We accrue losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued, may exceed, and in some cases have exceeded, applicable insurance coverage and could materially adversely affect our business, results of operations, financial condition, cash flows and/or prospects. Unless otherwise indicated, we are unable to reasonably estimate possible losses or a range of losses in excess of any amounts accrued.

Pending. In one of the cases, the court ruled in favor of SDG&E and the City of San Diego, upholding all terms of the franchise agreements, except for the two-thirds City Council vote requirement for termination if the City decides to terminate under certain circumstances. Under the court’s ruling, the City can instead terminate on a majority vote, so long as it satisfies repayment provisions under the franchise agreements. Both sides have appealed the ruling.

Palisades Fire Litigation - Pending. There is a consolidated legal action pending in Los Angeles County Superior Court related to the January 2025 Palisades fire. Various plaintiffs named nineteen defendants in a December 2025 master complaint, including but not limited to SoCalGas, Sempra, Edison, Edison International, the J. Paul Getty Trust, the City of Los Angeles, Los Angeles County, and the State of California (collectively, the Palisades Defendants). At this early stage of the legal process, it is unclear how many plaintiffs are asserting claims against the Palisades Defendants. The plaintiffs seek an award of economic and noneconomic damages, punitive damages, attorneys’ fees, litigation costs and pre-judgment interest.

Eaton Fire Litigation - Pending. There is a separate consolidated legal action pending in Los Angeles County Superior Court related to the January 2025 Eaton fire. The first of these lawsuits was filed against Edison in January 2025. In January 2026, Edison and Edison International filed cross-complaints in Los Angeles County Superior Court against more than a dozen defendants, including but not limited to SoCalGas, the City of Pasadena, Pasadena Water and Power, Los Angeles County, and Genasys Inc. (collectively, the Eaton Cross-Defendants) in connection with underlying litigation related to the January 2025 Eaton fire. The Edison cross-complaints against the Eaton Cross-Defendants seek indemnity, compensatory damages, attorneys’ fees, litigation costs and pre-judgment interest.

We describe below certain land disputes and permit challenges that may affect our ECA Regas Facility or ECA LNG liquefaction facilities under construction or in development. One or more unfavorable conclusions on these disputes or challenges could materially adversely affect our existing natural gas regasification operations and proposed natural gas liquefaction projects at the site of the ECA Regas Facility and have a material adverse effect on Sempra’s business, results of operations, financial condition, cash flows and/or prospects.

▪Pending - Sempra Infrastructure has been engaged in a long-running land dispute relating to property adjacent to and owned by its ECA Regas Facility (the facility, however, is not situated on the land that is the subject of this dispute). A claimant to the adjacent property filed suit to reinitiate an administrative procedure at SEDATU to obtain the property title for the disputed property, which title had previously been issued in a ruling by the federal Agrarian Court and subsequently reversed by a federal court in Mexico. In April 2021, the proceeding in the Agrarian Court concluded with the court ordering that the administrative procedure be restarted. The administrative procedure at SEDATU may continue if SEDATU decides to reopen the matter.

▪Resolved - A plaintiff filed a claim in the federal Agrarian Court that seeks to annul the property title for a portion of the land on which the ECA Regas Facility is situated and to obtain possession of a different parcel that allegedly overlaps with the site of the ECA Regas Facility. The proceeding, which seeks an order that SEDATU annul the ECA Regas Facility’s competing property title, was initiated in 2006 and, in July 2021, a decision was issued in favor of the ECA Regas Facility. The plaintiff appealed and, in February 2022, the appellate court confirmed the ruling in favor of the ECA Regas Facility and dismissed the appeal. The plaintiff filed a federal appeal against the appellate court ruling. In August 2024, the Federal Collegiate Circuit Court ruled in favor of the ECA Regas Facility. The plaintiff filed an appeal and, in May 2025, the Mexican Supreme Court dismissed the appeal, definitively resolving this matter.

