Summary
Sempra Energy (SRE) announced on August 23, 2017, that the California Public Utilities Commission (CPUC) issued a proposed decision denying San Diego Gas & Electric Company's (SDG&E) request to recover costs associated with the 2007 Southern California Wildfires. SDG&E and Sempra Energy have recorded approximately $350 million in regulatory assets related to these wildfire costs. The company is actively evaluating the impact of this proposed decision, including pursuing options for rehearing or appealing the decision, as it could materially affect its financial results and cash flows. Should the proposed decision be adopted as final and not overturned, Sempra Energy may need to record an after-tax charge of up to approximately $207 million if cost recovery from customers is deemed no longer probable. The company has indicated that a failure to obtain substantial or full recovery, or a conclusion that recovery is improbable, would likely have a material adverse effect on the results of operations and cash flows for both Sempra Energy and SDG&E. Investors should monitor further developments in this regulatory proceeding.
Key Highlights
- 1CPUC issued a proposed decision denying SDG&E's request to recover costs from the 2007 Southern California Wildfires.
- 2Sempra Energy and SDG&E have recorded approximately $350 million in regulatory assets related to these wildfire costs.
- 3The company is evaluating the impact of the proposed decision and exploring options for rehearing or appeal.
- 4An after-tax charge of up to $207 million may be recorded if cost recovery is deemed no longer probable.
- 5A failure to recover these costs could materially adversely affect Sempra Energy's and SDG&E's results of operations and cash flows.
- 6The decision, if adopted, would close the regulatory proceeding without further evaluation of SDG&E's actions in settling claims.