Good morning, and welcome to Sempra’s first quarter 2025 earnings call. The live webcast of this teleconference and slide presentation are available on our website under our events and presentations 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 Clevenger, Chief Financial Officer of Oncor; Caroline 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 and 10-Q file 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-Q for the quarter ended March 31st, 2025. I'd also like to mention that forward-looking statements contained in this presentation speak only of today, May 8th, 2025, and 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 3, and let me hand the call over to Jeff.

Thank you all for joining us today. Earlier this morning, we reported first quarter 2025 adjusted EPS of $1.44, which compares favorably to the prior period's results of $1.34. In addition, we're pleased to affirm our full year 2025 adjusted EPS guidance range of $4.30 to $4.70, and we're also affirming our 2026 EPS guidance of $4.80 to $5.30. You'll also recall that we've issued a projected long-term EPS CAGR of 7% to 9% for 2025 through 2029, and have guided to the high end or above that range. As we've discussed, this projection is a compound annual growth rate for the five-year planning period and does not imply linear growth year to year. Now let's turn to our plan of execution for the remainder of the year. Today our first quarter results reflect a positive step toward the execution of five value creation initiatives. First, we plan to invest roughly $13 billion this year in energy infrastructure, with over $10 billion targeted for our U.S. utilities. Just as important, we have initiatives underway that are intended to improve the regulatory compact in both Texas and California. Second, we continue to review opportunities to realign our portfolio to support the growth and expansion of our Texas and California utilities while also maintaining a strong balance sheet. As a result, we announced our intention to sell a minority interest in Sempra Infrastructure Partners. Given the robust demand today for energy infrastructure assets, we expect to complete a transaction that highlights the continued growth in the value of that business. Third, we're continuing our strategy of selling non-core assets and recycling capital to finance our future growth. That's why we recently announced our plans to divest Ecogas, a regulated natural gas distribution utility in Northern Mexico. In combination, these actions are designed to advance our company's broader effort to simplify the business and reduce reliance on future issuances of common equity to fund the company's five-year capital plan. With the close of these transactions and the anticipated growth of our utilities, we expect our regulated businesses will account for a much larger percentage of Sempra's earnings on an annualized basis. It's also important to note that we expect these combined transactions to be accretive to the company's earnings per share forecast and credit enhancing. We also continue to execute on our Fit For 2025 campaign that we launched in the summer of 2024. The goal of this initiative is to reduce the company's cost structure to align with our future business needs. These efforts are also focused on new technology adoption, including the use of artificial intelligence to improve productivity and customer service. Taken together, these efforts are expected to help support improvements in the affordability of our services and our financial performance. And finally, we'll continue our foundational work of delivering safe and reliable energy for our customers through operational excellence. We're an established leader today in wildfire science and mitigation, and we'll look to build on those competitive advantages here in California as well as at Oncor. The key takeaway is we have an exceptional opportunity to grow and competitively differentiate our company through the end of the decade. To deliver on that opportunity, we understand the importance of executing well in the near term. Our first quarter financial results are an important first step, and as a management team, we have a plan of execution in place for the balance of 2025 that we believe will make our company stronger and more valuable. With that, please turn to Slide 4, where Karen will walk through business and financial updates.

