Sempra Energy (SRE)

Risks

• Sempra’s cash flows, ability to pay dividends and ability to meet its debt obligations largely depend on the performance of its subsidiaries and entities accounted for as equity method investments.
• Sempra has substantial investments in and obligations arising from businesses it does not control or manage or in which it shares control.
• Our business could be negatively affected by actions of activist shareholders.
• Any impairment of our assets or investments could negatively impact us.
• The economic interest, voting rights and market value of our outstanding common and preferred stock may be adversely affected by any additional equity securities we may issue.
• Dividend requirements associated with our preferred stock subject us to risks.
• Our common stock is listed on the Mexican Stock Exchange and registered with the CNBV, which subjects us to additional regulation and liability in Mexico.
• Our businesses are subject to risks arising from their infrastructure and information systems.
• Our businesses face risks related to the COVID-19 pandemic.
• Severe weather, natural disasters and other similar events could materially adversely affect us.
• We seek growth opportunities in the market organically and inorganically, including through the acquisition of, or partnerships in, operating companies.
• Increasing activities and projects intended to advance new energy technologies could introduce new risks to our businesses.
• The operation of our facilities depends on good labor relations with our employees.
• In addition to general information and cyber risks that all large corporations face, we face evolving cybersecurity risks associated with protecting sensitive and confidential customer and employee information and energy grid, natural gas pipeline, storage and other infrastructure.
• Our debt service obligations expose us to risks, and with respect to Sempra, could require additional equity securities issuances.
• Credit rating agencies may downgrade our credit ratings or place those ratings on negative outlook.
• We do not fully hedge our assets or contract positions against changes in commodity prices, and for those contract positions that are hedged, our hedging procedures may not mitigate our risk as expected.
• Risk management procedures may not prevent or mitigate losses.
• Market performance or changes in other assumptions could require unplanned contributions to pension and other postretirement benefit plans.
• Our businesses require numerous permits, licenses, franchises and other approvals from various governmental agencies, and the failure to obtain or maintain any of them could materially adversely affect us.
• Our businesses are subject to numerous governmental regulations and complex tax and accounting requirements and may be materially adversely affected by these regulations or requirements or any changes to them.
• We may be materially adversely affected by the outcome of litigation or other proceedings in which we are involved.
• Wildfires in California pose risks to Sempra California (particularly SDG&E) and Sempra.
• The electricity industry is undergoing significant change, including increased deployment of distributed energy resources, technological advancements, and political and regulatory developments.
• Natural gas and natural gas storage have increasingly been the subject of political and public scrutiny, including a desire by some to reduce or eliminate reliance on natural gas as an energy source.
• SDG&E may incur significant costs and liabilities from its partial ownership of a nuclear facility being decommissioned.
• SDG&E and SoCalGas are subject to extensive regulation by federal, state and local legislative and regulatory authorities, which may materially adversely affect Sempra, SDG&E and SoCalGas.
• SoCalGas has incurred and may continue to incur significant costs, expenses and other liabilities related to the Leak, a substantial portion of which may not be recoverable through insurance.
• Any failure by the CPUC to adequately reform SDG&E’s rate structure could have a material adverse effect on SDG&E and Sempra.
• Certain ring-fencing measures, governance mechanisms and commitments limit our ability to influence the management, operations and policies of Oncor.
• Changes in the regulation or operation of the electric utility industry and/or the ERCOT market could materially adversely affect Oncor, which could materially adversely affect us.
• Oncor’s operations are capital-intensive, and it could have liquidity needs that necessitate additional investments.
• Sempra could incur substantial tax liabilities if EFH’s 2016 spin-off of Vistra from EFH is deemed to be taxable.
• Project development activities may not be successful, projects under construction may not be completed on schedule or within budget, and completed projects may not operate at expected levels, any of which could materially adversely affect us.
• We are dependent on the equipment provided by third parties to operate Cameron LNG JV’s Phase 1 project and the failure of such equipment may adversely impact our business and performance.
• Hydraulic fracturing is subject to political, economic and other uncertainties.
• Fixed-price long-term contracts for services or commodities expose our businesses to inflationary pressures.
• Increased competition could materially adversely affect us.
• We may not be able to enter into, maintain, extend or replace long-term supply, sales or capacity agreements.
• Our businesses depend on the performance of counterparties, and any performance failures by these counterparties could materially adversely affect us.
• We rely on transportation assets and services, much of which we do not own or control, to deliver natural gas and electricity.
• Our international businesses and operations expose us to foreign currency and inflation risks.
• Our businesses are exposed to market risks, including fluctuations in commodity prices, that could materially adversely affect us.
• Our international businesses and operations expose us to increased legal, regulatory, tax, economic, geopolitical and management oversight risks and challenges.
• Our businesses are subject to various legal actions challenging our property rights and permits, and our properties in Mexico could be subject to expropriation by the Mexican government.