	5,538

	December 31, 2021
Sempra:
Long-term note receivable(1)	$	300	$	—	$	—	$	327	$	327
Long-term amounts due from unconsolidated affiliates(5)	640		—		642		—		642
Long-term amounts due to unconsolidated affiliates	287		—		295		—		295
Total long-term debt(2)	20,099		—		22,126		—		22,126
SDG&E:
Total long-term debt(3)	$	6,417	$	—	$	7,236	$	—	$	7,236
SoCalGas:
Total long-term debt(4)	$	4,759	$	—	$	5,367	$	—	$	5,367

(1) Before allowances for credit losses of $7 and $8 at December 31, 2022 and 2021, respectively. Excludes unamortized transaction costs of $5 at both December 31, 2022 and 2021.

(2) Before reductions of unamortized discount and debt issuance costs of $289 and $260 at December 31, 2022 and 2021, respectively, and excluding finance lease obligations of $1,343 and $1,335 at December 31, 2022 and 2021, respectively.

(3) Before reductions of unamortized discount and debt issuance costs of $70 and $61 at December 31, 2022 and 2021, respectively, and excluding finance lease obligations of $1,256 and $1,274 at December 31, 2022 and 2021, respectively.

(4) Before reductions of unamortized discount and debt issuance costs of $48 and $36 at December 31, 2022 and 2021, respectively, and excluding finance lease obligations of $87 and $61 at December 31, 2022 and 2021, respectively.

(5) Before allowances for credit losses of $1 at December 31, 2021. Includes $2 of accrued interest receivable at December 31, 2021 in Due From Unconsolidated Affiliate – Current.

We provide the fair values for the securities held in the NDT related to SONGS in Note 15.

NOTE 13. PREFERRED STOCK

Sempra and SDG&E are authorized to issue up to 50 million and 45 million shares of preferred stock, respectively. At December 31, 2022 and 2021, SDG&E had no preferred stock outstanding. The rights, preferences, privileges and restrictions for any new series of preferred stock would be established by each company’s board of directors at the time of issuance. We discuss SoCalGas preferred stock below.

SEMPRA MANDATORY CONVERTIBLE PREFERRED STOCK

On January 15, 2021, we converted 17,250,000 shares of series A preferred stock into 13,781,025 shares of our common stock based on a conversion rate of 0.7989 shares of our common stock for each issued and outstanding share of series A preferred stock. As a consequence, no shares of series A preferred stock were outstanding after January 15, 2021 and the 17,250,000 shares that were formerly series A preferred stock have returned to the status of authorized and unissued shares of preferred stock.

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As of July 15, 2021, we had converted, pursuant to either early conversions at the election of the holder or the mandatory conversion of all outstanding shares, all 5,750,000 shares of series B preferred stock into an aggregate of 4,256,720 shares of our common stock and a nominal amount of cash in lieu of fractional share interests, based on a conversion rate of 0.7403 shares of our common stock for each issued and outstanding share of series B preferred stock. As a consequence, no shares of series B preferred stock were outstanding after July 15, 2021 and the 5,750,000 shares that were formerly series B preferred stock have returned to the status of authorized and unissued shares of preferred stock.

SEMPRA SERIES C PREFERRED STOCK

At December 31, 2022 and 2021, Sempra had 900,000 shares of 4.875% fixed-rate reset cumulative redeemable perpetual preferred stock, series C (series C preferred stock) outstanding.

Liquidation Preference

Each share of series C preferred stock has a liquidation preference of $1,000 plus any accumulated and unpaid dividends (whether or not declared) on such share.

Redemption at the Option of Sempra

The shares of series C preferred stock are perpetual and have no maturity date. However, we may, at our option, redeem the series C preferred stock in whole or in part, from time to time, on any day during the period from and including the July 15 immediately preceding October 15, 2025 and October 15 of every fifth year after 2025 through and including such October 15 at a redemption price in cash equal to $1,000 per share. Additionally, in the event that a credit rating agency then publishing a rating for us makes certain amendments, clarifications or changes to the criteria it uses to assign equity credit to securities such as the series C preferred stock (Ratings Event), we may redeem the series C preferred stock, in whole but not in part, at any time within 120 days after the conclusion of any review or appeal process instituted by us following the occurrence of the Ratings Event or, if no such review or appeal process is available or sought, the occurrence of such Ratings Event, at a redemption price in cash equal to $1,020 per share (102% of the liquidation preference per share).

Dividends

Dividends on the series C preferred stock, when, as and if declared by our board of directors or an authorized committee thereof, are payable in cash, on a cumulative basis, semi-annually in arrears. Dividends on the series C preferred stock will be cumulative whether or not:

▪we have earnings;

▪the payment of such dividends is then permitted under California law;

▪such dividends are authorized or declared; and

▪any agreements to which we are a party prohibit the current payment of dividends, including any agreement relating to our indebtedness.

We accrue dividends on the series C preferred stock on a monthly basis. The dividend rate from and including June 19, 2020 to, but excluding, October 15, 2025 is 4.875% per annum of the $1,000 liquidation preference per share. The dividend rate will reset on October 15, 2025 and on October 15 of every fifth year after 2025 and, for each five-year period following such reset dates, will be a per annum rate equal to the Five-year U.S. Treasury Rate (as defined in the certificate of determination of preferences of the series C preferred stock) as of the second business day prior to such reset date, plus a spread of 4.550%, of the $1,000 liquidation preference per share.

Voting Rights

The holders of series C preferred stock do not have any voting rights, except with respect to any authorization, creation or increase in the authorized amount of any class or series of capital stock ranking senior to the series C preferred stock, certain amendments to the terms of the series C preferred stock, in certain other limited circumstances and as otherwise specifically required by California law. In addition, whenever dividends on any shares of series C preferred stock have not been declared and paid or have been declared but not paid for three or more dividend periods, whether or not consecutive, the authorized number of directors on our board of directors will automatically be increased by two and the holders of the series C preferred stock, voting together as a single class with holders of any and all other outstanding series of preferred stock of equal rank having similar voting rights, will be entitled to elect two directors who satisfy certain requirements to fill such two newly created directorships. This voting right will terminate when all accumulated and unpaid dividends on the series C preferred stock have been paid in full and, upon such termination and the termination of the same voting rights of all other holders of outstanding series of preferred

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stock that have such voting rights, the term of office of each director elected pursuant to such rights will terminate and the authorized number of directors will automatically decrease by two, subject to the revesting of such rights in the event of each subsequent nonpayment.

Ranking

The series C preferred stock ranks, with respect to dividend rights and distribution rights upon our liquidation, winding-up or dissolution:

▪senior to our common stock and each other class or series of our capital stock established in the future, unless the terms of such capital stock expressly provide otherwise;

▪on parity with each class or series of our capital stock established in the future, if the terms of such capital stock provide that it ranks on parity with the series C preferred stock;

▪junior to each class or series of our capital stock established in the future, if the terms of such capital stock provide that it ranks senior to the series C preferred stock;

▪junior to our existing and future indebtedness and other liabilities; and

▪structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries and capital stock of our subsidiaries held by third parties.

SOCALGAS PREFERRED STOCK

SoCalGas is authorized to issue up to an aggregate of 11 million shares of preferred stock, series preferred stock and preference stock. The table below presents preferred stock outstanding at SoCalGas:


PREFERRED STOCK OUTSTANDING
(Dollars in millions, except per share amounts)
	December 31,
	2022		2021
$25 par value, authorized 1,000,000 shares:
6% Series, 79,011 shares outstanding	$	3	$	3
6% Series A, 783,032 shares outstanding	19		19
SoCalGas - Total preferred stock	22		22
Less: 50,970 shares of the 6% Series outstanding owned by PE	(2)		(2)
Sempra - Total preferred stock of subsidiary	$	20	$	20

None of SoCalGas’ outstanding preferred stock is callable, and no shares are subject to mandatory redemption.

All outstanding shares have one vote per share, cumulative preferences as to dividends and liquidation preferences of $25 per share plus any unpaid dividends.

In addition to the outstanding preferred stock above, SoCalGas’ articles of incorporation authorize 5 million shares of series preferred stock and 5 million shares of preference stock, both without par value and with cumulative preferences as to dividends and liquidation value. The preference stock would rank junior to all series of preferred stock and series preferred stock. Other rights and privileges of any new series of such stock would be established by the SoCalGas board of directors at the time of issuance.

NOTE 14. SEMPRA – SHAREHOLDERS’ EQUITY AND EARNINGS PER COMMON SHARE

SEMPRA COMMON STOCK REPURCHASES

On September 11, 2007, our board of directors authorized the repurchase of shares of our common stock, provided that the amounts spent for such purpose do not exceed the greater of $2 billion or amounts spent to purchase no more than 40 million shares. On July 1, 2020, we entered into an ASR program under which we prepaid $500 million to repurchase shares of our common stock in a share forward transaction. The total number of shares purchased was determined by dividing the $500 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of July 2, 2020 through August 4, 2020, minus a fixed discount. The ASR program was completed on August 4,

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2020 with an aggregate of 4,089,375 shares of Sempra common stock repurchased at an average price of $122.27 per share. Following the completion of the ASR program, the aggregate dollar amount authorized by the September 11, 2007 share repurchase authorization was exhausted.

On July 6, 2020, our board of directors authorized the repurchase of shares of our common stock at any time and from time to time in an aggregate amount not to exceed the lesser of $2 billion or amounts spent to purchase no more than 25 million shares. No shares were repurchased under this authorization in 2020.

Beginning on November 17, 2021, we executed a series of open market repurchases for which we paid $300 million to repurchase shares of our common stock in the open market. The repurchases were completed on December 7, 2021 with an aggregate of 2,422,758 shares of Sempra common stock repurchased at a weighted-average purchase price of $123.83 per share, excluding commissions.

On January 11, 2022, we entered into an ASR program under which we prepaid $200 million to repurchase shares of our common stock in a share forward transaction. A total of 1,472,756 shares were purchased under this program at an average price of $135.80 per share. The total number of shares purchased was determined by dividing the $200 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of January 12, 2022 through February 11, 2022, minus a fixed discount. The ASR program was completed on February 11, 2022.

On April 6, 2022, we entered into an ASR program under which we prepaid $250 million to repurchase shares of our common stock in a share forward transaction. A total of 1,471,957 shares were purchased under this program at an average price of $169.84 per share. The total number of shares purchased was determined by dividing the $250 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of April 7, 2022 through April 25, 2022, minus a fixed discount. The ASR program was completed on April 25, 2022. As of February 28, 2023, a maximum of $1.25 billion and no more than 19,632,529 shares may yet be purchased under the July 6, 2020 repurchase authorization.

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EARNINGS PER COMMON SHARE

Basic EPS is calculated by dividing earnings attributable to common shares (from both continuing and discontinued operations) by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.


EARNINGS PER COMMON SHARE COMPUTATIONS
(Dollars in millions, except per share amounts; shares in thousands)
	Years ended December 31,
	2022		2021		2020
Sempra:
Numerator for continuing operations:
Income from continuing operations, net of income tax	$	2,285	$	1,463	$	2,255
Earnings attributable to noncontrolling interests	(146)		(145)		(162)
Preferred dividends	(44)		(63)		(168)
Preferred dividends of subsidiary	(1)		(1)		(1)
Earnings from continuing operations attributable to common shares	$	2,094	$	1,254	$	1,924

Numerator for discontinued operations:
Income from discontinued operations, net of income tax	$	—	$	—	$	1,850
Earnings attributable to noncontrolling interests	—		—		(10)
Earnings from discontinued operations attributable to common shares	$	—	$	—	$	1,840

Numerator for earnings:
Earnings attributable to common shares	$	2,094	$	1,254	$	3,764

Denominator:
Weighted-average common shares outstanding for basic EPS(1)	315,159		311,755		291,077
Dilutive effect of stock options and RSUs(2)	1,219		752		1,175
Dilutive effect of mandatory convertible preferred stock	—		529		—
Weighted-average common shares outstanding for diluted EPS	316,378		313,036		292,252

Basic EPS:
Earnings from continuing operations	$	6.65	$	4.03	$	6.61
Earnings from discontinued operations	$	—	$	—	$	6.32
Earnings	$	6.65	$	4.03	$	12.93

Diluted EPS:
Earnings from continuing operations	$	6.62	$	4.01	$	6.58
Earnings from discontinued operations	$	—	$	—	$	6.30
Earnings	$	6.62	$	4.01	$	12.88

(1) Includes fully vested RSUs held in our Deferred Compensation Plan of 403 in 2022, 453 in 2021 and 537 in 2020. These fully vested RSUs are included in weighted-average common shares outstanding for basic EPS because there are no conditions under which the corresponding shares will not be issued.

