SAN DIEGO GAS & ELECTRIC CO

We discuss herein SDG&E’s results of operations and significant changes in earnings, revenues and costs for thethree months (Q2) and six months (YTD) ended June 30, 2025 compared to the same period in 2024.

Due to the delay in the issuance of the CPUC’s FD 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 half 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 June 30, 2025 compared to the same period in 2024, the decrease in earnings of $11 million (6%) was primarily due to:

▪$16 million lower CPUC base operating margin, net of operating expenses including higher depreciation and $4 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 net interest expense

▪$4 million higher AFUDC equity

▪$3 million higher net regulatory interest income

In the six months ended June 30, 2025 compared to the same period in 2024, the increase in earnings of $47 million (11%) was primarily due to:

▪$34 million higher CPUC base operating margin, net of operating expenses including higher depreciation and $9 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

▪$7 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 regulatory interest income

▪$14 million higher net interest expense

Electric Revenues and Cost of Electric Fuel and Purchased Power

In the three months ended June 30, 2025 compared to the same period in 2024, SDG&E’s electric revenues decreased by $115 million (10%) to $1.0 billion primarily due to:

▪$69 million decrease in cost of electric fuel and purchased power, which we discuss below

▪$28 million lower revenues associated with refundable programs, which are fully offset in O&M

▪$23 million lower regulatory revenues from higher ITCs from standalone energy storage projects, which are offset in income tax expense

▪$7 million higher revenues from transmission operations

In the three months ended June 30, 2025 compared to the same period in 2024, SDG&E’s cost of electric fuel and purchased power decreased by $69 million (39%) to $106 million primarily due to:

▪$44 million lower purchased power primarily due to change in excess capacity sales and lower renewable energy costs

▪$24 million lower purchased power from the California ISO due to lower customer demand from departing load now served by CCAs

In the six months ended June 30, 2025 compared to the same period in 2024, SDG&E’s electric revenues decreased by $111 million (5%) to $2.1 billion primarily due to:

▪$103 million decrease in cost of electric fuel and purchased power, which we discuss below

▪$67 million lower regulatory revenues from higher ITCs from standalone energy storage projects, which are offset in income tax expense

▪$11 million lower revenues associated with refundable programs, which are fully offset in O&M

▪$47 million higher CPUC-authorized base 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 $9 million lower authorized cost of capital

▪$14 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

▪$13 million higher revenues from transmission operations

In the six months ended June 30, 2025 compared to the same period in 2024, SDG&E’s cost of electric fuel and purchased power decreased by $103 million (37%) to $179 million primarily due to:

▪$73 million lower purchased power primarily due to change in excess capacity sales and lower renewable energy costs

▪$44 million lower purchased power from the California ISO due to lower customer demand from departing load now served by CCAs

▪$15 million lower sales to the California ISO due to decreased utility-owned generator availability

Natural Gas Revenues and Cost of Natural Gas

In the three months ended June 30, 2025 and 2024, SDG&E’s average cost of natural gas per thousand cubic feet was $4.60 and $3.53, respectively. In the six months ended June 30, 2025 and 2024, SDG&E’s average cost of natural gas per thousand cubic feet was $4.86 and $5.08, 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, 2025 compared to the same period in 2024, SDG&E’s natural gas revenues increased by $22 million (11%) to $228 million primarily due to:

▪$18 million higher CPUC-authorized base 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 $1 million lower authorized cost of capital

▪$7 million increase in cost of natural gas sold, which we discuss below

In the three months ended June 30, 2025 compared to the same period in 2024, SDG&E’s cost of natural gas increased by $7 million (19%) to $44 million primarily due to higher average natural gas prices.

In the six months ended June 30, 2025 compared to the same period in 2024, SDG&E’s natural gas revenues increased by $59 million (11%) to $584 million primarily due to:

▪$50 million higher CPUC-authorized base 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 $3 million lower authorized cost of capital

▪$19 million higher revenues associated with refundable programs, which are fully offset in O&M

▪$8 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

▪$14 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

▪$8 million decrease in cost of natural gas sold, which we discuss below

In the six months ended June 30, 2025 compared to the same period in 2024, SDG&E’s cost of natural gas decreased by $8 million (6%) to $131 million primarily due to lower average natural gas prices.

In the three months ended June 30, 2025 compared to the same period in 2024, SDG&E’s O&M decreased by $20 million (5%) to $403 million due to:

▪$26 million lower expenses associated with refundable programs, which costs are recovered in revenue

▪$6 million higher non-refundable operating costs

In the six months ended June 30, 2025 compared to the same period in 2024, SDG&E’s O&M increased by $9 million (1%) to $843 million primarily due to higher expenses associated with refundable programs, which costs are recovered in revenue.

Other Income, Net

In the three months ended June 30, 2025 compared to the same period in 2024, SDG&E’s other income, net, increased by $8 million (35%) to $31 million primarily due to:

▪$4 million higher net interest income on regulatory balancing accounts

▪$4 million higher AFUDC equity

In the six months ended June 30, 2025 compared to the same period in 2024, SDG&E’s other income, net, increased by $15 million (27%) to $71 million primarily due to:

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

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, 2025 compared to the same periods in 2024, SDG&E’s income tax expense decreased by $27 million and $53 million, respectively, primarily due to:

▪lower pretax income