Sempra

Overview

Sempra is a San Diego holding company organized around three regulated or infrastructure-heavy businesses: Sempra California, which owns San Diego Gas & Electric and Southern California Gas Company; Sempra Texas, which controls approximately 80% of Oncor Electric Delivery, the largest electric utility in Texas; and Sempra Infrastructure, which develops and operates LNG export facilities on the Gulf Coast and the Pacific coast of Mexico. Jeff Martin has been chairman, CEO, and president since 2018. In 2026 Sempra named Justin Bird chief financial officer, effective in the third quarter, with outgoing CFO Karen Sedgwick moving to become CEO of SoCalGas. The three segments differ fundamentally in geography, regulatory regime, and risk profile, which is both the appeal and the analytical challenge.

The California utilities are fully regulated by the CPUC and sit in the same fire liability environment that defines the investment cases of PG&E and Edison International. Sempra's California exposure concentrates in SDG&E, which has a dramatically smaller territory than its northern and central California peers and has spent nearly two decades hardening its infrastructure after the 2007 wildfires. SoCalGas, the nation's largest gas distribution utility, faces a different long-term question: California climate policy intends to phase out natural gas in buildings, which if fully executed would put sustained pressure on the volume basis of a large capital-intensive system.

Sempra Texas is the most visible growth story. Oncor is adding load faster than any major U.S. utility, driven by data center buildout, industrial expansion in the Permian Basin, and population growth across Dallas-Fort Worth and other Texas cities. The $47.5 billion 2026 through 2030 capital plan Oncor is executing is one of the largest in the country on a per-system basis, and ERCOT's peak load forecasts suggest the spending continues well beyond 2030. Unlike the California utilities, Oncor carries no wildfire exposure and operates under PUCT and FERC jurisdiction rather than the CPUC.

Business operations

SDG&E and the 2007 wildfires

SDG&E was the first California investor-owned utility to face the modern wildfire liability framework, and the 2007 fires shaped a response that distinguishes it from both PG&E and SCE. In October 2007, a severe Santa Ana wind event drove a complex of fires across San Diego County, including the 198,000-acre Witch Creek Fire near Santa Ysabel, the Guejito Fire, and the Rice Canyon Fire. State investigators concluded that high-voltage SDG&E lines produced electrical arcing that ignited Witch Creek. SDG&E ultimately paid approximately $686 million in settlements to insurers covering homeowners, with total claims approaching $900 million, plus uninsured legal costs.

The CPUC's response set an important precedent. SDG&E sought to pass approximately $379 million in unrecovered wildfire costs to ratepayers; the CPUC denied it, finding the company had not met the prudent utility standard required for recovery. The loss hit shareholders directly, before the AB 1054 fund existed. That outcome made the case for aggressive preventive investment clearer inside the company than at any California utility: the next fire would also go to shareholders if the CPUC found inadequate precautions.

SDG&E's response, sustained over nearly two decades, is now the most extensive hardening program among the three large California IOUs relative to system size. It has undergrounded more than 60% of its distribution lines across the 4,100-square-mile territory, against roughly 0.7% for PG&E's much larger system. It has replaced 34,000 wood poles with fire-resistant steel since 2007, deployed more than 100 wildfire-monitoring cameras, established the first utility Fire Science and Climate Adaptation Department in the country with six full-time meteorologists, and was the first California utility to implement a Public Safety Power Shutoff program, years before PSPS became standard practice elsewhere.

AB 1054, the 2019 wildfire insurance fund legislation, was partly structured around the SDG&E experience, and SDG&E contributed approximately $324 million at its creation. The fund backstops future claims across all three California IOUs, conditioned on maintaining a valid CPUC safety certification and demonstrating prudent operations. California went further in 2025 with SB 254, strengthening the fund and its claims-liquidity mechanism and calling for a Natural Catastrophe Resiliency Study due in 2026. For SDG&E, the fund plus unusually hardened infrastructure puts its liability profile on substantially different footing than in 2007, or than PG&E's and SCE's today, and no fixed investment eliminates ignition risk entirely in a territory that regularly sees sustained Santa Ana winds above 60 miles per hour.

