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 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
	2025		2024		2025		2024		2025		2024
Fixed-price contracts and other derivatives	$	50	$	53	$	7	$	11	$	43	$	42
Deferred income taxes recoverable in rates(1)	2,314		1,689		1,098		802		1,189		817
Pension and PBOP plan obligations	(610)		(458)		(1)		(2)		(609)		(456)
Employee benefit costs	18		19		3		3		15		16
Removal obligations	(3,540)		(3,295)		(2,913)		(2,676)		(627)		(619)
Environmental costs	152		149		113		115		39		34
Sunrise Powerlink fire mitigation	125		124		125		124		—		—
Regulatory balancing accounts(2)(3):
Commodity – electric	186		(313)		186		(313)		—		—
Commodity – gas, including transportation	173		(47)		17		86		156		(133)
Safety and reliability	894		820		286		227		608		593
Public purpose programs	(347)		(439)		(175)		(219)		(172)		(220)
2024 GRC retroactive impacts	299		631		124		277		175		354
Wildfire mitigation plan(4)	530		808		530		808		—		—
Liability insurance premium	(62)		(24)		(53)		(15)		(9)		(9)
Other balancing accounts	90		158		4		(51)		86		209
Other regulatory assets, net(3)	104		164		72		87		32		79
Total	$	376	$	39	$	(577)	$	(736)	$	926	$	707

(2) At December 31, 2025 and 2024, the noncurrent portion of regulatory balancing accounts – net undercollected for Sempra was $1,060 and $1,731, respectively, for SDG&E was $502 and $873, respectively, and for SoCalGas was $558 and $858, respectively.

▪Regulatory assets arising from fixed-price contracts and other derivatives are offset by corresponding liabilities arising from purchased power and natural gas commodity and transportation contracts. Regulatory assets increase/decrease based on changes in the fair market value of the contracts. They are also reduced as payments are made for commodities and services under these contracts. The related amounts are recovered in rates once these contracts are settled, generally within four years.

▪Deferred income taxes recoverable/refundable in rates are based on current regulatory ratemaking and income tax laws. SDG&E, SoCalGas and Sempra Infrastructure expect to recover/refund net regulatory assets/liabilities related to deferred income taxes over the lives of the assets, ranging from 5 to 69 years, that give rise to the related accumulated deferred income tax balances. Regulatory assets and liabilities include excess deferred income taxes resulting from statutory income tax rate changes and certain income tax benefits and expenses associated with flow-through items, which we discuss in Note 8.

▪Regulatory assets related to environmental costs represent the portion of our environmental liability recognized at the end of the period in excess of the amount that has been recovered through rates charged to customers. We expect this amount to be recovered in future rates as expenditures are made.

▪The regulatory asset related to Sunrise Powerlink fire mitigation is offset by a corresponding liability for the funding of a trust to cover the mitigation costs. SDG&E expects to recover the regulatory asset in rates as the trust is funded over a remaining 44-year period.

▪Over and undercollected regulatory balancing accounts and other regulatory assets, net, reflect the difference between customer billings and recorded or CPUC-authorized amounts. Depreciation, taxes and return on rate base may also be included in certain accounts. Amounts in the balancing accounts are recoverable (receivable) or refundable (payable) in future rates, subject to CPUC approval. The adopted revenue requirements in the 2024 GRC FD were placed into rates on February 1, 2025 and the incremental revenue requirements associated with the period from January 1, 2024 through January 31, 2025 are being recovered in rates over an 18-month period that began on February 1, 2025. SDG&E and SoCalGas periodically make requests to the CPUC to true up their revenue requirement for amounts accumulated in the regulatory balancing accounts and in other regulatory assets, net. The CPUC may require regulatory review procedures before authorizing recovery or refund of amounts accumulated for authorized programs, including reviews of costs for reasonableness, and may impose limitations on a program’s total cost or revenue requirement. These procedures and requirements could result in delays or disallowances of recovery from customers.

Amortization expense on certain regulatory assets for the years ended December 31, 2025, 2024 and 2023 was $16 million, $14 million and $12 million, respectively, at Sempra, $7 million, $7 million and $6 million, respectively, at SDG&E, and $9 million, $7 million and $6 million, respectively, at SoCalGas. In September 2025, we classified SI Partners as held for sale and ceased recording amortization.

