Company: SREA
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001032208-25-000012
Chunk: 125

Company: SEMPRA
Filing Date: 2025-02-25
Form: 10-K
Item: Item 1A
Chunk 125
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 if it were eliminated. In December 2024, the CPUC approved an FD in the SB 380 OII finding that the Aliso Canyon natural gas storage facility is currently necessary for natural gas and electric reliability and affordable rates and closed the OII. Among other things, and subject to future CPUC biennial reviews and potential additional proceedings, the FD authorizes the Aliso Canyon natural gas storage facility to continue operating and sets the maximum working natural gas storage level at 68.6 bcf. If the Aliso Canyon natural gas storage facility were to be permanently closed or if future cash flows from its operation were otherwise insufficient to recover its carrying value, we would record an impairment of the facility, which could be material, we could incur materially higher than expected operating costs and/or be required to make material additional capital expenditures (any or all of which may not be recoverable in rates), and natural gas reliability and electric generation could be jeopardized. Any such outcome could have a material adverse effect on SoCalGas’ and Sempra’s results of operations, financial condition, cash flows and/or prospects. We discuss proceeding SB 380 OII in Note 15 of the Notes to Consolidated Financial Statements.

2024 Form 10-K  |  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