The operator introduces the Sempra third quarter earnings call and turns it over to Glen Donovan. The call will be discussing forward-looking statements and non-GAAP financial measures, and listeners are encouraged to review the company's 10-K and 10-Q. The presentation slides and 10-Q reflect a 2-for-1 stock split that was announced in the second quarter. Various members of the management team are present on the call.

The speaker mentions that the forward-looking statements in the presentation are only applicable to the current date and the company is not obligated to update them. They then introduce Jeff Martin, who discusses the company's strong third quarter results and the trend towards deglobalization. They also mention the potential for growth in Mexico and the importance of investing in North America's energy grid. The company's mission is to become the premier energy infrastructure company in North America, and they prioritize building a high-performing culture and investing in their employees. Their strategy focuses on attractive markets with strong economic growth and favorable regulation.

Sempra's combination of capital discipline and favorable market conditions position the company to deliver strong returns for shareholders. The company plans to invest approximately $40 billion over the next five years, with a potential increase of 10-20% anchored by regulated utility investments, primarily through Oncor. The company reported strong third quarter earnings and expects to meet or exceed its 2023 adjusted EPS guidance range. The retirement of long-time executive Kevin Sagara is also mentioned.

The speaker, Allen Nye, discusses the strong operational performance of Oncor in the third quarter and the recent legislation that will improve their ability to provide high quality service and financial performance. He also highlights the growth drivers in Texas, including their strong economy and population growth, which has led to an increase in demand for electricity.

In the third quarter, Oncor made significant progress in connecting new premises, upgrading transmission and distribution lines, and managing interconnection requests. The recently passed HB 2555 and SB 1015 bills will provide Oncor with better tools to support the growth of the state and improve grid resiliency. Oncor plans to file its first system resiliency plan in the first quarter of 2024 and expects it to be approved within six months. The passage of SB 1015 also allows Oncor to file two distribution cost trackers each year, which is expected to improve earnings by $70 million to $90 million annually.

Oncor is currently reassessing their five-year capital plan due to growth in their service territory and new legislation. They will announce an update during Sempra's fourth quarter earnings call. The service territory is diverse and includes industries such as manufacturing, oil and gas, professional services, and data centers. The Permian Basin is experiencing significant growth and is expected to increase load demand in the next decade. In California, SDG&E received the number one ranking for reliability and recently withstood a rare tropical storm.

The award is given to SDG&E for their excellent and reliable service, including the use of clean energy technology and investment in the grid. SDG&E is also requesting approval for more energy storage assets to support the energy transition and maintain grid stability. This could result in significant savings for customers and is part of the company's efforts to improve affordability. Additionally, SDG&E is pursuing federal investment tax credits and is expected to be competitive in the Cal ISO's FERC 1000 solicitation. The transmission assets will benefit the integration of clean energy in California and the costs will be spread across the state.

The CPUC approved an increase in gas storage capacity at Aliso Canyon to improve reliability and affordability for customers. Governor Newsom directed the formation of a hydrogen market development strategy, and the U.S. Department of Energy awarded funding for a regional clean hydrogen hub in California. California also passed SB 410 to support investments for decarbonization and electrification of the energy system. This recognizes the need for utilities to proactively plan and make critical investments to keep pace with the state's goals. An update on the GRC process is also mentioned.

Sempra's applications prioritize safety, reliability, and clean energy. Settlement agreements have been filed with interveners, and a proposed decision is expected in the second quarter of 2024. The cost of capital mechanism has been triggered, and an increase in ROEs is expected. California's regulatory framework is seen as constructive, and Sempra's utilities are well-positioned for growth. In Sempra Infrastructure, key milestones have been reached, including the completion of a sale and receiving a permit for a project from FERC.

FERC has approved Phase 2 of the Cameron LNG project, allowing the DOE to consider the environmental review for the non-FDA application. Marketing for Phase 2's off-take is gaining momentum and is expected to add two additional liquefaction trains, doubling the total capacity of Port Arthur. Sempra Infrastructure is working with Bechtel to reduce construction risks and costs for the project. They are also collaborating with Mitsubishi Corporation and Japanese natural gas utility companies to explore the development and export of e-natural gas. The Port Arthur Energy Hub, currently under construction and development, showcases Sempra Infrastructure's expertise and value.

In the third quarter of 2023, Sempra reported GAAP earnings of $721 million, an increase from the same period in 2022. This was driven by factors such as lower income tax benefits and higher interest expenses, but offset by higher operating margin and regulatory interest income. In Sempra Texas, there were higher equity earnings due to weather and new base rates. Sempra Infrastructure saw lower net interest expenses and higher transportation tariffs. Sempra Parent had higher costs but also a net income tax benefit. The company is considering resegmentation, combining SDG&E and SoCalGas into one segment.

Sempra plans to complete their analysis in the fourth quarter of 2023 and implement a resegmentation if a positive determination is made. They are pleased with their third quarter results and the growth across all three platforms. They have been managing their balance sheet prudently and are focused on identifying and executing sound capital investment opportunities. They will now take questions from the audience.

