Q1 2024 Sempra Energy Earnings Call

Okay.

Operator: Good day, and welcome to Sempra's first quarter earnings call. Today's conference is being recorded. At this time, I'd like to turn it over to Glen Donovan. Please go ahead.

Good day and welcome to <unk> first 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.

Glen Donovan: Good morning, and welcome to <unk> first quarter 2024 earnings call.

Glen Donovan: Good morning and welcome to Sempra's first quarter and the live webcast of this teleconference. Available on our, There are several members of our management team with us today, including Jeff Martin, Trevor Mihalik, Executive Vice President and Group President, Sempra Energy, California; Justin Bird.

Speaker Change: The webcast of this teleconference and slide presentation.

Glen Donovan: On our website under events and presentations section.

Glen Donovan: We have several members of our management team with us today, including Jeff Martin Chairman and Chief Executive Officer.

Glen Donovan: Parents, Cedric Executive Vice President and Chief Financial Officer.

Glen Donovan: Trevor Mihalik Executive Vice President and group President in Central California.

Glen Donovan: Justin Bird Executive Vice President and Chief Executive Officer of infrastructure.

Glen Donovan: Alan Nye, Chief Executive Officer. Peter Wall, Senior Vice President. Before starting, I'd like to remind everyone that we'll be discussing four... The meeting of the private securities litigation committee is adjourned, whose results may differ materially.

Allen Nye, Chief Executive Officer of Encore, Peter Walsh, 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 extra.

Glen Donovan: Factors that could cause our actual results to differ materially are discussed in the company's Earnings per common share amounts in our presentation, shown on a diluted basis, and we'll be discussing certain non-... Please refer to the presentation slides. We also encourage you to review our 10-Q for the quarter ended March 31st. I'd also like to mention that four. Only if today, May 7th, 2020. It is important to note that the company does not assume any obligations from the other party.

Glen Donovan: Results may differ materially from those projected in any forward looking statements we make today.

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

Glen Donovan: 10-Q filed with the SEC.

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

Glen Donovan: Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures.

Glen Donovan: We also encourage you to review our 10-Q for the quarter ended March 31 2024.

Glen Donovan: I'd also like to mention that forward looking statements contained in this presentation speak only as of today may seven 2024, 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.

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

Glen Donovan: With that, please turn to slide four and let me hand the call over to you. Thank you, Glen, and thank you all for joining us today. We're pleased with the quarter financial results. It's a great start.

Jeffrey Walker Martin: Thank you Glenn and thank you all for joining US today, we're pleased to report our first quarter financial results. It is a great start to the year and sets us up well to provide strong financial performance for 2024. In addition to the strength of our financial performance the market backdrop for energy infrastructure continues to be very constructive.

Glen Donovan: We're seeing strong macroeconomic fundamentals supporting U S energy demand with the economy continuing to grow at a steady pace with manufacturing production gains easing of supply chain constraints and continued job creation.

Unnamed Speaker: [inaudible] Continuing to grow at a manufacturing productions. Easing of Supply Chain Constraints and Continued previously to discuss the view that our industry is, believes Sempra's strategy and portfolio are well-positioned to benefit, in addition to the long-term demand from reshoring. Artificial intelligence and data centers are driving new growth in digital infrastructure, with demand estimates tripling from 2.5% to 3.5%. However, growth in Texas is all. [inaudible] 5 gigawatts higher than the all. Against the backdrop of strong industry fundamentals, Sempra offers several, First in California, we're at the forefront. 25 million consumers in the country's largest are the largest manufacturers.

Glen Donovan: We've previously discussed the view that our industry has experienced in a super cycle of growth and believe separate strategy and portfolio are well positioned to benefit from current trends in.

Glen Donovan: In addition to the long term demand from re shoring and electrification of transportation artificial intelligence and data centers are driving new growth in digital infrastructure with demand estimates tripling from two 5% of total U S electric consumption to seven 5% by 2030.

Unnamed Speaker: Growth in Texas is also particularly remarkable with ERCOT recently, raising its forecast at peak demand by the end of the decade to over 150 Gigawatts of note that 65 gigawatts higher than the all time record in the state.

Glen Donovan: Against the backdrop of strong industry fundamentals separate offers several competitive advantages.

Unnamed Speaker: First in California, we are at the forefront of the energy transition, serving 25 million consumers in the country's largest economy and one of the largest manufacturing basis in the U S.

Unnamed Speaker: In our general rate cases, we're expecting to make new investments that support electrification and decarbonization while also improving affordability, safety, and reliability. Reverse Industrial, CNI. Thank you for joining us today. That's why ENCQORS recently filed a System Resiliency...

Glen Donovan: And through our general rate cases, we're expecting to make new investments that support electrification and decarbonization, while also improving affordability safety and reliability.

Turning to Texas, we're seeing diverse industrial C&I and residential growth, which is creating jobs, increasing electricity demand and requiring significant investments to modernize and expand the electricity grid with.

Glen Donovan: With economic expansion, the safety and resilience of the grid becomes even more critical and in part that's why encores recently filed system resiliency plan is both timely and important.

Unnamed Speaker: And finally, at Sempra and Global Demand for Energy Security, we are in the midst of a global crisis. Our dual-coast LNG strategy is contributing to this push with approximately 16 million tons per annum of new energy, more than double our... Key takeaways. I...

Al will speak to this in greater detail later in today's presentation.

Unnamed Speaker: And finally at simpler infrastructure, we're supporting global demand for energy security are in the midst of a second wave of LNG developments expected to support over 700 million tons per annum of demand by 2050, our dual coast LNG strategy is contributing to this push with approximately $16 million.

Glen Donovan: <unk> per annum of new export capacity currently under construction, which would more than double our existing LNG operating footprint. The key takeaway is we're excited about the opportunities ahead as separate infrastructure looks to provide cleaner and more reliable sources of energy to its customers, while charting a course for us.

Glen Donovan: Tractive built in growth through the end of the decade.

Glen Donovan: It's also important to note that separate infrastructures growth forecast are based solely on projects that have reached out and are under construction and doesn't yet include expected upside from a series of other projects still in development.

Unnamed Speaker: Projects that have reached FID and are under construction and doesn't yet include expected upside from a series of. Now to our financial results. We reported first quarter 2024 adjusted EPS of $1.99. We're pleased to also affirm our full year 2024 adjusted EPS guidance range of four dollars and sixty cents to four dollars, $4.00. And as a reminder, when you look at our adjusted EPS, 23-2025, it reflects approximately 7% of the world's greenhouse gas emissions and the long-term EPS. Please turn to the next slide, where I'll turn it over, and I'm excited to provide an update.

Glen Donovan: Turning now to our financial results, we reported first quarter 2024, adjusted EPS of $1 34.

Glen Donovan: In addition, we're pleased to also affirm our full year 2024, adjusted EPS guidance range of.

Glen Donovan: $4 62.

Unnamed Speaker: To $4 90.

And 2025, EPS guidance of $4 90 to $5 25.

As a reminder, when you look at our adjusted EPS guidance range from 2023 to 2025. It reflects approximately 7% annual growth, which is consistent with our long term EPS growth expectations of 6% to 8%. Please.

Glen Donovan: Please turn to the next slide where I'll turn the call over to Karen to provide several business update.

Speaker Change: Thank you Jeff.

Speaker Change: Obviously, you said the 2024 will be important your execution in each of our growth platforms and I'm excited to provide an update on our progress.

Unnamed Speaker: At Sempra California, we continue to see constructive regulatory outcomes. Thank you all for joining us today. The current cost of capital, operated as, and the recently established returns on equity at SDG&E of 10.65% and at SoCalGas remain in place through 2025 unless market conditions result in a trigger. Importantly, this improves... by affirming the protection that the CCM provides. Another example.

At Sempra, California, we continue to see constructive regulatory outcomes in March the CPUC issued a proposed decision supporting the updated return on equity that was implemented this year as part of the TCM trigger.

The Commission agreed that the current cost of capital mechanism operated as designed.

Unnamed Speaker: And the recently established returns on equity at <unk> of $10, six 5% and Socal gas of 10, 5% should remain in place through 2025 unless market conditions resulted in a trigger.

Unnamed Speaker: Importantly, this improved regulatory certainty by affirming the protection that the CCM provides to customers and shareholders.

Glen Donovan: And the key takeaway is that this is another constructive data point for California's regulatory framework.

Unnamed Speaker: Another example of this is rate reform improving affordability for all of our utility customers is a top priority.

Unnamed Speaker: Improving affordability for all of our utility customers is a top priority, and I'm pleased to share that a proposed decision was issued by the CPC in March to implement a fixed charge for residential electric customers. As currently proposed, this would reduce volume. and Help California Meet Its Clean Energy Goals. The next charge would then be expected to begin in the fourth quarter of 2025. During the quarter, we also made a joint filing with the other California utilities to develop projects that successfully demonstrate blending hydrogen into natural gas. Projects will begin blending at up to 5. Hydrogen Blending has been demonstrated

Unnamed Speaker: And I'm pleased to share that a proposed decision was issued at the CPUC in March to implement a fixed charge for residential electric customers.

Unnamed Speaker: As currently proposed this would reduce volumetric rate <unk>.

Unnamed Speaker: Support a more fair rate structure and help California meet its clean energy goals.

Unnamed Speaker: A final decision is expected in the second quarter of 2024, and the fixed charge would then be expected to begin in the fourth quarter of 2025 during the quarter. We also made a joint filing with the other California utilities to develop projects that successfully demonstrate blending hydrogen into the natural gas system.

Unnamed Speaker: These projects will begin blending at up to 5% isolated sections of the natural gas system and incrementally increase the hydrogen concentration based on safety and technical feasibility.

Unnamed Speaker: Hydrogen blending has been demonstrated safely and reliably around the world for decades, and we look forward to working with our partners to support new and improved ways to expand de carbonization effort here in the state.

Karen L. Sedgwick: And we look forward to working with our partners to support new and improved ways to expand decarbonization efforts here in the state, a proposed decision in the second quarter and a final decision this year. Retroactive to the Beginning of the Year, as a... To receive a final decision, we will have a clear regulatory, CalISO updated SDG&E that it was not, as well as building the other transmission projects that were directly... Reporting to TX, I'm Karen Sedgwick.

Karen L. Sedgwick: Turning to the DRC, we expect a proposed decision in the second quarter and a final decision this year.

Karen L. Sedgwick: Once the final decision is obtained it will be retroactive to the beginning of the year.

Karen L. Sedgwick: As a reminder, after we receive a final decision we will have a clear regulatory pathway for execution on our utility focused capital plan through 2027.

Karen L. Sedgwick: Lastly, Cal ISO updated SD Jamie that it was not selected to move forward on the Imperial Valley transmission line and substation.

Glen Donovan: It is important to note that we were financially disciplined in how we developed our bid and we look forward to supporting the project successful development as well as building. The other transmission projects that were directly awarded to <unk> by Cal ISO.

Karen L. Sedgwick: Turning to Texas, we continue to see significant growth across Oncor service territory, just last month ERCOT issued an updated transmission planning report <unk>.

Karen L. Sedgwick: Last month, ERCOT tested approximately a 40% higher load in 2030 than in last year's report. [inaudible] very excited about the opportunity to help deliver cleaner energy. Project Demonstrates Our Ability to Generate Attractive Returns While Utilizing Existing Company-Owned Transmission Capacity to Serve California's Future and Targeting O&M, great progress at ECHA LNG, Phase 1, and Port Arthur, on target to start commercial operations. Ford Arthur also remains on schedule with significant ongoing construction activity, including excellent progress around soil stabilization, new foundations, and the commencement of concrete pouring and structural steelwork.

Karen L. Sedgwick: Our casting approximately 40% higher load in 'twenty three than in last year's report.

Karen L. Sedgwick: And yesterday Oncor made its inaugural SRP filing, which includes approximately $3 billion of capital investments.

Karen L. Sedgwick: In addition to SRP the 2023 legislative session was particularly constructive for the state's utilities.

Karen L. Sedgwick: We're already seeing the positive impacts at encore in terms of the planning and execution that support the state's priorities and improved the timing of the company's returns on capital.

Karen L. Sedgwick: Moving to sent for infrastructure.

Karen L. Sedgwick: Excited about the opportunity to help deliver cleaner energy to our customers and partners.

Karen L. Sedgwick: Recently, we declared a positive.

Karen L. Sedgwick: At our Cimarron wind expansion project.

Karen L. Sedgwick: This project demonstrates our ability to generate attractive returns, while utilizing existing company owned transmission capacity to serve California market.

Karen L. Sedgwick: And targeting O&M efficiencies based on locational advantages.

Glen Donovan: Additionally, we're making great progress with LNG phase, one and port Arthur LNG phase one.

Karen L. Sedgwick: Okay. It was roughly 80% complete and remains on target to start commercial operations in the summer of 2025.

Karen L. Sedgwick: Port Arthur also remains on schedule with significant ongoing construction activity.

Karen L. Sedgwick: Excellent progress around soil stabilization, new foundations, and the commencement of concrete pouring and structural steelwork.

Karen L. Sedgwick: Turning to our marketing efforts the LNG market is long term by nature and while the dome pause has received a lot of press, we remain confident in our ability to deliver projects that offer long term secure and cleaner energy to customers.

Unnamed Speaker: The L&T market is long-term by nature, and the DOE pause... a lot of press, remain confident in our ability to deliver projects that offer long-term, secure, and cleaner energy to make progress on. Moreover, the referenced pause does not impact our confidence in the overall competitive positioning of our development projects, and we're strategically utilizing this time to steadily advance our opportunities. Also of note, even if you only take into consideration projects that have reached FID, Sempra's infrastructure has incredible potential, and a new wind project under, We're improving visibility to attractive earnings growth through the end of our program.

Unnamed Speaker: Simpler infrastructure benefits were experienced project development teams continue to make progress on our critical work streams, including permitting engineering and commercial negotiations.

Unnamed Speaker: Moreover, the referenced paal it does not impact our confidence in the overall competitive positioning of our development projects.

Unnamed Speaker: And we're strategically utilizing this time to steadily advance our opportunities.

Unnamed Speaker: Also of note.

Unnamed Speaker: Even if you only take into consideration projects that have reached FID.

Unnamed Speaker: Simpler infrastructure has incredible built in growth.

Unnamed Speaker: With 16 million tons per annum of LNG export facilities.

Unnamed Speaker: Associated infrastructure and a new wind project under construction.

Unnamed Speaker: We're improving visibility to attractive earnings growth through the end of our planning period in 2028.

Unnamed Speaker: And that's all before taking into account our development project pipeline, which Jeff referenced earlier, offers notable. You may now turn to the next... Allen will discuss ERCOT's new planning processes. As we have been discussing for several quarters now, Texas continues to experience strong growth, Encore now serves close to 13 million customers and has now. ERCOT is adapting to this, and account for higher expected... In April, ERCOT announced that peak load is expected

Unnamed Speaker: And that's all before taking into account our development project pipeline.

Unnamed Speaker: Which Jeff referenced earlier and offers notable upside.

Unnamed Speaker: We can now turn to the next slide where Alan will discuss ERCOT new planning processes.

Allen: Thank you Karen as we have been discussing for several quarters now, Texas continues to experience strong demand growth.

Unnamed Speaker: On core now serves close to 13 million customers.

Allen: And has now surpassed over 4 million meters ERCOT is adapting to this growth with our recently announced new planning process to account for higher expected electricity needs in the future.

Allen: In April ERCOT announced that peak load is expected to reach 152 Gigawatts in 2030, nearly double the record set last year of 85 Gigawatts.

Unnamed Speaker: 30, nearly double the record set last year of 85 gigawatts. This load growth, including new and expanded CMF, Electrification of Oil and Gas Operations, Data Centers, Manufacturers, and

Allen: This load growth is coming from a wide range of industries across the state, including new and expanded C&I electrification of oil and gas operations data centers manufacturing and residential.

Unnamed Speaker: To put this growth in context, the change from 2023 to 2030 would be like adding load greater than. So, from our perspective, as one of the premier builders of T&D infrastructure in America, we are excited about the opportunity to continue to scale our investments in electric infrastructure. Since 2018, Encore has constructed approximately 13,000 miles of transmission and distribution lines, approximately 6 miles per day. We have an active planning process underway and are confident in our ability to secure the materials and labor necessary to serve our customers in the ERCOT market. Please turn to the next slide.

Allen: To put this growth in context, the change from 2023 to 2030 would be like adding load greater than the size of the entire California power market. Currently we anticipate that approximately 40% of the new load will come from Oncor service territory.

Unnamed Speaker: So from our perspective is one of the Premier builders of T&D infrastructure in America. We're excited about the opportunity to continue to scale our investments in electric infrastructure since.

Unnamed Speaker: Since 2018 Encore has constructed approximately 13000 miles of transmission and distribution lines approximately six miles per day, we have an active planning process underway and are confident in our ability to secure the materials and labor necessary to serve our customers in the ERCOT market.

Unnamed Speaker: Please turn to the next slide.

Unnamed Speaker: Given the growth in the state resiliency is more critical than ever.

Unnamed Speaker: Given the growth in the state, resiliency is more critical than ever. In 2023, the Texas Legislature passed House Bill 2555, which allows electric utilities to file system resiliency plans proposing capital and operational expenditures to improve Firehead and Underground System Resiliency and Modernization, Flexible and Self-Healing Distribution System, Vegetation Management, and Wildfire Management. Please provide some additional information. The majority of our proposed spend is in the modernization and hardening of the older parts of our distribution system by adding lightning protection, stronger class poles, and crops. I would also like to highlight that we have invested in wildfire mitigation for many years, including effectively partnering with industry leaders like SDG&E and the Texas A&M Forest Service.

