SEMPRA
For the period ended Dec 31, 2024. Filed Feb 25, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 25, 2025
SRE$78.17-2.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-27.
0001032208-24-000007
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsOverviewResults of Operations by RegistrantSempraSDG&ESoCalGasCapital Resources and LiquidityCritical Accounting EstimatesNew Accounting StandardsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-25.
0001032208-25-000012
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsOverviewResults of Operations by RegistrantSempraSDG&ESoCalGasCapital Resources and LiquidityCritical Accounting EstimatesNew Accounting StandardsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 674 previous paragraphs and 576 current paragraphs.
224 unchanged; 176 reworded; 173 added; 254 removed; 20 previous and 3 current paragraphs rearranged.
Tables are not compared: 25 previous and 25 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (173)
Current report
Sempra has the following three reportable segments which reflect how the CODM oversees operational and financial performance:
Current report
Below are significant events, including major project updates, that affected our business in 2024 and may continue to affect our future results:
Current report
▪In December 2024, we received net proceeds of $1.2 billion from the issuance of 17,142,858 shares of Sempra common stock from the settlement of forward sale agreements entered into in November 2023
Current report
▪We established an ATM program providing for the offer and sale of shares of Sempra common stock having an aggregate gross sales price of up to $3.0 billion, and entered into a forward sale agreement under the ATM program for the sale of 2,909,274 shares with net proceeds expected to be approximately $268 million
Current report
▪The CPUC approved an FD in the GRC for SDG&E’s and SoCalGas’ revenue requirements for 2024 and attrition year adjustments for 2025 through 2027
Current report
▪The CPUC approved an FD to modify the CCM and update SDG&E’s and SoCalGas’ cost of capital effective January 1, 2025
Current report
▪The CPUC approved an FD in the SB 380 OII finding that the Aliso Canyon natural gas storage facility is currently necessary for natural gas and electric reliability and affordable rates and closed the OII (subject to future CPUC biennial reviews and potential additional proceedings)
Current report
▪The FERC issued an order, which SDG&E has appealed, finding that the TO5 adder refund provision has been triggered, requiring SDG&E to refund customers the California ISO adder retroactively from June 1, 2019
Current report
▪SDG&E submitted its TO6 filing to the FERC, which the FERC accepted but suspended the effective date to June 1, 2025 and disallowed inclusion of the California ISO adder, which SDG&E has appealed
Current report
▪The PUCT approved approximately $2.9 billion of capital expenditures and approximately $520 million of O&M under Oncor’s inaugural system resiliency plan
Current report
▪Sempra Infrastructure advanced construction of the ECA LNG Phase 1 project and PA LNG Phase 1 project and entered into an EPC contract with Bechtel for the proposed PA LNG Phase 2 project
Current report
▪Sempra Infrastructure commenced commercial operations at its refined products terminal in Topolobampo
Current report
▪Sempra Infrastructure made a positive final investment decision on and began construction of the Cimarrón Wind project
Current report
▪We resolved all VAT and legal matters related to and substantially completed liquidation of our equity method investment in RBS Sempra Commodities LLP
Current report
In 2024 compared to 2023, the increase in earnings of $99 million (6%) to $1.8 billion was primarily due to:
Current report
▪$9 million higher CPUC base operating margin authorized for 2024, net of operating expenses, including higher authorized cost of capital
Current report
▪$89 million charge in 2024 for amounts relating to the FERC order finding that the TO5 adder refund provision has been triggered, requiring SDG&E to refund customers the California ISO adder retroactively from June 1, 2019, which we discuss in Note 4 of the Notes to Consolidated Financial Statements
Current report
▪$15 million impairment from disallowed capital costs in the 2024 GRC FD
Current report
In 2024 compared to 2023, the increase in earnings of $34 million (4%) to $911 million was primarily due to:
Current report
▪$61 million favorable impact from $19 million net interest income in 2024 compared to $42 million net interest expense in 2023 primarily due to higher capitalization of interest expense in 2024 from projects under construction
Current report
▪$47 million favorable impact in interest expense from $30 million unrealized gains in 2024 compared to $17 million unrealized losses in 2023 on interest rate swaps related to the PA LNG Phase 1 project
Current report
▪$21 million favorable impact from $20 million income tax benefit in 2024 compared to $1 million income tax expense in 2023 primarily from outside basis differences and remeasurement of deferred taxes
Current report
▪$15 million from the renewables business driven by lower volumes from wind power generation assets
Current report
▪$330 million income tax expense in 2024 from changes to a valuation allowance against foreign tax credits that were carried forward from the implementation of the Tax Cuts and Jobs Act of 2017
Current report
▪$5 million related to settlement charges from our non-qualified pension plan in 2024
Current report
▪$2.6 billion decrease in cost of natural gas sold, which we discuss below
Current report
▪$268 million lower revenues from incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD, offset by higher authorized cost of capital
Current report
▪$79 million lower revenues associated with refundable programs, which are fully offset in O&M
Current report
▪$372 million higher CPUC-authorized revenues in 2024, including certain incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD and higher authorized cost of capital
Current report
▪$310 million higher regulatory revenues primarily from the release of a tax regulatory liability for gas repairs expenditures as a result of the 2024 GRC FD
Current report
In 2024 compared to 2023, Sempra’s cost of natural gas decreased by $2.6 billion to $1.1 billion driven by Sempra California, which included:
Showing the first 40 of 173 passages. Open the source sections for the rest.
