Based on the provided financial report articles, the title of the article is: "SEMPRA, SAN DIEGO GAS & ELECTRIC COMPANY, and SOUTHERN CALIFORNIA GAS COMPANY Annual Report (Form 10-K) for the fiscal year ended December 31, 2024

Sempra Infrastructure Made Positive Investment Decision on Cimarrón Wind Project

Sempra Infrastructure, a subsidiary of Sempra, made a positive final investment decision on and began construction of the Cimarrón Wind project, an approximately 320 MW wind generation facility in Baja California, Mexico. Sempra Infrastructure has a 20-year power purchase agreement (PPA) with Silicon Valley Power for the long-term supply of renewable energy to the City of Santa Clara, California. The Cimarrón Wind project will utilize Sempra Infrastructure’s existing cross-border high voltage transmission line to interconnect and deliver clean energy to the East County substation in San Diego County. Sempra Infrastructure estimates the capital expenditures for the project will be approximately $550 million, including capitalized interest and project contingency. The company expects the Cimarrón Wind project to begin generating energy in late 2025 and commence commercial operations in the first half of 2026.

Sempra Resolved VAT and Legal Matters Related to RBS Sempra Commodities LLP

Sempra also reported that it resolved all value-added tax (VAT) and legal matters related to and substantially completed the liquidation of its equity method investment in RBS Sempra Commodities LLP. This joint venture was previously involved in commodity trading activities.

Sempra’s Earnings by Segment

Sempra’s earnings are divided into four main business segments: Sempra California, Sempra Texas Utilities, Sempra Infrastructure, and Parent and Other.

In 2024, Sempra California, which includes San Diego Gas & Electric (SDG&E) and Southern California Gas (SoCalGas), had earnings of $1.85 billion, up 6% from 2023. This increase was primarily due to higher income tax benefits, higher electric transmission margin, higher allowance for funds used during construction (AFUDC) equity, and higher net regulatory interest income. These were partially offset by a charge related to a FERC order and higher net interest expense.

Sempra Texas Utilities, which includes Sempra’s 80.25% ownership interest in Oncor Holdings, had earnings of $781 million in 2024, up 13% from 2023. The increase was mainly driven by higher revenues at Oncor due to rate updates, customer growth, and the implementation of new base rates, partially offset by higher interest expense, depreciation, and operations and maintenance (O&M) costs.

Sempra Infrastructure’s earnings increased 4% to $911 million in 2024. This was primarily due to favorable foreign currency and inflation effects, higher net interest income, and lower unrealized losses on interest rate swaps. These were partially offset by lower earnings from asset and supply optimization, the transportation business, and the renewables business.

Earnings for Sempra’s Parent and Other segment decreased $433 million to a loss of $721 million. This was mainly due to a $330 million income tax expense from changes to a valuation allowance on foreign tax credits, higher net interest expense, and lower equity earnings from the RBS Sempra Commodities LLP investment.

Significant Changes in Revenues and Costs

Sempra’s natural gas revenues decreased 25% to $7.1 billion in 2024, driven by a $2.6 billion decrease in the cost of natural gas sold at Sempra California. This was partially offset by higher CPUC-authorized revenues and regulatory revenues.

Sempra’s electric revenues remained flat at $4.3 billion. The decrease was primarily due to lower revenues associated with refundable programs, a charge related to the FERC order, and lower franchise fee revenues. This was offset by higher CPUC-authorized revenues, revenues from incremental and balanced capital projects, and higher transmission revenues.

Sempra Infrastructure’s revenues from energy-related businesses decreased 40% to $1.7 billion, mainly due to lower revenues from asset and supply optimization contracts, pipeline transportation, and the TdM power plant.

Sempra’s operation and maintenance (O&M) expenses decreased 2% to $5.3 billion, driven by lower expenses at Sempra California, partially offset by higher costs at Sempra Infrastructure.

Impact of Foreign Currency and Inflation Rates

Sempra’s earnings were impacted by foreign currency translation and transactional effects related to its Mexican subsidiaries and joint ventures. In 2024, there was a $499 million favorable impact from foreign currency and inflation effects on Sempra Infrastructure’s monetary positions in Mexico, compared to a $236 million unfavorable impact in 2023.

Sempra’s Mexican subsidiaries and joint ventures have U.S. dollar-denominated assets and liabilities that are affected by changes in the Mexican peso exchange rate and Mexican inflation for Mexican income tax purposes. This can lead to volatility in Sempra’s income tax expense and other income.

Outlook and Liquidity

Sempra expects to meet its cash requirements through cash flows from operations, unrestricted cash and cash equivalents, borrowings, debt and equity issuances, and other financing transactions. The company believes these sources will be adequate to fund operations, capital expenditures, debt repayment, dividends, and other obligations.

Sempra, SDG&E, and SoCalGas currently have reasonable access to money and capital markets, but their ability to access these markets could become constrained if economic conditions worsen or market disruptions increase. Cash flows from operations may also be impacted by regulatory proceedings, project completion, and other events.

In 2024, Sempra received net proceeds of $1.2 billion from the issuance of 17.1 million shares of common stock. The company also established a $3 billion at-the-market (ATM) equity offering program, under which it entered into a forward sale agreement for 2.9 million shares.