Thank you, Jeff. Let me start by saying our three growth platforms are off to a solid start for the year. Let's start with Texas. Last year, ERCOT projected peak load growth to increase to 150 gigawatts by 2030. To meet this demand, ERCOT is proposing a regional transmission plan that would overlay a new high-voltage backbone across the state's transmission grid. Both the 345 kV and the 765 kV investments are under consideration. Together with the Permian plan, ERCOT estimates these investments will total between $32 billion and $35 billion. That includes approximately $14 billion to $15 billion for the Permian plan, with the import transmission path being constructed at the 765 kV level, and $18 billion to $20 billion for the remaining transmission buildout. I would refer you to Slide 9 in the appendix for a graphic that provides additional details on this. As a major owner of existing endpoints across Texas, we believe Oncor is well-positioned to construct a significant portion of the required transmission infrastructure that's been identified by ERCOT. Oncor is still assessing the impact of these developments and expects to have a better sense of the projected investment opportunity once the associated CCNs are filed. Oncor has begun seeking approvals for the remainder of the Permian plan and expects to continue making the required CCN filings, including for the import path through 2026. We're also currently monitoring the legislative session in Texas, including potential legislation that, if passed, might have beneficial impacts on the regulatory framework supporting T&D investments in Texas. In the meantime, Oncor is continuing to prepare to file its comprehensive base rate review and currently anticipates filing in the second quarter. Moving to Sempra California, I'd like to start by discussing an update on the regulatory front. Every three years, California utilities submit a new cost of capital application to the CPUC, which sets authorized rates for return for their investments in critical infrastructure. In March, SDG&E and SoCalGas, along with other large California IOUs filed their respective cost of capital applications. The current cost of capital filings are for the years 2026 through 2028 and seek to update SDG&E and SoCalGas's respective rates of return to align with current market conditions. SDG&E requested a 54% common equity layer and 11.25% return on equity. At SoCalGas, the company requested a 52% common equity layer and 11% return on equity. Please see Slide 11 in the appendix for a breakout of additional details. We expect a decision from the CPUC by the end of the year with the newly authorized rates of return effective at the start of 2026. As a reminder, this would be subject to the cost of capital adjustment mechanism, otherwise known as the CCM, which would apply in the years 2027 and 2028. As it relates to the FERC-TO6 filing, SDG&E's current authorized rate is 10.1%, and you'll recall that SDG&E requested a base ROE of 11.75%, which excludes the 50-basis point CAISO adder currently in the appeals process. New interim rates are scheduled to be implemented on June 1st, subject to refund. The settlement process is ongoing and expected to be resolved in the second half of this year. Also in the first quarter, the CPUC approved an expansion of Westside Canal battery storage, adding 100 megawatts of energy storage capacity to the existing 131-megawatt facility. This expansion should be fully operational this summer and represents a significant investment in the region's energy infrastructure, supporting local communities by providing more reliable and clean power, and positioning the region as a leader in sustainable energy solutions. Moving to affordability initiatives, Jeff discussed our Fit For 2025 campaign earlier, but I also want to mention that SDG&E and SoCalGas customers received a one-time California climate credit lowering bills last month by as much as $136 at SDG&E and $87 at SoCalGas. Also, there will be a second credit applied to the bills of SDG&E customers in October, bringing the total expected bill credit up to $217 in 2025. Also in March, an amended memorandum and ruling was issued establishing the scope and schedule for Track 3 of the 2024 GRC. Testimony was filed to review the reasonableness of SoCalGas' pipeline safety enhancement costs for 2015 to 2020, SDG&E's pipeline safety enhancement costs for 2014 to 2019, and SDG&E's wildfire mitigation costs in 2023, a proposed decision is anticipated in the first half of 2026. On the tariff front, we are closely monitoring potential impacts at Sempra, California. We've been proactive in taking action to manage rising prices to reduce impacts to our ratepayers. Since the pandemic, we analyzed where more supply chain risk exists and added additional sources of supply. We expect those diversified sources to help us better manage and mitigate tariff risks. We've also engaged with suppliers in an effort to source more domestically produced equipment and materials where possible, stocking inventory of critical materials and exploring new sources of supply that help reduce tariff exposure. These activities form part of our larger program of improving the affordability of our utility services. Moving to Sempra infrastructure, in March, we announced our plan to sell certain non-core energy infrastructure assets in Mexico, as well as a minority interest in Sempra infrastructure partners. Jeff discussed both earlier, but I would like to add that initial interest around these assets has been robust. On the minority interest sale process at Sempra infrastructure partners, you'll recall that KKR and ADIA have certain rights of first offer, followed by Sempra's right to respond. Also, as is customary, we are unable to reach an agreement with our current partners. We're prepared to pursue a third-party bid in an open and competitive process to help increase the value for Sempra shareholders. As outlined, we believe it will take a reasonable amount of time for both transactions to unfold and expect to provide our next update on the second quarter call in August. Moving to operational updates, Cimarron LNG phase one loaded 55 cargos and achieved a 98% plant reliability in Q1 2025. Together with our partners, we're very pleased with the high-quality operations from this critical infrastructure asset. And as it relates to tariff impacts, we're actively monitoring the evolving situation and assessing its potential impact on our businesses. Our current understanding is that energy is defined as a cross-border electric and natural gas deliveries is a USMCA-compliant good and is therefore unaffected by tariffs. As a result, we do not currently anticipate significant impacts from cross-border energy transactions. We also continue to advance major construction projects at Cimarron Wind LNG phase 1 and Port Arthur LNG Phase 1. Cimarron Wind is progressing key construction activities, including turbine installations, and continues to target power generation in late 2025 with COD planned for the first half of 2026. At LNG Phase 1, we have over 5,200 workers on site and construction is currently focused on pipe testing, electrical activities, instrumentation, and insulation, with the project around 92% complete. Additionally, we're excited to share that Phase 1 has achieved mechanical completion of various subsystems, which allows for the start of pre-commissioning activities. These developments are consistent with the expectation of commercial operations in spring of 2026. Moreover, I would note that at LNG Phase 1, our EPC contractor has completed its engineering and procurement activities, so we're not anticipating any significant impacts from increases in material costs. Moving to Port Arthur LNG Phase 1, I'd like to take a moment to acknowledge the safety incidents that occurred last week at the Port Arthur facility, which resulted in the loss of 3 employees. Our deepest condolences go out to the families and colleagues affected by this incident. Order construction has progressed, including the foundations, steel and pipe installations, dredging activities, major equipment setting, and other key milestones. Also, on the tariff front, Port Arthur LNG began admitting all items and the designated foreign trade zones into the United States as a preemptive action back in February to avoid higher costs being levied on these items. Earlier this year, we announced that we expected to take on Port Arthur LNG Phase 2 by the end of 2025. That remains our target as we're continuing to field strong commercial interest in the project. With that said, uncertainty in the macroeconomic environment may affect the timing of project development. As we have done in the past, we'll continue to exercise patience as we seek to mitigate cost risk and lock in favorable long-term economics. To wrap up, energy infrastructure remains a crucial component of economic growth and development. Allies in Europe and Asia are looking to American leadership to improve their energy security. That's why we continue to believe Sempra Infrastructure is well positioned to create value for its owners as we look to complete a series of important construction projects and capture new opportunities by extending the scale and reach of our platform. Now, please turn to the next slide. We'll walk through an update on our financial performance. Earlier today, Sempra reported first quarter 2025 GAAP earnings of $906 million or $1.39 per share. This compares to first quarter 2024 GAAP earnings of $801 million or $1.26 per share. On an adjusted basis, first quarter 2025 earnings were $942 million or $1.44 per share. This compares to our first quarter 2024 earnings of $854 million or $1.34 per share. We're pleased with these financial results and believe they represent a solid start to the year. Please turn to the next slide.