Environmental and Social Impact Permits. Several administrative challenges are pending before Mexico’s Secretariat of Environment and Natural Resources (the Mexican environmental protection agency) and Federal Tax and Administrative Courts, seeking revocation of the environmental impact authorization issued to the ECA Regas Facility in 2003. These cases generally allege that the conditions and mitigation measures in the environmental impact authorization are inadequate and challenge findings that the activities of the terminal are consistent with regional development guidelines.

In addition, in 2018 and 2021, three related claimants filed separate challenges in the federal district court in Ensenada, Baja California seeking revocation of the environmental and social impact permits issued by each of ASEA and SENER to ECA LNG authorizing natural gas liquefaction activities at the ECA Regas Facility, as follows:

▪Resolved - In the first case, the court issued a provisional injunction against the permits in September 2018. In December 2018, ASEA approved modifications to the environmental permit that facilitate the development of the proposed natural gas liquefaction facility in two phases. In May 2019, the court canceled the provisional injunction. The claimant appealed the cancelation of the injunction to the federal appellate court but was not successful. The lower court’s ruling was favorable to the ECA Regas Facility, as the court determined that no harm has been caused to the plaintiff and dismissed the lawsuit. The claimant appealed and petitioned the Mexican Supreme Court to resolve the appeal. The Mexican Supreme Court denied the petition to hear the case. A federal appellate court affirmed the rulings in favor of the ECA Regas Facility, definitively resolving this matter.

▪Resolved - In the second case, the initial request for a provisional injunction against the permits was denied. That decision was reversed on appeal in January 2020, resulting in the issuance of a new injunction against the permits that were issued by ASEA and SENER. This injunction has uncertain application absent clarification by the court. The claimants petitioned the court to rule that construction of natural gas liquefaction facilities violated the injunction and, in February 2022, the court ruled in favor of the ECA Regas Facility, holding that the natural gas liquefaction construction activities did not violate the injunction. The claimants appealed this ruling to the federal appellate court but were not successful. The lower court’s ruling was favorable to the ECA Regas Facility, as the court determined that no harm has been caused to the plaintiffs and dismissed the lawsuit. The claimants appealed and petitioned the Mexican Supreme Court to resolve the appeal. The Mexican Supreme Court denied the petition to hear the case. A federal appellate court affirmed the rulings in favor of the ECA Regas Facility, definitively resolving this matter.

▪Pending - In the third case, a group of residents filed an administrative appeal in June 2021 against various federal and state authorities alleging deficiencies in the public consultation process for the issuance of the permits. The request for an administrative appeal was denied. The claimants appealed this ruling via a constitutional challenge (an amparo trial) but were not successful. The lower court’s ruling was favorable to the ECA Regas Facility, as the court determined that no harm has been caused to the plaintiffs and dismissed the lawsuit. The claimants appealed the rulings via the Second Federal Collegiate Court, and the appeal is yet to be resolved.

TCEQ Permit - Resolved. The PA LNG Phase 1 project holds two Clean Air Act, Prevention of Significant Deterioration permits issued by the TCEQ, which we refer to as the “2016 Permit” and the “2022 Permit.” The 2022 Permit also governs emissions for the PA LNG Phase 2 project. In November 2023, a panel of the U.S. Court of Appeals for the Fifth Circuit issued a decision to vacate and remand the 2022 Permit to the TCEQ for additional explanation of the agency’s permit decision. In February 2024, the court withdrew its opinion and referred the case to the Supreme Court of Texas to resolve the question of the appropriate standard to be applied by the TCEQ. In February 2025, the Supreme Court of Texas adopted Port Arthur LNG I’s interpretation of the standard. In August 2025, the U.S. Court of Appeals for the Fifth Circuit applied the standard adopted by the Supreme Court of Texas and denied the petitioner’s argument under the case, resulting in the continued effectiveness of the 2022 Permit. Because the petitioners did not file a petition for writ of certiorari with the U.S. Supreme Court by November 2025, the ruling is final and is not subject to further challenge. The 2016 Permit was not the subject of, and is unaffected by, the litigation of the 2022 Permit.

