Summary
Sempra Energy's subsidiary, San Diego Gas & Electric Company (SDG&E), has formally notified the California Public Utilities Commission (CPUC) of its commitment to contribute to a Wildfire Fund, as established by recent California legislation (Assembly Bills 1054 and 111). This action is a crucial step in the formation of the Wildfire Fund, which offers significant benefits to participating investor-owned electric utilities (IOUs) in managing wildfire-related liabilities. The creation of this larger Wildfire Fund is contingent upon Southern California Edison Company (Edison) also committing its shareholder contributions by July 27, 2019. Should Edison participate, both SDG&E and Edison would be obligated to make initial contributions by September 10, 2019, followed by ten annual contributions. SDG&E's commitment includes an initial contribution of $322.5 million, funded by its shareholders, along with $12.9 million annually for ten years. Sempra Energy is currently assessing the accounting and tax implications, which could result in a charge against earnings in the third quarter of 2019, not exceeding the total contribution amount.
Key Highlights
- 1SDG&E has committed to contributing to a new Wildfire Fund established by California legislation, subject to Edison's participation.
- 2The Wildfire Fund aims to provide financial protection for investor-owned electric utilities against wildfire liabilities.
- 3Edison's commitment is required by July 27, 2019, for the Wildfire Fund to be established.
- 4If established, SDG&E's initial contribution will be $322.5 million, with annual contributions of $12.9 million for ten years, all shareholder-funded.
- 5The company anticipates a potential charge against earnings in Q3 2019 related to these contributions, capped at the total contribution amount.
- 6The legislation offers material benefits to participating utilities not available in a smaller Liquidity Fund.