(2) Due to market fluctuations of both Sempra common stock and the comparative indices used to determine the vesting percentage of our total shareholder return performance-based RSUs, which we discuss in Note 10, dilutive RSUs may vary widely from period-to-period.

The potentially dilutive impact from stock options and RSUs is calculated under the treasury stock method. Under this method, proceeds based on the exercise price and unearned compensation are assumed to be used to repurchase shares on the open market at the average market price for the period, reducing the number of potential new shares to be issued and sometimes causing an antidilutive effect. The computation of diluted EPS for 2022, 2021 and 2020 excludes potentially dilutive shares related to stock options and RSUs of 86,532, 211,155 and 187,028, respectively, because to include them would be antidilutive for the period. However, these shares could potentially dilute basic EPS in the future.

In 2021, the potentially dilutive impact from mandatory convertible preferred stock was calculated under the if-converted method until the mandatory conversion date. After the mandatory conversion date, the converted shares are included in weighted-average common shares outstanding for basic EPS. As we discuss in Note 13, we converted our series A preferred stock into common

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stock on January 15, 2021 and our series B preferred stock into common stock on July 15, 2021. The computation of diluted EPS for the years ended December 31, 2021 and 2020 excludes potentially dilutive shares related to our mandatory convertible preferred stock of 2,272,117 and 17,889,365, respectively, because to include them would be antidilutive for those periods.

We are authorized to issue 750 million shares of no par value common stock. The following table provides common stock activity for the last three years.


COMMON STOCK ACTIVITY

	2022	2021	2020
Sempra:
Common shares outstanding, January 1	316,919,782	288,470,244	291,712,925
Conversion of mandatory convertible preferred stock	—	18,037,745	—
Shares issued in IEnova exchange offer	—	12,306,777	—
RSUs vesting(1)	457,222	686,916	896,839
Stock options exercised	40,630	50,671	4,400
Savings plan issuance	—	—	201,431
Common stock investment plan(2)	—	—	42,955
Issuance of RSUs held in our Deferred Compensation Plan	65,013	102,238	103,552
Shares repurchased(3)	(3,147,969)	(2,734,809)	(4,491,858)
Common shares outstanding, December 31	314,334,678	316,919,782	288,470,244

(1) Includes dividend equivalents.

(2) Participants in the Direct Stock Purchase Plan may reinvest dividends to purchase newly issued shares.

(3) Includes shares repurchased under the repurchase programs that we discuss above. Generally, we purchase shares of our common stock or units from LTIP participants who elect to sell to us a sufficient number of vested RSUs to meet minimum statutory tax withholding requirements.

NOTE 15. SAN ONOFRE NUCLEAR GENERATING STATION

SDG&E has a 20% ownership interest in SONGS, a nuclear generating facility near San Clemente, California, which permanently ceased operations in June 2013 after an extended outage as a result of issues with the steam generators used in the facility. Edison, the majority owner and operator of SONGS, notified SDG&E that it had reached a decision to permanently retire SONGS and seek approval from the NRC to start the decommissioning activities for the entire facility. SONGS is subject to the jurisdiction of the NRC and the CPUC.

SDG&E, and each of the other owners, holds its undivided interest as a tenant in common in the property. Each owner is responsible for financing its share of costs. SDG&E’s share of operating expenses is included in Sempra’s and SDG&E’s Consolidated Statements of Operations.

NUCLEAR DECOMMISSIONING AND FUNDING

As a result of Edison’s decision to permanently retire SONGS Units 2 and 3, Edison began the decommissioning phase of the plant. Major decommissioning work began in 2020. We expect the majority of the decommissioning work to take approximately 10 years. Decommissioning of Unit 1, removed from service in 1992, is largely complete. The remaining work for Unit 1 will be completed once Units 2 and 3 are dismantled and the spent fuel is removed from the site. The spent fuel is currently being stored on-site, until the DOE identifies a spent fuel storage facility and puts in place a program for the fuel’s disposal, as we discuss below. SDG&E is responsible for approximately 20% of the total decommissioning cost.

The Samuel Lawrence Foundation filed a writ petition under the California Coastal Act in LA Superior Court in December 2019 seeking to invalidate the coastal development permit and to obtain injunctive relief to stop decommissioning work. The petition was denied in September 2021. In December 2021, the Samuel Lawrence Foundation filed a notice of appeal. In August 2022, the court dismissed the case based on the Samuel Lawrence Foundation’s request for dismissal, which finally resolves the writ petition. Decommissioning work was not interrupted as a result of this writ petition.

In accordance with state and federal requirements and regulations, SDG&E has assets held in the NDT to fund its share of decommissioning costs for SONGS Units 1, 2 and 3. Amounts that were collected in rates for SONGS’ decommissioning are invested in the NDT, which is comprised of externally managed trust funds. Amounts held by the NDT are invested in accordance

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with CPUC regulations. SDG&E classifies debt and equity securities held in the NDT as available-for-sale. The NDT assets are presented on the Sempra and SDG&E Consolidated Balance Sheets at fair value with the offsetting credits recorded in noncurrent Regulatory Liabilities.

Except for the use of funds for the planning of decommissioning activities or NDT administrative costs, CPUC approval is required for SDG&E to access the NDT assets to fund SONGS decommissioning costs for Units 2 and 3. In December 2022, the CPUC granted SDG&E authorization to access NDT funds of up to $81 million for forecasted 2023 costs.

In September 2020, the IRS and the U.S. Department of the Treasury published final regulations that clarify the definition of “nuclear decommissioning costs,” which are costs that may be paid for or reimbursed from a qualified trust fund. The final regulations adopted most of the provisions of the proposed regulations issued in December 2016. The final regulations apply to taxable years ending on or after September 4, 2020 and confirm that the definition of “nuclear decommissioning costs” includes amounts related to the storage of spent nuclear fuel at both on-site and off-site ISFSIs.

The final regulations also clarify that costs incurred for ISFSIs that may be or are expected to be reimbursed by the DOE may be paid or reimbursed from a qualified trust fund. Accordingly, the final regulations allow SDG&E the option to access qualified trust funds to recover spent fuel storage costs before Edison reaches final settlement with the DOE regarding the DOE’s reimbursement of these costs. Historically, the DOE’s reimbursements of spent fuel storage costs have not resulted in timely or complete recovery of these costs. We discuss the DOE’s responsibility for spent nuclear fuel below.

Nuclear Decommissioning Trusts

The following table shows the fair values and gross unrealized gains and losses for the securities held in the NDT on the Sempra and SDG&E Consolidated Balance Sheets. We provide additional fair value disclosures for the NDT in Note 12.


NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
	Cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	December 31, 2022
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)	$	40	$	1	$	(1)	$	40
Municipal bonds(2)	283		1		(14)		270
Other securities(3)	248		—		(21)		227
Total debt securities	571		2		(36)		537
Equity securities	111		194		(8)		297
Short-term investments, primarily cash equivalents	11		—		—		11
Receivables (payables), net	(4)		—		—		(4)
Total	$	689	$	196	$	(44)	$	841

	December 31, 2021
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	56	$	—	$	—	$	56
Municipal bonds	309		13		(1)		321
Other securities	255		7		(2)		260
Total debt securities	620		20		(3)		637
Equity securities	104		262		(2)		364
Short-term investments, primarily cash equivalents	3		—		—		3
Receivables (payables), net	8		—		—		8
Total	$	735	$	282	$	(5)	$	1,012

(1) Maturity dates are 2023-2053.

(2) Maturity dates are 2023-2056.

(3) Maturity dates are 2023-2072.

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The following table shows the proceeds from sales of securities in the NDT and gross realized gains and losses on those sales.


SALES OF SECURITIES IN THE NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Proceeds from sales	$	639	$	961	$	1,439
Gross realized gains	18		67		156
Gross realized losses	(20)		(5)		(17)

Net unrealized gains and losses, as well as realized gains and losses that are reinvested in the NDT, are included in noncurrent Regulatory Liabilities on Sempra’s and SDG&E’s Consolidated Balance Sheets. We determine the cost of securities in the trusts on the basis of specific identification.

ASSET RETIREMENT OBLIGATION

The present value of SDG&E’s ARO related to decommissioning costs for all three SONGS units was $540 million at December 31, 2022 and is based on a cost study prepared in 2020 that is pending CPUC approval, which SDG&E expects to receive in 2023. The ARO for Units 2 and 3 reflects the acceleration of the start of decommissioning of these units as a result of the early closure of the plant. We expect SDG&E’s undiscounted SONGS decommissioning payments to be $92 million in 2023, $77 million in 2024, $46 million in 2025, $52 million in 2026, $32 million in 2027, and $686 million thereafter.

U.S. DEPARTMENT OF ENERGY NUCLEAR FUEL DISPOSAL

Spent nuclear fuel from SONGS is currently stored on-site in an ISFSI licensed by the NRC. The ISFSI will operate until 2051, when it is assumed that the DOE will have taken custody of all the SONGS spent fuel. The ISFSI would then be decommissioned, and the site restored to its original environmental state. Until then, SONGS owners are responsible for interim storage of spent nuclear fuel at SONGS.

The Nuclear Waste Policy Act of 1982 made the DOE responsible for accepting, transporting, and disposing of spent nuclear fuel. However, it is uncertain when the DOE will begin accepting spent nuclear fuel from SONGS. This delay will lead to increased costs for spent fuel storage. In November 2019, Edison filed a claim for spent fuel management costs in the U.S. Court of Federal Claims for the time period from January 2017 through July 2018, which is pending DOE approval. It is unclear when Edison will pursue litigation claims for spent fuel management costs incurred on or after August 1, 2018. SDG&E will continue to support Edison in its pursuit of claims on behalf of the SONGS co-owners against the DOE for its failure to timely accept the spent nuclear fuel.

NUCLEAR INSURANCE

SDG&E and the other owners of SONGS have insurance to cover claims from nuclear liability incidents arising at SONGS. Currently, this insurance provides $450 million in coverage limits, the maximum amount available, including coverage for acts of terrorism. In addition, the Price-Anderson Act provides an additional $110 million of coverage. If a nuclear liability loss occurs at SONGS and exceeds the $450 million insurance limit, this additional coverage would be available to provide a total of $560 million in coverage limits per incident.

The SONGS owners have nuclear property damage insurance of $130 million, which exceeds the minimum federal requirement of $50 million. This insurance coverage is provided through NEIL. The NEIL policies have specific exclusions and limitations that can result in reduced coverage. Insured members as a group are subject to retrospective premium assessments to cover losses sustained by NEIL under all issued policies. SDG&E could be assessed up to $4.1 million of retrospective premiums based on overall member claims.

The nuclear property insurance program includes an industry aggregate loss limit for non-certified acts of terrorism (as defined by the Terrorism Risk Insurance Act) of $3.24 billion. This is the maximum amount that will be paid to insured members who suffer losses or damages from these non-certified terrorist acts.

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NOTE 16. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

We accrue losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued, may exceed, and in some cases have exceeded, applicable insurance coverage and could materially adversely affect our business, results of operations, financial condition, cash flows and/or prospects. Unless otherwise indicated, we are unable to reasonably estimate possible losses or a range of losses in excess of any amounts accrued.

At December 31, 2022, loss contingency accruals for legal matters, including associated legal fees and regulatory matters related to the Leak, that are probable and estimable were $281 million for Sempra, including $205 million for SoCalGas. Amounts for Sempra and SoCalGas include $130 million for matters related to the Leak, which we discuss below. We discuss our policy regarding accrual of legal fees in Note 1.

