Q3 2022 Sempra Energy and Oncor Electric Delivery Company LLC Earnings Call

November 3, 2022

Okay.

Good day and welcome to <unk> third quarter earnings call. Today's conference is being recorded at this time I'd like to turn it over to Glenn Donovan. Please go ahead.

Good morning, everyone welcome to <unk> third quarter 2022 earnings call a live webcast of this teleconference and slide presentation are available on our website under the investors section.

Here in San Diego, we have several members of our management team with us today, including.

Jeff Martin Chairman and Chief Executive Officer.

Trevor Mihalik Executive Vice President and Chief Financial Officer.

Kevin Cigar executive Vice President and group President.

Justin Bird Chief Executive Officer of Sempra infrastructure.

Allen Nye Chief Executive of Encore, Peter Wall, Senior Vice President Controller, and Chief Accounting Officer, and other members of our senior management team.

Before starting I would like to remind everyone that we'll be discussing forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.

Actual results may differ materially from those projected in any forward looking statements we make today.

Factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K and 10-Q.

Filled with the SEC.

Earnings per share amounts in our presentation are shown on a diluted basis, and we will be discussing certain non-GAAP financial measures.

Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We also encourage you to review our 10-Q for the quarter ended September 32022.

I'd also like to mention that the forward looking statements contained in this presentation speak only as of today November three 2022, and it's important to note that the company does not assume any obligation to update or revise any of these forward looking statements in the future.

With that please turn to slide four and let me hand, the call over to Jeff.

Thank you Glenn and thank you all for joining us today at <unk>, we're on a mission to build one of the largest and most resilient energy networks in North America today to think about our company's role in the energy markets, particularly against the backdrop of what the International Energy Agency is called the world's first global energy crisis.

We received the supply demand balance for oil and natural gas continues to be disrupted.

<unk> in Ukraine supply chain challenges and reduced investments in traditional forms of energy resources as compared to prior periods are contributing to the global challenge.

Without adequate security of supplies coal is unfortunately, playing a much larger role in the global energy mix today in fact, the combustion of coal is expected to match a record high reached nearly a decade ago and will likely move higher and set a new record next year.

Here in North America energy markets are continuing to expand and become increasingly integrated that is why investing in our modern energy network to support cleaner forms of energy and future economic growth is central to our efforts here at Sempra.

Also developing new large scale export facilities, so that European and Asian buyers of natural gas can diversify and improve the security of their energy supplies, while backing coal out of their supply chain and the production of electricity.

We're focused on expanding and modernizing north America's energy grids separate three growth platforms Central California separate taxes and separate infrastructure are strategically positioned to help serve the growing needs of consumers in North America and around the world, while staying at the forefront of innovation and integrating cleaner forms.

<unk> energy.

<unk> value proposition comes to life through its commitment to growing a stronger and more valuable business. One that serves the long term interest of our customers and owners.

Trevor will take us through each segment in detail, but first I'd like to highlight the strategic focus at each of our growth platforms as central California, We're continuing to innovate and invest in new technologies that are aligned with the state's clean energy goals and focus on safety innovation and grid resiliency is.

Separate Texas Oncor has advanced in its base rate review.

Which supports the continued expansion and modernization of its grid in Texas with a focus on load growth grid reliability and the integration of renewables.

We expect these developments will lead to substantially higher capital spending in future periods.

And at separate infrastructure, we're making significant progress aimed at providing cleaner and more secure energy to our customers. Specifically, we're excited to announce that work expecting to take a final investment decision on port Arthur LNG phase one in the first quarter of next year.

Shifting to the results for the quarter earlier. This morning, we reported third quarter 2022 adjusted earnings per share of $1 97.

And year to date 2022 adjusted earnings per share of $6 87.

Based on the strength of these results we are raising our full year 2022, adjusted EPS guidance range to $8 78.

To $9 per share. We're also affirming our existing full year 2023, EPS guidance range. Please turn to the next slide.

In August Congress passed the inflation reduction Act. This is largely viewed as one of the most significant clean energy bills in U S history, and incentivize substantial investments in key areas that are expected to reduce carbon in society.

This legislation also builds on the infrastructure investment and jobs Act that passed last summer with a focus on modernizing infrastructure across the country.

While some of the details in the IRI are still being finalized we believe that our growth platforms are well positioned to benefit from the positive tailwind created by this legislation.

For example, a common component of these bills as the focus on electrification and.

In our California, and Texas platforms are located in high growth markets, where the integration of renewables and the electrification of transportation continue to be major drivers of transmission and distribution infrastructure needs.

Additionally, socal gas continues to advance its position as a leader in the clean fuel space. The federal bills I mentioned outlined key spending priorities such as carbon capture hydrogen and biogas. This is important as you consider the different innovative pilot Socal gas has underway that are focused on the commercialization.

<unk> of new and cleaner fuels.

Further socal gas is integrating renewable natural gas or RMG across its pipeline system today.

As a reminder, earlier this year the CPUC issued a decision establishing a statewide RMG procurement standard, which together with the federal bills supports investment and continued de carbonization of Socal gas is T&D system.

And finally, it simpler infrastructure, we have identified opportunities for further innovation and carbon capture and sequestration such as they hackberry project and other investments to further decarbonize, our facilities and support our goal of delivering cleaner energy to our customers.

In summary, we believe our platforms are well positioned to advance the critical priorities detailed in the legislation.

Please turn to the next slide where I'll turn the call over to Trevor to provide several business updates for the quarter.

Thanks, Jeff.

Beginning with Sempra, California for <unk> 2022 cost of capital a proposed decision and an alternative proposed decision were issued on September 30th and the CPUC is expected to vote out a decision today.

We are pleased that both proposed decisions confirm that extraordinary circumstances, we're present.

And the cost of capital mechanism for 2022 should be suspended.

If the proposed decision is approved a second phase to determine <unk> rate of return for 2022 will be held.

If the alternative proposed decision is approved the 2022 cost of capital rates of return will be preserved and the proceeding will be closed.

Next I'd like to remind everyone that both <unk> and Socal gas filed their cost of capital applications with the CPUC in the spring to update their respective authorized rates of return for 2023 through 2025.

As part of this both utilities updated their respective cost of debt requests as recently as September .

We continue to expect a final decision on these filings by year end.

Also both <unk> and Socal gas jointly filed a CPUC application with southwest gas to conduct hydrogen blending demonstration projects designed to further enhance grid resiliency and help California reach its goal of carbon neutrality by 2045.

Each project builds upon years of research to identify ways to scale hydrogen blending to help drive de carbonization across multiple industries.

These innovative projects are examples of our strong alignment with policymakers at both the state and federal level and are expected to provide incremental opportunities to invest in new sustainable forms of energy.

Separately.

Socal gas recently made significant progress to substantially resolve the remaining legal and regulatory matters related to the 2015 Aliso Canyon natural gas storage facility Lee.

In October we announced that we settled with the fifth and final property developer and executed a settlement agreement with the CPUC safety and enforcement Division and public advocates office to resolve all aspects of the leeco yi.

The settlement with regulators is pending CPUC approval.

Finalizing lease settlements is a critical step in this matters resolution and we recorded a $101 million after tax charge in the third quarter.

Please refer to our SEC filings for additional details and descriptions of the remaining open issues.

Shifting to Sempra, Texas.

