Q2 2024 Oncor Electric Delivery Co LLC Sempra Earnings Call

Operator: Good day, and welcome to Sempra's second quarter earnings call. This 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> second 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 Sempra's second quarter 2024 earnings call. A live webcast of this teleconference and slide presentation are available on our website under our events and presentation section.

Speaker Change: Good morning, and welcome to <unk> second quarter 2024 earnings call.

Speaker Change: 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, Karen Sedgwick, Executive Vice President and Chief Financial Officer. Trevor Mihalik, Executive Vice President and Group President, Sempra California. Justin Bird, Executive Vice President and Chief Executive Officer of Sempra Infrastructure. Alan Nye, Chief Executive Officer of Encore.

Speaker Change: Several members of our management team with us today, including <unk>.

Speaker Change: Jeff Martin Chairman and Chief Executive Officer.

Karen centric: Karen centric executive Vice President and Chief Financial Officer.

Karen centric: Trevor Mihalik Executive Vice President and group President and for California.

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

Karen centric: Allen Nye, Chief Executive Officer of Encore.

Glen Donovan: Peter Wall, Senior Vice President, Controller, and Chief Accounting Officer, and other members of our Senior Management Team. Before starting, I'd like to remind everyone that we'll be discussing four looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in any forward-looking statement we make today. The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K and 10-Q filed with the SEC.

Speaker Change: Peter Wong Senior Vice President Controller, and Chief Accounting Officer, and other members of our senior management team.

Speaker Change: 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.

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

Speaker Change: The factors that could cause our actual results to differ materially.

Speaker Change: Because the company's most recent 10-K and 10-Q filed with the SEC.

Glen Donovan: Earnings per common share amounts in our presentation are shown on a diluted basis, and we'll be discussing certain non-GAAP financial measures; please refer to the presentation slides that accompany this call for the Reconciliation to Gap mission. We also encourage you to review our 10-2 for the quarter ended June 30, 2024. I'd also like to mention that forward-looking statements contained in this presentation speak only of today, August 6, 2024, and it's important to note that the company does not assume any obligation to update or revise any of these forward-looking statements in the future. With that, please turn to slide four and let me hand the call over to Jeff. Thank you, Glen.

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

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

Speaker Change: We also encourage you to review our 10-Q for the quarter ended June 32024.

Speaker Change: I'd also like to mention that forward looking statements contained in this presentation speak only as of today August six 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.

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

Jeff Martin: Thank you, Glen, and thank you all for joining us today. As we close out the first half of the year, we continue our focus on safety and operational excellence, and we're pleased with the strength of our financial performance. This actually sets us up well in the second half of the year, while also supporting our confidence in a projected long-term EPS growth rate of 6% to 8%. And more importantly, we think there's a lot to be excited about.

Jeff Martin: Thank you Glenn and thank you all for joining us today as we close out the first half of the year. We continue our focus on safety and operational excellence and we're pleased with the strength of our financial performance. This actually it sets us up well in the second half of the year, while also supporting our confidence in our projected long term EPS growth rate of six.

Jeff Martin: Went to 8% and more importantly, we think there's a lot to be excited about at central California. We continue to play a critical role in helping the state achieve its safety reliability and de carbonization goals.

Jeff Martin: At Sempra California, we continue to play a critical role in helping the state achieve its safety, reliability, and decarbonization goals. That's why we continue to make important investments to improve safety, modernize the grid, and better support the delivery of cleaner forms of energy. We also look forward to advancing our general rate cases here in the state and anticipate a proposed decision later this summer with a final decision expected before the end of the year.

Jeff Martin: That's why we continue to make important investments to improve safety modernize the grid and better support the delivery of cleaner forms of energy.

Jeff Martin: We also look forward to advancing that general rate cases here in the state and anticipate that proposed decision later this summer with a final decision expected before the end of the year.

Jeff Martin: The outcome of the <unk> is expected to help our utilities better meet the state's public policy goals advanced for liability and community safety and improved visibility into our plan and execution through 2027.

Speaker Change: At Sempra, Texas Oncor continues to see remarkable growth and it's coming from a wide range of industries, including manufacturing technology and digital infrastructure.

Speaker Change: Premise growth as one example continues to trend around 2%, which is almost double the national average.

Speaker Change: Alan will walk through how electricity demand is impacting that Texas grid and also driving the need for new capital investments all across Oncor service territory.

Speaker Change: Against that backdrop, you recall that encore is currently executing on a record five year capital plan of roughly $24 billion with a pending regulatory filing to improve system resiliency by investing incremental capital of up to $3 billion from 2025 through two.

Speaker Change: <unk> thousand 27 with.

Speaker Change: With the remarkable growth in Oncor service territory, we continue to expect to see higher levels of capital spending in the future and this will be a key consideration in our financial planning process. This fall.

Speaker Change: Finally separate infrastructure remains focused on advancing critical infrastructure investments that support the energy transition and enhanced energy security and we continue to see progress across several key development initiatives.

Speaker Change: Moving to our financial results for the quarter earlier. This morning, we reported adjusted EPS of <unk> 89, and year to date adjusted EPS of $2 24.