Financial performance

Sempra reported FY2025 adjusted earnings of $3.07 billion, or $4.69 per diluted share, up from $2.97 billion and $4.65 in FY2024. On a GAAP basis, FY2025 earnings were $1.80 billion, or $2.75 per share, well below adjusted; the gap reflects a $471 million after-tax charge SDG&E took in Q4 2025 related to a CPUC proposed decision on wildfire cost recovery for 2019 through 2024. FY2024 GAAP earnings had been $2.82 billion, or $4.42 per share. Consolidated revenue was approximately $13.2 billion in FY2024, down from prior years after the sale of certain non-utility assets.

For 2026, Sempra guided to adjusted EPS of $4.80 to $5.30, with 2027 guidance of $5.10 to $5.70 and a 2030 outlook of $6.70 to $7.50, consistent with a 7% to 9% long-term growth rate. In the first quarter of 2026, reported May 7, it earned adjusted EPS of $1.51 and affirmed full-year guidance. The $65 billion 2026 through 2030 capital plan is projected to grow consolidated rate base from approximately $57 billion in 2025 to $97 billion by 2030, a 70% increase over five years. Oncor contributes the largest share, executing a $47.5 billion plan against Texas load demand that has surprised even optimistic forecasters.

Strategy & outlook

The $65 billion program concentrates investment in two high-conviction areas: Texas transmission and distribution through Oncor, and California utility infrastructure at SDG&E and SoCalGas. More than 95% of projected capital goes to regulated operations, which makes the earnings trajectory primarily a function of PUCT and CPUC rate base approvals rather than commodity markets or project financing. The KKR transaction for 45% of Sempra Infrastructure is designed to recycle capital embedded in LNG assets back into the utility program while retaining upside from operating projects, particularly ECA LNG and any future expansion at Cameron or Port Arthur.

At SDG&E, the capital program extends undergrounding, replaces aging overhead infrastructure, and funds the wildfire monitoring and response systems built since 2007. The CPUC's December 2024 decision authorized $154.5 million a year for undergrounding and hardening, less than the $1.9 billion over four years SDG&E requested for a faster 605-mile program, and enough to continue roughly 35 miles of undergrounding a year alongside 100 miles of covered conductor. At SoCalGas, investment concentrates in pipeline safety, integrity management, and renewable natural gas programs meant to show gas distribution can remain relevant in a decarbonizing California. At Oncor, priorities are transmission upgrades for the Permian Basin, distribution expansion for new premises, and substation investment for data center load.

Key considerations

SDG&E's wildfire liability profile is materially better than SCE's or PG&E's: smaller territory, a far higher percentage of undergrounded lines, more monitoring infrastructure, and a longer post-2007 record of proactive mitigation. The CPUC's Q4 2025 proposed decision imposing a $471 million after-tax charge for wildfire cost recovery covering 2019 through 2025 is a reminder that the regulator's standard is strict and even a well-invested utility can face disallowances. High electricity rates create political and competitive pressure: Community Choice Aggregators have already drawn more than 1 million customers away for power procurement, and pressure to reduce bills constrains SDG&E's ability to pass through infrastructure costs unchallenged.

The three-segment structure is both the hedge and the complication. Oncor's load growth is the strongest single driver in the portfolio and carries no wildfire exposure, but Sempra owns only about 80% of it. SoCalGas faces a policy environment explicitly aimed at shrinking its volume base over decades. Sempra Infrastructure carries LNG construction and commodity exposure of a kind the utilities do not, partly offset by the KKR stake sale. Valuing the company means valuing three different businesses under three different regulators, which is why it has historically traded at a discount to pure-play regulated peers.

Sources