Sempra’s Condensed Consolidated Financial Statements include the accounts of Sempra and its consolidated entities. Sempra is a holding company whose principal businesses are regulated utilities in California and Texas. Our businesses invest in and operate electric and gas utilities and other energy infrastructure that provide energy services to customers. Sempra has three operating and reportable segments, which we describe in Note 14. All references in these Notes to our reportable segments are not intended to refer to any legal entity with the same or similar name.

SDG&E’s common stock is wholly owned by Enova Corporation, which is a wholly owned subsidiary of Sempra. SDG&E is a regulated public utility that provides electric service to San Diego and southern Orange counties and natural gas service to San Diego County. SDG&E has one operating and reportable segment.

SoCalGas’ common stock is wholly owned by Pacific Enterprises, which is a wholly owned subsidiary of Sempra. SoCalGas is a regulated public natural gas distribution utility, serving customers throughout most of Southern California and part of central California. SoCalGas has one operating and reportable segment.

We have prepared our Condensed Consolidated Financial Statements in conformity with U.S. GAAP and in accordance with the interim period reporting requirements of Form 10-Q and applicable rules of the SEC. The financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods. These adjustments are only of a normal, recurring nature. Results of operations for interim periods are not necessarily indicative of results for the entire year or for any other period. We evaluated events and transactions that occurred after June 30, 2026 through the date the financial statements were issued and, in the opinion of management, the accompanying financial statements reflect all adjustments and disclosures necessary for a fair presentation.

All December 31, 2025 balance sheet information in the Condensed Consolidated Financial Statements has been derived from our audited 2025 Consolidated Financial Statements in the Annual Report. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the interim period reporting provisions of U.S. GAAP and the SEC.

We describe our significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report and the impact of the adoption of new accounting standards on those policies in Note 2 below. We follow the same accounting policies for interim period reporting purposes.

SDG&E’s and SoCalGas’ accounting policies and financial statements reflect the application of U.S. GAAP provisions governing rate-regulated operations and the policies of the CPUC and the FERC. We discuss revenue recognition and the effects of regulation at our utilities in Notes 3 and 4 below and in Notes 1, 3 and 4 of the Notes to Consolidated Financial Statements in the Annual Report.

SDG&E’s power procurement is subject to reliability requirements that may require SDG&E to enter into various PPAs that include variable interests. SDG&E evaluates the respective entities to determine if variable interests exist and, based on the qualitative and quantitative analyses described above, if SDG&E, and indirectly Sempra, is the primary beneficiary.

SDG&E has agreements under which it purchases power generated by facilities for which it supplies all the natural gas to fuel the power plant (i.e., tolling agreements). SDG&E’s obligation to absorb natural gas costs may be a significant variable interest. In addition, SDG&E has the power to direct the dispatch of electricity generated by these facilities. Based on our analysis, the ability to direct the dispatch of electricity may have the most significant impact on the economic performance of the entity owning the generating facility because of the associated exposure to the cost of natural gas, which fuels the plants, and the value of electricity produced. To the extent that SDG&E (1) is obligated to purchase and provide fuel to operate the facility, (2) has the power to direct the dispatch, and (3) purchases all of the output from the facility for a substantial portion of the facility’s useful life, SDG&E may be the primary beneficiary of the entity owning the generating facility. SDG&E determines if it is the primary beneficiary in these cases based on a qualitative approach in which it considers the operational characteristics of the facility, including its expected power generation output relative to its capacity to generate and the financial structure of the entity, among other factors. If SDG&E determines that it is the primary beneficiary, SDG&E and Sempra consolidate the entity that owns the facility as a VIE.

In addition to tolling agreements, other variable interests involve various elements of fuel and power costs, and other components of cash flows expected to be paid to or received by our counterparties. In most of these cases, the expectation of variability is not substantial, and SDG&E generally does not have the power to direct activities, including the operation and maintenance activities of the generating facility, that most significantly impact the economic performance of the other VIEs. If our ongoing evaluation of these VIEs were to conclude that SDG&E becomes the primary beneficiary and consolidation by SDG&E becomes necessary, the effects could be significant to the financial position and liquidity of SDG&E and Sempra.