Removed paragraphs (254)
Previous 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.
Previous report
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:
Previous report
Our 2023 operational and financial results reflect our mission to be North America’s premier energy infrastructure company. Key events in 2023 include:
Previous report
▪Our company changed its legal name from Sempra Energy to Sempra
Previous report
▪We completed the offering of 17,142,858 shares of Sempra’s common stock at a public offering price of $70.00 per share, pursuant to forward sale agreements
Previous report
▪The CCM was triggered and approved for SDG&E and SoCalGas, which increases each company’s respective ROE by 70 bps effective January 1, 2024
Previous report
▪Oncor received a final order from the PUCT on its comprehensive base rate review
Previous report
▪Sempra Infrastructure reached a final investment decision and started construction on the PA LNG Phase 1 project and Port Arthur Pipeline Louisiana Connector and Louisiana Storage projects
Previous report
▪SI Partners completed the sales of a 30% and 42% NCI in the PA LNG Phase 1 project to ConocoPhillips and KKR Denali, respectively
Previous report
▪We invested $8.8 billion in capital expenditures and investments
Previous report
On August 2, 2023, Sempra’s board of directors declared a two-for-one split of Sempra’s common stock in the form of a 100% stock dividend for shareholders of record at the close of business on August 14, 2023. Sempra’s common stock began trading on a post-split basis effective August 22, 2023. Except as expressly noted, all share and per share information related to issued and outstanding common stock has been retroactively adjusted to reflect the stock split and is presented on a post-split basis herein.
Previous report
(1) Includes intercompany eliminations recorded in consolidation and certain corporate costs.
Previous report
In 2023 compared to 2022, the increase in earnings of $233 million (15%) was primarily due to:
Previous report
•$199 million charge in 2022 relating to litigation and regulatory matters pertaining to the Leak
Previous report
•$30 million higher CPUC base operating margin, net of operating expenses and $46 million from lower authorized cost of capital
Previous report
▪$16 million lower income tax benefit from the resolution of prior year income tax items
Previous report
In 2022 compared to 2021, the increase in earnings of $1.1 billion was primarily due to:
Previous report
▪$949 million decrease in charges relating to litigation and regulatory matters pertaining to the Leak comprised of a $199 million charge in 2022 compared to $1,148 million in 2021
Previous report
▪$161 million higher CPUC base operating margin, net of operating expenses
Previous report
▪$21 million lower net income tax expense primarily from flow-through items, net of lower associated regulatory revenues
Previous report
▪$20 million higher income tax benefit from the resolution of prior year income tax items
Previous report
In 2023 compared to 2022, the decrease in earnings of $42 million (6%) was primarily due to lower equity earnings from Oncor Holdings driven by:
Previous report
▪higher depreciation expense and interest expense attributable to invested capital
Previous report
In 2023 compared to 2022, the increase in earnings of $567 million was primarily due to:
Previous report
▪$112 million lower income tax expense in 2023 attributable to NCI’s share of higher U.S. partnerships’ pretax income
Previous report
▪$397 million decrease from $543 million earnings attributable to NCI in 2023 compared to $146 million earnings attributable to NCI in 2022 primarily due to an increase in SI Partners net income and from the sale of a 10% NCI in SI Partners to ADIA in June 2022
Previous report
▪$61 million lower net income tax benefit primarily from the remeasurement of certain deferred income taxes and outside basis differences in a JV investment
Previous report
▪$58 million lower equity earnings from Cameron LNG JV driven by lower revenues from excess LNG and higher interest expense
Previous report
▪$19 million higher net interest expense due to $27 million net unrealized losses in 2023 compared to $27 million net unrealized gains in 2022 on a contingent interest rate swap related to the PA LNG Phase 1 project and higher interest rates and borrowings on committed lines of credit, offset by higher capitalization of interest expense on projects under construction
Previous report
In 2022 compared to 2021, the decrease in earnings of $372 million was primarily due to:
Previous report
▪$431 million from asset and supply optimization driven by $283 million losses in 2022 compared to $148 million earnings in 2021 driven by higher unrealized losses on commodity derivatives due to changes in natural gas prices, offset by higher diversion fees
Showing the first 40 of 254 passages. Open the source sections for the rest.