Speaker Change: As a reminder, these results do not reflect the impact of a final, California, Trc decision, which we expect before year end with rates retroactively applied to January one from my perspective, we've had a great start to the first half of the year as a result, we are affirming.

Speaker Change: Both our full year 2024, adjusted EPS guidance range, and our 2025 EPS guidance range. Please turn to the next slide <unk>.

Speaker Change: As a reminder, we view our corporate strategy as an opportunity to a sort of competitive advantage in the energy markets and there are three key elements to our plan of execution.

Speaker Change: First we positioned our portfolio and some of the most attractive economic markets in North America.

Speaker Change: California, and Texas for example, I'll give our utilities, great exposure to increasing demand for new infrastructure investments, while separate infrastructure benefits from strong <unk> around the re shoring of industry to North America, and global demand for improved energy security associated with the export of liquefied natural gas from the United.

Speaker Change: <unk> states.

Speaker Change: Second we focused our investment strategy in a more narrow part of the energy value chain.

Speaker Change: Namely transmission and distribution investments.

Speaker Change: By doing so we aim to improve the quality and recurring nature of our earnings and cash flows while reducing exposure to risk and price volatility. We believe this provides an improved risk reward profile for our owners.

And finally, we aggressively compete capital inside our company across all three growth platforms to help ensure we are delivering the best overall returns to our owners at the end of the day being good stewards of capital is a top priority and has allowed us to continue delivering attractive risk adjusted returns as an example.

Speaker Change: <unk>, we've been successful in delivering a 10% adjusted EPS compound annual growth rate since 2018.

Speaker Change: Next I will turn the call over to Allen to walk through the improving growth story that continues to unfold in Texas.

Allen Nye: Please turn to the next slide.

Allen Nye: Thank you Jeff.

Allen Nye: I'd like to start by saying that growth continues at a rapid pace all across the state of Texas, and especially in the Oncor service territory in the second quarter alone, we built rebuilt or upgraded approximately 1050 miles of T&D lines increased our premise.

Allen Nye: <unk> by approximately 20000 and received approximately 100 new transmission.

Speaker Change: Quest, which has increased our active interconnection requests in our queue by 13% year over year.

Speaker Change: Also important to note that we continue to make progress on our five year capital plan that was announced earlier this year of approximately $24 billion.

Speaker Change: As Jeff mentioned this does not include the capital expenditures that may be approved as part of our system resiliency plan or SRP we've.

Jeff Martin: We filed our first SRP with the PUC T in may of this year.

Jeff Martin: Turning to our operating environment, Texas like the nation as a whole is seeing an increase in the frequency and intensity of severe weather events.

Jeff Martin: The number of extreme storms, including ice intense heat and extremely high winds have shown us that we must be even more focused on reliability resiliency and response.

Jeff Martin: That's why our SRP identify seven measures.

Jeff Martin: with detailed programs and activities for each measure to address the wide range of resiliency events we're seeing across our service territory will also accelerate our work to help comprehensively address wildfire mitigation, including continued electrification efforts in the Permian Basin.

Jeff Martin: With detailed programs and activities for each measure to address the wide range of resiliency events, we're seeing across our service territory.

Jeff Martin: <unk> extreme weather.

Jeff Martin: The risk of wildfires physical security threats and cyber security threats.

Jeff Martin: Along with the hardening of our system to prevent outages are proposed initiatives include a substantial opportunity to expand distribution automation to the legacy portions of our system.

Jeff Martin: We call this our flexible and self healing distribution grid measure today newer facilities on our system have this technology.

Jeff Martin: Which allows us to automatically redistribute load two undamaged parts of our grid during extreme weather or other events significantly reducing or in some cases, eliminating lengthy outages for many of our customers. We recently provided some examples to the PCT of how this technology.

Jeff Martin: Helped hundreds of our customers avoid what could have been de long outages from the severe storms we experienced in may.

Jeff Martin: Among other areas. Our SRP also proposes retrofitting older portions of our system with this technology. Additionally, we have proposed expanding our vegetation management programs by approximately $90 million per year.

Jeff Martin: <unk> further use of remote sensing and other new technologies to better target fast growing vegetation.

Jeff Martin: This expansion is expected to more than double our distribution vegetation management efforts.

Jeff Martin: These investments together with the SRP measures that specifically target wildfire risk will also accelerate our work to help comprehensively address wildfire mitigation.

Jeff Martin: These efforts will continue to build on our collaborations with the Texas A&M Forest service and our counterparts at San Diego gas and electric.

Jeff Martin: Both of whom are globally recognized as subject matter experts with significant experience in wildfire mitigation and response.

Jeff Martin: It's also noteworthy that our SRP filing is not the only action, we're taking to improve our resiliency and preparation for extreme weather events over a 21 day period in the months of May and June tornadoes touched down in the temple choline area.

Jeff Martin: Storm with straight line winds measuring as high as 95 miles per hour pass through the DFW metroplex, and additional storms impacted our east Texas region.

Jeff Martin: Want to thank the 12000 encore employees contractors and off system personnel, who worked around the clock.

Jeff Martin: Restoring service to our customers as soon as safely possible.

