Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS


SEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share amounts; shares in thousands)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
	(unaudited)
REVENUES
Utilities:
Natural gas	$	1,488	$	1,587	$	7,560	$	5,611
Electric	1,250		1,357		3,331		3,663
Energy-related businesses	596		673		2,338		1,710
Total revenues	3,334		3,617		13,229		10,984

EXPENSES AND OTHER INCOME
Utilities:
Cost of natural gas	(260)		(505)		(3,254)		(1,835)
Cost of electric fuel and purchased power	(183)		(307)		(385)		(763)
Energy-related businesses cost of sales	(163)		(340)		(437)		(764)
Operation and maintenance	(1,383)		(1,206)		(3,958)		(3,454)
Aliso Canyon litigation and regulatory matters	—		(122)		—		(259)
Depreciation and amortization	(563)		(506)		(1,651)		(1,500)
Franchise fees and other taxes	(169)		(162)		(509)		(474)
Other income (expense), net	3		(40)		75		(3)
Interest income	19		18		60		58
Interest expense	(312)		(282)		(995)		(796)
Income before income taxes and equity earnings	323		165		2,175		1,194
Income tax benefit (expense)	52		(21)		(499)		(435)
Equity earnings	479		417		1,086		1,118
Net income	854		561		2,762		1,877
Earnings attributable to noncontrolling interests	(122)		(65)		(435)		(187)
Preferred dividends	(11)		(11)		(33)		(33)
Preferred dividends of subsidiary	—		—		(1)		(1)
Earnings attributable to common shares	$	721	$	485	$	2,293	$	1,656

Basic EPS:
Earnings	$	1.14	$	0.77	$	3.64	$	2.63
Weighted-average common shares outstanding	630,036		629,447		629,963		630,603

Diluted EPS:
Earnings	$	1.14	$	0.77	$	3.63	$	2.62
Weighted-average common shares outstanding	632,324		632,175		632,231		632,914

See Notes to Condensed Consolidated Financial Statements.

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SEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Sempra shareholders’ equity
	Pretax amount		Income tax benefit (expense)		Net-of-tax amount		Noncontrolling interests (after tax)		Total
	(unaudited)
	Three months ended September 30, 2023 and 2022
2023:
Net income	$	680	$	52	$	732	$	122	$	854
Other comprehensive income (loss):
Foreign currency translation adjustments	(5)		—		(5)		(2)		(7)
Financial instruments	150		(39)		111		204		315
Pension and other postretirement benefits	2		(1)		1		—		1
Total other comprehensive income	147		(40)		107		202		309
Comprehensive income	$	827	$	12	$	839	$	324	$	1,163


2022:
Net income	$	517	$	(21)	$	496	$	65	$	561
Other comprehensive income (loss):
Foreign currency translation adjustments	—		—		—		(1)		(1)
Financial instruments	60		(15)		45		21		66
Pension and other postretirement benefits	2		—		2		—		2
Total other comprehensive income	62		(15)		47		20		67
Comprehensive income	$	579	$	(36)	$	543	$	85	$	628


	Nine months ended September 30, 2023 and 2022
2023:
Net income	$	2,826	$	(499)	$	2,327	$	435	$	2,762
Other comprehensive income (loss):
Foreign currency translation adjustments	16		—		16		6		22
Financial instruments	158		(43)		115		206		321
Pension and other postretirement benefits	(8)		(2)		(10)		—		(10)
Total other comprehensive income	166		(45)		121		212		333
Comprehensive income	2,992		(544)		2,448		647		3,095
Preferred dividends of subsidiary	(1)		—		(1)		—		(1)
Comprehensive income, after preferred dividends of subsidiary	$	2,991	$	(544)	$	2,447	$	647	$	3,094

2022:
Net income	$	2,125	$	(435)	$	1,690	$	187	$	1,877
Other comprehensive income (loss):
Foreign currency translation adjustments	5		—		5		—		5
Financial instruments	227		(56)		171		56		227
Pension and other postretirement benefits	15		(2)		13		—		13
Total other comprehensive income	247		(58)		189		56		245
Comprehensive income	2,372		(493)		1,879		243		2,122
Preferred dividends of subsidiary	(1)		—		(1)		—		(1)
Comprehensive income, after preferred dividends of subsidiary	$	2,371	$	(493)	$	1,878	$	243	$	2,121

See Notes to Condensed Consolidated Financial Statements.

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SEMPRA
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	September 30,		December 31,
	2023		2022(1)
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,149	$	370
Restricted cash	238		40
Accounts receivable – trade, net	1,939		2,635
Accounts receivable – other, net	498		685
Due from unconsolidated affiliates	42		54
Income taxes receivable	72		113
Inventories	451		403
Prepaid expenses	325		268
Regulatory assets	190		351
Fixed-price contracts and other derivatives	201		803
Greenhouse gas allowances	144		141
Other current assets	61		49
Total current assets	5,310		5,912

Other assets:
Restricted cash	104		52
Regulatory assets	3,277		2,588
Greenhouse gas allowances	1,219		796
Nuclear decommissioning trusts	827		841
Dedicated assets in support of certain benefit plans	513		505
Deferred income taxes	155		135
Right-of-use assets – operating leases	721		655
Investment in Oncor Holdings	14,148		13,665
Other investments	2,208		2,012
Goodwill	1,602		1,602
Other intangible assets	324		344
Wildfire fund	281		303
Other long-term assets	1,874		1,382
Total other assets	27,253		24,880

Property, plant and equipment:
Property, plant and equipment	70,348		63,893
Less accumulated depreciation and amortization	(17,176)		(16,111)
Property, plant and equipment, net	53,172		47,782
Total assets	$	85,735	$	78,574

(1) Derived from audited financial statements.

See Notes to Condensed Consolidated Financial Statements.

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SEMPRA
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in millions)
	September 30,		December 31,
	2023		2022(1)
	(unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	1,977	$	3,352
Accounts payable – trade	2,234		1,994
Accounts payable – other	219		275
Due to unconsolidated affiliates	5		—
Dividends and interest payable	734		621
Accrued compensation and benefits	496		484
Regulatory liabilities	529		504
Current portion of long-term debt and finance leases	974		1,019
Reserve for Aliso Canyon costs	126		129
Greenhouse gas obligations	144		141
Other current liabilities	1,327		1,380
Total current liabilities	8,765		9,899

Long-term debt and finance leases	27,703		24,548

Deferred credits and other liabilities:
Due to unconsolidated affiliates	303		301
Regulatory liabilities	3,468		3,341
Greenhouse gas obligations	942		565
Pension and other postretirement benefit plan obligations, net of plan assets	309		410
Deferred income taxes	5,095		4,591
Asset retirement obligations	3,584		3,546
Deferred credits and other	2,308		2,117
Total deferred credits and other liabilities	16,009		14,871

Commitments and contingencies (Note 10)

Equity:
Preferred stock (50,000,000 shares authorized):
Preferred stock, series C (900,000 shares outstanding)	889		889
Common stock (1,125,000,000 shares authorized; 629,328,058 and 628,669,356 shares outstanding at September 30, 2023 and December 31, 2022, respectively; no par value)	12,038		12,160
Retained earnings	15,371		14,201
Accumulated other comprehensive income (loss)	(60)		(135)
Total Sempra shareholders’ equity	28,238		27,115
Preferred stock of subsidiary	20		20
Other noncontrolling interests	5,000		2,121
Total equity	33,258		29,256
Total liabilities and equity	$	85,735	$	78,574

(1) Derived from audited financial statements.

See Notes to Condensed Consolidated Financial Statements.

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SEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Nine months ended September 30,
	2023		2022
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,762	$	1,877
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,651		1,500
Deferred income taxes and investment tax credits	234		387
Equity earnings	(1,086)		(1,118)
Foreign currency transaction (gains) losses, net	(1)		18
Share-based compensation expense	53		49
Fixed-price contracts and other derivatives	(580)		200
Bad debt expense	368		110
Other	7		47
Reserve for Aliso Canyon costs	(3)		(1,835)
Net change in other working capital components	1,613		(267)
Insurance receivable for Aliso Canyon costs	—		350
Distributions from investments	668		643
Changes in other noncurrent assets and liabilities, net	(557)		(506)
Net cash provided by operating activities	5,129		1,455

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(6,074)		(3,540)
Expenditures for investments	(281)		(275)
Purchases of nuclear decommissioning and other trust assets	(462)		(530)
Proceeds from sales of nuclear decommissioning and other trust assets	503		530
Repayments of advances to unconsolidated affiliates	—		626
Other	10		6
Net cash used in investing activities	(6,304)		(3,183)

CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid	(1,109)		(1,070)
Preferred dividends paid	(22)		(22)
Issuances of common stock	—		4
Repurchases of common stock	(32)		(478)
Issuances of debt (maturities greater than 90 days)	6,911		6,711
Payments on debt (maturities greater than 90 days) and finance leases	(6,018)		(3,365)
Increase (decrease) in short-term debt, net	629		(1,438)
Advances from unconsolidated affiliates	31		28
Proceeds from sales of noncontrolling interests	1,238		1,732
Distributions to noncontrolling interests	(289)		(146)
Contributions from noncontrolling interests	1,036		15
Settlement of cross-currency swaps	(99)		—
Other	(78)		(35)
Net cash provided by financing activities	2,198		1,936

Effect of exchange rate changes on cash, cash equivalents and restricted cash	6		(3)

Increase in cash, cash equivalents and restricted cash	1,029		205
Cash, cash equivalents and restricted cash, January 1	462		581
Cash, cash equivalents and restricted cash, September 30	$	1,491	$	786

See Notes to Condensed Consolidated Financial Statements.

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SEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in millions)
	Nine months ended September 30,
	2023		2022
	(unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	836	$	732
Income tax payments, net of refunds	162		241

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Repayment of advances from unconsolidated affiliate in lieu of distribution	$	36	$	32
Accrued capital expenditures	1,200		738
Increase in finance lease obligations for investment in PP&E	47		33
(Decrease) increase in ARO for investment in PP&E	(15)		49
Preferred dividends declared but not paid	22		22
Common dividends declared but not paid	374		360
Contributions from NCI	200		—
Sale of NCI post-closing adjustment payable	11		—

See Notes to Condensed Consolidated Financial Statements.

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SEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Dollars in millions)
	Preferred stock		Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Sempra shareholders' equity		Non- controlling interests		Total equity
	(unaudited)
	Three months ended September 30, 2023
Balance at June 30, 2023	$	889	$	12,044	$	15,024	$	(121)	$	27,836	$	3,178	$	31,014

Net income					732				732		122		854
Other comprehensive income							107		107		202		309

Share-based compensation expense			22						22				22
Dividends declared:
Series C preferred stock ($12.19/share)					(11)				(11)				(11)
Common stock ($0.60/share)					(374)				(374)				(374)
Repurchases of common stock			(1)						(1)				(1)
Noncontrolling interest activities:
Contributions			(11)						(11)		507		496
Distributions											(37)		(37)

Sales			(16)				(46)		(62)		1,048		986
Balance at September 30, 2023	$	889	$	12,038	$	15,371	$	(60)	$	28,238	$	5,020	$	33,258

	Three months ended September 30, 2022
Balance at June 30, 2022	$	889	$	12,121	$	13,998	$	(167)	$	26,841	$	2,212	$	29,053

Net income					496				496		65		561
Other comprehensive income							47		47		20		67

Share-based compensation expense			17						17				17
Dividends declared:
Series C preferred stock ($12.19/share)					(11)				(11)				(11)
Common stock ($0.57/share)					(360)				(360)				(360)

Issuances of common stock			1						1				1
Repurchases of common stock			(2)						(2)				(2)
Noncontrolling interest activities:
Contributions											2		2
Distributions											(40)		(40)
Sale			1						1				1
Balance at September 30, 2022	$	889	$	12,138	$	14,123	$	(120)	$	27,030	$	2,259	$	29,289

See Notes to Condensed Consolidated Financial Statements.

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SEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
(Dollars in millions)
	Preferred stock		Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Sempra shareholders' equity		Non- controlling interests		Total equity
	(unaudited)
	Nine months ended September 30, 2023
Balance at December 31, 2022	$	889	$	12,160	$	14,201	$	(135)	$	27,115	$	2,141	$	29,256

Net income					2,327				2,327		435		2,762
Other comprehensive income							121		121		212		333

Share-based compensation expense			53						53				53
Dividends declared:
Series C preferred stock ($36.57/share)					(33)				(33)				(33)
Common stock ($1.79/share)					(1,123)				(1,123)				(1,123)
Preferred dividends of subsidiary					(1)				(1)				(1)
Repurchases of common stock			(32)						(32)				(32)
Noncontrolling interest activities:
Contributions			(145)						(145)		1,236		1,091
Distributions											(289)		(289)
Sales			2				(46)		(44)		1,285		1,241
Balance at September 30, 2023	$	889	$	12,038	$	15,371	$	(60)	$	28,238	$	5,020	$	33,258

	Nine months ended September 30, 2022
Balance at December 31, 2021	$	889	$	11,862	$	13,548	$	(318)	$	25,981	$	1,438	$	27,419

Net income					1,690				1,690		187		1,877
Other comprehensive income							189		189		56		245

Share-based compensation expense			49						49				49
Dividends declared:
Series C preferred stock ($36.57/share)					(33)				(33)				(33)
Common stock ($1.72/share)					(1,081)				(1,081)				(1,081)
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											15		15
Distributions											(146)		(146)
Sale			701				9		710		709		1,419
Balance at September 30, 2022	$	889	$	12,138	$	14,123	$	(120)	$	27,030	$	2,259	$	29,289

See Notes to Condensed Consolidated Financial Statements.

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SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in millions)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
	(unaudited)
Operating revenues:
Electric	$	1,254	$	1,360	$	3,343	$	3,672
Natural gas	188		209		1,014		741
Total operating revenues	1,442		1,569		4,357		4,413
Operating expenses:
Cost of electric fuel and purchased power	200		316		442		806
Cost of natural gas	45		65		462		260
Operation and maintenance	463		439		1,364		1,256
Depreciation and amortization	280		247		810		730
Franchise fees and other taxes	101		97		287		277
Total operating expenses	1,089		1,164		3,365		3,329
Operating income	353		405		992		1,084
Other income, net	25		12		75		68
Interest income	7		2		12		3
Interest expense	(126)		(113)		(367)		(333)
Income before income taxes	259		306		712		822
Income tax benefit (expense)	15		(35)		4		(141)
Net income/Earnings attributable to common shares	$	274	$	271	$	716	$	681

See Notes to Condensed Financial Statements.

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SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Pretax amount		Income tax benefit (expense)		Net-of-tax amount
	(unaudited)
	Three months ended September 30, 2023 and 2022
2023:
Net income/Comprehensive income	$	259	$	15	$	274




2022:
Net income	$	306	$	(35)	$	271
Other comprehensive income (loss):
Pension and other postretirement benefits	1		—		1
Total other comprehensive income	1		—		1
Comprehensive income	$	307	$	(35)	$	272

	Nine months ended September 30, 2023 and 2022
2023:




Net income/Comprehensive income	$	712	$	4	$	716
2022:
Net income	$	822	$	(141)	$	681
Other comprehensive income (loss):
Pension and other postretirement benefits	1		—		1
Total other comprehensive income	1		—		1
Comprehensive income	$	823	$	(141)	$	682

See Notes to Condensed Financial Statements.

