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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549 
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedJune 30, 20222023
 or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period fromto

Commission File No.Exact Name of Registrant as Specified in its Charter,
Address of Principal Executive Office and Telephone Number		State of IncorporationI.R.S. Employer Identification No.Former name, former address and former fiscal year, if changed since last report
1-14201SEMPRA ENERGY
Sempra logo.jpg
California33-0732627No change
488 8th Avenue
San Diego, California 92101
(619) 696-2000
1-03779SAN DIEGO GAS & ELECTRIC COMPANY
sre-20220630_g2.jpgSDGE_tm_rgb_c_v12-19.jpg
California95-1184800No change
83268330 Century Park Court
San Diego, California 92123
(619) 696-2000
1-01402SOUTHERN CALIFORNIA GAS COMPANY
SoCalGas.jpg
California95-1240705No change
555 West Fifth5th Street
Los Angeles, California 90013
(213) 244-1200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
SEMPRA ENERGY:SEMPRA:
Common Stock, without par valueSRENew York Stock Exchange
5.75% Junior Subordinated Notes Due 2079, $25 par valueSREANew York Stock Exchange
SAN DIEGO GAS & ELECTRIC COMPANY:
None
SOUTHERN CALIFORNIA GAS COMPANY:
None
1

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Sempra EnergyYes☒No☐
San Diego Gas & Electric CompanyYes☒No☐
Southern California Gas CompanyYes☒No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Sempra EnergyYes☒No☐
San Diego Gas & Electric CompanyYes☒No☐
Southern California Gas CompanyYes☒No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Sempra Energy:Sempra:
☒Large Accelerated Filer
☐ Accelerated Filer
☐ Non-accelerated Filer
☐ Smaller Reporting Company
☐ Emerging Growth Company
San Diego Gas & Electric Company:
☐ Large Accelerated Filer
☐ Accelerated Filer
☒Non-accelerated Filer
☐ Smaller Reporting Company
☐ Emerging Growth Company
Southern California Gas Company:
☐Large Accelerated Filer
☐ Accelerated Filer
☒ Non-accelerated Filer
☐ Smaller Reporting Company
☐ Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Sempra EnergyYes☐No☐
San Diego Gas & Electric CompanyYes☐No☐
Southern California Gas CompanyYes☐No☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Sempra EnergyYes☐No☒
San Diego Gas & Electric CompanyYes☐No☒
Southern California Gas CompanyYes☐No☒
Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date.
Common stock outstanding on August 1, 2022:July 31, 2023:
Sempra Energy314,310,331314,653,565 shares
San Diego Gas & Electric CompanyWholly owned by Enova Corporation, which is wholly owned by Sempra Energy
Southern California Gas CompanyWholly owned by Pacific Enterprises, which is wholly owned by Sempra Energy
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TABLE OF CONTENTS
 Page
4
7
  
PART I – FINANCIAL INFORMATION 
Item 1.
9
Notes to Condensed Consolidated Financial Statements
Note 1. General Information and Other Financial Data
29
Note 2. New Accounting Standards
47
Note 3. Revenues
4847
Note 4. Regulatory Matters
5150
Note 5. AcquisitionsInvestments in Unconsolidated Entities
51
Note 6. Debt and DivestituresCredit Facilities
53
Note 6. Investments in Unconsolidated Entities7. Derivative Financial Instruments
54
Note 7. Debt and Credit Facilities
56
Note 8. Derivative Financial InstrumentsFair Value Measurements
5863
Note 9. Fair Value MeasurementsSan Onofre Nuclear Generating Station
6470
Note 10. San Onofre Nuclear Generating StationCommitments and Contingencies
72
Note 11. Commitments and ContingenciesSegment Information
7478
Note 12. Segment InformationSubsequent Event
8380
Item 2.
8681
Overview
8681
Results of Operations
8781
Capital Resources and Liquidity
9893
Critical Accounting Estimates
111106
New Accounting Standards
111106
Item 3.
112106
Item 4.
113108
  
PART II – OTHER INFORMATION 
Item 1.
113108
Item 1A.
113108
Item 2.5.
114109
Item 6.
115110
  
118113
This combined Form 10-Q is separately filed by Sempra Energy doing business as Sempra, San Diego Gas & Electric Company and Southern California Gas Company. Information contained herein relating to any one of these individual reporting entities is filed by such entity on its own behalf. Each such reporting entity makes statements herein only as to itself and its consolidated entities and makes no statement whatsoever as to any other entity.
You should read this report in its entirety as it pertains to each respective reporting entity. No one section of the report deals with all aspects of the subject matter. A separate Part I – Item 1 is provided for each reporting entity, except for the Notes to Condensed Consolidated Financial Statements. The Notes to Condensed Consolidated Financial Statements, which are combined for all of the reporting entities are combined.entities. All Items other than Part I – Item 1 are combined for the three reporting entities.
None of the website references in this report are active hyperlinks, and the information contained on or that can be accessed through any such website is not and shall not be deemed to be part of or incorporated by reference in this report.report or any other document that we file with or furnish to the SEC.

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The following terms and abbreviations appearing in this report have the meanings indicated below.
GLOSSARY
ABCalifornia Assembly Bill
ADIABlack Silverback ZC 2022 LP (assignee of Black River B 2017 Inc.), a wholly owned affiliate of Abu Dhabi Investment Authority
AFUDCallowance for funds used during construction
Annual ReportAnnual Report on Form 10-K for the year ended December 31, 20212022
AOCIaccumulated other comprehensive income (loss)
AROasset retirement obligation
ASCAccounting Standards Codification
ASEAAgencia de Seguridad, Energía y Ambiente (Mexico’s National Agency for Industrial Safety and Environmental Protection)
ASRaccelerated share repurchase
ASUAccounting Standards Update
Bcfbillion cubic feet
BechtelBechtel Energy Inc. (formerly known as Bechtel Oil, Gas and Chemicals, Inc.
BladeBlade Energy Partners)
bpsbasis points
CalGEMCalifornia Geologic Energy Management Division
Cameron LNG JVCameron LNG Holdings, LLC
Cameron LNG Phase 1 facilityCameron LNG JV liquefaction facility
Cameron LNG Phase 2 projectCameron LNG JV liquefaction expansion project
CCACommunity Choice Aggregation
CCMcost of capital adjustment mechanism
CENACECentro Nacional de Control de Energía (Mexico’s National Center for Energy Control)
CFEComisión Federal de Electricidad (Mexico’s Federal Electricity Commission)
CFINCameron LNG FINCO, LLC, a wholly owned and unconsolidated affiliate of Cameron LNG JV
ConocoPhillipsConocoPhillips Company
COVID-19coronavirus disease 2019
CPUCCalifornia Public Utilities Commission
CREComisión Reguladora de Energía (Mexico’s Energy Regulatory Commission)
CRRcongestion revenue right
DOEU.S. Department of Energy
ECA LNGECA LNG Phase 1 and ECA LNG Phase 2, collectively
ECA LNG Phase 1ECA LNG Holdings B.V.
ECA LNG Phase 2ECA LNG II Holdings B.V.
ECA Regas FacilityEnergía Costa Azul, S. de R.L. de C.V. LNG regasification facility
EcogasEcogas México, S. de R.L. de C.V.
EdisonSouthern California Edison Company, a subsidiary of Edison International
EFHEnergy Future Holdings Corp. (renamed Sempra Texas Holdings Corp.)
EPCengineering, procurement and construction
EPSearnings (losses) per common share
ESJEnergía Sierra Juárez, S. de R.L. de C.V.
ETReffective income tax rate
FEEDFront-End Engineering Designfront-end engineering design
FERCFederal Energy Regulatory Commission
FitchFitch Ratings, Inc.
FTAFree Trade Agreement
GazpromGCIMGazprom Marketing & Trading México S. de R.L. de C.V.Gas Cost Incentive Mechanism
GHGgreenhouse gas
GRCGeneral Rate Case
HOAHeads of Agreement
IEnovaInfraestructura Energética Nova, S.A.P.I. de C.V.
IMGInfraestructura Marina del Golfo
INEOSINEOS Energy Trading LTD., a subsidiary of INEOS Ltd.
IOUinvestor-owned utility
IRAInflation Reduction Act of 2022
IRSU.S. Internal Revenue Service
ISOIndependent System Operator
JVjoint venture
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GLOSSARY (CONTINUED)
KKR DenaliKKR Denali Holdco LLC, an affiliate of Kohlberg Kravis Roberts & Co. L.P.
KKR PinnacleKKR Pinnacle Investor L.P. (as successor-in-interest to KKR Pinnacle Aggregator L.P.), an affiliate of Kohlberg Kravis Roberts & Co. L.P.
LA Superior CourtLos Angeles County Superior Court
Leakthe leak at the SoCalGas Aliso Canyon natural gas storage facility injection-and-withdrawal well, SS25, discovered by SoCalGas on October 23, 2015
LIBORLondon Interbank Offered Rate
LNGliquefied natural gas
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
Mexican Stock ExchangeBolsa Mexicana de Valores, S.A.B. de C.V., or BMV
MMBtumillion British thermal units (of natural gas)
Moody’sMoody’s Investors Service, Inc.
MOUMemorandum of Understanding
Mtpamillion tonnes per annum
MWmegawatt
MWhmegawatt hour
NCInoncontrolling interest(s)
NDTnuclear decommissioning trusts
NEILNuclear Electric Insurance Limited
O&Moperation and maintenance expense
OCIother comprehensive income (loss)
OIIOrder Instituting Investigation
OncorOncor Electric Delivery Company LLC
Oncor HoldingsOncor Electric Delivery Holdings Company LLC
ORLENPolski Koncern Naftowy Orlen S.A. (formerly Polish Oil & Gas Company)
OSCOrder to Show Cause
PA LNG Phase 1 projectinitial phase of the proposed Port Arthur LNG liquefaction export project
PA LNG Phase 2 projectsecond phase of the proposed Port Arthur LNG liquefaction export project
PG&EPBOPPacific Gas and Electric Companypostretirement benefits other than pension
PGNiGPort Arthur LNGPolish Oil & Gas CompanyPort Arthur LNG, LLC, an indirect subsidiary of SI Partners that owns the PA LNG Phase 1 project
PP&Eproperty, plant and equipment
PPApower purchase agreement
PUCTPublic Utility Commission of Texas
RBSThe Royal Bank of Scotland plc
RBS SEERBS Sempra Energy Europe
RBS Sempra CommoditiesRBS Sempra Commodities LLP
ROEreturn on equity
RSUrestricted stock unit
S&PS&P Global Ratings, a division of S&P Global Inc.
Saavi EnergíaSaavi Energía S. de R.L. de C.V.
SBCalifornia Senate Bill
SDG&ESan Diego Gas & Electric Company
SDSRASenior Debt Service Reserve Account
SECU.S. Securities and Exchange Commission
SEDSafety and Enforcement Division of the CPUC
SEDATUSecretaría de Desarrollo Agrario, Territorial y Urbano (Mexico’s agency in charge of agriculture, land and urban development)
SempraSEFESempra Energy doing businessSEFE Marketing & Trading México S. de R.L. de C.V. (formerly known as Sempra, together with its consolidated entities unless otherwise stated or indicated by the contextGazprom Marketing & Trading México S. de R.L. de C.V.)
Sempra CaliforniaSan Diego Gas & Electric Company and Southern California Gas Company, collectively
SENERSecretaría de Energía de México (Mexico’s Ministry of Energy)
series AC preferred stock6% mandatory convertibleSempra’s 4.875% fixed-rate reset cumulative redeemable perpetual preferred stock, series A
series B preferred stock6.75% mandatory convertible preferred stock, series B
Shell MexicoShell México Gas Natural, S. de R.L. de C.V.C
SI PartnersSempra Infrastructure Partners, LP, the holding company for most of Sempra’s subsidiaries not subject to California or Texas utility regulation
SoCalGasSouthern California Gas Company
SOFRSecured Overnight Financing Rate
SONGSSan Onofre Nuclear Generating Station
5
Table of Contents
GLOSSARY (CONTINUED)
SoCalGasSouthern California Gas Company
SONGSSan Onofre Nuclear Generating Station
SPAsale and purchase agreement
Support Agreementsupport agreement, dated July 28, 2020 and amended on June 29, 2021, among Sempra and Sumitomo Mitsui Banking Corporation
TAGTAG Norte Holding, S. de R.L. de C.V.
TdMTermoeléctrica de Mexicali
Technip EnergiesTP Oil & Gas Mexico, S. De R.L. De C.V., an affiliate of Technip Energies N.V.
TO5Electric Transmission Owner Formula Rate, effective June 1, 2019
U.S. GAAPgenerally accepted accounting principles in the United States of America
VATvalue-added tax
VentikaVentika, S.A.P.I. de C.V. and Ventika II, S.A.P.I. de C.V., collectively
VIEvariable interest entity
Wildfire Fundthe fund established pursuant to AB 1054
Wildfire LegislationAB 1054 and AB 111

References in this report to “we,” “our,” “us,” “our company” and “Sempra” are to Sempra and its consolidated entities, collectively, unless otherwise stated or indicated by the context. We sometimes refer to SDG&E and SoCalGas collectively as Sempra California, which does not include the utilities in our Sempra Texas Utilities or Sempra Infrastructure segments. All references in this report to our reportable segments are not intended to refer to any legal entity with the same or similar name.
Throughout this report, we refer to the following as Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements when discussed together or collectively:
•▪the Condensed Consolidated Financial Statements and related Notes of Sempra;
•▪the Condensed Financial Statements and related Notes of SDG&E; and
•▪the Condensed Financial Statements and related Notes of SoCalGas.
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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
We make statements in this report that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions with respect to the future, involve risks and uncertainties, and are not guarantees. Future results may differ materially from those expressed or implied in any forward-looking statements.statement. These forward-looking statements represent our estimates and assumptions only as of the filing date of this report. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or other factors.otherwise.
Forward-looking statements can be identified by words such as “believes,” “expects,” “intends,” “anticipates,” “contemplates,” “plans,” “estimates,” “projects,” “forecasts,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “in process,” “construct,” “develop,” “opportunity,” “initiative,” “target,” “outlook,” “optimistic,” “poised,” “maintain,” “continue,” “progress,” “advance,” “goal,” “aim,” “commit,” or similar expressions, or when we discuss our guidance, priorities, strategy, goals, vision, mission, opportunities, projections, intentions or expectations.
Factors, among others, that could cause actual results and events to differ materially from those expressed or implied in any forward-looking statement include risks and uncertainties relating to:
▪California wildfires, including the risks that we may be found liablepotential liability for damages regardless of fault and that we may not be ableany inability to recover all or a substantial portion of costs from insurance, the Wildfire Fund, in rates from customers or a combination thereof
▪decisions, investigations, inquiries, regulations, issuancesdenials or revocations of permits, andconsents, approvals or other authorizations, renewals of franchises, and other actions by (i) the CPUC, CRE, DOE, FERC, PUCT, and other regulatorygovernmental and governmentalregulatory bodies and (ii) the U.S., Mexico and states, counties, cities and other jurisdictions therein and in other countries in whichwhere we do business
▪the success of business development efforts, construction projects and acquisitions and divestitures, including risks in (i) being able to make a final investment decision, (ii) completing construction projects or other transactions on schedule and budget, (iii) realizing anticipated benefits from any of these efforts if completed, and (iv) obtaining the consent or approval of partners or other third parties including governmental and regulatory bodies
▪civil and criminal litigation, regulatory inquiries, investigations, arbitrations, property disputes and other proceedings, including those related to the Leak
▪and changes to laws and regulations, including certain of Mexico’s laws and rules that impactthose related to the energy supplier permitting, energy contract rates, the electricity industry generally and the import, export, transport and storage of hydrocarbonsin Mexico
▪cybersecurity threats, including by state and state-sponsored actors, to the energy grid, storage and pipeline infrastructure, information and systems used to operate our businesses, and confidentiality of our proprietary information and personal information of our customers and employees, including ransomware or other attacks on our systems andor the systems of third-partiesthird parties with which we conduct business, including the energy grid or other energy infrastructure, all of which have become more pronounced due to recent geopolitical events
▪our ability to borrow money on favorable terms and other uncertainties, such as the war in Ukrainemeet our obligations, including due to (i) actions by credit rating agencies to downgrade our credit ratings or place those ratings on negative outlook or (ii) rising interest rates and inflation
▪failure of foreign governments, state-owned entities and our counterparties to honor their contracts and commitments
▪actions by credit rating agencies to downgrade our credit ratings or to place those ratingsthe impact on negative outlookaffordability of SDG&E’s and ourSoCalGas’ customer rates and their cost of capital and on SDG&E’s, SoCalGas’ and Sempra Infrastructure’s ability to borrow on favorable termspass through higher costs to customers due to (i) volatility in inflation, interest rates and meet our debt service obligationscommodity prices, (ii) with respect to SDG&E’s and SoCalGas’ businesses, the cost of the clean energy transition in California, and (iii) with respect to Sempra Infrastructure’s business, volatility in foreign currency exchange rates
▪the impact of energyclimate and climatesustainability policies, laws, rules, regulations, disclosures and disclosures, as well as related goals and actions of companies in our industry,trends, including actions to reduce or eliminate reliance on natural gas, generally and any deterioration of or increased uncertainty in the political or regulatory environment for California natural gas distribution companies, and the risk of nonrecovery for stranded assets,
▪the pace of the development and adoption of new technologies in the energy sector, including those designed to support governmental and private party energy and climate goals, and our ability to timely and economically incorporate them into our businessesnew technologies
▪weather, natural disasters, pandemics, accidents, equipment failures, explosions, acts of terrorism, information system outages or other events that disrupt our operations, damage our facilities andor systems, cause the release of harmful materials causeor fires or subject us to liability for damages, fines and penalties, some of which may be disputed or not covered by insurers, may not be recoverable through regulatory mechanisms or insurance or may impact our ability to obtain satisfactory levels of affordable insurance
▪inflationary and interest rate pressures, volatility in foreign currency exchange rates and commodity prices, our ability to effectively hedge these risks, and their impact, as applicable, on SDG&E’s and SoCalGas’ cost of capital and the affordability of customer rates
▪the availability of electric power, natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid, pipeline system or limitations on the withdrawal of natural gas from storage facilities
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▪the impact of the COVID-19 pandemic on capital projects, regulatory approvals and the execution of our operations
▪the impact at SDG&E on competitive customer rates and reliability due to growth in distributed and local power generation, including from departing retail load resulting from customers transferring to CCA and Direct Access, and the risk of nonrecovery for stranded assets and contractual obligations
▪Oncor’s ability to eliminatereduce or reduceeliminate its quarterly dividends due to regulatory and governance requirements and commitments, including by actions of Oncor’s independent directors or a minority member director
▪changes in tax and trade policies, laws and regulations, including tariffs, revisions to international trade agreements and sanctions, such as those that have been imposed and that may be imposed in the future in connection with the war in Ukraine,any of which may increase our costs, reduce our competitiveness, impact our ability to do business with certain counterparties, or impair our ability to resolve trade disputes
▪other uncertainties, some of which are difficult to predict and beyond our control
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We caution you not to rely unduly on any forward-looking statements. You should review and carefully consider carefully the risks, uncertainties and other factors that affect our businesses as described herein, in our Annual Report and in other reports we file with the SEC.
8
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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SEMPRA ENERGY
SEMPRASEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share amounts; shares in thousands)(Dollars in millions, except per share amounts; shares in thousands)(Dollars in millions, except per share amounts; shares in thousands)
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
(unaudited) (unaudited)
REVENUESREVENUES REVENUES 
Utilities:Utilities:Utilities:
Natural gasNatural gas$1,704 $1,278 $4,024 $3,055 Natural gas$1,660 $1,704 $6,072 $4,024 
ElectricElectric1,189 1,156 2,306 2,224 Electric1,054 1,189 2,081 2,306 
Energy-related businessesEnergy-related businesses654 307 1,037 721 Energy-related businesses621 654 1,742 1,037 
Total revenuesTotal revenues3,547 2,741 7,367 6,000 Total revenues3,335 3,547 9,895 7,367 
EXPENSES AND OTHER INCOMEEXPENSES AND OTHER INCOME EXPENSES AND OTHER INCOME 
Utilities:Utilities: Utilities: 
Cost of natural gasCost of natural gas(528)(261)(1,330)(610)Cost of natural gas(311)(528)(2,994)(1,330)
Cost of electric fuel and purchased powerCost of electric fuel and purchased power(251)(284)(456)(516)Cost of electric fuel and purchased power(88)(251)(202)(456)
Energy-related businesses cost of salesEnergy-related businesses cost of sales(289)(119)(424)(228)Energy-related businesses cost of sales(81)(289)(274)(424)
Operation and maintenanceOperation and maintenance(1,162)(1,024)(2,248)(2,025)Operation and maintenance(1,366)(1,162)(2,575)(2,248)
Aliso Canyon litigation and regulatory mattersAliso Canyon litigation and regulatory matters(45)— (137)— Aliso Canyon litigation and regulatory matters— (45)— (137)
Depreciation and amortizationDepreciation and amortization(501)(463)(994)(905)Depreciation and amortization(549)(501)(1,088)(994)
Franchise fees and other taxesFranchise fees and other taxes(150)(138)(312)(291)Franchise fees and other taxes(148)(150)(340)(312)
Other (expense) income, net(1)72 37 107 
Other income (expense), netOther income (expense), net31 (1)72 37 
Interest incomeInterest income15 15 40 34 Interest income17 15 41 40 
Interest expenseInterest expense(271)(258)(514)(517)Interest expense(317)(271)(683)(514)
Income before income taxes and equity earningsIncome before income taxes and equity earnings364 281 1,029 1,049 Income before income taxes and equity earnings523 364 1,852 1,029 
Income tax expenseIncome tax expense(80)(139)(414)(297)Income tax expense(175)(80)(551)(414)
Equity earningsEquity earnings375 313 701 631 Equity earnings388 375 607 701 
Net incomeNet income659 455 1,316 1,383 Net income736 659 1,908 1,316 
Earnings attributable to noncontrolling interestsEarnings attributable to noncontrolling interests(88)(10)(122)(43)Earnings attributable to noncontrolling interests(121)(88)(313)(122)
Preferred dividendsPreferred dividends(11)(20)(22)(41)Preferred dividends(11)(11)(22)(22)
Preferred dividends of subsidiaryPreferred dividends of subsidiary(1)(1)(1)(1)Preferred dividends of subsidiary(1)(1)(1)(1)
Earnings attributable to common sharesEarnings attributable to common shares$559 $424 $1,171 $1,298 Earnings attributable to common shares$603 $559 $1,572 $1,171 
Basic EPS:Basic EPS:Basic EPS:
EarningsEarnings$1.78 $1.38 $3.71 $4.27 Earnings$1.91 $1.78 $4.99 $3.71 
Weighted-average common shares outstandingWeighted-average common shares outstanding314,845 307,800 315,595 304,372 Weighted-average common shares outstanding315,007 314,845 314,963 315,595 
Diluted EPS:Diluted EPS:Diluted EPS:
EarningsEarnings$1.77 $1.37 $3.70 $4.24 Earnings$1.91 $1.77 $4.97 $3.70 
Weighted-average common shares outstandingWeighted-average common shares outstanding315,867 308,607 316,647 306,284 Weighted-average common shares outstanding316,060 315,867 316,092 316,647 
See Notes to Condensed Consolidated Financial Statements.
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SEMPRA ENERGY
SEMPRASEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Sempra Energy shareholders’ equity   Sempra shareholders’ equity  
Pretax
amount		Income tax
(expense) benefit		Net-of-tax
amount		Noncontrolling
interests
(after tax)		Total Pretax
amount		Income tax
(expense) benefit		Net-of-tax
amount		Noncontrolling
interests
(after tax)		Total
(unaudited) (unaudited)
Three months ended June 30, 2023 and 2022
2023:2023:     
Net incomeNet income$790 $(175)$615 $121 $736 
Other comprehensive income (loss):Other comprehensive income (loss):     
Foreign currency translation adjustmentsForeign currency translation adjustments11 — 11 4 15 
Financial instrumentsFinancial instruments69 (20)49 52 101 
Pension and other postretirement benefitsPension and other postretirement benefits2 (1)1 — 1 
Total other comprehensive incomeTotal other comprehensive income82 (21)61 56 117 
Comprehensive incomeComprehensive income872 (196)676 177 853 
Preferred dividends of subsidiaryPreferred dividends of subsidiary(1)— (1)— (1)
Comprehensive income, after preferred
dividends of subsidiary
Comprehensive income, after preferred
dividends of subsidiary
$871 $(196)$675 $177 $852 
2022:2022:     
Net incomeNet income$651 $(80)$571 $88 $659 
Other comprehensive income (loss):Other comprehensive income (loss):    
Foreign currency translation adjustmentsForeign currency translation adjustments2 — 2 — 2 
Financial instrumentsFinancial instruments65 (17)48 15 63 
Pension and other postretirement benefitsPension and other postretirement benefits4 (1)3 — 3 
Total other comprehensive incomeTotal other comprehensive income71 (18)53 15 68 
Comprehensive incomeComprehensive income722 (98)624 103 727 
Preferred dividends of subsidiaryPreferred dividends of subsidiary(1)— (1)— (1)
Comprehensive income, after preferred
dividends of subsidiary
Comprehensive income, after preferred
dividends of subsidiary
$721 $(98)$623 $103 $726 
Six months ended June 30, 2023 and 2022
2023:2023:     
Net incomeNet income$2,146 $(551)$1,595 $313 $1,908 
Other comprehensive income (loss):Other comprehensive income (loss):     
Foreign currency translation adjustmentsForeign currency translation adjustments21 — 21 8 29 
Financial instrumentsFinancial instruments8 (4)4 2 6 
Pension and other postretirement benefitsPension and other postretirement benefits(10)(1)(11)— (11)
Total other comprehensive incomeTotal other comprehensive income19 (5)14 10 24 
Comprehensive incomeComprehensive income2,165 (556)1,609 323 1,932 
Preferred dividends of subsidiaryPreferred dividends of subsidiary(1)— (1)— (1)
Comprehensive income, after preferred
dividends of subsidiary
Comprehensive income, after preferred
dividends of subsidiary
$2,164 $(556)$1,608 $323 $1,931 
Three months ended June 30, 2022 and 2021
2022:2022:     2022:    
Net incomeNet income$651 $(80)$571 $88 $659 Net income$1,608 $(414)$1,194 $122 $1,316 
Other comprehensive income (loss):Other comprehensive income (loss):     Other comprehensive income (loss):     
Foreign currency translation adjustmentsForeign currency translation adjustments2 — 2 — 2 Foreign currency translation adjustments5 — 5 1 6 
Financial instrumentsFinancial instruments65 (17)48 15 63 Financial instruments167 (41)126 35 161 
Pension and other postretirement benefitsPension and other postretirement benefits4 (1)3 — 3 Pension and other postretirement benefits13 (2)11 — 11 
Total other comprehensive incomeTotal other comprehensive income71 (18)53 15 68 Total other comprehensive income185 (43)142 36 178 
Comprehensive incomeComprehensive income722 (98)624 103 727 Comprehensive income1,793 (457)1,336 158 1,494 
Preferred dividends of subsidiaryPreferred dividends of subsidiary(1)— (1)— (1)Preferred dividends of subsidiary(1)— (1)— (1)
Comprehensive income, after preferred
dividends of subsidiary
Comprehensive income, after preferred
dividends of subsidiary
$721 $(98)$623 $103 $726 
Comprehensive income, after preferred
dividends of subsidiary
$1,792 $(457)$1,335 $158 $1,493 
2021:     
Net income$584 $(139)$445 $10 $455 
Other comprehensive income (loss):    
Foreign currency translation adjustments5 — 5 1 6 
Financial instruments(14)2 (12)(6)(18)
Pension and other postretirement benefits1 (1)— — — 
Total other comprehensive loss(8)1 (7)(5)(12)
Comprehensive income576 (138)438 5 443 
Preferred dividends of subsidiary(1)— (1)— (1)
Comprehensive income, after preferred
dividends of subsidiary
$575 $(138)$437 $5 $442 
Six months ended June 30, 2022 and 2021
2022:     
Net income$1,608 $(414)$1,194 $122 $1,316 
Other comprehensive income (loss):     
Foreign currency translation adjustments5 — 5 1 6 
Financial instruments167 (41)126 35 161 
Pension and other postretirement benefits13 (2)11 — 11 
Total other comprehensive income185 (43)142 36 178 
Comprehensive income1,793 (457)1,336 158 1,494 
Preferred dividends of subsidiary(1)— (1)— (1)
Comprehensive income, after preferred
dividends of subsidiary
$1,792 $(457)$1,335 $158 $1,493 
2021:    
Net income$1,637 $(297)$1,340 $43 $1,383 
Other comprehensive income (loss):     
Financial instruments107 (27)80 9 89 
Pension and other postretirement benefits18 (4)14 — 14 
Total other comprehensive income125 (31)94 9 103 
Comprehensive income1,762 (328)1,434 52 1,486 
Preferred dividends of subsidiary(1)— (1)— (1)
Comprehensive income, after preferred
dividends of subsidiary
$1,761 $(328)$1,433 $52 $1,485 
See Notes to Condensed Consolidated Financial Statements.
10
Table of Contents
SEMPRA ENERGY
SEMPRASEMPRA
CONDENSED CONSOLIDATED BALANCE SHEETSCONDENSED CONSOLIDATED BALANCE SHEETSCONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30,December 31,June 30,December 31,
2022
2021(1)
 2023
2022(1)
(unaudited)  (unaudited) 
ASSETSASSETS  ASSETS  
Current assets:Current assets:  Current assets:  
Cash and cash equivalentsCash and cash equivalents$1,931 $559 Cash and cash equivalents$1,077 $370 
Restricted cashRestricted cash103 19 Restricted cash74 40 
Accounts receivable – trade, netAccounts receivable – trade, net1,839 2,071 Accounts receivable – trade, net1,970 2,635 
Accounts receivable – other, netAccounts receivable – other, net323 398 Accounts receivable – other, net489 685 
Due from unconsolidated affiliatesDue from unconsolidated affiliates646 23 Due from unconsolidated affiliates26 54 
Income taxes receivableIncome taxes receivable73 79 Income taxes receivable74 113 
InventoriesInventories377 389 Inventories383 403 
Prepaid expensesPrepaid expenses173 260 Prepaid expenses159 268 
Regulatory assetsRegulatory assets145 271 Regulatory assets105 351 
Fixed-price contracts and other derivativesFixed-price contracts and other derivatives256 803 
Greenhouse gas allowancesGreenhouse gas allowances98 97 Greenhouse gas allowances143 141 
Other current assetsOther current assets194 209 Other current assets91 49 
Total current assetsTotal current assets5,902 4,375 Total current assets4,847 5,912 
Other assets:Other assets:  Other assets:  
Restricted cashRestricted cash59 3 Restricted cash91 52 
Due from unconsolidated affiliates— 637 
Regulatory assetsRegulatory assets2,465 2,011 Regulatory assets3,227 2,588 
Insurance receivable for Aliso Canyon costs344 360 
Greenhouse gas allowancesGreenhouse gas allowances643 422 Greenhouse gas allowances1,045 796 
Nuclear decommissioning trustsNuclear decommissioning trusts863 1,012 Nuclear decommissioning trusts863 841 
Dedicated assets in support of certain benefit plansDedicated assets in support of certain benefit plans498 567 Dedicated assets in support of certain benefit plans520 505 
Deferred income taxesDeferred income taxes138 151 Deferred income taxes149 135 
Right-of-use assets – operating leasesRight-of-use assets – operating leases580 594 Right-of-use assets – operating leases722 655 
Investment in Oncor HoldingsInvestment in Oncor Holdings13,301 12,947 Investment in Oncor Holdings13,869 13,665 
Other investmentsOther investments1,792 1,525 Other investments2,146 2,012 
GoodwillGoodwill1,602 1,602 Goodwill1,602 1,602 
Other intangible assetsOther intangible assets357 370 Other intangible assets331 344 
Wildfire fundWildfire fund317 331 Wildfire fund288 303 
Other long-term assetsOther long-term assets1,319 1,244 Other long-term assets1,549 1,382 
Total other assetsTotal other assets24,278 23,776 Total other assets26,402 24,880 
Property, plant and equipment:Property, plant and equipment:  Property, plant and equipment:  
Property, plant and equipmentProperty, plant and equipment60,855 58,940 Property, plant and equipment68,270 63,893 
Less accumulated depreciation and amortizationLess accumulated depreciation and amortization(15,453)(15,046)Less accumulated depreciation and amortization(16,792)(16,111)
Property, plant and equipment, netProperty, plant and equipment, net45,402 43,894 Property, plant and equipment, net51,478 47,782 
Total assetsTotal assets$75,582 $72,045 Total assets$82,727 $78,574 
(1)    Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.
11
Table of Contents
SEMPRA ENERGY
SEMPRASEMPRA
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30,December 31,June 30,December 31,
2022
2021(1)
 2023
2022(1)
(unaudited)  (unaudited) 
LIABILITIES AND EQUITYLIABILITIES AND EQUITY  LIABILITIES AND EQUITY  
Current liabilities:Current liabilities:  Current liabilities:  
Short-term debtShort-term debt$955 $3,471 Short-term debt$2,512 $3,352 
Accounts payable – tradeAccounts payable – trade1,604 1,671 Accounts payable – trade1,790 1,994 
Accounts payable – otherAccounts payable – other215 178 Accounts payable – other234 275 
Due to unconsolidated affiliatesDue to unconsolidated affiliates5 — 
Dividends and interest payableDividends and interest payable609 563 Dividends and interest payable651 621 
Accrued compensation and benefitsAccrued compensation and benefits334 479 Accrued compensation and benefits364 484 
Regulatory liabilitiesRegulatory liabilities307 359 Regulatory liabilities650 504 
Current portion of long-term debt and finance leasesCurrent portion of long-term debt and finance leases303 106 Current portion of long-term debt and finance leases924 1,019 
Reserve for Aliso Canyon costsReserve for Aliso Canyon costs2,003 1,980 Reserve for Aliso Canyon costs126 129 
Greenhouse gas obligationsGreenhouse gas obligations98 97 Greenhouse gas obligations143 141 
Other current liabilitiesOther current liabilities1,122 1,131 Other current liabilities1,052 1,380 
Total current liabilitiesTotal current liabilities7,550 10,035 Total current liabilities8,451 9,899 
Long-term debt and finance leasesLong-term debt and finance leases24,661 21,068 Long-term debt and finance leases27,521 24,548 
Deferred credits and other liabilities:Deferred credits and other liabilities:  Deferred credits and other liabilities:  
Due to unconsolidated affiliatesDue to unconsolidated affiliates282 287 Due to unconsolidated affiliates282 301 
Regulatory liabilitiesRegulatory liabilities3,295 3,402 Regulatory liabilities3,435 3,341 
Greenhouse gas obligationsGreenhouse gas obligations392 225 Greenhouse gas obligations800 565 
Pension and other postretirement benefit plan obligations, net of plan assetsPension and other postretirement benefit plan obligations, net of plan assets678 687 Pension and other postretirement benefit plan obligations, net of plan assets346 410 
Deferred income taxesDeferred income taxes4,212 3,477 Deferred income taxes5,064 4,591 
Asset retirement obligationsAsset retirement obligations3,467 3,375 Asset retirement obligations3,536 3,546 
Deferred credits and otherDeferred credits and other1,992 2,070 Deferred credits and other2,278 2,117 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities14,318 13,523 Total deferred credits and other liabilities15,741 14,871 
Commitments and contingencies (Note 11)00
Commitments and contingencies (Note 10)Commitments and contingencies (Note 10)
Equity:Equity:  Equity:  
Preferred stock (50 million shares authorized):Preferred stock (50 million shares authorized):Preferred stock (50 million shares authorized):
Preferred stock, series C
(0.9 million shares outstanding)
Preferred stock, series C
(0.9 million shares outstanding)
889 889 
Preferred stock, series C
(0.9 million shares outstanding)
889 889 
Common stock (750 million shares authorized; 314 million and 317 million shares
outstanding at June 30, 2022 and December 31, 2021, respectively; no par value)
12,121 11,862 
Common stock (1,125 million shares authorized; 315 million and 314 million shares
outstanding at June 30, 2023 and December 31, 2022, respectively; no par value)
Common stock (1,125 million shares authorized; 315 million and 314 million shares
outstanding at June 30, 2023 and December 31, 2022, respectively; no par value)
12,044 12,160 
Retained earningsRetained earnings13,998 13,548 Retained earnings15,024 14,201 
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(167)(318)Accumulated other comprehensive income (loss)(121)(135)
Total Sempra Energy shareholders’ equity26,841 25,981 
Total Sempra shareholders’ equityTotal Sempra shareholders’ equity27,836 27,115 
Preferred stock of subsidiaryPreferred stock of subsidiary20 20 Preferred stock of subsidiary20 20 
Other noncontrolling interestsOther noncontrolling interests2,192 1,418 Other noncontrolling interests3,158 2,121 
Total equityTotal equity29,053 27,419 Total equity31,014 29,256 
Total liabilities and equityTotal liabilities and equity$75,582 $72,045 Total liabilities and equity$82,727 $78,574 
(1)    Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.
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SEMPRA ENERGY
SEMPRASEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Six months ended June 30, Six months ended June 30,
20222021 20232022
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIES  CASH FLOWS FROM OPERATING ACTIVITIES  
Net incomeNet income$1,316 $1,383 Net income$1,908 $1,316 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:  Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortizationDepreciation and amortization994 905 Depreciation and amortization1,088 994 
Deferred income taxes and investment tax creditsDeferred income taxes and investment tax credits379 193 Deferred income taxes and investment tax credits323 379 
Equity earningsEquity earnings(701)(631)Equity earnings(607)(701)
Foreign currency transaction losses (gains), net22 (7)
Foreign currency transaction (gains) losses, netForeign currency transaction (gains) losses, net(4)22 
Share-based compensation expenseShare-based compensation expense32 34 Share-based compensation expense31 32 
Fixed-price contracts and other derivativesFixed-price contracts and other derivatives122 199 Fixed-price contracts and other derivatives(569)122 
OtherOther101 54 Other205 101 
Net change in working capital componentsNet change in working capital components(3)(63)Net change in working capital components1,474 (3)
Insurance receivable for Aliso Canyon costsInsurance receivable for Aliso Canyon costs16 31 Insurance receivable for Aliso Canyon costs— 16 
Distributions from investmentsDistributions from investments403 532 Distributions from investments402 403 
Changes in other noncurrent assets and liabilities, netChanges in other noncurrent assets and liabilities, net(317)(375)Changes in other noncurrent assets and liabilities, net(514)(317)
Net cash provided by operating activitiesNet cash provided by operating activities2,364 2,255 Net cash provided by operating activities3,737 2,364 
CASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIES  CASH FLOWS FROM INVESTING ACTIVITIES  
Expenditures for property, plant and equipmentExpenditures for property, plant and equipment(2,361)(2,424)Expenditures for property, plant and equipment(4,282)(2,361)
Expenditures for investments and acquisitions(181)(165)
Purchases of nuclear decommissioning trust assets(397)(542)
Proceeds from sales of nuclear decommissioning trust assets397 542 
Advances to unconsolidated affiliates— (8)
Distributions from investments— 4 
Expenditures for investmentsExpenditures for investments(184)(181)
Purchases of nuclear decommissioning and other trust assetsPurchases of nuclear decommissioning and other trust assets(322)(397)
Proceeds from sales of nuclear decommissioning and other trust assetsProceeds from sales of nuclear decommissioning and other trust assets356 397 
OtherOther7 5 Other11 7 
Net cash used in investing activitiesNet cash used in investing activities(2,535)(2,588)Net cash used in investing activities(4,421)(2,535)
CASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paidCommon dividends paid(711)(634)Common dividends paid(734)(711)
Preferred dividends paidPreferred dividends paid(22)(68)Preferred dividends paid(22)(22)
Issuances of common stockIssuances of common stock3 5 Issuances of common stock— 3 
Repurchases of common stockRepurchases of common stock(476)(38)Repurchases of common stock(31)(476)
Issuances of debt (maturities greater than 90 days)Issuances of debt (maturities greater than 90 days)4,818 285 Issuances of debt (maturities greater than 90 days)5,614 4,818 
Payments on debt (maturities greater than 90 days) and finance leasesPayments on debt (maturities greater than 90 days) and finance leases(1,543)(1,432)Payments on debt (maturities greater than 90 days) and finance leases(3,392)(1,543)
(Decrease) increase in short-term debt, net(2,011)1,584 
Decrease in short-term debt, netDecrease in short-term debt, net(388)(2,011)
Advances from unconsolidated affiliatesAdvances from unconsolidated affiliates18 20 Advances from unconsolidated affiliates14 18 
Proceeds from sale of noncontrolling interests, net1,732 7 
Purchases of noncontrolling interests— (10)
Proceeds from sales of noncontrolling interestsProceeds from sales of noncontrolling interests265 1,732 
Distributions to noncontrolling interestsDistributions to noncontrolling interests(106)— Distributions to noncontrolling interests(252)(106)
Contributions from noncontrolling interestsContributions from noncontrolling interests13 — Contributions from noncontrolling interests543 13 
Settlement of cross-currency swapsSettlement of cross-currency swaps(99)— 
OtherOther(30)(1)Other(61)(30)
Net cash provided by (used in) financing activities1,685 (282)
Net cash provided by financing activitiesNet cash provided by financing activities1,457 1,685 
Effect of exchange rate changes on cash, cash equivalents and restricted cashEffect of exchange rate changes on cash, cash equivalents and restricted cash(2)1 Effect of exchange rate changes on cash, cash equivalents and restricted cash7 (2)
Increase (decrease) in cash, cash equivalents and restricted cash1,512 (614)
Increase in cash, cash equivalents and restricted cashIncrease in cash, cash equivalents and restricted cash780 1,512 
Cash, cash equivalents and restricted cash, January 1Cash, cash equivalents and restricted cash, January 1581 985 Cash, cash equivalents and restricted cash, January 1462 581 
Cash, cash equivalents and restricted cash, June 30Cash, cash equivalents and restricted cash, June 30$2,093 $371 Cash, cash equivalents and restricted cash, June 30$1,242 $2,093 
See Notes to Condensed Consolidated Financial Statements.
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SEMPRA ENERGY
SEMPRASEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Six months ended June 30, Six months ended June 30,
20222021 20232022
(unaudited) (unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONSUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  
Interest payments, net of amounts capitalizedInterest payments, net of amounts capitalized$466 $488 Interest payments, net of amounts capitalized$612 $466 
Income tax payments, net of refundsIncome tax payments, net of refunds233 73 Income tax payments, net of refunds120 233 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIESSUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES  SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES  
Increase in Cameron LNG JV investment for guarantee— 22 
Repayment of advances from unconsolidated affiliate in lieu of distributionRepayment of advances from unconsolidated affiliate in lieu of distribution32 — Repayment of advances from unconsolidated affiliate in lieu of distribution$36 $32 
Accrued capital expendituresAccrued capital expenditures476 526 Accrued capital expenditures863 476 
Contributions from NCIContributions from NCI186 — 
Increase in finance lease obligations for investment in PP&EIncrease in finance lease obligations for investment in PP&E22 24 Increase in finance lease obligations for investment in PP&E36 22 
Increase in ARO for investment in PP&E55 8 
Issuance of common stock in exchange for NCI and related AOCI— 1,373 
(Decrease) increase in ARO for investment in PP&E(Decrease) increase in ARO for investment in PP&E(46)55 
Common dividends declared but not paidCommon dividends declared but not paid359 347 Common dividends declared but not paid375 359 
Conversion of mandatory convertible preferred stock— 1,693 
Preferred dividends declared but not paidPreferred dividends declared but not paid11 20 Preferred dividends declared but not paid11 11 
See Notes to Condensed Consolidated Financial Statements.
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SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Dollars in millions)
 Preferred stockCommon
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		Sempra
Energy
shareholders'
equity		Non-
controlling
interests		Total
equity
(unaudited)
Three months ended June 30, 2022
Balance at March 31, 2022$889 $11,656 $13,798 $(229)$26,114 $1,446 $27,560 
Net income571 571 88 659 
Other comprehensive income53 53 15 68 
Share-based compensation expense15 15 15 
Dividends declared:
Series C preferred stock ($12.19/share)(11)(11)(11)
Common stock ($1.14/share)(359)(359)(359)
Preferred dividends of subsidiary(1)(1)(1)
Repurchases of common stock(250)(250)(250)
Noncontrolling interest activities:
Contributions7 7 
Distributions(53)(53)
Sale700 9 709 709 1,418 
Balance at June 30, 2022$889 $12,121 $13,998 $(167)$26,841 $2,212 $29,053 
 Three months ended June 30, 2021
Balance at March 31, 2021$1,454 $8,730 $14,214 $(399)$23,999 $1,609 $25,608 
Net income445 445 10 455 
Other comprehensive loss(7)(7)(5)(12)
Share-based compensation expense17 17 17 
Dividends declared:
Series B preferred stock ($1.69/share)(9)(9)(9)
Series C preferred stock ($12.19/share)(11)(11)(11)
Common stock ($1.10/share)(347)(347)(347)
Preferred dividends of subsidiary(1)(1)(1)
Issuances of common stock5 5 5 
Repurchases of common stock(1)(1)(1)
Noncontrolling interest activities:
Purchases1,399 (38)1,361 (1,373)(12)
Balance at June 30, 2021$1,454 $10,150 $14,291 $(444)$25,451 $241 $25,692 

SEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Dollars in millions)
 Preferred stockCommon stockRetained earningsAccumulated
other
comprehensive
 income (loss)		Sempra
shareholders'
equity		Non-
controlling
interests		Total equity
(unaudited)
Three months ended June 30, 2023
Balance at March 31, 2023$889 $12,164 $14,796 $(182)$27,667 $2,578 $30,245 
Net income615 615 121 736 
Other comprehensive income61 61 56 117 
Share-based compensation expense14 14 14 
Dividends declared:
Series C preferred stock ($12.19/share)(11)(11)(11)
Common stock ($1.19/share)(375)(375)(375)
Preferred dividends of subsidiary(1)(1)(1)
Noncontrolling interest activities:
Contributions(134)(134)632 498 
Distributions(209)(209)
Balance at June 30, 2023$889 $12,044 $15,024 $(121)$27,836 $3,178 $31,014 
 Three months ended June 30, 2022
Balance at March 31, 2022$889 $11,656 $13,798 $(229)$26,114 $1,446 $27,560 
Net income571 571 88 659 
Other comprehensive income53 53 15 68 
Share-based compensation expense15 15 15 
Dividends declared:
Series C preferred stock ($12.19/share)(11)(11)(11)
Common stock ($1.14/share)(359)(359)(359)
Preferred dividends of subsidiary(1)(1)(1)
Repurchases of common stock(250)(250)(250)
Noncontrolling interest activities:
Contributions7 7 
Distributions(53)(53)
Sale700 9 709 709 1,418 
Balance at June 30, 2022$889 $12,121 $13,998 $(167)$26,841 $2,212 $29,053 
See Notes to Condensed Consolidated Financial Statements.
15
Table of Contents
SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
SEMPRASEMPRA
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Preferred stockCommon
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		Sempra
Energy
shareholders'
equity		Non-
controlling
interests		Total
equity		 Preferred stockCommon stockRetained earningsAccumulated
other
comprehensive
income (loss)		Sempra
shareholders'
equity		Non-
controlling
interests		Total
equity
(unaudited)
Six months ended June 30, 2023
Balance at December 31, 2022Balance at December 31, 2022$889 $12,160 $14,201 $(135)$27,115 $2,141 $29,256 
Net incomeNet income1,595 1,595 313 1,908 
Other comprehensive incomeOther comprehensive income14 14 10 24 
Share-based compensation expenseShare-based compensation expense31 31 31 
Dividends declared:Dividends declared:
Series C preferred stock ($24.38/share)Series C preferred stock ($24.38/share)(22)(22)(22)
Common stock ($2.38/share)Common stock ($2.38/share)(749)(749)(749)
Preferred dividends of subsidiaryPreferred dividends of subsidiary(1)(1)(1)
Repurchases of common stockRepurchases of common stock(31)(31)(31)
Noncontrolling interest activities:Noncontrolling interest activities:
ContributionsContributions(134)(134)729 595 
DistributionsDistributions(252)(252)
SaleSale18 18 237 255 
Balance at June 30, 2023Balance at June 30, 2023$889 $12,044 $15,024 $(121)$27,836 $3,178 $31,014 
(unaudited)
Six months ended June 30, 2022 Six months ended June 30, 2022
Balance at December 31, 2021Balance at December 31, 2021$889 $11,862 $13,548 $(318)$25,981 $1,438 $27,419 Balance at December 31, 2021$889 $11,862 $13,548 $(318)$25,981 $1,438 $27,419 
Net incomeNet income1,194 1,194 122 1,316 Net income1,194 1,194 122 1,316 
Other comprehensive incomeOther comprehensive income142 142 36 178 Other comprehensive income142 142 36 178 
Share-based compensation expenseShare-based compensation expense32 32 32 Share-based compensation expense32 32 32 
Dividends declared:Dividends declared:Dividends declared:
Series C preferred stock ($24.38/share)Series C preferred stock ($24.38/share)(22)(22)(22)Series C preferred stock ($24.38/share)(22)(22)(22)
Common stock ($2.29/share)Common stock ($2.29/share)(721)(721)(721)Common stock ($2.29/share)(721)(721)(721)
Preferred dividends of subsidiaryPreferred dividends of subsidiary(1)(1)(1)Preferred dividends of subsidiary(1)(1)(1)
Issuances of common stockIssuances of common stock3 3 3 Issuances of common stock3 3 3 
Repurchases of common stockRepurchases of common stock(476)(476)(476)Repurchases of common stock(476)(476)(476)
Noncontrolling interest activities:Noncontrolling interest activities:Noncontrolling interest activities:
ContributionsContributions13 13 Contributions13 13 
DistributionsDistributions(106)(106)Distributions(106)(106)
SaleSale700 9 709 709 1,418 Sale700 9 709 709 1,418 
Balance at June 30, 2022Balance at June 30, 2022$889 $12,121 $13,998 $(167)$26,841 $2,212 $29,053 Balance at June 30, 2022$889 $12,121 $13,998 $(167)$26,841 $2,212 $29,053 
Six months ended June 30, 2021
Balance at December 31, 2020$3,147 $7,053 $13,673 $(500)$23,373 $1,561 $24,934 
Net income1,340 1,340 43 1,383 
Other comprehensive income94 94 9 103 
Share-based compensation expense34 34 34 
Dividends declared:
Series B preferred stock ($3.38/share)(19)(19)(19)
Series C preferred stock ($24.38/share)(22)(22)(22)
Common stock ($2.20/share)(680)(680)(680)
Preferred dividends of subsidiary(1)(1)(1)
Conversion of series A preferred stock(1,693)1,693 — — 
Issuances of common stock5 5 5 
Repurchases of common stock(38)(38)(38)
Noncontrolling interest activities:
Purchases1,399 (38)1,361 (1,373)(12)
Sale4 4 1 5 
Balance at June 30, 2021$1,454 $10,150 $14,291 $(444)$25,451 $241 $25,692 
See Notes to Condensed Consolidated Financial Statements.
16
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SAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED STATEMENTS OF OPERATIONSCONDENSED STATEMENTS OF OPERATIONSCONDENSED STATEMENTS OF OPERATIONS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
(unaudited) (unaudited)
Operating revenues    
Operating revenues:Operating revenues:    
ElectricElectric$1,192 $1,158 $2,312 $2,227 Electric$1,058 $1,192 $2,089 $2,312 
Natural gasNatural gas207 160 532 428 Natural gas204 207 826 532 
Total operating revenuesTotal operating revenues1,399 1,318 2,844 2,655 Total operating revenues1,262 1,399 2,915 2,844 
Operating expenses    
Operating expenses:Operating expenses:    
Cost of electric fuel and purchased powerCost of electric fuel and purchased power269 304 490 545 Cost of electric fuel and purchased power107 269 242 490 
Cost of natural gasCost of natural gas69 40 195 122 Cost of natural gas38 69 417 195 
Operation and maintenanceOperation and maintenance420 373 817 763 Operation and maintenance474 420 901 817 
Depreciation and amortizationDepreciation and amortization244 220 483 433 Depreciation and amortization268 244 530 483 
Franchise fees and other taxesFranchise fees and other taxes88 83 180 171 Franchise fees and other taxes90 88 186 180 
Total operating expensesTotal operating expenses1,090 1,020 2,165 2,034 Total operating expenses977 1,090 2,276 2,165 
Operating incomeOperating income309 298 679 621 Operating income285 309 639 679 
Other income, netOther income, net22 22 56 57 Other income, net22 22 50 56 
Interest incomeInterest income1 — 1 1 Interest income4 1 5 1 
Interest expenseInterest expense(114)(101)(220)(203)Interest expense(123)(114)(241)(220)
Income before income taxesIncome before income taxes218 219 516 476 Income before income taxes188 218 453 516 
Income tax expenseIncome tax expense(42)(33)(106)(78)Income tax expense(4)(42)(11)(106)
Net income/Earnings attributable to common sharesNet income/Earnings attributable to common shares$176 $186 $410 $398 Net income/Earnings attributable to common shares$184 $176 $442 $410 
See Notes to Condensed Financial Statements.
17
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SAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Pretax
amount		Income tax expenseNet-of-tax
amount
(unaudited)
Three months ended June 30, 2023 and 2022
2023:2023:   
Net income/Comprehensive incomeNet income/Comprehensive income$188 $(4)$184 
Pretax
amount		Income tax expenseNet-of-tax
amount
(unaudited)
Three months ended June 30, 2022 and 2021
2022:2022:   2022:   
Net income/Comprehensive incomeNet income/Comprehensive income$218 $(42)$176 Net income/Comprehensive income$218 $(42)$176 
2021:   
Six months ended June 30, 2023 and 2022
2023:2023:   
Net income/Comprehensive incomeNet income/Comprehensive income$453 $(11)$442 
2022:2022:   
Net income/Comprehensive incomeNet income/Comprehensive income$219 $(33)$186 Net income/Comprehensive income$516 $(106)$410 
Six months ended June 30, 2022 and 2021
2022:   
Net income/Comprehensive income$516 $(106)$410 
2021:   
Net income/Comprehensive income$476 $(78)$398 
See Notes to Condensed Financial Statements.
18
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SAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED BALANCE SHEETSCONDENSED BALANCE SHEETSCONDENSED BALANCE SHEETS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30,December 31,June 30,December 31,
2022
2021(1)
 2023
2022(1)
(unaudited)  (unaudited) 
ASSETSASSETS  ASSETS  
Current assets:Current assets:  Current assets:  
Cash and cash equivalentsCash and cash equivalents$533 $25 Cash and cash equivalents$332 $7 
Accounts receivable – trade, netAccounts receivable – trade, net685 715 Accounts receivable – trade, net813 799 
Accounts receivable – other, netAccounts receivable – other, net72 78 Accounts receivable – other, net149 110 
Income taxes receivable, net11 9 
Due from unconsolidated affiliatesDue from unconsolidated affiliates1 — 
InventoriesInventories124 123 Inventories143 134 
Prepaid expensesPrepaid expenses115 174 Prepaid expenses78 179 
Regulatory assetsRegulatory assets134 231 Regulatory assets39 247 
Fixed-price contracts and other derivativesFixed-price contracts and other derivatives76 113 
Greenhouse gas allowancesGreenhouse gas allowances13 13 Greenhouse gas allowances22 22 
Other current assetsOther current assets65 63 Other current assets25 19 
Total current assetsTotal current assets1,752 1,431 Total current assets1,678 1,630 
Other assets:Other assets:  Other assets:  
Regulatory assetsRegulatory assets947 786 Regulatory assets1,564 1,219 
Greenhouse gas allowancesGreenhouse gas allowances127 111 Greenhouse gas allowances230 196 
Nuclear decommissioning trustsNuclear decommissioning trusts863 1,012 Nuclear decommissioning trusts863 841 
Right-of-use assets – operating leasesRight-of-use assets – operating leases198 185 Right-of-use assets – operating leases364 281 
Wildfire fundWildfire fund317 331 Wildfire fund288 303 
Other long-term assetsOther long-term assets130 154 Other long-term assets136 146 
Total other assetsTotal other assets2,582 2,579 Total other assets3,445 2,986 
Property, plant and equipment:Property, plant and equipment:  Property, plant and equipment:  
Property, plant and equipmentProperty, plant and equipment27,201 26,456 Property, plant and equipment29,704 28,574 
Less accumulated depreciation and amortizationLess accumulated depreciation and amortization(6,460)(6,408)Less accumulated depreciation and amortization(7,041)(6,768)
Property, plant and equipment, netProperty, plant and equipment, net20,741 20,048 Property, plant and equipment, net22,663 21,806 
Total assetsTotal assets$25,075 $24,058 Total assets$27,786 $26,422 
(1)    Derived from audited financial statements.
See Notes to Condensed Financial Statements.
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SAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED BALANCE SHEETS (CONTINUED)CONDENSED BALANCE SHEETS (CONTINUED)CONDENSED BALANCE SHEETS (CONTINUED)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30,December 31, June 30,December 31,
2022
2021(1)
2023
2022(1)
(unaudited)  (unaudited) 
LIABILITIES AND EQUITYLIABILITIES AND EQUITY  LIABILITIES AND EQUITY  
Current liabilities:Current liabilities:  Current liabilities:  
Short-term debtShort-term debt$— $776 Short-term debt$— $205 
Accounts payableAccounts payable635 588 Accounts payable757 744 
Due to unconsolidated affiliatesDue to unconsolidated affiliates68 97 Due to unconsolidated affiliates43 135 
Interest payableInterest payable61 50 Interest payable77 63 
Accrued compensation and benefitsAccrued compensation and benefits87 148 Accrued compensation and benefits95 140 
Accrued franchise feesAccrued franchise fees77 120 
Regulatory liabilitiesRegulatory liabilities13 14 Regulatory liabilities232 110 
Current portion of long-term debt and finance leasesCurrent portion of long-term debt and finance leases35 49 Current portion of long-term debt and finance leases891 489 
Customer deposits27 30 
Greenhouse gas obligationsGreenhouse gas obligations13 13 Greenhouse gas obligations22 22 
Asset retirement obligationsAsset retirement obligations94 86 Asset retirement obligations107 98 
Other current liabilitiesOther current liabilities281 260 Other current liabilities271 193 
Total current liabilitiesTotal current liabilities1,314 2,111 Total current liabilities2,572 2,319 
Long-term debt and finance leasesLong-term debt and finance leases8,958 7,581 Long-term debt and finance leases8,865 8,497 
Deferred credits and other liabilities:Deferred credits and other liabilities:  Deferred credits and other liabilities:  
Regulatory liabilitiesRegulatory liabilities2,213 2,302 Regulatory liabilities2,406 2,298 
Greenhouse gas obligationsGreenhouse gas obligations57 31 Greenhouse gas obligations119 81 
Pension obligation, net of plan assetsPension obligation, net of plan assets24 25 Pension obligation, net of plan assets33 42 
Deferred income taxesDeferred income taxes2,368 2,275 Deferred income taxes2,576 2,540 
Asset retirement obligationsAsset retirement obligations791 804 Asset retirement obligations779 789 
Deferred credits and otherDeferred credits and other691 680 Deferred credits and other927 789 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities6,144 6,117 Total deferred credits and other liabilities6,840 6,539 
Commitments and contingencies (Note 11)00
Commitments and contingencies (Note 10)Commitments and contingencies (Note 10)
Shareholder's equity:Shareholder's equity:  Shareholder's equity:  
Preferred stock (45 million shares authorized; NaN issued)— — 
Preferred stock (45 million shares authorized; none issued)Preferred stock (45 million shares authorized; none issued)— — 
Common stock (255 million shares authorized; 117 million shares outstanding;
no par value)
Common stock (255 million shares authorized; 117 million shares outstanding;
no par value)
1,660 1,660 
Common stock (255 million shares authorized; 117 million shares outstanding;
no par value)
1,660 1,660 
Retained earningsRetained earnings7,009 6,599 Retained earnings7,856 7,414 
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(10)(10)Accumulated other comprehensive income (loss)(7)(7)
Total shareholder’s equityTotal shareholder’s equity8,659 8,249 Total shareholder’s equity9,509 9,067 
Total liabilities and shareholder's equityTotal liabilities and shareholder's equity$25,075 $24,058 Total liabilities and shareholder's equity$27,786 $26,422 
(1)    Derived from audited financial statements.
See Notes to Condensed Financial Statements.
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SAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED STATEMENTS OF CASH FLOWSCONDENSED STATEMENTS OF CASH FLOWSCONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Six months ended June 30, Six months ended June 30,
20222021 20232022
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIES  CASH FLOWS FROM OPERATING ACTIVITIES  
Net incomeNet income$410 $398 Net income$442 $410 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization483 433 Depreciation and amortization530 483 
Deferred income taxes and investment tax creditsDeferred income taxes and investment tax credits41 41 Deferred income taxes and investment tax credits(31)41 
OtherOther19 (13)Other31 19 
Net change in working capital componentsNet change in working capital components165 (136)Net change in working capital components235 165 
Changes in noncurrent assets and liabilities, netChanges in noncurrent assets and liabilities, net(105)(113)Changes in noncurrent assets and liabilities, net(241)(105)
Net cash provided by operating activitiesNet cash provided by operating activities1,013 610 Net cash provided by operating activities966 1,013 
CASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIES  CASH FLOWS FROM INVESTING ACTIVITIES  
Expenditures for property, plant and equipmentExpenditures for property, plant and equipment(1,090)(1,072)Expenditures for property, plant and equipment(1,239)(1,090)
Purchases of nuclear decommissioning trust assetsPurchases of nuclear decommissioning trust assets(397)(542)Purchases of nuclear decommissioning trust assets(265)(397)
Proceeds from sales of nuclear decommissioning trust assetsProceeds from sales of nuclear decommissioning trust assets397 542 Proceeds from sales of nuclear decommissioning trust assets294 397 
OtherOther8 7 Other10 8 
Net cash used in investing activitiesNet cash used in investing activities(1,082)(1,065)Net cash used in investing activities(1,200)(1,082)
CASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIES  CASH FLOWS FROM FINANCING ACTIVITIES
Issuances of debt (maturities greater than 90 days)Issuances of debt (maturities greater than 90 days)1,395 — Issuances of debt (maturities greater than 90 days)792 1,395 
Payments on debt (maturities greater than 90 days) and finance leasesPayments on debt (maturities greater than 90 days) and finance leases(408)(231)Payments on debt (maturities greater than 90 days) and finance leases(19)(408)
(Decrease) increase in short-term debt, net(401)437 
Decrease in short-term debt, netDecrease in short-term debt, net(205)(401)
Debt issuance costsDebt issuance costs(9)— Debt issuance costs(9)(9)
Net cash provided by financing activitiesNet cash provided by financing activities577 206 Net cash provided by financing activities559 577 
Increase (decrease) in cash and cash equivalents508 (249)
Increase in cash and cash equivalentsIncrease in cash and cash equivalents325 508 
Cash and cash equivalents, January 1Cash and cash equivalents, January 125 262 Cash and cash equivalents, January 17 25 
Cash and cash equivalents, June 30Cash and cash equivalents, June 30$533 $13 Cash and cash equivalents, June 30$332 $533 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONSUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  
Interest payments, net of amounts capitalizedInterest payments, net of amounts capitalized$206 $201 Interest payments, net of amounts capitalized$224 $206 
Income tax payments, net of refundsIncome tax payments, net of refunds68 58 Income tax payments, net of refunds— 68 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIESSUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES  SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES  
Accrued capital expendituresAccrued capital expenditures$186 $192 Accrued capital expenditures$233 $186 
Increase in ARO for investment in PP&EIncrease in ARO for investment in PP&E1 18 Increase in ARO for investment in PP&E10 1 
Increase in finance lease obligations for investment in PP&EIncrease in finance lease obligations for investment in PP&E9 13 Increase in finance lease obligations for investment in PP&E4 9 
See Notes to Condensed Financial Statements.
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SAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANYSAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITYCONDENSED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITYCONDENSED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Common
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		Total
shareholder's
equity		 Common
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		Total
shareholder's
equity
(unaudited)(unaudited)
Three months ended June 30, 2022Three months ended June 30, 2023
Balance at March 31, 2023Balance at March 31, 2023$1,660 $7,672 $(7)$9,325 
Net incomeNet income184 184 
Balance at June 30, 2023Balance at June 30, 2023$1,660 $7,856 $(7)$9,509 
Three months ended June 30, 2022
Balance at March 31, 2022Balance at March 31, 2022$1,660 $6,833 $(10)$8,483 Balance at March 31, 2022$1,660 $6,833 $(10)$8,483 
Net incomeNet income176 176 Net income176 176 
Balance at June 30, 2022Balance at June 30, 2022$1,660 $7,009 $(10)$8,659 Balance at June 30, 2022$1,660 $7,009 $(10)$8,659 
Three months ended June 30, 2021 Six months ended June 30, 2023
Balance at March 31, 2021$1,660 $6,292 $(10)$7,942 
Balance at December 31, 2022Balance at December 31, 2022$1,660 $7,414 $(7)$9,067 
Net incomeNet income186 186 Net income442 442 
Balance at June 30, 2021$1,660 $6,478 $(10)$8,128 
Balance at June 30, 2023Balance at June 30, 2023$1,660 $7,856 $(7)$9,509 
Six months ended June 30, 2022Six months ended June 30, 2022
Balance at December 31, 2021Balance at December 31, 2021$1,660 $6,599 $(10)$8,249 Balance at December 31, 2021$1,660 $6,599 $(10)$8,249 
Net incomeNet income410 410 Net income410 410 
Balance at June 30, 2022Balance at June 30, 2022$1,660 $7,009 $(10)$8,659 Balance at June 30, 2022$1,660 $7,009 $(10)$8,659 
Six months ended June 30, 2021
Balance at December 31, 2020$1,660 $6,080 $(10)$7,730 
Net income398 398 
Balance at June 30, 2021$1,660 $6,478 $(10)$8,128 
See Notes to Condensed Financial Statements.
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SOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF OPERATIONSCONDENSED STATEMENTS OF OPERATIONSCONDENSED STATEMENTS OF OPERATIONS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
20222021202220212023202220232022
(unaudited) (unaudited)
Operating revenuesOperating revenues$1,501 $1,124 $3,494 $2,632 Operating revenues$1,467 $1,501 $5,261 $3,494 
Operating expenses 
Operating expenses:Operating expenses: 
Cost of natural gasCost of natural gas459 223 1,136 496 Cost of natural gas284 459 2,631 1,136 
Operation and maintenanceOperation and maintenance605 525 1,156 1,028 Operation and maintenance715 605 1,340 1,156 
Aliso Canyon litigation and regulatory mattersAliso Canyon litigation and regulatory matters45 — 137 — Aliso Canyon litigation and regulatory matters— 45 — 137 
Depreciation and amortizationDepreciation and amortization188 180 375 353 Depreciation and amortization208 188 414 375 
Franchise fees and other taxesFranchise fees and other taxes57 51 119 109 Franchise fees and other taxes56 57 145 119 
Total operating expensesTotal operating expenses1,354 979 2,923 1,986 Total operating expenses1,263 1,354 4,530 2,923 
Operating incomeOperating income147 145 571 646 Operating income204 147 731 571 
Other income (expense), netOther income (expense), net4 (2)38 37 Other income (expense), net1 4 (7)38 
Interest incomeInterest income1 — 1 — Interest income1 1 5 1 
Interest expenseInterest expense(45)(40)(85)(79)Interest expense(71)(45)(140)(85)
Income before income taxesIncome before income taxes107 103 525 604 Income before income taxes135 107 589 525 
Income tax expense(19)(8)(103)(102)
Income tax benefit (expense)Income tax benefit (expense)21 (19)(73)(103)
Net incomeNet income88 95 422 502 Net income156 88 516 422 
Preferred dividendsPreferred dividends(1)(1)(1)(1)Preferred dividends(1)(1)(1)(1)
Earnings attributable to common sharesEarnings attributable to common shares$87 $94 $421 $501 Earnings attributable to common shares$155 $87 $515 $421 
See Notes to Condensed Financial Statements.
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SOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Pretax
amount		Income tax expenseNet-of-tax
amount		 Pretax
amount		Income tax benefit (expense)Net-of-tax
amount
(unaudited) (unaudited)
Three months ended June 30, 2022 and 2021 Three months ended June 30, 2023 and 2022
2023:2023:   
Net incomeNet income$135 $21 $156 
Other comprehensive income (loss):Other comprehensive income (loss):
Financial instrumentsFinancial instruments1 — 1 
Total other comprehensive incomeTotal other comprehensive income1 — 1 
Comprehensive incomeComprehensive income$136 $21 $157 
2022:2022:   2022:   
Net incomeNet income$107 $(19)$88 Net income$107 $(19)$88 
Other comprehensive income (loss):Other comprehensive income (loss):Other comprehensive income (loss):
Financial instrumentsFinancial instruments1 — 1 Financial instruments1 — 1 
Total other comprehensive incomeTotal other comprehensive income1 — 1 Total other comprehensive income1 — 1 
Comprehensive incomeComprehensive income$108 $(19)$89 Comprehensive income$108 $(19)$89 
2021:   
Six months ended June 30, 2023 and 2022
2023:2023:   
Net incomeNet income$103 $(8)$95 Net income$589 $(73)$516 
Other comprehensive income (loss):Other comprehensive income (loss):Other comprehensive income (loss):
Financial instrumentsFinancial instruments1 — 1 
Pension and other postretirement benefitsPension and other postretirement benefits1 — 1 Pension and other postretirement benefits1 — 1 
Total other comprehensive incomeTotal other comprehensive income1 — 1 Total other comprehensive income2 — 2 
Comprehensive incomeComprehensive income$104 $(8)$96 Comprehensive income$591 $(73)$518 
Six months ended June 30, 2022 and 2021
2022:2022:   2022:   
Net incomeNet income$525 $(103)$422 Net income$525 $(103)$422 
Other comprehensive income (loss):Other comprehensive income (loss):Other comprehensive income (loss):
Financial instrumentsFinancial instruments1 — 1 Financial instruments1 — 1 
Pension and other postretirement benefitsPension and other postretirement benefits1 — 1 Pension and other postretirement benefits1 — 1 
Total other comprehensive incomeTotal other comprehensive income2 — 2 Total other comprehensive income2 — 2 
Comprehensive incomeComprehensive income$527 $(103)$424 Comprehensive income$527 $(103)$424 
2021:   
Net income$604 $(102)$502 
Other comprehensive income (loss):
Pension and other postretirement benefits1 — 1 
Total other comprehensive income1 — 1 
Comprehensive income$605 $(102)$503 
See Notes to Condensed Financial Statements.
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SOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANY
CONDENSED BALANCE SHEETSCONDENSED BALANCE SHEETSCONDENSED BALANCE SHEETS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30,December 31, June 30,December 31,
2022
2021(1)
2023
2022(1)
(unaudited)  (unaudited) 
ASSETSASSETS  ASSETS  
Current assets:Current assets:  Current assets:  
Cash and cash equivalentsCash and cash equivalents$416 $37 Cash and cash equivalents$1 $21 
Accounts receivable – trade, netAccounts receivable – trade, net722 1,084 Accounts receivable – trade, net856 1,295 
Accounts receivable – other, netAccounts receivable – other, net48 58 Accounts receivable – other, net84 293 
Due from unconsolidated affiliatesDue from unconsolidated affiliates31 49 Due from unconsolidated affiliates1 77 
Income taxes receivable, net23 23 
InventoriesInventories169 172 Inventories180 159 
Regulatory assetsRegulatory assets11 40 Regulatory assets61 104 
Greenhouse gas allowancesGreenhouse gas allowances76 75 Greenhouse gas allowances113 111 
Other current assetsOther current assets32 61 Other current assets42 69 
Total current assetsTotal current assets1,528 1,599 Total current assets1,338 2,129 
Other assets:Other assets:  Other assets:  
Regulatory assetsRegulatory assets1,441 1,148 Regulatory assets1,585 1,291 
Insurance receivable for Aliso Canyon costs344 360 
Greenhouse gas allowancesGreenhouse gas allowances488 290 Greenhouse gas allowances729 551 
Right-of-use assets – operating leasesRight-of-use assets – operating leases49 57 Right-of-use assets – operating leases35 42 
Other long-term assetsOther long-term assets616 627 Other long-term assets605 583 
Total other assetsTotal other assets2,938 2,482 Total other assets2,954 2,467 
Property, plant and equipment:Property, plant and equipment:  Property, plant and equipment:  
Property, plant and equipmentProperty, plant and equipment23,975 23,104 Property, plant and equipment25,872 25,058 
Less accumulated depreciation and amortizationLess accumulated depreciation and amortization(7,087)(6,861)Less accumulated depreciation and amortization(7,573)(7,308)
Property, plant and equipment, netProperty, plant and equipment, net16,888 16,243 Property, plant and equipment, net18,299 17,750 
Total assetsTotal assets$21,354 $20,324 Total assets$22,591 $22,346 
(1)    Derived from audited financial statements.
See Notes to Condensed Financial Statements.
25
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SOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANY
CONDENSED BALANCE SHEETS (CONTINUED)CONDENSED BALANCE SHEETS (CONTINUED)CONDENSED BALANCE SHEETS (CONTINUED)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30,December 31, June 30,December 31,
2022
2021(1)
2023
2022(1)
(unaudited)  (unaudited) 
LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITY  LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:Current liabilities:  Current liabilities:  
Short-term debtShort-term debt$— $385 Short-term debt$238 $900 
Accounts payable – tradeAccounts payable – trade647 775 Accounts payable – trade509 953 
Accounts payable – otherAccounts payable – other152 142 Accounts payable – other161 176 
Due to unconsolidated affiliatesDue to unconsolidated affiliates36 36 Due to unconsolidated affiliates36 36 
Accrued compensation and benefitsAccrued compensation and benefits159 202 Accrued compensation and benefits170 209 
Regulatory liabilitiesRegulatory liabilities294 345 Regulatory liabilities418 394 
Current portion of long-term debt and finance leasesCurrent portion of long-term debt and finance leases13 11 Current portion of long-term debt and finance leases22 318 
Customer deposits15 13 
Reserve for Aliso Canyon costsReserve for Aliso Canyon costs2,003 1,980 Reserve for Aliso Canyon costs126 129 
Greenhouse gas obligationsGreenhouse gas obligations76 75 Greenhouse gas obligations113 111 
Asset retirement obligationsAsset retirement obligations76 77 Asset retirement obligations66 68 
Other current liabilitiesOther current liabilities230 271 Other current liabilities312 429 
Total current liabilitiesTotal current liabilities3,701 4,312 Total current liabilities2,171 3,723 
Long-term debt and finance leasesLong-term debt and finance leases5,471 4,773 Long-term debt and finance leases6,790 5,780 
Deferred credits and other liabilities:Deferred credits and other liabilities:  Deferred credits and other liabilities:  
Regulatory liabilitiesRegulatory liabilities1,082 1,100 Regulatory liabilities1,029 1,043 
Greenhouse gas obligationsGreenhouse gas obligations303 174 Greenhouse gas obligations630 443 
Pension obligation, net of plan assetsPension obligation, net of plan assets545 551 Pension obligation, net of plan assets225 277 
Deferred income taxesDeferred income taxes1,212 1,039 Deferred income taxes1,466 1,306 
Asset retirement obligationsAsset retirement obligations2,609 2,505 Asset retirement obligations2,672 2,675 
Deferred credits and otherDeferred credits and other416 428 Deferred credits and other393 401 
Total deferred credits and other liabilitiesTotal deferred credits and other liabilities6,167 5,797 Total deferred credits and other liabilities6,415 6,145 
Commitments and contingencies (Note 11)00
Commitments and contingencies (Note 10)Commitments and contingencies (Note 10)
Shareholders’ equity:Shareholders’ equity:  Shareholders’ equity:  
Preferred stock (11 million shares authorized; 1 million shares outstanding)Preferred stock (11 million shares authorized; 1 million shares outstanding)22 22 Preferred stock (11 million shares authorized; 1 million shares outstanding)22 22 
Common stock (100 million shares authorized; 91 million shares outstanding; no par value)Common stock (100 million shares authorized; 91 million shares outstanding; no par value)1,816 1,666 Common stock (100 million shares authorized; 91 million shares outstanding; no par value)2,316 2,316 
Retained earningsRetained earnings4,206 3,785 Retained earnings4,899 4,384 
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(29)(31)Accumulated other comprehensive income (loss)(22)(24)
Total shareholders’ equityTotal shareholders’ equity6,015 5,442 Total shareholders’ equity7,215 6,698 
Total liabilities and shareholders’ equityTotal liabilities and shareholders’ equity$21,354 $20,324 Total liabilities and shareholders’ equity$22,591 $22,346 
(1)    Derived from audited financial statements.
See Notes to Condensed Financial Statements.
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SOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF CASH FLOWSCONDENSED STATEMENTS OF CASH FLOWSCONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Six months ended June 30, Six months ended June 30,
20222021 20232022
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIES  CASH FLOWS FROM OPERATING ACTIVITIES  
Net incomeNet income$422 $502 Net income$516 $422 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization375 353 Depreciation and amortization414 375 
Deferred income taxes and investment tax creditsDeferred income taxes and investment tax credits103 18 Deferred income taxes and investment tax credits79 103 
OtherOther36 42 Other156 36 
Net change in working capital componentsNet change in working capital components225 297 Net change in working capital components40 225 
Insurance receivable for Aliso Canyon costsInsurance receivable for Aliso Canyon costs16 31 Insurance receivable for Aliso Canyon costs— 16 
Changes in other noncurrent assets and liabilities, netChanges in other noncurrent assets and liabilities, net(316)(280)Changes in other noncurrent assets and liabilities, net(280)(316)
Net cash provided by operating activitiesNet cash provided by operating activities861 963 Net cash provided by operating activities925 861 
CASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIES  CASH FLOWS FROM INVESTING ACTIVITIES  
Expenditures for property, plant and equipmentExpenditures for property, plant and equipment(931)(936)Expenditures for property, plant and equipment(961)(931)
Net cash used in investing activitiesNet cash used in investing activities(931)(936)Net cash used in investing activities(961)(931)
CASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIES
Preferred dividends paidPreferred dividends paid(1)(1)Preferred dividends paid(1)(1)
Common dividends paid— (50)
Equity contribution from Sempra Energy150 — 
Equity contribution from SempraEquity contribution from Sempra— 150 
Issuances of debt (maturities greater than 90 days)Issuances of debt (maturities greater than 90 days)697 — Issuances of debt (maturities greater than 90 days)997 697 
Payments on finance leases(6)(6)
(Decrease) increase in short-term debt, net(385)30 
Payments on debt (maturities greater than 90 days) and finance leasesPayments on debt (maturities greater than 90 days) and finance leases(1,109)(6)
Increase (decrease) in short-term debt, netIncrease (decrease) in short-term debt, net138 (385)
Debt issuance costsDebt issuance costs(6)— Debt issuance costs(9)(6)
Net cash provided by (used in) financing activities449 (27)
Net cash provided by financing activitiesNet cash provided by financing activities16 449 
Increase in cash and cash equivalents379 — 
(Decrease) increase in cash and cash equivalents(Decrease) increase in cash and cash equivalents(20)379 
Cash and cash equivalents, January 1Cash and cash equivalents, January 137 4 Cash and cash equivalents, January 121 37 
Cash and cash equivalents, June 30Cash and cash equivalents, June 30$416 $4 Cash and cash equivalents, June 30$1 $416 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONSUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  
Interest payments, net of amounts capitalizedInterest payments, net of amounts capitalized$75 $76 Interest payments, net of amounts capitalized$138 $75 
Income tax payments, net of refunds— 82 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIESSUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES  SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES  
Accrued capital expendituresAccrued capital expenditures$199 $156 Accrued capital expenditures$222 $199 
Increase (decrease) in ARO for investment in PP&E54 (10)
Increase in finance lease obligations for investment in PP&EIncrease in finance lease obligations for investment in PP&E13 11 Increase in finance lease obligations for investment in PP&E32 13 
Common dividends declared but not paid— 25 
(Decrease) increase in ARO for investment in PP&E(Decrease) increase in ARO for investment in PP&E(56)54 
See Notes to Condensed Financial Statements.
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SOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANYSOUTHERN CALIFORNIA GAS COMPANY
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYCONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYCONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Preferred
stock		Common
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		Total
shareholders’
equity		 Preferred
stock		Common
stock		Retained
earnings		Accumulated
other
comprehensive
income (loss)		Total
shareholders’
equity
(unaudited)
Three months ended June 30, 2023
Balance at March 31, 2023Balance at March 31, 2023$22 $2,316 $4,744 $(23)$7,059 
Net incomeNet income156 156 
Other comprehensive incomeOther comprehensive income1 1 
Dividends declared:Dividends declared:
Preferred stock ($0.37/share)Preferred stock ($0.37/share)(1)(1)
Balance at June 30, 2023Balance at June 30, 2023$22 $2,316 $4,899 $(22)$7,215 
(unaudited)
Three months ended June 30, 2022Three months ended June 30, 2022
Balance at March 31, 2022Balance at March 31, 2022$22 $1,666 $4,119 $(30)$5,777 Balance at March 31, 2022$22 $1,666 $4,119 $(30)$5,777 
Net incomeNet income88 88 Net income88 88 
Other comprehensive incomeOther comprehensive income1 1 Other comprehensive income1 1 
Dividends declared:Dividends declared:Dividends declared:
Preferred stock ($0.37/share)Preferred stock ($0.37/share)(1)(1)Preferred stock ($0.37/share)(1)(1)
Equity contribution from Sempra Energy150 150 
Equity contribution from SempraEquity contribution from Sempra150 150 
Balance at June 30, 2022Balance at June 30, 2022$22 $1,816 $4,206 $(29)$6,015 Balance at June 30, 2022$22 $1,816 $4,206 $(29)$6,015 
Three months ended June 30, 2021 Six months ended June 30, 2023
Balance at March 31, 2021$22 $866 $4,644 $(31)$5,501 
Balance at December 31, 2022Balance at December 31, 2022$22 $2,316 $4,384 $(24)$6,698 
Net incomeNet income95 95 Net income516 516 
Other comprehensive incomeOther comprehensive income1 1 Other comprehensive income2 2 
Dividends declared:Dividends declared:Dividends declared:
Preferred stock ($0.37/share)(1)(1)
Common stock ($0.27/share)(25)(25)
Balance at June 30, 2021$22 $866 $4,713 $(30)$5,571 
Preferred stock ($0.75/share)Preferred stock ($0.75/share)(1)(1)
Balance at June 30, 2023Balance at June 30, 2023$22 $2,316 $4,899 $(22)$7,215 
Six months ended June 30, 2022Six months ended June 30, 2022
Balance at December 31, 2021Balance at December 31, 2021$22 $1,666 $3,785 $(31)$5,442 Balance at December 31, 2021$22 $1,666 $3,785 $(31)$5,442 
Net incomeNet income422 422 Net income422 422 
Other comprehensive incomeOther comprehensive income2 2 Other comprehensive income2 2 
Dividends declared:Dividends declared:Dividends declared:
Preferred stock ($0.75/share)Preferred stock ($0.75/share)(1)(1)Preferred stock ($0.75/share)(1)(1)
Equity contribution from Sempra Energy150 150 
Equity contribution from SempraEquity contribution from Sempra150 150 
Balance at June 30, 2022Balance at June 30, 2022$22 $1,816 $4,206 $(29)$6,015 Balance at June 30, 2022$22 $1,816 $4,206 $(29)$6,015 
Six months ended June 30, 2021
Balance at December 31, 2020$22 $866 $4,287 $(31)$5,144 
Net income502 502 
Other comprehensive income1 1 
Dividends declared:
Preferred stock ($0.75/share)(1)(1)
Common stock ($0.82/share)(75)(75)
Balance at June 30, 2021$22 $866 $4,713 $(30)$5,571 
See Notes to Condensed Financial Statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. GENERAL INFORMATION AND OTHER FINANCIAL DATA
PRINCIPLES OF CONSOLIDATION
Sempra
Effective May 12, 2023, our company changed its legal name from Sempra Energy to Sempra. Sempra’s Condensed Consolidated Financial Statements include the accounts of Sempra, Energy, a California-based holding company, doing business as Sempra, and its consolidated entities. In the fourth quarter of 2021, we formed Sempra Infrastructure, which resulted in a change to our reportable segments. Historical segment disclosuresWe have been restated to conform with the current presentation of our 4four separate reportable segments, which we discuss in Note 12.11. All references in these Notes to our reportable segments are not intended to refer to any legal entity with the same or similar name.
SDG&E
SDG&E’s common stock is wholly owned by Enova Corporation, which is a wholly owned subsidiary of Sempra.
SoCalGas
SoCalGas’ common stock is wholly owned by Pacific Enterprises, which is a wholly owned subsidiary of Sempra.
BASIS OF PRESENTATION
This is a combined report of Sempra, SDG&E and SoCalGas. We provide separate information for SDG&E and SoCalGas as required. We have eliminated intercompany accounts and transactions within theSempra’s consolidated financial statements of each reporting entity.statements.
We have prepared our Condensed Consolidated Financial Statements in conformity with U.S. GAAP and in accordance with the interim period reporting requirements of Form 10-Q and applicable rules of the SEC. The financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods. These adjustments are only of a normal, recurring nature. Results of operations for interim periods are not necessarily indicative of results for the entire year or for any other period. We evaluated events and transactions that occurred after June 30, 20222023 through the date the financial statements were issued and, in the opinion of management, the accompanying statements reflect all adjustments necessary for a fair presentation.
All December 31, 20212022 balance sheet information in the Condensed Consolidated Financial Statements has been derived from our audited 20212022 Consolidated Financial Statements in the Annual Report. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the interim period reporting provisions of U.S. GAAP and the SEC.
We describe our significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report and the impact of the adoption of new accounting standards on those policies in Note 2 below. We follow the same accounting policies for interim period reporting purposes.
The information contained in this report should be read in conjunction with the Annual Report.
Regulated Operations
SDG&E, SoCalGas and Sempra Infrastructure’s natural gas distribution utility, Ecogas, prepare their financial statements in accordance with the provisions of U.S. GAAP governing rate-regulated operations. We discuss revenue recognition and the effects of regulation at our utilities in Notes 3 and 4 below and in Notes 1, 3 and 4 of the Notes to Consolidated Financial Statements in the Annual Report.
Our Sempra Texas Utilities segment is comprised of our equity method investments in holding companies that own interests in regulated electric transmission and distribution utilities in Texas.
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Our Sempra Infrastructure segment includes the operating companies of our subsidiary, IEnova, as well as certain holding companies and risk management activity. Certain business activities at IEnovaSempra Infrastructure are regulated by the CRE and the FERC and meet the regulatory accounting requirements of U.S. GAAP. Pipeline projects currently under construction at IEnova that meet the regulatory accounting requirements of U.S. GAAP record the impact of AFUDC related to equity. We discuss AFUDC below and in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash equivalents are highly liquid investments with original maturities of three months or less at the date of purchase.
Restricted cash includes:
▪for Sempra Infrastructure, funds fully drawn against Gazprom’sSEFE’s letters of credit, including draws associated with its LNG storage and regasification agreement that we discuss in Note 11, andagreement; funds denominated in U.S. dollars and Mexican pesos to pay for rights-of-way license fees, permits, topographic surveys and other costs pursuant to trust and debt agreements related to pipeline projectsprojects; and certain funds at Port Arthur LNG for which withdrawals and usage are dictated by its debt agreements
▪for Parent and other, funds held in a delisting trust for the purpose of purchasing the remaining publicly owned IEnova shares
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on Sempra’s Condensed Consolidated Balance Sheets to the sum of such amounts reported on Sempra’s Condensed Consolidated Statements of Cash Flows.
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASHRECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASHRECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30,
2022		December 31,
2021		 June 30,
2023		December 31,
2022
Cash and cash equivalentsCash and cash equivalents$1,931 $559 Cash and cash equivalents$1,077 $370 
Restricted cash, currentRestricted cash, current103 19 Restricted cash, current74 40 
Restricted cash, noncurrentRestricted cash, noncurrent59 3 Restricted cash, noncurrent91 52 
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of
Cash Flows
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of
Cash Flows
$2,093 $581 
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of
Cash Flows
$1,242 $462 

CREDIT LOSSES
We are exposed to credit losses from financial assets measured at amortized cost, including trade and other accounts receivable, amounts due from unconsolidated affiliates, our net investment in sales-type leases and a note receivable. We are also exposed to credit losses from off-balance sheet arrangements through Sempra’s guarantee related to Cameron LNG JV’s SDSRA, which we discuss in Note 6.5.
We regularly monitor and evaluate credit losses and record allowances for expected credit losses, if necessary, for trade and other accounts receivable using a combination of factors, including past-due status based on contractual terms, trends in write-offs, the age of the receivables and customer payment patterns, historical and industry trends, counterparty creditworthiness, economic conditions and specific events, such as bankruptcies, pandemics and other factors. We write off financial assets measured at amortized cost in the period in which we determine they are not recoverable. We record recoveries of amounts previously written off when it is known that they will be recovered.
In 2021,the first quarter of 2022, SDG&E and SoCalGas applied,received $63 million and $79 million, respectively, on behalf of their customers for financial assistance from the California Department of Community Services and Development under the 2021 California Arrearage Payment Program which provided funds of $63 million and $79 million for SDG&E and SoCalGas, respectively. In the first quarter of 2022, SDG&E and SoCalGas received and applied the amounts directly to eligible customer accounts to reduce past due balances. In June 2022, AB 205 was approved establishing, among other things, the 2022 California Arrearage Payment Program. In December 2022, SDG&E and SoCalGas expectreceived funding of $51 million and $59 million, respectively, related to apply for funding from this program on behalf of their residential customers withand, in January 2023, applied the amounts directly to eligible customer accounts to reduce past due balances and, if approved, receive such funding in the first quarterbalances.
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We provide below allowances andthe changes in allowances for credit losses for trade receivables and other receivables. SDG&E and SoCalGas record changes in the allowances for credit losses related to Accounts Receivable – Trade in regulatory accounts.
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RECEIVABLES – ALLOWANCES FOR CREDIT LOSSES
CHANGES IN ALLOWANCES FOR CREDIT LOSSESCHANGES IN ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
2022202120232022
Sempra:Sempra:Sempra:
Allowances for credit losses at January 1Allowances for credit losses at January 1$136 $138 Allowances for credit losses at January 1$181 $136 
Provisions for expected credit lossesProvisions for expected credit losses77 66 Provisions for expected credit losses228 77 
Write-offsWrite-offs(36)(12)Write-offs(43)(36)
Allowances for credit losses at June 30Allowances for credit losses at June 30$177 $192 Allowances for credit losses at June 30$366 $177 
SDG&E:SDG&E:SDG&E:
Allowances for credit losses at January 1Allowances for credit losses at January 1$66 $69 Allowances for credit losses at January 1$78 $66 
Provisions for expected credit lossesProvisions for expected credit losses37 13 Provisions for expected credit losses63 37 
Write-offsWrite-offs(18)(7)Write-offs(23)(18)
Allowances for credit losses at June 30Allowances for credit losses at June 30$85 $75 Allowances for credit losses at June 30$118 $85 
SoCalGas:SoCalGas:SoCalGas:
Allowances for credit losses at January 1Allowances for credit losses at January 1$69 $68 Allowances for credit losses at January 1$98 $69 
Provisions for expected credit lossesProvisions for expected credit losses37 52 Provisions for expected credit losses164 37 
Write-offsWrite-offs(18)(5)Write-offs(20)(18)
Allowances for credit losses at June 30Allowances for credit losses at June 30$88 $115 Allowances for credit losses at June 30$242 $88 

Allowances for credit losses related to accounts receivabletrade receivables and other receivables are included in the Condensed Consolidated Balance Sheets as follows:
ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
June 30,December 31,
20222021
Sempra:
Accounts receivable – trade, net$142 $94 
Accounts receivable – other, net33 39 
Other long-term assets2 3 
Total allowances for credit losses$177 $136 
SDG&E:
Accounts receivable – trade, net$62 $42 
Accounts receivable – other, net22 22 
Other long-term assets1 2 
Total allowances for credit losses$85 $66 
SoCalGas:
Accounts receivable – trade, net$76 $51 
Accounts receivable – other, net11 17 
Other long-term assets1 1 
Total allowances for credit losses$88 $69 
As we discuss below in “Transactions with Affiliates,” we have loans due from unconsolidated affiliates with varying tenors, interest rates and currencies. On a quarterly basis, we evaluate credit losses and record allowances for expected credit losses on amounts due from unconsolidated affiliates, if necessary, based on credit quality indicators such as external credit ratings, published default rate studies, the maturity date of the instrument and past delinquencies. However, we do not record allowances for expected credit losses related to accrued interest receivable on loans due from unconsolidated affiliates because we write off such amounts, if any, through a reversal of interest income in the period we determine such amounts are uncollectible. In the absence of external credit ratings, we may utilize an internally developed credit rating based on our analysis of a counterparty’s financial statements to determine our expected credit losses. At December 31, 2021, $1 million of expected credit losses are included in noncurrent Due From Unconsolidated Affiliates on Sempra’s Condensed Consolidated Balance Sheet.
ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
June 30,December 31,
20232022
Sempra:
Accounts receivable – trade, net$320 $140 
Accounts receivable – other, net46 40 
Other long-term assets— 1 
Total allowances for credit losses$366 $181 
SDG&E:
Accounts receivable – trade, net$91 $52 
Accounts receivable – other, net27 25 
Other long-term assets— 1 
Total allowances for credit losses$118 $78 
SoCalGas:
Accounts receivable – trade, net$223 $83 
Accounts receivable – other, net19 15 
Total allowances for credit losses$242 $98 
As we discuss below in “Note Receivable,” we have an interest-bearing promissory note due from KKR.KKR Pinnacle. On a quarterly basis, we evaluate credit losses and record allowances for expected credit losses on this note receivable, including compounded interest and unamortized transaction costs, based on published default rate studies, the maturity date of the instrument and an internally developed credit rating. At June 30, 20222023 and December 31, 2021, $72022, $6 million and $8$7 million, respectively, of expected credit losses are included in Other Long-Term Assets on Sempra’s Condensed Consolidated Balance Sheets.
As we discuss below in Note 6,5, Sempra provided a guarantee for the benefit of Cameron LNG JV related to amounts withdrawn
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by Sempra Infrastructure from the SDSRA. On a quarterly basis, we evaluate credit losses and record liabilities for expected credit losses on this off-balance sheet arrangement based on external credit ratings, published default rate studies and the maturity date of the arrangement. At both June 30, 20222023 and December 31, 2021,2022, $6 million and $7 million, respectively, of expected credit losses are included in Deferred Credits and Other on Sempra’s Condensed Consolidated Balance Sheets.

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INVENTORIES
The components of inventories are as follows:
INVENTORY BALANCESINVENTORY BALANCESINVENTORY BALANCES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
SempraSDG&ESoCalGas SempraSDG&ESoCalGas
June 30,
2022		 December 31, 2021June 30,
2022		 December 31, 2021June 30,
2022		 December 31, 2021 June 30,
2023		December 31,
2022		June 30,
2023		December 31,
2022		June 30,
2023		December 31,
2022
Natural gasNatural gas$138 $164 $— $— $102 $114 Natural gas$87 $106 $1 $1 $63 $74 
LNGLNG31 27 — — — — LNG17 62 — — — — 
Materials and suppliesMaterials and supplies208 198 124 123 67 58 Materials and supplies279 235 142 133 117 85 
TotalTotal$377 $389 $124 $123 $169 $172 Total$383 $403 $143 $134 $180 $159 

NOTE RECEIVABLE
In OctoberNovember 2021, Sempra loaned $300 million to KKR Pinnacle in exchange for an interest-bearing promissory note that is due in full no later than October 2029 and bears compound interest at 5% per annum, which may be paid quarterly or added to the outstanding principal at the election of KKR.KKR Pinnacle. At June 30, 20222023 and December 31, 2021,2022, Other Long-Term Assets includes $308$324 million and $297$316 million, respectively, of outstanding principal, compounded interest and unamortized transaction costs, net of allowance for credit losses, and at December 31, 2021, Other Current Assets includes $3 million of interest receivable on Sempra’s Condensed Consolidated Balance Sheets.

CAPITALIZED FINANCING COSTS
Capitalized financing costs include capitalized interest costs and AFUDC related to both debt and equity financing of construction projects. We capitalize interest costs incurred to finance capital projects and interest at equity method investments that have not commenced planned principal operations.
The table below summarizes capitalized financing costs, comprised of AFUDC and capitalized interest.
CAPITALIZED FINANCING COSTSCAPITALIZED FINANCING COSTSCAPITALIZED FINANCING COSTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30,Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
SempraSempra$60 $55 $117 $114 Sempra$110 $60 $183 $117 
SDG&ESDG&E26 28 54 58 SDG&E31 26 62 54 
SoCalGasSoCalGas17 15 35 31 SoCalGas20 17 35 35 
PROPERTY, PLANT AND EQUIPMENT
Sempra Infrastructure’s Sonora natural gas pipeline consists of two segments, the Sasabe-Puerto Libertad-Guaymas segment and the Guaymas-El Oro segment. Each segment has its own service agreement with the CFE. Following the start of commercial operations of the Guaymas-El Oro segment, Sempra Infrastructure reported damage to the pipeline in the Yaqui territory that has made that section inoperable since August 2017. Discussions with the CFE regarding the future of the pipeline are underway and the parties are working on restarting service on the pipeline, including the potential re-routing of a portion of the pipeline. If the parties do not agree on a definitive arrangement to re-route a portion of the pipeline or the parties do not agree on a new service start date, Sempra Infrastructure retains the right to terminate the contract and seek to recover its reasonable and documented costs and lost profits. At June 30, 2023, Sempra Infrastructure had $414 million in PP&E, net, related to the Guaymas-El Oro segment of the Sonora pipeline.
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VARIABLE INTEREST ENTITIES
We consolidate a VIE if we are the primary beneficiary of the VIE. Our determination of whether we are the primary beneficiary is based on qualitative and quantitative analyses, which assess:
▪the purpose and design of the VIE;
▪the nature of the VIE’s risks and the risks we absorb;
▪the power to direct activities that most significantly impact the economic performance of the VIE; and
▪the obligation to absorb losses or the right to receive benefits that could be significant to the VIE.
We will continue to evaluate our VIEs for any changes that may impact our determination of whether an entity is a VIE and if we are the primary beneficiary.
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SDG&E
SDG&E’s power procurement is subject to reliability requirements that may require SDG&E to enter into various PPAs that include variable interests. SDG&E evaluates the respective entities to determine if variable interests exist and, based on the qualitative and quantitative analyses described above, if SDG&E, and indirectly Sempra, is the primary beneficiary.
SDG&E has agreements under which it purchases power generated by facilities for which it supplies all of the natural gas to fuel the power plant (i.e., tolling agreements). SDG&E’s obligation to absorb natural gas costs may be a significant variable interest. In addition, SDG&E has the power to direct the dispatch of electricity generated by these facilities. Based on our analysis, the ability to direct the dispatch of electricity may have the most significant impact on the economic performance of the entity owning the generating facility because of the associated exposure to the cost of natural gas, which fuels the plants, and the value of electricity produced. To the extent that SDG&E (1) is obligated to purchase and provide fuel to operate the facility, (2) has the power to direct the dispatch, and (3) purchases all of the output from the facility for a substantial portion of the facility’s useful life, SDG&E may be the primary beneficiary of the entity owning the generating facility. SDG&E determines if it is the primary beneficiary in these cases based on a qualitative approach in which it considers the operational characteristics of the facility, including its expected power generation output relative to its capacity to generate and the financial structure of the entity, among other factors. If SDG&E determines that it is the primary beneficiary, SDG&E and Sempra consolidate the entity that owns the facility as a VIE.
In addition to tolling agreements, other variable interests involve various elements of fuel and power costs, and other components of cash flows expected to be paid to or received by our counterparties. In most of these cases, the expectation of variability is not substantial, and SDG&E generally does not have the power to direct activities, including the operation and maintenance activities of the generating facility, that most significantly impact the economic performance of the other VIEs. If our ongoing evaluation of these VIEs were to conclude that SDG&E becomes the primary beneficiary and consolidation by SDG&E becomes necessary, the effects could be significant to the financial position and liquidity of SDG&E and Sempra.
SDG&E determined that none of its PPAs and tolling agreements resulted in SDG&E being the primary beneficiary of a VIE at June 30, 20222023 and December 31, 2021.2022. PPAs and tolling agreements that relate to SDG&E’s involvement with VIEs are primarily accounted for as finance leases. The carrying amounts of the assets and liabilities under these contracts are included in PP&E, net, and finance lease liabilities with balances of $1,206$1,181 million and $1,217$1,194 million at June 30, 20222023 and December 31, 2021,2022, respectively. SDG&E recovers costs incurred on PPAs, tolling agreements and other variable interests through CPUC-approved long-term power procurement plans. SDG&E has no residual interest in the respective entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees or other commitments associated with these contracts other than the purchase commitments described in Note 16 of the Notes to Consolidated Financial Statements in the Annual Report. As a result, SDG&E’s potential exposure to loss from its variable interest in these VIEs is not significant.
Sempra Texas Utilities
Oncor Holdings is a VIE. Sempra is not the primary beneficiary of this VIE because of the structural and operational ring-fencing and governance measures in place that prevent us from having the power to direct the significant activities of Oncor Holdings. As a result, we do not consolidate Oncor Holdings and instead account for our ownership interest as an equity method investment. See Note 6 of the Notes to Consolidated Financial Statements in the Annual Report for additional information about our equity method investment in Oncor Holdings and restrictions on our ability to influence its activities. Our maximum exposure to loss, which fluctuates over time, from our interest in Oncor Holdings does not exceed the carrying value of our investment, which was $13,301$13,869 million and $13,665 million at June 30, 20222023 and $12,947 million at December 31, 2021.2022, respectively.
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Sempra Infrastructure
Cameron LNG JV
Cameron LNG JV is a VIE principally due to contractual provisions that transfer certain risks to customers. Sempra is not the primary beneficiary of this VIE because we do not have the power to direct the most significant activities of Cameron LNG JV, including LNG production and operation and maintenance activities at the liquefaction facility. Therefore, we account for our investment in Cameron LNG JV under the equity method. The carrying value of our investment, including amounts recognized in AOCI related to interest-rate cash flow hedges at Cameron LNG JV, was $723$979 million at June 30, 20222023 and $514$886 million at December 31, 2021.2022. Our maximum exposure to loss, which fluctuates over time, includes the carrying value of our investment and our obligation under the SDSRA, which we discuss in Note 6.
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5.
CFIN
As we discuss in Note 6,5, in July 2020, Sempra entered into a Support Agreement for the benefit of CFIN, which is a VIE. Sempra is not the primary beneficiary of this VIE because we do not have the power to direct the most significant activities of CFIN, including modification, prepayment, and refinance decisions related to the financing arrangement with external lenders and Cameron LNG JV’s four project owners as well as the ability to determine and enforce remedies in the event of default. The conditional obligations of the Support Agreement represent a variable interest that we measure at fair value on a recurring basis (see Note 9)8). Sempra’s maximum exposure to loss under the terms of the Support Agreement is $979 million.
ECA LNG Phase 1
ECA LNG Phase 1 is a VIE because its total equity at risk is not sufficient to finance its activities without additional subordinated financial support. We expect that ECA LNG Phase 1 will require future capital contributions or other financial support to finance the construction of the facility. Sempra is the primary beneficiary of this VIE because we have the power to direct the development activities related to the construction and future operation and maintenance of the liquefaction facility, which we consider to be the most significant activities of ECA LNG Phase 1 during the construction phase of its natural gas liquefaction export project.facility. As a result, we consolidate ECA LNG Phase 1. Sempra consolidated $767$1,330 million and $632$1,099 million of assets at June 30, 20222023 and December 31, 2021,2022, respectively, consisting primarily of PP&E, net, and Accounts Receivable – Other attributable to ECA LNG Phase 1 that could be used only to settle obligations of this VIE and that are not available to settle obligations of Sempra, and $532$900 million and $455$685 million of liabilities at June 30, 20222023 and December 31, 2021,2022, respectively, consisting primarily of long-term debt, accounts payable and short-term debt and accounts payable attributable to ECA LNG Phase 1 for which creditors do not have recourse to the general credit of Sempra. Additionally, as we discuss in Note 7, Sempra6, IEnova and TotalEnergies SE have provided guarantees for 83.4% and 16.6%, respectively, of the loan facility supporting construction of the liquefaction facility based on their respective proportionate ownership interest in ECAfacility.
Port Arthur LNG
Port Arthur LNG is a VIE because its total equity at risk is not sufficient to finance its activities without additional subordinated financial support. We expect that Port Arthur LNG will require future capital contributions or other financial support to finance the construction of the PA LNG Phase 1.1 project. Sempra is the primary beneficiary of this VIE because we have the power to direct the activities related to the construction and future operation and maintenance of the liquefaction facility. As a result, we consolidate Port Arthur LNG. Sempra consolidated $2,690 million of assets at June 30, 2023 consisting primarily of PP&E, net, attributable to Port Arthur LNG that could be used only to settle obligations of this VIE and that are not available to settle obligations of Sempra, and $455 million of liabilities at June 30, 2023 consisting primarily of accounts payable and long-term debt attributable to Port Arthur LNG for which creditors do not have recourse to the general credit of Sempra.

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PENSION AND OTHER POSTRETIREMENT BENEFITSPBOP
Net Periodic Benefit Cost
The following three tables provide the components of net periodic benefit cost. The components of net periodic benefit cost, other than the service cost component, are included in the Other Income (Expense) Income,, Net, table below.
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NET PERIODIC BENEFIT COST – SEMPRA
(Dollars in millions)
 Pension benefitsOther postretirement benefits
 Three months ended June 30,
 2022202120222021
Service cost$42 $36 $6 $5 
Interest cost29 28 7 7 
Expected return on assets(45)(43)(16)(15)
Amortization of:  
Prior service cost2 2 — — 
Actuarial loss (gain)5 11 (3)(2)
Net periodic benefit cost (credit)33 34 (6)(5)
Regulatory adjustments24 22 6 5 
Total expense recognized$57 $56 $— $— 
 Six months ended June 30,
 2022202120222021
Service cost$83 $73 $13 $11 
Interest cost59 56 14 14 
Expected return on assets(91)(86)(32)(30)
Amortization of:    
Prior service cost (credit)5 5 (1)(1)
Actuarial loss (gain)11 22 (7)(4)
Settlement charges— 7 — — 
Net periodic benefit cost (credit)67 77 (13)(10)
Regulatory adjustments(3)(7)13 10 
Total expense recognized$64 $70 $— $— 
NET PERIODIC BENEFIT COST – SDG&E
(Dollars in millions)
 Pension benefitsOther postretirement benefits
 Three months ended June 30,
 2022202120222021
Service cost$10 $9 $1 $1 
Interest cost6 6 2 2 
Expected return on assets(11)(13)(3)(3)
Amortization of:  
Actuarial loss (gain)1 1 — (1)
Net periodic benefit cost (credit)6 3 — (1)
Regulatory adjustments7 11 — 1 
Total expense recognized$13 $14 $— $— 
 Six months ended June 30,
 2022202120222021
Service cost$20 $17 $3 $2 
Interest cost13 12 3 3 
Expected return on assets(22)(25)(5)(5)
Amortization of:  
Actuarial loss (gain)1 1 (1)(1)
Net periodic benefit cost (credit)12 5 — (1)
Regulatory adjustments2 9 — 1 
Total expense recognized$14 $14 $— $— 
NET PERIODIC BENEFIT COST – SEMPRA
(Dollars in millions)
 PensionPBOP
 Three months ended June 30,
 2023202220232022
Service cost$29 $42 $3 $6 
Interest cost39 29 10 7 
Expected return on assets(42)(45)(18)(16)
Amortization of:  
Prior service cost1 2 — — 
Actuarial loss (gain)2 5 (6)(3)
Net periodic benefit cost (credit)29 33 (11)(6)
Regulatory adjustments29 24 11 6 
Total expense recognized$58 $57 $— $— 
 Six months ended June 30,
 2023202220232022
Service cost$57 $83 $7 $13 
Interest cost79 59 19 14 
Expected return on assets(85)(91)(35)(32)
Amortization of:    
Prior service cost (credit)2 5 (1)(1)
Actuarial loss (gain)4 11 (12)(7)
Net periodic benefit cost (credit)57 67 (22)(13)
Regulatory adjustments58 (3)22 13 
Total expense recognized$115 $64 $— $— 
NET PERIODIC BENEFIT COST – SDG&E
(Dollars in millions)
 PensionPBOP
 Three months ended June 30,
 2023202220232022
Service cost$8 $10 $— $1 
Interest cost10 6 2 2 
Expected return on assets(10)(11)(2)(3)
Amortization of:  
Actuarial loss1 1 — — 
Net periodic benefit cost9 6 — — 
Regulatory adjustments4 7 — — 
Total expense recognized$13 $13 $— $— 
 Six months ended June 30,
 2023202220232022
Service cost$16 $20 $1 $3 
Interest cost20 13 4 3 
Expected return on assets(20)(22)(4)(5)
Amortization of:  
Actuarial loss (gain)2 1 (1)(1)
Net periodic benefit cost18 12 — — 
Regulatory adjustments8 2 — — 
Total expense recognized$26 $14 $— $— 
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NET PERIODIC BENEFIT COST – SOCALGASNET PERIODIC BENEFIT COST – SOCALGASNET PERIODIC BENEFIT COST – SOCALGAS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Pension benefitsOther postretirement benefits PensionPBOP
Three months ended June 30, Three months ended June 30,
2022202120222021 2023202220232022
Service costService cost$28 $25 $5 $4 Service cost$17 $28 $2 $5 
Interest costInterest cost21 20 6 6 Interest cost26 21 7 6 
Expected return on assetsExpected return on assets(33)(30)(14)(12)Expected return on assets(31)(33)(15)(14)
Amortization of:Amortization of:  Amortization of:  
Prior service costPrior service cost2 2 — — Prior service cost1 2 — — 
Actuarial loss (gain)Actuarial loss (gain)4 10 (3)(2)Actuarial loss (gain)— 4 (5)(3)
Net periodic benefit cost (credit)Net periodic benefit cost (credit)22 27 (6)(4)Net periodic benefit cost (credit)13 22 (11)(6)
Regulatory adjustmentsRegulatory adjustments17 11 6 4 Regulatory adjustments25 17 11 6 
Total expense recognizedTotal expense recognized$39 $38 $— $— Total expense recognized$38 $39 $— $— 
Six months ended June 30, Six months ended June 30,
2022202120222021 2023202220232022
Service costService cost$56 $50 $10 $8 Service cost$34 $56 $5 $10 
Interest costInterest cost41 40 11 11 Interest cost51 41 14 11 
Expected return on assetsExpected return on assets(64)(58)(27)(24)Expected return on assets(60)(64)(30)(27)
Amortization of:Amortization of:   Amortization of:   
Prior service cost (credit)Prior service cost (credit)4 4 (1)(1)Prior service cost (credit)2 4 (1)(1)
Actuarial loss (gain)Actuarial loss (gain)8 19 (6)(3)Actuarial loss (gain)— 8 (10)(6)
Net periodic benefit cost (credit)Net periodic benefit cost (credit)45 55 (13)(9)Net periodic benefit cost (credit)27 45 (22)(13)
Regulatory adjustmentsRegulatory adjustments(5)(16)13 9 Regulatory adjustments50 (5)22 13 
Total expense recognizedTotal expense recognized$40 $39 $— $— Total expense recognized$77 $40 $— $— 

RABBI TRUSTDEDICATED ASSETS IN SUPPORT OF CERTAIN BENEFITS PLANS
In support of its Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans, Sempra maintains dedicated assets, including a Rabbi Trust and investments in life insurance contracts, which totaled $498$520 million and $567$505 million at June 30, 20222023 and December 31, 2021,2022, respectively.

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SEMPRA EARNINGS PER COMMON SHARE
Basic EPS is calculated by dividing earnings attributable to common shares by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
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EARNINGS PER COMMON SHARE COMPUTATIONSEARNINGS PER COMMON SHARE COMPUTATIONSEARNINGS PER COMMON SHARE COMPUTATIONS
(Dollars in millions, except per share amounts; shares in thousands)(Dollars in millions, except per share amounts; shares in thousands)(Dollars in millions, except per share amounts; shares in thousands)
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
Numerator:Numerator:    Numerator:    
Earnings attributable to common sharesEarnings attributable to common shares$559 $424 $1,171 $1,298 Earnings attributable to common shares$603 $559 $1,572 $1,171 
Denominator:Denominator:    Denominator:    
Weighted-average common shares outstanding for basic EPS(1)
Weighted-average common shares outstanding for basic EPS(1)
314,845 307,800 315,595 304,372 
Weighted-average common shares outstanding for basic EPS(1)
315,007 314,845 314,963 315,595 
Dilutive effect of stock options and RSUs(2)
Dilutive effect of stock options and RSUs(2)
1,022 807 1,052 846 
Dilutive effect of stock options and RSUs(2)
1,053 1,022 1,129 1,052 
Dilutive effect of mandatory convertible preferred stock— — — 1,066 
Weighted-average common shares outstanding for diluted EPSWeighted-average common shares outstanding for diluted EPS315,867 308,607 316,647 306,284 Weighted-average common shares outstanding for diluted EPS316,060 315,867 316,092 316,647 
EPS:EPS:EPS:
BasicBasic$1.78 $1.38 $3.71 $4.27 Basic$1.91 $1.78 $4.99 $3.71 
DilutedDiluted$1.77 $1.37 $3.70 $4.24 Diluted$1.91 $1.77 $4.97 $3.70 
(1)    Includes 399355 and 447399 fully vested RSUs held in our Deferred Compensation Plan for the three months ended June 30, 20222023 and 2021,2022, respectively, and 403358 and 454403 of such RSUs for the six months ended June 30, 20222023 and 2021,2022, respectively. These fully vested RSUs are included in weighted-average common shares outstanding for basic EPS because there are no conditions under which the corresponding shares will not be issued.
(2)    Due to market fluctuations of both Sempra common stock and the comparative indices used to determine the vesting percentage of our total shareholder return performance-based RSUs, which we discuss in Note 10 of the Notes to Consolidated Financial Statements in the Annual Report, dilutive RSUs may vary widely from period-to-period.

The potentially dilutive impact from stock options and RSUs is calculated under the treasury stock method. Under this method, proceeds based on the exercise price and unearned compensation are assumed to be used to repurchase shares on the open market at the average market price for the period, reducing the number of potential new shares to be issued and sometimes causing an antidilutive effect. The computation of diluted EPS for the three months and six months ended June 30, 20222023 excludes 8,899214,069 and 173,064197,042 potentially dilutive shares, respectively, and the computation of diluted EPS for the three months and six months ended June 30, 20212022 excludes 145,2478,899 and 287,061173,064 potentially dilutive shares, respectively, because to include them would be antidilutive for the period. However, these shares could potentially dilute basic EPS in the future.
In 2021, the potentially dilutive impact from mandatory convertible preferred stock was calculated under the if-converted method until the mandatory conversion date. After the mandatory conversion date, the converted shares are included in weighted-average common shares outstanding for basic EPS. We converted all of our series A preferred stock into common stock on January 15, 2021 and all of our series B preferred stock into common stock on July 15, 2021. The computation of diluted EPS for both the three months and six months ended June 30, 2021 excludes 4,256,725 potentially dilutive shares.
In January 2022, pursuantPursuant to Sempra’s share-based compensation plans, the Compensation and Talent Development Committee of Sempra’s board of directors granted 219,898163,287 nonqualified stock options, 338,080330,810 performance-based RSUs and 150,286135,461 service-based RSUs.RSUs in the six months ended June 30, 2023, primarily in January.
We discuss share-based compensation plans and related awards and the terms and conditions of Sempra’s equity securities further in Notes 10, 13 and 14 of the Notes to Consolidated Financial Statements in the Annual Report.

