Sempra Reports 2025 Financial Results with Significant Earnings Decline Driven by Charges, Advances $38.7B Capital Plan and Major Divestitures
Summary
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.
Key Events
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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.
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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.
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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.
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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.
Analysis
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.
At the time of this filing, SRE was trading at $95.20 on NYSE in the Energy & Transportation sector, with a market capitalization of approximately $62.1B. The 52-week trading range was $61.90 to $97.45. This filing was assessed with neutral market sentiment and an importance score of 8 out of 10.