SAN DIEGO GAS & ELECTRIC CO

We discuss herein SoCalGas’ results of operations and significant changes in earnings, revenues and costs in the three months (Q2) and six months (YTD) ended June 30, 2026 compared to the same period in 2025.

RESULTS OF OPERATIONS

(Dollars in millions)

In the three months ended June 30, 2026 compared to the same period in 2025, the increase in earnings of $23 million (27%) was primarily due to:

▪$21 million higher income tax benefits primarily from flow-through items

▪$4 million higher CPUC base operating margin, net of operating expenses

▪$11 million higher net interest expense

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

▪$3 million lower AFUDC equity

In the six months ended June 30, 2026 compared to the same period in 2025, the increase in earnings of $4 million (1%) was primarily due to:

▪$10 million higher CPUC base operating margin, net of operating expenses

▪$16 million higher net interest expense

▪$6 million lower AFUDC equity

▪$5 million lower income tax benefits primarily from flow-through items

Natural Gas Revenues and Cost of Natural Gas

In the three months ended June 30, 2026 and 2025, SoCalGas’ average cost of natural gas per thousand cubic feet was $0.87 and $2.50, respectively. In the six months ended June 30, 2026 and 2025, SoCalGas’ average cost of natural gas per thousand cubic feet was $2.21 and $3.57, 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, 2026 compared to the same period in 2025, SoCalGas’ natural gas revenues decreased by $81 million (6%) to $1.2 billion primarily due to:

▪$101 million decrease in cost of natural gas sold, which we discuss below

▪$43 million lower revenues from a $21 million credit in 2026 compared to a $22 million cost in 2025 for the non-service components of net periodic benefit cost, which fully offsets in other income (expense), net

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

▪$7 million lower regulatory revenues associated with the acceleration of self-developed software deductions, which are offset in income tax expense

▪$5 million lower regulatory revenues associated with refundable programs, which are fully offset in O&M

▪$30 million higher CPUC-authorized base revenues

▪$20 million higher regulatory revenues primarily from lower gas repairs tax benefits

▪$14 million higher revenues from incremental and balanced capital projects

In the three months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ cost of natural gas decreased by $101 million to $51 million due to:

▪$96 million lower average natural gas prices

▪$5 million lower volumes driven by weather

In the six months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ natural gas revenues decreased by $373 million (11%) to $2.9 billion primarily due to:

▪$260 million decrease in cost of natural gas sold, which we discuss below

▪$142 million lower regulatory revenues associated with refundable programs, which are fully offset in O&M

▪$43 million lower revenues from a $43 million credit in 2026 compared to a negligible cost in 2025 for the non-service components of net periodic benefit cost, which fully offsets in other income (expense), net

▪$35 million lower regulatory revenues associated with the acceleration of self-developed software deductions, which are offset in income tax expense

▪$66 million higher CPUC-authorized base revenues

▪$24 million higher revenues from incremental and balanced capital projects

In the six months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ cost of natural gas decreased by $260 million (46%) to $307 million due to:

▪$190 million lower average natural gas prices

▪$70 million lower volumes driven by weather

In the six months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ O&M decreased by $139 million (10%) to $1.2 billion primarily due to lower expenses associated with refundable programs, which costs are recovered in revenue.

Other Income (Expense), Net

In the three months ended June 30, 2026 compared to the same period in 2025, SoCalGas had $41 million of other income, net, in 2026 compared to $2 million of other expense, net, in 2025 primarily due to:

▪$44 million from a $21 million credit in 2026 compared to a $23 million cost in 2025 for the non-service components of net periodic benefit cost

▪$7 million reduction in regulatory interest in 2025 from disallowed regulatory recovery of COVID-19 costs

▪$3 million lower AFUDC equity

▪$2 million lower net interest income on regulatory balancing accounts

In the six months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ other income, net, increased by $44 million to $84 million due to:

▪$48 million from a $42 million credit in 2026 compared to a $6 million cost in 2025 for the non-service components of net periodic benefit cost

▪$7 million reduction in regulatory interest in 2025 from disallowed regulatory recovery of COVID-19 costs

▪$6 million lower AFUDC equity

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

In the three months and six months ended June 30, 2026 compared to the same periods in 2025, SoCalGas’ income tax expense decreased by $6 million and $24 million, respectively, primarily due to higher income tax benefits from flow-through items.