SAN DIEGO GAS & ELECTRIC CO

We discuss herein SoCalGas’ results of operations and significant changes in (losses) earnings, revenues and costs in the three months (Q3) and nine months (YTD) ended September 30, 2026 compared to the same periods in 2025.

RESULTS OF OPERATIONS

(Dollars in millions)

In the three months ended September 30, 2026 compared to the same period in 2025, SoCalGas’ losses were $153 million compared to earnings of $46 million primarily due to:

▪$216 million charge in 2026 from regulatory disallowances related to prior years, which we discuss in Note 4 of the Notes to the Condensed Financial Statements

▪$7 million higher net interest expense

▪$17 million higher CPUC base operating margin, net of operating expenses and a $7 million charge in 2026 from regulatory disallowances

In the nine months ended September 30, 2026 compared to the same period in 2025, the decrease in earnings of $195 million (34%) was primarily due to:

▪$216 million charge in 2026 from regulatory disallowances related to prior years

▪$23 million higher net interest expense

▪$6 million lower net regulatory interest income

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

▪$27 million higher CPUC base operating margin, net of operating expenses and a $7 million charge in 2026 from regulatory disallowances

▪$25 million charge in 2025 from disallowed regulatory recovery of COVID-19 costs

Natural Gas Revenues and Cost of Natural Gas

In the three months ended September 30, 2026 and 2025, SoCalGas’ average cost of natural gas per thousand cubic feet was $3.42 and $3.96, respectively. In the nine months ended September 30, 2026 and 2025, SoCalGas’ average cost of natural gas per thousand cubic feet was $2.50 and $3.65, 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, 2026 compared to the same period in 2025, SoCalGas’ natural gas revenues decreased by $10 million (1%) remaining at $1.2 billion primarily due to:

▪$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 are fully offset in other income (expense), net

▪$29 million decrease in cost of natural gas sold, which we discuss below

▪$12 million lower regulatory revenues associated with refundable programs, which are fully offset in O&M

▪$44 million higher regulatory revenues from the election in 2025 to accelerate self-developed software deductions, which are fully offset in income tax benefit

▪$13 million higher CPUC-authorized base revenues

▪$12 million higher revenues from incremental and balanced capital projects

▪$7 million higher regulatory revenues primarily from lower gas repairs tax benefits

In the three months ended September 30, 2026 compared to the same period in 2025, SoCalGas’ cost of natural gas decreased by $29 million (16%) to $153 million due to:

▪$24 million lower average natural gas prices

▪$5 million lower volumes driven by weather

In the nine months ended September 30, 2026 compared to the same period in 2025, SoCalGas’ natural gas revenues decreased by $383 million (9%) to $4.1 billion primarily due to:

▪$289 million decrease in cost of natural gas sold, which we discuss below

▪$154 million lower regulatory revenues associated with refundable programs, which are fully offset in O&M

▪$86 million lower revenues from a $64 million credit in 2026 compared to a $22 million cost in 2025 for the non-service components of net periodic benefit cost, which are fully offset in other income (expense), net

▪$79 million higher CPUC-authorized base revenues

▪$36 million higher revenues from incremental and balanced capital projects

▪$29 million lower revenues in 2025 from disallowed regulatory recovery of COVID-19 costs

▪$11 million higher regulatory revenues primarily from lower gas repairs tax benefits

In the nine months ended September 30, 2026 compared to the same period in 2025, SoCalGas’ cost of natural gas decreased by $289 million (39%) to $460 million due to:

▪$212 million lower average natural gas prices

▪$77 million lower volumes driven by weather

In the three months ended September 30, 2026 compared to the same period in 2025, SoCalGas’ O&M decreased by $41 million (7%) to $582 million due to:

▪$29 million lower non-refundable operating costs

▪$12 million lower expenses associated with refundable programs, which costs are recovered in revenue

In the nine months ended September 30, 2026 compared to the same period in 2025, SoCalGas’ O&M decreased by $180 million (9%) to $1.8 billion due to:

▪$154 million lower expenses associated with refundable programs, which costs are recovered in revenue

▪$26 million lower non-refundable operating costs

Regulatory Disallowances

As we discuss in Note 4 of the Notes to Condensed Financial Statements, SoCalGas recorded a charge in the third quarter of 2026 from regulatory disallowances of $309 million ($223 million after tax), of which $300 million ($216 million after tax) relates to prior years and $9 million ($7 million after tax) relates to 2026.

Gain on Sale

In September 2026, SoCalGas recognized a $16 million gain on the sale of land, of which $11 million is refundable to ratepayers and offset in natural gas revenues.

Other Income (Expense), Net

In the three months ended September 30, 2026 compared to the same period in 2025, SoCalGas had $45 million of other income, net, compared to $3 million of other expense, net, primarily due to a change of $48 million from a $20 million credit in 2026 compared to a $28 million cost in 2025 for the non-service components of net periodic benefit cost.

In the nine months ended September 30, 2026 compared to the same period in 2025, SoCalGas’ other income, net, increased by $92 million to $129 million due to:

▪$96 million from a $62 million credit in 2026 compared to a $34 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

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

In the three months and nine months ended September 30, 2026 compared to the same periods in 2025, SoCalGas’ income tax benefit increased by $20 million and $44 million, respectively, primarily due to:

▪$84 million income tax benefit in 2026 from a charge to regulatory disallowances related to prior years