In July 2025, the CPUC issued an FD that authorizes partial recovery of costs recorded in SoCalGas’ Catastrophic Event Memorandum Account. The FD authorizes the recovery of $19 million out of the requested $55 million, denying recovery of COVID-19 costs included in the Catastrophic Event Memorandum Account. In the year ended December 31, 2025, SoCalGas recorded a write-off of $36 million ($25 million after tax) in disallowed costs, comprising a $29 million reduction in Utilities: Natural Gas Revenues and a $7 million reduction in regulatory interest in Other (Expense) Income, Net, on Sempra’s and SoCalGas’ Consolidated Statements of Operations. The CPUC denied SoCalGas’ request for a rehearing of the FD.

A CPUC GRC proceeding is designed to set authorized base revenue requirements that are sufficient to allow SDG&E and SoCalGas to recover their reasonable operating costs and to provide the opportunity to realize their authorized rates of return on their capital investments. In December 2024, the CPUC approved an FD in the 2024 GRC for SDG&E and SoCalGas that authorizes SDG&E’s and SoCalGas’ revenue requirements for 2024 and attrition year adjustments for 2025 through 2027, inclusively.

The GRC FD adopts a 2024 revenue requirement of $2,699 million for SDG&E’s combined operations ($2,193 million for its electric operations and $506 million for its natural gas operations). SDG&E’s authorized 2024 combined revenue requirement represents an increase of $189 million (7.5%) over its authorized 2023 combined revenue requirement. In connection with SDG&E’s election to change its tax accounting method for gas repairs expenditures, the 2024 combined revenue requirement increase is net of $68 million of income tax benefits for 2023 and 2024 to be flowed through to customers. The GRC FD also specifies an increase in SDG&E’s 2025, 2026, and 2027 combined revenue requirements of $147 million (5.45%), $119 million (4.17%) and $122 million (4.11%), respectively, over the preceding year’s combined revenue requirement. The 2025, 2026 and 2027 revenue requirements will be updated to implement the applicable authorized changes in the cost of capital, which we describe below.

The GRC FD adopts a 2024 revenue requirement of $3,806 million for SoCalGas. SoCalGas’ authorized 2024 revenue requirement represents an increase of $324 million (9.3%) over its authorized 2023 revenue requirement. In connection with SoCalGas’ election to change its tax accounting method for gas repairs expenditures, the 2024 revenue requirement increase is net of $202 million of income tax benefits for 2023 and 2024 to be flowed through to customers. The GRC FD also specifies an increase in SoCalGas’ 2025, 2026, and 2027 revenue requirements of $190 million (5.00%), $116 million (2.91%) and $120 million (2.92%), respectively, over the preceding year’s revenue requirement. The 2025 and 2026 revenue requirements were, and 2027 revenue requirements will be, updated to implement the applicable authorized changes in the cost of capital, which we describe below.

In December 2025, SDG&E and SoCalGas filed a petition for modification of the 2024 GRC, seeking to modify the post-test year mechanism for capital related costs. The petition for modification seeks increases of $55 million, $87 million and $79 million to the approved revenue requirements for SDG&E for 2025, 2026 and 2027, respectively, and increases of $86 million, $122 million and $109 million to the approved revenue requirements for SoCalGas for 2025, 2026 and 2027, respectively. There is no established timeline for the CPUC to act on this filing.

The GRC provides SDG&E and SoCalGas with numerous mechanisms to seek cost recovery of specified projects and programs. We expect that the requests for cost recovery of these projects and programs, which remain subject to CPUC approval, may result in additional amounts of authorized revenue requirement recoverable from customers that are not included in the amounts described above. We record regulatory revenues associated with the O&M and capital costs of these projects and programs as such costs are incurred.

In October 2023, SDG&E submitted a separate request to the CPUC in its 2024 GRC, known as a Track 2 request. This request seeks review and recovery of $1,472 million of WMP costs incurred from 2019 through 2022 that were incremental to amounts authorized in the 2019 GRC and not otherwise addressed in the 2024 GRC FD. In January 2026, the CPUC issued an FD in SDG&E’s Track 2 request that approves recovery of $1,023 million of these requested costs, including $78 million of O&M costs and $945 million of capital costs. The Track 2 FD allows SDG&E to seek recovery in Track 3 of this proceeding of the drone inspection and repair program costs that were disallowed in the Track 2 FD.

