We make statements in this report that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions with respect to the future, involve risks and uncertainties, and are not guarantees of performance.guarantees. Future results may differ materially from those expressed in theany forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the filing date of this report. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or other factors.

In this report, forward-lookingForward-looking statements can be identified by words such as “believes,” “expects,” “intends,” “anticipates,” “plans,” “estimates,” “projects,” “forecasts,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “target,“in process,” “pursue,“under construction,” “in development,” “opportunity,” “target,” “outlook,” “maintain,” “continue,” “goal,” “aim,” “commit,” or similar expressions, or when we discuss our guidance, priorities, strategy, goals, vision, mission, opportunities, projections, intentions or intentions.expectations.

We caution you not to rely unduly on any forward-looking statements. You should review and consider carefully the risks, uncertainties and other factors that affect our business as described herein and in other reports that we file with the SEC.

We are a California-based energy-services holding company.company with energy infrastructure investments in North America. Our businesses invest in, develop and operate energy infrastructure, and provide electric and gas services to customers in North America. through regulated public utilities.

Sempra Energy was formed in 1998 through a business combination of Enova and PE, the holding companies of our regulated public utilities in California: SDG&E, which began operations in 1881, and SoCalGas, which began operations in 1867. We have since expanded our regulated public utility presence into Texas through our 2018 and 2020 acquisitions of an aggregate indirect 80.45%80.25% interest in Oncor and in 2019, Oncor’s acquisition of InfraREIT and our acquisition of an indirect 50% interest in Sharyland Utilities. Since 1995, we

We have had a strong and growing presence in Mexico through IEnova, the first energy infrastructure company to be listed on the Mexican Stock Exchange. IEnova has a diverse portfolio of energy infrastructure projects and assets serving Mexico’s growing energy needs. Our energy infrastructure footprint continues to expand across North America, through LNG development projects and assets in Louisiana, Texas and Mexico, includingalso includes our indirect 50.2% interest in Cameron LNG JV, which commenced commercial operationis a natural gas liquefaction export facility operating in Louisiana, and construction and development of LNG projects and assets on the firstGulf Coast and Pacific Coast of three liquefaction trainsNorth America.

In the fourth quarter of 2021, we formed Sempra Infrastructure, a new segment that includes the operating companies of our subsidiary, SI Partners, as well as a holding company and certain services companies. Through an internal reorganization, we consolidated the assets of our LNG business (previously included in August 2019.our Sempra LNG segment) and our ownership of IEnova (previously included in our Sempra Mexico segment) under Sempra Global (previously included in Parent and other), which was renamed SI Partners. This reorganization simplifies Sempra’s ownership and management of its non-utility, energy infrastructure assets in North America by consolidating them under a single platform. As a result, the Sempra LNG and Sempra Mexico segments no longer exist. Our historical segment disclosures have been restated to conform with the current presentation, so that all segment discussions reflect the revised segment information of our four separate reportable segments.

In 2018, we announced a multi-phase portfolio optimization initiative designed to sharpen our strategic focus on North America. We have since executed on that initiative by completing the sales of our renewables businesses and our non-utility natural gas storage assets in the U.S., and by entering into agreements to sell our South American businesses. We expect to completecompleting the sales of our South American businesses in the first half of 2020.South America. We present the South American businesses as discontinued operations throughout this report.

Our mission is to be North America’s premier energy infrastructure company. We are primarily focused on generatingtransmission and distribution investments, among other areas, that we believe are capable of producing stable predictable earnings and cash flows by investing in, developing and operating electric and gas infrastructureearnings visibility, with the goal of delivering safe and reliable energy to our customers and increasing shareholder value.

SDG&E is a regulated public utility that provides electric services to a population of, at December 31, 2021, approximately 3.73.6 million and natural gas services to approximately 3.43.3 million of that population, covering a 4,100 square mile service territory in Southern California that encompasses San Diego County and an adjacent portion of southern Orange County.

SDG&E’s 500-kV Southwest Powerlink transmission line, which is shared with Arizona Public Service Company and Imperial Irrigation District, extends from Palo Verde, Arizona to San Diego, California. SDG&E’s share of the line is 1,162 MW, although it can be less under certain system conditions. SDG&E’s Sunrise Powerlink is a 500-kV transmission line constructed and operated by SDG&E with import capability of 1,000 MW of power.

Mexico’s Baja California transmission system is connected to SDG&E’s system via two 230-kV interconnections with combined capacity of up to 408600 MW in the north-to-south direction and 800 MW in the south-to-north direction, although it can be less under certain system conditions.

Edison’s transmission system is connected to SDG&E’s system via five 230-kV transmission lines.

Charges under most of the contracts with QFs are based on what it would incrementally cost SDG&E to produce the power or procure it from other sources. Charges under the contracts with other suppliers are for firm and as-generated energy and are based on the amount of energy received or are tolls based on available capacity. Tolling contracts are purchased-power contracts under which SDG&E provides natural gas for generation to the energy supplier. The prices under these contracts include 125 MW at prices that are based on the market value at the time the contracts were negotiated.

