Sempra Subsidiary SDG&E Reaches Unopposed Regulatory Settlement, Boosting Authorized ROE
Summary
Sempra's subsidiary, SDG&E, filed an unopposed settlement with FERC to increase its authorized return on equity from 10.10% to 10.28%, effective retroactively to June 2025, which is expected to fall within Sempra's current EPS guidance.
Key Events
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Regulatory Settlement Reached
San Diego Gas & Electric Company (SDG&E), a Sempra subsidiary, filed an unopposed offer of settlement in its TO6 proceeding with the U.S. Federal Energy Regulatory Commission (FERC).
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Authorized Return on Equity Increased
The settlement proposes to increase SDG&E's authorized base return on equity (ROE) from 10.10% to 10.28%.
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Retroactive Effectiveness
If approved by FERC, the terms of the settlement would be effective retroactively to June 1, 2025.
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EPS Guidance Maintained
The impact of these settlement terms on Sempra's diluted earnings-per-common-share (EPS) is expected to fall within its previously announced 2026 and 2027 EPS guidance ranges.
Analysis
San Diego Gas & Electric Company (SDG&E), a Sempra subsidiary, has reached an unopposed settlement with the U.S. Federal Energy Regulatory Commission (FERC) regarding its Electric Transmission Owner Formula Rate. This settlement, if approved, will increase SDG&E's authorized base return on equity (ROE) from 10.10% to 10.28% and establish a 54% equity hypothetical capital structure, effective retroactively to June 1, 2025. While the company states the impact is expected to fall within existing EPS guidance, this positive regulatory outcome provides greater certainty and a favorable financial framework for SDG&E's transmission operations, especially following the previous year's regulatory disallowances that impacted Sempra's net income. The stock is currently trading near its 52-week high, and this positive regulatory news could help sustain that momentum. Investors should monitor FERC's final approval, which is expected in the second half of 2026.
At the time of this filing, SRE was trading at $95.54 on NYSE in the Energy & Transportation sector, with a market capitalization of approximately $62.4B. The 52-week trading range was $61.90 to $97.45. This filing was assessed with positive market sentiment and an importance score of 7 out of 10.