Good day, and welcome to Sempra's Fourth Quarter Earnings Call. Today's conference is being recorded. At this time, I'd like to turn it over to Glen Donovan. Please go ahead.

Good morning, and welcome to Sempra's fourth quarter 2024 earnings call. A live webcast of this teleconference and slide presentation are available on our website under our events and presentation section. We have several members of our management team with us today, including Jeff Martin, Chairman and Chief Executive Officer; Karen Sedgwick, Executive Vice President and Chief Financial Officer; Justin Bird, Executive Vice President and Chief Executive Officer of Sempra Infrastructure; Allen Nye, Chief Executive Officer of Oncor; Don Clevinger, Chief Financial Officer of Oncor; Carolyn Winn, Chief Executive Officer of SDG&E; Peter Wall, Senior Vice President, Controller, and Chief Accounting Officer; and other members of our senior management team. Before starting, I'd like to remind everyone that we'll be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in any forward-looking statement we make today. The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K filed with the SEC. Earnings per common share amounts in our presentation are shown on a diluted basis, and we'll be discussing certain non-GAAP financial measures. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We also encourage you to review our 10-K for the year ended December 31, 2024. I'd also like to mention that forward-looking statements contained in this presentation speak only of today, February 25, 2025. It's important to note that the company does not assume any obligation to update or revise any of these forward-looking statements in the future. With that, please turn to slide five and let me hand the call over to Jeff.

Thank you, Glen, and thank you all for joining us today. This year, as we report our Q4 and full-year financial results, we've organized our materials to lay out a clear roadmap for our company to deliver a decisive decade of growth. In part, that's why we took the time over the last several months to reach out to investors and the research community to get new ideas and suggestions on how to make today's call as informative as possible. With your input, we've added a lot more content to today's presentation and adjusted our list of presenters so you get to hear directly from a broader group of executives. In terms of our agenda, I'll start by reviewing our accomplishments in 2024 and provide an overview of our corporate strategy. Then we'll move to the leaders of our three business segments, where each will discuss recent developments and operational initiatives in their businesses as well as their respective capital plans. Afterwards, Karen will follow the presentation on our Q4 and full-year financial results and the details surrounding our new five-year capital plan. Then at the end, I'll rejoin you to make some closing remarks. Turning to our 2024 financial results, we delivered adjusted EPS of $4.65, which is just below the midpoint of our guidance range. Later in today's call, Karen will walk through the key drivers behind those results. Turning to 2025 guidance, we've adjusted our financial forecast to account for a series of changes. These include the final decision in our California rate cases as well as updated assumptions relating to interest rates, commodity prices, and O&M costs. Another key assumption in our 2025 guidance has to do with Oncor's next base rate review. As you know, Texas is enjoying strong economic and population growth. Some estimates…

Thank you, Jeff. We had a successful year at Oncor, headlined by several key accomplishments. We deployed approximately $4.7 billion, a new record, and grew our rate base by approximately 15%. We continue to believe in the Texas miracle and do not see it slowing down anytime soon. As Jeff mentioned, we are contemplating filing a comprehensive base rate review with the PUCT this year. As you may recall, our last base rate review was approved in 2023 based on a 2021 historic test year. Market conditions have certainly changed, with higher interest rates, insurance premiums, and inflationary pressure, to name a few. Moving to our operational performance. In 2024, Oncor built, rebuilt, or upgraded 4,300 miles of T&D lines, increased our premise count by approximately 77,000, set company records for new and active transmission interconnection requests, and witnessed 4% growth in electricity volumes delivered. Oncor was also recognized by EEI with the Emergency Response Award for our May 2024 storm response, the second worst storm in Oncor's history, further demonstrating our commitment to restoring power after extreme weather events as soon as safely possible. To come full circle, the main takeaway is that Oncor had an excellent year. And I'll speak next about the long-term growth we are seeing. Please turn to the next slide. As we've highlighted throughout the year, new points of interconnection requests grew 27% in 2020. This is an important metric because it serves as a strong leading indicator of customers looking to connect to Oncor's system and simultaneously helps replenish the existing queue of active requests, both of which represent future investment opportunities. The increase in interconnection interest continues to emerge primarily from large C&I customers, which span multiple diverse industries located across our service territory. As of December 31, 2024, the total amount…

Thank you, Allen. I'll start by providing an update on Sempra California's 2024 accomplishments and five-year capital plan. Then, since we've received a lot of outreach from the investment community on how the state limits investor exposure to wildfire risk, I want to reserve time to provide an update on that as well. Starting with 2024 accomplishments, we saw a number of material developments in our California utilities. First and foremost, we received a final decision in our general rate cases. With the final decision, we're now able to focus our efforts on executing the approved plan and continuing to provide customers with safe and reliable energy. And speaking of safety, SDG&E became California's first utility to be awarded with the prestigious Cal OSHA VPP safety certification. This designation is the highest safety recognition offered by the nation's largest state-run division of occupational safety and health. The award is reserved for organizations that demonstrate exemplary safety practices, employee engagement, and injury prevention measures that exceed standard regulatory requirements. It is also noteworthy to mention that SDG&E was also once again recognized as the best in the west for electric customer reliability for the nineteenth consecutive year, another accomplishment we're quite proud of. Operationally, we continue to see growing energy demand, and recently, the California Energy Commission issued a report projecting 2.8% annual growth in statewide electricity consumption from 2023 through 2030, which should have favorable impacts on customer affordability by putting downward pressure on rates. In October, SDG&E submitted its TO6 filing with FERC, including a 50 basis point California ISO adder. In December, FERC issued an order finding that SDG&E is not eligible for the ISO adder. SDG&E believes there is a reasonable basis to appeal this decision and has already requested a rehearing. At SoCalGas, the CPUC issued…