<unk> continues to experience tremendous growth during.

During the third quarter of 2022 Encore added another 14000, new premises to its system and continues to anticipate maintaining approximately 2% average annual long term premise growth, which is significantly above the national average also during the third quarter Encore added approximately 65, new trans.

Mission interconnection requests towards Q.

Which at this pace, which set a company record for new annual interconnection requests.

This highlights the continued growing demand and penetration of renewables in its service territory.

Last month Oncor management reviewed with its board.

Need to grow and expand its transmission and distribution system with the expectation of substantially higher levels of capital spending.

We expect to provide you with a more fulsome update on the five year capital plan in the first quarter.

Additionally, oncor expects a final order regarding its pending rate case by the end of the first quarter of 2023 with new rates going into effect thereafter.

At Sempra infrastructure, we've made substantial progress moving port Arthur LNG phase one closer to <unk>.

And Justin will speak to those details in just a moment.

At both Sempra and Sempra infrastructure, we've stated the importance of advancing projects with a robust risk adjusted return as well as maintaining a strong balance sheet and investment grade credit ratings to.

To that end, we've been working diligently on an optimal financing and capital structure plan for port Arthur to align with those principles that would allow us to enhance our risk adjusted returns all while maintaining or exceeding our credit metrics.

We're currently advancing two efforts to raise capital to fund the construction of the first phase of Port Arthur LNG.

All with a view towards securing lower cost of capital for the project.

The first work stream targets issuing debt at the project level and we expect to kick this off in the coming weeks and.

In addition, we have already launched the second work stream, which aims to raise capital by selling project level equity to one or more investors.

These work streams are expected to.

Full forward a portion of the projects NPV to reduce our capital contribution.

Maintain sempra and Sempra infrastructures strong credit profile, while also highlighting notable value to our owners.

Next I will turn the call over to Justin to discuss additional updates at Sempra infrastructure.

Thanks, Trevor let me start at Cameron LNG, where operations for phase one are going very well with production levels exceeding expectations.

In addition, both the proposed phase II expansion project and related Debottlenecking activities of the existing three trains are moving along as planned.

At train for FEMSA, the U S pipeline regulator recently voiced support for our pending FERC permit.

We continue to work through the competitive feed process, which we anticipate will be completed in the summer of 2023 and expect to take FID. Shortly thereafter.

So we expect a full debottlenecking efforts to be complete before commercial operations commence at train four.

Next I want to provide you an update.

On progress at our LNG Phase one project, where we recently began erecting the first structural steel onsite overall construction is slightly behind our original plan, but the project is on budget and we continue to expect to commence commercial operations in the middle of 2025.

At our energy networks business, we're pleased to announce that our Pueblo fuels terminal outside of Mexico City has started commercial operations. This.

This terminal is integrated with our Veracruz port and Viator in Mexico terminals and combined creates our refined fuels terminal network that we collectively refer to as <unk> central.

This network provides for the end to end transportation of fuel by ship to the port of Veracruz, and then into the Mexico City market by both rail and truck.

The facilities are supported by a 20 year contract with Valero for the entire offtake.

Finally at our clean power business, we signed a 20 year power purchase agreement for Cimarron, a 300 megawatt wind development project with Silicon Valley power, a double a rated entity to deliver electricity into the California power market.

The site is adjacent to our <unk>, whereas phase one and two wind facilities and directly ties into our power transmission lines at the California, Mexico border. We plan to proceed.

Pending receipt of final permits and completion of the engineering and design work.

With that let's move on to the Port Arthur LNG Phase one update please turn to the next slide.

As Trevor mentioned, we have had an exciting quarter port Arthur LNG continues to draw strong market demand and its advanced permitting and development status makes it an increasingly attractive project.

As I've mentioned there are three key work streams associated with reaching FID.

And we are optimistic that we can achieve each of these by the first quarter of next year.

First we completed the EPC refresh and signed a $10 5 billion contract that is dependent on reaching FID.

This fixed price turnkey contract creates critical momentum for the project.

Efforts to date for the project include preparing the site for an efficient construction process moving a major state highway building dock capacity for the construction materials and conducting robust soils test across the entire site.

Second as Trevor detailed above the financing work streams are underway.

Finally on the marketing front things continue to progress at a rapid pace and we are in advanced discussions with several potential customers for long term offtake contracts and are confident in our ability to convert existing HOA into Sba's base.

Based on these discussions we have more than enough interest to be in a position to take FID in the first quarter of 2023.

Please turn to the next slide.

The interest in Port Arthur LNG exceeds the volumes of phase one and we are actively marketing and expansion that could include a combination of trains three <unk> for the.

The takeaway here is that there are scenarios in which we are oversubscribed for the port Arthur LNG Phase one development project and look forward to advancing ongoing offtake discussions for a potential expansion phase.

We will provide a further update on port Arthur on our fourth quarter earnings call.

Please turn to the next slide where Trevor will review <unk> financial results for the quarter.

Thanks, Justin.

Turning to <unk> financial results.

Earlier. This morning, we reported third quarter 2020 to GAAP earnings of $485 million or $1 53 per share.

This compares to third quarter, 2021, GAAP losses of $648 million or $2 <unk> per share.

On an adjusted basis third quarter 2022 earnings were $622 million.

One dollar at <unk> 97 per share.

This compares to our third quarter 2021, adjusted earnings of $545 million or $1 70 per share.

On a year to date basis, 2022, GAAP earnings were $1.656 billion or $5 23 per share.

This compares to year to date, 2021, GAAP earnings of $650 million or $2 <unk> per share.

Adjusted year to date 2022 earnings were $2 billion $172 million or $6 87 per share.

Which compares to our year to date 2021, adjusted earnings of $1 billion $949 million or $6 27 per share.

As a reminder, this is the first quarter, where we will reflect the full impact of the minority interest sales and Sempra infrastructure partners, which closed with KKR in October of 2021, and <unk> in June of 2022.

In addition to improving our year over year results, we raised over $5 billion of capital through our minority interest sales a portion of which was used to lower parent debt and reduce our interest rate exposure outside of our utilities.

Taken together, our strong financial results and growing adjusted earnings demonstrate the strength of our underlying business.

Please turn to the next slide.

The variance in the third quarter 2022, adjusted earnings compared to the same period last year can be summarized by the following.

$79 million of higher earnings at Sempra, California from income tax benefits from flow through items and CPUC base operating margin net of operating expenses at <unk> and Socal gas.

$50 million of higher equity earnings at Sempra, Texas utilities.

<unk> due to higher consumption and customer growth and rate updates to reflect increases in invested capital.

$74 million of lower earnings at Sempra infrastructure attributable to higher Noncontrolling interest net of operating earnings and $22 million of lower losses at parent and other.

Please turn to the next slide.

We are pleased with our performance this quarter, which has generated a lot of momentum across our platforms for the remainder of the year.

We look forward to progressing the cost of capital and general rate case proceedings at Sempra, California, and the resolution of the base rate case at encore.

While continuing development progress at Sempra infrastructure.

We view these work streams as opportunities to continue to drive significant growth and shareholder value into 2023 and beyond.

And with that this concludes our prepared remarks, and I will now stop and we can open the lineup to take some of your questions.

Thank you. This concludes the prepared remarks, we will now open the line to take your questions. If you would like to ask a question. Please signal by pressing star one on your telephone keypad.

