SEMPRA

We discuss herein SDG&E’s results of operations and significant changes in earnings, revenues and costs for the three months ended March 31, 2025 compared to the same period in 2024.

Due to the delay in the issuance of the CPUC’s final decision in the SDG&E 2024 GRC, SDG&E recorded revenues in the first three quarters of 2024 based on levels authorized for 2023 under the 2019 GRC. In December 2024, the CPUC approved an FD in the 2024 GRC, effective retroactive to January 1, 2024, for which SDG&E recorded the retroactive impacts in the fourth quarter of 2024. SDG&E’s authorized base revenues for the first quarter of 2025 are based on the revenues authorized for the 2024 test year plus the amount authorized for attrition for 2025. We provide additional information on the 2024 GRC FD 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.

RESULTS OF OPERATIONS

(Dollars in millions)

In the three months ended March 31, 2025 compared to the same period in 2024, the increase in earnings of $58 million (26%) was primarily due to:

▪$50 million higher CPUC base operating margin, net of operating expenses and $5 million lower authorized cost of capital. In the first three quarters of 2024, SDG&E recorded CPUC-authorized base revenues based on 2023 authorized levels

▪$8 million higher income tax benefits primarily from flow-through items, including gas repairs tax benefits, which in the first three quarters of 2024 were recorded as a regulatory liability that was released in the fourth quarter of 2024 as a result of the 2024 GRC FD

▪$6 million higher net interest expense

Electric Revenues and Cost of Electric Fuel and Purchased Power

In the three months ended March 31, 2025 compared to the same period in 2024, SDG&E’s electric revenues increased by $4 million remaining at $1.1 billion primarily due to:

▪$45 million higher CPUC-authorized revenues, including certain incremental and balanced capital projects that are now in CPUC-authorized base revenues as a result of the 2024 GRC FD offset by $5 million lower authorized cost of capital

▪$9 million higher revenues from incremental and balanced capital projects offset by certain projects that are now in CPUC-authorized base revenues as a result of the 2024 GRC FD and lower authorized cost of capital

▪$6 million higher revenues from transmission operations

▪$44 million lower regulatory revenues from higher ITCs from standalone energy storage projects, which are offset in income tax expense

▪$34 million decrease in cost of electric fuel and purchased power, which we discuss below

In the three months ended March 31, 2025 compared to the same period in 2024, SDG&E’s cost of electric fuel and purchased power decreased by $34 million (32%) to $73 million primarily due to:

▪$26 million lower purchased power primarily due to change in excess capacity sales

▪$20 million lower purchased power from the California ISO due to lower market prices

▪$15 million lower sales to the California ISO due to lower market prices

Natural Gas Revenues and Cost of Natural Gas

In the three months ended March 31, 2025 and 2024, SDG&E’s average cost of natural gas per thousand cubic feet was $5.69 and $6.79, 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 March 31, 2025 compared to the same period in 2024, SDG&E’s natural gas revenues increased by $37 million (12%) to $356 million primarily due to:

▪$32 million higher CPUC-authorized revenues, including certain incremental and balanced capital projects that are now in CPUC-authorized base revenues as a result of the 2024 GRC FD offset by $2 million lower authorized cost of capital

▪$7 million higher regulatory revenues, including gas repairs tax benefits, which are offset in income tax expense. Gas repairs tax benefits in the first three quarters of 2024 were recorded as a regulatory liability that was released in the fourth quarter of 2024 as a result of the 2024 GRC FD

▪$15 million decrease in cost of natural gas sold, which we discuss below

▪$12 million lower revenues from incremental and balanced capital projects, including those that are now in CPUC-authorized base revenues as a result of the 2024 GRC FD and lower authorized cost of capital

In the three months ended March 31, 2025 compared to the same period in 2024, SDG&E’s cost of natural gas decreased by $15 million (15%) to $87 million primarily due to lower average natural gas prices.

In the three months ended March 31, 2025 compared to the same period in 2024, SDG&E’s O&M increased by $29 million (7%) to $440 million due to:

▪$34 million higher expenses associated with refundable programs, which costs are recovered in revenue

▪$5 million lower non-refundable operating costs

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

In the three months ended March 31, 2025 compared to the same period in 2024, SDG&E’s income tax expense decreased by $26 million primarily due to:

▪higher income tax benefit in 2025 from higher ITCs from standalone energy storage projects

▪higher pretax income