Thanks, Karen. Geopolitical and market events continue to highlight and strengthen the value proposition of our Sempra Infrastructure platform, and we're making the most of the opportunity. We're making substantial progress on our dual-basin LNG strategy through the construction of ECA LNG Phase 1, Port Arthur LNG Phase 1, and the active development of Port Arthur LNG Phase 2. And when ECA and Port Arthur LNG Phase 1 are up and running, we'll have the ability to deliver natural gas from the Permian and Haynesville basins into our terminals and dispatch LNG into both the Pacific and Atlantic energy markets. And as the CEO, I can tell you this is an exciting time for Sempra Infrastructure. First, we delivered financial results at the high end of our range in 2024 and continued to generate strong distributable cash flow to our owners. Second, construction on ECA LNG Phase 1 continues to progress, and we expect to be on time and on budget in the spring of 2026. We also reached COD on our GRO pipeline, supporting natural gas supply into ECA LNG. Third, construction on Port Arthur LNG Phase 1 with Bechtel as our EPC contractor and our associated pipeline remain on time and on budget. Lastly, the development of Port Arthur LNG Phase 2 is in development. We already have an HOA with Aramco that includes offtake of 5 million tons per annum and a 25% equity interest. We have a fixed-price EPC agreement with Bechtel, and we have interest of well over 5 MTPA for the rest of the capacity for Phase 2. With this in mind, we're pleased to announce we're targeting FID in 2025. Please turn to the next slide. At Sempra Infrastructure, we continue to focus on safety, disciplined development and construction, and operational excellence. At…

Thanks, Justin. Earlier today, Sempra reported fourth quarter 2024 GAAP earnings of $665 million or $1.04 per share. This compares to fourth quarter 2023 GAAP earnings of $737 million or $1.16 per share. On an adjusted basis, fourth quarter 2024 earnings were $960 million or $1.50 per share. This compares to our fourth quarter 2023 earnings of $719 million or $1.13 per share. Full-year 2024 GAAP earnings were $2.817 billion or $4.42 per share. This compares to 2023 GAAP earnings of $3.030 billion or $4.79 per share. On an adjusted basis, full-year 2024 earnings were $2.969 billion or $4.65 per share. This compares to our previous full-year 2023 adjusted earnings of $2.920 billion or $4.61 per share. Please turn to the next slide. Variances in the full-year 2024 adjusted earnings compared to the same period last year can be summarized as follows: At Sempra California, we had $46 million primarily from higher electric transmission margin, higher AFUDC equity, and higher CPUC-based operating margin, and $157 million primarily from higher income tax benefits from flow-through items, including higher gas tax repair benefits, partially offset by higher net interest expense. Turning to Sempra Texas, we had $43 million of higher equity earnings primarily from higher invested capital and customer growth, partially offset by higher interest and operating expenses, and lower consumption primarily due to mild weather. At Sempra Infrastructure, we had $170 million of lower transportation earnings, including the cumulative impact of new tariffs going into effect in 2023, lower asset and supply optimization, and lower volumes for the renewables business, partially offset by $50 million primarily from lower net interest expense due to higher capitalized interest and higher income tax benefits. At Sempra Parent, the $77 million net decrease is primarily due to higher net interest expense and lower income tax…

Thank you, Karen. Next, I'd like to briefly summarize the key takeaways from today's call. Over the last three decades, roughly 10% of public companies have been successful in consistently growing earnings faster than US GDP. That's why I've long believed that EPS growth in our sector and others is loosely correlated to GDP growth. Looking at this slide, you can see this play out over the last five, ten, and twenty-plus year time horizons. US GDP has grown on average at 2%, and over those same time periods, the utility sector has grown earnings per share in the range of 3% to 4%. In contrast, over the same time period, Sempra has been successful in growing its adjusted earnings per share faster than both US GDP and the utility sector's adjusted earnings. Note too that we're one of the few companies in the utility sector who have both, number one, announced a long-term EPS growth forecast of 7% to 9%, and also, number two, delivered that same level of growth over the short and long term. We've been able to accomplish this by emphasizing the importance of a clear corporate strategy, disciplined capital allocation, and efficient sourcing of capital while also simplifying and derisking our business and advancing a culture of high performance. To be clear, I have a bullish view of Sempra's future growth, and we believe we're in the right markets with the right strategy to continue posting strong financial results over the long term. Please turn to the next slide. In 2024, we delivered a total return of 21%. As shown on this slide, Sempra has also delivered a solid total return over the last three years of 45%, which compares favorably to the utility sector. Please turn to the next slide. There are two key…

Thank you. This concludes the prepared remarks. We will now open the line to take your questions. Please limit your questions to one question and one follow-up. If you would like to ask a question, we will pause for just a moment to allow everyone to signal for questions. And our first question will come from Shar Pourreza from Guggenheim Partners. Your line is open.

