SAN DIEGO GAS & ELECTRIC CO

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, 2025 compared to the same period in 2024.

Due to the delay in the issuance of the CPUC’s FD in the SoCalGas 2024 GRC, SoCalGas 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 SoCalGas recorded the retroactive impacts in the fourth quarter of 2024. SoCalGas’ 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 $46 million (35%) was primarily due to:

▪$19 million lower 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

▪$9 million higher net interest expense

In the six months ended June 30, 2025 compared to the same period in 2024, the increase in earnings of $38 million (8%) was primarily due to:

▪$38 million higher CPUC base operating margin, net of operating expenses including higher depreciation and $13 million lower authorized cost of capital. In the first three quarters of 2024, SoCalGas recorded CPUC-authorized base revenues based on 2023 authorized levels

▪$35 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

▪$18 million higher net interest expense

Natural Gas Revenues and Cost of Natural Gas

In the three months ended June 30, 2025 and 2024, SoCalGas’ average cost of natural gas per thousand cubic feet was $2.50 and $1.84, respectively. In the six months ended June 30, 2025 and 2024, SoCalGas’ average cost of natural gas per thousand cubic feet was $3.57 and $3.50, 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, 2025 compared to the same period in 2024, SoCalGas’ natural gas revenues decreased by $41 million (3%) remaining at $1.3 billion primarily due to:

▪$99 million lower revenues associated with refundable programs, which are fully offset in O&M

▪$68 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 lower 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

▪$3 million lower revenues associated with impacts resulting from changes in tax laws tracked in the income tax expense memorandum account

▪$111 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 $7 million lower authorized cost of capital

▪$38 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, SoCalGas’ cost of natural gas increased by $38 million (33%) to $152 million primarily due to higher average natural gas prices.

In the six months ended June 30, 2025 compared to the same period in 2024, SoCalGas’ natural gas revenues increased by $174 million (6%) to $3.3 billion primarily due to:

▪$258 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 $18 million lower authorized cost of capital

▪$47 million higher revenues associated with refundable programs, which are fully offset in O&M

▪$37 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

▪$127 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

▪$12 million decrease in cost of natural gas sold, which we discuss below

▪$11 million lower revenues associated with impacts resulting from changes in tax laws tracked in the income tax expense memorandum account

In the six months ended June 30, 2025 compared to the same period in 2024, SoCalGas’ cost of natural gas decreased by $12 million (2%) to $567 million primarily due to:

▪$23 million lower volumes driven by weather

▪$11 million higher average natural gas prices

In the three months ended June 30, 2025 compared to the same period in 2024, SoCalGas’ O&M decreased by $85 million (12%) to $622 million primarily due to:

▪$99 million lower expenses associated with refundable programs, which costs are recovered in revenue

▪$14 million higher non-refundable operating costs

In the six months ended June 30, 2025 compared to the same period in 2024, SoCalGas’ O&M increased by $59 million (4%) to $1.4 billion primarily due to:

▪$47 million higher expenses associated with refundable programs, which costs are recovered in revenue

▪$12 million higher non-refundable operating costs

Other (Expense) Income, Net

In the three months ended June 30, 2025 compared to the same period in 2024, SoCalGas had $2 million of other expense, net, in 2025 compared to $13 million of other income, net, in 2024 primarily due to:

▪$7 million reduction in regulatory interest from disallowed regulatory recovery of COVID-19 costs

▪$6 million higher non-service components of net periodic benefit cost

In the six months ended June 30, 2025 compared to the same period in 2024, SoCalGas’ other income, net, decreased by $20 million (33%) to $40 million primarily due:

▪$10 million decrease from a $6 million cost in 2025 compared to $4 million credit in 2024 for the non-service components of net periodic benefit cost

▪$7 million reduction in regulatory interest from disallowed regulatory recovery of COVID-19 costs

In the three months ended June 30, 2025 compared to the same period in 2024, SoCalGas’ income tax expense decreased by $4 million (40%) primarily due to lower pretax income.

In the six months ended June 30, 2025 compared to the same period in 2024, SoCalGas’ income tax expense decreased by $9 million (17%) primarily due tohigher income tax benefit from flow-through items.