Variances in the first quarter 2025 adjusted earnings as compared to the same period last year can be summarized as follows. At Sempra California, we had $88 million from higher CPUC based operating margin, net of operating expenses and lower authorized cost of capital. Sempra California also had $54 million of higher income tax benefits, partially offset by higher net interest expense and other. As a reminder, in the first three quarters of 2024, Sempra California reported revenues and taxes in accordance with 2023 CPUC authorized levels. Turning to Sempra Texas, we had $37 million of lower equity earnings, primarily from higher interest and operating expenses, partially offset by higher revenues from invested capital and higher consumption attributable to weather and customer growth. At Sempra Infrastructure, we largely reported in line with the prior period, with a $2 million decrease driven by lower asset optimization, partially offset by lower O&M and higher interest income. And at the parent, a $15 million decrease is primarily due to higher net interest expense, partially offset by other expenses. Please turn to the next slide.

To conclude our prepared remarks, we're off to a solid start for the year. We understand the importance of our plan of execution for 2025, and across our management team, we're focused on delivering the strategic initiatives that Jeff outlined on today's call. Taken together, these initiatives are designed to divest non-core assets in support of recycling proceeds into new investments in our Texas and California utilities, strengthen the company's balance sheet while efficiently funding growth and improving the quality and affordability of our services, and reward Sempra's owners with improved visibility to consistent growth in earnings and cash flows and long-term value creation. Our first quarter results represent an important first step in our growth plans. With that, we'll now take a moment to open the line and answer your questions.

Thank you. This concludes the prepared remarks. We will now open the line to take your questions. Our first question will come from Ross Fowler from Bank of America. Your line is open.

Good morning. How are you? Good morning, Jeff. Good morning, Karen.

Good morning.

So, just a couple of questions to touch on, and maybe I'm just tired because I'm 42. I'm usually so steep. But just to walk through the SIP process from here, I think KKR would be due on May 12th. And then we've got, if I've got it right, 10 business days for ADIA. And then you would have 30 days to respond to either one of those, which would kind of put us late June, early July. And that's the sort of contextualization for why you're talking about an update on the second quarter call. Am I thinking about that correctly?

Yeah, the only thing I would clarify is to think about that sequentially. So, once KKR provides their written offer, if they were to bid, then Sempra has a 30-day process to deliberate that and or respond. After that process, then ADIA would have their 10 days, followed by Sempra’s 30 days to respond to that. So, I think we feel comfortable that Q2 call will be the appropriate time to update it. And look, we certainly realize that people like more details. So, I think, Ross, the best thing to do is just let the process play itself out. I think Q2 will be the appropriate time for an update.

Perfect, Jeff. Thank you. And then, Allen, maybe one for you, just as we sort of contextualize what you've referred to, I think, in our conversations in the past is the Texas Miracle and the Texas growth. We've seen the 765 kV network as I look at Slide 9 into the Permian. Then there's this other 765 stuff off to the east. What would be the advantages or disadvantages of doing the rest of that 765 or 345? And then just contextualize what you're seeing on the growth front in Texas right now.

Sure. Please go ahead, Allen.

You bet. Thanks, Ross. Yeah, the Texas Miracle, as I've said before, continues. Just from a general high-level perspective, things I generally talk about when I'm talking about growth, premise growth is up again 3% over quarter one last year, 19,000 new premises. Transmission POIs, a new request up 66% year-to-date, first quarter versus last year, first quarter. Total active requests are up 35%. Our LC&I large customer queue continues to grow at a record pace now up 30% from where we were last quarter over the 152, I think that's what we announced last time. West Texas, Far West Texas weather zone is up 3%. New peak, Culberson transmission loop is up 41% over last year's peak, and Stanton transmission loop is up about 9%, 8.8% over last year's peak. So those are kind of the metrics I generally talk about on these calls. Around growth, obviously, we've got a lot of other things going on that you mentioned. There's the Permian plan, obviously, with the latest announcement that we're going to be doing the import path with 765 kV, that’s a big one. And then the remainder of the STEP program, the 765 plan that ERCOT and the PUC are looking at, we were kind of agnostic from a financial perspective on 765 versus 345 because if you don't build the 765, you have to build a lot more 345. So we were going to be good either way. However, from an operational perspective, we've been very adamant that operationally 765 makes a lot more sense for a state that's growing like ours. Obviously, if you build bigger capacity now on fewer right-of-ways, you have increased ability to operate your system differently and more effectively. It provides for the allowance of generation siting at pretty much anywhere you can connect to the 765 as opposed to having to build 345 directly to locations where generation is coming online. So we think there are operational benefits to 765. That's what we said at the legislature, that's what we said at the PUC, and we were pleased with that announcement. Now we'll have to see what happens with the eastern half of the 765 plan. Again, there's a decision to be made there as to how and when that will take place if the PUC and the legislature go forward. But obviously, as we've said before, and I think as Jeff alluded to, we have opportunities on both those plans given the number of endpoints that we own, it's around, I think, over 1,300 now. And the application of the 1938 bill, which formalized the ERCOT criteria of using endpoints to determine the ownership of transmission lines. So we feel very good about the growth in Texas. We feel very good about where ERCOT and the PUC are headed with these two major transmission plans, and we think we'll be a major participant in both.

Well, the only thing I would add is it's obviously a very ambitious plan. We think it's critical to support the state's future growth. And I think given the endpoints that Allen just identified, we certainly expect to be in a position to build over half of the proposed investment.