Reworded paragraphs (176)
Previous wording
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 before foreign currency and inflation effects and NCI, where applicable.
Current wording
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.
Previous wording
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 year ended December 31, 2023 compared to the year ended December 31, 2022 and the year ended December 31, 2022 compared to the year ended December 31, 2021. We also discuss herein the impact of foreign currency and inflation rates on Sempra’s results of operations.
Current wording
We discuss herein Sempra’s results of operations and significant changes in earnings, revenues and costs by segment, as well as Parent and other, for the year ended December 31, 2024 compared to the year ended December 31, 2023. For a discussion of our results of operations and significant changes in earnings, revenues and costs for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to “Part II – Item 7. MD&A – Results of Operations” in our 2023 annual report on Form 10-K filed with the SEC on February 27, 2024. We also discuss herein the impact of foreign currency and inflation rates on Sempra’s results of operations.
Previous wording
•$37 million higher 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
Current wording
▪$217 million higher income tax benefits primarily from flow-through items, including higher gas repairs tax benefits, offset by $25 million related to income tax benefits in 2023 from previously unrecognized income tax benefits pertaining to gas repairs expenditures
Previous wording
In 2022 compared to 2021, the increase in earnings of $120 million (19%) was primarily due to higher equity earnings from Oncor Holdings driven by:
Current wording
In 2024 compared to 2023, the increase in earnings of $87 million (13%) to $781 million was primarily due to higher equity earnings from Oncor Holdings driven by:
Previous wording
▪higher interest expense and depreciation expense attributable to invested capital
Current wording
▪higher interest expense and depreciation expense attributable to increases in invested capital
Previous wording
▪$127 million unfavorable impact from foreign currency and inflation effects on our monetary positions in Mexico, comprised of a $346 million unfavorable impact in 2023 compared to a $219 million unfavorable impact in 2022
Current wording
▪$499 million favorable impact from foreign currency and inflation effects on our monetary positions in Mexico, comprised of a $263 million favorable impact in 2024 compared to a $236 million unfavorable impact in 2023
Previous wording
▪$1.1 billion from asset and supply optimization driven by unrealized gains in 2023 compared to unrealized losses in 2022 on commodity derivatives due to changes in natural gas prices
Current wording
▪$463 million from asset and supply optimization driven by unrealized losses in 2024 compared to unrealized gains in 2023 on commodity derivatives due to changes in natural gas prices and lower LNG diversion fees
Previous wording
▪$99 million from the transportation business driven by higher equity earnings and revenues, including the cumulative impact of new tariffs going into effect in June 2023 for certain pipelines in Mexico
Current wording
▪$79 million from the transportation business driven by lower equity earnings and revenues, including the cumulative impact of new tariffs going into effect in June 2023 for certain pipelines in Mexico and a customer’s early termination of firm transportation agreements in 2023
Previous wording
▪$37 million higher O&M from a provision for expected credit losses on a customer’s past due receivable balance
Current wording
▪$14 million from lower revenues in 2024 offset by higher O&M in 2023 from a provision for expected credit losses on a customer’s past due receivable balance
Previous wording
In 2022 compared to 2021, the increase in losses of $30 million (7%) was primarily due to:
Current wording
In 2024 compared to 2023, the increase in losses of $433 million to $721 million was primarily due to:
Previous wording
▪$40 million equity earnings in 2023 from our investment in RBS Sempra Commodities based on a legal settlement, which we discuss in Note 16 of the Notes to Consolidated Financial Statements
Current wording
▪$24 million decrease in equity earnings related to our investment in RBS Sempra Commodities LLP due to $16 million in 2024 from the substantial dissolution of the partnership and $40 million in 2023 related to a legal settlement, which we discuss in Notes 5 and 15 of the Notes to Consolidated Financial Statements
Previous wording
The regulatory framework permits SoCalGas and SDG&E to recover certain program expenditures and other costs authorized by the CPUC (referred to as “refundable programs”).