SDG&E determined that none of its PPAs and tolling agreements resulted in SDG&E being the primary beneficiary of a VIE at June 30, 2026 and December 31, 2025. PPAs and tolling agreements that relate to SDG&E’s involvement with VIEs are primarily accounted for as finance leases. The carrying amounts of the assets and liabilities under these contracts are included in PP&E, net, and finance lease liabilities with balances of $1,093 million and $1,109 million at June 30, 2026 and December 31, 2025, respectively. SDG&E recovers costs incurred on PPAs, tolling agreements and other variable interests through CPUC-approved long-term power procurement plans. SDG&E has no residual interest in the respective entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees or other commitments associated with these contracts other than the purchase commitments described in Note 16 of the Notes to Consolidated Financial Statements in the Annual Report. As a result, SDG&E’s potential exposure to loss from its variable interest in these VIEs is not significant.

Oncor Holdings. Oncor Holdings is a VIE. Sempra is not the primary beneficiary of this VIE because of the structural and operational ring-fencing measures, governance mechanisms and commitments in place that prevent us from having the power to direct the significant activities of Oncor Holdings. As a result, we do not consolidate Oncor Holdings and instead account for our ownership interest as an equity method investment. See Note 5 of the Notes to Consolidated Financial Statements in the Annual Report for additional information about our equity method investment in Oncor Holdings and restrictions on our ability to influence its activities. Our maximum exposure to loss, which fluctuates over time, from our interest in Oncor Holdings does not exceed the carrying value of our investment, which is $19,002 million and $17,472 million at June 30, 2026 and December 31, 2025, respectively.

CFIN. As we discuss in Note 13, in July 2020, Sempra entered into the Support Agreement for the benefit of CFIN, which is a VIE. Sempra is not the primary beneficiary of this VIE because we do not have the power to direct the most significant activities of CFIN, including modification, prepayment, and refinance decisions related to the financing arrangement with external lenders and Cameron LNG JV’s four project owners as well as the ability to determine and enforce remedies in the event of default. The conditional obligations of the Support Agreement represent a variable interest that we measure at fair value on a recurring basis (see Note 9). Sempra’s maximum exposure to loss under the terms of the Support Agreement is $979 million.

Cameron LNG JV. Cameron LNG JV is a VIE principally due to contractual provisions that transfer certain risks to customers. Sempra is not the primary beneficiary of this VIE because we do not have the power to direct the most significant activities of Cameron LNG JV, including LNG production and operation and maintenance activities at the liquefaction facility. Therefore, we account for our investment in Cameron LNG JV under the equity method. At June 30, 2026 and December 31, 2025, the carrying value of our investment is $1,315 million and $1,259 million, respectively, of which $1,299 million and $1,242 million, respectively, is classified as held for sale (see Note 6). Our maximum exposure to loss, which fluctuates over time, includes the carrying value of our investment and our obligation under the SDSRA, which we discuss in Note 13.

ECA LNG Phase 1, Port Arthur LNG I and Port Arthur LNG II are VIEs because their total equity at risk is not sufficient to finance their activities without additional subordinated financial support. We expect that these entities will require future capital contributions or other financial support to finance the construction of their respective liquefaction facilities. Sempra is the primary beneficiary of these VIEs because we have the power to direct the activities that most significantly impact their economic performance, including construction and future operation and maintenance of the facilities. As a result, we consolidate these VIEs.

Sempra consolidated $17,386 million and $15,950 million of assets at June 30, 2026 and December 31, 2025, respectively, consisting primarily of PP&E, net, and restricted cash attributable to these VIEs that could be used only to settle obligations of these VIEs and that are not available to settle obligations of Sempra, and $7,662 million and $6,335 million of liabilities at June 30, 2026 and December 31, 2025, respectively, consisting primarily of long-term debt and accounts payable attributable to these VIEs for which creditors do not have recourse to the general credit of Sempra. At June 30, 2026 and December 31, 2025, these assets and liabilities are classified as held for sale (see Note 6).