Thanks for that, Jeff, and Allen as well. Just one last one from me. Jeff, you highlighted in your opening comments the Fit For 2025 program. Can you maybe talk about something in that program a little bit more specifically, like what you've achieved so far and what you might have sight by, too, just to give a little bit of flavor of what you're seeing there and what those programs actually entail?

Yeah, sure. Last year, Ross, we kicked off our Fit For 2025 campaign to improve the competitive cost structure of our company. This isn't something that's new at Sempra. For those of you who have followed our company for a long period of time, we routinely go back and look for ways to reduce costs and improve productivity. What we're fundamentally trying to do, Ross, is find new and better ways to serve customers. So we're looking at opportunities to reduce headcount through voluntary retirement programs. We're making new investments in technology. SDG&E is targeted using artificial intelligence, for example, in over 40% of its customer interactions in its call center. We'll continue to look at ways to basically outsource calls where we think it can be done on a cheaper basis. But look, I think part of serving customers better is working hard to improve the affordability of their services. And let me just give you a quick recap of where we think we're at. In Texas today, Oncor, for example, has the lowest rates among investor-owned utilities. And notwithstanding their current $36 billion capital plan, Ross, they expect to remain the lowest across the five-year plan. Similarly, at SoCal Gas, you recall, that's the largest natural gas utility platform in the United States. Their bills today are in the bottom quartile nationally. And similarly, at SDG&E, Ross, we have the lowest average bills among investor-owned utilities in the state. So as you think about our five value creation initiatives, part of creating a more competitive cost structure is about finding better ways to be responsive to the needs of our customers. And maybe before I wrap up, Caroline, you could add a few specifics that you're taking at SDG&E to give a little more color to Ross.

Sure. Happy to do so. You know, we remain laser-focused on affordability for customers, and we're proud that SDG&E's monthly electric delivery bills are lower for the second year in a row. But we have more work to do there. Through our Fit for 2025 initiative, we're driving down operating costs and improving efficiency. We're securing non-ratepayer sources of funding, like tax credits for batteries, and advocating for policy changes. We applaud the Governor of California issuing the executive order last year, which focuses on improving electric affordability, that's highly constructive. And the order is largely focused on pass-through programs that become less cost-effective and does not appear to impact equity or capital deployment. SDG&E recently filed to reduce costs associated with certain energy efficiency programs that are no longer cost-effective. And if approved, it could save customers $300 million. And we're really happy about the use of climate credits that Karen mentioned to lower energy bills by $217 this year. Customer affordability is a top priority, and we're doing everything possible to make sure that our bills are transparent, they're stable, and they're affordable.

Thank you, Ross.

Thank you. Have a great rest of your morning.

You too.

Thank you. Our next question will come from Carly Davenport from Goldman Sachs. Your line is open.

Hi, Carly.

Hey, Jeff. Thanks so much for taking the questions. Maybe to start on the LNG front, just to follow up on some of the comments in the prepared remarks, you talked about some of the macro uncertainty potentially impacting project development on Port Arthur 2. Could you just help us frame that potential impact? Is that more just a potential kind of slippage, or is that anything we should think about from a structural shift in views on that project?

No, I would just clarify, Carly, I think we're in great shape on Port Arthur Phase 2, and Justin, maybe you could walk through how you're thinking about that project moving forward this year.

Yeah, thanks, Jeff. Hi, Carly. As Karen said in the prepared remarks, we are continuing to target FID in 2025. We're very pleased with the strong commercial interest in that project and the progress we're making on the development front. Those include commercial negotiations, receiving our final permits, and financing the projects. Karen mentioned some of the recent macroeconomic uncertainties, and I think for us it's important to emphasize we're committed to managing cost risks and maintaining discipline to achieve our targeted returns. And that, Carly, will take precedent over the timing of any announcements. I also just want to remind folks of the point Karen and Jeff have made; the priorities reflected in Sempra’s capital program are focused on growing regulated utilities, and that means we'll only take FID on a project like Port Arthur Phase 2 when we're comfortable it will deliver strong shareholder value.

Thank you, Justin.

Great. Thanks so much for that. That was really helpful. And then maybe just a clarification on some of the comments in the prepared remarks around the tariff exposure. I recognize there's still a degree of movement there, but could you just help us frame out the potential earnings exposure on a Sempra-consolidated basis, as well as you think about the broader capital plan over the next five years, how you think about the exposure there?

Yeah, I would say right from the top, I think this remains a fluid environment for all industries, but I think we're in good shape here, and any type of impact from tariffs, I think, falls well within our established guidance. Let me go through a couple of things that might be helpful. At our utilities, Carly, we remain focused on minimizing tax tariff exposure for our customers. The majority of our equipment is sourced domestically, and that limits the direct impact on planned capital expenditures to around 2% or 3%. To reduce that impact even further, our utilities are taking steps to diversify the supplier pool and are exploring new supply sources with reduced exposure. Second, they're adding higher levels of domestically produced equipment and materials. And finally, they're continuing to stock higher levels of inventory for critical materials, and I think Karen talked about that in her prepared remarks. Turning to Sempra Infrastructure, I think it's also a very positive story there. At ECA, LNG procurement is complete and not impacted by tariffs. At Port Arthur LNG, approximately 90% of our spend is with U.S. suppliers and contractors. Karen noted this, but we're also currently using foreign trade zones to mitigate tariff impacts, and Train One Steel was fully sourced domestically. And I would just mention that the remaining tariff exposure for Phase 1 is estimated to be about 1% of CapEx. On our other development projects, we would only take FID after securing firm pricing and also mitigating any cost risks to achieve our target returns, and we'll be very disciplined about that. So as we've looked at this back in March and April and May, we feel like we're in very good shape relative to tariffs.

Great. I appreciate all that detail. Thanks so much for the time.

Thank you, Carly.

Thank you. Our next question comes from Steve Fleishman from Wolfe. Your line is open.

Hi, Steve.

Hi, Jeff, Karen, Allen. I'd like to focus on Texas and the pending Unified Tracker bill. Could you discuss how that might interact with your rate case filing and the benefits of the bill compared to the current situation?

Sure. Let me provide a couple of broader comments, and then we'll come back and talk about the legislative session and specifically UTM. I would think about the rate case separately. I mean, the way to think about it is they've got an authorized ROE today, Steve, of 9.7%. And there's two things that can impact lower earned ROEs. One is when you've got a higher cost structure that can be resolved in the base rate review. And secondly, just ordinary regulatory lag based on how their capital tracker mechanisms work. So I think what Allen and team will try to focus on is continuing to strengthen their balance sheet by addressing both sides of that. But I'll make a quick comment, and I'll pass it over to Allen, which is I talked about early on our value creation initiatives. And the first one, Steve, is this idea of investing about $13 billion this year. The second component of that is we're committed to actually improving our financial returns. And that means whether it's legislative sessions in Texas or California or base rate reviews or regulatory filings, we're very, very focused on improving our regulatory compact. So that's kind of the framing as you think about what we might be able to accomplish in Texas legislative session as well as the base rate review. But Allen, if you could maybe provide some additional color on the legislative session, specifically UTM.

Sure. Yeah, thanks for the question, Steve. There's a number of bills that continue to make progress through the legislature. And we're obviously tracking everything from UTM to interim rates to wildfire and capital structures. And there's still a lot of time left, even though it's only a month. And there's still a lot of time for material changes to be made to all these bills. But we'll continue monitoring closely, working with all the constituents, and we'll have a better update on what actually gets through on the Q2 call. Specifically with regards to House Bill 5247 or the UTM bill. It's the most impactful potential bill for us, given our large and growing capital plan. It'd give us a way to moderate the impacts of regulatory lag and improve our credit quality. We've had broad support from stakeholders, and we really are appreciative of those parties who have worked with us on this bill. And while there are other bills that are out there that we'll continue to monitor work on, this one is potentially the most important to us. Generally, what it would do is it would provide a one-stop, kind of streamlined mechanism in lieu of the existing trackers, your TCOST, DCOST, and TCRF trackers that we make our adjustments with today. So there's benefits to it. We still need approval by the Senate, and it still needs to be assigned. It's signed by the Governor. But we'll keep working on it, and hopefully it also would decrease the workload of PUC staff. So there's benefits to this bill. The rate case, as Jeff said, we're still planning on filing something in the second quarter. So I would think of those two separately right now for the reasons that Jeff described. And that's kind of where we are in the UTM and the rate case.

Thank you, Allen.

What, if you don't mind, on the same kind of thematic, Jeff, one other question. California, and I think on the last call, you were pretty optimistic on something maybe done this year on the wildfire fund changes. Could you maybe give us your latest thoughts on any potential changes on AB 1054?

Yeah, and I think this is a good follow-on question. Because very similar to Texas, they've got House Bill 145 in Texas, which we also think is important, which really attempts to move the standard there from a simple negligence standard to a gross negligence standard. So as you think about opportunities, whether it's through legislation or regulation, anything we can do to take risk out of the operating environment. We're sure if our balance sheet is obviously very, very positive for the growth story that we have underway in Texas. To your point in California, it's very similar. Obviously, Wall Street's following the developments up and down the state relative to wildfire risk. I remain quite constructive that here in California, the leadership is focused on the right things. And let me highlight a couple points that you might find helpful. First off, I've long said that wildfire in the state of California is a societal issue. People tend to think of it narrowly as a utility issue, but it's much more important to the state from a statewide standpoint in terms of how folks, you know, go about their day-to-day lives here. And I would applaud the Governor's work. He has his team, Steve, focused on three key areas, the first of which is the size and durability of the wildfire fund under AB 1054. Second is opportunities to continue to improve the insurance environment, particularly for residential homeowners. And finally, there's a continued interest in looking for opportunities for regulatory reform. I would mention when we talk about wildfire, I think it's always important to differentiate SDG&E, Steve. We think that they have demonstrably lower wildfire risk for three reasons. Obviously, it's a significantly smaller service territory. Second, it's a semi-arid desert topography, so there's not that much fuel content relative to other parts of the state. And obviously, since 2007, there have been significant amounts of funding in the neighborhood of $6 billion to $7 billion around our leadership position in wildfire science and mitigation. But if I could, Steve, I've got Caroline Winn here as the CEO of SDG&E. And Caroline, perhaps you could also share your perspective from your company.

Sure. Hi, Steve. Yeah, we're proud of the significant strides that we've made in mitigating wildfire risk and our strong track record, which includes 17 years without a utility-related catastrophic wildfire. Much of our recent work was facilitated in part by the passage of AB 1054 and the stability that the wildfire fund has provided to the market. So it seems clear to us that we need to build on the successful foundation of AB 1054 to extend its framework and durability, as Jeff said. The conversations that we've had up and down the state leave us confident that stakeholders understand the criticality of addressing the issue and the important role that investor-owned utilities play in supporting California's growth, economic development, and the safety of the communities we serve. So yeah, absolutely agree with Jeff. I feel constructive about getting something done this year.