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SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED BALANCE SHEETS
(Dollars in millions)
	September 30,		December 31,
	2023		2022(1)
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	246	$	7
Accounts receivable – trade, net	952		799
Accounts receivable – other, net	155		110
Due from unconsolidated affiliates	8		—
Inventories	147		134
Prepaid expenses	196		179
Regulatory assets	15		247
Fixed-price contracts and other derivatives	86		113
Greenhouse gas allowances	22		22
Other current assets	27		19
Total current assets	1,854		1,630

Other assets:
Regulatory assets	1,694		1,219
Greenhouse gas allowances	251		196
Nuclear decommissioning trusts	827		841
Right-of-use assets – operating leases	364		281
Wildfire fund	281		303
Other long-term assets	143		146
Total other assets	3,560		2,986

Property, plant and equipment:
Property, plant and equipment	30,304		28,574
Less accumulated depreciation and amortization	(7,216)		(6,768)
Property, plant and equipment, net	23,088		21,806
Total assets	$	28,502	$	26,422

(1) Derived from audited financial statements.

See Notes to Condensed Financial Statements.

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SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED BALANCE SHEETS (CONTINUED)
(Dollars in millions)
	September 30,		December 31,
	2023		2022(1)
	(unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	—	$	205
Accounts payable	854		744
Due to unconsolidated affiliates	49		135
Interest payable	111		63
Accrued compensation and benefits	138		140
Accrued franchise fees	103		120
Regulatory liabilities	300		110
Current portion of long-term debt and finance leases	441		489
Greenhouse gas obligations	22		22
Asset retirement obligations	110		98
Other current liabilities	330		193
Total current liabilities	2,458		2,319

Long-term debt and finance leases	9,453		8,497

Deferred credits and other liabilities:
Regulatory liabilities	2,417		2,298
Greenhouse gas obligations	130		81
Pension obligation, net of plan assets	27		42
Deferred income taxes	2,596		2,540
Asset retirement obligations	772		789
Deferred credits and other	966		789
Total deferred credits and other liabilities	6,908		6,539

Commitments and contingencies (Note 10)

Shareholder's equity:
Preferred stock (45,000,000 shares authorized; none issued)	—		—
Common stock (255,000,000 shares authorized; 116,583,358 shares outstanding; no par value)	1,660		1,660
Retained earnings	8,030		7,414
Accumulated other comprehensive income (loss)	(7)		(7)
Total shareholder’s equity	9,683		9,067
Total liabilities and shareholder's equity	$	28,502	$	26,422

(1) Derived from audited financial statements.

See Notes to Condensed Financial Statements.

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SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Nine months ended September 30,
	2023		2022
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	716	$	681
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	810		730
Deferred income taxes and investment tax credits	(56)		91
Bad debt expense	94		46
Other	(30)		(23)
Net change in working capital components	269		57
Changes in noncurrent assets and liabilities, net	(319)		(214)
Net cash provided by operating activities	1,484		1,368

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(1,893)		(1,651)
Purchases of nuclear decommissioning trust assets	(391)		(530)
Proceeds from sales of nuclear decommissioning trust assets	437		530
Other	9		8
Net cash used in investing activities	(1,838)		(1,643)

CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid	(100)		(100)
Issuances of debt (maturities greater than 90 days)	1,389		1,395
Payments on debt (maturities greater than 90 days) and finance leases	(479)		(416)
Decrease in short-term debt, net	(205)		(401)
Debt issuance costs	(12)		(9)
Net cash provided by financing activities	593		469

Increase in cash and cash equivalents	239		194
Cash and cash equivalents, January 1	7		25
Cash and cash equivalents, September 30	$	246	$	219

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	315	$	303
Income tax payments, net of refunds	—		68

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures	$	237	$	236
Increase in finance lease obligations for investment in PP&E	7		12
Increase in ARO for investment in PP&E	13		1

See Notes to Condensed Financial Statements.

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SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY
(Dollars in millions)
	Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Total shareholder's equity
	(unaudited)
	Three months ended September 30, 2023
Balance at June 30, 2023	$	1,660	$	7,856	$	(7)	$	9,509

Net income			274				274

Common stock dividends declared ($0.86/share)			(100)				(100)
Balance at September 30, 2023	$	1,660	$	8,030	$	(7)	$	9,683

	Three months ended September 30, 2022
Balance at June 30, 2022	$	1,660	$	7,009	$	(10)	$	8,659

Net income			271				271
Other comprehensive income					1		1

Common stock dividends declared ($0.86/share)			(100)				(100)
Balance at September 30, 2022	$	1,660	$	7,180	$	(9)	$	8,831

	Nine months ended September 30, 2023
Balance at December 31, 2022	$	1,660	$	7,414	$	(7)	$	9,067

Net income			716				716

Common stock dividends declared ($0.86/share)			(100)				(100)
Balance at September 30, 2023	$	1,660	$	8,030	$	(7)	$	9,683

	Nine months ended September 30, 2022
Balance at December 31, 2021	$	1,660	$	6,599	$	(10)	$	8,249

Net income			681				681
Other comprehensive income					1		1

Common stock dividends declared ($0.86/share)			(100)				(100)
Balance at September 30, 2022	$	1,660	7,180		$	(9)	$	8,831

See Notes to Condensed Financial Statements.

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SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in millions)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
	(unaudited)

Operating revenues	$	1,313	$	1,385	$	6,574	$	4,879
Operating expenses:
Cost of natural gas	224		441		2,855		1,577
Operation and maintenance	733		590		2,073		1,746
Aliso Canyon litigation and regulatory matters	—		122		—		259
Depreciation and amortization	211		190		625		565
Franchise fees and other taxes	64		62		209		181
Total operating expenses	1,232		1,405		5,762		4,328
Operating income (loss)	81		(20)		812		551
Other expense, net	(2)		(43)		(9)		(5)
Interest income	2		3		7		4
Interest expense	(70)		(50)		(210)		(135)
Income (loss) before income taxes	11		(110)		600		415
Income tax benefit (expense)	5		28		(68)		(75)
Net income (loss)	16		(82)		532		340
Preferred dividends	—		—		(1)		(1)
Earnings (losses) attributable to common shares	$	16	$	(82)	$	531	$	339

See Notes to Condensed Financial Statements.

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SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Pretax amount		Income tax benefit (expense)		Net-of-tax amount
	(unaudited)
	Three months ended September 30, 2023 and 2022
2023:
Net income	$	11	$	5	$	16
Other comprehensive income (loss):

Pension and other postretirement benefits	1		(1)		—
Total other comprehensive income	1		(1)		—
Comprehensive income	$	12	$	4	$	16
2022:
Net loss	$	(110)	$	28	$	(82)
Other comprehensive income (loss):

Pension and other postretirement benefits	1		—		1
Total other comprehensive income	1		—		1
Comprehensive loss	$	(109)	$	28	$	(81)

	Nine months ended September 30, 2023 and 2022
2023:
Net income	$	600	$	(68)	$	532
Other comprehensive income (loss):
Financial instruments	1		—		1
Pension and other postretirement benefits	2		(1)		1
Total other comprehensive income	3		(1)		2
Comprehensive income	$	603	$	(69)	$	534
2022:
Net income	$	415	$	(75)	$	340
Other comprehensive income (loss):
Financial instruments	1		—		1
Pension and other postretirement benefits	2		—		2
Total other comprehensive income	3		—		3
Comprehensive income	$	418	$	(75)	$	343

See Notes to Condensed Financial Statements.

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SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED BALANCE SHEETS
(Dollars in millions)
	September 30,		December 31,
	2023		2022(1)
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	26	$	21
Accounts receivable – trade, net	665		1,295
Accounts receivable – other, net	71		293
Due from unconsolidated affiliates	1		77
Inventories	260		159
Regulatory assets	172		104
Greenhouse gas allowances	114		111
Other current assets	82		69
Total current assets	1,391		2,129

Other assets:
Regulatory assets	1,505		1,291
Greenhouse gas allowances	850		551
Right-of-use assets – operating leases	32		42
Other long-term assets	606		583
Total other assets	2,993		2,467

Property, plant and equipment:
Property, plant and equipment	26,401		25,058
Less accumulated depreciation and amortization	(7,716)		(7,308)
Property, plant and equipment, net	18,685		17,750
Total assets	$	23,069	$	22,346

(1) Derived from audited financial statements.

See Notes to Condensed Financial Statements.

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SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED BALANCE SHEETS (CONTINUED)
(Dollars in millions)
	September 30,		December 31,
	2023		2022(1)
	(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	420	$	900
Accounts payable – trade	570		953
Accounts payable – other	177		176
Due to unconsolidated affiliates	38		36
Accrued compensation and benefits	217		209
Regulatory liabilities	229		394
Current portion of long-term debt and finance leases	523		318
Reserve for Aliso Canyon costs	126		129
Greenhouse gas obligations	114		111
Asset retirement obligations	66		68
Other current liabilities	505		429
Total current liabilities	2,985		3,723

Long-term debt and finance leases	6,291		5,780

Deferred credits and other liabilities:
Regulatory liabilities	1,051		1,043
Greenhouse gas obligations	748		443
Pension obligation, net of plan assets	198		277
Deferred income taxes	1,469		1,306
Asset retirement obligations	2,726		2,675
Deferred credits and other	370		401
Total deferred credits and other liabilities	6,562		6,145

Commitments and contingencies (Note 10)

Shareholders’ equity:
Preferred stock (11,000,000 shares authorized; 862,043 shares outstanding)	22		22
Common stock (100,000,000 shares authorized; 91,300,000 shares outstanding; no par value)	2,316		2,316
Retained earnings	4,915		4,384
Accumulated other comprehensive income (loss)	(22)		(24)
Total shareholders’ equity	7,231		6,698
Total liabilities and shareholders’ equity	$	23,069	$	22,346

(1) Derived from audited financial statements.

See Notes to Condensed Financial Statements.

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SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Nine months ended September 30,
	2023		2022
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	532	$	340
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	625		565
Deferred income taxes and investment tax credits	79		77
Bad debt expense	272		60
Other	(9)		(9)
Reserve for Aliso Canyon costs	(3)		(1,835)
Net change in other working capital components	2		98
Insurance receivable for Aliso Canyon costs	—		350
Changes in other noncurrent assets and liabilities, net	(234)		(408)
Net cash provided by (used in) operating activities	1,264		(762)

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(1,451)		(1,394)
Net cash used in investing activities	(1,451)		(1,394)

CASH FLOWS FROM FINANCING ACTIVITIES
Preferred dividends paid	(1)		(1)
Equity contribution from Sempra	—		650
Issuances of debt (maturities greater than 90 days)	997		1,497
Payments on debt (maturities greater than 90 days) and finance leases	(1,115)		(10)
Increase in short-term debt, net	320		42
Debt issuance costs	(9)		(6)
Net cash provided by financing activities	192		2,172

Increase in cash and cash equivalents	5		16
Cash and cash equivalents, January 1	21		37
Cash and cash equivalents, September 30	$	26	$	53

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest payments, net of amounts capitalized	$	183	$	123

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures	$	253	$	235
Increase in finance lease obligations for investment in PP&E	40		21
(Decrease) increase in ARO for investment in PP&E	(28)		48

See Notes to Condensed Financial Statements.

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SOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in millions)
	Preferred stock		Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Total shareholders’ equity
	(unaudited)
	Three months ended September 30, 2023
Balance at June 30, 2023	$	22	$	2,316	$	4,899	$	(22)	$	7,215

Net income					16				16

Dividends declared:
Preferred stock ($0.38/share)					—				—
Balance at September 30, 2023	$	22	$	2,316	$	4,915	$	(22)	$	7,231

	Three months ended September 30, 2022
Balance at June 30, 2022	$	22	$	1,816	$	4,206	$	(29)	$	6,015

Net loss					(82)				(82)
Other comprehensive income							1		1

Dividends declared:
Preferred stock ($0.38/share)					—				—
Equity contribution from Sempra			500						500
Balance at September 30, 2022	$	22	$	2,316	$	4,124	$	(28)	$	6,434

	Nine months ended September 30, 2023
Balance at December 31, 2022	$	22	$	2,316	$	4,384	$	(24)	$	6,698

Net income					532				532
Other comprehensive income							2		2

Dividends declared:
Preferred stock ($1.13/share)					(1)				(1)
Balance at September 30, 2023	$	22	$	2,316	$	4,915	$	(22)	$	7,231

	Nine months ended September 30, 2022
Balance at December 31, 2021	$	22	$	1,666	$	3,785	$	(31)	$	5,442

Net income					340				340
Other comprehensive income							3		3

Dividends declared:
Preferred stock ($1.13/share)					(1)				(1)
Equity contribution from Sempra			650						650
Balance at September 30, 2022	$	22	$	2,316	$	4,124	$	(28)	$	6,434

See Notes to Condensed Financial Statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. GENERAL INFORMATION AND OTHER FINANCIAL DATA

PRINCIPLES OF CONSOLIDATION

Sempra

Effective May 12, 2023, our company changed its legal name from Sempra Energy to Sempra. Sempra’s Condensed Consolidated Financial Statements include the accounts of Sempra, a California-based holding company, and its consolidated entities. We have four separate reportable segments, which we discuss in Note 11. 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 Corporation, which is a wholly owned subsidiary of Sempra.

SoCalGas

SoCalGas’ common stock is wholly owned by Pacific Enterprises, 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 Sempra’s consolidated financial statements.

We have prepared our Condensed Consolidated Financial Statements in conformity with U.S. GAAP and in accordance with the interim period reporting requirements of Form 10-Q and applicable rules of the SEC. The financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods. These adjustments are only of a normal, recurring nature. Results of operations for interim periods are not necessarily indicative of results for the entire year or for any other period. We evaluated events and transactions that occurred after September 30, 2023 through the date the financial statements were issued and, in the opinion of management, the accompanying statements reflect all adjustments necessary for a fair presentation.

All December 31, 2022 balance sheet information in the Condensed Consolidated Financial Statements has been derived from our audited 2022 Consolidated Financial Statements in the Annual Report. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the interim period reporting provisions of U.S. GAAP and the SEC.

We describe our significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report and the impact of the adoption of new accounting standards on those policies in Note 2 below. We follow the same accounting policies for interim period reporting purposes.

The information contained in this report should be read in conjunction with the Annual Report.

Regulated Operations

SDG&E, SoCalGas and Sempra Infrastructure’s natural gas distribution utility, Ecogas, prepare their financial statements in accordance with the provisions of U.S. GAAP governing rate-regulated operations. We discuss revenue recognition and the effects of regulation at our utilities in Notes 3 and 4 below and in Notes 1, 3 and 4 of the Notes to Consolidated Financial Statements in the Annual Report.

Our Sempra Texas Utilities segment is comprised of our equity method investments in holding companies that own interests in regulated electric transmission and distribution utilities in Texas.

Certain business activities at Sempra Infrastructure are regulated by the CRE and the FERC and meet the regulatory accounting requirements of U.S. GAAP. Pipeline projects currently under construction that meet the regulatory accounting requirements of U.S. GAAP record the impact of AFUDC related to equity. We discuss AFUDC below and in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

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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 held as collateral in lieu of a customer’s letters of credit associated with its LNG storage and regasification agreement; funds denominated in U.S. dollars and Mexican pesos to pay for rights-of-way and other costs pursuant to trust agreements related to pipeline projects; and certain funds at Port Arthur LNG for which withdrawals and usage are dictated by its debt agreements

▪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 Condensed Consolidated Balance Sheets to the sum of such amounts reported on Sempra’s Condensed Consolidated Statements of Cash Flows.


RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(Dollars in millions)
	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	1,149	$	370
Restricted cash, current	238		40
Restricted cash, noncurrent	104		52
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows	$	1,491	$	462

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 sales-type leases 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 5.

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 the first quarter of 2022, SDG&E and SoCalGas received $63 million and $79 million, respectively, on behalf of their customers from the California Department of Community Services and Development under the 2021 California Arrearage Payment Program 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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As a result of the impact and duration of suspending collections processes during the COVID*-*19 pandemic, the implementation of programs such as the Arrearage Management Plan, and higher winter season customer billings, certain SDG&E and SoCalGas customers exhibit slower payment and higher levels of nonpayment than has been the case historically. This in turn has resulted in an increase in provisions for expected credit losses in the nine months ended September 30, 2023 for both companies, even as collections processes resume and past due payments potentially begin increasing. SDG&E and SoCalGas have regulatory mechanisms to recover credit losses and thus record changes in the allowances for credit losses related to Accounts Receivable – Trade that are probable of recovery in regulatory accounts. We discuss regulatory accounts in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report and herein.

Changes in allowances for credit losses for trade receivables and other receivables are as follows:


CHANGES IN ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
	2023		2022
Sempra:
Allowances for credit losses at January 1	$	181	$	136
Provisions for expected credit losses	374		111
Write-offs	(74)		(57)
Allowances for credit losses at September 30	$	481	$	190
SDG&E:
Allowances for credit losses at January 1	$	78	$	66
Provisions for expected credit losses	96		51
Write-offs	(34)		(30)
Allowances for credit losses at September 30	$	140	$	87
SoCalGas:
Allowances for credit losses at January 1	$	98	$	69
Provisions for expected credit losses	276		58
Write-offs	(40)		(27)
Allowances for credit losses at September 30	$	334	$	100

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


ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
	September 30,		December 31,
	2023		2022
Sempra:
Accounts receivable – trade, net	$	432	$	140
Accounts receivable – other, net	48		40
Other long-term assets	1		1
Total allowances for credit losses	$	481	$	181
SDG&E:
Accounts receivable – trade, net	$	113	$	52
Accounts receivable – other, net	26		25
Other long-term assets	1		1
Total allowances for credit losses	$	140	$	78
SoCalGas:
Accounts receivable – trade, net	$	312	$	83
Accounts receivable – other, net	22		15
Total allowances for credit losses	$	334	$	98

As we discuss below in “Note Receivable,” we have an interest-bearing promissory note due from KKR Pinnacle. 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 September 30, 2023 and December 31, 2022, $6 million and $7 million, respectively, of expected credit losses are included in Other Long-Term Assets on Sempra’s Condensed Consolidated Balance Sheets.

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As we discuss in Note 5, 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 date of the arrangement. At both September 30, 2023 and December 31, 2022, $6 million of expected credit losses are included in Deferred Credits and Other on Sempra’s Condensed Consolidated Balance Sheets.

INVENTORIES

The components of inventories are as follows:


INVENTORY BALANCES
(Dollars in millions)
	Sempra				SDG&E				SoCalGas
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Natural gas	$	160	$	106	$	1	$	1	$	144	$	74
LNG	9		62		—		—		—		—
Materials and supplies	282		235		146		133		116		85
Total	$	451	$	403	$	147	$	134	$	260	$	159

NOTE RECEIVABLE

In November 2021, Sempra loaned $300 million to KKR Pinnacle 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 Pinnacle. At September 30, 2023 and December 31, 2022, Other Long-Term Assets includes $328 million and $316 million, respectively, of outstanding principal, compounded interest and unamortized transaction costs, net of allowance for credit losses, on Sempra’s Condensed Consolidated Balance Sheets.

WILDFIRE FUND

In July 2019, the Wildfire Legislation was signed into law to address certain issues related to catastrophic wildfires in the State of California and their impact on electric IOUs. We discuss the Wildfire Legislation further in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

In October 2023, the OEIS approved SDG&E’s 2023 Wildfire Mitigation Plan, which is effective until the OEIS approves a new plan.

SDG&E submitted its request to the OEIS for its annual wildfire safety certification in September 2023. OEIS has until December 2023 to issue the certification or provide written notice explaining why additional time is needed. SDG&E’s existing certification remains valid until this pending request is resolved.

CAPITALIZED FINANCING COSTS

Capitalized financing costs include capitalized interest costs and AFUDC related to both debt and equity financing of construction projects. 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)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Sempra	$	128	$	65	$	311	$	182
SDG&E	28		30		90		84
SoCalGas	20		19		55		54

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PROPERTY, PLANT AND EQUIPMENT

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. Following the start of commercial operations of the Guaymas-El Oro segment, Sempra Infrastructure reported damage to the pipeline in the Yaqui territory that has made that section inoperable since August 2017. Discussions with the CFE regarding the future of the pipeline are ongoing and the parties are working on restarting service on the pipeline, including the potential re-routing of a portion of the pipeline. If the parties do not agree on a definitive arrangement to re-route a portion of the pipeline or the parties do not agree on a new service start date, Sempra Infrastructure retains the right to terminate the contract and seek to recover its reasonable and documented costs and lost profits. At September 30, 2023, Sempra Infrastructure had $411 million in PP&E, net, related to the Guaymas-El Oro segment of the Sonora pipeline.

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:

▪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.

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SDG&E determined that none of its PPAs and tolling agreements resulted in SDG&E being the primary beneficiary of a VIE at September 30, 2023 and December 31, 2022. 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 $1,174 million and $1,194 million at September 30, 2023 and December 31, 2022, 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 of the Notes to Consolidated Financial Statements in the Annual Report. 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 of the Notes to Consolidated Financial Statements in the Annual Report 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 $14,148 million and $13,665 million at September 30, 2023 and December 31, 2022, 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, 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 $989 million at September 30, 2023 and $886 million at December 31, 2022. 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 5.

CFIN

As we discuss in Note 5, 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 8). 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 activities related to the construction and future operation and maintenance of the liquefaction facility. As a result, we consolidate ECA LNG Phase 1. Sempra consolidated $1,430 million and $1,099 million of assets at September 30, 2023 and December 31, 2022, respectively, consisting primarily of PP&E, net, 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 $924 million and $685 million of liabilities at September 30, 2023 and December 31, 2022, respectively, consisting primarily of long-term debt, accounts payable and short-term debt 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 6, IEnova and TotalEnergies SE have provided guarantees for 83.4% and 16.6%, respectively, of the loan facility supporting construction of the liquefaction facility.

Table of Con tents

Port Arthur LNG

Port Arthur LNG is a VIE because its total equity at risk is not sufficient to finance its activities without additional subordinated financial support. We expect that Port Arthur LNG will require future capital contributions or other financial support to finance the construction of the PA LNG Phase 1 project. Sempra is the primary beneficiary of this VIE because we have the power to direct the activities related to the construction and future operation and maintenance of the liquefaction facility. As a result, we consolidate Port Arthur LNG. Sempra consolidated $3,830 million of assets at September 30, 2023 consisting primarily of PP&E, net, other long-term assets and restricted cash attributable to Port Arthur LNG that could be used only to settle obligations of this VIE and that are not available to settle obligations of Sempra, and $788 million of liabilities at September 30, 2023 consisting primarily of accounts payable and long-term debt attributable to Port Arthur LNG for which creditors do not have recourse to the general credit of Sempra.

Table of Con tents

PENSION AND PBOP

Net Periodic Benefit Cost

The following tables provide the components of net periodic benefit cost. The components of net periodic benefit cost, other than the service cost component, are included in the Other Income (Expense), Net, table below.


NET PERIODIC BENEFIT COST – SEMPRA
(Dollars in millions)
	Pension				PBOP
	Three months ended September 30,
	2023		2022		2023		2022
Service cost	$	25	$	27	$	3	$	4
Interest cost	39		29		9		7
Expected return on assets	(42)		(46)		(17)		(16)
Amortization of:
Prior service cost (credit)	2		3		(1)		(1)
Actuarial loss (gain)	3		8		(5)		(4)
Net periodic benefit cost (credit)	27		21		(11)		(10)
Regulatory adjustments	30		87		10		10
Total expense (income) recognized	$	57	$	108	$	(1)	$	—

	Nine months ended September 30,
	2023		2022		2023		2022
Service cost	$	82	$	110	$	10	$	17
Interest cost	118		88		28		21
Expected return on assets	(127)		(137)		(52)		(48)
Amortization of:
Prior service cost (credit)	4		8		(2)		(2)
Actuarial loss (gain)	7		19		(17)		(11)
Net periodic benefit cost (credit)	84		88		(33)		(23)
Regulatory adjustments	88		84		32		23
Total expense (income) recognized	$	172	$	172	$	(1)	$	—


NET PERIODIC BENEFIT COST – SDG&E
(Dollars in millions)
	Pension				PBOP
	Three months ended September 30,
	2023		2022		2023		2022
Service cost	$	8	$	8	$	1	$	1
Interest cost	10		7		2		1
Expected return on assets	(9)		(13)		(2)		(2)
Amortization of:
Actuarial loss (gain)	2		—		—		(1)
Net periodic benefit cost (credit)	11		2		1		(1)
Regulatory adjustments	3		24		(1)		1
Total expense recognized	$	14	$	26	$	—	$	—

	Nine months ended September 30,
	2023		2022		2023		2022
Service cost	$	24	$	28	$	2	$	4
Interest cost	30		20		6		4
Expected return on assets	(29)		(35)		(6)		(7)
Amortization of:
Actuarial loss (gain)	4		1		(1)		(2)
Net periodic benefit cost (credit)	29		14		1		(1)
Regulatory adjustments	11		26		(1)		1
Total expense recognized	$	40	$	40	$	—	$	—

Table of Con tents


NET PERIODIC BENEFIT COST – SOCALGAS
(Dollars in millions)
	Pension				PBOP
	Three months ended September 30,
	2023		2022		2023		2022
Service cost	$	15	$	16	$	2	$	3
Interest cost	24		20		7		5
Expected return on assets	(29)		(30)		(14)		(13)
Amortization of:
Prior service cost (credit)	1		2		(1)		(1)
Actuarial loss (gain)	1		6		(5)		(3)
Net periodic benefit cost (credit)	12		14		(11)		(9)
Regulatory adjustments	27		63		11		9
Total expense recognized	$	39	$	77	$	—	$	—

	Nine months ended September 30,
	2023		2022		2023		2022
Service cost	$	49	$	72	$	7	$	13
Interest cost	75		61		21		16
Expected return on assets	(89)		(94)		(44)		(40)
Amortization of:
Prior service cost (credit)	3		6		(2)		(2)
Actuarial loss (gain)	1		14		(15)		(9)
Net periodic benefit cost (credit)	39		59		(33)		(22)
Regulatory adjustments	77		58		33		22
Total expense recognized	$	116	$	117	$	—	$	—

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 $513 million and $505 million at September 30, 2023 and December 31, 2022, respectively.

Table of Con tents

COMPREHENSIVE INCOME

The following tables present the changes in AOCI by component and amounts reclassified out of AOCI to net income, after amounts attributable to NCI.


CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1)
(Dollars in millions)
	Foreign currency translation adjustments		Financial instruments		Pension and PBOP		Total AOCI
	Three months ended September 30, 2023 and 2022
Sempra:
Balance at June 30, 2023	$	(38)	$	14	$	(97)	$	(121)
OCI before reclassifications	(5)		116		—		111
Amounts reclassified from AOCI(2)	—		(51)		1		(50)
Net OCI(2)	(5)		65		1		61
Balance at September 30, 2023	$	(43)	$	79	$	(96)	$	(60)

Balance at June 30, 2022	$	(65)	$	(30)	$	(72)	$	(167)
OCI before reclassifications	—		40		—		40
Amounts reclassified from AOCI	—		5		2		7
Net OCI	—		45		2		47
Balance at September 30, 2022	$	(65)	$	15	$	(70)	$	(120)
SDG&E:




Balance at June 30, 2023 and September 30, 2023					$	(7)	$	(7)

Balance at June 30, 2022					$	(10)	$	(10)
Amounts reclassified from AOCI					1		1
Net OCI					1		1
Balance at September 30, 2022					$	(9)	$	(9)
SoCalGas:
Balance at June 30, 2023 and September 30, 2023			$	(11)	$	(11)	$	(22)






Balance at June 30, 2022			$	(12)	$	(17)	$	(29)
Amounts reclassified from AOCI			—		1		1
Net OCI			—		1		1
Balance at September 30, 2022			$	(12)	$	(16)	$	(28)

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

(2) Total AOCI includes ($46) of financial instruments associated with sale of NCI to KKR Denali, which we discuss below in “Other Noncontrolling Interests – Sempra Infrastructure.” This transaction did not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).

Table of Con tents


CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) (CONTINUED)
(Dollars in millions)
	Foreign currency translation adjustments		Financial instruments		Pension and PBOP		Total AOCI
	Nine months ended September 30, 2023 and 2022
Sempra:
Balance at December 31, 2022	$	(59)	$	10	$	(86)	$	(135)
OCI before reclassifications	16		129		(13)		132
Amounts reclassified from AOCI(2)	—		(60)		3		(57)
Net OCI(2)	16		69		(10)		75
Balance at September 30, 2023	$	(43)	$	79	$	(96)	$	(60)

Balance at December 31, 2021	$	(79)	$	(156)	$	(83)	$	(318)
OCI before reclassifications	4		151		7		162
Amounts reclassified from AOCI(3)	10		20		6		36
Net OCI(3)	14		171		13		198
Balance at September 30, 2022	$	(65)	$	15	$	(70)	$	(120)
SDG&E:




Balance at December 31, 2022 and September 30, 2023					$	(7)	$	(7)

Balance at December 31, 2021					$	(10)	$	(10)

Amounts reclassified from AOCI					1		1
Net OCI					1		1
Balance at September 30, 2022					$	(9)	$	(9)
SoCalGas:
Balance at December 31, 2022			$	(12)	$	(12)	$	(24)
Amounts reclassified from AOCI			1		1		2
Net OCI			1		1		2
Balance at September 30, 2023			$	(11)	$	(11)	$	(22)

Balance at December 31, 2021			$	(13)	$	(18)	$	(31)
Amounts reclassified from AOCI			1		2		3
Net OCI			1		2		3
Balance at September 30, 2022			$	(12)	$	(16)	$	(28)

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

(3) Total AOCI includes $9 of foreign currency translation adjustments associated with sale of NCI to ADIA, which we discuss below in “Other Noncontrolling Interests – Sempra Infrastructure.” This transaction did not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).