Additionally, IEnova and TotalEnergies SE have provided guarantees for repayment of up to $1,226 million and $305 million, respectively, plus accrued and unpaid interest, of the loan facility supporting construction of the ECA LNG Phase 1 project (see Note 7). Both SI Partners and ConocoPhillips have provided guarantees relating to their respective affiliate’s commitment to make its pro rata equity share of capital contributions to fund 110% of the development budget of the PA LNG Phase 1 project, in an aggregate amount of up to $9.0 billion (see Note 11). SI Partners’ guarantee covers 70% of this amount plus enforcement costs of its guarantee. SI Partners has committed to fund up to $7.8 billion to PA2 JVCo to support its share of the budgeted PA LNG Phase 2 project construction costs, while Blackstone has committed to fund $7.0 billion (see Note 12 of the Notes to Consolidated Financial Statements in the Annual Report). SI Partners has also provided a guarantee for repayment of the $300 million credit facility supporting construction of the PA LNG Phase 2 project (see Note 7 of the Notes to Consolidated Financial Statements in the Annual Report).

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on Sempra’s Condensed Consolidated Balance Sheets to the sum of such amounts reported on Sempra’s Condensed Consolidated Statements of Cash Flows. We provide information about the nature of restricted cash in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.


RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(Dollars in millions)
	June 30, 2026		December 31, 2025
Sempra:
Cash and cash equivalents	$	48	$	29
Restricted cash, current	2		2

Assets held for sale	2,650		3,521
Total cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows	$	2,700	$	3,552

We regularly monitor and evaluate credit losses and record allowances for expected credit losses, if necessary, for trade and other accounts receivable using a combination of factors, including past-due status based on contractual terms, trends in write-offs, the age of the receivables and customer payment patterns, historical and industry trends, counterparty creditworthiness, economic conditions and specific events, such as bankruptcies, pandemics and other factors. We write off financial assets measured at amortized cost in the period in which we determine they are not recoverable. We record recoveries of amounts previously written off when it is known that they will be recovered.

As we discuss below in “Note Receivable,” we have an interest-bearing promissory note due from KKR Pinnacle. On a quarterly basis, we evaluate credit losses and record allowances for expected credit losses on this note receivable, including compounded interest and unamortized transaction costs, based on published default rate studies, the maturity date of the instrument and an internally developed credit rating.


CHANGES IN ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
	2026		2025
Sempra:
Allowances for credit losses at January 1	$	298	$	519
Provisions for expected credit losses(1)	50		33
Write-offs	(78)		(94)
Reclassification to assets held for sale	6		—
Allowances for credit losses at June 30	$	276	$	458
SDG&E:
Allowances for credit losses at January 1	$	80	$	114
Provisions for expected credit losses	34		25
Write-offs	(35)		(40)
Allowances for credit losses at June 30	$	79	$	99
SoCalGas:
Allowances for credit losses at January 1	$	214	$	285
Provisions for expected credit losses	22		21
Write-offs	(43)		(54)
Allowances for credit losses at June 30	$	193	$	252


ALLOWANCES FOR CREDIT LOSSES
(Dollars in millions)
	June 30,		December 31,
	2026		2025
Sempra:
Accounts receivable – trade, net	$	212	$	235
Accounts receivable – other, net	48		47
Other long-term assets(1)(2)	16		16
Total allowances for credit losses	$	276	$	298
SDG&E:
Accounts receivable – trade, net	$	48	$	49
Accounts receivable – other, net	27		26
Other long-term assets(1)	4		5
Total allowances for credit losses	$	79	$	80
SoCalGas:
Accounts receivable – trade, net	$	164	$	186
Accounts receivable – other, net	21		21
Other long-term assets(1)	8		7
Total allowances for credit losses	$	193	$	214

We are exposed to credit losses from off-balance sheet arrangements through Sempra’s guarantee related to the SDSRA which we discuss in Note 13. We were also exposed to credit losses related to SI Partners’ February 2025 credit support agreement, which expired in May 2026. On a quarterly basis, we evaluate credit losses and record liabilities for expected credit losses on our off-balance sheet arrangements based on external credit ratings, published default rate studies and the maturity date of the arrangements. On Sempra’s Condensed Consolidated Balance Sheets, expected credit losses of $4 million and $5 million are included in Deferred Credits and Other at June 30, 2026 and December 31, 2025, respectively, and $2 million are included in Liabilities Held for Sale at December 31, 2025.