We have an EPC contract with Bechtel to construct the PA LNG Phase 1 project. Under the EPC contract, Bechtel has full custody and control of the site during the construction period. OSHA opened inspections with respect to Bechtel and SI Partners but has released the site. OSHA’s inspection of SI Partners concluded without the issuance of citations to SI Partners. Bechtel is continuing construction of the PA LNG Phase 1 project.

As of February 19, 2026, there are two pending lawsuits filed by 17 plaintiffs in the 172nd Judicial District Court in Jefferson County, Texas and the 295th Judicial District Court in Harris County, Texas. A complaint filed in the 60th Judicial District Court in Jefferson County, Texas was dismissed without prejudice following the plaintiff’s intervention in the proceeding in the 172nd Judicial District Court in Jefferson County, Texas. The complaints collectively name as defendants Port Arthur LNG I, SI Partners, Sempra and/or other Sempra affiliates, Bechtel and/or Bechtel Corporation, and ConocoPhillips. In the lawsuits, plaintiffs assert negligence and gross negligence and additional causes of action for wrongful death, survival and bystander claims. Plaintiffs seek compensatory and punitive damages, lost wages and attorneys’ fees. In November 2025, the cases were transferred to a multidistrict litigation pretrial court and remain stayed pending assignment to a judge by the Texas Multidistrict Litigation Panel.

Amendments to Mexico’s Electricity Industry Law - Resolved. In March 2021, the Mexican government published a decree with amendments to the LIE that included public policy changes, including establishing priority of dispatch for CFE plants over privately owned ones and allowing the CNE to revoke self-supply permits granted under the former electricity law under certain circumstances. In 2024, the Mexican government adopted changes to the Mexican Constitution to reinforce state control over strategic sectors by granting a central role to government entities like the CFE and PEMEX. Following these constitutional reforms, in March 2025, the Mexican government adopted the 2025 Energy Laws, which repealed the LIE.

Prior to the enactment of the 2025 Energy Laws, Sempra Infrastructure had initiated three amparo lawsuits challenging the 2021 amendments to the LIE. The first lawsuit addressed the provision allowing revocation of self-supply permits, which lawsuit the Second Collegiate Court definitively dismissed in July 2024. The second lawsuit impacted generation permits for certain Sempra Infrastructure facilities, which lawsuit the Second Chamber of the Mexican Supreme Court definitively dismissed in February 2025. The third lawsuit relating to the 2021 amendments to the LIE that impacted Sempra Infrastructure’s power marketing business was definitively dismissed by the Plenary of the Mexican Supreme Court in November 2025.

We are also defendants in ordinary routine litigation incidental to our businesses, including personal injury, employment litigation, product liability, property damage and other claims. Juries have demonstrated an increasing willingness to grant large awards, including punitive damages, in these types of cases.

Some of our lease agreements contain nonlease components, which represent activities that transfer a separate good or service to the lessee. As the lessee for both operating and finance leases, we have elected to combine lease and nonlease components as a single lease component for real estate, fleet vehicles, aircraft, power generating facilities and pipelines, whereby fixed or in-substance fixed payments allocable to the nonlease component are accounted for as part of the related lease liability and ROU asset. As the lessor, we have elected to combine lease and nonlease components as a single lease component for refined products terminals if the timing and pattern of transfer of the lease and nonlease components are the same and the lease component would be classified as an operating lease if accounted for separately.

We have operating and finance leases for real and personal property (including office space, land, fleet vehicles, aircraft, tugboats, machinery and equipment, warehouses and other operational facilities) and PPAs with renewable energy, energy storage and peaker plant facilities.

Some of our leases include options to extend the lease terms for up to 25 years, or to terminate the lease within one year. Our lease liabilities and ROU assets are based on lease terms that may include such options when it is reasonably certain that we will exercise the option.

Certain of our contracts are short-term leases, which have a lease term of 12 months or less at lease commencement. We do not recognize a lease liability or ROU asset arising from short-term leases for all existing classes of underlying assets. In such cases, we recognize short-term lease costs on a straight-line basis over the lease term. Our short-term lease costs for the period reasonably reflect our short-term lease commitments.