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COMPREHENSIVE INCOME
The following tables present the changes in AOCI by component and amounts reclassified out of AOCI to net income, after amounts attributable to NCI.
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1)
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1)
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Foreign
currency
translation
adjustments		Financial
instruments		Pension
and other
postretirement
benefits		Total
accumulated other
comprehensive
income (loss)		 Foreign
currency
translation
adjustments		Financial
instruments		Pension
and PBOP		Total
AOCI
Three months ended June 30, 2022 and 2021 Three months ended June 30, 2023 and 2022
Sempra:Sempra:Sempra:
Balance at March 31, 2023Balance at March 31, 2023$(49)$(35)$(98)$(182)
OCI before reclassificationsOCI before reclassifications11 53 — 64 
Amounts reclassified from AOCIAmounts reclassified from AOCI— (4)1 (3)
Net OCINet OCI11 49 1 61 
Balance at June 30, 2023Balance at June 30, 2023$(38)$14 $(97)$(121)
   
Balance at March 31, 2022Balance at March 31, 2022$(76)$(78)$(75)$(229)Balance at March 31, 2022$(76)$(78)$(75)$(229)
OCI before reclassificationsOCI before reclassifications1 37 1 39 OCI before reclassifications1 37 1 39 
Amounts reclassified from AOCI(2)
Amounts reclassified from AOCI(2)
10 11 2 23 
Amounts reclassified from AOCI(2)
10 11 2 23 
Net OCI(2)
Net OCI(2)
11 48 3 62 
Net OCI(2)
11 48 3 62 
Balance at June 30, 2022Balance at June 30, 2022$(65)$(30)$(72)$(167)Balance at June 30, 2022$(65)$(30)$(72)$(167)
SDG&E:SDG&E:
Balance at March 31, 2023 and June 30, 2023Balance at March 31, 2023 and June 30, 2023$(7)$(7)
   
Balance at March 31, 2021$(69)$(239)$(91)$(399)
OCI before reclassifications(3)
(19)(36)(2)(57)
Amounts reclassified from AOCI— 10 2 12 
Net OCI(3)
(19)(26)— (45)
Balance at June 30, 2021$(88)$(265)$(91)$(444)
SDG&E:
Balance at March 31, 2022 and June 30, 2022Balance at March 31, 2022 and June 30, 2022$(10)$(10)Balance at March 31, 2022 and June 30, 2022$(10)$(10)
Balance at March 31, 2021 and June 30, 2021$(10)$(10)
SoCalGas:SoCalGas:SoCalGas:
Balance at March 31, 2022$(13)$(17)$(30)
Balance at March 31, 2023Balance at March 31, 2023$(12)$(11)$(23)
Amounts reclassified from AOCIAmounts reclassified from AOCI1 — 1 Amounts reclassified from AOCI1 — 1 
Net OCINet OCI1 — 1 Net OCI1 — 1 
Balance at June 30, 2022$(12)$(17)$(29)
Balance at June 30, 2023Balance at June 30, 2023$(11)$(11)$(22)
Balance at March 31, 2021$(13)$(18)$(31)
Balance at March 31, 2022Balance at March 31, 2022$(13)$(17)$(30)
Amounts reclassified from AOCIAmounts reclassified from AOCI— 1 1 Amounts reclassified from AOCI1 — 1 
Net OCINet OCI— 1 1 Net OCI1 — 1 
Balance at June 30, 2021$(13)$(17)$(30)
Balance at June 30, 2022Balance at June 30, 2022$(12)$(17)$(29)
(1)    All amounts are net of income tax, if subject to tax, and after NCI.
(2)    Total AOCI includes $9 of foreign currency translation adjustments associated with sale of NCI to ADIA, which we discuss below in “Other Noncontrolling Interests – Sempra Infrastructure.” This transaction did not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).
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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) (CONTINUED)
(Dollars in millions)
 Foreign
currency
translation
adjustments		Financial
instruments		Pension
and PBOP		Total
AOCI
 Six months ended June 30, 2023 and 2022
Sempra:
Balance at December 31, 2022$(59)$10 $(86)$(135)
OCI before reclassifications21 13 (13)21 
Amounts reclassified from AOCI— (9)2 (7)
Net OCI21 4 (11)14 
Balance at June 30, 2023$(38)$14 $(97)$(121)
   
Balance at December 31, 2021$(79)$(156)$(83)$(318)
OCI before reclassifications4 111 7 122 
Amounts reclassified from AOCI(2)
10 15 4 29 
Net OCI(2)
14 126 11 151 
Balance at June 30, 2022$(65)$(30)$(72)$(167)
SDG&E:
Balance at December 31, 2022 and June 30, 2023$(7)$(7)
Balance at December 31, 2021 and June 30, 2022$(10)$(10)
SoCalGas:
Balance at December 31, 2022$(12)$(12)$(24)
Amounts reclassified from AOCI1 1 2 
Net OCI1 1 2 
Balance at June 30, 2023$(11)$(11)$(22)
Balance at December 31, 2021$(13)$(18)$(31)
Amounts reclassified from AOCI1 1 2 
Net OCI1 1 2 
Balance at June 30, 2022$(12)$(17)$(29)
(1)    All amounts are net of income tax, if subject to tax, and after NCI.
(2)    Total AOCI includes $9 of foreign currency translation adjustments associated with sale of NCI to ADIA, which we discuss below in “Other Noncontrolling Interests – Sempra Infrastructure.” This transaction did not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).
(3)    Total AOCI includes $24 of foreign currency translation adjustments and $14 of financial instruments associated with the IEnova exchange offer, which we discuss below in “Other Noncontrolling Interests – Sempra Infrastructure.” This transaction did not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).


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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) (CONTINUED)
(Dollars in millions)
 Foreign
currency
translation
adjustments		Financial
instruments		Pension
and other
postretirement
benefits		Total
accumulated other
comprehensive
income (loss)
 Six months ended June 30, 2022 and 2021
Sempra:
Balance as of December 31, 2021$(79)$(156)$(83)$(318)
OCI before reclassifications4 111 7 122 
Amounts reclassified from AOCI(2)
10 15 4 29 
Net OCI(2)
14 126 11 151 
Balance as of June 30, 2022$(65)$(30)$(72)$(167)
   
Balance as of December 31, 2020$(64)$(331)$(105)$(500)
OCI before reclassifications(3)
(24)37 5 18 
Amounts reclassified from AOCI— 29 9 38 
Net OCI(3)
(24)66 14 56 
Balance as of June 30, 2021$(88)$(265)$(91)$(444)
SDG&E:
Balance at December 31, 2021 and June 30, 2022$(10)$(10)
Balance at December 31, 2020 and June 30, 2021$(10)$(10)
SoCalGas:
Balance as of December 31, 2021$(13)$(18)$(31)
Amounts reclassified from AOCI1 1 2 
Net OCI1 1 2 
Balance as of June 30, 2022$(12)$(17)$(29)
Balance as of December 31, 2020$(13)$(18)$(31)
Amounts reclassified from AOCI— 1 1 
Net OCI— 1 1 
Balance as of June 30, 2021$(13)$(17)$(30)
(1)    All amounts are net of income tax, if subject to tax, and after NCI.
(2)    Total AOCI includes $9 of foreign currency translation adjustments associated with sale of NCI to ADIA, which we discuss below in “Other Noncontrolling Interests – Sempra Infrastructure.” This transaction did not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).
(3)    Total AOCI includes $24 of foreign currency translation adjustments and $14 of financial instruments associated with the IEnova exchange offer, which we discuss below in “Other Noncontrolling Interests – Sempra Infrastructure.” This transaction did not impact the Condensed Consolidated Statement of Comprehensive Income (Loss).
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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Details about accumulated other
comprehensive income (loss) components		Amounts reclassified
from accumulated other
comprehensive income (loss)		 Affected line item on Condensed
Consolidated Statements of Operations
Details about AOCIDetails about AOCIAmounts reclassified
from AOCI		 Affected line item on Condensed
Consolidated Statements of Operations
Three months ended June 30,  Three months ended June 30, 
20222021  20232022 
Sempra:Sempra:   Sempra:   
Foreign currency translation adjustmentsForeign currency translation adjustments$1 $— Operation and MaintenanceForeign currency translation adjustments$— $1 Operation and Maintenance
Financial instruments:Financial instruments:   Financial instruments:   
Interest rate instruments$— $(1)Interest Expense
Interest rate instrumentsInterest rate instruments13 19 
Equity Earnings(1)
Interest rate instruments$(14)$13 
Equity Earnings(1)
Foreign exchange instrumentsForeign exchange instruments(1)— Revenues: Energy-Related BusinessesForeign exchange instruments— (1)Revenues: Energy-Related Businesses
1 — Other (Expense) Income, Net1 1 Other Income (Expense), Net
Foreign exchange instrumentsForeign exchange instruments1 — Equity Earnings
Interest rate and foreign exchange instrumentsInterest rate and foreign exchange instruments(1)— Interest ExpenseInterest rate and foreign exchange instruments(1)(1)Interest Expense
— (7)Other (Expense) Income, Net
Total, before income taxTotal, before income tax12 11  Total, before income tax(13)12  
(4)(1)Income Tax Expense — (4)Income Tax Expense
Total, net of income taxTotal, net of income tax8 10  Total, net of income tax(13)8  
3 — Earnings Attributable to Noncontrolling Interests 9 3 Earnings Attributable to Noncontrolling Interests
Total, net of income tax and after NCITotal, net of income tax and after NCI$11 $10  Total, net of income tax and after NCI$(4)$11  
Pension and other postretirement benefits(2):
   
Pension and PBOP(2):
Pension and PBOP(2):
   
Amortization of actuarial lossAmortization of actuarial loss$2 $1 Other (Expense) Income, NetAmortization of actuarial loss$1 $2 Other Income (Expense), Net
Amortization of prior service costAmortization of prior service cost1 1 Other (Expense) Income, NetAmortization of prior service cost— 1 Other Income (Expense), Net
Total, before income taxTotal, before income tax3 2 Total, before income tax1 3 
(1)— Income Tax Expense — (1)Income Tax Expense
Total, net of income taxTotal, net of income tax$2 $2  Total, net of income tax$1 $2  
Total reclassifications for the period, net of income
tax and NCI
$14 $12  
Total reclassifications for the period, net of income
tax and after NCI
Total reclassifications for the period, net of income
tax and after NCI
$(3)$14  
SoCalGas:SoCalGas:   
Financial instruments:Financial instruments:
Interest rate instrumentsInterest rate instruments$1 $1 Interest Expense
SoCalGas:   
Financial instruments:
Interest rate instruments$1 $— Interest Expense
Pension and other postretirement benefits(2):
   
Amortization of prior service cost$— $1 Other Income (Expense), Net
Total reclassifications for the period, net of income
tax
Total reclassifications for the period, net of income
tax
$1 $1 
Total reclassifications for the period, net of income
tax
$1 $1 
(1)    Equity earnings at our foreign equity method investees are recognized after tax.
(2)    Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits”“Net Periodic Benefit Cost” above).
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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (CONTINUED)RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (CONTINUED)RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (CONTINUED)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Details about accumulated other
comprehensive income (loss) components		Amounts reclassified
from accumulated other
comprehensive income (loss)		Affected line item on Condensed
Consolidated Statements of Operations
Details about AOCIDetails about AOCIAmounts reclassified
from AOCI		Affected line item on Condensed
Consolidated Statements of Operations
Six months ended June 30,Six months ended June 30,
2022202120232022
Sempra:Sempra:Sempra:
Foreign currency translation adjustmentsForeign currency translation adjustments$1 $— Operation and MaintenanceForeign currency translation adjustments$— $1 Operation and Maintenance
Financial instruments:Financial instruments:Financial instruments:
Interest rate instrumentsInterest rate instruments$(1)$1 Interest ExpenseInterest rate instruments$— $(1)Interest Expense
Interest rate instrumentsInterest rate instruments27 38 
Equity Earnings(1)
Interest rate instruments(21)27 
Equity Earnings(1)
Foreign exchange instrumentsForeign exchange instruments(2)1 Revenues: Energy-Related BusinessesForeign exchange instruments— (2)Revenues: Energy-Related Businesses
1 — Other (Expense) Income, Net2 1 Other Income (Expense), Net
Foreign exchange instrumentsForeign exchange instruments(1)1 
Equity Earnings(1)
Foreign exchange instruments2 (1)
Equity Earnings(1)
Interest rate and foreign exchange instrumentsInterest rate and foreign exchange instruments(1)— Interest ExpenseInterest rate and foreign exchange instruments(1)(1)Interest Expense
(6)(1)Other (Expense) Income, Net(6)(6)Other Income (Expense), Net
Total, before income taxTotal, before income tax17 40 Total, before income tax(24)17 
(5)(9)Income Tax Expense3 (5)Income Tax Expense
Total, net of income taxTotal, net of income tax12 31 Total, net of income tax(21)12 
3 (2)Earnings Attributable to Noncontrolling Interests12 3 Earnings Attributable to Noncontrolling Interests
Total, net of income tax and after NCITotal, net of income tax and after NCI$15 $29 Total, net of income tax and after NCI$(9)$15 
Pension and other postretirement benefits(2):
  
Pension and PBOP(2):
Pension and PBOP(2):
  
Amortization of actuarial lossAmortization of actuarial loss$4 $3 Other (Expense) Income, NetAmortization of actuarial loss$1 $4 Other Income (Expense), Net
Amortization of prior service costAmortization of prior service cost2 2 Other (Expense) Income, NetAmortization of prior service cost1 2 Other Income (Expense), Net
Settlement charges— 7 Other (Expense) Income, Net
Total, before income taxTotal, before income tax6 12 Total, before income tax2 6 
(2)(3)Income Tax Expense— (2)Income Tax Expense
Total, net of income taxTotal, net of income tax$4 $9 Total, net of income tax$2 $4 
Total reclassifications for the period, net of income
tax and NCI
$20 $38 
Total reclassifications for the period, net of income
tax and after NCI
Total reclassifications for the period, net of income
tax and after NCI
$(7)$20 
SoCalGas:SoCalGas:   SoCalGas:   
Financial instruments:Financial instruments:Financial instruments:
Interest rate instrumentsInterest rate instruments$1 $— Interest ExpenseInterest rate instruments$1 $1 Interest Expense
Pension and other postretirement benefits(2):
   
Pension and PBOP(2):
Pension and PBOP(2):
   
Amortization of actuarial lossAmortization of actuarial loss$1 $— Other Income (Expense), NetAmortization of actuarial loss$— $1 Other Income (Expense), Net
Amortization of prior service costAmortization of prior service cost— 1 Other Income (Expense), NetAmortization of prior service cost1 — Other Income (Expense), Net
Total, before income tax1 1 
— — Income Tax Expense
Total, net of income taxTotal, net of income tax$1 $1 Total, net of income tax$1 $1 
Total reclassifications for the period, net of income
tax
Total reclassifications for the period, net of income
tax
$2 $1 
Total reclassifications for the period, net of income
tax
$2 $2 
(1)    Equity earnings at our foreign equity method investees are recognized after tax.
(2)    Amounts are included in the computation of net periodic benefit cost (see “Pension and Other Postretirement Benefits”“Net Periodic Benefit Cost” above).

For the three months and six months ended June 30, 20222023 and 2021,2022, reclassifications out of AOCI to net income were negligible for SDG&E.

SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS
Sempra Common Stock
On May 12, 2023, Sempra’s shareholders approved an amendment to Sempra’s Articles of Incorporation to increase the number of authorized shares of Sempra’s common stock from 750,000,000 to 1,125,000,000.
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SHAREHOLDERS’ EQUITY AND NONCONTROLLING INTERESTSSempra Common Stock Repurchases
Sempra Series A Preferred Stock
On January 15, 2021,In the six months ended June 30, 2023 and 2022, we converted all 17,250,000repurchased 197,770 shares of series A preferred stock into 13,781,025for $31 million and 196,592 shares for $26 million, respectively, of our common stock based on a conversion ratefrom long-term incentive plan participants to satisfy minimum statutory tax withholding requirements in connection with the vesting of 0.7989 sharesRSUs and exercise of our common stock for each issued and outstanding share of series A preferred stock. As a consequence, no shares of series A preferred stock were outstanding after January 15, 2021 and the 17,250,000 shares that were formerly series A preferred stock returned to the status of authorized and unissued shares of preferred stock.
Sempra Common Stock Repurchasesoptions.
On January 11, 2022, we entered into an ASR program under which we prepaid $200 million to repurchase shares of our common stock in a share forward transaction. A total of 1,472,756 shares were purchased under this program at an average price of $135.80 per share. The total number of shares purchased was determined by dividing the $200 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of January 12, 2022 through February 11, 2022, minus a fixed discount. The ASR program was completed on February 11, 2022.
On April 6, 2022, we entered into an ASR program under which we prepaid $250 million to repurchase shares of our common stock in a share forward transaction. A total of 1,471,957 shares were purchased under this program at an average price of $169.84 per share. The total number of shares purchased was determined by dividing the $250 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of April 7, 2022 through April 25, 2022, minus a fixed discount. The ASR program was completed on April 25, 2022.
Other Noncontrolling Interests
The following table provides information about NCI held by others in subsidiaries or entities consolidated by us and recorded in Other Noncontrolling Interests in Total Equity on Sempra’s Condensed Consolidated Balance Sheets.
OTHER NONCONTROLLING INTERESTSOTHER NONCONTROLLING INTERESTSOTHER NONCONTROLLING INTERESTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Percent ownership held by noncontrolling interests Equity held by
noncontrolling interests		 Percent ownership held by noncontrolling interests Equity held by
noncontrolling interests
June 30,
2022		December 31,
2021		June 30,
2022		December 31,
2021		 June 30,
2023		December 31,
2022		June 30,
2023		December 31,
2022
Sempra Infrastructure:Sempra Infrastructure:    Sempra Infrastructure:    
SI PartnersSI Partners30.0 %20.0 %$2,146 $1,384 SI Partners30.0 %30.0 %$2,424 $2,060 
SI Partners subsidiaries(1)
SI Partners subsidiaries(1)
0.1 - 16.60.1 - 16.646 34 
SI Partners subsidiaries(1)
0.1 - 30.00.1 - 16.6734 61 
Total SempraTotal Sempra  $2,192 $1,418 Total Sempra  $3,158 $2,121 
(1)    SI Partners has subsidiaries with NCI held by others. Percentage range reflects the highest and lowest ownership percentages among these subsidiaries.
Sempra Infrastructure
Sale of NCI into KKR Denali. In March 2023, an indirect subsidiary of SI Partners entered into an agreement for the sale to KKR Denali of an indirect interest in the PA LNG Phase 1 project. KKR Denali intends to acquire a 42% indirect interest in the PA LNG Phase 1 project for approximately $108 million, plus its pro rata equity share of development costs incurred prior to the closing that exceed $439 million, subject to customary post-closing adjustments. We are targeting the closing of the sale of NCI to KKR Denali in the third quarter of 2023, subject to regulatory approvals and other closing conditions. If the closing conditions are satisfied and KKR Denali fails to complete the closing, then KKR Denali must pay a termination fee of $130 million.
In connection with the closing of the sale of NCI to KKR Denali, the associated limited liability company agreement will be amended and restated to include KKR Denali as a member of such company and to set forth certain governance and other agreements with respect to the funding of the PA LNG Phase 1 project. Pursuant to the limited liability company agreement, (i) the indirect subsidiary of SI Partners (a) will be the managing member; (b) will exclusively hold the right to make decisions with respect to certain expansions, such as the potential PA LNG Phase 2 project; (c) will have certain rights to preferential distributions from specified revenues and expansion true-up payments; and, (d) through a parent entity that is a subsidiary of Sempra, will bear a disproportionately higher allocation of certain capital contribution commitments in certain budgetary overrun scenarios, and (ii) KKR Denali will receive certain investor protection voting rights. The indirect subsidiary of SI Partners and KKR Denali will also make capital contribution commitments to fund their respective equity share of the equity funding amount of anticipated development costs of the PA LNG Phase 1 project, except in those certain budget overrun scenarios discussed above.
Upon closing of the sale of NCI to KKR Denali, Sempra would hold an indirect interest in the PA LNG Phase 1 project of 19.6%.
Sale of NCI to ConocoPhillips Affiliate. In March 2023, an indirect subsidiary of SI Partners completed the sale of an indirect 30% NCI in the PA LNG Phase 1 project to an affiliate of ConocoPhillips for aggregate cash consideration of approximately $265 million, subject to customary post-closing adjustments. As a result of this sale, we recorded a $237 million increase in equity held
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by NCI and an increase in Sempra’s shareholders’ equity of $18 million, net of $3 million in transaction costs and $7 million in tax impacts.
At the closing of the sale of NCI to the ConocoPhillips affiliate, the associated limited liability company agreement was amended and restated to include the ConocoPhillips affiliate as a member of such company and to set forth certain governance and other agreements with respect to the funding of the PA LNG Phase 1 project. Pursuant to the limited liability company agreement, such company will generally be managed by a board of managers, initially constituting three representatives appointed by the indirect subsidiary of SI Partners and two representatives appointed by the ConocoPhillips affiliate.
The indirect subsidiary of SI Partners and the ConocoPhillips affiliate have made certain customary capital contribution commitments to fund their respective pro rata equity share of the total anticipated capital calls for the equity portion of the anticipated development costs of the PA LNG Phase 1 project. In addition, both SI Partners and ConocoPhillips provided guarantees relating to their respective affiliate’s commitment to make its pro rata equity share of capital contributions to fund 110% of the development budget of the PA LNG Phase 1 project, in an aggregate amount of up to $9.0 billion. SI Partners’ guarantee covers 70% of this amount plus enforcement costs of its guarantee.
Sale of NCI to ADIA. OnIn June 1, 2022, Sempra and ADIA consummated the transaction contemplated under a purchase and sale agreement dated December 21, 2021 (the ADIA Purchase Agreement). Pursuant to the ADIA Purchase Agreement, ADIA acquired Class A Units representing a 10% NCI in SI Partners for a purchase price of $1.7 billion. Following the closing of the transaction, Sempra, KKR Pinnacle and ADIA directly or indirectly own 70%, 20%, and 10%, respectively, of the outstanding Class A Units of SI Partners, which excludes the non-voting Sole Risk Interests held only by Sempra. As a result of this sale to ADIA, we recorded a $709 million increase in equity held by NCI and an increase in Sempra’s shareholders’ equity of $709$710 million, net of $12 million in transaction costs and $301$300 million in tax impacts. Transaction costs include $10 million paid to ADIA for reimbursement of certain expenses that ADIA incurred in connection with closing the transaction.
At the closing of the sale ofContributions from NCI. In October 2021, KKR Pinnacle acquired a 20% NCI in SI Partners to ADIA, SI Partners indirectly owned 99.9% ofPartners. Under the outstanding shares of IEnova. To the extent we acquire additional shares of IEnova after the closing, such additional shares will be acquired by SI Partners,limited partnership agreement that governs our and KKR and ADIA will provide 20% and 10%, respectively, of the funding.
At the closing, KKR and ADIA (the Minority Partners) and Sempra entered into a second amended and restated agreement of limited partnership of SI Partners (the Amended LP Agreement), which governs theirPinnacle’s respective rights and obligations in respect of our and their ownership of SI Partners. Under the Amended LP Agreement, matters are decided generally by majority vote and the managers designated by Sempra, KKR and ADIA each, as a group, have voting power equivalent to the ownership percentage of their respective designating limited partner. Sempra maintains control of SI Partners. However,interests in SI Partners, and its controlled subsidiaries are prohibitedKKR Pinnacle is entitled to a $200 million credit from taking certain limited actions without the prior written approval of the Minority Partners (subject
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Sempra to each Minority Partner maintaining certain ownership thresholds in SI Partners). The minority protections held by ADIA constitute a subset of the minority protections granted to KKR.
The terms of the Amended LP Agreement applicable to ADIA in relationbe applied to capital contributions and distributions are generally consistent with those granted to KKR, with adjustments and limitations to take into account ADIA’s relative ownership percentage, including limiting ADIA’s priority distribution rights to the failure of certain proposed projects to receivecalls once an LNG project reaches a positive final investment decision by aand meets certain date or to achieve specified thresholds of projected internal rates of return or leverage. The transfer rightsreturn. In the three months and restrictions and registration rights in the Amended LP Agreement applicablesix months ended June 30, 2023, KKR Pinnacle used $186 million of this credit to ADIA are also generally consistent with those grantedfund its share of contributions to KKR, with adjustments and limitations to take into account ADIA’s relative ownership percentage, includingSI Partners. As a general restriction on ADIA transferring its interests in SI Partners to third parties (other than pursuant to certain specified permitted transfers) for a specified period following its entry into the Amended LP Agreement.
SI Partners Subsidiaries. In May 2021, we acquired 381,015,194 publicly owned shares of IEnova in exchange for 12,306,777 newly issued shares of our common stock upon completion of our exchange offer launched in the U.S. and Mexico, which increased our ownership interest in IEnova from 70.2% to 96.4%. We acquired the IEnova shares at an exchange ratio of 0.0323 shares of our common stock for each one IEnova share. In connection with the exchange offer,result, we recorded a $1.4 billion decrease$186 million increase in equity held by NCI and an increasea decrease in Sempra’s shareholders’ equity of $1.4 billion,$134 million, net of $12 million in transactions costs.
Following the exchange offer we completed in May 2021 and a subsequent cash tender offer we completed in September 2021, IEnova’s shares were delisted from the Mexican Stock Exchange effective October 15, 2021. In connection with the delisting, we are maintaining a trust for the purpose of purchasing the 1,212,981 IEnova sharesdeferred income taxes. We expect that remained publicly owned as of the completion of the cash tender offer for 78.97 Mexican pesos per share, the same price per share that was offered in our cash tender offer. The trust was to be in place through the earlier of April 14, 2022 or the date on which we acquired allKKR Pinnacle will fully utilize the remaining publicly owned IEnova shares. On April 13, 2022,balance of this credit in the termthird quarter of the trust was amended so that it will remain in place until we terminate it, subject to any maximum term under applicable Mexican law. As of August 1, 2022, an aggregate of 851,211 of the remaining publicly owned IEnova shares had been acquired by such trust.2023.

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TRANSACTIONS WITH AFFILIATES
We summarize amounts due from and to unconsolidated affiliates at Sempra, SDG&E and SoCalGas in the following table.
AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATESAMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATESAMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30,
2022		December 31,
2021		 June 30,
2023		December 31,
2022
Sempra:Sempra:  Sempra:  
Sempra Infrastructure – IMG – Note due March 15, 2023(1)
$626 $2 
Tax sharing arrangement with Oncor HoldingsTax sharing arrangement with Oncor Holdings$15 $41 
Various affiliatesVarious affiliates20 21 Various affiliates11 13 
Total due from unconsolidated affiliates – currentTotal due from unconsolidated affiliates – current$646 $23 Total due from unconsolidated affiliates – current$26 $54 
Sempra Infrastructure – IMG – Note due March 15, 2022, net of allowance for credit losses
of $1 at December 31, 2021(1)
$— $637 
Total due from unconsolidated affiliates – noncurrent$— $637 
Sempra Infrastructure(1):
Sempra Infrastructure(1):
TAG Pipelines Norte, S. de R.L. de C.V. – 5.5% Note due January 9, 2024TAG Pipelines Norte, S. de R.L. de C.V. – 5.5% Note due January 9, 2024$(5)$— 
Total due to unconsolidated affiliates – currentTotal due to unconsolidated affiliates – current$(5)$— 
Sempra Infrastructure(2):
Sempra Infrastructure(1):
Sempra Infrastructure(1):
TAG Pipelines Norte, S. de R.L. de C.V.:TAG Pipelines Norte, S. de R.L. de C.V.:TAG Pipelines Norte, S. de R.L. de C.V.:
5.5% Note due January 9, 20245.5% Note due January 9, 2024$(39)$(69)5.5% Note due January 9, 2024$— $(40)
5.5% Note due January 14, 20255.5% Note due January 14, 2025(22)(21)5.5% Note due January 14, 2025(23)(23)
5.5% Note due July 16, 20255.5% Note due July 16, 2025(21)(20)5.5% Note due July 16, 2025(22)(21)
5.5% Note due January 14, 20265.5% Note due January 14, 2026(18)— 5.5% Note due January 14, 2026(19)(19)
5.5% Note due July 14, 20265.5% Note due July 14, 2026(11)(11)
5.5% Note due January 19, 20275.5% Note due January 19, 2027(14)— 
TAG – 5.74% Note due December 17, 2029TAG – 5.74% Note due December 17, 2029(182)(177)TAG – 5.74% Note due December 17, 2029(193)(187)
Total due to unconsolidated affiliates – noncurrentTotal due to unconsolidated affiliates – noncurrent$(282)$(287)Total due to unconsolidated affiliates – noncurrent$(282)$(301)
SDG&E:SDG&E:  SDG&E:  
Various affiliatesVarious affiliates$1 $— 
Total due from unconsolidated affiliates – currentTotal due from unconsolidated affiliates – current$1 $— 
SempraSempra$(26)$(40)Sempra$(29)$(49)
SoCalGasSoCalGas(30)(48)SoCalGas— (72)
Various affiliatesVarious affiliates(12)(9)Various affiliates(14)(14)
Total due to unconsolidated affiliates – currentTotal due to unconsolidated affiliates – current$(68)$(97)Total due to unconsolidated affiliates – current$(43)$(135)
Income taxes due from Sempra(3)
$21 $19 
Income taxes due (to) from Sempra(2)
Income taxes due (to) from Sempra(2)
$(32)$10 
SoCalGas:SoCalGas:  SoCalGas:  
SDG&ESDG&E$30 $48 SDG&E$— $72 
Various affiliatesVarious affiliates1 1 Various affiliates1 5 
Total due from unconsolidated affiliates – currentTotal due from unconsolidated affiliates – current$31 $49 Total due from unconsolidated affiliates – current$1 $77 
SempraSempra$(36)$(36)Sempra$(36)$(36)
Total due to unconsolidated affiliates – currentTotal due to unconsolidated affiliates – current$(36)$(36)Total due to unconsolidated affiliates – current$(36)$(36)
Income taxes due from Sempra(3)
$6 $6 
Income taxes due to Sempra(2)
Income taxes due to Sempra(2)
$(11)$(16)
(1)At December 31, 2021, represents a Mexican peso-denominated revolving line of credit for up to 14.2 billion Mexican pesos or approximately $691 U.S. dollar-equivalent at a variable interest rate based on the 91-day Interbank Equilibrium Interest Rate plus 220 bps. In March 2022, Sempra Infrastructure amended and restated the revolving line of credit to a U.S. dollar-denominated note in the amount of $625 at a variable interest rate based on the adjusted 1-month Secured Overnight Financing Rate plus 180 bps (3.41% at June 30, 2022) and extended the maturity date to March 15, 2023. At June 30, 2022 and December 31, 2021, $1 and $2 of accrued interest receivable, respectively, is included in Due from Unconsolidated Affiliates – Current. In July 2022, this note receivable was paid in full.
(2)     U.S. dollar-denominated loans at fixed interest rates. Amounts include principal balances plus accumulated interest outstanding.
(3)(2)    SDG&E and SoCalGas are included in the consolidated income tax return of Sempra, and their respective income tax expense is computed as an amount equal to that which would result from each company having always filed a separate return. Amounts include current and noncurrent income taxes due to/from Sempra.
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The following table summarizes income statement information from unconsolidated affiliates.
INCOME STATEMENT IMPACT FROM UNCONSOLIDATED AFFILIATESINCOME STATEMENT IMPACT FROM UNCONSOLIDATED AFFILIATES  INCOME STATEMENT IMPACT FROM UNCONSOLIDATED AFFILIATES
(Dollars in millions)(Dollars in millions)  (Dollars in millions)
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
Sempra:Sempra:    Sempra:    
RevenuesRevenues$15 $7 $22 $15 Revenues$11 $15 $24 $22 
Cost of sales— — — 11 
Interest incomeInterest income4 12 14 27 Interest income— 4 — 14 
Interest expenseInterest expense4 3 8 7 Interest expense4 4 8 8 
SDG&E:SDG&E:    SDG&E:    
RevenuesRevenues$4 $2 $8 $4 Revenues$6 $4 $10 $8 
Cost of salesCost of sales26 27 50 55 Cost of sales27 26 57 50 
SoCalGas:SoCalGas:SoCalGas:
RevenuesRevenues$23 $23 $49 $48 Revenues$28 $23 $62 $49 
Cost of sales(1)
Cost of sales(1)
(4)— (4)3 
Cost of sales(1)
4 (4)35 (4)
(1)    Includes net commodity costs from natural gas transactions with unconsolidated affiliates.
Guarantees
Sempra provided guarantees related to Cameron LNG JV’s SDSRA and CFIN’s Support Agreement, which remain outstanding. We discuss these guarantees in Note 65 below and in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

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OTHER INCOME (EXPENSE) INCOME,, NET
Other (expense) income, net,Income (Expense), Net, consists of the following:
OTHER (EXPENSE) INCOME, NET   
OTHER INCOME (EXPENSE), NETOTHER INCOME (EXPENSE), NET   
(Dollars in millions)(Dollars in millions)   (Dollars in millions)   
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
Sempra:Sempra:    Sempra:    
Allowance for equity funds used during constructionAllowance for equity funds used during construction$34 $34 $69 $72 Allowance for equity funds used during construction$37 $34 $70 $69 
Investment (losses) gains, net(1)
(34)19 (47)28 
Investment gains (losses), net(1)
Investment gains (losses), net(1)
5 (34)17 (47)
(Losses) gains on interest rate and foreign exchange instruments, net(Losses) gains on interest rate and foreign exchange instruments, net(1)7 5 (23)(Losses) gains on interest rate and foreign exchange instruments, net(1)(1)4 5 
Foreign currency transaction (losses) gains, net(2)
(3)26 (22)7 
Non-service components of net periodic benefit (cost) credit(9)(15)32 14 
Foreign currency transaction gains (losses), net(2)
Foreign currency transaction gains (losses), net(2)
3 (3)4 (22)
Non-service components of net periodic benefit costNon-service components of net periodic benefit cost(26)(9)(51)32 
Interest on regulatory balancing accounts, netInterest on regulatory balancing accounts, net4 2 5 3 Interest on regulatory balancing accounts, net19 4 37 5 
Sundry, netSundry, net8 (1)(5)6 Sundry, net(6)8 (9)(5)
TotalTotal$(1)$72 $37 $107 Total$31 $(1)$72 $37 
SDG&E:SDG&E:    SDG&E:    
Allowance for equity funds used during constructionAllowance for equity funds used during construction$21 $22 $42 $45 Allowance for equity funds used during construction$23 $21 $46 $42 
Non-service components of net periodic benefit (cost) credit(2)(4)9 5 
Non-service components of net periodic benefit costNon-service components of net periodic benefit cost(5)(2)(9)9 
Interest on regulatory balancing accounts, netInterest on regulatory balancing accounts, net3 2 4 3 Interest on regulatory balancing accounts, net11 3 21 4 
Sundry, netSundry, net— 2 1 4 Sundry, net(7)— (8)1 
TotalTotal$22 $22 $56 $57 Total$22 $22 $50 $56 
SoCalGas:SoCalGas:   SoCalGas:   
Allowance for equity funds used during constructionAllowance for equity funds used during construction$13 $11 $26 $23 Allowance for equity funds used during construction$14 $13 $24 $26 
Non-service components of net periodic benefit (cost) credit(6)(9)26 19 
Non-service components of net periodic benefit costNon-service components of net periodic benefit cost(19)(6)(38)26 
Interest on regulatory balancing accounts, netInterest on regulatory balancing accounts, net1 — 1 — Interest on regulatory balancing accounts, net8 1 16 1 
Sundry, netSundry, net(4)(4)(15)(5)Sundry, net(2)(4)(9)(15)
TotalTotal$4 $(2)$38 $37 Total$1 $4 $(7)$38 
(1)    Represents net investment gains (losses) gains on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are offset by corresponding changes in compensation expense related to the plans, recorded in O&M on the Condensed Consolidated Statements of Operations.
(2)    Includes losses of $11 in the six months ended June 30, 2022 and gains of $28 and $5 in the three months and six months ended June 30, 2021, respectively, from translation to U.S. dollars of a Mexican peso-denominated loan to IMG, which are offset by corresponding amounts included in Equity Earnings on the Condensed Consolidated StatementsStatement of Operations.

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INCOME TAXES
We provide our calculations of ETRs in the following table.
INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES
INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATESINCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30,Three months ended June 30,Six months ended June 30,
20222021202220212023202220232022
Sempra:Sempra:Sempra:
Income tax expenseIncome tax expense$80 $139 $414 $297 Income tax expense$175 $80 $551 $414 
Income before income taxes and equity earningsIncome before income taxes and equity earnings$364 $281 $1,029 $1,049 Income before income taxes and equity earnings$523 $364 $1,852 $1,029 
Equity earnings, before income tax(1)
Equity earnings, before income tax(1)
159 185 302 320 
Equity earnings, before income tax(1)
153 159 285 302 
Pretax incomePretax income$523 $466 $1,331 $1,369 Pretax income$676 $523 $2,137 $1,331 
Effective income tax rateEffective income tax rate15 %30 %31 %22 %Effective income tax rate26 %15 %26 %31 %
SDG&E:SDG&E:SDG&E:
Income tax expenseIncome tax expense$42 $33 $106 $78 Income tax expense$4 $42 $11 $106 
Income before income taxesIncome before income taxes$218 $219 $516 $476 Income before income taxes$188 $218 $453 $516 
Effective income tax rateEffective income tax rate19 %15 %21 %16 %Effective income tax rate2 %19 %2 %21 %
SoCalGas:SoCalGas:SoCalGas:
Income tax expense$19 $8 $103 $102 
Income tax (benefit) expenseIncome tax (benefit) expense$(21)$19 $73 $103 
Income before income taxesIncome before income taxes$107 $103 $525 $604 Income before income taxes$135 $107 $589 $525 
Effective income tax rateEffective income tax rate18 %8 %20 %17 %Effective income tax rate(16)%18 %12 %20 %
(1)    We discuss how we recognize equity earnings in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

Sempra, SDG&E and SoCalGas record income taxes for interim periods utilizing a forecasted ETR anticipated for the full year. Unusual and infrequent items and items that cannot be reliably estimated are recorded in the interim period in which they occur, which can result in variability in the ETR.
For SDG&E and SoCalGas, the CPUC requires flow-through rate-making treatment for the current income tax benefit or expense arising from certain property-related and other temporary differences between the treatment for financial reporting and income tax, which will reverse over time. Under the regulatory accounting treatment required for these flow-through temporary differences, deferred income tax assets and liabilities are not recorded to deferred income tax expense, or benefit, but rather to a regulatory asset or liability, which impacts the ETR. As a result, changes in the relative size of these items compared to pretax income, from period to period, can cause variations in the ETR. The following items are subject to flow-through treatment:
▪repairs expenditures related to a certain portion of utility plant fixed assets
▪the equity portion of AFUDC, which is non-taxable
▪a portion of the cost of removal of utility plant assets
▪utility self-developed software expenditures
▪depreciation on a certain portion of utility plant assets
▪state income taxes
The AFUDC related to equity recorded for regulated construction projects at Sempra Infrastructure has similar flow-through treatment.
Under the IRA, beginning in 2023, the scope of projects eligible for investment tax credits was expanded to include standalone energy storage projects. The IRA also provided an election that prospectively permits investment tax credits related to standalone energy storage projects to be returned to utility customers over a period that is shorter than the life of the applicable asset. Under this election, SDG&E recorded a regulatory liability to offset these investment tax credits, which reduced SDG&E’s and Sempra’s ETR in 2023.
On April 14, 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting for gas repairs expenditures. As a result of this Revenue Procedure, SoCalGas updated its assessment of prior years’ unrecognized income tax benefits and, in the three months and six months ended June 30, 2023, recorded an income tax benefit of $43 million for previously unrecognized income tax benefits pertaining to gas repairs expenditures. SoCalGas recorded an associated
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regulatory liability for the portion that will benefit customers in the future. We are assessing the potential future impacts of this Revenue Procedure.
In the six months ended June 30, 2022, we recognized income tax expense of $120 million for a deferred income tax liability related to outside basis differences in our foreign subsidiaries that we had previously considered to be indefinitely reinvested.
NOTE 2. NEW ACCOUNTING STANDARDS
We describe belowThere are no recent accounting pronouncements that have had or may have a significant effect on our results of operations, financial condition, cash flows or disclosures.
ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”: ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and
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contracts on an entity’s own equity. In addition to other changes, this standard amends ASC 470-20, “Debt with Conversion and Other Options,” by removing the accounting models for instruments with beneficial and cash conversion features. The standard also amends certain guidance in ASC 260, “Earnings Per Share,” for the computation of EPS for convertible instruments and contracts on an entity’s own equity. For public entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. An entity can use either a full or modified retrospective approach to adopt ASU 2020-06 and must disclose, in the period of adoption, EPS transition information about the effect of the change on affected per-share amounts. We adopted the standard on January 1, 2022 using a modified retrospective approach and the adoption did not materially impact our financial statements or per-share amounts.
NOTE 3. REVENUES
We discuss revenue recognition for revenues from contracts with customers and from sources other than contracts with customers in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report.
The following table disaggregates our revenues from contracts with customers by major service line and market and provides a reconciliation to total revenues by segment. The majority of our revenue is recognized over time.
DISAGGREGATED REVENUESDISAGGREGATED REVENUESDISAGGREGATED REVENUES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
SDG&ESoCalGasSempra InfrastructureConsolidating adjustments and Parent
and other		SempraSDG&ESoCalGasSempra InfrastructureConsolidating adjustments and Parent
and other		Sempra
Three months ended June 30, 2022Three months ended June 30, 2023
By major service line:By major service line:By major service line:
UtilitiesUtilities$1,250 $1,347 $20 $(27)$2,590 Utilities$1,400 $1,291 $19 $(34)$2,676 
Energy-related businessesEnergy-related businesses— — 457 (14)443 Energy-related businesses— — 235 (19)216 
Revenues from contracts with customersRevenues from contracts with customers$1,250 $1,347 $477 $(41)$3,033 Revenues from contracts with customers$1,400 $1,291 $254 $(53)$2,892 
By market:By market:By market:
GasGas$159 $1,347 $340 $(19)$1,827 Gas$252 $1,291 $167 $(30)$1,680 
ElectricElectric1,091 — 137 (22)1,206 Electric1,148 — 87 (23)1,212 
Revenues from contracts with customersRevenues from contracts with customers$1,250 $1,347 $477 $(41)$3,033 Revenues from contracts with customers$1,400 $1,291 $254 $(53)$2,892 
Revenues from contracts with customersRevenues from contracts with customers$1,250 $1,347 $477 $(41)$3,033 Revenues from contracts with customers$1,400 $1,291 $254 $(53)$2,892 
Utilities regulatory revenuesUtilities regulatory revenues149 154 — — 303 Utilities regulatory revenues(138)176 — — 38 
Other revenuesOther revenues— — 212 (1)211 Other revenues— — 406 (1)405 
Total revenuesTotal revenues$1,399 $1,501 $689 $(42)$3,547 Total revenues$1,262 $1,467 $660 $(54)$3,335 
Six months ended June 30, 2022 Six months ended June 30, 2023
By major service line:By major service line:By major service line:
UtilitiesUtilities$2,751 $3,259 $48 $(56)$6,002 Utilities$3,165 $5,132 $49 $(72)$8,274 
Energy-related businessesEnergy-related businesses— — 749 (29)720 Energy-related businesses— — 547 (40)507 
Revenues from contracts with customersRevenues from contracts with customers$2,751 $3,259 $797 $(85)$6,722 Revenues from contracts with customers$3,165 $5,132 $596 $(112)$8,781 
By market:By market:By market:
GasGas$489 $3,259 $569 $(45)$4,272 Gas$806 $5,132 $371 $(65)$6,244 
ElectricElectric2,262 — 228 (40)2,450 Electric2,359 — 225 (47)2,537 
Revenues from contracts with customersRevenues from contracts with customers$2,751 $3,259 $797 $(85)$6,722 Revenues from contracts with customers$3,165 $5,132 $596 $(112)$8,781 
Revenues from contracts with customersRevenues from contracts with customers$2,751 $3,259 $797 $(85)$6,722 Revenues from contracts with customers$3,165 $5,132 $596 $(112)$8,781 
Utilities regulatory revenuesUtilities regulatory revenues93 235 — — 328 Utilities regulatory revenues(250)129 — — (121)
Other revenuesOther revenues— — 316 1 317 Other revenues— — 1,260 (25)1,235 
Total revenuesTotal revenues$2,844 $3,494 $1,113 $(84)$7,367 Total revenues$2,915 $5,261 $1,856 $(137)$9,895 
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DISAGGREGATED REVENUES (CONTINUED)DISAGGREGATED REVENUES (CONTINUED)DISAGGREGATED REVENUES (CONTINUED)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
SDG&ESoCalGasSempra InfrastructureConsolidating adjustments and Parent
and other		SempraSDG&ESoCalGasSempra InfrastructureConsolidating adjustments and Parent
and other		Sempra
Three months ended June 30, 2021Three months ended June 30, 2022
By major service line:By major service line:By major service line:
UtilitiesUtilities$1,170 $1,062 $17 $(25)$2,224 Utilities$1,250 $1,347 $20 $(27)$2,590 
Energy-related businessesEnergy-related businesses— — 260 (14)246 Energy-related businesses— — 457 (14)443 
Revenues from contracts with customersRevenues from contracts with customers$1,170 $1,062 $277 $(39)$2,470 Revenues from contracts with customers$1,250 $1,347 $477 $(41)$3,033 
By market:By market:By market:
GasGas$162 $1,062 $185 $(24)$1,385 Gas$159 $1,347 $340 $(19)$1,827 
ElectricElectric1,008 — 92 (15)1,085 Electric1,091 — 137 (22)1,206 
Revenues from contracts with customersRevenues from contracts with customers$1,170 $1,062 $277 $(39)$2,470 Revenues from contracts with customers$1,250 $1,347 $477 $(41)$3,033 
Revenues from contracts with customersRevenues from contracts with customers$1,170 $1,062 $277 $(39)$2,470 Revenues from contracts with customers$1,250 $1,347 $477 $(41)$3,033 
Utilities regulatory revenuesUtilities regulatory revenues148 62 — — 210 Utilities regulatory revenues149 154 — — 303 
Other revenuesOther revenues— — 64 (3)61 Other revenues— — 212 (1)211 
Total revenuesTotal revenues$1,318 $1,124 $341 $(42)$2,741 Total revenues$1,399 $1,501 $689 $(42)$3,547 
Six months ended June 30, 2021 Six months ended June 30, 2022
By major service line:By major service line:By major service line:
UtilitiesUtilities$2,386 $2,719 $44 $(52)$5,097 Utilities$2,751 $3,259 $48 $(56)$6,002 
Energy-related businessesEnergy-related businesses— — 529 (15)514 Energy-related businesses— — 749 (29)720 
Revenues from contracts with customersRevenues from contracts with customers$2,386 $2,719 $573 $(67)$5,611 Revenues from contracts with customers$2,751 $3,259 $797 $(85)$6,722 
By market:By market:By market:
GasGas$435 $2,719 $397 $(48)$3,503 Gas$489 $3,259 $569 $(45)$4,272 
ElectricElectric1,951 — 176 (19)2,108 Electric2,262 — 228 (40)2,450 
Revenues from contracts with customersRevenues from contracts with customers$2,386 $2,719 $573 $(67)$5,611 Revenues from contracts with customers$2,751 $3,259 $797 $(85)$6,722 
Revenues from contracts with customersRevenues from contracts with customers$2,386 $2,719 $573 $(67)$5,611 Revenues from contracts with customers$2,751 $3,259 $797 $(85)$6,722 
Utilities regulatory revenuesUtilities regulatory revenues269 (87)— — 182 Utilities regulatory revenues93 235 — — 328 
Other revenuesOther revenues— — 217 (10)207 Other revenues— — 316 1 317 
Total revenuesTotal revenues$2,655 $2,632 $790 $(77)$6,000 Total revenues$2,844 $3,494 $1,113 $(84)$7,367 
REVENUES FROM CONTRACTS WITH CUSTOMERS
Remaining Performance Obligations
For contracts greater than one year, at June 30, 2022,2023, we expect to recognize revenue related to the fixed fee component of the consideration as shown below. Sempra’s remaining performance obligations primarily relate to capacity agreements for natural gas storage and transportation at Sempra Infrastructure and transmission line projects at SDG&E. SoCalGas did not have any remaining performance obligations at June 30, 2022.2023.
REMAINING PERFORMANCE OBLIGATIONS(1)
REMAINING PERFORMANCE OBLIGATIONS(1)
REMAINING PERFORMANCE OBLIGATIONS(1)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
SempraSDG&ESempraSDG&E
2022 (excluding first six months of 2022)$200 $2 
2023384 4 
2023 (excluding first six months of 2023)2023 (excluding first six months of 2023)$175 $2 
20242024385 4 2024300 4 
20252025384 4 2025338 4 
20262026382 4 2026365 4 
20272027365 4 
ThereafterThereafter4,525 63 Thereafter4,077 59 
Total revenues to be recognizedTotal revenues to be recognized$6,260 $81 Total revenues to be recognized$5,620 $77 
(1)    Excludes intercompany transactions.
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Contract Liabilities from Revenues from Contracts with Customers
Activities within Sempra’s and SDG&E’s contract liabilities are presented below. There were no contract liabilities at SoCalGas in the six months ended June 30, 20222023 or 2021.2022. As we discuss in Note 11,16 of the Notes to Consolidated Financial Statements in the Annual Report, Sempra Infrastructure drew against and fully exhausted Gazprom’sSEFE’s letters of credit in April 2022 due to Gazprom’sSEFE’s non-renewal of such letters of credit as required under its LNG storage and regasification agreement. Sempra Infrastructure recorded a contract liability for the funds drawn from the letters of credit as payments received in advance. Gazprom has not paid its invoices since March 2022, so funds drawn from the letters of credit have been used to fully offset such nonpayment, which have been reflected as revenue from performance obligations satisfied during the reporting period. We expect that these funds will provide payment security from Gazprom through the end of 2024.
CONTRACT LIABILITIESCONTRACT LIABILITIESCONTRACT LIABILITIES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
2022202120232022
Sempra:Sempra:Sempra:
Contract liabilities at January 1Contract liabilities at January 1$(278)$(207)Contract liabilities at January 1$(252)$(278)
Revenue from performance obligations satisfied during reporting periodRevenue from performance obligations satisfied during reporting period86 49 Revenue from performance obligations satisfied during reporting period5 86 
Payments received in advancePayments received in advance(105)(1)Payments received in advance(2)(105)
Contract liabilities at June 30(1)
Contract liabilities at June 30(1)
$(297)$(159)
Contract liabilities at June 30(1)
$(249)$(297)
SDG&E:SDG&E:SDG&E:
Contract liabilities at January 1Contract liabilities at January 1$(83)$(87)Contract liabilities at January 1$(79)$(83)
Revenue from performance obligations satisfied during reporting periodRevenue from performance obligations satisfied during reporting period2 2 Revenue from performance obligations satisfied during reporting period2 2 
Contract liabilities at June 30(1)(2)
Contract liabilities at June 30(1)(2)
$(81)$(85)
Contract liabilities at June 30(1)(2)
$(77)$(81)
(1)     Balances at June 30, 20222023 include $81$6 in Other Current Liabilities and $243 in Deferred Credits and Other.
(2)    Balances at June 30, 2023 include $4 in Other Current Liabilities and $216 and $77$73 in Deferred Credits and Other on Sempra’s and SDG&E’s Condensed Consolidated Balance Sheets, respectively.Other.
Receivables from Revenues from Contracts with Customers
The table below shows receivable balances associated with revenues from contracts with customers on the Condensed Consolidated Balance Sheets.
RECEIVABLES FROM REVENUES FROM CONTRACTS WITH CUSTOMERSRECEIVABLES FROM REVENUES FROM CONTRACTS WITH CUSTOMERSRECEIVABLES FROM REVENUES FROM CONTRACTS WITH CUSTOMERS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30, 2022December 31, 2021June 30, 2023December 31, 2022
Sempra:Sempra:Sempra:
Accounts receivable – trade, net$1,620 $1,886 
Accounts receivable – trade, net(1)
Accounts receivable – trade, net(1)
$1,828 $2,291 
Accounts receivable – other, netAccounts receivable – other, net13 19 Accounts receivable – other, net14 25 
Due from unconsolidated affiliates – current(1)
5 2 
Other long-term assets(2)
32 70 
Due from unconsolidated affiliates – current(2)
Due from unconsolidated affiliates – current(2)
7 9 
Other long-term assets(3)
Other long-term assets(3)
3 9 
TotalTotal$1,670 $1,977 Total$1,852 $2,334 
SDG&E:SDG&E:SDG&E:
Accounts receivable – trade, net$685 $715 
Accounts receivable – trade, net(1)
Accounts receivable – trade, net(1)
$813 $799 
Accounts receivable – other, netAccounts receivable – other, net11 9 Accounts receivable – other, net10 12 
Due from unconsolidated affiliates – current(1)
3 2 
Other long-term assets(2)
17 25 
Due from unconsolidated affiliates – current(2)
Due from unconsolidated affiliates – current(2)
6 2 
Other long-term assets(3)
Other long-term assets(3)
2 6 
TotalTotal$716 $751 Total$831 $819 
SoCalGas:SoCalGas:SoCalGas:
Accounts receivable – trade, netAccounts receivable – trade, net$722 $1,084 Accounts receivable – trade, net$856 $1,295 
Accounts receivable – other, netAccounts receivable – other, net2 10 Accounts receivable – other, net4 13 
Other long-term assets(2)(3)
Other long-term assets(2)(3)
15 45 
Other long-term assets(2)(3)
1 3 
TotalTotal$739 $1,139 Total$861 $1,311 
(1)At June 30, 2023 and December 31, 2022, includes $123 and $72, respectively, of receivables due from customers that were billed on behalf of CCAs, which are not included in revenues.
(2)     Amount is presented net of amounts due to unconsolidated affiliates on the Condensed Consolidated Balance Sheets, when right of offset exists.
(2)(3)     In connection with the COVID-19 pandemic and at the direction of the CPUC, SDG&E and SoCalGas enrolled residential and small business customers with past-due balances in long-term repayment plans.
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NOTE 4. REGULATORY MATTERS
We discuss regulatory matters in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report and provide updates to those discussions and information about new regulatory matters below. With the exception of regulatory balancing accounts, we generally do not earn a return on our regulatory assets until such time as a related cash expenditure has been made. Upon the occurrence of a cash expenditure associated with a regulatory asset, the related amounts are recoverable through a regulatory account mechanism for which we earn a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate. The periods during which we recognize a regulatory asset while we do not earn a return vary by regulatory asset.
REGULATORY ASSETS (LIABILITIES)REGULATORY ASSETS (LIABILITIES)REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30,
2022		December 31,
2021		June 30,
2023		December 31,
2022
SDG&E:SDG&E:  SDG&E:  
Fixed-price contracts and other derivativesFixed-price contracts and other derivatives$(24)$(50)Fixed-price contracts and other derivatives$8 $(110)
Deferred income taxes recoverable in ratesDeferred income taxes recoverable in rates176 125 Deferred income taxes recoverable in rates429 296 
Pension and other postretirement benefit plan obligations(8)(7)
Pension and PBOP plan obligationsPension and PBOP plan obligations3 11 
Removal obligationsRemoval obligations(2,185)(2,251)Removal obligations(2,371)(2,248)
Environmental costsEnvironmental costs61 62 Environmental costs106 107 
Sunrise Powerlink fire mitigationSunrise Powerlink fire mitigation121 122 Sunrise Powerlink fire mitigation121 123 
Regulatory balancing accounts(1)(2)
Regulatory balancing accounts(1)(2):
Regulatory balancing accounts(1)(2):
Commodity – electricCommodity – electric246 77 Commodity – electric181 220 
Gas transportationGas transportation33 49 Gas transportation7 60 
Safety and reliabilitySafety and reliability80 67 Safety and reliability158 107 
Public purpose programsPublic purpose programs(117)(107)Public purpose programs(109)(69)
Wildfire mitigation planWildfire mitigation plan255 178 Wildfire mitigation plan519 375 
Liability insurance premiumLiability insurance premium102 110 Liability insurance premium102 99 
Other balancing accountsOther balancing accounts(17)207 Other balancing accounts(342)(50)
Other regulatory assets, net(2)
Other regulatory assets, net(2)
132 119 
Other regulatory assets, net(2)
153 137 
Total SDG&ETotal SDG&E(1,145)(1,299)Total SDG&E(1,035)(942)
SoCalGas:SoCalGas:  SoCalGas:  
Deferred income taxes recoverable in ratesDeferred income taxes recoverable in rates113 44 Deferred income taxes recoverable in rates241 161 
Pension and other postretirement benefit plan obligations39 51 
Pension and PBOP plan obligationsPension and PBOP plan obligations(232)(170)
Employee benefit costsEmployee benefit costs31 31 Employee benefit costs24 24 
Removal obligationsRemoval obligations(603)(627)Removal obligations(591)(616)
Environmental costsEnvironmental costs34 34 Environmental costs37 38 
Regulatory balancing accounts(1)(2)
Regulatory balancing accounts(1)(2):
Regulatory balancing accounts(1)(2):
Commodity – gas, including transportationCommodity – gas, including transportation(46)(146)Commodity – gas, including transportation(362)(257)
Safety and reliabilitySafety and reliability425 339 Safety and reliability644 575 
Public purpose programsPublic purpose programs(213)(183)Public purpose programs(152)(158)
Liability insurance premiumLiability insurance premium18 16 Liability insurance premium22 23 
Other balancing accountsOther balancing accounts125 42 Other balancing accounts288 115 
Other regulatory assets, net(2)
Other regulatory assets, net(2)
153 142 
Other regulatory assets, net(2)
280 223 
Total SoCalGasTotal SoCalGas76 (257)Total SoCalGas199 (42)
Sempra Infrastructure:Sempra Infrastructure:Sempra Infrastructure:
Deferred income taxes recoverable in ratesDeferred income taxes recoverable in rates77 77 Deferred income taxes recoverable in rates78 78 
Other regulatory assetsOther regulatory assets5 — 
Total Sempra InfrastructureTotal Sempra Infrastructure83 78 
Total SempraTotal Sempra$(992)$(1,479)Total Sempra$(753)$(906)
(1)    At June 30, 20222023 and December 31, 2021,2022, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $453$748 and $358,$562, respectively, and for SoCalGas was $601$859 and $410,$692, respectively.
(2)    Includes regulatory assets earning a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate.
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SEMPRA CALIFORNIA
CPUC GRC
The CPUC uses GRCs to set rates designedrevenues to allow SDG&E and SoCalGas to recover their reasonable operating costs and to provide the opportunity to realize their authorized rates of return on their investments.
In May 2022, SDG&E and SoCalGas filed their 2024 GRC applications requesting CPUC approval of test year revenue requirements for 2024 and attrition year adjustments for 2025 through 2027. SDG&E and SoCalGas requested revenue requirements for 2024 of $3.0 billion and $4.4 billion, respectively. SDG&E and SoCalGas are proposingproposed post-test year revenue requirement changes using various mechanisms that are estimated to result in annual increases of approximately 8% to 12%11% at SDG&E and approximately 6% to 8% at SoCalGas. Intervening parties have proposed various adjustments to SDG&E’s and SoCalGas’ revenue requirement requests. In October 2022, the CPUC issued a scoping ruling that set a schedule for the proceeding, including the expected issuance of a proposed decision in the second quarter of 2024. The CPUC has authorized SDG&E and SoCalGas have requested thatto recognize the CPUC issue aeffects of the GRC final decision by the end of 2023 with new ratesretroactive to be implemented in January 1, 2024. SDG&E proposesexpects to submit separate requests in its GRC for review and recovery of its wildfire mitigation plan costs in mid-2023the second half of 2023 for costs incurred from 2019 through 2022 and in mid-2024 for costs incurred in 2023. The results of the GRC may materially and adversely differ from what is contained in the GRC applications.
CPUC Cost of Capital
AThe CPUC approved the following cost of capital proceeding determines a utility’s authorized capital structure and authorized return on rate base. The CCM applies in the interim years between required cost of capital applications and considers changes in the cost of capital based on changes in interest rates based on the applicable utility bond index published by Moody’s (the CCM benchmark rate) for each 12-month period ending September 30 (the measurement period). The CCM benchmark rate is the basis of comparison to determine if the CCM is triggered, which occurs if the change in the applicable Moody’s utility bond index relative to the CCM benchmark rate is larger than plus or minus 1.000% at the end of the measurement period. The index applicable to SDG&E and SoCalGas is based on each utility’s credit rating. Alternatively, each of SDG&E and SoCalGas is permitted to file a cost of capital application in an interim year in which an extraordinary or catastrophic event materially impacts its cost of capital and affects utilities differently than the market as a whole to have its cost of capital determined in lieu of the CCM.
Authorized Cost of Capital, Subject to the CCM
In December 2019, the CPUC approved the cost of capital (shown in the table below) for SDG&E and SoCalGas that became effective on January 1, 20202023 and will remain in effect through December 31, 2022, subject to the CCM. SDG&E’s CCM benchmark rate is 4.498% based on Moody’s Baa- utility bond index, and SoCalGas’ CCM benchmark rate is 4.029% based on Moody’s A- utility bond index.
AUTHORIZED CPUC COST OF CAPITAL, SUBJECT TO THE CCM
SDG&ESoCalGas
Authorized weightingReturn on
rate base		Weighted
return on
rate base		Authorized weightingReturn on
rate base		Weighted
return on
rate base
45.25 %4.59 %2.08 %Long-Term Debt45.60 %4.23 %1.93 %
2.75 6.22 0.17 Preferred Equity2.40 6.00 0.14 
52.00 10.20 5.30 Common Equity52.00 10.05 5.23 
100.00 %7.55 %100.00 %7.30 %
For the measurement period that ended September 30, 2021, the CCM would trigger for SDG&E if the CPUC determines that the CCM should be implemented because the average Moody’s Baa- utility bond index between October 1, 2020 and September 30, 2021 was 1.17% below SDG&E’s CCM benchmark rate of 4.498%. In August 2021, SDG&E filed an application with the CPUC to update its cost of capital due to the ongoing effects of the COVID-19 pandemic rather than have the CCM apply. In December 2021, the CPUC established a proceeding to determine if SDG&E’s cost of capital was impacted by an extraordinary event such that the CCM should not apply. If the CPUC finds that there was not an extraordinary event, the CCM would be effective retroactive to January 1, 2022 and would automatically adjust SDG&E’s authorized ROE from 10.20% to 9.62% and adjust its authorized cost of debt to reflect the then current embedded cost and projected interest rate. If the CPUC finds that there was an extraordinary event, it will then determine whether to suspend the CCM for 2022 and preserve SDG&E’s current authorized cost of capital or hold a second phase of the proceeding to set a new cost of capital for 2022. SDG&E expects to receive a final decision in the second half of 2022. In December 2021, the CPUC granted SDG&E the establishment of memorandum accounts effective January 1, 2022 to track any differences in revenue requirement resulting from the interim cost of capital decision expected in 2022.
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Proposed Cost of Capital
In April 2022, SDG&E and SoCalGas each filed applications with the CPUC to update their cost of capital (shown in the table below), which would become effective on January 1, 2023 and would remain in effect through December 31, 2025, subject to the CCMCCM. The CPUC will open a second phase of this cost of capital proceeding to evaluate the CCM.
CPUC AUTHORIZED COST OF CAPITAL FOR 2023 – 2025
SDG&ESoCalGas
Authorized weightingReturn on
rate base
Weighted
return on
rate base(1)
Authorized weightingReturn on
rate base		Weighted
return on
rate base
45.25 %4.05 %1.83 %Long-Term Debt45.60 %4.07 %1.86 %
2.75 6.22 0.17 Preferred Equity2.40 6.00 0.14 
52.00 9.95 5.17 Common Equity52.00 9.80 5.10 
100.00 %7.18 %100.00 %7.10 %
(1)    Total weighted return on rate base does not sum due to rounding differences.
SDG&E
FERC Rate Matters
SDG&E files separately with the FERC for its authorized ROE on FERC-regulated electric transmission operations and assets. SDG&E’s currently effective TO5 settlement provides for a ROE of 10.60%, consisting of a base ROE of 10.10% plus an additional 50 bps for participation in the California ISO (the California ISO adder). If the FERC issues an order ruling that California IOUs are no longer eligible for the California ISO adder, SDG&E would refund the California ISO adder as of the refund effective date (June 1, 2019) if it remainssuch a refund is determined to be required by the terms of the TO5 settlement. The TO5 term is effective June 1, 2019 and shall remain in place as proposed. SDG&E and SoCalGas expect to receiveeffect until terminated by a final decision bynotice provided at least six months before the end of 2022.
PROPOSED CPUC COST OF CAPITAL
SDG&ESoCalGas
Authorized weightingReturn on
rate base		Weighted
return on
rate base		Authorized weightingReturn on
rate base		Weighted
return on
rate base
46.00 %3.87 %1.78 %Long-Term Debt45.60 %3.89 %1.77 %
— — — Preferred Equity0.40 6.00 0.02 
54.00 10.55 5.70 Common Equity54.00 10.75 5.81 
100.00 %7.48 %100.00 %7.60 %
SOCALGAS
OSCs – Energy Efficiency and Advocacy
In October 2019, the CPUC issuedcalendar year. Following such notice, SDG&E would file an OSC to determine whether SoCalGas should be sanctioned for violationupdated rate request with an effective date of certain CPUC code sections and orders relating to energy efficiency (EE) codes and standards advocacy activities, undertaken by SoCalGas following a CPUC decision disallowing SoCalGas’ future engagement in advocacy around such EE codes and standards. In February 2022, the assigned Administrative Law Judge issued a Presiding Officer’s Decision (POD 1) that found that SoCalGas did undertake prohibited EE codes and standards advocacy activities using ratepayer funds. PODJanuary 1 imposes on SoCalGas a financial penalty of $10 million; customer refunds for certain ratepayer expenditures and shareholder incentives that SoCalGas estimates will be negligible; and a prohibition from recovering from ratepayers costs of proposed codes and standards activities until SoCalGas demonstrates policies, practices and procedures that adhere to the CPUC’s intent for codes and standards advocacy. POD 1 became the final decision of the CPUC in March 2022.
In December 2019, the CPUC issued a second OSC to determine whether SoCalGas is entitled to the EE program’s shareholder incentives for codes and standards advocacy in 2016 and 2017 (later expanded to include 2014 and 2015), whether its shareholders should bear the costs of those advocacy activities, and to address whether any other remedies are appropriate. In April 2021, the assigned Administrative Law Judge issued a Presiding Officer’s Decision (POD 2) on this second OSC. POD 2 finds no violations and assesses no fines or penalties but finds that SoCalGas spent ratepayer funds on activities that were not aligned with the CPUC’s intent for EE codes and standards advocacy, and orders customer refunds that SoCalGas estimates will be negligible. Additionally, POD 2 precludes SoCalGas from seeking cost recovery associated with EE codes and standards advocacy programs until lifted by the CPUC, and orders certain nonfinancial remedies. POD 2 was appealed by intervenors and in February 2022, a CPUC commissioner issued an alternative decision finding that there were violations of certain legal principles and imposing a financial penalty of $150,000. The alternative decision was adopted by the CPUC as the final decision in April 2022.following year.
NOTE 5. ACQUISITIONS AND DIVESTITURES
ACQUISITION
Sempra Infrastructure
ESJ
In March 2021, Sempra Infrastructure completed the acquisition of Saavi Energía’s 50% equity interest in ESJ for a purchase price of $65 million (net of $14 million of acquired cash and cash equivalents) plus the assumption of $277 million in debt (including $94 million owed from ESJ to Sempra Infrastructure that eliminates upon consolidation). Sempra Infrastructure previously accounted for its 50% interest in ESJ as an equity method investment. This acquisition increased Sempra Infrastructure’s ownership interest in ESJ from 50% to 100%. We accounted for this asset acquisition using a cost accumulation
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model whereby the cost of the acquisition and carrying value of our previously held interest in ESJ ($34 million) were allocated to assets acquired ($458 million) and liabilities assumed ($345 million) based on their relative fair values. ESJ owns a fully operating wind power generation facility with a nameplate capacity of 155 MW that is fully contracted by SDG&E under a long-term PPA. Sempra Infrastructure recorded a $190 million intangible asset for the relative fair value of the PPA that will be amortized over a period of 14 years against revenues. On January 15, 2022, ESJ completed construction and began commercial operation of a second wind power generation facility with a nameplate capacity of 108 MW that is also fully contracted by SDG&E under a long-term PPA.
NOTE 6.5. INVESTMENTS IN UNCONSOLIDATED ENTITIES
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We generally account for investments under the equity method when we have significant influence over, but do not have control of, these entities. Equity earnings and losses, both before and net of income tax, are combined and presented as Equity Earnings on the Condensed Consolidated Statements of Operations. See Note 1211 for information on equity earnings and losses, both before and net of income tax, by segment. See Note 1 for information on how equity earnings and losses before income taxes are factored into the calculations of our pretax income or loss and ETR.
We provide additional information concerning our equity method investments in Notes 5 andNote 6 of the Notes to Consolidated Financial Statements in the Annual Report.
SEMPRA TEXAS UTILITIES
Oncor Holdings
We account for our 100% equity ownership interest in Oncor Holdings, which owns an 80.25% interest in Oncor, as an equity method investment. Due to the ring-fencingring-fence measures, governance mechanisms and commitments in effect, we do not have the power to direct the significant activities of Oncor Holdings and Oncor. See Note 6 of the Notes to Consolidated Financial Statements in the Annual Report for additional information related to the restrictions on our ability to direct the significant activities of Oncor Holdings and Oncor.
In the six months ended June 30, 20222023 and 2021,2022, Sempra contributed $171$178 million and $100$171 million, respectively, to Oncor Holdings, and Oncor Holdings distributed $170$204 million and $162$170 million, respectively, to Sempra.
We provide summarized income statement information for Oncor Holdings in the following table.
SUMMARIZED FINANCIAL INFORMATION – ONCOR HOLDINGSSUMMARIZED FINANCIAL INFORMATION – ONCOR HOLDINGSSUMMARIZED FINANCIAL INFORMATION – ONCOR HOLDINGS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
20222021202220212023202220232022
Operating revenuesOperating revenues$1,293 $1,147 $2,542 $2,286 Operating revenues$1,343 $1,293 $2,635 $2,542 
Operating expensesOperating expenses(908)(836)(1,805)(1,665)Operating expenses(976)(908)(2,000)(1,805)
Income from operationsIncome from operations385 311 737 621 Income from operations367 385 635 737 
Interest expenseInterest expense(108)(102)(216)(204)Interest expense(133)(108)(256)(216)
Income tax expenseIncome tax expense(52)(34)(94)(70)Income tax expense(43)(52)(67)(94)
Net incomeNet income226 167 417 332 Net income197 226 296 417 
Noncontrolling interest held by Texas Transmission Investment LLCNoncontrolling interest held by Texas Transmission Investment LLC(46)(34)(84)(67)Noncontrolling interest held by Texas Transmission Investment LLC(40)(46)(60)(84)
Earnings attributable to Sempra(1)
Earnings attributable to Sempra(1)
180 133 333 265 
Earnings attributable to Sempra(1)
157 180 236 333 
(1)    Excludes adjustments to equity earnings related to amortization of a tax sharing liability associated with a tax sharing arrangement and changes in basis differences in AOCI within the carrying value of our equity method investment.
SEMPRA INFRASTRUCTURE
Cameron LNG JV
In the six months ended June 30, 2023 and 2022, Sempra Infrastructure contributed $6 million and $10 million, respectively, to Cameron LNG JV. In the six months ended June 30, 2022JV, and 2021, Cameron LNG JV distributed to Sempra Infrastructure$198 million and $233 million, and $378 million, respectively, of which $165 million relates to the distribution from Cameron LNG JV’s SDSRA that we discuss below.Sempra Infrastructure.
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Sempra Promissory Note for SDSRA Distribution
Cameron LNG JV’s debt agreements require Cameron LNG JV to maintain the SDSRA, which is an additional reserve account beyond the Senior Debt Service Accrual Account, where funds accumulate from operations to satisfy senior debt obligations due and payable on the next payment date. Both accounts can be funded with cash or authorized investments. In June 2021, Sempra Infrastructure received a distribution of $165 million based on its proportionate share of the SDSRA, for which Sempra provided a promissory note and letters of credit to secure a proportionate share of Cameron LNG JV’s obligation to fund the SDSRA. Sempra’s maximum exposure to loss is replenishment of the amount withdrawn by Sempra Infrastructure from the SDSRA, or $165 million. We recorded a guarantee liability of $22 million in June 2021, with an associated carrying value of $2120 million at June 30, 2022,2023, for the fair value of the promissory note, which is being reduced over the duration of the guarantee through Sempra Infrastructure’s investment in Cameron LNG JV. The guarantee will terminate upon full repayment of Cameron LNG JV’s debt, scheduled to occur in 2039, or replenishment of the amount withdrawn by Sempra Infrastructure from the SDSRA.
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Sempra Support Agreement for CFIN
In July 2020, CFIN entered into a financing arrangement with Cameron LNG JV’s 4four project owners and received aggregate proceeds of $1.5 billion from 2two project owners and from external lenders on behalf of the other 2two project owners (collectively, the affiliate loans), based on their proportionate ownership interest in Cameron LNG JV. CFIN used the proceeds from the affiliate loans to provide a loan to Cameron LNG JV. The affiliate loans mature in 2039. Principal and interest will be paid from Cameron LNG JV’s project cash flows from its three-train natural gas liquefaction facility. Cameron LNG JV used the proceeds from its loan to return equity to its project owners. Sempra used its $753 million share of the proceeds for working capital and other general corporate purposes, including the repayment of indebtedness.
Sempra Infrastructure’s $753 million proportionate share of the affiliate loans, based on itsSI Partners’ 50.2% ownership interest in Cameron LNG JV, was funded by external lenders comprised of a syndicate of 8eight banks (the bank debt) to whom Sempra has provided a guarantee pursuant to a Support Agreement as amended on June 29, 2021, under which:
▪Sempra has severally guaranteed repayment of the bank debt plus accrued and unpaid interest if CFIN fails to pay the external lenders;
▪the external lenders may exercise an option to put the bank debt to Sempra Infrastructure upon the occurrence of certain events, including a failure by CFIN to meet its payment obligations under the bank debt;
▪the external lenders will put some or all of the bank debt to Sempra Infrastructure on the fifth, tenth, or fifteenth anniversary date of the affiliate loans, except the portion of the debt owed to any external lender that has elected not to participate in the put option six months prior to the respective anniversary date;
▪Sempra Infrastructure also has a right to call the bank debt back from, or to refinance the bank debt with, the external lenders at any time; and
▪the Support Agreement will terminate upon full repayment of the bank debt, including repayment following an event in which the bank debt is put to Sempra Infrastructure.
In exchange for this guarantee, the external lenders will pay a guarantee fee that is based on the credit rating of Sempra’s long-term senior unsecured non-credit enhanced debt rating, which guarantee fee Sempra Infrastructure will recognizerecognizes as interest income as earned. Sempra’s maximum exposure to loss is the bank debt plus any accrued and unpaid interest and related fees, subject to a liability cap of 130% of the bank debt, or $979 million. We measure the Support Agreement at fair value, net of related guarantee fees, on a recurring basis (see Note 9)8). At June 30, 2022,2023, the fair value of the Support Agreement was $16$23 million, of which $7 million is included in Other Current Assets and $9$16 million is included in Other Long-Term Assets on Sempra’s Condensed Consolidated Balance Sheet.
ESJ
As we discuss in Note 5, in March 2021, Sempra Infrastructure completed the acquisition of the remaining 50% equity interest in ESJ and ESJ became a wholly owned, consolidated subsidiary. Prior to the acquisition date, Sempra Infrastructure owned 50% of ESJ and accounted for its interest as an equity method investment. In the six months ended June 30, 2021, ESJ distributed a $4 million return of investment to IEnova.
TAG
In the six months ended June 30, 2023 and 2022, TAG distributed $36 million and $32 million, respectively, to Sempra Infrastructure.
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NOTE 7.6. DEBT AND CREDIT FACILITIES
The principal terms of our debt arrangements are described below and in Note 7 of the Notes to Consolidated Financial Statements in the Annual Report.
SHORT-TERM DEBT
Committed Lines of Credit
At June 30, 2022,2023, Sempra had an aggregate capacity of $9.5$9.9 billion under 7eight primary committed lines of credit, which provide liquidity and support commercial paper programs. Because our commercial paper programs are supported by some of these lines of credit, we reflect the amount of commercial paper outstanding, before reductions of any unamortized discounts, and any letters of credit outstanding as a reduction to the available unused credit capacity.capacity in the following table.
COMMITTED LINES OF CREDIT
(Dollars in millions)
June 30, 2022
BorrowerExpiration date of facilityTotal facilityCommercial paper outstandingAmounts outstandingAvailable unused credit
SempraMay 2024$3,185 $(42)$— $3,143 
SempraMay 20241,250 — — 1,250 
SDG&EMay 20241,500 — — 1,500 
SoCalGasMay 2024750 — — 750 
SI PartnersNovember 20241,000 — (285)715 
IEnovaSeptember 2023350 — (310)40 
IEnovaFebruary 20241,500 — — 1,500 
Total$9,535 $(42)$(595)$8,898 
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COMMITTED LINES OF CREDIT
(Dollars in millions)
June 30, 2023
BorrowerExpiration date of facilityTotal facilityCommercial paper outstandingAmounts outstandingLetters of credit outstandingAvailable unused credit
SempraOctober 2027$4,000 $(813)$— $— $3,187 
SDG&EOctober 20271,500 — — — 1,500 
SoCalGasOctober 20271,200 (238)— — 962 
SI PartnersNovember 20241,000 — — — 1,000 
IEnova and SI PartnersSeptember 2023350 — (350)— — 
IEnova and SI PartnersDecember 2023150 — — — 150 
IEnova and SI PartnersFebruary 20241,500 — (1,086)— 414 
Port Arthur LNGMarch 2030200 — — (15)185 
Total$9,900 $(1,051)$(1,436)$(15)$7,398 