SoCalGas

Aliso Canyon Natural Gas Storage Facility Gas Leak

From October 23, 2015 through February 11, 2016, SoCalGas experienced a natural gas leak from one of the injection-and-withdrawal wells, SS25, at its Aliso Canyon natural gas storage facility in Los Angeles County.

Litigation – Resolved. In September 2021, SoCalGas and Sempra entered into an agreement with counsel to resolve approximately 390 lawsuits including approximately 36,000 plaintiffs (the Individual Plaintiffs) pending against SoCalGas and Sempra related to the Leak (the Individual Plaintiff Litigation) for a payment of up to $1.8 billion.

These cases were coordinated before a single court in the LA Superior Court for pretrial management under a Third Amended Consolidated Master Case Complaint for Individual Actions filed in November 2017. The consolidated complaint asserts causes of action for negligence, negligence per se, private and public nuisance (continuing and permanent), trespass, inverse condemnation, strict liability, negligent and intentional infliction of emotional distress, fraudulent concealment, loss of consortium and wrongful death against SoCalGas and Sempra (the Individual Plaintiff Litigation). The complaint also asserted violations of Proposition 65, which were resolved in January 2022. The consolidated complaint seeks compensatory and punitive damages for personal injuries, lost wages and/or lost profits, property damage and diminution in property value, injunctive relief, costs of future medical monitoring, civil penalties, and attorneys’ fees.

The agreement governing the settlement of the Individual Plaintiff Litigation requires each plaintiff who agrees to participate in the settlement to release all such plaintiff’s claims against SoCalGas, Sempra and their respective affiliates related to the Leak and the Individual Plaintiff Litigation. The Individual Plaintiffs who do not participate in the settlement (the Remaining Individual Plaintiffs) will be able to continue to pursue their claims. Over 99% of the Individual Plaintiffs agreed to participate and submitted valid releases, and SoCalGas paid $1.79 billion in 2022 under the agreement. As of February 21, 2023, approximately 265 of the Remaining Individual Plaintiffs had not been located or had failed to respond, according to plaintiffs’ counsel.

In September 2021, SoCalGas and Sempra entered into an agreement to settle a class action on behalf of persons and businesses who owned or leased real property within a five-mile radius of the well where the Leak occurred for a total amount of $40 million. In April 2022, the LA Superior Court gave final approval of the settlement.

In October 2018 and October 2020, complaints on behalf of five property developers (the Developer Plaintiffs) were filed against SoCalGas and Sempra in connection with the Leak. The complaints alleged causes of action for strict liability, negligence per se, negligence, negligent interference, continuing nuisance, permanent nuisance, inverse condemnation and violation of the California Unfair Competition Law and California Public Utilities Code section 2106, and sought compensatory, statutory and punitive damages, injunctive relief and attorneys’ fees. In 2022, SoCalGas and Sempra settled the claims of all of the Developer Plaintiffs and their claims were dismissed.

Litigation – Unresolved. Four shareholder derivative actions were filed alleging breach of fiduciary duties against certain officers and certain directors of Sempra and/or SoCalGas. Three of the four shareholder derivative actions that were filed alleging breach of fiduciary duties against certain officers and certain directors of Sempra and/or SoCalGas were joined in an Amended Consolidated Shareholder Derivative Complaint filed in the coordinated proceeding in the LA Superior Court, which was

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dismissed with prejudice in January 2021. The plaintiffs have appealed this dismissal. The LA Superior Court dismissed the remaining fourth action with prejudice in November 2022. The plaintiffs have appealed this dismissal.

In addition, the Remaining Individual Plaintiffs referred to above will be able to continue to pursue their claims. Also, as of February 21, 2023, 14 new lawsuits on behalf of approximately 235 plaintiffs were filed since the September 2021 settlement.

Regulatory Proceedings – Subject to Agreements to Resolve. In June 2019, the CPUC opened an OII (the Leak OII) to investigate and consider, among other things, whether SoCalGas should be sanctioned for the Leak and what damages, fines or other penalties, if any, should be imposed for any violations, unreasonable or imprudent practices or failure to cooperate sufficiently with SED, as well as to determine the amount of various costs incurred by SoCalGas and other parties in connection with the Leak and the ratemaking treatment or other disposition of such costs, which could result in little or no recovery of such costs by SoCalGas. In October 2022, SoCalGas executed a settlement agreement with SED and the Public Advocates Office at the CPUC to resolve all aspects of the Leak OII. The settlement agreement provides for financial penalties, certain costs that SoCalGas will reimburse, a violation of California Public Utilities Code section 451, and costs previously incurred by SoCalGas for which it will not seek recovery from ratepayers, among other provisions. The settlement agreement was filed with and is subject to approval by the CPUC.

Regulatory Proceedings – Unresolved. In February 2017, the CPUC opened a proceeding pursuant to the SB 380 OII to determine the feasibility of minimizing or eliminating the use of the Aliso Canyon natural gas storage facility while still maintaining energy and electric reliability for the region, but excluding issues with respect to air quality, public health, causation, culpability or cost responsibility regarding the Leak. The first phase of the proceeding established a framework for the hydraulic, production cost and economic modeling assumptions for the potential reduction in usage or elimination of the Aliso Canyon natural gas storage facility, as well as evaluating the impacts of reducing or eliminating the Aliso Canyon natural gas storage facility using the established framework and models. The next phase of the proceeding included engaging a consultant to analyze alternative means for meeting or avoiding the demand for the facility’s services if it were eliminated in either the 2027 or 2035 timeframe, and to address potential implementation of alternatives to the Aliso Canyon natural gas storage facility if the CPUC determines that the Aliso Canyon natural gas storage facility should be permanently closed. The CPUC also added all California IOUs as parties to the proceeding and encouraged all load serving entities in the Los Angeles Basin to join the proceeding.

In November 2021, the CPUC issued a decision on the interim range of gas inventory levels at the Aliso Canyon natural gas storage facility, setting an interim range of gas inventory levels of up to 41.16 Bcf. The CPUC may issue future changes to this interim range of authorized gas inventory levels before issuing a final inventory determination within the SB 380 OII proceeding.

At December 31, 2022, the Aliso Canyon natural gas storage facility had a net book value of $958 million. If the Aliso Canyon natural gas storage facility were to be permanently closed or if future cash flows from its operation were otherwise insufficient to recover its carrying value, we may record an impairment of the facility, which could be material, or 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.

Cost Estimate, Insurance and Accounting and Other Impacts. SoCalGas has incurred significant costs related to the Leak, primarily to defend against and settle civil and criminal litigation and regulatory proceedings arising from the Leak; for temporary relocation of community residents; to control the well and stop the Leak; to mitigate the natural gas released; to purchase natural gas to replace what was lost through the Leak; to pay the costs of the government-ordered response to the Leak, including the costs for a root cause analysis; to respond to various government and agency investigations regarding the Leak; and to comply with increased regulation imposed as a result of the Leak. At December 31, 2022, SoCalGas estimates these costs related to the Leak are $3,486 million (the cost estimate), including $1,279 million of costs recovered from insurance. Other than insurance for directors’ and officers’ liability, we have exhausted all of our insurance for this matter. We continue to pursue other sources of insurance coverage for costs related to this matter, but we may not be successful in obtaining additional insurance recovery for any of these costs. At December 31, 2022, $129 million of the cost estimate is accrued in Reserve for Aliso Canyon Costs and $4 million of the cost estimate is accrued in Deferred Credits and Other on SoCalGas’ and Sempra’s Consolidated Balance Sheets.

SoCalGas recorded total charges of $259 million ($199 million after tax), $1.59 billion ($1.15 billion after tax) and $307 million ($233 million after tax) in the years ended December 31, 2022, 2021 and 2020, respectively, in Aliso Canyon Litigation and Regulatory Matters on the SoCalGas and Sempra Consolidated Statements of Operations related to the litigation and regulatory proceedings that we describe above. These charges are included in the cost estimate.

Except for the amounts paid or estimated to settle certain legal and regulatory matters as described above, the cost estimate does not include any amounts necessary to resolve the matters that we describe above in “Litigation – Unresolved” and “Regulatory Proceedings – Unresolved,” threatened litigation, other potential litigation or other costs, in each case to the extent it is not possible to predict at this time the outcome of these actions or reasonably estimate the possible costs or a range of possible costs.

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Further, we are not able to reasonably estimate the possible loss or a range of possible losses in excess of the amounts accrued. The costs or losses not included in the cost estimate could be significant.

An adverse outcome with respect to (i) the litigation described above under “Litigation – Unresolved,” (ii) threatened or other potential litigation related to the Leak, (iii) the Leak OII if approval of the negotiated settlement is not obtained, or (iv) the unresolved proceeding pursuant to the SB 380 OII, could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects.

Sempra Infrastructure

Energía Costa Azul

We describe below certain land and customer disputes and permit challenges affecting our ECA Regas Facility. Certain of these land disputes involve land on which portions of the ECA LNG liquefaction facilities under construction and in development are expected to be situated or on which portions of the ECA Regas Facility that would be necessary for the operation of such ECA LNG liquefaction facilities are situated. One or more unfavorable final decisions on these disputes or challenges could materially adversely affect our existing natural gas regasification operations and proposed natural gas liquefaction projects at the site of the ECA Regas Facility and have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.

Land Disputes – Unresolved. Sempra Infrastructure has been engaged in a long-running land dispute relating to property adjacent to its ECA Regas Facility that allegedly overlaps with land owned by the ECA Regas Facility (the facility, however, is not situated on the land that is the subject of this dispute), as follows:

▪A claimant to the adjacent property filed complaints in the federal Agrarian Court challenging the refusal of SEDATU in 2006 to issue title to him for the disputed property. In November 2013, the federal Agrarian Court ordered that SEDATU issue the requested title to the claimant and cause it to be registered. Both SEDATU and Sempra Infrastructure challenged the ruling due to lack of notification of the underlying process. In May 2019, a federal court in Mexico reversed the ruling and ordered a retrial, which is pending resolution.

▪In a separate proceeding, the claimant filed suit to reinitiate an administrative procedure at SEDATU to obtain the property title that was previously dismissed. In April 2021, the Agrarian Court ordered that the administrative procedure be restarted. The proceeding in the Agrarian Court has concluded; however, the administrative procedure at SEDATU may continue if SEDATU decides to reopen the matter.

In addition, a case involving an area of real property on which part of the ECA Regas Facility is situated is subject to a claim in the federal Agrarian Court, in which the plaintiff seeks to annul the property title for a portion of the land on which the ECA Regas Facility is situated and to obtain possession of a different parcel that allegedly overlaps with the site of the ECA Regas Facility. The proceeding, which seeks an order that SEDATU annul the ECA Regas Facility’s competing property title, was initiated in 2006 and, in July 2021, a decision was issued in favor of the ECA Regas Facility. The plaintiff appealed, and in February 2022, the appellate court confirmed the ruling in favor of the ECA Regas Facility and dismissed the appeal. The plaintiff filed a federal appeal against the appellate court ruling. A ruling from the Federal Collegiate Circuit Court is pending.