The Track 2 request also addresses SDG&E’s requested revenue requirement for the period from 2019 through 2027 for ongoing capital-related costs for capital assets placed into service from 2019 through 2022. The FD authorizes a total Track 2 revenue requirement of $707 million for 2019 through 2027, which is $441 million lower than SDG&E’s requested revenue requirement of $1,148 million. In February 2024, the CPUC authorized an interim cost recovery mechanism that permitted SDG&E to collect in rates $194 million and $96 million of this revenue requirement in 2024 and 2025, respectively. The FD authorizes SDG&E to collect the remaining $417 million from 2026 through 2028.

In April 2025, SDG&E and SoCalGas each submitted additional requests to the CPUC in the 2024 GRC, known as Track 3 requests. SDG&E submitted a request seeking review and recovery of $417 million of its WMP costs incurred in 2023 that were in addition to the amounts authorized in the 2019 GRC and not addressed in the 2024 GRC. SDG&E expects to provide supplemental testimony in its Track 3 request for drone inspection and repair program costs that were disallowed in its Track 2 request. SDG&E expects to receive a PD for its Track 3 request related to its WMP costs in the second half of 2026. Additionally, SDG&E and SoCalGas submitted a combined request seeking review and recovery of $240 million of PSEP costs incurred from 2014 through 2019 and $499 million of PSEP costs incurred from 2015 through 2020. SDG&E and SoCalGas expect to receive a PD for their Track 3 requests related to their PSEP costs in the first half of 2026.

Revenue requirements associated with the Track 3 requests have been recorded in regulatory accounts and disallowances resulting from Track 3 would be recorded as an expense on the Sempra, SDG&E and SoCalGas Consolidated Statements of Operations. SDG&E and SoCalGas are authorized interim rate recovery of up to 50% of the recorded PSEP regulatory account balance at the end of each year. Such interim rate recovery is subject to refund, contingent on the reasonableness review decision for their Track 3 requests.

In connection with the Track 2 FD, in the fourth quarter of 2025, SDG&E recorded a charge of $651 million ($464 million after tax) in Regulatory Disallowances on the SDG&E and Sempra Consolidated Statements of Operations, of which $605 million ($432 million after tax) relates to 2019 through 2024, $41 million ($28 million after tax) relates to the first nine months of 2025, and $5 million ($4 million after tax) relates to the fourth quarter of 2025.

A CPUC cost of capital proceeding every three years determines a utility’s authorized capital structure and return on rate base. The CPUC applies the CCM in the interim years to consider changes in the cost of capital using changes in interest rates as reflected by the applicable utility bond index published by Moody’s (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 1.00% for the measurement period. Alternatively, each of SDG&E and SoCalGas is permitted to file a cost of capital application to have its cost of capital determined in lieu of the CCM in an interim year in which an extraordinary or catastrophic event materially impacts its cost of capital and affects utilities differently than the market.

The CPUC-approved cost of capital, subject to the CCM, for SDG&E and SoCalGas that became effective on January 1, 2023 was to remain in effect through December 31, 2025. The CCM was triggered for SDG&E and SoCalGas for the measurement period ending September 30, 2023, and in December 2023, the CPUC approved updated authorized rates of return effective January 1, 2024.

In October 2023, the CPUC issued a ruling to initiate a second phase of the 2023-2025 cost of capital proceeding to evaluate potential modifications to the CCM. In October 2024, the CPUC issued an FD to modify the CCM. The FD updates the upward or downward adjustment to authorized ROE, if the CCM is triggered, from 50% to 20% of the change in the benchmark rate during the measurement period. The FD adopted this change effective January 1, 2025, reducing both SDG&E’s and SoCalGas’ ROE by 42 bps to 10.23% and 10.08%, respectively, and allowing SDG&E and SoCalGas to update their respective costs of preferred equity and debt for 2025.


AUTHORIZED COST OF CAPITAL

	Authorized weighting		2023		2024		2025		2023(1)		2024		2025
			Return on rate base						Weighted return on rate base
SDG&E:
Long-Term Debt	45.25	%	4.05	%	4.34	%	4.34	%	1.83	%	1.96	%	1.96	%
Preferred Equity	2.75		6.22		6.22		6.22		0.17		0.17		0.17
Common Equity	52.00		9.95		10.65		10.23		5.17		5.54		5.32
	100.00	%							7.18	%	7.67	%	7.45	%
SoCalGas:
Long-Term Debt	45.60	%	4.07	%	4.54	%	4.63	%	1.86	%	2.07	%	2.11	%
Preferred Equity	2.40		6.00		6.00		6.00		0.14		0.14		0.14
Common Equity	52.00		9.80		10.50		10.08		5.10		5.46		5.24
	100.00	%							7.10	%	7.67	%	7.49	%


