Company: SREA
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001032208-25-000012
Chunk: 213

Company: SEMPRA
Filing Date: 2025-02-25
Form: 10-K
Item: Item 1
Chunk 213
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 |  51

CARB, California’s primary regulator for GHG emissions reduction programs, is evaluating various options for reducing natural gas demand through building decarbonization measures and is considering a proposed statewide zero-emissions standard for space and water heaters. Additionally, the CEC adopted changes to the Title 24 California Building Standards Code that require newly constructed residential and commercial buildings to include heat pump technologies for space and water heating beginning in 2026. 

The CPUC has an open proceeding to establish policies, processes, and rules governing safe and reliable gas system operation and long-term gas system infrastructure planning for natural gas utilities in alignment with California’s decarbonization goals. Potential outcomes include reductions in natural gas demand over time in favor of electrification, renewable energy alternatives, and/or cleaner fuels and changes to rate and cost recovery policies. 

A substantial reduction in or the elimination of natural gas use in California without adequate recovery of investments could result in impairment of some or all of SoCalGas’ and SDG&E’s natural gas infrastructure assets if they were not permitted to be repurposed for alternative fuels, were required to be depreciated on an accelerated basis or were to become stranded, which could have a material adverse effect on SoCalGas’, SDG&E’s and Sempra’s results of operations, financial conditions, cash flows and/or prospects.

SDG&E may incur significant costs and liabilities from its partial ownership of a nuclear facility being decommissioned. 

SDG&E has a 20% ownership interest in SONGS, which we discuss in Note 14 of the Notes to Consolidated Financial Statements. SDG&E and each of the other owners of SONGS is responsible for financing its share of the facility’s expenses and capital expenditures, including those related to decommissioning activities. Although the facility is being decommissioned, SDG&E’s ownership interest in SONGS continues to subject it to risks, including:

▪the potential release of radioactive material

▪the potential harmful effects from the former operation of the facility

▪limitations on the insurance commercially available to cover losses associated with operating and decommissioning the facility

▪uncertainties with respect to the technological, financial, and political aspects of decommissioning the facility and the long-term storage of radioactive materials

SDG&E maintains the SONGS NDT to provide funds for nuclear decommissioning. Trust assets generally have been invested in equity and debt securities, which are subject to market fluctuations. A decline in the market value of trust assets