Unnamed Speaker: In 2023, the Texas Legislature passed house, Bill $25, 55, which allows electric utilities to file system resiliency plans proposing capital and operational expenditures to improve overall grid resiliency we.

Unnamed Speaker: We made our first filing yesterday for approximately $3 billion of new capital expenditures and just over $500 million of operating expenditures to be made over a period of three years.

Unnamed Speaker: This investment would address overhead and underground system resiliency and modernization.

Unnamed Speaker: Flexible and self healing distribution system veg.

Unnamed Speaker: <unk> management.

Unnamed Speaker: Wildfire mitigation and cyber and physical security to provide.

Unnamed Speaker: Some additional color.

Unnamed Speaker: The majority of our proposed spend is in the modernization and hardening of the older parts of our distribution system by adding lightning protection stronger class polls and cross arms and addressing capacity constraint parts of the grid during extreme temperatures.

Unnamed Speaker: Furthermore, we are proposing significant technology and infrastructure investments that will help enable the automated reconfiguration of our system when extreme storms hit quickly restoring service to customers on undamaged segments by intelligently rerouting power.

Unnamed Speaker: I would also like to highlight that we have invested in wildfire mitigation for many years, including effectively partnering with industry leaders like <unk> and the Texas A&M Forest service now thanks to HB $25 55 <unk>.

Unnamed Speaker: Now, thanks to HB 2555, Encore has an additional opportunity to further accelerate our wildfire mitigation program. We estimate that approximately $900 million of the total proposed spend, including both CAPEX and OPEX, will focus on expanding our wildfire mitigation tools and implementing our grid monitoring. The SRP program, with approximately $3 billion of capital expenditures, if approved, would be incremental to ENCQOR's $24.2 billion of planned CapEx announced earlier this year for the. I believe our proposed SRP creates an opportunity to fundamentally improve customer reliability and overall... Also, helped, and I'll turn the call. Earlier today, Sempra reported first quarter 2024 GAAP earnings of $801 million, or $1.26 per share.

Unnamed Speaker: Non core has an additional opportunity to further accelerate our wildfire mitigation strategies across our service territory.

Unnamed Speaker: We estimate that approximately $900 million of the total proposed spend including both Capex and Opex will focus on expanding our wildfire mitigation tools and implementing our grid modernization and hardening measures and wildfire prone areas.

Unnamed Speaker: Seasonally the SRP statute provides 180 days for the PCT to review the filing and we anticipate having a decision by the end of the year.

Unnamed Speaker: The SRP program with approximately $3 billion of capital expenditures, if approved would be incremental to encore 24 $2 billion of planned Capex announced earlier this year for the five year period 2024 to 2028.

Unnamed Speaker: We believe our proposed SRP creates an opportunity to fundamentally improve customer reliability and overall customer service during and after extreme weather events, while also helping to mitigate other risks.

Unnamed Speaker: I'll now turn the call back to Karen to walk through <unk> financial update.

Speaker Change: Thanks, Alan earlier today, <unk> reported first quarter 2024, GAAP earnings of $801 million.

Unnamed Speaker: Our $1 26 per share.

Unnamed Speaker: This compares to first quarter 2023 GAAP earnings of $969 million, or $1. Our first quarter 2023 earnings of $9.5 million, $2 million, or $1. The period last year can be summarized as follows.

Unnamed Speaker: This compares to first quarter 2023, GAAP earnings of $969 million or $1 53 per share.

Unnamed Speaker: On an adjusted basis first quarter 2024 earnings were $854 million.

Unnamed Speaker: Or $1 34 per share.

Unnamed Speaker: This compares to our first quarter 2023 earnings of $922 million or $1 46 per share.

Unnamed Speaker: Please turn to the next slide.

Unnamed Speaker: Variances in the first quarter 2024, adjusted earnings compared to the same period last year can be summarized as follows at.

Unnamed Speaker: At Sempra California... $12 million of lower CPU-C base operating margin, net of... As a reminder, because our GRC is still pending, our CPUC revenues in first quarter 2024 are still based on 2023, and will be retroactively applied to January 1st when the final decision is approved. $56 million of higher equity earnings attributable to rate, $13 million of lower transportation revenues, and higher..., partially offset by higher power And $27 million of lower asset and supply optimization, partially offset by a lower net interest expense due to capitalized. As a note, beginning this year, the Waterfall Number, After Non-Controlling Interest to Improve Comparison, primarily due to higher... Annual Forecasted Consolidated... Please turn to the next slide. I want to outline it.

Unnamed Speaker: At Sempra, California, we had $24 million, primarily from higher net interest expense and lower income tax benefits and $12 million of lower CPUC base operating margin net of operating expenses offset by higher authorized cost of capital.

Unnamed Speaker: As a reminder, because our <unk> is still pending our CPUC revenues in first quarter 2024 are still based on 2023 authorized levels.

Unnamed Speaker: This is important because any true up later this year will be retroactively applied to January one when the final decision is approved.

Unnamed Speaker: Turning to Sempra, Texas, we had $56 million of higher equity earnings attributable to rate updates increased invested capital and consumption, partially offset by higher interest and operating expenses.

Unnamed Speaker: At Sempra infrastructure, we had $13 million of lower transportation revenues and higher O&M, partially offset by higher power results.

Unnamed Speaker: And $27 million of lower asset and supply optimization, partially offset by lower net interest expense due to capitalized interest lower taxes and other.

Unnamed Speaker: As a note beginning this year the waterfall numbers presented after noncontrolling interest to improve comparability.

Unnamed Speaker: At Sempra parent the $48 million quarter over quarter change is primarily due to higher taxes in the interim period application of an annual forecasted consolidated effective tax rate.

Unnamed Speaker: Which is expected to turnaround over the course of the year. Please turn to the next slide.

Speaker Change: Before we close out our prepared remarks, I want to outline some price value proposition as we execute our corporate strategy.

Unnamed Speaker: Our management team is committed to challenging the status quo in all aspects of our business. We offer exposure to growth. Transcripts provided by Transcription Outsourcing, LLC.

Unnamed Speaker: At Sempra, our management team is committed to challenging the status quo in all aspects of our business operations.

Unnamed Speaker: We offer exposure to growth and some of north America's largest economic markets.

Unnamed Speaker: Our position as a leader in the infrastructure development in these markets translates into a record 48 billion capital campaign through 2028 and.

Unnamed Speaker: Transforms into a record $48 billion capital campaign through 2028. In addition, we make energy infrastructure investments that target a track. We understand the importance of returning capital, and expect to continue growing by roughly 7% annually over the last 10 years. This is particularly important. Sempra, we're excited about the prospects ahead of us.

Unnamed Speaker: In addition, we make energy infrastructure investments that target attractive mid teens returns on equity and we under.

Unnamed Speaker: Understand that disciplined capital allocation is central to our success.

Unnamed Speaker: And we understand the importance of returning capital to our owners and expect to continue growing our dividend.

Unnamed Speaker: Of note, we've successfully grown our dividend at a rate of roughly 7% annually over the last 10 years.

Unnamed Speaker: This is particularly noteworthy given the expected strength of our future earnings growth.

Unnamed Speaker: To conclude through all of our industry is becoming increasingly important to society and at <unk>. We're excited about the prospects ahead of us.

Unnamed Speaker: Sampras competitively positioned to capitalize on opportunities and we'll continue to invest in our people.

Operator: Capitalize on opportunities, and we'll continue to invest, prudently manage risk, efficiently finance our businesses, and be good stewards of the capital entrusted to us. We thank you for joining us, and I'd now like to say, 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 11 on your telephone keypad. Please make sure that your mute function is turned off.

Operator: Prudently manage risks.

Operator: Efficiently finance, our businesses and be good stewards of the capital and trusted tests.

Speaker Change: Thank you for joining us and I'd now like to open the line for your questions.

Speaker Change: Thank you.

Operator: 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.

Operator: Please make sure your mute function is turned off we will pause for just a moment to allow everyone to signal for questions.

Operator: We will pause for just a moment to allow everyone to signal for questions, and our first question will come from Shahriar Pourreza from Guggenheim Partners. Your line is open. Hey, guys. Good morning, Shahriar.

Shahriar Pourreza: And our first question will come from Shar <unk> from Guggenheim Partners. Your line is open.

Shahriar Pourreza: Hey, guys.

Shahriar Pourreza: Good morning, Shar good morning, Jeff.

Jeffrey Walker Martin: Good morning, Jeff. Um, maybe just starting off on the kind of incremental upsides that are starting to build versus the 4Q plan, including at SIP and the SRP in Texas. I guess, does the existing financing plan have room to support the spend in 25 through 27? And would you look to maybe utilize some SIP balance sheet capacity to offset potential equity needs from incremental CapEx that we could see coming? I appreciate the question, and I think we're in good shape on our balance sheet.

Shahriar Pourreza: Maybe just starting off on the kind of the incremental upsides, that's starting to build versus the <unk> plan, including at S. IP in the SRP and Texas I guess does the existing financing plan have room to support the spend in 25 through 27 and would you look to maybe utilize some of that balance.

Jeffrey Walker Martin: <unk> capacity to offset potential equity needs from incremental capex that we could see coming.

Jeffrey Walker Martin: I'll remind everyone, Shahriar, that we have a track record of officially financing our growth, and that's been a big part of our success, as you know, since 2018. In fact, over the last five years, we've been successful at growing our adjusted EPS at roughly a 10 percent annual growth rate.

Speaker Change: Yes, I appreciate the question and I think we're in good shape on our balance sheet I'll remind everyone shar.

Jeffrey Walker Martin: We have a track record of officially financing our growth and that's been a big part of our success as you know since 2018 in fact over the last five years, we've been successful at growing our adjusted EPS at roughly a 10% annual growth rate.

Jeffrey Walker Martin: Our current plan, as you know, contemplates that we'll make about $48 million in investments through 2028. We certainly think there are opportunities to continue to grow that plan, but I would also mention that well in advance of announcing our capital plan, Shahriar, we got our equity needs out of the way last fall, so the key takeaway is we're in great shape with no need for additional equity. We have great visibility into our future growth, and I think you indicated a couple of levers that we have to pull, and we have a plan in place that should allow us to officially finance our growth. Perfect.

Jeffrey Walker Martin: Our plan as you know contemplates that we will make about $48 million of investments through 2028.

Jeffrey Walker Martin: Certainly think theres opportunities to continue to grow that plan, but I would also mentioned that well in advance of announced at our capital plan Shar, We got our equity needs out of the way last fall. So the key takeaway is we're in great shape with no need for additional equity we have great visibility to our future growth and I think you indicated a couple of levers. So we have to pull and we have.

Jeffrey Walker Martin: A plan in place that should allow us to officially finance our growth.

Jeffrey Walker Martin: So you're comfortable with the balance sheet, and if there's incremental capex coming, that's helpful, Jeff. Yes, we are. Perfect.

Shahriar: Perfect. So youre comfortable with the balance sheet, if there's incremental capex coming thats helpful.

Speaker Change: Yes, we are perfect and then just given the cost of capital affirmation in California.

Jeffrey Walker Martin: And then just given the cost of capital in California, I guess, how are you planning, maybe, to recognize the impacts of the CCM? Is there a customer reinvestment plan? And would you kind of, you know, plan to provide an update on California utilities earnings after the PD? Yeah, I think there's going to be an opportunity as we get through our rate case. You'll recall that we're expecting to have our proposed decision later this quarter and a final decision at the end of the year.

Jeffrey Walker Martin: How are you planning maybe to recognize the impacts of the CCM is there a customer reinvestment plan and would you kind of plan to provide an update on the California utilities earnings after the PD.

Jeffrey Walker Martin: Yes, I think theres, a columbia and opportunity as we get to our rate case, you'll recall that we're expecting to have our proposed decision later this quarter and a final decision at the end of the year and those type of issues that we would reconcile that then next earnings call, which could be as early as Q3 to make sure we provide clear visibility to.

Jeffrey Walker Martin: And those are the type of issues that we would reconcile on the next earnings call, which could be as early as Q3, to make sure we provide real, clear visibility to the impact of the rate case on our forward earnings. Fantastic. Thank you, Jeff. Much appreciated for the call. All right. Thank you. Thank you, Shahriar.

Jeffrey Walker Martin: The impact of the rate case sort of forward earnings.

Speaker Change: Fantastic. Thank you Jeff much appreciate the color. Thank you. Thank you shar.

Speaker Change: Thank you.

Operator: Thank you. Our next question will come from Jeremy Tonet from J.P. Morgan Securities. Your line is now open. Hi, good morning.

Jeffrey Walker Martin: Our next question will come from Jeremy Tonet from Jpmorgan Securities. Your line is now open.

Jeremy Bryan Tonet: Hi, good morning.

Jeremy Bryan Tonet: Hi, Jeremy. Turning to Texas, I was just wondering if you could frame this latest ERCOT load growth outlook against the last capital plan raised at Encore. Is that level of system investment contemplated consistent with this load growth, or is there even more, I guess, upside down the pike here, and if so, what timeframe do you think that could make it into the pipeline? Well, it's certainly a great question.

Jeremy Bryan Tonet: Hi, Jeremy.

Operator: Hi.

Jeremy Bryan Tonet: Turning to Texas I was just wondering if you could frame this latest ERCOT load growth outlook against the last capital plan raise the encore.

Jeremy Bryan Tonet: Is that level of system investments contemplated consistent with this load growth or is there even more I guess upside down the pike here and if so what timeframe do you think that could make it into the plant.

Jeffrey Walker Martin: Obviously, ERCOT just released their latest information in the last couple of weeks, and Alan noted this in his prepared remarks, but it's pretty amazing that you could take the peak demand load in America's largest economic environment, which is California, and the expectation is in Texas that the load could grow that much between now and 2030. The key thing that Alan's mentioned before, too, is ERCOT's right in the middle of this growth story, right?

Jeremy: Well, it's certainly a great question, obviously ERCOT just released their latest information in the last couple of weeks. Alan noted. This in his prepared remarks, but it's pretty amazing that you could take the peaks demand load in America's largest economic environment, which is California, and the expectation is in Texas that load could grow.

Jeffrey Walker Martin: That much between now and 2030.

Jeffrey Walker Martin: The key thing, but balanced mentioned before too as ERCOT is right in the middle of this growth story right. So as you think about growth opportunities. We think between 40 and 50% of that would fall to his service territory and there is no question that this will be evaluated in the fall as Alan and his team put their plans together.

Jeffrey Walker Martin: So as you think about growth opportunities, we think that between 40% and 50% of that would fall within his service territory, and there's no question that this will be evaluated in the fall as Alan and his team put their plan together. Got it, that's very helpful there, thanks.

Jeffrey Walker Martin: Okay.

Jeffrey Walker Martin: Got it that's very helpful. Thanks, and then <expletive> again on the SRP a little bit more I was just wondering if you could kind of bracket.

Jeffrey Walker Martin: And then, digging in on the SRP a little bit more, I was just wondering if you could kind of bracket what this work will accomplish over the next three years relative to the overall resiliency needs you see in the system. Yeah, let me make a couple of contextual comments, and I'll turn it over to Alan.

Alan: What this work will accomplish over the next three years relative to overall resiliency needs you see in the system.

Jeffrey Walker Martin: Yes, let me make a couple of kind of contextual comments I'll turn it over to Alan.

Alan: Just yesterday they made their inaugural filing you know from our materials its $3 billion over three years and one of the things that we're interested in a separate very much like all the investments that we make across our different growth platforms. This plans intended to harden our system to withstand extreme weather conditions.

Jeffrey Walker Martin: You know, from our materials, it's $3 billion over three years. And one of the things that we're interested in at Sempra, very much like all the investments that we make across our different growth platforms, this plan is intended to harden their system to withstand extreme weather conditions, reduce restoration outage times, and improve overall reliability. I would also note, Jeremy, that the requested capital is incremental to ENCQOR's existing capital plan. But Alan, what might be helpful, and I think this would go to the heart of this question, is can we just take a step back, talk about your overall $24 billion capital plan, why the SRP piece is so important, and then maybe I'll return to kind of the value proposition to your regulator. Yeah, sure, Jeff.

Speaker Change: Restoration outage times and improve overall reliability.

Speaker Change: Also note Jeremy that the requested capital is incremental to encores existing capital plan, but Alan.

Alan: It might be helpful. I think that's I'll go to the heart of this question is can we just take a step back talk about your overall $24 billion capital plan by the SRP piece is so important and maybe I'll, maybe I'll return to kind of the value proposition to your regulator.

Alan Nye: And thanks for the question, Jeremy. You know, going back to Jeff's point about our original, our current five-year capital plan is presently at $24.2 billion. And that breaks down generally into about $5.1 billion for distribution expansion, about $13.5 billion for transmission expansion, $4.2 billion for maintenance, and about $1.4 billion for technology.

Alan: Yes, sure Jeff and thanks for the question, Jeremy you know going back to Jeff's point to our original our current five year capital plan is presently at $24 2 billion.

Alan Nye: And that breaks down generally into about $5 1 billion for distribution expansion.

Alan Nye: $13 5 billion for transmission expansion.

Alan Nye: $4 2 billion for maintenance and about $1 4 billion for technology and again as I've said before that demonstrates about 70% of our capital plan is growth.

Alan Nye: And again, as I've said before, that demonstrates about 70% of our capital plan is growth. 97% of our capital plan, or more is, recoverable through our trackers. And that provides us right now with a very, we think, solid industry-leading rate-based CAGR of around 11 percent. Now, obviously, that's before the SRP and whatever the commission ultimately rules on our SRP.

Alan Nye: Seven 4% of our capital plan or more is.

Alan Nye: Recoverable through our trackers and that provides us right now.

Alan Nye: A very we think solid industry, leading rate base CAGR of around 11% now obviously that's before.

Alan Nye: The SRP and whatever the commission.

Alan Nye: Ultimately rules on our SRP, we feel.