Certain of our leases contain escalation clauses requiring annual increases in rent ranging from 2% to 5% or based on the Consumer Price Index. The rentals payable under these leases may increase by a fixed amount each year or by a percentage of a base year. Variable lease payments that are based on an index or rate are included in the initial measurement of our lease liability and ROU asset based on the index or rate at lease commencement and are not remeasured because of changes to the index or rate. Rather, changes to the index or rate are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred.

Similarly, PPAs for the purchase of renewable energy at SDG&E require lease payments based on a stated rate per MWh produced by the facilities, and we are required to purchase substantially all the output from the facilities. SDG&E is required to pay additional amounts for capacity charges and actual purchases of energy that exceed the minimum energy commitments. Under these contracts, we do not recognize a lease liability or ROU asset for leases for which there are no fixed lease payments. Rather, these variable lease payments are recognized separately as variable lease costs. SDG&E estimates these variable lease payments to be $290 million in 2026, $289 million in 2027, $290 million in 2028, $289 million in each of 2029 and 2030 and $1.6 billion thereafter.

As of the lease commencement date, we recognize a lease liability for our obligation to make future lease payments, which we initially measure at present value using our incremental borrowing rate at the date of lease commencement, unless the rate implicit in the lease is readily determinable. We determine our incremental borrowing rate based on the rate of interest that we would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. We also record a corresponding ROU asset, initially equal to the lease liability and adjusted for lease payments made at or before lease commencement, lease incentives, and any initial direct costs. We test ROU assets for recoverability whenever events or changes in circumstances have occurred that may affect the recoverability or the estimated useful lives of the ROU assets.

For our operating leases, our non-regulated entities recognize a single lease cost on a straight-line basis over the lease term in operating expenses. SDG&E and SoCalGas recognize this single lease cost on a basis that is consistent with the recovery of such costs in accordance with U.S. GAAP governing rate-regulated operations.

For our finance leases, the interest expense on the lease liability and amortization of the ROU asset are accounted for separately. Our non-regulated entities use the effective interest rate method to account for the imputed interest on the lease liability and amortize the ROU asset on a straight-line basis over the lease term. SDG&E and SoCalGas recognize amortization of the ROU asset on a basis that is consistent with the recovery of such costs in accordance with U.S. GAAP governing rate-regulated operations.


LESSEE INFORMATION ON THE CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	Sempra						SDG&E						SoCalGas
	December 31,
	2025			2024			2025			2024			2025			2024
ROU assets(1):
Operating leases:
ROU assets	$	1,262		$	1,177		$	1,047		$	795		$	68		$	18

Finance leases:
PP&E	1,673			1,626			1,440			1,426			233			200
Accumulated depreciation	(380)			(311)			(264)			(221)			(116)			(90)
PP&E, net	1,293			1,315			1,176			1,205			117			110
Total ROU assets	$	2,555		$	2,492		$	2,223		$	2,000		$	185		$	128

Lease liabilities(1):
Operating leases:
Other current liabilities(2)	$	90		$	91		$	85		$	68		$	—		$	8
Deferred credits and other(3)	1,176			1,019			969			734			67			9
	1,266			1,110			1,054			802			67			17
Finance leases:
Current portion of long-term debt and finance leases	73			65			48			42			25			23
Long-term debt and finance leases	1,220			1,250			1,128			1,163			92			87
	1,293			1,315			1,176			1,205			117			110
Total lease liabilities	$	2,559		$	2,425		$	2,230		$	2,007		$	184		$	127

Weighted-average remaining lease term (in years):
Operating leases(4)	12			13			12			12			15			2
Finance leases	13			14			14			15			6			6
Weighted-average discount rate:
Operating leases(4)(5)	5.18		%	6.10		%	5.25		%	5.06		%	5.19		%	4.70		%
Finance leases	13.65		%	13.71		%	14.08		%	14.11		%	5.67		%	5.35		%

(5) Weighted-average discount rate related to PPAs at December 31, 2025 and 2024 is 5.23% and 5.04%, respectively, at both Sempra and SDG&E. Weighted-average discount rate related to all other operating leases at December 31, 2025 and 2024 is 5.05% and 7.41%, respectively, at Sempra and 5.37% and 5.23%, respectively, at SDG&E.