AMOUNTS DUE FROM (TO) UNCONSOLIDATED AFFILIATES
(Dollars in millions)
	June 30, 2026		December 31, 2025
Sempra:
Tax sharing agreement with Oncor Holdings	$	15	$	—
Sharyland Utilities – 5.14% Note due May 1, 2027(1)	30		—

Total due from unconsolidated affiliates – current	$	45	$	—

Tax sharing agreement with Oncor Holdings	$	—	$	(8)
Total due to unconsolidated affiliates – current	$	—	$	(8)
SDG&E:
SoCalGas	$	17	$	—
Various affiliates	1		1
Total due from unconsolidated affiliates – current	$	18	$	1

Sempra	$	(32)	$	(48)
SoCalGas	—		(6)
Various affiliates	(8)		(5)
Total due to unconsolidated affiliates – current	$	(40)	$	(59)

Income taxes due from Sempra(2)	$	88	$	43
SoCalGas:
SDG&E	$	—	$	6
Various affiliates	5		2
Total due from unconsolidated affiliates – current	$	5	$	8

Sempra	$	(46)	$	(35)
SDG&E	(17)		—

Total due to unconsolidated affiliates – current	$	(63)	$	(35)

Income taxes due from (to) Sempra(2)	$	24	$	(6)

(2) SDG&E and SoCalGas are included in the consolidated income tax return of Sempra, and their respective income tax expense/benefit is computed as an amount equal to that which would result from each company having always filed a separate return. Amounts include current and noncurrent income taxes due from/to Sempra.

At both June 30, 2026 and December 31, 2025, amounts due from unconsolidated affiliates – current of $3 million are included in Assets Held for Sale on the Sempra Condensed Consolidated Balance Sheets. At June 30, 2026 and December 31, 2025, amounts due to unconsolidated affiliates – noncurrent of $506 million and $477 million, respectively, are included in Liabilities Held for Sale on the Sempra Condensed Consolidated Balance Sheets. These amounts relate to U.S. dollar‑denominated loans at fixed interest rates with TAG Pipelines and TAG Norte and a variable interest rate note with IMG, and include outstanding principal, accrued interest, and value‑added tax payable to the Mexican government.


INCOME STATEMENT IMPACT FROM UNCONSOLIDATED AFFILIATES
(Dollars in millions)
	Three months ended June 30,				Six months ended June 30,
	2026		2025		2026		2025
Sempra:
Revenues	$	8	$	8	$	16	$	17

Interest expense	6		5		12		9
SDG&E:
Revenues	$	6	$	5	$	12	$	11
Cost of sales	35		30		63		68
SoCalGas:
Revenues	$	46	$	40	$	92	$	81
Cost of sales(1)	(2)		—		(2)		(1)

At both June 30, 2026 and December 31, 2025, total inventories of $109 million are included in Assets Held for Sale on the Sempra Condensed Consolidated Balance Sheets. At June 30, 2026 and December 31, 2025, inventories consist of $8 million and $12 million of natural gas, $3 million and $12 million of LNG, and $98 million and $85 million of materials and supplies, respectively.

In support of its Supplemental Executive Retirement Plan, Cash Balance Restoration Plan and Employee and Director Savings Plan, Sempra maintains dedicated assets, including a Rabbi Trust and investments in life insurance contracts, which totaled $617 million and $605 million at June 30, 2026 and December 31, 2025, respectively.