Please make sure your mute function is turned off to allow your signal to reach our equipment.

We will pause for just a moment to allow everyone to signal for questions.

And we will take our first question from Shar <unk> from Guggenheim Partners. Your line is open.

Hey, Jonathan Trevor.

Sure.

Good morning.

Jeff Good news on Port Arthur one for sure.

On Port Arthur to as your Slide noted you guys have some offtake already locked in and media I think it was reported on more agreements with Williams are those sort of an advanced stages as well and in terms of.

Formation, just given bechtel has been on site for Port Arthur is there an advanced understanding of the EPC process and available EPC capacity to do the work on phase two in sequential order.

Yeah look it's a great set of questions you have there I would refer again the audience to slide eight of our presentation is that it kind of reflects what you're just describing which is as you look forward to phase III, which has the opportunity to deliver both trains three and trained for it reflects the fact that we've got volumes currently.

That Cameron.

Could be moved over to support phase III and it also reflects roughly 3 million tonnes per annum of.

Capacity Thats in advanced negotiations currently but this goes back to something we've talked about a lot in the past, which is we really think there is a strategic advantage at port Arthur So remember, we've got 3000 acres of furniture in the waterway theyre roughly three miles of access to water.

Also what's very attractive to customers as the potential scale of the development opportunity Youll recall that this has the opportunity to be up to eight trains if you ever got that far and obviously, that's well into the future. It would be the largest export project in the western hemisphere. So it really has the ability to scale quite nicely and to your point.

<unk> probably has.

The best reputation for delivering projects on time and on budget, they've got great craft in the Gulf Coast region. They have spent a significant amount of time on this site and thats been a real big Lynchpin does.

Confident in RFID opportunity for phase, one, which we'll talk about hopefully in Q1, but it also has a real competitive advantage for our phase III. So when you think about the considerations I just outlined there is no question that we're receiving a lot of strong inbound interest on phase II and I would tell you something else because we make <unk>.

Yes, shar towards getting to ESI decision on phase one it actually increases the interest and likelihood that phase two will go forward. So we said this in our prepared remarks, but by the time, we get to our February call. We are hopeful to provide a lot more detail on our progress on phase III.

Perfect and Jeff the Bechtel has the EPC capacity to continue on phase II.

Look I will tell you that they are one of our finalists on the Cameron expansion project, obviously, they've got opportunities to work on a variety of projects around the world, but from our perspective, we're really pleased to have been part of phase one and there is no question that the most ideal situation for our company is to not allow your EPC contractor to demobilize.

The ability to go from one project to the next could be a real competitive advantage for port Arthur.

Okay, Great and then Jeff just moving on to the guidance assumptions I guess, what are some of the inputs that youre thinking about as Youre reaffirming 'twenty three, especially as we're thinking about bridging from 'twenty. Two there is clearly a strong base in 2010, but can we get your thoughts on some of the.

C that is building for 'twenty, three and maybe how youre seeing some of the offsets O&M and interest rates get incorporated into the 'twenty three assumptions. Thank you.

Yes, let me give you my perspective on this and I would tell you. This goes back to something that we as a management team have discussed switches, we're really really happy with the progress we're making across all three of our growth platforms. I think is a true competitive advantage for any company always comes down to the depth of your talent and leadership and how Chris Your strategy is and I think youre seeing both of them.

Both of those factors show up in our results. Let me give you a little bit of perspective before I turn to 2023, when you think back to where we were in 2021, we launched 2021 with an estimated range of $7 50 to $8 10, and short you may recall that we actually delivered.

$8 43 last year, and we did not change our 2022 guidance, we kept our 2022 guidance.

810 to 870 and now we're in a great situation, where we're updating that guidance to $8 70 to $9 or a midpoint of roughly $8 85. So now as you look forward into 2023, our guidance, which we published in February is unchanged at $8 60.

To $8 to $9 20.

Roughly a midpoint of $8 90, so very similar circumstance that we're walking into next year in terms of how we found ourselves earlier this year, but I think the key for us as well.

We are very excited about the strength of all three growth platforms certainly the progress, we're making on port Arthur Phase, one and particularly Cameron expansion causes us to have a pretty bullish view of the future.

And in our prepared remarks, we reaffirmed our guidance for next year and it was full visibility to our 2022 financial results. We will be excited to take this up again on our February call.

Got it terrific execution, guys seeing about a week.

Thanks, a lot short.

Thank you.

One moment for our next question please.

And our next question will come from Ross Sandler with UBS. Your line is open.

Morning Ross.

Yes.

So maybe following up on <unk> question, a little bit here.

There's certainly some.

Headwinds I can think about into 2003 from 22, one you've had.

Good weather in Texas this year.

There is some excess marketing revenue on Cameron.

From some excess volumes in the second quarter, and then obviously there'll be a full year at the BRD Stakes or there was some of the drivers that are sort of.

As you Contextualize 23 against your 6% to 8% long term growth guidance that you've given previously that youre thinking about and then as you think about 'twenty three once you get to 'twenty. Two I think you said in your answer cap youre going to work.

Into that 23 number you can provide a little bit of an update in February call yes.

Yes.

Might be helpful. Ralph Let me just comment in a potentially in terms of how I think about the long term growth opportunity at Sempra and I'm going to pass it to Trevor and maybe Trevor you can walk through some of the drivers for the quarter because I think that informs our continued bullish view for next year, but I was thinking about this wrong that earlier this year, we began to execute on that.

36 billion five year capital program, and I think as you've seen us update across the year, we've been making great progress, we're still very comfortable with our 6% to 8% long term EPS growth rate and I think as you've heard us describe a new set of opportunities that are in front of us I think we're going to be working really hard to see if we can beat.

Those numbers in the future and I look back at our growth rate on an earnings per share basis now its a new midpoint of 80 to 85.

Since the ended the year in 2017 that would allow us to grow our earnings per share at 11% CAGR. So I think we've got the right mix. We've got the right strategy, we have really sharp execution of current across the business and thats showing up in the quarter and maybe Trevor you could talk about some of the puts and takes in the quarter and how that makes you think about 2023, yes sure.

Thanks, Jeff.

Yeah, Ross as Jeff said, there were some puts or takes in the quarter, but underlying that I think.

We really did have a strong operational performance across all three platforms and so what I wanted to do is just maybe give you a little more color and clarity around what we presented on page 10.

First on the Cal utilities, there was $36 million of higher CPUC base operating margin and that was roughly split evenly between the utilities and then separate Texas.

<unk> had significantly higher consumption as you mentioned this quarter.

As well as rate updates from the increase in capital deployed year over year and that really was about $58 million of higher earnings and then third and this is a big point that we kind of brought out in the prepared remarks.

The big driver here relates to the minority interest sale and Thats really reduced the period over period earnings of about $83 million, but these were partially offset by higher earnings in the business driven by higher gas prices and the.

The outperformance in the power business as well as assets placed into service. So what I'm really pleased about is that we had a nine 5% year over year growth for adjusted EPS over the nine months ended September 30, and as Jeff said all in all this really speaks to the strength and diversity of the T&D platform.

So we're pretty pleased about where we are raising our guidance.

That's great guys. Thank you for that and then just one more from me.

You talked about sort of.

Running through the year, starting the capital raise project financing.

Financing work streams for Port Arthur.

