SAN DIEGO GAS & ELECTRIC CO

We discuss herein SoCalGas’ results of operations and significant changes in earnings (losses), revenues and costs for the three 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 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 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, SoCalGas’ earnings were $46 million compared to losses of $14 million primarily due to:

▪$39 million higher income tax benefits primarily from the resolution of prior year income tax items and from flow-through items, including impacts from the election to accelerate self-developed software deductions

▪$32 million higher 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, SoCalGas recorded CPUC-authorized base revenues based on 2023 authorized levels

▪$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 $98 million (21%) was primarily due to:

▪$74 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) and impacts from the election to accelerate self-developed software deductions, and from the resolution of prior year income tax items

▪$70 million higher CPUC base operating margin, net of operating expenses including higher depreciation and $17 million lower authorized cost of capital. In the first three quarters of 2024, SoCalGas recorded CPUC-authorized base revenues based on 2023 authorized levels

▪$10 million regulatory award approved by the CPUC in 2025

▪$26 million higher net interest expense

▪$25 million from disallowed regulatory recovery of COVID-19 costs

Natural Gas Revenues and Cost of Natural Gas

In the three months ended September 30, 2025 and 2024, SoCalGas’ average cost of natural gas per thousand cubic feet was $3.96 and $1.82, respectively. In the nine months ended September 30, 2025 and 2024, SoCalGas’ average cost of natural gas per thousand cubic feet was $3.65 and $3.14, 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 September 30, 2025 compared to the same period in 2024, SoCalGas’ natural gas revenues increased by $127 million (12%) to $1.2 billion primarily due to:

▪$107 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

▪$100 million increase in cost of natural gas sold, which we discuss below

▪$42 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

▪$52 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

▪$48 million lower regulatory revenues associated with impacts from the election to accelerate self-developed software deductions, which are offset in income tax benefit (expense)

▪$24 million lower revenues associated with refundable programs, which are fully offset in O&M

In the three months ended September 30, 2025 compared to the same period in 2024, SoCalGas’ cost of natural gas increased by $100 million to $182 million primarily due to higher average natural gas prices.

In the nine months ended September 30, 2025 compared to the same period in 2024, SoCalGas’ natural gas revenues increased by $301 million (7%) to $4.5 billion primarily due to:

▪$365 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 $24 million lower authorized cost of capital

▪$88 million increase in cost of natural gas sold, which we discuss below

▪$79 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

▪$23 million higher revenues associated with refundable programs, which are fully offset in O&M

▪$14 million regulatory award approved by the CPUC in 2025

▪$13 million higher revenues from higher non-service components of net periodic benefit cost, which fully offsets in other (expense) income, net

▪$179 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

▪$48 million lower regulatory revenues associated with impacts from the election to accelerate self-developed software deductions, which are offset in income tax benefit (expense)

▪$29 million lower revenues from disallowed regulatory recovery of COVID-19 costs

In the nine months ended September 30, 2025 compared to the same period in 2024, SoCalGas’ cost of natural gas increased by $88 million (13%) to $749 million due to:

▪$105 million higher average natural gas prices

▪$17 million lower volumes driven by weather

In the three months ended September 30, 2025 compared to the same period in 2024, SoCalGas’ O&M decreased by $55 million (8%) to $623 million due to:

▪$31 million lower non-refundable operating costs

▪$24 million lower expenses associated with refundable programs, which costs are recovered in revenue

In the nine months ended September 30, 2025 compared to the same period in 2024, SoCalGas’ O&M increased by $4 million remaining at $2.0 billion due to:

▪$23 million higher expenses associated with refundable programs, which costs are recovered in revenue

▪$19 million lower non-refundable operating costs

Other (Expense) Income, Net

In the three months ended September 30, 2025 compared to the same period in 2024, SoCalGas had $3 million of other expense, net, in 2025 compared to $13 million of other income, net, in 2024 primarily due to higher non-service components of net periodic benefit cost.

In the nine months ended September 30, 2025 compared to the same period in 2024, SoCalGas’ other income, net, decreased by $36 million (49%) to $37 million primarily due to:

▪$22 million higher non-service components of net periodic benefit cost

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

▪$5 million lower net interest income on regulatory balancing accounts

In the three months ended September 30, 2025 compared to the same period in 2024, SoCalGas’ income tax benefit increased by $43 million primarily due to:

▪higher income tax benefit from flow-through items, including $47 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

▪$19 million lower income tax benefit from the resolution of prior year income tax items, including benefits that are flowed to customers and recorded as a regulatory liability

In the nine months ended September 30, 2025 compared to the same period in 2024, SoCalGas had an income tax benefit in 2025 compared to an income tax expense in 2024 primarily due to:

▪higher income tax benefit from flow-through items, including $47 million income tax benefit in 2025 from the election to accelerate self-developed software deductions

▪$19 million lower income tax benefit from the resolution of prior year income tax items, including benefits that are flowed to customers and recorded as a regulatory liability