SDG&E procures natural gas under short-term contracts for its owned generation facilities and for certain tolling contracts associated with purchased-power arrangements. Purchases are from various southwestern U.S. suppliers and are primarily priced based on published monthly bid-week indices.

SDG&E is a participant in the Western Systems Power Pool, which includes an electric-power and transmission-rate agreement that allows access to power trading with more than 300 member utilities, power agencies, energy brokers and power marketers located throughout the U.S. and Canada. Participants can make power transactions on standardized terms, including market-based rates, preapproved by the FERC. Participation in the Western Systems Power Pool is intended to assist members in managing power delivery and price risk.

San Diego’s mild climate and SDG&E’s robust energy efficiency programs contribute to lower consumption by our customers. Rooftop solar installations continue to reduce residential and commercial volumes sold by SDG&E. As ofAt December 31, 2019, 20182021, 2020 and 2017,2019, the residential and commercial rooftop solar capacity in SDG&E’s territory totaled 1,2331,620 MW, 1,0231,423 MW and 8361,233 MW, respectively.

Demand for electricity is dependent on the health and expansion of the Southern California economy, prices of alternative energy products, consumer preference, environmental regulations, legislation, renewable power generation, the effectiveness of energy efficiency programs, demand-side management impact and distributed generation resources. California’s energy policy supports increased electrification, particularly electrification of vehicles, which could result in significant increases in sales volumes in the coming years. Other external factors, such as the price of purchased power, the use of hydroelectric power, the use of and further development of renewable energy resources and energy storage, development of new natural gas supply sources, demand for natural gas and general economic conditions, can also result in significant shifts in the market price of electricity, which may in turn impact demand. Demand for electricity is also impacted by seasonal weather patterns (or “seasonality”), tending to increase in the summer months to meet cooling load and in the winter months to meet heating load.

SoCalGas is a regulated public utility that owns and operates a natural gas distribution, transmission and storage system that supplies natural gas to a population of, at December 31, 2021, approximately 22 million, covering a 24,000 square mile service territory that encompasses Southern California and portions of central California (excluding San Diego County, the City of Long Beach and the desert area of San Bernardino County).

We describe SoCalGas’ natural gas utility operations below in “California Utilities’“Sempra California’s Natural Gas Utility Operations.”

At December 31, 2019,2021, SoCalGas’ natural gas facilities include 3,058included 3,047 miles of transmission and storage pipelines, 51,07351,724 miles of distribution pipelines, 48,31548,549 miles of service pipelines and nine transmission compressor stations, whileand SDG&E’s natural gas facilities consistconsisted of 168176 miles of transmission pipelines, 8,9619,058 miles of distribution pipelines, 6,5826,686 miles of service pipelines and one compressor station.

SoCalGas purchases natural gas under short-term and long-term contracts for the California Utilities’SDG&E’s and SoCalGas’ core customers. SoCalGas purchases natural gas from various sources, including from Canada, the U.S. Rockies and the southwestern regions of the U.S. Purchases of natural gas are primarily priced based on published monthly bid-weekbid week indices.

To help ensuresupport the delivery of natural gas supplies to its distribution system and to meet the seasonal and annual needs of customers, SoCalGas has firm interstate pipeline capacity contracts that require the payment of fixed reservation charges to reserve firm transportation rights.

Energy companies, primarily El Paso Natural Gas Company, Transwestern Pipeline Company and Kern River Gas Transmission Company, provide transportation services into SoCalGas’ intrastate transmission system for supplies purchased by SoCalGas or its transportation customers from outside of California.SoCalGas.

SoCalGas and SDG&E sell, distribute and transport natural gas. SoCalGas purchases and stores natural gas for its core customers in its territory and SDG&E’s territory on a combined portfolio basis. SoCalGas also offers natural gas transportation and storage services for others.

For regulatory purposes, end-use customers are classified as either core or noncore customers. Core customers are primarily residential and small commercial and industrial customers.

Most core customers purchase natural gas directly from SoCalGas or SDG&E. While core customers are permitted to purchase directlytheir natural gas supplies from producers, marketers or brokers, the California UtilitiesSoCalGas and SDG&E are obligated to provide reliable supplies of natural gasmaintain adequate delivery capacity to serve the requirements of all their core customers. A substantial portion of SoCalGas’ and SDG&E’s revenues are from core customers.

Noncore customers at SoCalGas consist primarily of electric generation, wholesale, and large commercial and industrial customers. A portion of SoCalGas’ noncore customers are non-end-users. SoCalGas’ non-end-users, which include wholesale customers consisting primarily

of other utilities, including SDG&E, or municipally owned natural gas distribution systems. Noncore customers at SDG&E consist primarily of electric generation and large commercial customers.

Noncore customers are responsible for the procurement ofprocuring their natural gas requirements, as the regulatory framework does not allow usSoCalGas and SDG&E to recover the cost of natural gas procured and delivered to noncore customers.