Current wording
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”).
Previous wording
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.
Current wording
SDG&E and SoCalGas operate under a regulatory framework that permits the cost of natural gas purchased for core customers to be passed through to customers in rates substantially as incurred and without markup. The GCIM provides for SoCalGas to share in the savings and/or costs from buying natural gas for its core customers at prices below or above monthly market-based benchmarks. This mechanism permits full recovery of costs incurred when average purchase costs are within a price range around the benchmark price. Any higher costs incurred or savings realized outside this range are shared between SoCalGas and its core customers. We provide further discussion in Note 3 of the Notes to Consolidated Financial Statements.
Previous wording
In 2022 compared to 2021, Sempra’s natural gas revenues increased by $1.5 billion (24%) to $7.9 billion driven by Sempra California, which included:
Current wording
In 2024 compared to 2023, Sempra’s natural gas revenues decreased by $2.4 billion (25%) to $7.1 billion driven by Sempra California, which included:
Previous wording
In 2023 compared to 2022, Sempra’s electric revenues decreased by $449 million (9%) to $4.3 billion driven by Sempra California, which included:
Current wording
In 2024 compared to 2023, Sempra’s electric revenues decreased by $38 million (1%) remaining at $4.3 billion driven by Sempra California, which included:
Previous wording
▪$197 million in 2023 from the recognition of investment tax credits from standalone energy storage projects, which are offset in income tax expense
Current wording
▪$178 million lower ITCs from standalone energy storage projects, which are offset in income tax expense
Current wording
▪$110 million higher CPUC-authorized revenues in 2024, including certain incremental and balanced capital projects that are now in CPUC-authorized revenues as a result of the 2024 GRC FD and higher authorized cost of capital
Previous wording
▪$259 million lower sales to the California ISO due to lower market prices
Current wording
▪$331 million lower sales to the California ISO due to lower market prices
Previous wording
▪$65 million higher realized gains on derivative contracts for fixed-price natural gas, which are entered into to hedge the cost of electric fuel, and GHG allowances
Current wording
▪$129 million from realized losses in 2024 compared to realized gains in 2023 on derivative contracts for fixed-price natural gas, which are entered into to hedge the cost of electric fuel
Previous wording
In 2023 compared to 2022, Sempra’s revenues from energy-related businesses increased by $1.1 billion to $2.9 billion primarily due to:
Current wording
In 2024 compared to 2023, Sempra’s revenues from energy-related businesses decreased by $1.1 billion (40%) to $1.7 billion primarily due to:
Previous wording
▪$1.2 billion increase in revenues from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including:
Current wording
▪$1.0 billion from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including:
Previous wording
◦$1.3 billion primarily driven by $710 million unrealized gains in 2023 compared to $660 million unrealized losses in 2022 on commodity derivatives offset by $223 million primarily from lower natural gas prices
Current wording
◦$896 million primarily driven by $51 million unrealized losses in 2024 compared to $710 million unrealized gains in 2023 on commodity derivatives and $177 million primarily from lower natural gas prices offset by higher volumes
Previous wording
◦$83 million higher diversion fees due to higher natural gas prices
Current wording
◦$115 million primarily from lower diversion fees due to lower natural gas prices
Previous wording
▪$102 million decrease in revenues from TdM mainly due to lower power prices
Current wording
▪$45 million from TdM mainly due to $78 million from lower power prices offset by $26 million from higher volumes
Previous wording
In 2022 compared to 2021, Sempra’s revenues from energy-related businesses decreased by $78 million (4%) to $1.8 billion primarily due to:
Current wording
In 2024 compared to 2023, Sempra’s cost of sales from energy-related businesses decreased by $168 million (31%) to $380 million primarily due to:
Previous wording
▪$65 million at TdM driven by higher natural gas prices offset by lower volumes from scheduled major maintenance completed in March 2022
Current wording
▪$99 million at TdM driven by $111 million from lower natural gas prices offset by $11 million from higher volumes
Previous wording
▪$257 million driven by higher natural gas and LNG purchases related to asset and supply optimization
Current wording
▪$69 million driven by lower natural gas purchases related to asset and supply optimization
Previous wording