Good morning, Shar. Good morning, guys. Good morning, Jeff. So just maybe starting off on the 2025 rebates, there are just three pieces I want to reconcile there. First, is the plan embedding lower rate-based growth in California, or is that partially moved to future plan years? And then similarly in Texas, does the higher interest and investment cost in 2025 reverse with the potential base rate filing? And then third, the natural gas sensitivity assumed versus the downward revision for 2025 there? Thanks. I mean, it's a loaded question, but it's just Yeah. On the Look, Shar, there's no question our revised guidance falls below the prior expectation that we've set. That being said, I think we're making the right decision for the business, particularly looking to bring Oncor in earlier for a base rate review. The answers to your question are yes, yes, and we have not disclosed the third answer. What I thought might be helpful is to see if Karen can go through a little bit more detail. Karen, you want to return to slide forty-two? It might be helpful to walk through the key drivers to our 2025 guidance.

Sure. Thanks, Jeff. So I think, you know, we just finished finalizing the five-year plan for our board last week, and there are a few key items at each business platform. So the first one that Jeff talked about, at Sempra Texas, you know, our plan assumes that Oncor does file this base rate review rather than waiting till 2027. Among other things, this impacts their tracker filings during the course of the proceeding, but also provides the opportunity to update their revenue requirements to reflect the higher O&M, insurance costs, and interest expense that they're seeing. With the unprecedented growth in Texas, we think it makes sense to file more periodic rate cases to ensure the company's financial strength. And while this is a negative for 2025, we think it's the right thing to do for Texas' future growth. Turning to California, we have adjusted our financial forecast to include the final decision on the GRC, which came in below the assumptions that were included in our prior plan. Also, it's important to note that the CPUC lowered the authorized return on equity by 42 basis points for 2025. That's in addition to the SPARC 50-point basis point ISO add-on that Jeff spoke about. In combination, these three items put downward pressure on our previous forecast for Sempra California. And then, of course, at SI last year, we announced the change in the expected schedule for commercial operations at ECA LNG to spring of 2026. And finally, at Parent, we're seeing higher interest expense from growth in our capital plan as well as updated assumptions related to changes in interest rates over the prior year's forecast. Given all these impacts, it was important for us to reset our 2025 guidance and create a new base for our expected growth.

Thank you, Karen. And, Shar, to your third question, obviously, our natural gas price assumption has gone down across the plan period.

Got it. Got it. And then just lastly, shifting just to the forward view, you're highlighting the upside in Texas that is material and longer term on the SI side with Port Arthur going into service and Port Arthur 2 now on an FID track. I guess the incremental to the new 7% to 9% plan, what does that imply for where you are in the range coming off the lower base? Especially these incremental items come into plan? And I'm asking more around the current trajectory, not beyond 2029. Can you breach the 9% in the current trajectory? Thanks.

Yes, Shar. Thank you for that question. In the supplemental remarks I made earlier on this call, I clarified that we fully expect in the 2025 to 2029 plan to be at 9% or higher as a CAGR across that plan period. But remember, as we've always talked about, we tend to guide our EPS forecast over long periods of time at 7% to 9%. It just so happens that in the plan period, we fully expect to exceed that.

Fantastic. Thank you, guys, so much. Appreciate it. Thank you, Shar.

Thank you. Our next question will come from Nick Campanella from Barclays. Your line is open.

Hi, Nick.

Hey. Good morning, everyone, or good afternoon. Thanks for taking the time. So I just wanted to touch on, you know, you're raising your rate base CAGR about 1%, and I understand you have to finance a lot of this capital, and there's lag in Texas. But, you know, a 1% increase in the rate base CAGR for, you know, roughly a 10% or more cut in EPS expectations just seems somewhat counterintuitive. And, you know, I know that you said you can get back. You're within the 6% to 8% off of 2024 on when you look back to the original plan, you can get there. But even using the high end of the 7% to 9% plan, you know, it doesn't imply that you're really back in that range until 2029. I could have something wrong with the math there, but just why is it prudent to invest this much amount of capital and for shareholders to kind of take this much pain upfront for that capital? Thank you.

Yeah. Thank you, Nick, for the question. You know, on a couple of points there, as we did clarify, we could have maintained a 6% to 8% long-term EPS growth rate off the 2024 actuals. And that gives you some sense about how we're thinking about the future. What's fundamentally changed in this higher growth environment for all utilities is we think we have the opportunity for sustained EPS growth at levels above 6% to 8%, and we've guided into the long term for that range. In the plan that we're talking about, we will not produce 7% to 9%. We expect to produce 9% or higher. And to your point, there's no question that the front end of our financial results has been impacted. We've got a lot of work to do as a management team to grind through 2025 to exceed expectations and come back in 2026 and do it again. But long term, there's a fundamental view in our company that we have the opportunity to produce higher earnings and higher earnings per share than we've done historically. And that's why we're guiding to above the 9% range for the 2025 to 2029 period. And let me give you an example of why I'm so bullish if you'll allow me. Number one, go back to Oncor. This is one of the upsides to our plan. I think it's very important to be clear about where our expectations are. Oncor has a base plan of $36 billion that's shown on slide fourteen. This is a conservative view and generally covers only three areas of planned investment, Nick. First, approved investments inside SRP. Number two, capital investments where all regulatory approvals are already in hand. And capital needed to satisfy large C&I transmission requests that are subject to an…

Thanks for the information. And then I guess just moving to the equity needs, we clarified, you know, it seems like there's a lot of equities in the front part of the plan. Is that going to be would you consider a block? And then you kind of talked about buying back stock. In footnote two, the sources and uses, and I heard you in the prepared remarks, Karen. Could you know, if you're issuing equity and repurchasing equity in the same five-year plan, where does the balance sheet stand in the near term, and you know, why is that the right kind of strategy here? Thank you.