In July 2019, the 2019 Wildfire Legislation was signed into law to address certain issues related to catastrophic wildfires in California and their impact on electric IOUs through the establishment of the Wildfire Fund. We discuss the 2019 Wildfire Legislation and related Wildfire Fund further in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

In July 2026, a participating IOU publicly disclosed that it has received, or expects to receive, approximately $1.38 billion in aggregate reimbursements from the Wildfire Fund for eligible claims related to wildfires that occurred in 2019 and 2021. Also in July 2026, another participating IOU publicly disclosed it has received, or expects to receive, approximately $645 million in aggregate reimbursements from the Wildfire Fund for losses incurred and expected to be incurred in connection with one of the LA Fires, which was found by the LACoFD and CAL FIRE investigators to have been caused by such IOU’s equipment. The administrator of the Wildfire Fund has confirmed that this wildfire qualifies as a “covered wildfire” for purposes of accessing the Wildfire Fund, and the scope of potential damages caused by this fire could materially reduce or exhaust the Wildfire Fund. The participating IOU whose equipment was found to have caused this LA Fire stated that it is currently unable to reasonably estimate a range of potential losses associated with this event. Accordingly, SDG&E is unable to estimate a range of potential loss resulting from any reduction in available coverage from the Wildfire Fund. The carrying value of SDG&E’s Wildfire Fund asset totaled $248 million at June 30, 2026.

In September 2025, the 2025 Wildfire Legislation was signed into law to establish, among other things, the Continuation Account, a new state-administered account with up to $18.0 billion of additional liquidity to reimburse catastrophic wildfire-related claims incurred by participating California electric IOUs, including SDG&E, if certain conditions are met. We discuss the 2025 Wildfire Legislation and related Continuation Account further in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report.

In November 2021, Sempra loaned $300 million to KKR Pinnacle in exchange for an interest-bearing promissory note that is due in full no later than October 2029 and bears compound interest at 5% per annum, which may be paid quarterly or added to the outstanding principal at the election of KKR Pinnacle. At June 30, 2026 and December 31, 2025, Other Long-Term Assets includes $377 million and $368 million, respectively, of outstanding principal, compounded interest and unamortized transaction costs, net of allowances for credit losses, on Sempra’s Condensed Consolidated Balance Sheets.

Upon completion of the planned sale of a portion of our equity interest in SI Partners, which we discuss in Note 6, Sempra and the KKR Partners will amend this promissory note to, among other things, extend its maturity date and increase its interest rate to 8.5% per annum before January 1, 2031 and 10.0% per annum thereafter through a due date seven years and 91 days after the closing.


CAPITALIZED FINANCING COSTS
(Dollars in millions)
	Three months ended June 30,				Six months ended June 30,
	2026		2025		2026		2025
Sempra:
Capitalized interest	$	195	$	133	$	379	$	253
AFUDC debt	14		16		27		29
AFUDC equity	38		46		80		87
SDG&E:
AFUDC debt	$	7	$	9	$	13	$	15
AFUDC equity	16		23		33		42
SoCalGas:
AFUDC debt	$	7	$	7	$	14	$	14
AFUDC equity	15		18		30		36


CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1)
(Dollars in millions)
	Foreign currency translation adjustments		Financial instruments		Pension and PBOP		Total AOCI
	Three months ended June 30, 2026 and 2025
Sempra:
Balance at March 31, 2026	$	(47)	$	(52)	$	(92)	$	(191)
OCI before reclassifications	7		37		—		44
Amounts reclassified from AOCI	—		1		2		3
Net OCI	7		38		2		47
Balance at June 30, 2026	$	(40)	$	(14)	$	(90)	$	(144)

Balance at March 31, 2025	$	(66)	$	(17)	$	(112)	$	(195)
OCI before reclassifications	11		(34)		—		(23)
Amounts reclassified from AOCI	—		1		2		3
Net OCI	11		(33)		2		(20)
Balance at June 30, 2025	$	(55)	$	(50)	$	(110)	$	(215)
SDG&E:




Balance at March 31, 2026 and June 30, 2026					$	(6)	$	(6)

Balance at March 31, 2025 and June 30, 2025					$	(12)	$	(12)
SoCalGas:




Balance at March 31, 2026 and June 30, 2026			$	(9)	$	(8)	$	(17)

Balance at March 31, 2025			$	(10)	$	(15)	$	(25)
Amounts reclassified from AOCI			—		1		1
Net OCI			—		1		1
Balance at June 30, 2025			$	(10)	$	(14)	$	(24)


CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(1) (CONTINUED)
(Dollars in millions)
	Foreign currency translation adjustments		Financial instruments		Pension and PBOP		Total AOCI
	Six months ended June 30, 2026 and 2025
Sempra:
Balance at December 31, 2025	$	(45)	$	(54)	$	(98)	$	(197)
OCI before reclassifications	5		42		5		52
Amounts reclassified from AOCI	—		(2)		3		1
Net OCI	5		40		8		53
Balance at June 30, 2026	$	(40)	$	(14)	$	(90)	$	(144)

Balance at December 31, 2024	$	(66)	$	15	$	(115)	$	(166)
OCI before reclassifications	11		(65)		(2)		(56)
Amounts reclassified from AOCI	—		—		7		7
Net OCI	11		(65)		5		(49)
Balance at June 30, 2025	$	(55)	$	(50)	$	(110)	$	(215)
SDG&E:




Balance at December 31, 2025 and June 30, 2026					$	(6)	$	(6)

Balance at December 31, 2024 and June 30, 2025					$	(12)	$	(12)
SoCalGas:




Balance at December 31, 2025 and June 30, 2026			$	(9)	$	(8)	$	(17)

Balance at December 31, 2024			$	(10)	$	(17)	$	(27)
OCI before reclassifications			—		(2)		(2)
Amounts reclassified from AOCI			—		5		5
Net OCI			—		3		3
Balance at June 30, 2025			$	(10)	$	(14)	$	(24)


RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
Details about AOCI components	Amounts reclassified from AOCI				Affected line item on Condensed Consolidated Statements of Operations
	Three months ended June 30,
	2026		2025
Sempra:
Financial instruments:
Interest rate instruments	$	(2)	$	—	Interest expense
Interest rate instruments	1		1		Equity earnings(1)
Foreign exchange instruments	(1)		(1)		Revenues: Energy-related businesses
	1		1		Other income, net
Foreign exchange instruments	1		(1)		Equity earnings(1)


Total, net of income tax	—		—
	1		1		Earnings attributable to noncontrolling interests
Total, net of income tax and after NCI	$	1	$	1

Pension and PBOP(2):
Amortization of actuarial loss	$	1	$	1	Other income, net
Amortization of prior service cost	1		1		Other income, net



Total, net of income tax	$	2	$	2

Total reclassifications for the period, net of income tax and after NCI	$	3	$	3









SoCalGas:



Pension and PBOP(2):

Amortization of prior service cost	$	—	$	1	Other income (expense), net




Total, net of income tax	$	—	$	1

Total reclassifications for the period, net of income tax	$	—	$	1


RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (CONTINUED)
(Dollars in millions)
Details about AOCI components	Amounts reclassified from AOCI				Affected line item on Condensed Consolidated Statements of Operations
	Six months ended June 30,
	2026		2025
Sempra:
Financial instruments:
Interest rate instruments	$	(3)	$	(2)	Interest expense
Interest rate instruments	—		(4)		Equity earnings(1)
Foreign exchange instruments	(3)		1		Revenues: Energy-related businesses
	1		1		Other income, net
Foreign exchange instruments	(1)		1		Equity earnings(1)


Total, before income tax	(6)		(3)
	1		1		Income tax expense
Total, net of income tax	(5)		(2)
	3		2		Earnings attributable to noncontrolling interests
Total, net of income tax and after NCI	$	(2)	$	—

Pension and PBOP(2):
Amortization of actuarial loss	$	2	$	3	Other income, net
Amortization of prior service cost	1		1		Other income, net
Settlement charges	—		4		Other income, net
Total, before income tax	3		8
	—		(1)		Income tax expense
Total, net of income tax	$	3	$	7

Total reclassifications for the period, net of income tax and after NCI	$	1	$	7









SoCalGas:



Pension and PBOP(2):
Amortization of actuarial loss	$	—	$	1	Other income (expense), net
Amortization of prior service cost	—		1		Other income (expense), net
Settlement charges	—		4		Other income (expense), net
Total, before income tax	—		6
	—		(1)		Income tax expense
Total, net of income tax	$	—	$	5

