The operator introduces Glen Donovan, the speaker for Sempra's first quarter earnings call. The call will discuss forward-looking statements and non-GAAP financial measures, and participants are encouraged to review the company's recent SEC filings. The speaker also notes that the information discussed is current as of May 7, 2024 and may not be updated in the future.

Jeff Martin, the speaker on slide 4, is pleased to report strong first quarter financial results for Sempra. He mentions the positive market conditions for energy infrastructure and the company's strategic positioning to benefit from current trends. He also highlights the growth in digital infrastructure and Texas, and Sempra's competitive advantages in California, including investments to support electrification and decarbonization.

In this paragraph, the speaker discusses the growth and expansion of Sempra Infrastructure in various areas, including Texas and the global demand for energy security. They also mention their financial results and affirm their EPS guidance for the next few years. The speaker concludes by handing over the call to Karen, who will provide more updates on the business.

In 2024, Sempra will focus on executing its growth platforms and has made progress in achieving constructive regulatory outcomes in California. The CPUC issued a proposed decision supporting the updated return on equity and affirmed the protection provided by the CCM. Rate reform is also a priority, with a proposed fixed charge for residential electric customers to reduce volumetric rates and support clean energy goals. Sempra also made a joint filing to develop projects for blending hydrogen into the natural gas system, which has been demonstrated successfully and safely around the world.

The speaker mentions their excitement to work with partners to expand decarbonization efforts in the state and expects a final decision on the GRC in the second quarter. They also mention Oncor's significant growth in Texas and the positive impact of the 2023 legislative session on the state's utilities. Additionally, they highlight the positive FID at the Cimarron Wind Expansion project and its potential for generating attractive returns and targeting O&M efficiencies.

Sempra Infrastructure is making great progress on their ECA and Port Arthur LNG projects, with ECA expected to start commercial operations in 2025 and Port Arthur on schedule. Despite the DOE pause, Sempra remains confident in their ability to deliver long-term, secure, and cleaner energy to customers. They also have significant built-in growth through 2028 and a promising development project pipeline. Meanwhile, Oncor in Texas continues to experience strong demand growth, serving close to 13 million customers and surpassing four million meters.

ERCOT is preparing for the expected growth in electricity needs in Texas through a new planning process. They anticipate a doubling of peak load by 2030, with 40% of the new load coming from Oncor's service territory. Oncor is confident in their ability to meet this demand and has plans to invest in resiliency measures to improve the grid's reliability.

The majority of the proposed spend for Oncor is focused on modernizing and hardening the older parts of their distribution system, as well as investing in technology and infrastructure to quickly restore service during extreme weather events. They have also invested in wildfire mitigation and plan to further accelerate these strategies thanks to HB 2555. The SRP program, if approved, would be incremental to Oncor's planned $24.2 billion in capital expenditures. Sempra reported first quarter 2024 GAAP earnings of $801 million.

In the first quarter of 2024, Sempra reported a GAAP earnings of $854 million or $1.34 per share, compared to $969 million or $1.53 per share in the same period last year. This was due to various factors, such as higher net interest expense and lower income tax benefits at Sempra California, and higher equity earnings and operating expenses at Sempra Texas. At Sempra Infrastructure, there were lower transportation revenues and higher O&M costs, offset by higher power results and lower net interest expense. At Sempra Parent, there was a $48 million increase in taxes due to an interim period application of an annual forecasted consolidated effective tax rate. Overall, Sempra remains committed to its corporate strategy and delivering value to its stakeholders.

The management team at Sempra is focused on challenging the status quo and investing in growth opportunities in North America's largest markets. They have a record $48 billion capital campaign planned through 2028 and aim for attractive returns on equity through disciplined capital allocation. The company also plans to continue growing its dividend, which has increased by 7% annually over the last 10 years. Sempra is well-positioned to take advantage of opportunities in the industry and is committed to responsible management of capital. During the Q&A portion of the call, an analyst asked about the potential for additional spending in the future and the company's financing plans to support it.

Jeff Martin, the speaker, is confident about the company's balance sheet and its ability to finance growth efficiently. He mentions their track record of achieving a 10% annual growth rate in adjusted EPS over the past five years. He also mentions that they have already taken care of their equity needs and have a plan in place to continue financing their growth. The interviewer, Shar Pourreza, asks about the impact of the cost of capital affirmation in California and potential customer reinvestment plans. Jeff responds that they will provide an update on the California Utilities earnings after the proposed decision later this quarter and the final decision at the end of the year. They plan to reconcile any impacts on their forward earnings during the next earnings call, which could be as early as Q3.

In a recent conference call, operator Jeremy Tonet from JPMorgan Securities asked about the impact of ERCOT load growth on Oncor's capital plan. CEO Jeff Martin responded that the growth in Texas is expected to be significant and that between 40-50% of it will fall to Oncor's service territory. They plan to evaluate this in the fall. Tonet also asked about the SRP and its impact on the system's resiliency. Martin mentioned that the SRP is a $3 billion investment over three years and that it will contribute to overall resiliency needs.