Yeah. Nick, I'll address that. And Karen, you can come in if you want to add anything to my comment. But I would refer you to slide thirty-three, Nick. You know, our equity needs are substantially similar to what we'd outlined on a net basis over the last couple of years. I would the three things I'd focus on is the most efficient source of financing is always our operating cash flow. We have a number of different initiatives in place to improve returns and lower costs. We can maximize our internally generated cash flows. That will be a priority and the core part of our financing plan. Second, we'll look to issue new debt as well as new hybrids that get 50% equity treatment. And to your point, I want to speak specifically to it. You recall last quarter, we established an ATM program to provide additional financing flexibility. We plan to use that program and other sources of equity financing, including asset sales at Sempra Infrastructure. We've got an evaluation process underway focusing on our Mexican assets, and that's something we'll look to update the Street on in the coming months and quarters. That can come in the form of selling down further in the capital structure at SI as well as the expected asset sales referenced. Assuming asset sales at or above the $1 billion level, we expect to issue $2 billion to $3 billion in net equity, and that's reflected on slide thirty-three. Each of these sources will be used to efficiently fund our capital plan.

Thank you. And our next question will come from Steve Fleishman from Wolfe Research.

Yeah. Hey. So just could you give us some sense of where FFO to debt is at the, I guess, 2024 and 2025, and just, if you had a chance to show the new plan to the rating agencies and how that affects their view?

Yeah. Sure. One of the things we do, Steve, is we always coordinate our capital plan, our expected sources and uses closely with the rating agencies. This is obviously something we'll be meeting with them in later this spring. But, Karen, perhaps you can just update Steve on where we're at in terms of current discussions.

Sure. So I will say for 2024, we're below their metrics for FFO to debt for the main agencies. We are in constant discussions with them about our financial plan, and that's why in our sources and uses, you saw that we had some equity in there. And that, of course, is to get us closer to those metrics that they're looking for in FFO to debt.

The other thing I would add, Steve, is it's been helpful recently as we crystallized the 2023 offering that we had in forwards at the end of December. We also got off some ATM equity in the fourth quarter. And, obviously, adding about $3 billion of hybrids last year was also helpful.

Okay. But yeah. Are you gonna disclose what the FFO to debt was? Or in the plan?

Well, you know, we target it yeah. We target obviously 15% at S&P, and Karen or Glen, you'll add anything else to that.

Yeah. Obviously, our plan is to beat and exceed those metrics. So those are the discussions that we're having with the rating agencies right now.

And the equity that Jeff took you through is gonna be what gets us there.

So, Steve, I think we're comfortable in the plan that will meet our metrics for 2025.

Okay. And then on the earned returns in Texas, can you give us any waiver on just even in 2026? But by the time you do have rate relief, kind of what earned ROEs are you earning and know, like, rough cut looks like they're still, like, 7% to 8%, but could be wrong there. But just, like, how do you get those up toward the allowed and when?

Yeah. Yeah. Thank you for the question. You know, for our audience, you recall that we've got a 9.7% authorized ROE because we have a we filed two different trackers both for distribution and transmission each year. Steve, you're noting it correctly. We've got regulatory lag at that business. That impacts our earned ROE. The second thing that impacts earned ROE, Steve, is, remember, they have a backwards test year. So right now, they're operating off of their 2021 cost structure. The most important thing is across that planning cycle, they will generally be between 8% and 9%. At some point in the five-year plan, they're actually above 9%. A couple of things are happening. Right? SRP both the current SRP and the roll-forward SRP for 2028 and 2029 are helpful. Plus, we expect to do things relative to our ROEs and equity layers and probably just as importantly is to true up our cost structure. One of the things that they've gone through is they've historically not gone in for a rate case on a periodic basis. But I think what's important now is they're going through so much growth, Steve, as they build out their delivery capability. It's very important, and we should assume that they come back in more periodic rate cases. So we're comfortable that they'll have higher earned ROEs across the planning period. But generally, they run in that 8% to 9% and much closer to 9% a little bit above or below that toward the end of the planning cycle.

Okay. Last question, just you know, obviously, this is a big reset to the prior plans, and then you've kind of highlighted now this 9% growth up from the 7% to 9%, you said? This morning. Just what Jeff, or could you say we talked to folks, like, you're gonna do differently to make sure you hit this 9% or better?