Land Disputes – Resolved. Three cases involving an area of real property on which part of the ECA Regas Facility is situated, each brought by a single plaintiff or her descendants, were filed against the facility. The disputed area, which is a parcel adjacent to the ECA Regas Facility that allegedly overlaps with land on which the ECA Regas Facility is situated and also adjacent to the parcel subject to the unresolved Agrarian Court proceeding described in the preceding paragraph, is subject to a claim in the federal Agrarian Court and two claims in Mexican civil courts. The ECA Regas Facility first bought the property from the federal government in 2003; however, to resolve an ownership controversy, in 2008, the ECA Regas Facility reached a financial settlement with the plaintiff to eliminate an adverse claim to its title. Nevertheless, the plaintiff sued in 2013 for the nullity of both titles. The Agrarian Court ruled in favor of the plaintiff in May 2021, nullifying the first property title. Sempra Infrastructure appealed the ruling in July 2021. In May 2022, Sempra Infrastructure won the appeal and the plaintiff’s claims were dismissed, thereby concluding the Agrarian Court proceeding. The ECA Regas Facility continues to hold the second property title to the land. The two civil court proceedings seek to invalidate the contract by which the ECA Regas Facility purchased for the second time the applicable parcel of land on which the ECA Regas Facility is situated on the grounds that the purchase price was allegedly unfair. In the first civil case, initiated in 2013, the court ruled in favor of the ECA Regas Facility, and the final decision was affirmed on a federal appeal, thereby concluding the first civil case. The descendants of the same plaintiff filed the second civil case in 2019, which was dismissed by the court. However, the dismissal was appealed. In April 2022, the ECA Regas Facility entered into a settlement agreement with the plaintiff, whereby the plaintiff has agreed to recognize the ECA Regas Facility as the sole owner of the property and waive any current or future rights over the property, or any other properties related

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to the ECA Regas Facility. The settlement agreement has been approved by the court, thereby concluding the remaining civil case.

Environmental and Social Impact Permits – Unresolved. Several administrative challenges are pending before Mexico’s Secretariat of Environment and Natural Resources (the Mexican environmental protection agency) and Federal Tax and Administrative Courts, seeking revocation of the environmental impact authorization issued to the ECA Regas Facility in 2003. These cases generally allege that the conditions and mitigation measures in the environmental impact authorization are inadequate and challenge findings that the activities of the terminal are consistent with regional development guidelines.

In 2018 and 2021, three related claimants filed separate challenges in the federal district court in Ensenada, Baja California in relation to the environmental and social impact permits issued by each of ASEA and SENER to ECA LNG authorizing natural gas liquefaction activities at the ECA Regas Facility, as follows:

▪In the first case, the court issued a provisional injunction in September 2018. In December 2018, ASEA approved modifications to the environmental permit that facilitate the development of the proposed natural gas liquefaction facility in two phases. In May 2019, the court canceled the provisional injunction. The claimant appealed the court’s decision canceling the injunction but was not successful. The claimant’s underlying challenge to the permits remains pending.

▪In the second case, the initial request for a provisional injunction was denied. That decision was reversed on appeal in January 2020, resulting in the issuance of a new injunction against the permits that were issued by ASEA and SENER. This injunction has uncertain application absent clarification by the court. The claimants petitioned the court to rule that construction of natural gas liquefaction facilities violated the injunction, and in February 2022, the court ruled in favor of the ECA Regas Facility, holding that the natural gas liquefaction activities did not violate the injunction. The claimants have appealed this ruling.

▪In the third case, a group of residents filed a complaint in June 2021 against various federal and state authorities alleging deficiencies in the public consultation process for the issuance of the permits. The request for an initial injunction was denied and the claimants have appealed, which is pending the appellate court’s ruling.

Customer Dispute – Resolved. In May 2020, the two third-party capacity customers at the ECA Regas Facility, Shell Mexico and Gazprom, asserted that a 2019 update of the general terms and conditions for service at the facility, as approved by the CRE, resulted in a breach of contract by Sempra Infrastructure and a force majeure event. In July 2020, Shell Mexico submitted a request for arbitration of the dispute, and Gazprom joined the proceeding, and a hearing was held in October 2021. The International Court of Arbitration issued a final, non-appealable decision in April 2022 in favor of Sempra Infrastructure dismissing all claims and confirming the contracts remain in force. In August 2022, the International Court of Arbitration issued an additional decision dismissing a request by Shell Mexico and Gazprom to consider additional arguments.

Citing the alleged breach, Shell Mexico stopped making payments under its LNG storage and regasification agreement. Due to nonpayment, Sempra Infrastructure drew against Shell Mexico’s letters of credit provided as payment security until they were fully exhausted in March 2022. In September 2022, Shell Mexico paid its invoices from March 2022 through August 2022, bringing its account to current, resumed paying invoices as they come due, and renewed its letters of credit. Although Gazprom had previously been making regular monthly payments under its LNG storage and regasification agreement, Sempra Infrastructure drew against and fully exhausted Gazprom’s letters of credit in April 2022 due to Gazprom’s non-renewal of such letters of credit as required under the agreement. Gazprom did not pay its invoices from March 2022 through July 2022, so funds drawn from the letters of credit were used to fully offset such nonpayment. In September 2022, Gazprom paid its August 2022 invoice, bringing its account to current, and resumed paying invoices as they come due. Subsequent invoices, if not paid by Gazprom, will be offset by funds drawn from the letters of credit. In November 2022, the German government nationalized the parent company of Gazprom, Gazprom Germania (rebranded as “Securing Energy for Europe”), to help stabilize Gazprom’s finances.

In addition to the arbitration proceeding, Shell Mexico also filed constitutional claims against the CRE’s approval of the general terms and conditions for service at the facility and against the issuance of the liquefaction permit. Shell Mexico’s request for an injunction against the general terms and conditions was denied, and the ruling was upheld on appeal. The request for an injunction against the liquefaction permit was denied, and the decision was vacated and remanded on appeal to the First District Court in Administrative Matters, which again denied the injunction. The case on the injunction request was then heard again by the appellate court and was denied, making the decision final.

Sonora Pipeline

Guaymas-El Oro Segment – Unresolved. Sempra Infrastructure’s Sonora natural gas pipeline consists of two segments, the Sasabe-Puerto Libertad-Guaymas segment and the Guaymas-El Oro segment. Each segment has its own service agreement with the CFE. In 2015, the Yaqui tribe, with the exception of some members living in the Bácum community, granted its consent and a right-of-way easement agreement for the construction of the Guaymas-El Oro segment of the Sonora natural gas pipeline that

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crosses its territory. Representatives of the Bácum community filed a legal challenge in Mexican federal court demanding the right to withhold consent for the project, the stoppage of work in the Yaqui territory and damages. In 2016, the judge granted a suspension order that prohibited the construction of such segment through the Bácum community territory. Because the pipeline does not pass through the Bácum community, Sempra Infrastructure did not believe the 2016 suspension order prohibited construction in the remainder of the Yaqui territory. Construction of the Guaymas-El Oro segment was completed, and commercial operations began in May 2017.

Following the start of commercial operations of the Guaymas-El Oro segment, Sempra Infrastructure reported damage to the Guaymas-El Oro segment of the Sonora pipeline in the Yaqui territory that has made that section inoperable since August 2017 and, as a result, Sempra Infrastructure declared a force majeure event. In 2017, an appellate court ruled that the scope of the 2016 suspension order encompassed the wider Yaqui territory, which has prevented Sempra Infrastructure from making repairs to put the pipeline back in service. In July 2019, a federal district court ruled in favor of Sempra Infrastructure and held that the Yaqui tribe was properly consulted and that consent from the Yaqui tribe was properly received. Representatives of the Bácum community appealed this decision, causing the suspension order preventing Sempra Infrastructure from repairing the damage to the Guaymas-El Oro segment of the Sonora pipeline in the Yaqui territory to remain in place until the appeals process is exhausted. In December 2021, the court of appeals referred the matter to Mexico’s Supreme Court. In June 2022, the Supreme Court remanded the case back to the court of appeals for final resolution. The CFE asked the court of appeals to dismiss the Bácum community’s appeal based on the plan to re-route the portion of the pipeline that is in the Yaqui territory. In December 2022, the court of appeals reversed the federal district court’s ruling and ordered the district court to issue a new ruling that takes into account the planned re-routing of the pipeline.

Sempra Infrastructure exercised its rights under the contract, which included seeking force majeure payments for the two-year period such force majeure payments were required to be made, which ended in August 2019.

In July 2019, the CFE filed a request for arbitration generally to nullify certain contract terms that provide for fixed capacity payments in instances of force majeure and made a demand for substantial damages in connection with the force majeure event. In September 2019, the arbitration process ended when Sempra Infrastructure and the CFE reached an agreement to restart natural gas transportation service in January 2020 as the new service start date, and to modify the tariff structure and extend the term of the contract by 10 years. Subsequently, Sempra Infrastructure and the CFE agreed to extend the service start date multiple times, most recently to May 31, 2023. 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. If the pipeline is not back in service or the parties do not agree on a new service start date by May 31, 2023, Sempra Infrastructure retains the right to terminate the contract and seek to recover its reasonable and documented costs and lost profits. Discussions with the CFE regarding the future of the pipeline are underway in accordance with a non-binding MOU announced in January 2022 that, among other matters, addresses efforts to restart service on the pipeline. In July 2022, Sempra Infrastructure and the CFE entered into a Shareholders’ Agreement that establishes a framework for a JV between the parties to work on restarting service on the pipeline, including the re-routing of a portion of the pipeline. This agreement is subject to a number of conditions to be satisfied before it becomes effective, including regulatory and corporate authorizations.

At December 31, 2022, Sempra Infrastructure had $420 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 (which has not been agreed to by the parties, but is subject to negotiation pursuant to a non-binding MOU and a Shareholders’ Agreement, as described above) 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.

Sasabe-Puerto Libertad-Guaymas Segment – Resolved. In June 2014, Sempra Infrastructure and a landowner agreed to enter into a voluntary right-of-way easement agreement for the construction and operation of a seven-mile section of the 314-mile Sasabe-Puerto Libertad-Guaymas segment of the Sonora natural gas pipeline on the landowner’s property. However, in 2015, the landowner filed a complaint demanding the easement agreement be nullified. In September 2021, a definitive and non-appealable judgment was issued declaring the easement agreement nullified and ordering the removal of the pipeline from the landowner’s property. The execution of the judgment was suspended as a result of an amparo lawsuit filed by the CFE as an interested third party that did not participate in the litigation. Sempra Infrastructure filed a special judicial action asking the civil court to acknowledge the existence of the easement and to determine the consideration the landowner should receive in exchange for the easement. In July 2022, Sempra Infrastructure and the landowner entered into a new easement agreement approved by the court for the seven-mile section on the landowner’s property, thus bringing this case to definitive conclusion.

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Litigation Related to Regulatory and Other Actions by the Mexican Government – Unresolved

Amendments to Mexico’s Electricity Industry Law. In March 2021, the Mexican government published a decree with amendments to Mexico’s Electricity Industry Law that include some public policy changes, including establishing priority of dispatch for CFE plants over privately owned plants. According to the decree, these amendments were to become effective on March 10, 2021, and SENER, the CRE and Centro Nacional de Control de Energía (Mexico’s National Center for Energy Control) were to have 180 calendar days to modify, as necessary, all resolutions, policies, criteria, manuals and other regulations applicable to the power industry to conform with this decree. However, a Mexican court issued a suspension of the amendments on March 19, 2021. In April 2022, the Mexican Supreme Court resolved an action of unconstitutionality filed by a group of senators against the amended Electricity Industry Law, but the qualified majority of eight votes out of 11 as is required in matters involving constitutionality was not reached and the proceeding was dismissed, which means that the Mexican Supreme Court did not issue a binding precedent and the amended Electricity Industry Law remains in force. Sempra Infrastructure filed three lawsuits against the amendments to the Electricity Industry Law and, in each of them, Sempra Infrastructure obtained a favorable judgment in the lower courts, which has been appealed. If the proposed amendments are affirmed by the lower courts or by the Mexican Supreme Court (which in these cases would only require a simple majority vote), the CRE may be required to revoke self-supply permits granted under the former electricity law, which were grandfathered when the new Electricity Industry Law was enacted, under a legal standard that is ambiguous and not well defined under the law. If such self-supply permits granted under the former electricity law are revoked, it 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 could have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.