Alan Nye: We feel very excited about the plan we filed. I think our team has done a great job of preparing a very strong plan that will have, I think, significant benefits for our customers. And if I can, I can break it down a little more into what we filed. Our SRP is generally broken down into six major categories.

Alan Nye: We're very excited about the plan, we filed I think our team has done.

Alan Nye: And preparing a very strong plan.

Alan Nye: That will have I think significant benefits for our customers and if I can I can break it down a little more into what we filed.

Alan Nye: The first one being overhead and underground resiliency and modernization. That includes things like new and repaired poles, cross arms, lightning protection, increased capacity for high-demand days, and rehab or replacement of underground conductors. And so in that first category, that's around $1.830 billion in the first category. Our second category is Continued Optimization of Distribution Automation. And what we're talking about here is an expansion of our distribution automation program through new tie lines, increased capacity, and the addition of intelligent switches. And we have about $510 million in that bucket. The third category is Expanded Vegetation Management, or VM.

Alan Nye: Our SRP is generally broken down into six major categories.

Alan Nye: First one being overhead and underground resiliency and modernization.

Alan Nye: That includes things like new and prepared polls cross arms.

Alan Nye: Lightning protection increased capacity for high.

Alan Nye: High demand days.

Alan Nye: Rehab or replacement of underground conductor and so in that first category. That's around 183, a $1 billion in the first category.

Alan Nye: Our second category is continued optimization of distribution automation and what we're talking about there is expansion of our distribution automation program through new ties increased capacity.

Alan Nye: The addition of intelligent switches and we have about $510 million.

Alan Nye: In that bucket.

Alan Nye: The third category is expanded vegetation management are BM.

Alan Nye: We're going to do that primarily on a bunch of lateral circuits, and we're going to leverage remote sensing capabilities, such as satellite and LiDAR, to better direct our VM program moving forward through this program. We have about $285 million allotted to Expanded VM in this plan. The fourth category is enhancing our cyber risk management, that means all things cyber risk related mitigation, as well as enhancement and security related to Encore's digital backbone. We have about $525 million allocated to that category. Improved physical security

Alan Nye: We can do that primarily on a bunch of a lateral circuits and we're going to leverage remote sensing capabilities such as satellite.

Alan Nye: And lidar to better direct our VM program moving forward through this program, we have about $285 million allotted to expanded in this plan.

Alan Nye: The fourth category is enhancing our cyber cyber risk management.

Alan Nye: That means all things cyber risk related mitigation.

Alan Nye: As well as enhancement in the security.

Alan Nye: Related to encores digital backbone and we have about $525 million allocated to that category excuse me fifth.

Alan Nye: Like all utilities, many around the country, we're facing additional intrusions and risks to our physical assets. And so we have about $80 million allocated in our plan to things such as video and event correlation systems to assist law enforcement, as well as just general asset protective measures to try and better protect our assets and equipment. We have about $80 million in that category. Finally, we have about $900 million total in the plan, but about $182 million specifically related to wildfire mitigation measures.

Alan Nye: Improved physical security like all utilities, many around the country, we're facing additional.

Alan Nye: Intrusions and risk to our physical assets.

Alan Nye: So we have about $80 million allocated in our planned two things such as video video and event correlation systems to assist law enforcement as well as just general asset protection measures.

Alan Nye: And better protect our assets and equipment and we have about $80 million in that category.

Alan Nye: Finally.

Alan Nye: We have about 900 million total in the plan, but about $182 million.

Alan Nye: Specifically related to.

Alan Nye: <unk> fire mitigation measures and that would include.

Alan Nye: And that would include things like strengthening and protecting assets in high-risk, higher-risk wildfire zones, safe device deployment, advanced wildfire risk modeling, overhead and under ground resiliency measures, and again, increased distribution automation in higher wildfire risk areas. And I would say, just lastly, on that last piece, that's a continuation of wildfire risk mitigation and prevention that we've had going on for a number of years. But with this additional $900 million that we have allocated to this category in this plan, we think we can make some real headway on that issue as well as the other ones I described.

Alan Nye: Things like strengthening.

Alan Nye: Protection of assets in high risk wildfire higher risk wildfire zones.

Alan Nye: Safe device deployment.

Alan Nye: Advanced wildfire risk modeling.

Alan Nye: Overhead and underground resiliency measures and again increase just distribution automation and higher wildfire risk areas and I would say just lastly on that last piece that's a continuation.

Alan Nye: Wildfire mis wildfire risk mitigation and prevention that we've had going on for a number of years.

Alan Nye: But with this additional 900 or so million that we have allocated to this category.

Speaker Change: As planned we think we can make some real headway on that issue as well as the other ones I described hey, Alan If you would maybe it's a follow up go into kind of the heart of Jeremy's question I don't want to get in front of your regulator, but could you just kind of define the value proposition that you think that the plan will deliver well.

Alan Nye: Hey, Alan, maybe as a follow-up, going to kind of the heart of Jeremy's question, I don't want to get in front of your regulator, but could you just kind of define the value proposition that you think that the plan will deliver? Well, Jeff, and I think, you know, I think you said it very well, and I've said on prior calls that I view this, and I think we view this... as a historic opportunity to really directly take action on our system to the benefit of our customers in the ERCOP market.

Speaker Change: Sure, Jeff and I think.

Alan Nye: Thank you said, it very well and I've said on prior calls I view. This I think we view this.

Jeff: As a historic opportunity to really directly take action on our system to the benefit of our customers in the ERCOT market.

Alan Nye: And I think each one of these categories would provide very specific benefits, from resiliency to avoidance and prevention of wildfires to better reliability, all things that will benefit our customers very directly. Got it. That's very helpful. Thank you for all the details.

Alan Nye: And I think each one of these categories would provide.

Alan Nye: Very specific benefits from resiliency to avoid incident prevention of wildfires to better reliability, all things that will benefit our customers very directly.

Alan Nye: Thank you.

Speaker Change: Got it that's very helpful. Thank you for all the detail.

Speaker Change: You bet. Thank you Jeremy.

Alan Nye: Yeah.

Alan Nye: Thank you.

Jeffrey Walker Martin: You bet. Thank you, Jeremy. Thank you. Our next question will come from Durgesh Chopra from Evercore ISI. Your line is open. Hey, team. Good afternoon or good morning to you guys, I guess. Hi, Durgesh.

Alan Nye: Our next question will come from their guests Chopra from Evercore ISI. Your line is open.

Durgesh Chopra: Hi team good afternoon, good morning, guys.

Durgesh Chopra: As our desk.

Durgesh Chopra: Hey, Jeff, thanks for giving me time. Maybe, Jeff, can you just share your thoughts on the pause on the FTA permit and how you see that progressing? Yeah, thank you for asking me that question, Durgesh. I think I would start by saying that two things come to mind. First, we believe the permitting pause is temporary and that permits will be issued in the future. I mean, many of you followed the comments that were made at CIRA Week.

Durgesh Chopra: Hey, Jeff Thanks for giving me time, maybe Jeff just can you.

Durgesh Chopra: Just share your thoughts on the on the pause on the.

Durgesh Chopra: FTA permit and how do you see that progressing.

Durgesh Chopra: Yes. Thank you for asking that question, Doug I think I would start by saying that two things come to mind first is we believe the permitting pauls is temporary and that permits will be issued in the future.

Durgesh Chopra: Many of you followed the comments were made at Cerro week, I think Secretary Grand home has repeatedly Enel said that she anticipates. This issue will be in the rearview mirror at some point early next year.

Jeffrey Walker Martin: I think Secretary Granholm has repeatedly now said that she anticipates this issue will be in the rearview mirror at some point early next year. Secondly, I would also remind folks that it only really impacts Port Arthur Phase 2. We already have existing Department of Energy non-FTA permits for Cameron Phase 1, which is in operation, ECA Phase 1, and Port Arthur Phase 1, both of which are in construction, as well as Cameron Phase 2, ECA Phase 2, and Vista Pacifico.

Jeffrey Walker Martin: Secondly, I would also remind folks that it only really impacts port Arthur phase two we already have existing department of energy non FTA permits for Cameron phase, one which is an operations eco phase one in port Arthur Phase one both of which are in construction as well as Cameron phase two <unk>.

Jeffrey Walker Martin: So this is really something that directly impacts Port Arthur Phase 2, and we expect to work through that early next year. I would note that Justin's team continues to work diligently to advance Port Arthur Phase 2, which we continue to believe has tremendous commercial value. But I also thought it might be helpful if I returned to what we think are probably the most important points around our LNG strategy. We have quality LNG development projects, which obviously include the expansion of Port Arthur. They are geographically advantaged.

Jeffrey Walker Martin: As to invest the Pacific Coast. So this is really something that really impacts directly port Arthur phase two and we expect to work through that early next year.

Jeffrey Walker Martin: I'd note that just since team continues to work diligently to advance Port Arthur Phase two which we continue to believe has tremendous commercial value.

Jeffrey Walker Martin: But also I thought it might be helpful. If I return to what we think are probably the most important points around our LNG strategy, we have quality LNG development projects, which obviously include the expansion of the port Arthur They are geographically advantaged theres no. Other developer out there that has the opportunity to directly access to Asia and also dispatch.

Jeffrey Walker Martin: There's no other developer out there that has the opportunity to directly access Asia and also dispatch it into the Atlantic through the Gulf. The next two in the queue have the advantage of being brownfield sites. That's another economic advantage for us at Port Arthur Phase II as well as Cameron Expansion, and we're advancing these projects in a disciplined manner for the benefit of our shareholders. I would also note that they are effectively upside to our current $48 billion capital plan, and they are also upside to our long-term growth rate. Thanks, Jeff. I appreciate all that color.

Jeffrey Walker Martin: Into the Atlantic through the golf.

Jeffrey Walker Martin: The next two and the Q have the advantage of being brownfield sites. That's another economic advantage for us at Port Arthur Phase II as well as Cameron expansion and were advancing these projects in a disciplined manner for the benefit of our shareholders. I would also note that they are effectively upside to our current $48 billion of capital plan.

Speaker Change: And they are also upside to our long term growth rate.

Jeffrey Walker Martin: And you did answer my question. I was just going to ask you if there is a timeline that we should follow as you think about FID, whether it's Port Arthur Phase II or the Cameron expansion. Sure, I would mention two things. One is that we have guided our expected FID for Cameron expansion to the first half of 2025. We have not yet set an FID expectation for Fort Arthur phase two.

Speaker Change: Thanks, Jeff I appreciate all that color.

Speaker Change: You did answer my question I was just going to ask you.

Jeffrey Walker Martin: If there is a timeline that we should follow as you think about FY <unk>, whether it's port Arthur Phase two of the Cameron expansion.

Jeffrey Walker Martin: Sure I would mentioned two things one is we have guided or expected for Cameron expansion to the first half of 2025, we have not yet set in.

Jeffrey Walker Martin: Expectation for Port Arthur Phase II, but I can assure you that just this team continues to make steady progress.

Jeffrey Walker Martin: But I can assure you that Justin's team continues to make steady progress. I mean, as you go quarter over quarter, we are continuing to make progress in commercially developing both of those projects. And I think the momentum inside of our company continues to build on their overall success. Thank you again. Excellent quarter, guys. Thanks so much again.

Jeffrey Walker Martin: Quarter over quarter, we are continuing to make progress in commercially develop in both of those projects.

Jeffrey Walker Martin: The momentum inside of our company continues to build on their overall success.

Jeffrey Walker Martin: Thank you again excellent quarter guys. Thanks, so much again thank.

Speaker Change: Thank you so much.

Speaker Change: Thank you Andrew.

Jeffrey Walker Martin: Thank you so much. Thank you. And our next question will come from Carly Davenport of Goldman Sachs. Your line is now open. Hi, thanks so much for taking the questions today. Hi, Carly. Hey Jeff, how are you? I wanted to just go back to the SRP filing.

Jeffrey Walker Martin: Our next question will come from Carly Davenport from Goldman Sachs. Your line is now open.

Carly S. Davenport: Alright, thanks, so much for taking the questions today.

Carly S. Davenport: Hi, Charlie.

Carly S. Davenport: Hi, Jeff how are you wanted to just go back to the to the FRP filing really appreciate all the detail there. So far just wanted to get a sense of how we should think about the timing and the cadence of that spend assuming that the plan sort of goes into effect in the 2025 timeframe and then can you just remind us how procedurally you expect this to play out between now and year end.

Carly S. Davenport: I really appreciate all the detail there so far. I just wanted to get a sense of how we should think about the timing and the cadence of that spending, assuming that the plan sort of goes into effect in the 2025 timeframe. And then can you just remind us how procedurally you expect this to play out between now and year-end? Yeah, let me start with the procedural point, and then I'll pass it on to Alan to talk about how he expects that capital to go forward. You know, obviously, they made the filing yesterday, which was contemplated in the legislative bill that passed last year. The commission has a statutory 180 days to review and approve the filing.

Jeffrey Walker Martin: So, I think for now, we're expecting that to be in hand in the fourth quarter. And then, in terms of that rolling out, it's a spend over three years, and maybe, Alan, you can talk about on a going forward basis how you think that capital would come in, obviously, subject to the commission's approval on the final number. Yeah, you bet, Jeff. Pretty simply, it's basically 2025 through 2027 for those outlays, and it's slightly backloaded. Got it. Thank you. Thank you so much for that.

Alan Nye: Yes, let me start with a procedural point and then I'll pass it on to Allen talked about how you expect that capital to go forward.

Jeffrey Walker Martin: Obviously, they've made the filing yesterday, which was contemplated in the legislative Bill that passed last year.

Jeffrey Walker Martin: The Commission has a statutory 180 days to review and approve the filing so I think for now we're expecting that to be in hand in the fourth quarter and then in terms of that rolling out or suspend over three years. So maybe Alan you can talk about on a going forward basis, how do you think that capital with Les and obviously subject to the commission.

Alan Nye: Approval on the final number yes, you bet Jeff.

Jeffrey Walker Martin: Pretty simply it's basically 22025 through 2027 for those outlays and it's slightly backloaded.

Jeffrey Walker Martin: Got it thank you.

Speaker Change: Thank you so much for that and then the follow up just on you've talked a lot about these robust load growth.

Carly S. Davenport: And then to follow up just on, you know, you've talked a lot about robust load growth and opportunities in Texas supporting infrastructure investment. Could you talk a little bit about if there's any sort of supply chain or other constraints that you're running into in terms of executing on that T&D build out at Encore? Yeah.

Carly S. Davenport: <unk> is in Texas supporting infrastructure investment just could you talk a little bit about if theres any sort of supply chain or other constraints that you're running into in terms of executing on that T&D buildout at encore.

Jeffrey Walker Martin: You know, I said something about this in my prepared remarks. We continue to see some supply chain constraints in some areas, but, in general, we're seeing, obviously, low growth across all of our markets, and there's been some relaxation of this supply chain issue. I think Encore, in particular, and both Justin and I serve on the board of directors, have done a really good job of going into the marketplace to secure the appropriate contractors and hard goods, but Alan, perhaps you could talk about the work that your team has done and over what period of time you feel like you've got what you need locked in. Sure. Yeah, Carly, it's a great question.

Speaker Change: Yes, Sir.

Carly S. Davenport: Something about this in my prepared remarks.

Alan Nye: We continue to see some supply chain the supply chain constraints in some areas, but in general we're seeing obviously load growth across all of our markets and there has been some relaxation of the supply chain issue I think encore in particular in both adjusted and I serve on the board of directors have done a really good job.

Jeffrey Walker Martin: Going into the marketplace to secure the appropriate contractors and hard goods, but Alan perhaps you could talk about the work that you've seen is done and over what period of time, you feel like you've got what you need locked in sure.

Alan Nye: Again, as Jeff said, we at Encore and our operations and our supply chain people have been working to get in position to be able to execute on this plan for quite a while now, and we've done a number of things, including diversifying our supply chain, adding additional suppliers five and six years ago that have put us in a position now to, while there certainly are issues out there with the supply chain, we feel extremely confident in the first two years. I've said it to my board of directors.

Alan Nye: So great question.

Alan Nye: And as Jeff said, we at Encore and our operations and our supply chain people, who had been working to get in position to be able to execute on this plan.

Alan Nye: For quite a while now.

Alan Nye: We've done a number of things, including diversifying our supply chain and adding additional suppliers five and six years ago that have put us in a position now to while there certainly are issues out there with supply chain, we feel extremely confident in the first two years.

Alan Nye: I think we have the first two years effectively in the box with what we need from both an equipment perspective and from a vendor perspective, and we've made very significant progress on the last three years as well, and what we're doing now is filling in the gap and waiting, you know, to assign things out like engineering studies. Those are not completed yet for the outer years because we wouldn't assign them out until we know exactly what we're facing.

Alan Nye: I've said it to my Board I think we are the first two years effectively in the box with what we need from both an equipment perspective and from a vendor perspective, and we've made very significant progress on the outer three years as well and what we're doing now is filling in the gaps.

Alan Nye: And waiting to assign things out like engineering studies those are not completed yet for the outer years, because we wouldn't assign them out until we know exactly what we're facing.

Alan Nye: But we've managed, I believe, to work through supply chain issues very effectively, and we feel very good about where we are right now. And then, Carly, the only other thing I would add to Alan's comments is think about his base capital plan, which is just over $24 billion. It is really organized around growth, and specifically it is weighted toward transmission. So roughly 60% of that spin is transmission.

Alan Nye: But we managed to I believe to work through supply chain issues very effectively.

Alan Nye: And we feel very good about where we are right now and then currently the only other thing I would add to Alan's comments think about his base capital plan and which is just over $24 billion is really organized around growth and specifically it is weighted toward transmission. So roughly 60% of that spend is transmission.