AUTHORIZED COST OF CAPITAL FOR 2026 – 2028

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	%	5.02	%	2.29	%
2.75		6.22		0.17		Preferred Equity	2.40		6.00		0.14
52.00		9.93		5.16		Common Equity	52.00		9.78		5.09
100.00	%			7.41	%		100.00	%			7.52	%

SDG&E’s authorized TO5 settlement provided for an ROE of 10.60%, consisting of a base ROE of 10.10% plus the California ISO adder. In December 2024, the FERC issued an order, which SDG&E has appealed, finding that SDG&E is not eligible for the California ISO adder and that the TO5 adder refund provision had been triggered, requiring SDG&E to refund customers the California ISO adder retroactively from June 1, 2019. As a result of the FERC order, SDG&E recorded a charge of $120 million ($89 million after tax) with $94 million in Electric Revenues and $26 million in Other Income, Net, on the SDG&E and Sempra Consolidated Statements of Operations in the year ended December 31, 2024.

In October 2024, SDG&E submitted its TO6 filing to the FERC and requested it to be effective January 1, 2025. SDG&E’s TO6 filing proposed, among other items, an increase to SDG&E’s currently authorized base ROE from 10.10% to 11.75% plus the California ISO adder, for a total ROE of 12.25%. In December 2024, the FERC accepted SDG&E’s TO6 filing, subject to refund; suspended the effective date to June 1, 2025; established hearing and settlement judge procedures; and disallowed the inclusion of the California ISO adder, the last of which SDG&E has appealed. In February 2026, the settlement judge in the TO6 proceeding reported to the FERC that the participants had reached an agreement in principle on all issues in the proceeding. The parties will draft an offer of settlement to be filed with the FERC for approval.

SDG&E has a 20% ownership interest in SONGS, a nuclear generating facility near San Clemente, California, which permanently ceased operations in June 2013 after an extended outage as a result of issues with the steam generators used in the facility. Edison, the majority owner and operator of SONGS, notified SDG&E that it had reached a decision to permanently retire SONGS and seek approval from the NRC to start the decommissioning activities for the entire facility. SONGS is subject to the jurisdiction of the NRC and the CPUC.

SDG&E, and each of the other owners, holds its undivided interest as a tenant in common in the property. Each owner is responsible for financing its share of costs. SDG&E’s share of operating expenses is included in Sempra’s and SDG&E’s Consolidated Statements of Operations.

As a result of Edison’s decision to permanently retire SONGS Units 2 and 3, Edison began the decommissioning phase of the plant. Major decommissioning work began in 2020. We expect the majority of the decommissioning work to be completed around 2030. Decommissioning of Unit 1, removed from service in 1992, is largely complete. The remaining work for Unit 1 will be completed once Units 2 and 3 are dismantled and the spent fuel is removed from the site. The spent fuel is currently being stored on-site, until the DOE identifies an ISFSI and puts in place a program for the fuel’s disposal, as we discuss below. SDG&E is responsible for approximately 20% of the total decommissioning cost.

In accordance with state and federal requirements and regulations, SDG&E has assets held in the NDT to fund its share of decommissioning costs for SONGS Units 1, 2 and 3. Amounts that were collected in rates for SONGS’ decommissioning are invested in the NDT, which is comprised of externally managed trust funds. Amounts held by the NDT are invested in accordance with CPUC regulations. SDG&E classifies debt and equity securities held in the NDT as available-for-sale. The NDT assets are presented on the Sempra and SDG&E Consolidated Balance Sheets at fair value with the offsetting credits recorded in noncurrent Regulatory Liabilities.

Except for the use of funds for the planning of decommissioning activities or NDT administrative costs, CPUC approval is required for SDG&E to access the NDT assets to fund SONGS decommissioning costs for Units 2 and 3. In January 2026, the CPUC granted SDG&E authorization to access NDT funds of up to $45 million for forecasted 2026 costs.

In September 2020, the IRS and the U.S. Department of the Treasury published final regulations that clarify the definition of “nuclear decommissioning costs,” which are costs that may be paid for or reimbursed from a qualified trust fund. The final regulations adopted most of the provisions of the proposed regulations issued in December 2016. The final regulations apply to taxable years ending on or after September 4, 2020 and confirm that the definition of “nuclear decommissioning costs” includes amounts related to the storage of spent nuclear fuel at both on-site and off-site ISFSIs.