Litigation Related to Regulatory and Other Actions by the Mexican Government – Resolved

Transmission Rates for Legacy Generation Facilities. In May 2020, the CRE approved an update to the transmission rates included in legacy renewable and cogeneration energy contracts based on the claim that the legacy transmission rates did not reflect fair and proportional costs for providing the applicable services and, therefore, created inequitable competitive conditions. Three of Sempra Infrastructure’s renewable energy facilities (Don Diego Solar, Border Solar and Ventika) are currently holders of contracts with such legacy rates, and under the terms of these contracts any increases in the transmission rates would be passed through directly to their customers. These renewable energy facilities sought and obtained injunctive relief but were required to guarantee the difference in tariffs. The three facilities obtained favorable resolutions from a lower court and the CRE appealed those decisions, which were definitively affirmed in favor of the Don Diego Solar, Border Solar and Ventika facilities, whereby the injunctions were made permanent, the regulations were declared unconstitutional, and the guarantee was determined to not be required. There are no further opportunities to appeal and therefore these resolutions are final.

Offtakers of Legacy Generation Permits. In October 2020, the CRE approved a resolution to amend the rules for the inclusion of new offtakers of legacy generation and self-supply permits (the Offtaker Resolution), which became effective immediately. The Offtaker Resolution prohibits self-supply permit holders from adding new offtakers that were not included in the original development or expansion plans, making modifications to the amount of energy allocated to the named offtakers, and including load centers that have entered into a supply arrangement under Mexico’s Electricity Industry Law. Don Diego Solar, Border Solar and Ventika are holders of self-supply permits, and the two solar facilities are currently affected by the Offtaker Resolution. In January 2022, Don Diego Solar and Border Solar obtained injunctive relief and a favorable resolution from a Mexican federal district court and the CRE appealed that decision. In December 2022, the court of appeals definitively resolved the case by confirming the federal district court’s judgment in favor of Don Diego Solar and Border Solar and there are no further opportunities to appeal and therefore this resolution is final.

Amendments to Mexico’s Hydrocarbons Law. In May 2021, amendments to Mexico’s Hydrocarbons Law were published and became effective. The amendments grant SENER and the CRE additional powers to suspend and revoke permits related to the midstream and downstream sectors. Suspension of permits will be determined by SENER or the CRE when a danger to national security, energy security, or to the national economy is foreseen. Likewise, new grounds for the revocation of permits are in place if the permit holder (i) carries out its activity with illegally imported products; (ii) fails, on more than one occasion, to comply with the provisions applicable to quantity, quality and measurement of the products; or (iii) modifies the technical conditions of its infrastructure without authorization. Additionally, in the case of existing permits, authorities will revoke those permits that fail to comply with the minimum storage requirements established by SENER or fail to comply with requirements or violate provisions established by the amended Hydrocarbons Law. All the Sempra Infrastructure entities participating in the Mexico hydrocarbons sector filed lawsuits against the initiative to reform the Hydrocarbons Law. In 2021, district courts issued judgments that the amendments do not affect the interests of the companies at this time and, as a result, dismissed the amparo lawsuits, including the lawsuits filed by the Sempra Infrastructure entities. The Sempra Infrastructure entities have appealed these

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judgments. The Circuit Courts upheld the dismissal of the amparo lawsuits and there are no further opportunities to appeal, thereby concluding the amparo lawsuits.

Other Litigation – Unresolved

RBS Sempra Commodities

Sempra holds an equity method investment in RBS Sempra Commodities, a limited liability partnership in the process of being liquidated. In 2015, liquidators filed a claim in the High Court of Justice against RBS (now NatWest Markets plc, our partner in the JV) and Mercuria Energy Europe Trading Limited (the Defendants) on behalf of 10 companies (the Liquidating Companies) that engaged in carbon credit trading via chains that included a company that traded directly with RBS SEE, a subsidiary of RBS Sempra Commodities. The claim alleges that the Defendants’ participation in the purchase and sale of carbon credits resulted in the Liquidating Companies’ carbon credit trading transactions creating a VAT liability they were unable to pay, and that the Defendants are liable to provide for equitable compensation due to dishonest assistance and compensation under the U.K. Insolvency Act of 1986. Trial on the matter was held in June and July of 2018. In March 2020, the High Court of Justice rendered its judgment mostly in favor of the Liquidating Companies and awarded damages of approximately £45 million (approximately $54 million in U.S. dollars at December 31, 2022), plus costs and interest. In October 2020, the High Court of Justice assessed costs and interest to be approximately £21 million (approximately $25 million in U.S. dollars at December 31, 2022) as of that date, with interest continuing to accrue. The Defendants appealed and, in May 2021, the Court of Appeal set aside the High Court of Justice’s decision and ordered a retrial. In July 2022, the Supreme Court of the U.K. denied the Liquidating Companies application for permission to appeal the Court of Appeal’s decision. No date has been scheduled for the retrial. J.P. Morgan Chase & Co., which acquired RBS SEE and later sold it to Mercuria Energy Group, Ltd., previously notified us that Mercuria Energy Group, Ltd. has sought indemnity for the claim, and J.P. Morgan Chase & Co. has in turn sought indemnity from Sempra and RBS.

We recorded $100 million in equity losses from our investment in RBS Sempra Commodities in Equity Earnings on Sempra’s Consolidated Statement of Operations in 2020, which represented an estimate of our obligations to settle pending VAT matters and related legal costs. In 2021, we reduced this estimate by $50 million based on a related settlement with HMRC on the First-Tier Tribunal case and revised assumptions on the High Court of Justice case.

Asbestos Claims Against EFH Subsidiaries

Certain EFH subsidiaries that we acquired as part of the merger of EFH with an indirect subsidiary of Sempra were defendants in personal injury lawsuits brought in state courts throughout the U.S. These cases alleged illness or death as a result of exposure to asbestos in power plants designed and/or built by companies whose assets were purchased by predecessor entities to the EFH subsidiaries, and generally assert claims for product defects, negligence, strict liability and wrongful death. They sought compensatory and punitive damages. As of February 21, 2023, two lawsuits are pending. Additionally, in connection with a December 2015 deadline in the EFH bankruptcy proceeding, approximately 28,000 proofs of claim were filed on behalf of persons who allege exposure to asbestos under similar circumstances and assert the right to file such lawsuits in the future. None of these claims or lawsuits were discharged in the EFH bankruptcy proceeding. The costs to defend or resolve these lawsuits or claims and the amount of damages that may be imposed or incurred could have a material adverse effect on Sempra’s results of operations, financial condition, cash flows and/or prospects.

Ordinary Course Litigation

We are also defendants in ordinary routine litigation incidental to our businesses, including personal injury, employment litigation, product liability, property damage and other claims. Juries have demonstrated an increasing willingness to grant large awards, including punitive damages, in these types of cases.

LEASES

A lease exists when a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. We determine if an arrangement is or contains a lease at inception of the contract.

Some of our lease agreements contain nonlease components, which represent activities that transfer a separate good or service to the lessee. As the lessee for both operating and finance leases, we have elected to combine lease and nonlease components as a single lease component for real estate, fleet vehicles, power generating facilities and pipelines, whereby fixed or in-substance fixed payments allocable to the nonlease component are accounted for as part of the related lease liability and ROU asset. As the lessor, we have elected to combine lease and nonlease components as a single lease component for real estate and refined products

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terminals if the timing and pattern of transfer of the lease and nonlease components are the same and the lease component would be classified as an operating lease if accounted for separately.

Lessee Accounting

We have operating and finance leases for real and personal property (including office space, land, fleet vehicles, machinery and equipment, warehouses and other operational facilities) and PPAs with renewable energy, energy storage and peaker plant facilities.

Some of our leases include options to extend the lease terms for up to 25 years, or to terminate the lease within one year. Our lease liabilities and ROU assets are based on lease terms that may include such options when it is reasonably certain that we will exercise the option.

Certain of our contracts are short-term leases, which have a lease term of 12 months or less at lease commencement. We do not recognize a lease liability or ROU asset arising from short-term leases for all existing classes of underlying assets. In such cases, we recognize short-term lease costs on a straight-line basis over the lease term. Our short-term lease costs for the period reasonably reflect our short-term lease commitments.

Certain of our leases contain escalation clauses requiring annual increases in rent ranging from 2% to 7% or based on the Consumer Price Index. The rentals payable under these leases may increase by a fixed amount each year or by a percentage of a base year. Variable lease payments that are based on an index or rate are included in the initial measurement of our lease liability and ROU asset based on the index or rate at lease commencement and are not remeasured because of changes to the index or rate. Rather, changes to the index or rate are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred.

Similarly, PPAs for the purchase of renewable energy at SDG&E require lease payments based on a stated rate per MWh produced by the facilities, and we are required to purchase substantially all the output from the facilities. SDG&E is required to pay additional amounts for capacity charges and actual purchases of energy that exceed the minimum energy commitments. Under these contracts, we do not recognize a lease liability or ROU asset for leases for which there are no fixed lease payments. Rather, these variable lease payments are recognized separately as variable lease costs. SDG&E estimates these variable lease payments to be $297 million in each of 2023 and 2024, $296 million in 2025, $290 million in 2026, $289 million in 2027 and $2,496 million thereafter.

As of the lease commencement date, we recognize a lease liability for our obligation to make future lease payments, which we initially measure at present value using our incremental borrowing rate at the date of lease commencement, unless the rate implicit in the lease is readily determinable. We determine our incremental borrowing rate based on the rate of interest that we would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. We also record a corresponding ROU asset, initially equal to the lease liability and adjusted for lease payments made at or before lease commencement, lease incentives, and any initial direct costs. We test ROU assets for recoverability whenever events or changes in circumstances have occurred that may affect the recoverability or the estimated useful lives of the ROU assets.

For our operating leases, our non-regulated entities recognize a single lease cost on a straight-line basis over the lease term in operating expenses. SDG&E and SoCalGas recognize this single lease cost on a basis that is consistent with the recovery of such costs in accordance with U.S. GAAP governing rate-regulated operations.

For our finance leases, the interest expense on the lease liability and amortization of the ROU asset are accounted for separately. Our non-regulated entities use the effective interest rate method to account for the imputed interest on the lease liability and amortize the ROU asset on a straight-line basis over the lease term. SDG&E and SoCalGas recognize amortization of the ROU asset on a basis that is consistent with the recovery of such costs in accordance with U.S. GAAP governing rate-regulated operations.

Our leases do not contain any material residual value guarantees, restrictions or covenants.

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Classification of ROU assets and lease liabilities and the weighted-average remaining lease term and discount rate associated with operating and finance leases are summarized in the table below.


LESSEE INFORMATION ON THE CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	Sempra						SDG&E						SoCalGas
	December 31,
	2022			2021			2022			2021			2022			2021
ROU assets:
Operating leases:
ROU assets	$	655		$	594		$	281		$	185		$	42		$	57

Finance leases:
PP&E	1,529			1,473			1,395			1,381			133			92
Accumulated depreciation	(186)			(138)			(140)			(107)			(46)			(31)
PP&E, net	1,343			1,335			1,255			1,274			87			61
Total ROU assets	$	1,998		$	1,929		$	1,536		$	1,459		$	129		$	118

Lease liabilities:
Operating leases:
Other current liabilities	$	53		$	49		$	32		$	26		$	11		$	15
Deferred credits and other	528			470			249			159			29			41
	581			519			281			185			40			56
Finance leases:
Current portion of long-term debt and finance leases	57			43			39			32			18			11
Long-term debt and finance leases	1,286			1,292			1,217			1,242			69			50
	1,343			1,335			1,256			1,274			87			61
Total lease liabilities	$	1,924		$	1,854		$	1,537		$	1,459		$	127		$	117

Weighted-average remaining lease term (in years):
Operating leases	14			14			11			11			4			4
Finance leases	16			17			17			17			6			7
Weighted-average discount rate:
Operating leases	6.21		%	5.45		%	4.06		%	3.22		%	1.80		%	1.98		%
Finance leases	14.04		%	14.25		%	14.35		%	14.48		%	4.14		%	2.91		%

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The components of lease costs were as follows:


LESSEE INFORMATION ON THE CONSOLIDATED STATEMENTS OF OPERATIONS(1)
(Dollars in millions)
	Sempra						SDG&E						SoCalGas
	Years ended December 31,
	2022		2021		2020		2022		2021		2020		2022		2021		2020

Operating lease costs	$	83	$	89	$	92	$	45	$	32	$	31	$	18	$	20	$	24

Finance lease costs:
Amortization of ROU assets(2)	48		39		35		33		27		23		15		12		12
Interest on lease liabilities	184		186		188		181		184		186		2		2		2
Total finance lease costs	232		225		223		214		211		209		17		14		14

Short-term lease costs(3)	3		7		7		2		1		3		—		—		—
Variable lease costs(3)	411		432		477		399		422		467		11		10		10
Total lease costs	$	729	$	753	$	799	$	660	$	666	$	710	$	46	$	44	$	48

(1) Includes costs capitalized in PP&E.