Total reclassifications for the period, net of income tax	$	—	$	5

In connection with the planned sale of a portion of our equity interest in SI Partners, which we discuss in Note 6, Sempra entered into an agreement to contribute Sempra Services Corporation, a wholly owned subsidiary of Sempra, to SI Partners. Sempra Services Corporation employs U.S. employees performing services for SI Partners and is a participating employer in Sempra’s noncontributory defined benefit pension and PBOP plans. Upon closing the sale, which we expect to occur in the third quarter of 2026, Sempra Services Corporation will cease to be a participating employer in Sempra’s pension and PBOP plans. This will result in a partial termination of Sempra’s pension plan due to a reduction in the number of active participants by more than 20%. All impacted participants will be fully vested in their pension benefits as of the termination date. We expect to recognize the financial statement impact, which is currently probable but not estimable, including adjustments to pension and PBOP liabilities, AOCI, curtailment and special termination benefit accounting at the close of the sale. The financial impact for settlement accounting will be recognized when the lump sum payout crosses the annual settlement threshold.


NET PERIODIC BENEFIT COST
(Dollars in millions)
	Pension				PBOP
	Three months ended June 30,
	2026		2025		2026		2025
Sempra:
Service cost	$	33	$	32	$	4	$	4
Interest cost	44		45		11		9
Expected return on assets	(45)		(44)		(19)		(17)
Amortization of:
Prior service cost	1		1		—		—
Actuarial loss (gain)	3		3		(2)		(3)

Special termination benefits	—		—		1		40
Net periodic benefit cost (credit)	36		37		(5)		33
Regulatory adjustments	(16)		27		5		(30)
Total expense recognized	$	20	$	64	$	—	$	3
SDG&E:
Service cost	$	11	$	10	$	—	$	—
Interest cost	12		12		2		2
Expected return on assets	(13)		(12)		(1)		(2)
Amortization of:

Actuarial gain	—		—		(1)		—
Special termination benefits	—		—		2		17
Net periodic benefit cost	10		10		2		17
Regulatory adjustments	2		2		(2)		(14)
Total expense recognized	$	12	$	12	$	—	$	3
SoCalGas:
Service cost	$	20	$	19	$	3	$	2
Interest cost	28		28		9		8
Expected return on assets	(28)		(29)		(16)		(15)
Amortization of:
Prior service cost	—		1		—		—
Actuarial gain	—		—		(2)		(2)

Special termination benefits	—		—		(1)		23
Net periodic benefit cost (credit)	20		19		(7)		16
Regulatory adjustments	(18)		25		7		(16)
Total expense recognized	$	2	$	44	$	—	$	—


NET PERIODIC BENEFIT COST (CONTINUED)
(Dollars in millions)
	Pension				PBOP
	Six months ended June 30,
	2026		2025		2026		2025
Sempra:
Service cost	$	67	$	64	$	7	$	7
Interest cost	89		90		22		19
Expected return on assets	(90)		(89)		(37)		(33)
Amortization of:
Prior service cost (credit)	2		2		(1)		(1)
Actuarial loss (gain)	4		6		(5)		(6)
Settlement charges	—		4		—		—
Special termination benefits	—		—		19		40
Net periodic benefit cost	72		77		5		26
Regulatory adjustments	(44)		(1)		(5)		(23)
Total expense recognized	$	28	$	76	$	—	$	3
SDG&E:
Service cost	$	21	$	19	$	1	$	1
Interest cost	24		24		4		4
Expected return on assets	(26)		(24)		(4)		(4)
Amortization of:

Actuarial loss (gain)	1		2		(1)		(1)
Special termination benefits	—		—		8		17
Net periodic benefit cost	20		21		8		17
Regulatory adjustments	(8)		(8)		(8)		(14)
Total expense recognized	$	12	$	13	$	—	$	3
SoCalGas:
Service cost	$	39	$	38	$	5	$	5
Interest cost	56		56		17		15
Expected return on assets	(58)		(59)		(31)		(29)
Amortization of:
Prior service cost (credit)	1		2		(1)		(1)
Actuarial loss (gain)	—		1		(4)		(4)
Settlement charges	—		4		—		—
Special termination benefits	—		—		11		23
Net periodic benefit cost (credit)	38		42		(3)		9
Regulatory adjustments	(36)		7		3		(9)
Total expense recognized	$	2	$	49	$	—	$	—