The final regulations also clarify that costs incurred for ISFSIs that may be or are expected to be reimbursed by the DOE may be paid or reimbursed from a qualified trust fund. Accordingly, the final regulations allow SDG&E the option to access qualified trust funds to recover spent fuel storage costs before Edison reaches final settlement with the DOE regarding the DOE’s reimbursement of these costs. Historically, the DOE’s reimbursements of spent fuel storage costs have not resulted in timely or complete recovery of these costs. We discuss the DOE’s responsibility for spent nuclear fuel below.


NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
	Cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	December 31, 2025
Short-term investments, primarily cash equivalents	$	12	$	—	$	—	$	12
Equity securities	69		221		(2)		288
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)	46		1		—		47
Municipal bonds(2)	301		4		(5)		300
Other securities(3)	253		5		(3)		255
Total debt securities	600		10		(8)		602
Receivables (payables), net	(3)		—		—		(3)
Total	$	678	$	231	$	(10)	$	899

	December 31, 2024
Short-term investments, primarily cash equivalents	$	10	$	—	$	—	$	10
Equity securities	78		223		(3)		298
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	67		1		(1)		67
Municipal bonds	295		1		(9)		287
Other securities	234		2		(8)		228
Total debt securities	596		4		(18)		582
Receivables (payables), net	(15)		—		—		(15)
Total	$	669	$	227	$	(21)	$	875

Net unrealized gains and losses, as well as realized gains and losses that are reinvested in the NDT, are included in noncurrent Regulatory Liabilities on Sempra’s and SDG&E’s Consolidated Balance Sheets. We determine the cost of securities in the trusts on the basis of specific identification.

The present value of SDG&E’s ARO related to decommissioning costs for all three SONGS units was $446 million at December 31, 2025 and is based on a cost study prepared in 2024, which is pending CPUC approval. SDG&E expects to receive an FD in the first half of 2026. The ARO for Units 2 and 3 reflects the acceleration of the start of decommissioning of these units as a result of the early closure of the plant. We expect SDG&E’s undiscounted SONGS decommissioning payments to be $100 million in 2026, $37 million in 2027, $25 million in 2028, $11 million in 2029, $9 million in 2030, and $860 million thereafter.

Spent nuclear fuel from SONGS is currently stored on-site in an ISFSI licensed by the NRC. The ISFSI will operate until 2054, when it is assumed that the DOE will have taken custody of all the SONGS spent fuel. The ISFSI would then be decommissioned, and the site restored to its original environmental state. Until then, SONGS owners are responsible for interim storage of spent nuclear fuel at SONGS.

The Nuclear Waste Policy Act of 1982 made the DOE responsible for accepting, transporting, and disposing of spent nuclear fuel. However, it is uncertain when the DOE will begin accepting spent nuclear fuel from SONGS. This delay will lead to increased costs for spent fuel storage. In November 2019, Edison filed a claim for spent fuel management costs in the U.S. Court of Federal Claims for the time period from January 2017 through July 2018, which is pending approval. Additionally, in July 2024, Edison filed a claim for spent fuel management costs in the U.S. Court of Federal Claims for the time period from August 2018 through December 2021, which was subsequently amended to include costs through September 2024 and is pending approval. SDG&E will continue to support Edison in its pursuit of claims on behalf of the SONGS co-owners against the DOE for its failure to timely accept the spent nuclear fuel.

SDG&E and the other owners of SONGS have insurance to cover claims from nuclear liability incidents arising at SONGS. Currently, this insurance provides $500 million in coverage limits, the maximum amount available, including coverage for acts of terrorism. In addition, the Price-Anderson Act provides an additional $60 million of coverage. If a nuclear liability loss occurs at SONGS and exceeds the $500 million insurance limit, this additional coverage would be available to provide a total of $560 million in coverage limits per incident.

The SONGS owners have nuclear property damage insurance of $130 million, which exceeds the minimum federal requirement of $50 million. This insurance coverage is provided through NEIL. The NEIL policies have specific exclusions and limitations that can result in reduced coverage. Insured members as a group are subject to retrospective premium assessments to cover losses sustained by NEIL under all issued policies. SDG&E could be assessed a negligible amount for retrospective premiums based on overall member claims.

The nuclear property insurance program includes an industry aggregate loss limit for non-certified acts of terrorism (as defined by the Terrorism Risk Insurance Act) of $3.24 billion. This is the maximum amount that will be paid to insured members who suffer losses or damages from these non-certified terrorist acts.