Table of Con tents


RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
Details about AOCI	Amounts reclassified from AOCI				Affected line item on Condensed Consolidated Statements of Operations
	Three months ended September 30,
	2023		2022
Sempra:


Financial instruments:
Interest rate instruments	$	1	$	2	Interest Expense
Interest rate instruments	(12)		1		Equity Earnings(1)

Foreign exchange instruments	(1)		—		Other Income (Expense), Net

Foreign exchange instruments	(1)		—		Equity Earnings
Interest rate and foreign exchange instruments	—		3		Other Income (Expense), Net
Total, before income tax	(13)		6
	2		(2)		Income Tax Benefit (Expense)
Total, net of income tax	(11)		4
	6		1		Earnings Attributable to Noncontrolling Interests
Total, net of income tax and after NCI	$	(5)	$	5

Pension and PBOP(2):
Amortization of actuarial loss	$	1	$	2	Other Income (Expense), Net
Amortization of prior service cost	1		1		Other Income (Expense), Net

Total, before income tax	2		3
	(1)		(1)		Income Tax Benefit (Expense)
Total, net of income tax	$	1	$	2

Total reclassifications for the period, net of income tax and after NCI	$	(4)	$	7
SDG&E:
Pension and PBOP(2):
Amortization of actuarial loss	$	—	$	1	Other Income, Net


Total reclassifications for the period, net of income tax	$	—	$	1
SoCalGas:



Pension and PBOP(2):

Amortization of prior service cost	$	—	$	1	Other Expense, Net






Total reclassifications for the period, net of income tax	$	—	$	1

(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” above).

Table of Con tents


RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (CONTINUED)
(Dollars in millions)
Details about AOCI	Amounts reclassified from AOCI				Affected line item on Condensed Consolidated Statements of Operations
	Nine months ended September 30,
	2023		2022
Sempra:
Foreign currency translation adjustments	$	—	$	1	Operation and Maintenance

Financial instruments:
Interest rate instruments	$	1	$	1	Interest Expense
Interest rate instruments	(33)		28		Equity Earnings(1)
Foreign exchange instruments	—		(2)		Revenues: Energy-Related Businesses
	1		1		Other Income (Expense), Net
Foreign exchange instruments	1		(1)		Equity Earnings(1)
Interest rate and foreign exchange instruments	(1)		(1)		Interest Expense
	(6)		(3)		Other Income (Expense), Net
Total, before income tax	(37)		23
	5		(7)		Income Tax Benefit (Expense)
Total, net of income tax	(32)		16
	18		4		Earnings Attributable to Noncontrolling Interests
Total, net of income tax and after NCI	$	(14)	$	20

Pension and PBOP(2):
Amortization of actuarial loss	$	2	$	6	Other Income (Expense), Net
Amortization of prior service cost	2		3		Other Income (Expense), Net
Total, before income tax	4		9
	(1)		(3)		Income Tax Benefit (Expense)
Total, net of income tax	$	3	$	6

Total reclassifications for the period, net of income tax and after NCI	$	(11)	$	27
SDG&E:
Pension and PBOP(2):
Amortization of actuarial loss	$	—	$	1	Other Income, Net

Total reclassifications for the period, net of income tax	$	—	$	1
SoCalGas:
Financial instruments:
Interest rate instruments	$	1	$	1	Interest Expense

Pension and PBOP(2):
Amortization of actuarial loss	$	—	$	1	Other Expense, Net
Amortization of prior service cost	1		1		Other Expense, Net


Total, net of income tax	$	1	$	2

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

(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” above).

Table of Con tents

SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS

Sempra Common Stock

On May 12, 2023, Sempra’s shareholders approved an amendment to Sempra’s Articles of Incorporation to increase the number of authorized shares of Sempra’s common stock from 750,000,000 to 1,125,000,000.

Sempra Common Stock Split in the Form of a Stock Dividend

On August 2, 2023, Sempra’s board of directors declared a two-for-one split of Sempra’s common stock in the form of a 100% stock dividend for shareholders of record at the close of business on August 14, 2023. Each such shareholder of record received one additional share of Sempra common stock for every then-held share of Sempra common stock, which was distributed after the close of trading on August 21, 2023. Sempra’s common stock began trading on a post-split basis effective August 22, 2023. Sempra’s common stock continues to have no par value with 1,125,000,000 authorized shares.

All shares and per share information related to issued and outstanding common stock and outstanding equity awards with respect to common stock have been retroactively adjusted to reflect the stock split and are presented on a post-split basis herein.

Sempra Common Stock Repurchases

In the nine months ended September 30, 2023 and 2022, we repurchased 411,447 shares for $32 million and 404,806 shares for $28 million, respectively, of our common stock from long-term incentive plan participants to satisfy minimum statutory tax withholding requirements in connection with the vesting of RSUs and exercise of stock options.

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 2,945,512 shares were purchased under this program at an average price of $67.90 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 2,943,914 shares were purchased under this program at an average price of $84.92 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.

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 Condensed Consolidated Balance Sheets.


OTHER NONCONTROLLING INTERESTS
(Dollars in millions)
	Percent ownership held by noncontrolling interests				Equity held by noncontrolling interests
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Sempra Infrastructure:
SI Partners	30.0	%	30.0	%	$	4,011	$	2,060
SI Partners subsidiaries(1)	0.1 - 42.0		0.1 - 16.6		989		61
Total Sempra					$	5,000	$	2,121

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

Table of Con tents

Sempra Infrastructure

Sale of NCI to KKR Denali. In September 2023, an indirect subsidiary of SI Partners completed the sale of an indirect 42% NCI in the PA LNG Phase 1 project to KKR Denali for aggregate cash consideration of approximately $984 million, including its pro rata equity share of development costs incurred prior to the closing that exceeded $439 million, subject to customary post-closing adjustments. As a result of this sale, we recorded a $1.1 billion increase in equity held by NCI and a decrease in Sempra’s shareholders’ equity of $56 million, including $11 million in transaction costs and net of a $22 million tax benefit.

At the closing of the sale of NCI to KKR Denali, the associated limited liability company agreement was amended and restated to include KKR Denali as a member of such company and to set forth certain governance and other agreements with respect to the funding of the PA LNG Phase 1 project. Pursuant to the limited liability company agreement, (i) the indirect subsidiary of SI Partners (a) is the managing member; (b) exclusively holds the right to make decisions with respect to certain expansions, such as the potential PA LNG Phase 2 project; (c) has certain rights to preferential distributions from specified revenues and expansion true-up payments; and (d) through a parent entity that is a subsidiary of Sempra, bears a disproportionately higher allocation of certain capital contribution commitments in certain budgetary overrun scenarios, and (ii) KKR Denali has certain investor protection voting rights. The indirect subsidiary of SI Partners and KKR Denali have also made capital contribution commitments to fund their respective equity share of the equity funding amount of anticipated development costs of the PA LNG Phase 1 project, except in those certain budget overrun scenarios discussed above.

Upon closing the sale of NCI to KKR Denali, Sempra holds an indirect interest in the PA LNG Phase 1 project of 19.6%.

Sale of NCI to ConocoPhillips Affiliate. In March 2023, an indirect subsidiary of SI Partners completed the sale of an indirect 30% NCI in the PA LNG Phase 1 project to an affiliate of ConocoPhillips for aggregate cash consideration of $254 million, subject to customary post-closing adjustments. As a result of this sale, we recorded a $234 million increase in equity held by NCI and an increase in Sempra’s shareholders’ equity of $12 million, net of $3 million in transaction costs and $5 million in tax expense.

At the closing of the sale of NCI to the ConocoPhillips affiliate, the associated limited liability company agreement was amended and restated to include the ConocoPhillips affiliate as a member of such company and to set forth certain governance and other agreements with respect to the funding of the PA LNG Phase 1 project. Pursuant to the limited liability company agreement, such company will generally be managed by a board of managers, initially constituting three representatives appointed by the indirect subsidiary of SI Partners and two representatives appointed by the ConocoPhillips affiliate.

The indirect subsidiary of SI Partners and the ConocoPhillips affiliate have made certain customary capital contribution commitments to fund their respective pro rata equity share of the total anticipated capital calls for the equity portion of the anticipated development costs of the PA LNG Phase 1 project. In addition, both SI Partners and ConocoPhillips provided guarantees relating to their respective affiliate’s commitment to make its pro rata equity share of capital contributions to fund 110% of the development budget of the PA LNG Phase 1 project, in an aggregate amount of up to $9.0 billion. SI Partners’ guarantee covers 70% of this amount plus enforcement costs of its guarantee.

Sale of NCI to ADIA. In June 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 Pinnacle 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.

Contributions from NCI. In October 2021, KKR Pinnacle acquired a 20% NCI in SI Partners. Under the limited partnership agreement that governs our and KKR Pinnacle’s respective rights and obligations in respect of our and their ownership interests in SI Partners, KKR Pinnacle was entitled to a $200 million credit from Sempra to be applied to capital calls once an LNG project reached a positive final investment decision and met certain projected internal rates of return. In the three months and nine months ended September 30, 2023, KKR Pinnacle used $14 million and $200 million, respectively, of this credit to fund its share of contributions to SI Partners. As a result, we recorded a $200 million increase in equity held by NCI and a decrease in Sempra’s shareholders’ equity of $145 million, net of a tax benefit.

Table of Con tents

SEMPRA EARNINGS PER COMMON SHARE

Basic EPS is calculated by dividing earnings attributable to common shares 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)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Numerator:
Earnings attributable to common shares	$	721	$	485	$	2,293	$	1,656

Denominator:
Weighted-average common shares outstanding for basic EPS(1)	630,036		629,447		629,963		630,603
Dilutive effect of stock options and RSUs(2)	2,288		2,728		2,268		2,311
Weighted-average common shares outstanding for diluted EPS	632,324		632,175		632,231		632,914

EPS:
Basic	$	1.14	$	0.77	$	3.64	$	2.63
Diluted	$	1.14	$	0.77	$	3.63	$	2.62

(1) Includes 716 and 803 fully vested RSUs held in our Deferred Compensation Plan for the three months ended September 30, 2023 and 2022, respectively, and 716 and 805 of such RSUs for the nine months ended September 30, 2023 and 2022, respectively. 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 of the Notes to Consolidated Financial Statements in the Annual Report, 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 the three months and nine months ended September 30, 2023 excludes 624,242 and 470,804 potentially dilutive shares, respectively, and the computation of diluted EPS for the three months and nine months ended September 30, 2022 excludes no potentially dilutive shares and 230,752 potentially dilutive shares, respectively, because to include them would be antidilutive for the period. However, these shares could potentially dilute basic EPS in the future.

Pursuant to Sempra’s share-based compensation plans, the Compensation and Talent Development Committee of Sempra’s board of directors granted 326,574 nonqualified stock options, 661,620 performance-based RSUs and 272,729 service-based RSUs in the nine months ended September 30, 2023, primarily in January.

We discuss share-based compensation plans and related awards and the terms and conditions of Sempra’s equity securities further in Notes 10, 13 and 14 of the Notes to Consolidated Financial Statements in the Annual Report.

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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)
	September 30, 2023		December 31, 2022
Sempra:
Tax sharing arrangement with Oncor Holdings	$	34	$	41
Various affiliates	8		13
Total due from unconsolidated affiliates – current	$	42	$	54

Sempra Infrastructure(1):
TAG Pipelines Norte, S. de R.L. de C.V. – 5.5% Note due January 9, 2024	$	(5)	$	—
Total due to unconsolidated affiliates – current	$	(5)	$	—

Sempra Infrastructure(1):
TAG Pipelines Norte, S. de R.L. de C.V.:
5.5% Note due January 9, 2024	$	—	$	(40)
5.5% Note due January 14, 2025	(24)		(23)
5.5% Note due July 16, 2025	(22)		(21)
5.5% Note due January 14, 2026	(20)		(19)
5.5% Note due July 14, 2026	(11)		(11)
5.5% Note due January 19, 2027	(14)		—
5.5% Note due July 21, 2027	(17)		—
TAG – 5.74% Note due December 17, 2029	(195)		(187)
Total due to unconsolidated affiliates – noncurrent	$	(303)	$	(301)
SDG&E:
SoCalGas	$	8	$	—
Total due from unconsolidated affiliates – current	$	8	$	—

Sempra	$	(38)	$	(49)
SoCalGas	—		(72)
Various affiliates	(11)		(14)
Total due to unconsolidated affiliates – current	$	(49)	$	(135)

Income taxes due (to) from Sempra(2)	$	(43)	$	10
SoCalGas:
SDG&E	$	—	$	72
Various affiliates	1		5
Total due from unconsolidated affiliates – current	$	1	$	77

Sempra	$	(30)	$	(36)
SDG&E	(8)		—
Total due to unconsolidated affiliates – current	$	(38)	$	(36)

Income taxes due to Sempra(2)	$	(6)	$	(16)

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

(2) 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)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Sempra:
Revenues	$	10	$	10	$	34	$	32
Interest income	—		2		—		16
Interest expense	3		4		11		12
SDG&E:
Revenues	$	5	$	4	$	15	$	12
Cost of sales	25		17		82		67
SoCalGas:
Revenues	$	29	$	24	$	91	$	73
Cost of sales(1)	2		(1)		37		(5)

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

Guarantees

Sempra provided guarantees related to Cameron LNG JV’s SDSRA and CFIN’s Support Agreement, which remain outstanding. We discuss these guarantees in Note 5 below and in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

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OTHER INCOME (EXPENSE), NET

Other Income (Expense), Net, consists of the following:


OTHER INCOME (EXPENSE), NET
(Dollars in millions)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Sempra:
Allowance for equity funds used during construction	$	35	$	35	$	105	$	104
Investment losses, net(1)	(19)		(13)		(2)		(60)
Gains (losses) on interest rate and foreign exchange instruments, net	1		(3)		5		2
Foreign currency transaction (losses) gains, net(2)	(3)		4		1		(18)
Non-service components of net periodic benefit cost	(28)		(77)		(79)		(45)
Interest on regulatory balancing accounts, net	19		7		56		12
Sundry, net	(2)		7		(11)		2
Total	$	3	$	(40)	$	75	$	(3)
SDG&E:
Allowance for equity funds used during construction	$	21	$	22	$	67	$	64
Non-service components of net periodic benefit cost	(5)		(17)		(14)		(8)
Interest on regulatory balancing accounts, net	10		5		31		9
Sundry, net	(1)		2		(9)		3
Total	$	25	$	12	$	75	$	68
SoCalGas:
Allowance for equity funds used during construction	$	14	$	14	$	38	$	40
Non-service components of net periodic benefit cost	(22)		(58)		(60)		(32)
Interest on regulatory balancing accounts, net	9		2		25		3
Sundry, net	(3)		(1)		(12)		(16)
Total	$	(2)	$	(43)	$	(9)	$	(5)

(1) Represents net investment losses 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 Condensed Consolidated Statements of Operations.

(2) Includes losses of $11 in the nine months ended September 30, 2022 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 Condensed Consolidated Statement of Operations.

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INCOME TAXES

We provide our calculations of ETRs in the following table.


INCOME TAX (BENEFIT) EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
	Three months ended September 30,						Nine months ended September 30,
	2023			2022			2023			2022
Sempra:
Income tax (benefit) expense	$	(52)		$	21		$	499		$	435

Income before income taxes and equity earnings	$	323		$	165		$	2,175		$	1,194
Equity earnings, before income tax(1)	133			134			418			436
Pretax income	$	456		$	299		$	2,593		$	1,630

Effective income tax rate	(11)		%	7		%	19		%	27		%
SDG&E:
Income tax (benefit) expense	$	(15)		$	35		$	(4)		$	141
Income before income taxes	$	259		$	306		$	712		$	822
Effective income tax rate	(6)		%	11		%	(1)		%	17		%
SoCalGas:
Income tax (benefit) expense	$	(5)		$	(28)		$	68		$	75
Income (loss) before income taxes	$	11		$	(110)		$	600		$	415
Effective income tax rate	(45)		%	25		%	11		%	18		%

(1) We discuss how we recognize equity earnings in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

Sempra, SDG&E and SoCalGas record income taxes for interim periods utilizing a forecasted ETR anticipated for the full year. Unusual and infrequent items and items that cannot be reliably estimated are recorded in the interim period in which they occur, which can result in variability in the ETR.

