8-KOther Events

SEMPRA 8-K Report, Corporate Update (Oct 12, 2022)

Filed October 12, 2022For Securities:SRESREA

Summary

Sempra Energy (SRE) has filed an 8-K report providing a significant update on the resolution of matters related to the 2015 Aliso Canyon natural gas leak. Key developments include a settlement agreement reached by its subsidiary, Southern California Gas Company (SoCalGas), with the California Public Utilities Commission's (CPUC) Safety and Enforcement Division (SED) and Public Advocates (CalPA) to resolve all phases of an investigation into the leak. This settlement includes financial penalties and reimbursement of certain costs, subject to CPUC approval. Furthermore, the report details the progress in resolving civil litigation stemming from the leak. While the vast majority of individual plaintiffs have settled their claims for up to $1.8 billion, a small percentage remain. All developer plaintiff claims have been settled. The company also notes the dismissal of three out of four shareholder derivative actions, with an appeal ongoing for one and an amended complaint filed in another. These settlements and resolutions are expected to result in a pre-tax charge of approximately $122 million ($101 million after-tax) in the third quarter of 2022.

Key Highlights

  • 1SoCalGas has reached a settlement with CPUC's SED and CalPA to resolve the "Leak OII" investigation concerning the Aliso Canyon natural gas leak.
  • 2The settlement includes financial penalties and specific cost reimbursements, with the agreement pending CPUC approval.
  • 3Approximately 98% of individual plaintiffs (over 36,000 individuals) have agreed to a settlement for up to $1.8 billion to resolve leak-related claims.
  • 4A small percentage of individual plaintiffs (Remaining Individual Plaintiffs) have not settled and may pursue their claims.
  • 5All claims from five property developers ('Developer Plaintiffs') have been settled.
  • 6Three of four shareholder derivative lawsuits have been dismissed; one is under appeal and another has an amended complaint.
  • 7Sempra and SoCalGas expect to record a pre-tax charge of approximately $122 million ($101 million after-tax) in Q3 2022 due to these settlements.

Frequently Asked Questions

Sempra and SoCalGas expect to record a pre-tax charge of approximately $122 million ($101 million after-tax) in the third quarter of 2022 related to the settlement with the fifth developer plaintiff and the CPUC regulatory settlement.

Most civil litigation has been resolved, with over 98% of individual plaintiffs settling their claims and all developer plaintiff claims settled. However, a small group of 'Remaining Individual Plaintiffs' have not settled and may continue to pursue their claims. Additionally, shareholder derivative actions are still ongoing, with one under appeal and another with an amended complaint.

The settlement with the CPUC's Safety and Enforcement Division (SED) and Public Advocates (CalPA) resolves all phases of the investigation into the Aliso Canyon leak. It includes financial penalties and certain costs that SoCalGas will reimburse, as well as costs SoCalGas previously incurred that it will not seek recovery for from ratepayers. This settlement is subject to approval by the full CPUC.

The report states that adverse outcomes in lawsuits by the Remaining Individual Plaintiffs, the unresolved shareholder derivative actions, the CPUC settlement if not approved, or the pending SB 380 OII could materially and adversely affect SoCalGas' and Sempra's results of operations, financial condition, cash flows, and prospects.