Jeffrey Walker Martin: And I think that's why this SRP file is so important. It really creates a second leg of growth specifically around building in redundancy and resiliency in the system, which is equally important to the state of Texas.

Alan Nye: Thats why this SRP filing is so important it really creates a second leg of growth specifically around building and redundancy and resiliency in the system, which is equally important to the state of Texas.

Carly S. Davenport: I appreciate it. Thank you. Thank you. And our next question will come from Steve Fleishman from Wolf. Your line is open. Steve.

Carly: Understood. Thanks, so much for that color I appreciate it.

Steven Isaac Fleishman: Thank you.

Steven Isaac Fleishman: Thank you.

Carly S. Davenport: And our next question will come from Steve Fleishman from Wolfe Your line is open.

Steven Isaac Fleishman: Hi, Steve.

Steven Isaac Fleishman: Hey, good afternoon. Just one question. I think Conoco might have said they had an interest in selling down a stake in Port Arthur, but I did not see it myself, so I'd just be curious what you're hearing from them. Yeah, I'll make a couple of comments here. One is, Steve, Conoco is a very important strategic partner force at Port Arthur. I would note that we've got a lot of respect for their management team and certainly have great relationships across both companies.

Steven Isaac Fleishman: Hey, good afternoon.

Steven Isaac Fleishman: One question just I think.

Steven Isaac Fleishman: Conoco Might've said they have interest in selling down a stake in port Arthur.

Steven Isaac Fleishman: But I did not see it myself, so I'd just be curious.

Speaker Change: What youre hearing from them.

Speaker Change: Yes, I'll make a couple of comments here one is Steve Conoco is a very important strategic partner for us at Port Arthur I would note that we've got a lot of respect for their management team and certainly have great relationships across both companies and I think a strong alignment of interest and this is the key point.

Steven Isaac Fleishman: And I think a strong alignment of interest, and this is the key point, around both Phase 1 and Phase 2. So, you know, whether they elect to put new capital into Phase 2 as an open matter, I'd certainly refer that to their management team. But just remember, in the first phase, they took roughly half of the offtake, or 5 million tons per annum. They own 30% of the project-level equity, and they are also the gas manager for the first phase.

Steven Isaac Fleishman: Round, both phase, one and phase II, so whether they elect to put new capital into phase II is an open matter I'd certainly would refer that to their management team, but just remember in the first phase I took roughly half of the offtake or 5 million tons per annum, they own 30% of the project level equity.

Steven Isaac Fleishman: And they are also the gas manager for the first phase.

Jeffrey Walker Martin: The second phase is an important context, I believe, for Conoco because the second phase will be taking gas supply, Steve, from the Permian Basin, which has significant strategic considerations for a variety of commercial parties, and that's particularly true for ConocoPhillips. So I would just note that this is an area we're working closely with a variety of counterparties who want to collaborate with us on the success of Phase 2. And based on the conversations we're currently having, we continue to be very excited about moving forward with that project. Okay, great. I'll leave it there. Thank you very much.

Steven Isaac Fleishman: The second phase is important context, I believe on conoco because.

Jeffrey Walker Martin: The second phase will be taking gas supply from the Permian basin, which has significant strategic considerations for a variety of commercial parties and thats, particularly true for Conocophillips. So I would just note that this is an area. We are working closely with a variety of counterparties.

Jeffrey Walker Martin: We want to collaborate with us on the success of phase two and based on the conversations. We're currently having we continue to be very excited about moving forward with that project.

Jeffrey Walker Martin:

Jeffrey Walker Martin: Uh huh.

Speaker Change: Okay great.

Jeffrey Walker Martin: I'll leave it there. Thank you very much thank.

Steven Isaac Fleishman: Thank you, Steve. Thank you. And one moment for our next question. Thank you. And our next question will come from Anthony Crowdell from Azuho. Your line is open. Hey, good afternoon, team.

Speaker Change: Thank you Steve.

Anthony Christopher Crowdell: Thank you.

Anthony Christopher Crowdell: And one moment for our next question.

Steven Isaac Fleishman: Yes.

Steven Isaac Fleishman: Yes.

Anthony Christopher Crowdell: Thank you and our next question will come from Anthony <unk> from Mizuho. Your line is open.

Anthony Christopher Crowdell: Hey, good afternoon team.

Anthony Christopher Crowdell: If I could, I guess... Jump on our Carly's question, I guess hers is more specific, maybe the supply chain to the regulated utility. If I think about the infrastructure business, particularly with Port Arthur II and Cameron Phase II, any big changes or estimates you're seeing in the E&C contracts that maybe Bechtel is looking into? Yeah, what might be helpful here, Anthony, is if Justin could just take us through maybe a little bit of a construction update as well as what you're doing to secure some long-lead time items on some of the projects you're near-term focused on, and that might be helpful for his question. Yeah,

Anthony Christopher Crowdell: Anthony I guess.

Anthony Christopher Crowdell: Jump on our car lease question I guess, just more specific maybe supply chain to the regulated utility if I think about the.

Anthony Christopher Crowdell: Infrastructure business, particularly with Port Arthur too and Cameron phase two any big changes or estimate youre seeing in the E&C contracts that may be bechtel is looking into.

Speaker Change: Yes, well it might be helpful. Here Anthony is just and if you just take us through maybe a little bit of a construction update as well as what youre doing to secure some long lead time items on some of the projects here near term focus.

Speaker Change: It might be helpful. First question, yes, yes.

Jeffrey Walker Martin: Hi Anthony, and thank you, Jeff. Yeah, so let me start with construction, then I'll go to the heart of your question. So we're seeing solid progress on construction at both ECA Phase 1 and Port Arthur Phase 1. I've had opportunities to visit both sites recently.

Speaker Change: Hi, Anthony and thank you Jeff.

Speaker Change: Yes, So let me start with construction and then I'll go to the heart of your question. So.

Justin Christopher Bird: Jeff and I were at ECA just two weeks ago observing construction, and I was at Port Arthur recently for the one-year commemorative groundbreaking. Both projects remain on track. We're not seeing the supply chain issues. At ECA Phase 1, we remain on track for COD in the summer of 2025. We're now more than 80% complete, and construction is ongoing across all main areas of the project. We have about 4,000 people deployed on site and have over 15 million hours of work with no lost time incidents.

Justin: We're seeing solid progress construction at both <unk> phase, one and Port Arthur Phase one I have had opportunities to visit both sites recently, Jeff and I were at.

Justin Christopher Bird: Just two weeks ago observing construction.

Justin Christopher Bird: And I was at Port Arthur recently for the one year commemorative groundbreaking.

Justin Christopher Bird: Both projects remain on track, we're not seeing the supply chain issues.

Justin Christopher Bird: Yeah.

Justin Christopher Bird: <unk> phase one we remain on track for COPD in the summer of 2025.

Justin Christopher Bird: Now more than 80% complete construction is on going across all areas of the project. We have about 4000 people deployed on site and have over 15 million hours work with no lost time incidents.

Justin Christopher Bird: Bechtel at Port Arthur, Phase I. Construction activities are progressing well, as Karen mentioned in her remarks. We're focused on the foundation stage construction, soil stabilization, piling, concrete pouring, and it's exciting to see we have recently commenced structural steel. In terms of our development projects, we remain excited about these projects. We're continuing to see strong market interest and do expect these projects to advance. In terms of construction contracts or progress, for Port Arthur Phase II, while we're awaiting our DOE non-FTA expert permit, we're continuing to work with Bechtel on an EPC agreement that can optimize efficiencies with the Phase I construction schedule.

Justin Christopher Bird: Backfill at Port Arthur Phase, one construction activities are progressing well.

Justin Christopher Bird: As Karen mentioned in her remarks, we're focused on the foundation stage construction.

Justin Christopher Bird: Soil stabilization piling concrete pouring and it's exciting to see we recently commenced structural steel.

Justin Christopher Bird: In terms of our development projects.

Justin Christopher Bird: We remain excited about these projects were continuing to see strong market interest and do you expect these projects to advance.

Justin Christopher Bird: In terms of construction contracts or progress at Port Arthur Phase III.

Justin Christopher Bird: We are awaiting our non FTA export permit we're continuing to work with bechtel on an EPC agreement that can optimize efficiencies with the phase one construction schedule.

Justin Christopher Bird: We're also continuing marketing efforts for offtake and equity. On Cameron Phase II, we're currently working with the Cameron partners to optimize cost through value engineering, and as Jeff mentioned, we're also exploring the procurement or reservation of long lead time and critical path equipment. You know, Cameron Phase II is a comparatively low-emission project, and it's a brownfield asset sourcing low-cost gas. So we think this is really important, and as Jeff had previously mentioned, we're advancing that with a view toward taking FID in the first half of 2025. I guess as a takeaway, you know, I talk about the reverse field of dreams model.

Justin Christopher Bird: Also continuing marketing efforts for offtake and equity.

Justin Christopher Bird: On Cameron phase two.

Justin Christopher Bird: We're currently working with the camera partners to optimize cost through value engineering and as Jeff mentioned, we're also exploring the procurement or reservation of long lead time and critical path equipment.

Justin Christopher Bird: Cameron Phase II is a comparatively low emission project and it's a brownfield asset sourcing logos low cost gas.

Justin Christopher Bird: So we think this is really important and as Jeff had previously mentioned.

Justin Christopher Bird: Advancing that with a view towards taking in.

Justin Christopher Bird: In the first half of 2025.

Justin Christopher Bird: Yes.

Justin Christopher Bird: As a takeaway.

Justin Christopher Bird: No.

Justin Christopher Bird: Talking about the reverse field of dreams model when they come and when we achieve the right returns we will build it.

Jeffrey Walker Martin: When they come and when we achieve the right returns, we'll build it along these lines. We'll only move forward with our projects when we have the right cost and risk structure and long-term contracted cash flows that support our corporate strategy, our targeted mid-teen equity returns, and create value for our shareholders. Hey, Anthony, I'd also point out to the heart of your question that Bechtel relationships, the strategic relationship for us, they're very, very helpful, kind of the best in the business in the Gulf. And that's why Justin commented on the importance of not demobilizing phase one and going right into a continuous build into phase two at Port Arthur.

Jeffrey Walker Martin: Along these lines, we will only move forward with our projects when we have the right cost and restructure and long term contracted cash flows that support our corporate strategy, our targeted mid teen equity returns.

Jeffrey Walker Martin: I would also note that his team has master purchase agreements with all the key vendors in place, and there's a lot of focus on making sure we're sourcing the key equipment and, particularly, planning in advance for the long-lead time items. So that all goes into the box of how we manage risk to make sure that we're delivering projects that create the right risk reward for our owners. And then if I get one follow-up, and I know it's a very small part of SIP, it's Cimarron Wind. The company has been, you know, very, very successful at recycling capital and sold a renewable portfolio several years ago. Very opportunistic there.

Jeffrey Walker Martin: And create value for our shareholders.

Speaker Change: Anthony I'd also mention to the heart of your question.

Jeffrey Walker Martin: The better relationships with strategic relationship for Us Theyre very very helpful kind of the best in the business in the Gulf and Thats why I just commented on the importance of not demobilizing phase, one and going right into a continuous build into phase II at Port Arthur I would also note that his team has master purchase agreements with all the key vendors in place.

Jeffrey Walker Martin: And Theres a lot of focus on making sure we're sourcing the key equipment and particularly planning in advance of long lead time items. So that all goes into the box of how we manage risk to make sure that we're delivering projects that create the right risk reward for our owners.

Jeffrey Walker Martin: And then if I get one follow up and I know, it's a very.

Jeffrey Walker Martin: Small part of.

Jeffrey Walker Martin: The Cimarron win.

Jeffrey Walker Martin: The company has been.

Jeffrey Walker Martin: Very.

Jeffrey Walker Martin: Very successful recycling capital and sold our renewable portfolio several years ago.

Jeffrey Walker Martin: Very opportunistic there and now the company as it.

Jeffrey Walker Martin: Should we think of more win coming on a more renewable coming on to rebuilding.

Jeffrey Walker Martin: <unk> portfolio of chip and I'll leave it there.

Speaker Change: Yeah, Let me let me.

Jeffrey Walker Martin: Provide a little bit of context for that because we're excited about that project. Let me start Anthony with the fact that we rolled out our new corporate strategy back in 2018 and really at the heart of that strategy was subordinate <unk> focus on two things the first of which was building leadership and scale advantages and large economic markets and number two more.

Anthony Christopher Crowdell: And now the company is, should we think of more wind coming on or more renewable energy coming on to rebuild a renewable portfolio with Zip? And I'll leave it be. Yeah, let me provide a little bit of context for that because we're excited about that project. Let me start, Anthony, with the fact that we rolled out our new corporate strategy back in 2018, and really at the heart of that strategy was a more narrow focus on two things, the first of which was building leadership and skill advantages in large economic markets, and number two, more narrowly invested in the energy value chain around T&D type of infrastructure, investments like Cimarron where we can produce highly recurring cash flows.

Anthony Christopher Crowdell: Narrowly investing in the energy value chain around T&D type of infrastructure investments like Cimarron, where we can produce highly recurring cash flows. So when you turn that corporate strategy back to Mexico, We built a leadership position there going back to the 19 nineties, it's a market with over 130 million consumers.

Anthony Christopher Crowdell: So when you turn that corporate strategy back to Mexico, we built a leadership position there going back to the 1990s. It's a market with over 130 million consumers. When I became CEO in 2018, Anthony, it was the 15th largest economy in the world. Today, the IMF has it ranked as the 12th largest economy in the world, and PricewaterhouseCoopers now forecasts it'll be number seven in the world by 2040. It's also our largest trading partner with an energy network that's highly integrated with the United States, and that really plays to our strategy along the border and particularly the WIM project that you're referencing, which is located right along the U.S. border.

Anthony Christopher Crowdell: I became CEO in 2018, Anthony It was the 15th largest economy in the world today. The IMF has it ranked as the number 12 economy in the world and price Waterhouse Coopers now forecast there'll be number seven in the world by 2040.

Anthony Christopher Crowdell: It is also our largest trading partner with an energy network is highly integrated with the United States and that really plays to our strategy along the border and particularly the wind projects that Youre referencing is located right along the U S. Border is an expansion of a very large <unk> complex that we already own.

Jeffrey Walker Martin: It's an expansion of a very large ESG WIM complex that we already own. It's integrated electrically with a high voltage system and serves California, and it's being built using SI's operating cash flows from Mexico. So I think the key point here is, and we've referenced it several times in our prepared remarks, there is a very strong built-in growth story at SI based on projects that have already taken FID, and the opportunity with this land position we have adjacent to California is to efficiently and cost-effectively build some additional solar and wind to serve the California market, which is integrated with Mexico, and fill in and continue to improve on that recurring cash flow growth story I appreciate it.

Jeffrey Walker Martin: It's integrated electrically with a high voltage system and does serve California and is being built using SaaS operating cash flows from Mexico. So I think the key point here is and we've referenced it several times in our prepared remarks. There is a very strong built in growth story at ESI based upon <unk>.

Jeffrey Walker Martin: <unk> that have already taken.

Jeffrey Walker Martin: And the opportunity with this land position, we have adjacent to California is to efficiently and cost effectively build some additional solar and wind to serve the California market, which is integrated with Mexico and fill in and continue to improve on that recurring cash flow growth story.

Jeffrey Walker Martin: Jeff has been talking about.

Speaker Change: Great. Thanks for taking my questions.

Jeffrey Walker Martin: <unk> it.

Operator: Thank you. And we have time for one more question. And our next question will come from Craig Shere from TUI Brothers. Your line is now open. Hi, thanks for fitting me in.

Speaker Change: Thank you and.

Speaker Change: And we have time for one more question.

Operator: And our next question will come from Craig Shere from Tuohy Brothers. Your line is now open.

Craig Kenneth Shere: Alright, Thanks for fitting me in.

Operator: Thanks.

Craig Kenneth Shere: I'd like to dovetail a little on Anthony's first question about labor and the LNG market and kind of feed that into a broader question for Justin. In the last two, three months, you know, we've seen some peer projects announce potential delays due to skilled labor issues. For the same reasons, you've announced increasing demand in your domestic utility networks and T&D networks from data centers to AI, but also coal to gas fuel switching and others.

Craig Kenneth Shere: I would like to dovetail a little on Anthony as first question about labor and.

Craig Kenneth Shere: The LNG markets.

Craig Kenneth Shere: And kind of feed that into a broader question for Justin.

Craig Kenneth Shere: And the last two three months.

Craig Kenneth Shere: We've seen some peer projects announced potential delays.

Craig Kenneth Shere: Skilled labor issues.

Craig Kenneth Shere: For the same reasons you've announced.

Craig Kenneth Shere: Increasing demand.

Craig Kenneth Shere: And your domestic utility networks <unk> networks.

Craig Kenneth Shere: From data centers to AI, but also hold a gas fuel switching and other we've kind of seen a stabilization and rebound in the LNG markets with.

Craig Kenneth Shere: We've kind of seen a stabilization and rebound in the LNG markets with a kind of sense that this digestion period everybody was looking for in the second half may be soft and short or may not exist at all.

Craig Kenneth Shere: Ton of sense.

Craig Kenneth Shere: This digestion period, everybody was looking for in the second half, maybe soft and short or not exist at all.

Justin Christopher Bird: And in this context of the last two, three months' kind of change, I'm wondering if you're seeing any change in body language and, you know, a desire to kind of seize the day on, you know, prospective offtakes. Yeah, thanks for the question, Craig. I think You talked a little bit about the supply chain, about labor, but let me go to the heart of your question at the end there. So I think the LNG pause, I would say, I think there was some time to react to that in the marketplace. You saw some people step back, maybe with a little less desperation than they maybe had as part of the war in Ukraine.

Justin Christopher Bird: In this context of the last two three months kind of change.