(2) Included in O&M, except for $25 at Sempra, $24 at SDG&E and $1 at SoCalGas in 2022, $22 at Sempra, $21 at SDG&E and $1 at SoCalGas in 2021, and $18 at Sempra and SDG&E in 2020, which is included in Depreciation and Amortization Expense.

(3) Short-term leases with variable lease costs are recorded and presented as variable lease costs.

Cash paid for amounts included in the measurement of lease liabilities and supplemental noncash information were as follows:


LESSEE INFORMATION ON THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Sempra						SDG&E						SoCalGas
	Years ended December 31,
	2022		2021		2020		2022		2021		2020		2022		2021		2020
Operating activities:
Cash paid for operating leases	$	88	$	78	$	79	$	45	$	32	$	31	$	18	$	20	$	24
Cash paid for finance leases	169		171		173		166		169		171		2		2		2
Financing activities:
Cash paid for finance leases	48		39		35		33		27		23		15		12		12
Increase (decrease) in operating lease obligations for ROU assets	142		116		20		134		112		(1)		1		1		1
Increase in finance lease obligations for investment in PP&E	57		43		77		16		24		30		41		19		47

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The table below presents the maturity analysis of our lease liabilities and reconciliation to the present value of lease liabilities:


LESSEE MATURITY ANALYSIS OF LIABILITIES
(Dollars in millions)
	December 31, 2022
	Sempra				SDG&E				SoCalGas
	Operating leases(1)		Finance leases(2)		Operating leases(1)		Finance leases(2)		Operating leases		Finance leases
2023	$	74	$	222	$	34	$	201	$	13	$	21
2024	80		212		40		195		11		17
2025	70		206		33		190		10		16
2026	67		204		32		190		8		14
2027	55		202		30		189		—		13
Thereafter	558		2,111		177		2,094		—		17
Total undiscounted lease payments	904		3,157		346		3,059		42		98
Less: imputed interest	(323)		(1,814)		(65)		(1,803)		(2)		(11)
Total lease liabilities	581		1,343		281		1,256		40		87
Less: current lease liabilities	(53)		(57)		(32)		(39)		(11)		(18)
Long-term lease liabilities	$	528	$	1,286	$	249	$	1,217	$	29	$	69

(1) Includes $12 in each of 2023 through 2027 and $94 thereafter related to purchased-power contracts.

(2) Substantially all amounts are related to purchased-power contracts.

Leases That Have Not Yet Commenced

SDG&E has entered into two energy storage tolling agreements, of which SDG&E expects one will commence in the first quarter of 2023 and one will commence in the third quarter of 2023. SDG&E expects the future minimum lease payments to be $12 million in 2023, $15 million in each of 2024 through 2027 and $78 million thereafter until expiration in 2033.

SoCalGas has entered into a fleet vehicle agreement, under which SoCalGas expects leases will commence in the first quarter of 2023 through the fourth quarter of 2023. SoCalGas expects the future minimum lease payments to be $1 million in 2023, $2 million in each of 2024 through 2027 and $9 million thereafter until expiration in 2031.

Lessor Accounting

Sempra Infrastructure is a lessor for certain of its natural gas and ethane pipelines, compressor stations, LPG storage facilities, a rail facility and refined products terminals, which we account for as operating or sales-type leases. These leases expire at various dates from 2026 through 2042.

Over the lease term, we monitor the underlying assets in operating leases for impairment, and we evaluate the net investment in sales-type leases for expected credit losses. Sempra Infrastructure expects to continue to derive value from the underlying assets associated with its pipelines following the end of their respective lease terms based on the expected remaining useful life, expected market conditions and plans to re-market and re-contract the underlying assets.

Generally, we recognize operating lease income on a straight-line basis over the lease term, and sales-type lease income based on the effective interest method over the lease term. Certain of our leases contain rate adjustments or are based on foreign currency exchange rates that may result in lease payments received that vary in amount from one period to the next. In addition to minimum fixed payments, our refined products terminals receive variable lease payments for barrels delivered that exceed minimum delivery requirements.

In July 2021, a rail facility agreement commenced, which Sempra Infrastructure is accounting for as a sales-type lease. The rail facility is being used by the lessee to transport refined products out of the Veracruz terminal. The lessee has the right to direct the use of the rail facility and will obtain substantially all of the economic benefits of the rail facility. At lease commencement, Sempra Infrastructure derecognized the $44 million carrying value of the rail facility from PP&E and recognized a net investment in sales-type lease asset of $62 million and a selling profit of $18 million. The agreement expires in 2041 and will automatically renew for successive five-year terms unless written notice is provided by Sempra Infrastructure or the lessee. Fixed lease payments are payable in the first five years of the agreement, which the lessee is required to pay even in the event of lease termination.

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LESSOR INFORMATION – SEMPRA
(Dollars in millions)
	December 31,
	2022		2021
Assets subject to operating leases:
Property, plant and equipment:
Pipelines and storage	$	1,026	$	1,018
Refined products terminals	611		405
Other	76		76
Total	1,713		1,499
Accumulated depreciation	(330)		(276)
Property, plant and equipment, net	$	1,383	$	1,223

	December 31, 2022
Maturity analysis of lease payments:	Operating leases		Sales-type leases
2023	$	300	$	16
2024	300		17
2025	300		17
2026	300		9
2027	300		—
Thereafter	3,091		—
Total undiscounted cash flows	$	4,591	59
Present value of lease payments (recognized as lease receivable)(1)			50
Difference between undiscounted cash flows and discounted cash flows			$	9

(1) Includes $10 in Other Current Assets and $40 in Other Long-Term Assets on the Consolidated Balance Sheet.


LESSOR INFORMATION ON THE CONSOLIDATED STATEMENTS OF OPERATIONS – SEMPRA
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sales-type leases:
Income recognized at lease commencement	$	—	$	18	$	1
Interest income	8		4		1
Total revenues from sales-type leases(1)	$	8	$	22	$	2

Operating leases:
Fixed lease payments	$	290	$	256	$	195
Variable lease payments	10		10		1
Total revenues from operating leases(1)	$	300	$	266	$	196

Depreciation expense	$	54	$	48	$	39

(1) Included in Revenues: Energy-Related Businesses on the Consolidated Statements of Operations.

CONTRACTUAL COMMITMENTS

Natural Gas Contracts

SoCalGas has responsibility for procuring natural gas for both SDG&E’s and SoCalGas’ core customers in a combined portfolio. SoCalGas buys natural gas under short-term and long-term contracts for this portfolio from various producing regions in the southwestern U.S., U.S. Rockies and Canada.

SoCalGas transports natural gas primarily under long-term firm interstate pipeline capacity agreements that provide for annual reservation charges, which are recovered in rates. SoCalGas has commitments with interstate pipeline companies for firm pipeline capacity under contracts that expire at various dates through 2032.

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Sempra Infrastructure has various capacity agreements for natural gas storage and transportation that expire at various dates through 2059. Transportation costs on these agreements vary based on pipeline capacity.

Payments on our natural gas contracts could exceed the minimum commitment based on portfolio needs. At December 31, 2022, the future minimum payments under existing natural gas contracts and natural gas storage and transportation contracts are as follows:


FUTURE MINIMUM PAYMENTS
(Dollars in millions)
	Sempra						SoCalGas
	Storage and transportation		Natural gas(1)		Total(1)		Transportation		Natural gas		Total
2023	$	202	$	139	$	341	$	132	$	4	$	136
2024	184		49		233		114		22		136
2025	144		31		175		77		21		98
2026	141		—		141		75		—		75
2027	138		—		138		72		—		72
Thereafter	795		—		795		240		—		240
Total minimum payments	$	1,604	$	219	$	1,823	$	710	$	47	$	757

(1) Excludes amounts related to the LNG purchase agreement that we discuss below.

Total payments under natural gas contracts and natural gas storage and transportation contracts as well as payments to meet additional portfolio needs at Sempra and SoCalGas were as follows:


PAYMENTS UNDER NATURAL GAS CONTRACTS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra	$	2,536	$	1,691	$	989
SoCalGas	2,492		1,590		935

LNG Purchase Agreement

Sempra Infrastructure has an SPA for the supply of LNG to the ECA Regas Facility. The commitment amount is calculated using a predetermined formula based on estimated forward prices of the index applicable from 2023 to 2029. Although this agreement specifies a number of cargoes to be delivered, under its terms, the supplier may divert certain cargoes, which would reduce amounts paid under the agreement by Sempra Infrastructure.

At December 31, 2022, the following LNG commitment amounts are based on the assumption that all LNG cargoes, less those already confirmed to be diverted as of February 21, 2023, under the agreement are delivered:


LNG COMMITMENT AMOUNTS
(Dollars in millions)
Sempra:
2023	$	1,068
2024	797
2025	802
2026	796
2027	787
Thereafter	1,307
Total	$	5,557

Actual LNG purchases were approximately $108 million in 2022, $27 million in 2021 and $16 million in 2020 due to the supplier electing to divert cargoes as allowed by the agreement.

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Purchased-Power Contracts

Payments on SDG&E’s purchased-power contracts could exceed the minimum commitments based on energy needs. These purchased-power contracts expire on various dates through 2042. At December 31, 2022, the future minimum payments under long-term purchased-power contracts for Sempra and SDG&E are as follows:


FUTURE MINIMUM PAYMENTS – PURCHASED-POWER CONTRACTS(1)
(Dollars in millions)
2023	$	175
2024	150
2025	95
2026	91
2027	73
Thereafter	578
Total minimum payments	$	1,162

(1) Excludes purchase agreements accounted for as operating leases and finance leases.

Payments on these contracts represent capacity charges and minimum energy and transmission purchases that exceed the minimum commitment. SDG&E is required to pay additional amounts for actual purchases of energy that exceed the minimum energy commitments. SDG&E estimates these variable payments to be $77 million in each of 2023 through 2027 and $564 million thereafter. Total payments under purchased-power contracts for Sempra and SDG&E were $484 million in 2022, $495 million in 2021 and $534 million in 2020.

Construction and Development Projects

Sempra has various capital projects in progress in the U.S. and Mexico. Our total contractual commitments at December 31, 2022 under these projects are approximately $241 million, requiring future payments of $87 million in 2023, $24 million in 2024, $20 million in 2025, $20 million in 2026, $19 million in 2027 and $71 million thereafter. The following is a summary by segment of contractual commitments and contingencies related to such projects.

SDG&E

At December 31, 2022, SDG&E has commitments to make future payments of $33 million for construction projects that include:

▪$25 million related to spent fuel management at SONGS; and

▪$8 million for infrastructure improvements for electric transmission and distribution systems.

SDG&E expects future payments under these contractual commitments to be $10 million in 2023, $1 million in each of 2024 through 2026, $2 million in 2027 and $18 million thereafter.

SoCalGas

At December 31, 2022, SoCalGas has commitments to make future payments of $12 million for an information technology software project. SoCalGas expects future payments under this contractual commitment to be $4 million in each of 2023 and 2024 and $2 million in each of 2025 and 2026.

Sempra Infrastructure

At December 31, 2022, Sempra Infrastructure has commitments to make future payments of $196 million for construction and development projects that include:

▪$16 million for refined products terminals;

▪$174 million for natural gas pipelines and ongoing maintenance services; and

▪$6 million for renewables and other projects.

Sempra Infrastructure expects future payments under these contractual commitments to be $73 million in 2023, $19 million in 2024, $17 million in each of 2025 through 2027 and $53 million thereafter.

