What is the financial impact of the CPUC's final decision on the 2024 GRC for Sempra's subsidiaries?

The CPUC's decision authorizes significant increases in the revenue requirements for SDG&E and SoCalGas for 2024 and subsequent years through 2027. Specifically, SDG&E's 2024 revenue requirement is authorized to increase by 7.5%, and SoCalGas' by 9.3%, over their 2023 levels. These increases will impact future revenues, though a portion of the immediate increase in 2024 is offset by tax benefits being returned to customers.

Are there any additional cost recovery mechanisms for SDG&E and SoCalGas beyond the approved revenue requirements?

Yes, the GRC final decision provides several mechanisms for SDG&E and SoCalGas to seek cost recovery for specific projects and programs related to safety, maintenance, and reliability. These include wildfire mitigation plans, pipeline safety enhancement plans, infrastructure projects like compressor stations, and other programs. These potential future cost recovery requests are not included in the current authorized revenue requirements and are subject to separate CPUC approval.

What is the impact of the FERC ruling on SDG&E's transmission operations?

The Federal Energy Regulatory Commission (FERC) ruled that SDG&E is no longer eligible for a California Independent System Operator (California ISO) adder, which was part of a settlement for its FERC Transmission Owner Formula Rate 5 (TO5) proceeding. This ruling will result in a charge of approximately $120 million ($89 million after tax) being recorded in the fourth quarter of 2024, impacting Sempra and SDG&E's non-GAAP earnings calculations. SDG&E intends to appeal this decision.

What is the significance of the Aliso Canyon decision?

The CPUC has closed its investigation into the Aliso Canyon natural gas storage facility, ruling that it is necessary for natural gas and electric reliability and affordable rates in the region. The facility is authorized to continue operating with a maximum working natural gas storage level of 68.6 billion cubic feet. This decision provides clarity on the operational status of this critical energy infrastructure.

SRE/SREA 8-K SEC Disclosure

Summary

Sempra Energy (SRE) has filed an 8-K report detailing the final decision from the California Public Utilities Commission (CPUC) regarding the 2024 General Rate Case (GRC) for its subsidiaries, San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas). The decision authorizes significant increases in revenue requirements for both utilities for 2024 and subsequent attrition years through 2027. This includes substantial percentage increases over 2023 authorized revenues, partially offset by tax benefits being flowed through to customers. The filing also outlines various mechanisms for SDG&E and SoCalGas to seek recovery of additional costs related to safety, maintenance, and reliability projects, such as wildfire mitigation, pipeline safety, and infrastructure upgrades. These potential future cost recovery requests are not included in the authorized revenue requirements stated in the GRC decision and will be subject to further CPUC approval. Additionally, the report addresses a Federal Energy Regulatory Commission (FERC) ruling that impacts SDG&E's transmission operations, leading to a non-GAAP charge, and confirms the CPUC's decision to allow the Aliso Canyon natural gas storage facility to continue operating, deeming it necessary for regional reliability.

Key Highlights

1CPUC approved the 2024 General Rate Case (GRC) final decision for SDG&E and SoCalGas, authorizing increased revenue requirements.
2SDG&E's 2024 combined revenue requirement authorized to increase by 7.5% ($189 million) over 2023, with further increases through 2027.
3SoCalGas' 2024 revenue requirement authorized to increase by 9.3% ($324 million) over 2023, with subsequent annual increases through 2027.
4Tax benefits totaling $68 million for SDG&E and $202 million for SoCalGas for 2023-2024 will be flowed through to customers, reducing the reported revenue requirement increase.
5The GRC FD establishes mechanisms for SDG&E and SoCalGas to seek cost recovery for various safety, maintenance, and reliability projects, which could lead to additional revenue requirements.
6FERC ruled SDG&E is ineligible for a California ISO adder, resulting in an approximate $120 million charge (after-tax effect of $89 million) to Sempra and SDG&E's 2024 non-GAAP earnings.
7CPUC closed the Aliso Canyon investigation, ruling the facility is necessary for natural gas and electric reliability and affordable rates, authorizing its continued operation.

SEMPRA 8-K Report, Corporate Update (Dec 23, 2024)

Summary

Key Highlights

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