LESSEE INFORMATION ON THE CONSOLIDATED STATEMENTS OF OPERATIONS(1)
(Dollars in millions)
	Sempra						SDG&E						SoCalGas
	Years ended December 31,
	2025		2024		2023		2025		2024		2023		2025		2024		2023

Operating lease costs(2)	$	164	$	118	$	99	$	113	$	71	$	53	$	8	$	12	$	13

Finance lease costs:
Amortization of ROU assets(3)	69		65		60		43		42		40		26		23		20
Interest on lease liabilities	176		178		182		169		173		177		7		6		5
Total finance lease costs	245		243		242		212		215		217		33		29		25

Short-term lease costs(4)	8		9		9		8		8		8		—		—		—
Variable lease costs(4)	450		472		458		430		460		447		9		10		10
Total lease costs	$	867	$	842	$	808	$	763	$	754	$	725	$	50	$	51	$	48


LESSEE INFORMATION ON THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Sempra						SDG&E						SoCalGas
	Years ended December 31,
	2025		2024		2023		2025		2024		2023		2025		2024		2023
Operating activities:
Cash paid for operating leases	$	159	$	112	$	85	$	114	$	70	$	46	$	8	$	12	$	13
Cash paid for finance leases	161		163		167		154		158		162		7		6		5
Financing activities:
Cash paid for finance leases	69		66		60		43		42		40		26		24		20
Increase in operating lease obligations for ROU assets	386		520		143		319		474		134		60		—		—
Increase in finance lease obligations capitalized to PP&E	47		41		57		14		14		17		33		27		40


LESSEE MATURITY ANALYSIS OF LIABILITIES
(Dollars in millions)
	Sempra				SDG&E				SoCalGas
	Operating leases(1)(2)		Finance leases		Operating leases(1)		Finance leases(3)		Operating leases		Finance leases
2026	$	147	$	229	$	128	$	198	$	6	$	31
2027	143		227		130		197		—		30
2028	143		220		125		195		5		25
2029	147		212		122		192		12		20
2030	147		202		121		187		12		15
Thereafter	1,078		1,561		780		1,546		161		15
Total undiscounted lease payments	1,805		2,651		1,406		2,515		196		136
Less: imputed interest	(539)		(1,358)		(352)		(1,339)		(129)		(19)
Total lease liabilities	1,266		1,293		1,054		1,176		67		117
Less: current lease liabilities	(90)		(73)		(85)		(48)		—		(25)
Long-term lease liabilities	$	1,176	$	1,220	$	969	$	1,128	$	67	$	92

SDG&E has two PPAs, of which SDG&E expects one will commence in 2027 and one will commence in 2028. SDG&E expects the future minimum lease payments to be $4 million in 2028, $5 million in each of 2029 and 2030, and $66 million thereafter (through expiration in 2043).

SI Partners has a lease agreement for tugboat services for the PA LNG Phase 1 project that it expects will commence in 2027. SI Partners expects the future minimum lease payments to be $10 million in 2027, $12 million in each of 2028 through 2030, and $186 million thereafter (through expiration in 2047, exclusive of certain renewal options) and total future minimum fixed payments for operation and maintenance services to be $184 million.

SI Partners is a lessor for certain of its natural gas and ethane pipelines, compressor stations, LPG storage facilities, a rail facility and refined products terminals, which we account for as operating or sales-type leases. These leases expire at various dates from 2026 through 2042.

Over the lease term, we monitor the underlying assets in operating leases for impairment, and we evaluate the net investment in sales-type leases for expected credit losses. SI Partners expects to continue to derive value from the underlying assets associated with its pipelines following the end of their respective lease terms based on the expected remaining useful life, expected market conditions and plans to re-market and re-contract the underlying assets.