Thanks, Steve.

Thank you. Our next question comes from Nicholas Campanella from Barclays. Your line is open.

Hi, Nick.

Hey. How's everything going? How's everyone doing? Thanks for taking my questions. So hey, just really quick on the EPS CAGR commentary. You kind of talked about in the prepared remarks as not being linear. Understand that Oncor is working through a rate case. You're working through these asset sales. But I guess just, what year do you kind of think that you'd be above that 7% to 9% range?

Look, I think we haven't given that level of guidance. I think one of the things we realized that we got a lot of feedback from our Q4 call was there's probably an opportunity to be more clear and less ambiguous about our expectations. And obviously, it was a very challenging call for us. It's something that we take very seriously. And I think what we wanted to do is make sure we were very clear-eyed about what the opportunity was through 2029. So we took the opportunity to clarify for everyone that we expect to be at the high end or above that range. I think some of the things, Nick, on today's call provides a little bit more visibility into our confidence there. You recall that we had a $36 billion capital plan that we discussed in February for Oncor. And now that you see the 765 decision, now that you've seen not just the import path, not just the local path, but the import path that the Permian being moved back to 2030. Obviously, we feel quite confident that a lot of that $12 billion will come into the plan. And that's currently not in our forecast of 7% to 9%. So I hope that's helpful.

That is. Thanks so much, Jeff. And then, just to follow up on SIP and the transaction you're pursuing here, is there any scenario in which you think you can kind of go beyond the 30%? And then, you mentioned it's accretive, which is great. So clearly, the multiple should still be robust. But maybe you can kind of talk about your confidence level and just the current outlook of our interest rates and tariffs and economic uncertainty potentially impacting this valuation versus where you've successfully transacted on it in the past.

Yeah, I would start, Nick, with some conversations you and I have had before. But I think, over long periods of time, Sempra has an established track record, both in acquiring assets and also in divesting assets. This is something we've been very thoughtful about with our Board of Directors. We tend to look at these types of opportunities to unlock value almost at every board meeting. So we're always open to new ideas. I think what we've tried to do is be very thoughtful about picking a scope of transaction, a transaction boundary between 15% and 30%. It meets the needs of our capital program. But really, a comment that's true of our entire portfolio is we're always open to new ideas, right? So I think we've got this thing sized correctly. But if we happen to take both a conforming bid and a non-conforming bid, we would always look at that through the lens of what creates the most value for our owners.

All right. Thanks for taking my question. Appreciate it.

All right. Thank you very much.

Thank you. Our next question will come from Shar Pourreza from Guggenheim Partners. Your line is open.

Hi, good morning. It's actually here. Hey, Jeff, how are you?

Good.

Maybe coming back to Texas for a second, the Oncor CCN applications are already being filed for the seven projects that you highlighted. And do those enable the visibility on any of the upsides? Or is there a potentially larger pull forward into plan with the 765kV standard? How does that flow versus the $12 billion of upside CapEx?

Yes, let me make a couple comments here, and I'll pass it to Don or Allen to answer some following questions. But remember, I think that Oncor, in its discussions with its board of directors, had really circled about a $48 billion opportunity between 2025 and 2029. And what we at Sempra remember is that we're always trying to be very disciplined about capital. The Oncor team shares that same view. And what we elected to do was divide that planned capital spending into two categories. A category where there was high confidence of the capital spend, and they were reasonably far along in securing all the required permits or CCNs for those projects to be built. That $12 billion category, which we've always referred to as incremental, was where we thought that some additional work needed to be done to make sure we firmed up our ability to commence construction. Permits would be an example. CCNs would be an example. So, they made a lot of progress in Q1 on CCNs. And the two big things that have changed were, originally, the Permian plan, which is going to cost $15 billion to $17 billion, had two components. There was a local component that the regulator asked to be completed by 2030. And then there was this import component, which was expected to stretch into the next decade. The two things that have happened are that the regulator determined that, relative to that import opportunity, they're going to use the 765 kV level of infrastructure. And number two, they now move that timeline forward so both the local projects and the import projects have to be done by 2030. So, that really firms up the need for Oncor to move forward with much of that $12 billion incremental plan. And Allen, if you could provide a little bit more color. I know your team has been very busy in terms of filing permits and CCNs. But if you could offer some, that'd be helpful.

Now, Jeff, I think you really covered it. And as you mentioned with regards to CCNs, I think we've already filed seven. I think we're planning on filing in the mid-20s this year. Just to give a little color, I did this work as outside counsel for 17 years. I think I did 40 or 50 total in 17 years. And we're filing 24 this year. So, that's somewhat of an indication of how busy we are on the regulatory front. Otherwise, I think you've addressed it.

I think the key takeaway there is of the '24 CCNs that have been filed, we've filed roughly one-third of them. There's more work to be done.

And as you mentioned, I think this would be accretive to the $12 billion that you highlighted because $12 billion was based on a longer timeframe, right?

I would like to highlight two points. First, within the $12 billion discussion, we noted that the import aspect is expected to accelerate towards 2030. This suggests that the $12 billion is indeed necessary, and it may even require Oncor to exceed this amount during the five-year planning period ending in 2029.

Excellent. Thanks for the clarity there. And maybe shifting to California, you started some of the filings around the incremental approval versus the GRC decision, like the Track 3 and SB 410 and some others. Is upside to the base plan around the 2026 timeframe? And how is the cost of capital kind of layered into the plan, just to clarify the moving pieces on the respective upside for California?