The HOA I think can you remind us that contemplated at 30% equity stake from Conocophillips did it not.

It sure did.

Okay, and then one last one maybe just an update on the Angeles Lake project, It's a pretty big and exciting potential growth area for you with hydrogen.

Steps.

From here.

In the near term as we try to continue to move back to Julian to realization.

Thanks for asking about that Ralph So I'll make a couple comments and I'll pass.

Ask Mike to Kevin to fill us in on some of the details, but it's really interesting.

As we think about California, and Socal gas in particular, one of the things we talk a lot about internally as a management team is the importance to win in the business of today and quite clearly our customers are asking us to decarbonize the system and make sure it's safe and that's one of the reasons, we talked about this in our prepared remarks, we've set a self imposed.

The goal of delivering 20% our renewable natural gas to our core customers by 2030, we're very pleased to see the states step forward and mandates that all load serving entities should be delivering at least 12% for that period of time. So we're going to make sure. The system safe today, we're going to continue to decarbonize it but theres no question that <unk>.

<unk> is the future, particularly for hard to decarbonize areas around heavy duty trucking, some industrial applications and hopefully for power generation, the United States is behind and the hydrogen race Europe is making great progress in many of our customers on the LNG side, particularly in Japan are much further ahead and there is a clarity.

<unk> call across the policymakers in California that they want to see companies step up in innovation and new applications around hydrogen. So that's one of the reasons. We're really excited about the leadership at Socal gas Thats showing in Kevin maybe if you could provide a little bit of visibility into next steps on the Angeles Lee. Thanks for that I'll, just just kind of echo.

Jeff a little bit here, but southern California is one of the nation's largest manufacturing areas and has a very significant industrial base, along with the nation's largest port so opportunities to back off diesel and other fossil fuels and even natural gas to help accelerate California's and the region's clean air goals is really important and we are.

<unk> gotten a lot of good early feedback from stakeholders around this project, including city and state officials labor and environmental groups. All of that's been really positive even the governor Governor Newsome Energy Secretary Grant homeless had some positive statements. So so far so good on that project and I guess in terms of next steps we filed.

Brett memo account at the CPUC to start capturing cost related to developing a large project like this I think the memo account asked for something just short of $30 million and we expect that that memo account would get approved before year end. So.

It's early but we're really bullish on this.

Okay. Thanks, Kevin Thanks, everybody see you in a couple of weeks.

Thanks, a lot.

Thank you.

One moment for our next question please.

Our next question will come from Nicholas Campanella from Credit Suisse. Your line is open.

Hey, good morning, everyone. Thanks for getting me in here Martin Hi, Nick Good morning.

Couple of questions on just the financing comments on Port Arthur unit.

Can you just maybe expand on where you have flexibility in those two efforts to raise capital I recall you have some amortizing debt at Cameron one through three so is there additional kind of debt capacity at the site level already and then just what the ownership structure around port Arthur like is there a kind of like a <unk>.

<unk> pro forma ownership, we should be thinking about for phase one and is the goal ultimately here to limit external common equity at the central level. Thank you.

Yes. There is no question it will be a goal to limit any external equity, it's a separate level and you raised some great points. So let me kind of cap off Theres two work streams underway here. One is the equity process that's referenced in our slides and after I cover that I will pass it to <unk> to talk about the debt amortization and his approach to the financing, which they're looking to launch.

The near term.

As we've disclosed in the past Nick we've been taking a tremendous amount of inbound interest regarding participation in the capital structure at Port Arthur over the last 12 to 18 months. So we see this as an opportunity to really kick off our sales process to sell a noncontrolling stake that could result in separate infrastructures ownership settling into level.

Similar to Conocophillips weather, a little bit more or less the key for US is we're really focused on three goals on the equity side number one making sure that we highlight value for owners that we use this as an opportunity to pull forward the projects NPV to reduce our capital contribution and one of the things we talk about a lot inside the company.

It's really replicating what we did at Cameron, which effectively allows us to take a carried interest.

Also make sure that as part of this process. It allows us to maintain simpler and simpler infrastructure strong credit profile.

In General this is a way for us to effectively take a carried interest in the project to create a really strong return on invested capital and deliver a great outcome for our shareholders and I will say just as importantly, and you'll hear US talk about this a lot more what's most important about phase. One is also making sure it sets us up well for phase two and three so.

This is the type of project given its scale getting phase one really makes future phase, there's a lot more exciting and a lot more probable, but maybe <unk> licensed out there and maybe you can turn to the debt side and whats. The plans are for the financing yes sure. So first of all I think you are right. We do have amortizing debt across all extend for infrastructure, it's not just a camera by itself.

Within some of our joint ventures in the pipeline side, and so that does give us more debt capacity at the at the temporary infrastructure level on and actually our credit metrics have improved from where we were earlier in the year to where we are right. Now. So we are building sort of debt capacity as we said and get closer to FID.

And as we think about sort of the the layers of financing for for Port Arthur and we've been very consistent about this over the last few several quarters first we're going to start with sort of non recourse project financing underpinned by credit worthy Counterparties. So it's nonrecourse at investment grade pricing and we've got strong interest from the banks.

Finance this project.

Secondly.

<unk> done in the past.

It's project level equity for offtake or so we have seen conocophillips a world class set of partners step into this project with us in the HOA side as that spread 30% equity interest and then as Jeff alluded to we've got the potential to to sell down additional equity to project level highlight value. So that's kind of where we're at we feel like we're in a good spot and we were working on this for a very long period of.

Time.

Yes.

Really helpful. Thanks, a lot and just shifting to Texas and encore.

Line of sight to getting this this case done here I know, we're kind of coming towards the end of the.

Of the process, but as a settlement still in the cards. If at all and are you willing to just kind of take it to the take it the full distance on the final order at this point. Thank you.

We continue to be really impressed with the team the quality of the relationships. There. There's obviously a stunning amount of growth taking place across the state. So I think the rate case is really important.

Really think that we can get a great outcome independent of whether it's the settlement or a commission decision, but Alan perhaps we could just talk about procedurally.

The rate case, and how you think about next steps.

You bet. Thanks, Jeff just generally where we are as you said, we did have our hearing on the merits of our 26 through October 4th.

Since then we have all the parties have filed two rounds of post hearing briefs and we're anticipating a proposal for decision at the end of December with the commission likely to take up a proposed final order rather than a couple of open meetings at least.

First quarter of next year, but in final order before the end of the first quarter.

Just a little color on the hearing we believe it went.

Very well our witnesses performed very well many of them.

We're not even cross examined.

From a settlement perspective, we have had extensive discussions.

We will continue to have discussions thus.

Thus far they have not reached something that we believe is beneficial to the company to stakeholders, especially the ratepayers.

So while those conducts conversations will continue.

We are very confident in our case, we think we've put on a very strong case.

Should we need to go to the commission, where we're comfortable and confident doing so thanks. Thanks Alan.

Thanks, a lot see in a few weeks here.

Appreciate it.

Thank you one moment for our next question. Please.

Our next question will come from Michael Lapides from Goldman Sachs. Your line is open hey.

Michael Good morning, Good morning, Jeff Thanks for taking my questions.

I'll follow up for Allen, which is starting to see housing prices taxes thats happening in a lot of places, but some of the dips.

Not only outside Europe in and around the edges of your service territory, but also kind of south of you are starting to get pretty meaningful.