Jeff Martin: Recently, we also sent 500 mutual assistance workers to the Gulf coast to assist in the recovery from Hurricane barrel.

Jeff Martin: These storms have shown that our industry must continue to improve our plans for prevention response and communication. So that we are meeting and exceeding our customers' expectations for the safe and reliable delivery of electricity.

Jeff Martin: And I can assure you that it is a top priority for our team.

Encore: At Encore, we are dedicated to being a safe and reliable operator, and helping ensure a resilient grid, which is even more critical given the amount of growth we're seeing in Texas. Please turn to the next slide.

Encore: Interconnection request from large C&I customers and the additional transmission expansion needed to bring power to these high demand customers are the primary drivers of the growth in our capital plan under our current capital plan on course rate base is anticipated to grow at an.

Encore: Average annual rate of 11%.

Encore: From 2023 through 2028.

Encore: To help meet the scale of these new investments, we've taken important steps to diversify our supplier base.

Encore: Enter into multiyear agreements ordered various critical inventory in advance and have begun procuring necessary equipment with significant investments in warehousing and lay down yards to support the timely rollout of our capital investments.

Encore: We also see opportunities for significant future growth in our service territory.

Encore: As announced earlier this year.

Encore: Cut projects peak load in 2030 to be 152 Gigawatts.

Encore: Nearly double the current record of 85, five Gigawatts set in August 2023 <unk>.

Encore: Based on our current share of ERCOT load and our internal projections, we expect.

Encore: Approximately 40% of that future load to be served by encore.

Encore: Included in ERCOT load growth projections are the continued electrification efforts in the Permian basin and.

Encore: In response to House Bill 50, 66 passed in the 2023 legislative session to address this growth.

Encore: ERCOT filed a plan with the PCT in late July.

Encore: That identifies new transmission investments of 13% to $15 billion by 2038, given the scope of our operations in the region.

Speaker Change: We expect to build a significant portion of the projects that are ultimately approved in the Permian plan.

Jeff Martin: As Jeff noted.

Jeff Martin: There is a likelihood of higher capital spending in the future.

Jeff Martin: And we continue to review our forecast for future capital expenditures and expect to provide an update on the Q4 earnings call. After our SRP filing is finalized by the PUC T and.

Jeff Martin: And our analysis is complete and reviewed by Encores Board.

Speaker Change: I would conclude by saying that we are all really excited about the opportunity set in Texas, and we will remain relentless in our efforts to provide reliable affordable electric service to our customers, while maintaining a sharp focus on the safety of everyone who works on our system.

Speaker Change: Let's turn to the next slide where Karen will walk through simpler California's business update.

Karen centric: Thank you Alan Super, California, strategically positioned the largest economy in the U S and benefits from constructive regulation that supports investment opportunities to decarbonize and improve the safety and resiliency of the grid.

Karen centric: Forward looking rate cases.

Karen centric: Our cost of capital adjustment mechanism and an established wildfire fund it backstops the financial strength of the state's utilities.

Speaker Change: And so Cal gas, we're participating in several de carbonization initiatives that support California's state wide goals.

Speaker Change: Recently arches of what's still Cal gas as a partner became the country's first hydrogen hub. This time with the <unk> to secure its funding.

Speaker Change: <unk> forecast, California will need 17 million tons per year of hydrogen to help meet the state's 2045 climate goals.

Speaker Change: These cleaner molecules are expected to play a pivotal role in helping Los Angeles, one of the nation's largest manufacturing hubs lowered submissions and heavy duty transportation and other hard to electrify sectors.

Speaker Change: That's my Socal gas as proposed Angeles link will form a key component in California's regional hydrogen hub.

Jamie: Turning to SD, Jamie <unk> safety continues to be our number one priority.

Jamie: Over the last two decades, we've made significant investments in wildfire mitigation and hardened 100% of the transmission lines and our tier three high fire threat districts.

Jamie: We have proactively taken steps to further strengthen our predictive tools training and resources by making significant upgrades to sce's wildfire and climate Resiliency Center.

Speaker Change: I recently had a chance to visit the state of the art facility and it's impressive.

Speaker Change: Invite you to come see the facility if you can.

Speaker Change: Substantial innovative features of the facility include.

Speaker Change: AI enabled solutions high resolution cameras enhanced strong data and line conductor fault detection.

Speaker Change: This facility is one of the most technologically advanced of its kind anywhere in America and played a central role in helping to ensure <unk> is prepared for and actively mitigating risks related to its operating environment.

Speaker Change: This is all part of a larger effort at <unk> to meet the state's public policy goals, while building out a climate resilient energy grid.

Speaker Change: Now moving to our regulatory updates of California utilities.

Speaker Change: In June STG delivered a notice of termination to FERC.

Speaker Change: This transmission owner formula rate mechanism or tier five and is preparing a Q six filings.

Speaker Change: We expect <unk> to make a submission in the fourth quarter with an effective date in 2025.

Speaker Change: In our filing we anticipate updating our formulaic rate and making a constructive case for competitive ROE, reflecting today's market conditions.

Speaker Change: Lastly, on the California JRC.