Generally, we recognize operating lease income on a straight-line basis over the lease term, and sales-type lease income based on the effective interest method over the lease term. Certain of our leases contain rate adjustments or are based on foreign currency exchange rates that may result in lease payments received that vary in amount from one period to the next. In addition to minimum fixed payments, our refined products terminals receive variable lease payments for barrels delivered that exceed minimum delivery requirements.


LESSOR INFORMATION(1)
(Dollars in millions)
	December 31,
	2024
Sempra – Assets subject to operating leases:
Property, plant and equipment:
Pipelines and storage	$	1,313
Refined products terminals	623
Other	77
Total	2,013
Accumulated depreciation	(605)
Property, plant and equipment, net	$	1,408

(1) At December 31, 2025, excludes total net property, plant and equipment subject to operating leases of $1,336, which is included in Assets Held for Sale on the Sempra Consolidated Balance Sheet and is comprised of $1,320 in pipelines and storage, $628 in refined products terminals, $76 in other, and $688 in accumulated depreciation.


LESSOR INFORMATION ON THE CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
	Years ended December 31,
	2025		2024		2023
Sempra – Sales-type leases:
Interest income	$	3	$	5	$	6
Total revenues from sales-type leases(1)	$	3	$	5	$	6

Sempra – Operating leases:
Fixed lease payments	$	362	$	340	$	321
Variable lease payments	24		38		34
Total revenues from operating leases(1)	$	386	$	378	$	355

Depreciation expense	$	53	$	73	$	62

SoCalGas procures natural gas for both SDG&E’s and SoCalGas’ core customers in a combined portfolio. SoCalGas purchases natural gas under short-term and long-term contracts for this portfolio from various producing regions, including from Canada, the U.S. Rockies and the southwestern regions of the U.S. Purchases of natural gas are primarily priced based on published indices, which can be subject to volatility.

SoCalGas transports natural gas primarily under long-term firm and variable interstate pipeline capacity contracts that require the payment of fixed and variable tariffed and negotiated reservation charges to reserve firm and interruptible transportation rights. Commitments under these contracts expire at various dates through 2035.

Within our disposal group that is classified as held for sale, which we discuss in Note 6, SI Partners has various capacity agreements for natural gas storage and transportation that expire at various dates through 2059. SI Partners procures natural gas supply through both short-term and long-term contracts with payment terms that are either indexed to natural gas hubs or at fixed prices. Transportation costs on these agreements vary based on pipeline capacity.

At December 31, 2025, SI Partners’ future minimum payments under existing fixed price natural gas storage and transportation contracts of $99 million in 2026, $100 million in 2027, $86 million in 2028, $221 million in 2029, $263 million in 2030, and $4,454 million thereafter are within the disposal group that is classified as held for sale.

SI Partners has an SPA for the supply of LNG to the ECA Regas Facility, which is included within the disposal group that is classified as held for sale. The commitment amount is calculated using a predetermined formula based on estimated forward prices of the index applicable from 2026 to 2029. Although this agreement specifies a number of cargoes to be delivered, under its terms, the supplier may divert certain cargoes, which would reduce amounts paid under the agreement by SI Partners. Based on the assumption that all LNG cargoes under the agreement are delivered less those already confirmed to be diverted as of December 31, 2025, SI Partners expects LNG commitments to total $1,859 million with expected purchases of $389 million in 2026, $569 million in 2027, $553 million in 2028 and $348 million in 2029. Actual LNG purchases were approximately $7 million in 2025, $23 million in 2024 and $30 million in 2023.

Payments on these contracts represent capacity charges and minimum energy and transmission purchases that exceed the minimum commitment. SDG&E is required to pay additional amounts for actual purchases of energy that exceed the minimum energy commitments. SDG&E estimates these variable payments to be $79 million in each of 2026 and 2027, $80 million in each of 2028 through 2030, and $361 million thereafter. Total fixed and variable payments under PPAs not accounted for as leases for Sempra and SDG&E were $312 million in 2025, $326 million in 2024 and $325 million in 2023.