Just curious how that impacts if anything at all or how a slowdown in residential construction impact kind of your views of what kind of resi load growth would be and what the need for new infrastructure. I know you are talking a lot about potentially raising your capital spend budget.

I guess, there's a lot of that has to do with a lot of the new renewable and storage that's coming online, but can you kind of talk high level about those items.

And Michael I'll, just jump in real quickly to say that.

I think we really seeing great growth on the residential customer and industrial side and al and what might be particularly helpful to be responsive to Michael as some of the news you've got in terms of reaching the highest permitted housing starts and what some of the issues are in terms of that show up on the system.

Sure sure Thanks, Jeff Yeah, Michael.

I agree we're seeing as I think it was in some of the remarks earlier, we added 14000 new.

Premises this quarter.

And while we're a little below probably in the one seven range, whereas we've been 2% over the last few years, we're still anticipating and saying.

Long term projections still in the 2% range.

Jeff I may have mentioned this before.

We saw in June our largest request for new subdivisions ever in our company's history.

So while there is a little dip in front us growth so far this year.

And I'll tell you a little color on that is what we're hearing is that as.

Primarily supply chain and labor issues associated with the builders and our areas.

But the demand for lots of demand for new subdivisions.

We're still seeing long term around 2% and just.

Overall on our system I know you didn't ask about it but it's been discussed a little bit previously, yes to your point transmission points of interconnection.

Especially on the renewable side are extremely high.

Jeff said earlier, we're headed toward a historic here and Thats accurate.

565 active request right now versus $3 70.

At the same time last year in West, Texas just continues to grow.

Grow at record pace, we're seeing 29% annual load growth on the Culberson Lou.

A new peak of 1000 megawatts versus 900 megawatts last year.

New peaks in the far West, Texas, whether zone at 50, 486 versus 50 163 last year.

Stan Lou growing at 16% annual load growth.

And similar back to your residential just another data point for you there.

Not just the DFW area, we're seeing for example.

Waco load growth in Waco at three times the ERCOT average so we're continuing to see really strong growth across our system, regardless of a little dip this year in fairness growth, which we think is related to.

Issues on the builder side, and we think it will bounce back and we're continuing to see projected long term growth of 2% on the credit side on our system and Michael I'll make one other comment maybe to wrap it up with Allen, which is Trevor and I will be back at the Oncor Board early next year to review their final capital program and you may recall about this time lag.

Last year, we had it approved there prompt year capital program and review their five year plan and it wasn't until late February or March I believe Alan that we already had updated us by about $200 million. So this will give us a chance to pick up on some of these new opportunities and the confidence level at least from <unk> perspective, and I think alan's, we're going to have the opportunity to put a lot more capital to work in.

Future than it is in the current plan so stay tuned and we'll look forward to updating thereby on next year's call about that.

Got it thanks, Jeff Hey, I had one follow up and it's probably a Charleston one.

Kosta I think.

The comment that <unk> may be a little bit behind schedule, but the cost hasn't really moved and it's a matter of months not years define.

I remember correctly, you all have contracts already on one of the big pipelines that goes out of the Permian West towards the California border and then it would connect and head South Dakota.

Spreads between <unk> West Texas.

California really wide I mean, while high gasoline negative recently.

That imply that in the short run long term that that gas is going to be used to supply kosta zillow small scale like short run.

Are you guys benefiting from that and has that gotten more material.

And potentially a tailwind I know you've talked a lot about some of the headwinds for next year.

Yeah, Yeah, Michael I think.

As we move forward towards E on <unk> phase one one of the things our board of directors and we wanted to make sure that we thought we had adequate transportation capacity through the areas you described and until we actually utilize that capacity for ACA. It really gives us a chance to optimize and you've been seeing us do that so.

Yes.

Tillman, it's a tailwind.

Alright, Steve that the fact that <unk> pricing well below a buck at Socal gas quarter is above Henry hub.

Until Kosta small scale comes online you're actually capturing that spread.

Correct.

Got it thanks, Jonathan much appreciate it.

Thanks, Michael.

Thank you.

One moment for our next question please.

Our next question will come from Julien Dumoulin Smith from Bank of America. Your line is open.

Hi, Julien.

Hey, Jeff Good morning, Tim Thank you guys.

Got it.

Refresh here back to where we started the conversation on Port Arthur.

And more importantly, do here just can you give us a little bit more of a sense.

You alluded to it in the prepared remarks, as the ability to pivot rapidly into <unk> here.

And can you speak more directly to the permitting context year, how that might impact the EPC timeline and also the ability to readily translate that HOA interest.

Well, let me do this let me speak briefly to phase II and recap some of our prior comments then maybe just I think there might be value to go from the backfill contract plus some of the things you're working on to make Q1 happen, but I would just go back just take you back Julien if you'll allow me to this macro view, you've got a big scalable project right.

Which is unique relative to a lot of our competitors, it's well situated on.

On the ship channel there with over 3000 acres and we've had backfill on site for a very very long period of time, so that enabling EPC contracts that helps us launch phase one is critical as we continue to build out and refine our price estimates for phase II. So in our prepared slides on slide eight you can see we are.

Got pretty advanced interest at least for train three thus far and we've got conversations well beyond that so our goal really is we make and crystallize the opportunity for phase. One there is no question that the market interest in phase II will be increased and we're hopeful to be back in front of our investors on our end of year call.

Our Q4 call in February with a more detailed view about the phase two opportunity, but there may be some benefit Justin just to walk through in a little bit more granular level, what we're trying to accomplish over the next 90 days.

Thank you Chuck Yes, Julian I think as we look at Port Arthur Phase one I think the completion of the EPC contract is really the linchpin thats really going to unlock us.

To have the ability to convert those <unk> into definitive SBA isn't really to capture.

The remaining interest in that project and frankly additional trains at that project. So that work stream is ongoing.

Dynamic moving quickly.

On the finance side, I think Jeff and Trevor and final I'll cover that and then.

Finally, we are working through the required governance process with our boards of directors and management to really get to a point, where we can take final investment decision in.

In the first quarter of next year as Jeff mentioned as you move towards that date.

The ability to commercially contract on phase II and subsequent phases increases as you know the market tends to coalesce around projects that have a high probability of launching and I think the market is starting to see that momentum at port Arthur I. Just mentioned one other contextual comment for you Julien that you might find interested as you may recall over the <unk>.

Last 12 months, you've seen various parties analysis.

And you've seen us take a lot of questions about HOA is but what this really reflects is the key linchpin is getting that EPC contract done and not committing to the price of the offtake until you have that in hand, and now just his team is running quickly to go back and document those definitive Sps on the basis of those economics, which is really.

Positive and finally on our Q2 call we got pressed a lot about the future opportunity for Port Arthur and I actually said there are scenarios, where it could occur after the Saudi for camera and there were some scenarios where it could occur in the first half. So it's a real credit to justin's team and really a validation of the level.

The interest in Port Arthur that we've been able to accelerate it to a projected <unk> decision in Q1.

Right got it but from a permitting perspective any specific update the timeline there just on <unk> when can we get that far.

For the second time here.

So yes, so as you look at Port Arthur.

Two I think again three work streams that you should watch one is.

Commercial interest and we've talked a lot about that today, the second would be really the construction contract and again as Jeff mentioned earlier. The important thing there is the quality of backfill and really the ability to not force demobilization and re mobilization puts us at a competitive advantage and then finally here.