Speaker Change: Expect a proposed decision later this summer and a final decision by year end.

Speaker Change: As a reminder, the final decision will be retroactive to the beginning of this year. Please.

Speaker Change: Please turn to the next slide.

Speaker Change: Simpler infrastructure long term strategy is focused on capitalizing on the growing demand for cleaner and more secure energy.

Speaker Change: Wood Mackenzie estimates that global LNG demand will grow nearly 70% and reached more than $700 million tons per year by 2050.

Speaker Change: Our development pipeline is making significant strides to help meet those needs.

Jeff Martin: At ECA LNG Phase 1, we are roughly 85% complete. At Cameron Phase II, we continue to work with our partners to enhance cost efficiency through value engineering. At Sempra Infrastructure, we had $48 million of lower equity earnings and revenues in the transportation business. To conclude, this is an exciting time for our company, and we look forward to continuing to deliver strong financial and operational results.

Speaker Change: LNG phase one were roughly 85% complete.

Speaker Change: However, our contractor has experienced labor retention and productivity issues in recent months.

Speaker Change: As a result, our commercial operations date will be delayed until the spring of 2026.

Speaker Change: We are actively engaged with our contractor to advance the project.

Speaker Change: We'll see increased capital expenditures for the projects in the form of additional carrying costs and lower estimated commissioning revenues, which are based on forward price curves.

Speaker Change: Despite the delay potential changes in capital, we still expect to maintain strong integrated financial returns.

Speaker Change: With our original forecast at the time that we took in 2020.

Speaker Change: This is the result of a combination of factors, including optimization opportunities.

Speaker Change: <unk> LNG demand over the long term and inflation protection within the Sta's.

Speaker Change: Moving to Port Arthur LNG, we're making steady progress on phase one and we remain on budget and schedule. We recently received FERC authorization for $24 seven construction.

Speaker Change: As expected to improve the overall efficiency of the construction activities.

Speaker Change: At Cameron Phase II, we continue to work with our partners to enhance cost efficiency to value engineering.

Finally, we have begun construction on sovereign when the 320 megawatt project and expect to reach commercial operations in the first half of 2026.

Speaker Change: Our experience in Mexico demonstrates our ability to work well with both regulators and legislators and we look forward to supporting their increasing energy needs.

Speaker Change: That's real restoring continues to drive economic expansion.

Speaker Change: Please turn to the next slide for an update on progress at Port Arthur Phase II.

Speaker Change: We're very excited about some of the recent developments at Port Arthur LNG Phase II.

Speaker Change: Earlier this summer we executed an HOA with Aramco for 5 million tons per annum of offtake capacity and 25% interest in the project level equity.

Speaker Change: Last month, we also executed a fixed price contract with bechtel.

Speaker Change: This contract provides an opportunity to continue our partnership with a world class EPC firm, while also benefiting from continuous construction.

Speaker Change: In combination with the common facilities that are being constructed as part of phase one we expect to generate robust investment returns on the overall port Arthur energy hub.

Speaker Change: We are working with all stakeholders to advance this project, which has received all material permits with the exception of the doughy non FTA export permit that is pending approval how's.

Speaker Change: However, we do not anticipate the daily pause will impact our development timeline.

Speaker Change: As a reminder, phase II at Port Arthur and all other projects that have not reached FID.

Speaker Change: Represent upside to our existing capital plan.

Speaker Change: Please turn to the next slide where I'll walk through some financials.

Speaker Change: Earlier. This morning, <unk> reported second quarter, 2024, GAAP earnings of $713 million or $1 12 per share.

Speaker Change: This compares to second quarter, 2023, GAAP earnings of $603 million or <unk> 95 per share.

Speaker Change: On an adjusted basis second quarter, 2024 earnings were $567 million or <unk> 89 per share.

Speaker Change: This compares to our second quarter 2023 earnings of $594 million or <unk> 94 per share.

Speaker Change: The key takeaways that we're pleased with our financial results for the first six months of the year, we're trending above our financial forecast.

Speaker Change: Well positioned to deliver another strong year of financial performance. Please turn to the next slide.

Speaker Change: <unk> in the second quarter of 2024 adjusted earnings compared to the same period last year can be summarized as follows.

Speaker Change: At Sempra, California, we had $26 million, primarily from higher CPUC base operating margin net of operating expenses, including higher authorized cost of capital.

Speaker Change: This was more than offset by $49 million, primarily from lower income tax benefits lower regulatory awards and higher net interest expense.

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

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

Speaker Change: Turning to December, Texas, we had $42 million of higher equity earnings attributable to rate updates increased invested capital and consumption, partially offset by higher interest and operating expenses.

Speaker Change: At Sempra infrastructure, we had $48 million of lower equity earnings and revenues in the transportation business.

Speaker Change: Including the cumulative impact of new tariffs in Mexico in the prior year.

Speaker Change: An $8 million and higher income tax expense higher O&M and lower revenues, partially offset by lower net interest expense.

Speaker Change: At Sempra parent the $10 million net change is primarily due to lower taxes from the interim period application of an annual forecasted consolidated effective tax rate.

