Company: SREA
Filing Date: 2025-06-23
Form Type: 8-K
Source: 0001032208-25-000038
Chunk: 0

Company: SEMPRA
Filing Date: 2025-06-23
Form: 8-K
Item: Item 7.01
Chunk 0
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Item 7.01 Regulation FD Disclosure.

Unified Tracker Mechanism

In Texas, interim rate adjustment applications for capital investments are known as “capital tracker” filings, which are intended to reduce regulatory lag associated with certain transmission and distribution (T& D) capital investments. Under current rules, each year electric utilities may file up to two such applications to reflect changes in transmission-related capital investments and up to two such applications to reflect changes in distribution-related capital investments. Investments included in a capital tracker filing remain subject to prudency review in the utility’s next base rate review before the Public Utility Commission of Texas (PUCT).

On June 20, 2025, Texas House Bill 5247 (HB 5247) was signed into law and became effective. The bill establishes what is known as the “unified tracker mechanism” (UTM), which creates an alternative method, available through 2035, for qualifying electric utilities to apply for interim rate adjustments once annually using a comprehensive regulatory filing for cost recovery of certain T& D capital expenditures. Qualifying electric utilities consist of utilities that (i) operate solely inside the Electric Reliability Council of Texas, Inc. (ERCOT) market, (ii) have been identified by the PUCT as having responsibility for constructing transmission infrastructure as part of ERCOT’s Permian Basin Reliability Plan, and (iii) make annual capital expenditures in T& D that exceed 300% of annual depreciation.

Oncor Electric Delivery Company LLC (Oncor) expects to qualify for and commence using the referenced alternative capital recovery method. Sempra owns an 80.25% interest in Oncor.

A qualifying utility electing to use the UTM is permitted to defer all or a portion of the costs associated with its eligible T& D capital investments placed into service during the period covered by the UTM, including depreciation expense and carrying costs, as a regulatory asset. HB 5247 provides that the PUCT must review a UTM filing within 120 days, and if a final order is not issued by the PUCT within 165 days after the UTM filing is submitted, the utility can place the requested rates into effect on a temporary basis and refund or credit against future customer bills any difference between such temporary rates and the final approved rates.

Anticipated Financial Impact

At Oncor, use of the UTM instead of existing capital trackers is expected to improve the company’s earnings, cash flows, and credit metrics. The projected positive impact of use of the UTM by Onc