The paragraph introduces the participants of Sempra's First Quarter 2025 Earnings Call, including key executives like Jeff Martin, Chairman and CEO, and Karen Sedgwick, EVP and CFO. Glen Donovan, SVP of Finance, begins the call by welcoming participants and refers to the availability of the webcast and presentation on Sempra's website. The paragraph also notes the presence of other executives from Sempra and its subsidiaries, like Oncor and SDG&E, and alerts listeners that forward-looking statements will be discussed, which may differ from actual future results as detailed in Sempra's SEC filings. Non-GAAP financial measures will also be part of the presentation.

The paragraph outlines a company's recent financial performance and strategic plans. On May 8th, 2025, they reported a first-quarter adjusted EPS of $1.44, up from $1.34. They affirmed their full-year 2025 adjusted EPS guidance of $4.30 to $4.70 and a 2026 EPS guidance of $4.80 to $5.30, projecting a long-term EPS compound annual growth rate of 7% to 9% through 2029. Their plan includes investing $13 billion in energy infrastructure, largely targeting U.S. utilities, and improving regulatory relationships in Texas and California. Additionally, they aim to realign their portfolio to support utility growth in these states and intend to sell a minority interest in Sempra Infrastructure Partners.

The paragraph outlines a company's strategy to enhance growth and financial performance by divesting non-core assets like Ecogas to simplify operations and reduce equity reliance. They aim to increase earnings from regulated businesses, ensure transactions are accretive and credit enhancing, and execute the "Fit For 2025" campaign to reduce costs and adopt new technology for productivity boosts. The company also focuses on delivering safe, reliable energy and leveraging its leadership in wildfire science for competitive advantage. Overall, these efforts aim to facilitate growth and differentiation through the decade.

The paragraph discusses the company's focus on executing a strategic plan to enhance its value and strength. Karen Sedgwick provides updates on their growth platforms, highlighting that the Electric Reliability Council of Texas (ERCOT) predicts an increase in peak load growth and proposes a substantial transmission infrastructure development in Texas. This involves investments between $32 billion and $35 billion, with a significant portion for the Permian plan. Oncor, as a major stakeholder, is poised to play a key role in constructing this infrastructure. Oncor is currently reviewing the investment opportunities and is in the process of obtaining necessary approvals, with plans to continue filings through 2026.

The paragraph discusses current legislative and regulatory updates for energy companies in Texas and California. In Texas, potential legislation could positively impact the regulatory framework for transmission and distribution investments, while Oncor plans to file a comprehensive base rate review in the second quarter. In California, every three years, utilities submit cost of capital applications to the CPUC to set authorized rates of return for infrastructure investments. SDG&E and SoCalGas have filed applications for 2026-2028, requesting specific common equity layers and returns on equity. A decision from the CPUC is expected by the end of the year, with new rates effective in 2026. The cost of capital adjustment mechanism will apply for 2027 and 2028. For SDG&E's FERC-TO6 filing, the current authorized rate is 10.1%, and a requested base ROE of 11.75% is under appeal. New interim rates are to be implemented on June 1st, with the settlement expected later in the year.

In the first quarter, the CPUC approved a 100-megawatt expansion of the Westside Canal battery storage, enhancing the region's energy infrastructure with reliable and clean power. SDG&E and SoCalGas customers benefited from a one-time California climate credit, reducing bills by up to $136 and $87, respectively, with an additional credit expected for SDG&E customers later in the year. Testimony was filed to evaluate the costs of pipeline safety and wildfire mitigation measures from previous years, with a decision anticipated in 2026. Sempra, California, is actively managing rising prices and tariff risks by diversifying supply sources and engaging with domestic suppliers to mitigate impacts on ratepayers.

The paragraph discusses Sempra's plans to sell certain non-core energy infrastructure assets in Mexico and a minority interest in Sempra Infrastructure Partners, mentioning the interest from potential buyers and highlighting KKR and ADIA's rights of first offer. The company is open to third-party bids if agreements with current partners aren't reached, aiming to maximize shareholder value. Operational updates include the successful Phase 1 operations of Cimarron LNG, which achieved high reliability and cargo loading rates in Q1 2025. Despite potential tariff impacts, cross-border energy transactions remain compliant with USMCA and unaffected. The paragraph also notes ongoing construction progress on Cimarron Wind LNG Phase 1 and Port Arthur LNG Phase 1, including turbine installations.