We're waiting for our FERC quarter, well, we've applied that its been before FERC and we're continuing to move that forward. So we do need a FERC quarter for subsequent phases at port Arthur but again, we think that process.

It has been commenced a long time ago and we're optimistic.

Okay. So it's a little bit unclear on timing, but just putting it all together, Jeff if I can when can you be in a position to provide sort of this longer term view with an EPS CAGR that includes presumably at least one right I know you've talked about the CAGR a moment ago with Ross, but can you can you speak to this about what do we get that fully inclusive one.

Yes, we have a convention as you know a doing a.

A roll forward of our five year plan that process is underway by Peter Walsh Treasurer currently and I think we will be in a position on our February call to do a couple of things will go back and re look at our 2023 guidance, we will expect to announce our 2020 for guidance and we hoped at that time have a definitive view.

On the roll forward of our capital program.

Sometimes in the past Julien you may recall, we save that for the Analyst Conference later in the spring we have not made a definitive decision with the IR team Thats, whether there'll be an analyst conference and my personal orientation is to come back on that February call and make sure it's fulsome and be in a position to talk about the roll forward of our five year capital program, which to your point.

Should reflect the opportunities that we are discussing this morning.

Excellent I look forward to it good luck guys. Thank you. Thank you. Thank you Julian.

Thank you one moment for our next question. Please.

And our next question will come from David Arcaro from Morgan Stanley . Your line is open.

Hi, Thanks for taking my question.

Good morning.

Wonder if you might be able to talk to just the hydrogen opportunities a bit more of the recent Mou.

<unk> with Avon grid, and then thoughts on the blue hydrogen potential opportunity down in the Gulf Coast, just when might we see in terms of timing and potential concrete project opportunities arise.

Yes sure.

We're very bullish on hydrogen I made some comments about this earlier one of the benefits. We've had is really twofold one is.

S&P came out with a study or Oracle in the last six months had talked about the 25, leading pilot programs for hydrogen in the United States and over half of them, David or in the separate family of companies. So we have made this a strategic priority I've made this comment before we need to win in the business of today, while we're building our competitive position in that.

Business of the future and there is no question that across our three growth platforms hydrogen will play a larger role. So most of what's taken place in California today.

Folks are evaluating opportunities to either blend hydrogen into the existing pipeline system. There's been some work done at Socal Socal gas about creating hydrogen.

<unk> homes on the residential side fuel cells are a big opportunity for our core customers, but I think broadly speaking this is a strategic commitment and I think one thing that I would fall as one of the things that Kevin talked about earlier is this memo account process that we expect to have resolved by the end of the year that will be a very very strong signal from the <unk>.

<unk> makers in the state of California about their commitment to make sure that we fully optimize our hydrogen future, but maybe just.

Since we have an LNG a net zero P&L adjustments portfolio, you could talk about how we're having conversations with some of our LNG buyers. So that said that's very recently in his speech.

The United States has a unique opportunity to not only improve the energy security in many of our allies I think we're in a position to produce the cleanest value chain from the wellhead to the liquefaction facility of any country in the World I think innovation is going to be a key part of that but just maybe you could talk about some of the projects you all have under.

Way to help introduce hydrogen.

David Great question look we had San for infrastructure are very excited as Jeff referenced earlier, we talk about succeeding in the business of today and really looking forward to being able to be successful in the future.

In the middle of last month.

We signed our agreement with oven grid and that really is about working together.

Identify appraise and potentially develop large scale green hydrogen projects to meet the needs of energy and de carbonization in both the U S and abroad.

The LNG business as Jeff mentioned provides a strong foundation for our ability to work with all of those partners as they look to Decarbonize and look toward future energy, whether it's green hydrogen blue hydrogen.

For Blue ammonia. So we're excited about the opportunities in front of US I think the other thing you saw recently the inflation reduction Act really provides a springboard for not only the hydrogen business, but also for carbon sequestration. We're excited because we continue to developing hackberry with our partners.

It's a wonderful opportunity to really decarbonize, our LNG facilities, and really look at as a means to capture carbon.

In local industrial facilities as well so we're very excited about the opportunities and the net gyro side of our business.

Yeah.

Okay, Great appreciate all the comments I'll leave it there. Thanks, so much thank.

Thank you David.

Thank you one moment for our next question.

Our next question will come from your guess Chopra from Evercore ISI. Your line is open.

Hey, guys. Thank you for giving me time and nowhere close to the hour here.

Hey, Hey, Jeff Thanks, again, maybe just.

Given your sort of historical timeline precedents and considering shortages supply chain issues et cetera et cetera.

Should we think about assuming our phase one.

Greenlight here in the first quarter, how should we think about can you give us a timeline of the scope of that project.

Correct.

Well first off that will certainly be tied to the date and time when we take these.

These projects typically get built between 50 and 60 months, but if you look at Q1 and assume that there is an <unk> in that timeframe I would look out in that $50 to 55 months' timeframe and you can back into a reasonable estimate.

Got it perfect. Thank you and just one quick follow up as we think about financing. The project are we going to basically the question is are we going to be are you going to be fully financed.

The $10 5 billion.

By first quarter next year or is that expected in chunks, yes.

Adjusted did a great job of kind of outlining some of the key milestones, we're tracking to get to <unk>, but our assumption and goal, which I guess would be that when we get to a decision with our board. We go through a very fulsome process.

<unk> all aspects of the transaction and we will not take.

Without having lined up both the financing and the equity.

Got it perfect guys. Thanks, so much excellent quarter here. Thank you again.

Thank you for joining our call.

Thank you.

One moment for our next question please.

Yes.

Our next question will come from Steve Fleishman from Wolfe Research. Your line is open.

Dave.

Hi, Jeff sorry.

Make the call go the full distance here, but just.

Sure.

Just one one strategic question so.

Obviously, you are having a lot of success with growth projects in all your businesses.

We're now seeing I think a lot of a lot better.

Public market values of midstream companies, particularly companies that are successfully growing LNG so justin.

When youre looking at that Big picture decision on the structure of the company and the like just maybe would be helpful to get some thoughts on how you're kind of thinking about that in terms of does it make sense to keep all those together or to.

To review other options. Thank you, yes sure no problem I'll tell you. It's a great question and one of the things that we spend the most time over to our board of directors has strategy. So when you think back to 2017 timeframe, Steve assuming we hit the midpoint of the new guidance range. We put out today, we have been successful in <unk>.

And the EPS of this business had a 11% CAGR. So I think we've got a really high quality leadership team and I don't mean, just the folks in this room, but across our top 25% or 40 leadership group. We've got a really good high performing culture and I think we've got a razor sharp strategy one of the things that you're really seeing them come together in the first three quarters of this year.

Here is our ability to produce improved financial results in all three of our growth platforms and we try to integrate those activities from the separate level I would say are doing extremely well and youre absolutely right. We've got growth in California, We've got growth in Texas. We continue to have a lot of growth opportunities in Mexico, and certainly <unk>.

<unk> business really has a unique opportunity set so I would say we're currently happy with the overall organization of our three platforms and particularly so for infrastructure remember Steve that separate infrastructure has been very critical in providing additional cash flows to support growth in our utilities and I think going forward.