Yeah. A couple of things. I appreciate you giving me the opportunity to have the question as I think we've got the right strategy, Steve. We've got a good financing plan. We've got a lot of growth. And part of what you're challenged to do is make sure you're allocating capital to the highest opportunities. I think what we just went through with our board of directors we just finalized our financial plan last week, is making sure that we're allocating capital, Steve, disproportionately to the businesses we think will earn the highest value on the street. And you're seeing us gear our capital plan around growth at Oncor in our Sempra Texas segment. One of the most important things we can do is continue to deliver better regulatory outcomes. We had a series of regulatory outcomes at the end of 2024. And you recall, Steve, that California rate case was supposed to be decided in December of 2023. That put a lot more entropy into our financial plan. I'd offer two things to you. Number one, we need to finish our financial planning process earlier in the year. Number two, we need to make sure that we're delivering better regulatory outcomes. And number three, which I feel very good about, is we need to continue to allocate capital with a lot of discipline where we can produce the best results. And I think taking Oncor back in for a rate case, even though it pushes downward pressure on their returns this year, is the right thing for the business longer term. So a little bit of a different view in terms of how you frame that is. There is a 100% chance that we have lowered our expectations for what we can produce in 2025 and 2026. That's a management issue. I personally own that. You should expect to see us fight and claw to exceed expectations in 2025, and we come back and do that again in 2026. But the key point I want to tell you is the earnings power of this business is higher today than it was a year ago. So you can focus on the 2029 plan, but our longer-term assumption of what we can produce in a higher growth environment has gone up, and that's not really related to the reset of 2025. We see more earnings power in the business, and what we need to do, Steve, is spend more time with our investors and the sell side to make sure there's no asymmetry of knowledge. The planning numbers we have in front of us are not the exact planning numbers y'all have visibility to. I think part of the answer to your question is, let's find ways to have more transparency so that you have the same confidence that we do in the long-term earnings power of the business.

Thank you. Appreciate it. Thank you, Steve.

Thank you. And one moment for our next question, please. Our next question will come from David Arcaro from Morgan Stanley. Line is open.

Good morning, David.

Good morning. Thanks so much for taking the question. I guess, maybe a bit of a continuation of that last question. Is there a point in the plan where you expect that crossover to meet kind of when you catch back up to the prior 6% to 8%, you know, EPS growth level?

Look, I'm not sure that we're providing the guidance as to where the crossover occurs. I think what we're trying to express is we've really revised the long-term view of the earnings per share growth rate that we can deliver while talking about inside our five-year planning period, we expect to beat that rate of growth. And that's really important. I mean, even today, in the fifth year of our plan, we've got an earnings per share number that is well above the fifth year of last year's plan. Right? So what we're trying to do is make sure that we're guiding the strength of our convictions about the business growth, the ability to grow the business in the long term. And we don't feel great about the 2025 guidance, but it was the right thing to do for the business. Our job now, David, is to make sure that we execute well in 2025 and 2026, make sure we earn everyone's confidence.

Yep. Understood. Appreciate the comments there. And then maybe, you know, would you be able to touch on the that we've got active legislation, active legislative backdrops, I guess, in both Texas and California here. Would you be able to touch on your thoughts around potential impact or changes to the financial profile of Texas utilities based on any legislation that could come this session and then maybe on the wildfire legislative backdrop in California, any efforts there to look for some more longer-term changes to the wildfire funding and protection in the state?

Sure. Sure. There's a variety of questions here, but what might be helpful is let me give you a little bit of visibility into where the growth is coming from in Texas. Because I think that's reflective of the quality of the legislative session we had two years ago. And I think that also impacts how Allen can talk about that. But, Allen, if you could do two things, maybe provide a little bit of color about where you're seeing growth show up on the system and how that influences some of the regulatory initiatives you're following in Austin.

Sure, Jeff. Thank you. I know I talked a lot about growth in my prepared remarks, so it's unprecedented. Really unlike anything we've ever seen, and I'll try to break it down into some categories and maybe provide some color and some context. First, premise growth, as I said before, continues to be around 2% annual. We connected 77,000 new premises in 2024, a 5% year-over-year increase from 2023. The story really continues to be transmission points of interconnection, where we set a record for new and active transmission POIs in our queue. The total for 2024 is up above the total for 2023 by about 28%. Broken down into generation and LC&I, the two categories here, generation in 2024 is up about 8% over where it was in December of 2023. And then the real story continues to be on the LC&I queue, where 2024 numbers were up about 62% above where they were in December of 2023. This LC&I queue potential load is about a 250% increase over where we were in December of 2023. Broken down two ways and two pieces rather, about 119 gigawatts of that 137 total is data centers, and about 18 gigawatts is non-data center, more traditional LC&I. With regard to this potential LC&I load, in 2024, we submitted to ERCOT a list of LC&I customers that we had high confidence that they would eventually sign an agreement and post collateral, which we believe are clear key indicators of the likelihood of the potential load actually materializing. So in 2024, we submitted 25 gigawatts of high-confidence load. In 2025, we increased that to 29 gigawatts of high-confidence potential load. So when you look at our 2025 high-confidence load projection of 29 and you add that to the number of customers with whom we…

I'm talking about regulatory initiatives you're tracking? Legislation?

Yeah. Yeah. So we're early on in the Texas legislative session. And, you know, we still have a long ways to go with committee hearings and bills still being filed. Some of the things that, you know, we're particularly interested in or following are, you know, various ideas related to the backlog and increase in large load customers, much of which I just discussed. And in particular, issues related to cost. For example, SP6, proposals to reflect utility actual cap structures as reflected in recent financial filings, such as HB 2668. I think this would be an important step because it would shore up the balance sheets of the state utilities during this high period of really strong growth. And then we're tracking various ideas that could potentially set limits on utility liabilities of utilities given, you know, some of the more challenging weather events that we're all facing, and there's been at least a couple of bills filed in that regard and maybe more to come. So we're gonna continue watching. There's other concepts as well, but those are some of the key areas right now. Like, the bottom line is we remain very confident that the state of Texas will continue to implement good public policies that support both our customers and our shareholders.