Our total contractual commitments on various capital projects in progress at December 31, 2025 are approximately $200 million, requiring future payments of $126 million in 2026, $18 million in 2027, $15 million in 2028, $13 million in 2029, $2 million in 2030, and $26 million thereafter. The following is a summary of contractual commitments and contingencies related to such projects.

At December 31, 2025, SoCalGas has commitments to make future payments of $16 million for an information technology software project. SoCalGas expects future payments under this contractual commitment to be $5 million in each of 2027 and 2028, and $6 million in 2029.

In connection with the completion of the Sunrise Powerlink project in 2012, the CPUC required that SDG&E establish a fire mitigation fund to minimize the risk of fire as well as reduce the potential wildfire impact on residences and structures near the Sunrise Powerlink. The future payments for these contractual commitments, for which a liability has been recorded, are expected to be $4 million in each of 2026 through 2030, and $260 million thereafter, subject to escalation of 2% per year, ending in 2069. At December 31, 2025, the present value of these future payments of $125 million has been recorded as a regulatory asset as the amounts represent a cost that we expect will be recovered from customers in the future.

In July 2021, SDG&E’s natural gas and electric franchise agreements for the City of San Diego went into effect. These franchise agreements provide SDG&E the opportunity to serve the City of San Diego for a period of 20 years, consisting of 10-year agreements that will automatically renew for an additional 10 years unless the City Council voids the automatic renewals. At December 31, 2025, SDG&E has commitments to make future principal and interest payments as consideration for the franchise agreements of $4 million in 2026, $2 million in each of 2027 through 2029, $14 million in 2030, and $30 million thereafter. The consideration paid will not be recovered from customers and will be amortized over 20 years.

Our operations are subject to federal, state, regional, local, tribal and foreign environmental laws. We also are subject to regulations related to hazardous wastes, air and water quality, land use, solid waste disposal and the protection of wildlife. These laws and regulations generally require that we investigate and correct the effects of the release or disposal of certain materials at sites associated with our past and our present operations. These sites include those at which we have been identified as a PRP under the federal Superfund laws and similar state laws.

In addition, we are required to obtain numerous governmental permits, licenses and other approvals to construct facilities and operate our businesses. The related costs of environmental monitoring, pollution control equipment, environmental safety practices, cleanup and other mitigation costs, and emissions fees and other payments are significant. Increasing national and international concerns regarding global warming and mercury, carbon dioxide, nitrogen oxide and sulfur dioxide emissions could increase these requirements in a manner that could adversely affect our businesses. Although SDG&E’s and SoCalGas’ costs to operate their facilities in compliance with these laws and regulations generally have been recovered in customer rates, this may not be the case in the future or with respect to all costs.

We disclose any proceeding under environmental laws to which a government authority is a party when the potential monetary sanctions, exclusive of interest and costs, exceed the lesser of $1 million or 1% of current assets, which was $348 million for Sempra, $18 million for SDG&E and $19 million for SoCalGas at December 31, 2025.

We generally capitalize the significant costs we incur to mitigate or prevent future environmental contamination or extend the life, increase the capacity, or improve the safety or efficiency of property used in current operations. The following table shows our capital expenditures (including construction work in progress) in order to comply with environmental laws and regulations:

The environmental issues currently facing us, except for those resolved during the last three years, include (1) investigation and remediation of SDG&E’s and SoCalGas’ manufactured-gas sites, (2) cleanup of third-party waste-disposal sites used by SDG&E and SoCalGas at which we have been identified as a PRP and (3) mitigation of damage to the marine environment caused by the cooling-water discharge from SONGS.

We record environmental liabilities when our liability is probable and the costs can be reasonably estimated. In many cases, however, investigations are not yet at a stage where we can determine whether we are liable or, if the liability is probable, reasonably estimate the amount or range of amounts of the costs. Estimates of our liability are further subject to uncertainties such as the nature and extent of site contamination, evolving cleanup standards and imprecise engineering evaluations. We review our accruals periodically and, as investigations and cleanups proceed, we make adjustments as necessary.

