Company: SREA
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001032208-25-000027
Chunk: 54

Company: SEMPRA
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 1
Chunk 54
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$0.01 2024(3.69)to9.55 (0.44)The impact associated with discounting is not significant. Because these auction prices are a less observable input, these instruments are classified as Level 3. The fair value of these instruments is derived from auction price differences between two locations. Positive values between two locations represent expected future reductions in congestion costs, whereas negative values between two locations represent expected future charges. Valuation of our CRRs is sensitive to a change in auction price. If auction prices at one location increase (decrease) relative to another location, this could result in a significantly higher (lower) fair value measurement. We summarize CRR volumes in Note 8.

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Realized gains and losses associated with CRRs, which are recoverable in rates, are recorded in Cost of Electric Fuel and Purchased Power on the Condensed Consolidated Statements of Operations. Because unrealized gains and losses are recorded as regulatory assets and liabilities, they do not affect earnings.Other SempraThe table below sets forth reconciliations of changes in the fair value of Sempra’s Support Agreement for the benefit of CFIN classified as Level 3 in the fair value hierarchy.LEVEL 3 RECONCILIATIONS(Dollars in millions)Three months ended March 31, 20252024Balance at January 1$25 $23 Realized and unrealized gains (losses), net(1) 15 2 Settlements(2)(2)Balance at March 31(2)$38 $23 Change in unrealized gains relating to instruments still held at March 31$15 $1 (1)    Net gains are included in Interest Income and net losses are included in Interest Expense on Sempra’s Condensed Consolidated Statements of Operations.(2)    Includes $8 in Other Current Assets and $30 in Other Long-term Assets at March 31, 2025 on Sempra’s Condensed Consolidated Balance Sheet.The fair value of the Support Agreement, net of related guarantee fees, is based on a discounted cash flow model using a probability of default and survival methodology. Our estimate of fair value considers inputs such as third-party default rates, credit ratings, recovery rates, and risk-adjusted discount rates, which may be readily observable, market corroborated or generally unobservable inputs. Because CFIN’s credit rating and related default and survival rates are unobservable inputs that are significant to the valuation,