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

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

Under the IRA, beginning in 2023, the scope of projects eligible for investment tax credits was expanded to include standalone energy storage projects. The IRA also provided an election that prospectively permits investment tax credits related to standalone energy storage projects to be returned to utility customers over a period that is shorter than the life of the applicable asset. Under this election, SDG&E recorded a regulatory liability to offset these investment tax credits, which reduced SDG&E’s and Sempra’s ETR in 2023.

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In April 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting for gas repairs expenditures. As a result of this Revenue Procedure, SoCalGas updated its assessment of prior years’ unrecognized income tax benefits and, in the nine months ended September 30, 2023, recorded an income tax benefit of $43 million for previously unrecognized income tax benefits pertaining to gas repairs expenditures. SoCalGas recorded an associated regulatory liability for the portion that will benefit customers in the future. We are assessing the potential future impacts of this Revenue Procedure.

In the nine months ended September 30, 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.

NOTE 2. NEW ACCOUNTING STANDARDS

There are no recent accounting pronouncements that have had or may have a significant effect on our results of operations, financial condition, cash flows and/or disclosures.

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NOTE 3. REVENUES

We discuss revenue recognition for revenues from contracts with customers and from sources other than contracts with customers in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report.

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
	Three months ended September 30, 2023
By major service line:
Utilities	$	1,438	$	1,120	$	18	$	(35)	$	2,541
Energy-related businesses	—		—		369		(16)		353
Revenues from contracts with customers	$	1,438	$	1,120	$	387	$	(51)	$	2,894

By market:
Gas	$	182	$	1,120	$	234	$	(30)	$	1,506
Electric	1,256		—		153		(21)		1,388
Revenues from contracts with customers	$	1,438	$	1,120	$	387	$	(51)	$	2,894

Revenues from contracts with customers	$	1,438	$	1,120	$	387	$	(51)	$	2,894
Utilities regulatory revenues	4		193		—		—		197
Other revenues	—		—		242		1		243
Total revenues	$	1,442	$	1,313	$	629	$	(50)	$	3,334

	Nine months ended September 30, 2023
By major service line:
Utilities	$	4,603	$	6,252	$	67	$	(107)	$	10,815
Energy-related businesses	—		—		916		(56)		860
Revenues from contracts with customers	$	4,603	$	6,252	$	983	$	(163)	$	11,675

By market:
Gas	$	988	$	6,252	$	605	$	(95)	$	7,750
Electric	3,615		—		378		(68)		3,925
Revenues from contracts with customers	$	4,603	$	6,252	$	983	$	(163)	$	11,675

Revenues from contracts with customers	$	4,603	$	6,252	$	983	$	(163)	$	11,675
Utilities regulatory revenues	(246)		322		—		—		76
Other revenues	—		—		1,502		(24)		1,478
Total revenues	$	4,357	$	6,574	$	2,485	$	(187)	$	13,229

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DISAGGREGATED REVENUES (CONTINUED)
(Dollars in millions)
	SDG&E		SoCalGas		Sempra Infrastructure		Consolidating adjustments and Parent and other		Sempra
	Three months ended September 30, 2022
By major service line:
Utilities	$	1,383	$	1,214	$	19	$	(29)	$	2,587
Energy-related businesses	—		—		532		(13)		519
Revenues from contracts with customers	$	1,383	$	1,214	$	551	$	(42)	$	3,106

By market:
Gas	$	175	$	1,214	$	379	$	(30)	$	1,738
Electric	1,208		—		172		(12)		1,368
Revenues from contracts with customers	$	1,383	$	1,214	$	551	$	(42)	$	3,106

Revenues from contracts with customers	$	1,383	$	1,214	$	551	$	(42)	$	3,106
Utilities regulatory revenues	186		171		—		—		357
Other revenues	—		—		146		8		154
Total revenues	$	1,569	$	1,385	$	697	$	(34)	$	3,617

	Nine months ended September 30, 2022
By major service line:
Utilities	$	4,134	$	4,473	$	67	$	(85)	$	8,589
Energy-related businesses	—		—		1,281		(42)		1,239
Revenues from contracts with customers	$	4,134	$	4,473	$	1,348	$	(127)	$	9,828

By market:
Gas	$	664	$	4,473	$	948	$	(75)	$	6,010
Electric	3,470		—		400		(52)		3,818
Revenues from contracts with customers	$	4,134	$	4,473	$	1,348	$	(127)	$	9,828

Revenues from contracts with customers	$	4,134	$	4,473	$	1,348	$	(127)	$	9,828
Utilities regulatory revenues	279		406		—		—		685
Other revenues	—		—		462		9		471
Total revenues	$	4,413	$	4,879	$	1,810	$	(118)	$	10,984

REVENUES FROM CONTRACTS WITH CUSTOMERS

Remaining Performance Obligations

For contracts greater than one year, at September 30, 2023, 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 September 30, 2023.


REMAINING PERFORMANCE OBLIGATIONS(1)
(Dollars in millions)
	Sempra		SDG&E
2023 (excluding first nine months of 2023)	$	85	$	1
2024	300		4
2025	338		4
2026	365		4
2027	365		4
Thereafter	4,077		59
Total revenues to be recognized	$	5,530	$	76

(1) Excludes intercompany transactions.

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Contract Liabilities from Revenues from Contracts with Customers

Activities within Sempra’s and SDG&E’s contract liabilities are presented below. There were no contract liabilities at SoCalGas in the nine months ended September 30, 2023 or 2022. Sempra Infrastructure recorded a contract liability for funds held as collateral in lieu of a customer’s letters of credit associated with its LNG storage and regasification agreement.


CONTRACT LIABILITIES
(Dollars in millions)
	2023		2022
Sempra:
Contract liabilities at January 1	$	(252)	$	(278)
Revenue from performance obligations satisfied during reporting period	9		129
Payments received in advance	(21)		(105)
Contract liabilities at September 30(1)	$	(264)	$	(254)
SDG&E:
Contract liabilities at January 1	$	(79)	$	(83)
Revenue from performance obligations satisfied during reporting period	3		3
Contract liabilities at September 30(2)	$	(76)	$	(80)

(1) Balances at September 30, 2023 include $9 in Other Current Liabilities and $255 in Deferred Credits and Other.

(2) Balances at September 30, 2023 include $4 in Other Current Liabilities and $72 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 Condensed Consolidated Balance Sheets.


RECEIVABLES FROM REVENUES FROM CONTRACTS WITH CUSTOMERS
(Dollars in millions)
	September 30, 2023		December 31, 2022
Sempra:
Accounts receivable – trade, net(1)	$	1,780	$	2,291
Accounts receivable – other, net	15		25
Due from unconsolidated affiliates – current(2)	5		9
Other long-term assets(3)	1		9
Total	$	1,801	$	2,334
SDG&E:
Accounts receivable – trade, net(1)	$	952	$	799
Accounts receivable – other, net	13		12
Due from unconsolidated affiliates – current(2)	6		2
Other long-term assets(3)	1		6
Total	$	972	$	819
SoCalGas:
Accounts receivable – trade, net	$	665	$	1,295
Accounts receivable – other, net	2		13
Other long-term assets(3)	—		3
Total	$	667	$	1,311

(1) At September 30, 2023 and December 31, 2022, includes $201 and $72, 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 Condensed 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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NOTE 4. REGULATORY MATTERS

We discuss regulatory matters in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report and provide updates to those discussions and information about new regulatory matters below. With the exception of regulatory balancing accounts, we generally do not earn a return on our regulatory assets until 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)
	September 30, 2023		December 31, 2022

SDG&E:
Fixed-price contracts and other derivatives	$	(10)	$	(110)
Deferred income taxes recoverable in rates	518		296
Pension and PBOP plan obligations	(2)		11
Removal obligations	(2,382)		(2,248)
Environmental costs	105		107
Sunrise Powerlink fire mitigation	123		123
Regulatory balancing accounts(1)(2):
Commodity – electric	111		220
Gas transportation	15		60
Safety and reliability	186		107
Public purpose programs	(133)		(69)
Wildfire mitigation plan	607		375
Liability insurance premium	96		99
Other balancing accounts	(338)		(50)
Other regulatory assets, net(2)	96		137
Total SDG&E	(1,008)		(942)
SoCalGas:
Deferred income taxes recoverable in rates	244		161
Pension and PBOP plan obligations	(265)		(170)
Employee benefit costs	24		24
Removal obligations	(597)		(616)
Environmental costs	39		38
Regulatory balancing accounts(1)(2):
Commodity – gas, including transportation	(356)		(257)
Safety and reliability	691		575
Public purpose programs	(149)		(158)
Liability insurance premium	23		23
Other balancing accounts	519		115
Other regulatory assets, net(2)	224		223
Total SoCalGas	397		(42)
Sempra Infrastructure:
Deferred income taxes recoverable in rates	78		78
Other regulatory assets	3		—
Total Sempra Infrastructure	81		78
Total Sempra	$	(530)	$	(906)

(1) At September 30, 2023 and December 31, 2022, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $842 and $562, respectively, and for SoCalGas was $957 and $692, 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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SEMPRA CALIFORNIA

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 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 proposed 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. Intervening parties have proposed various adjustments to SDG&E’s and SoCalGas’ revenue requirement requests. 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. The CPUC has authorized SDG&E and SoCalGas to recognize the effects of the GRC final decision retroactive to January 1, 2024. In October 2023, SDG&E submitted a separate request with the CPUC in its 2024 GRC describing $2.2 billion in costs to implement its wildfire mitigation plans from 2019 through 2022, and seeking review and recovery of the incremental wildfire mitigation plan costs incurred during that period, totaling $1.5 billion. SDG&E expects to receive a proposed decision on this request in the second half of 2024. SDG&E also expects to submit in mid-2024 a separate request in its 2024 GRC for review and recovery of its wildfire mitigation plan costs incurred in 2023. The results of the GRC may materially and adversely differ from what is contained in the GRC applications.

CPUC Cost of Capital

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 has issued a ruling to initiate a second phase of this cost of capital proceeding to evaluate potential modifications to the CCM.


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.

The CCM was triggered for SDG&E and SoCalGas on September 30, 2023 and, subject to regulatory approval, would increase each of their authorized rates of return effective January 1, 2024 as follows:


PROPOSED CPUC COST OF CAPITAL FOR 2024 – 2025

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	%	4.34	%	1.96	%	Long-Term Debt	45.60	%	4.54	%	2.07	%
2.75		6.22		0.17		Preferred Equity	2.40		6.00		0.14
52.00		10.65		5.54		Common Equity	52.00		10.50		5.46
100.00	%			7.67	%		100.00	%			7.67	%

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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.

NOTE 5. 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 Condensed Consolidated Statements of Operations. See Note 11 for information on equity earnings and losses, both before and net of income tax, by segment. See Note 1 for information on how equity earnings and losses before income taxes are factored into the calculations of our pretax income or loss and ETR.

We provide additional information concerning our equity method investments in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

SEMPRA TEXAS UTILITIES

Oncor Holdings

We account for our 100% equity ownership interest in Oncor Holdings, which owns an 80.25% interest in Oncor, as an equity method investment. Due to the ring-fence measures, governance mechanisms and commitments in effect, we do not have the power to direct the significant activities of Oncor Holdings and Oncor. See Note 6 of the Notes to Consolidated Financial Statements in the Annual Report for additional information related to the restrictions on our ability to direct the significant activities of Oncor Holdings and Oncor.

In the nine months ended September 30, 2023 and 2022, Sempra contributed $270 million and $256 million, respectively, to Oncor Holdings, and Oncor Holdings distributed $323 million and $255 million, respectively, to Sempra.

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


SUMMARIZED FINANCIAL INFORMATION – ONCOR HOLDINGS
(Dollars in millions)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Operating revenues	$	1,592	$	1,438	$	4,227	$	3,980
Operating expenses	(1,007)		(929)		(3,007)		(2,734)
Income from operations	585		509		1,220		1,246
Interest expense	(140)		(115)		(396)		(331)
Income tax expense	(81)		(70)		(148)		(164)
Net income	376		315		672		732
Noncontrolling interest held by Texas Transmission Investment LLC	(75)		(62)		(135)		(146)
Earnings attributable to Sempra(1)	301		253		537		586

(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.

Table of Con tents

SEMPRA INFRASTRUCTURE

Cameron LNG JV

In the nine months ended September 30, 2023 and 2022, Sempra Infrastructure contributed $11 million and $19 million, respectively, to Cameron LNG JV, and Cameron LNG JV distributed $339 million and $388 million, respectively, to Sempra Infrastructure.

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 $19 million at September 30, 2023, 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 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 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 recognizes 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 8). At September 30, 2023, the fair value of the Support Agreement was $18 million, of which $7 million is included in Other Current Assets and $11 million is included in Other Long-Term Assets on Sempra’s Condensed Consolidated Balance Sheet.

TAG

In the nine months ended September 30, 2023 and 2022, TAG distributed $36 million and $32 million, respectively, to Sempra Infrastructure.

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IMG

In the nine months ended September 30, 2023, IMG distributed $6 million to Sempra Infrastructure.

NOTE 6. DEBT AND CREDIT FACILITIES

The principal terms of our debt arrangements are described below and in Note 7 of the Notes to Consolidated Financial Statements in the Annual Report.

SHORT-TERM DEBT

Committed Lines of Credit

At September 30, 2023, Sempra had an aggregate capacity of $9.9 billion under seven primary committed lines of credit, which provide liquidity and support 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.


COMMITTED LINES OF CREDIT
(Dollars in millions)
		September 30, 2023
Borrower	Expiration date of facility	Total facility		Commercial paper outstanding		Amounts outstanding		Letters of credit outstanding		Available unused credit
Sempra	October 2028(1)	$	4,000	$	(970)	$	—	$	—	$	3,030
SDG&E	October 2028(1)	1,500		—		—		—		1,500
SoCalGas	October 2028(1)	1,200		(421)		—		—		779
SI Partners and IEnova	September 2025(2)	500		—		(350)		—		150
SI Partners and IEnova	August 2026(3)	1,000		—		—		—		1,000
SI Partners and IEnova	August 2028(4)	1,500		—		(201)		—		1,299
Port Arthur LNG	March 2030	200		—		—		(25)		175
Total		$	9,900	$	(1,391)	$	(551)	$	(25)	$	7,933

(1) In October 2023, Sempra, SDG&E and SoCalGas each amended their respective credit facility to extend the expiration date from October 2027 to October 2028. Each credit facility will maintain a syndicate of 23 lenders through October 2027, at which time the syndicate of lenders for each credit facility will be reduced to 22 unless a new or existing lender agrees to assume the 23**rd lender’s commitment. Such a reduction in lenders would result in a reduction to the available credit capacity to $3,845, $1,442 and $1,153 for Sempra, SDG&E and SoCalGas, respectively, through October 2028.