In 2023 compared to 2022, Sempra’s O&M increased by $713 million (15%) to $5.5 billion primarily due to:
Current wording
In 2024 compared to 2023, Sempra’s O&M decreased by $122 million (2%) to $5.3 billion primarily due to:
Previous wording
In 2023 compared to 2022, Sempra’s cost of electric fuel and purchased power decreased by $562 million to $375 million primarily due to a $549 million decrease at Sempra California, which included:
Previous wording
◦$38 million higher development costs and certain non-capitalized expenses from projects under construction
Current wording
◦$33 million higher development costs and certain non-capitalized expenses from projects under construction
Previous wording
◦$52 million from a provision for expected credit losses on a customer’s past due receivable balance
Current wording
◦$6 million from a provision for expected credit losses on a customer’s past due receivable balance
Previous wording
In 2023 compared to 2022, Sempra’s other income, net, increased by $107 million to $131 million primarily due to:
Current wording
In 2024 compared to 2023, Sempra’s other income, net, increased by $5 million (4%) to $136 million primarily due to:
Previous wording
▪$20 million higher net interest income on regulatory balancing accounts at Sempra California
Current wording
▪$15 million higher net interest income on regulatory balancing accounts at Sempra California
Previous wording
▪$70 million increase from $28 million net investment gains in 2023 compared to $42 million net investment losses in 2022 primarily on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation plan at Parent and other
Current wording
▪$8 million higher net investment gains on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation plan at Parent and other
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
▪$372 million at Sempra Infrastructure from:
Current report — wording carried from elsewhere
▪$40 million higher income tax benefit from the resolution of prior year income tax items
Current report — wording carried from elsewhere
SDG&E and SoCalGas have regulatory mechanisms to recover credit losses and thus record changes in the allowances for credit losses related to Accounts Receivable – Trade that are probable of recovery in regulatory accounts. Although SDG&E and SoCalGas have regulatory mechanisms to recover credit losses, delay in payments by customers impacts the timing of their cash flows.
Rearranged previous paragraphs (20)
Previous report — wording carried elsewhere
▪$21 million from the LNG business driven by higher development costs and certain non-capitalized expenses from projects under construction
Previous report — wording carried elsewhere
◦$33 million primarily from lower LNG diversion fees
Previous report — wording carried elsewhere
▪$344 million decrease in revenues from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including:
Previous report — wording carried elsewhere
(1)Includes eliminations of intercompany activity.
Previous report — wording carried elsewhere
◦$33 million higher non-refundable operating costs
Previous report — wording carried elsewhere
▪$106 million increase at Sempra Infrastructure due to:
Previous report — wording carried elsewhere
▪$33 million lower losses from impacts associated with interest rate and foreign exchange instruments and foreign currency transactions primarily at Sempra Infrastructure, including:
Previous report — wording carried elsewhere
◦$18 million higher from $13 million losses in 2022 compared to $5 million gains in 2021 on other foreign currency transactional effects
Previous report — wording carried elsewhere
•rate updates to reflect increases in invested capital
Previous report — wording carried elsewhere
•new base rates implemented in May 2023
Previous report — wording carried elsewhere
▪$118 million at Oncor Holdings due to:
Previous report — wording carried elsewhere
▪$310 million increase due to an increase in SI Partners’ net income
Previous report — wording carried elsewhere
▪$18 million higher net regulatory interest income
Previous report — wording carried elsewhere
▪$45 million higher CPUC-authorized revenues
Previous report — wording carried elsewhere
▪$12 million higher CPUC-authorized revenues
Previous report — wording carried elsewhere
▪$8 million higher non-service components of net periodic benefit cost
Previous report — wording carried elsewhere
▪$43 million income tax benefit in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures
Previous report — wording carried elsewhere
From October 23, 2015 through February 11, 2016, SoCalGas experienced the Leak, which we discuss in Note 16 of the Notes to Consolidated Financial Statements and in “Part I – Item 1A. Risk Factors.”
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
▪the amount of the loss or a range of possible losses can be reasonably estimated