In connection with the issuance of operating permits, SDG&E and the other owners of SONGS previously reached an agreement with the California Coastal Commission to mitigate the damage to the marine environment caused by the cooling-water discharge from SONGS during its operation. SONGS’ early retirement, described in Note 15, does not impact SDG&E’s mitigation obligation under this agreement. SDG&E’s share of the estimated mitigation costs is $154 million, of which $57 million has been incurred through December 31, 2025 and $97 million is accrued for remaining costs through 2059, which is recoverable in rates and included in noncurrent Regulatory Assets on Sempra’s and SDG&E’s Consolidated Balance Sheets.

Cameron LNG JV’s debt agreements require Cameron LNG JV to maintain the SDSRA, which is an additional reserve account beyond the Senior Debt Service Accrual Account, where funds accumulate from operations to satisfy senior debt obligations due and payable on the next payment date. Both accounts can be funded with cash or authorized investments. In June 2021, Sempra Infrastructure received a distribution of $165 million based on its proportionate share of the SDSRA, for which Sempra provided a promissory note and letters of credit to secure a proportionate share of Cameron LNG JV’s obligation to fund the SDSRA. Sempra’s maximum exposure to loss is replenishment of the amount withdrawn by Sempra Infrastructure from the SDSRA, or $165 million. We recorded a guarantee liability of $22 million in June 2021, with an associated carrying value of $17 million at December 31, 2025, for the fair value of the promissory note, which is being reduced over the duration of the guarantee through Sempra Infrastructure’s investment in Cameron LNG JV. The guarantee will terminate upon full repayment of Cameron LNG JV’s debt, scheduled to occur in 2039, or replenishment of the amount withdrawn by Sempra Infrastructure from the SDSRA.

In July 2020, CFIN entered into a financing arrangement with Cameron LNG JV’s four project owners and received aggregate proceeds of $1.5 billion from two project owners and from external lenders on behalf of the other two project owners (collectively, the affiliate loans), based on their proportionate ownership interest in Cameron LNG JV. CFIN used the proceeds from the affiliate loans to provide a loan to Cameron LNG JV. The affiliate loans mature in 2039. Principal and interest are paid from Cameron LNG JV’s project cash flows from its three-train natural gas liquefaction facility. Cameron LNG JV used the proceeds from its loan to return equity to its project owners.

Sempra Infrastructure’s $753 million proportionate share of the affiliate loans, based on SI Partners’ 50.2% ownership interest in Cameron LNG JV, was funded by external lenders comprised of a syndicate of banks (the bank debt) to whom Sempra has provided a guarantee pursuant to the Support Agreement under which:

▪on March 28, 2028, March 28, 2030 and March 28, 2035, the agent for the external lenders, on behalf of such external lenders, is obligated to put all of the then outstanding bank debt to Sempra Infrastructure, except to the extent any external lender elects not to participate in the put three months prior to the applicable put exercise date

In exchange for this guarantee, the external lenders pay a guarantee fee that is based on the credit rating of Sempra’s long-term senior unsecured non-credit enhanced debt rating, which guarantee fee Sempra Infrastructure recognizes as interest income as earned. Sempra’s maximum exposure to loss is the bank debt plus any accrued and unpaid interest and related fees, subject to a liability cap of 130% of the bank debt, or $979 million. We measure the Support Agreement at fair value, net of related guarantee fees, on a recurring basis (see Note 11). At December 31, 2025, the fair value of the Support Agreement is $41 million, of which $8 million is included in Other Current Assets and $33 million is included in Other Long-Term Assets on Sempra’s Consolidated Balance Sheet.

In February 2025, SI Partners entered into a 15-month credit support agreement with a third-party financial institution related to a customer’s secured borrowing for repayment of its past due account balance owed to SI Partners. At December 31, 2025, SI Partners’ maximum exposure to loss under this off-balance sheet arrangement is $60 million.