Thank you, Allen. And David, I'll also talk a little bit about how we're thinking about legislation in California. As you know, we have a financial backstop in place today under AB 1054. Over the last five years, I think that served the state well, providing stability to the marketplace as well as allowing utilities to raise capital efficiently, which also reduces costs to customers. I'm not prepared to forecast the outcome of this legislative session, but I'm confident that the right people are focused on the issue with a view toward reducing risk. And remember, this is not just a utility issue. This is a broader wildfire risk. It's really a societal issue in California. I would also note that on slide forty-seven and forty-eight, David, we provide a wildfire mechanism summary about how it works currently. And in that scenario, at the very bottom of the second page on forty-eight, you can see it outlines that the liability cap at SDG&E using that 20% of the rolling three-year average rate base is $1.4 billion, and that's a worst-case scenario. Beyond the wildfire mechanism, SDG&E has not had a significant utility-caused wildfire in seventeen years. And recently, SDG&E encountered substantially similar, in some cases, worse red flag conditions than was experienced in the LA region this year. And SDG&E successfully managed its system safely. So we think there's an opportunity for legislation. We feel great about the backdrop of AB 1054. But the most important thing we can do as a management team across all three of our business platforms is run our businesses safely and protect our communities.

Great. Thanks very much.

Thank you, David.

Thank you. One moment for our next question, please. Our next question will come from Ross Fowler from Bank of America. Line is open.

Good morning, Ross. Good morning.

Morning or afternoon on this side of the phone. How are you? So just a couple of questions, kind of maybe one for you, Karen, go back to slide forty-two for a second. Just trying to understand kind of the moving pieces and maybe the magnitude of the moving pieces a little bit. I know the exact magnitudes aren't here, but California GRC PD was out in the fall, and ECA LNG Phase 1 was delayed to the spring of 2026 in August, I believe, of last year. So was that sort of contemplated in your prior 2025 guidance kind of on the third quarter call on that EAI? Was that pushing you to the low end? Or is most of the magnitude sort of midpoint to midpoint based on the Texas changes, the fifty basis points, the things that we've got since then, or just trying to figure out what was in 2025 on the third quarter call on some of these factors and then what kind of moved everything.

Sure. Hey, Ross. Thank you for the question. Obviously, we talked about the three most important recent events, two of which were at the very end of December and then the recent decision on some of the 2025 issues that you're referring to, the base rate case non-core. Karen, why don't you go back and review?

Sure. And it's a good question because, as you know, we were working on our plan, you know, all through the fall. And again, I mentioned we just finalized it recently. So some of the data points we had, and some we did not. So starting with the California rate case, we had a proposed decision in that rate case. We received the final at the end of December, which was unfortunately not, you know, we thought it would get better between the proposed and the final, but that's typically what we see. We did not see that here. And then going into January, as we implemented that rate case, we continue to see more, you know, pieces as we put that through our financial plan. And again, the impact of having things outside the rate case and having to hold those funds on our balance sheet is causing additional pressure because it's taking so long for us to get that funding. Now, again, we think that gets resolved in the latter half of the plan, but that was certainly an impact that continued to get worse. The other two big pieces in California, the piece we knew about was the cost of capital. That was the bigger of the two, obviously. And I think you could check that as probably about, you know, a fifty million hit there. What was added at the end of December was the FERC ISO adder that again was unexpected. So, that's closer, I think, to about twenty million additional. So those are two things that also impacted California. In Texas, you know, this is really brand new. We really looked at the plan. We talked a lot to Oncor about going in for this rate case, just seeing the higher cost, this capital growth, the rise in insurance, and overall O&M costs. The decision here really is it gets a hit to 2025. We think it's the right thing to do. So I know it's hard. I know it's disappointing. We think this is the right decision to get earnings in the future. And then as I mentioned, as we load in the Texas growth, which was again higher than we anticipated in even November or December, that's having us increase interest at the parent to fund all this growth. So there's a mixture there of things we knew in the third quarter and then things that became newly aware of in late December and, you know, and really some of these items just in the last two weeks. Jeff, do you want to add anything there?

No. I think that's good.

No. Thank you. And then just Jeff, you said something interesting about the growth rate because it's growing at about 12%, 13% midpoint to midpoint, 2025 to 2026. And then you said interesting on the call, that that should pull through the future years. So if I think about 7% to 9%, I'm just trying to think about the right base here. Should I think about that 7% to 9%, or now you're saying 9% off the 2026 base because that growth is pulling through? Or should I think about the above 9% on the 2025? How should I go about that?