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OTHER COMMITMENTS

SDG&E

We discuss nuclear insurance and nuclear fuel disposal related to SONGS in Note 15.

Fire Mitigation Fund

In connection with the completion of the Sunrise Powerlink project in 2012, the CPUC required that SDG&E establish a fire mitigation fund to minimize the risk of fire as well as reduce the potential wildfire impact on residences and structures near the Sunrise Powerlink. The future payments for these contractual commitments, for which a liability has been recorded, are expected to be $4 million per year in 2023 through 2027 and $271 million thereafter, subject to escalation of 2% per year, ending in 2069. At December 31, 2022, the present value of these future payments of $123 million has been recorded as a regulatory asset as the amounts represent a cost that we expect will be recovered from customers in the future.

Franchise Agreements

In July 2021, SDG&E’s natural gas and electric franchise agreements for the City of San Diego went into effect. These franchise agreements provide SDG&E the opportunity to serve the City of San Diego for a period of 20 years, consisting of 10-year agreements that will automatically renew for an additional 10 years unless the City Council voids the automatic renewals with a supermajority vote. At December 31, 2022, SDG&E has commitments to make future principal and interest payments as consideration for the franchise agreements of $14 million in 2023, $15 million in each of 2024 and 2025, $4 million in 2026, $2 million in 2027 and $50 million thereafter. The consideration paid will not be recovered from customers and will be amortized over 20 years.

In 2021, two lawsuits were filed in the California Superior Court challenging various aspects of the natural gas and electric franchise agreements granted by the City of San Diego to SDG&E. Both lawsuits ultimately sought to void the franchise agreements. In one of the cases, judgment was granted in favor of SDG&E and the City of San Diego. A final ruling is pending on the second case.

SoCalGas

In May 2022, SoCalGas’ new gas franchise agreement with the City of Los Angeles (City of LA) went into effect. This franchise agreement provides SoCalGas a gas system franchise to install, retain, operate and maintain its gas system within the City of LA for 21 years, consisting of a 13-year term that will automatically renew for an additional eight years unless the City of LA exercises its option to terminate the renewal term. At December 31, 2022, SoCalGas has one remaining future payment obligation of $11 million to be paid within 30 days of commencement of the eight-year renewal term in 2035 (if the renewal term is not terminated by the City of LA). This future payment obligation would not be recovered from customers and would be amortized over eight years.

Sempra Infrastructure

Additional consideration for a 2006 comprehensive legal settlement with California to resolve the Continental Forge litigation included an agreement that, for a period of 18 years beginning in 2011, Sempra Infrastructure would sell to SDG&E and SoCalGas, subject to annual CPUC approval, up to 500 MMcf per day of regasified LNG from Sempra Infrastructure’s ECA Regas Facility that is not delivered or sold in Mexico at the price indexed to the California border minus $0.02 per MMBtu. There are no specified minimums required, and to date, Sempra Infrastructure has not been required to deliver any natural gas pursuant to this agreement.

ENVIRONMENTAL ISSUES

Our operations are subject to federal, state and local environmental laws. We also are subject to regulations related to hazardous wastes, air and water quality, land use, solid waste disposal and the protection of wildlife. These laws and regulations require that we investigate and correct the effects of the release or disposal of materials at sites associated with our past and our present operations. These sites include those at which we have been identified as a PRP under the federal Superfund laws and similar state laws.

In addition, we are required to obtain numerous governmental permits, licenses and other approvals to construct facilities and operate our businesses. The related costs of environmental monitoring, pollution control equipment, cleanup costs, and emissions fees are significant. Increasing national and international concerns regarding global warming and mercury, carbon dioxide, nitrogen oxide and sulfur dioxide emissions could result in requirements for additional pollution control equipment or significant

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emissions fees or taxes that could adversely affect Sempra Infrastructure. SDG&E’s and SoCalGas’ costs to operate their facilities in compliance with these laws and regulations generally have been recovered in customer rates.

We disclose any proceeding under environmental laws to which a government authority is a party when the potential monetary sanctions, exclusive of interest and costs, exceed the lesser of $1 million or 1% of current assets, which was $59 million for Sempra, $16 million for SDG&E and $21 million for SoCalGas at December 31, 2022.

We discuss environmental matters related to the natural gas leak at SoCalGas’ Aliso Canyon natural gas storage facility above in “Legal Proceedings – SoCalGas – Aliso Canyon Natural Gas Storage Facility Gas Leak.”

Other Environmental Issues

We generally capitalize the significant costs we incur to mitigate or prevent future environmental contamination or extend the life, increase the capacity, or improve the safety or efficiency of property used in current operations. The following table shows our capital expenditures (including construction work in progress) in order to comply with environmental laws and regulations:


CAPITAL EXPENDITURES FOR ENVIRONMENTAL ISSUES
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Sempra	$	87	$	95	$	76
SDG&E	31		32		39
SoCalGas	56		63		37

We have not identified any significant environmental issues outside the U.S.

At SDG&E and SoCalGas, costs that relate to current operations or an existing condition caused by past operations are generally recorded as a regulatory asset due to the probability that these costs will be recovered in rates.

The environmental issues currently facing us, except for those related to the Leak as we discuss above or resolved during the last three years, include (1) investigation and remediation of SDG&E’s and SoCalGas’ manufactured-gas sites, (2) cleanup of third-party waste-disposal sites used by SDG&E and SoCalGas at which we have been identified as a PRP and (3) mitigation of damage to the marine environment caused by the cooling-water discharge from SONGS.

The table below shows the status at December 31, 2022 of SDG&E’s and SoCalGas’ manufactured-gas sites and the third-party waste-disposal sites for which we have been identified as a PRP:


STATUS OF ENVIRONMENTAL SITES

	# Sites complete(1)	# Sites in process
SDG&E:
Manufactured-gas sites	3	—
Third-party waste-disposal sites	2	1
SoCalGas:
Manufactured-gas sites	39	3
Third-party waste-disposal sites	5	2

(1) There may be ongoing compliance obligations for completed sites, such as regular inspections, adherence to land use covenants and water quality monitoring.

We record environmental liabilities when our liability is probable and the costs can be reasonably estimated. In many cases, however, investigations are not yet at a stage where we can determine whether we are liable or, if the liability is probable, to reasonably estimate the amount or range of amounts of the costs. Estimates of our liability are further subject to uncertainties such as the nature and extent of site contamination, evolving cleanup standards and imprecise engineering evaluations. We review our accruals periodically and, as investigations and cleanups proceed, we make adjustments as necessary.

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The following table shows our accrued liabilities for environmental matters at December 31, 2022. Of the total liability, $14 million at SoCalGas is recorded on a discounted basis, with a weighted-average discount rate of 0.4%.


ACCRUED LIABILITIES FOR ENVIRONMENTAL MATTERS
(Dollars in millions)
	Manufactured- gas sites		Waste disposal sites (PRP)(1)		Other hazardous waste sites		Total(2)
SDG&E(3)	$	—	$	5	$	11	$	16
SoCalGas(4)	38		3		1		42
Other	—		1		—		1
Total Sempra(3)(4)	$	38	$	9	$	12	$	59

(1) Sites for which we have been identified as a PRP.

(2) Includes $5, $1 and $4 classified as current liabilities and $54, $15 and $38 classified as noncurrent liabilities on Sempra’s, SDG&E’s and SoCalGas’ Consolidated Balance Sheets, respectively.

(3) Does not include SDG&E’s liability for SONGS marine environment mitigation.

(4) Does not include SoCalGas’ liability for environmental matters for the Leak. We discuss matters related to the Leak above in “Legal Proceedings – SoCalGas – Aliso Canyon Natural Gas Storage Facility Gas Leak.”

We expect future payments related to our environmental liabilities on an undiscounted basis to be $5 million in 2023, $11 million in 2024, $10 million in 2025, $1 million in 2026, $17 million in 2027 and $15 million thereafter.

In connection with the issuance of operating permits, SDG&E and the other owners of SONGS previously reached an agreement with the California Coastal Commission to mitigate the damage to the marine environment caused by the cooling-water discharge from SONGS during its operation. SONGS’ early retirement, described in Note 15, does not reduce SDG&E’s mitigation obligation. SDG&E’s share of the estimated mitigation costs is $144 million, of which $54 million has been incurred through December 31, 2022 and $90 million is accrued for remaining costs through 2059, which is recoverable in rates and included in noncurrent Regulatory Assets on Sempra’s and SDG&E’s Consolidated Balance Sheets.

NOTE 17. SEGMENT INFORMATION

We have four separately managed reportable segments, as follows:

▪SDG&E provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County.

▪SoCalGas is a natural gas distribution utility, serving customers throughout most of Southern California and part of central California.

▪Sempra Texas Utilities holds our investment in Oncor Holdings, which owns an 80.25% interest in Oncor, a regulated electric transmission and distribution utility serving customers in the north-central, eastern, western and panhandle regions of Texas; and our indirect, 50% interest in Sharyland Holdings, which owns Sharyland Utilities, a regulated electric transmission utility serving customers near the Texas-Mexico border.

▪Sempra Infrastructure includes the operating companies of our subsidiary, SI Partners, as well as a holding company and certain services companies. Sempra Infrastructure develops, builds, operates and invests in energy infrastructure to help enable the energy transition in North American markets and globally. Sempra Infrastructure owns a 70% interest in SI Partners, which held a 100% ownership interest in Sempra LNG Holding, LP and a 99.9% ownership interest in IEnova at December 31, 2022.

As we discuss in Note 5, the financial information related to our businesses that constituted the Sempra South American Utilities segment is presented as discontinued operations for all periods presented. The information in the tables below excludes amounts from discontinued operations unless otherwise noted. We completed the sales of our discontinued operations in the second quarter of 2020.

We evaluate each segment’s performance based on its contribution to Sempra’s reported earnings and cash flows. SDG&E and SoCalGas operate in essentially separate service territories, under separate regulatory frameworks and rate structures set by the CPUC and, in the case of SDG&E, the FERC. We describe the accounting policies of all of our segments in Note 1.

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The cost of common services shared by the business segments is assigned directly or allocated based on various cost factors, depending on the nature of the service provided. Interest income and expense is recorded on intercompany loans. The loan balances and related interest are eliminated in consolidation.

The following tables show selected information by segment from our Consolidated Statements of Operations and Consolidated Balance Sheets. We provide information about our equity method investments by segment in Note 6. Amounts labeled as “All other” in the following tables consist primarily of activities of parent organizations and include certain nominal amounts from our South American businesses that did not qualify for treatment as discontinued operations.