OTHER INCOME (EXPENSE), NET
(Dollars in millions)
	Three months ended June 30,				Six months ended June 30,
	2026		2025		2026		2025
Sempra:
AFUDC equity	$	38	$	46	$	80	$	87
Investment gains, net(1)	25		23		26		25
Losses on foreign exchange instruments, net	(41)		(1)		(32)		(1)
Foreign currency transaction gains, net	7		2		6		6
Non-service components of net periodic benefit cost	17		(31)		46		(8)
Interest on regulatory balancing accounts, net	23		20		42		41
Sundry, net	(2)		—		(1)		—
Total	$	67	$	59	$	167	$	150
SDG&E:
AFUDC equity	$	16	$	23	$	33	$	42
Non-service components of net periodic benefit cost	(1)		(5)		10		4
Interest on regulatory balancing accounts, net	13		15		25		26
Sundry, net	(4)		(2)		(6)		(1)
Total	$	24	$	31	$	62	$	71
SoCalGas:
AFUDC equity	$	15	$	18	$	30	$	36
Non-service components of net periodic benefit cost	21		(23)		42		(6)
Interest on regulatory balancing accounts, net	10		5		17		15
Sundry, net	(5)		(2)		(5)		(5)
Total	$	41	$	(2)	$	84	$	40

(1) Represents net investment gains (losses) on dedicated assets in support of our executive retirement and deferred compensation plans. These amounts are offset by corresponding changes in compensation expense related to the plans, recorded in O&M on the Condensed Consolidated Statements of Operations.


INCOME TAX EXPENSE (BENEFIT) AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
	Three months ended June 30,						Six months ended June 30,
	2026			2025			2026			2025
Sempra:
Income tax expense	$	112		$	172		$	177		$	229

Income before income taxes and equity earnings	$	507		$	298		$	1,355		$	949
Equity earnings, before income tax(1)	167			169			315			310
Pretax income	$	674		$	467		$	1,670		$	1,259

Effective income tax rate	17		%	37		%	11		%	18		%
SDG&E:
Income tax expense	$	39		$	7		$	108		$	21
Income before income taxes	$	229		$	182		$	594		$	477
Effective income tax rate	17		%	4		%	18		%	4		%
SoCalGas:
Income tax expense	$	—		$	6		$	20		$	44
Income before income taxes	$	108		$	91		$	552		$	572
Effective income tax rate	—		%	7		%	4		%	8		%

Sempra, SDG&E and SoCalGas record income taxes for interim periods utilizing a forecasted ETR anticipated for the full year. Unusual and infrequent items and items that cannot be reliably estimated are recorded in the interim period in which they occur, which can result in variability in the ETR.

For SDG&E and SoCalGas, the CPUC requires flow-through rate-making treatment for the current income tax benefit or expense arising from certain property-related and other temporary differences between the treatment for financial reporting and income tax, which will reverse over time. Under the regulatory accounting treatment required for these flow-through temporary differences, deferred income tax assets and liabilities are not recorded to deferred income tax expense, but rather to a regulatory asset or liability that will be flowed through to customers in the future, which impacts the ETR. As a result, changes in the relative size of these items compared to pretax income, from period to period, can cause variations in the ETR. Items subject to flow-through treatment include:

In the three months and six months ended June 30, 2026, we recognized an income tax benefit of $21 million and $54 million, respectively, related to the outside basis differences in our investment in SI Partners. We also recognized income tax expense of $1 million and an income tax benefit of $2 million ($1 million after NCI) in the three months and six months ended June 30, 2026, respectively, and income tax expense of $38 million ($26 million after NCI) in the three months and six months ended June 30, 2025, related to the outside basis difference in our investment in Ecogas. These amounts were recorded in Income Tax Expense on Sempra’s Condensed Consolidated Statements of Operations and relate to changes in the deferred income tax liabilities associated with these outside basis differences as a result of classifying these assets as held for sale, which we discuss in Note 6.