Demand for natural gas largely depends on the health and expansion of the Southern California economy, prices of alternative energy products, consumer preference, environmental regulations, legislation, California’s energy policy supporting increased electrification and renewable power generation, and the effectiveness of energy efficiency programs. Other external factors such as weather, the price of, electricity, the usedemand for, and supply sources of hydroelectric power,electricity, the use of and further development of renewable energy resources and energy storage, development of new natural gas supply sources, demand for natural gas outside California, and general economic conditions can also result in significant shifts in market price, which may in turn impact demand.

One of the larger sources for natural gas demand is electric generation. Natural gas-fired electric generation within Southern California (and demand for natural gas supplied to such plants) competes with electric power generated throughout the western U.S. Natural gas transported for electric generating plant customers may be affected by the overall demand for electricity, growth in self-generation from rooftop solar, the addition of more efficient gas technologies, new energy efficiency initiatives, and the extent thatdegree to which regulatory changes in electric transmission infrastructure investment divert electric generation from the California

The natural gas distribution business is seasonal,subject to seasonality, and cash provided fromby operating activities generally is greater during and immediately following the winter heating months. As is prevalent in the industry, but subject to current regulatory limitations, SoCalGas usuallytypically injects natural gas into storage during the summer months (Aprilof April through October), which reduces cash provided by operating activities during this period,October, and usually withdraws natural gas from storage during the winter months (Novemberof November through March), which increases cash provided by operating activities, when customer demand is higher.March.

Certain ring-fencing measures, existing governance mechanisms and commitments, which we describe in “Item“Part I – Item 1A. Risk Factors,” remainare in effect following the Merger and are intended to enhance Oncor Holdings’ and Oncor’s separateness from their owners and to mitigate the risk that these entities would be negatively impacted by the bankruptcy of, or other adverse financial developments affecting, their owners. Sempra Energy does not control Oncor Holdings or Oncor, and the ring-fencing measures, governance mechanisms and commitments limit our ability to direct the management, policies and operations of Oncor Holdings and Oncor, including the deployment or disposition of their assets, declarations of dividends, strategic planning and other important corporate issues and actions. These limitations includeactions, including limited representation on the Oncor Holdings and Oncor boards of directors, asdirectors. Because Oncor Holdings and Oncor will continue to have a majority of independent directors. Thus, Oncor Holdings and Oncor will continue to beare managed independently (i.e., ring-fenced). As such,, we account for our 100% ownership interest in Oncor Holdings as an equity method investment. See Note 6 of the Notes to Consolidated Financial Statements for information about our equity method investment in Oncor Holdings.

At December 31, 2019,2021, Oncor’s transmission system included approximately 17,79918,249 circuit miles of transmission lines, 349a total of 1,174 transmission stations and 775 distribution substations, which are interconnectedand interconnection to 100130 third-party generation facilities totaling 40,68745,403 MW.

Transmission revenues are provided under tariffs approved by either the PUCT or, to a small degree related to limited interconnection to other markets, the FERC. Network transmission revenues compensate Oncor for delivery of electricity over transmission facilities operating at 60 kV and above. Other services offered by Oncor through its transmission business include system impact studies, facilities studies, transformation service and maintenance of transformer equipment, substations and transmission lines owned by other parties.

Oncor’s distribution system included more than 3.63.8 million points of delivery at December 31, 20192021 and consisted of approximately 121,747122,441 miles of overhead lines and underground lines.

Distribution revenues from residential and small business users are based on actual monthly consumption (kWh) and depending on size and annual load factor,distribution revenues from large commercial and industrial users are based on, depending on size and annual load factor, either on actual monthly demand (kW) or the greater of actual monthly demand (kW) or 80% of peak monthly demand during the prior eleven months.

Oncor’s revenues and results of operations are subject to seasonality, weather conditions and other electricity usage drivers, with revenues being highest in the summer.

Sharyland Utilities is a regulated electric transmission utility that as of December 31, 2019, owns and operates, at December 31, 2021, approximately 6563 miles of electric transmission lines in south Texas, including a direct current line connecting Mexico and assets in McAllen, Texas. Sharyland Utilities is responsible for providing safe, reliable and efficient transmission and substation services and investing to support infrastructure needs throughout the ERCOT grid,in its service territory, which we discuss below in “Regulation – Utility Regulation – ERCOT Market.” Transmission revenues are provided under tariffs approved by the PUCT.

Our Sempra MexicoInfrastructure segment includes the operating companies of our subsidiary, IEnova,SI Partners, as well as a holding company and certain holding companiesservices companies. SI Partners is included within our Sempra Infrastructure reportable segment, but is not the same in its entirety as the reportable segment. Sempra Infrastructure develops, builds, operates and risk management activities. IEnova develops, owns and operates, or holds interestsinvests in energy infrastructure to help enable the energy transition in MexicoNorth American markets and globally.