(2) In September 2023, the $150 facility was terminated and the $350 facility was amended to increase the commitment to $500, adjust the applicable margin to 80 bps (including credit adjustment spread), and extend the expiration date from September 2023 to September 2025.

(3) In August 2023, the facility was amended to include IEnova as a co-borrower, adjust the Term SOFR credit adjustment spread to 10 bps in all tenors, and extend the expiration date from November 2024 to August 2026. Additionally, either SI Partners or IEnova has the right to increase the total facility to $1,500, subject to lender approval.

(4) In August 2023, the facility was amended to extend the expiration date from February 2024 to August 2028.

Sempra, SDG&E and SoCalGas each 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 September 30, 2023, each entity was in compliance with this ratio under its respective credit facility.

SI Partners must maintain a ratio of consolidated adjusted net indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (as defined in each of the applicable credit facilities) of no more than 5.25 to 1.00 at the end of each quarter. At September 30, 2023, SI Partners was in compliance with this ratio.

In March 2023, Port Arthur LNG entered into a seven-year initial working capital facility agreement with a syndicate of lenders expiring in March 2030. The credit facility permits borrowings of up to $200 million, which bear interest by reference to Term SOFR, plus the applicable margin and a credit adjustment spread. The credit facility also provides for the issuance of up to $200 million of letters of credit.

Table of Con tents

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 $37 million was outstanding at September 30, 2023. The amounts outstanding are before reductions of any unamortized discounts. Borrowings can be in U.S. dollars or Mexican pesos. At September 30, 2023, 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. In June 2023, the facility was amended to extend the expiration date to August 2024 and replace the London Interbank Offered Rate reference rate plus 105 bps with the SOFR reference rate plus 115 bps. As such, borrowings made in U.S. dollars bear interest at a variable rate based on the one-month or three-month SOFR plus 115 bps.

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 September 30, 2023, we had $508 million in standby letters of credit outstanding under these agreements.


UNCOMMITTED LETTERS OF CREDIT
(Dollars in millions)
		September 30, 2023
	Expiration date range	Uncommitted letters of credit outstanding
SDG&E	January 2024 - May 2024	$	15
SoCalGas	March 2024 - November 2024	20
Sempra Infrastructure	October 2023 - October 2043	307
Parent and other	March 2024 - September 2024	166
Total		$	508

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 bore interest at benchmark rates plus 70 bps and was due in full upon maturity. SoCalGas used the proceeds for payment of a portion of the costs relating to litigation pertaining to the Leak. In the second quarter of 2023, SoCalGas repaid the term loan in full.

Weighted-Average Interest Rates

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


WEIGHTED-AVERAGE INTEREST RATES

	September 30, 2023		December 31, 2022
Sempra	5.86	%	5.57	%
SDG&E	—		4.76
SoCalGas	5.37		4.71

LONG-TERM DEBT

SDG&E

In March 2023, SDG&E issued $800 million aggregate principal amount of 5.35% first mortgage bonds due in full upon maturity on April 1, 2053 and received proceeds of $783 million (net of debt discount, underwriting discounts and debt issuance costs of $17 million). The first mortgage bonds are redeemable prior to maturity, subject to their terms, and in certain circumstances subject to make-whole provisions. SDG&E used the net proceeds for general corporate purposes, including repayment of commercial paper and other indebtedness.

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In August 2023, SDG&E issued $600 million aggregate principal amount of 4.95% green first mortgage bonds due in full upon maturity on August 15, 2028 and received proceeds of $593 million (net of debt discount, underwriting discounts and debt issuance costs of $7 million). The first mortgage bonds are redeemable prior to maturity, subject to their terms, and in certain circumstances subject to make-whole provisions. SDG&E intends to use the net proceeds to finance or refinance investments in eligible projects that fall into one or more of the following categories: climate change adaptation, clean energy solutions and clean transportation.

SoCalGas

In May 2023, SoCalGas issued $500 million aggregate principal amount of 5.20% first mortgage bonds due in full upon maturity on June 1, 2033 and received proceeds of $495 million (net of debt discount, underwriting discounts and debt issuance costs of $5 million), and $500 million aggregate principal amount of 5.75% first mortgage bonds due in full upon maturity on June 1, 2053 and received proceeds of $493 million (net of debt discount, underwriting discounts and debt issuance costs of $7 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. SoCalGas used the net proceeds to repay its $300 million senior unsecured floating rate notes prior to their September 2023 scheduled maturity, a portion of its $800 million term loan and other general corporate purposes.

Sempra

In June 2023, Sempra issued $550 million aggregate principal amount of 5.40% senior unsecured notes due in full upon maturity on August 1, 2026 and received proceeds of $545 million (net of debt discount, underwriting discounts and debt issuance costs of $5 million), and $700 million aggregate principal amount of 5.50% senior unsecured notes due in full upon maturity on August 1, 2033 and received proceeds of $692 million (net of debt discount, underwriting discounts and debt issuance costs of $8 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, including repayment of commercial paper and other indebtedness.

Sempra Infrastructure

ECA LNG Phase 1

ECA LNG Phase 1 has a five-year loan agreement with a syndicate of seven external lenders that matures in December 2025 for an aggregate principal amount of up to $1.3 billion. IEnova and TotalEnergies SE have provided guarantees for repayment of the loans plus accrued and unpaid interest of 83.4% and 16.6%, respectively. At September 30, 2023 and December 31, 2022, $782 million and $575 million, respectively, of borrowings from external lenders were outstanding under the loan agreement, with a weighted-average interest rate of 8.35% and 7.54%, respectively.

Port Arthur LNG

In March 2023, Port Arthur LNG entered into a term loan facility agreement with a syndicate of lenders for an aggregate principal amount of approximately $6.8 billion. Proceeds from the loans will be used to finance the cost of construction of the PA LNG Phase 1 project. The loans mature on March 20, 2030 and bear interest by reference to Term SOFR, plus the applicable margin and a credit adjustment spread. The applicable margin prior to completion of the PA LNG Phase 1 project (which occurs upon the satisfaction or waiver of a series of customary operational, technical, environmental and social and other tests and conditions that generally would not be fully met until after the commercial operations date) is 2.00% and on completion and thereafter is 2.25%. The principal amounts outstanding on the loans must be repaid in quarterly installments, commencing on the earlier of (i) the first quarterly payment date occurring more than three calendar months following completion of the PA LNG Phase 1 project and (ii) April 20, 2029. Under the terms of the loan agreement, at least 60% of the projected outstanding balance is required to be hedged during construction and over the underlying 20-year notional amortization period. As we discuss in Note 7, Port Arthur LNG entered into hedging instruments in satisfaction of this requirement in March 2023. An upfront equity funding amount of $4.7 billion is required to have been contributed to Port Arthur LNG for construction costs as a condition to the initial advance of term loans under the agreement (other than advances for fees, interest, expenses and certain other specified costs). Port Arthur LNG paid $200 million in debt issuance costs at closing. Additionally, the loan agreement and the related working capital facility agreement that we discuss above require payment of commitment fees calculated at a rate per annum equal to 30% of the applicable margin for Term SOFR loans multiplied by the outstanding debt commitments, and additional administrative fees. At September 30, 2023, $243 million of borrowings were outstanding under the loan agreement, with an all-in weighted-average interest rate of 5.71%.

Table of Con tents

In connection with this loan agreement, SI Partners and ConocoPhillips have collectively provided commitments for approximately $2.8 billion in equity funding for the benefit of Port Arthur LNG for their respective affiliate’s share of the equity funding of anticipated construction costs of the PA LNG Phase 1 project in excess of the upfront equity funding amount of $4.7 billion. The amount of each commitment is based on each of SI Partners’ and ConocoPhillips’ proportionate indirect ownership interest in Port Arthur LNG of 70% and 30%, respectively, as of the March 2023 loan agreement. The obligation under these guarantees will be reduced as their respective affiliates fund their direct proportionate interest of capital calls. Such equity funding can be called upon by Port Arthur LNG to fund project costs or, upon the taking of an enforcement action under the terms of Port Arthur LNG’s finance documents, to pay its senior debt obligations.

The pari passu secured obligations under the related finance documents are secured by a first priority lien (subject to customary permitted encumbrances) in substantially all of the assets of Port Arthur LNG, including the equity interests in, and real property

interests of, Port Arthur LNG.

NOTE 7. 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 Condensed 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 amounts related to terminations or early settlements of interest rate swaps as financing activities and settlements of other derivative instruments as operating activities on the Condensed 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 of variability of future cash flows of a given revenue or expense item, 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. SDG&E’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

Table of Con tents

in rates. Net commodity cost impacts on the Condensed 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 Condensed 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 Condensed Consolidated Statements of Operations.

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

The following table summarizes net energy derivative volumes.


NET ENERGY DERIVATIVE VOLUMES
(Quantities in millions)
Commodity	Unit of measure	September 30, 2023	December 31, 2022
Sempra:
Natural gas	MMBtu	441	254
Electricity	MWh	—	1
Congestion revenue rights	MWh	40	42
SDG&E:
Natural gas	MMBtu	16	15

Congestion revenue rights	MWh	40	42
SoCalGas:
Natural gas	MMBtu	347	224

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 PA LNG Phase 1 project. The contingent interest rate swap had a 25-year tenor, and its settlement was conditional upon the closing of project-level debt financing with respect to the PA LNG Phase 1 project. In March 2023, we closed on the project-level debt financing and, shortly thereafter, paid $14 million to cash settle the contingent interest rate swap.

As we discuss in Note 6, a minimum of 60% of the projected amount of term loans outstanding is required to be hedged under the Port Arthur LNG term loan facility agreement. In March 2023, Port Arthur LNG entered into floating-to-fixed interest rate swaps with 17 counterparties to hedge the variability in cash flows related to the SOFR-based component of interest payments on forecasted loans outstanding under the agreement. The notional amounts of the interest rate swaps generally increase in proportion to the forecasted borrowings up to a maximum amount of $4.2 billion prior to the maturity of the term loans on March 20, 2030. Under the interest rate swaps, which are designated as cash flow hedges, Port Arthur LNG receives interest at Term SOFR and pays interest at a fixed rate of 3.23% based on amortizing notional amounts maturing in 2048.

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.

Table of Con tents


INTEREST RATE DERIVATIVES
(Dollars in millions)
	September 30, 2023			December 31, 2022
	Notional debt		Maturities	Notional debt		Maturities
Sempra:
Cash flow hedges(1)	$	4,454	2023-2048	$	294	2023-2034

(1) At September 30, 2023 and December 31, 2022, cash flow hedges accrued interest based on a notional of $491 and $294, respectively.

FOREIGN CURRENCY DERIVATIVES

We may 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.

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)
	September 30, 2023			December 31, 2022
	Notional amount		Maturities	Notional amount		Maturities
Sempra:
Cross-currency swaps	$	—	—	$	306	2023
Other foreign currency derivatives	150		2023-2025	111		2023-2024

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FINANCIAL STATEMENT PRESENTATION

The Condensed 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 Condensed 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 CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	September 30, 2023
	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	$	15	$	363	$	—	$	—
Foreign exchange instruments	—		1		(8)		—
Derivatives not designated as hedging instruments:
Commodity contracts not subject to rate recovery	175		25		(172)		(29)
Associated offsetting commodity contracts	(166)		(22)		166		22
Commodity contracts subject to rate recovery	22		15		(171)		(6)
Associated offsetting commodity contracts	(16)		(3)		16		3
Associated offsetting cash collateral	—		—		—		1
Net amounts presented on the balance sheet	30		379		(169)		(9)
Additional cash collateral for commodity contracts not subject to rate recovery	89		—		—		—
Additional cash collateral for commodity contracts subject to rate recovery	82		—		—		—
Total(2)	$	201	$	379	$	(169)	$	(9)
SDG&E:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery	$	18	$	15	$	(13)	$	(4)
Associated offsetting commodity contracts	(12)		(3)		12		3
Associated offsetting cash collateral	—		—		—		1
Net amounts presented on the balance sheet	6		12		(1)		—
Additional cash collateral for commodity contracts subject to rate recovery	80		—		—		—
Total(2)	$	86	$	12	$	(1)	$	—
SoCalGas:
Derivatives not designated as hedging instruments:
Commodity contracts subject to rate recovery	$	4	$	—	$	(158)	$	(2)
Associated offsetting commodity contracts	(4)		—		4		—
Net amounts presented on the balance sheet	—		—		(154)		(2)
Additional cash collateral for commodity contracts subject to rate recovery	2		—		—		—
Total	$	2	$	—	$	(154)	$	(2)

(1) Included in Other Current Assets for SoCalGas.

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

Table of Con tents


DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(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 Other Current Assets for SoCalGas.

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

Table of Con tents

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


CASH FLOW HEDGE IMPACTS
(Dollars in millions)
	Pretax gain (loss) recognized in OCI					Pretax gain (loss) reclassified from AOCI into earnings
	Three months ended September 30,					Three months ended September 30,
	2023		2022		Location	2023		2022
Sempra:
Interest rate instruments	$	320	$	4	Interest Expense	$	(1)	$	(2)
Interest rate instruments	32		68		Equity Earnings(1)	12		(1)
Foreign exchange instruments	8		2		Revenues: Energy- Related Businesses	—		—
					Other Income (Expense), Net	1		—
Foreign exchange instruments	7		1		Equity Earnings(1)	1		—
Interest rate and foreign exchange instruments	—		—		Other Income (Expense), Net	—		(3)
Total	$	367	$	75		$	13	$	(6)



	Nine months ended September 30,					Nine months ended September 30,
	2023		2022		Location	2023		2022
Sempra:
Interest rate instruments	$	337	$	39	Interest Expense	$	(1)	$	(1)
Interest rate instruments	56		212		Equity Earnings(1)	33		(28)
Foreign exchange instruments	—		(1)		Revenues: Energy- Related Businesses	—		2
					Other Income (Expense), Net	(1)		(1)
Foreign exchange instruments	1		(1)		Equity Earnings(1)	(1)		1
Interest rate and foreign exchange instruments	7		13		Interest Expense	1		1
					Other Income (Expense), Net	6		3
Total	$	401	$	262		$	37	$	(23)
SoCalGas:
Interest rate instruments	$	—	$	—	Interest Expense	$	(1)	$	(1)

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

For Sempra, we expect that net gains before NCI of $48 million, which are net of income tax expense, that are currently recorded in AOCI (with net gains of $22 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 September 30, 2023 is approximately 24 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 16 years.

Table of Con tents

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


UNDESIGNATED DERIVATIVE IMPACTS
(Dollars in millions)
		Pretax gain (loss) on derivatives recognized in earnings
		Three months ended September 30,				Nine months ended September 30,
	Location	2023		2022		2023		2022
Sempra:
Commodity contracts not subject to rate recovery	Revenues: Energy-Related Businesses	$	83	$	(227)	$	785	$	(455)
Commodity contracts subject to rate recovery	Cost of Natural Gas	(125)		(11)		(172)		(15)
Commodity contracts subject to rate recovery	Cost of Electric Fuel and Purchased Power	23		16		5		10
Interest rate instrument	Interest Expense	—		—		(47)		—
Total		$	(19)	$	(222)	$	571	$	(460)
SDG&E:
Commodity contracts subject to rate recovery	Cost of Electric Fuel and Purchased Power	$	23	$	16	$	5	$	10
SoCalGas:
Commodity contracts subject to rate recovery	Cost of Natural Gas	$	(125)	$	(11)	$	(172)	$	(15)

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 September 30, 2023 and December 31, 2022 was $160 million and $106 million, respectively. For SoCalGas, the total fair value of this group of derivative instruments in a liability position at September 30, 2023 and December 31, 2022 was $157 million and $69 million, respectively. SDG&E did not have this group of derivative instruments in a liability position at September 30, 2023 or December 31, 2022. At September 30, 2023, if the credit ratings of Sempra or SoCalGas were reduced below investment grade, $160 million and $157 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.

Table of Con tents

NOTE 8. FAIR VALUE MEASUREMENTS

We discuss the valuation techniques and inputs we use to measure fair value and the definition of the three levels of the fair value hierarchy in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

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 September 30, 2023 and December 31, 2022. 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. We have not changed the valuation techniques or types of inputs we use to measure recurring fair value since December 31, 2022.

The fair value of commodity derivative assets and liabilities is presented in accordance with our netting policy, as we discuss in Note 7 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 5, 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. 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.”

Table of Con tents


RECURRING FAIR VALUE MEASURES – SEMPRA
(Dollars in millions)
	Level 1		Level 2		Level 3		Total
	Fair value at September 30, 2023
Assets:
Nuclear decommissioning trusts:
Short-term investments, primarily cash equivalents	$	21	$	3	$	—	$	24
Equity securities	291		4		—		295
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	27		16		—		43
Municipal bonds	—		260		—		260
Other securities	—		216		—		216
Total debt securities	27		492		—		519
Total nuclear decommissioning trusts(1)	339		499		—		838
Short-term investments held in Rabbi Trust	62		—		—		62
Interest rate instruments	—		378		—		378
Foreign exchange instruments	—		1		—		1
Commodity contracts not subject to rate recovery	—		12		—		12
Effect of netting and allocation of collateral(2)	89		—		—		89
Commodity contracts subject to rate recovery	—		—		18		18
Effect of netting and allocation of collateral(2)	76		—		6		82
Support Agreement, net of related guarantee fees	—		—		18		18
Total	$	566	$	890	$	42	$	1,498
Liabilities:
Foreign exchange instruments	$	—	$	8	$	—	$	8
Commodity contracts not subject to rate recovery	—		13		—		13
Commodity contracts subject to rate recovery	2		156		—		158
Effect of netting and allocation of collateral(2)	(1)		—		—		(1)
Total	$	1	$	177	$	—	$	178

(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.

Table of Con tents


RECURRING FAIR VALUE MEASURES – SEMPRA (CONTINUED)
(Dollars in millions)
	Level 1		Level 2		Level 3		Total
	Fair value at December 31, 2022
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.

Table of Con tents


RECURRING FAIR VALUE MEASURES – SDG&E
(Dollars in millions)
	Level 1		Level 2		Level 3		Total
	Fair value at September 30, 2023
Assets:
Nuclear decommissioning trusts:
Short-term investments, primarily cash equivalents	$	21	$	3	$	—	$	24
Equity securities	291		4		—		295
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	27		16		—		43
Municipal bonds	—		260		—		260
Other securities	—		216		—		216
Total debt securities	27		492		—		519
Total nuclear decommissioning trusts(1)	339		499		—		838
Commodity contracts subject to rate recovery	—		—		18		18
Effect of netting and allocation of collateral(2)	74		—		6		80
Total	$	413	$	499	$	24	$	936
Liabilities:
Commodity contracts subject to rate recovery	$	2	$	—	$	—	$	2
Effect of netting and allocation of collateral(2)	(1)		—		—		(1)
Total	$	1	$	—	$	—	$	1

	Fair value at December 31, 2022
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

(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.

Table of Con tents


RECURRING FAIR VALUE MEASURES – SOCALGAS
(Dollars in millions)
	Level 1		Level 2		Level 3		Total
	Fair value at September 30, 2023
Assets:
Effect of netting and allocation of collateral(1)	$	2	$	—	$	—	$	2
Total	$	2	$	—	$	—	$	2
Liabilities:
Commodity contracts subject to rate recovery	$	—	$	156	$	—	$	156
Total	$	—	$	156	$	—	$	156

	Fair value at December 31, 2022
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

(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)
	Three months ended September 30,
	2023		2022
Balance at July 1	$	20	$	33
Realized and unrealized losses	(2)		(35)
Allocated transmission instruments	1		2
Settlements	(1)		33
Balance at September 30	$	18	$	33
Change in unrealized gains relating to instruments still held at September 30	$	1	$	3

	Nine months ended September 30,
	2023		2022
Balance at January 1	$	35	$	54
Realized and unrealized losses	(10)		(58)
Allocated transmission instruments	(1)		(4)
Settlements	(6)		41
Balance at September 30	$	18	$	33
Change in unrealized losses relating to instruments still held at September 30	$	(8)	$	(15)

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

Table of Con tents

Inputs used to determine the fair value of CRRs and fixed-price electricity positions are reviewed and compared with market conditions to determine reasonableness.

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)

The impact associated with discounting is not significant. 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 7.

Long-term, fixed-price electricity positions in 2022 that were valued using significant unobservable data were classified as Level 3 because the contract terms related to a delivery location or tenor for which observable market rate information was not available. The fair value of the net electricity positions classified as Level 3 was derived from a discounted cash flow model using market electricity forward price inputs. The range and weighted-average price of these inputs at September 30, 2022 were $26.75 to $127.20 and $68.50, respectively. We summarize long-term, fixed-price electricity position volumes in Note 7.

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 Condensed 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)
	Three months ended September 30,
	2023		2022
Balance at July 1	$	23	$	16
Realized and unrealized (losses) gains(1)	(3)		2
Settlements	(2)		(2)
Balance at September 30(2)	$	18	$	16
Change in unrealized (losses) gains relating to instruments still held at September 30	$	(2)	$	2

	Nine months ended September 30,
	2023		2022
Balance at January 1	$	17	$	7
Realized and unrealized gains(1)	7		16
Settlements	(6)		(7)
Balance at September 30(2)	$	18	$	16
Change in unrealized gains relating to instruments still held at September 30	$	7	$	15

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

(2) Includes $7 in Other Current Assets and $11 in Other Long-term Assets at September 30, 2023 on Sempra’s Condensed Consolidated Balance Sheet.

Table of Con tents

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 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 Condensed Consolidated Balance Sheets.


FAIR VALUE OF FINANCIAL INSTRUMENTS
(Dollars in millions)
	Carrying amount			Fair value
			Level 1			Level 2			Level 3			Total
	September 30, 2023
Sempra:

Long-term note receivable(1)	$	330		$	—		$	—		$	295		$	295
Long-term amounts due to unconsolidated affiliates	308			—			269			—			269
Total long-term debt(2)	27,657			—			23,765			—			23,765
SDG&E:
Total long-term debt(3)	$	8,750		$	—		$	7,202		$	—		$	7,202
SoCalGas:
Total long-term debt(4)	$	6,759		$	—		$	5,953		$	—		$	5,953

	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

(1) Before allowances for credit losses of $6 and $7 at September 30, 2023 and December 31, 2022, respectively. Excludes unamortized transaction costs of $4 and $5 at September 30, 2023 and December 31, 2022, respectively.

(2) Before reductions of unamortized discount and debt issuance costs of $326 and $289 at September 30, 2023 and December 31, 2022, respectively, and excluding finance lease obligations of $1,346 and $1,343 at September 30, 2023 and December 31, 2022, respectively.

(3) Before reductions of unamortized discount and debt issuance costs of $90 and $70 at September 30, 2023 and December 31, 2022, respectively, and excluding finance lease obligations of $1,234 and $1,256 at September 30, 2023 and December 31, 2022, respectively.

(4) Before reductions of unamortized discount and debt issuance costs of $57 and $48 at September 30, 2023 and December 31, 2022, respectively, and excluding finance lease obligations of $112 and $87 at September 30, 2023 and December 31, 2022, respectively.

We provide the fair values for the securities held in the NDT related to SONGS in Note 9.

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NOTE 9. SAN ONOFRE NUCLEAR GENERATING STATION

We provide below updates to ongoing matters related to SONGS, a nuclear generating facility near San Clemente, California that permanently ceased operations in June 2013, and in which SDG&E has a 20% ownership interest. We discuss SONGS further in Note 15 of the Notes to Consolidated Financial Statements in the Annual Report.

NUCLEAR DECOMMISSIONING AND FUNDING

As a result of Edison’s decision to permanently retire SONGS Units 2 and 3, Edison began the decommissioning phase of the plant. Major decommissioning work began in 2020. We expect the majority of the decommissioning work to be completed around 2030. Decommissioning of Unit 1, removed from service in 1992, is largely complete. The remaining work for Unit 1 will be completed once Units 2 and 3 are dismantled and the spent fuel is removed from the site. The spent fuel is currently being stored on-site, until the DOE identifies a spent fuel storage facility and puts in place a program for the fuel’s disposal. SDG&E is responsible for approximately 20% of the total decommissioning cost.

In accordance with state and federal requirements and regulations, SDG&E has assets held in the NDT to fund its share of decommissioning costs for SONGS Units 1, 2 and 3. Amounts that were collected in rates for SONGS’ decommissioning are invested in the NDT, which is comprised of externally managed trust funds. Amounts held by the NDT are invested in accordance with CPUC regulations. SDG&E classifies debt and equity securities held in the NDT as available-for-sale. The NDT assets are presented on the Sempra and SDG&E Condensed Consolidated Balance Sheets at fair value with the offsetting credits recorded in noncurrent Regulatory Liabilities.

Except for the use of funds for the planning of decommissioning activities or NDT administrative costs, CPUC approval is required for SDG&E to access the NDT assets to fund SONGS decommissioning costs for Units 2 and 3. In December 2022, the CPUC granted SDG&E authorization to access NDT funds of up to $81 million for forecasted 2023 costs.

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The following table shows the fair values and gross unrealized gains and losses for the securities held in the NDT on the Sempra and SDG&E Condensed Consolidated Balance Sheets. We provide additional fair value disclosures for the NDT in Note 8.


NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
	Cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	September 30, 2023
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)	$	44	$	1	$	(2)	$	43
Municipal bonds(2)	278		—		(18)		260
Other securities(3)	234		1		(19)		216
Total debt securities	556		2		(39)		519
Equity securities	99		201		(5)		295
Short-term investments, primarily cash equivalents	24		—		—		24
Receivables (payables), net	(11)		—		—		(11)
Total	$	668	$	203	$	(44)	$	827

	December 31, 2022
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	40	$	1	$	(1)	$	40
Municipal bonds	283		1		(14)		270
Other securities	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

(1) Maturity dates are 2023-2054.

(2) Maturity dates are 2023-2062.

(3) Maturity dates are 2023-2072.

The following table shows the proceeds from sales of securities in the NDT and gross realized gains and losses on those sales.


SALES OF SECURITIES IN THE NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Proceeds from sales	$	143	$	133	$	437	$	530
Gross realized gains	12		2		20		16
Gross realized losses	(3)		(3)		(9)		(14)

Net unrealized gains and losses, as well as realized gains and losses that are reinvested in the NDT, are included in noncurrent Regulatory Liabilities on Sempra’s and SDG&E’s Condensed Consolidated Balance Sheets. We determine the cost of securities in the trusts on the basis of specific identification.

ASSET RETIREMENT OBLIGATION

The present value of SDG&E’s ARO related to decommissioning costs for all three SONGS units was $512 million at September 30, 2023 and is based on a cost study prepared in 2020 that is pending CPUC approval. SDG&E expects to receive a proposed decision in the fourth quarter of 2023.

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NOTE 10. 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 September 30, 2023, loss contingency accruals for legal matters, including associated legal fees and regulatory matters related to the Leak, that are probable and estimable were $203 million for Sempra, including $127 million for SoCalGas. Amounts for Sempra and SoCalGas include $125 million for matters related to the Leak, which we discuss below.

SDG&E

City of San Diego Franchise Agreement

In 2021, two lawsuits were filed in the California Superior Court challenging various aspects of the natural gas and electric franchise agreements granted by the City of San Diego to SDG&E. Both lawsuits ultimately sought to void the franchise agreements. In one of the cases, judgment was granted in favor of SDG&E and the City of San Diego, and the plaintiff in that case has appealed. In the second case, the court ruled in favor of SDG&E and the City of San Diego, upholding all terms of the franchise agreements, except for the two-thirds City Council vote requirement for termination if the City decides to terminate under certain circumstances. Under the court’s ruling, the City can instead terminate on a majority vote, so long as it satisfies repayment provisions under the franchise agreements. This matter is subject to a motion for reconsideration, and subsequently an appeal if not otherwise resolved.

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. In September 2021, SoCalGas and Sempra entered into an agreement with counsel to resolve approximately 390 lawsuits including approximately 36,000 plaintiffs (the Individual Plaintiffs) then pending against SoCalGas and Sempra related to the Leak for a payment of up to $1.8 billion. Over 99% of the Individual Plaintiffs participated and submitted valid releases, and SoCalGas paid $1.79 billion in 2022 under the agreement. The Individual Plaintiffs who have not participated in the settlement (the Remaining Individual Plaintiffs) are able to continue to pursue their claims. In addition, as of October 31, 2023, new lawsuits related to the Leak on behalf of approximately 394 new plaintiffs have been filed against SoCalGas and Sempra since the September 2021 settlement.

The Remaining Individual Plaintiffs’ cases and new plaintiffs’ cases are coordinated before a single court in the LA Superior Court for pretrial management under a consolidated master complaint filed in November 2017, with one plaintiff’s case proceeding under a separate complaint. Both the consolidated master complaint and the separate complaint assert negligence, negligence per se, strict liability, negligent and intentional infliction of emotional distress and fraudulent concealment. The consolidated master complaint asserts additional causes of action for private and public nuisance (continuing and permanent), trespass, inverse condemnation, loss of consortium and wrongful death against SoCalGas and Sempra. The separate complaint asserts an additional cause of action for assault and battery. Both complaints seek compensatory and punitive damages for personal injuries, lost wages and/or lost profits, costs of future medical monitoring, and attorneys’ fees. The consolidated master complaint also seeks property damage and diminution in property value, injunctive relief and civil penalties. In October 2023, the LA Superior Court ordered the cases of 233 Remaining Individual Plaintiffs who did not respond to discovery requests to be dismissed.

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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 were joined in an Amended Consolidated Shareholder Derivative Complaint filed in the same coordinated proceeding in the LA Superior Court, which was dismissed with prejudice in January 2021, and in June 2023, the Court of Appeal of the State of California Second Appellate District Division Five affirmed the dismissal. Plaintiffs have sought review in the California Supreme Court. The LA Superior Court dismissed the remaining fourth action with prejudice in November 2022. Plaintiffs appealed this dismissal, but in October 2023, abandoned the appeal; as a result, the dismissal is final.

Regulatory Proceeding. In February 2017, the CPUC opened proceeding SB 380 OII to determine the feasibility of minimizing or eliminating the use of the Aliso Canyon natural gas storage facility while still maintaining energy and electric reliability for the region, but excluding issues with respect to air quality, public health, causation, culpability or cost responsibility regarding the Leak. The first phase of the proceeding established a framework for the hydraulic, production cost and economic modeling assumptions for the potential reduction in usage or elimination of the Aliso Canyon natural gas storage facility, as well as evaluating the impacts of reducing or eliminating the Aliso Canyon natural gas storage facility using the established framework and models. The next phase of the proceeding included engaging a consultant to analyze alternative means for meeting or avoiding the demand for the facility’s services if it were eliminated in either the 2027 or 2035 timeframe, and to address potential implementation of alternatives to the Aliso Canyon natural gas storage facility if the CPUC determines that the Aliso Canyon natural gas storage facility should be permanently closed. The CPUC also added all California IOUs as parties to the proceeding and encouraged all load serving entities in the Los Angeles Basin to join the proceeding.

In 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. In August 2023, the CPUC issued a decision approving a new interim range of gas inventory levels of up to 68.6 Bcf. The CPUC may issue future changes to this interim range of authorized gas inventory levels before issuing a final decision within the SB 380 OII proceeding.

At September 30, 2023, the Aliso Canyon natural gas storage facility had a net book value of $993 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.

Regulatory Proceeding – Resolved. 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. 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 that SoCalGas will not seek recovery from ratepayers for costs previously incurred, among other provisions. In September 2023, the CPUC issued a final decision approving the settlement agreement.

Insurance and Accounting and Other Impacts. Since 2015, SoCalGas has incurred significant costs related to the Leak, including costs to defend against and settle civil litigation arising from the Leak. 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.

In the three months and nine months ended September 30, 2022, SoCalGas recorded total charges of $122 million ($101 million after tax) and $259 million ($199 million after tax), respectively, in Aliso Canyon Litigation and Regulatory Matters on the SoCalGas and Sempra Condensed Consolidated Statements of Operations related to the litigation and regulatory proceedings associated with the Leak.

At September 30, 2023, $126 million is accrued in Reserve for Aliso Canyon Costs and $3 million is accrued in Deferred Credits and Other on SoCalGas’ and Sempra’s Condensed Consolidated Balance Sheets. These accruals do not include any amounts in excess of what has been estimated to resolve certain matters that we describe above in “Litigation” and “Regulatory Proceeding,” nor any amounts that may be necessary to resolve 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. Further, we are not able to reasonably estimate the possible loss or a range of possible losses in excess of the amounts accrued, which could be significant and could have a material adverse effect on SoCalGas’ and Sempra’s business, results of operations, financial condition, cash flows and/or prospects.

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Sempra Infrastructure

Energía Costa Azul

We describe below certain land disputes and permit challenges affecting our ECA Regas Facility. Certain of these land disputes involve land on which portions of the ECA LNG liquefaction facilities under construction and in development are expected to be situated or on which portions of the ECA Regas Facility that would be necessary for the operation of such ECA LNG liquefaction facilities are situated. One or more unfavorable final decisions on these disputes or challenges could materially adversely affect our existing natural gas regasification operations and proposed natural gas liquefaction projects at the site of the ECA Regas Facility and have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.

Land Disputes. Sempra Infrastructure has been engaged in a long-running land dispute with a claimant relating to property adjacent to its ECA Regas Facility that allegedly overlaps with land owned by the ECA Regas Facility (the facility, however, is not situated on the land that is the subject of this dispute), as follows:

▪The claimant to the adjacent property filed complaints in the federal Agrarian Court challenging the refusal of SEDATU in 2006 to issue title to him for the disputed property. In November 2013, the federal Agrarian Court ordered that SEDATU issue the requested title to the claimant and cause it to be registered. Both SEDATU and Sempra Infrastructure challenged the ruling due to lack of notification of the underlying process. In May 2019, a federal court in Mexico reversed the ruling and ordered a retrial, 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, as described above, had previously been issued in a ruling by the federal Agrarian Court and subsequently reversed by a federal court in Mexico. In April 2021, the proceeding in the Agrarian Court concluded with the court ordering that the administrative procedure be restarted. The administrative procedure at SEDATU may continue if SEDATU decides to reopen the matter.

In addition, 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.

Environmental and Social Impact Permits. Several administrative challenges are pending before Mexico’s Secretariat of Environment and Natural Resources (the Mexican environmental protection agency) and Federal Tax and Administrative Courts, seeking revocation of the environmental impact authorization issued to the ECA Regas Facility in 2003. These cases generally allege that the conditions and mitigation measures in the environmental impact authorization are inadequate and challenge findings that the activities of the terminal are consistent with regional development guidelines.

In 2018 and 2021, three related claimants filed separate challenges in the federal district court in Ensenada, Baja California 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 against the permits in September 2018. In December 2018, ASEA approved modifications to the environmental permit that facilitate the development of the proposed natural gas liquefaction facility in two phases. In May 2019, the court canceled the provisional injunction. The claimant appealed the court’s decision 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 against the permits was denied. That decision was reversed on appeal in January 2020, resulting in the issuance of a new injunction against the permits that were issued by ASEA and SENER. This injunction has uncertain application absent clarification by the court. The claimants petitioned the court to rule that construction of natural gas liquefaction facilities violated the injunction and, in February 2022, the court ruled in favor of the ECA Regas Facility, holding that the natural gas liquefaction construction activities did not violate the injunction. The claimants appealed this ruling but were not successful. The claimants’ underlying challenge to the permits remains pending.

▪In the third case, a group of residents filed a complaint in June 2021 against various federal and state authorities alleging deficiencies in the public consultation process for the issuance of the permits. The request for an initial injunction was denied. The claimants appealed this ruling but were not successful. The lower court’s ruling was favorable to the ECA Regas Facility, as the court determined that no harm has been caused to the plaintiffs and dismissed the lawsuit. The claimants appealed and the appellate court’s ruling is pending.

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Litigation Related to Regulatory and Other Actions by the Mexican Government

Amendments to Mexico’s Electricity Industry Law. In March 2021, the Mexican government published a decree with amendments to Mexico’s Electricity Industry Law that include some public policy changes, including establishing priority of dispatch for CFE plants over privately owned plants. According to the decree, these amendments were to become effective in March 2021, and SENER, the CRE and Centro Nacional de Control de Energía (Mexico’s National Center for Energy Control) were to have 180 calendar days to modify, as necessary, all resolutions, policies, criteria, manuals and other regulations applicable to the power industry to conform with this decree. However, a Mexican court issued a suspension of the amendments later in March 2021. In April 2022, the Mexican Supreme Court resolved an action of unconstitutionality filed by a group of senators against the amended Electricity Industry Law, 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 were challenged by the CRE. Final resolution is pending. 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 for its power consumers, adversely affect our ability to develop new projects, result in decreased revenues and cash flows, and negatively impact our ability to recover the carrying values of our investments in Mexico, any of which could have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.

Sonora Pipeline – Resolved

Guaymas-El Oro Segment. 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 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, resulting in a suspension order in 2016 that prohibited construction through the Bácum community territory. Because Sempra Infrastructure did not believe the 2016 suspension order prohibited construction in the remainder of the Yaqui territory, construction was completed, and commercial operations began in May 2017.

Following the start of commercial operations, Sempra Infrastructure reported damage to the Guaymas-El Oro segment 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 to remain in place until the appeals process was exhausted. Following a request by the CFE to dismiss the 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. In February 2023, the district court issued a new ruling and resolved to dismiss the case, which was not appealed and, in March 2023, the district court declared that the case was definitively concluded.

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Other Litigation

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 value-added tax 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 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 $55 million in U.S. dollars at September 30, 2023), plus costs and interest. In October 2020, the High Court of Justice assessed costs and interest to be approximately £21 million (approximately $26 million in U.S. dollars at September 30, 2023) 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.

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 October 31, 2023, two lawsuits are pending. Additionally, approximately 28,000 proofs of claim were filed, but not discharged, in advance of a December 2015 deadline to file a proof of claim in the EFH bankruptcy proceeding on behalf of persons who allege exposure to asbestos under similar circumstances and assert the right to file such lawsuits in the future. The costs to defend or resolve such claims and the amount of damages that may be 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

We discuss leases further in Note 16 of the Notes to Consolidated Financial Statements in the Annual Report.

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.

SDG&E entered into an energy storage agreement that commenced in the second quarter of 2023 and expires in 2033. SDG&E recorded an operating lease right-of-use asset and operating lease liability of $101 million. Undiscounted lease payments are $9 million in 2023, $13 million in each of 2024 through 2027 and $66 million thereafter.

Leases That Have Not Yet Commenced

SDG&E has entered into seven purchased-power contracts, of which SDG&E expects one will commence in the fourth quarter of 2023, two will commence in 2024, three will commence in 2025, and one will commence in 2026. SDG&E expects the future minimum lease payments to be $32 million in 2024, $61 million in 2025, $82 million in 2026, $83 million in 2027 and $919 million thereafter until expiration in 2041.

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Lessor Accounting

Sempra Infrastructure is a lessor for certain of its natural gas and ethane pipelines, compressor stations, liquid petroleum gas storage facilities, a rail facility and refined products terminals, which we account for as operating or sales-type leases.

We provide information below for leases for which we are the lessor.


LESSOR INFORMATION ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – SEMPRA
(Dollars in millions)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Sales-type leases:

Interest income	$	2	$	2	$	5	$	6
Total revenues from sales-type leases(1)	$	2	$	2	$	5	$	6

Operating leases:
Fixed lease payments	$	78	$	71	$	234	$	211
Variable lease payments	10		3		26		7
Total revenues from operating leases(1)	$	88	$	74	$	260	$	218

Depreciation expense	$	15	$	14	$	45	$	41

(1) Included in Revenues: Energy-Related Businesses on the Condensed Consolidated Statements of Operations.

CONTRACTUAL COMMITMENTS

We discuss below significant changes in the first nine months of 2023 to contractual commitments discussed in Note 16 of the Notes to Consolidated Financial Statements in the Annual Report.

Natural Gas Contracts

Sempra Infrastructure’s natural gas contracts and natural gas storage and transportation commitments have increased by approximately $877 million since December 31, 2022 primarily from entering into new storage and transportation contracts in the first nine months of 2023. We expect future payments to decrease by $29 million in 2023, and increase by $38 million in 2024, $35 million in 2025, $33 million in 2026, $30 million in 2027 and $770 million thereafter through expiration in 2059 compared to December 31, 2022.

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 September 30, 2023, we expect the commitment amount to decrease by $980 million in 2023, $62 million in 2024, $45 million in 2025, $47 million in 2026, $58 million in 2027 and $136 million thereafter (through contract termination in 2029) compared to December 31, 2022, reflecting changes in estimated forward prices since December 31, 2022 and actual transactions for the first nine months of 2023. These LNG commitment amounts are based on the assumption that all LNG cargoes under the agreement are delivered, less those already confirmed to be diverted as of September 30, 2023. Actual LNG purchases in the current and prior years have been significantly lower than the maximum amount provided under the agreement due to the supplier electing to divert cargoes as allowed by the agreement.

Purchased-Power Contracts

SDG&E’s purchased-power contract commitments have increased by approximately $482 million since December 31, 2022 primarily from entering into energy storage, hybrid renewable energy and energy storage, and resource adequacy agreements for the first nine months of 2023. At September 30, 2023, we expect the commitment amount to increase by $14 million in 2023, $3 million in 2024, $13 million in 2025, $32 million in 2026, $33 million in 2027, and $387 million thereafter through expiration in 2042 compared to December 31, 2022.

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ENVIRONMENTAL ISSUES

We disclose any proceeding under environmental laws to which a government authority is a party when the potential monetary sanctions, exclusive of interest and costs, exceed the lesser of $1 million or 1% of current assets, which was $53 million for Sempra, $19 million for SDG&E and $14 million for SoCalGas at September 30, 2023.

NOTE 11. 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 electricity 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 L.P., which owns Sharyland Utilities, L.L.C., 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.

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.

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 Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Balance Sheets. Amounts labeled as “All other” in the following tables consist primarily of activities of parent organizations.

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SEGMENT INFORMATION
(Dollars in millions)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
REVENUES
SDG&E	$	1,442	$	1,569	$	4,357	$	4,413
SoCalGas	1,313		1,385		6,574		4,879
Sempra Infrastructure	629		697		2,485		1,810
All other	—		1		—		1
Adjustments and eliminations	—		—		(1)		—
Intersegment revenues(1)	(50)		(35)		(186)		(119)
Total	$	3,334	$	3,617	$	13,229	$	10,984
DEPRECIATION AND AMORTIZATION
SDG&E	$	280	$	247	$	810	$	730
SoCalGas	211		190		625		565
Sempra Infrastructure	71		67		210		199
All other	1		2		6		6
Total	$	563	$	506	$	1,651	$	1,500
INTEREST INCOME
SDG&E	$	7	$	2	$	12	$	3
SoCalGas	2		3		7		4
Sempra Infrastructure	4		7		25		37
All other	7		6		17		14
Intercompany eliminations	(1)		—		(1)		—
Total	$	19	$	18	$	60	$	58
INTEREST EXPENSE
SDG&E	$	126	$	113	$	367	$	333
SoCalGas	70		50		210		135
Sempra Infrastructure	7		39		127		98
All other	109		81		292		232
Intercompany eliminations	—		(1)		(1)		(2)
Total	$	312	$	282	$	995	$	796
INCOME TAX (BENEFIT) EXPENSE
SDG&E	$	(15)	$	35	$	(4)	$	141
SoCalGas	(5)		(28)		68		75
Sempra Texas Utilities	—		1		—		1
Sempra Infrastructure	24		58		555		219
All other	(56)		(45)		(120)		(1)
Total	$	(52)	$	21	$	499	$	435
EQUITY EARNINGS
Equity earnings, before income tax:
Sempra Texas Utilities	$	2	$	1	$	5	$	6
Sempra Infrastructure	131		133		413		430

	133		134		418		436
Equity earnings, net of income tax:
Sempra Texas Utilities	305		257		548		603
Sempra Infrastructure	41		26		120		79
	346		283		668		682
Total	$	479	$	417	$	1,086	$	1,118

(1) Revenues for reportable segments include intersegment revenues of $5, $29, and $16 for the three months ended September 30, 2023 and $14, $91, and $81 for the nine months ended September 30, 2023; $4, $24, and $7 for the three months ended September 30, 2022 and $11, $73, and $35 for the nine months ended September 30, 2022 for SDG&E, SoCalGas, and Sempra Infrastructure, respectively.

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SEGMENT INFORMATION (CONTINUED)
(Dollars in millions)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
EARNINGS (LOSSES) ATTRIBUTABLE TO COMMON SHARES
SDG&E	$	274	$	271	$	716	$	681
SoCalGas	16		(82)		531		339
Sempra Texas Utilities	305		256		548		604
Sempra Infrastructure	223		114		746		392
All other	(97)		(74)		(248)		(360)
Total	$	721	$	485	$	2,293	$	1,656
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT
SDG&E					$	1,893	$	1,651
SoCalGas					1,451		1,394
Sempra Infrastructure					2,725		489
All other					5		6
Total					$	6,074	$	3,540

					September 30, 2023		December 31, 2022
ASSETS
SDG&E					$	28,502	$	26,422
SoCalGas					23,069		22,346
Sempra Texas Utilities					14,269		13,781
Sempra Infrastructure					19,722		15,760
All other					1,205		1,376
Intersegment receivables					(1,032)		(1,111)
Total					$	85,735	$	78,574
EQUITY METHOD INVESTMENTS
Sempra Texas Utilities					$	14,260	$	13,772
Sempra Infrastructure					2,096		1,905
Total					$	16,356	$	15,677

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