At the end of 2024, Sempra had $1.6 billion in unrestricted cash and cash equivalents, and $8.6 billion in available unused credit. SDG&E and SoCalGas had $1.1 billion and $863 million, respectively, in available unused credit.

Sempra, SDG&E, and SoCalGas maintain investment-grade credit ratings, which could be negatively impacted by economic conditions, actions by credit rating agencies, and other factors. Downgrades could increase borrowing costs and collateral requirements.

Sempra California Segment

Sempra California’s earnings are comprised of SDG&E and SoCalGas. In 2024, Sempra California’s earnings increased 6% to $1.8 billion, primarily due to higher income tax benefits, higher electric transmission margin, higher AFUDC equity, and higher net regulatory interest income. These were partially offset by a charge related to the FERC order, higher net interest expense, and an impairment of disallowed capital costs.

SDG&E’s earnings decreased 5% to $891 million, mainly due to the FERC order charge, higher net interest expense, and lower AFUDC equity. These were partially offset by higher income tax benefits, higher CPUC-authorized revenues, and lower Wildfire Fund amortization.

SoCalGas’ earnings increased 18% to $955 million, primarily due to higher income tax benefits, higher AFUDC equity, and higher net regulatory interest income. These were partially offset by higher net interest expense, lower CPUC-authorized revenues, and an impairment of disallowed capital costs.

Sempra Texas Utilities Segment

Sempra Texas Utilities’ earnings, which are primarily derived from its 80.25% ownership interest in Oncor Holdings, increased 13% to $781 million. This was mainly driven by higher revenues at Oncor due to rate updates, customer growth, and new base rates, partially offset by higher interest expense, depreciation, and O&M costs.

Sempra Infrastructure Segment

Sempra Infrastructure’s earnings increased 4% to $911 million. This was primarily due to favorable foreign currency and inflation effects, higher net interest income, and lower unrealized losses on interest rate swaps. These were partially offset by lower earnings from asset and supply optimization, the transportation business, and the renewables business.

Sempra Infrastructure is developing several natural gas liquefaction projects, including the Cameron LNG Phase 2 project, the ECA LNG Phase 1 and Phase 2 projects, and the Port Arthur LNG Phase 1 and Phase 2 projects. The company is also constructing the Cimarrón Wind project and the Hackberry Carbon Sequestration project.

The successful development and construction of these projects is subject to numerous risks and uncertainties, including securing customer commitments, financing, permits, and regulatory approvals. Unfavorable outcomes could have a material adverse effect on the projects and Sempra’s financial results.

Parent and Other Segment

Sempra’s Parent and Other segment, which includes the parent company and other operations, had a $433 million increase in losses to $721 million. This was mainly due to a $330 million income tax expense from changes to a valuation allowance on foreign tax credits, higher net interest expense, and lower equity earnings from the RBS Sempra Commodities LLP investment.

Regulatory Matters

SDG&E and SoCalGas operate under a regulatory framework that allows them to recover certain costs in customer rates. Changes in regulatory balancing accounts, particularly the transition between over- and under-collected status, can significantly impact their cash flows.

In 2024, the California Public Utilities Commission (CPUC) approved final decisions for SDG&E’s and SoCalGas’ 2024 general rate cases. This authorized revenue requirement increases of 7.5% for SDG&E and 9.3% for SoCalGas in 2024, with additional annual increases through 2027.

The CPUC also modified the cost of capital mechanism, reducing SDG&E’s and SoCalGas’ authorized returns on equity by 42 basis points to 10.23% and 10.08%, respectively, effective January 1, 2025.

SDG&E has regulatory mechanisms to recover wildfire mitigation costs, including a Track 2 request for $1.5 billion in costs from 2019-2022 and a future Track 3 request for 2023 costs. SoCalGas faces potential costs related to the recent LA Fires, which the company has mechanisms available to potentially recover.

Liquidity and Capital Resources

Sempra, SDG&E, and SoCalGas expect their available funds, cash flows from operations, and other financing activities to be adequate to fund their operations, capital expenditures, debt repayment, dividends, and other obligations.

Sempra’s total capitalization increased 14% in 2024 due to increases in long-term debt and equity, partially offset by decreases in short-term debt and distributions to noncontrolling interests. SDG&E’s and SoCalGas’ total capitalization increased 6% and 9%, respectively, due to increases in debt and equity.

Sempra, SDG&E, and SoCalGas paid common stock dividends of $1.5 billion, $225 million, and $200 million, respectively, in 2024. Sempra’s board of directors has discretion over future dividend declarations.

Sempra expects to make capital expenditures and investments of approximately $12.5 billion in 2025, primarily for transmission, distribution, and LNG projects. From 2025-2029, Sempra expects aggregate capital expenditures of $41.4 billion, subject to various factors that could cause these estimates to vary.

In summary, Sempra had a mixed financial performance in 2024, with earnings growth in its Sempra California and Sempra Texas Utilities segments offset by lower earnings in its Sempra Infrastructure and Parent and Other segments. The company continues to invest heavily in infrastructure projects, particularly in the LNG and renewable energy sectors, which carry significant risks but also opportunities for future growth. Sempra maintains a strong liquidity position and investment-grade credit ratings, though its financial results and access to capital could be impacted by regulatory, economic, and other factors.