Sempra, SDG&E and SoCalGas each must maintain a ratio of indebtedness to total capitalization (as defined in each of the applicable credit facilities) of no more than 65% at the end of each quarter. At June 30, 2022,2023, each entity was in compliance with this ratio under its respective credit facility.
SI Partners must maintain a ratio of consolidated adjusted net indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (as defined in its credit facility)facilities) of no more than 5.25 to 1.00 as ofat the end of each quarter. At June 30, 2022,2023, SI Partners was in compliance with this ratio.
In March 2023, Port Arthur LNG entered into a seven-year initial working capital facility agreement with a syndicate of lenders expiring in March 2030. The credit facility permits borrowings of up to $200 million, which bear interest by reference to Term SOFR, plus the applicable margin and a credit adjustment spread. The credit facility also provides for the issuance of up to $200 million of letters of credit.
Uncommitted LinesLine of Credit
In addition to our committed linesECA LNG Phase 1 has an uncommitted line of credit, Sempra Infrastructure’s foreign operations in Mexico have uncommitted lines of creditwhich is generally used for working capital requirements, with an aggregate capacity of $570$200 million of which $32 million was outstanding at June 30, 2022, which are generally used for working capital requirements. We reflect2023. The amounts outstanding under these uncommitted lines of creditare before reductions of any unamortized discounts.
FOREIGN UNCOMMITTED LINES OF CREDIT
(Dollars and U.S. dollar equivalent in millions)
June 30, 2022
BorrowerExpiration date of facilityBorrowing denominationTotal facilityAmounts outstandingAvailable unused credit
IEnovaSeptember 2022U.S. dollars$250 $(250)$— 
ECA LNG Phase 1(1)
August 2023U.S. dollars or Mexican pesos200 (32)168 
IEnova(2)
October 2023U.S. dollars100 (36)64 
IEnovaOctober 2023U.S. dollars or Mexican pesos20 — 20 
Total$570 $(318)$252 
(1) Borrowings can be in U.S. dollars or Mexican pesos. At June 30, 2023, outstanding amounts were borrowed in Mexican pesos and bear interest at a variable rate based on the 28-day Interbank Equilibrium Interest Rate plus 105 bps. In March 2022,June 2023, the facility was amended to increaseextend the borrowing capacity from $100expiration date to $200.
(2)    Advances are dueAugust 2024 and replace the LIBOR reference rate plus 105 bps with the SOFR reference rate plus 115 bps. As such, borrowings made in full within 180 days ofU.S. dollars bear interest at a variable rate based on the disbursement date, which may be extended in increments of 180 days provided that no advance may have a maturity date that falls more than three years after the date of disbursement.
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1-month or 3-month SOFR plus 115 bps.
Uncommitted Letters of Credit
Outside of our domestic and foreign credit facilities, we have bilateral unsecured standby letter of credit capacity with select lenders that is uncommitted and supported by reimbursement agreements. At June 30, 2022,2023, we had approximately $730$514 million in standby letters of credit outstanding under these agreements.
UNCOMMITTED LETTERS OF CREDIT
(Dollars in millions)
June 30, 20222023
Expiration date rangeUncommitted letters of credit outstanding
SDG&EJanuary 2023 to2024 - May 20232024$15 
SoCalGasNovember 2022 to2023 - October 2023202420 
Sempra InfrastructureJuly 2022 to2023 - October 2043525311 
Parent and otherSeptember 2022 to2023 - June 20232024170168 
Total$730514 
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Term Loan
In July 2022, SoCalGas entered into an $800 million, 364-day term loan agreement with a maturity date of July 6, 2023. In August 2022, SoCalGas may request one borrowing of up toborrowed $800 million, through October 7, 2022.net of negligible debt issuance costs, under the term loan agreement. The borrowings will bearborrowing bore interest at benchmark rates plus 70 bps and arewas due in full upon maturity. The term loan provides SoCalGas with additional liquidity outside of its line of credit, which may includeused the proceeds for payment of a portion of the costs associated with civilrelating to litigation relatedpertaining to the Leak. In the second quarter of 2023, SoCalGas repaid the term loan in full.
Weighted-Average Interest Rates
The weighted-average interest rates on all short-term debt were as follows:
WEIGHTED-AVERAGE INTEREST RATESWEIGHTED-AVERAGE INTEREST RATESWEIGHTED-AVERAGE INTEREST RATES
June 30, 2022December 31, 2021June 30, 2023December 31, 2022
SempraSempra2.70 %0.60 %Sempra5.92 %5.57 %
SDG&ESDG&E— 0.65 SDG&E— 4.76 
SoCalGasSoCalGas— 0.21 SoCalGas5.14 4.71 
LONG-TERM DEBT
SempraSDG&E
In March 2022, we2023, SDG&E issued $750$800 million aggregate principal amount of 3.30% senior unsecured notes5.35% first mortgage bonds due in full upon maturity on April 1, 20252053 and received proceeds of $745$783 million (net of debt discount, underwriting discounts and debt issuance costs of $5 million), and $500 million of 3.70% senior unsecured notes due in full upon maturity on April 1, 2029 and received proceeds of $494 million (net of debt discount, underwriting discounts and debt issuance costs of $6$17 million). Each series of the notes is redeemable prior to maturity, subject to their terms, and in certain circumstances subject to make-whole provisions. We used a portion of the net proceeds for general corporate purposes and repayment of commercial paper.
SDG&E
In February 2022, SDG&E entered into a $400 million, two-year term loan with a maturity date of February 18, 2024. SDG&E borrowed $200 million in the three months ended March 31, 2022 and an additional $200 million in the three months ended June 30, 2022. The borrowings bear interest at benchmark rates plus 62.5 bps and are due in full upon maturity. The margin is based on SDG&E’s long-term senior unsecured credit rating. SDG&E used the net proceeds for repayment of commercial paper and for general corporate purposes.
In March 2022, SDG&E issued $500 million aggregate principal amount of 3.00% first mortgage bonds due in full upon maturity on March 15, 2032 and received proceeds of $494 million (net of debt discount, underwriting discounts and debt issuance costs of $6 million), and $500 million aggregate principal amount of 3.70% first mortgage bonds due in full upon maturity on March 15, 2052 and received proceeds of $492 million (net of debt discount, underwriting discounts and debt issuance costs of $8 million). Each of the first mortgage bonds are redeemable prior to maturity, subject to their terms, and in certain circumstances subject to make-whole provisions. SDG&E used a portion of the net proceeds for general corporate purposes, including repayment of commercial paper and its 364-day term loan
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and intends to use the remaining proceeds for capital expenditures and other general corporate purposes.indebtedness.
SoCalGas
In March 2022,May 2023, SoCalGas issued $700$500 million aggregate principal amount of 2.95% senior unsecured notes5.20% first mortgage bonds due in full upon maturity on April 15, 2027June 1, 2033 and received proceeds of $691$495 million (net of debt discount, underwriting discounts and debt issuance costs of $9$5 million). The notes are redeemable prior to maturity, subject to their terms,, and in certain circumstances subject to make-whole provisions. SoCalGas used a portion of the net proceeds for repayment of commercial paper and intends to use the remaining proceeds for general corporate purposes, which may include payment of a portion of the costs relating to civil litigation pertaining to the Leak.
Sempra Infrastructure
SI Partners
In January 2022, SI Partners completed a private offering of $400$500 million in aggregate principal amount of 3.25% senior notes5.75% first mortgage bonds due in full upon maturity on January 15, 2032 to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933, as amended (the Securities Act),June 1, 2053 and non-U.S. persons outside the U.S. under Regulation S under the Securities Act. The notes are senior unsecured obligations that rank equally with all of SI Partners’ existing and future outstanding unsecured senior indebtedness and are redeemable prior to maturity, subject to their terms, and in certain circumstances subject to make-whole provisions. Sempra Infrastructure received proceeds of $390$493 million (net of debt discount, underwriting discounts and debt issuance costs of $10$7 million). Each series of first mortgage bonds is redeemable prior to maturity, subject to its terms, and in certain circumstances subject to make-whole provisions. SoCalGas used the net proceeds to repay its $300 million senior unsecured floating rate notes prior to their September 2023 scheduled maturity, a portion of its $800 million term loan and other general corporate purposes.
Sempra
In June 2023, Sempra Infrastructure usedissued $550 million aggregate principal amount of 5.40% senior unsecured notes due in full upon maturity on August 1, 2026 and received proceeds of $545 million (net of debt discount, underwriting discounts and debt issuance costs of $5 million), and $700 million aggregate principal amount of 5.50% senior unsecured notes due in full upon maturity on August 1, 2033 and received proceeds of $692 million (net of debt discount, underwriting discounts and debt issuance costs of $8 million). Each series of notes is redeemable prior to maturity, subject to its terms, and in certain circumstances subject to make-whole provisions. We intend to use the net proceeds for general corporate purposes, including the repayment of certain indebtedness of its subsidiaries.commercial paper and potentially other indebtedness.
Sempra Infrastructure
ECA LNG Phase 1
In December 2020, ECA LNG Phase 1 entered intohas a five-year loan agreement with a syndicate of 9 banksseven external lenders that matures in December 2025 for an aggregate principal amount of up to $1.6$1.3 billion. SempraIEnova and TotalEnergies SE have provided guarantees for repayment of the loans plus accrued and unpaid interest based on their proportionate ownership interest in ECA LNG Phase 1 of 83.4% and 16.6%, respectively. At June 30, 20222023 and December 31, 2021, $4552022, $708 million and $341$575 million, respectively, wasof borrowings from external lenders were outstanding under the loan agreement, with a weighted-average interest rate of 4.37%8.20% and 2.93%7.54%, respectively.
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Port Arthur LNG
In July 2022, ECAMarch 2023, Port Arthur LNG entered into a term loan facility agreement with a syndicate of lenders for an aggregate principal amount of approximately $6.8 billion. Proceeds from the loans will be used to finance the cost of construction of the PA LNG Phase 1 replaced Sempra with IEnova asproject. The loans mature on March 20, 2030 and bear interest by reference to Term SOFR, plus the guarantorapplicable margin and replaced 2a credit adjustment spread. The applicable margin prior to completion of the 9 banksPA LNG Phase 1 project (which occurs upon the satisfaction or waiver of a series of customary operational, technical, environmental and their combinedsocial and other tests and conditions that generally would not be fully met until after the commercial operations date) is 2.00% and on completion and thereafter is 2.25%. The principal amounts outstanding on the loans must be repaid in quarterly installments, commencing on the earlier of (i) the first quarterly payment date occurring more than three calendar months following completion of the PA LNG Phase 1 project and (ii) April 20, 2029. Under the terms of the loan agreement, at least 60% of the projected outstanding balance is required to be hedged during construction and over the underlying 20-year notional amortization period. As we discuss in Note 7, Port Arthur LNG entered into hedging instruments in satisfaction of this requirement in March 2023. An upfront equity funding amount of $4.7 billion is required to have been contributed to Port Arthur LNG for construction costs as a condition to the initial advance of term loans under the agreement (other than advances for fees, interest, expenses and certain other specified costs). Port Arthur LNG paid $200 million in debt issuance costs at closing. Additionally, the loan agreement and the related working capital facility agreement that we discuss above require payment of commitment fees calculated at a rate per annum equal to 30% of $203 million ($61the applicable margin for Term SOFR loans multiplied by the outstanding debt commitments, and additional administrative fees. At June 30, 2023, $228 million of which wasborrowings were outstanding at June 30, 2022)under the loan agreement, with an all-in weighted-average interest rate of 5.58%.
In connection with this loan agreement, SI Partners and ConocoPhillips have collectively provided commitments for approximately $2.8 billion in equity funding for the benefit of Port Arthur LNG for their respective affiliate’s share of the equity funding of anticipated construction costs of the PA LNG Phase 1 project in excess of the upfront equity funding amount of $4.7 billion. The amount of each commitment is based on each of SI Partners’ and ConocoPhillips’ proportionate indirect ownership interest in Port Arthur LNG of 70% and 30%, respectively. The obligation under these guarantees will be reduced as their respective affiliates fund their direct proportionate interest of capital calls. Such equity funding can be called upon by Port Arthur LNG to fund project costs or, upon the taking of an enforcement action under the terms of Port Arthur LNG’s finance documents, to pay its senior debt obligations.
The pari passu secured obligations under the related finance documents are secured by a shareholder loan from IEnova, thereby reducingfirst priority lien (subject to customary permitted encumbrances) in substantially all of the syndicate to 7 banks.assets of Port Arthur LNG, including the equity interests in, and real property
interests of, Port Arthur LNG.
NOTE 8.7. DERIVATIVE FINANCIAL INSTRUMENTS
We use derivative instruments primarily to manage exposures arising in the normal course of business. Our principal exposures are commodity market risk, benchmark interest rate risk and foreign exchange rate exposures. Our use of derivatives for these risks is integrated into the economic management of our anticipated revenues, anticipated expenses, assets and liabilities. Derivatives may be effective in mitigating these risks (1) that could lead to declines in anticipated revenues or increases in anticipated expenses, or (2) that could cause our asset values to fall or our liabilities to increase. Accordingly, our derivative activity summarized below generally represents an impact that is intended to offset associated revenues, expenses, assets or liabilities that are not included in the tables below.
In certain cases, we apply the normal purchase or sale exception to derivative instruments and have other commodity contracts that are not derivatives. These contracts are not recorded at fair value and are therefore excluded from the disclosures below.
In all other cases, we record derivatives at fair value on the Condensed Consolidated Balance Sheets. We may have derivatives that are (1) cash flow hedges, (2) fair value hedges, or (3) undesignated. Depending on the applicability of hedge accounting and, for SDG&E and SoCalGas and other operations subject to regulatory accounting, the requirement to pass impacts through to customers, the impact of derivative instruments may be offset in OCI (cash flow hedges), on the balance sheet (regulatory offsets), or recognized in earnings (fair value hedges and undesignated derivatives not subject to rate recovery). We classify cash flows from the principal settlements of cross-currency swaps that hedge exposure related to Mexican peso-denominated debt and hedge termination costs onamounts related to terminations or early settlements of interest rate swaps as financing activities and settlements of other derivative instruments as operating activities on the Condensed Consolidated Statements of Cash Flows.
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HEDGE ACCOUNTING
We may designate a derivative as a cash flow hedging instrument if it effectively converts anticipated cash flows associated with revenues or expenses to a fixed dollar amount. We may utilize cash flow hedge accounting for derivative commodity instruments, foreign currency instruments and interest rate instruments. Designating cash flow hedges is dependent on the business context in which the instrument is being used, the effectiveness of the instrument in offsetting the risk that theof variability of future cash flows of a given revenue or expense item, may vary, and other criteria.
ENERGY DERIVATIVES
Our market risk is primarily related to natural gas and electricity price volatility and the specific physical locations where we transact. We use energy derivatives to manage these risks. The use of energy derivatives in our various businesses depends on the particular energy market, and the operating and regulatory environments applicable to the business, as follows:
▪SDG&E and SoCalGas use natural gas derivatives and SDG&E uses electricity derivatives, for the benefit of customers, with the objective of managing price risk and basis risks,risk, and stabilizing and lowering natural gas and electricity costs. These derivatives include fixed-price natural gas and electricity positions, options, and basis risk instruments, which are either exchange-traded or over-the-counter financial instruments, or bilateral physical transactions. This activity is governed by risk management and transacting activity plans that have beenlimited by company policy. SDG&E’s risk management and transacting activity plans for electricity derivatives are also required to be filed with, and have been approved by, the CPUC. SoCalGas is also subject to certain regulatory requirements and thresholds related to natural gas procurement under the GCIM. Natural gas and electricity derivative activities are recorded as commodity costs that are offset by regulatory account balances and are recovered in rates. Net commodity cost impacts on the Condensed Consolidated Statements of Operations are reflected in Cost of Natural Gas or in Cost of Electric Fuel and Purchased Power or in Cost of Natural Gas.Power.
▪SDG&E is allocated and may purchase CRRs, which serve to reduce the regional electricity price volatility risk that may result from local transmission capacity constraints. Unrealized gains and losses do not impact earnings, as they are offset by regulatory account balances. Realized gains and losses associated with CRRs, which are recoverable in rates, are recorded in Cost of Electric Fuel and Purchased Power on the Condensed Consolidated Statements of Operations.
▪Sempra Infrastructure may use natural gas and electricity derivatives, as appropriate, in an effort to optimize the earnings of theirits assets which support the following businesses: LNG, natural gas transportationpipelines and storage, and power generation. Gains and losses associated with undesignated derivatives are recognized in Energy-Related Businesses Revenues on the Condensed Consolidated Statements of Operations. Certain of these derivatives may also be designated as cash flow hedges.
▪From time to time, our various businesses, including SDG&E and SoCalGas, may use other energy derivatives to hedge exposures such as greenhouse gasGHG allowances.
The following table summarizes net energy derivative volumes.
NET ENERGY DERIVATIVE VOLUMESNET ENERGY DERIVATIVE VOLUMESNET ENERGY DERIVATIVE VOLUMES
(Quantities in millions)(Quantities in millions)(Quantities in millions)
CommodityCommodityUnit of measureJune 30, 2022December 31, 2021CommodityUnit of measureJune 30, 2023December 31, 2022
Sempra:Sempra:Sempra:
Natural gasNatural gasMMBtu193 184 Natural gasMMBtu380 254 
ElectricityElectricityMWh— 1 ElectricityMWh— 1 
Congestion revenue rightsCongestion revenue rightsMWh49 45 Congestion revenue rightsMWh35 42 
SDG&E:SDG&E:SDG&E:
Natural gasNatural gasMMBtu10 7 Natural gasMMBtu20 15 
ElectricityMWh— 1 
Congestion revenue rightsCongestion revenue rightsMWh49 45 Congestion revenue rightsMWh35 42 
SoCalGas:SoCalGas:SoCalGas:
Natural gasNatural gasMMBtu141 201 Natural gasMMBtu271 224 
INTEREST RATE DERIVATIVES
We are exposed to interest rates primarily as a result of our current and expected use of financing. SDG&E and SoCalGas, as well as Sempra and its other subsidiaries and JVs, periodically enter into interest rate derivative agreements intended to moderate our exposure to interest rates and to lower our overall costs of borrowing. In addition, we may utilize interest rate swaps, typically designated as cash flow hedges, to lock in interest rates on outstanding debt or in anticipation of future financings.
In December 2022, Sempra Infrastructure entered into an undesignated contingent interest rate swap to lock in interest rates on up to $3.5 billion of the variable rate indebtedness from anticipated future project-level debt financing that would be used to pay for
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construction costs of the PA LNG Phase 1 project. The contingent interest rate swap had a 25-year tenor, and its settlement was conditional upon the closing of project-level debt financing with respect to the PA LNG Phase 1 project. In March 2023, we closed on the project-level debt financing and, shortly thereafter, paid $14 million to cash settle the contingent interest rate swap.
As we discuss in Note 6, a minimum of 60% of the projected amount of term loans outstanding is required to be hedged under the Port Arthur LNG term loan facility agreement. In March 2023, Port Arthur LNG entered into floating-to-fixed interest rate swaps with 17 counterparties to hedge the variability in cash flows related to the SOFR-based component of interest payments on forecasted loans outstanding under the agreement. The notional amounts of the interest rate swaps generally increase in proportion to the forecasted borrowings up to a maximum amount of $4.2 billion prior to the maturity of the term loans on March 20, 2030. Under the interest rate swaps, which are designated as cash flow hedges, Port Arthur LNG receives interest at Term SOFR and pays interest at a fixed rate of 3.23% based on amortizing notional amounts maturing in 2048.
The following table presents the net notional amounts of our interest rate derivatives, excluding those in our equity method investments.investments and the contingent interest rate swap.
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INTEREST RATE DERIVATIVES
(Dollars in millions)
 June 30, 2023December 31, 2022
 Notional debtMaturitiesNotional debtMaturities
Sempra:    
Cash flow hedges(1)
$4,454 2023-2048$294 2023-2034
Table(1)    At June 30, 2023 and December 31, 2022, cash flow hedges accrued interest based on a notional of Contents$491 and $294, respectively.
INTEREST RATE DERIVATIVES
(Dollars in millions)
 June 30, 2022December 31, 2021
 Notional debtMaturitiesNotional debtMaturities
Sempra:    
Cash flow hedges$436 2022-2034$462 2022-2034
FOREIGN CURRENCY DERIVATIVES
We may utilize cross-currency swaps to hedge exposure related to Mexican peso-denominated debt at our Mexican subsidiaries and JVs. These cash flow hedges exchange our Mexican peso-denominated principal and interest payments into the U.S. dollar and swap Mexican fixed interest rates for U.S. fixed interest rates. From time to time, Sempra Infrastructure and its JVs may use other foreign currency derivatives to hedge exposures related to cash flows associated with revenues from contracts denominated in Mexican pesos that are indexed to the U.S. dollar.
We are also exposed to exchange rate movements at our Mexican subsidiaries and JVs, which have U.S. dollar-denominated cash balances, receivables, payables and debt (monetary assets and liabilities) that give rise to Mexican currency exchange rate movements for Mexican income tax purposes. They also have deferred income tax assets and liabilities denominated in the Mexican peso, which must be translated to U.S. dollars for financial reporting purposes. In addition, monetary assets and liabilities and certain nonmonetary assets and liabilities are adjusted for Mexican inflation for Mexican income tax purposes. We may utilize foreign currency derivatives as a means to manage the risk of exposure to significant fluctuations in our income tax expense and equity earnings from these impacts; however, we generally do not hedge our deferred income tax assets and liabilities or for inflation.
The following table presents the net notional amounts of our foreign currency derivatives, excluding those in our equity method investments.
FOREIGN CURRENCY DERIVATIVESFOREIGN CURRENCY DERIVATIVESFOREIGN CURRENCY DERIVATIVES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30, 2022December 31, 2021 June 30, 2023December 31, 2022
Notional amountMaturitiesNotional amountMaturities Notional amountMaturitiesNotional amountMaturities
Sempra:Sempra:    Sempra:    
Cross-currency swapsCross-currency swaps$306 2022-2023$306 2022-2023Cross-currency swaps$— — $306 2023
Other foreign currency derivativesOther foreign currency derivatives65 2022-2023106 2022-2023Other foreign currency derivatives65 2023-2024111 2023-2024
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FINANCIAL STATEMENT PRESENTATION
The Condensed Consolidated Balance Sheets reflect the offsetting of net derivative positions and cash collateral with the same counterparty when a legal right of offset exists. The following tables provide the fair values of derivative instruments on the Condensed Consolidated Balance Sheets, including the amount of cash collateral receivables that were not offset because the cash collateral was in excess of liability positions.
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DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETSDERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETSDERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30, 2022 June 30, 2023
Other current assetsOther long-term assetsOther current liabilitiesDeferred credits and other
Current assets: Fixed-price contracts and other derivatives(1)
Other long-term assets
Other current
liabilities
Deferred credits and other
Sempra:Sempra:    Sempra:    
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:    Derivatives designated as hedging instruments:    
Interest rate instrumentsInterest rate instruments$5 $27 $— $— Interest rate instruments$16 $46 $— $(2)
Foreign exchange instrumentsForeign exchange instruments— — (2)— Foreign exchange instruments— — (15)— 
Interest rate and foreign exchange instruments— — (117)— 
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:    Derivatives not designated as hedging instruments:    
Commodity contracts not subject to rate recoveryCommodity contracts not subject to rate recovery182 91 (182)(89)Commodity contracts not subject to rate recovery251 35 (236)(42)
Associated offsetting commodity contractsAssociated offsetting commodity contracts(167)(32)167 32 Associated offsetting commodity contracts(232)(35)232 35 
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery27 25 (22)(1)Commodity contracts subject to rate recovery20 17 (64)(17)
Associated offsetting commodity contractsAssociated offsetting commodity contracts(3)— 3 — Associated offsetting commodity contracts(12)(4)12 4 
Associated offsetting cash collateralAssociated offsetting cash collateral— — 10 4 
Net amounts presented on the balance sheetNet amounts presented on the balance sheet44 111 (153)(58)Net amounts presented on the balance sheet43 59 (61)(18)
Additional cash collateral for commodity contracts
not subject to rate recovery
Additional cash collateral for commodity contracts
not subject to rate recovery
76 — — — 
Additional cash collateral for commodity contracts
not subject to rate recovery
143 — — — 
Additional cash collateral for commodity contracts
subject to rate recovery
Additional cash collateral for commodity contracts
subject to rate recovery
48 — — — 
Additional cash collateral for commodity contracts
subject to rate recovery
70 — — — 
Total(1)
$168 $111 $(153)$(58)
Total(2)
Total(2)
$256 $59 $(61)$(18)
SDG&E:SDG&E:    SDG&E:    
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:    Derivatives not designated as hedging instruments:    
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery$26 $25 $(14)$— Commodity contracts subject to rate recovery$18 $17 $(26)$(8)
Associated offsetting commodity contractsAssociated offsetting commodity contracts(3)— 3 — Associated offsetting commodity contracts(11)(4)11 4 
Associated offsetting cash collateralAssociated offsetting cash collateral— — 10 4 
Net amounts presented on the balance sheetNet amounts presented on the balance sheet23 25 (11)— Net amounts presented on the balance sheet7 13 (5)— 
Additional cash collateral for commodity contracts
subject to rate recovery
Additional cash collateral for commodity contracts
subject to rate recovery
36 — — — 
Additional cash collateral for commodity contracts
subject to rate recovery
69 — — — 
Total(1)
$59 $25 $(11)$— 
Total(2)
Total(2)
$76 $13 $(5)$— 
SoCalGas:SoCalGas:    SoCalGas:    
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:    Derivatives not designated as hedging instruments:    
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery$1 $— $(8)$(1)Commodity contracts subject to rate recovery$2 $— $(38)$(9)
Associated offsetting commodity contractsAssociated offsetting commodity contracts(1)— 1 — 
Net amounts presented on the balance sheetNet amounts presented on the balance sheet1 — (8)(1)Net amounts presented on the balance sheet1 — (37)(9)
Additional cash collateral for commodity contracts
subject to rate recovery
Additional cash collateral for commodity contracts
subject to rate recovery
12 — — — 
Additional cash collateral for commodity contracts
subject to rate recovery
1 — — — 
TotalTotal$13 $— $(8)$(1)Total$2 $— $(37)$(9)
(1)    Included in Other Current Assets for SoCalGas.
(2)Normal purchase contracts previously measured at fair value are excluded.
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DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)DERIVATIVE INSTRUMENTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
December 31, 2021 December 31, 2022
Other current assetsOther long-term assetsOther current liabilitiesDeferred credits and other
Current assets: Fixed-price contracts and other derivatives(1)
Other long-term assetsOther current liabilitiesDeferred credits and other
Sempra:Sempra:    Sempra:    
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:    Derivatives designated as hedging instruments:    
Interest rate instrumentsInterest rate instruments$— $6 $(6)$(2)Interest rate instruments$10 $33 $— $— 
Foreign exchange instrumentsForeign exchange instruments1 1 (1)— Foreign exchange instruments— — (7)(1)
Interest rate and foreign exchange instrumentsInterest rate and foreign exchange instruments— — (1)(130)Interest rate and foreign exchange instruments— — (105)— 
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:    Derivatives not designated as hedging instruments:    
Commodity contracts not subject to rate recoveryCommodity contracts not subject to rate recovery136 11 (122)(10)Commodity contracts not subject to rate recovery480 133 (399)(132)
Associated offsetting commodity contractsAssociated offsetting commodity contracts(93)(8)93 8 Associated offsetting commodity contracts(301)(39)301 39 
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery38 52 (58)— Commodity contracts subject to rate recovery138 27 (97)(2)
Associated offsetting commodity contractsAssociated offsetting commodity contracts(8)— 8 — Associated offsetting commodity contracts(27)(2)27 2 
Interest rate instrumentInterest rate instrument33 — — — 
Net amounts presented on the balance sheetNet amounts presented on the balance sheet74 62 (87)(134)Net amounts presented on the balance sheet333 152 (280)(94)
Additional cash collateral for commodity contracts
not subject to rate recovery
Additional cash collateral for commodity contracts
not subject to rate recovery
58 — — — 
Additional cash collateral for commodity contracts
not subject to rate recovery
451 — — — 
Additional cash collateral for commodity contracts
subject to rate recovery
Additional cash collateral for commodity contracts
subject to rate recovery
46 — — — 
Additional cash collateral for commodity contracts
subject to rate recovery
18 — — — 
Total(1)
$178 $62 $(87)$(134)
Total(2)
Total(2)
$802 $152 $(280)$(94)
SDG&E:SDG&E:    SDG&E:    
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:    Derivatives not designated as hedging instruments:    
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery$34 $52 $(20)$— Commodity contracts subject to rate recovery$107 $27 $(13)$(2)
Associated offsetting commodity contractsAssociated offsetting commodity contracts(5)— 5 — Associated offsetting commodity contracts(12)(2)12 2 
Net amounts presented on the balance sheetNet amounts presented on the balance sheet29 52 (15)— Net amounts presented on the balance sheet95 25 (1)— 
Additional cash collateral for commodity contracts
subject to rate recovery
Additional cash collateral for commodity contracts
subject to rate recovery
28 — — — 
Additional cash collateral for commodity contracts
subject to rate recovery
17 — — — 
Total(1)
$57 $52 $(15)$— 
Total(2)
Total(2)
$112 $25 $(1)$— 
SoCalGas:SoCalGas:    SoCalGas:    
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:    Derivatives not designated as hedging instruments:    
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery$4 $— $(38)$— Commodity contracts subject to rate recovery$31 $— $(84)$— 
Associated offsetting commodity contractsAssociated offsetting commodity contracts(3)— 3 — Associated offsetting commodity contracts(15)— 15 — 
Net amounts presented on the balance sheetNet amounts presented on the balance sheet1 — (35)— Net amounts presented on the balance sheet16 — (69)— 
Additional cash collateral for commodity contracts
subject to rate recovery
Additional cash collateral for commodity contracts
subject to rate recovery
18 — — — 
Additional cash collateral for commodity contracts
subject to rate recovery
1 — — — 
TotalTotal$19 $— $(35)$— Total$17 $— $(69)$— 
(1)    Included in Other Current Assets for SoCalGas.
(2)Normal purchase contracts previously measured at fair value are excluded.

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The following table includes the effects of derivative instruments designated as cash flow hedges on the Condensed Consolidated Statements of Operations and in OCI and AOCI.
CASH FLOW HEDGE IMPACTSCASH FLOW HEDGE IMPACTSCASH FLOW HEDGE IMPACTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Pretax gain (loss)
recognized in OCI		Pretax gain (loss) reclassified
from AOCI into earnings		Pretax gain (loss)
recognized in OCI		Pretax gain (loss) reclassified
from AOCI into earnings
Three months ended June 30, Three months ended June 30,Three months ended June 30, Three months ended June 30,
20222021Location20222021 20232022Location20232022
Sempra:Sempra:     Sempra:     
Interest rate instrumentsInterest rate instruments$13 $(6)Interest Expense$— $1 Interest rate instruments$94 $13 Interest Expense$— $— 
Interest rate instrumentsInterest rate instruments50 (32)
Equity Earnings(1)
(13)(19)Interest rate instruments41 50 
Equity Earnings(1)
14 (13)
Foreign exchange instrumentsForeign exchange instruments— (1)
Revenues: Energy-
Related Businesses
1 — Foreign exchange instruments(2)— 
Revenues: Energy-
Related Businesses
— 1 
Other (Expense) Income, Net(1)— Other Income (Expense), Net(1)(1)
Foreign exchange instrumentsForeign exchange instruments— (1)
Equity Earnings(1)
— — Foreign exchange instruments(1)— 
Equity Earnings(1)
(1)— 
Interest rate and foreign
exchange instruments
Interest rate and foreign
exchange instruments
4 7 Interest Expense1 — 
Interest rate and foreign
exchange instruments
— 4 Interest Expense1 1 
Other (Expense) Income, Net— 7 
TotalTotal$67 $(33) $(12)$(11)Total$132 $67  $13 $(12)
SoCalGas:SoCalGas:SoCalGas:
Interest rate instrumentsInterest rate instruments$— $— Interest Expense$(1)$— Interest rate instruments$— $— Interest Expense$(1)$(1)
Six months ended June 30, Six months ended June 30, Six months ended June 30, Six months ended June 30,
20222021Location20222021 20232022Location20232022
Sempra:Sempra:     Sempra:     
Interest rate instrumentsInterest rate instruments$35 $20 Interest Expense$1 $(1)Interest rate instruments$17 $35 Interest Expense$— $1 
Interest rate instrumentsInterest rate instruments144 51 
Equity Earnings(1)
(27)(38)Interest rate instruments24 144 
Equity Earnings(1)
21 (27)
Foreign exchange instrumentsForeign exchange instruments(3)2 
Revenues: Energy-
Related Businesses
2 (1)Foreign exchange instruments(8)(3)
Revenues: Energy-
Related Businesses
— 2 
Other (Expense) Income, Net(1)— Other Income (Expense), Net(2)(1)
Foreign exchange instrumentsForeign exchange instruments(2)2 
Equity Earnings(1)
1 (1)Foreign exchange instruments(6)(2)
Equity Earnings(1)
(2)1 
Interest rate and foreign
exchange instruments
Interest rate and foreign
exchange instruments
13 1 Interest Expense1 — 
Interest rate and foreign
exchange instruments
7 13 Interest Expense1 1 
Other (Expense) Income, Net6 1 Other Income (Expense), Net6 6 
TotalTotal$187 $76  $(17)$(40)Total$34 $187  $24 $(17)
SoCalGas:SoCalGas:SoCalGas:
Interest rate instrumentsInterest rate instruments$— $— Interest Expense$(1)$— Interest rate instruments$— $— Interest Expense$(1)$(1)
(1)    Equity earnings at our foreign equity method investees are recognized after tax.

