Sempra Reports 2025 Financial Results with Significant Earnings Decline Driven by Charges, Advances $38.7B Capital Plan and Major Divestitures

summarizeSummary

Sempra reported a significant drop in 2025 net income and EPS due to regulatory disallowances and tax expenses from asset sales, while simultaneously advancing a multi-billion dollar capital plan and strategic divestitures, alongside favorable regulatory outcomes for its utility operations.

check_boxKey Events

• Significant 2025 Earnings Decline

  Net income for 2025 decreased to $2,072 million from $3,500 million in 2024, with diluted EPS falling to $2.75 from $4.42. This was largely driven by a $651 million regulatory disallowance charge for SDG&E and a $703 million income tax expense related to assets classified as held for sale.

• Major Divestitures Underway

  Sempra entered into agreements in 2025 to sell a 45% equity interest in SI Partners for approximately $9.99 billion and Ecogas for approximately $500 million, with both sales expected to close in Q2/Q3 2026. These assets are now classified as held for sale.

• Ambitious Five-Year Capital Plan

  The company announced a $38.7 billion capital expenditure plan for 2026-2030, including a 32% increase in Oncor's five-year base capital plan to $47.5 billion, signaling significant future investment in regulated infrastructure.

• Key Regulatory Approvals and Settlements

  Oncor filed an unopposed settlement in January 2026 for its base rate review, proposing an 8.8% annualized revenue increase. The CPUC also approved new cost of capital for SDG&E and SoCalGas effective January 1, 2026, through 2028, with ROEs of 9.93% and 9.78% respectively.

auto_awesomeAnalysis

Sempra's 2025 annual report reveals a substantial decline in net income and EPS, primarily due to a $651 million regulatory disallowance charge for SDG&E related to past wildfire mitigation costs and a $703 million income tax expense from classifying Sempra Infrastructure Partners (SI Partners) and Ecogas as held for sale. Despite these significant charges, the company is executing a robust capital recycling program, including the planned $9.99 billion sale of a 45% equity interest in SI Partners and the $500 million sale of Ecogas, which will provide substantial liquidity. Sempra also outlined an ambitious $38.7 billion five-year capital expenditure plan for 2026-2030, signaling strong future investment in its regulated utilities. Key regulatory developments include an unopposed settlement for Oncor's base rate review, proposing an 8.8% revenue increase, and the approval of new cost of capital for SDG&E and SoCalGas for 2026-2028. The filing also details the establishment of an $18 billion Wildfire Fund Continuation Account, providing additional liquidity for California wildfire claims, though other IOUs' claims are impacting the existing fund. Investors should weigh the impact of the one-time charges on 2025 earnings against the long-term strategic initiatives and favorable regulatory environment for its core utility businesses.