SEGMENT INFORMATION
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
REVENUES
SDG&E	$	5,838	$	5,504	$	5,313
SoCalGas	6,840		5,515		4,748
Sempra Infrastructure	1,919		1,997		1,400
All other	1		5		2
Adjustments and eliminations	(1)		(1)		(3)
Intersegment revenues(1)	(158)		(163)		(90)
Total	$	14,439	$	12,857	$	11,370
DEPRECIATION AND AMORTIZATION
SDG&E	$	982	$	889	$	801
SoCalGas	761		716		654
Sempra Infrastructure	268		239		198
All other	8		11		13
Total	$	2,019	$	1,855	$	1,666
INTEREST INCOME
SDG&E	$	5	$	1	$	2
SoCalGas	6		1		2
Sempra Infrastructure	44		75		141
All other	20		3		7
Intercompany eliminations	—		(11)		(56)
Total	$	75	$	69	$	96
INTEREST EXPENSE
SDG&E	$	449	$	412	$	413
SoCalGas	198		157		158
Sempra Infrastructure	104		205		174
All other	306		444		390
Intercompany eliminations	(3)		(20)		(54)
Total	$	1,054	$	1,198	$	1,081
INCOME TAX EXPENSE (BENEFIT)
SDG&E	$	182	$	201	$	190
SoCalGas	138		(310)		96
Sempra Texas Utilities	—		—		1
Sempra Infrastructure	249		238		149
All other	(13)		(30)		(187)
Total	$	556	$	99	$	249
EARNINGS (LOSSES) ATTRIBUTABLE TO COMMON SHARES
SDG&E	$	915	$	819	$	824
SoCalGas	599		(427)		504
Sempra Texas Utilities	736		616		579
Sempra Infrastructure	310		682		580
Discontinued operations	—		—		1,840
All other	(466)		(436)		(563)
Total	$	2,094	$	1,254	$	3,764

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SEGMENT INFORMATION (CONTINUED)
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT
SDG&E	$	2,473	$	2,220	$	1,942
SoCalGas	1,993		1,984		1,843
Sempra Infrastructure	884		802		879
All other	7		9		12
Total	$	5,357	$	5,015	$	4,676
GEOGRAPHIC INFORMATION
Long-lived assets(2):
United States	$	55,035	$	50,657	$	46,902
Mexico	8,423		7,708		6,929
Asia	1		1		—
Total	$	63,459	$	58,366	$	53,831
Revenues(3):
United States	$	13,015	$	11,154	$	10,205
Mexico	1,424		1,703		1,165
Total	$	14,439	$	12,857	$	11,370

			December 31,
			2022		2021
ASSETS
SDG&E			$	26,422	$	24,058
SoCalGas			22,346		20,324
Sempra Texas Utilities			13,781		13,047
Sempra Infrastructure			15,760		14,408
All other			1,376		1,399
Intersegment receivables			(1,111)		(1,191)
Total			$	78,574	$	72,045

*(1)*Revenues for reportable segments include intersegment revenues of $15, $100, and $43 for 2022; $10, $98, and $55 for 2021; and $5, $88, and $(3) for 2020 for SDG&E, SoCalGas, and Sempra Infrastructure, respectively.

*(2)*Includes net PP&E and investments.

*(3)*Amounts are based on where the revenue originated, after intercompany eliminations.

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SCHEDULE I – SEMPRA ENERGY
INDEX TO CONDENSED FINANCIAL INFORMATION OF PARENT

Condensed Statements of Operations for the years ended December 31, 2022, 2021 and 2020			S-2

C ondensed Statements of Comprehensive Income (Loss) for the years ended December 31 , 2022 , 2021 a nd 2020			S-3

Condensed Balance Sheets at December 31, 2022 and 2021			S-4

Condensed Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020			S-5

Notes to Condensed Financial Information of Parent
Note 1. Basis of Presentation			S-6
Note 2. New Accounting Standards			S-6
Note 3. Debt and Credit Facility			S-6
Note 4. Commitments and Contingencies			S-7

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SEMPRA ENERGY
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share amounts; shares in thousands)
	Years ended December 31,
	2022		2021		2020
Interest income	$	35	$	11	$	4
Interest expense	(326)		(576)		(495)
Operating expenses	(92)		(92)		(86)
Other (expense) income, net	(58)		20		(38)
Income tax benefit	111		190		176
Loss before equity in earnings of subsidiaries	(330)		(447)		(439)
Equity in earnings of subsidiaries, net of income taxes	2,468		1,764		4,371
Net income	2,138		1,317		3,932
Preferred dividends	(44)		(63)		(168)
Earnings	$	2,094	$	1,254	$	3,764

Basic EPS:
Earnings	$	6.65	$	4.03	$	12.93
Weighted-average common shares outstanding	315,159		311,755		291,077

Diluted EPS:
Earnings	$	6.62	$	4.01	$	12.88
Weighted-average common shares outstanding	316,378		313,036		292,252

See Notes to Condensed Financial Information of Parent.

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SEMPRA ENERGY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Years ended December 31, 2022, 2021 and 2020
	Pretax amount		Income tax benefit (expense)		Net-of-tax amount
2022:
Net income	$	2,027	$	111	$	2,138
Other comprehensive income (loss):
Foreign currency translation adjustments	11		—		11
Financial instruments	221		(55)		166
Pension and other postretirement benefits	3		(6)		(3)
Total other comprehensive income	235		(61)		174
Comprehensive income	$	2,262	$	50	$	2,312
2021:
Net income	$	1,127	$	190	$	1,317
Other comprehensive income (loss):
Foreign currency translation adjustments	(6)		—		(6)
Financial instruments	191		(47)		144
Pension and other postretirement benefits	28		(6)		22
Total other comprehensive income	213		(53)		160
Comprehensive income	$	1,340	$	137	$	1,477
2020:
Net income	$	3,756	$	176	$	3,932
Other comprehensive income (loss):
Foreign currency translation adjustments	547		—		547
Financial instruments	(146)		33		(113)
Pension and other postretirement benefits	11		1		12
Total other comprehensive income	412		34		446
Comprehensive income	$	4,168	$	210	$	4,378

See Notes to Condensed Financial Information of Parent.

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SEMPRA ENERGY
CONDENSED BALANCE SHEETS
(Dollars in millions)
	December 31,
	2022		2021
Assets:
Cash and cash equivalents	$	219	$	186
Restricted cash	1		2
Due from affiliates	102		446
Income taxes receivable, net	104		—
Other current assets	17		31
Total current assets	443		665

Investments in subsidiaries	35,209		33,308
Due from affiliates	20		21
Deferred income taxes	233		626
Other long-term assets	1,050		1,090
Total assets	$	36,955	$	35,710

Liabilities and shareholders’ equity:
Short-term debt	$	454	$	1,240
Due to affiliates	226		185
Other current liabilities	566		535
Total current liabilities	1,246		1,960

Long-term debt	7,215		5,969
Due to affiliates	776		1,151
Other long-term liabilities	603		649

Commitments and contingencies (Note 4)

Shareholders’ equity	27,115		25,981
Total liabilities and shareholders’ equity	$	36,955	$	35,710

See Notes to Condensed Financial Information of Parent.

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SEMPRA ENERGY
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Years ended December 31,
	2022		2021		2020
Net cash provided by (used in) operating activities	$	775	$	(255)	$	(978)

Expenditures for property, plant and equipment	(7)		(8)		(9)
Capital contributions to investees	(661)		(1,005)		(364)
Disbursement for note receivable	—		(305)		—
Distributions from investments	—		1,552		3,616
Purchases of trust assets	(114)		—		—
Proceeds from sales of trust assets	123		—		—
(Increase) decrease in loans to affiliates, net	(92)		(20)		2
Other	(3)		—		—
Net cash (used in) provided by investing activities	(754)		214		3,245

Common dividends paid	(1,430)		(1,331)		(1,174)
Preferred dividends paid	(44)		(99)		(157)
Issuances of preferred stock, net	—		—		891
Issuances of common stock, net	4		5		11
Repurchases of common stock	(478)		(339)		(566)
Issuances of debt (maturities greater than 90 days)	1,569		990		1,599
Payments on debt (maturities greater than 90 days)	(322)		(3,200)		(3,700)
(Decrease) increase in short-term debt	(785)		1,240		—
(Decrease) increase in loans from affiliates, net	(226)		1,092		1,194
Purchases of noncontrolling interests	—		(217)		—
Proceeds from sale of noncontrolling interests	1,732		1,846		—
Equity transaction costs with third parties	—		—		(4)
Make-whole premiums related to early redemptions of debt	—		(121)		—
Other	(8)		(2)		(1)
Net cash provided by (used in) financing activities	12		(136)		(1,907)

Effect of exchange rate changes on cash and cash equivalents	(1)		(1)		—

Increase (decrease) in cash and cash equivalents	32		(178)		360
Cash and cash equivalents, January 1	188		366		6
Cash, cash equivalents and restricted cash, December 31	$	220	$	188	$	366

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of common stock in exchange for NCI and related AOCI	$	—	$	1,373	$	—
Common dividends declared but not paid	360		349		301
Conversion of mandatory convertible preferred stock	—		2,258		—
Preferred dividends declared but not paid	11		11		47
Equitization of amounts due from affiliates	93		4,351		—

See Notes to Condensed Financial Information of Parent.

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NOTES TO CONDENSED FINANCIAL INFORMATION OF PARENT

NOTE 1. BASIS OF PRESENTATION

The condensed financial information of Sempra Energy has been prepared in accordance with SEC Regulation S-X Rule 5-04 and Rule 12-04. We apply the same accounting policies as in the consolidated financial statements of Sempra, except that Sempra Energy accounts for the earnings of its subsidiaries under the equity method in this unconsolidated financial information. This financial information should be read in conjunction with Sempra’s consolidated financial statements and the accompanying notes thereto included in this Form 10-K.

Sempra Energy received cash dividends from its subsidiaries totaling $832 million, $375 million and $300 million in 2022, 2021 and 2020, respectively.

NOTE 2. NEW ACCOUNTING STANDARDS

We describe in Note 2 of the Notes to Consolidated Financial Statements recent pronouncements that have had or may have a significant effect on Sempra Energy’s results of operations, financial condition, cash flows or disclosures.

NOTE 3. DEBT AND CREDIT FACILITY

SHORT-TERM DEBT

Committed Line of Credit

At December 31, 2022, Sempra Energy had capacity of $4.0 billion under a committed line of credit with available unused credit of $3.5 billion, which provides liquidity and supports its commercial paper program.

The principal terms of Sempra Energy’s committed line of credit include the following:

▪The facility has a syndicate of 23 lenders. No single lender has greater than a 6% share in the facility.

▪The facility provides for the issuance of $200 million of letters of credit. Subject to obtaining commitments from existing or new lenders and satisfaction of other specified conditions, Sempra Energy has the right to increase its letter of credit commitment to up to $500 million. No letters of credit were outstanding at December 31, 2022.

▪Borrowings bear interest at a benchmark rate plus a margin that varies with Sempra Energy’s credit rating.

▪Sempra Energy must maintain a ratio of indebtedness to total capitalization (as defined in its credit facility) of no more than 65% at the end of each quarter. At December 31, 2022, Sempra Energy was in compliance with this ratio under its credit facility.

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LONG-TERM DEBT

The following table shows the detail and maturities of uncollateralized long-term debt outstanding.


LONG-TERM DEBT
(Dollars in millions)
	December 31,
	2022		2021
3.3% Notes April 1, 2025	$	750	$	—
3.25% Notes June 15, 2027	750		750
3.4% Notes February 1, 2028	1,000		1,000
3.7% Notes April 1, 2029	500		—
3.8% Notes February 1, 2038	1,000		1,000
6% Notes October 15, 2039	750		750
4% Notes February 1, 2048	800		800
4.125% Junior Subordinated Notes April 1, 2052(1)	1,000		1,000
5.75% Junior Subordinated Notes July 1, 2079(1)	758		758
	7,308		6,058
Unamortized discount on long-term debt	(28)		(37)
Unamortized debt issuance costs	(65)		(52)
Total long-term debt	$	7,215	$	5,969

(1) Callable long-term debt not subject to make-whole provisions.

In March 2022, we issued $750 million aggregate principal amount of 3.30% senior unsecured notes due in full upon maturity on April 1, 2025 and received proceeds of $745 million (net of debt discount, underwriting discounts and debt issuance costs of $5 million), and $500 million of 3.70% senior unsecured notes due in full upon maturity on April 1, 2029 and received proceeds of $494 million (net of debt discount, underwriting discounts and debt issuance costs of $6 million). Each series of the notes is redeemable prior to maturity, subject to their terms, and in certain circumstances subject to make-whole provisions. We used the net proceeds for general corporate purposes and repayment of commercial paper.

At December 31, 2022, Sempra Energy had long-term debt maturities of $750 million in 2025, $750 million in 2027 and $5.8 billion thereafter.

Additional information on Sempra Energy’s short-term and long-term debt is provided in Note 7 of the Notes to Consolidated Financial Statements.

NOTE 4. COMMITMENTS AND CONTINGENCIES

Sempra Energy has an operating lease commitment related to its corporate headquarters building of approximately $241 million. Sempra Energy expects payments for its operating lease to be $12 million in each of 2023 and 2024, $13 million in each of 2025 through 2027 and $178 million thereafter.

For other contingencies and guarantees related to Sempra Energy, refer to Notes 6 and 16 of the Notes to Consolidated Financial Statements.

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Previous: Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES