Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

			Page
Overview			83
Results of Operations by Registrant			83
Sempra			83
SDG&E			94
SoCalGas			97
Capital Resources and Liquidity			100
Critical Accounting Estimates			112
New Accounting Standards			113

OVERVIEW

This combined MD&A includes the operational and financial results of the following three Registrants:

▪Sempra is a California-based holding company with energy infrastructure investments in North America. Our businesses invest in, develop and operate energy infrastructure, and provide electric and gas services to customers.

▪SDG&E is a regulated public utility that provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County.

▪SoCalGas is a regulated public natural gas distribution utility, serving customers throughout most of Southern California and part of central California.

This combined MD&A should be read in conjunction with the Condensed Consolidated Financial Statements and the Notes thereto in this report, and the Consolidated Financial Statements and the Notes thereto, “Part I – Item 1A. Risk Factors” and “Part II – Item 7. MD&A” in the Annual Report.

In the fourth quarter of 2023, Sempra realigned its reportable segments to reflect changes in how the CODM oversees our three platforms: Sempra California, Sempra Texas Utilities and Sempra Infrastructure. Our former SDG&E and SoCalGas reportable segments were combined into one operating and reportable segment, Sempra California, which is consistent with how the CODM assesses performance due to the similarities of their operations, including geographic location and regulatory framework in California.

Sempra’s historical segment disclosures have been restated to conform with the current presentation, so that all discussions reflect the revised segment information of its three reportable segments:

▪Sempra California

▪Sempra Texas Utilities

▪Sempra Infrastructure

SDG&E and SoCalGas each has one reportable segment.

RESULTS OF OPERATIONS BY REGISTRANT

Throughout the MD&A, our references to earnings represent earnings attributable to common shares. Variance amounts presented are the after-tax earnings impact (based on applicable statutory tax rates unless otherwise noted) and after NCI but before foreign currency and inflation effects, where applicable.

We discuss herein Sempra’s results of operations and significant changes in earnings (losses), revenues and costs by segment, as well as Parent and other, for the three months (Q2) and six months (YTD) ended June 30, 2024 compared to the same periods in 2023. We also discuss herein the impact of foreign currency and inflation rates on Sempra’s results of operations.

Sempra California recorded CPUC-authorized base revenues in the three months and six months ended June 30, 2024 based on 2023 levels authorized under the 2019 GRC because a final decision in the 2024 GRC remains pending.

Table of Contents

RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
(Dollars and shares in millions, except per share amounts)

EARNINGS (LOSSES) BY SEGMENT
(Dollars in millions)
			Three months ended June 30,												Six months ended June 30,
			2024						2023						2024						2023
Sempra:
Sempra California			$	316					$	339					$	898					$	957
Sempra Texas Utilities			202						160						385						243
Sempra Infrastructure			291						208						422						523
Parent and other(1)			(96)						(104)						(191)						(151)
Earnings attributable to common shares			$	713					$	603					$	1,514					$	1,572

(1) Includes intercompany eliminations recorded in consolidation and certain corporate costs.

Sempra California

Sempra California’s earnings are comprised of SDG&E and SoCalGas. Because changes in SDG&E’s and SoCalGas’ cost of natural gas and/or electricity are recovered in rates, changes in these costs are offset in the changes in revenues and therefore do not impact earnings, other than potential impacts related to the GCIM for SoCalGas that we describe below. In addition to the changes in cost or market prices, natural gas or electric revenues recorded during a period are impacted by the difference between customer billings and recorded or CPUC-authorized amounts. These differences are required to be balanced over time, resulting in over- and undercollected regulatory balancing accounts. We discuss balancing accounts and their effects further in Note 4 of the Notes to Condensed Consolidated Financial Statements in this report and in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.

In the three months ended June 30, 2024 compared to the same period in 2023, the decrease in earnings of $23 million (7%) to $316 million was primarily due to:

▪$37 million lower income tax benefits primarily from flow-through items, which includes $25 million related to income tax benefits in 2023 for previously unrecognized income tax benefits pertaining to gas repairs expenditures

▪$21 million regulatory awards approved by the CPUC in 2023

▪$11 million higher net interest expense

Offset by:

▪$26 million higher CPUC base operating margin, net of operating expenses, including higher authorized cost of capital. Sempra California recorded CPUC-authorized revenues based on 2023 authorized levels

▪$8 million higher electric transmission margin

Table of Contents

In the six months ended June 30, 2024 compared to the same period in 2023, the decrease in earnings of $59 million (6%) to $898 million was primarily due to:

▪$51 million lower income tax benefits primarily from flow-through items, which includes $25 million related to income tax benefits in 2023 for previously unrecognized income tax benefits pertaining to gas repairs expenditures

▪$26 million higher net interest expense

▪$21 million regulatory awards approved by the CPUC in 2023

Offset by:

▪$14 million higher CPUC base operating margin, net of operating expenses, including higher authorized cost of capital. Sempra California recorded CPUC-authorized revenues based on 2023 authorized levels

▪$12 million higher electric transmission margin

▪$5 million higher AFUDC equity

Sempra Texas Utilities

In the three months ended June 30, 2024 compared to the same period in 2023, the increase in earnings of $42 million (26%) to $202 million was primarily due to higher equity earnings from Oncor Holdings driven by:

▪higher revenues primarily attributable to:

◦rate updates to reflect increases in invested capital

◦increases in transmission billing units

◦higher customer consumption primarily attributable to weather

◦new base rates implemented in May 2023

◦customer growth

Offset by:

▪higher interest expense and depreciation expense attributable to invested capital

▪higher O&M

In the six months ended June 30, 2024 compared to the same period in 2023, the increase in earnings of $142 million to $385 million was primarily due to higher equity earnings from Oncor Holdings driven by:

▪higher revenues primarily attributable to:

◦rate updates to reflect increases in invested capital

◦increases in transmission billing units

◦higher customer consumption primarily attributable to weather

◦new base rates implemented in May 2023

◦customer growth

▪write-off of rate base disallowances in 2023 resulting from the PUCT’s final order in Oncor’s comprehensive base rate review

Offset by:

▪higher interest expense and depreciation expense attributable to invested capital

▪higher O&M

Sempra Infrastructure

In the three months ended June 30, 2024 compared to the same period in 2023, the increase in earnings of $83 million (40%) to $291 million was primarily due to:

▪$247 million favorable impact from foreign currency and inflation effects on our monetary positions in Mexico, comprised of a $153 million favorable impact in 2024 compared to a $94 million unfavorable impact in 2023

▪$13 million from $3 million net interest income in 2024 compared to $10 million net interest expense in 2023 primarily due to higher capitalization of interest expense on projects under construction

Offset by:

▪$91 million from asset and supply optimization driven by unrealized losses in 2024 compared to unrealized gains in 2023 on commodity derivatives due to changes in natural gas prices

▪$48 million from the transportation business driven by lower equity earnings and revenues, including the cumulative impact of new tariffs going into effect in June 2023 for certain pipelines in Mexico

Table of Contents

▪$13 million from $7 million net income tax expense in 2024 compared to $6 million net income tax benefit in 2023 primarily from the remeasurement of certain deferred income taxes

▪$12 million higher O&M and lower revenues from a provision for expected credit losses on a customer’s past due receivable balance

▪$12 million from TdM driven by unrealized losses in 2024 compared to unrealized gains in 2023 on commodity derivatives due to changes in power and natural gas prices

In the six months ended June 30, 2024 compared to the same period in 2023, the decrease in earnings of $101 million (19%) to $422 million was primarily due to:

▪$394 million from asset and supply optimization driven by unrealized losses in 2024 compared to unrealized gains in 2023 on commodity derivatives due to changes in natural gas prices and lower LNG diversion fees

▪$62 million from the transportation business driven by lower equity earnings and revenues, including the cumulative impact of new tariffs going into effect in June 2023 for certain pipelines in Mexico and a customer’s early termination of firm transportation agreements in 2023

▪$24 million higher O&M and lower revenues from a provision for expected credit losses on a customer’s past due receivable balance

Offset by:

▪$315 million favorable impact from foreign currency and inflation effects on our monetary positions in Mexico, comprised of a $112 million favorable impact in 2024 compared to a $203 million unfavorable impact in 2023

▪$54 million from $6 million net interest income in 2024 compared to $48 million net interest expense in 2023 primarily due to higher capitalization of interest expense on projects under construction and $17 million net unrealized losses in 2023 on a contingent interest rate swap related to the PA LNG Phase 1 project

▪$11 million lower income tax expense primarily from the remeasurement of certain deferred income taxes

▪$9 million from TdM driven by lower natural gas prices and higher volumes net of unrealized losses in 2024 compared to unrealized gains in 2023 on commodity derivatives due to changes in power and natural gas prices

Parent and Other

In the three months ended June 30, 2024 compared to the same period in 2023, the decrease in losses of $8 million (8%) to $96 million was primarily due to:

▪$31 million from $13 million income tax benefit in 2024 compared to $18 million income tax expense in 2023 from the interim period application of an annual forecasted consolidated ETR

Offset by:

▪$6 million from higher net interest expense

▪$5 million related to settlement charges from our non-qualified pension plan in 2024

In the six months ended June 30, 2024 compared to the same period in 2023, the increase in losses of $40 million (26%) to $191 million was primarily due to:

▪$17 million from higher net interest expense

▪$11 million lower income tax benefit from the interim period application of an annual forecasted consolidated ETR

▪$5 million related to settlement charges from our non-qualified pension plan in 2024

Table of Contents

SIGNIFICANT CHANGES IN REVENUES AND COSTS

The regulatory framework permits SDG&E and SoCalGas to recover certain program expenditures and other costs authorized by the CPUC (referred to as “refundable programs”).

Utilities: Natural Gas Revenues and Cost of Natural Gas

Our utilities revenues include natural gas revenues at Sempra California and Sempra Infrastructure, which includes Ecogas. Intercompany revenues are eliminated in Sempra’s Condensed Consolidated Statements of Operations.

SoCalGas and SDG&E operate under a regulatory framework that permits the cost of natural gas purchased for customers (residential and small commercial and industrial customers, also referred to as core customers for SoCalGas) to be passed through to customers in rates substantially as incurred and without markup. The GCIM provides for SoCalGas to share in the savings and/or costs from buying natural gas for its core customers at prices below or above monthly market-based benchmarks. This mechanism permits full recovery of costs incurred when average purchase costs are within a price range around the benchmark price. Any higher costs incurred or savings realized outside this range are shared between SoCalGas and its core customers. We provide further discussion in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report.

UTILITIES: NATURAL GAS REVENUES AND COST OF NATURAL GAS
(Dollars in millions)
			Three months ended June 30,												Six months ended June 30,
			2024						2023						2024						2023
Sempra:
Natural gas revenues:
Sempra California			$	1,480					$	1,645					$	3,564					$	6,032
Sempra Infrastructure			18						19						48						49
Eliminations and adjustments			(4)						(4)						(9)						(9)
Total			$	1,494					$	1,660					$	3,603					$	6,072
Cost of natural gas(1):
Sempra California			$	136					$	314					$	680					$	3,026
Sempra Infrastructure			5						2						14						1
Eliminations and adjustments			(4)						(5)						(3)						(33)
Total			$	137					$	311					$	691					$	2,994

(1) Excludes depreciation and amortization, which are presented separately on Sempra’s Condensed Consolidated Statements of Operations.

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s natural gas revenues decreased by $166 million (10%) to $1.5 billion driven by Sempra California, which included:

▪$178 million decrease in cost of natural gas sold, which we discuss below

▪$33 million lower regulatory revenues in 2024 from adopting a change in tax accounting method for gas repairs expenditures, which are offset in income tax benefit (expense)

▪$29 million regulatory awards approved by the CPUC in 2023

Offset by:

▪$37 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

▪$26 million lower regulatory revenues in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures, which are offset in income tax benefit (expense)

▪$15 million higher CPUC-authorized revenues attributable to higher authorized cost of capital

▪$7 million higher revenues associated with refundable programs, which are fully offset in O&M

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s cost of natural gas decreased by $174 million to $137 million driven by Sempra California, which included:

▪$163 million lower average natural gas prices

▪$15 million lower volumes driven by weather

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s natural gas revenues decreased by $2.5 billion (41%) to $3.6 billion driven by Sempra California, which included:

▪$2.3 billion decrease in cost of natural gas sold, which we discuss below

Table of Contents

▪$109 million lower regulatory revenues in 2024 from adopting a change in tax accounting method for gas repairs expenditures, which are offset in income tax benefit (expense)

▪$47 million lower revenues from an $8 million credit in 2024 compared to $39 million cost in 2023 for the non-service components of net periodic benefit cost, which fully offsets in other income, net

▪$33 million lower franchise fee revenues

▪$29 million regulatory awards approved by the CPUC in 2023

▪$10 million lower revenues associated with refundable programs, which are fully offset in O&M

Offset by:

▪$49 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

▪$36 million higher CPUC-authorized revenues attributable to higher authorized cost of capital

▪$26 million lower regulatory revenues in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures, which are offset in income tax benefit (expense)

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s cost of natural gas decreased by $2.3 billion to $691 million driven by Sempra California, which included:

▪$2.0 billion lower average natural gas prices

▪$385 million lower volumes driven by weather

Utilities: Electric Revenues and Cost of Electric Fuel and Purchased Power

Our utilities revenues include electric revenues at Sempra California, substantially all of which is at SDG&E. Intercompany revenues are eliminated in Sempra’s Condensed Consolidated Statements of Operations.

SDG&E operates under a regulatory framework that permits it to recover the actual cost incurred to generate or procure electricity based on annual estimates of the cost of electricity supplied to customers. The differences in cost between estimates and actual are recovered or refunded in subsequent periods through rates.

Utility cost of electric fuel and purchased power includes utility-owned generation, power purchased from third parties, and net power purchases and sales to/from the California ISO.

UTILITIES: ELECTRIC REVENUES AND COST OF ELECTRIC FUEL AND PURCHASED POWER
(Dollars in millions)
			Three months ended June 30,												Six months ended June 30,
			2024						2023						2024						2023
Sempra:
Electric revenues:
Sempra California			$	1,145					$	1,055					$	2,202					$	2,083
Eliminations and adjustments			(1)						(1)						(2)						(2)
Total			$	1,144					$	1,054					$	2,200					$	2,081
Cost of electric fuel and purchased power(1):
Sempra California			$	175					$	107					$	282					$	242
Eliminations and adjustments			(19)						(19)						(37)						(40)
Total			$	156					$	88					$	245					$	202

(1) Excludes depreciation and amortization, which are presented separately on Sempra’s Condensed Consolidated Statements of Operations.

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s electric revenues increased by $90 million (9%) remaining at $1.1 billion driven by Sempra California, which included:

▪$68 million higher cost of electric fuel and purchased power, which we discuss below

▪$43 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

▪$30 million lower ITCs from standalone energy storage projects, which are offset in income tax benefit (expense)

▪$18 million higher revenues from transmission operations

Offset by:

▪$35 million lower revenues associated with refundable programs, which are fully offset in O&M

▪$7 million lower franchise fee revenues

▪$5 million lower CPUC-authorized revenues offset by higher authorized cost of capital

Table of Contents

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s cost of electric fuel and purchased power increased by $68 million to $156 million driven by Sempra California, which included:

▪$120 million lower sales to the California ISO due to lower market prices

▪$37 million higher purchased power primarily due to change in excess capacity sales

Offset by:

▪$85 million lower purchased power from the California ISO due to lower market prices

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s electric revenues increased by $119 million (6%) to $2.2 billion driven by Sempra California, which included:

▪$88 million lower ITCs from standalone energy storage projects, which are offset in income tax benefit (expense)

▪$66 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

▪$40 million higher cost of electric fuel and purchased power, which we discuss below

▪$30 million higher revenues from transmission operations

▪$5 million higher CPUC-authorized revenues attributable to higher authorized cost of capital

Offset by:

▪$65 million lower revenues associated with refundable programs, which are fully offset in O&M

▪$12 million lower revenues from a $6 million credit in 2024 compared to $6 million cost in 2023 for the non-service components of net periodic benefit cost, which fully offsets in other income, net

▪$8 million lower franchise fee revenues

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s cost of electric fuel and purchased power increased by $43 million (21%) to $245 million driven by Sempra California, which included:

▪$214 million lower sales to the California ISO due to lower market prices

▪$77 million realized gains in 2023 on derivative contracts for fixed-price natural gas, which are entered into to hedge the cost of electric fuel

Offset by:

▪$185 million lower purchased power from the California ISO due to lower market prices

▪$65 million lower utility-owned generation costs

Energy-Related Businesses: Revenues and Cost of Sales

ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES
(Dollars in millions)
			Three months ended June 30,												Six months ended June 30,
			2024						2023						2024						2023
Sempra:
Revenues:
Sempra Infrastructure			$	391					$	641					$	880					$	1,807
Parent and other(1)			(18)						(20)						(32)						(65)
Total			$	373					$	621					$	848					$	1,742
Cost of sales(2):
Sempra Infrastructure			$	54					$	81					$	163					$	274
Total			$	54					$	81					$	163					$	274

(1) Includes eliminations of intercompany activity.

(2) Excludes depreciation and amortization, which are presented separately on Sempra’s Condensed Consolidated Statements of Operations.

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s revenues from energy-related businesses decreased by $248 million (40%) to $373 million primarily due to:

▪$246 million from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including:

◦$240 million primarily driven by $12 million unrealized losses in 2024 compared to $199 million unrealized gains in 2023 on commodity derivatives

▪$11 million lower pipeline revenue

Offset by:

▪$10 million from TdM mainly due to higher volumes

Table of Contents

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s cost of sales from energy-related businesses decreased by $27 million (33%) to $54 million primarily due to:

▪$34 million driven by lower natural gas purchases related to asset and supply optimization

Offset by:

▪$9 million at TdM driven by higher volumes

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s revenues from energy-related businesses decreased by $894 million to $848 million primarily due to:

▪$857 million from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including:

◦$750 million primarily driven by $34 million unrealized losses in 2024 compared to $617 million unrealized gains in 2023 on commodity derivatives and $155 million primarily from lower natural gas prices

◦$98 million primarily from lower diversion fees due to lower natural gas prices

▪$42 million lower transportation revenues primarily from a customer’s early termination of firm transportation agreements in the first quarter of 2023

▪$21 million lower pipeline revenue

▪$2 million from TdM mainly due to $37 million from lower power prices offset by $32 million from higher volumes

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s cost of sales from energy-related businesses decreased by $111 million (41%) to $163 million primarily due to:

▪$66 million at TdM driven by $87 million from lower natural gas prices offset by $14 million from higher volumes

▪$42 million driven by lower natural gas prices related to asset and supply optimization

Operation and Maintenance

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s O&M decreased by $33 million (2%) to $1.3 billion primarily due to:

▪$62 million decrease at Sempra California due to:

◦$34 million lower non-refundable operating costs

◦$28 million lower expenses associated with refundable programs, which costs are recovered in revenue

Offset by:

▪$24 million increase at Sempra Infrastructure due to:

◦$14 million from a provision for expected credit losses on a customer’s past due receivable balance

◦$9 million higher development costs and certain non-capitalized expenses from projects under construction

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s O&M decreased by $30 million (1%) to $2.5 billion primarily due to:

▪$92 million decrease at Sempra California due to:

◦$75 million lower expenses associated with refundable programs, which costs are recovered in revenue

◦$17 million lower non-refundable operating costs

Offset by:

▪$53 million increase at Sempra Infrastructure due to:

◦$25 million from a provision for expected credit losses on a customer’s past due receivable balance

◦$17 million higher development costs and certain non-capitalized expenses from projects under construction

◦$5 million higher purchased services

Other Income, Net

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s other income, net, increased by $57 million to $129 million primarily due to:

▪$47 million lower non-service components of net periodic benefit cost primarily at Sempra California

▪$5 million higher AFUDC equity at Sempra California

▪$5 million higher net interest income on regulatory balancing accounts at Sempra California

Table of Contents

Offset by:

▪$8 million gains in 2023 from impacts associated with interest rate and foreign exchange instruments and foreign currency transactions at Sempra Infrastructure primarily due to cross-currency swaps as a result of fluctuation of the Mexican peso

Interest Expense

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s interest expense decreased by $6 million (2%) to $311 million primarily due to:

▪$25 million at Sempra Infrastructure primarily from lower interest expense due to higher capitalization of interest expense on projects under construction

Offset by:

▪$15 million at Sempra California primarily from higher debt balances from debt issuances

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s interest expense decreased by $67 million (10%) to $616 million primarily due to:

▪$120 million at Sempra Infrastructure primarily from:

◦$54 million lower interest expense due to higher capitalization of interest expense on projects under construction

◦$47 million interest expense in 2023 comprised of $33 million net unrealized losses and $14 million settlement on a contingent interest rate swap related to the PA LNG Phase 1 project

Offset by:

▪$33 million at Sempra California primarily from higher debt balances from debt issuances

▪$20 million at Parent and other primarily from higher interest expense due to higher debt balances from debt issuances, offset by capitalization of interest expense in 2024 on projects under construction at Sempra Infrastructure

Income Taxes

INCOME TAX (BENEFIT) EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
			Three months ended June 30,												Six months ended June 30,
			2024						2023						2024						2023
Sempra:
Income tax (benefit) expense			$	(130)					$	175					$	42					$	551
Income before income taxes and equity earnings			$	308					$	523					$	1,013					$	1,852
Equity earnings, before income tax(1)			160						153						294						285
Pretax income			$	468					$	676					$	1,307					$	2,137
Effective income tax rate			(28)		%				26		%				3		%				26		%

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

We report as part of our pretax results the income or loss attributable to NCI. However, we do not record income taxes for a portion of this income or loss, as some of our entities with NCI are currently treated as partnerships for U.S. income tax purposes, and thus we are only liable for income taxes on the portion of the earnings that are allocated to us. Our pretax income, however, includes 100% of these entities. If our entities with NCI grow, and if we continue to invest in such entities, the impact on our ETR may become more significant.

In April 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting for gas repairs expenditures. Sempra intends to elect this change in tax accounting method in its consolidated 2023 income tax return filing and has applied this methodology in the calculation of its 2024 forecasted ETR.

Sempra records regulatory liabilities for benefits that will be flowed through to customers in the future.

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra had an income tax benefit in 2024 compared to income tax expense in 2023 primarily due to:

▪$303 million from $186 million income tax benefit in 2024 compared to $117 million income tax expense in 2023 from foreign currency and inflation effects on our monetary positions in Mexico

▪$31 million from $13 million income tax benefit in 2024 compared to $18 million income tax expense in 2023 from the interim period application of an annual forecasted consolidated ETR

Table of Contents

▪higher income tax benefits from flow-through items, including an income tax benefit in 2024 from adopting a change in tax accounting method for gas repairs expenditures

▪lower pretax income

Offset by:

▪$43 million income tax benefit in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures

▪lower income tax benefit from lower ITCs from standalone energy storage projects under the IRA

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s income tax expense decreased by $509 million primarily due to:

▪$385 million from $133 million income tax benefit in 2024 compared to $252 million income tax expense in 2023 from foreign currency and inflation effects on our monetary positions in Mexico

▪lower pretax income

▪higher income tax benefits from flow-through items, including an income tax benefit in 2024 from adopting a change in tax accounting method for gas repairs expenditures

Offset by:

▪lower income tax benefit from lower ITCs from standalone energy storage projects under the IRA

▪$43 million income tax benefit in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures

We discuss the impact of foreign currency exchange rates and inflation on income taxes below in “Impact of Foreign Currency and Inflation Rates on Results of Operations.” See Note 1 of the Notes to Condensed Consolidated Financial Statements in this report and Notes 1 and 8 of the Notes to Consolidated Financial Statements in the Annual Report for further details about our accounting for income taxes and items subject to flow-through treatment.

Equity Earnings

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s equity earnings increased by $45 million (12%) to $433 million primarily due to:

▪$43 million at IMG due to income tax benefit in 2024 compared to an income tax expense in 2023 primarily from foreign currency and inflation effects

▪$42 million at Oncor Holdings driven by:

◦higher revenues primarily attributable to:

• rate updates to reflect increases in invested capital

• increases in transmission billing units

• higher customer consumption primarily attributable to weather

• new base rates implemented in May 2023

• customer growth

Offset by:

◦higher interest expense and depreciation expense attributable to invested capital

◦higher O&M

Offset by:

▪$47 million at TAG Norte from the cumulative impact of new tariffs going into effect in June 2023 offset by income tax benefit in 2024 compared to an income tax expense in 2023

Table of Contents

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s equity earnings increased by $174 million (29%) to $781 million primarily due to:

▪$142 million at Oncor Holdings driven by:

◦higher revenues primarily attributable to

• rate updates to reflect increases in invested capital

• increases in transmission billing units

• higher customer consumption primarily attributable to weather

• new base rates implemented in May 2023

• customer growth

◦write-off of rate base disallowances in 2023 resulting from the PUCT’s final order in Oncor’s comprehensive base rate review

Offset by:

◦higher interest expense and depreciation expense attributable to invested capital

◦higher O&M

▪$58 million at IMG due to income tax benefit in 2024 compared to an income tax expense in 2023 primarily from foreign currency and inflation effects

Offset by:

▪$35 million at TAG Norte primarily from the cumulative impact of new tariffs going into effect in June 2023 offset by lower income tax expense

Earnings Attributable to Noncontrolling Interests

In the three months ended June 30, 2024 compared to the same period in 2023, Sempra’s earnings attributable to NCI increased by $25 million (21%) to $146 million primarily due to an increase in SI Partners’ net income.

In the six months ended June 30, 2024 compared to the same period in 2023, Sempra’s earnings attributable to NCI decreased by $98 million (31%) to $215 million primarily due to a decrease in SI Partners’ net income.

IMPACT OF FOREIGN CURRENCY AND INFLATION RATES ON RESULTS OF OPERATIONS

Because our natural gas distribution utility in Mexico, Ecogas, uses its local currency as its functional currency, revenues and expenses are translated into U.S. dollars at average exchange rates for the period for consolidation in Sempra’s results of operations. We discuss further the impact of foreign currency and inflation rates on results of operations, including impacts on income taxes and related hedging activity, in “Part II – Item 7. MD&A – Impact of Foreign Currency and Inflation Rates on Results of Operations” in the Annual Report.

Foreign Currency Translation

Any difference in average exchange rates used for the translation of income statement activity from year to year can cause a variance in Sempra’s comparative results of operations. In the three months and six months ended June 30, 2024 compared to the same periods in 2023, the change in our earnings as a result of foreign currency translation rates was negligible.

Table of Contents

Transactional Impacts

Income statement activities at our foreign operations and their JVs are also impacted by transactional gains and losses, a summary of which is shown in the table below:

TRANSACTIONAL (LOSSES) GAINS FROM FOREIGN CURRENCY AND INFLATION EFFECTS
(Dollars in millions)
			Total reported amounts												Transactional (losses) gains included in reported amounts
			Three months ended June 30,
			2024						2023						2024						2023
Other income, net			$	30					$	31					$	(1)					$	2
Income tax benefit (expense)			130						(175)						186						(117)
Equity earnings			433						388						38						(20)
Net income			871						736						223						(135)
Earnings attributable to noncontrolling interests			(146)						(121)						(71)						42
Earnings attributable to common shares			713						603						152						(93)
			Six months ended June 30,
			2024						2023						2024						2023
Other income, net			$	129					$	72					$	—					$	8
Income tax benefit (expense)			(42)						(551)						133						(252)
Equity earnings			781						607						30						(51)
Net income			1,752						1,908						163						(295)
Earnings attributable to noncontrolling interests			(215)						(313)						(52)						93
Earnings attributable to common shares			1,514						1,572						111						(202)

We discuss herein SDG&E’s results of operations and significant changes in earnings, revenues and costs for the three months (Q2) and six months (YTD) ended June 30, 2024 compared to the same periods in 2023.

SDG&E recorded CPUC-authorized base revenues in the three months and six months ended June 30, 2024 based on 2023 levels authorized under the 2019 GRC because a final decision in the 2024 GRC remains pending.

RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
(Dollars in millions)

Table of Contents

In the three months ended June 30, 2024 compared to the same period in 2023, the increase in earnings of $2 million (1%) to $186 million was primarily due to:

▪$8 million higher electric transmission margin

▪$5 million higher CPUC base operating margin, net of operating expenses, including higher authorized cost of capital. SDG&E recorded CPUC-authorized revenues based on 2023 authorized levels

Offset by:

▪$7 million higher net interest expense

▪$5 million lower income tax benefits primarily from flow-through items

In the six months ended June 30, 2024 compared to the same period in 2023, the decrease in earnings of $33 million (7%) to $409 million was primarily due to:

▪$16 million lower CPUC base operating margin, net of operating expenses, offset by higher authorized cost of capital. SDG&E recorded CPUC-authorized revenues based on 2023 authorized levels

▪$15 million higher net interest expense

▪$8 million lower income tax benefits primarily from flow-through items

▪$7 million lower AFUDC equity

Offset by:

▪$12 million higher electric transmission margin

SIGNIFICANT CHANGES IN REVENUES AND COSTS

Electric Revenues and Cost of Electric Fuel and Purchased Power

In the three months ended June 30, 2024 compared to the same period in 2023, SDG&E’s electric revenues increased by $91 million (9%) to $1.1 billion primarily due to:

▪$68 million higher cost of electric fuel and purchased power, which we discuss below

▪$43 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

▪$30 million lower ITCs from standalone energy storage projects, which are offset in income tax expense

▪$18 million higher revenues from transmission operations

Offset by:

▪$35 million lower revenues associated with refundable programs, which are fully offset in O&M

▪$7 million lower franchise fee revenues

▪$5 million lower CPUC-authorized revenues offset by higher authorized cost of capital

In the three months ended June 30, 2024 compared to the same period in 2023, SDG&E’s cost of electric fuel and purchased power increased by $68 million to $175 million primarily due to:

▪$120 million lower sales to the California ISO due to lower market prices

▪$37 million higher purchased power primarily due to change in excess capacity sales

Offset by:

▪$85 million lower purchased power from the California ISO due to lower market prices

In the six months ended June 30, 2024 compared to the same period in 2023, SDG&E’s electric revenues increased by $120 million (6%) to $2.2 billion primarily due to:

▪$88 million lower ITCs from standalone energy storage projects, which are offset in income tax expense

▪$66 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

▪$40 million higher cost of electric fuel and purchased power, which we discuss below

▪$30 million higher revenues from transmission operations

▪$5 million higher CPUC-authorized revenues attributable to higher authorized cost of capital

Offset by:

▪$65 million lower revenues associated with refundable programs, which are fully offset in O&M

▪$12 million lower revenues from a $6 million credit in 2024 compared to $6 million cost in 2023 for the non-service components of net periodic benefit cost, which fully offsets in other income, net

Table of Contents

▪$8 million lower franchise fee revenues

In the six months ended June 30, 2024 compared to the same period in 2023, SDG&E’s cost of electric fuel and purchased power increased by $40 million (17%) to $282 million primarily due to:

▪$214 million lower sales to the California ISO due to lower market prices

▪$77 million realized gains in 2023 on derivative contracts for fixed-price natural gas, which are entered into to hedge the cost of electric fuel

Offset by:

▪$185 million lower purchased power from the California ISO due to lower market prices

▪$65 million lower utility-owned generation costs

Natural Gas Revenues and Cost of Natural Gas

In the three months ended June 30, 2024 and 2023, SDG&E’s average cost of natural gas per thousand cubic feet was $3.53 and $3.69, respectively. In the six months ended June 30, 2024 and 2023, SDG&E’s average cost of natural gas per thousand cubic feet was $5.08 and $13.38, respectively. The average cost of natural gas sold at SDG&E is impacted by market prices, as well as transportation, tariff and other charges.

In the three months ended June 30, 2024 compared to the same period in 2023, SDG&E’s natural gas revenues increased by $2 million (1%) to $206 million primarily due to:

▪$12 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

Offset by:

▪$9 million lower regulatory revenues in 2024 from adopting a change in tax accounting method for gas repairs expenditures, which are offset in income tax expense

In the six months ended June 30, 2024 compared to the same period in 2023, SDG&E’s natural gas revenues decreased by $301 million (36%) to $525 million primarily due to:

▪$278 million decrease in cost of natural gas sold, which we discuss below

▪$25 million lower regulatory revenues in 2024 from adopting a change in tax accounting method for gas repairs expenditures, which are offset in income tax expense

▪$7 million lower franchise fee revenues

Offset by:

▪$12 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

In the six months ended June 30, 2024 compared to the same period in 2023, SDG&E’s cost of natural gas decreased by $278 million to $139 million primarily due to:

▪$227 million lower average natural gas prices

▪$51 million lower volumes driven by weather

Operation and Maintenance

In the three months ended June 30, 2024 compared to the same period in 2023, SDG&E’s O&M decreased by $51 million (11%) to $423 million due to:

▪$33 million lower expenses associated with refundable programs, which costs are recovered in revenue

▪$18 million lower non-refundable operating costs

In the six months ended June 30, 2024 compared to the same period in 2023, SDG&E’s O&M decreased by $67 million (7%) to $834 million due to lower expenses associated with refundable programs, which costs are recovered in revenue.

Other Income, Net

In the six months ended June 30, 2024 compared to the same period in 2023, SDG&E’s other income, net, increased by $6 million (12%) to $56 million primarily due to:

▪$16 million increase from a $7 million credit in 2024 compared to $9 million cost in 2023 for the non-service components of net periodic benefit cost

Offset by:

▪$7 million lower AFUDC equity

Table of Contents

Interest Expense

In the three months and six months ended June 30, 2024 compared to the same periods in 2023, SDG&E’s interest expense increased by $8 million (7%) to $131 million and $18 million (7%) to $259 million, respectively, primarily from higher debt balances from debt issuances.

Income Taxes

INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
			Three months ended June 30,												Six months ended June 30,
			2024						2023						2024						2023
SDG&E:
Income tax expense			$	34					$	4					$	74					$	11
Income before income taxes			$	220					$	188					$	483					$	453
Effective income tax rate			15		%				2		%				15		%				2		%

In April 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting for gas repairs expenditures. SDG&E intends to elect this change in tax accounting method in Sempra’s consolidated 2023 income tax return filing and has applied this methodology in the calculation of its 2024 forecasted ETR.

SDG&E records regulatory liabilities for benefits that will be flowed through to customers in the future.

In the three months and six months ended June 30, 2024 compared to the same periods in 2023, SDG&E’s income tax expense increased by $30 million and $63 million, respectively, primarily due to:

▪lower income tax benefit from lower ITCs from standalone energy storage projects under the IRA

▪higher pretax income

We discuss herein SoCalGas’ results of operations and significant changes in earnings, revenues and costs for the three months (Q2) and six months (YTD) ended June 30, 2024 compared to the same period in 2023.

SoCalGas recorded CPUC-authorized base revenues in the three months and six months ended June 30, 2024 based on 2023 levels authorized under the 2019 GRC because a final decision in the 2024 GRC remains pending.

RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
(Dollars in millions)

Table of Contents

In the three months ended June 30, 2024 compared to the same period in 2023, the decrease in earnings of $25 million (16%) to $130 million were primarily due to:

▪$32 million lower income tax benefits primarily from flow-through items, which includes $25 million related to income tax benefits in 2023 for previously unrecognized income tax benefits pertaining to gas repairs expenditures

▪$21 million regulatory awards approved by the CPUC in 2023

▪$4 million higher net interest expense

Offset by:

▪$21 million higher CPUC base operating margin, net of higher operating expenses in 2023, including higher authorized cost of capital. SoCalGas recorded CPUC-authorized revenues based on 2023 authorized levels

▪$5 million higher AFUDC equity

▪$4 million higher net regulatory interest income

In the six months ended June 30, 2024 compared to the same period in 2023, the decrease in earnings of $26 million (5%) to $489 million were primarily due to:

▪$43 million lower income tax benefits primarily from flow-through items, which includes $25 million related to income tax benefits in 2023 for previously unrecognized income tax benefits pertaining to gas repairs expenditures

▪$21 million regulatory awards approved by the CPUC in 2023

▪$11 million higher net interest expense

Offset by:

▪$30 million higher CPUC base operating margin, net of higher operating expenses in 2023, including higher authorized cost of capital. SoCalGas recorded CPUC-authorized revenues based on 2023 authorized levels

▪$12 million higher AFUDC equity

▪$6 million higher net regulatory interest income

SIGNIFICANT CHANGES IN REVENUES AND COSTS

Natural Gas Revenues and Cost of Natural Gas

In the three months ended June 30, 2024 and 2023, SoCalGas’ average cost of natural gas per thousand cubic feet was $1.84 and $4.31, respectively. In the six months ended June 30, 2024 and 2023, SoCalGas’ average cost of natural gas per thousand cubic feet was $3.50 and $13.88, respectively. The average cost of natural gas sold at SoCalGas is impacted by market prices, as well as transportation and other charges.

In the three months ended June 30, 2024 compared to the same period in 2023, SoCalGas’ natural gas revenues decreased by $158 million (11%) to $1.3 billion primarily due to:

▪$170 million decrease in cost of natural gas sold, which we discuss below

▪$29 million regulatory awards approved by the CPUC in 2023

▪$24 million lower regulatory revenues in 2024 from adopting a change in tax accounting method for gas repairs expenditures, which are offset in income tax (expense) benefit

Offset by:

▪$26 million lower regulatory revenues in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures, which are offset in income tax (expense) benefit

▪$25 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

▪$14 million higher CPUC-authorized revenues attributable to higher authorized cost of capital

▪$5 million higher revenues associated with refundable programs, which are fully offset in O&M

In the three months ended June 30, 2024 compared to the same period in 2023, SoCalGas’ cost of natural gas decreased by $170 million to $114 million primarily due to:

▪$154 million lower average natural gas prices

▪$16 million lower volumes driven by weather

In the six months ended June 30, 2024 compared to the same period in 2023, SoCalGas’ natural gas revenues decreased by $2.1 billion (41%) to $3.1 billion primarily due to:

▪$2.1 billion decrease in cost of natural gas sold, which we discuss below

Table of Contents

▪$84 million lower regulatory revenues in 2024 from adopting a change in tax accounting method for gas repairs expenditures, which are offset in income tax (expense) benefit

▪$44 million lower revenues from a $6 million credit in 2024 compared to $38 million cost in 2023 for the non-service components of net periodic benefit cost, which fully offsets in other income (expense), net

▪$29 million regulatory awards approved by the CPUC in 2023

▪$26 million lower franchise fee revenues

▪$8 million lower revenues associated with refundable programs, which are fully offset in O&M

Offset by:

▪$37 million higher revenues from incremental and balanced capital projects, including higher authorized cost of capital

▪$33 million higher CPUC-authorized revenues attributable to higher authorized cost of capital

▪$26 million lower regulatory revenues in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures, which are offset in income tax (expense) benefit

In the six months ended June 30, 2024 compared to the same period in 2023, SoCalGas’ cost of natural gas decreased by $2.1 billion to $579 million primarily due to:

▪$1.7 billion lower average natural gas prices

▪$334 million lower volumes driven by weather

Operation and Maintenance

In the three months ended June 30, 2024 compared to the same period in 2023, SoCalGas’ O&M decreased by $8 million (1%) to $707 million due to:

▪$13 million lower non-refundable operating costs

Offset by:

▪$5 million higher expenses associated with refundable programs, which costs are recovered in revenue

In the six months ended June 30, 2024 compared to the same period in 2023, SoCalGas’ O&M decreased by $20 million (1%) to $1.3 billion due to:

▪$12 million lower non-refundable operating costs

▪$8 million lower expenses associated with refundable programs, which costs are recovered in revenue

Other Income (Expense), Net

In the three months ended June 30, 2024 compared to the same period in 2023, SoCalGas’ other income, net increased by $12 million to $13 million primarily due to:

▪$5 million higher AFUDC equity

▪$5 million higher net interest income on regulatory balancing accounts

In the six months ended June 30, 2024 compared to the same period in 2023, SoCalGas’ other income, net, was $60 million compared to other expense, net, of $7 million primarily due to:

▪$42 million increase from a $4 million credit in 2024 compared to $38 million cost in 2023 for the non-service components of net periodic benefit cost

▪$12 million higher AFUDC equity

▪$8 million higher net interest income on regulatory balancing accounts

Interest Expense

In the three months and six months ended June 30, 2024 compared to the same periods in 2023, SoCalGas’ interest expense increased by $7 million (10%) to $78 million and $15 million (11%) to $155 million, respectively, primarily from higher debt balances from debt issuances.

Table of Contents

Income Taxes

INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
			Three months ended June 30,												Six months ended June 30,
			2024						2023						2024						2023
SoCalGas:
Income tax expense (benefit)			$	10					$	(21)					$	53					$	73
Income before income taxes			$	141					$	135					$	543					$	589
Effective income tax rate			7		%				(16)		%				10		%				12		%

In April 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting for gas repairs expenditures. SoCalGas intends to elect this change in tax accounting method in Sempra’s consolidated 2023 income tax return filing and has applied this methodology in the calculation of its 2024 forecasted ETR.

SoCalGas records regulatory liabilities for benefits that will be flowed through to customers in the future.

In the three months ended June 30, 2024 compared to the same period in 2023, SoCalGas had income tax expense in 2024 compared to an income tax benefit in 2023 primarily due to:

▪$43 million income tax benefit in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures

Offset by:

▪higher income tax benefits from flow-through items, including an income tax benefit in 2024 from adopting a change in tax accounting method for gas repairs expenditures

In the six months ended June 30, 2024 compared to the same period in 2023, SoCalGas’ income tax expense decreased by $20 million (27%) primarily due to:

▪higher income tax benefits from flow-through items, including an income tax benefit in 2024 from adopting a change in tax accounting method for gas repairs expenditures

▪lower pretax income

Offset by:

▪$43 million income tax benefit in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures

CAPITAL RESOURCES AND LIQUIDITY

OVERVIEW

Sempra

Liquidity

We expect to meet our cash requirements through cash flows from operations, unrestricted cash and cash equivalents, borrowings under or supported by our credit facilities, other incurrences of debt which may include issuing debt securities and obtaining term loans, and other financing transactions which may include issuing equity securities, distributions from our equity method investments, project financing and funding from NCI owners. We believe that these cash flow sources, combined with available funds, will be adequate to fund our operations in both the short-term and long-term, including to:

▪finance capital expenditures

▪repay debt

▪fund dividends

▪fund contractual and other obligations and otherwise meet liquidity requirements

▪fund capital contribution requirements

▪fund new business or asset acquisitions

Table of Contents

Sempra, SDG&E and SoCalGas currently have reasonable access to the money markets and capital markets and are not currently constrained in their ability to borrow or otherwise raise money at market rates from commercial banks, under existing revolving credit facilities, through public offerings of debt or equity securities, or through private placements of debt supported by our revolving credit facilities in the case of commercial paper. However, our ability to access these markets or obtain credit from commercial banks outside of our committed revolving credit facilities could become materially constrained if economic conditions worsen or disruptions to or volatility in these markets increase. Debt funding has become less attractive due to the rise in both short-term and long-term interest rates. In addition, our financing activities and actions by credit rating agencies, as well as many other factors, could negatively affect the availability and cost of both short-term and long-term debt and equity financing. Also, cash flows from operations may be impacted by the timing of commencement and completion of, and potentially cost overruns for, large projects and other material events, such as the settlement of material litigation. If cash flows from operations were to be significantly reduced or we were unable to borrow or obtain other financing under acceptable terms, we would likely first reduce or postpone discretionary capital expenditures (not related to safety/reliability) and investments in new businesses. We monitor our ability to finance the needs of our operating, investing and financing activities in a manner consistent with our goal to maintain our investment-grade credit ratings.

Common Stock Offering and Forward Sale Agreements

As we discuss in Note 9 of the Notes to Condensed Consolidated Financial Statements in this report and Note 14 of the Notes to Consolidated Financial Statements in the Annual Report, our offering of Sempra common stock completed in November 2023 provided initial net proceeds of $144 million upon the underwriters’ partial exercise of their over-allotment option to purchase additional shares of our common stock. We did not initially receive any proceeds from the sale of our common stock pursuant to the forward sale agreements entered into in connection with the offering. The forward sale agreements permit us to elect, subject to certain conditions, physical settlement, cash settlement or net share settlement for all or a portion of our obligations under the agreements. We expect to settle the forward sale agreements entirely by delivery of shares of our common stock under physical settlement in exchange for cash proceeds in one or more settlements no later than December 31, 2024, which is the final settlement date under the agreements. As of August 6, 2024, at the initial forward sale price of $68.845 per share, we expect that the net proceeds from full physical settlement of the forward sale agreements would be approximately $1.2 billion (net of underwriting discounts, but before deducting equity issuance costs, and subject to certain adjustments pursuant to the forward sale agreements). If we were to elect cash settlement or net share settlement instead of physical settlement, the amount of cash proceeds we receive upon settlement would be less, perhaps substantially, or we may not receive any cash proceeds or we may deliver cash (in an amount that could be significant) or shares of our common stock to the counterparties to the forward sale agreements.

We used the initial net proceeds from this offering, and we expect to use any net proceeds from the sale of shares of our common stock pursuant to the forward sale agreements, to fund working capital and for other general corporate purposes, including to partly finance our long-term capital plan and to repay commercial paper and potentially other indebtedness.

Available Funds

Our committed lines of credit provide liquidity and support commercial paper. Sempra, SDG&E and SoCalGas each have five-year credit agreements expiring in 2028 and Sempra Infrastructure has four committed lines of credit expiring on various dates from 2025 through 2030, and an uncommitted line of credit expiring on August 12, 2024.

AVAILABLE FUNDS AT JUNE 30, 2024
(Dollars in millions)
			Sempra						SDG&E						SoCalGas
Unrestricted cash and cash equivalents(1)			$	228					$	66					$	10
Available unused credit(2)			8,132						1,500						1,094

(1) Amounts at Sempra include $114 held in non-U.S. jurisdictions. We discuss repatriation in Note 8 of the Notes to Consolidated Financial Statements in the Annual Report.

(2) Available unused credit is the total available on committed and uncommitted lines of credit that we discuss in Note 6 of the Notes to Condensed Consolidated Financial Statements. Because our commercial paper programs are supported by these lines, we reflect the amount of commercial paper outstanding and any letters of credit outstanding as a reduction to the available unused credit.

Short-Term Borrowings

We use short-term debt primarily to meet liquidity requirements, fund shareholder dividends, and temporarily finance capital expenditures or acquisitions. SDG&E and SoCalGas use short-term debt primarily to meet working capital needs or to help fund event-specific costs. Commercial paper, a term loan and lines of credit were our primary sources of short-term debt funding in the first six months of 2024.

Table of Contents

We discuss our short-term debt activities in Note 6 of the Notes to Condensed Consolidated Financial Statements and below in “Sources and Uses of Cash.”

Long-Term Debt Activities

Significant issuances of and payments on long-term debt in the first six months of 2024 included the following:

LONG-TERM DEBT ISSUANCES AND PAYMENTS
(Dollars in millions)
Issuances:			Amount at issuance						Maturity
Sempra 6.875% junior subordinated notes			$	1,100					2054
SDG&E 5.55% first mortgage bonds			600						2054
SoCalGas 5.6% first mortgage bonds			500						2054
Sempra Infrastructure variable rate notes (ECA LNG Phase 1 project)			162						2025
Sempra Infrastructure variable rate notes (PA LNG Phase 1 project)			31						2030
Payments:			Payments						Maturity
SDG&E variable rate term loan			$	400					2024

We discuss our long-term debt activities, including the use of proceeds on long-term debt issuances, in Note 6 of the Notes to Condensed Consolidated Financial Statements.

Credit Ratings

We provide additional information about the credit ratings of Sempra, SDG&E and SoCalGas in “Part I – Item 1A. Risk Factors” and “Part II – Item 2. MD&A – Capital Resources and Liquidity” in the Annual Report.

The credit ratings of Sempra, SDG&E and SoCalGas remained at investment grade levels in the first six months of 2024.

ISSUER CREDIT RATINGS AT JUNE 30, 2024
			Sempra						SDG&E						SoCalGas
Moody’s			Baa2 with a stable outlook						A3 with a stable outlook						A2 with a stable outlook
S&P			BBB+ with a stable outlook						BBB+ with a stable outlook						A with a negative outlook
Fitch			BBB+ with a stable outlook						BBB+ with a stable outlook						A with a stable outlook

A downgrade of Sempra’s or any of its subsidiaries’ credit ratings or rating outlooks may, depending on the severity, result in the imposition of financial or other burdensome covenants or a requirement for collateral to be posted in the case of certain financing arrangements and may materially and adversely affect the market prices of their equity and debt securities, the rates at which borrowings are made and commercial paper is issued, and the various fees on their outstanding credit facilities. This could make it more costly for Sempra, SDG&E, SoCalGas and Sempra’s other subsidiaries to issue debt securities, to borrow under credit facilities and to raise certain other types of financing.

Sempra has agreed that, if the credit rating of Oncor’s senior secured debt by any of the three major rating agencies falls below BBB (or the equivalent), Oncor will suspend dividends and other distributions (except for contractual tax payments), unless otherwise allowed by the PUCT. Oncor’s senior secured debt was rated A2, A+ and A at Moody’s, S&P and Fitch, respectively, at June 30, 2024.

Loans due to/from Affiliates

At June 30, 2024, Sempra had $302 million in loans due to unconsolidated affiliates.

Minimum Tax Directive

The Organization for Economic Cooperation and Development has introduced a framework to implement a global minimum corporate tax of 15%, referred to as the “minimum tax directive.” Many aspects of the minimum tax directive became effective beginning in 2024. While it is uncertain whether the U.S. will enact legislation to adopt the minimum tax directive, other countries are in the process of introducing and enacting legislation to implement the minimum tax directive. We do not currently expect the minimum tax directive to have a material effect on Sempra’s, SDG&E’s or SoCalGas’ results of operations, financial condition and/or cash flows.

Table of Contents

Sempra California

SDG&E’s and SoCalGas’ operations have historically provided relatively stable earnings and liquidity. Their future performance and liquidity will depend primarily on the ratemaking and regulatory process, environmental regulations, economic conditions, actions by legislatures, litigation and the changing energy marketplace, as well as other matters described in this report. SDG&E and SoCalGas expect that the available unused funds from their credit facilities described above, which also supports their commercial paper programs, cash flows from operations, and other incurrences of debt including issuing debt securities and obtaining term loans will continue to be adequate to fund their respective current operations and planned capital expenditures. SDG&E and SoCalGas manage their capital structures and pay dividends when appropriate and as approved by their respective boards of directors.

The implementation of customer assistance programs and higher 2023 winter season customer billings have resulted in certain SDG&E and SoCalGas customers exhibiting slower payment and higher levels of nonpayment than has been the case historically. In January 2024, the CPUC directed SDG&E and SoCalGas to offer long-term repayment plans to eligible residential customers with past-due balances until October 2026. Delay in payments by customers impacts the timing of SDG&E’s and SoCalGas’ cash flows.

As we discuss in Note 4 of the Notes to Condensed Consolidated Financial Statements in this report and in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report, changes in regulatory balancing accounts for significant costs at SDG&E and SoCalGas, particularly a change between over- and undercollected status, may have a significant impact on cash flows. These changes generally represent the difference between when costs are incurred and when they are ultimately recovered or refunded in rates through billings to customers.

SDG&E

Wildfire Fund

The carrying value of SDG&E’s Wildfire Fund asset totaled $286 million at June 30, 2024. We describe the Wildfire Legislation and SDG&E’s commitment to make annual shareholder contributions to the Wildfire Fund through 2028 in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

SDG&E is exposed to the risk that the participating California electric IOUs may incur third-party wildfire costs for which they will seek recovery from the Wildfire Fund with respect to wildfires that have occurred since enactment of the Wildfire Legislation in July 2019. In such a situation, SDG&E may recognize a reduction of its Wildfire Fund asset and record accelerated amortization against earnings when available coverage is reduced due to recoverable claims from any of the participating IOUs, as was the case in 2023 after Pacific Gas and Electric Company indicated that it will seek reimbursement from the Wildfire Fund for losses associated with the Dixie Fire, which burned from July 2021 through October 2021 and was reported to be the largest single wildfire (measured by acres burned) in California history. If any California electric IOU’s equipment is determined to be a cause of a fire, it could have a material adverse effect on SDG&E’s and Sempra’s financial condition and results of operations up to the carrying value of our Wildfire Fund asset, with additional potential material exposure if SDG&E’s equipment is determined to be a cause of a fire. In addition, the Wildfire Fund could be completely exhausted due to fires in the other California electric IOUs’ service territories, by fires in SDG&E’s service territory or by a combination thereof. In the event that the Wildfire Fund is materially diminished, exhausted or terminated, SDG&E will lose the protection afforded by the Wildfire Fund, and as a consequence, a fire in SDG&E’s service territory could have a material adverse effect on SDG&E’s and Sempra’s results of operations, financial condition, cash flows and/or prospects.

Wildfire Mitigation Cost Recovery Mechanism

2024 GRC Track 2. In October 2023, SDG&E submitted a separate request to the CPUC in its 2024 GRC, known as a Track 2 request. This request seeks review and recovery of $1.5 billion of wildfire mitigation plan costs incurred from 2019 through 2022 that were in addition to amounts authorized in the 2019 GRC. SDG&E expects to receive a proposed reasonableness review decision for Track 2 in the first quarter of 2025.

Revenues associated with the Track 2 amounts described above have been recorded in a regulatory account. In February 2024, the CPUC approved an interim cost recovery mechanism that would permit SDG&E to recover in rates $194 million and $96 million of this regulatory account balance in 2024 and 2025, respectively. Such recovery of SDG&E’s wildfire mitigation plan regulatory account balance will be subject to refund, contingent on the reasonableness review decision for Track 2.

2024 GRC Track 3. SDG&E expects to submit in late 2024 an additional request to the CPUC in its 2024 GRC, known as a Track 3 request, for review and recovery of its 2023 wildfire mitigation plan costs.

Table of Contents

Off-Balance Sheet Arrangements

SDG&E has entered into PPAs and tolling agreements that are variable interests in unconsolidated entities. We discuss variable interests in Note 1 of the Notes to Condensed Consolidated Financial Statements.

SoCalGas

Aliso Canyon Natural Gas Storage Facility Gas Leak

From October 23, 2015 through February 11, 2016, SoCalGas experienced the Leak, which we discuss in Note 11 of the Notes to Condensed Consolidated Financial Statements in this report and in “Part I – Item 1A. Risk Factors” in the Annual Report.

At June 30, 2024, $26 million is accrued in Other Current Liabilities and $1 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 reasonably estimated to resolve certain matters that we describe in “Legal Proceedings – SoCalGas – Aliso Canyon Natural Gas Storage Facility Gas Leak” in Note 11 of the Notes to Condensed Consolidated Financial Statements, nor any amounts that may be necessary to resolve threatened litigation, other potential litigation or other costs. We are not able to reasonably estimate the possible loss or a range of possible losses in excess of the amounts accrued, which could be significant and could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects.

Natural Gas Storage Operations and Reliability

Natural gas withdrawn from storage is important to help maintain service reliability during peak demand periods, including consumer heating needs in the winter and peak electric generation needs in the summer. The Aliso Canyon natural gas storage facility is the largest SoCalGas storage facility and an important component of SoCalGas’ delivery system. In 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, including analyzing alternative means for meeting or avoiding the demand for the facility’s services if it were eliminated.

At June 30, 2024, the Aliso Canyon natural gas storage facility had a net book value of $1.0 billion. If the Aliso Canyon natural gas storage facility were to be permanently closed or if future cash flows from its operation were otherwise insufficient to recover its carrying value, we may record an impairment of the facility, which could be material, and natural gas reliability and electric generation could be jeopardized.

Franchise Agreement

SoCalGas’ Los Angeles County franchise initially expired in June 2023 and the subsequent extension expired in December 2023. SoCalGas is in the process of negotiating a new agreement with Los Angeles County. SoCalGas is operating under the terms and provisions of the expired franchise and expects to continue to do so until a new agreement is reached and does not anticipate disruption of service to customers in unincorporated Los Angeles County while negotiations continue.

Sempra Texas Utilities

Oncor relies on external financing as a significant source of liquidity for its capital requirements. In the event that Oncor fails to meet its capital requirements, access sufficient capital, or raise capital on favorable terms to finance its ongoing needs, we may elect to make additional capital contributions to Oncor (as our commitments to the PUCT prohibit us from making loans to Oncor), which could be substantial and reduce the cash available to us for other purposes, increase our indebtedness and ultimately materially adversely affect our results of operations, financial condition, cash flows and/or prospects. Oncor’s ability to make distributions may be limited by factors such as its credit ratings, regulatory capital requirements, increases in its capital plan, debt-to-equity ratio approved by the PUCT and other restrictions and considerations. In addition, Oncor will not make distributions if a majority of Oncor’s independent directors or any minority member director determines it is in the best interests of Oncor to retain such amounts to meet expected future requirements.

Table of Contents

Rates and Cost Recovery

The PUCT issued a final order in Oncor’s most recent comprehensive base rate proceeding in April 2023, and rates implementing that order went into effect on May 1, 2023. In June 2023, the PUCT issued an order on rehearing in response to the motions for rehearing filed by Oncor and certain intervening parties in the proceeding. The order on rehearing made certain technical and typographical corrections to the final order but otherwise affirmed the material provisions of the final order and did not require modification of the rates that went into effect on May 1, 2023. In September 2023, Oncor filed an appeal in Travis County District Court seeking judicial review of certain rate base disallowances and related expense effects of those disallowances in the PUCT’s order on rehearing. In February 2024, the court dismissed the appeal for lack of jurisdiction. In March 2024, Oncor appealed the court’s dismissal with the Third Court of Appeals in Texas.

Off-Balance Sheet Arrangement

Our investment in Oncor Holdings is a variable interest in an unconsolidated entity. We discuss variable interests in Note 1 of the Notes to Condensed Consolidated Financial Statements.

Sempra Infrastructure

Sempra Infrastructure expects to fund capital expenditures, investments and operations in part with available funds, including existing credit facilities, and cash flows from operations from the Sempra Infrastructure businesses. We expect Sempra Infrastructure will require additional funding for the development and expansion of its portfolio of projects, which may be financed through a combination of funding from the parent and NCI owners, bank financing, issuances of debt, project financing, partnering in JVs and asset sales.

Sempra, KKR Pinnacle and ADIA directly or indirectly own a 70%, 20%, and 10% interest, respectively, in SI Partners, and KKR Denali, an affiliate of ConocoPhillips and TotalEnergies SE each own a 60%, 30% and 16.6% interest, respectively, in three separate SI Partners subsidiaries. In the six months ended June 30, 2024 and 2023, Sempra Infrastructure distributed $203 million and $252 million, respectively, to its NCI owners, and NCI owners contributed $786 million and $729 million, respectively, to Sempra Infrastructure.

Sempra Infrastructure is in various stages of development or construction on natural gas liquefaction projects, pipeline and terminal projects, and renewable generation and sequestration projects, which we describe below. The successful development and/or construction of these projects is subject to numerous risks and uncertainties.

With respect to projects in development, these risks and uncertainties include, as applicable depending on the project, any failure to:

▪secure binding customer commitments

▪identify suitable project and equity partners

▪obtain sufficient financing

▪reach agreement with project partners or other applicable parties to proceed

▪obtain, modify, and/or maintain permits and regulatory approvals, including LNG export applications to non-FTA countries

▪negotiate, complete and maintain suitable commercial agreements, which may include EPC, tolling, equity acquisition, governance, LNG sales, gas supply and transportation contracts

▪reach a positive final investment decision

With respect to projects under construction, these risks and uncertainties include, in addition to the risks described above as applicable to each project, construction delays and cost overruns.

An unfavorable outcome with respect to any of these factors could have a material adverse effect on (i) the development and construction of the applicable project, including a potential impairment of all or a substantial portion of the capital costs invested in the project to date, which could be material, and (ii) for any project that has reached a positive final investment decision, Sempra’s results of operations, financial condition, cash flows and/or prospects. For a further discussion of these risks, see “Part I – Item 1A. Risk Factors” in the Annual Report.

The descriptions below discuss several HOAs, MOUs and other non-binding development agreements with respect to Sempra Infrastructure’s various development projects. These arrangements do not commit any party to enter into definitive agreements or otherwise participate in the applicable project, and the ultimate participation by the parties remains subject to negotiation and finalization of definitive agreements, among other factors.

Table of Contents

LNG

Cameron LNG Phase 2 Project. Cameron LNG JV is developing a proposed expansion project that would add one electric drive liquefaction train with an expected maximum production capacity of approximately 6.75 Mtpa and would increase the production capacity of the existing three trains at the Cameron LNG Phase 1 facility by up to approximately 1 Mtpa through debottlenecking activities. The Cameron LNG JV site can accommodate additional trains beyond the proposed Cameron LNG Phase 2 project.

Cameron LNG JV has received major permits, as amended to allow the use of electric drives for a one-train electric drive expansion along with other design enhancements, and FTA and non-FTA approvals associated with the potential expansion. The non-FTA approval for the proposed Cameron LNG Phase 2 project includes, among other things, a May 2026 deadline to commence commercial exports, for which we expect to request an extension.

Sempra Infrastructure and the other Cameron LNG JV members, namely affiliates of TotalEnergies SE, Mitsui & Co., Ltd. and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha, have entered into a non-binding HOA for the potential development of the Cameron LNG Phase 2 project. The non-binding HOA provides a commercial framework for the proposed project, including the contemplated allocation to SI Partners of 50.2% of the fourth train production capacity and 25% of the debottlenecking capacity from the project under tolling agreements. The non-binding HOA contemplates the remaining capacity to be allocated equally to the existing Cameron LNG Phase 1 facility customers. Sempra Infrastructure plans to sell the LNG corresponding to its allocated capacity from the proposed Cameron LNG Phase 2 project under long-term SPAs prior to making a final investment decision.

After completion of certain value engineering work in the first quarter of 2024, Cameron LNG JV is conducting additional value engineering work to improve the overall value of the project and evaluate other potential EPC contractors. We expect this work will continue through the end of 2024 and we could be in a position to make a final investment decision in the first half of 2025, subject to satisfactory conclusion on the EPC process as well as completion of all related financing and permitting activities necessary to align our authorizations with the proposed schedule for the project.

In December 2023, Entergy Louisiana, LLC, a subsidiary of Entergy Corporation, and Cameron LNG JV signed a new electricity service agreement (and related ancillary agreements) for the supply to Cameron LNG JV of up to 950 MW of renewable power from new renewable resources in Louisiana.

Expansion of the Cameron LNG Phase 1 facility beyond the first three trains is subject to certain restrictions and conditions under the JV project financing agreements, including among others, scope restrictions on expansion of the project unless appropriate prior consent is obtained from the existing project lenders. Under the Cameron LNG JV equity agreements, the expansion of the project requires the unanimous consent of all the members, including with respect to the equity investment obligation of each member.

ECA LNG Phase 1 Project. ECA LNG Phase 1 is constructing a one-train natural gas liquefaction facility at the site of Sempra Infrastructure’s existing ECA Regas Facility with a nameplate capacity of 3.25 Mtpa and an initial offtake capacity of 2.5 Mtpa. We do not expect the construction or operation of the ECA LNG Phase 1 project to disrupt operations at the ECA Regas Facility. SI Partners owns an 83.4% interest in ECA LNG Phase 1, and an affiliate of TotalEnergies SE owns the remaining 16.6% interest. Sempra holds an indirect interest in the ECA LNG Phase 1 project of 58.4%.

We received authorizations from the DOE to export U.S.-produced natural gas to Mexico and to re-export LNG to non-FTA countries from the ECA LNG Phase 1 project. ECA LNG Phase 1 has definitive 20-year SPAs with an affiliate of TotalEnergies SE for approximately 1.7 Mtpa of LNG and with Mitsui & Co., Ltd. for approximately 0.8 Mtpa of LNG. The customers have a termination right if the ECA LNG Phase 1 project does not commence commercial operations under the SPAs by February 24, 2026, subject to certain additional conditions, for which we expect to request an extension if necessary.

We have an EPC contract with TP Oil & Gas Mexico, S. De R.L. De C.V., an affiliate of Technip Energies N.V., to construct the ECA LNG Phase 1 project. We estimate the total price of the EPC contract to be approximately $1.6 billion, with capital expenditures approximating $2.5 billion including capitalized interest at the project level and project contingency. The actual cost of the EPC contract and the actual amount of these capital expenditures may differ substantially from our estimates. We expect the ECA LNG Phase 1 project to commence commercial operations in the spring of 2026.

ECA LNG Phase 1 has a five-year loan agreement with a syndicate of seven external lenders that matures in December 2025 for an aggregate principal amount of up to $1.3 billion, of which $994 million was outstanding at June 30, 2024. Proceeds from the loan are being used to finance the cost of construction of the ECA LNG Phase 1 project.

With respect to the ECA LNG Phase 1 and Phase 2 projects, recent and proposed changes to the law in Mexico and an unfavorable resolution of land disputes and permit challenges, in each case that we discuss in Note 11 of the Notes to Condensed Consolidated Financial Statements, could have a material adverse effect on the development and construction of these projects.

Table of Contents

ECA LNG Phase 2 Project. Sempra Infrastructure is developing a second, large-scale natural gas liquefaction project at the site of its existing ECA Regas Facility. We expect the proposed ECA LNG Phase 2 project to be comprised of two trains and one LNG storage tank and produce approximately 12 Mtpa of export capacity. We expect that construction of the proposed ECA LNG Phase 2 project would conflict with the current operations at the ECA Regas Facility, which currently has long-term regasification contracts for 100% of the regasification facility’s capacity through 2028. This makes the decisions on whether, when and how to pursue the proposed ECA LNG Phase 2 project dependent in part on whether the investment in a large-scale liquefaction facility would, over the long term, be more beneficial financially than continuing to supply regasification services under our existing contracts.

We received authorizations from the DOE to export U.S.-produced natural gas to Mexico and to re-export LNG to non-FTA countries from the proposed ECA LNG Phase 2 project.

We have non-binding MOUs and/or HOAs with Mitsui & Co., Ltd., an affiliate of TotalEnergies SE, and ConocoPhillips that provide a framework for their potential offtake of LNG from the proposed ECA LNG Phase 2 project and potential acquisition of an equity interest in ECA LNG Phase 2.

PA LNG Phase 1 Project. Sempra Infrastructure is constructing a natural gas liquefaction project on a greenfield site that it owns in the vicinity of Port Arthur, Texas, located along the Sabine-Neches waterway. The PA LNG Phase 1 project will consist of two liquefaction trains, two LNG storage tanks, a marine berth and associated loading facilities and related infrastructure necessary to provide liquefaction services with a nameplate capacity of approximately 13 Mtpa and an initial offtake capacity of approximately 10.5 Mtpa. SI Partners, KKR Denali and an affiliate of ConocoPhillips indirectly own a 28%, 42% and 30% interest, respectively, in the PA LNG Phase 1 project, and Sempra holds a 19.6% indirect interest in the project.

Sempra Infrastructure has received authorizations from the DOE that permit the LNG to be produced from the PA LNG Phase 1 project to be exported to all current and future FTA and non-FTA countries. In April 2019, the FERC approved the siting, construction and operation of the PA LNG Phase 1 project. In June 2023, Port Arthur LNG requested authorization from the FERC to increase its work force and implement a 24-hours-per-day construction schedule to further enhance construction efficiency while reducing temporal impacts to the community and environment in the vicinity of the project. The authorization was granted in May 2024 and provides the EPC contractor with more optionality to meet or exceed the project’s construction schedule.

The PA LNG Phase 1 project holds two Clean Air Act, Prevention of Significant Deterioration permits issued by the TCEQ, which we refer to as the “2016 Permit” and the “2022 Permit.” The 2022 Permit also governs emissions for the proposed PA LNG Phase 2 project. In November 2023, a panel of the U.S. Court of Appeals for the Fifth Circuit issued a decision to vacate and remand the 2022 Permit to the TCEQ for additional explanation of the agency’s permit decision. In February 2024, the court withdrew its opinion and referred the case to the Supreme Court of Texas to resolve the question of the appropriate standard to be applied by the TCEQ. The 2022 Permit is effective during the Texas Supreme Court’s review. The 2016 Permit was not the subject of, and is unaffected by, the pending litigation of the 2022 Permit. Construction of the PA LNG Phase 1 project is proceeding uninterrupted under existing permits, and we do not currently anticipate the pending litigation to materially impact the PA LNG Phase 1 project cost, schedule or expected commercial operations at this stage.

Sempra Infrastructure has definitive SPAs for LNG offtake from the PA LNG Phase 1 project with:

▪an affiliate of ConocoPhillips for a 20-year term for 5 Mtpa of LNG, as well as a natural gas supply management agreement whereby an affiliate of ConocoPhillips will manage the feed gas supply requirements for the PA LNG Phase 1 project.

▪RWE Supply & Trading GmbH, a subsidiary of RWE AG, for a 15-year term for 2.25 Mtpa of LNG.

▪INEOS for a 20-year term for approximately 1.4 Mtpa of LNG.

▪ORLEN for a 20-year term for approximately 1 Mtpa of LNG.

▪ENGIE S.A. for a 15-year term for approximately 0.875 Mtpa of LNG.

We have an EPC contract with Bechtel to construct the PA LNG Phase 1 project. In March 2023, we issued a final notice to proceed under the EPC contract, which has an estimated price of approximately $10.7 billion. We estimate the capital expenditures for the PA LNG Phase 1 project will be approximately $13 billion, including capitalized interest at the project level and project contingency. The actual cost of the EPC contract and the actual amount of these capital expenditures may differ substantially from our estimates. We expect the first and second trains of the PA LNG Phase 1 project to commence commercial operations in 2027 and 2028, respectively.

Table of Contents

As we discuss in Note 9 of the Notes to Condensed Consolidated Financial Statements, SI Partners and ConocoPhillips have provided guarantees relating to their respective affiliate’s commitment to make its pro rata equity share of capital contributions to fund 110% of the development budget of the PA LNG Phase 1 project, in an aggregate amount of up to $9.0 billion. SI Partners’ guarantee covers 70% of this amount plus enforcement costs of its guarantee. As of June 30, 2024, an aggregate amount of $2.4 billion has been paid by SI Partners’ indirect subsidiary in satisfaction of its commitment to fund its portion of the development budget of the PA LNG Phase 1 project.

In March 2023, Port Arthur LNG entered into a seven-year term loan facility agreement with a syndicate of lenders for an aggregate principal amount of approximately $6.8 billion and an initial working capital facility agreement for up to $200 million. The facilities mature in March 2030. Proceeds from the loans will be used to finance the cost of construction of the PA LNG Phase 1 project. At June 30, 2024, $289 million of borrowings were outstanding under the term loan facility agreement.

PA LNG Phase 2 Project. Sempra Infrastructure is developing a second phase of the Port Arthur natural gas liquefaction project that we expect will be a similar size to the PA LNG Phase 1 project. We are progressing the development of the proposed PA LNG Phase 2 project, while continuing to evaluate overall opportunities to develop the entirety of the Port Arthur site as well as potential design changes that could reduce GHG emissions, including a facility design utilizing renewable power sourcing and other technological solutions.

In September 2023, the FERC approved the siting, construction and operation of the proposed PA LNG Phase 2 project, including the potential addition of up to two liquefaction trains. In February 2020, Sempra Infrastructure filed an application with the DOE to permit LNG produced from the proposed PA LNG Phase 2 project to be exported to all current and future FTA and non-FTA countries. We received the FTA authorization from the DOE in July 2020.

As we discuss above, a U.S. federal court previously issued and subsequently withdrew a decision that would have vacated and remanded the 2022 Permit authorizing emissions from the PA LNG Phase 1 and Phase 2 projects to the TCEQ for additional explanation of the agency’s permit decision. The U.S. Court of Appeals for the Fifth Circuit has referred the case to the Supreme Court of Texas to resolve the question of the appropriate standard to be applied by the TCEQ. The 2022 Permit is effective pending the Texas Supreme Court’s review.

Sempra Infrastructure has entered into a non-binding HOA for the negotiation and potential finalization of a definitive SPA with INEOS for approximately 0.2 Mtpa of LNG offtake from the proposed PA LNG Phase 2 project. Additionally, Sempra Infrastructure has entered into a non-binding HOA for a 20-year SPA with Aramco for 5 Mtpa of LNG offtake from the proposed PA LNG Phase 2 project. The HOA further contemplates Aramco’s 25% participation in the project-level equity of the PA LNG Phase 2 project.

In July 2024, Sempra Infrastructure entered into an $8.2 billion EPC contract with Bechtel for the proposed PA LNG Phase 2 project. The EPC contract contemplates the construction of two liquefaction trains capable of producing approximately 13 Mtpa, an additional LNG storage tank and marine berth and associated loading facilities and related infrastructure necessary to provide liquefaction services. We have no obligation to move forward on the EPC contract, and we may release Bechtel to perform portions of the work pursuant to limited notices to proceed. The price is subject to change if certain limited notices to proceed and the full notice to proceed are not issued, each by specified dates. We plan to fully release Bechtel to perform all the work to construct the PA LNG Phase 2 project only after we reach a final investment decision with respect to the project and after certain other conditions are met, including obtaining permits, executing definitive agreements for LNG offtake and equity investments, and securing project financing.

Vista Pacifico LNG Liquefaction Project. Sempra Infrastructure is developing the Vista Pacifico LNG project, a mid-scale natural gas liquefaction export facility proposed to be located in the vicinity of the Port of Topolobampo in Sinaloa, Mexico. In June 2024, we extended the non-binding development agreement with the CFE to December 15, 2024, with an automatic one-year extension to December 15, 2025. We continue to progress with the CFE on the negotiation of definitive agreements, including a natural gas supply agreement. The proposed LNG export terminal would be supplied with U.S. natural gas and would use excess capacity on existing pipelines in Mexico with the intent of helping to meet growing demand for natural gas and LNG in the Mexican and Pacific markets.

Sempra Infrastructure received authorization from the DOE to permit the export of U.S.-produced natural gas to Mexico and for LNG produced from the proposed Vista Pacifico LNG facility to be re-exported to all current and future FTA countries and non-FTA countries.

In March 2022, TotalEnergies SE and Sempra Infrastructure entered into a non-binding MOU that contemplates TotalEnergies SE potentially contracting approximately one-third of the long-term export production of the proposed Vista Pacifico LNG project and potentially participating as a minority partner in the project.

Table of Contents

Asset and Supply Optimization. As we discuss in “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report, Sempra Infrastructure enters into hedging transactions to help mitigate commodity price risk and optimize the value of its LNG, natural gas pipelines and storage, and power-generating assets. Some of these derivatives that we use as economic hedges do not meet the requirements for hedge accounting, or hedge accounting is not elected, and as a result, the changes in fair value of these derivatives are recorded in earnings. Consequently, significant changes in commodity prices have in the past and could in the future result in earnings volatility, which may be material, as the economic offset of these derivatives may not be recorded at fair value.

Off-Balance Sheet Arrangements. Our investment in Cameron LNG JV is a variable interest in an unconsolidated entity. We discuss variable interests in Note 1 of the Notes to Condensed Consolidated Financial Statements.

In June 2021, Sempra provided a promissory note, which constitutes a guarantee, for the benefit of Cameron LNG JV with a maximum exposure to loss of $165 million. The guarantee will terminate upon full repayment of Cameron LNG JV’s debt, scheduled to occur in 2039, or replenishment of the amount withdrawn by Sempra Infrastructure from the SDSRA. We discuss this guarantee in Note 5 of the Notes to Condensed Consolidated Financial Statements.

In July 2020, Sempra entered into a Support Agreement, which contains a guarantee and represents a variable interest, for the benefit of CFIN with a maximum exposure to loss of $979 million. The guarantee will terminate upon full repayment of the guaranteed debt by 2039, including repayment following an event in which the guaranteed debt is put to Sempra. We discuss this guarantee in Notes 1, 5 and 8 of the Notes to Condensed Consolidated Financial Statements.

Energy Networks

Sonora Pipeline. Sempra Infrastructure’s Sonora natural gas pipeline consists of two pipeline segments, the Sasabe-Puerto Libertad-Guaymas segment and the Guaymas-El Oro segment. Each segment has its own service agreement with the CFE. Following the start of commercial operations of the Guaymas-El Oro segment, Sempra Infrastructure reported damage to the pipeline in the Yaqui territory that has made that section inoperable since August 2017. In September 2019, Sempra Infrastructure and the CFE reached an agreement to modify the tariff structure and extend the term of the contract by 10 years. Under the revised agreement, the CFE will resume making payments only when the damaged section of the Guaymas-El Oro segment of the Sonora pipeline is back in service.

Sempra Infrastructure and the CFE have agreed to an amendment to their transportation services agreement and to re-route the portion of the pipeline that is in the Yaqui territory, whereby the CFE would pay for the re-routing with a new tariff. This amendment will terminate if certain conditions are not met, and Sempra Infrastructure retains the right to terminate the transportation services agreement and seek to recover its reasonable and documented costs and lost profit. Sempra Infrastructure continues to acquire and pursue the necessary rights-of-way and permits for the re-routed portion of the pipeline.

The Guaymas-El Oro segment of the Sonora pipeline currently constitutes a Sole Risk Project under the terms of the SI Partners limited partnership agreement. Sole Risk Projects are separated from other SI Partners projects and are conducted at Sempra’s sole cost, expense and liability and we receive, through the acquisition of Sole Risk Interests, any economic and other benefits from such projects. At June 30, 2024, Sempra Infrastructure had $406 million in PP&E, net, related to the Guaymas-El Oro segment of the Sonora pipeline, which could be subject to impairment if Sempra Infrastructure is unable to re-route a portion of the pipeline and resume operations or if Sempra Infrastructure terminates the contract and is unable to obtain recovery, which in each case could have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.

Refined Products Terminals. In May 2022, Sempra Infrastructure substantially completed construction of a terminal for the receipt, storage, and delivery of refined products in Topolobampo, at which time commissioning activities commenced. The Topolobampo terminal commenced commercial operations in June 2024.

Sempra Infrastructure is also developing terminals for the receipt, storage, and delivery of refined products in the vicinity of Manzanillo and Ensenada.

SI Partners holds a 100% indirect interest and Sempra holds a 70% indirect interest in these terminals.

Table of Contents

Port Arthur Pipeline Louisiana Connector. Sempra Infrastructure is constructing the Port Arthur Pipeline Louisiana Connector, a 72-mile pipeline connecting the PA LNG Phase 1 project to Gillis, Louisiana, in which SI Partners holds a 100% indirect interest and Sempra holds a 70% indirect interest. In April 2019, the FERC approved the siting, construction and operation of the Port Arthur Pipeline Louisiana Connector, which will be used to supply feed gas to the PA LNG Phase 1 project. In July 2023, Sempra Infrastructure filed a limited amendment application with the FERC to implement construction process enhancements and minor modifications to several discrete sections of the Port Arthur Pipeline Louisiana Connector. These modifications are intended to decrease environmental impacts, accommodate landowner routing requests and enhance construction procedures. In May 2024, the FERC approved the Port Arthur Pipeline Louisiana Connector amendment application. We expect the Port Arthur Pipeline Louisiana Connector to be ready for service ahead of the PA LNG Phase 1 project’s gas requirements. We estimate the capital expenditures for the project will be approximately $1 billion, including capitalized interest at the project level and project contingency. The actual amount of these capital expenditures may differ substantially from our estimates.

Louisiana Storage. Sempra Infrastructure is constructing Louisiana Storage, a 12.5-Bcf salt dome natural gas storage facility to support the PA LNG Phase 1 project, in which SI Partners holds a 100% indirect interest and Sempra holds a 70% indirect interest. The construction includes an 11-mile pipeline that will connect to the Port Arthur Pipeline Louisiana Connector. In September 2022, the FERC approved the development of the project. We expect Louisiana Storage to be ready for service in time to support the needs of the PA LNG Phase 1 project. We estimate the capital expenditures for the project will be approximately $300 million, including capitalized interest at the project level and project contingency. The actual amount of these capital expenditures may differ substantially from our estimates.

Low Carbon Solutions

Cimarrón Wind. Sempra Infrastructure has made a positive final investment decision on and begun constructing the Cimarrón Wind project, an approximately 320-MW wind generation facility in Baja California, Mexico, in which SI Partners holds a 100% indirect interest and Sempra holds a 70% indirect interest. Sempra Infrastructure has a 20-year PPA with Silicon Valley Power for the long-term supply of renewable energy to the City of Santa Clara, California. Cimarrón Wind will utilize Sempra Infrastructure’s existing cross-border high voltage transmission line to interconnect and deliver clean energy to the East County substation in San Diego County. We estimate the capital expenditures for the project will be approximately $550 million, including capitalized interest at the project level and project contingency. The actual amount of these capital expenditures may differ substantially from our estimates. We expect the Cimarrón Wind project to begin generating energy in late 2025 and commence commercial operations in the first half of 2026.

Hackberry Carbon Sequestration Project. Sempra Infrastructure is developing the potential Hackberry Carbon Sequestration project near Hackberry, Louisiana. This proposed project under development is designed to permanently sequester carbon dioxide from the Cameron LNG Phase 1 facility and the proposed Cameron LNG Phase 2 project. In 2021, Sempra Infrastructure filed an application with the U.S. Environmental Protection Agency (EPA) for a Class VI carbon injection well to advance this project. The permit is pending approval from the State of Louisiana as the EPA has transferred Class VI permitting authority to the state.

Sempra Infrastructure, TotalEnergies SE, Mitsui & Co., Ltd. and Mitsubishi Corporation have entered into a Participation Agreement for the development of the proposed Hackberry Carbon Sequestration project. The Participation Agreement contemplates that the combined Cameron LNG Phase 1 facility and proposed Cameron LNG Phase 2 project would potentially serve as the anchor source for the capture and sequestration of carbon dioxide by the proposed project. It also provides the basis for the parties to acquire an equity interest by entering into a JV with Sempra Infrastructure for the Hackberry Carbon Sequestration project. In May 2023, Sempra Infrastructure and Cameron LNG JV entered into a non-binding HOA, which sets forth a framework for further development of the Hackberry Carbon Sequestration project.

Legal and Regulatory Matters

See Note 11 of the Notes to Condensed Consolidated Financial Statements in this report and “Part I – Item 1A. Risk Factors” in the Annual Report for discussions of the following legal and regulatory matters affecting our operations in Mexico and risks associated with Mexican laws, policies and government influence:

Table of Contents

Energía Costa Azul

▪Land Disputes

▪Environmental and Social Impact Permits

One or more unfavorable final decisions on these land disputes or environmental and social impact permit challenges could materially adversely affect our existing natural gas regasification operations and proposed natural gas liquefaction projects at the site of the ECA Regas Facility and have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.

Regulatory and Other Actions by the Mexican Government

▪Amendments to Mexico’s Hydrocarbons Law

▪Amendments to Mexico’s Electricity Industry Law

Sempra Infrastructure and other parties affected by these amendments to Mexican law have challenged them by filing amparo and other claims, some of which remain pending. An unfavorable decision on one or more of these amparo or other challenges, the impact of the amendments that have become effective (due to unsuccessful amparo challenges or otherwise), or the possibility of future reforms to the energy industry through additional amendments to Mexican laws, regulations or rules (including through amendments to the constitution) may impact our ability to operate our facilities at existing levels or at all, may result in increased costs for Sempra Infrastructure and its customers, may adversely affect our ability to develop new projects, may result in decreased revenues and cash flows, and may negatively impact our ability to recover the carrying values of our investments in Mexico, any of which may have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.

The most recent federal elections in Mexico that took place in June 2024 resulted in the election of the MORENA party candidate as the new president, who will take office in October 2024. The coalition led by MORENA also secured a qualified two-thirds majority in the Chamber of Deputies and close to a qualified majority in the Senate. This new political configuration could give the MORENA party substantial authority to implement significant changes to the Constitution, laws, policies, and regulations of Mexico, which could affect the Mexican economy, energy sector and our businesses, the extent and timing of which we currently are unable to predict.

SOURCES AND USES OF CASH

The following tables include only significant changes in cash flow activities for each of the Registrants.

CASH FLOWS FROM OPERATING ACTIVITIES
(Dollars in millions)
Six months ended June 30,						Sempra						SDG&E						SoCalGas
2024						$	2,520					$	1,056					$	1,046
2023						3,737						966						925
Change						$	(1,217)					$	90					$	121
Change in net margin posted, current and noncurrent						$	(933)					$	87
Change in income taxes receivable/payable, net						(288)						(20)
Change in fixed-price contracts and other derivatives, current and noncurrent						(275)						(119)						$	(156)
Change in GHG allowances, current and noncurrent						(206)						(32)						(151)
(Lower) higher net income, adjusted for noncash items included in earnings						(83)						95						(140)
Change in regulatory accounts, current and noncurrent						(62)						(400)						333
Change in accounts receivable						(31)						295						(100)
Change in qualified pension liability						55												42
Change in GHG obligations, current and noncurrent						87												71
Change in deferred capacity sales						202						202
Change in accounts payable						262												177
Other						55						(18)						45
						$	(1,217)					$	90					$	121

Table of Contents

CASH FLOWS FROM INVESTING ACTIVITIES
(Dollars in millions)
Six months ended June 30,						Sempra						SDG&E						SoCalGas
2024						$	(4,168)					$	(1,206)					$	(978)
2023						(4,421)						(1,200)						(961)
Change						$	253					$	(6)					$	(17)
Decrease (increase) in capital expenditures						$	452											$	(17)
Higher contributions to Oncor Holdings						(207)
Other						8						$	(6)
						$	253					$	(6)					$	(17)

CASH FLOWS FROM FINANCING ACTIVITIES
(Dollars in millions)
Six months ended June 30,						Sempra						SDG&E						SoCalGas
2024						$	1,618					$	166					$	(60)
2023						1,457						559						16
Change						$	161					$	(393)					$	(76)
Lower payments for short-term debt with maturities greater than 90 days						$	2,092											$	800
Higher contributions from NCI						243
Lower (higher) payments on long-term debt and finance leases						103						$	(403)					298
Settlement of cross-currency swaps in 2023						99
Lower distributions to NCI						49
Proceeds from sale of noncontrolling interest in 2023						(265)
Change in borrowings and repayments of short-term debt, net						(429)						205						(978)
Lower issuances of long-term debt						(842)						(198)						(500)
(Lower) higher issuances of short-term debt with maturities greater than 90 days						(960)												300
Other						71						3						4
						$	161					$	(393)					$	(76)

Capital Expenditures and Investments

CAPITAL EXPENDITURES AND INVESTMENTS
(Dollars in millions)
			Six months ended June 30,
			2024						2023
Sempra California(1)			$	2,212					$	2,200
Sempra Texas Utilities			385						178
Sempra Infrastructure			1,619						2,084
Parent and other			1						4
Total			$	4,217					$	4,466

(1) Includes expenditures for PP&E of $1,234 and $1,239 at SDG&E and $978 and $961 at SoCalGas for 2024 and 2023, respectively.

The amounts and timing of capital expenditures and certain investments are generally subject to approvals by various regulatory and other governmental and environmental bodies, including the CPUC, the FERC and the PUCT, and various other factors described in this MD&A and in “Part I – Item 1A. Risk Factors” in the Annual Report.

CRITICAL ACCOUNTING ESTIMATES

Management views certain accounting estimates as critical because their application is the most relevant, judgmental and/or material to our financial position and results of operations, and/or because they require the use of material judgments and estimates. We discuss critical accounting estimates in “Part II – Item 7. MD&A” in the Annual Report.

Table of Contents

NEW ACCOUNTING STANDARDS

We discuss any recent accounting pronouncements that have had or may have a significant effect on our financial statements and/or disclosures in Note 2 of the Notes to Condensed Consolidated Financial Statements.