Part of what we need to do to be successful is to continue sourcing the lowest cost of capital to help <unk> grow you've seen us be fairly creative through the KKR process and Audi and now the process. It sizable described earlier today. So we've demonstrated a willingness to transact at the simpler infrastructure level and at the project level.

And we will continue to forecast and we continue to forecast a portfolio of new opportunities to grow that business. So I think the most important takeaway relative to your question is our sole focus is on driving value to sempra shareholders.

I think you've seen this but we're willing to look at new and better ways to do that and part of that is continuing to optimize all three growth platforms. So there's a fair amount of excitement inside of our company about the increased earning power of all three platforms and we're looking forward to executing into 2023.

Great. Thank you very much.

Thanks for joining our call.

Yes.

Thank you one moment for our next question.

And we will take our last question from Anthony <unk> from Mizuho. Your line is open.

Jeff Trevor.

How are you doing good afternoon, just hopefully quickly too.

Two quick questions. One on Cameron is there ability to also go forward with construction of Cameron at the same time. If you go forward with Port Arthur or is there enough craft labor and everything to those coincide and then second follow up is on Port Arthur too is you talked about maybe selling down some of the equity ownership to finance. It is there a design.

Our level of ownership and I'll leave it there.

Yes, I appreciate the question I would tell you that we're now forecasting an opportunity to take FID on Port Arthur Phase one in the first quarter hopefully we will have a fulsome update on that on our February call and Youll recall that we have also forecasted taken on Cameron expansion.

In the middle of the summer or in the Q3 once we go through the competitive feed process that we have ongoing. So there is no question that we're in a position in terms of trade craft and our expectation from our EPC contractors that we can deliver both projects at the same time, and then going back to phase II of Port Arthur We've talked about this a little bit.

I think the most important thing here for US is stay focused on phase one.

Closer we get to take an ideal in phase one we're going to see the permitting process come together, we're going to crystallize some of the contract opportunities around phase two and remember the real strategic opportunity at Port Arthur is the ability to continue to scale. It so multiple phases become more probable once you get phase one done so I.

I appreciate the question.

And just on Port Arthur is there a desired level of ownership there.

Look I think youre going to see us take different approaches at different times I think the Best example, we can give and we really appreciated being able to contribute to re gas facility into the capital structure at Cameron and take effectively a carried interest youre going to see us do that on the phase one our job is to find the most efficient sources of capital and produce.

The highest returns on invested capital and I think we've got a really good plan in place that we're executing on phase one we don't have a target ownership level for phase two at this point, but that answer will be determined by how we can deliver the highest returns from the project.

Great. Thanks, so much and congratulation on a great quarter.

Thanks for joining the call. Thanks Anthony.

Thank you and that concludes today's question and answer session. At this time I would like to turn the conference back to Jeff Martin for any additional closing remarks.

Sure I would just like to take a moment and thank everyone for joining our call today I know there were some competing calls at the same time.

Per custom if there are any follow up items. Please reach out to our IR team with any additional information information not also mentioned for the balance of the year. We look forward to meeting with many of you in Florida at the <unk> conference on the 13th and 14th and will also be attending the Wells Fargo Conference in New York on December 7th and eight this concludes our call.

Okay.

Thank you for your participation you may now disconnect.

Okay.

The conference will begin shortly to raise Johan during Q&A you can dial one one.

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Good day and welcome to <unk> third quarter earnings call. Today's conference is being recorded at this time I would like to turn it over to Glenn Donovan. Please go ahead.

Good morning, everyone welcome to <unk> third quarter 2022 earnings call a live webcast of this teleconference and slide presentation are available on our website under the investors section.

Here in San Diego, we have several members of our management team with us today, including Jeff Martin Chairman and Chief Executive Officer.

Trevor Mihalik Executive Vice President and Chief Financial Officer.

Kevin Cigar executive Vice President and group President.

Justin Bird Chief Executive Officer of Sempra infrastructure.

Alan <unk> Chief executive of Encore.

Peter Wall, Senior Vice President Controller, and Chief Accounting Officer, and other members of our senior management team.

Before starting I would like to remind everyone that we'll be discussing forward looking statements within the meaning of the private Securities Litigation Reform Act of $19 95.

Actual results may differ materially from those projected in any forward looking statements we make today.

Factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K and 10-Q filed with the SEC.

Earnings per share amounts in our presentation are shown on a diluted basis, and we will be discussing certain non-GAAP financial measures.

Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We also encourage you to review our 10-Q for the quarter ended September 32022.

I'd also like to mention that the forward looking statements contained in this presentation speak only as of today November three 2022, and it is important to note that the company does not assume any obligation to update or revise any of these forward looking statements in the future.

With that please turn to slide four and let me hand, the call over to Jeff.

Overseas the supply demand balance for oil and natural gas continues to be disrupted.

<unk> in Ukraine supply chain challenges and reduced investments in traditional forms of energy resources as compared to prior periods are contributing to the global challenge.

Without adequate security of supplies of coal is unfortunately, playing a much larger role in the global energy mix today in fact, the combustion of coal is expected to match a record high reached nearly a decade ago, and we will likely move higher and set a new record next year.

Here in North American energy markets are continuing to expand and become increasingly integrated that is why investing in our modern energy network to support cleaner forms of energy and future economic growth is central to our efforts here at Sempra. We're also developing new large scale export facilities, so that European and Asian buyers of Nash.

<unk> gas can diversify and improve the security of their energy supplies, while backing coal out of their supply chain and the production of electricity.

We're focused on expanding and modernizing north America's energy grids, Sippers three growth platforms Central California separate taxes, and Sempra infrastructure are strategically positioned to help serve the growing needs of consumers in North America and around the world, while staying at the forefront of innovation and integrating cleaner forms.

<unk> energy.

<unk> value proposition comes to life through his commitment to growing a stronger and more valuable business. One that serves the long term interest of our customers and owners.

Trevor will take us through each segment in detail, but first I'd like to highlight the strategic focus at each of our growth platforms at Sempra, California, we're continuing to innovate and invest in new technologies. There are align with the state's clean energy goals and focus on safety innovation and grid resiliency.

Separate Texas Oncor has advanced in its base rate review.

Which supports the continued expansion and modernization of its grid in Texas with a focus on load growth grid reliability and integration of renewables.

We expect these developments will lead to substantially higher capital spending in future periods.

And at separate infrastructure, we're making significant progress aimed at providing cleaner and more secure energy to our customers. Specifically, we're excited to announce that we're expecting to take a final investment decision on port Arthur LNG phase one in the first quarter of next year.

Shifting to the results for the quarter earlier. This morning, we reported third quarter 2022 adjusted earnings per share of $1 97.

And year to date 2022 adjusted earnings per share of $6 87.

Based on the strength of these results we are raising our full year 2022, adjusted EPS guidance range to $8 78.

To $9 per share. We're also affirming our existing full year 2023, EPS guidance range.

Turning to the next slide.

This legislation also builds on the infrastructure investment and jobs Act that passed last summer with a focus on modernizing infrastructure across the country.

While some of the details in the IRI are still being finalized we believe that our growth platforms are well positioned to benefit from the positive tailwind created by this legislation.

For example, a common component of these bills as the focus on electrification and.

In our California, and Texas platforms are located in high growth markets, where the integration of renewables in the electrification of transportation continued to be major drivers of transmission and distribution infrastructure needs.