Speaker Change: Partially offset by higher net interest expense.

Speaker Change: Please turn to the next slide.

Speaker Change: To wrap up our prepared remarks, I want to reiterate a couple of the key points that helped drive the overall success of our corporate strategy.

Energy needs to grow and evolve in North America, our unwavering commitment to safety and operational excellence support our delivery of safer more reliable and resilient energy and our position as a leader in some of north Americas largest economic markets.

Speaker Change: <unk> investors visibility to our future growth.

Speaker Change: We look to invest higher levels of capital and critical new energy infrastructure through the end of the decade and beyond.

Speaker Change: To conclude this is an exciting time for our company and we look forward to continuing to deliver strong financial and operational results. Thank.

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

Speaker Change: Thank you.

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

Speaker Change: Please make sure your mute function is turned off.

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

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

Shar: Sure. Good morning, Jeff how are you doing I am doing great. Thank you.

Shar: So just Jeff on the <unk> COPD delays I know you'll be looking at sort of firming up the 25 guidance later from a timing perspective, but I guess, how are you thinking about offsets as we roll forward into next year can you kind of mitigate the project delay or should we assume some level of timing drag I know.

Speaker Change: Obviously, you reiterated guidance.

Speaker Change: But.

Speaker Change: There is also a perception that the 25 guide as somewhat conservative so how do we think about the moving pieces. Thanks.

Speaker Change: Thank you sorry for asking that question I'll start by talking about the change in schedule, then I'll move to the 2025 guidance I'll start with saying that we're disappointed in the change of schedule at acre.

Speaker Change: As has been our practice when we work with our contractors, we expect our projects to be built on time and on budget that is the standard at Sempra and in this case that standard has not been met but I am confident that justice team will get it corrected here's what's important going into the heart of your question, we target mid teens equity returns across the portfolio at separate infrastructure.

Speaker Change: And as we've updated our forecast we continue to believe that equal remains in line with those original targets. We've made financial commitments as you know to our owners in the form of published EPS guidance ranges for both 2004 and 2025.

Speaker Change: Been confident in Reconfirming those ranges this morning.

Speaker Change: I'd note that we have plenty of opportunities to both grow and reduce costs, where it makes sense and we will continue to work hard to exceed people's expectations regarding the performance for our business.

Speaker Change: I would also like to turn this over to Karen to talk a little bit about.

Karen centric: 2025, if you could care.

Karen centric: Sure. So as Jeff mentioned, we have a diverse portfolio with many levers to meet our guidance. So with the schedule change at Echo, we're taking several steps to ensure we deliver on our financial commitment.

Karen centric: This includes asset optimization, such as utilizing our available pipeline capacity. In addition to driving some operational efficiencies in the business.

Karen centric: We continue to see significant growth across our utility platforms. For example, Allen's business updates on today's call points to incremental opportunities at Sempra, Texas that we expect to benefit us next year and across our planning period.

Karen centric: And then across the enterprise, we're always focused on creating efficiencies and increasing productivity. So we'll continue this process and look forward to refreshing. Our plan later this fall and provide updates on our fourth quarter call.

Karen centric: <unk>.

Speaker Change: Okay, perfect and then just.

Karen centric: On the <unk> outcome.

Speaker Change: CPUC has been a bit slower kind of acting on things recently with various kind of proceedings I guess, how are you thinking about a timely outcome 24 on the geography, and if kind of like a final vote is delayed let's say into the latter part of the year or even 25, how do we sort of think.

Speaker Change: About the cadence of that financial update you just brought up for $25. So do you need to wait for.

Speaker Change: For an order in the PD or is the PD sufficient enough to firm up 25.

Speaker Change: Yes, I'll give you a couple of thoughts on that says obviously, the California public utility Commission has had a very busy docket, particularly over the last 12 months. So we understand kind of the timing of our rate case has been delayed into this year, but I would make a couple of points. So im sure is that we put together what I think is a very strong <unk> filing for both San Diego gas and electric.

Speaker Change: And Socal gas and the reason we have some level of confidence is both of those filings are strongly aligned with the state to key priorities, which you will recall, our trial safety and specifically community safety reliability and clean energy I would also note as a reminder, that last fall we reached a settlement on roughly one third.

Speaker Change: The rate cases for each of those businesses with a subset of intervenors and we look forward to receiving a proposal proposed decision later this summer with a final decision expected for the end of the year. So I think we still have very high confidence that the rate case, we voted out this year and I would remind our lifting the audience that rates would be.

Speaker Change: Actively effective January one of 2024, and then to the larger point.

Speaker Change: I will conclude by saying we have a very strong track record of working with our regulators and stakeholders to get to good outcomes and I think we're comfortable that we'll be able to give strong update in terms of our forward guidance, including our capital plan on our Q4 call and hopefully we'll be able to give more visibility on our Q3 call.

Speaker Change: Paul to potential changes in our capital plan.

Paul: Okay, that's actually perfect Jeff. Thank you so much I appreciate the additional color I'll see you soon.

Paul: Thank you for joining our call Sean.

Paul: Thank you.

Speaker Change: Our next question will come from <unk> Chopra from Evercore ISI. Your line is open.