The paragraph discusses progress on LNG Phase 1, which targets power generation by late 2025 and commercial operations by spring 2026. Construction is 92% complete, with a focus on pipe testing and electrical activities. Mechanical completion of subsystems has enabled pre-commissioning, and the EPC contractor has finished engineering and procurement, minimizing risks related to material costs. At Port Arthur LNG, construction is advancing despite last week's incident resulting in three fatalities, with foundations, steel, and pipe installations progressing. The facility began admitting items into the U.S. to preemptively avoid tariff costs. Port Arthur LNG Phase 2 aims for completion by the end of 2025, despite potential macroeconomic uncertainties. The paragraph emphasizes the importance of mitigating cost risks while recognizing energy infrastructure's role in economic growth.

The paragraph discusses Sempra Infrastructure's strategic position to enhance energy security for allies in Europe and Asia. It reports Sempra's financial performance for the first quarter of 2025, highlighting GAAP earnings of $906 million or $1.39 per share, up from $801 million or $1.26 per share in the first quarter of 2024. Adjusted earnings were $942 million or $1.44 per share, compared to $854 million or $1.34 per share the previous year. Sempra California saw increased earnings from a higher operating margin and tax benefits, despite higher interest expenses. Sempra Texas experienced lower equity earnings, mainly due to higher expenses, but benefited from increased revenues due to customer growth and weather. Sempra Infrastructure had slight decreases from lower asset optimization, countered by reduced O&M and increased interest income.

The paragraph is part of a conference call where the management discusses their company's financial performance and strategic plans. They mention a $15 million decrease at the parent level due to higher net interest expenses but highlight their solid start to the year and commitment to executing their 2025 strategic initiatives. These initiatives include divesting non-core assets, investing in Texas and California utilities, strengthening the balance sheet, and improving the quality of services. They emphasize the importance of growth plans and open the floor to questions. Ross Fowler from Bank of America asks for clarification on the Strategic Investor Process (SIP) timeline, confirming that updates are expected by late June or early July. Jeff Martin confirms Ross's understanding, emphasizing sequential consideration.

The paragraph discusses the procedural timeline for KKR and ADIA's potential bids and Sempra's response periods, suggesting that the company will provide an update during the Q2 call. Ross Fowler then asks about Texas' energy infrastructure, particularly the advantages and disadvantages of expanding the 765 kV or 345 kV network. Allen Nye responds by highlighting significant growth indicators in Texas, including a 3% increase in new premises, a 66% rise in transmission request POIs, and a surge in large customer queues and transmission loops, emphasizing the ongoing robust growth known as the Texas Miracle.

The paragraph discusses the benefits and plans for constructing 765 kV transmission lines as part of the Permian and STEP programs in Texas. It highlights the operational advantages of 765 kV lines over 345 kV lines, particularly for a rapidly growing state like Texas. The 765 kV lines offer better capacity, flexibility in generation siting, and effective system operation. The decision on the eastern part of the plan is pending from the PUC and legislature, but opportunities exist with the numerous endpoints owned by the company. Confidence is expressed in the growth prospects in Texas and the company's potential significant involvement in both major transmission plans. Jeff Martin concludes by acknowledging the ambitious nature of the plan.

In the paragraph, Jeff Martin discusses the Fit For 2025 program, which aims to improve Sempra's competitive cost structure by reducing costs and enhancing productivity. The company is exploring methods such as voluntary retirement programs, technology investments, and outsourcing to better serve customers affordably. He highlights that SDG&E is using artificial intelligence for customer interactions and mentions that Oncor in Texas and SoCal Gas have low rates compared to other utilities, with Oncor having the lowest rates among investor-owned utilities despite its significant capital plan.

The paragraph discusses SDG&E's efforts to maintain low electric bills for customers. Caroline Winn highlights their focus on affordability, mentioning initiatives like "Fit for 25" to reduce operating costs and improve efficiency. They are securing non-ratepayer funding and advocating for beneficial policies, like a California executive order to improve electric affordability. SDG&E has filed to cut costs associated with non-cost-effective energy programs, potentially saving customers $300 million. They also utilize climate credits to reduce bills by $217 this year, emphasizing the priority on keeping bills transparent, stable, and affordable.

The paragraph discusses the current status and future plans for the Port Arthur Phase 2 LNG project. Jeff Martin confirms confidence in the project's development, while Justin Bird outlines the ongoing progress related to commercial negotiations, permits, and financing. Despite some macroeconomic uncertainties, the emphasis remains on managing costs and ensuring shareholder value before making a final investment decision (FID), which is targeted for 2025. Additionally, Sempra's capital program prioritizes regulated utilities, indicating that FID will only proceed if it aligns with these priorities. Carly Davenport then seeks clarification regarding tariff exposure comments.