Yeah, I would mention a couple of things here. One is we certainly think there are opportunities outside the GRC in terms of cost of capital. We have a really good appendix slide that you can refer to there in terms of what our filing is. But let's stick to your first topic, which is opportunities outside the GRC. Some of these are in our plan and some of these are outside the plan, but it might be good just to go through kind of a listing of some of the things or categories that Caroline and her team are focused on. And Caroline, perhaps you could walk us through those.

Sure, Jeff. Yeah. Some of those items include modernization of some of our really important compressor stations. We have those electrification investments that are supported by Senate Bill 410 that you mentioned. We also have GRC Track 2 and Track 3, which includes costs related to our pipeline system enhancement programs and wildfire investments. But we're also looking at increasing modernization of our systems. We're looking at high voltage transmission in our northern and eastern portions of our service territory, as well as additional battery storage resources supporting not only overall grid reliability, but also increasingly clean energy. So I think, the takeaway here is we're closely working with parties on outcomes beneficial to our customers that will continue and will continue to make investments for safety and reliability.

And I know, Constatini, we raised the cost of capital. And I think we have a good slide on Slide 11 in the appendix that outlines what we're currently operating under versus what we've requested.

Excellent. And just a quick clarification on the next question. And obviously, there's some sequencing for the SIP transaction, but would a constructive ROFO indication potentially shorten that 12- to 18-month process?

Yes, it would. And I would just mention that if you go back and look at the transactions that we completed in 2021 and 2022, each of those transactions, following the date of an announcement of a definitive agreement, took approximately six months.

Excellent. Appreciate that. Thanks for all. Thanks for taking the questions.

Thank you.

Thank you. Our next question comes from Julien Dumoulin-Smith from Jefferies. Your line is open.

Hi, Julian.

Hey, good afternoon. Thanks, Jeff. Thanks, team. Appreciate it. Maybe to follow up on that last question a little bit further and talk about the potential transaction here. Can you guys elaborate a little bit on how you would set expectations? I mean, whether it's the KK or ADIA team or someone else? To what extent would you say on the valuation front, at least the level that was implied from the last transaction, is that kind of a fair baseline here that you're thinking about, the extent to which they may or may not want to participate? So be it, they'll indicate, but just in a sense to establish like a baseline on value that you'd be willing to transact at. I mean, is that a fair statement?

No, I might approach it a little bit differently. You'll recall that on our March 31st press release, we outlined the implied equity transaction values both for KKR and for ADIA. And the way to think about it, Julian, is since that time period, several things have happened. We've been able to successfully grow our EBITDA, number one. Number two, the amount of construction we have in progress or in flight leads to an increase in near-term EBITDA. And then I think there's been a significant change in the overall breadth and scope of our long-term pipeline. So we have a fair amount of confidence that the business is of more value today than it has been in the past. And that's why you've seen us use language, even in our value creation initiatives that we see this as an opportunity to highlight value and the implication being there is value that's not currently in our stock price.

Got it. From a multiple perspective, hard to say given both the prospects improving, but also the significant uptick in EBITDA, but nonetheless, feel confident about it, it seems.

Yeah, I think that's a good point. I would say, obviously, this is a slightly higher interest rate environment, which goes into that. But I think one of the things that sometimes people miss, Julian, is on the multiple itself. A lot of times you get to that higher multiple based upon how the acquiring party values the depth and scope of the pipeline of development projects out there. So, you can start off with some type of market multiple, but I think the big issue is this is a significant franchise. This is not a development company. It's not a project. This is a franchise that's been built over the last 25 years. It's one that cannot be replicated. And I think the construction that's in flight and the scale and scope of the development pipeline is significant.

Excellent. And if I could just follow up real quickly on that, I mean, where do you stand on FFO to debt? I mean, where do we end the quarter, or what have you on kind of a trailing basis? And also, where do you stand with respect to Moody's today? I mean, obviously, they made their actions in the last couple of months here, but how do you think about the conversation and the 15% to 30% reconciling against the needs that they've laid out for you to get back to a stable outlook?

Yeah, I think, Julian, as you would imagine, I think we feel like we're in pretty good shape on our credit ratings. And we continue to be very committed to maintaining our credit ratings. I would also note that we have a lot of confidence in the plan that we've put in front of the agencies. And they understand that we expect to complete the transactions that you and I have been discussing over the next 12 to 18 months. As part of that plan, you know, our use of proceeds is expected to fund our capital plan in a much more efficient way than we originally proposed. I think the benefit to our shareholders is that we'll be able to reduce future common equity needs and also help to improve our credit profile. And with respect to our current credit metrics, the roll forward 12-month deal on that is very consistent with where it was at the end of the year.

All right. Excellent, guys. Thank you very much. All right. We'll chat soon.

All right. Thanks a lot, Julian.

Thank you. Our next question comes from Durgesh Chopra from Evercore ISI. Your line is open.

Hi, Durgesh.

Hey, Jeff. Good morning to you. Thank you for giving me time. Hey, just wanted to quickly follow up on Julian's question related to Moody's. Is it your understanding, or at least in your conversation with the team, both Moody's and S&P, who have you on negative outlook, that they'll be patient here? I'm just double checking. Usually their process is 12 to 18 months. But just in your conversation, will they be patient here and see through your asset sale process if it goes the full distance in 18 months? The reason why I'm asking that question is, obviously, if they're not, you may decide to issue equity sooner than this process plays out. So maybe just your thoughts on that.