Shar Pourreza asks Jeff Martin about the source of funding for the 10% to 20% increase in capital expenditures mentioned by Trevor Mihalik. Jeff Martin defers to Trevor, who explains that the increase will mainly be for regulated utilities and they are currently analyzing efficient ways to finance it, with common equity being one of the options. Shar notes that the range is wide and appreciates the early update on the CapEx plan.

Shar asks about the factors that determine the 10% to 20% growth guidance for Sempra's capital plan. Jeff explains that the plan will be finalized in February and will be mainly driven by utility investments, particularly in Texas. Shar also asks about the impact of Sempra's IP development pipeline, including the delay of the fuel terminal project and the upcoming expiration of the ECA Regas contract.

The company's LNG strategy is progressing well, with Cameron Phase 1 exceeding expected volumes and both ECA Phase 1 and Port Arthur Phase 1 on schedule. The development status of Cameron LNG Phase 2, Port Arthur Phase 2, and the Louisiana connector and storage facility are also discussed, with FERC approval received for Port Arthur Phase 2 and value engineering being conducted for Cameron Phase 2. The company is also in discussions with potential customers and project equity partners.

In 2024, a final investment decision will be made for the Port Arthur LNG project, pending commercial arrangements, project financing, and regulatory extensions. The Port Arthur pipeline and LA storage are important components of the Port Arthur energy hub, with the pipeline having access to a liquid supply hub and the storage supporting the gas supply strategy. Both projects are expected to be online before Port Arthur Phase 1. Significant progress has been made on the LNG strategy and development, and the company is confident in the projects' ability to support customers. A question was then asked by Carly Davenport from Goldman Sachs.

Jeff Martin, the CEO of a utility company, discusses potential drivers for capital expenditure (CapEx) upside. He mentions new retail connections and a successful execution of their general rate case as key factors. Justin, a member of the team, also mentions development opportunities in Texas, which has seen significant growth and diversification. Allen, another member of the team, provides more details on the strong growth in Encore, including a 43% increase in premise growth and a 34% increase in total transmission points of interconnection.

The retail and generation points of interconnection have seen strong growth, particularly in West Texas. Economic development projects and requests for information are also on the rise. This growth has been a consistent driver for the company's CapEx plan, which is expected to see a significant increase in the coming year. The company has also maintained operational excellence during this period of exceptional growth.

During a conference call, Allen and Jeff discussed the progress of their company, highlighting the decrease in customer outages and the safe practices of their employees. They also addressed the CCM trigger and the steps they have taken in response to it, including filing advice letters and anticipating support from the commission. When asked about their earnings expectations for next year, Jeff reaffirmed their previous guidance and stated that it is not affected by the CCM trigger. Steve Fleishman from Wolfe asked the question.

Steve Fleishman congratulates Kevin and Allen on their recent achievements and asks about the potential resegmentation of California businesses. Jeff Martin and Trevor Mihalik explain that it is primarily an accounting analysis and that the consolidated financial statements will still be available. Julien Dumoulin-Smith also congratulates Kevin and asks about more efficient alternatives for equity.

The speaker discusses the company's plans for funding utility growth and mentions that they are not planning on selling any portions of their utilities. They emphasize the importance of being a disciplined allocator of capital and efficiently sourcing it. They also mention that they will consider all sources of capital for their growth. The speaker then pivots to discussing the potential impact of CapEx on regulatory lag and points to Slide 13 in the slide deck for more information.

The speaker is discussing the growth of their company's capital plan from 2017 to 2023 and how they have been strategic in sourcing and allocating capital for growth. They also mention the impact of regulatory lag and how recent legislation in Texas and California has improved their earnings expectations. The company is focused on driving discipline in capital allocation and improving returns in all three of their growth businesses.

During a conference call, Jeff Martin, CEO of Sempra Energy, answered a question from Nicholas Campanella about the company's segmentation in California. Martin explained that the goal of the segmentation is to simplify the business model, which has been a priority for the company in recent years. The evaluation is ongoing and the results will be shared during the next quarterly report. Martin clarified that this is not a major legal reorganization, but rather a reflection of how the company manages and operates its business. Campanella also asked about the company's growth rate, to which Martin responded that it is still being evaluated.

Jeff Martin, CEO of a company, was asked about the cost of capital and the potential for upward pressure on their growth rate. He responded by saying that while they are always looking to increase their growth rate, they are comfortable with their current 6-8% growth rate. He also mentioned that their company has a history of exceeding expectations and growing at a higher rate than their industry average. He thanked everyone for joining the call and provided some key takeaways.

The company had a strong financial quarter and expects to exceed their earnings per share guidance. They also have new investment opportunities in Texas and will be attending a conference in Phoenix. The call has now ended.

This summary was generated with AI and may contain some inaccuracies.