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 (Q3) and nine months (YTD) ended September 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 three quarters 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 September 30, 2025 compared to the same period in 2024, the increase in earnings of $63 million (24%) was primarily due to:

▪$53 million higher income tax benefits primarily from flow-through items, including impacts from the election to accelerate self-developed software deductions, and from the resolution of prior year income tax items

▪$15 million higher CPUC base operating margin, net of operating expenses including higher depreciation 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

▪$4 million higher electric transmission margin

▪$4 million higher net regulatory interest income

▪$8 million higher net interest expense

In the nine months ended September 30, 2025 compared to the same period in 2024, the increase in earnings of $110 million (16%) was primarily due to:

▪$60 million higher income tax benefits primarily from flow-through items, including impacts from the election to accelerate self-developed software deductions and 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), and from the resolution of prior year income tax items

▪$49 million higher CPUC base operating margin, net of operating expenses including higher depreciation and $14 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

▪$10 million higher net regulatory interest income

▪$7 million higher electric transmission margin

▪$22 million higher net interest expense

Electric Revenues and Cost of Electric Fuel and Purchased Power

In the three months ended September 30, 2025 compared to the same period in 2024, SDG&E’s electric revenues increased by $191 million (18%) to $1.3 billion primarily due to:

▪$140 million increase in cost of electric fuel and purchased power, which we discuss below

▪$40 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 $6 million lower authorized cost of capital

▪$15 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

▪$12 million higher revenues from transmission operations

▪$19 million lower regulatory revenues associated with impacts from the election to accelerate self-developed software deductions, which are offset in income tax benefit (expense)

▪$7 million lower regulatory revenues from higher ITCs from standalone energy storage projects, which are offset in income tax benefit (expense)

In the three months ended September 30, 2025 compared to the same period in 2024, SDG&E’s cost of electric fuel and purchased power increased by $140 million to $135 million primarily due to:

▪$140 million higher purchased power primarily due to change in excess capacity sales and tolling agreements

▪$30 million lower sales to the California ISO due to lower market prices

▪$28 million lower purchased power from the California ISO due to lower market prices and lower customer demand from departing load now served by CCAs

In the nine months ended September 30, 2025 compared to the same period in 2024, SDG&E’s electric revenues increased by $80 million (2%) to $3.4 billion primarily due to:

▪$87 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 $15 million lower authorized cost of capital

▪$37 million increase in cost of electric fuel and purchased power, which we discuss below

▪$29 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

▪$25 million higher revenues from transmission operations

▪$74 million lower regulatory revenues from higher ITCs from standalone energy storage projects, which are offset in income tax benefit (expense)

▪$19 million lower regulatory revenues associated with impacts from the election to accelerate self-developed software deductions, which are offset in income tax benefit (expense)

▪$9 million lower revenues associated with refundable programs, which are fully offset in O&M

In the nine months ended September 30, 2025 compared to the same period in 2024, SDG&E’s cost of electric fuel and purchased power increased by $37 million (13%) to $314 million primarily due to:

▪$67 million higher purchased power primarily due to tolling agreements and change in excess capacity sales

▪$45 million lower sales to the California ISO due to lower market prices

▪$72 million lower purchased power from the California ISO due to lower market prices and lower customer demand from departing load now served by CCAs

Natural Gas Revenues and Cost of Natural Gas

In the three months ended September 30, 2025 and 2024, SDG&E’s average cost of natural gas per thousand cubic feet was $6.30 and $5.61, respectively. In the nine months ended September 30, 2025 and 2024, SDG&E’s average cost of natural gas per thousand cubic feet was $5.16 and $5.19, 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 September 30, 2025 compared to the same period in 2024, SDG&E’s natural gas revenues increased by $46 million (27%) to $216 million primarily due to:

▪$25 million higher revenues associated with refundable programs, which are fully offset in O&M

▪$16 million higher regulatory revenues, including gas repairs tax benefits, which are offset in income tax benefit (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 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

▪$6 million increase in cost of natural gas sold, which we discuss below

▪$13 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 September 30, 2025 compared to the same period in 2024, SDG&E’s cost of natural gas increased by $6 million (16%) to $44 million primarily due to higher average natural gas prices.

In the nine months ended September 30, 2025 compared to the same period in 2024, SDG&E’s natural gas revenues increased by $105 million (15%) to $800 million primarily due to:

▪$65 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 $4 million lower authorized cost of capital

▪$44 million higher revenues associated with refundable programs, which are fully offset in O&M

▪$24 million higher regulatory revenues, including gas repairs tax benefits, which are offset in income tax benefit (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

▪$27 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 and nine months ended September 30, 2025 compared to the same periods in 2024, SDG&E’s O&M increased by $31 million (7%) to $451 million and $40 million (3%) remaining at $1.3 billion, respectively, primarily due to higher expenses associated with refundable programs, which costs are recovered in revenue.

Other Income, Net

In the three months and nine months ended September 30, 2025 compared to the same periods in 2024, SDG&E’s other income, net, increased by $2 million (7%) to $32 million and $17 million (20%) to $103 million, respectively, primarily due to higher net interest income on regulatory balancing accounts.

In the three months and nine months ended September 30, 2025 compared to the same periods in 2024, SDG&E had an income tax benefit in 2025 compared to an income tax expense in 2024, respectively, primarily due to:

▪higher income tax benefit from flow-through items, including $26 million income tax benefit in 2025 from the election to accelerate self-developed software deductions, which we discuss in Note 1 of the Notes to Condensed Consolidated Financial Statements