Sempra Infrastructure owned an 80% interest in SI Partners at December 31, 2021, with the remaining 20% interest owned by KKR upon completion of its purchase of a NCI in SI Partners on October 1, 2021. On December 21, 2021, Sempra entered into a purchase and sale agreement with ADIA, pursuant to which ADIA agreed to acquire a 10% NCI in SI Partners. The consummation of the ADIA transaction is subject to the receipt of certain regulatory and third-party approvals, and other customary closing conditions. Following the closing of the ADIA transaction, Sempra, KKR and ADIA would directly or

indirectly own 70%, 20%, and 10%, respectively, of the outstanding Class A Units of SI Partners. SI Partners has two key energy markets: gasauthorized classes of limited partnership interests designated as “Class A Units” (which are common voting units) and power. IEnova’s gas business offers pipeline services for natural gas, LPG“Sole Risk Interests” (which are only owned by Sempra, are non-voting and ethane,are not considered in the calculation of each limited partner’s respective ownership interests, subject to certain restrictions). We discuss KKR’s purchase and ADIA’s pending purchase of NCI in SI Partners, as well as storage forSI Partners’ limited partnership agreement that governs the partners’ respective rights and obligations in respect of their ownership interests in SI Partners in Note 1 of the Notes to Consolidated Financial Statements.

SI Partners held a 100% ownership interest in Sempra LNG Holding, LP and a 99.9% ownership interest in IEnova at December 31, 2021, following completion of the exchange offer and cash tender offer to acquire the publicly owned shares of IEnova, which we discuss in Note 1 of the Notes to Consolidated Financial Statements. SI Partners simplifies Sempra’s ownership and management of its non-utility, energy infrastructure assets in North America by consolidating them under a single platform. These assets include LNG and natural gas infrastructure in the U.S. and Mexico, and renewable energy, LPG and distribution of natural gas. Currently, IEnova is constructing marine and land terminals for the receipt, storage and delivery of liquid fuels. In its power business, IEnova operates a natural-gas-fired combined-cycle plant and wind and solar power generation facilities, and is constructing additional wind and solar power generation facilities.

At December 31, 2021, Sempra Infrastructure owned or held interests in the following assets:

positioned to supply the Atlantic and Pacific markets. Cameron LNG JV Phase 1 achieved commercial operations of Train 1, Train 2 and Train 3 in August 2019, our pipeline assets in Mexico had designFebruary 2020 and August 2020, respectively. The three liquefaction trains have a combined nameplate capacity of 13.9 Mtpa of LNG with an export capacity of 12 Mtpa of LNG, or approximately 16,501 MMcf per day1.7 Bcf of natural gas 204 MMcf per dayday. Cameron LNG JV has 20-year liquefaction and regasification tolling capacity agreements in place with affiliates of ethane gas, 106,000 barrels per dayTotalEnergies SE, Mitsubishi Corporation and Mitsui & Co., Ltd., which collectively subscribe for the full nameplate capacity of ethane liquid, 34,000 barrels per day of LPG transmission and 80,000 barrels of LPG storage.

The ECA Regas Facility generates revenues from reservation and usagefirm storage service fees under terminal capacityfirm storage service agreements and nitrogen injection service agreements with Shell Mexico and Gazprom expiringthat expire in 2028, thatwhich permit them together, to collectively use one-half50% of the terminal’s capacity.capacity, with the remaining 50% of the capacity available for Sempra Infrastructure’s use. Shell Mexico and Gazprom have commenced binding arbitration to terminate these agreements and seek other relief. The land on which the ECA Regas Facility and the proposed ECA LNG liquefaction projects is situated as well as land adjacent to those properties are the subject of litigation. We discuss the ECA Regas Facility arbitration and land litigation in Note 16 of the Notes to Consolidated Financial Statements and “Part I – Item 1A. Risk Factors.”

Sempra LNG has an agreement with Sempra Mexico to supply LNG toInfrastructure uses its 50% capacity at the ECA Regas Facility to satisfy its obligation under an LNG Regasification facility. In connection with Sempra LNG’ssale and purchase agreement with Tangguh PSC through 2029, which we discuss below, and ECA LNG Phase 1 will be the sole user of this capacity thereafter.

Sempra Infrastructure purchases, transports and sells natural gas, and has customers in both the U.S. and Mexico, including the CFE. Sempra Infrastructure may also purchase natural gas from other Sempra LNG’s marketing operations.affiliates. Natural gas purchases and transportation arrangements are substantially backed by long-term, U.S. dollar-based contracts for the sale of natural gas to third parties (both U.S. sourced and derived from imported LNG), LNG offtake and natural gas storage and pipeline capacity.

ECA LNG Phase 1 has definitive 20-year LNG sale and purchase agreementagreements with Tangguh PSC specifiesan affiliate of TotalEnergies SE for approximately 1.7 Mtpa of LNG and Mitsui & Co., Ltd. for approximately 0.8 Mtpa of LNG.

The construction of the ECA LNG Phase 1 project is subject to numerous risks and uncertainties. For a numberdiscussion of cargoesthese risks and uncertainties, see “Part I – Item 1A. Risk Factors” and “Part II – Item 7. MD&A – Capital Resources and Liquidity – Sempra Infrastructure.”