For Sempra, we expect that net gains before NCI of $6$23 million, which are net of income tax expense, that are currently recorded in AOCI (with net gains of $11$14 million attributable to NCI) related to cash flow hedges will be reclassified into earnings during the next 12 months as the hedged items affect earnings. SoCalGas expects that $1 million of losses, net of income tax benefit, that are currently recorded in AOCI related to cash flow hedges will be reclassified into earnings during the next 12 months as the hedged items affect earnings. Actual amounts ultimately reclassified into earnings depend on the interest rates in effect when derivative contracts mature.
For all forecasted transactions, the maximum remaining term over which we are hedging exposure to the variability of cash flows at June 30, 20222023 is approximately 1225 years for Sempra. The maximum remaining term for which we are hedging exposure to the variability of cash flows at our equity method investees is 1716 years.
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The following table summarizes the effects of derivative instruments not designated as hedging instruments on the Condensed Consolidated Statements of Operations.
UNDESIGNATED DERIVATIVE IMPACTSUNDESIGNATED DERIVATIVE IMPACTSUNDESIGNATED DERIVATIVE IMPACTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
 Pretax (loss) gain on derivatives recognized in earnings  Pretax gain (loss) on derivatives recognized in earnings
 Three months ended June 30,Six months ended June 30,  Three months ended June 30,Six months ended June 30,
Location2022202120222021 Location2023202220232022
Sempra:Sempra:    Sempra:    
Commodity contracts not subject
to rate recovery
Commodity contracts not subject
to rate recovery
Revenues: Energy-Related
Businesses
$(151)$(142)$(228)$(190)
Commodity contracts not subject
to rate recovery
Revenues: Energy-Related
Businesses
$253 $(151)$702 $(228)
Commodity contracts subject
to rate recovery
Commodity contracts subject
to rate recovery
Cost of Natural Gas(4)— (4)2 
Commodity contracts subject
to rate recovery
Cost of Natural Gas(20)(4)(47)(4)
Commodity contracts subject
to rate recovery
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
(24)41 (6)43 
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
(27)(24)(18)(6)
Foreign exchange instrumentsOther (Expense) Income, Net— — — (24)
Interest rate instrumentInterest rate instrumentInterest Expense— — (47)— 
TotalTotal $(179)$(101)$(238)$(169)Total $206 $(179)$590 $(238)
SDG&E:SDG&E:    SDG&E:    
Commodity contracts subject
to rate recovery
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
$(24)$41 $(6)$43 
Commodity contracts subject
to rate recovery
Cost of Electric Fuel
and Purchased Power
$(27)$(24)$(18)$(6)
SoCalGas:SoCalGas:    SoCalGas:    
Commodity contracts subject
to rate recovery
Commodity contracts subject
to rate recovery
Cost of Natural Gas$(4)$— $(4)$2 
Commodity contracts subject
to rate recovery
Cost of Natural Gas$(20)$(4)$(47)$(4)
CREDIT RISK RELATED CONTINGENT FEATURES
For Sempra, SDG&E and SoCalGas, certain of our derivative instruments contain credit limits which vary depending on our credit ratings. Generally, these provisions, if applicable, may reduce our credit limit if a specified credit rating agency reduces our ratings. In certain cases, if our credit ratings were to fall below investment grade, the counterparty to these derivative liability instruments could request immediate payment or demand immediate and ongoing full collateralization.
For Sempra, the total fair value of this group of derivative instruments in a liability position at June 30, 20222023 and December 31, 20212022 was $17$50 million and $88$106 million, respectively. For SoCalGas, the total fair value of this group of derivative instruments in a liability position at June 30, 20222023 and December 31, 20212022 was $9$46 million and $36$69 million, respectively. SDG&E did not have this group of derivative instruments in a liability position at June 30, 20222023 or December 31, 2021.2022. At June 30, 2022,2023, if the credit ratings of Sempra or SoCalGas were reduced below investment grade, $17$50 million and $9$46 million, respectively, of additional assets could be required to be posted as collateral for these derivative contracts.
For Sempra, SDG&E and SoCalGas, some of our derivative contracts contain a provision that would permit the counterparty, in certain circumstances, to request adequate assurance of our performance under the contracts. Such additional assurance, if needed, is not material and is not included in the amounts above.
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NOTE 9.8. FAIR VALUE MEASUREMENTS
We discuss the valuation techniques and inputs we use to measure fair value and the definition of the three levels of the fair value hierarchy in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
RECURRING FAIR VALUE MEASURES
The three tables below, by level within the fair value hierarchy, set forth our financial assets and liabilities that were accounted for at fair value on a recurring basis at June 30, 20222023 and December 31, 2021.2022. We classify financial assets and liabilities in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair-valued assets and liabilities and their placement within the fair value hierarchy. We have not changed the valuation techniques or types of inputs we use to measure recurring fair value since December 31, 2021.
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2022.
The fair value of commodity derivative assets and liabilities is presented in accordance with our netting policy, as we discuss in Note 87 under “Financial Statement Presentation.”
The determination of fair values, shown in the tables below, incorporates various factors, including but not limited to, the credit standing of the counterparties involved and the impact of credit enhancements (such as cash deposits, letters of credit and priority interests).
Our financial assets and liabilities that were accounted for at fair value on a recurring basis in the tables below include the following:
▪Nuclear decommissioning trusts reflect the assets of SDG&E’s NDT, excluding accounts receivable and accounts payable. A third-party trustee values the trust assets using prices from a pricing service based on a market approach. We validate these prices by comparison to prices from other independent data sources. Securities are valued using quoted prices listed on nationally recognized securities exchanges or based on closing prices reported in the active market in which the identical security is traded (Level 1). Other securities are valued based on yields that are currently available for comparable securities of issuers with similar credit ratings (Level 2).
▪For commodity contracts, interest rate derivativesinstruments and foreign exchange instruments, we primarily use a market or income approach with market participant assumptions to value these derivatives. Market participant assumptions include those about risk, and the risk inherent in the inputs to the valuation techniques. These inputs can be readily observable, market corroborated, or generally unobservable. We have exchange-traded derivatives that are valued based on quoted prices in active markets for the identical instruments (Level 1). We also may have other commodity derivatives that are valued using industry standard models that consider quoted forward prices for commodities, time value, current market and contractual prices for the underlying instruments, volatility factors, and other relevant economic measures (Level 2). Level 3 recurring items relate to CRRs and long-term, fixed-price electricity positions at SDG&E, as we discuss below in “Level 3 Information – SDG&E.”
▪Rabbi Trust investments include short-term investments that consist of money market and mutual funds that we value using a market approach based on closing prices reported in the active market in which the identical security is traded (Level 1).
▪As we discuss in Note 6,5, in July 2020, Sempra entered into a Support Agreement for the benefit of CFIN. We measure the Support Agreement, which includes a guarantee obligation, a put option and a call option, net of related guarantee fees, at fair value on a recurring basis. We use a discounted cash flow model to value the Support Agreement, net of related guarantee fees. Because some of the inputs that are significant to the valuation are less observable, the Support Agreement is classified as Level 3, as we describe below in “Level 3 Information – Sempra Infrastructure.”
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RECURRING FAIR VALUE MEASURES – SEMPRA
(Dollars in millions)
 Level 1Level 2Level 3Total
Fair value at June 30, 2023
Assets:    
Nuclear decommissioning trusts:    
Short-term investments, primarily cash equivalents$22 $2 $— $24 
Equity securities318 4 — 322 
Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
25 14 — 39 
Municipal bonds— 266 — 266 
Other securities— 218 — 218 
Total debt securities25 498 — 523 
Total nuclear decommissioning trusts(1)
365 504 — 869 
Short-term investments held in Rabbi Trust51 — — 51 
Interest rate instruments— 62 — 62 
Commodity contracts not subject to rate recovery— 19 — 19 
Effect of netting and allocation of collateral(2)
143 — — 143 
Commodity contracts subject to rate recovery— 1 20 21 
Effect of netting and allocation of collateral(2)
65 — 5 70 
Support Agreement, net of related guarantee fees— — 23 23 
Total$624 $586 $48 $1,258 
Liabilities:    
Interest rate instruments$— $2 $— $2 
Foreign exchange instruments— 15 — 15 
Commodity contracts not subject to rate recovery— 11 — 11 
Commodity contracts subject to rate recovery14 51 — 65 
Effect of netting and allocation of collateral(2)
(14)— — (14)
Total$— $79 $— $79 
(1)    Excludes receivables (payables), net.
(2)    Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.
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RECURRING FAIR VALUE MEASURES – SEMPRA (CONTINUED)
(Dollars in millions)
 Level 1Level 2Level 3Total
Fair value at December 31, 2022
Assets:
Nuclear decommissioning trusts:
Short-term investments, primarily cash equivalents$10 $1 $— $11 
Equity securities293 4 — 297 
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
27 13 — 40 
Municipal bonds— 270 — 270 
Other securities— 227 — 227 
Total debt securities27 510 — 537 
Total nuclear decommissioning trusts(1)
330 515 — 845 
Short-term investments held in Rabbi Trust55 — — 55 
Interest rate instruments— 76 — 76 
Commodity contracts not subject to rate recovery— 273 — 273 
Effect of netting and allocation of collateral(2)
451 — — 451 
Commodity contracts subject to rate recovery82 19 35 136 
Effect of netting and allocation of collateral(2)
12 — 6 18 
Support Agreement, net of related guarantee fees— — 17 17 
Total$930 $883 $58 $1,871 
Liabilities:
Foreign exchange instruments$— $8 $— $8 
Interest rate and foreign exchange instruments— 105 — 105 
Commodity contracts not subject to rate recovery— 191 — 191 
Commodity contracts subject to rate recovery— 70 — 70 
Total$— $374 $— $374 
1)    Excludes receivables (payables), net.
(2)    Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.
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RECURRING FAIR VALUE MEASURES – SEMPRA
RECURRING FAIR VALUE MEASURES – SDG&ERECURRING FAIR VALUE MEASURES – SDG&E
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Fair value at June 30, 2022Level 1Level 2Level 3Total
Level 1Level 2Level 3Total Fair value at June 30, 2023
Assets:Assets:    Assets:    
Nuclear decommissioning trusts:Nuclear decommissioning trusts:    Nuclear decommissioning trusts:    
Short-term investments, primarily cash equivalentsShort-term investments, primarily cash equivalents$15 $— $— $15 Short-term investments, primarily cash equivalents$22 $2 $— $24 
Equity securitiesEquity securities283 5 — 288 Equity securities318 4 — 322 
Debt securities:Debt securities:    Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
30 13 — 43 
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
25 14 — 39 
Municipal bondsMunicipal bonds— 293 — 293 Municipal bonds— 266 — 266 
Other securitiesOther securities— 237 — 237 Other securities— 218 — 218 
Total debt securitiesTotal debt securities30 543 — 573 Total debt securities25 498 — 523 
Total nuclear decommissioning trusts(1)
Total nuclear decommissioning trusts(1)
328 548 — 876 
Total nuclear decommissioning trusts(1)
365 504 — 869 
Short-term investments held in Rabbi Trust50 — — 50 
Interest rate instruments— 32 — 32 
Commodity contracts not subject to rate recovery— 74 — 74 
Effect of netting and allocation of collateral(2)
76 — — 76 
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery13 1 35 49 Commodity contracts subject to rate recovery— — 20 20 
Effect of netting and allocation of collateral(2)
Effect of netting and allocation of collateral(2)
32 10 6 48 
Effect of netting and allocation of collateral(2)
64 — 5 69 
Support Agreement, net of related guarantee fees— — 16 16 
TotalTotal$499 $665 $57 $1,221 Total$429 $504 $25 $958 
Liabilities:Liabilities:    Liabilities:    
Foreign exchange instruments$— $2 $— $2 
Interest rate and foreign exchange instruments— 117 — 117 
Commodity contracts not subject to rate recovery— 72 — 72 
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery$14 $5 $— $19 
Effect of netting and allocation of collateral(2)
Effect of netting and allocation of collateral(2)
(14)— — (14)
TotalTotal$— $5 $— $5 
Fair value at December 31, 2022
Assets:Assets:    
Nuclear decommissioning trusts:Nuclear decommissioning trusts:    
Short-term investments, primarily cash equivalentsShort-term investments, primarily cash equivalents$10 $1 $— $11 
Equity securitiesEquity securities293 4 — 297 
Debt securities:Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
27 13 — 40 
Municipal bondsMunicipal bonds— 270 — 270 
Other securitiesOther securities— 227 — 227 
Total debt securitiesTotal debt securities27 510 — 537 
Total nuclear decommissioning trusts(1)
Total nuclear decommissioning trusts(1)
330 515 — 845 
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery82 3 35 120 
Effect of netting and allocation of collateral(2)
Effect of netting and allocation of collateral(2)
11 — 6 17 
TotalTotal$423 $518 $41 $982 
Liabilities:Liabilities:    
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery— 18 2 20 Commodity contracts subject to rate recovery$— $1 $— $1 
TotalTotal$— $209 $2 $211 Total$— $1 $— $1 
(1)    Excludes receivables (payables), net.
(2)    Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.
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RECURRING FAIR VALUE MEASURES – SEMPRA (CONTINUED)
(Dollars in millions)
Fair value at December 31, 2021
Level 1Level 2Level 3Total
Assets:
Nuclear decommissioning trusts:
Short-term investments, primarily cash equivalents$13 $(10)$— $3 
Equity securities358 6 — 364 
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
48 8 — 56 
Municipal bonds— 321 — 321 
Other securities— 260 — 260 
Total debt securities48 589 — 637 
Total nuclear decommissioning trusts(1)
419 585 — 1,004 
Short-term investments held in Rabbi Trust81 — — 81 
Interest rate instruments— 6 — 6 
Foreign exchange instruments— 2 — 2 
Commodity contracts not subject to rate recovery— 46 — 46 
Effect of netting and allocation of collateral(2)
58 — — 58 
Commodity contracts subject to rate recovery12 1 69 82 
Effect of netting and allocation of collateral(2)
31 9 6 46 
Support Agreement, net of related guarantee fees— — 7 7 
Total$601 $649 $82 $1,332 
Liabilities:
Interest rate instruments$— $8 $— $8 
Foreign exchange instruments— 1 — 1 
Interest rate and foreign exchange instruments— 131 — 131 
Commodity contracts not subject to rate recovery— 31 — 31 
Commodity contracts subject to rate recovery— 35 15 50 
Total$— $206 $15 $221 
(1)    Excludes receivables (payables), net.
(2)    Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.
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RECURRING FAIR VALUE MEASURES – SDG&E
(Dollars in millions)
 Fair value at June 30, 2022
 Level 1Level 2Level 3Total
Assets:    
Nuclear decommissioning trusts:    
Short-term investments, primarily cash equivalents$15 $— $— $15 
Equity securities283 5 — 288 
Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
30 13 — 43 
Municipal bonds— 293 — 293 
Other securities— 237 — 237 
Total debt securities30 543 — 573 
Total nuclear decommissioning trusts(1)
328 548 — 876 
Commodity contracts subject to rate recovery13 — 35 48 
Effect of netting and allocation of collateral(2)
30 — 6 36 
Total$371 $548 $41 $960 
Liabilities:    
Commodity contracts subject to rate recovery$— $9 $2 $11 
Total$— $9 $2 $11 
 Fair value at December 31, 2021
 Level 1Level 2Level 3Total
Assets:    
Nuclear decommissioning trusts:    
Short-term investments, primarily cash equivalents$13 $(10)$— $3 
Equity securities358 6 — 364 
Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies
48 8 — 56 
Municipal bonds— 321 — 321 
Other securities— 260 — 260 
Total debt securities48 589 — 637 
Total nuclear decommissioning trusts(1)
419 585 — 1,004 
Commodity contracts subject to rate recovery12 — 69 81 
Effect of netting and allocation of collateral(2)
22 — 6 28 
Total$453 $585 $75 $1,113 
Liabilities:    
Commodity contracts subject to rate recovery$— $— $15 $15 
Total$— $— $15 $15 
(1)    Excludes receivables (payables), net.
(2)    Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.
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RECURRING FAIR VALUE MEASURES – SOCALGASRECURRING FAIR VALUE MEASURES – SOCALGASRECURRING FAIR VALUE MEASURES – SOCALGAS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Fair value at June 30, 2022Level 1Level 2Level 3Total
Level 1Level 2Level 3Total Fair value at June 30, 2023
Assets:Assets:    Assets:    
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery$— $1 $— $1 Commodity contracts subject to rate recovery$— $1 $— $1 
Effect of netting and allocation of collateral(1)
Effect of netting and allocation of collateral(1)
2 10 — 12 
Effect of netting and allocation of collateral(1)
1 — — 1 
TotalTotal$2 $11 $— $13 Total$1 $1 $— $2 
Liabilities:Liabilities:    Liabilities:    
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery$— $9 $— $9 Commodity contracts subject to rate recovery$— $46 $— $46 
TotalTotal$— $9 $— $9 Total$— $46 $— $46 
Fair value at December 31, 2021
Level 1Level 2Level 3Total Fair value at December 31, 2022
Assets:Assets:    Assets:    
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery$— $1 $— $1 Commodity contracts subject to rate recovery$— $16 $— $16 
Effect of netting and allocation of collateral(1)
Effect of netting and allocation of collateral(1)
9 9 — 18 
Effect of netting and allocation of collateral(1)
1 — — 1 
TotalTotal$9 $10 $— $19 Total$1 $16 $— $17 
Liabilities:Liabilities:    Liabilities:    
Commodity contracts subject to rate recoveryCommodity contracts subject to rate recovery$— $35 $— $35 Commodity contracts subject to rate recovery$— $69 $— $69 
TotalTotal$— $35 $— $35 Total$— $69 $— $69 
(1)    Includes the effect of the contractual ability to settle contracts under master netting agreements and with cash collateral, as well as cash collateral not offset.
Level 3 Information
SDG&E
The table below sets forth reconciliations of changes in the fair value of CRRs and long-term, fixed-price electricity positions classified as Level 3 in the fair value hierarchy for Sempra and SDG&E.
LEVEL 3 RECONCILIATIONS(1)
LEVEL 3 RECONCILIATIONS(1)
LEVEL 3 RECONCILIATIONS(1)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30, Three months ended June 30,
20222021 20232022
Balance at April 1Balance at April 1$58 $62 Balance at April 1$30 $58 
Realized and unrealized (losses) gains(30)8 
Realized and unrealized lossesRealized and unrealized losses(4)(30)
Allocated transmission instrumentsAllocated transmission instruments(6)(2)Allocated transmission instruments(2)(6)
SettlementsSettlements11 12 Settlements(4)11 
Balance at June 30Balance at June 30$33 $80 Balance at June 30$20 $33 
Change in unrealized (losses) gains relating to instruments still held at June 30$(23)$14 
Change in unrealized losses relating to instruments still held at June 30Change in unrealized losses relating to instruments still held at June 30$(7)$(23)
Six months ended June 30,Six months ended June 30,
2022202120232022
Balance at January 1Balance at January 1$54 $69 Balance at January 1$35 $54 
Realized and unrealized (losses) gains(23)6 
Realized and unrealized lossesRealized and unrealized losses(8)(23)
Allocated transmission instrumentsAllocated transmission instruments(6)(2)Allocated transmission instruments(2)(6)
SettlementsSettlements8 7 Settlements(5)8 
Balance at June 30Balance at June 30$33 $80 Balance at June 30$20 $33 
Change in unrealized (losses) gains relating to instruments still held at June 30$(18)$12 
Change in unrealized losses relating to instruments still held at June 30Change in unrealized losses relating to instruments still held at June 30$(9)$(18)
(1)    Excludes the effect of the contractual ability to settle contracts under master netting agreements.

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Inputs used to determine the fair value of CRRs and fixed-price electricity positions are reviewed and compared with market conditions to determine reasonableness. SDG&E expects all costs related to these instruments to be recoverable through customer rates. As such, there is no impact to earnings from changes in the fair value of these instruments.
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CRRs are recorded at fair value based almost entirely on the most current auction prices published by the California ISO, an objective source. Annual auction prices are published once a year, typically in the middle of November, and are the basis for valuing CRRs settling in the following year. For the CRRs settling from January 1 to December 31, the auction price inputs, at a given location, were in the following ranges for the years indicated below:
CONGESTION REVENUE RIGHTS AUCTION PRICE INPUTSCONGESTION REVENUE RIGHTS AUCTION PRICE INPUTSCONGESTION REVENUE RIGHTS AUCTION PRICE INPUTS
Settlement yearSettlement yearPrice per MWhMedian price per MWhSettlement yearPrice per MWhMedian price per MWh
20232023$(3.09)to$10.71 $(0.56)
20222022$(3.67)to$6.96 $(0.70)2022(3.67)to6.96 (0.70)
2021(1.81)to14.11 (0.12)
The impact associated with discounting is negligible.not significant. Because these auction prices are a less observable input, these instruments are classified as Level 3. The fair value of these instruments is derived from auction price differences between two locations. Positive values between two locations represent expected future reductions in congestion costs, whereas negative values between two locations represent expected future charges. Valuation of our CRRs is sensitive to a change in auction price. If auction prices at one location increase (decrease) relative to another location, this could result in a significantly higher (lower) fair value measurement. We summarize CRR volumes in Note 8.7.
Long-term, fixed-price electricity positions that are valued using significant unobservable data are classified as Level 3 because the contract terms relate to a delivery location or tenor for which observable market rate information is not available. The fair value of the net electricity positions classified as Level 3 is derived from a discounted cash flow model using market electricity forward price inputs. The range and weighted-average price of these inputs at June 30 were as follows:
LONG-TERM, FIXED-PRICE ELECTRICITY POSITIONS PRICE INPUTSLONG-TERM, FIXED-PRICE ELECTRICITY POSITIONS PRICE INPUTSLONG-TERM, FIXED-PRICE ELECTRICITY POSITIONS PRICE INPUTS
Settlement yearSettlement yearPrice per MWhWeighted-average
price per MWh		Settlement yearWeighted-average
price per MWh
20232023$22.75 to$117.50 $74.02 
20222022$25.25 to$125.00 $66.36 202225.25 to125.00 66.36 
202122.45 to151.90 49.27 
A significant increase (decrease) in market electricity forward prices would result in a significantly higher (lower) fair value. We summarize long-term, fixed-price electricity position volumes in Note 8.7.
Realized gains and losses associated with CRRs and long-term, fixed-price electricity positions, which are recoverable in rates, are recorded in Cost of Electric Fuel and Purchased Power on the Condensed Consolidated Statements of Operations. Because unrealized gains and losses are recorded as regulatory assets and liabilities, they do not affect earnings.
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Sempra Infrastructure
The table below sets forth reconciliations of changes in the fair value of Sempra’s Support Agreement for the benefit of CFIN classified as Level 3 in the fair value hierarchy for Sempra.
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LEVEL 3 RECONCILIATIONSLEVEL 3 RECONCILIATIONSLEVEL 3 RECONCILIATIONS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Three months ended June 30,
20222021 20232022
Balance at April 1Balance at April 1$12 $3 Balance at April 1$24 $12 
Realized and unrealized gains(1)
Realized and unrealized gains(1)
6 3 
Realized and unrealized gains(1)
1 6 
SettlementsSettlements(2)(2)Settlements(2)(2)
Balance at June 30(2)
Balance at June 30(2)
$16 $4 
Balance at June 30(2)
$23 $16 
Change in unrealized gains relating to instruments still held at June 30Change in unrealized gains relating to instruments still held at June 30$5 $2 Change in unrealized gains relating to instruments still held at June 30$1 $5 
Six months ended June 30,Six months ended June 30,
2022202120232022
Balance at January 1Balance at January 1$7 $3 Balance at January 1$17 $7 
Realized and unrealized gains(1)
Realized and unrealized gains(1)
14 5 
Realized and unrealized gains(1)
10 14 
SettlementsSettlements(5)(4)Settlements(4)(5)
Balance at June 30(2)
Balance at June 30(2)
$16 $4 
Balance at June 30(2)
$23 $16 
Change in unrealized gains relating to instruments still held at June 30Change in unrealized gains relating to instruments still held at June 30$13 $4 Change in unrealized gains relating to instruments still held at June 30$9 $13 
(1)    Net gains are included in Interest Income and net losses are included in Interest Expense on Sempra’s Condensed Consolidated Statements of Operations.
(2)    Includes $7 in Other Current Assets and $9$16 in Other Long-term Assets at June 30, 20222023 on Sempra’s Condensed Consolidated Balance Sheet.

The fair value of the Support Agreement, net of related guarantee fees, is based on a discounted cash flow model using a probability of default and survival methodology. Our estimate of fair value considers inputs such as third-party default rates, credit ratings, recovery rates, and risk-adjusted discount rates, which may be readily observable, market corroborated or generally unobservable inputs. Because CFIN’s credit rating and related default and survival rates are unobservable inputs that are significant to the valuation, the Support Agreement, net of related guarantee fees, is classified as Level 3. We assigned CFIN an internally developed credit rating of A3 and relied on default rate data published by Moody’s to assign a probability of default. A hypothetical change in the credit rating up or down one notch could result in a significant change in the fair value of the Support Agreement.
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Fair Value of Financial Instruments
The fair values of certain of our financial instruments (cash, accounts receivable, amounts due to/from unconsolidated affiliates with original maturities of less than 90 days, dividends and accounts payable, short-term debt and customer deposits) approximate their carrying amounts because of the short-term nature of these instruments. Investments in life insurance contracts that we hold in support of our Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans are carried at cash surrender values, which represent the amount of cash that could be realized under the contracts. The following table provides the carrying amounts and fair values of certain other financial instruments that are not recorded at fair value on the Condensed Consolidated Balance Sheets.
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FAIR VALUE OF FINANCIAL INSTRUMENTSFAIR VALUE OF FINANCIAL INSTRUMENTSFAIR VALUE OF FINANCIAL INSTRUMENTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Carrying
amount		Fair value Carrying
amount		Fair value
Level 1Level 2Level 3Total Level 1Level 2Level 3Total
June 30, 2022June 30, 2023
Sempra:Sempra:     Sempra:     
Short-term amounts due from unconsolidated affiliates(1)
$626 $— $630 $— $630 
Long-term note receivable(2)
310 — — 278 278 
Long-term note receivable(1)
Long-term note receivable(1)
$326 $— $— $296 $296 
Long-term amounts due to unconsolidated affiliatesLong-term amounts due to unconsolidated affiliates282 — 251 — 251 Long-term amounts due to unconsolidated affiliates287 — 251 — 251 
Total long-term debt(2)
Total long-term debt(2)
27,419 — 24,630 — 24,630 
SDG&E:SDG&E:     
Total long-term debt(3)
Total long-term debt(3)
23,924 — 21,709 — 21,709 
Total long-term debt(3)
$8,600 $— $7,535 $— $7,535 
SDG&E:     
Total long-term debt(4)
$7,800 $— $7,102 $— $7,102 
SoCalGas:SoCalGas:     SoCalGas:     
Total long-term debt(5)(4)
Total long-term debt(5)(4)
$5,459 $— $5,110 $— $5,110 
Total long-term debt(5)(4)
$6,759 $— $6,270 $— $6,270 
December 31, 2021 December 31, 2022
Sempra:Sempra:     Sempra:     
Long-term note receivable(2)
$300 $— $— $327 $327 
Long-term amounts due from unconsolidated affiliates(1)
640 — 642 — 642 
Long-term note receivable(1)
Long-term note receivable(1)
$318 $— $— $286 $286 
Long-term amounts due to unconsolidated affiliatesLong-term amounts due to unconsolidated affiliates287 — 295 — 295 Long-term amounts due to unconsolidated affiliates301 — 263 — 263 
Total long-term debt(2)
Total long-term debt(2)
24,513 — 21,549 — 21,549 
SDG&E:SDG&E:     
Total long-term debt(3)
Total long-term debt(3)
20,099 — 22,126 — 22,126 
Total long-term debt(3)
$7,800 $— $6,726 $— $6,726 
SDG&E:     
SoCalGas:SoCalGas:     
Total long-term debt(4)
Total long-term debt(4)
$6,417 $— $7,236 $— $7,236 
Total long-term debt(4)
$6,059 $— $5,538 $— $5,538 
SoCalGas:     
Total long-term debt(5)
$4,759 $— $5,367 $— $5,367 
(1)    Before allowances for credit losses of $1 at December 31, 2021. Includes $1$6 and $2 of accrued interest receivable$7 at June 30, 20222023 and December 31, 2021, respectively, in Due From Unconsolidated Affiliates – Current.
(2)    Before allowances for credit losses of $7 and $8 at June 30, 2022, and December 31, 2021, respectively. Excludes unamortized transaction costs of $4 and $5 at both June 30, 20222023 and December 31, 2021,2022, respectively.
(2)    Before reductions of unamortized discount and debt issuance costs of $325 and $289 at June 30, 2023 and December 31, 2022, respectively, and excluding finance lease obligations of $1,351 and $1,343 at June 30, 2023 and December 31, 2022, respectively.
(3)    Before reductions of unamortized discount and debt issuance costs of $294$85 and $260$70 at June 30, 20222023 and December 31, 2021,2022, respectively, and excluding finance lease obligations of $1,334$1,241 and $1,335$1,256 at June 30, 20222023 and December 31, 2021,2022, respectively.
(4)    Before reductions of unamortized discount and debt issuance costs of $73$57 and $61$48 at June 30, 20222023 and December 31, 2021,2022, respectively, and excluding finance lease obligations of $1,266$110 and $1,274$87 at June 30, 20222023 and December 31, 2021, respectively.
(5)    Before reductions of unamortized discount and debt issuance costs of $43 and $36 at June 30, 2022, and December 31, 2021, respectively, and excluding finance lease obligations of $68 and $61 at June 30, 2022 and December 31, 2021, respectively.

We provide the fair values for the securities held in the NDT related to SONGS in Note 10.

9.
NOTE 10.9. SAN ONOFRE NUCLEAR GENERATING STATION
We provide below updates to ongoing matters related to SONGS, a nuclear generating facility near San Clemente, California that permanently ceased operations in June 2013, and in which SDG&E has a 20% ownership interest. We discuss SONGS further in Note 15 of the Notes to Consolidated Financial Statements in the Annual Report.
NUCLEAR DECOMMISSIONING AND FUNDING
As a result of Edison’s decision to permanently retire SONGS Units 2 and 3, Edison began the decommissioning phase of the plant. Major decommissioning work began in 2020. We expect the majority of the decommissioning work to take approximately 10 years. Decommissioning of Unit 1, removed from service in 1992, is largely complete. The remaining work for Unit 1 will be completed once Units 2 and 3 are dismantled and the spent fuel is removed from the site. The spent fuel is currently being stored
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on-site, until the DOE identifies a spent fuel storage facility and puts in place a program for the fuel’s disposal, as we discuss below.disposal. SDG&E is responsible for approximately 20% of the total decommissioning cost.
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The Samuel Lawrence Foundation filed a writ petition under the California Coastal Act in LA Superior Court in December 2019 seeking to invalidate the coastal development permit and to obtain injunctive relief to stop decommissioning work. The petition was denied in September 2021. In December 2021, the Samuel Lawrence Foundation filed a notice of appeal. To date, decommissioning work has not been interrupted as a result of this writ petition.
In accordance with state and federal requirements and regulations, SDG&E has assets held in the NDT to fund its share of decommissioning costs for SONGS Units 1, 2 and 3. Amounts that were collected in rates for SONGS’ decommissioning are invested in the NDT, which is comprised of externally managed trust funds. Amounts held by the NDT are invested in accordance with CPUC regulations. SDG&E classifies debt and equity securities held in the NDT as available-for-sale. The NDT assets are presented on the Sempra and SDG&E Condensed Consolidated Balance Sheets at fair value with the offsetting credits recorded in noncurrent Regulatory Liabilities.
Except for the use of funds for the planning of decommissioning activities or NDT administrative costs, CPUC approval is required for SDG&E to access the NDT assets to fund SONGS decommissioning costs for Units 2 and 3. In December 2021,2022, the CPUC granted SDG&E received authorization from the CPUC to access NDT funds of up to $78$81 million for forecasted 20222023 costs.
The following table shows the fair values and gross unrealized gains and losses for the securities held in the NDT on the Sempra and SDG&E Condensed Consolidated Balance Sheets. We provide additional fair value disclosures for the NDT in Note 9.8.
NUCLEAR DECOMMISSIONING TRUSTSNUCLEAR DECOMMISSIONING TRUSTSNUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
CostGross
unrealized
gains		Gross
unrealized
losses		Estimated
fair
value		 CostGross
unrealized
gains		Gross
unrealized
losses		Estimated
fair
value
June 30, 2022June 30, 2023
Debt securities:Debt securities:    Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)
$43 $1 $(1)$43 
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)
$40 $1 $(2)$39 
Municipal bonds(2)
Municipal bonds(2)
305 1 (13)293 
Municipal bonds(2)
277 1 (12)266 
Other securities(3)
Other securities(3)
256 1 (20)237 
Other securities(3)
234 — (16)218 
Total debt securitiesTotal debt securities604 3 (34)573 Total debt securities551 2 (30)523 
Equity securitiesEquity securities109 187 (8)288 Equity securities104 222 (4)322 
Short-term investments, primarily cash equivalentsShort-term investments, primarily cash equivalents15 — — 15 Short-term investments, primarily cash equivalents24 — — 24 
Receivables (payables), netReceivables (payables), net(13)— — (13)Receivables (payables), net(6)— — (6)
TotalTotal$715 $190 $(42)$863 Total$673 $224 $(34)$863 
December 31, 2021December 31, 2022
Debt securities:Debt securities:    Debt securities:    
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agenciesDebt securities issued by the U.S. Treasury and other U.S. government corporations and agencies$56 $— $— $56 Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies$40 $1 $(1)$40 
Municipal bondsMunicipal bonds309 13 (1)321 Municipal bonds283 1 (14)270 
Other securitiesOther securities255 7 (2)260 Other securities248 — (21)227 
Total debt securitiesTotal debt securities620 20 (3)637 Total debt securities571 2 (36)537 
Equity securitiesEquity securities104 262 (2)364 Equity securities111 194 (8)297 
Short-term investments, primarily cash equivalentsShort-term investments, primarily cash equivalents3 — — 3 Short-term investments, primarily cash equivalents11 — — 11 
Receivables (payables), netReceivables (payables), net8 — — 8 Receivables (payables), net(4)— — (4)
TotalTotal$735 $282 $(5)$1,012 Total$689 $196 $(44)$841 
(1)    Maturity dates are 2023-2052.2023-2053.
(2)    Maturity dates are 2022-2056.2023-2062.
(3)    Maturity dates are 2022-2072.2023-2072.
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The following table shows the proceeds from sales of securities in the NDT and gross realized gains and losses on those sales.
SALES OF SECURITIES IN THE NUCLEAR DECOMMISSIONING TRUSTSSALES OF SECURITIES IN THE NUCLEAR DECOMMISSIONING TRUSTSSALES OF SECURITIES IN THE NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
Proceeds from salesProceeds from sales$155 $254 $397 $542 Proceeds from sales$138 $155 $294 $397 
Gross realized gainsGross realized gains3 18 14 39 Gross realized gains6 3 8 14 
Gross realized lossesGross realized losses(7)(1)(11)(3)Gross realized losses(3)(7)(6)(11)

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Net unrealized gains and losses, as well as realized gains and losses that are reinvested in the NDT, are included in noncurrent Regulatory Liabilities on Sempra’s and SDG&E’s Condensed Consolidated Balance Sheets. We determine the cost of securities in the trusts on the basis of specific identification.
ASSET RETIREMENT OBLIGATION
The present value of SDG&E’s ARO related to decommissioning costs for all three SONGS Units 1, 2 and 3units was $557$523 million at June 30, 20222023 and is based on a cost study prepared in 2020 that is pending CPUC approval, which SDG&E expects to receive in 2023.
NUCLEAR INSURANCE
The SONGS owners have nuclear property damage insurance of $130 million, which exceeds the minimum federal requirement of $50 million. This insurance coverage is provided through NEIL. The NEIL policies have specific exclusions and limitations that can result in reduced coverage. Insured members as a group are subject to retrospective premium assessments to cover losses sustained by NEIL under all issued policies. SDG&E could be assessed up to $4.1 million of retrospective premiums based on overall member claims.
NOTE 11.10. COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS
We accrue losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued, may exceed, and in some cases have exceeded, applicable insurance coverage and could materially adversely affect our business, results of operations, financial condition, cash flows and/or prospects. Unless otherwise indicated, we are unable to reasonably estimate possible losses or a range of losses in excess of any amounts accrued.
At June 30, 2022,2023, loss contingency accruals for legal matters, including associated legal fees and regulatory matters related to the Leak, that are probable and estimable were $2,118$222 million for Sempra, including $13$6 million for SDG&E and $2,029$142 million for SoCalGas. Amounts for Sempra and SoCalGas include $2,004$126 million for matters related to the Leak, which we discuss below.
SoCalGas
Aliso Canyon Natural Gas Storage Facility Gas Leak
From October 23, 2015 through February 11, 2016, SoCalGas experienced a natural gas leak from one of the injection-and-withdrawal wells, SS25, at its Aliso Canyon natural gas storage facility in Los Angeles County. As described below, numerous lawsuits, investigations
Litigation. In September 2021, SoCalGas and regulatory proceedings have been initiated in responseSempra entered into an agreement with counsel to the Leak, resulting in significant costs, which together with other Leak-related costs are discussed below in “Cost Estimate, Accounting Impact and Insurance.”
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Civil Litigation – Litigation Subject to Agreements to Resolve. As of August 1, 2022,resolve approximately 390 lawsuits including approximately 36,000 plaintiffs (the Individual Plaintiffs) were pending against SoCalGas and Sempra related to the Leak. All theseLeak for a payment of up to $1.8 billion. Over 99% of the Individual Plaintiffs participated and submitted valid releases, and SoCalGas paid $1.79 billion in 2022 under the agreement. The Individual Plaintiffs who have not participated in the settlement (the Remaining Individual Plaintiffs) are able to continue to pursue their claims.
The Individual Plaintiffs’ cases arewere coordinated before a single court in the LA Superior Court for pretrial management.
Inmanagement under a consolidated master complaint filed in November 2017, in the coordinated proceeding, a Third Amended Consolidated Master Case Complaint for Individual Actions was filed on behalf of the Individual Plaintiffs, through which their separate lawsuits are managed for pretrial purposes.2017. The consolidated master complaint asserts causes of action for negligence, negligence per se, private and public nuisance (continuing and permanent), trespass, inverse condemnation, strict liability, negligent and intentional infliction of emotional distress, fraudulent concealment, loss of consortium and wrongful death against SoCalGas and Sempra (the Individual Plaintiff Litigation).Sempra. The complaint also asserted violations of Proposition 65, which were resolved in January 2022. The consolidated master complaint seeks compensatory and punitive damages for personal injuries, lost wages and/or lost profits, property damage and diminution in property value, injunctive relief, costs of future medical monitoring, civil penalties, and attorneys’ fees. In July 2023, the LA Superior Court issued an order to 243 Remaining Individual Plaintiffs who did not respond to discovery requests to show why their cases should not be dismissed.
In October 2018 and January 2019, complaints were filedaddition, as of July 31, 2023, new lawsuits on behalf of 51 firefighters stationed near the Aliso Canyon natural gas storage facility who allege they were injured by exposure to chemicals released during the Leak. The complaintsapproximately 388 new plaintiffs have been filed against SoCalGas and Sempra assert causes of actions for negligence, negligence per se, private and public nuisance (continuing and permanent), trespass, inverse condemnation, strict liability, negligent and intentional infliction of emotional distress, fraudulent concealment and loss of consortium. The complaints seek compensatory and punitive damages for personal injuries, lost wages and/or lost profits, property damage and diminution in property value, and attorneys’ fees.since the September 2021 settlement. These complaintscases are includedbeing joined in the same coordinated proceeding and the Individual Plaintiff Litigation.
In September 2021, SoCalGas and Sempra entered into an agreement with counsel representing over 80% of the plaintiffs in the Individual Plaintiff Litigation to resolve the claims of all Individual Plaintiffs for a payment of up to $1.8 billion. The agreement is subject to acceptance by no fewer than roughly 97% of all plaintiffs in the Individual Plaintiff Litigation. The agreement, which requires each plaintiff who accepts a settlement to release all such plaintiff’s claims against SoCalGas, Sempra and their respective affiliates related to the Individual Plaintiff Litigation and the Leak, provides that the settlement amount will be reduced based on the number of plaintiffs who do not accept. The LA Superior Court previously approved the process to allocate payments among the plaintiffs. The Individual Plaintiffs’ counsel report that they have exceeded the 97% threshold described above and, in July 2022, the parties extended the date by which all conditions under the agreement must be met by the Individual Plaintiffs’ counsel or waived by SoCalGas and Sempra. SoCalGas expects to make a payment of approximately $1.8 billion under the agreement on or around August 30, 2022. The plaintiffs who do not agree to participate in the settlement will be able to continue to pursue their claims. Pursuant to the agreement, the Individual Plaintiff Litigation has been stayed.
In January 2017, a putative class of persons and businesses who own or lease real property within a five-mile radius of the well filed a consolidated class action complaint against SoCalGas and Sempra (the Property Class Action). The Property Class Action asserts claims for strict liability for ultra-hazardous activities, negligence, negligence per se, violation of the California Unfair Competition Law, trespass, permanent and continuing public and private nuisance, and inverse condemnation.
In September 2021, SoCalGas and Sempra entered into an agreement to settle the Property Class Action for a total amount of $40 million. In April 2022, the LA Superior Court gave final approval ofunder the settlement, which releases SoCalGas, Sempra and their respective affiliates from all claims of the property class members.consolidated master complaint.
Complaints on behalf of five property developers (the Developer Plaintiffs) were filed in October 2018 and October 2020 against SoCalGas and Sempra alleging causes of action for strict liability, negligence per se, negligence, negligent interference, continuing nuisance, permanent nuisance, inverse condemnation and violation of the California Unfair Competition Law and California Public Utilities Code section 2106. The complaints seek compensatory, statutory and punitive damages, injunctive relief and attorneys’ fees. In January 2022 and March 2022, SoCalGas and Sempra entered into agreements to settle the claims of four of the Developer Plaintiffs.
Civil Litigation – Unresolved Litigation. The complaint of one of the Developer Plaintiffs remains pending, and the LA Superior Court has scheduled a trial for October 2022. SoCalGas has engaged in settlement discussions with the remaining Developer Plaintiff.
NaNFour shareholder derivative actions were filed alleging breach of fiduciary duties against certain officers and certain directors of Sempra and/or SoCalGas. NaNThree of the four shareholder derivative actions that were filed alleging breach of fiduciary duties against certain officers and certain directors of Sempra and/or SoCalGas were joined in an Amended Consolidated Shareholder Derivative Complaint filed in the same coordinated proceeding in the LA Superior Court, which was dismissed with prejudice in January 2021.2021, and in June 2023, the Court of Appeal affirmed the dismissal. Plaintiffs have sought review in the California Supreme Court. The LA Superior Court dismissed the remaining fourth action with prejudice in November 2022. The plaintiffs have appealed this dismissal. In the remaining fourth action, the plaintiffs filed an amended complaint in June 2022.
An adverse ruling in any of the lawsuits by plaintiffs in the Individual Plaintiff Litigation who do not agree to settle or by the remaining Developer Plaintiff could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial
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condition, cash flows and/or prospects. In addition, there can be no assurance that the conditions to resolve the Individual Plaintiff Litigation will be satisfied or waived to the extent not satisfied.
Regulatory Proceedings. In January 2016, CalGEM and the CPUC directed an independent analysis of the technical root cause of the Leak to be conducted by Blade. In May 2019, Blade released its report, which concluded that the Leak was caused by a failure of the production casing of the well due to corrosion and that attempts to stop the Leak were not effectively conducted, but did not identify any instances of non-compliance by SoCalGas. Blade concluded that SoCalGas’ compliance activities conducted prior to the Leak did not find indications of a casing integrity issue. Blade opined, however, that there were measures, none of which were required by gas storage regulations at the time, that could have been taken to aid in the early identification of corrosion and that, in Blade’s opinion, would have prevented or mitigated the Leak. The report also identified well safety practices and regulations that have since been adopted by CalGEM and implemented by SoCalGas.
In June 2019, the CPUC opened an OII to consider penalties against SoCalGas for the Leak, which it later bifurcated into two phases. The first phase will consider whether SoCalGas violated California Public Utilities Code Section 451 or other laws, CPUC orders or decisions, rules or requirements, whether SoCalGas engaged in unreasonable and/or imprudent practices with respect to its operation and maintenance of the Aliso Canyon natural gas storage facility or its related record-keeping practices, whether SoCalGas cooperated sufficiently with the SED of the CPUC and Blade during the pre-formal investigation, and whether any of the mitigation measures proposed by Blade should be implemented to the extent not already done. The SED, based largely on the Blade report, has alleged a total of 324 violations in the first phase, asserting that SoCalGas violated California Public Utilities Code Section 451 and failed to cooperate in the investigation and to keep proper records. Hearings on a subset of issues began in March 2021. A schedule for hearings on the remaining issues has not been set. The second phase will consider whether SoCalGas should be sanctioned for the Leak and what damages, fines or other penalties, if any, should be imposed for any violations, unreasonable or imprudent practices, or failure to cooperate sufficiently with the SED as determined by the CPUC in the first phase. In addition, the second phase will determine the amounts of various costs incurred by SoCalGas and other parties in connection with the Leak and the ratemaking treatment or other disposition of such costs, which could result in little or no recovery of such costs by SoCalGas. SoCalGas has engaged in settlement discussions with the SED in connection with this proceeding.
In February 2017, the CPUC opened a proceeding pursuant to the SB 380 OII to determine the feasibility of minimizing or eliminating the use of the Aliso Canyon natural gas storage facility while still maintaining energy and electric reliability for the region, but excluding issues with respect to air quality, public health, causation, culpability or cost responsibility regarding the Leak. The first phase of the proceeding established a framework for the hydraulic, production cost and economic modeling assumptions for the potential reduction in usage or elimination of the Aliso Canyon natural gas storage facility. Phase 2 of the proceeding, which isfacility, as well as evaluating the impacts of reducing or eliminating the Aliso Canyon natural gas storage facility using the established framework and models, began in the first quarter of 2019. In December 2019, the CPUC added a thirdmodels. The next phase of the proceeding and engagedincluded engaging a consultant who is analyzingto analyze alternative means for meeting or avoiding the demand for the facility’s services if it were eliminated in either the 2027 or 2035 timeframe. In July 2021, the CPUC combined Phase 2timeframe, and Phase 3 and modified the scope of Phase 3 to also address potential implementation of alternatives to the Aliso Canyon natural gas storage facility if the CPUC determines that the Aliso Canyon natural gas storage facility should be permanently closed. The CPUC also added all California IOUs as parties to the proceeding and encouraged all load serving entities in the Los Angeles Basin to join the proceeding.
In November 2021, the CPUC issued a decision on the interim range of gas inventory levels at the Aliso Canyon natural gas storage facility, setting an interim range of gas inventory levels of up to 41.16 Bcf. The CPUC may issue future changes to this interim range of authorized gas inventory levels before issuing a final inventory determination within the SB 380 OII proceeding.
At June 30, 2022,2023, the Aliso Canyon natural gas storage facility had a net book value of $908$976 million. If the Aliso Canyon natural gas storage facility were to be permanently closed or if future cash flows from its operation were otherwise insufficient to recover its carrying value, we may record an impairment of the facility, which could be material, or we could incur materially higher than expected operating costs and/or be required to make material additional capital expenditures (any or all of which may not be recoverable in rates), and natural gas reliability and electric generation could be jeopardized. Any
Regulatory Proceeding – Subject to an Agreement to Resolve. In June 2019, the CPUC opened an OII (the Leak OII) to investigate and consider, among other things, whether SoCalGas should be sanctioned for the Leak and what damages, fines or other penalties, if any, should be imposed for any violations, unreasonable or imprudent practices or failure to cooperate sufficiently with SED, as well as to determine the amount of various costs incurred by SoCalGas and other parties in connection with the Leak and the ratemaking treatment or other disposition of such outcomecosts, which could haveresult in little or no recovery of such costs by SoCalGas. In October 2022, SoCalGas executed a material adverse effect on SoCalGas’settlement agreement with SED and Sempra’s resultsthe Public Advocates Office at the CPUC to resolve all aspects of operations,the Leak OII. The settlement agreement provides for financial condition, cash flows and/or prospects.penalties, certain costs that SoCalGas will reimburse, a violation of California Public Utilities Code section 451, and costs previously incurred by SoCalGas for which it will not seek recovery from ratepayers, among other provisions. The settlement agreement was filed with and is subject to approval by the CPUC.
Cost Estimate,Insurance and Accounting Impact and Insurance. Other Impacts. Since 2015, SoCalGas has incurred significant costs related to the Leak, primarily for temporary relocation of community residents; to control the well and stop the Leak; to mitigate the natural gas released; to purchase natural gas to replace what was lost through the Leak;including costs to defend against and in certain cases, settle civil and criminal litigation arising from the Leak;Leak. Other than insurance for directors’ and officers’ liability, we have exhausted all of our insurance for this matter. We continue to pay thepursue other sources of insurance coverage for costs related to this matter, but we may not be successful in obtaining additional insurance recovery for any of the government-ordered response to the Leak, including the costs for Blade to conduct the root cause analysis described above; to respond to various government and agency investigations regarding the Leak; and to comply with increased regulation imposed as a result of the Leak. At June 30, 2022, SoCalGas estimates these costs relatedcosts.
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to the Leak are $3,361 million (the cost estimate), which includes $1,279 million of costs recovered or probable of recovery from insurance. This cost estimate may increase significantly as more information becomes available. At June 30, 2022, $2,003 million of the cost estimate is accrued in Reserve for Aliso Canyon Costs and $4 million of the cost estimate is accrued in Deferred Credits and Other on SoCalGas’ and Sempra’s Condensed Consolidated Balance Sheets.
In the three months and six months ended June 30, 2022, SoCalGas recorded total charges of $45 million ($32 million after tax) and $137 million ($98 million after tax), respectively, inclusive of estimated legal costs, in Aliso Canyon Litigation and Regulatory Matters on the SoCalGas and Sempra Condensed Consolidated Statements of Operations related to the claims oflitigation and regulatory proceedings associated with the Developer Plaintiffs that we describe above.Leak.
At June 30, 2023, $126 million is accrued in Reserve for Aliso Canyon Costs and $2 million is accrued in Deferred Credits and Other on SoCalGas’ and Sempra’s Condensed Consolidated Balance Sheets. These charges are included in the cost estimate that we describe above.
Except for theaccruals do not include any amounts paid orbeyond what has been estimated to settle certain legal and regulatory matters as described above, the cost estimate does not include (i) any amounts necessary to resolve claims of Individual Plaintiffs who do not agree to participate in the settlement of the Individual Plaintiff Litigation or (ii) the matters that we describe above in “Civil Litigation – Unresolved Litigation”“Litigation” and “Regulatory Proceedings”Proceedings,” nor any amounts that may be necessary to resolve threatened litigation, other potential litigation or other costs, in each case to the extent it is not possible to predict at this time the outcome of these actions or reasonably estimate the possible costs or a range of possible costs for damages, restitution, civil or administrative fines or penalties, defense, settlement or other costs or remedies that may be imposed or incurred. The cost estimate also does not include certain other costs incurred by Sempra associated with defending against shareholder derivative lawsuits and other potential costs that we currently do not anticipate incurring or that we cannot reasonably estimate.costs. Further, we are not able to reasonably estimate the possible loss or a range of possible losses in excess of the amounts accrued. The costs or losses not included in the cost estimateaccrued, which could be significant and could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects.
We have received insurance payments for many of the categories of costs included in the cost estimate, including temporary relocation and associated processing costs, control-of-well expenses, costs of the government-ordered response to the Leak, certain legal costs and lost gas. At June 30, 2022, we recorded the expected recovery of the cost estimate related to the Leak of $344 million as Insurance Receivable for Aliso Canyon Costs on SoCalGas’ and Sempra’s Condensed Consolidated Balance Sheets. This amount is exclusive of insurance retentions and $935 million of insurance proceeds we received through June 30, 2022. We intend to pursue the full extent of our insurance coverage for the costs we have incurred. Other than insurance for certain future defense costs we may incur as well as directors’ and officers’ liability, we have exhausted all of our insurance in this matter. We continue to pursue other sources of insurance coverage for costs related to this matter, but we may not be successful in obtaining additional insurance recovery for any of these costs. If we are not able to secure additional insurance recovery, if any costs we have recorded as an insurance receivable are not collected, if there are delays in receiving insurance recoveries, or if the insurance recoveries are subject to income taxes while the associated costs are not tax deductible, such amounts and/or delays could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects.significant.
Sempra Infrastructure
Energía Costa Azul
We describe below certain land and customer disputes and permit challenges affecting our ECA Regas Facility. Certain of these land disputes involve land on which portions of the ECA LNG liquefaction facilities under construction and in development are proposedexpected to be situated or on which portions of the ECA Regas Facility that would be necessary for the operation of the proposedsuch ECA LNG liquefaction facilities are situated. One or more unfavorable final decisions on these disputes or challenges could materially adversely affect our existing natural gas regasification operations and proposed natural gas liquefaction projects at the site of the ECA Regas
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Facility and have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
Land Disputes. Sempra Infrastructure has been engaged in a long-running land dispute relating to property adjacent to its ECA Regas Facility that allegedly overlaps with land owned by the ECA Regas Facility (the facility, however, is not situated on the land that is the subject of this dispute), as follows:
▪A claimant to the adjacent property filed complaints in the federal Agrarian Court challenging the refusal of SEDATU in 2006 to issue title to him for the disputed property. In November 2013, the federal Agrarian Court ordered that SEDATU issue the requested title to the claimant and cause it to be registered. Both SEDATU and Sempra Infrastructure challenged the ruling due to lack of notification of the underlying process. In May 2019, a federal court in Mexico reversed the ruling and ordered a retrial, which is pending resolution.
▪In a separate proceeding, the claimant filed suit to reinitiate an administrative procedure at SEDATU to obtain the property title that was previously dismissed. In April 2021, the Agrarian Court ordered that the administrative procedure be restarted. The proceeding in the Agrarian Court has concluded; however, the administrative procedure at SEDATU may continue if SEDATU decides to reopen the matter.
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In addition, four cases involving two adjacent areasan area of real property on which part of the ECA Regas Facility is situated each brought by a single plaintiff or her descendants, remain pending against the facility, as follows:
▪The first disputed area is subject to a claim in the federal Agrarian Court, that has been ongoing since 2006, in which the plaintiff seeks to annul the property title for a portion of the land on which the ECA Regas Facility is situated and to obtain possession of a different parcel that allegedly overlaps with the site of the ECA Regas Facility. The proceeding, which seeks an order that SEDATU annul the ECA Regas Facility’s competing property title, was initiated in 2006 and, in July 2021, a decision was issued in favor of the ECA Regas Facility. The plaintiff appealed, and in February 2022, the appellate court confirmed the ruling in favor of the ECA Regas Facility and dismissed the appeal. The plaintiff filed a final federal appeal against the appellate court ruling. A final ruling from the Federal Collegiate Circuit Court is pending.
▪The second disputed area is a parcel adjacent to the ECA Regas Facility that allegedly overlaps with land on which the ECA Regas Facility is situated, which is subject to a claim in the federal Agrarian Court and two claims in Mexican civil courts. The ECA Regas Facility first bought the property from the federal government in 2003; however, to resolve an ownership controversy, in 2008, the ECA Regas Facility reached a financial settlement with the plaintiff to eliminate an adverse claim to its title. Nevertheless, the plaintiff sued in 2013 for the nullity of both titles. The Agrarian Court ruled in favor of the plaintiff in May 2021, nullifying the first property title. Sempra Infrastructure appealed the ruling in July 2021. In May 2022, Sempra Infrastructure won the appeal and the plaintiff’s claims were dismissed, which the plaintiff has appealed. The ECA Regas Facility continues to hold the second property title to the land. The two civil court proceedings, which seek to invalidate the contract by which the ECA Regas Facility purchased for the second time the applicable parcel of land on which the ECA Regas Facility is situated on the grounds that the purchase price was allegedly unfair, are progressing at different stages. In the first civil case, initiated in 2013, the court ruled in favor of the ECA Regas Facility, and the final decision was affirmed on a federal appeal. The descendants of the same plaintiff filed the second civil case in 2019, which was dismissed by the court. However, the dismissal has been appealed, which is pending the appellate court’s ruling. In April 2022, the ECA Regas Facility entered into a settlement agreement with the plaintiff, whereby the plaintiff has agreed to recognize the ECA Regas Facility as the sole owner of the property and waive any current or future rights over the property, or any other properties related to the ECA Regas Facility. The settlement agreement is pending court approval and would definitively resolve all three pending cases.
Environmental and Social Impact Permits. Several administrative challenges are pending before Mexico’s Secretariat of Environment and Natural Resources (the Mexican environmental protection agency) and Federal Tax and Administrative Courts, seeking revocation of the environmental impact authorization issued to the ECA Regas Facility in 2003. These cases generally allege that the conditions and mitigation measures in the environmental impact authorization are inadequate and challenge findings that the activities of the terminal are consistent with regional development guidelines.
In 2018 and 2021, three related claimants filed separate challenges in the federal district court in Ensenada, Baja California in relation to the environmental and social impact permits issued by each of ASEA and SENER to ECA LNG authorizing natural gas liquefaction activities at the ECA Regas Facility, as follows:
▪In the first case, the court issued a provisional injunction in September 2018. In December 2018, ASEA approved modifications to the environmental permit that facilitate the development of the proposed natural gas liquefaction facility in two phases. In May 2019, the court canceled the provisional injunction. The claimant appealed the court’s decision canceling the injunction but was not successful. The claimant’s underlying challenge to the permits remains pending.
▪In the second case, the initial request for a provisional injunction was denied. That decision was reversed on appeal in January 2020, resulting in the issuance of a new injunction against the permits that were issued by ASEA and SENER. This injunction has uncertain application absent clarification by the court. The claimants petitioned the court to rule that construction of natural gas liquefaction facilities violated the injunction, and in February 2022, the court ruled in favor of the ECA Regas Facility, meaningholding that the natural gas liquefaction activities havedid not been affected.violate the injunction. The claimants have appealed this ruling.ruling but were not successful. The claimant’s underlying challenge to the permits remains pending.
▪In the third case, a group of residents filed a complaint in June 2021 against various federal and state authorities alleging deficiencies in the public consultation process for the issuance of the permits. The request for an initial injunction was denied and thedenied. The claimants have appealed which is pending the appellatethis ruling but were not successful. The court’s ruling.
Customer Dispute. In May 2020, the two third-party capacity customers atfirst instance ruling was favorable to the ECA Regas Facility, Shell Mexicoas the court determined that no harm has been caused to the plaintiffs and Gazprom, asserteddismissed the lawsuit. The claimants appealed and the appellate court’s ruling is pending.
Litigation Related to Regulatory and Other Actions by the Mexican Government
Amendments to Mexico’s Electricity Industry Law. In March 2021, the Mexican government published a decree with amendments to Mexico’s Electricity Industry Law that include some public policy changes, including establishing priority of dispatch for CFE plants over privately owned plants. According to the decree, these amendments were to become effective on March 10, 2021, and SENER, the CRE and Centro Nacional de Control de Energía 2019 update(Mexico’s National Center for Energy Control) were to have 180 calendar days to modify, as necessary, all resolutions, policies, criteria, manuals and other regulations applicable to the power industry to conform with this decree. However, a Mexican court issued a suspension of the general terms and conditions for service atamendments on March 19, 2021. In April 2022, the facility,Mexican Supreme Court resolved an action of unconstitutionality filed by a group of senators against the amended Electricity Industry Law, but the qualified majority of eight votes out of 11 as approved by the CRE, resultedis required in a breach of contract by Sempra Infrastructure and a force majeure event. In July 2020, Shell Mexico submitted a request for arbitration of the dispute and Gazprom joined the proceeding, and a hearing was held in October 2021. The International Court of Arbitration issued a final, non-appealable decision dated April 27, 2022 in favor of Sempra Infrastructure dismissing all claims and confirming the contracts remain in force. Shell Mexico submitted a request to the International Court of Arbitration, and Gazprom joined the request, to issue an additional decision, asserting that two of the claims were not addressed in the ruling. Sempra Infrastructure filed a response and requested that any additional decision by the International Court of Arbitration be incorporated into the original decision as one, final ruling for clarity to aid in enforcement proceedings should they become necessary.matters
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Citinginvolving constitutionality was not reached and the alleged breach, Shell Mexico stopped making payments under its LNG storageproceeding was dismissed, which means that the Mexican Supreme Court did not issue a binding precedent and regasification agreement. Due to nonpayment,the amended Electricity Industry Law remains in force. Sempra Infrastructure drewfiled three lawsuits against Shell Mexico’s lettersthe amendments to the Electricity Industry Law and, in each of credit provided as payment security until they were fully exhausted in March 2022 and this customer has not resumed making payments. Although Gazprom had previously been making regular monthly payments under its LNG storage and regasification agreement,them, Sempra Infrastructure drew against and fully exhausted Gazprom’s letters of creditobtained a favorable judgment in April 2022 duethe lower courts, which were challenged by the CRE. Final resolution is pending. If the proposed amendments are affirmed by the lower courts or by the Mexican Supreme Court (which in these cases would only require a simple majority vote), the CRE may be required to Gazprom’s non-renewal of such letters of credit as requiredrevoke self-supply permits granted under the agreement. Gazprom hasformer electricity law, which were grandfathered when the new Electricity Industry Law was enacted, under a legal standard that is ambiguous and not paidwell defined under the law. If such self-supply permits granted under the former electricity law are revoked, it may result in increased costs for Sempra Infrastructure and for its invoices since March 2022, so funds drawn frompower consumers, may adversely affect our ability to develop new projects, may result in decreased revenues and cash flows, and may negatively impact our ability to recover the letterscarrying values of creditour investments in Mexico, any of which could have been used to fully offset such nonpayment. We expect that these funds will provide payment security from Gazprom through the enda material adverse effect on Sempra’s business, results of 2024.
In addition to the arbitration proceeding, Shell Mexico also filed constitutional claims against the CRE’s approval of the general terms and conditions for service at the facility and against the issuance of the liquefaction permit. Shell Mexico’s request for an injunction against the general terms and conditions was denied, and the ruling was upheld on appeal. The request for an injunction against the liquefaction permit was denied, and the decision was vacated and remanded on appeal to the First District Court in Administrative Matters, which again denied the injunction. The case on the injunction request was then heard again by the appellate court. A hearing was held on the merits and a decision is pending.operations, financial condition, cash flows and/or prospects.
Sonora Pipeline – Resolved
Guaymas-El Oro Segment. Sempra Infrastructure’s Sonora natural gas pipeline consists of two segments, the Sasabe-Puerto Libertad-Guaymas segment and the Guaymas-El Oro segment. Each segment has its own service agreement with the CFE. In 2015, the Yaqui tribe, with the exception of some members living in the Bácum community, granted its consent and a right-of-way easement agreement for the construction of the Guaymas-El Oro segment of the Sonora natural gas pipeline that crosses its territory. Representatives of the Bácum community filed a legal challenge in Mexican federal court demanding the right to withhold consent for the project, the stoppage of workresulting in the Yaqui territory and damages. In 2016, the judge granted a suspension order in 2016 that prohibited the construction of such segment through the Bácum community territory. Because the pipeline does not pass through the Bácum community, Sempra Infrastructure did not believe the 2016 suspension order prohibited construction in the remainder of the Yaqui territory. Construction of the Guaymas-El Oro segmentterritory, construction was completed, and commercial operations began in May 2017.
Following the start of commercial operations, of the Guaymas-El Oro segment, Sempra Infrastructure reported damage to the Guaymas-El Oro segment of the Sonora pipeline in the Yaqui territory that has made that section inoperable since August 2017 and, as a result, Sempra Infrastructure declared a force majeure event. In 2017, an appellate court ruled that the scope of the 2016 suspension order encompassed the wider Yaqui territory, which has prevented Sempra Infrastructure from making repairs to put the pipeline back in service. In July 2019, a federal district court ruled in favor of Sempra Infrastructure and held that the Yaqui tribe was properly consulted and that consent from the Yaqui tribe was properly received. Representatives of the Bácum community appealed this decision, causing the suspension order preventing Sempra Infrastructure from repairing the damage to the Guaymas-El Oro segment of the Sonora pipeline in the Yaqui territory to remain in place until the appeals process was exhausted. Following a request by the CFE to dismiss the appeal based on the plan to re-route the portion of the pipeline that is exhausted. Inin the Yaqui territory, in December 2021,2022, the court of appeals referredreversed the matterfederal district court’s ruling and ordered the district court to Mexico’s Supreme Court. In June 2022, the Supreme Court remanded the case back to the court of appeals for final resolution.
Sempra Infrastructure exercised its rights under the contract, which included seeking force majeure payments for the two-year period such force majeure payments were required to be made, which ended in August 2019.
In July 2019, the CFE filed a request for arbitration generally to nullify certain contract terms that provide for fixed capacity payments in instances of force majeure and made a demand for substantial damages in connection with the force majeure event. In September 2019, the arbitration process ended when Sempra Infrastructure and the CFE reached an agreement to restart natural gas transportation service on the earlier of completion of repair of the damaged pipeline or January 15, 2020, and to modify the tariff structure and extend the term of the contract by 10 years. Subsequently, Sempra Infrastructure and the CFE agreed to extend the service start date multiple times, most recently to November 30, 2022. Under the revised agreement, the CFE will resume making payments only when the damaged section of the Guaymas-El Oro segment of the Sonora pipeline is repaired. If the pipeline is not repaired by November 30, 2022, and the parties do not agree onissue a new service start date, Sempra Infrastructure retainsruling that takes into account the right to terminate the contract and seek to recover its reasonable and documented costs and lost profits. Discussions with the CFE regarding the futureplanned re-routing of the pipeline are underway in accordance with a non-binding MOU announced in January 2022 that, among other matters, addresses efforts to restart service on the pipeline. In July 2022, Sempra Infrastructure andFebruary 2023, the CFE entered into a Shareholders’ Agreement that establishes a framework for a JV between the parties to work on restarting service on the pipeline, including the potential re-routing of a portion of the pipeline. This agreement is subject to a number of conditions to be satisfied before it becomes effective, including regulatory and corporate authorizations.
At June 30, 2022, Sempra Infrastructure had $426 million in PP&E, net, related to the Guaymas-El Oro segment of the Sonora pipeline, which could be subject to impairment if Sempra Infrastructure is unable to make such repairs (which have not
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commenced) or re-route a portion of the pipeline (which has not been agreed to by the parties, but is subject to negotiation pursuant to a non-binding MOU and a Shareholders’ Agreement, as described above) and resume operations or if Sempra Infrastructure terminates the contract and is unable to obtain recovery, which in each case could have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
Sasabe-Puerto Libertad-Guaymas Segment. In June 2014, Sempra Infrastructure and a landowner agreed to enter into a voluntary right-of-way easement agreement for the construction and operation of a seven-mile section of the 314-mile Sasabe-Puerto Libertad-Guaymas segment of the Sonora natural gas pipeline on the landowner’s property. However, in 2015, the landowner filed a complaint demanding the easement agreement be nullified. In September 2021, a definitive and non-appealable judgment was issued declaring the easement agreement nullified and ordering the removal of the pipeline from the landowner’s property. The execution of the judgment is suspended as a result of an amparo lawsuit filed by the CFE as an interested third party that did not participate in the litigation. Sempra Infrastructure filed a special judicial action asking the civil court to acknowledge the existence of the easement and to determine the consideration the landowner should receive in exchange for the easement. In July 2022, Sempra Infrastructure and the landowner entered into a new easement agreement approved by the court for the seven-mile section on the landowner’s property, thus bringing this case to definitive conclusion.
Regulatory and Other Actions by the Mexican Government
We describe below certain actions by the Mexican government that could have a material impact on the energy sector in Mexico. Sempra Infrastructure and other parties affected by these resolutions, orders, decrees, regulations and proposed amendments to Mexican law have challenged them by filing amparo and other claims, some of which have been granted injunctive relief. The court-ordered injunctions or suspensions provide temporary relief until Mexico’s federal district court or Supreme Court ultimately resolves the amparo and other claims. An unfavorable decision on one or more of these amparo or other challenges or the potential for extended disputes may impact our ability to operate our facilities at existing levels or at all, may result in increased costs for Sempra Infrastructure and its customers, may adversely affect our ability to develop new projects, may result in decreased revenues and cash flows, and may negatively impact our ability to recover the carrying values of our investments in Mexico, any of which may have a material adverse effect on our business, results of operations, financial condition, cash flows and/or prospects.
Transmission Rates for Legacy Generation Facilities. In May 2020, the CRE approved an update to the transmission rates included in legacy renewable and cogeneration energy contracts based on the claim that the legacy transmission rates did not reflect fair and proportional costs for providing the applicable services and, therefore, created inequitable competitive conditions. Three of Sempra Infrastructure’s renewable energy facilities (Don Diego Solar, Border Solar and Ventika) are currently holders of contracts with such legacy rates, and under the terms of these contracts any increases in the transmission rates would be passed through directly to their customers. These renewable energy facilities sought and obtained injunctive relief but were required to guarantee the difference in tariffs. The three facilities obtained favorable resolutions from a lower court and the CRE appealed those decisions, which were definitively affirmed in favor of the Don Diego Solar, Border Solar and Ventika facilities, whereby the injunctions were made permanent, the regulations were declared unconstitutional, and the guarantee was determined to not be required. The resolution is definitive and final.
Offtakers of Legacy Generation Permits. In October 2020, the CRE approved a resolution to amend the rules for the inclusion of new offtakers of legacy generation and self-supply permits (the Offtaker Resolution), which became effective immediately. The Offtaker Resolution prohibits self-supply permit holders from adding new offtakers that were not included in the original development or expansion plans, making modifications to the amount of energy allocated to the named offtakers, and including load centers that have entered into a supply arrangement under Mexico’s Electricity Industry Law. Don Diego Solar, Border Solar and Ventika are holders of self-supply permits and are impacted by the Offtaker Resolution. In January 2022, Don Diego Solar and Border Solar obtained a favorable resolution from a Mexican federal district court and the CRE appealed that decision. If Sempra Infrastructure is not able to obtain legal protection for these impacted facilities, Sempra Infrastructure expects it will sell Border Solar’s capacity and a portion of Don Diego Solar’s capacity affected by the Offtaker Resolution into the spot market. Currently, prices in the spot market are higher than the fixed prices in the PPAs that were entered into through self-supply permits, but these markets are subject to significant volatility. At June 30, 2022, Sempra Infrastructure had $14 million in other intangible assets, net, related to these self-supply permits previously granted by the CRE and impacted by the Offtaker Resolution that could be subject to impairment if Sempra Infrastructure is unable to obtain adequate legal protection. Sempra Infrastructure has filed lawsuits against the Offtaker Resolution and received injunctive relief pending final resolution.
Amendments to Mexico’s Electricity Industry Law. In March 2021, the Mexican government published a decree with amendments to Mexico’s Electricity Industry Law that include some public policy changes, including establishing priority of dispatch for CFE plants over privately owned plants. According to the decree, these amendments were to become effective on March 10, 2021, and SENER, the CRE and CENACE were to have 180 calendar days to modify, as necessary, all resolutions,
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policies, criteria, manuals and other regulations applicable to the power industry to conform with this decree. However, a Mexican court issued a suspension ofnew ruling and resolved to dismiss the amendments on March 19, 2021. In April 2022, the Mexican Supreme Court resolved an action of unconstitutionality filed by a group of senators against the amended Electricity Industry Law, but the qualified majority of eight votes out of 11 as is required in matters involving constitutionalitycase, which was not reachedappealed and, in March 2023, the proceeding was dismissed, which meansdistrict court declared that the Mexican Supreme Court did not issue a binding precedent and the amended Electricity Industry Law remains in force. Sempra Infrastructure filed three lawsuits against the amendments to the Electricity Industry Law and, in each of them, Sempra Infrastructure obtained a favorable judgment of the first instance in the lower courts, which has been appealed. If the proposed amendments are affirmed by the lower courts or by the Mexican Supreme Court (which in these cases would only require a simple majority vote), the CRE may be required to revoke self-supply permits granted under the former electricity law, which were grandfathered when the new Electricity Industry Lawcase was enacted, under a legal standard that is ambiguous and not well defined under the law.
Amendments to Mexico’s Hydrocarbons Law. In May 2021, amendments to Mexico’s Hydrocarbons Law were published and became effective. The amendments grant SENER and the CRE additional powers to suspend and revoke permits related to the midstream and downstream sectors. Suspension of permits will be determined by SENER or the CRE when a danger to national security, energy security, or to the national economy is foreseen. Likewise, new grounds for the revocation of permits are in place if the permit holder (i) carries out its activity with illegally imported products; (ii) fails, on more than one occasion, to comply with the provisions applicable to quantity, quality and measurement of the products; or (iii) modifies the technical conditions of its infrastructure without authorization. Additionally, in the case of existing permits, authorities will revoke those permits that fail to comply with the minimum storage requirements established by SENER or fail to comply with requirements or violate provisions established by the amended Hydrocarbons Law. All the Sempra Infrastructure entities participating in the Mexico hydrocarbons sector filed lawsuits against the initiative to reform the Hydrocarbons Law. In 2021, district courts issued judgments that the amendments do not affect the interests of the companies at this time and, as a result, dismissed the amparo lawsuits, including the lawsuits filed by Sempra Infrastructure entities. The Sempra Infrastructure entities have appealed these judgments. The Circuit Courts upheld the dismissal of the amparo lawsuits, except one that is pending resolution.
Proposed Constitutional Reform in Mexico. In September 2021, the President of Mexico presented a constitutional reform initiative with the stated goal of preserving energy security and self-sufficiency, and a continuous supply of electricity to the country’s population, as a condition for guaranteeing national security and the human right to a decent life. The CRE and the National Commission of Hydrocarbons would be dissolved, and their functions would be carried out by SENER. CENACE would be reinstated to the CFE, and the CFE would be responsible for generating, conducting, transforming, distributing and supplying electricity, and would be the only entity allowed to commercialize electric energy in Mexico. Electricity generation permits and contracts for the sale of electricity and RECs to the CFE, including permits at all of Sempra Infrastructure’s operational power generation facilities, would be canceled. The public electricity supply service would be provided exclusively by the CFE, which may acquire up to 46% of required energy from the private sector. Only certain private power plants would be permitted to continue generating electricity and compete to offer the CFE the lowest production costs. On April 17, 2022, the Chamber of Deputies in Mexico rejected the proposed constitutional reform.definitively concluded.
Other Litigation
RBS Sempra Commodities
Sempra holds an equity method investment in RBS Sempra Commodities, a limited liability partnership in the process of being liquidated. In 2015, liquidators filed a claim in the High Court of Justice against RBS (now NatWest Markets plc, our partner in the JV) and Mercuria Energy Europe Trading Limited (the Defendants) on behalf of 10 companies (the Liquidating Companies) that engaged in carbon credit trading via chains that included a company that traded directly with RBS SEE, a subsidiary of RBS Sempra Commodities. The claim alleges that the Defendants’ participation in the purchase and sale of carbon credits resulted in the Liquidating Companies’ carbon credit trading transactions creating a VAT liability they were unable to pay, and that the Defendants are liable to provide for equitable compensation due to dishonest assistance and compensation under the U.K. Insolvency Act of 1986. Trial on the matter was held in June and July of 2018. In March 2020, the High Court of Justice rendered its judgment mostly in favor of the Liquidating Companies and awarded damages of approximately £45 million (approximately $55$57 million in U.S. dollars at June 30, 2022)2023), plus costs and interest. In October 2020, the High Court of Justice assessed costs and interest to be approximately £21 million (approximately $26$27 million in U.S. dollars at June 30, 2022)2023) as of that date, with interest continuing to accrue. The Defendants appealed and, in May 2021, the Court of Appeal set aside the High Court of Justice’s decision and ordered a retrial. In July 2022, the Supreme Court of the U.K. denied the Liquidating Companies application for permission to appeal the Court of Appeal’s decision. No date has been scheduled for the retrial. J.P. Morgan Chase & Co., which acquired RBS SEE and later sold it to Mercuria Energy Group, Ltd., previously notified us that Mercuria Energy
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Group, Ltd. has sought indemnity for the claim, and J.P. Morgan Chase & Co. has in turn sought indemnity from Sempra and RBS.
In the second quarter
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Table of 2021, we reduced our estimate of our obligations to settle pending VAT matters and related legal costs by $50 million in Equity Earnings on Sempra’s Condensed Consolidated Statement of Operations based on the settlement with Her Majesty’s Revenue and Customs (U.K.’s Revenue and Customs Department) on the First-Tier Tribunal case and revised assumptions on the High Court of Justice case.Contents
Asbestos Claims Against EFH Subsidiaries
Certain EFH subsidiaries that we acquired as part of the merger of EFH with an indirect subsidiary of Sempra were defendants in personal injury lawsuits brought in state courts throughout the U.S. These cases alleged illness or death as a result of exposure to asbestos in power plants designed and/or built by companies whose assets were purchased by predecessor entities to the EFH subsidiaries, and generally assert claims for product defects, negligence, strict liability and wrongful death. They sought compensatory and punitive damages. As of August 1, 2022, 1 lawsuit isJuly 31, 2023, two lawsuits are pending. Additionally, in connection with the EFH bankruptcy proceeding, approximately 28,000 proofs of claim were filed, but not discharged, in advance of a December 2015 deadline to file a proof of claim in the EFH bankruptcy proceeding on behalf of persons who allege exposure to asbestos under similar circumstances and assert the right to file such lawsuits in the future. None of these claims or lawsuits were discharged in the EFH bankruptcy proceeding. The costs to defend or resolve these lawsuitssuch claims and the amount of damages that may be imposed or incurred could have a material adverse effect on Sempra’s results of operations, financial condition, cash flows and/or prospects.
Ordinary Course Litigation
We are also defendants in ordinary routine litigation incidental to our businesses, including personal injury, employment litigation, product liability, property damage and other claims. Juries have demonstrated an increasing willingness to grant large awards, including punitive damages, in these types of cases.