I think this is one of the challenges, Ross. I think we've had conversations with you and other analysts. You know, for many, many years, we did not have a long-term EPS growth rate. And I think it was in 2022 where we brought that back. And one of the reasons we brought it back was we view that as a long-term expectation of sustained growth, what we think we can produce. So think about that over seven to ten years. Really in an upswing of capital spending across the industry. Based on our visibility, we try to provide some of that today as you saw the growth that Oncor's anticipated in the 2030 to 2034 timeframe. So we have a raised expectation of how we can grow the business over the long term. Now when you come back inside the 2025 to 2029 plan, which you're articulating, we certainly think that we're gonna be at or above the high end of that. Right? And the issue will be what happens in the intra-planning years that you're referring to. And this is one of the issues is most analysts just take, you know, 1.07 or 1.08 and they add that each year in the plan, and we don't expect our earnings growth to be like that. We expect there to be periods of growth well above 7% to 9% at various parts of the plan, and you're gonna have years like you have now where you've got the lower growth in 2025. So if you think about our business over a long period of time, we have had inflection points just like you see today. The management team is frustrated by it, many of our investors are frustrated by it. But, fundamentally, our view of what we can produce over longer periods of time has increased. And we're gonna try to do exactly what you're talking about. Increase the growth rate in the intra-planning years through 2029. I've given you kind of a roadmap of the things we're gonna be focused on to try to improve our projections.

And some of that growth variance, Jeff, to be fair, is the lumpiness of when projects come into that period?

That's exactly correct. I mean, as an example, you raised this with Karen. It was a significantJeff Martin: issue that we could maintain guidance for 2025 by moving ECA Phase 1 out of 2025. That was a big issue. We felt confident we had planning room to do that. There was kind of a series of things that put us into the low end of the range as Karen talked about. And these three recent events, I think, were caused us to reassess 2025. I don't think 2025 is an inflection point for us, Ross. I think you're on the right issues. We're going to exceed expectations relative to 7% to 9%. What we have to do a better job of is in the near term, producing results that exceed expectations. We've got a track record of doing that, and there's a commitment on our management team to get back to that.

Okay. Thank you very much.

Thank you.

Thank you. One moment for our next question. And our next question will come from Carly Davenport from Goldman Sachs. Your line is open.

Hey, Jeff. Thanks for taking the questions. Maybe just two quick ones for me on upcoming regulatory filings. First, just as you look to cost of capital in California, just given some of the moving pieces there lately, can you talk a little bit about what you expect to put forth there? And anything you can share about what's embedded kind of in the plan around California returns?

Yeah. I would just start with saying that we saw some backwardation in the authorized returns in California in the last twelve months as there were changes to the cost of capital mechanism. That filing is upcoming for our company, and we look forward to doing that. I think our planning assumption is something very similar to what we have in the plan today. We also think given the market environment, it's an opportunity to improve our returns in the state.

Great. That's helpful. And then just as you look towards potential Oncor rate case filing. Apologies if I missed this, but I think you had mentioned a more frequent cadence of filings there going forward. Just kind of any color on what you think that could look like relative to the four-year requirement?

Yeah. You recall that the two rate cases ago, Oncor settled their rate case in November of 2017. That was in the midst that was in the middle of our purchase of the EFH interest. They went back in with a base year of 2021 to prosecute that case in 2022. And remember, it wasn't actually finalized until May of 2023. So you got a rate case in May of 2023 with a cost run rate in that business off of 2021, and think about the growth they've been through, Carly, in terms of headcount, O&M, increased insurance costs. And I think that's really been together with the regulatory lag, putting pressure on their earned ROEs. We think this is the right time. It's something that we don't want to be defensive about in the middle of the year. But we're comfortable enough to assume that in our guidance. And it does put material downward pressure on our expectation for 2025. But you'll see that have a very positive expectation in 2026. It'll depend on when those rates are effective. I think this is the right thing to do to put them on a better footing to earn much higher earned ROEs.

Appreciate that color. Thank you.

Thank you, Carly.

Thank you. And our next question will come from Anthony Crowdell from Jefferies. Your line is open.

Hello. Good afternoon. How are you doing? Just two quick questions. One is, I guess, maybe it's kind of following Steve's question earlier. If I think about the cadence of regulatory filings, I think there's another filing that would happen in California maybe in 2026 for new rates in 2028. What confidence do you have that the plan is stressed enough that, you know, we don't have a repeat of it looks like a challenging filing came as December that caused this reset that the next plan is a similar thing, given even though Texas is growing, it's still 45% of the company.

Yeah. A couple of things is, you know, through 2027, when we come back into California and file the next rate case, good news in California is you use a forward test year, which I think is a positive fact. We've also got the pending FERC decision about what our new FERC rate of return will be. Now you may remember, we filed for 12.25% without the FERC adder. That's 11.75%. There's an opportunity to prosecute that case or settle it. But we think there's an opportunity to improve returns at FERC. Obviously, Carly mentioned this too, but the cost of capital mechanism this year is a positive. And obviously, the regulatory filings taking place in Oncor's positive. I will mention that CenterPoint on their recent rate case got a slightly higher bump to their equity layer. Clearly, I think there's an opportunity there as well for Oncor. So look, I think we've got the business set up now where we have relatively conservative assumptions. I've outlined all the positive aspects of opportunities that are not in the plan. But you're raising another good one, which is there are opportunities around earned ROEs, capital structure, and other issues in the regulatory compact both in Texas and California and with FERC, which could prove to be upside to our plan.

Great. And then just one quick follow-up. Think to Ross's question, you talked about investors may miss some of the earnings power of the company. If they just take last year's number and multiply it by 1.07, you know, what's some factor. Just start as you feel and just hearing it, you think the plan is more resilient. Thoughts of not giving annual guidance further than just two years. You give us 2025. You give us 2026. We've seen some companies that feel really good about their plan even giving us an annual guidance north of the two years. Any thoughts of doing that to give the street more transparency of the earnings power given it may not be linear?