Justin Christopher Bird: Im wondering if youre seeing any change in body language.

Justin Christopher Bird: And.

Justin Christopher Bird: Yes desire to kind of sees the day on.

Speaker Change: Prospective off takers.

Speaker Change: Yeah. Thanks for the question Craig I think.

Justin Christopher Bird: You talked a little bit about supply chain about labor, but let me go to the heart of your question at the end there. So I think the LNG pause I would say.

Justin Christopher Bird: I think there was some time to react to that in the marketplace. You saw some people step back maybe with a little less desk.

Speaker Change: Desperation than they may be had as part of the war in Ukraine, but I will say and I think we've said it multiple times on this call. We are still seeing a robust commercial interest in our projects. Our projects are expansion opportunities we've been a strong partner.

Justin Christopher Bird: But I will say, and I think we've said it multiple times on this call, we are still seeing robust commercial interest in our projects. Our projects are expansion opportunities. We've been a strong partner.

Justin Christopher Bird: So we're seeing robust interest. And I'd say, you know, currently, we have teams around the world actively engaged in commercial discussions for long-term contracted volumes. I would also add, Craig, I appreciate your question. If it's all about seizing the day, I'm betting on Justin's team.

Speaker Change: We're seeing robust interest in I would say currently we have teams around the world actively engaged in commercial discussions.

Justin Christopher Bird: For long term contracted volumes.

Justin Christopher Bird: Also add Craig and I appreciate your question.

Justin Christopher Bird: If it's all about seize the day.

Justin Christopher Bird: Betting on Justin's team, we're very excited about the progress we're making on the LNG front and look forward to providing updates in the future.

Jeffrey Walker Martin: We're very excited about the progress we're making on the LNG front and look forward to providing updates in the future. Great, thank you. Thank you. And that concludes today's question and answer session. At this time, I'd like to turn the conference back to Jeff Martin for any additional closing remarks. But I would just start by thanking everyone for joining us today.

Jeffrey Walker Martin: Alright, thank you.

Jeffrey Walker Martin: Thank you.

Jeffrey Walker Martin: 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.

Jeffrey Walker Martin: I know there were competing calls this morning, so we appreciate everyone making the time to join us. As Karen mentioned, we certainly believe we have a compelling value proposition with a strong growth and income story. Our management team is committed to the long-term success of Sempra, and we believe there's an incredible opportunity for us to continue innovating and finding new and better ways to serve customers, while also delivering strong financial returns to our owners.

Jeffrey Walker Martin: Now let me just start by thanking everyone for joining us today I know there were competing calls. This morning. So we appreciate everyone taking the time to join US as Karen mentioned, we certainly believe we have a compelling value proposition with a strong growth in income story. Our management team is committed to the long term success of Sempra and we believe there is an incredible opportunity for us to continue.

Jeffrey Walker Martin: If there are any follow-up items, please reach out to our IR team with your questions, and we look forward to seeing you in California at AGA on May 20th and 21st. This concludes our call. Thank you for your participation. You may now disconnect.

Jeffrey Walker Martin: And finding new and better ways to serve customers. While also delivering strong financial returns to our owners. If there are any follow up items. Please reach out to our IR team with your questions and we look forward to seeing you in California at HCA on May 20th in 'twenty one.

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Glen Donovan: This concludes our call.

Good morning and welcome to Sempra's first quarter and the live webcast of this teleconference. Bill O'Honor, There are several members of our management team with us today, including Jeff Martin, Trevor Mihalik, Executive Vice President and Group President, Sempra Energy, California. Justin Bird.

Glen Donovan: Thank you for your participation you may now disconnect.

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Glen Donovan: Good day and welcome to <unk> first quarter earnings call Today's conference is being recorded.

Glen Donovan: At this time I'd like to turn it over to Glenn Donovan. Please go ahead.

Speaker Change: Good morning, and welcome to <unk> first quarter 2024 earnings call a live webcast of this teleconference and slide presentation are available on our website under events and presentations section.

Glen Donovan: We have several members of our management team with us today, including Jeff Martin Chairman and Chief Executive Officer.

Operator: Karen Cedric Executive Vice President and Chief Financial Officer Trevor.

Glen Donovan: Trevor Mihalik Executive Vice President and group President Central California.

Operator: Justin Bird Executive Vice President and Chief Executive Officer of infrastructure.

Alan Nye, Chief Executive Officer. Peter Wall, Senior Vice President. Before starting, I'd like to remind everyone that we'll be discussing four..., meetings of the private securities litigation. The actual results may differ materially.

Operator: Allen Nye, Chief Executive Officer of Encore, Peter Walsh, 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.

Operator: <unk> results may differ materially from those projected in any forward looking statements we make today.

The factors that could cause our actual results to differ materially are discussed in the company's Earnings per common share amounts in our presentation, on a diluted basis, and we'll be discussing certain non-gaseous... Please refer to the presentation slides. We also encourage you to review our 10-Q for the quarter ended March 31st. I'd also like to mention that four, and the President of the United States.

Operator: Factors that could cause our actual results to differ materially.

Operator: Just in the Companys, most recent 10-K and 10-Q filed with the SEC.

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

Operator: Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures.

Operator: We also encourage you to review our 10-Q for the quarter ended March 31 2024.

Operator: I'd also like to mention that forward looking statements contained in this presentation speak only of today may seven 2024.

Only if today, May 7th, 2024. It is important to note that the company does not assume any obligations from the other company. With that, please turn to slide four and let me hand the call over to you. Thank you, Glen, and thank you all for joining us today. We're pleased. Quarter Financial Results. [inaudible] Manufacturing Productions, Easing of Supply Chain Constraints and Continued, previously to discuss the view that our industry is, believes Sempra's strategy and portfolio are well-positioned to benefit, in addition to the long-term demand from reshoring. Artificial intelligence and data centers are driving new growth in digital infrastructure with demand, and Jeff Walsh. We'll see you next time.

Operator: Important to note that the company does not assume any obligation to update.

Operator: Or revise any of these forward looking statements in the future.

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

Jeffrey Walker Martin: Thank you Glenn and thank you all for joining US today, we're pleased to report our first quarter financial results. It is a great start to the year and sets us up well to provide strong financial performance for 2024. In addition to the strength of our financial performance the market backdrop for energy infrastructure continues to be very constructive.

Speaker Change: We're seeing strong macroeconomic fundamentals supported U S energy demand with the economy continuing to grow at a steady pace with manufacturing production gains easing of supply chain constraints and continued job creation.

Jeffrey Walker Martin: We've previously discussed the view that our industry is experiencing a super cycle of growth and believe separate strategy and portfolio are well positioned to benefit from current trends.

Jeffrey Walker Martin: In addition to the long term demand from re shoring and electrification of transportation artificial intelligence and data centers are driving new growth in digital infrastructure with demand estimates tripling from two 5% of total U S electric consumption to seven 5% by 2030.

Growth in Texas is all. [inaudible] 5 gigawatts higher than the rest of the country. With the backdrop of strong industry fundamentals, Sempra offers several, First in California, we're at the forefront. 25 million consumers in the country's large... In our General Rate Cases, we're expecting to make new investments that support electrification and decarbonization while also, Diverse Industrial, CNI. Thank you for joining us today. And in part, that's why Encore's recently filed its System Resiliency... Timely and important. And finally, at Sempra...

Jeffrey Walker Martin: Growth in Texas is also particularly remarkable with ERCOT recently, raising its forecast at peak demand by the end of the decade to over 150 Gigawatts of note that 65 gigawatt higher than the all time record in the state.

Operator: Against the backdrop of strong industry fundamentals Sempra offers several competitive advantages.

Operator: First in California, we are at the forefront of the energy transition, serving 25 million consumers in the country's largest economy and one of the largest manufacturing basis in the U S.

Operator: Through our general rate cases, we're expecting to make new investments that support electrification and decarbonization, while also improving affordability safety and reliability.

Operator: Turning to Texas, we're seeing diverse industrial C&I and residential growth.

Operator: Is creating jobs, increasing electricity demand and requiring significant investments to modernize and expand the electricity grid.

Operator: With economic expansion, the safety and resilience of the grid becomes even more critical and in part that's why encores recently filed.

Operator: <unk> resiliency plan is both timely and important alloys.

Operator: Al will speak to this in greater detail later in today's presentation.

Operator: And finally at simpler infrastructure, we're supporting global demand for energy security are in the midst of a second wave of LNG developments expected to support over 700 million tons per annum of demand by 2050, our dual coast LNG strategy is contributing to this push with approximately $16 million.

Global Demand for Energy Security We are in the midst of, Our dual-coast LNG strategy is contributing to this push with approximately 16 million tons per annum of new energy, more than double our. Key takeaways I'm excited about the opportunities ahead as Sempra Infrastructure looks to provide cleaner and more reliable energy. Projects that have reached FID and are under construction and doesn't yet include expected upside from a series of, Coming now to our financial results, we reported first quarter 2024 adjusted EPS of $1.00. We're pleased to also affirm our full year 2024 adjusted EPS guidance range of four dollars and sixty cents to four dollars, 25.

Operator: Tons per annum of new export capacity currently under construction, which would more than double our existing LNG operating footprint.

Operator: The key takeaway is we're excited about the opportunities ahead.

Operator: <unk> infrastructure looks to provide cleaner and more reliable sources of energy to its customers, while charting a course, where attractive built in growth through the end of the decade.

Operator: It's also important to note that separate infrastructures growth forecast are based solely on projects that have reached out and are under construction and doesn't yet include expected upside from a series of other projects still in development.

Operator: Turning now to our financial results, we reported first quarter 2024, adjusted EPS of $1 34.

Operator: In addition, we're pleased to also affirm our full year 2024, adjusted EPS guidance range of.

Operator: $4 62.

Operator: To $4 90.

Operator: In 2025, EPS guidance of $4 90.

Operator: $5 25.

Just a reminder, when you look at our adjusted EPS, 23-2025, it reflects approximately 7% of the world's greenhouse gas emissions, a long-term EPS. Please turn to the next slide, where I'll turn it over to you, and I'm excited to provide an update.

Operator: As a reminder, when you look at our adjusted EPS guidance range from 2023 to 2025. It reflects approximately 7% annual growth, which is consistent with our long term EPS growth expectations of 6% to 8%. Please.

Operator: Please turn to the next slide where I'll turn the call over to Karen to provide several business update.

Speaker Change: Thank you Jeff.

Operator: Obviously said that 2024 will be an important year of execution in each of our growth platforms and I'm excited to provide an update on our progress.

At Sempra California, we continue to see constructive regulatory outcomes. Thank you all for joining us today. Current cost of capital, operated as, and the recently established Returns on Equity. CalGAS will remain in place through 2025 unless market conditions result in a trigger. Importantly, this improves the CCM by affirming the protection that the CCM provides. Another example of, Improving affordability for all of our utility customers is a top priority, and I'm pleased to share that a proposed decision was issued at the CPC in March to implement a fixed charge for residential electric customers. As currently proposed, this would reduce volume and help California Meet Its Clean Energy Goals.

Operator: At Sempra, California, we continue to see constructive regulatory outcomes in March the CPUC issued a proposed decision supporting the updated return on equity that was implemented this year as part of the CCM trigger.

Operator: The Commission agreed that the current cost of capital mechanism operated as designed.

Operator: And the recent lease Thomas returns on equity at STG name of $10, six 5% and at Socal gas of 10, 5% should remain in place through 2025 unless market conditions resulted in a trigger.

Operator: Importantly, this improved regulatory certainty by affirming the protection of the CCM provides to customers and shareholders.

Operator: And the key takeaway is that this is another constructive data point for California's regulatory framework.

Operator: Another example of this is rate reform.

Operator: The affordability for all of our utility customers is a top priority.

Operator: And I'm pleased to share that a proposed decision was issued at the CPUC in March to implement a fixed charge for residential electric customers.

Operator: As currently proposed this would reduce volumetric rate.

Operator: <unk>, a more fair rate structure and help California meet its clean energy goals.

Operator: A final decision is expected in the second quarter of 2024, and the fixed charge would then be expected to begin in the fourth quarter of 2025 during the quarter. We also made a joint filing with the other California utilities to develop projects that successfully demonstrate blending hydrogen into the natural gas system.

The next charge would then be expected to begin in the fourth quarter of 2025. During the quarter, we also made a joint filing with the other California utilities to develop projects that successfully demonstrate lending, Project will begin blending at up to 5.0, and incrementally increase the hydrogen once hydrogen Blending has been demonstrated. We look forward to working with our partners to support new and improved ways to expand decarbonization efforts here in the state. We expect a proposed decision in the second quarter and a final decision this year.

Operator: These projects will begin blending and up to 5% on isolated sections of the natural gas system and incrementally increase the hydrogen concentration based on safety and technical feasibility.

Operator: Hydrogen blending has been demonstrated safely and reliably around the world for decades, and we look forward to working with our partners to support new and improved ways to expand de carbonization efforts here in the state.

Operator: Turning to the DRC, we expect a proposed decision in the second quarter and a final decision this year.

Operator: Once the final decision is obtained it will be retroactive to the beginning of the year.

Retroactive to the beginning of the year. As a reminder... To receive a final decision, we will have a clear regulatory path. CalISO updated SCG&E that it was not, as well as built the other transmission projects that were directly awarded to STGD by CalISO.

Operator: As a reminder, after we receive a final decision we will have a clear regulatory pathway for execution on our utility focused capital plan through 2027.

Operator: Lastly, Cal ISO updated SD Jamie that it was not selected to move forward on the Imperial Valley transmission line and substation.

Operator: Important to note that we were financially disciplined in how we developed our bid and we look forward to supporting the projects successful development as well as building. The other transmission projects that were directly awarded to SGD by Cal ISO.

Operator: Turning to Texas, we continue to see significant growth across Oncor service territory.

Last month, ERCOT is passing approximately 40% higher load in 2030 than in last year's report. [inaudible] I'm very excited about the opportunity to help deliver cleaner energy. The project demonstrates our ability to generate attractive returns while utilizing existing company-owned transmission capacity to serve California. Great progress has been made at ECA LNG, Phase 1, and Port Arthur, on target to start commercial operations. Howard Arthur also remains on schedule with significant ongoing construction activity, including excellent progress around soil stabilization, new foundations, and the commencement of concrete pouring and structural steelwork. The L&G market is long-term by nature, and will the DOE pause...

Operator: Last month ERCOT issued an updated transmission planning report forecasting approximately 40% higher load in 'twenty three than in last year's report.

Operator: And yesterday Oncor made its inaugural SRP filing, which includes approximately $3 billion of capital investments.

Operator: In addition to SRP the 2023 legislative session was particularly constructive for the state's utilities.

Operator: We're already seeing the positive impacts at encore in terms of the planning and execution that support the state's priorities and improve the timing of the company's returns on capital.

Operator: Moving to Semper infrastructure, we're very excited about the opportunity to help deliver cleaner energy to our customers and partners.

Operator: Recently, we declared a positive.

Operator: Our Cimarron wind expansion project.

Operator: This project demonstrates our ability to generate attractive returns, while utilizing existing company owned transmission capacity to serve California market.

Operator: And targeting O&M efficiencies based on locational advantages.

Operator: Additionally, we're making great progress of LNG phase, one and port Arthur LNG phase one.

Operator: Second is roughly 80% complete and remains on target to start commercial operations in the summer of 2025.

Operator: Port Arthur also remains on schedule with significant ongoing construction activity, including excellent progress around soil stabilization, new foundations and the commencement of concrete pouring and structural steelwork.

Operator: Turning to our marketing efforts the LNG market is long term by nature and we will the pause has received a lot of press, we remain confident in our ability to deliver projects that offer long term secure and cleaner energy to customers.

There's a lot of press, but we remain confident in our ability to deliver projects that offer long-term, secure, and cleaner energy. Sempra Infrastructure Benefits from Experienced Projects to make progress on. Moreover, the referenced pause has not impacted our confidence in the overall competitive positioning of our development projects, and we're strategically utilizing this time to steadily advance our opportunities. Also of note, even if you only take into consideration projects that have reached FID, Sempra infrastructure has incredible potential, and a new wind project under We're improving visibility to attractive earnings growth through the end of our. And that's all before taking into account our Development Project Pipeline, which Jeff referenced earlier, offers notable.

Operator: Simpler infrastructure benefits from experienced project development teams.

Operator: Continue to make progress on our critical work streams, including permitting engineering and commercial negotiations.

Operator: Moreover, the referenced Todd does not impact our confidence in the overall competitive positioning of our development projects.

Operator: And we're strategically utilizing this time to steadily advance our opportunities.

Operator: Also of note.

Operator: Even if you only take into consideration projects that have reached FID.

Operator: Simpler infrastructure has incredible built in growth.

Operator: With 16 million tons per annum of LNG export facilities.

Operator: Associated infrastructure and a new wind project under construction.

Operator: Improving visibility to attractive earnings growth through the end of our planning period in 2028.

Operator: And that's all before taking into account our development project pipeline, which Jeff referenced earlier and offers notable upside.

Operator: We can now turn to the next slide where Alan will discuss ERCOT, new planning processes. Thank.

You may now turn to the next... Allen will discuss ERCOT's new planning processes. We have been discussing for several quarters now, Texas continues to experience strong growth, Encore now serves close to 13 million customers and has now. ERCOT is adapting to this. New Planet, account for higher expected.

Allen: Thank you Karen.

Operator: We have been discussing for several quarters now.

Operator: Texas continues to experience strong demand growth oncor.

Operator: Encore now serves close to 13 million customers.

Allen: And has now surpassed over 4 million meters ERCOT is adapting to this growth with our recently announced new planning process to account for higher expected electricity needs in the future.