LEASES
We discuss leases further in Note 16 of the Notes to Consolidated Financial Statements in the Annual Report.
Lessee Accounting
We have operating and finance leases for real and personal property (including office space, land, fleet vehicles, machinery and equipment, warehouses and other operational facilities) and PPAs with renewable energy, energy storage and peaker plant facilities.
SDG&E entered into an energy storage agreement that commenced in the second quarter of 2023 and expires in 2033. SDG&E recorded an operating lease right-of-use asset and operating lease liability of $101 million. Undiscounted lease payments are $9 million in 2023, $13 million in each of 2024 through 2027 and $66 million thereafter.
Leases That Have Not Yet Commenced
SDG&E has entered into threefour energy storage tolling agreements, of which SDG&E expects two will commence in the third quarter of 2022 and one will commence in the second quarterhalf of 2023.2023, two will commence in 2024 and one will commence in 2025. SDG&E expects the future minimum lease payments to be $7$1 million in 2022, $182023, $32 million in 2024, $41 million in each of 2023 through2025 and 2026, $40 million in 2027 and $101$377 million thereafter until expiration at various dates from 2032 through 2033.in 2039.
SoCalGas has entered into a fleet vehicle agreement, under which SoCalGas expects leases will commence inthroughout the second half of 2022 through the2023 and first halfquarter of 2023.2024. SoCalGas expects the future minimum lease payments to be $2$1 million in each of 20232024 through 20262027 and $10$6 million thereafter until expiration at various dates from 2030 through 2031.in 2032.
Lessor Accounting
Sempra Infrastructure is a lessor for certain of its natural gas and ethane pipelines, compressor stations, liquid petroleum gas storage facilities, a rail facility and liquid fuelsrefined products terminals, which we account for as operating or sales-type leases.
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We provide information below for leases for which we are the lessor.
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LESSOR INFORMATION ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – SEMPRA
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30,Three months ended June 30,Six months ended June 30,
20222021202220212023202220232022
Sales-type leases:Sales-type leases:Sales-type leases:
Interest incomeInterest income$2 $— $4 $— Interest income$1 $2 $3 $4 
Total revenues from sales-type leases(1)
Total revenues from sales-type leases(1)
$2 $— $4 $— 
Total revenues from sales-type leases(1)
$1 $2 $3 $4 
Operating leases:Operating leases:Operating leases:
Fixed lease paymentsFixed lease payments$70 $59 $140 $112 Fixed lease payments$76 $70 $156 $140 
Variable lease paymentsVariable lease payments3 1 4 1 Variable lease payments14 3 16 4 
Total revenues from operating leases(1)
Total revenues from operating leases(1)
$73 $60 $144 $113 
Total revenues from operating leases(1)
$90 $73 $172 $144 
Depreciation expenseDepreciation expense$14 $12 $27 $22 Depreciation expense$15 $14 $30 $27 
(1)    Included in Revenues: Energy-Related Businesses on the Condensed Consolidated Statements of Operations.

CONTRACTUAL COMMITMENTS
We discuss below significant changes in the first six months of 20222023 to contractual commitments discussed in Notes 1 andNote 16 of the Notes to Consolidated Financial Statements in the Annual Report.
Natural Gas Contracts
Sempra Infrastructure’s natural gas contracts and natural gas storage and transportation commitments have increased by approximately $863 million since December 31, 2022, primarily from entering into new storage and transportation contracts in the first six months of 2023. We expect future payments to decrease by $27 million in 2023, and increase by $23 million in 2024, $33 million in each of 2025 and 2026, $30 million in 2027 and $771 million thereafter through expiration in 2059 compared to December 31, 2022.
LNG Purchase Agreement
Sempra Infrastructure has aan SPA for the supply of LNG to the ECA Regas Facility. The commitment amount is calculated using a predetermined formula based on estimated forward prices of the index applicable from 20222023 to 2029. Although this agreement specifies a number of cargoes to be delivered, under its terms, the supplier may divert certain cargoes, which would reduce amounts paid under the agreement by Sempra Infrastructure. At June 30, 2022,2023, we expect the commitment amount to decrease by $208 million in 2022 and then increase by $227$841 million in 2023, $203$87 million in 2024, $191$65 million in 2025, $175$87 million in 2026, $98 million in 2027 and by $421$208 million thereafter (through contract termination in 2029) compared to December 31, 2021,2022, reflecting changes in estimated forward prices since December 31, 20212022 and actual transactions for the first six months of 2022.2023. These LNG commitment amounts are based on the assumption that all LNG cargoes, less those already confirmed to be diverted as of June 30, 2023, under the agreement are delivered. Actual LNG purchases in the current and prior years have been significantly lower than the maximum amount provided under the agreement due to the customersupplier electing to divert cargoes as allowed by the agreement.
ENVIRONMENTAL ISSUES
We disclose any proceeding under environmental laws to which a government authority is a party when the potential monetary sanctions, exclusive of interest and costs, exceed the lesser of $1 million or 1% of current assets, which was $59$48 million for Sempra, $18$17 million for SDG&E and $15$13 million for SoCalGas at June 30, 2022.2023.
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NOTE 12.11. SEGMENT INFORMATION
We have 4four separately managed reportable segments, as follows:
▪SDG&E provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County.
▪SoCalGas is a natural gas distribution utility, serving customers throughout most of Southern California and part of central California.
▪Sempra Texas Utilities holds our investment in Oncor Holdings, which owns an 80.25% interest in Oncor, a regulated electricelectricity transmission and distribution utility serving customers in the north-central, eastern, western and panhandle regions of Texas; and our indirect, 50% interest in Sharyland Holdings L.P., which owns Sharyland Utilities, L.L.C., a regulated electric transmission utility serving customers near the Texas-Mexico border.
▪Sempra Infrastructure includes the operating companies of our subsidiary, SI Partners, as well as a holding company and certain services companies. Sempra Infrastructure develops, builds, operates and invests in energy infrastructure to help enable the energy transition in North American markets and globally. Sempra Infrastructure owns a 70% interest in SI Partners, which held a 100% ownership interest in Sempra LNG Holding, LP and a 99.9% ownership interest in IEnova at June 30, 2022.
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We evaluate each segment’s performance based on its contribution to Sempra’s reported earnings and cash flows. SDG&E and SoCalGas operate in essentially separate service territories, under separate regulatory frameworks and rate structures set by the CPUC and, in the case of SDG&E, the FERC.
The cost of common services shared by the business segments is assigned directly or allocated based on various cost factors, depending on the nature of the service provided. Interest income and expense is recorded on intercompany loans. The loan balances and related interest are eliminated in consolidation.
The following tables show selected information by segment from our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets. Amounts labeled as “All other” in the following tables consist primarily of activities of parent organizations.
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SEGMENT INFORMATIONSEGMENT INFORMATION   SEGMENT INFORMATION   
(Dollars in millions)(Dollars in millions)   (Dollars in millions)   
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
REVENUESREVENUES    REVENUES    
SDG&ESDG&E$1,399 $1,318 $2,844 $2,655 SDG&E$1,262 $1,399 $2,915 $2,844 
SoCalGasSoCalGas1,501 1,124 3,494 2,632 SoCalGas1,467 1,501 5,261 3,494 
Sempra InfrastructureSempra Infrastructure689 341 1,113 790 Sempra Infrastructure660 689 1,856 1,113 
All other— 1 — 2 
Adjustments and eliminationsAdjustments and eliminations(2)(1)— (1)Adjustments and eliminations(2)(2)(1)— 
Intersegment revenues(1)
Intersegment revenues(1)
(40)(42)(84)(78)
Intersegment revenues(1)
(52)(40)(136)(84)
TotalTotal$3,547 $2,741 $7,367 $6,000 Total$3,335 $3,547 $9,895 $7,367 
DEPRECIATION AND AMORTIZATIONDEPRECIATION AND AMORTIZATION  DEPRECIATION AND AMORTIZATION  
SDG&ESDG&E$244 $220 $483 $433 SDG&E$268 $244 $530 $483 
SoCalGasSoCalGas188 180 375 353 SoCalGas208 188 414 375 
Sempra InfrastructureSempra Infrastructure67 59 132 113 Sempra Infrastructure70 67 139 132 
All otherAll other2 4 4 6 All other3 2 5 4 
TotalTotal$501 $463 $994 $905 Total$549 $501 $1,088 $994 
INTEREST INCOMEINTEREST INCOME    INTEREST INCOME    
SDG&ESDG&E$1 $— $1 $1 SDG&E$4 $1 $5 $1 
SoCalGasSoCalGas1 — 1 — SoCalGas1 1 5 1 
Sempra InfrastructureSempra Infrastructure9 20 30 41 Sempra Infrastructure6 9 21 30 
All otherAll other4 1 8 1 All other6 4 10 8 
Intercompany eliminations— (6)— (9)
TotalTotal$15 $15 $40 $34 Total$17 $15 $41 $40 
INTEREST EXPENSEINTEREST EXPENSE    INTEREST EXPENSE    
SDG&ESDG&E$114 $101 $220 $203 SDG&E$123 $114 $241 $220 
SoCalGasSoCalGas45 40 85 79 SoCalGas71 45 140 85 
Sempra InfrastructureSempra Infrastructure32 45 59 86 Sempra Infrastructure25 32 120 59 
All otherAll other81 79 151 162 All other99 81 183 151 
Intercompany eliminationsIntercompany eliminations(1)(7)(1)(13)Intercompany eliminations(1)(1)(1)(1)
TotalTotal$271 $258 $514 $517 Total$317 $271 $683 $514 
INCOME TAX EXPENSE (BENEFIT)INCOME TAX EXPENSE (BENEFIT)  INCOME TAX EXPENSE (BENEFIT)  
SDG&ESDG&E$42 $33 $106 $78 SDG&E$4 $42 $11 $106 
SoCalGasSoCalGas19 8 103 102 SoCalGas(21)19 73 103 
Sempra InfrastructureSempra Infrastructure70 94 161 151 Sempra Infrastructure201 70 531 161 
All otherAll other(51)4 44 (34)All other(9)(51)(64)44 
TotalTotal$80 $139 $414 $297 Total$175 $80 $551 $414 
EQUITY EARNINGS (LOSSES)    
EQUITY EARNINGSEQUITY EARNINGS    
Equity earnings, before income tax:Equity earnings, before income tax:    Equity earnings, before income tax:    
Sempra Texas UtilitiesSempra Texas Utilities$3 $2 $5 $3 Sempra Texas Utilities$2 $3 $3 $5 
Sempra InfrastructureSempra Infrastructure156 133 297 267 Sempra Infrastructure151 156 282 297 
All other— 50 — 50 
159 185 302 320 
Equity earnings (losses), net of income tax:   
153 159 285 302 
Equity earnings, net of income tax:Equity earnings, net of income tax:   
Sempra Texas UtilitiesSempra Texas Utilities184 137 346 273 Sempra Texas Utilities160 184 243 346 
Sempra InfrastructureSempra Infrastructure32 (9)53 38 Sempra Infrastructure75 32 79 53 
216 128 399 311 235 216 322 399 
TotalTotal$375 $313 $701 $631 Total$388 $375 $607 $701 
(1)    Revenues for reportable segments include intersegment revenues of $5, $28, and $19 for the three months ended June 30, 2023 and $9, $62, and $65 for the six months ended June 30, 2023; $3, $23, and $14 for the three months ended June 30, 2022;2022 and $7, $49, and $28 for the six months ended June 30, 2022; $2, $23, and $17 for the three months ended June 30, 2021 and $4, $48, and $26 for the six months ended June 30, 20212022 for SDG&E, SoCalGas, and Sempra Infrastructure, respectively.
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SEGMENT INFORMATION (CONTINUED)SEGMENT INFORMATION (CONTINUED)SEGMENT INFORMATION (CONTINUED)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30,Three months ended June 30,Six months ended June 30,
20222021202220212023202220232022
EARNINGS (LOSSES) ATTRIBUTABLE TO COMMON SHARESEARNINGS (LOSSES) ATTRIBUTABLE TO COMMON SHARES EARNINGS (LOSSES) ATTRIBUTABLE TO COMMON SHARES 
SDG&ESDG&E$176 $186 $410 $398 SDG&E$184 $176 $442 $410 
SoCalGasSoCalGas87 94 421 501 SoCalGas155 87 515 421 
Sempra Texas UtilitiesSempra Texas Utilities186 138 348 273 Sempra Texas Utilities160 186 243 348 
Sempra InfrastructureSempra Infrastructure183 53 278 255 Sempra Infrastructure208 183 523 278 
All otherAll other(73)(47)(286)(129)All other(104)(73)(151)(286)
TotalTotal$559 $424 $1,171 $1,298 Total$603 $559 $1,572 $1,171 
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENTEXPENDITURES FOR PROPERTY, PLANT & EQUIPMENTEXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT
SDG&ESDG&E$1,090 $1,072 SDG&E$1,239 $1,090 
SoCalGasSoCalGas931 936 SoCalGas961 931 
Sempra InfrastructureSempra Infrastructure336 415 Sempra Infrastructure2,078 336 
All otherAll other4 1 All other4 4 
TotalTotal$2,361 $2,424 Total$4,282 $2,361 
June 30,
2022		December 31,
2021		June 30,
2023		December 31,
2022
ASSETSASSETSASSETS
SDG&ESDG&E$25,075 $24,058 SDG&E$27,786 $26,422 
SoCalGasSoCalGas21,354 20,324 SoCalGas22,591 22,346 
Sempra Texas UtilitiesSempra Texas Utilities13,406 13,047 Sempra Texas Utilities13,988 13,781 
Sempra InfrastructureSempra Infrastructure14,958 14,408 Sempra Infrastructure17,610 15,760 
All otherAll other1,984 1,399 All other1,773 1,376 
Intersegment receivablesIntersegment receivables(1,195)(1,191)Intersegment receivables(1,021)(1,111)
TotalTotal$75,582 $72,045 Total$82,727 $78,574 
EQUITY METHOD AND OTHER INVESTMENTS
EQUITY METHOD INVESTMENTSEQUITY METHOD INVESTMENTS
Sempra Texas UtilitiesSempra Texas Utilities$13,406 $13,047 Sempra Texas Utilities$13,979 $13,772 
Sempra InfrastructureSempra Infrastructure1,687 1,425 Sempra Infrastructure2,036 1,905 
TotalTotal$15,093 $14,472 Total$16,015 $15,677 

NOTE 12. SUBSEQUENT EVENT
SEMPRA COMMON STOCK SPLIT IN THE FORM OF A STOCK DIVIDEND
On August 2, 2023, Sempra’s board of directors declared a two-for-one split of Sempra’s common stock in the form of a 100% stock dividend for shareholders of record at the close of business on August 14, 2023. Each shareholder of record will receive one additional share of Sempra common stock for every then-held share of Sempra common stock, to be distributed after the close of trading on August 21, 2023. We expect Sempra’s common stock will begin trading on a post-split basis effective August 22, 2023. Sempra’s common stock will continue to have no par value with 1,125,000,000 authorized shares.
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The following represents the unaudited pro forma effect of the two-for-one stock split as if it had been effective for all periods presented:
PRO FORMA EARNINGS PER COMMON SHARE COMPUTATIONS ON A POST-SPLIT BASIS
(Dollars in millions, except per share amounts; shares in thousands)
 Three months ended June 30,Six months ended June 30,
 2023202220232022
Numerator:    
Earnings attributable to common shares$603 $559 $1,572 $1,171 
Denominator:    
Weighted-average common shares outstanding for basic EPS(1)
630,014 629,691 629,926 631,190 
Dilutive effect of stock options and RSUs2,107 2,044 2,259 2,104 
Weighted-average common shares outstanding for diluted EPS632,121 631,735 632,185 633,294 
EPS:
Basic$0.96 $0.89 $2.50 $1.86 
Diluted$0.95 $0.89 $2.49 $1.85 
(1)    Includes 710 and 798 fully vested RSUs held in our Deferred Compensation Plan for the three months ended June 30, 2023 and 2022, respectively, and 716 and 806 of such RSUs for the six months ended June 30, 2023 and 2022, respectively. These fully vested RSUs are included in weighted-average common shares outstanding for basic EPS because there are no conditions under which the corresponding shares will not be issued.

Upon the distribution date for the stock dividend, all historical shares and per share information related to issued and outstanding common stock and outstanding equity awards exercisable into common stock will be retroactively adjusted to reflect the stock split in future financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This combined MD&A for Sempra, SDG&E and SoCalGas should be read in conjunction with the Condensed Consolidated Financial Statements and the Notes thereto in this report, and the Consolidated Financial Statements and the Notes thereto, “Part I – Item 1A. Risk Factors” and “Part II – Item 7. MD&A” in the Annual Report.
OVERVIEW
Sempra is a California-based holding company with energy infrastructure investments in North America. Our businesses invest in, develop and operate energy infrastructure, and provide electric and gas services to customers through regulated public utilities. In the fourth quarter of 2021, we formed Sempra Infrastructure, which resulted in a change to our reportable segments. Historical segment disclosures have been restated to conform with the current presentation of our four reportable segments, which we discuss in Note 12 of the Notes to Condensed Consolidated Financial Statements in this report and in “Part I – Item 1. Business” in the Annual Report.customers.
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RESULTS OF OPERATIONS
We discuss the following in Results of Operations:
▪Overall results of operations of Sempra;
▪Segment results;
▪Significant changes in revenues, costs and earnings; and
▪Impact of foreign currency and inflation rates on results of operations.

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OVERALL RESULTS OF OPERATIONS OF SEMPRA
Sempra’s overall results of operations for the three months ended (Q2) and six months (YTD) ended (YTD) June 30, 20222023 and 20212022 were as follows:
OVERALL RESULTS OF OPERATIONS OF SEMPRA
(Dollars and shares in millions, except per share amounts)
sre-20220630_g4.jpgsre-20220630_g5.jpgsre-20220630_g6.jpg153154155
Our earnings and diluted EPS were impacted by variances discussed below in “Segment Results.”

SEGMENT RESULTS
This section presents earnings (losses) by Sempra segment, as well as Parent and other, and a related discussion of the changes in segment earnings (losses). Throughout the MD&A, our reference to earnings represents earnings attributable to common shares. Variance amounts presented are the after-tax earnings impact (based on applicable statutory tax rates), unless otherwise noted, and before foreign currency and inflation effects and NCI, where applicable.
SEMPRA EARNINGS (LOSSES) BY SEGMENTSEMPRA EARNINGS (LOSSES) BY SEGMENT SEMPRA EARNINGS (LOSSES) BY SEGMENT 
(Dollars in millions)(Dollars in millions) (Dollars in millions) 
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
SDG&ESDG&E$176 $186 $410 $398 SDG&E$184 $176 $442 $410 
SoCalGasSoCalGas87 94 421 501 SoCalGas155 87 515 421 
Sempra Texas UtilitiesSempra Texas Utilities186 138 348 273 Sempra Texas Utilities160 186 243 348 
Sempra InfrastructureSempra Infrastructure183 53 278 255 Sempra Infrastructure208 183 523 278 
Parent and other(1)
Parent and other(1)
(73)(47)(286)(129)
Parent and other(1)
(104)(73)(151)(286)
Earnings attributable to common sharesEarnings attributable to common shares$559 $424 $1,171 $1,298 Earnings attributable to common shares$603 $559 $1,572 $1,171 
(1)    Includes intercompany eliminations recorded in consolidation and certain corporate costs.

SDG&E
The decreaseincrease in earnings of $10$8 million (5%) in the three months ended June 30, 20222023 compared to the same period in 20212022 was primarily due to:
▪$11 million higher CPUC base operating margin, net of operating expenses and $6 million from lower authorized cost of capital; and
▪$6 million higher net regulatory interest income; offset by
▪$6 million higher net interest expense.
The increase in earnings of $32 million (8%) in the six months ended June 30, 2023 compared to the same period in 2022 was primarily due to:
▪$27 million higher CPUC base operating margin, net of operating expenses and $12 million from lower authorized cost of capital;
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▪$12 million higher net regulatory interest income; and
▪$10 million lower income tax expense primarily from flow-through items and lower associated regulatory revenues; and
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▪$9 million higher interest expense;revenues in 2022; offset by
▪$614 million higher CPUC base operating margin, net of operating expenses; andinterest expense.
▪$5 million higher electric transmission margin.SoCalGas
The increase in earnings of $12$68 million (3%) in the six months ended June 30, 2022 compared to the same period in 2021 was primarily due to:
▪$30 million higher CPUC base operating margin, net of operating expenses; and
▪$8 million higher electric transmission margin; offset by
▪$13 million higher interest expense; and
▪$9 million higher income tax expense primarily from flow-through items and lower associated regulatory revenues.
SoCalGas
The decrease in earnings of $7 million (7%) in the three months ended June 30, 20222023 compared to the same period in 20212022 was primarily due to:
▪$32 million charge in 2022 relating to civil litigation pertaining to the Leak; and
▪$428 million lowerhigher income tax benefits primarily from flow-through items;items, which includes $25 million related to income tax benefits in 2023 for previously unrecognized income tax benefits pertaining to gas repairs expenditures;
▪$21 million regulatory awards approved by the CPUC in 2023; and
▪$5 million higher net regulatory interest income; offset by
▪$3019 million higher CPUC base operating margin, net of operating expenses.interest expense.
The decreaseincrease in earnings of $80$94 million (16%(22%) in the six months ended June 30, 20222023 compared to the same period in 20212022 was primarily due to:
▪$98 million charge in 2022 relating to civil litigation pertaining to the Leak;
▪$17 million higher income tax benefits primarily from flow-through items, which includes $25 million related to income tax benefits in 2023 for previously unrecognized income tax benefits pertaining to gas repairs expenditures;
▪$13 million higher regulatory awards approved by the CPUC;
▪$11 million higher net regulatory interest income; and
▪$10 million in penalties in 2022 related to the energy efficiency and advocacy OSCs, which we discuss in Note 4 of the Notes to Condensed Consolidated Financial Statements;OSCs; offset by
▪$3237 million higher net interest expense; and
▪$12 million lower CPUC base operating margin, net of operating expenses.expenses and $12 million from lower authorized cost of capital.
Sempra Texas Utilities
The increasedecrease in earnings of $48$26 million (35%(14%) in the three months ended June 30, 20222023 compared to the same period in 20212022 was primarily due to higherlower equity earnings from Oncor Holdings driven by:
▪higher interest expense and depreciation expense attributable to invested capital; and
▪higher O&M; offset by
▪higher revenues attributable to updates to transmission billing factors, new base rates implemented in May 2023 and customer growth, offset by increasedlower revenues from higherdecreased customer consumption primarily attributable to weather, rate updates to reflect increases in invested capital and customer growth, offset by increased expenses and operating costs attributable to invested capital.weather.
The increasedecrease in earnings of $75$105 million (27%(30%) in the six months ended June 30, 20222023 compared to the same period in 20212022 was primarily due to higherlower equity earnings from Oncor Holdings driven by:
▪write-off of rate base disallowances in 2023 resulting from the PUCT’s final order in Oncor’s comprehensive base rate review;
▪higher interest expense and depreciation expense attributable to invested capital; and
▪higher O&M; offset by
▪higher revenues attributable to updates to transmission billing factors, new base rates implemented in May 2023 and customer growth, offset by increasedlower revenues from rate updates to reflect increases in invested capital, higherdecreased customer consumption primarily attributable to weather and customer growth, offset by increased expenses and operating costs attributable to invested capital.weather.
Sempra Infrastructure
The increase in earnings of $130$25 million (14%) in the three months ended June 30, 20222023 compared to the same period in 20212022 was primarily due to:
▪$78125 million higher earnings from asset and supply optimization primarily driven by unrealized gains in 2023 compared to unrealized losses in 2022 on commodity derivatives due to changes in natural gas prices, offset by lower volumes;
▪$69 million favorable impact from foreign currency and inflation effects on our monetary positions in Mexico, net of foreign currency derivative effects, comprised of a $16 million unfavorable impact in 2022 compared to an $85 million unfavorable impact in 2021;
▪$16 million higher equity earnings from Cameron LNG JV primarily from higher maintenance revenues;
▪$13 million favorable U.S. tax impact in 2022 from converting SI Partners from a corporation to a partnership in October 2021;
▪$11 million higher transportation revenues primarily driven by higher rates;
▪$8 million higher earnings from the renewables business primarily due to the second phase of ESJ being placed in service in January 2022 and higher transmission rates;diversion fees; and
▪$764 million primarily due tofrom the starttransportation business driven by higher equity earnings and revenues, including the cumulative impact of commercial operations of the Mexico City terminalnew tariffs going into effect for certain pipelines in July 2021;Mexico; offset by
▪$88 million earnings attributable to NCI in 2022 compared to $11 million earnings in 2021, primarily due to the sale of a 20% NCI in SI Partners to KKR in October 2021 and the sale of a 10% NCI in SI Partners to ADIA in June 2022, offset by the increase in our ownership interest in IEnova; and
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▪$8 million lower net income tax benefit primarily from the remeasurement of certain deferred income taxes and outside basis differences in JV investments.
The increase in earnings of $23 million (9%) in the six months ended June 30, 2022 compared to the same period in 2021 was primarily due to:
▪$43 million higher net income tax benefit primarily from the remeasurement of certain deferred income taxes and outside basis differences in JV investments;
▪$24 million higher transportation revenues primarily driven by higher rates;
▪$20 million primarily due to the start of commercial operations of the Veracruz and Mexico City terminals in March and July of 2021, respectively;
▪$18 million favorable U.S. tax impact in 2022 from converting SI Partners from a corporation to a partnership in October 2021;
▪$18 million higher equity earnings from Cameron LNG JV primarily from higher maintenance revenues; and
▪$12 million higher earnings from the renewables business primarily due to Border Solar and the second phase of ESJ being placed in service in March 2021 and January 2022, respectively; offset by
▪$122 million earnings attributable to NCI in 2022 compared to $44 million earnings in 2021, primarily due to the sale of a 20% NCI in SI Partners to KKR in October 2021 and the sale of a 10% NCI in SI Partners to ADIA in June 2022, offset by the increase in our ownership interest in IEnova;
▪$38119 million unfavorable impact from foreign currency and inflation effects on our monetary positions in Mexico, net of foreign currency derivative effects, comprised of a $111$136 million unfavorable impact in 20222023 compared to a $73$17 million unfavorable impact in 2021;2022;
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▪$121 million earnings attributable to NCI in 2023 compared to $88 million earnings attributable to NCI in 2022 primarily due to an increase in SI Partners’ net income and from the sale of a 10% NCI in SI Partners to ADIA in June 2022; and
▪$618 million lowerfrom the LNG business driven by higher development costs and certain non-capitalized expenses from projects under construction.
The increase in earnings of $245 million in the six months ended June 30, 2023 compared to the same period in 2022 was primarily due to:
▪$607 million from asset and supply optimization primarily driven by unrealized gains in 2023 compared to unrealized losses in 2022 on commodity derivatives due to changes in natural gas prices and lower volumes.higher LNG diversion revenues; and
▪$85 million from the transportation business driven by higher equity earnings and revenues, including the cumulative impact of new tariffs going into effect for certain pipelines in Mexico and a customer’s early termination of firm transportation agreements; offset by
▪$313 million earnings attributable to NCI in 2023 compared to $122 million earnings attributable to NCI in 2022 primarily due to an increase in SI Partners’ net income and from the sale of a 10% NCI in SI Partners to ADIA in June 2022;
▪$183 million unfavorable impact from foreign currency and inflation effects on our monetary positions in Mexico, comprised of a $296 million unfavorable impact in 2023 compared to a $113 million unfavorable impact in 2022; and
▪$51 million higher net interest expense, including $27 million net unrealized losses in 2023 on a contingent interest rate swap related to the PA LNG Phase 1 project and higher interest expense on committed lines of credit.
Parent and Other
The increase in losses of $26$31 million (42%) in the three months ended June 30, 20222023 compared to the same period in 20212022 was primarily due to:
▪$50 million equity earnings in 2021 related to our investment in RBS Sempra Commodities to settle pending VAT matters and related legal costs; and
▪$20 million net investment losses in 2022 compared to $15 million net investment gains in 2021 on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation obligations; offset by
▪$30 million income tax benefit in 2022 from changes to a valuation allowance against certain tax credit carryforwards;
▪$1917 million lowerhigher income tax expense from the interim period application of an annual forecasted consolidated ETR; and
▪$911 million lower preferred dividends duehigher net interest expense; offset by
▪$1 million net investment gains in 2023 compared to the mandatory conversion$20 million net investment losses in 2022 on dedicated assets in support of all series B preferred stock in July 2021.our employee nonqualified benefit plan and deferred compensation obligations.
The increasedecrease in losses of $157$135 million (47%) in the six months ended June 30, 20222023 compared to the same period in 20212022 was primarily due to:
▪$120 million deferred income tax expense in 2022 associated with the change in our indefinite reinvestment assertion related to our foreign subsidiaries, which we discuss in Note 1 of the Notes to Condensed Consolidated Financial Statements;subsidiaries;
▪$378 million net investment gains in 2023 compared to $37 million net investment losses in 2022 compared to $17 million net investment gains in 2021 on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation obligations; and
▪$507 million equity earnings in 2021 related to our investment in RBS Sempra Commodities to settle pending VAT matters and related legal costs; higher income tax benefit from the interim period application of an annual forecasted consolidated ETR;offset by
▪$30 million income tax benefit in 2022 from changes to a valuation allowance against certain tax credit carryforwards;
▪$19 million lower preferred dividends due to the mandatory conversion of all series B preferred stock in July 2021;
▪$5 million income tax benefit in 2022 compared to an $8 million income tax expense in 2021 from the interim period application of an annual forecasted consolidated ETR; and
▪$1121 million lowerhigher net interest expense.

SIGNIFICANT CHANGES IN REVENUES, COSTS AND EARNINGS
This section contains a discussion of the differences between periods in the specific line items of the Condensed Consolidated Statements of Operations for Sempra, SDG&E and SoCalGas.
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Utilities Revenues and Cost of Sales
Our utilities revenues include natural gas revenues at SoCalGas and SDG&E and Sempra Infrastructure’s Ecogas and electric revenues at SDG&E. Intercompany revenues included in the separate revenues of each utility are eliminated in Sempra’s Condensed Consolidated Statements of Operations.
SoCalGas and SDG&E currently operate under a regulatory framework that permits:
▪The cost of natural gas purchased for core customers (primarily residential and small commercial and industrial customers) to be passed through to customers in rates substantially as incurred. SoCalGas’ Gas Cost Incentive Mechanismincurred and without markup. The GCIM provides for SoCalGas the opportunity to share in the savings and/or costs from buying natural gas for its core customers at prices below or above monthly market-based benchmarks. This mechanism permits full recovery of costs incurred when average purchase costs are within a price range around the benchmark price. Any higher costs incurred or savings realized outside this range are shared between the core customers and SoCalGas. We provide further discussion in Note 3
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▪SDG&E to recover the actual cost incurred to generate or procure electricity based on annual estimates of the cost of electricity supplied to customers. The differences in cost between estimates and actual are recovered or refunded in subsequent periods through rates.
▪SoCalGas and SDG&E to recover certain program expenditures and other costs authorized by the CPUC, orherein referred to as “refundable programs.”
Because changes in SoCalGas’ and SDG&E’s cost of natural gas and/or electricity are recovered in rates, changes in these costs are offset in the changes in revenues and therefore do not impact earnings.earnings, other than potential impacts related to the GCIM for SoCalGas that we describe above. In addition to the changes in cost or market prices, natural gas or electric revenues recorded during a period are impacted by the difference between customer billings and recorded or CPUC-authorized amounts. These differences are required to be balanced over time, resulting in over- and undercollected regulatory balancing accounts. We discuss balancing accounts and their effects further in Note 4 of the Notes to Condensed Consolidated Financial Statements in this report and in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.
SoCalGas’ and SDG&E’s revenues are decoupled from, or not tied to, actual sales volumes. SoCalGas recognizes annual authorized revenue for core natural gas customers using seasonal factors established in the Triennial Cost Allocation Proceeding,applicable proceedings, resulting in a significant portion of SoCalGas’ earnings being recognized in the first and fourth quarters of each year. SDG&E’s authorized revenue recognition is also impacted by seasonal factors, resulting in higher earnings in the third quarter when electric loads are typically higher than in the other three quarters of the year. We discuss this decoupling mechanism and its effects further in Note 3 of the Notes to Consolidated Financial Statements in the Annual Report.
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The table below summarizes utilities revenues and cost of sales.
UTILITIES REVENUES AND COST OF SALESUTILITIES REVENUES AND COST OF SALESUTILITIES REVENUES AND COST OF SALES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
Natural gas revenues:Natural gas revenues:Natural gas revenues:
SoCalGasSoCalGas$1,501 $1,124 $3,494 $2,632 SoCalGas$1,467 $1,501 $5,261 $3,494 
SDG&ESDG&E207 160 532 428 SDG&E204 207 826 532 
Sempra InfrastructureSempra Infrastructure20 17 48 44 Sempra Infrastructure19 20 49 48 
Eliminations and adjustmentsEliminations and adjustments(24)(23)(50)(49)Eliminations and adjustments(30)(24)(64)(50)
TotalTotal1,704 1,278 4,024 3,055 Total1,660 1,704 6,072 4,024 
Electric revenues:Electric revenues:Electric revenues:
SDG&ESDG&E1,192 1,158 2,312 2,227 SDG&E1,058 1,192 2,089 2,312 
Eliminations and adjustmentsEliminations and adjustments(3)(2)(6)(3)Eliminations and adjustments(4)(3)(8)(6)
TotalTotal1,189 1,156 2,306 2,224 Total1,054 1,189 2,081 2,306 
Total utilities revenuesTotal utilities revenues$2,893 $2,434 $6,330 $5,279 Total utilities revenues$2,714 $2,893 $8,153 $6,330 
Cost of natural gas(1):
Cost of natural gas(1):
Cost of natural gas(1):
SoCalGasSoCalGas$459 $223 $1,136 $496 SoCalGas$284 $459 $2,631 $1,136 
SDG&ESDG&E69 40 195 122 SDG&E38 69 417 195 
Sempra InfrastructureSempra Infrastructure5 6 14 12 Sempra Infrastructure2 5 1 14 
Eliminations and adjustmentsEliminations and adjustments(5)(8)(15)(20)Eliminations and adjustments(13)(5)(55)(15)
TotalTotal528 261 1,330 610 Total311 528 2,994 1,330 
Cost of electric fuel and purchased power(1):
Cost of electric fuel and purchased power(1):
Cost of electric fuel and purchased power(1):
SDG&ESDG&E269 304 490 545 SDG&E107 269 242 490 
Eliminations and adjustmentsEliminations and adjustments(18)(20)(34)(29)Eliminations and adjustments(19)(18)(40)(34)
TotalTotal251 284 456 516 Total88 251 202 456 
Total utilities cost of salesTotal utilities cost of sales$779 $545 $1,786 $1,126 Total utilities cost of sales$399 $779 $3,196 $1,786 
(1)     Excludes depreciation and amortization, which are presented separately on the Sempra, SDG&E and SoCalGas Condensed Consolidated Statements of Operations.

Natural Gas Revenues and Cost of Natural Gas
The table below summarizes the average cost of natural gas sold by Sempra California and included in cost of natural gas. The average cost of natural gas sold at each utility is impacted by market prices, as well as transportation, tariff and other charges.
SEMPRA CALIFORNIA AVERAGE COST OF NATURAL GAS
(Dollars per thousand cubic feet)
 Three months ended June 30,Six months ended June 30,
 2022202120222021
SoCalGas$7.63 $3.73 $7.11 $3.01 
SDG&E7.84 4.42 7.16 4.44 
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SEMPRA CALIFORNIA AVERAGE COST OF NATURAL GAS
(Dollars per thousand cubic feet)
 Three months ended June 30,Six months ended June 30,
 2023202220232022
SoCalGas$4.31 $7.63 $13.88 $7.11 
SDG&E3.69 7.84 13.38 7.16 
In the three months ended June 30, 2022,2023, our natural gas revenues increaseddecreased by $426$44 million (33%(3%) toremaining at $1.7 billion compared to the same period in 20212022 primarily due to:
▪$37734 million increasedecrease at SoCalGas, which included:
◦$236175 million increasedecrease in cost of natural gas sold, which we discuss below, and
◦$6526 million lower regulatory revenues in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures, which are offset in income tax expense, offset by
◦$90 million higher recovery of costs associated with refundable programs, which revenues are offset in O&M,
◦$5229 million regulatory awards approved by the CPUC in 2023,
◦$25 million higher CPUC-authorized revenues, and
◦$1213 million higher revenues from incremental and balanced capital projects;non-service components of net periodic benefit cost, which fully offsets in other income (expense), net; and
▪$473 million increasedecrease at SDG&E, which included:
◦$2931 million increasedecrease in cost of natural gas sold, which we discuss below, andoffset by
◦$1314 million higher recovery of costs associated with refundable programs, which revenues are offset in O&M.&M, and
◦$6 million higher revenues from balanced capital projects.
In the three months ended June 30, 2022,2023, our cost of natural gas increaseddecreased by $267$217 million (41%) to $528$311 million compared to the same period in 20212022 primarily due to:
▪$236175 million increasedecrease at SoCalGas, primarily due to higherincluding $220 million from lower average natural gas prices;prices, offset by $45 million from higher volumes driven by weather; and
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▪$2931 million increasedecrease at SDG&E, primarily due to higherincluding $43 million from lower average natural gas prices.prices, offset by $12 million from higher volumes driven by weather.
In the six months ended June 30, 2022,2023, our natural gas revenues increased by $969 million (32%)$2.0 billion to $4.0$6.1 billion compared to the same period in 20212022 primarily due to:
▪$862 million1.8 billion increase at SoCalGas, which included:
◦$640 million1.5 billion increase in cost of natural gas sold, which we discuss below,
◦$82141 million higher recovery of costs associated with refundable programs, which revenues are offset in O&M,
◦$8138 million cost in 2023 compared to a $26 million credit in 2022 for the non-service components of net periodic benefit cost, which fully offsets in other income (expense), net,
◦$43 million higher CPUC-authorized revenues,
◦$3326 million higher franchise fee revenues, and
◦$18 million higher regulatory awards approved by the CPUC, offset by
◦$26 million lower regulatory revenues in 2023 from incrementalthe recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures, which are offset in income tax expense; and balanced capital projects,
▪$294 million increase at SDG&E, which included:
◦$222 million increase in cost of natural gas sold, which we discuss below,
◦$30 million higher recovery of costs associated with refundable programs, which revenues are offset in O&M, and
◦$24 million higher revenues from balanced capital projects.
In the six months ended June 30, 2023, our cost of natural gas increased by $1.7 billion to $3.0 billion compared to the same period in 2022 primarily due to:
▪$1.5 billion increase atSoCalGas, including $1.3 billion from higher average natural gas prices and $213 million from higher volumes driven by weather; and
▪$222 million increase at SDG&E, including $194 million from higher average natural gas prices and $28 million from higher volumes driven by weather.
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Electric Revenues and Cost of Electric Fuel and Purchased Power
In the three months ended June 30, 2023, our electric revenues, substantially all of which are at SDG&E, decreased by $135 million (11%) to $1.1 billion compared to the same period in 2022 primarily due to:
▪$162 million lower cost of electric fuel and purchased power, which we discuss below; and
▪$44 million in 2023 from the recognition of investment tax credits from standalone energy storage projects, offset in income tax expense; offset by
▪$14 million higher CPUC-authorized revenues;
▪$12 million higher revenues from balanced capital projects;
▪$11 million higher revenues associated with impacts resulting from changes in tax laws tracked in the income tax expense memorandum account; and
▪$104 million increase at SDG&E, which included:
◦$73 million increase in cost of natural gas sold, which we discuss below,
◦$13 million higher revenues from balanced capital projects,
◦$128 million higher recovery of costs associated with refundable programs, which revenues are offset in O&M, and
◦$6 million higher CPUC-authorized revenues.
In the six months ended June 30, 2022, our cost of natural gas increased by $720 million to $1.3 billion compared to the same period in 2021 primarily due to:
▪$640 million increase at SoCalGas primarily due to higher average natural gas prices; and
▪$73 million increase at SDG&E primarily due to higher average natural gas prices.
Electric Revenues and Cost of Electric Fuel and Purchased Power
In the three months ended June 30, 2022, our electric revenues, substantially all of which are at SDG&E, increased by $33 million (3%) remaining at $1.2 billion compared to the same period in 2021 primarily due to:
▪$35 million higher recovery of costs associated with refundable programs, which revenues are offset in O&M;
▪$17 million higher CPUC-authorized revenues;
▪$16 million higher revenues associated with SDG&E’s wildfire mitigation plan;
▪$12 million higher revenues from transmission operations; and
▪$8 million higher revenues associated with lower income tax benefits from flow-through items; offset by
▪$35 million lower cost of electric fuel and purchased power, which we discuss below; and
▪$10 million lower revenues associated with impacts resulting from changes in tax laws tracked in the income tax expense memorandum account.&M.
Our utility cost of electric fuel and purchased power includes utility-owned generation, power purchased from third parties, and net power purchases and sales to the California ISO. In the three months ended June 30, 2022,2023, the cost of electric fuel and purchased power decreased by $33$163 million (12%) to $251$88 million compared to the same period in 20212022 primarily due to $35a $162 million decrease at SDG&E, which included:
▪$84 million lower purchased power from, net of higher excess capacity sales to, third parties;
▪$45 million higher sales to the California ISO due to higher market pricesprices; and
▪$30 million lower customer demand primarily due to departing load now served by CCAs, offset by higher utility-owned generation costs.
In the six months ended June 30, 2022,2023, our electric revenues, substantially all of which are at SDG&E, increaseddecreased by $82$225 million (4%(10%) to $2.3$2.1 billion compared to the same period in 20212022 primarily due to:
▪$37248 million lower cost of electric fuel and purchased power, which we discuss below; and
▪$102 million in 2023 from the recognition of investment tax credits from standalone energy storage projects, offset in income tax expense; offset by
▪$40 million higher revenues from balanced capital projects;
▪$23 million higher CPUC-authorized revenues;
▪$6 million cost in 2023 compared to a $7 million credit in 2022 for the non-service components of net periodic benefit cost, which fully offsets in other income (expense), net;
▪$11 million higher recovery of costs associated with refundable programs, which revenues are offset in O&M;
▪$34 million higher CPUC-authorized revenues;
▪$329 million higher revenues associated with SDG&E’s wildfire mitigation plan;impacts resulting from changes in tax laws tracked in the income tax expense memorandum account; and
▪$227 million higher revenues from transmission operations; and
▪$14 million higher revenues associated with lower income tax benefits from flow-through items; offset by
▪$55 million lower cost of electric fuel and purchased power, which we discuss below.operations.
In the six months ended June 30, 2022,2023, the cost of electric fuel and purchased power decreased by $60$254 million (12%) to $456$202 million compared to the same period in 20212022 primarily due to:to a $248 million decrease at SDG&E, which included:
▪$55142 million at SDG&E from higher sales to the California ISO due to higher market prices;
▪$100 million lower purchased power from, net of higher excess capacity sales to, third parties; and
▪$59 million higher realized gains on fixed-price natural gas derivative contracts, which are entered into to hedge the cost of electric fuel; offset by
▪$42 million higher purchased power from the California ISO due to higher market prices, andnet of lower customer demand primarily due tofrom departing load now served by CCAs, offset by higher utility-owned generation costs; andCCAs.
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▪$5 million higher intercompany eliminations associated with sales between SDG&E and Sempra Infrastructure due to the acquisition of ESJ in March 2021.
Energy-Related Businesses: Revenues and Cost of Sales
The table below shows revenues and cost of sales for our energy-related businesses.
ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALESENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALESENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30, Three months ended June 30,Six months ended June 30,
2022202120222021 2023202220232022
Revenues:Revenues:  Revenues:  
Sempra InfrastructureSempra Infrastructure$669 $324 $1,065 $746 Sempra Infrastructure$641 $669 $1,807 $1,065 
Parent and other(1)
Parent and other(1)
(15)(17)(28)(25)
Parent and other(1)
(20)(15)(65)(28)
Total revenuesTotal revenues$654 $307 $1,037 $721 Total revenues$621 $654 $1,742 $1,037 
Cost of sales(2):
Cost of sales(2):
  
Cost of sales(2):
  
Sempra InfrastructureSempra Infrastructure$289 $119 $424 $227 Sempra Infrastructure$81 $289 $274 $424 
Parent and other(1)
— — — 1 
Total cost of salesTotal cost of sales$289 $119 $424 $228 Total cost of sales$81 $289 $274 $424 
(1)    Includes eliminations of intercompany activity.
(2)    Excludes depreciation and amortization, which are presented separately on Sempra’s Condensed Consolidated Statements of Operations.