Sempra is interested in investing in its growth platforms, including a $24 billion capital plan that aims to improve system resilience and reliability. The requested capital for the plan is incremental to Oncor's existing plan. Allen Nye explains that the current plan is divided into distribution expansion, transmission expansion, maintenance, and technology, with 70% of the capital being for growth. The company is excited about the plan they filed, which includes six categories such as overhead and underground resiliency and modernization.

The paragraph discusses the different categories of investments being made by the company, totaling $1.830 billion in the first category, $510 million in the second, $285 million in the third, $525 million in the fourth, $80 million in the fifth, and $182 million specifically for wildfire mitigation measures. These investments include distribution automation, vegetation management, cyber risk management, physical security, and measures to prevent wildfires. The company has been focused on wildfire risk mitigation for a number of years.

The company has allocated an additional $900 million to address issues such as resiliency, wildfire prevention, and reliability in the ERCOT market. They view this as a historic opportunity to directly benefit their customers. The pause on the FDA permit is seen as temporary and is expected to be resolved early next year, and it only affects Port Arthur Phase 2.

The company has existing permits for several LNG projects, including Cameron Phase 1, ECA Phase 1, and Port Arthur Phase 1. They expect to work through the permit process for Port Arthur Phase 2 early next year. The company believes their LNG strategy is strong, with geographically advantageous projects and potential for growth. They have not yet set an FID expectation for Port Arthur Phase 2, but progress is being made.

The company is making progress in developing two projects and their momentum is building. The next question is about the timing and cadence of spending for the SRP filing, which is expected to be approved in the fourth quarter. The spending will occur over three years and is slightly backloaded. The company has also discussed the potential for load growth in Texas to support infrastructure investment.

Jeff Martin, CEO of Oncor, discussed supply chain constraints in executing their T&D build out plan during a recent earnings call. He mentioned that while there have been some challenges, they have seen load growth and some relaxation of supply chain issues. Allen Nye, who serves on Oncor's Board of Directors, added that they have been working to secure contractors and hard goods for a while and feel confident about the first two years of the plan. They have also diversified their supply chain and made significant progress on the outer three years, with plans to fill in any remaining gaps. Nye assured the Board that they have managed to work through supply chain issues effectively and are in a good position at the moment.

Jeff Martin, CEO of Sempra Energy, adds to Allen's comments on the company's base capital plan, which is focused on growth and includes a significant investment in transmission. Martin also highlights the importance of the recent filing by SRP, which will provide additional growth opportunities for the company. In response to a question about ConocoPhillips potentially selling down their stake in Port Arthur, Martin notes that the company has a strong partnership with Conoco and a shared interest in the success of both phases of the project. He also mentions that the second phase of the project, which will utilize gas supply from the Permian Basin, has strategic significance for Conoco.

The speaker discusses the progress of construction on two projects, ECA Phase 1 and Port Arthur Phase 1, and notes that there are no supply chain issues. They are on track for completion in 2025 and have a large number of workers on-site with no safety incidents. They also mention ongoing conversations with counterparties for the success of Phase 2.

Construction activities at Port Arthur Phase 1 are progressing well, with a focus on foundation stage construction and strong market interest in development projects. For Port Arthur Phase 2, the company is working on an EPC agreement with Bechtel and continuing marketing efforts for off-take and equity. For Cameron Phase 2, the company is optimizing costs and exploring procurement of critical equipment, with plans to take FID in the first half of 2025. The company will only move forward with projects when they have the right cost and risk structure, long-term contracted cash flows, and support their corporate strategy and targeted returns. The Bechtel relationship is a strategic one for the company.

Justin emphasized the importance of not stopping Phase 1 and immediately starting continuous building for Phase 2 at Port Arthur. His team has already established agreements with key vendors and is focused on sourcing necessary equipment and planning ahead for long lead time items to manage risk and ensure successful project delivery. In terms of SIP, the company has a new corporate strategy that focuses on building leadership and scale advantages in large economic markets and investing in energy value chain projects like Cimarron Wind, which will provide highly recurring cash flows. The company has a strong presence in Mexico and has seen significant growth in the country's economy.

The speaker asks a question about labor and its impact on the LNG market, referencing recent delays and issues with unskilled labor. They also mention increasing demand in the domestic utility and T&D networks from various industries. The speaker notes that the LNG market has stabilized and may not experience the expected slowdown in the second half as previously thought.

The speaker thanks the audience for joining the conference call and highlights the company's compelling value proposition, strong growth and income potential, and commitment to long-term success. The management team is focused on innovation and delivering strong financial returns to owners.

The speaker invites the audience to reach out to the IR team with any follow-up questions and invites them to attend the AGA in California on May 20 and 21. The call is now over and the operator thanks the participants for their participation.

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