Additionally, socal gas continues to advance its position as a leader in the clean fuel space. The federal bills I've mentioned outlined key spinning priorities such as carbon capture hydrogen and biogas. This is important as you consider the different innovative pilot Socal gas has underway that are focused on the commercialized.

<unk> of you and cleaner fuels.

Further socal gas is integrating renewable natural gas, where RMG across its pipeline system today.

And finally, it simpler infrastructure, we have identified opportunities for further innovation and carbon capture and sequestration such as the Hackberry project and other investments to further decarbonize, our facilities and support our goal of delivering cleaner energy to our customers.

In summary, we believe our platforms are well positioned to advance the critical priorities detailed in the legislation.

Please turn to the next slide where I'll turn the call over to Trevor to provide several business updates for the quarter.

Thanks, Jeff.

Beginning with Sanford, California for <unk> 2022 cost of capital a proposed decision and an alternative proposed decision were issued on September 30, and.

And the CPUC is expected to vote out a decision today.

We are pleased that both proposed decisions confirm that extraordinary circumstances, we're present in.

And the cost of capital mechanism for 2022 should be suspended.

If the proposed decision is approved a second phase to determine <unk> rate of return for 2022 will be held.

The alternative proposed decision is approved the 2022 cost of capital rates of return will be preserved and the proceeding will be closed.

Next I would like to remind everyone that both <unk> and Socal gas filed their cost of capital applications with the CPUC in the spring to update their respective authorized rates of return for 2023 through 2025.

As part of this both utilities updated their respective cost of that request as recently as September .

We continue to expect a final decision on these filings by year end.

Each project builds upon years of research to identify ways to scale hydrogen blending to help drive de carbonization across multiple industries.

Separately.

Socal gas recently made significant progress to substantially resolve the remaining legal and regulatory matters related to the 2015 Aliso Canyon natural gas storage facility Lee.

In October we announced that we settled with the fifth and final property developer and executed a settlement agreement with the CPUC safety and enforcement Division and public advocates office.

All aspects of the <unk> yi.

The settlement with regulators is pending CPUC approval.

Finalizing lease settlements is a critical step in this matters resolution and we recorded a $101 million after tax charge in the third quarter.

Please refer to our SEC filings for additional details and descriptions of the remaining open issues.

<unk> to Sempra, Texas Oncor continues to experience tremendous growth.

Mission interconnection requests towards Q.

Which at this pace, which set a company record for new annual interconnection requests.

This highlights the continued growing demand and penetration of renewables in its service territory.

Last month Oncor management reviewed with its board.

Need to grow and expand its transmission and distribution system with the expectation of substantially higher levels of capital spending.

We expect to provide you with a more fulsome update on the five year capital plan in the first quarter.

Additionally, oncor expects a final order regarding its pending rate case by the end of the first quarter of 2023 with new rates going into effect thereafter.

At Sempra infrastructure, we've made substantial progress moving port Arthur LNG phase one closer to <unk>.

And Justin will speak to those details in just a moment.

We're currently advancing two efforts to raise capital to fund the construction of the first phase of Port Arthur LNG.

All with a view towards securing lower cost of capital for the project.

The first work stream targets issuing debt at the project level and we expect to kick this off in the coming weeks and.

In addition, we've already launched the second work stream, which aims to raise capital by selling project level equity to one or more investors.

These work streams are expected to.

Pull forward a portion of the projects NPV to reduce our capital contribution.

Maintain sempra and Sempra infrastructures strong credit profile, while also highlighting notable value to our owners.

Next I will turn the call over to Justin to discuss additional updates at Sempra infrastructure.

Thanks, Trevor let me start at Cameron LNG, where operations for phase one are going very well with production levels exceeding expectations.

In addition, both the proposed phase II expansion project and related Debottlenecking activities of the existing three trains are moving along as planned.

That train for FEMSA the U S pipeline regulator recently voiced support for our pending FERC permit.

We continue to work through the competitive feed process, which we anticipate will be completed in the summer of 2023 and expect to take FID. Shortly thereafter.

So we expect a full debottlenecking efforts to be complete before commercial operations commence at train four.

Next I want to provide you an update.

At our energy networks business, we're pleased to announce that our Pueblo fuels terminal outside of Mexico City has started commercial operations.

This terminal is integrated with our Veracruz port and Viator in Mexico terminals and combined creates our refined fuels terminal network that we collectively refer to as <unk> central.

This network provides for the end to end transportation of fueled by ship to the port of Veracruz, and then into the Mexico City market by both rail and truck.

The facilities are supported by a 20 year contract with Valero for the entire offtake.

The site is adjacent to our <unk>, whereas phase one and two wind facilities and directly ties into our power transmission lines at the California, Mexico border. We plan to proceed.

Pending receipt of final permits and completion of the engineering and design work.

With that let's move on to the Port Arthur LNG Phase one update please.

Please turn to the next slide.

As Trevor mentioned, we have had an exciting quarter port Arthur LNG continues to draw strong market demand and as advanced permitting and development status makes it an increasingly attractive project.

As I've mentioned there are three key work streams associated with <unk>.

And we are optimistic that we can achieve each of these by the first quarter of next year.

First we completed the EPC refresh and signed a $10 5 billion contract that is dependent on reaching FID.

This fixed price turnkey contract creates critical momentum for the project.

Second as Trevor detailed above the financing work streams are underway.

Based on these discussions we have more than enough interest to be in a position to take FID in the first quarter of 2023.

Please turn to the next slide.

The interest in Port Arthur LNG exceeds the volume of phase one and we are actively marketing and expansion that could include a combination of trains three <unk> for the.

We will provide a further update on port Arthur on our fourth quarter earnings call.

Please turn to the next slide where Trevor will review <unk> financial results for the quarter.

Thanks, Justin.

Turning to San Francis financial results.

Earlier. This morning, we reported third quarter 2020 to GAAP earnings of $485 million or $1 53 per share.

This compares to third quarter, 2021, GAAP losses of $648 million or $2 <unk> per share.

On an adjusted basis third quarter 2022 earnings were $622 million.

$1 97 per share.

This compares to our third quarter 2021, adjusted earnings of $545 million or $1 70 per share.

On a year to date basis 2022, GAAP earnings were $1.656 billion.

Our $5 23 per share.

This compares to year to date 2021, GAAP earnings of $650 million.

Our $2 <unk> per share.

Adjusted year to date 2022 earnings were $2 billion $172 million or $6 87 per share, which compares to our year to date 2021, adjusted earnings of $1 billion $949 million or $6 27 per share.

Taken together, our strong financial results and growing adjusted earnings demonstrate the strength of our underlying business.

Please turn to the next slide.

The variance in the third quarter 2022, adjusted earnings compared to the same period last year can be summarized by the following.

$79 million of higher earnings at Sempra, California from income tax benefits from flow through items and CPUC base operating margin net of operating expenses at <unk> and Socal gas.

$50 million of higher equity earnings at Sempra, Texas utilities.

Merrily due to higher consumption and customer growth and rate updates to reflect increases in invested capital.

$74 million of lower earnings at Sempra infrastructure attributable to higher Noncontrolling interest net of operating earnings and $22 million of lower losses at parent and other.

Please turn to the next slide.

We are pleased with outperformance this quarter, which has generated a lot of momentum across our platforms for the remainder of the year.