No final investment decision has been significantly lower thanreached for any of these potential projects. The development of these projects is subject to numerous risks and uncertainties. For a discussion of these proposed projects and their risks, see “Part I – Item 1A. Risk Factors” and “Part II – Item 7. MD&A – Capital Resources and Liquidity – Sempra Infrastructure.”

Additionally, our Cameron LNG JV co-owners and customers compete globally to market and sell LNG to end users, including gas and electric utilities located in LNG-importing countries around the world. By providing liquefaction services, Cameron LNG JV and future LNG export development projects compete indirectly with liquefaction projects currently operating and those under development in the agreement. As a result, Sempraglobal LNG is contractually requiredmarket. In addition to make monthly indemnity payments to Sempra Mexico for failure to deliver the contracted LNG.U.S., these competitors are located in the Middle East, Southeast Asia, Africa, South America, Australia and Europe.

The LNG regasification business is impacted by worldwide LNG market prices. High LNG prices in markets outside the market in which Sempra Mexico’sInfrastructure’s ECA LNG Regasification facilityRegas Facility operates have resulted and could continue to result in lower than expectedlower-than-expected deliveries of LNG cargoes to the ECA LNG Regasification facility,Regas Facility, which could increase costs if Sempra MexicoInfrastructure is instead required to obtain LNG in the open market at prevailing prices. Any inability to obtain expected LNG cargoes could also impact Sempra Mexico’sInfrastructure’s ability to maintain the minimum level of LNG required to keep the ECA LNG Regasification facilityRegas Facility in operation at the proper temperature. Prices in international LNG markets through which Sempra MexicoInfrastructure must purchase natural gas to meet its contractual obligations to deliver natural gas to customers may also affect how Sempra Mexico’s LNG marketing operations,Infrastructure optimizes its assets and supply, which could have an adverse impact on its earnings, but may be mitigated in part by the indemnity payments discussed above.earnings.

Sempra Mexico’s LNG marketing operations sellInfrastructure’s Energy Networks business line is comprised of a natural gas totransportation and distribution network.

Sempra Infrastructure owns a 40-mile natural gas viapipeline in south Louisiana, the Cameron Interstate Pipeline, which links the Cameron LNG JV Phase 1 facility in Cameron Parish in Louisiana, to five interstate pipelines that offer access to major feed gas supply basins in Texas and the customers at the agreed upon delivery points,northeast, midcontinent and in the casesoutheast regions of the CFE, at its thermoelectric power plants.U.S. The majority of transportation capacity on the Cameron Interstate Pipeline is under long-term transportation service agreements with shippers for delivery to Cameron LNG JV Phase 1.

At December 31, 2021, Sempra Infrastructure had marine and inland terminals under development and construction, with a projected storage capacity of approximately 5 million barrels. We expect the Topolobampo marine terminal to performreach commercial operations in the first half of 2022. The inland terminal in the vicinity of Puebla has been temporarily shut down during the pendency of an industrywide investigation initiated by the CRE to enforce Mexico’s fuel procurement laws and Ecogas is unableits storage permit may be at risk due to obtain suppliesa separate CRE administrative proceeding. We discuss this investigation and other risks and uncertainties related to the construction of natural gas from alternate sources, Ecogas could lose customersthese projects in “Part I – Item 1A. Risk Factors” and sales volume“Part II – Item 7. MD&A – Capital Resources and could also be exposed to commodity price riskLiquidity – Sempra Infrastructure.”

Sempra Infrastructure’s Clean Power Businessbusiness line consists of a renewable energy infrastructure portfolio and a natural gas-fired power plant in Mexico.

Generation from Sempra Mexico’sInfrastructure’s renewable energy assets is susceptible to fluctuations in naturally occurring conditions such as wind, inclement weather and hours of sunlight. Because Sempra MexicoInfrastructure sells power that it generates at its Energía Sierra JuárezESJ wind power generation facility into California, Sempra Mexico’sInfrastructure’s future performance and the demand for renewable energy may be impacted by U.S. state mandated requirements to deliver a portion of total energy load from renewable energy sources. The rules governing these requirements in California are generally known as the RPS Program. In California, certification of a generation project by the CEC as an ERR allows the purchase of output from such generation facility to be counted towards fulfillment of the RPS Program requirements, if such purchase meets the provisions of SB X1-2.X1-2, the California Renewable Energy Resources Act. The RPS Program may affect the demand for output from renewablesrenewable energy projects developed by Sempra Mexico,Infrastructure, particularly the demand from California’s utilities. We expect to receiveThe first phase of ESJ, a wind power generation facility that delivers energy into California, has been certified by the CEC and is in compliance with the RPS Program as of December 31, 2021. Sempra Infrastructure is pursuing ERR certification for all our Sempra Mexico renewable facilities providing power to California as they become operational.the second phase of ESJ.