Speaker Change: Turning to our desk.

<unk> Chopra: Hey, good morning, Jeff Thanks for taking my question Hey, just.

Speaker Change: Picking up on the discussion I think the initial estimates of costs, we're onto a $5 billion and you mentioned some construction delays obviously just.

Speaker Change: How does that number sort of the overall.

Cost tracking versus $2 5 billion, if you could share any color there.

Jeff Martin: Sure, I'll provide some returns on the changes in capital, and then maybe it might be helpful, Justin, if we just provided a little bit more color around the schedule at ECA for our listening audience. The first thing I'd mention, Durgesh, is that as a result of the schedule change, we're expecting the estimated increase in capital for Sempra's net share to be about $300 million. Karen referenced this earlier, but we still expect to maintain our targeted delivered returns in the mid-teens for the overall integrated project, and as you know, that certainly includes continuing to optimize our transportation position.

Speaker Change: Sure I'll provide some returns on the changes in capital than maybe it might be helpful. Just if we just provide a little bit more color around the schedule at acre for our listening audience. The first thing I'd mentioned, our guess is as a result of the schedule change we're expecting that the estimated increase in capital for <unk> net share to be about $300 million.

Speaker Change: Karen referenced this earlier, but we still expect to maintain our targeted levered returns in the mid teens for the overall integrated project and as you can.

Speaker Change: That's certainly includes continuing to optimize our transportation position.

Speaker Change: Youll recall too that with the change in schedule. It provides us opportunities to continue to manage that transportation position.

Speaker Change: For those of you are hearing about our transportation recall that we've got positions that connect us to the producing regions, both in Texas, and new Mexico and allow us to serve what is increasingly been a constrained market in the western part of the United States, including Baja California, where we've seen natural gas demand increased over 30% and.

Speaker Change: The last 10 years.

Speaker Change: Thing Thats been benefiting us at the project. Our guess is we have certain inflation protections that our SBA and that's also been helpful. In helping us meet our expected original returns. So I think the key takeaway from my perspective is we're in a good position to continue to manage that project deliberate consistent with the new expectations in the spring.

A 2026 and also meet our targeted financial returns.

Speaker Change: That's very helpful.

Justin Bird: Yes, I'll, let Justin go and speak to some of the additional color on the change of schedule Hydro cash first of all let me say like Jeff I'm disappointed with the schedule change at ACA.

Justin Bird: I'll also say given our ongoing efforts I am confident that one will reach commercial operations in the spring of 2026, and two will meet our return expectations at ACA.

Justin Bird: Let me give you just a little bit of color on where we are the project is roughly 85% complete.

Justin Bird: Steel construction has been completed piping is in full swing, 65% complete.

Justin Bird: Pulled roughly 87 miles of cable and 95% of the main equipment has been received onsite and nearly 80% of that equipment has been delivered.

Justin Bird: The critical issue has been that during our peak in the work cycle given some of the craft labor constraints in Baja our contractor was unable to retain and secure the necessary labor resources to meet the schedule and this loss of labor has created a change in schedule Big picture I still view this.

Justin Bird: As an opportunity to showcase our ability to work constructively with our partners and contractors to safely deliver a quality.

Justin Bird: Project in the spring of 2026 with strong returns over the long term. Thank you Justin.

Speaker Change: Thank you that is very clear.

Speaker Change: Shifting gears over to Texas.

Speaker Change: Good to see that you have a settlement in the system resiliency plan.

Speaker Change: Just wondering if there is any.

Speaker Change: Clash, whether it's from the PUC or other stakeholders given sort of just what we have seen in media.

Speaker Change: In response to the hurricane.

Speaker Change: Just any thoughts there just thinking about risks to your potential settlement here.

Speaker Change: That would just make a couple of comments here number one I think the timing of this agreement in principle, which is an all party settlement is very very good I think as we think about our industry generally jordache were contained the same extreme weather conditions and it's highlighting the importance not just in Texas, but California other jurisdictions have.

Speaker Change: <unk> to invest in resiliency at our company, we've got over 100 year history of dealing with these types of events I think we're pleased of course recent storm response. If you followed on core back in May They went through some very severe weather and did a great job of our store in their system. So I think the opportunity for us is to marry up the commitment to <unk>.

Speaker Change: Operational excellence and storm, our spas that oncor has built a reputation on with this forward looking SRP program and the good news is as it's been crafted as a settlement in principle those dollars will start to flow in Q4 of this year and allows us to get after continuing to harden that system. So I think it is.

Speaker Change: Right outcome at the right time for the customers of encore.

Speaker Change: Perfect.

Speaker Change: Thank you for taking my questions.

Speaker Change: Alright, Thank you guys.

Speaker Change: Thank you.

Speaker Change: And our next question will come from Julien Dumoulin Smith from Jefferies. Your line is open.

Speaker Change: Julian we wanted to welcome you back.

Speaker Change: Hey, Thank you so much Jeff Thiede, President John with you guys.

Julian: So you got you.

Speaker Change: You guys continue to make great progress across the board, including here in Texas, So to that end right with this SRP, let me if I can ask that.