Jeff Martin explains that despite the fluid industry environment, Sempra is well-prepared to handle any impact from tariffs, which falls within their guidance. At their utilities, they are focused on minimizing tariff exposure by sourcing the majority of their equipment domestically, which limits the impact on capital expenditures to 2-3%. They are diversifying their supplier pool, exploring new sources, increasing domestically produced materials, and maintaining higher inventory levels for critical materials. For Sempra Infrastructure, their LNG procurement at ECA is complete and unaffected by tariffs, while 90% of spending at Port Arthur LNG is with U.S. suppliers. They utilize foreign trade zones to reduce tariff impacts, with Phase 1's exposure estimated at about 1% of CapEx. Future projects will only proceed after securing firm pricing and mitigating cost risks to ensure target returns.

The paragraph discusses the relationship between the Unified Tracker bill and a rate case filing in Texas. Jeff Martin explains that the rate case should be viewed separately, with an authorized Return on Equity (ROE) currently at 9.7%. He highlights two factors that can lower earned ROEs: a higher cost structure resolved through the base rate review and regulatory lag due to capital tracker mechanisms. Martin emphasizes their commitment to improving financial returns through investments and strategic actions in legislative sessions and regulatory filings, both in Texas and California. The goal is to strengthen their balance sheet and regulatory compact.

In the paragraph, Allen Nye discusses the legislative progress of various bills, notably the UTM bill (House Bill 5247), which is significant for his organization due to its potential to reduce regulatory lag and improve credit quality. The bill has received broad support and seeks to simplify existing regulatory processes. While additional approvals are needed from the Senate and the Governor, the bill could also reduce the workload for the Public Utility Commission (PUC) staff. Nye mentions that while there are other bills under consideration, the UTM bill is particularly important. Additionally, a rate case filing is expected in the second quarter, which should be viewed separately.

The paragraph discusses potential changes to California's wildfire fund under AB 1054 and draws parallels to legislative efforts in Texas, specifically House Bill 145, which aims to shift the negligence standard. Jeff Martin highlights that California's approach to addressing wildfire risk is multifaceted, focusing on three key areas: enhancing the size and durability of the wildfire fund, improving the insurance environment for residential homeowners, and seeking regulatory reform. He emphasizes that wildfire is a statewide societal issue, not just a utility problem, and praises the Governor's efforts on these fronts. Additionally, Martin distinguishes San Diego Gas & Electric (SDG&E) for having a demonstrably lower wildfire risk for specific reasons.

The paragraph discusses wildfire risk mitigation by SDG&E, highlighting their efforts and success in avoiding utility-related catastrophic wildfires for 17 years. Caroline Winn, SDG&E's CEO, emphasizes the importance of continuing the framework established by AB 1054, which has provided stability through a wildfire fund. She notes that stakeholders throughout California recognize the importance of addressing wildfire issues and the role of investor-owned utilities in supporting the state's growth and safety. The conversation then shifts to a question from Nicholas Campanella of Barclays regarding EPS CAGR, asset sales, and a rate case involving Oncor.

In the paragraph, Jeff Martin discusses the company's plans and confidence in exceeding the 7% to 9% growth range by 2029. He references feedback from a previous call indicating the need for clearer guidance and highlights a $36 billion capital plan related to Oncor. Martin expresses confidence in a significant portion of a $12 billion investment plan coming to fruition, impacting growth forecasts. Nicholas asks about the potential of going beyond a 30% investment threshold in a transaction being pursued, with Martin emphasizing Sempra's strong history in acquiring and divesting assets, despite the challenges presented by current interest rates and economic uncertainty.

The paragraph discusses the company's strategic approach to unlocking value through transactions, emphasizing a thoughtful process in collaboration with its Board of Directors. The company is open to new ideas, evaluating transaction opportunities between 15% and 30% that align with their capital program while always considering what creates the most value for shareholders. Nicholas Campanella and Jeff Martin discuss questions from analysts, specifically addressing Oncor's CCN applications in Texas and their potential impact on a $12 billion upside in capital expenditure. Jeff Martin explains that Oncor and Sempra aim to be disciplined about capital spending, with Oncor identifying a $48 billion opportunity between 2025 and 2029 and dividing planned capital spending into two categories.

The paragraph discusses the progress of capital spending and project permitting for an infrastructure plan, highlighting a $12 billion incremental category needing work to commence construction. It outlines changes to the Permian plan requiring both local and import projects to be completed by 2030, necessitating the use of 765 kV infrastructure. Allen Nye mentions significant progress on filing the necessary CCNs, planning to file 24 this year, indicating increased regulatory activity compared to past experience. Jeff Martin notes about one-third of the planned 24 CCNs have already been filed, emphasizing ongoing efforts.