In the three months ended June 30, 2022,2023, revenues from our energy-related businesses increaseddecreased by $347$33 million (5%) to $654$621 million compared to the same period in 20212022 primarily due to:
▪$26644 million lower revenues from TdM mainly due to lower power prices and lower volumes from scheduled major maintenance completed in April 2023; offset by
▪$17 million increase in revenues from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including:
◦$230141 million from higher natural gas prices and lowerprimarily driven by $199 million unrealized gains in 2023 compared to $19 million unrealized losses in 2022 on commodity derivatives, offset by $86 million from lower natural gas prices and volumes, offset by
◦$71 million lower LNG sales, and
◦$3644 million primarily from higherlower LNG diversion fees due to higher natural gas prices;
▪$24 million higher revenues from TdM mainly due to higher power prices offset by lower volumes;
▪$20 million higher revenues from the renewables business primarily due to higher transmission rates and the second phase of ESJ being placed in service in January 2022;
▪$14 million higher transportation revenues primarily driven by higher rates; and
▪$11 million higher revenues primarily from the Mexico City terminal placed in service in July 2021.fees.
In the three months ended June 30, 2022,2023, the cost of sales for our energy-related businesses increaseddecreased by $170$208 million to $289$81 million compared to the same period in 20212022 primarily due to higherto:
▪$177 million driven by lower natural gas prices and higher LNG purchases related to asset and supply optimizationoptimization; and higher natural gas prices offset
▪$34 million at TdM driven by lower prices and lower volumes at TdM.from scheduled major maintenance completed in April 2023.
In the six months ended June 30, 2022,2023, revenues from our energy-related businesses increased by $316$705 million (44%) to $1.0$1.7 billion compared to the same period in 20212022 primarily due to:
▪$197700 million increase in revenues from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including:
◦$157731 million primarily driven by $617 million unrealized gains in 2023 compared to $107 million unrealized losses in 2022 on commodity derivatives and $41 million from higher volumes and natural gas prices, and lower unrealized losses on commodity derivatives offset by lower volumes, and
◦$40 million primarily from higher LNG diversion fees, due to higher natural gas prices;offset by
◦$71 million lower LNG sales; and
▪$36 million higher transportation revenues fromdriven by a customer’s early termination of firm transportation agreements.
In the renewables businesssix months ended June 30, 2023, the cost of sales for our energy-related businesses decreased by $150 million (35%) to $274 million compared to the same period in 2022 primarily due to:
▪$204 million decrease driven by lower natural gas and LNG purchases, net of higher natural gas prices, related to Border Solarasset and the second phase of ESJ being placed in service in March 2021 and January 2022, respectively, and the acquisition of ESJ in March 2021;supply optimization; offset by
▪$3552 million higher transportation revenues primarilyincrease at TdM driven by higherrates;
▪$28 million higher revenues primarily from the Veracruz and Mexico City terminals placed in service in March and July of 2021, respectively; and
▪$14 million higher revenues from TdM mainly due to higher power prices offset by lower volumes from scheduled major maintenance completed in March 2022, which resulted in increased plant reliability.April 2023.
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In the six months ended June 30, 2022, the cost of sales for our energy-related businesses increased by $196 million to $424 million compared to the same period in 2021 primarily due to higher natural gas prices and higher LNG purchases related to asset and supply optimization and higher natural gas prices offset by lower volumes from scheduled major maintenance completed in March 2022 at TdM.
Operation and Maintenance
In the three months ended June 30, 2022,2023, O&M increased by $138$204 million (13%(18%) to $1.2$1.4 billion compared to the same period in 20212022 primarily due to:
▪$80110 million increase at SoCalGas primarily due to:
◦$6590 million higher expenses associated with refundable programs, which costs incurred are recovered in revenue, and
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◦$1520 million higher non-refundable operating costs;
▪$4754 million increase at SDG&E primarily due toto:
◦$32 million higher non-refundable operating costs, and
◦$22 million higher expenses associated with refundable programs, which costs incurred are recovered in revenue; and
▪$2431 million increase at Sempra Infrastructure, primarily due to:
◦$1319 million higher development costs and certain non-capitalized expenses from the renewables business primarily due toprojects under construction, repairs and maintenance at Ventika, and
◦$6 million primarily due to the start of commercial operations of the Mexico City terminal in July 2021; offset by
▪$13 million decrease at Parent and other primarily from lower deferred compensation expense.
In the six months ended June 30, 2022, O&M increased by $223 million (11%) to $2.2 billion compared to the same period in 2021 primarily due to:
▪$128 million increase at SoCalGas primarily due to:
◦$82 million higher expenses associated with refundable programs, which costs incurred are recovered in revenue, and
◦$46 million higher non-refundable operating costs;
▪$54 million increase at SDG&E primarily due to:
◦$49 million higher expenses associated with refundable programs, which costs incurred are recovered in revenue, and
◦$5 million higher non-refundable operating costs; and
▪$52 million increase at Sempra Infrastructure primarily due to:
◦$20 million from the renewables business primarily due to construction repairs and maintenance at Ventika,
◦$17 million primarily due to the start of commercial operations of the Veracruz and Mexico City terminals in March and July of 2021, respectively, and
◦$148 million higher operating costs at TdM primarily from higher purchased materials and services due to scheduled major maintenance completed in March 2022; April 2023.
In the six months ended June 30, 2023, O&M increased by $327 million (15%) to $2.6 billion compared to the same period in 2022 primarily due to:
▪offset by$184 million increase at SoCalGas due to:
◦$141 million higher expenses associated with refundable programs, which costs incurred are recovered in revenue, and
◦$43 million higher non-refundable operating costs;
▪$1184 million decreaseincrease at ParentSDG&E due to:
◦$43 million higher non-refundable operating costs, and other primarily
◦$41 million higher expenses associated with refundable programs, which costs incurred are recovered in revenue; and
▪$60 million increase at Sempra Infrastructure due to:
◦$31 million higher development costs and certain non-capitalized expenses from lower deferred compensation expense.projects under construction,
◦$12 million higher operating cost due to remeasurement of operating leases at the refined products terminals in 2022, and
◦$10 million higher purchased services.
Aliso Canyon Litigation and Regulatory Matters
In the three months and six months ended June 30, 2022, SoCalGas recorded charges of $45 million and $137 million, respectively, relating to civil litigation pertaining to the Leak. We describe these charges in Note 11 of the Notes to Condensed Consolidated Financial Statements.
Other Income (Expense) Income,, Net
As part of our central risk management function, we may enter into foreign currency derivatives to hedge SI Partners’ exposure to movements in the Mexican peso from its controlling interest in IEnova. The gains/losses associated with these derivatives are included in Other Income, Net,other income (expense), net, as described below, and partially mitigate the transactional effects of foreign currency and inflation included in Income Tax Expenseincome tax expense for SI Partners’ consolidated entities and in Equity Earningsequity earnings for SI Partners’ equity method investments. We discuss policies governing our risk management in “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report.
Other expense,income, net, in the three months ended June 30, 20222023 was $1$31 million compared to other income,expense, net, of $72$1 million in the same period in 20212022 primarily due to:
▪$345 million net investment gains in 2023 compared to $34 million investment losses in 2022 compared to $19 million investment gains in 2021 on dedicated assets in support of our executive retirementemployee nonqualified benefit plan and deferred compensation plans;obligations; and
▪$415 million higher net interest income on regulatory balancing accounts at SDG&E and SoCalGas; offset by
▪$17 million higher non-service components of net periodic benefit cost.
In the six months ended June 30, 2023, other income, net, increased by $35 million to $72 million compared to the same period in 2022 primarily due to:
▪$17 million net investment gains in 2023 compared to $47 million investment losses in 2022 on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation obligations;
▪$32 million higher net interest income on regulatory balancing accounts at SDG&E and SoCalGas; and
▪$8 million net gains in 2023 compared to $17 million net losses in 2022 from impacts associated with interest rate and foreign exchange instruments and foreign currency transactions, compared to $33 million gains in 2021 primarily due to:
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◦$28 million in foreign currency gains in 2021 on a Mexican peso-denominated loan to IMG, which is offset in Equity Earnings, andincluding:
◦$74 million gains in 2021 on cross-currency swaps as a result of fluctuation of the Mexican peso; offset by
▪$6 million lower non-service component of net periodic benefit cost.
In the six months ended June 30, 2022, other income, net, decreased by $70 million to $37 million2023 compared to the same period in 2021 primarily due to:
▪$47$11 million investment losses in 2022 compared to $28 million investment gains in 2021 on dedicated assets in support of our executive retirement and deferred compensation plans;
▪$10 million in penalties at SoCalGas related to the energy efficiency and advocacy OSCs; and
▪$1 million higher net losses from impacts associated with interest rate and foreign exchange instruments andother foreign currency transactions primarily due to:transactional effects, and
◦$11 million foreign currency losses in 2022 compared to $5 million foreign currency gains in 2021 on a Mexican peso-denominated loan to IMG, which is fully offset in Equity Earnings,equity earnings; and
◦▪$1110 million lossesin penalties at SoCalGas in 2022 comparedrelated to $2 million gains in 2021 on other foreign currency transactional effects,energy efficiency and advocacy OSCs; offset by
◦▪$651 million gainscost in 2023 compared to a $32 million credit in 2022 on cross-currency swapsfor the non-service components of net periodic benefit cost.
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Interest Expense
In the three months ended June 30, 2023, interest expense increased by $46 million (17%) to $317 million compared to $23the same period in 2022 primarily due to:
▪$26 million losses in 2021 on foreign currency derivatives and cross-currency swaps as a result of fluctuation of the Mexican peso; offset byat SoCalGas from higher debt balances from debt issuances;
▪$18 million at Parent and other from higher non-service componentinterest rates and borrowings on commercial paper; and
▪$9 million at SDG&E primarily from higher debt balances from debt issuances.
In the six months ended June 30, 2023, interest expense increased by $169 million (33%) to $683 million compared to the same period in 2022 primarily due to:
▪$61 million at Sempra Infrastructure primarily due to:
◦$47 million interest expense in 2023 comprised of $33 million net periodic benefit credit.unrealized losses and a $14 million settlement on a contingent interest rate swap related to the PA LNG Phase 1 project that we discuss in Note 7 of the Condensed Consolidated Financial Statements, and
◦$44 million higher interest rates and borrowings on committed lines of credit, offset by
◦$26 million higher net capitalized interest from projects under construction; and
▪$55 million at SoCalGas from higher debt balances from debt issuances and higher interest rates;
▪$32 million at Parent and other from higher interest rates and borrowings on commercial paper and higher debt balances from debt issuances; and
▪$21 million at SDG&E primarily from higher debt balances from debt issuances.
Income Taxes
The table below shows the income tax expense and ETRs for Sempra, SDG&E and SoCalGas.
INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES
INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATESINCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Three months ended June 30,Six months ended June 30,Three months ended June 30,Six months ended June 30,
20222021202220212023202220232022
Sempra:Sempra:Sempra:
Income tax expenseIncome tax expense$80 $139 $414 $297 Income tax expense$175 $80 $551 $414 
Income before income taxes and equity earningsIncome before income taxes and equity earnings$364 $281 $1,029 $1,049 Income before income taxes and equity earnings$523 $364 $1,852 $1,029 
Equity earnings, before income tax(1)
Equity earnings, before income tax(1)
159 185 302 320 
Equity earnings, before income tax(1)
153 159 285 302 
Pretax incomePretax income$523 $466 $1,331 $1,369 Pretax income$676 $523 $2,137 $1,331 
Effective income tax rateEffective income tax rate15 %30 %31 %22 %Effective income tax rate26 %15 %26 %31 %
SDG&E:SDG&E:SDG&E:
Income tax expenseIncome tax expense$42 $33 $106 $78 Income tax expense$4 $42 $11 $106 
Income before income taxesIncome before income taxes$218 $219 $516 $476 Income before income taxes$188 $218 $453 $516 
Effective income tax rateEffective income tax rate19 %15 %21 %16 %Effective income tax rate2 %19 %2 %21 %
SoCalGas:SoCalGas:SoCalGas:
Income tax expense$19 $8 $103 $102 
Income tax (benefit) expenseIncome tax (benefit) expense$(21)$19 $73 $103 
Income before income taxesIncome before income taxes$107 $103 $525 $604 Income before income taxes$135 $107 $589 $525 
Effective income tax rateEffective income tax rate18 %8 %20 %17 %Effective income tax rate(16)%18 %12 %20 %
(1)    We discuss how we recognize equity earnings in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

Under the IRA, beginning in 2023, the scope of projects eligible for investment tax credits was expanded to include standalone energy storage projects. The IRA also provided an election that prospectively permits investment tax credits related to standalone energy storage projects to be returned to utility customers over a period that is shorter than the life of the applicable asset. Under this election, SDG&E recorded a regulatory liability to offset these investment tax credits, which reduced SDG&E’s and Sempra’s ETR in 2023.
On April 14, 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting for gas repairs expenditures. As a result of this Revenue Procedure, SoCalGas updated its assessment of prior years’ unrecognized income tax benefits and, in the three months and six months ended June 30, 2023, recorded an income tax benefit of $43 million for previously unrecognized income tax benefits pertaining to gas repairs expenditures. SoCalGas recorded an associated
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regulatory liability for the portion that will benefit customers in the future. We are assessing the potential future impacts of this Revenue Procedure.
Sempra
In the three months ended June 30, 2022,2023, Sempra’s income tax expense decreasedincreased by $59$95 million (42%) compared to the same period in 20212022 primarily due to:
▪$14117 million income tax expense in 20222023 compared to $83$14 million income tax expense in 20212022 from foreign currency and inflation effects on our monetary positions in Mexico and associated derivatives;Mexico;
▪$30 million income tax benefit in 2022 from changes to a valuation allowance against certain tax credit carryforwards; and
▪$13 million favorable U.S. tax impact in 2022 from converting SI Partners from a corporation to a partnership in October 2021;higher pretax income; offset by
▪$1643 million income tax benefits in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures; and
▪income tax benefit in 20212023 from the remeasurementrecognition of certain deferred income taxes;investment tax credits from standalone energy storage projects.
▪
lower income tax benefit from flow-through items; and
▪higher pretax income.
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In the six months ended June 30, 2022,2023, Sempra’s income tax expense increased by $117$137 million (39%(33%) compared to the same period in 20212022 primarily due to:
▪$120 million deferred income tax expense associated with the change in our indefinite reinvestment assertion related to our foreign subsidiaries, which we discuss in Note 1 to Condensed Consolidated Financial Statements;
▪$84252 million income tax expense in 20222023 compared to $41$84 million income tax expense in 20212022 from foreign currency and inflation effects on our monetary positions in Mexico and associated derivatives; andMexico;
▪lower$34 million income tax benefit in 2022 from flow-through items; offset bythe remeasurement of certain deferred income taxes;
▪$30 million income tax benefit in 2022 from changes to a valuation allowance against certain tax credit carryforwards; and
▪higher pretax income; offset by
▪$18120 million higher net deferred income tax expense in 2022 associated with the change in our indefinite reinvestment assertion related to our foreign subsidiaries;
▪$43 million income tax benefits in 2023 from the recognition of previously unrecognized income tax benefits pertaining to gas repairs expenditures; and
▪income tax benefit in 20222023 from the remeasurementrecognition of certain deferred income taxes; andinvestment tax credits from standalone energy storage projects.
▪$18 million favorable U.S. income tax impact in 2022 from converting SI Partners from a corporation to a partnership in October 2021.
We discuss the impact of foreign currency exchange rates and inflation on income taxes below in “Impact of Foreign Currency and Inflation Rates on Results of Operations.” See Note 1 of the Notes to Condensed Consolidated Financial Statements in this report and Notes 1 and 8 of the Notes to Consolidated Financial Statements in the Annual Report for further details about our accounting for income taxes and items subject to flow-through treatment.
SDG&E
In the three months and six months ended June 30, 2022,2023, SDG&E’s income tax expense increaseddecreased by $9$38 million (27%)and $95 million, respectively, compared to the same periodperiods in 20212022 primarily due to loweran income tax benefitsbenefit in 2023 from flow-through items.
In the six months ended June 30, 2022, SDG&E’s incomerecognition of investment tax expense increased by $28 million (36%) compared to the same period in 2021 primarily due to higher pretax incomecredits from standalone energy storage projects and lower income tax benefits from flow-through items.pretax income.
SoCalGas
In the three months ended June 30, 2022,2023, SoCalGas’ income tax expense increased by $11 millionbenefit compared to income tax expense in the same period in 20212022 was primarily due to lowerthe recognition of previously unrecognized income tax benefits from flow-through items.pertaining to gas repairs expenditures.
In the six months ended June 30, 2022,2023, SoCalGas’ income tax expense increaseddecreased by $1$30 million (1%(29%) compared to the same period in 20212022 primarily due to lowerthe recognition of previously unrecognized income tax benefits from flow-through items partiallypertaining to gas repairs expenditures, offset by lowerhigher pretax income.
Equity Earnings
In the three months ended June 30, 2022,2023, equity earnings increased by $62$13 million (20%(3%) to $375$388 million compared to the same period in 20212022 primarily due to:
▪$4760 million higher equity earnings at TAG due to higher revenues, including the cumulative impact of new tariffs going into effect, offset by higher income tax expense; offset by
▪$24 million lower equity earnings at Oncor Holdings primarily duedriven by:
◦higher interest expense and depreciation expense attributable to increasedinvested capital, and
◦higher O&M, offset by
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◦higher revenues attributable to updates to transmission billing factors, new base rates implemented in May 2023 and customer growth, offset by lower revenues from higherdecreased customer consumption primarily attributable to weather,weather; and
▪$17 million lower equity earnings at IMG due to higher income tax expense and interest expense.
In the six months ended June 30, 2023, equity earnings decreased by $94 million (13%) to $607 million compared to the same period in 2022 primarily due to:
▪$103 million lower equity earnings at Oncor Holdings driven by:
◦write-off of rate base disallowances in 2023 resulting from the PUCT’s final order in Oncor’s comprehensive base rate review,
◦higher interest expense and depreciation expense attributable to invested capital, and
◦higher O&M, offset by
◦higher revenues attributable to updates to reflect increasestransmission billing factors, new base rates implemented in invested capitalMay 2023 and customer growth, offset by increased expenses and operating costslower revenues from decreased customer consumption primarily attributable to invested capital;
▪$23 million higher equity earnings at Cameron LNG JV primarily due to higher maintenance revenues;weather; and
▪$3534 million higherlower equity earnings at IMG primarily due to higher income tax expense, foreign currency effects, including $28$11 million foreign currency lossesgains in 20212022 on IMG’s Mexican peso-denominated loans from its JV owners, which is fully offset in Other (Expense) Income, Net,other income (expense), net and lower interest expense; offset by
▪$50 million equity earnings in 2021 related our investment in RBS Sempra Commodities to settle pending VAT matters and related legal costs.
In the six months ended June 30, 2022, equity earnings increased by $70 million (11%) to $701 million compared to the same period in 2021 primarily due to:
▪$7360 million higher equity earnings at Oncor Holdings primarily due to increased revenues from rate updates to reflect increases in invested capital, higher customer consumption primarily attributable to weather and customer growth, offset by increased expenses and operating costs attributable to invested capital;
▪$30 million higher equity earnings at Cameron LNG JV primarilyTAG due to higher maintenance revenues; and
▪$14 million higher equity earnings at IMG, primarily due to foreign currency effects,revenues, including $11 million foreign currency gains in 2022 compared to $5 million foreign currency losses in 2021 on IMG’s Mexican peso-denominated loans from its JV owners, which is fully offset in Other (Expense) Income, Net, and lower interest expensethe cumulative impact of new tariffs going into effect, offset by higher income tax expense;expense. offset by
▪$50 million equity earnings in 2021 related to our investment in RBS Sempra Commodities to settle pending VAT matters and related legal costs.
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Earnings Attributable to Noncontrolling Interests
In the three months ended June 30, 2022,2023, earnings attributable to NCI increased by $78$33 million (38%) to $88$121 million compared to the same period in 20212022 primarily due to:
▪$4027 million increase as a result of a decrease in our ownership interest in SI Partners net of an increase in our ownership interest in IEnova;and SI Partners subsidiaries; and
▪$376 million primarilyincrease due to an increase in SI Partners subsidiariesPartners’ net income.
In the six months ended June 30, 2022,2023, earnings attributable to NCI increased by $79$191 million to $122$313 million compared to the same period in 20212022 primarily due to:
▪$57100 million increase due to an increase in SI Partners’ net income; and
▪$91 million increase as a result of a decrease in our ownership interest in SI Partners net of an increase in our ownership interest in IEnova; and
▪$21 million primarily due to an increase in SI Partners subsidiaries net income.subsidiaries.
Preferred Dividends
In the three months and six months ended June 30, 2022, preferred dividends decreased by $9 million to $11 million and $19 million to $22 million, respectively, compared to the same period in 2021 primarily due to the conversion of all series B preferred stock in July 2021.