Speaker Change: Sort of elaborate a little bit how do you think about the SRP in light of what's happened with Barrow and perhaps any expansion plans around mobile gen or otherwise right. So it's an ever evolving landscape here that needs are evolving obviously this was contemplated in the last legislative session.

Speaker Change: Comments about how to move from here on expanding the SRP and or expectations of the legislative session next year I had that could come ahead.

Speaker Change: Let me do a couple of things, let me start with.

Allen Nye: My views on the SRP I'll pass it to Allen to talk about some next steps procedural Julien I'll start right up in front and say I have been around the utility business for roughly 30 years going back to $19 92, and in my career I've never seen an evolving growth story like we see in Texas. So we made a great investment as you know back in March of two.

18, we were invested in what was at that time and 80% owner that had been bankrupt. We thought there was an opportunity to deploy capital in a way that better serve customers. So I think we are invested in our management team and our growth story and it certainly has played out very well and I will tell you that story continues to evolve and are more bullish today.

Speaker Change: <unk> that I've been at any point on the capital opportunity in Texas, Let's talk about this our payroll quickly you'll recall that the encore team followed that case back in may it outlined nearly $3 billion of capital investments and Youll recall that thats incremental to the record campaign that are executing on right now which comes in right.

Speaker Change: Around 24 billion as we update it on the call. We're pleased that <unk> been successful in reaching a preliminary settlement. That's an all party settlement and we view the settlement in principle constructively and hope to move to a final settlement in the coming weeks I wouldn't want to have a note of caution here that we don't want to speak to the details of the settlement nor.

Speaker Change: Julian do you understand we don't want to front run the Commission's review.

Alan: We feel very positive about it I think it's a great sign for our ability to step forward and continuing to help rate payers in Texas, Alan maybe it'd be helpful. For Julian if you talked a little bit about kind of the procedural next steps.

Alan: Yeah sure Thanks, Jeff and good.

Julien: Good morning Julien.

Alan: But as Jeff said, we are re.

Julian: Really really excited about announcing this settlement in principle of our SRP. This morning.

Alan: And I do want to thank the parties and in particular, the PUC staff for the willingness to work with us on getting to this outcome.

Alan: That we think is really going to find some meaningful benefits to our customers but.

Jeff Martin: With regards to the next steps, you know, now that we've we've announced that we filed with the PUC and informed the judge of our of our preliminary settlement, we're in the process of drafting a definitive settlement agreement plus supporting testimony. We're going to file that by August 16th and at that time, you know, the details will be public and we can talk more about it. Next step would be to have the case remanded from State Office of Administrative Hearings back to the PEC and to try and get that scheduled for PEC consideration as soon as reasonably possible.

Alan: With regards to the next steps now that we've announced that we filed with the PUC and informed the judge of our preliminary settlement.

Alan: We're in the process of drafting a definitive settlement agreement plus supporting testimony were going to file that by August 16.

Alan: At that time the details.

Alan: We will be public and we can talk more about it.

Alan: Next step would be to have the case remanded from state office of administrative hearings back to the PUC.

Alan: And to try and get that scheduled for PC consideration as soon as reasonably possible and as Jeff said I never like to get in front of the commissioner assume anything.

Jeff Martin: And, as Jeff said, I never like to get in front of the Commissioner or assume anything, but assuming that we get approval, we think we'll be in a position to begin making the SRP-related investments and expenditures late this year, in 2024. And, I think importantly, we believe that this settlement will allow us to accomplish all of the benefits that we identified in our original filing. And given some of the challenges that our state has faced over the last few months, we think this is a really, very positive development for both us and our customers.

Speaker Change: But assuming that we get approval, we think we'll be in a position to begin making the SRP related investments and expenditures late.

Jeff: Late in this year in 2024, I think importantly.

Jeff: Importantly, we believe that this settlement will allow us to accomplish all of the benefits that we identified in our original filing.

Jeff: And given some of the challenges that our state has faced over the last few months.

Speaker Change: We think this is a really very positive development for both us and our customers only other thing I would add Julian to the back part of your question is later this week I'll be meeting with the Governor of Louisiana in Louisiana, and then on Friday will be meeting with the Governor Abbott and part of the purpose of our visit is to continue to.

Jeff Martin: Another thing I would add, Julian, to the back part of your question is later this week I'll be meeting with the governor of Louisiana in Louisiana, and then on Friday I'll be meeting with Governor Abbott. And part of the purpose of my visit is to continue to reiterate Sempra's strong commitment to investing in the state of Texas, and I think we might be the largest investor in the state today. In addition to the $27 billion of spending we've circled at Encore, you know, we're putting to work $13 billion at Port Arthur Phase I, and we're aggressively looking to put forward a similar project of scale for Port Arthur Phase II.

Speaker Change: Reiterate super strong commit commitment to investing in the state of Texas, I think we might be the largest investor in the state today. In addition to the $27 billion of spending we've circled at encore.

Speaker Change: Putting it to work at $13 billion at Port Arthur Phase, one and we're aggressively looking to put forward.

Speaker Change: Of our projects of scale for Port Arthur Phase two as you think about the legislative session for next year.