In this discussion, an unidentified analyst and executives, Jeff Martin and Caroline Winn, discuss financial and infrastructure plans. Martin confirms that a $12 billion plan will be accelerated and might exceed this amount by 2029, based on revised strategies and needs, like import acceleration by 2030. The conversation shifts to California-specific regulatory developments and investment opportunities beyond the General Rate Case (GRC). Caroline Winn details additional plans, including the modernization of compressor stations, electrification investments supported by Senate Bill 410, and enhancements to pipeline systems and wildfire investments outlined in GRC Tracks 2 and 3.

The paragraph discusses a company's efforts towards modernizing its systems by focusing on high voltage transmission and additional battery storage to enhance grid reliability and support clean energy. Jeff Martin talks about investments for safety and reliability and mentions a slide in the presentation that outlines the current versus requested cost of capital. An unidentified analyst asks if a constructive ROFO (Right of First Offer) indication could shorten a 12- to 18-month process for a transaction, and Jeff Martin confirms that it could, citing past transactions that took about six months from the announcement to completion. The operator then introduces Julien Dumoulin-Smith from Jefferies, who asks about setting expectations for potential transactions.

In the discussion between Julien Dumoulin-Smith and Jeff Martin, they address the valuation of a business following its last transaction. Jeff Martin suggests that since a prior assessment in March 31st, the company has experienced growth in its EBITDA, increased construction in progress, and an expansion of its long-term project pipeline. These developments contribute to the notion that the business holds more value now than before, although this may not yet be reflected in its stock price. Julien acknowledges that the improved prospects and increased EBITDA indicate confidence, but notes the challenge of valuation given the current higher interest rate environment. Jeff Martin further explains that valuation multiples can rise based on how the acquiring party perceives the development pipeline's potential.

The paragraph is a discussion between Julien Dumoulin-Smith and Allen Nye regarding the financial standing and credit ratings of a significant franchise business. Allen Nye expresses confidence in maintaining good credit ratings and emphasizes the strong plan presented to credit agencies. He explains that their strategy for the next 12 to 18 months aims to fund their capital plan more efficiently, reducing future common equity needs and improving the credit profile. Nye also indicates that current credit metrics are consistent with previous figures. The operators then transition to the next speaker, Durgesh Chopra from Evercore ISI.

In the paragraph, Jeff Martin and Karen Sedgwick discuss their company's interactions with Moody's and S&P regarding their negative outlook status. Jeff reassures Durgesh Chopra that the company is in good shape and has had productive conversations with the rating agencies, who understand their 12 to 18-month time frame for asset sales. They are committed to maintaining their ratings and believe they have enough time to complete their planned transactions. Durgesh seeks clarity on tax implications, and Jeff emphasizes their focus on maximizing equity value and minimizing tax leakage in their transactions.

The paragraph details a discussion about tax considerations and the strategic focus of Sempra's business model. The goal is to minimize taxes in transactions to maximize after-tax proceeds and increase earnings per share (EPS). Sempra is focusing on allocating more capital to regulated utilities, aiming for a mix where 90% or more of earnings and cash flows come from regulated investments. This strategy involves reducing their ownership in non-regulated assets, like SI, to lower risk in their portfolio. Jeff Martin emphasizes this strategic direction to Anthony Crowdell during a call.

The paragraph is a discussion during a conference call where David Arcaro from Morgan Stanley asks about the current gigawatts in the LC&I pipeline related to Oncor, specifically inquiring about data centers and the likelihood of them hitting the market. Jeff Martin notes that ERCOT’s forecasts have increased, leading to questions about the real demand. Allen Nye responds, stating that there are currently 156 gigawatts of data centers and an additional 22 gigawatts from traditional industrial sectors in the queue, totaling 178 gigawatts. There is a conversation on assessing the certainty of these interconnection requests.

In the article paragraph, Jeff Martin and David Arcaro discuss future power capacity plans submitted to ERCOT, highlighting a high confidence addition of 29.5 gigawatts by 2031 due to factors like signed interconnection agreements and completed studies. This capacity more than doubles the current 31-gigawatt peak load. The conversation underscores the significance of building essential infrastructure to support economic growth in Texas, particularly in the Oncor Service Territory. The session concludes with Jeff Martin appreciating participants for joining despite competing engagements.

The paragraph informs that any follow-up questions should be directed to the IR team. It also mentions that Glen and the speaker are traveling to Los Angeles to meet investors, while Karen and her team are preparing for an AJ event in Florida later in the month. The call then concludes with the operator thanking participants and signaling that they can disconnect.

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