IMPACT OF FOREIGN CURRENCY AND INFLATION RATES ON RESULTS OF OPERATIONS
Because our natural gas distribution utility in Mexico, Ecogas, uses its local currency as its functional currency, revenues and expenses are translated into U.S. dollars at average exchange rates for the period for consolidation in Sempra’s results of operations. We discuss further the impact of foreign currency and inflation rates on results of operations, including impacts on income taxes and related hedging activity, in “Part II – Item 7. MD&A – Impact of Foreign Currency and Inflation Rates on Results of Operations” in the Annual Report.
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Foreign Currency Translation
Any difference in average exchange rates used for the translation of income statement activity from year to year can cause a variance in Sempra’s comparative results of operations. In the three months and six months ended June 30, 2022,2023, the change in our earnings as a result of foreign currency translation rates was negligible$1 million and $2 million higher, respectively, compared to the same periodperiods in 2021.2022.
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Transactional Impacts
Income statement activities at our Mexicoforeign operations and their JVs are also impacted by transactional gains and losses, a summary of which is shown in the table below:
TRANSACTIONAL (LOSSES) GAINS FROM FOREIGN CURRENCY AND INFLATION EFFECTS AND ASSOCIATED DERIVATIVES
TRANSACTIONAL GAINS (LOSSES) FROM FOREIGN CURRENCY AND INFLATION EFFECTSTRANSACTIONAL GAINS (LOSSES) FROM FOREIGN CURRENCY AND INFLATION EFFECTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Total reported amountsTransactional (losses) gains included in reported amounts Total reported amountsTransactional gains (losses) included in reported amounts
Three months ended June 30, Three months ended June 30,
2022202120222021 2023202220232022
Other (expense) income, net$(1)$72 $(4)$33 
Other income (expense), netOther income (expense), net$31 $(1)$2 $(4)
Income tax expenseIncome tax expense(80)(139)(14)(83)Income tax expense(175)(80)(117)(14)
Equity earningsEquity earnings375 313 — (35)Equity earnings388 375 (20)— 
Net incomeNet income659 455 (18)(85)Net income736 659 (135)(18)
Earnings attributable to noncontrolling interestsEarnings attributable to noncontrolling interests(88)(10)2 13 Earnings attributable to noncontrolling interests(121)(88)42 2 
Earnings attributable to common sharesEarnings attributable to common shares559 424 (16)(72)Earnings attributable to common shares603 559 (93)(16)
Six months ended June 30, Six months ended June 30,
2022202120222021 2023202220232022
Other (expense) income, net$37 $107 $(17)$(16)
Other income (expense), netOther income (expense), net$72 $37 $8 $(17)
Income tax expenseIncome tax expense(414)(297)(84)(41)Income tax expense(551)(414)(252)(84)
Equity earningsEquity earnings701 631 (12)(16)Equity earnings607 701 (51)(12)
Net incomeNet income1,316 1,383 (113)(73)Net income1,908 1,316 (295)(113)
Earnings attributable to noncontrolling interestsEarnings attributable to noncontrolling interests(122)(43)22 4 Earnings attributable to noncontrolling interests(313)(122)93 22 
Earnings attributable to common sharesEarnings attributable to common shares1,171 1,298 (91)(69)Earnings attributable to common shares1,572 1,171 (202)(91)
CAPITAL RESOURCES AND LIQUIDITY
OVERVIEW
Sempra
Impact of the COVID-19 Pandemic
Our businesses that invest in, develop and operate energy infrastructure and provide electric and gas services to customers have been identified as critical or essential services in the U.S. and Mexico and have continued to operate throughout the COVID-19 pandemic. As our businesses continue to operate, our priority is the safety of our employees, customers, partners and the communities we serve. We and other companies, including our partners, are taking steps to try to protect the health and well-being of our employees and other stakeholders. We continue to work closely with local, state and federal authorities in an effort to provide essential services with minimum interruption to customers and in accordance with applicable orders, including potential vaccination mandates.
For a further discussion of risks and uncertainties related to the COVID-19 pandemic, see “Part I – Item 1A. Risk Factors” in the Annual Report.
Liquidity
We expect to meet our cash requirements through cash flows from operations, unrestricted cash and cash equivalents, borrowings under or supported by our credit facilities, other incurrences of debt includingwhich may include issuing debt securities and obtaining term loans, other financing transactions which may include issuing equity securities, distributions from our equity method investments, project financing and funding from minority interest owners. We believe that
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these cash flow sources, combined with available funds, will be adequate to fund our operations in both the short-term and long-term, including to:
▪finance capital expenditures
▪repay debt
▪fund dividends
▪fund contractual and other obligations and otherwise meet liquidity requirements
▪fund capital contribution requirements
▪fund expenditures related to the natural gas leak at SoCalGas’ Aliso Canyon natural gas storage facility
▪repurchase shares of our common stock
▪fund new business or asset acquisitions or start-ups
Sempra, SDG&E and SoCalGas currently have reasonable access to the money markets and capital markets and are not currently constrained in their ability to borrow money at market rates from commercial banks, under existing revolving credit facilities, through public offerings of debt securities registered with the SEC, or through private placements of debt supported by our revolving credit facilities in the case of commercial paper. However, our ability to access the money markets and capital markets or obtain credit from commercial banks outside of our committed revolving credit facilities could become materially constrained if changing economic conditions or disruptions to or volatility in the money markets and capital markets worsen. These sources of funding also mayhave become less attractive due to the extentrecent rise in both short-term and long-term interest rates rise.rates. In addition, our financing activities and actions by credit rating agencies, as well as many other factors, could negatively affect the availability and cost of
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both short-term and long-term debt financing and equity financing. Also, cash flows from operations may be impacted by the timing of commencement and completion, and potentially cost overruns, of large projects and other material events, such as significant outflows resulting from the agreements expected to resolve certainsettlement of material litigation related to the Leak.litigation. If cash flows from operations were to be significantly reduced or we were unable to borrow or obtain other financing under acceptable terms, we would likely first reduce or postpone discretionary capital expenditures (not related to safety)safety/reliability) and investments in new businesses. We monitor our ability to finance the needs of our operating, investing and financing activities in a manner consistent with our goal to maintain our investment-grade credit ratings.
Although we have not been impacted to date by the disruptions to the banking sector and resulting financial market instability, we cannot predict the broader or follow-on effects of recent bank failures. The disruption and uncertainty impacting the banking industry may result in reduced access to capital and increased costs of capital and could adversely affect our ability to secure financing arrangements and facilities. In addition, if the liquidity of our partners, customers or other counterparties is impacted by the disruptions in the banking sector, it may have a material adverse impact on our liquidity.
Available Funds
Our committed lines of credit provide liquidity and support commercial paper. Sempra, SDG&E and SoCalGas each have five-year credit agreements expiring in 2024, SI Partners2027 and Sempra Infrastructure has a three-year credit agreement expiring in 2024, and IEnova has committed lines of credit that expireexpiring in 2023, 2024 and 2024. In addition, IEnova2030, and ECA LNG Phase 1 havean uncommitted revolving credit facilities that expirefacility expiring in 2022 and 2023.2024.
AVAILABLE FUNDS AT JUNE 30, 2022
AVAILABLE FUNDS AT JUNE 30, 2023AVAILABLE FUNDS AT JUNE 30, 2023
(Dollars in millions)(Dollars in millions)(Dollars in millions)
SempraSDG&ESoCalGas SempraSDG&ESoCalGas
Unrestricted cash and cash equivalents(1)
Unrestricted cash and cash equivalents(1)
$1,931 $533 $416 
Unrestricted cash and cash equivalents(1)
$1,077 $332 $1 
Available unused credit(2)
Available unused credit(2)
9,150 1,500 750 
Available unused credit(2)
7,566 1,500 962 
(1)    Amounts at Sempra include $92$90 held in non-U.S. jurisdictions. We discuss repatriation in Note 1 of the Notes to Condensed Consolidated Financial Statements in this report and Note 8 of the Notes to Consolidated Financial Statements in the Annual Report.
(2)    Available unused credit is the total available on committed and uncommitted lines of credit that we discuss in Note 76 of the Notes to Condensed Consolidated Financial Statements. Because our commercial paper programs are supported by these lines, we reflect the amount of commercial paper outstanding and any letters of credit outstanding as a reduction to the available unused credit.
Short-Term Borrowings
We use short-term debt primarily to meet liquidity requirements, fund shareholder dividends, and temporarily finance capital expenditures, acquisitions or start-ups. SDG&E and SoCalGas use short-term debt primarily to meet working capital needs or to help fund event-specific costs, such as upcoming payments at SoCalGas related to resolving certain civil litigation pertaining to the Leak.costs. Commercial paper, and lines of credit and a term loan were our primary sources of short-term debt funding in the first six months of 2022.2023.
We discuss our short-term debt activities in Note 76 of the Notes to Condensed Consolidated Financial Statements and below in “Sources and Uses of Cash.”
Long-Term Debt Activities
Significant issuances of and payments on long-term debt in the first six months of 20222023 included the following:
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LONG-TERM DEBT ISSUANCES AND PAYMENTS
(Dollars in millions)
Issuances:Amount at issuanceMaturity
Sempra 3.30% fixed rate notes$750 2025
Sempra 3.70% fixed rate notes500 2029
SDG&E variable rate term loan400 2024
SDG&E 3.00% first mortgage bonds500 2032
SDG&E 3.70% first mortgage bonds500 2052
SoCalGas 2.95% fixed rate notes700 2027
Sempra Infrastructure variable rate notes114 2025
Sempra Infrastructure 3.25% fixed rate notes400 2032
Payments:PaymentsMaturity
SDG&E 1.914% amortizing first mortgage bonds17 2022
Sempra Infrastructure amortizing variable rate notes (5.13% after floating-to-fixed rate swaps)23 2022
LONG-TERM DEBT ISSUANCES AND PAYMENTS
(Dollars in millions)
Issuances:Amount at issuanceMaturity
SDG&E 5.35% first mortgage bonds$800 2053
Sempra Infrastructure variable rate notes (ECA LNG Phase 1 project)133 2025
Sempra Infrastructure variable rate notes (PA LNG Phase 1 project)228 2030
SoCalGas 5.20% first mortgage bonds500 2033
SoCalGas 5.75% first mortgage bonds500 2053
Sempra 5.40% senior unsecured notes550 2026
Sempra 5.50% senior unsecured notes700 2033
Payments:PaymentsMaturity
SoCalGas senior unsecured variable rate notes$300 2023
Sempra Infrastructure 6.3% notes (4.124% after cross-currency swap)208 2023
We discuss our long-term debt activities, including the use of proceeds on long-term debt issuances, in Note 76 of the Notes to Condensed Consolidated Financial Statements.
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Credit Ratings
We provide additional information about the credit ratings of Sempra, SDG&E and SoCalGas in “Part I – Item 1A. Risk Factors” and “Part II – Item 2. MD&A – Capital Resources and Liquidity” in the Annual Report.
The credit ratings of Sempra, SDG&E and SoCalGas remained at investment grade levels in the first six months of 2022.2023.
CREDIT RATINGS AT JUNE 30, 20222023  
 SempraSDG&ESoCalGas
Moody’sBaa2 with a stable outlookA3 with a stable outlookA2 with a stable outlook
S&PBBB+ with a negativestable outlookBBB+ with a stable outlookA with a negative outlook
FitchBBB+ with a stable outlookBBB+ with a stable outlookA with a stable outlook
A downgrade of Sempra’s or any of its subsidiaries’ credit ratings or rating outlooks may, depending on the severity, result in the imposition of financial and/or other burdensome covenants andor a requirement for collateral to be posted in the case of certain financing arrangements and may materially and adversely affect the market prices of their equity and debt securities, the rates at which borrowings are made and commercial paper is issued, and the various fees on their outstanding credit facilities. This could make it more costly for Sempra, SDG&E, SoCalGas and Sempra’s other subsidiaries to issue debt securities, to borrow under credit facilities and to raise certain other types of financing.
Sempra has agreed that, if the credit rating of Oncor’s senior secured debt by any of the three major rating agencies falls below BBB (or the equivalent), Oncor will suspend dividends and other distributions (except for contractual tax payments), unless otherwise allowed by the PUCT. Oncor’s senior secured debt was rated A2, A+ and A at Moody’s, S&P and Fitch, respectively, at June 30, 2022.2023.
Loans withto/from Affiliates
At June 30, 2022,2023, Sempra had a $626 million loan due from an unconsolidated affiliate and $282$287 million in loans due to unconsolidated affiliates. In July
Inflation Reduction Act of 2022
The IRA was signed into law in August 2022. The IRA includes tax credits and other incentives for energy and climate initiatives and introduces a 15% corporate alternative minimum tax on adjusted financial statement income for tax years beginning after December 31, 2022. We do not currently expect the loan due from an unconsolidated affiliate was paid in full, priorIRA to its March 2023 maturity date.have a material adverse impact on Sempra’s, SDG&E’s or SoCalGas’ results of operations, financial condition and/or cash flows. We will continue to assess the impacts of the IRA as the U.S. Department of the Treasury and the IRS issue guidance on tax implementation, and the U.S. Environmental Protection Agency and DOE issue guidance on energy and climate initiatives.
Sempra California
SDG&E’s and SoCalGas’ operations have historically provided relatively stable earnings and liquidity. Their future performance and liquidity will depend primarily on the ratemaking and regulatory process, environmental regulations, economic conditions, actions by the California legislature,legislators, litigation and the changing energy marketplace, as well as other matters described in this report. SDG&E and SoCalGas expect that the available unused creditfunds from their credit facilities described above, which also supports their commercial paper programs, cash flows from operations, and other incurrences of debt including issuing debt securities and obtaining term loans will continue to be adequate to fund their respective current operations and planned capital expenditures. Additionally, as we discuss below, Sempra elected to make equity contributions to SoCalGas of $800 million in
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September 2021 and $150 million in June 2022 and expects to make an additional equity contribution of approximately $500 million in August 2022. These voluntary equity contributions are intended to assist SoCalGas in maintaining its approved capital structure. SDG&E and SoCalGas manage their capital structures and pay dividends when appropriate and as approved by their respective boards of directors.
As we discuss in Note 4 of the Notes to Condensed Consolidated Financial Statements in this report and in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report, changes in regulatory balancing accounts for significant costs at SDG&E and SoCalGas, particularly a change between over- and undercollected status, may have a significant impact on cash flows. These changes generally represent the difference between when costs are incurred and when they are ultimately recovered or refunded in rates through billings to customers.
COVID-19 Pandemic Protections
SDG&E and SoCalGas are continuing to monitor the impacts of the COVID-19 pandemic on cash flows and results of operations. Some customers have experienced and continue to experience a diminished ability to pay their electric or gas bills, leading to slower payments and higher levels of nonpayment than has been the case historically. These impacts could become significant and could require modifications to our financing plans.
In connection with the COVID-19 pandemic and at the direction of the CPUC SDG&E and SoCalGas implemented a number of measures to assist customers, including automatically enrolling residential and small business customers with past-due balances in long-term repayment plans.
In 2021, SDG&E and SoCalGas applied, on behalf of their customers, for financial assistance from the California Department of Community Services and Development under the California Arrearage Payment Program, which provided funds of $63 million and $79 million for SDG&E and SoCalGas, respectively. In the first quarter of 2022, SDG&E and SoCalGas received and applied the amounts directly to eligible customer accounts to reduce past due balances. In June 2022, AB 205 was approved establishing, among other things, the 2022 California Arrearage Payment Program. SDG&E and SoCalGas expect to apply for funding from this program on behalf of their residential customers with past due balances and, if approved, receive such funding in the first quarter of 2023.
SDG&E
Authorized Cost of Capital Subject to the CCM
As we discuss in Note 4 of the Notes to the Condensed Consolidated Financial Statements, in December 2019, the CPUC approved the cost of capital for SDG&E and SoCalGas that became effective on January 1, 20202023 and will remain in effect through December 31, 2022,2025, subject to the CCM. The CPUC will open a second phase of this cost of capital proceeding to evaluate the CCM.
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The CCM applies in the interim years between required cost of capital applications and considers changes in the cost of capital based on changes in interest rates using the applicable utility bond index published by Moody’s (the CCM benchmark rate) for each 12-month period ending September 30 (the measurement period). The CCM benchmark rate is the basis of comparison to determine if the CCM is triggered, which occurs if the change in the applicable Moody’s utility bond index relative to the CCM benchmark rate is larger than plus or minus 1.000% at the end of the measurement period. The index applicable to SDG&E and SoCalGas is based on each utility’s credit rating. For the measurement period that endedends on September 30, 2021, the2023, SDG&E’s CCM would trigger for SDG&E if the CPUC determines that the CCM should be implemented because the averagebenchmark rate is 4.367% based on Moody’s Baa- utility bond index between October 1, 2020 and September 30, 2021 was 1.17% below SDG&E’sSoCalGas’ CCM benchmark rate of 4.498%. In August 2021, SDG&E filed an application with the CPUC to update its cost of capital due to the ongoing effects of the COVID-19 pandemic rather than have the CCM apply. In December 2021, the CPUC established a proceeding to determine ifis 4.074% based on Moody’s A- utility bond index. SDG&E’s cost of capital was impacted by an extraordinary event such thatand SoCalGas’ average bond index rates for the CCM should not apply. If the CPUC finds that there was not an extraordinary event, the CCM would be effective retroactive to Januaryperiod from October 1, 2022 andthrough June 30, 2023 were more than 1.000% above their respective CCM benchmark rates. The CCM, if triggered on September 30, 2023, would, automatically adjust SDG&E’ssubject to regulatory approval, increase the authorized ROE from 10.20% to 9.62% and adjust its authorizedrate of return, including the cost of debt to reflect the then current embedded cost and projected interest rate. If the CPUC finds that there was an extraordinary event, it will then determine whether to suspend the CCM for 2022 and preserve SDG&E’s current authorized cost of capital or hold a second phase of the proceeding to set a new cost of capital for 2022. SDG&E expects to receive a final decision in the second half of 2022. In December 2021, the CPUC granted SDG&E the establishment of memorandum accountsreturn on equity, effective January 1, 2022 to track any differences in revenue requirement resulting from the interim cost of capital decision expected in 2022.2024.
We further discuss the CCM in “Part I – Item 1A. Risk Factors” in the Annual Report.
SDG&E
Wildfire Fund
The carrying value of SDG&E’s Wildfire Fund asset totals $346totaled $317 million at June 30, 2022.2023. We describe the Wildfire Legislation and related accounting treatment and SDG&E’s commitment to make annual shareholder contributions to the Wildfire Fund through 2028 in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.
SDG&E is exposed to the risk that the participating California electric IOUs may incur third-party wildfire costs for which they will seek recovery from the Wildfire Fund with respect to wildfires that have occurred since enactment of the Wildfire Legislation
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in July 2019. In such a situation, SDG&E may recognize a reduction of its Wildfire Fund asset and record an impairment charge against earnings when thereavailable coverage is a reduction of the available coveragereduced due to recoverable claims from any of the participating IOUs. PG&EPacific Gas and Electric Company has indicated that it will seek reimbursement from the Wildfire Fund for losses associated with the Dixie Fire, which burned from July 2021 through October 2021 and was reported to be the largest single wildfire (measured by acres burned) in California history. If any California electric IOU’s equipment is determined to be a cause of a fire, it could have a material adverse effect on SDG&E’s and Sempra’s financial condition and results of operations up to the carrying value of our Wildfire Fund asset, with additional potential material exposure if SDG&E’s equipment is determined to be a cause of a fire. In addition, the Wildfire Fund could be completely exhausted due to fires in the other California electric IOUs’ service territories, by fires in SDG&E’s service territory or by a combination thereof. In the event that the Wildfire Fund is materially diminished, exhausted or terminated, SDG&E will lose the protection afforded by the Wildfire Fund, and as a consequence, a fire in SDG&E’s service territory could have a material adverse effect on SDG&E’s and Sempra’s results of operations, financial condition, cash flows and/or prospects.
Wildfire Cost Recovery Mechanism
In July 2021, SDG&E filed a request with the CPUC to establish an interim cost recovery mechanism that would recover in rates 50% of its wildfire mitigation plan costs. The proposed recovery would be incremental to wildfire costs currently authorized in its GRC and would be subject to reasonableness review. In May 2022, the CPUC issued a final decision denying SDG&E’s request and directing SDG&E to file for the review and recovery of its wildfire mitigation plan costs through its next GRC or a separate application. SDG&E proposes to submit separate requests in its GRC for review and recovery of its wildfire mitigation plan costs in mid-2023 for costs incurred from 2019 through 2022 and in mid-2024 for costs incurred in 2023.
Off-Balance Sheet Arrangements
SDG&E has entered into PPAs and tolling agreements that are variable interests in unconsolidated entities. We discuss variable interests in Note 1 of the Notes to Condensed Consolidated Financial Statements.
SoCalGas
Aliso Canyon Natural Gas Storage Facility Gas Leak
SoCalGas’ future performance and liquidity willmay be impacted by the resolution of legal, regulatory and other matters concerningpertaining to the Leak, which we discuss below and in Note 1110 of the Notes to Condensed Consolidated Financial Statements in this report and in “Part I – Item 1A. Risk Factors” in the Annual Report.
Aliso Canyon Natural Gas Storage Facility Gas Leak
From October 23,Insurance and Accounting and Other Impacts. Since 2015, through February 11, 2016, SoCalGas experienced a natural gas leak from one of the injection-and-withdrawal wells, SS25, at its Aliso Canyon natural gas storage facility located in Los Angeles County.
Cost Estimate, Accounting Impact and Insurance.At June 30, 2022, SoCalGas estimates certainhas incurred significant costs related to the Leak, are $3,361 million (the cost estimate). This cost estimate may increase significantly as more information becomes available. At June 30, 2022, $2,003 million ofincluding costs to defend against and settle civil litigation arising from the cost estimate is accrued in Reserve for Aliso Canyon Costs and $4 million of the cost estimate is accrued in Deferred Credits and Other on SoCalGas’ and Sempra’s Condensed Consolidated Balance Sheets.
Sempra elected to make equity contributions to SoCalGas of $800 million in September 2021 and $150 million in June 2022 and expects to make an additional equity contribution of approximately $500 million in August 2022. These voluntary equity contributions are intended to assist SoCalGas in maintaining its approved capital structure. SoCalGas expects to make a payment of approximately $1.8 billion on or around August 30, 2022 related to the settlement of the Individual Plaintiff Litigation. SoCalGas plans to fund the settlement payment using a combination of equity contributions from Sempra, short-term debt and cash on hand.
Except for the amounts paid or estimated to settle certain legal and regulatory matters, the cost estimate does not include (i) any amounts necessary to resolve claims of Individual Plaintiffs who do not agree to participate in the settlement of the Individual Plaintiff Litigation or (ii) the matters that we describe in “Civil Litigation – Unresolved Litigation” and “Regulatory Proceedings” in Note 11 of the Notes to Condensed Consolidated Financial Statements to the extent it is not possible to predict at this time the outcome of these actions or reasonably estimate the possible costs or a range of possible costs for damages, restitution, civil or administrative fines or penalties, defense, settlement or other costs or remedies that may be imposed or incurred. The cost estimate also does not include certain other costs incurred by Sempra associated with defending against shareholder derivative lawsuits and other potential costs that we currently do not anticipate incurring or that we cannot reasonably estimate. Further, we are not able to reasonably estimate the possible loss or a range of possible losses in excess of the amounts accrued. The costs or losses not included in the cost estimate could be significant and could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects.
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We have received insurance payments for many of the categories of costs included in the cost estimate, including temporary relocation and associated processing costs, control-of-well expenses, costs of the government-ordered response to the Leak, certain legal costs and lost gas. As of June 30, 2022, we recorded the expected recovery of the cost estimate related to the Leak of $344 million as Insurance Receivable for Aliso Canyon Costs on SoCalGas’ and Sempra’s Condensed Consolidated Balance Sheets. This amount is exclusive of insurance retentions and $935 million of insurance proceeds we received through June 30, 2022. We intend to pursue the full extent of our insurance coverage for the costs we have incurred.Leak. Other than insurance for certain future defense costs we may incur as well as directors’ and officers’ liability, we have exhausted all of our insurance infor this matter. We continue to pursue other sources of insurance coverage for costs related to this matter, but we may not be successful in obtaining additional insurance recovery for any of these costs. If
At June 30, 2023, $126 million is accrued in Reserve for Aliso Canyon Costs and $2 million is accrued in Deferred Credits and Other on SoCalGas’ and Sempra’s Condensed Consolidated Balance Sheets. These accruals do not include any amounts beyond what has been estimated to resolve the matters that we describe in “Litigation” and “Regulatory Proceedings” nor any amounts that may be necessary to resolve threatened litigation, other potential litigation or other costs, in each case to the extent it is not possible to predict at this time the outcome of these actions or reasonably estimate the possible costs or a range of possible costs. Further, we are not able to secure additional insurance recovery,reasonably estimate the possible loss or a range of possible losses in excess of the amounts accrued, which could be significant.
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An adverse outcome with respect to (i) the litigation we describe under “Litigation,” (ii) the unresolved proceeding pursuant to the SB 380 OII we describe under “Regulatory Proceedings,” (iii) the Leak OII we describe under “Regulatory Proceeding – Subject to an Agreement to Resolve,” if any costsapproval of the negotiated settlement is not obtained, or (iv) threatened or other potential litigation related to the Leak, in each case that we have recorded as an insurance receivable are not collected, if there are delaysdiscuss in receiving insurance recoveries, or ifNote 10 of the insurance recoveries are subjectNotes to income taxes while the associated costs are not tax deductible, such amounts and/or delaysCondensed Consolidated Financial Statements could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects.
Natural Gas Storage Operations and Reliability. Natural gas withdrawn from storage is important for service reliability during peak demand periods, including peak electric generation needs in the summer and consumer heating needs in the winter. The Aliso Canyon natural gas storage facility is the largest SoCalGas storage facility and an important component of SoCalGas’ delivery system. As a result of the Leak, the CPUC has issued a series of directives to SoCalGas specifying the range of working gas to be maintained in the Aliso Canyon natural gas storage facility as well as protocols for the withdrawal of gas, to support safe and reliable natural gas service. In February 2017, the CPUC opened a proceeding pursuant to the SB 380 OII to determine the feasibility of minimizing or eliminating the use of the Aliso Canyon natural gas storage facility while still maintaining energy and electric reliability for the region, including considering alternative means for meeting or avoiding the demand for the facility’s services if it were eliminated.
At June 30, 2022,2023, the Aliso Canyon natural gas storage facility had a net book value of $908$976 million. If the Aliso Canyon natural gas storage facility were to be permanently closed or if future cash flows from its operation were otherwise insufficient to recover its carrying value, we may record an impairment of the facility, which could be material, or we could incur materially higher than expected operating costs and/or be required to make material additional capital expenditures (any or all of which may not be recoverable in rates), and natural gas reliability and electric generation could be jeopardized. Any such outcome could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects.
Franchise Agreement
In December 2021, the Los Angeles City Council awarded SoCalGas a new, 21-year natural gas franchise following an invitation for bids, which was approved and signed by the City of Los Angeles mayor in January 2022. The 21-year term consists of an initial 13-year term from the effective date, followed by an 8-year term that the City of Los Angeles has the option to terminate. Among other conditions, the new franchise agreement was subject to CPUC approval of the rates and surcharges therein for it to become effective, which SoCalGas received in March 2022. Consistent with its terms, the new agreement went into effect on May 1, 2022, until which time SoCalGas continued to serve customers located in the City of Los Angeles in accordance with the agreement that expired on December 31, 2021, by operation of law.
Sempra Texas Utilities
Oncor relies on external financing as a significant source of liquidity for its capital requirements. In the event that Oncor fails to meet its capital requirements, or is unable to access sufficient capital, or raise capital on favorable terms to finance its ongoing needs, we may elect to make additional capital contributions to Oncor (as our commitments to the PUCT prohibit us from making loans to Oncor), which could be substantial and reduce the cash available to us for other purposes, increase our indebtedness and ultimately materially adversely affect our results of operations, financial condition, cash flows and/or prospects. Oncor’s ability to make distributions may be limited by factors such as its credit ratings, regulatory capital requirements, increases in its capital plan, debt-to-equity ratio approved by the PUCT and other restrictions and considerations. In addition, Oncor will not make distributions if a majority of Oncor’s independent directors or any minority member director determines it is in the best interests of Oncor to retain such amounts to meet expected future requirements.
Capital Structure and Return on Equity
On April 6, 2023, the PUCT issued a final order in Oncor’s comprehensive base rate review. The final order sets Oncor’s authorized ROE at 9.7%, a decrease from its previously authorized ROE of 9.8%, and maintains Oncor’s authorized regulatory capital structure at 57.5% debt to 42.5% equity. The new rates became effective on May 1, 2023. On June 30, 2023, the PUCT issued an order on rehearing in response to the motions for rehearing filed by Oncor and certain intervenor parties in the proceeding. The order on rehearing made certain technical and typographical corrections to the final order but otherwise affirmed the material provisions of the final order and did not require modification of the rates that went into effect on May 1, 2023. The order on rehearing is subject to motions for rehearing and appeals.
Off-Balance Sheet Arrangement
Our investment in Oncor Holdings is a variable interest in an unconsolidated entity. We discuss variable interests in Note 1 of the Notes to Condensed Consolidated Financial Statements.
Sempra Infrastructure
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Sempra Infrastructure expects to fund capital expenditures, investments and operations in part with available funds, including credit facilities, and cash flows from operations of the Sempra Infrastructure businesses. We expect Sempra Infrastructure will require additional funding for the development and expansion of its portfolio of projects, which may be financed through a combination of funding from the parent and minority interest owners, bank financing, issuances of debt, project financing, and partnering in JVs.
On June 1, 2022, we completed the sale of a 10% NCI in SI Partners to ADIA for cash proceeds of $1.7 billion. We have used a portion of the proceeds from the sale to ADIA to repay commercial paper borrowings used to repurchase $750 million in shares of our common stock ($300 million of which was completed in the fourth quarter of 2021, $200 million of which was completed in the first quarter of 2022JVs and $250 million of which was completed in the second quarter of 2022), and we intend to use the remaining proceeds to help fund capital expenditures at Sempra California and Sempra Texas Utilities and to further strengthen our balance sheet.
Following the closing of the ADIA transaction, Sempra, KKR and ADIA directly or indirectly own a 70%, 20%, and 10% interest, respectively, in SI Partners. The sale of NCI in SI Partners to ADIA has reduced our ownership interest in SI Partners and requires us to involve a new minority partner in making certain business decisions. Moreover, the decrease in our ownership of SI Partners also decreases our share of the cash flows, profits and other benefits these businesses currently or may in the future produce.asset sales.
In the six months ended June 30, 2022, SI Partners2023, Sempra Infrastructure distributed $106$252 million to its minority shareholder, KKR.shareholders and minority shareholders contributed $729 million to Sempra Infrastructure.
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LNG and Net-Zero Solutions
In 2022 to date, Sempra Infrastructure has entered into the following non-binding HOAs for the negotiation and finalization of definitive SPAs with:
▪PGNiG for a 20-year term for 2 Mtpa of LNG from the proposed Cameron LNG JV liquefaction expansion project (Cameron LNG JV Phase 2 project) and 1 Mtpa from the proposed PA LNG Phase 1 project. The HOA also provides PGNiG the opportunity in 2022 to reallocate volumes from the Cameron LNG JV Phase 2 project to the PA LNG Phase 1 project.
▪INEOS Energy Trading Ltd., a subsidiary of INEOS Ltd., for a 20-year term for approximately 1.4 Mtpa of LNG from the proposed PA LNG Phase 1 project or the proposed Cameron LNG JV Phase 2 project, with amounts to be allocated between the two projects at Sempra Infrastructure’s election.
▪RWE Supply & Trading GmbH, a subsidiary of RWE AG, for a 15-year term for 2.25 Mtpa of LNG from the proposed PA LNG Phase 1 project.
▪ConocoPhillips for a 20-year term for 5 Mtpa of LNG from the proposed PA LNG Phase 1 project. The HOA is further discussed below.
The ultimate participation in and offtake from the proposed projects remain subject to negotiation and finalization of definitive agreements, among other factors, and the HOAs do not commit any party to enter into definitive agreements with respect to any of the applicable proposed projects.
Cameron LNG JV Liquefaction ExpansionPhase 2 Project. Cameron LNG JV is developing a proposed expansion project that would add one liquefaction train with an expected maximum production capacity of approximately 6.75 Mtpa and would increase the production capacity of the existing three trains at the Cameron LNG Phase 1 facility by up to approximately 1 Mtpa through debottlenecking activities. The Cameron LNG JV site can accommodate additional trains beyond the proposed Cameron LNG JV Phase 2 project.
Cameron LNG JV previously received major permits and FTA and non-FTA approvals associated with the potential expansion that included up to two additional liquefaction trains and up to two additional full containment LNG storage tanks. In January 2022,The non-FTA approval for the proposed Cameron LNG JV filedPhase 2 project includes, among other things, a May 2026 deadline to commence commercial exports, for which we expect to request an amendment, subject to approval byextension. In March 2023, the FERC approved Cameron LNG JV’s request to modifyamend the permits to allow the use of electric drives, instead of gas turbine drives, which would reduce overall emissions. The amendment if approved, would also changeallows the design to be changed from a two-train gas turbine expansion to a one-train electric drive expansion along with other design enhancements that, together, are expected to result in a more cost-effective and efficient facility, while also reducing overall greenhouse gasGHG emissions.
Sempra Infrastructure and the other Cameron LNG JV partners,members, namely affiliates of TotalEnergies SE, Mitsui & Co., Ltd. and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha, have entered into ana non-binding HOA for the potential development of the Cameron LNG JV Phase 2 project. The non-binding HOA provides a commercial framework for the proposed project, including the contemplated allocation to Sempra Infrastructure of 50.2% of the projected fourth train production capacity and 25% of the projected debottlenecking capacity from the project under tolling agreements. The non-binding HOA contemplates the remaining capacity to be allocated equally to the existing Cameron LNG JV Phase 1 facility customers. Sempra Infrastructure plans to sell the LNG corresponding to its allocated capacity from the proposed Cameron LNG JV Phase 2 project
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under long-term SPAs prior to making a final investment decision. The HOA is a non-binding arrangement. The ultimate participation in and offtake by Sempra Infrastructure, TotalEnergies SE, Mitsui & Co., Ltd. and Japan LNG Investment, LLC remain subject to negotiation and finalization of definitive agreements, among other factors, and the non-binding HOA does not commit any party to enter into definitive agreements with respect to the proposed Cameron LNG JV Phase 2 project.
Sempra Infrastructure, the other Cameron LNG JV partners,members, and Cameron LNG JV have entered into a Phase 2 Project Development Agreement under which Sempra Infrastructure, subject to certain conditions and ongoing approvals by the Cameron LNG JV board, will manage and lead the Cameron LNG JV Phase 2 project development work up tountil Cameron LNG JV makes a final investment decision by Cameron LNG JV.decision.
In April 2022, Cameron LNG JV, upon the unanimous approval of the Cameron LNG JV board, awarded two FEED contracts, one to Bechtel Energy Inc. and the other to a joint venture between JGC America Inc. and Zachry Industrial Inc. At the conclusion of the resulting competitive FEED process, we expect to select one contractor to be the EPC contractor for the proposed Cameron LNG JV Phase 2 project.
In connection with the execution of the Phase 2 Project Development Agreement and the award of the FEED contracts, the Cameron LNG JV board unanimously approved an expansion development budget to fund, subject to the terms of the Phase 2 Project Development Agreement, development work necessary to prepare for a potential final investment decision.
In July 2023, Cameron LNG JV informed Bechtel that it has been selected to perform additional value engineering work on the proposed Cameron LNG Phase 2 project, which we expect will continue through the fall of 2023. The parties are negotiating the terms and conditions of a definitive EPC contract for the project. The current arrangement with Bechtel does not commit any party to enter into a definitive EPC contract or to otherwise participate in the project.
Cameron LNG JV has entered into a non-binding MOU with Entergy Louisiana, LLC, a subsidiary of Entergy Corporation, to negotiate the terms and conditions for a new electric service agreement intended to reduce Cameron LNG JV’s scope 2 emissions from the electricity it purchases from Entergy Louisiana, LLC. The non-binding MOU sets forth a framework for Entergy Louisiana, LLC and Cameron LNG JV to finalize and sign a minimum 20-year agreement for the procurement of new renewable generation resources in Louisiana, subject to the ultimate approval of the Louisiana Public Service Commission and Cameron LNG JV. The ultimate arrangement between Cameron LNG JV and Entergy Louisiana, LLC remains subject to negotiation and finalization of definitive agreements, among other factors, and the non-binding MOU does not commit any party to enter into definitive agreements with respect to the proposed electric services agreement.
Sempra Infrastructure has entered into a non-binding HOA for the negotiation and potential finalization of a definitive 20-year SPA with ORLEN for 2 Mtpa of LNG offtake from the proposed Cameron LNG Phase 2 project. The ultimate participation in and offtake from the proposed project remains subject to negotiation and finalization of a definitive agreement, among other factors, and the non-binding HOA does not commit any party to enter into a definitive agreement with respect to the proposed project. Sempra Infrastructure also entered into a non-binding HOA with Williams for the negotiation of potential LNG offtake from, and feed gas supply to, the PA LNG Phase 2 project and Cameron LNG Phase 2 project that are under development, as well as a
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potential strategic JV related to the existing Cameron Interstate Pipeline and the proposed Port Arthur Pipeline Louisiana Connector. The term of this non-binding HOA ended in March 2023.
Expansion of the Cameron LNG JV liquefactionPhase 1 facility beyond the first three trains is subject to certain restrictions and conditions under the JV project financing agreements, including among others, scope restrictions on expansion of the project unless appropriate prior consent is obtained from the existing project lenders. Under the Cameron LNG JV equity agreements, the expansion of the project requires the unanimous consent of all the partners, including with respect to the equity investment obligation of each partner. Working under the framework established in the Phase 2 Project Development Agreement, Sempra Infrastructure is targeting completingand the FEED work inother Cameron LNG JV members are investing additional time upfront to reduce construction risk and project costs and better optimize the summerconstruction schedule. We expect this process to continue through the fall of 2023 and expectsexpect to be in a position to make a final investment decision shortly thereafter.in 2024, subject to executing an EPC contract, securing project financing, and extending the commercial export deadline under the project’s non-FTA approval. The timing of when or if Cameron LNG JV will receive approval from the FERC to amend its permits and from the existing project lenders to conduct the expansion under its financing agreements is uncertain, and there is no assurance that Sempra Infrastructure will complete the necessary development work, sufficiently reduce construction risks and project costs, or that the Cameron LNG JV members will unanimously agree in a timely manner or at all on making a final investment decision, which, if not accomplished, would materially and adversely impact the development of the Cameron LNG JV Phase 2 project.
The developmentDevelopment of the proposed Cameron LNG JV Phase 2 project is subject to numerous other risks and uncertainties, including securing binding customer commitments; reaching unanimous agreement with our partners to proceed; obtaining, modifying and maintaining a number of permits and regulatory approvals, including approval from the FERC for amendments to existing permits;approvals; sufficiently reducing construction risks and project costs; securing certain consents under the existing financing agreements and securingobtaining sufficient new financing; negotiating, completing and completingmaintaining suitable commercial agreements, including a definitive EPC, contract and definitive Cameron LNG JV tolling and governance agreements; reaching a positive final investment decision; and other factors associated with this potential investment. For a discussion of these risks, see “Part I – Item 1A. Risk Factors” in the Annual Report.
ECA LNG Liquefaction Export Projects.Phase 1 Project. Sempra Infrastructure is developing two separate natural gas liquefaction export projects at its existing ECA Regas Facility. The liquefaction export projects, which are planned for developmentSI Partners owns an 83.4% interest in two phases (a mid-scale project by ECA LNG Phase 1, that is under construction and a proposed large-scale project byan affiliate of TotalEnergies SE owns the remaining 16.6% interest. ECA LNG Phase 2), are being developed to provide buyers1 is constructing a one-train natural gas liquefaction facility at the site of Sempra Infrastructure’s existing ECA Regas Facility with direct access to North American west coast LNG supplies.a nameplate capacity of 3.25 Mtpa and an initial offtake capacity of 2.5 Mtpa. We do not expect the construction or operation of the ECA LNG Phase 1 project to disrupt operations at the ECA Regas Facility, but have planned measures to limit disruption of operations should any arise. However, construction of the proposed ECA LNG Phase 2 project would conflict with the current operations at the ECA Regas Facility, which currently has long-term regasification contracts for 100% of the regasification facility’s capacity through 2028, making the decisions on whether, when and how to pursueFacility. We expect the ECA LNG Phase 21 project dependentto commence commercial operations in part on whether the investment in a large-scale liquefaction facility would, over the long term, be more beneficial financially than continuing to supply regasification services under our existing contracts.summer of 2025.
In March 2019, ECA LNGWe received two authorizations from the DOE to export U.S.-produced natural gas to Mexico and to re-export LNG to non-FTA countries from itsthe ECA LNG Phase 1 project, which is a one-train natural gas liquefaction facility with a nameplate capacity of 3.25 Mtpa and initial offtake capacity of approximately 2.5 Mtpa that is under construction, and its proposed ECA LNG Phase 2 project that is under development.
In April 2020,project. ECA LNG Phase 1 executedhas definitive 20-year SPAs with an affiliate of TotalEnergies SE for approximately 1.7 Mtpa of LNG and with Mitsui & Co., Ltd. for approximately 0.8 Mtpa of LNG and with an affiliate of TotalEnergies SE for approximately 1.7 Mtpa of LNG. In December 2020, an affiliate of TotalEnergies SE acquired a 16.6% ownership interest in ECA LNG Phase 1, with Sempra Infrastructure retaining an 83.4% ownership interest. Our MOUs and/or HOAs with Mitsui & Co., Ltd., TotalEnergies SE, and ConocoPhillips, which we describe below, provide a framework for their potential offtake of LNG from, and potential acquisition of an equity interest in, ECA LNG Phase 2.
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In February 2020, we entered into an EPC contract with Technip Energies for the engineering, procurement and construction of the ECA LNG Phase 1 project. Since reaching a positive final investment decision with respect to the project in November 2020, Technip Energies has been working to construct the ECA LNG Phase 1 project. TheWe estimate the total price of the EPC contract is estimated atto be approximately $1.5 billion. We estimate thatbillion, with capital expenditures will approximate $2.0approximating $2 billion including capitalized interest and project contingency. The actual cost of the EPC contract and the actual amount of these capital expenditures may differ perhaps substantially from our estimates. We expect
ECA LNG Phase 1 to begin producing LNG by the end of 2024.
In December 2020, ECA LNG Phase 1 entered intohas a five-year loan agreement with a syndicate of seven external lenders that matures in December 2025 for an aggregate principal amount of up to $1.6$1.3 billion, of which $455$708 million was outstanding at June 30, 2022.2023. Proceeds from the loan are being used to finance the cost of construction of the ECA LNG Phase 1 project. We discuss the details of this loan in Note 76 of the Notes to Condensed Consolidated Financial Statements in this report and in Note 7 of the Notes to Consolidated Financial Statements in the Annual Report.
The constructionConstruction of the ECA LNG Phase 1 project and the development of the potential ECA LNG Phase 2 project areis subject to numerous risks and uncertainties. For Phase 1, these includeuncertainties, including maintaining permits and regulatory approvals; construction delays; securingnegotiating, completing and maintaining suitable commercial arrangements, such asagreements, including definitive gas supply and transportation agreements; the impact of recent and proposed changes to the law in Mexico; and other factors associated with the project and its construction. For the ECA LNG Phase 2 project, these include obtaining binding customer commitments; the receipt of a number of permits and regulatory approvals; obtaining financing; negotiating and completing suitable commercial agreements, including a definitive EPC contract, equity acquisition and governance agreements, LNG sales agreements and gas supply and transportation agreements; reaching a positive final investment decision; the impact of recent and proposed changes to the law in Mexico; and other factors associated with this potential investment. In addition, as we discuss in Note 1110 of the Notes to Condensed Consolidated Financial Statements, an unfavorable decision on certain property disputes orand permit challenges or an extended dispute with existing customers at the ECA Regas Facility,that could materially adversely affect the development and construction of these projects and Sempra’s results of operations, financial condition, cash flows and/or prospects, including the impairment of all or a substantial portion of the capital costs invested in the projects to date. For a discussion of these risks, see “Part I – Item 1A. Risk Factors” in the Annual Report.
Port Arthur LNG Liquefaction Export Project. Sempra Infrastructure is developing a proposed natural gas liquefaction export project on a greenfield site that it owns in the vicinity of Port Arthur, Texas, located along the Sabine-Neches waterway. Sempra Infrastructure received authorizations from the DOE in August 2015 and May 2019 that collectively permit the LNG to be produced from the proposed PA LNG Phase 1 project to be exported to all current and future FTA and non-FTA countries. In February 2020, Sempra Infrastructure filed an application with the DOE to permit LNG produced from the proposed PA LNG Phase 2 project to be exported to all current and future FTA and non-FTA countries.
In April 2019, the FERC approved the siting, construction and operation of the proposed PA LNG Phase 1 project facilities, along with certain natural gas pipelines, including the Louisiana Connector and Texas Connector Pipelines, that could be used to supply feed gas to the liquefaction facility if and when the project is completed. In February 2020, Sempra Infrastructure filed a FERC application for the siting, construction and operation of the proposed PA LNG Phase 2 project, including the potential addition of up to two liquefaction trains.
In February 2020, we entered into an EPC contract with Bechtel for the proposed PA LNG Phase 1 project. The EPC contract contemplates the construction of two liquefaction trains with a nameplate capacity of approximately 13 Mtpa, two LNG storage tanks, a marine berth and associated loading facilities and related infrastructure necessary to provide liquefaction services. In December 2020, we amended and restated the EPC contract to reflect an estimated price of approximately $8.7 billion. Since we did not issue a full notice to proceed by July 15, 2021, agreement by both parties on an amendment to the EPC contract is necessary to proceed. On April 8, 2022, we entered into an agreement with Bechtel to provide a revised proposal for the EPC contract price and the EPC schedule for the proposed PA LNG Phase 1 project. Bechtel is scheduled to issue this revised proposal later this year for Sempra Infrastructure’s consideration. Any agreement on such an amendment to the EPC contract by both parties or on favorable terms to Sempra Infrastructure cannot be assured.
In July 2022, Sempra Infrastructure and ConocoPhillips entered into a non-binding HOA to develop Sempra Infrastructure’s proposed PA LNG Phase 1 project and jointly participate in other related energy infrastructure in Southeast Texas and the Pacific Coast of Mexico, including ECA LNG Phase 2. In addition to potential offtake of 5 Mtpa of LNG from the proposed PA LNG Phase 1 project, the HOA also contemplates a 30% equity investment in the proposed PA LNG Phase 1 project by ConocoPhillips and the potential for ConocoPhillips to supply additional natural gas to the proposed facility.
We are progressing the development of the proposed PA LNG Phase 1 project, taking into account market demands given the current geopolitical environment, completing certain milestones with Bechtel, executing definitive agreements for LNG offtake and equity investments, and obtaining financing. We also continue to evaluate overall opportunities to develop the entirety of the
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Port Arthur site as well as potential design changes that could reduce overall emissions, including a facility design utilizing electric drives, renewable power sourcing and other technological solutions, which may apply to any future expansions, such as the proposed PA LNG Phase 2 project.
Development of the Port Arthur LNG liquefaction export project is subject to a number of risks and uncertainties, including obtaining binding customer commitments; identifying suitable project partners; completing the required commercial agreements, such as equity acquisition and governance agreements, LNG sales agreements and gas supply and transportation agreements; completing construction contracts, including an amendment to the EPC contract with Bechtel; securing and maintaining all necessary permits and approvals; obtaining financing and incentives, such as obtaining property tax abatement; reaching a positive final investment decision;project; and other factors associated with the potential investment.project and its construction. An unfavorable outcome with respect to any of these factors could have a material adverse effect on Sempra’s results of operations, financial condition, cash flows and/or prospects, including the impairment of all or a substantial portion of the capital costs invested in the project to date. For a discussion of these risks, see “Part I – Item 1A. Risk Factors” in the Annual Report.
ECA LNG Phase 2 Project. Sempra Infrastructure is developing a second, large-scale natural gas liquefaction project at the site of its existing ECA Regas Facility. We expect the proposed ECA LNG Phase 2 project to be comprised of two trains and one
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LNG storage tank and produce approximately 12 Mtpa of export capacity. We expect that construction of the proposed ECA LNG Phase 2 project would conflict with the current operations at the ECA Regas Facility, which currently has long-term regasification contracts for 100% of the regasification facility’s capacity through 2028. This makes the decisions on whether, when and how to pursue the proposed ECA LNG Phase 2 project dependent in part on whether the investment in a large-scale liquefaction facility would, over the long term, be more beneficial financially than continuing to supply regasification services under our existing contracts.
We received authorizations from the DOE to export U.S.-produced natural gas to Mexico and to re-export LNG to non-FTA countries from the proposed ECA LNG Phase 2 project.
We have non-binding MOUs and/or HOAs with Mitsui & Co., Ltd., TotalEnergies SE, and ConocoPhillips that provide a framework for their potential offtake of LNG from the proposed ECA LNG Phase 2 project and potential acquisition of an equity interest in ECA LNG Phase 2. The ultimate participation in and offtake by these parties remains subject to negotiation and finalization of definitive agreements, among other factors, and the non-binding MOUs and/or HOAs do not commit any party to enter into definitive agreements with respect to the proposed ECA LNG Phase 2 project.
Development of the proposed ECA LNG Phase 2 project is subject to numerous risks and uncertainties, including securing binding customer commitments; obtaining and maintaining permits and regulatory approvals; obtaining financing; negotiating, completing and maintaining suitable commercial agreements, including definitive EPC, equity acquisition, governance, LNG sales, gas supply and transportation agreements; reaching a positive final investment decision; the impact of recent and proposed changes to the law in Mexico; the property disputes and permit challenges that we reference in the ECA LNG Phase 1 project discussion above; and other factors associated with this potential investment. For a discussion of these risks, see “Part I – Item 1A. Risk Factors” in the Annual Report.
PA LNG Phase 1 Project. Since making a positive final investment decision in March 2023, Sempra Infrastructure is constructing a natural gas liquefaction project on a greenfield site that it owns in the vicinity of Port Arthur, Texas, located along the Sabine-Neches waterway. The PA LNG Phase 1 project will consist of two liquefaction trains, two LNG storage tanks, a marine berth and associated loading facilities and related infrastructure necessary to provide liquefaction services with a nameplate capacity of approximately 13 Mtpa and an initial offtake capacity of approximately 10.5 Mtpa. We expect the first and second trains of the PA LNG Phase 1 project to commence commercial operations in 2027 and 2028, respectively.
In April 2019, the FERC approved the siting, construction and operation of the PA LNG Phase 1 project facilities, along with certain natural gas pipelines, including the Port Arthur Pipeline Louisiana Connector and Texas Connector, that could be used to supply feed gas to the liquefaction facility when the project is completed. Sempra Infrastructure received authorizations from the DOE in August 2015 and May 2019 that collectively permit the LNG to be produced from the PA LNG Phase 1 project to be exported to all current and future FTA and non-FTA countries. In June 2023, Port Arthur LNG submitted an amendment to its FERC order requesting authorization to increase its work force and implement a 24-hours-per-day construction schedule in order to further enhance construction efficiency while minimizing temporal impacts to the community and environment in the vicinity of the project. If approved, the amendment would also provide the EPC contractor with more optionality to meet or exceed the project’s construction schedule, subject to the timing of FERC approval of the amendment.
Sempra Infrastructure has definitive SPAs for LNG offtake from the PA LNG Phase 1 project with:
▪an affiliate of ConocoPhillips for a 20-year term for 5 Mtpa of LNG, as well as a natural gas supply management agreement whereby an affiliate of ConocoPhillips will manage the feed gas supply requirements for the facility.
▪RWE Supply & Trading GmbH, a subsidiary of RWE AG, for a 15-year term for 2.25 Mtpa of LNG.
▪INEOS for a 20-year term for approximately 1.4 Mtpa of LNG.
▪ORLEN for a 20-year term for approximately 1 Mtpa of LNG.
▪ENGIE S.A. for a 15-year term for approximately 0.875 Mtpa of LNG.
In February 2020, we entered into an EPC contract, as amended and restated in October 2022, with Bechtel for the PA LNG Phase 1 project. In March 2023, we issued a final notice to proceed under the EPC contract, which has an estimated price of approximately $10.7 billion after change orders. We estimate the capital expenditures for the PA LNG Phase 1 project will be approximately $13 billion including capitalized interest at the project level and project contingency. The actual cost of the EPC contract and the actual amount of these capital expenditures may differ substantially from our estimates.
As we discuss in Note 1 of the Notes to Condensed Consolidated Financial Statements, in March 2023, an indirect subsidiary of SI Partners completed the sale of an indirect 30% NCI in the PA LNG Phase 1 project to an affiliate of ConocoPhillips for aggregate cash consideration of approximately $265 million, subject to customary post-closing adjustments. We used the proceeds from this sale for capital expenditures and other general corporate purposes. In connection with this sale, both SI Partners and
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ConocoPhillips provided guarantees relating to their respective affiliate’s commitment to make its pro rata equity share of capital contributions to fund 110% of the development budget of the PA LNG Phase 1 project, in an aggregate amount of up to $9.0 billion. SI Partners’ guarantee covers 70% of this amount plus enforcement costs of its guarantee.
In March 2023, an indirect subsidiary of SI Partners entered into an agreement for the sale to KKR Denali of an indirect interest in the PA LNG Phase 1 project. KKR Denali intends to acquire a 42% indirect interest in the PA LNG Phase 1 project for approximately $108 million, plus its pro rata equity share of development costs incurred prior to the closing that exceed $439 million, subject to customary post-closing adjustments. We are targeting the closing of the sale of NCI to KKR Denali in the third quarter of 2023, subject to regulatory approvals and other closing conditions. If the closing conditions are satisfied and KKR Denali fails to complete the closing, then KKR Denali must pay a termination fee of $130 million.
Upon closing of the sale of NCI to KKR Denali, Sempra would hold an indirect interest in the PA LNG Phase 1 project of 19.6%.
As we discuss in Note 6 of the Notes to Condensed Consolidated Financial Statements, in March 2023, Port Arthur LNG entered into a seven-year term loan facility agreement with a syndicate of lenders for an aggregate principal amount of approximately $6.8 billion and an initial working capital facility agreement for up to $200 million. The facilities mature on March 20, 2030. Proceeds from the loans will be used to finance the cost of construction of the PA LNG Phase 1 project. At June 30, 2023, $228 million of borrowings were outstanding under the term loan facility agreement.
Construction of the PA LNG Phase 1 project is subject to numerous risks and uncertainties, including maintaining and modifying permits and regulatory approvals; construction delays; negotiating, completing and maintaining suitable commercial agreements, including definitive gas supply and transportation agreements; and other factors associated with the project and its construction. Additionally, closing of the sale of NCI to KKR Denali is subject to regulatory approvals and other closing conditions, any of which, if not received or satisfied, could prevent the consummation of the sale. An unfavorable outcome with respect to any of these factors could have a material adverse effect on Sempra’s results of operations, financial condition, cash flows and/or prospects, including the impairment of all or a substantial portion of the capital costs invested in the project to date. For a discussion of these risks, see “Part I – Item 1A. Risk Factors” in the Annual Report.
PA LNG Phase 2 Project. Sempra Infrastructure is developing a second phase of the natural gas liquefaction project that we expect will be a similar size to the PA LNG Phase 1 project. We are progressing the development of the proposed PA LNG Phase 2 project, while continuing to evaluate overall opportunities to develop the entirety of the Port Arthur site as well as potential design changes that could reduce overall emissions, including a facility design utilizing renewable power sourcing and other technological solutions.
In February 2020, Sempra Infrastructure filed an application, subject to approval by the FERC, for the siting, construction and operation of the proposed PA LNG Phase 2 project, including the potential addition of up to two liquefaction trains. Also in February 2020, Sempra Infrastructure filed an application with the DOE to permit LNG produced from the proposed PA LNG Phase 2 project to be exported to all current and future FTA and non-FTA countries.
Sempra Infrastructure has entered into a non-binding HOA for the negotiation and potential finalization of a definitive SPA with INEOS for approximately 0.2 Mtpa of LNG offtake from the proposed PA LNG Phase 2 project. The ultimate participation in and offtake from the proposed project remains subject to negotiation and finalization of a definitive agreement, among other factors, and the non-binding HOA does not commit any party to enter into a definitive agreement with respect to the proposed project.
Development of the proposed PA LNG Phase 2 project is subject to numerous risks and uncertainties, including securing binding customer commitments; identifying suitable project and equity partners; obtaining and maintaining permits and regulatory approvals, including approval from the FERC; obtaining financing; negotiating, completing and maintaining suitable commercial agreements, including definitive EPC, equity acquisition, governance, LNG sales, gas supply and transportation agreements; reaching a positive final investment decision; and other factors associated with this potential investment. For a discussion of these risks, see “Part I – Item 1A. Risk Factors” in the Annual Report.
Vista Pacifico LNG Liquefaction Export Project.Sempra Infrastructure is developing the Vista Pacifico LNG project, a potential natural gas liquefaction, storage, and mid-scale export facility proposed to be located in the vicinity of Topolobampo in Sinaloa, Mexico, under ana non-binding MOU with the CFE, which was subsequently updated in July 2022, that contemplates the negotiation of definitive agreements that would cover development of the Vista Pacifico LNG as well as a separate natural gas regasification project in La Paz Baja California Sur, and the potential re-routing of a portion of the Guaymas-El Oro segment of the Sonora pipeline and resumption of its operations through mutual agreements between the CFE and the Yaqui tribe.operations. The proposed LNG export terminal would be supplied with U.S. natural gas and would use excess natural gas and pipeline capacity on existing pipelines in Mexico with the intent of helping to meet growing demand for natural gas and LNG in the Mexican and Pacific markets. In November 2020,
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Sempra Infrastructure filed an application withreceived authorization from the DOE to permit the export of U.S.-produced natural gas to Mexico and for LNG produced from the proposed Vista Pacifico LNG facility to be re-exported to all current and future FTA countries in April 2021 and non-FTA countries. In April 2021, the DOE granted Vista Pacifico’s LNG export authorization application for FTA countries.countries in December 2022.
In March 2022, TotalEnergies SE and Sempra Infrastructure entered into ana non-binding MOU that contemplates TotalEnergies SE potentially contracting approximately one-third of the long-term export production of the proposed Vista Pacifico LNG project and potentially participating as a minority partner in the project.
The MOUs related to the proposed Vista Pacifico LNG project are non-binding arrangements. The ultimate participation in and offtake from the proposed project remain subject to negotiation and finalization of definitive agreements, among other factors, and the non-binding MOUs do not commit any party to enter into definitive agreements with respect to the project.
The developmentDevelopment of the potentialproposed Vista Pacifico LNG project (as well as the other projects subject to the MOU with the CFE discussed above) is subject to numerous risks and uncertainties, including securing binding customer commitments; identifying suitable project and equity partners; obtaining and maintaining a number of permits and regulatory approvals; securingobtaining financing; identifying suitable project partners; negotiating, completing and completingmaintaining suitable commercial agreements, including definitive EPC, contracts, equity acquisition, and governance, agreements, LNG sales, agreements and gas supply and transportation agreements; reaching a positive final investment decision; the impact of recent and proposed changes to the law in Mexico; and other factors associated with this potential investment. For a discussion of these risks, see “Part I – Item 1A. Risk Factors” in the Annual Report.
Hackberry Carbon Sequestration Project. Sempra Infrastructure is developing the potential Hackberry Carbon Sequestration project near Hackberry, Louisiana. This proposed project under development is designed to permanently sequester carbon dioxide from the Cameron LNG JV facilities.Phase 1 facility and the proposed Cameron LNG Phase 2 project. In the third quarter of 2021, Sempra Infrastructure filed an application with the U.S. Environmental Protection AgencyEPA for a Class VI carbon injection well to advance this project.
In May 2022, Sempra Infrastructure, TotalEnergies SE, Mitsui & Co., Ltd. and Mitsubishi Corporation signed a Participation Agreement for the development of the proposed Hackberry Carbon Sequestration project. In May 2023, the Participation Agreement was amended and restated in connection with ongoing progress of the work program and budget for the proposed project. The Participation Agreement contemplates that the combined Cameron LNG JV Phase 1 facility and proposed Cameron LNG JV Phase 2 projectsproject would potentially serve as the anchor source for the capture and sequestration of carbon dioxide by the proposed project. It also provides the basis for the parties to enteracquire an equity interest by entering into a JV with Sempra Infrastructure for the Hackberry Carbon Sequestration project.
The In addition to the amended and restated Participation Agreement, in May 2023, Sempra Infrastructure and Cameron LNG JV entered into a non-binding HOA, which sets forth a framework for further development of the potentialHackberry Carbon Sequestration project.
Development of the proposed Hackberry Carbon Sequestration project is subject to numerous risks and uncertainties, including securing binding customer commitments; obtaining required consents from the Cameron LNG JV partners, securing binding customer commitments;members; identifying suitable project and equity partners; obtaining and maintaining a number of permits and regulatory approvals; securingobtaining financing; negotiating, completing and completingmaintaining suitable commercial agreements, including a definitive EPC, contract, and equity acquisition and governance agreements; reaching a positive final investment decision; and other factors associated with this potential investment. For a discussion of these risks, see “Part I – Item 1A. Risk Factors” in the Annual Report.
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Off-Balance Sheet Arrangements. Our investment in Cameron LNG JV is a variable interest in an unconsolidated entity. We discuss variable interests in Note 1 of the Notes to Condensed Consolidated Financial Statements.
In June 2021, Sempra provided a promissory note, which constitutes a guarantee, for the benefit of Cameron LNG JV with a maximum exposure to loss of $165 million. The guarantee will terminate upon full repayment of Cameron LNG JV’s debt, scheduled to occur in 2039, or replenishment of the amount withdrawn by Sempra Infrastructure from the SDSRA. We discuss this guarantee in Note 65 of the Notes to Condensed Consolidated Financial Statements.
In July 2020, Sempra entered into a Support Agreement, which contains a guarantee and represents a variable interest, for the benefit of CFIN with a maximum exposure to loss of $979 million. The guarantee will terminate upon full repayment of the guaranteed debt by 2039, including repayment following an event in which the guaranteed debt is put to Sempra. We discuss this guarantee in Notes 1, 65 and 98 of the Notes to Condensed Consolidated Financial Statements.
Energy Networks
Sonora Pipeline. Sempra Infrastructure’s Sonora natural gas pipeline consists of two segments, the Sasabe-Puerto Libertad-Guaymas segment and the Guaymas-El Oro segment. Each segment has its own service agreement with the CFE.
A portion of the Guaymas-El Oro segment of the Sonora natural gas pipeline crosses into territory owned by the Yaqui tribe who, with the exception of some members living in the Bácum community, granted its consent and a right-of-way easement agreement for the pipeline in its territory. Following the start of commercial operations of the Guaymas-El Oro segment, Sempra
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Infrastructure reported damage to the pipeline in the Yaqui territory that has made that section inoperable since August 2017. Legal challenges raised by representatives of the Bácum community, which we discuss in Note 10 of the Notes to Condensed Consolidated Financial Statements, have prevented Sempra Infrastructure from making repairs to put the pipeline back in service. Such legal challenges were definitively resolved in March 2023 based on the agreement by the CFE and Sempra Infrastructure to re-route the portion of the pipeline that is in the Yaqui territory.
Discussions with the CFE regarding the future of the pipeline are underway in accordance with a non-binding MOU announced in January 2022 that, among other matters, addresses efforts to proceed with re-routing a portion of the pipeline, which will require either an extension of the service start date, as discussed below, or a separate definitive arrangement between Sempra Infrastructure and the CFE concerning the restarting of service on the pipeline. In July 2022, Sempra Infrastructure and the CFE entered into a Shareholders’ Agreement that establishes a framework for a JV between the parties to work on restarting service on the pipeline, including the potential re-routing of a portion of the pipeline. This agreement is subject to a number of conditions to be satisfied before it becomes effective, including regulatory and corporate authorizations.
In September 2019, Sempra Infrastructure and the CFE reached an agreement to modify the tariff structure and extend the term of the contract by 10 years. Under the revised agreement, the CFE will resume making payments only when the damaged section of the Guaymas-El Oro segment of the Sonora pipeline is back in service. If the parties do not agree on a definitive arrangement to re-route a portion of the pipeline or the parties do not agree on a new service start date by October 31, 2023, Sempra Infrastructure retains the right to terminate the contract and seek to recover its reasonable and documented costs and lost profits.
At June 30, 2023, Sempra Infrastructure had $414 million in PP&E, net, related to the Guaymas-El Oro segment of the Sonora pipeline, which could be subject to impairment if Sempra Infrastructure is unable to re-route a portion of the pipeline (which has not been agreed to by the parties, but is subject to negotiation pursuant to a non-binding MOU and a Shareholders’ Agreement, as described above) and resume operations or if Sempra Infrastructure terminates the contract and is unable to obtain recovery, which in each case could have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
Construction Projects. In May 2022, Sempra Infrastructure is currently constructing additional terminalssubstantially completed construction of a terminal for the receipt, storage, and delivery of liquid fuels in the vicinity of Puebla and Topolobampo. Sempra Infrastructure is also developing terminals for the receipt, storage, and delivery of liquid fuels in the vicinity of Manzanillo and Ensenada.
As part of an industrywide audit and investigative process initiated by the CRE to enforce fuel procurement laws, federal prosecutors conducted inspections at several refined products terminals, including Sempra Infrastructure's refined products terminal in Puebla, to confirm that the gasoline and/or diesel in storage were legally imported. During the inspection of the Puebla terminal in September 2021, a federal prosecutor took samples from all the train and storage tanks in the terminal and ordered that the facility be temporarily shut down during the pendency of the analysis of the samples and investigation, while leaving the terminal in Sempra Infrastructure’s custody. In November 2021, the CRE notified Sempra Infrastructure that it had started a process to revoke Sempra Infrastructure’s storage permit at the Puebla terminal. In December 2021, Sempra Infrastructure filed its response to the CRE. In May 2022, the CRE provided a final resolution that stopped the permit revocation process. We expect that, with this resolution, the federal prosecutors will close the investigation and the Puebla terminal will commence commercial operations in the second half of 2022.
Construction of the Topolobampo, terminal was completed in May 2022, at which time commissioning activities commenced. We expect the Topolobampo terminal will commence commercial operations in the second halffourth quarter of 2022,2023, subject to the receipt of pending permits.the CRE’s approval of the regulated rates.
Expected commencement dates could be delayed by worsening or extended disruptions of project construction caused by factors outside our control, including the COVID-19 pandemic. Sempra Infrastructure is continuing to monitoralso developing terminals for the impactsreceipt, storage, and delivery of refined products in the COVID-19 pandemic on cash flowsvicinity of Manzanillo and results of operations.Ensenada.
The ability to successfully complete major construction projects is subject to a number of risks and uncertainties. For a discussion of these risks and uncertainties, see “Part I – Item 1A. Risk Factors” in the Annual Report.
Clean Power
Construction Projects.Port Arthur Pipeline Louisiana Connector. ESJ completedSempra Infrastructure is developing the potential Port Arthur Pipeline Louisiana Connector, a 72-mile pipeline connecting the PA LNG Phase 1 project to Gillis, Louisiana. In April 2019, the FERC approved the siting, construction and began commercial operationsoperation of a second, 108-MW wind power generation facility on January 15, 2022. This second wind power generation facility is fully contracted by SDG&E under a long-term PPA expiring in 2042.
the proposed Port Arthur Pipeline Louisiana Connector, which would be used to supply feed gas to the PA LNG Phase 1 project. In March 2022, TotalEnergies SE andJuly 2023, Sempra Infrastructure entered intofiled a non-binding MOU that provideslimited amendment application with the FERC to implement construction process enhancements and minor modifications to several discrete sections of the Port Arthur Pipeline Louisiana Connector. These modifications are intended to decrease environmental impacts, accommodate landowner routing requests and enhance construction procedures. We expect to make a framework for cooperationfinal investment decision in the developmentthird quarter of North American renewable energy projects. The MOU includes2023 to position the potential acquisition by Sempra Infrastructure of a target of 30% of TotalEnergies SE’s 80% equity interest in a proposed offshore wind project in California that is under development, which would result in an acquisition of 24%Port Arthur Pipeline Louisiana Connector to be ready for service ahead of the total equity interestPA LNG Phase 1 project’s gas requirements.
Development of the proposed Port Arthur Pipeline Louisiana Connector is subject to numerous risks and uncertainties, including obtaining, maintaining and modifying permits and regulatory approvals; securing rights of ways; reaching a positive final investment decision; and other factors associated with this potential investment. For a discussion of these risks, see “Part I – Item 1A. Risk Factors” in the project, and the potential acquisition by TotalEnergies SE of a targeted 30% equity interest in certain renewable and energy storage development projects that are under development by Sempra Infrastructure in Northern Mexico. In June 2022, Sempra Infrastructure notified TotalEnergies SE that it does not intend to participate in the proposed offshore wind project in California. The ultimate participation of TotalEnergies SE and/or Sempra Infrastructure remain subject to negotiation and finalization of definitive agreements, among other factors, and TotalEnergies SE and Sempra Infrastructure have no commitment to participate in any or all these projects unless such definitive agreements are established.
Acquisition of ESJ. As we discuss in Note 5 of the Notes to Condensed Consolidated Financial Statements, in March 2021, Sempra Infrastructure increased its ownership interest in ESJ from 50% to 100% by acquiring Saavi Energía’s 50% equity interest in ESJ.Annual Report.
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Legal and Regulatory Matters
See Note 1110 of the Notes to Condensed Consolidated Financial Statements in this report and “Part I – Item 1A. Risk Factors” in the Annual Report for discussions of the following legal and regulatory matters affecting our operations in Mexico:
Energía Costa Azul
▪Land Disputes
▪Environmental and Social Impact Permits
▪Customer Dispute
One or more unfavorable final decisions on these land and customer disputes or environmental and social impact permit challenges could materially adversely affect our existing natural gas regasification operations and proposed natural gas liquefaction projects at the site of the ECA Regas Facility and have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
Sonora Pipeline
▪Guaymas-El Oro Segment
Our investment in the Guaymas-El Oro segment of the Sonora pipeline could be subject to impairment if Sempra Infrastructure is unable to make certain repairs (which have not commenced) or re-route a portion of the pipeline (which has not been agreed to by the parties, but is subject to negotiation pursuant to a non-binding MOU and a Shareholders’ Agreement that remains subject to regulatory and corporate authorizations) and resume operations or if Sempra Infrastructure terminates the contract and is unable to obtain recovery. Any such occurrence could have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.
Regulatory and Other Actions by the Mexican Government
▪Transmission Rates for Legacy Generation FacilitiesAmendments to Mexico
▪Offtakers of Legacy Generation Permits’s Hydrocarbons Law
▪Amendments to Mexico’s Electricity Industry Law
▪Amendments to Mexico’s Hydrocarbons Law
Sempra Infrastructure and other parties affected by these resolutions, orders, decrees, regulations and proposed amendments to Mexican law have challenged them by filing amparo and other claims, some of which have been granted injunctive relief. The court-ordered injunctions or suspensions provide temporary relief until Mexico’s federal district court or Supreme Court ultimately resolves the amparo and other claims.remain pending. An unfavorable decision on one or more of these amparo or other challenges, the potential for extended disputes,impact of the amendments that have become effective (due to unsuccessful amparo challenges or otherwise), or the possibility of future reforms to the energy industry through furtheradditional amendments to Mexican laws, regulations or rules or(including through amendments to the constitutionconstitution) may impact our ability to operate our facilities at existing levels or at all, may result in increased costs for Sempra Infrastructure and its customers, may adversely affect our ability to develop new projects, may result in decreased revenues and cash flows, and may negatively impact our ability to recover the carrying values of our investments in Mexico, any of which may have a material adverse effect on ourSempra’s business, results of operations, financial condition, cash flows and/or prospects.

SOURCES AND USES OF CASH
The following tables include only significant changes in cash flow activities for each of our registrants.
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CASH FLOWS FROM OPERATING ACTIVITIES
(Dollars in millions)
Six months ended June 30,SempraSDG&ESoCalGas
2023$3,737 $966 $925 
20222,364 1,013 861 
Change$1,373 $(47)$64 
Change in net margin posted$1,065 $(66)
Change in accounts receivable405 (119)$122 
Change in income taxes receivable/payable, net335 45 
Change in net undercollected regulatory balancing accounts (including long-term amounts in regulatory assets)305 201 104 
Higher net income, adjusted for noncash items included in earnings110 19 229 
Net decrease in Reserve for Aliso Canyon Costs, due to $137 lower accruals offset by $111 lower payments(26)(26)
Change in legal reserve(63)(58)
Change in accounts payable(612)(79)(344)
Change in amounts due to/from unconsolidated affiliates(64)58 
Other(146)16 (21)
$1,373 $(47)$64 
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CASH FLOWS FROM OPERATING ACTIVITIES
(Dollars in millions)
Six months ended June 30,SempraSDG&ESoCalGas
2022$2,364 $1,013 $861 
20212,255 610 963 
Change$109 $403 $(102)
Change in accounts receivable$165 $7 $195 
Change in accounts payable148 95 31 
Higher net income, adjusted for noncash items included in earnings135 94 21 
Funds fully drawn against customer’s letters of credit, net of amounts applied96 
Change in customer deposits60 18 33 
Net increase in Reserve for Aliso Canyon Costs, current and noncurrent, due to $140 higher accruals offset by $88 higher payments52 52 
Change in inventory49 4 (26)
Lower proceeds received from Insurance Receivable for Aliso Canyon(15)(15)
Lower distributions received from Cameron LNG JV(145)
Change in net undercollected regulatory balancing accounts (including long-term amounts in regulatory assets)(186)188 (374)
Change in income taxes receivable/payable, net(254)12 (2)
Other4 (15)(17)
$109 $403 $(102)

CASH FLOWS FROM INVESTING ACTIVITIES
(Dollars in millions)
Six months ended June 30,SempraSDG&ESoCalGas
2022$(2,535)$(1,082)$(931)
2021(2,588)(1,065)(936)
Change$53 $(17)$5 
Acquisition of 50% interest in ESJ in March 2021 for $79, net of $14 of cash and cash equivalents acquired$65 
Decrease (increase) in capital expenditures63 $(18)$5 
Contributions to Cameron LNG JV in 2022(10)
Higher contributions to Oncor Holdings(71)
Other6 1 
$53 $(17)$5 
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CASH FLOWS FROM FINANCING ACTIVITIES
(Dollars in millions)
Six months ended June 30,SempraSDG&ESoCalGas
2022$1,685 $577 $449 
2021(282)206 (27)
Change$1,967 $371 $476 
Higher issuances of long-term debt$3,663 $1,395 $697 
Proceeds from sale of NCI to ADIA in 2022, net of $12 of transaction costs1,719 
Lower payments on long-term debt and finance leases1,061 198 
Higher issuances of short-term debt with maturities greater than 90 days870 
Equity contribution from Sempra Energy150 
(Higher) lower common dividends paid(77)50 
Distributions to SI Partners’ minority shareholder in 2022(106)
Higher repurchases of common stock(438)
Higher payments for commercial paper and other short-term debt with maturities greater than 90 days(1,172)(375)
Change in borrowings and repayments of short-term debt, net(3,595)(838)(415)
Other42 (9)(6)
$1,967 $371 $476 
CASH FLOWS FROM INVESTING ACTIVITIES
(Dollars in millions)
Six months ended June 30,SempraSDG&ESoCalGas
2023$(4,421)$(1,200)$(961)
2022(2,535)(1,082)(931)
Change$(1,886)$(118)$(30)
Increase in capital expenditures$(1,921)$(149)$(30)
Other35 31 
$(1,886)$(118)$(30)
CASH FLOWS FROM FINANCING ACTIVITIES
(Dollars in millions)
Six months ended June 30,SempraSDG&ESoCalGas
2023$1,457 $559 $16 
20221,685 577 449 
Change$(228)$(18)$(433)
Lower proceeds from sales of NCI$(1,467)
(Higher) lower payments for commercial paper and other short-term debt with maturities greater than 90 days(1,376)$375 $(800)
(Lower) higher issuances of long-term debt(627)(603)300 
(Higher) lower payments on long-term debt and finance leases(473)14 (303)
Higher distributions to NCI(146)
Settlement of cross-currency swaps(99)
Higher common dividends paid(23)
Lower repurchases of common stock445 
Higher contributions from NCI530 
Higher issuances of short-term debt with maturities greater than 90 days1,423 
Change in borrowings and repayments of short-term debt, net1,623 196 523 
Equity contribution from Sempra in 2022(150)
Other(38)(3)
$(228)$(18)$(433)
Capital Expenditures Investments and AcquisitionsInvestments
EXPENDITURES FOR PP&E, INVESTMENTS AND ACQUISITIONS
EXPENDITURES FOR PP&E AND INVESTMENTSEXPENDITURES FOR PP&E AND INVESTMENTS
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Six months ended June 30,Six months ended June 30,
20222021 20232022
SDG&ESDG&E$1,090 $1,072 SDG&E$1,239 $1,090 
SoCalGasSoCalGas931 936 SoCalGas961 931 
Sempra Texas UtilitiesSempra Texas Utilities171 100 Sempra Texas Utilities178 171 
Sempra InfrastructureSempra Infrastructure346 480 Sempra Infrastructure2,084 346 
Parent and otherParent and other4 1 Parent and other4 4 
TotalTotal$2,542 $2,589 Total$4,466 $2,542 
The amountsHaving reached a positive final investment decision for the PA LNG Phase 1 project and timing ofOncor having received a final order from the PUCT in its comprehensive base rate review, we have updated our expected capital expenditures and certain investments are generally subject to approvals by various regulatory and other governmental and environmental bodies, including the CPUC, the FERC and the PUCT, and various other factors describedfrom what we disclosed in this“Part II – Item 7. MD&A – Capital Resources and in “Part I – Item 1A. Risk Factors”Liquidity” in the Annual Report. In 2022, we expect
From 2023 through 2027, and subject to the factors described below, which could cause these estimates to vary substantially, Sempra expects to make aggregate capital expenditures and investments of approximately $5.8$38.6 billion (which excludes capital expenditures that will be funded by unconsolidated entities) a decrease, as follows: $11.6 billion at SDG&E, $9.8 billion at SoCalGas, $2.5 billion at Sempra Texas Utilities and $14.7 billion at Sempra Infrastructure. Capital expenditure amounts include capitalized interest and AFUDC related to debt.
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In 2023, we expect to make capital expenditures and investments of approximately $9.4 billion (which excludes capital expenditures that will be funded by unconsolidated entities), which is an increase from the $6.2$5.7 billion projected in “Part II – Item 7. MD&A – Capital Resources and Liquidity” in the Annual Report. The decreaseincrease is primarily attributable to a delay in certain capital expendituresan increase of approximately $300$3.3 billion at Sempra Infrastructure related to the PA LNG Phase 1 project, an increase of $200 million at SDG&E related to energy storage projects and $100an increase of $200 million at SoCalGas.Sempra Texas Utilities.
We expect the majority of our capital expenditures and investments in 2023 will relate to transmission and distribution improvements at our regulated public utilities, and construction of the PA LNG Phase 1 project, ECA LNG Phase 1 project and natural gas pipelines at Sempra Infrastructure.
Our level of capital expenditures and investments in the next few years may vary substantially and will depend on, among other things, the cost and availability of financing, regulatory approvals, changes in tax law and business opportunities providing desirable rates of return. See “Part I – Item 1A. Risk Factors” in the Annual Report for a discussion of these and other factors that could affect future levels of our capital expenditures and investments. We intend to finance our capital expenditures in a manner that will maintain our investment-grade credit ratings and capital structure, but there is no guarantee that we will be able to do so.
CRITICAL ACCOUNTING ESTIMATES
Management views certain accounting estimates as critical because their application is the most relevant, judgmental and/or material to our financial position and results of operations, and/or because they require the use of material judgments and estimates. We discuss critical accounting estimates in “Part II – Item 7. MD&A” in the Annual Report.
NEW ACCOUNTING STANDARDS
We discuss theany recent accounting pronouncements that have had or may have a significant effect on our financial statements and/or disclosures in Note 2 of the Notes to Condensed Consolidated Financial Statements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We provide disclosure regarding derivative activity in Note 87 of the Notes to Condensed Consolidated Financial Statements. We discuss our market risk and risk policies in detail in “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report.
COMMODITY PRICE RISK
Sempra Infrastructure is generally exposed to commodity price risk indirectly through its LNG, natural gas pipelines and storage, and power-generating assets. In the first six months of 2022,2023, a hypothetical 10% unfavorable change in commodity prices would have resulted in a change in the fair value of our commodity-based natural gas and electricity derivatives of $8$22 million at June 30, 20222023 compared to $3$24 million at December 31, 2021.2022.
The one-day value at risk for SDG&E&E’s and SoCalGas’ commodity positions were $11$5 million and negligible, respectively, at June 30, 20222023 compared to $5$25 million and $1$2 million, respectively, at December 31, 2021.2022.
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INTEREST RATE RISK
The table below shows the nominal amount of our debt:
NOMINAL AMOUNT OF DEBT(1)
NOMINAL AMOUNT OF DEBT(1)
NOMINAL AMOUNT OF DEBT(1)
(Dollars in millions)(Dollars in millions)(Dollars in millions)
June 30, 2022December 31, 2021 June 30, 2023December 31, 2022
SempraSDG&ESoCalGasSempraSDG&ESoCalGas SempraSDG&ESoCalGasSempraSDG&ESoCalGas
Short-term:Short-term:Short-term:
Sempra CaliforniaSempra California$— $— $— $1,161 $776 $385 Sempra California$238 $— $238 $1,105 $205 $900 
OtherOther955 — — 2,310 — — Other2,281 — — 2,247 — — 
Long-term:Long-term:Long-term:
Sempra California fixed-rateSempra California fixed-rate$12,559 $7,400 $5,159 $10,876 $6,417 $4,459 Sempra California fixed-rate$14,959 $8,200 $6,759 $13,159 $7,400 $5,759 
Sempra California variable-rateSempra California variable-rate700 400 300 300 — 300 Sempra California variable-rate400 400 — 700 400 300 
Other fixed-rateOther fixed-rate10,218 — — 8,591 — — Other fixed-rate11,322 — — 10,079 — — 
Other variable-rateOther variable-rate455 — — 341 — — Other variable-rate738 — — 575 — — 
(1)    After the effects of interest rate swaps. Before the effects of acquisition-related fair value adjustments and reductions for unamortized discount and debt issuance costs and excluding finance lease obligations.

An interest rate risk sensitivity analysis measures interest rate risk by calculating the estimated changes in earnings that would result from a hypothetical change in market interest rates. Earnings are affected by changes in interest rates on short-term debt and variable-rate long-term debt. If weighted-average interest rates on short-term debt outstanding at June 30, 20222023 increased or decreased by 10%, the change in earnings over the 12-month period ending June 30, 20232024 would be approximately $2$10 million. If interest rates increased or decreased by 10% on all variable-rate long-term debt at June 30, 2022,2023, after considering the effects of interest rate swaps, the change in earnings over the 12-month period ending June 30, 20232024 would be approximately $2$5 million.
FOREIGN CURRENCY EXCHANGE RATE RISK AND INFLATION RATE RISKEXPOSURE
We discuss our foreign currency exchange rate risk and inflation exposuresexposure in “Part I – Item 2. MD&A – Impact of Foreign Currency and Inflation Rates on Results of Operations” in this report and in “Part II – Item 7. MD&A – Impact of Foreign Currency and Inflation Rates on Results of Operations” in the Annual Report. At June 30, 2022,2023, there were no significant changes to our exposure to foreign currency rate risk since December 31, 2021.2022.
In 2022 and 2023 to date, SDG&E and SoCalGas have experienced inflationary pressures from increases in various costs, including the cost of natural gas, electric fuel and purchased power, labor, materials and supplies, as well as availability of labor and materials. Sempra Texas Utilities has experienced increased costs of labor and materials and does not have specific regulatory mechanisms that allow for recovery of higher costs due to inflation.inflation; rather, recovery is limited to rate updates through capital trackers and base rate reviews, which may result in partial non-recovery due to the regulatory lag. If such costs were to continue to be subject to significant inflationary pressures and we are not able to fully recover such higher costs in rates or there is a delay in recovery, these increased costs may have a significant effect on ourSempra’s, SDG&E’s and SoCalGas’ results of operations, financial condition, cash flows and/or prospects.
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Sempra Infrastructure has experienced inflationary pressures from increases in various costs, including the cost of labor, materials and supplies. Sempra Infrastructure generally secures long-term contracts that are U.S. dollar-denominated or referenced and are periodically adjusted for market factors, including inflation, and Sempra Infrastructure generally enters into lump-sum contracts for its large construction projects in which much of the risk during construction is absorbed or hedged by the EPC contractor. If additional costs were to become subject to significant inflationary pressures, we may not be able to fully recover such higher costs through contractual adjustments for inflation, which may have a significant effect on ourSempra’s results of operations, financial condition, cash flows and/or prospects.
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ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Sempra, SDG&E and SoCalGas maintain disclosure controls and procedures designed to ensure that information required to be disclosed in their respective reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to the management of each company, including each respective principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. In designing and evaluating these controls and procedures, the management of each company recognizes that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives; therefore, the management of each company applies judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision and with the participation of the principal executive officers and principal financial officers of Sempra, SDG&E and SoCalGas, each such company’s management evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of June 30, 2022,2023, the end of the period covered by this report. Based on these evaluations, the principal executive officers and principal financial officers of Sempra, SDG&E and SoCalGas concluded that their respective company’s disclosure controls and procedures were effective at the reasonable assurance level as of such date.
INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in Sempra’s, SDG&E’s or SoCalGas’ internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, any such company’s internal control over financial reporting.

PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not party to, and our property is not the subject of, any material pending legal proceedings (other than ordinary routine litigation incidental to our businesses) except for the matters (1) described in Notes 109 and 1110 of the Notes to Condensed Consolidated Financial Statements in this report and in Notes 15 and 16 of the Notes to Consolidated Financial Statements in the Annual Report, or (2) referred to in “Part I – Item 2. MD&A” in this report or in “Part I – Item 1A. Risk Factors” or “Part II – Item 7. MD&A” in the Annual Report.
ITEM 1A. RISK FACTORS
When evaluating our company and its subsidiaries and any investment in our or their securities, you should consider carefully the risk factors and all other information contained in this report and in the other documents we file with the SEC (including those
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filed subsequent to this report), including the factors discussed in “Part I – Item 2. MD&A” in this report and “Part I – Item 1A. Risk Factors” and “Part II – Item 7. MD&A” in the Annual Report. Any of the risks and other information discussed in this report or any of the risk factors discussed in “Part I – Item 1A. Risk Factors” or “Part II – Item 7. MD&A” in the Annual Report, as well as additional risks and uncertainties not currently known to us or that we currently deem to be immaterial, could materially adversely affect our results of operations, financial condition, cash flows, prospects and/or the trading prices of our securities or those of our subsidiaries.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
On July 6, 2020, our board of directors authorized the repurchase of shares of our common stock at any time and from time to time in an aggregate amount not to exceed the lesser of $2 billion or amounts spent to purchase no more than 25 million shares. This repurchase authorization was publicly announced on August 5, 2020 and has no expiration date. As of August 4, 2022, a maximum of $1.25 billion and no more than 19,632,529 shares may yet be purchased under this repurchase authorization.
The following table sets forth information about our common stock repurchase activity for the three months ended June 30, 2022:
PURCHASES OF EQUITY SECURITIES
(Dollars in millions, except per share amounts)
Total number of shares purchased(1)
Average price paid per share(1)
Total number of shares purchased as part of publicly announced plans or programs(1)
Maximum dollar value of shares that may yet be purchased under the plans or programs
April 1, 2022 - April 30, 20221,471,957 $169.84 1,471,957 $1,250 
(1)    On April 6, 2022, we entered into an ASR program under which we prepaid $250 to repurchase shares of our common stock in a share forward transaction. The total number of shares purchased was determined by dividing the $250 purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of April 7, 2022 through April 25, 2022, minus a fixed discount. The ASR program was completed on April 25, 2022.

We may also, from time to time, purchase shares of our common stock to which participants would otherwise be entitled from long-term incentive plan participants who elect to sell a sufficient number of shares in connection with the vesting of RSUs and stock options in order to satisfy minimum statutory tax withholding requirements.
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ITEM 5. OTHER INFORMATION
(a)None.
(b)There have been no material changes to the procedures by which security holders may recommend nominees to Sempra’s board of directors since we last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K.
(c)During the most recent fiscal quarter, no Sempra, SDG&E or SoCalGas director or officer, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, adopted or terminated a Rule 10b5-1 trading arrangement, as defined in Item 408(a) of Regulation S-K, or a non-Rule 10b5-1 trading arrangement, as defined in Item 408(c) of Regulation S-K.

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ITEM 6. EXHIBITS
The exhibits listed below relate to each registrant as indicated. Unless otherwise indicated, the exhibits that are incorporated by reference herein were filed under File Number 1-14201 (Sempra Energy)(Sempra), File Number 1-40 (Pacific Lighting Corporation), File Number 1-03779 (San Diego Gas & Electric Company) and/or File Number 1-01402 (Southern California Gas Company).
EXHIBIT INDEX
Incorporated by Reference
Exhibit NumberExhibit DescriptionFiled or Furnished HerewithFormExhibit or AppendixFiling Date
EXHIBIT 3 -- ARTICLES OF INCORPORATION AND BYLAWS
Sempra Energy
3.110-K3.102/27/20
3.28-K3.104/14/20
3.38-K3.101/09/18
3.48-K3.107/13/18
3.58-K3.106/15/20
San Diego Gas & Electric Company
3.610-K3.402/26/15
3.710-Q3.111/02/16
Southern California Gas Company
3.810-K3.0103/28/97
3.98-K3.101/31/17
EXHIBIT 10 -- MATERIAL CONTRACTS
Sempra Energy / Southern California Gas Company
10.1X
EXHIBIT INDEX
Incorporated by Reference
Exhibit NumberExhibit DescriptionFiled or Furnished HerewithFormExhibit or AppendixFiling Date
EXHIBIT 3 -- ARTICLES OF INCORPORATION AND BYLAWS
Sempra
3.110-K3.102/27/20
3.28-K3.101/09/18
3.38-K3.107/13/18
3.48-K3.106/15/20
3.58-K3.105/16/23
3.68-K3.205/16/23
San Diego Gas & Electric Company
3.710-K3.402/26/15
3.810-Q3.111/02/16
Southern California Gas Company
3.910-K3.0103/28/97
3.108-K3.101/31/17
EXHIBIT 4 -- INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
Certain instruments defining the rights of holders of long-term debt instruments are not required to be filed or incorporated by reference herein pursuant to Item 601(b)(4)(iii)(A) of SEC Regulation S-K. Each registrant agrees to furnish a copy of such instruments to the SEC upon request.
Sempra
4.18-K4.106/23/23
Sempra / Southern California Gas Company
4.28-K4.105/23/23
4.38-K4.205/23/23
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EXHIBIT INDEX (CONTINUED)
Exhibit NumberExhibit DescriptionFiled or Furnished Herewith
EXHIBIT 31 -- SECTION 302 CERTIFICATIONS
Sempra Energy
31.1X
31.2X
San Diego Gas & Electric Company
31.3X
31.4X
Southern California Gas Company
31.5X
31.6X
EXHIBIT 32 -- SECTION 906 CERTIFICATIONS
Sempra Energy
32.1X
32.2X
San Diego Gas & Electric Company
32.3X
32.4X
Southern California Gas Company
32.5X
32.6X
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EXHIBIT INDEX (CONTINUED)
Exhibit NumberExhibit DescriptionFiled or Furnished Herewith
EXHIBIT 101 -- INTERACTIVE DATA FILE
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.X
101.SCHInline XBRL Taxonomy Extension Schema Document.X
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.X
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.X
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.X
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.X
EXHIBIT 104 -- COVER PAGE INTERACTIVE DATA FILE
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES
Sempra Energy:Sempra:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 SEMPRA, ENERGY,
(Registrant)
  
Date: August 4, 20223, 2023By: /s/ Peter R. Wall
 Peter R. Wall
Senior Vice President, Controller and Chief Accounting Officer (Duly Authorized Officer)

San Diego Gas & Electric Company:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 SAN DIEGO GAS & ELECTRIC COMPANY,
(Registrant)
  
Date: August 4, 20223, 2023By: /s/ Valerie A. Bille
 Valerie A. Bille
Vice President, Controller and Chief Accounting Officer (Duly Authorized Officer)
 
Southern California Gas Company:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 SOUTHERN CALIFORNIA GAS COMPANY,
(Registrant)
  
Date: August 4, 20223, 2023By: /s/ Mia L. DeMontigny
 Mia L. DeMontigny
Senior Vice President, Chief Financial Officer and Chief Accounting Officer (Duly Authorized Officer)

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