In January 2019,We completed the sales of our board of directors approved a plan to sellequity interests in our Peruvian businesses in April 2020 and our Chilean businesses in June 2020. These South American businesses which previously constitutedincluded our Sempra South American Utilities segment. These businesses include ourformer 100% interest in Chilquinta Energía (an electric distribution utility in Chile,Chile), our former 83.6% interest in Luz del Sur (an electric distribution utility in PeruPeru) and our former interests in two energy-services companies, Tecnored and Tecsur, which provide electric construction and infrastructure services to Chilquinta Energía and Luz del Sur, respectively, as well as third parties. These businesses and certain activities associated with these businesses are presented as discontinued operations as the sales represent a strategic shift that will have a major effect on our operations and financial results. We do not plan to have significant continuing involvement in or be able to exercise significant influence on the operating or financial policies of these operations after they are sold.

SDG&E and SoCalGas are principally regulated at the state level by the CPUC, CEC and CARB.CARB.

The CPUC also oversees and regulates other energy-related products and services, including solar and wind energy, bioenergy, alternative energy storage and other forms of renewable energy. In addition, the CPUC’s safety and enforcement role includes inspections, investigations and penalty and citation processes for safety and other violations.

The CEC conducts a 20-year forecast of available supplies and prices for every market sector that consumes natural gas in California. This forecast includes resource evaluation, pipeline capacity needs, natural gas demand and wellhead prices, and costs of transportation and distribution. This analysis is one of many resource materials used to support the California Utilities’SDG&E’s and SoCalGas’ long-term investment decisions.

California requires certain of its electric retail sellers, including SDG&E, to deliver a significant percentage of their retail energy sales from renewable energy sources. The rules governing this requirement, administered by both the CPUC and the CEC, are generally known as the RPS Program.

AB 32, the California Global Warming Solutions Act of 2006, assigns responsibility to CARB for monitoring and establishing policies for reducing GHG emissions. The law requires CARB to develop and adopt a comprehensive plan for achieving real, quantifiable and cost-effective GHG emissionemissions reductions, including a statewide GHG emissions cap, mandatory reporting rules, and regulatory and market mechanisms to achieve reductions of GHG emissions. CARB is a department within the California Environmental Protection Agency, an organization that reports directly to the Governor’s Office. Sempra LNG and Sempra Mexico areInfrastructure is also subject to the rules and regulations of CARB.

The operation and maintenance of SoCalGas’ natural gas storage facilities are regulated by CalGEM and the CPUC, as well as various other state and local agencies.

Oncor’s and Sharyland Utilities’ transmission and distribution rates are regulated at the state and city level by the PUCT and, in the case of Oncor, at the city level by certain cities. The PUCT has original jurisdiction over wholesale transmission rates and distributionservices and retail rates and services in unincorporated areas and in those municipalities that have ceded original jurisdiction to the PUCT, and has exclusive appellate jurisdiction to review the retail rate and service orders and ordinances of municipalities. Generally, the Texas PURA prohibits the collection of any rates or charges by a public utility (as defined by PURA) that do not have the prior approval of the appropriate regulatory authority (i.e., the PUCT or the municipality with original jurisdiction).

At the state level, PURA requires utility owners or operators of electric transmission facilities to provide open-access wholesale transmission services to third parties at rates and terms that are nondiscriminatory and comparable to the rates and terms of the utility’s own use of its system. The PUCT has adopted rules implementing the state open-access requirements for all utilities that are subject to the PUCT’s jurisdiction over electric transmission services, including Oncor.

The California UtilitiesSDG&E and SoCalGas are also regulated at the federal level by the FERC, the NRC, the EPA, the DOE and the DOT.DOT, and for SDG&E the NRC.

The FERC regulates the California Utilities’SDG&E’s and SoCalGas’ interstate sale and transportation of natural gas and the application of the uniform systems of accounts. In the case of SDG&E, thegas. The FERC also regulates theSDG&E’s transmission and wholesale sales of electricity in interstate commerce, transmission access, rates of return on transmission investment, rates of depreciation, and electric rates involving sales for resale.resale and the application of the uniform system of accounts. The U.S. Energy Policy Act governs procedures for requests for electric transmission service. The California IOUs’ electric transmission facilities are under the operational control of the California ISO. As member utilities, Oncor and Sharyland Utilities operate within the ERCOT market, which we discuss below. To a small degree related to limited interconnections to other markets, Oncor’s electric transmission revenues are provided under tariffs approved by the FERC.

The NRC oversees the licensing, construction, operation and decommissioning of nuclear facilities in the U.S., including SONGS, in which SDG&E owns a 20% interest and which was permanently retired in 2013. The NRC and various state regulations require extensive review of the safety, radiological and environmental aspects of these facilities. We provide further discussion of SONGS matters, including the closure and pending decommissioning of the facility, in Note 15 of the Notes to Consolidated Financial Statements.

The EPA implements federal laws to protect human health and the environment, including federal laws on air quality, water quality, wastewater discharge, solid waste management, and hazardous waste disposal and remediation. The EPA also sets national environmental standards that state and tribal governments implement through their own regulations. The California Utilities,SDG&E, SoCalGas, Oncor and Sharyland Utilities are therefore subject to an interrelated framework of environmental laws and regulations.

