Company: SREA
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001032208-25-000048
Chunk: 181

Company: SEMPRA
Filing Date: 2025-08-07
Form: 10-Q
Item: Item 2
Chunk 181
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SEP 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.

CPUC Cost of Capital

In March 2025, SDG&E and SoCalGas each filed applications with the CPUC seeking to update their cost of capital for 2026 through 2028, subject to the CCM. SDG&E and SoCalGas expect to receive an FD by the end of 2025. We further discuss the cost of capital and CCM in Note 4 of the Notes to Condensed Consolidated Financial Statements.

SDG&E

Wildfire Fund

We describe the Wildfire Legislation and SDG&E’s commitment to make annual shareholder contributions to the Wildfire Fund through 2028 in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

SDG&E is exposed to the risk that the participating California electric IOUs may incur third-party wildfire costs for which they will seek recovery from the Wildfire Fund with respect to wildfires that have occurred since enactment of the Wildfire Legislation in July 2019. In such a situation, SDG&E may recognize a reduction of its Wildfire Fund asset and record accelerated amortization against earnings when available coverage is reduced due to recoverable claims from any of the participating IOUs. The Wildfire Fund could be completely exhausted due to fires in the other California electric IOUs’ service territories, by fires in SDG&E’s service territory or by a combination thereof, which would result in accelerated amortization of SDG&E’s Wildfire Fund asset. The carrying value of SDG&E’s Wildfire Fund asset totaled $269 million at June 30, 2025.

PG&E is seeking reimbursement from the Wildfire Fund for losses associated with the Dixie fire, which burned from July 2021 through October 2021. Although the cause of the LA Fires has not been determined, these fires may have a material adverse impact on the Wildfire Fund. Multiple lawsuits related to the Eaton fire have been initiated against Edison, and in July 2025, Edison announced that it is beginning a claims process for the Eaton fire in advance of a formal agency determination of the cause of the fire. Edison has disclosed that its equipment could have been associated with the ignition of the Eaton fire and that a liability is probable but not reasonably estimable.

If any California electric IOUs’ assets are determined to be a cause of fires, including fires of the size and scope of