In April, ERCOT announced that peak load is expected to be 30, nearly double the record set last year of 85 gigawatts. This load growth, including new and expanded CM, Electrification of Oil and Gas Operations, Data Centers, Manufacturers, and

Operator: In April ERCOT announced that peak load is expected to reach 152 Gigawatts in 2030, nearly double the record set last year of 85 Gigawatts.

Operator: This load growth is coming from a wide range of industries across the state, including new and expanded C&I electrification of oil and gas operations data centers manufacturing and residential.

To put this growth in context, the change from 2023 to 2030 would be like adding more load. So from our perspective, as one of the premier builders of T&D infrastructure in America, we are excited about the opportunity to continue to scale our investments in electric infrastructure. Since 2018, Encore has constructed approximately 13,000 miles of transmission and distribution lines, approximately 6 miles per day. We have an active planning process underway and are confident in our ability to secure the materials and labor necessary to serve our customers in the ERCOT market. Please turn to the next slide.

Operator: To put this growth in context, the change from 2023 to 2030 would be like adding load greater than the size of the entire California power market. Currently we anticipate that approximately 40% of the new loan will come from Oncor service territory.

Operator: So from our perspective is one of the Premier builders of T&D infrastructure in America. We are excited about the opportunity to continue to scale our investments in electric infrastructure since.

Operator: Since 2018 Encore has constructed approximately 13000 miles of transmission and distribution lines approximately six miles per day, we have an active planning process underway and are confident in our ability to secure the materials and labor necessary to serve our customers in the ERCOT market.

Operator: Please turn to the next slide.

Given the growth in the state, resiliency is more critical than ever. In 2023, the Texas Legislature passed House Bill 2555, which allows electric utilities to file system resiliency plans proposing capital and operational expenditures to improve. We began our first filing yesterday for approximately $3 billion of new capital expenditures and just over $500 million of operating expenditures to be made over a period of three years. Firehead and Underground System Resiliency and Modernization, Flexible and Self-Healing Distribution System, Vegetation Management, Wildfire Management, and Fire Safety.

Operator: Given the growth in the state resiliency is more critical than ever.

Operator: In 2023, the Texas Legislature passed house, Bill $25, 55, which allows electric utilities to file system resiliency plans proposing capital and operational expenditures to improve overall grid resiliency.

Operator: We made our first filing yesterday for approximately $3 billion of new capital expenditures and just over $500 million of operating expenditures to be made over a period of three years.

Operator: This investment would address.

Operator: Her head and underground system resiliency and modernization.

Operator: Flexible and self healing distribution system <unk>.

Operator: Vegetation management work.

Operator: Wildfire mitigation and cyber and physical security to provide some.

Operator: Additional color.

The majority of our proposed spending is on the modernization and hardening of the older parts of our distribution system by adding lightning protection, stronger class poles, and crops. I'd also like to highlight that we have invested in wildfire mitigation for many years, including effectively partnering with industry leaders like SDG&E and the Texas A&M Forest Service. Now, thanks to HB 2555, Encore has We estimate that approximately $900 million of the total proposed spend, including both CAPEX and OPEX, will focus on expanding our wildfire mitigation tools and implementing our grid. This SRP program, with approximately $3 billion of capital expenditures, if approved, would be incremental to ENCQOR's $24.2 billion of planned CAPEX announced earlier this year for $5.2 billion.

Operator: The majority of our proposed spend is in the modernization and hardening of the older parts of our distribution system by adding the lightning protection stronger class polls and cross arms and addressing capacity constraint parts of the grid during extreme temperatures.

Operator: Furthermore, we are proposing significant technology and infrastructure investments that will help enable the automated reconfiguration of our system when extreme storms hit quickly restoring service to customers on undamaged segments by intelligently rerouting power.

Operator: I would also like to highlight that we have invested in wildfire mitigation for many years, including effectively partnering with industry leaders like <unk> and the Texas A&M Forest service now thanks to HB $25 55 <unk>.

Operator: <unk> has an additional opportunity to further accelerate our wildfire mitigation strategies across our service territory.

Operator: We estimate that approximately $900 million.

Operator: Of the total proposed spend including both Capex and Opex will focus on expanding our wildfire mitigation tools and implementing our grid modernization and hardening measures and wildfire prone areas.

Operator: Procedurally the SRP statute provides 180 days for the PUC to review the filing and we anticipate having a decision by the end of the year.

Operator: The SRP program with approximately $3 billion of capital expenditures, if approved would be incremental to encores $24 $2 billion of planned Capex announced earlier this year for the five year period 2024 to 2028, we.

I believe our proposed SRP creates an opportunity to fundamentally improve customer reliability and overall customer satisfaction. I'll turn the call back over to you. Earlier today, Sempra reported first quarter 2024 gap earnings of $801 million.

Operator: Believe our proposed SRP creates an opportunity to fundamentally improve customer reliability and overall customer service during and after extreme weather events, while also helping to mitigate other risks.

Operator: I will now turn the call back to Karen to walk through <unk> financial update.

Speaker Change: Thanks Alan.

Operator: Earlier today <unk> reported first quarter 2024, GAAP earnings of $801 million.

$1.26 per share. This compares to the first quarter 2023 gap. $969 million or $1. $2 million for $1. The period last year can be summarized as follows.

Operator: Our $1 26 per share.

Operator: This compares to first quarter 2023, GAAP earnings of $969 million or $1 53 per share.

Operator: On an adjusted basis first quarter 2024 earnings were $854 million.

Operator: Or $1 34 per share.

Operator: This compares to our first quarter 2023 earnings of $922 million or $1 46 per share.

Speaker Change: Please turn to the next slide.

Operator: Variances in the first quarter 2024, adjusted earnings compared to the same period last year can be summarized as follows.

At Sempra California, $12 million of lower CPU-C base operating margin, net of operation, will be offset by higher authority. As a reminder, because our GRC is still pending, our CPUC revenues in the first quarter 2024 are still based on 2023 and will be retroactively applied to January 1st when the final decision is approved. $56 million of higher equity earnings attributable to the rate, offset by higher $13 million of lower transportation revenues and higher..., partially offset by higher power.

Operator: At Sempra, California, we had $24 million, primarily from higher net interest expense and lower income tax benefits and $12 million of lower CPUC base operating margin net of operating expenses offset by higher authorized cost of capital.

Operator: As a reminder, because our GSE is still pending our CPUC revenues in first quarter 2024 are still based on 2023 authorized levels.

Operator: This is important because any true up later this year will be retroactively applied to January one when the final decision is approved.

Operator: Turning to Sempra, Texas, we had $56 million of higher equity earnings attributable to REIT updates increased invested capital and consumption, partially offset by higher interest and operating expenses.

Operator: At Sempra infrastructure, we had $13 million of lower transportation revenues and higher O&M, partially offset by higher power results.

Operator: And $27 million of lower asset and supply optimization, partially offset by lower net interest expense due to capitalized interest lower taxes and other.

[inaudible] As a note, beginning this year, the waterfall number, After Non-Controlling Interest to Improve Comparison, primarily due to higher..., interim period. Annual Forecasted Consolidated... Please turn to the next slide. Before we close out our presentation, I would like to remind you that our webinar will be available on our website. If you have any questions, please feel free to contact us. I want to outline.

Operator: As a note beginning this year the waterfall numbers are presented after noncontrolling interest to improve comparability.

Operator: At Sempra parent the $48 million quarter over quarter change is primarily due to higher taxes on the.

Operator: Interim period application of an annual.

Operator: Forecasted consolidated effective tax rate, which.

Operator: Which is expected to turnaround over the course of the year. Please turn to the next slide.

Operator: Before we close out our prepared remarks, I want to outline some price value proposition as we execute our corporate strategy.

Our management team is committed to challenging the status quo in all aspects of our business. We offer exposure to growth. Transcription by CastingWords Transcription by CastingWords, Translates into a record $48 billion capital campaign through 2028. In addition, we make energy infrastructure investments that target a track. We understand the importance of returning capital, roughly 7% annually over the last 10 years. This is particularly so because Sempra were excited about the prospects ahead of us. Sempra.

Operator: Sempra our management team is committed to challenging the status quo in all aspects of our business operations.

Operator: We offer exposure to growth and some of North America is the largest economic markets.

Operator: Our position as a leader in the infrastructure development in these markets translates into a record 48 billion capital campaign through 2028.

Operator: In addition, we make energy infrastructure investments that target attractive mid teens returns on equity.

Operator: I understand that disciplined capital allocation is central to our success.

Operator: And we understand the importance of returning capital to our owners and expect to continue growing our dividend of note. We've successfully grown our dividend at a rate of roughly 7% annually over the last 10 years.

Operator: This is particularly noteworthy given the expected strength of our future earnings growth.

Operator: To conclude the rollover industry is becoming increasingly important to society and at <unk>. We're excited about the prospects ahead of us.

Operator: Sampras competitively positioned to capitalize on opportunities and we'll continue to invest in our people.

Capitalize on opportunities, and we'll continue to invest, prudently manage risk, efficiently finance our businesses, and be good stewards of the capital entrusted to us. We thank you for joining us, and I'd now like to say, 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 11 on your telephone keypad. Please make sure that your mute function is turned off.

Operator: Prudently manage risks.

Operator: Additionally, finance our businesses and be good stewards of the capital entrusted to us.

Speaker Change: Thank you for joining us and I'd now like to open the line for your questions.

Speaker Change: Thank you.

Operator: 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.

Operator: Please make sure your mute function is turned off we will pause for just a moment to allow everyone to signal for questions.

We will pause for just a moment to allow everyone to signal for questions, and our first question will come from Shahriar Pourreza from Guggenheim Partners. Your line is open. Hey, guys. Good morning, Shahriar.

Shahriar Pourreza: And our first question will come from Shar <unk> from Guggenheim Partners. Your line is open.

Shahriar Pourreza: Hey, guys.

Shahriar Pourreza: Good morning Shar.

Um, maybe just starting off on the kind of incremental upsides that are starting to build versus the 4Q plan, including at SIP and the SRP in Texas. I guess, does the existing financing plan have room to support the spend in 25 through 27? And would you look to maybe utilize some SIP balance sheet capacity to offset potential equity needs from incremental CapEx that we could see coming? I appreciate the question, and I think we're in good shape on our balance sheet.

Operator: Jackson.

Shahriar Pourreza: Maybe just starting off on the kind of the incremental upsides, that's starting to build versus the <unk> plan, including at S. IP in the SRP and Texas I guess does the existing financing plan have room to support the spend in 25 through 27% would you look to maybe utilize.

Operator: <unk> balance sheet capacity to offset potential equity needs from incremental capex that we could see coming.

Speaker Change: Yes, I appreciate the question and I think we're in good shape on our balance sheet I'll remind everyone that we have a track record of officially financing our growth and that's been a big part of our success as you know since 2018 in fact over the last five years, we've been successful at growing our adjusted EPS at roughly a 10% annual grew.

I'll remind everyone, Shahriar, that we have a track record of officially financing our growth, and that's been a big part of our success, as you know, since 2018. In fact, over the last five years, we've been successful at growing our adjusted EPS at roughly a 10 percent annual growth rate.

Our current plan, as you know, contemplates that we'll make about $48 million in investments through 2028. We certainly think there are opportunities to continue to grow that plan, but I would also mention that well in advance of announcing our capital plan, Shahriar, we got our equity needs out of the way last fall, so the key takeaway is we're in great shape with no need for additional equity. We have great visibility into our future growth, and I think you indicated a couple of levers that we have to pull, and we have a plan in place that should allow us to officially finance our growth.

Operator: Both right.

Operator: Current plan as you know contemplates that we will make about $48 million of investments through 228, we certainly think there's opportunities to continue to grow that plan, but I would also mentioned that well in advance of analysis of our capital plan Shar, We got our equity needs out of the way last fall. So the key takeaway is we're in great shape with no need for additional.

Operator: It'll equity, we have great visibility to our future growth and I think you indicated a couple of levers. So we have to pull and we have a plan in place that should allow us to officially finance our growth.

Perfect. So you're comfortable with the balance sheet, and if there's incremental capex coming, that's helpful, Jeff. Yes, we are. Perfect. And then just given the cost of capital affirmation in California, I guess, how are you planning, maybe, to recognize the impacts of the CCM? Is there a customer reinvestment plan?

Shahriar: Perfect. So you are comfortable with the balance sheet and if there's incremental capex coming that's helpful. Jeff.

Operator: Yes, we are perfect and then just given the cost of capital affirmation in California.

Operator: How are you planning maybe to recognize the impacts of the CCM is there a customer reinvestment plan and would you kind of plan to provide an update on the California utilities earnings after the PD.

And would you kind of, you know, plan to provide an update on California utilities earnings after the PD? Yeah, I think there's going to be an opportunity as we get through our rate case. You'll recall that we're expecting to have our proposed decision later this quarter and a final decision at the end of the year. And those are the type of issues that we would reconcile on the next earnings call, which could be as early as Q3, to make sure we provide real, clear visibility to the impact of the rate case on our forward earnings. Fantastic. Thank you, Jeff. Much appreciated for the call. Thank you. Thank you, Shahriar.

Operator: Yes, I think theres, a colombian opportunity as we get through our rate case, you'll recall that we're expecting to have our proposed decision later this quarter and a final decision at the end of the year and those type of issues that we would reconcile that then next earnings call, which could be as early as Q3 to make sure we provide clear visibility to.

Operator: The impact of the rate case on our forward earnings.

Speaker Change: Fantastic. Thank you Jeff much appreciate the color. Thank you. Thank you shar.

Speaker Change: Thank you.

Thank you. Our next question will come from Jeremy Tonet from J.P. Morgan Securities. Your line is now open. Hi, good morning.

Operator: Our next question will come from Jeremy Tonet from Jpmorgan Securities. Your line is now open.

Jeremy Bryan Tonet: Hi, good morning.

Hi, Jeremy. Turning to Texas, I was just wondering if you could frame this latest ERCOT load growth outlook against the last capital plan raised at Encore. Is that level of system investment contemplated consistent with this load growth, or is there even more, I guess, upside down the pike here, and if so, what timeframe do you think that could make it into the plan? Well, it's certainly a great question.

Jeremy Bryan Tonet: Hi, Jeremy.

Operator: Alright.

Operator: Turning to Texas I was just wondering if you could frame this latest ERCOT load growth outlook against the last capital plan raised encore.

Operator: Is that level of system investment contemplated consistent with this load growth or is there even more I guess upside down the pike here and if so what timeframe do you think that could make it into the plant.

Obviously, ERCOT just released their latest information in the last couple weeks, and Alan noted this in his prepared remarks, but it's pretty amazing that you could take the peak demand load in America's largest economic environment, which is California, and the expectation is in Texas that the load could grow that much between now and 2030. The key thing that Alan mentioned before, too, is ERCOT's right in the middle of this growth story, right? So as you think about growth opportunities, we think that between 40% and 50% of that would fall within his service territory, and there's no question that this will be evaluated in the fall as Alan and his team put their plan together. Got it, that's very helpful there, thanks. And then dig again on the SRP a little bit more.

Jeremy: Well, it's certainly a great question, obviously ERCOT just released their latest information in the last couple of weeks. Alan noted. This in his prepared remarks, but it's pretty amazing that you could take the peaks demand load in America's largest economic environment, which is California, and the expectation is in Texas that load could grow.

Operator: That much between now and 2030.

Operator: The key thing, but balanced mentioned before too as ERCOT is right in the middle of this growth story right. So as you think about growth opportunities. We think between 40 and 50% of that would fall to his service territory and there is no question that this will be evaluated in the fall as Alan and his team put their plans together.

Operator: Okay.

Operator: Got it that's very helpful. Thanks, and then <expletive> again on the SRP a little bit more I was just wondering if you could kind of bracket.

I was just wondering if you could kind of bracket what this work will accomplish over the next three years relative to the overall resiliency needs you see in the system. Yeah, let me make a couple of contextual comments, and I'll turn it over to Alan. Just yesterday, they made their inaugural filing.

Speaker Change: What this work will accomplish over the next three years relative to overall resiliency needs you see in the system.

Operator: Yes, let me make a couple of kind of contextual comments I'll turn it over to Alan.

Operator: Just yesterday they made their inaugural filing you know from our materials its $3 billion over three years and one of the things that we're interested in at Sempra very much like all the investments that we make across our different growth platforms. This plans intended to harden our system to withstand extreme weather conditions.

You know, from our materials, it's $3 billion over three years, and one of the things that we're interested in at Sempra, very much like all the investments that we make across our different growth platforms, this plan is intended to harden their system to withstand extreme weather conditions, reduce restoration outage times, and improve overall reliability. I would also note, Jeremy, that the requested capital is incremental to Encore's existing capital plan, but Alan, what might be helpful, and I think this would go to the heart of this question, is, can we just take a step back, talk about your overall $24 billion capital plan, why the SRP piece is so important, and then maybe I'll return to kind of the value proposition to your regulator. Yeah, sure, Jeff.

Operator: Restoration outage times and improve overall reliability I would also note Jeremy that the requested capital is incremental to encores existing capital plan, but Alan.

Speaker Change: It might be helpful. I think that's I'll go to the heart of this question is can we just take a step back talk about your overall $24 billion capital plan, while the SRP piece is so important and then maybe I'll return to kind of the value proposition to your regulator.

And thanks for the question, Jeremy. You know, going back to Jeff's point about our original, our current five-year capital plan is presently at $24.2 billion. And that breaks down generally into about $5.1 billion for distribution expansion, about $13.5 billion for transmission expansion, $4.2 billion for maintenance, and about $1.4 billion for technology.

Alan Nye: Yes, sure Jeff and thanks for the question, Jeremy you know going back to Jeff's point to our original our current five year capital plan is presently at $24 2 billion.

Operator: And that breaks down generally into about $5 1 billion for distribution expansion.

Operator: $13 5 billion for transmission expansion.