The DOT, through PHMSA, has established regulations regarding engineering standards and operating procedures, including procedures intended to manage cybersecurity risks, applicable to the California Utilities’SDG&E’s and SoCalGas’ natural gas transmission and distribution pipelines, as well as natural gas storage facilities. The DOT has certified the CPUC to administer oversight and compliance with these regulations for the entities they regulate in California. See “Other U.S. Regulation” below.

As member utilities, Oncor and Sharyland Utilities operate within the ERCOT market, which represents approximately 90% of the electricity consumption in Texas. ERCOT is the regional reliability coordinating organization for member electricity systems in Texas and the ISO of the interconnected transmission grid for those systems. ERCOT is subject to oversight by the PUCT and the Texas Legislature. ERCOT is responsible for ensuring reliability, adequacy and security of the electric systems, as well as nondiscriminatory access to transmission service by all wholesale market participants, in the ERCOT region. ERCOT’s membership consists of corporate and associate members, including electric cooperatives, municipal power agencies, independent generators, independent power marketers, transmission service providers, distribution services providers, independent retail electric providers and consumers.

The PUCT has primary jurisdiction over the ERCOT market to ensure the adequacy and reliability of power supply across Texas’ main interconnected electric transmission grid. Oncor and Sharyland Utilities, along with other owners of electric transmission and distribution facilities in Texas, assistparticipate with the ERCOT ISO and other member utilities in its operations. Each of these Texas utilities has planning, design, construction, operation and maintenance responsibility for the portion of the transmission grid and for the load-serving substations it owns, primarily within its certificated distribution service area. Each participates with the ERCOT ISO and other ERCOT utilities in obtaining regulatory approvals and planning, designing, constructing and upgrading transmission lines in order to remove any existing

Oncor and Sharyland Utilities are subject to reliability standards adopted and enforced by the Texas Reliability Entity, Inc., an independent organization that develops reliability standards for the ERCOT region and monitors and enforces compliance with the standards of the North American Electric Reliability Corporation, (includingincluding critical infrastructure protection) standardsprotection, and ERCOT protocols.

The SCAQMDSouth Coast Air Quality Management District is the air pollution control agency responsible for regulating stationary sources of air pollution in the South Coast Air Basin in Southern California. The district’s territory covers all of Orange County and the urban portions of Los Angeles, San Bernardino and Riverside counties.

SDG&E has electric franchises with the two counties and the 27 cities in or adjoining its electric service territory, and natural gas franchises with the one county and the 18 cities in its natural gas service territory. These franchises allow SDG&E to locate, operate and maintain facilities for the transmission and distribution of natural gas and/or electricity. Most of the franchises have indefinite lives with no expiration dates. Some of SDG&E’s natural gas and electric franchises have fixed expiration dates that range from 20212028 to 2035, including2035. In June 2021, the City of San Diego which is scheduledapproved ordinances granting to expire in January 2021. The City of San Diego has launchedSDG&E the process to reevaluate SDG&E’s natural gas and electric franchises consistent withfor the terms ofcity. These franchise agreements provide SDG&E the opportunity to serve the City Charter.of San Diego for the next 20 years, consisting of 10-year agreements that will automatically renew for an additional 10 years unless the City Council voids the automatic renewal with a supermajority vote. The agreements went into effect in July 2021.

SoCalGas has natural gas franchises with the 12 counties and the 223 cities in its service territory. These franchises allow SoCalGas to locate, operate and maintain facilities for the transmission and distribution of natural gas. Most of the franchises have indefinite lives with no expiration date. Some franchises have fixed expiration dates, ranging from 20202023 to 2069.2069, including the Los Angeles County franchise, which is scheduled to expire in June 2023.

The FERC regulates certain Sempra LNGInfrastructure assets pursuant to the U.S. Federal Power Act and Natural Gas Act, which provide for FERC jurisdiction over, among other things, sales of wholesale power in interstate commerce, transportation of natural gas in interstate commerce, and siting and permitting of LNG facilities.

The California Utilities, Sempra Infrastructure’s investment in Cameron LNG JV is subject to regulations of the DOE regarding the export of LNG. Sempra Infrastructure’s other potential natural gas liquefaction export projects would, if completed, be subject to similar regulation.

SDG&E and SoCalGas and businesses that Sempra LNGInfrastructure invests in are subject to the DOT rules and regulations regarding pipeline safety. PHMSA, acting through the Office of Pipeline Safety, is responsible for administering the DOT’s national regulatory program to assurehelp ensure the safe transportation of natural gas, petroleum and other hazardous materials by pipelines, including pipelines associated with natural gas storage, and develops regulations and other approaches to risk management to assurehelp ensure safety in design, construction, testing, operation, maintenance and emergency response of pipeline facilities. The California Utilities, Sempra LNGSDG&E, SoCalGas and Sempra MexicoInfrastructure are also subject to regulation by the U.S. Commodity Futures Trading Commission.