Yeah, I'll be very clear. We think we're in great shape here. And maybe, Karen, you can provide additional color.

Yeah, we've had great conversations with the rating agencies. We have laid out the plan, and I think they understand the 12 to 18 month timeframe we've talked about. So we're committed to our ratings. And we've had good conversations with them on this front. So we think we have the time to complete these transactions. And as Jeff mentioned, our timeframe could be shorter than that.

Got it. Yeah, I just wanted to be crystal clear. Okay, that's very helpful. And just really quickly, hopefully this is a quick one. At least the way we're modeling the transaction is very little to no tax leakage. Is that a fair way to think about transaction proceeds?

No, I think the way that we focus on this is making sure that we focus on key three variables. Our first obligation is to either work with our partners or run a process that solves for the highest possible equity value. Secondly, we've had a team of folks working on the tax side, and our goal is to minimize leakage. Obviously, you're going to pay taxes as part of a transaction like this, but our goal is to minimize that. That certainly has a big impact on your after-tax usable proceeds. And then it's very important when you look at all the different possibilities of how you can use those proceeds to maximize your accretion. And that's work that we've spent a lot of time on. It's been well-briefed with accrediting agencies, and we're comfortable through a range of outcomes that we can deliver a set of transactions that are accretive to our EPS forecast, and it's accretive to credit.

Got it. That's very clear. Thank you.

Thank you.

Thank you. Our next question comes from Anthony Crowdell from Mizuho. Your line is open.

Hi, Anthony.

Hey, good afternoon, team. Jeff, just one quick one. I think it may follow up on Nick Campanella's train of thought. When you look out towards the end of your forecast period, four or five years, we have the Oncor CapEx spending. You've sold down the piece of SIP. You keep talking about the growth is going to be mainly focused on the regulated utility side of Sempra. What's the mix of regulated utility earnings to, say, your infrastructure earnings towards the end of your plan?

Yeah. I really appreciate the opportunity to clarify this. Look, I think we have been very clear over a long period of time that we're continuing to build this business with a view toward taking risk away from the portfolio and allocating capital disproportionately to our regulated investments. What we've done with our board of directors is target a mix where our regulated earnings and cash flows will be at the level of 90% or greater. And that you'll see us have a lower ownership inside of SI accordingly. This transaction really just accelerates our movement to that. So, at some point in our five-year plan, we're quite confident that we'll be at 90% or better in terms of an earnings mix from our regulated utilities.

Great. That's all I had. Thanks again.

Okay. Thank you.

Thank you. And we do have time for one last question today. And our last question will come from David Arcaro from Morgan Stanley. Your line is open.

Hi, David.

Hey. Thanks so much for sneaking me in. Apologies if I didn't quite catch it, but I was wondering, Oncor, just what are the gigawatts of the LC&I pipeline currently and how much of that is data centers? And I'd also just be curious your current view on what you would consider advanced stage, more like realistic to hit the market. We've just heard skepticism just around how much load it might actually show up.

Yeah. Look, I think this is a great question. Obviously, you've seen ERCOT's forecasts have increased. A year ago, they were forecasting something closer to 152 gigawatts by the end of the decade. That's now gone up, and I think that's led to a lot of questions and concerns about how much of that might be real. I think from Oncor standpoints, they've had historically a peak load in their territory of around 31 or 32 gigawatts, and they have had significant interconnection requests. And Allen, perhaps you or Don could just kind of highlight for us what the changes in that have been and the part that you feel very confident in.

You bet. Thanks, David. The direct answer to your question is we presently have 156 gigawatts of data centers in the queue and another 22 gigawatts of load from kind of more traditional diverse industrial sectors. So that is whatever 178 total of large C&I in the queue, of which 156 is data centers.

Do you want to comment on how you think about the more certainty of that and once you're holding?

Sure. I mean, yeah, I apologize, Jeff. Absolutely. I mean, so what we submitted to ERCOT was about 29.5 gigawatts in our officer letter that we think we have high confidence in. And high confidence comes from a number of things, including two or more of the following, execution and securitization of an agreement for things like engineering or procurement, delivery of technical information, proof of site control, completed site-related studies, attestation of non-duplicative load requests, verification of financial capabilities, and a payment of study fees. So things like that are how we get to the high confidence level. So 29.5 gigawatts of that. And then we have another 9 gigawatts or so of signed interconnection agreements. And the 29.5 gigawatts, I should have said, is by 2031. So that’s, as you said, Jeff, that's additional gigawatts on top of what is presently a 31 gigawatt peak.

Yeah. So think about that, David, just to kind of put that in context is their high confidence level of interconnections is more than double their existing peak load. And they've got actually a backlog that's 5x of their current peak load. So I think the goal here really is to make sure that we are building the critical infrastructure that continues to support the economic growth in the state. And I feel quite confident that the growth around the Oncor Service Territory will lead the state in terms of what needs to be done from an infrastructure standpoint.

Excellent. Perfect. Yeah, huge numbers. Really appreciate the data there. I'll leave it there.

Thank you, David.

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

Hey, I want to take a moment to thank everyone for joining us today. I know there are a lot of competing calls. We certainly appreciate everyone making the time to join us. If there are any follow-up items, please reach out to our IR team with your questions. I would also mention that Glen and I are heading up to Los Angeles to meet with investors today. And Karen and the team will be looking forward to seeing many of you in Florida at the upcoming AJ event later this month. This concludes our call.

Thank you for your participation. You may now disconnect.