Operator: $4 2 billion for maintenance and about $1 4 billion for technology and again as I've said before that demonstrates about 70% of our capital plan is growth.

And again, as I've said before, that demonstrates about 70% of our capital plan is growth. 97% of our capital plan, or more is, recoverable through our trackers. And that provides us right now with a very, we think, solid industry-leading rate-based CAGR of around 11 percent. Now, obviously, that's before the SRP and whatever the commission ultimately rules on our SRP.

Operator: Seven 4% of our capital plan or more is.

Operator: Recoverable through our trackers and that provides us right now with a very we think solid industry, leading rate base CAGR of around 11% now obviously that's before.

Operator: The SRP and whatever the commission.

Operator: Ultimately rules on our SRP, we feel.

We feel very excited about the plan we filed. I think our team has done a great job of preparing a very strong plan that will have, I think, significant benefits for our customers. And if I can, I can break it down a little more into what we filed. Our SRP is generally broken down into six major categories.

Operator: We're very excited about the plan, we filed I think our team has done a great.

Operator: And preparing a very strong plan.

Operator: That will have significant benefits for our customers and if I can I can break it down a little more into what we filed.

The first one being overhead and underground resiliency and modernization. That includes things like new and repaired poles, cross arms, lightning protection, increased capacity for high-demand days, and rehab or replacement of underground conductors. And so in that first category, that's around $1.830 billion in the first category. Our second category is Continued Optimization of Distribution Automation. And what we're talking about here is an expansion of our distribution automation program through new tie lines, increased capacity, and the addition of intelligence switches. And we have about $510 million in that bucket. The third category is Expanded Vegetation Management, or VM.

Operator: SRP is generally broken down into six major categories.

Operator: First one being overhead and underground resiliency and modernization.

Operator: That includes things like new and repaired Poles Cross arms.

Operator: Lightning protection increased capacity for high.

Operator: High demand days.

Operator: Rehab or replacement of underground conductor and so in that first category that's around $183 billion in the first category.

Operator: Our second category is continued optimization of distribution automation and what we're talking about there is expansion of our distribution automation program through new ties increased capacity.

Operator: The addition of intelligent switches and we have about $510 million.

Operator: In that bucket.

We're going to do that primarily on a bunch of lateral circuits, and we're going to leverage remote sensing capabilities such as satellite and lidar to better direct our VM program moving forward through this program. We have about $285 million allotted to Expanded VM in this plan. The fourth category is enhancing our cyber risk management, that means all things cyber risk related mitigation, as well as enhancement and security related to Encore's digital backbone. We have about $525 million allocated to that category. Improved physical security

Operator: The third category is expanded vegetation management or <unk>.

Operator: We can do that primarily on a bunch of a lateral circuits and we're going to leverage remote sensing capabilities such as satellite.

Operator: And lidar to better direct our VM program moving forward through this program, we have about $285 million allotted two expanded the in this plan.

Operator: The fourth category is enhancing our cyborg cyber risk management.

Operator: That means all things cyber risk related mitigation.

Operator: As well as enhancements in security.

Operator: Related to encores digital backbone, and we have about $525 million allocated to that category.

Operator: Excuse me fifth.

Like all utilities around the country, we're facing additional intrusions and risks to our physical assets. And so, we have about $80 million allocated in our plan to things such as video and event correlation systems to assist law enforcement, as well as just general asset protective measures to try and better protect our assets and equipment. We have about $80 million in that category. Finally, we have about $900 million total in the plan, but about $182 million specifically related to wildfire mitigation measures, and that would include things like strengthening and protection of assets in high-risk, higher-risk wildfire zones, safe device deployment, advanced wildfire risk modeling, overhead and underground resiliency measures, and again, increased distribution automation in higher wildfire-risk areas.

Operator: Improved physical security like all utilities, many around the country, we're facing additional.

Operator: Intrusions and risks to our physical assets.

Operator: So we have about $80 million allocated in our plan to things such as video video and event correlation systems to assist law enforcement as well as just general asset protective measures to try and better protect our assets.

Operator: And equipment, and we have about $80 million in that category.

Operator: Finally.

Operator: We have about 900 million total in the plan, but about $182 million.

Operator: Specifically related to wildfire mitigation measures and that would include.

Operator: Things like strengthening.

Operator: Protection of assets in high risk wildfire higher risk wildfire zones.

Operator: Safe device deployment.

Operator: Advanced wildfire risk modeling.

Operator: Overhead and underground resiliency measures and again increase just distribution automation and higher wildfire risk areas and I would say just lastly on that last piece that's a continuation.

And I would say just lastly on that last piece, that's a continuation of wildfire risk mitigation and prevention that we've had going on for a number of years. But with this additional $900 million that we have allocated to this category in this plan, we think we can make some real headway on that issue as well as the other ones I described. Hey, Alan, maybe as a follow-up, going to kind of the heart of Jeremy's question, I don't want to get in front of your regulator, but could you just kind of define the value proposition that you think that the plan will deliver?

Alan Nye: Wildfire mis wildfire risk mitigation and prevention that we've had going on for a number of years.

Alan Nye: But with this additional 900 or so million that we have allocated to this category.

Operator: This plan, we think we can make some real headway on that issue as well as the other ones are described hey, Alan If you would maybe as a follow up go into kind of the heart of Jeremy's question I don't want to get in front of me a regulator, but could you give us kind of define the value proposition that you think that the plan will deliver well.

Well, Jeff, and I think you said it very well, and I've said on prior calls, I view this, and I think we view this, as a historic opportunity to really directly take action on our system to the benefit of our customers in the ERCOP market. And I think each one of these categories would provide very specific benefits, from resiliency to avoidance and prevention of wildfires to better reliability, all things that will benefit our customers very directly. I got it. That's very helpful. Thank you for all the details.

Alan Nye: Sure, Jeff and I think.

Operator: Thank you said, it very well and I've said on prior calls I view. This I think we view this.

Operator: As a historic opportunity to really directly take action on our system to the benefit of our customers in the ERCOT market.

Operator: And I think each one of these categories would provide.

Operator: The very specific benefits from resiliency to avoid incidents prevention of wildfires to better reliability, all things that will benefit our customers very directly.

Speaker Change: Thank you.

Speaker Change: Got it that's very helpful. Thank you for all the detail.

Speaker Change: You bet. Thank you Jeremy.

Operator: Yeah.

Speaker Change: Thank you.

You bet. Thank you, Jeremy. Thank you. Our next question will come from Durgesh Chopra from Evercore ISI. Your line is open. Hey team, good afternoon, good morning to you guys, I guess. Hi Durgesh.

Operator: Our next question will come from their guests Chopra from Evercore ISI. Your line is open.

Operator: Okay.

Durgesh Chopra: Hi team good afternoon. Good morning, Thanks, guys I guess.

Durgesh Chopra: Hi, Joe.

Hey, Jeff, thanks for giving me time. Maybe, Jeff, can you just share your thoughts on the pause on the FTA permit and how you see that progressing? Yeah, thank you for asking me that question, Durgesh. I think I would start by saying that two things come to mind. First, we believe the permitting pause is temporary and that permits will be issued in the future. I mean, many of you followed the comments that were made at CIRA Week.

Durgesh Chopra: Hey, Jeff Thanks for getting me time, maybe Jeff just can you.

Operator: Just your thoughts.

Operator: That's on the on the pause on the.

Operator: FTA permit and how do you see that progressing.

Operator: Yes. Thank you for asking that question, Doug I think I would start by saying that two things come to mind first is we believe the permitting pauls is temporary and that permits will be issued in the future. I mean, many of you followed the comments were made at Cerro week, I think Secretary Grand home has repeatedly now said that she anticipates this issue will be in the rearview.

I think Secretary Granholm has repeatedly now said that she anticipates this issue will be in the rearview mirror at some point early next year. Secondly, I would also remind folks that it only really impacts Port Arthur Phase 2. We already have existing Department of Energy non-FTA permits for Cameron Phase 1, which is in operation, ECA Phase 1, and Port Arthur Phase 1, both of which are in construction, as well as Cameron Phase 2, ECA Phase 2, and Vista Pacifico.

Operator: Mirror at some point early next year.

Operator: Secondly, I would also remind folks that it only really impacts port Arthur phase two we already have existing department of energy non FTA permits for Cameron phase, one which is an operations eco phase one in port Arthur Phase one both of which are in construction as well as Cameron phase two <unk>.

So this is really something that directly impacts Port Arthur Phase 2, and we expect to work through that early next year. I would note that Justin's team continues to work diligently to advance Port Arthur Phase 2, which we continue to believe has tremendous commercial value. But I also thought it might be helpful if I returned to what we think are probably the most important points around our LNG strategy. We have quality LNG development projects, which obviously include the expansion of Port Arthur. They are geographically advantaged.

Operator: As to invest the Pacifica. So this is really something that really impacts directly port Arthur phase two and we expect to work through that early next year.

Operator: I'd note that just since team continues to work diligently to advance Port Arthur Phase two which we continue to believe has tremendous commercial value.

Operator: But I also thought it might be helpful. If I return to what we think are probably the most important points around our LNG strategy, we have quality LNG development projects, which obviously include the expansion of the port Arthur They are geographically advantaged theres no. Other developer out there that has the opportunity to directly access Asia and also dispatch.

There's no other developer out there that has the opportunity to directly access Asia and also dispatch it into the Atlantic through the Gulf. The next two in the queue have the advantage of being brownfield sites. That's another economic advantage for us at Port Arthur Phase II as well as Cameron Expansion, and we're advancing these projects in a disciplined manner for the benefit of our shareholders. I would also note that they are effectively upside to our current $48 billion capital plan, and they are also upside to our long-term growth rate. Thanks, Jeff. I appreciate all that color.

Operator: Into the Atlantic through the golf.

Operator: The next two and the Q have the advantage of being brownfield sites. That's another economic advantage for us at Port Arthur Phase II as well as Cameron expansion and were advancing these projects in a disciplined manner for the benefit of our shareholders. I would also note that they are effectively upside to our current $48 billion capital plan and they.

Operator: We're also upside to our long term growth rate.

And you did answer my question. I was just going to ask you if there is a timeline that we should follow as you think about FID, whether it's Port Arthur Phase II or the Cameron expansion. Sure, I would mention two things. One is that we have guided our expected FID for Cameron expansion to the first half of 2025. We have not yet set an FID expectation for Fort Arthur phase two.

Speaker Change: Thanks, Jeff I appreciate all that color and I think you did answer my question I was just going to ask you.

Operator: If there is a timeline that we should follow as you think about FY <unk>, whether it's port Arthur Phase two of the Cameron expansion.

Operator: Sure I've mentioned two things one is we have guided or expected for Cameron expansion into the first half of 2025, we have not yet set an expectation for port Arthur Phase II, but I can assure you that just this team continues to make steady progress.

But I can assure you that Justin's team continues to make steady progress. I mean, as you go quarter over quarter, we are continuing to make progress in commercially developing both of those projects. And I think the momentum inside of our company continues to build on their overall success. Thank you again. Excellent quarter, guys. Thanks so much again.

Operator: Quarter over quarter, we are continuing to make progress in commercially develop in both of those projects.

Operator: The momentum inside of our company continues to build on their overall success.

Operator: Thank you again excellent quarter guys. Thanks, so much again thank.

Speaker Change: Thank you so much.

Speaker Change: Thank you.

Thank you so much. Thank you. And our next question will come from Carly Davenport of Goldman Sachs. Your line is now open. Hi, thanks so much for taking the questions today. Hi, Carly. Hey Jeff, how are you? I wanted to just go back to the SRP filing.

Operator: And our next question will come from Carly Davenport from Goldman Sachs. Your line is now open.

Carly S. Davenport: Alright, thanks, so much for taking the questions today.

Carly S. Davenport: Hey, Jeff how are you wanted to just go back to the to that.

Carly S. Davenport: Sarpy filing really appreciate all the detail there so far just wanted to get a sense of how we should think about the timing and the cadence of that spend assuming that the plan sort of goes into effect in the 2025 time frame and then can you just remind us how procedurally you expect this to play out between now and yearend.

I really appreciate all the detail there so far. I just wanted to get a sense of how we should think about the timing and the cadence of that spending, assuming that the plan sort of goes into effect in the 2025 timeframe. And then, can you just remind us how procedurally you expect this to play out between now and year-end? Yeah. Let me start with the procedural point, and then I'll pass it on to Alan to talk about how he expects that capital to go forward. You know, obviously, they made the filing yesterday, which was contemplated in the legislative bill that passed last year. The commission has a statutory 180 days to review and approve the application.

So, I think, for now, we're expecting that to be in hand in the fourth quarter. And then, in terms of that rolling out, it's going to take over three years. And maybe, Alan, you can talk about, on a going forward basis, how you think that capital would come in, obviously, subject to the commission's approval and the final number. Yeah. You bet, Jeff. Pretty simply, it's basically 2025 through 2027 for those outlays, and it's slightly backloaded. I got it.

Operator: Yes, let me start with a procedural point and then I'll pass it on to Allen talked about how you expect that capital to go forward.

Operator: Honestly, they've made the filing yesterday, which was contemplated in the legislative Bill that passed last year.

Speaker Change: The Commission has a statutory of 180 days to review and approve the filing.

Operator: For now we're expecting that to be in hand in the fourth quarter and then in terms of that rolling out at suspend over three years. So maybe Alan you can talk about on a going forward basis, how do you think that capital with Les and obviously subject to the Commission's approval and the final number yes, you bet Jeff.

Alan Nye: Pretty simply.

Alan Nye: Basically 22025 through 2027 for those outlays and it's slightly backloaded.

Thank you. Great. Thank you so much for that.

Speaker Change: Got it thank you.

And then to follow up just on, you know, you've talked a lot about robust load growth and opportunities in Texas supporting infrastructure investment. Could you talk a little bit about if there's any sort of supply chain or other constraints that you're running into in terms of executing on that T&D build out at Encore? Yeah.

Speaker Change: Thank you so much for that and then to follow up just on you've talked a lot about these robust slowed growth.

Operator: Opportunities in Texas supporting infrastructure investment just could you talk a little bit about if theres any sort of supply chain or other constraints that youre running into in terms of executing on that T&D build out at encore.

You know, I said something about this in my prepared remarks. We continue to see some supply chain constraints in some areas, but, in general, we're seeing, obviously, low growth across all of our markets, and there's been some relaxation of the supply chain issue. I think Encore, in particular, and both Justin and I serve on the board of directors, have done a really good job of going into the marketplace to secure the appropriate contractors and hard goods, but Alan, perhaps you could talk about the work that your team has done and over what period of time you feel like you've got what you need locked in. Sure. Yeah. Carly, it's a great question.

Operator: Yes.

Operator: Something about this in my prepared remarks.

Operator: We continue to see some supply chain the supply chain constraints in some areas, but in general we're seeing obviously load growth across all of our markets and theres been some relaxation of the supply chain issue.

Operator: Encore in particular in both adjusted and I serve on the board of directors have done a really good job.

Operator: Going into the marketplace to secure the appropriate contractors and hard goods, but Alan perhaps you could talk about the work the team has done and over what period of time, you feel like you've got what you need locked in sure.

Again, as Jeff said, we at Encore and our operations and our supply chain people have been working to get in position to be able to execute on this plan for quite a while now, and we've done a number of things, including diversifying our supply chain, adding additional suppliers five and six years ago that have put us in a position now to, while there certainly are issues out there with the supply chain, we feel extremely confident in the first two years. I've said it to my board of directors.

Alan Nye: Currently it's a great question.

Alan Nye: And as Jeff said, we at Encore and our operations and our supply chain people, who had been working to get them positioned to be able to execute on this plan.

Operator: For quite a while now.

Operator: We've done a number of things including <unk>.

Operator: Diversifying our supply chain and adding additional suppliers five and six years ago.

Operator: It has put us in a position now to while there is certainly our issues out there with supply chain, we feel extremely confident in the first two years.

I think we have the first two years effectively in the box with what we need from both an equipment perspective and from a vendor perspective, and we've made very significant progress on the last three years as well, and what we're doing now is filling in the gap and waiting, you know, to assign things out like engineering studies. Those are not completed yet for the outer years because we wouldn't assign them out until we know exactly what we're facing.

Operator: I've said it to my Board I think we are the first two years effectively in the box with what we need from both an equipment perspective and from a vendor perspective, and we've made very significant progress on the outer three years as well and what we're doing now is filling in the gaps.

Operator: Waiting to assign things out like engineering studies those are not completed yet for the outer years, because we wouldn't assign them out until we know exactly what we're facing.

But we've managed, I believe, to work through supply chain issues very effectively, and we feel very good about where we are right now. And then, Carly, the only other thing I would add to Alan's comments is think about his base capital plan, which is just over $24 billion. It is really organized around growth, and specifically it is weighted toward transmission. So roughly 60% of that spin is transmission.

Operator: But we've managed I believe to work through supply chain issues very effectively and.

Operator: And we feel very good about where we are right now and then currently the only other thing I would add to Alan's comments think about his base capital plan, which is just over $24 billion is really organized around growth and specifically it is weighted toward transmission. So roughly 60% of that spend is transmission and I think.

And I think that's why this SRP file is so important. It really creates a second leg of growth specifically around building in redundancy and resiliency in the system, which is equally important to the state of Texas.

Operator: That's why this SRP filing is so important it really creates a second leg of growth specifically around building and redundancy and resiliency in the system, which is equally important to the state of Texas.

I appreciate it. Thank you. Thank you. And our next question will come from Steve Fleishman from Wolf. Your line is open. That's Dave.

Carly: Understood. Thanks, so much for that color I appreciate it.

Steven Isaac Fleishman: Thank you.

Steven Isaac Fleishman: Thank you.

Operator: And our next question will come from Steve Fleishman from Wolfe Your line is open.