Operations and projects in our Sempra MexicoInfrastructure segment are subject to regulation by the CRE, the Mexican Safety, Energy and Environment Agency (Agencia de Seguridad, Energía y Ambiente), SENER, the Mexican SecretaryMinistry of EnergyEnvironment and Natural Resources of Mexico (Secretaría de Energía or SENER)del Medio Ambiente y Recursos Naturales), and other labor and environmental agencies of city, state and federal governments in Mexico. New energy infrastructure projects may also require a favorable opinion from Comisión Federal de Competencia Económica (Mexico’s Competition Commission) in order to be constructed and operated.

Our utilities in California and Texas obtain numerous permits, authorizations and licenses for, as applicable, the transmission and distribution of natural gas and electricity and the operation and construction of related assets, including electric generation and natural gas storage facilities, some of which may require periodic renewal.

Sempra MexicoInfrastructure obtains numerous permits, authorizations and licenses for theirits electric and natural gas distribution, generation and transmission systems from the local governmentgovernments where the service isthese services are provided. The permits for generation, transportation, storage and distribution operations at Sempra MexicoInfrastructure are generally for 30-year terms, with options for renewal under certain regulatory conditions.

Sempra LNGInfrastructure obtains permits, authorizations and licenses for the construction and operation of natural gas storage facilities and pipelines, and in connection with participation in the wholesale electricity market.

Most of the permits and licenses associated with Sempra LNG’sInfrastructure’s construction and operations are for periods generally in alignment with the construction cycle or expected useful life of the asset and in many cases are greater than 20 years.

A CPUC GRC proceeding is designed to set sufficient base rates to allow the California UtilitiesSDG&E and SoCalGas to recover their reasonable forecasted operating costs and to provide the opportunity to realize their authorized rates of return on theirits investment. The proceeding generally establishes the test year revenue requirements, which authorizes how much the California UtilitiesSDG&E and SoCalGas can collect from their customers, and provides for attrition, or annual increases in revenue requirements, for each year following the test year. In January 2020,

We discuss the CPUC implemented a four-year GRC cycle for California IOUs. The California Utilities were directedin Note 4 of the Notes to file a petition for modification to revise their 2019 GRC to add two additional years, resulting in a transitional five-year GRC period (2019-2023).Consolidated Financial Statements.

A CPUC cost of capital proceeding determines a utility’s authorized capital structure and authorized return on rate base, which is a weighted-average of the authorized returns on debt, preferred stockequity and common equity (referred to as return on equity or ROE), weighted on a basis consistent with the authorized capital structure. The authorized return on rate base approved by the CPUC is the rate that the California UtilitiesSDG&E and SoCalGas use to establish customer rates to recover costs to finance investments in CPUC-regulated electric distribution and generation, as well as natural gas distribution, transmission and storage assets.assets, as well as general plant and information technology systems investments to support operations.

A cost of capital proceeding also addresses the CCM, which applies in interim years between cost of capital proceedings and considers changes in the cost of capital based on changes in interest rates based on the applicable 12-month average Moody’s utility bond index. The index applicable to each utility is based on each utility’s credit rating. The CCM was reauthorizedbenchmark rates for SDG&E and SoCalGas are the basis of comparison to determine if future measurement periods “trigger” the CCM. The trigger occurs if the change in the 2020 cost of capital proceeding and will continue through 2022.applicable average Moody’s utility bond index relative to the CCM benchmark is larger than plus or minus 100 bps. The CCM, if triggered, couldwould automatically update the authorized cost of debt based on actual costs and update the authorized ROE upupward or downdownward by one-half of the change indifference between the CCM benchmark and the applicable 12-month average Moody’s utility bond index.index, unless the CPUC accepts a utility’s interim application to have its cost of capital assessed between regular cost of capital proceedings based on an extraordinary or catastrophic event that materially impacts the utility’s cost of capital and affects utilities differently than the market as a whole. SDG&E filed such an interim application in August 2021 due to the ongoing effects of the COVID-19 pandemic.

SDG&E files separately with the FERC for its authorized ROE on FERC-regulated electric transmission operations and assets. The proceeding establishes a ROE and a formulaic rate whereby rates are determined using (1) a base period of historical costs and a forecast of capital investments, and (2) a true-up period, similar to balancing account treatment, that is designed to provide earnings equal to SDG&E’s actual cost of service including its authorized return on investment. SDG&E makes annual information filings with the FERC in December to update rates for the following calendar year. SDG&E may also file for ROE incentives that might apply under FERC rules. SDG&E’s debt-to-equity ratio is set annually based on the actual ratio at the end of each year.

The CPUC applies certain performance-based measures and incentive mechanisms to all California IOUs, under which the California UtilitiesSDG&E and SoCalGas have earnings potential above authorized CPUC base operating margin if they achieve or exceed specific performance and operating goals. Generally, for performance-based awards,measures, if performance is above or below specific benchmarks, the utility is eligible for financial awards or subject to financial penalties.