REGULATORY MATTERS (Tables)

12 Months Ended

Dec. 31, 2022

We show the details of regulatory assets and liabilities in the following table and discuss them 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)
(Dollars in millions)
	December 31,
	2022		2021
SDG&E:
Fixed-price contracts and other derivatives	$	(110)	$	(50)
Deferred income taxes recoverable in rates	296		125
Pension and PBOP plan obligations	11		(7)
Removal obligations	(2,248)		(2,251)
Environmental costs	107		62
Sunrise Powerlink fire mitigation	123		122
Regulatory balancing accounts(1)(2)
Commodity – electric	220		77
Gas transportation	60		49
Safety and reliability	107		67
Public purpose programs	(69)		(107)
Wildfire mitigation plan	375		178
Liability insurance premium	99		110
Other balancing accounts	(50)		207
Other regulatory assets, net(2)	137		119
Total SDG&E	(942)		(1,299)
SoCalGas:
Deferred income taxes recoverable in rates	161		44
Pension and PBOP plan obligations	(170)		51
Employee benefit costs	24		31
Removal obligations	(616)		(627)
Environmental costs	38		34
Regulatory balancing accounts(1)(2)
Commodity – gas, including transportation	(257)		(146)
Safety and reliability	575		339
Public purpose programs	(158)		(183)
Liability insurance premium	23		16
Other balancing accounts	115		42
Other regulatory assets, net(2)	223		142
Total SoCalGas	(42)		(257)
Sempra Infrastructure:
Deferred income taxes recoverable in rates	78		77
Total Sempra	$	(906)	$	(1,479)

(1) At December 31, 2022 and 2021, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $562 and $358, respectively, and for SoCalGas was $692 and $410, respectively.

(2) Includes regulatory assets earning a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate.

Schedule of Regulatory Liabilities


REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	December 31,
	2022		2021
SDG&E:
Fixed-price contracts and other derivatives	$	(110)	$	(50)
Deferred income taxes recoverable in rates	296		125
Pension and PBOP plan obligations	11		(7)
Removal obligations	(2,248)		(2,251)
Environmental costs	107		62
Sunrise Powerlink fire mitigation	123		122
Regulatory balancing accounts(1)(2)
Commodity – electric	220		77
Gas transportation	60		49
Safety and reliability	107		67
Public purpose programs	(69)		(107)
Wildfire mitigation plan	375		178
Liability insurance premium	99		110
Other balancing accounts	(50)		207
Other regulatory assets, net(2)	137		119
Total SDG&E	(942)		(1,299)
SoCalGas:
Deferred income taxes recoverable in rates	161		44
Pension and PBOP plan obligations	(170)		51
Employee benefit costs	24		31
Removal obligations	(616)		(627)
Environmental costs	38		34
Regulatory balancing accounts(1)(2)
Commodity – gas, including transportation	(257)		(146)
Safety and reliability	575		339
Public purpose programs	(158)		(183)
Liability insurance premium	23		16
Other balancing accounts	115		42
Other regulatory assets, net(2)	223		142
Total SoCalGas	(42)		(257)
Sempra Infrastructure:
Deferred income taxes recoverable in rates	78		77
Total Sempra	$	(906)	$	(1,479)

(2) Includes regulatory assets earning a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate.

Proposed Revenue Requirement

The following table summarizes the location of balances related to the Wildfire Fund on Sempra’s and SDG&E’s Consolidated Balance Sheets and Consolidated Statements of Operations.


WILDFIRE FUND
(Dollars in millions)
				December 31,
	Location			2022		2021
Wildfire Fund asset:
Current	Prepaid Expenses			$	29	$	29
Noncurrent	Wildfire Fund			303		331
Wildfire Fund obligation:
Current	Other Current Liabilities			$	13	$	13
Noncurrent	Deferred Credits and Other			53		64

		Years ended December 31,
		2022		2021		2020
Amortization of Wildfire Fund asset	Operation and Maintenance	$	29	$	29	$	29
Impairment of Wildfire Fund asset	Operation and Maintenance	—		3		—
Accretion of Wildfire Fund obligation	Operation and Maintenance	2		2		2

A CPUC 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 index applicable to SDG&E and SoCalGas is based on each utility’s credit rating. The CCM benchmark rate is the basis of comparison to determine if the CCM is triggered in each measurement period, 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 CCM, if triggered, would automatically update the authorized cost of debt based on actual costs and update the authorized ROE upward or downward by one-half of the difference between the CCM benchmark rate and the applicable Moody’s utility bond index. Alternatively, each of SDG&E and SoCalGas are 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.

In December 2019, the CPUC approved the following cost of capital for SDG&E and SoCalGas that became effective on January 1, 2020 and remained in effect through December 31, 2022, subject to the CCM.


CPUC AUTHORIZED COST OF CAPITAL FOR 2020 – 2022

SDG&E							SoCalGas
Authorized weighting		Return on rate base		Weighted return on rate base			Authorized weighting		Return on rate base		Weighted return on rate base
45.25	%	4.59	%	2.08	%	Long-Term Debt	45.60	%	4.23	%	1.93	%
2.75		6.22		0.17		Preferred Equity	2.40		6.00		0.14
52.00		10.20		5.30		Common Equity	52.00		10.05		5.23
100.00	%			7.55	%		100.00	%			7.30	%


CPUC AUTHORIZED COST OF CAPITAL FOR 2023 – 2025

SDG&E							SoCalGas
Authorized weighting		Return on rate base		Weighted return on rate base(1)			Authorized weighting		Return on rate base		Weighted return on rate base
45.25	%	4.05	%	1.83	%	Long-Term Debt	45.60	%	4.07	%	1.86	%
2.75		6.22		0.17		Preferred Equity	2.40		6.00		0.14
52.00		9.95		5.17		Common Equity	52.00		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.