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)
(Dollars in millions)
	Sempra				SDG&E				SoCalGas
	March 31, 2026		December 31, 2025		March 31, 2026		December 31, 2025		March 31, 2026		December 31, 2025
Fixed-price contracts and other derivatives	$	21	$	50	$	6	$	7	$	15	$	43
Deferred income taxes recoverable in rates(1)	2,503		2,314		1,134		1,098		1,334		1,189
Pension and PBOP plan obligations	(570)		(610)		15		(1)		(585)		(609)
Employee benefit costs	18		18		3		3		15		15
Removal obligations	(3,584)		(3,540)		(2,956)		(2,913)		(628)		(627)
Environmental costs	152		152		113		113		39		39
Sunrise Powerlink fire mitigation	122		125		122		125		—		—
Regulatory balancing accounts(2)(3):
Commodity – electric	228		186		228		186		—		—
Commodity – gas, including transportation	403		173		49		17		354		156
Safety and reliability	893		894		290		286		603		608
Public purpose programs	(330)		(347)		(143)		(175)		(187)		(172)
2024 GRC retroactive impacts	172		299		71		124		101		175
Wildfire mitigation plan	560		530		560		530		—		—
Liability insurance premium	(62)		(62)		(54)		(53)		(8)		(9)
Other balancing accounts	(254)		90		(150)		4		(104)		86
Other regulatory assets, net(3)	60		104		61		72		(1)		32
Total	$	332	$	376	$	(651)	$	(577)	$	948	$	926

(2) At March 31, 2026 and December 31, 2025, the noncurrent portion of regulatory balancing accounts – net undercollected for Sempra is $1,073 and $1,060, respectively, for SDG&E is $505 and $502, respectively, and for SoCalGas is $568 and $558, respectively.

In July 2025, the CPUC issued an FD that authorized partial recovery of costs recorded in SoCalGas’ Catastrophic Event Memorandum Account. The FD authorized the recovery of $19 million out of the requested $55 million, denying recovery of coronavirus disease 2019 costs included in the Catastrophic Event Memorandum Account. The CPUC denied SoCalGas’ request for a rehearing of the FD. In February 2026, SoCalGas filed a petition with the California Court of Appeal.

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.

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.

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 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. In March 2026 and amended in April 2026, SDG&E provided supplemental testimony in its Track 3 request for drone inspection and repair program costs that were disallowed in its Track 2 request. The supplemental testimony seeks review and recovery of $522 million of direct WMP and drone inspection and repair program costs. 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 an FD for their Track 3 requests related to their PSEP costs in the second half of 2026.

Revenue requirements associated with the Track 3 requests have been recorded in regulatory accounts and any disallowances resulting from Track 3 would be recorded as an expense on the Sempra, SDG&E and SoCalGas Condensed 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.

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.


AUTHORIZED COST OF CAPITAL

	Authorized weighting		2026-2028		2025		2026-2028		2025
			Return on rate base				Weighted return on rate base
SDG&E:
Long-Term Debt	45.25	%	4.59	%	4.34	%	2.08	%	1.96	%
Preferred Equity	2.75		6.22		6.22		0.17		0.17
Common Equity	52.00		9.93		10.23		5.16		5.32
	100.00	%					7.41	%	7.45	%
SoCalGas:
Long-Term Debt	45.60	%	5.02	%	4.63	%	2.29	%	2.11	%
Preferred Equity	2.40		6.00		6.00		0.14		0.14
Common Equity	52.00		9.78		10.08		5.09		5.24
	100.00	%					7.52	%	7.49	%

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.

In October 2024, SDG&E submitted its TO6 filing to the FERC and requested it to be effective January 1, 2025. 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 March 2026, SDG&E filed with the FERC an uncontested offer of settlement in the TO6 proceeding. Among other things, the offer of settlement reflects an increase to SDG&E’s currently authorized base ROE from 10.10% to 10.28%, a hypothetical capital structure with 54% common equity, and does not affect SDG&E’s appeal of the FERC’s disallowance of the inclusion of the California ISO adder. The settlement is pending approval with the FERC and SDG&E expects to receive a decision in the second half of 2026. If approved, the TO6 settlement will be effective retroactively to June 1, 2025 and will remain in effect until terminated by a notice provided in March of any year. Following any such notice, SDG&E would submit a new Transmission Owner Rate filing for rates to go into effect January 1 of the following year.

We provide below updates to ongoing matters related to SONGS, a nuclear generating facility near San Clemente, California that permanently ceased operations in June 2013, and in which SDG&E has a 20% ownership interest. We discuss SONGS further in Note 15 of the Notes to Consolidated Financial Statements in the Annual Report.

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 independent spent fuel storage installation and puts in place a program for the fuel’s disposal. 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 Condensed 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.

The following table shows the fair values and gross unrealized gains and losses for the securities held in the NDT on the Sempra and SDG&E Condensed Consolidated Balance Sheets. We provide additional fair value disclosures for the NDT in Note 9.


NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
	Cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	March 31, 2026
Short-term investments, primarily cash equivalents	$	25	$	—	$	—	$	25
Equity securities	66		208		(2)		272
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)	43		1		(1)		43
Municipal bonds(2)	295		2		(6)		291
Other securities(3)	263		3		(5)		261
Total debt securities	601		6		(12)		595
Receivables (payables), net	(8)		—		—		(8)
Total	$	684	$	214	$	(14)	$	884

	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	46		1		—		47
Municipal bonds	301		4		(5)		300
Other securities	253		5		(3)		255
Total debt securities	600		10		(8)		602
Receivables (payables), net	(3)		—		—		(3)
Total	$	678	$	231	$	(10)	$	899

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 Condensed 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 $443 million at March 31, 2026 and is based on a cost study prepared in 2024, which is pending CPUC approval. SDG&E expects to receive an FD in the second half of 2026.