Yeah. You know, you make a great point because it certainly has not been historically linear for our company, and I think this has been a misunderstanding from time to time. If you go back to the middle part of the last decade, we gave out years one and two, and we gave a fifth-year earnings guidance. I wish I'd given a fifth-year earnings guidance for the call because I think people would be a lot happier, by the way. We haven't done that. But I would say that what we started doing in 2022, Anthony, was given years one and two. And I think we understand that we can deliver those with some level of confidence today. We're gonna try to beat those. And then we've raised our long-term EPS guidance range. We think about that as a number beyond the planning period. But I've indicated that we're quite confident that we can deliver at or above that range in the planning period. So you raised a good point. I think the key issue is to make sure that there's not asymmetry of knowledge between what we have in our plan and how we illustrate it or make it transparent to Wall Street. I think we've got some more work to be done in that area. So we're certainly open-minded about other ideas to increase that transparency.

Great. Thanks for taking my questions.

Thank you.

Thank you. And our next question will come from Paul Fremont from Ladenburg Thalmann and Co. Line is open.

Great. Guess my first question is really a follow-up to Carly's question. In terms of cost of capital, are you assuming that there's no significant change in the ROE assumption that comes out of the cost of capital this year?

Yeah. I would say that we've got an existing cost of capital for both businesses. I think in the plan today, we think it's substantially similar to that, but I think there's an opportunity to exceed the plan expectations.

Great. And then also following up on sort of David Arcaro's question on California legislation. If there was no replenishment of the fund, is there an alternative that you see coming out of the legislature rather than topping up the fund back to the $21 billion?

This is a great question. And, obviously, this has been on the minds of a lot of people up and down the state and a lot of people who are investors in the state. And what I can't do is I really can't forecast the outcome. I can basically say this. The mechanism that's in place today has worked well. I know there's a lot of ideas today about, for example, extending the CWR bonds, which would make that a in perpetuity fund. So it'd go well above $21 billion. That's one of the ideas that's been floated around. Another idea that's been floated is allowing for greater participation from other utilities in the state, specifically the large municipal utilities. There's been discussions around allowing each utility to have their own separate or segregated wildfire fund. From our standpoint, it goes back to a couple of things. Number one, gotta remember this is a societal issue in California. Right? Wildfires are rarely started by utilities. Lots of people are impacted, and I think there's a lot of focus on making sure this gets solved. I know, for example, that Guggenheim is back in as a consultant with the governor's office. Guggenheim was also a consultant back in 2019 for AB 1054. So, look, I think the right people are joined on the issue. And from our standpoint, because we had such little contributions to the fund and a relatively low liability cap even if we were to improve it, we think the fund makes a lot of sense. Anything we can do as a state to strengthen the fund and ensure there's not issues or concerns like the ones you're addressing would be very, very helpful. But we feel good about, number one, making sure we run a safe business. That will always be our day-to-day focus, and we'll obviously be at the table in Sacramento to support legislation that strengthens either the current mechanism or some form of replacement that's better than what we currently have.

And then another California utility sort of implied that it might not happen this legislative session, that it might take two years for the legislature to put something new in place. Is that timing consistent with your thoughts?

Look. Yeah. Now I've said it a couple of times now. I'm not prepared to forecast an outcome. I'm prepared to say that a lot of people are working on it right now. So I think an answer from our legislative body sooner rather than later would be helpful. I feel good about the current framework of AB 1054. So any activity that strengthens Wall Street's confidence that you can earn an appropriate return in California is a positive. And guess what? It also allows our ratepayers to have lower costs. So this issue of taking risk away from the business, making sure we have the appropriate returns and the appropriate equity layers. That's very, very important in terms of how we access capital. And it allows the ratepayers to be exposed to less cost.

And then when I look at your 2026 sort of guidance numbers, it looks like the benefit at Oncor is mostly eaten up or completely eaten up by losses or additional loss at the parent. Can you is that because of the timing of the Oncor rate case or what's happening there?

Yeah. Would you mind repeating that question again?

Sure. It looks in 2026 as if the improvement at Sempra Texas is more than offset by additional losses at the parent.

Well, you know, I would say there's a lot of different things that go into the parent cost structure. Right? Obviously, it has to do with how we're, you know, financing the business, whether we're using hybrids, we're using traditional financing mechanisms, whether we're doing equity. I would not associate those two together. I think what we're trying to do is we're gonna provide greater earnings power from all three business segments across the five-year plan. And I think Karen's job and Glen's job as the treasurer is to make sure we're financing it in the most efficient way possible. If we can beat those 2026 numbers, I can assure you we're gonna try to do that.

Thank you. And that concludes today's question and answer session. At this time, we'd like to turn the conference back to Jeff Martin for any additional closing remarks.

No. I would just say that we're pleased that people could join on the call. I know there's been a lot of changes in terms of how people are thinking about our business. Appreciate the fact that there are some competing calls today as well. We appreciate everyone joining us. I want to mention that our executive team is attending multiple investor conferences in New York next week. I think that's a real opportunity to meet with Oncor and our senior team. We hope to see many of you there. Per customer, if there are any follow-up items, please reach out to our IR team with your questions. Thank you again, and this concludes our call.

Thank you. For your participation, you may now disconnect. Everyone, have a wonderful day.