01—Abstract
Summary
Summary of the 8-K filed December 19, 2025. Cited figures are marked; the original filing is the authoritative source.
Sempra (SRE) disclosed on December 19, 2025 that the CPUC approved a Final Decision (FD) in the 2026 Cost of Capital proceeding for SDG&E and SoCalGas, raising the authorized return on equity by 5 basis points versus the original proposed decision.
All other terms of that proposed decision are unchanged. This is a modest positive for the California utilities' allowed returns. The more significant item is the Track 2 proposed decision in SDG&E's 2024 General Rate Case.
The CPUC did not vote on it on December 18, 2025, leaving it pending. Sempra estimates it will produce a $471 milliona after-tax charge in Q4 2025, of which $34 million relates to the first three quarters of 2025 and $437 million relates to 2019-2024. SDG&E is pursuing regulatory avenues to improve the outcome, and the final amount depends on the timing and terms of the CPUC's final decision in 2026.
As a result, Sempra lowered its GAAP full-year 2025 EPS guidance to $2.38b-$2.78 from its prior range, reflecting the charge. It is guiding to the high end of its adjusted 2025 EPS range of $4.30-$4.70, and affirmed 2026 adjusted EPS guidance of $4.80-$5.30. Investors should weigh the one-time GAAP hit and the regulatory uncertainty around the Track 2 outcome against the affirmed forward earnings outlook.
02—Key points
Key Highlights
- CPUC approved a Final Decision in the SDG&E/SoCalGas Cost of Capital proceeding on December 18, 2025, with a return on equity 5 basis points higher than the original proposed decision.
- The CPUC did not vote on the Track 2 proposed decision in SDG&E's 2024 GRC, deferring the outcome into 2026.
- Sempra estimates a $471 million after-tax Q4 2025 charge from the Track 2 PD: $437 million for 2019-2024 and $34 million for the first three quarters of 2025.
- Full-year 2025 GAAP EPS guidance was updated to $2.38-$2.78, reflecting the estimated charge and nine-month 2025 results.
- Full-year 2025 adjusted EPS guidance is $4.30-$4.70, with Sempra now guiding to the high end of that range.
- 2026 adjusted EPS guidance of $4.80-$5.30 was affirmed, incorporating the Track 2 PD and Cost of Capital FD impacts.
- The $471 million charge is an estimate that may differ substantially depending on the timing and outcome of the 2026 final decision on Track 2.
03—Questions
Frequently Asked Questions
What is the financial impact of the Track 2 proposed decision on Sempra?
Sempra estimates a $471 million after-tax charge to earnings of Sempra and SDG&E in Q4 2025, with $437 million tied to 2019-2024 and $34 million to the first three quarters of 2025. This is excluded from adjusted EPS but reduces GAAP EPS.
Why did Sempra lower its GAAP EPS guidance but keep adjusted guidance intact?
The GAAP 2025 range was reduced to $2.38-$2.78 to include the estimated Track 2 charge. Adjusted EPS excludes significant non-recurring regulatory disallowances, so the adjusted 2025 range of $4.30-$4.70 is retained, with Sempra guiding to the high end.
What does the Cost of Capital Final Decision mean for SDG&E and SoCalGas?
The FD raises the authorized return on equity by 5 basis points above the original proposed decision, a modest increase. All other elements of the proposed decision are unchanged, so the effect on earnings is incremental and positive.
Could the $471 million charge change before it is finalized?
Yes. Sempra cautions the estimate may differ substantially from actual results, depending on the timing and outcome of the CPUC's 2026 final decision on Track 2. SDG&E is actively pursuing regulatory options to improve that outcome.
Is the 2026 earnings outlook still intact?
Sempra affirmed its 2026 adjusted EPS guidance of $4.80-$5.30, which already factors in the Track 2 proposed decision and the Cost of Capital final decision. The company did not provide a GAAP 2026 range, citing inability to reasonably estimate certain items.
04—Continue