REGULATORY MATTERS (Tables)

12 Months Ended

Dec. 31, 2023

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) AT DECEMBER 31
(Dollars in millions)
	Sempra				SDG&E				SoCalGas
	2023		2022		2023		2022		2023		2022
Fixed-price contracts and other derivatives	$	215	$	(56)	$	14	$	(110)	$	201	$	54
Deferred income taxes recoverable in rates	1,142		535		626		296		430		161
Pension and PBOP plan obligations	(212)		(159)		48		11		(260)		(170)
Employee benefit costs	24		29		3		5		21		24
Removal obligations	(3,082)		(2,864)		(2,468)		(2,248)		(614)		(616)
Environmental costs	139		145		105		107		34		38
Sunrise Powerlink fire mitigation	124		123		124		123		—		—
Regulatory balancing accounts(1)(2):
Commodity – electric	(233)		220		(233)		220		—		—
Commodity – gas, including transportation	(259)		(197)		52		60		(311)		(257)
Safety and reliability	959		682		207		107		752		575
Public purpose programs	(273)		(227)		(144)		(69)		(129)		(158)
Wildfire mitigation plan	685		375		685		375		—		—
Liability insurance premium	113		122		90		99		23		23
Other balancing accounts	373		65		(152)		(50)		525		115
Other regulatory (liabilities) assets, net(2)	(10)		301		49		132		(58)		169
Total	$	(295)	$	(906)	$	(994)	$	(942)	$	614	$	(42)

(1) At December 31, 2023 and 2022, the noncurrent portion of regulatory balancing accounts – net undercollected for Sempra was $1,913 and $1,254, respectively, for SDG&E was $950 and $562, respectively, and for SoCalGas was $963 and $692, 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) AT DECEMBER 31
(Dollars in millions)
	Sempra				SDG&E				SoCalGas
	2023		2022		2023		2022		2023		2022
Fixed-price contracts and other derivatives	$	215	$	(56)	$	14	$	(110)	$	201	$	54
Deferred income taxes recoverable in rates	1,142		535		626		296		430		161
Pension and PBOP plan obligations	(212)		(159)		48		11		(260)		(170)
Employee benefit costs	24		29		3		5		21		24
Removal obligations	(3,082)		(2,864)		(2,468)		(2,248)		(614)		(616)
Environmental costs	139		145		105		107		34		38
Sunrise Powerlink fire mitigation	124		123		124		123		—		—
Regulatory balancing accounts(1)(2):
Commodity – electric	(233)		220		(233)		220		—		—
Commodity – gas, including transportation	(259)		(197)		52		60		(311)		(257)
Safety and reliability	959		682		207		107		752		575
Public purpose programs	(273)		(227)		(144)		(69)		(129)		(158)
Wildfire mitigation plan	685		375		685		375		—		—
Liability insurance premium	113		122		90		99		23		23
Other balancing accounts	373		65		(152)		(50)		525		115
Other regulatory (liabilities) assets, net(2)	(10)		301		49		132		(58)		169
Total	$	(295)	$	(906)	$	(994)	$	(942)	$	614	$	(42)

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

Schedule of Regulated Operations

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


WILDFIRE FUND
(Dollars in millions)
		December 31,
	Location	2023		2022
Wildfire Fund asset:
Current	Prepaid Expenses	$	28	$	29
Noncurrent	Wildfire Fund	269		303
Wildfire Fund obligation:
Current	Other Current Liabilities	13		13
Noncurrent	Deferred Credits and Other	42		53

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.


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	%


AUTHORIZED COST OF CAPITAL FOR 2023

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.

For the measurement period that ended on September 30, 2023, SDG&E’s CCM benchmark rate was 4.367% based on Moody’s Baa- utility bond index and SoCalGas’ CCM benchmark rate was 4.074% based on Moody’s A- utility bond index. The actual average rate during the measurement period was 5.777% for SDG&E and 5.472% for SoCalGas. As such, the CCM was triggered for SDG&E and SoCalGas on September 30, 2023. In December 2023, the CPUC approved increases to SDG&E’s and SoCalGas’ authorized rates of return effective January 1, 2024, which will remain in effect through December 31, 2025, subject to the CCM. In January 2024, several parties submitted a request for the CPUC to review such approval.


AUTHORIZED COST OF CAPITAL FOR 2024 – 2025

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	%	4.34	%	1.96	%	Long-Term Debt	45.60	%	4.54	%	2.07	%
2.75		6.22		0.17		Preferred Equity	2.40		6.00		0.14
52.00		10.65		5.54		Common Equity	52.00		10.50		5.46
100.00	%			7.67	%		100.00	%			7.67	%