Summary
Sempra Energy (SRE) has filed an 8-K report detailing proposed decisions from the California Public Utilities Commission (CPUC) concerning its subsidiaries, San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas). The report highlights two key areas: SDG&E's 2024 General Rate Case (GRC) Track 2 request and the 2026 Cost of Capital proceeding for both SDG&E and SoCalGas. The proposed decisions, while not final, indicate a significant reduction in the recovery of wildfire mitigation costs for SDG&E and a slightly lower authorized return on equity for both utilities compared to current rates. For SDG&E's GRC Track 2, the CPUC's proposed decision approves approximately $1.036 billion of the $1.472 billion requested for wildfire mitigation costs incurred from 2019-2022, with notable denials in operational and maintenance expenses. Furthermore, the proposed decision authorizes a lower total revenue requirement for ongoing capital-related costs from 2019-2027 than what SDG&E requested. In the Cost of Capital proceeding, the proposed decision maintains current capital structures but suggests a 35 basis point reduction in the authorized return on equity for both SDG&E and SoCalGas, effective 2026 through 2028. These proposed decisions are subject to public comment and a final vote by the CPUC. The outcomes could impact Sempra's subsidiaries' future revenue recovery and profitability. Investors should monitor the comment period and the final CPUC vote, scheduled for December 18, 2025, as these decisions will influence the financial performance of SDG&E and SoCalGas.
Key Highlights
- 1CPUC issued proposed decisions (PDs) on November 14, 2025, impacting SDG&E and SoCalGas, subsidiaries of Sempra Energy.
- 2For SDG&E's 2024 GRC Track 2, the PD approves $1,036 million of $1,472 million requested wildfire mitigation costs (2019-2022), denying $436 million, including significant O&M and capital costs.
- 3The Track 2 PD authorizes a total revenue requirement of $721 million for 2019-2027 for ongoing capital-related costs, which is $427 million lower than SDG&E's request.
- 4The proposed Cost of Capital decision for SDG&E and SoCalGas (2026-2028) maintains current capital structures but proposes a 35 basis point reduction in authorized return on equity for both utilities.
- 5Public comments on the PDs are due December 4, 2025, with reply comments due December 9, 2025.
- 6The earliest possible date for the CPUC to vote on these proposed decisions is December 18, 2025.
- 7Sempra Energy notes that these are proposed decisions and can be modified or rejected by the CPUC before becoming final.