Steven Isaac Fleishman: Hi, Steve.

Hey, good afternoon. Just one question. I think Conoco might have said they had an interest in selling down a stake in Port Arthur, but I did not see it myself, so I'd just be curious what you're hearing from them. Yeah, I'll make a couple of comments here. One is, Steve, Conoco is a very important strategic partner for us at Port Arthur. I would note that we've got a lot of respect for their management team and certainly have great relationships across both companies.

Steven Isaac Fleishman: Hey, good afternoon.

Operator: One question just I think.

Operator: Conoco Might've said they have interest in selling down a stake in port Arthur.

Operator: But I did not see it myself, so I'd just be curious.

Speaker Change: What youre hearing from them.

And I think a strong alignment of interest, and this is the key point, around both Phase 1 and Phase 2. So, you know, whether they elect to put new capital into Phase 2 as an open matter, I'd certainly refer that to their management team. But just remember, in the first phase, they took roughly half of the offtake, or 5 million tons per annum. They own 30% of the project-level equity, and they are also the gas manager for the first phase.

Operator: Yes, I'll make a couple comments here one is Steve Conoco is a very important strategic partner for us at Port Arthur I would note that we've got a lot of respect for their management team and certainly have great relationships across both companies and I think a strong alignment of interest and this is the key point.

Operator: Around both phase one and phase two so whether they elect to put new capital into phase II is an open matter certainly would refer that to their management team, but just remember in the first phase I took roughly half of the offtake or 5 million tons per annum, they own 30% of the project level equity.

The second phase is an important context, I believe, for Conoco because the second phase will be taking gas supplies, Steve, from the Permian Basin, which has significant strategic considerations for a variety of commercial parties, and that's particularly true for ConocoPhillips. So I would just note that this is an area we're working closely with a variety of counterparties who want to collaborate with us on the success of Phase 2. And based on the conversations we're currently having, we continue to be very excited about moving forward with that project. Okay, great. I'll leave it there. Thank you very much.

Operator: And they are also the gas manager for the first phase.

Operator: The second phase is important context, I believe on conoco because the.

Operator: The second phase will be taking gas suppliers, Steve from the Permian Basin, which has significant strategic considerations for a variety of commercial parties and Thats, particularly true for Conocophillips. So I would just note that this is an area. We're working closely with a variety of counterparties.

Operator: Who want to collaborate with us on the success of phase two and based on the conversations. We're currently having we continue to be very excited about moving forward with that project.

Speaker Change: Okay great.

Operator: I'll leave it there thank you very much.

Speaker Change: Thank you Steve.

Operator: Yes.

Speaker Change: Thank you.

Thank you, Steve. Thank you. And one moment for our next question. Thank you, and our next question will come from Anthony Crowdell from Azuho. Your line is open.

Speaker Change: And one moment for our next question.

Operator: Yes.

Anthony Christopher Crowdell: Thank you and our next question will come from Anthony <unk> from Mizuho. Your line is open.

Good afternoon, team. If I could, I guess... Jump on Carly's question. I guess hers is more specific, maybe the supply chain to the regulated utility. If I think about the infrastructure business, particularly with Port Arthur II and Cameron Phase II, any big changes or estimates you're seeing in the E&C contracts that maybe Bechtel is looking into? Yeah. What might be helpful here, Anthony, is Justin, if you just take us through maybe a little bit of a construction update as well as what you're doing to secure some long-lead time items on some of the projects you're near-term focused on, and that might be helpful for his question. Yeah. Yeah. Hi Anthony, and thank you, Jeff. Yeah.

Anthony Christopher Crowdell: Hey, good afternoon team, if I could ask Anthony I guess.

Operator: Jump on our car lease question I guess, just more specific maybe supply chain to the regulated utility if I think about the.

Justin: <unk> business, particularly with Port Arthur too and Cameron phase two any big changes or estimate youre seeing in the E&C contracts that may be bechtel is looking into.

Justin: Yes, well it might be helpful. Here Anthony is just and if you just take us through maybe a little bit of a construction update.

Justin: Thats, what youre doing to secure some long lead time items on some of the projects here near term focus and that might be helpful. First question, Yeah, Yeah, Hi, Ann.

So, let me start with construction, then I'll go to the heart of your question. So, we're seeing solid progress on construction at both ECHA Phase 1 and Port Arthur Phase 1. I've had opportunities to visit both sites recently.

Speaker Change: And thank you Jeff Yes, So let me start with construction then I'll go to the heart of your question. So.

Justin: We're seeing solid progress construction at both <unk> phase, one and Port Arthur Phase one.

Operator: <unk> had opportunities to visit both sites recently, Jeff and I were at.

Jeff and I were at ECHA just two weeks ago observing construction, and I was at Port Arthur recently for the one-year commemorative groundbreaking. Both projects remain on track. We're not seeing the supply chain issues.

Operator: Just two weeks ago observing construction.

Operator: And I was at Port Arthur recently for the one year commemorative groundbreaking.

Operator: Both projects remain on track, we're not seeing the supply chain issues.

At ECA phase one, we remain on track for COD in the summer of 2025. We're now more than 80 percent complete, and construction is ongoing across all main areas of the project. We have about 4000 people deployed on site and have over 15 million hours of work with no lost time incidents.

Operator: Yeah.

Operator: Phase one we remain on track for COPD in the summer of 2025.

Operator: Now more than 80% complete construction is on going across all areas of the project. We have about 4000 people deployed on site and have over 15 million hours work with no lost time incidents.

Bechtel at Port Arthur, Phase I. Construction activities are progressing well, as Karen mentioned in her remarks. We're focused on the foundation stage construction, soil stabilization, piling, concrete pouring, and it's exciting to see we have recently commenced structural steel. In terms of our development projects, we remain excited about these projects. We're continuing to see strong market interest and do expect these projects to advance. In terms of construction contracts or progress, for Port Arthur Phase II, while we're awaiting our DOE non-FTA expert permit, we're continuing to work with Bechtel on an EPC agreement that can optimize efficiencies with the Phase I construction schedule.

Operator: Backfill at Port Arthur Phase, one construction activities are progressing well.

Operator: As Karen mentioned in her remarks, we're focused on the foundation stage construction.

Operator: Soil stabilization piling concrete pouring and it's exciting to see we recently commenced structural steel.

Operator: In terms of our development projects.

Operator: We remain excited about these projects were continuing to see strong market interest and do you expect these projects to advance.

Operator: In terms of construction contracts or progress at Port Arthur Phase II.

Operator: We're awaiting our non FTA export permit we're continuing to work with bechtel on an EPC agreement that can optimize efficiencies with the phase one construction schedule.

We're also continuing marketing efforts for offtake and equity. On Cameron Phase II, we're currently working with the Cameron partners to optimize cost through value engineering, and as Jeff mentioned, we're also exploring the procurement or reservation of long lead time and critical path equipment. You know, Cameron Phase II is a comparatively low emission project, and it's a brownfield asset sourcing low-cost gas.

Operator: Also continuing marketing efforts for offtake and equity.

Operator: On Cameron phase two.

Operator: We're currently working with the camera partners to optimize cost through value engineering and as Jeff mentioned, we're also exploring the procurement or reservation of long lead time and critical path equipment.

Operator: Cameron Phase II is a comparatively low emission project and it's a brownfield asset sourcing logos low cost gas.

So we think this is really important, and as Jeff had previously mentioned, we're advancing that with a view toward taking FID in the first half of 2025. I guess as a takeaway, you know, I talk about the reverse field of dreams model. When they come, and when we achieve the right returns, we'll build it along these lines. We'll only move forward with our projects when we have the right cost and risk structure and long-term contracted cash flows that support our corporate strategy, our targeted mid-teen equity returns, and create value for our shareholders.

Operator: So we think this is really important and as Jeff had previously mentioned.

Operator: Advancing that with a view towards taking in.

Operator: In the first half of 2025.

Operator: Yes.

Operator: The takeaway.

Operator: I talked about the reverse field of dreams model when they come and when we achieve the right returns we will build it.

Operator: Along these lines, we will only move forward with our projects when we have the right cost and restructure and long term contracted cash flows that support our corporate strategy, our targeted mid teen equity returns.

Operator: And create value for our shareholders.

Hey, Anthony, I'd also point out to the heart of your question that Bechtel relationships, the strategic relationship for us, they're very, very helpful, kind of the best in the business in the Gulf. And that's why Justin commented on the importance of not demobilizing phase one and going right into a continuous build into phase two at Port Arthur.

Jeff: Anthony I would also mention to the heart of your question.

Operator: The better relationships with strategic relationship for Us Theyre very very helpful kind of the best in the business in the Gulf and Thats why I just commented on the importance of not demobilizing phase, one and going right into a continuous build into phase II at Port Arthur I would also note that his team has master purchase agreements with all the key vendors in place.

I would also note that his team has master purchase agreements with all the key vendors in place, and there's a lot of focus on making sure we're sourcing the key equipment and, particularly, planning in advance for long-lead time items. So that all goes into the box of how we manage risk to make sure that we're delivering projects that create the right risk reward for our owners. And then if I get one follow-up, and I know it's a very small part of SIP, it's Cimarron Wind. The company has been, you know, very, very successful at recycling capital and sold a renewable portfolio several years ago. Very opportunistic there.

Operator: And Theres a lot of focus on making sure we're sourcing the key equipment and particularly planning in advance of long lead time items. So that all goes into the box of how we manage risk to make sure that we're delivering projects that create the right risk reward for our owners.

Operator: And then if I get one follow up I know, it's a very.

Operator: Small part of it.

Operator: Cimarron win.

Operator: The company is.

Operator: Ben.

Operator: Very.

Operator: Very successful recycling capital and sold our renewable portfolio several years ago.

Operator: Very opportunistic there and now the company as it.

And now the company is, should we think of more wind coming on or more renewable energy coming on to rebuild a renewable portfolio with SIP? And I'll leave it be. Yeah, let me provide a little bit of context for that because we're excited about that project. Let me start, Anthony, with the fact that we rolled out our new corporate strategy back in 2018, and really at the heart of that strategy was a more narrow focus on two things, the first of which was building leadership and skill advantages in large economic markets, and number two, more narrowly invested in the energy value chain around T&D type of infrastructure, investments like Cimarron where we can produce highly recurring cash flows.

Operator: Should we think of more win coming on a more renewables coming on to rebuilding.

Operator: <unk> portfolio of chip and I'll leave it there.

Speaker Change: Yeah, Let me let me.

Operator: Provide a little bit of context for that because we're excited about that project. Let me start Anthony with the fact that we rolled out our new corporate strategy back in 2018 and really at the heart of that strategy was subordinate focus on two things. The first of which was building leadership and scale advantages and large economic markets and number two more.

So when you turn that corporate strategy back to Mexico, we built a leadership position there going back to the 1990s. It's a market with over 130 million consumers. When I became CEO in 2018, Anthony, it was the 15th largest economy in the world. Today, the IMF has it ranked as the 12th largest economy in the world, and PricewaterhouseCoopers now forecasts it'll be number seven in the world by 2040. It's also our largest trading partner with an energy network that's highly integrated with the United States, and that really plays to our strategy along the border and particularly the WIM project that you're referencing, which is located right along the U.S. border.

Operator: Narrowly investing in the energy value chain around T&D type of infrastructure investments like Cimarron, where we can produce highly recurring cash flows. So when you turn that corporate strategy back to Mexico, we built a leadership position there going back to the 19 nineties.

Operator: Market with over 130 million consumers when I became CEO in 2018, Anthony It was the 15th largest economy in the world today. The IMF has it ranked as the number 12 economy in the world and price Waterhouse Coopers now forecast there'll be number seven in the world by 2040.

Operator: It is also our largest trading partner with an energy network is highly integrated with the United States and that really plays to our strategy along the border and particularly the wind projects that Youre referencing is located right along the U S. Border is an expansion of a very large <unk> complex that we already own.

It's an expansion of a very large ESGA WIM complex that we already own. It's integrated electrically with a high voltage system and serves California, and it's being built using SI's operating cash flows from Mexico. So I think the key point here is, and we've referenced it several times in our prepared remarks, there is a very strong built-in growth story at SI based on projects that have already taken FID, and the opportunity with this land position we have adjacent to California is to efficiently and cost-effectively build some additional solar and wind to serve the California market, which is integrated with Mexico, and fill in and continue to improve on that recurring cash flow growth story I appreciate it.

Operator: It's integrated electrically with a high voltage system and does serve California and is being built using SaaS operating cash flows from Mexico. So I think the key point here is and we've referenced it several times in our prepared remarks. There is a very strong built in growth story at ESI based upon <unk>.

Operator: <unk> that have already taken.

Operator: And the opportunity with this land position, we have adjacent to California is to efficiently and cost effectively build some additional solar and wind to serve the California market, which is integrated with Mexico and fill in and continue to improve on that recurring cash flow growth story that.

Operator: Jeff has been talking about.

Speaker Change: Great. Thanks for taking my questions.

Speaker Change: Appreciate it.

Thank you. And we have time for one more question. And our next question will come from Craig Shere from Toohey Brothers. Your line is now open. Hi, thanks for fitting me in.

Speaker Change: Thank you.

Speaker Change: And we have time for one more question.

Operator: Yeah.

Operator: And our next question will come from Craig Shere from Tuohy Brothers. Your line is now open.

Craig Kenneth Shere: Alright, Thanks for fitting me in.

Operator: Greg.

I'd like to dovetail a little on Anthony's first question about labor and the LNG market and kind of feed that into a broader question for Justin. In the last two, three months, you know, we've seen some peer projects announce potential delays due to skilled labor issues. For the same reasons, you've announced increasing demand in your domestic utility networks and T&D networks from data centers to AI, but also coal to gas fuel switching and others.

Craig Kenneth Shere: I would like to dovetail a little on Anthony as first question about labor and.

Operator: The LNG market.

Operator: And kind of feed that into a broader question for Justin.

Operator: And the last two three months.

Operator: We've seen some peer projects announced potential delays.

Operator: Skilled labor issues.

Operator: For the same reasons, you've announced increasing.

Operator: <unk> demand.

Operator: And your domestic utility networks in T&D networks.

Operator: Data centers AI, but also hold a gas fuel switching and other we've kind of seen a stabilization and rebound in the LNG markets with.

We've kind of seen a stabilization and rebound in the LNG markets with a kind of sense that this digestion period everybody was looking for in the second half may be soft and short or may not exist at all.

Operator: So in a sense that this digestion period, everybody was looking for in the second half, maybe soft and short or not exist at all.

Operator: In this context of the last two three months kind of change.

Operator: Im wondering if youre seeing any change in body language.

And in this context of the last two, three months' kind of change, I'm wondering if you're seeing any change in body language and a desire to kind of seize the day on prospective offtakes. Yeah, thanks for the question, Craig. I think You talked a little bit about the supply chain, about labor, but let me go to the heart of your question at the end there. So I think the LNG pause, I would say, I think there was some time to react to that in the marketplace. You saw some people step back, maybe with a little less desperation than they maybe had as part of the war in Ukraine.

Operator: And.

Operator: Yes desire to kind of sees today.

Operator: Prospective off takers.

Speaker Change: Yeah. Thanks for the question Craig I think.

Operator: You talked a little bit about supply chain about labor, but let me go to the heart of your question at the end there. So I think the LNG pause I would say.

Operator: I think there was some time to react to that in the marketplace. You saw some people step back maybe with a little less desk.

Speaker Change: Desperation than they may be had as part of the war in Ukraine, but I will say and I think we've said it multiple times on this call. We are still seeing a robust commercial interest in our projects. Our projects are expansion opportunities we've been a strong partner.

But I will say, and I think we've said it multiple times on this call, we are still seeing robust commercial interest in our projects. Our projects, our expansion opportunities, we've been a strong partner, so we're seeing robust interest. And I'd say, you know, currently, we have teams around the world actively engaged in commercial discussions for long-term contracted volumes. I would also add, Craig, I appreciate your question. If it's all about seizing the day, I'm betting on Justin's team. We're very excited about the progress you're making on the LNG front and look forward to providing updates in the future.

Operator: We're seeing robust interest in I would say currently we have teams around the world actively engaged in commercial discussions.

Operator: For long term contracted volumes.

Operator: Also add Craig and I appreciate your question.

Operator: If it's all about seize the day betting on Justin's team. We're very excited about the progress we're making on the LNG front and look forward to providing updates in the future.

Speaker Change: Alright, thank you.

Thank you. And that concludes today's question and answer session. At this time, I'd like to turn the conference back to Jeff Martin for any additional closing remarks. But let me just start by thanking everyone for joining us today. I know there were competing calls this morning, so we appreciate everyone making the time to join us. As Karen mentioned, we certainly believe we have a compelling value proposition with a strong growth and income story.

Speaker Change: Thank you.

Operator: 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.

Jeffrey Walker Martin: So let me just start by thanking everyone for joining us today I know there were competing calls. This morning. So we appreciate everyone taking the time to join US as Karen mentioned, we certainly believe we have a compelling value proposition with a strong growth in income story. Our management team is committed to the long term success of Sempra and we believe there is an incredible opportunity for us to continue.

Our management team is committed to the long-term success of Sempra, and we believe there's an incredible opportunity for us to continue innovating and finding new and better ways to serve customers while also delivering strong financial returns to our owners.

Jeffrey Walker Martin: And finding new and better ways to serve customers. While also delivering strong financial returns to our owners. If there are any follow up items. Please reach out to our IR team with your questions and we look forward to seeing you in California at HCA on May 20th in 'twenty one.

If there are any follow-up items, please reach out to our IR team with your questions, and we look forward to seeing you in California at AGA on May 20th and 21st. This concludes our call. Thank you for your participation. You may now disconnect.

Operator: This concludes our call.

Operator: Thank you for your participation you may now disconnect.