Jeff Martin: As you think about the legislative session for next year, you know, my personal view, Julian, is that public policy in the state of Texas favors new investment around reliability and resilient infrastructure, and I will tell you that's right in Encore's wheelhouse. So we'll continue to expect constructive regulatory and legislative outcomes in Texas, and I think we've seen that, Julian, over the last year or two, and we're committed to partnering with stakeholders to continue to achieve outcomes that directly support our customers' needs.

Speaker Change: Personal view Julian is that public policy in the state of Texas favors new investment around reliability and resilient infrastructure and I would tell you thats right non core wheelhouse. So we will continue to expect constructive regulatory and legislative outcomes in Texas, I think you've seen that Julian over the last year or two and we are committed to partnering with.

Speaker Change: Orders to continue to achieve outcomes that directly support our customers in north Texas.

Julian: Excellent. Thank you guys very much of the details there and just quickly on the <unk>.

Julian: Obviously, you saw the developments here.

Speaker Change: Just to confirm here that doesn't have any reads here or concerns for with.

Speaker Change: With respect to the on time on budget conversation and then subsequently to your prospects for phase two as you think about like that continuous construction mantra that I think you've previously articulated here.

Speaker Change: And then just your expectations on the costs. Yes. There is actually two questions here I think let me speak to that read through to Port Arthur first and then Jeff I think it would be really helpful to talk about your excitement on port Arthur Phase II.

Jeff: Really quickly the short answer to your question is core to Arthur LNG Phase one is not impacted Julien you know that's a different market, it's a different craft labor pool.

Jeff: Fully wrapped EPC contract with what we think is the best EPC contractor in the business, which is back door. So I think thats one of the things that we're not as concerned about what we encountered an acre which are unique to the craft market in Baja California, we feel very good about port Arthur Phase, one, but just that I think it would be helpful to Julien if you don't mind walking through where youre at on phase II.

Jeff Martin: Absolutely. Hi Julien.

Julien: Yeah, absolutely Hi, Julien.

Speaker Change: As Karen mentioned in her prepared remarks, we've had a number of exciting announcements recently.

Jeff Martin: You know, as Karen mentioned in her prepared remarks, we've had a number of exciting announcements recently. As you referenced, we executed a fixed-price EPC agreement with Bechtel. Bechtel is doing incremental pre-FID work, and we're excited to move this project forward while targeting cost and construction efficiencies by having them roll uninterrupted from phase 1 to phase 2. Secondly, we announced the execution of an HOA with Saudi Aramco for 25% of the project equity and 5 million tons per annum of offtake.

Speaker Change: As you referenced we executed a fixed price EPC agreement with Bechtel.

Speaker Change: <unk> is doing incremental pre FID work and we're excited to move this project forward, while targeting cost of construction efficiencies by have them roll uninterrupted from phase one to phase two.

Speaker Change: Secondly, we announced the execution of an HOA with Saudi Aramco for 25% of the project equity and 5 million tonnes per annum of offtake.

Speaker Change: This demonstrates the global demand for LNG at Port Arthur and more broadly the value of low cost and secure U S. LNG.

Jeff Martin: This demonstrates the global demand for LNG out of Port Arthur and, more broadly, the value of low-cost and secure U.S. LNG. I might add that commercial discussions are progressing very well, and there is a reasonable likelihood that the remainder of our volume is under similar HOA-type agreements in the coming months.

Speaker Change: Might add that the commercial discussions are progressing very well and there is a reasonable likelihood that the remainder of our volume is under similar HOA type agreements in the coming months and I Hope we will have be in a position to provide continued positive progress on our third quarter call.

Speaker Change: From a permitting perspective, we've already received our FERC permit and FTA export and we're now awaiting the non FTA export permit which again, we do not expect to impact our decision timing and.

Speaker Change: As a reminder, with Sempra is planning convention since Port Arthur to is not has not reached a positive.

Speaker Change: It is not included in our plan and represents a significant new growth opportunities Julien we can't be more excited about what we're seeing at port Arthur Phase II.

Speaker Change: Alright, Thanks, guys, we will see you soon here.

Thank you Julien.

Speaker Change: Okay.

Julien: Thank you.

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

Carly Davenport: Hey, thanks, so much for taking the questions.

Carly Davenport: Wanted to ask just on a couple a couple of points on Texas. So I appreciate the updates on the growth outlook there.

Carly Davenport: I wanted to ask on the 13% to $15 billion of transmission Capex that you referenced that was proposed by ERCOT in the Permian could you help us think about how large of a share of that spend oncor could help execute on as we think about that timeframe.

Speaker Change: Thank you Carla I think it'd be helpful. Alan to answer that question directly and then go back I think you've got some additional color on overall growth in the state, but maybe to tackle the Permian plan first and then talk about the broader opportunity.

Speaker Change: Yeah, you bet, Thanks, Jeff and thanks, Charlie so.

The Permian reliable in the Permian plan is presently.

Speaker Change: <unk> discussed in Austin plan was issued the PUC has published questions answers do I believe on Friday, there may be more rounds of questions.

Speaker Change: I anticipate there'll be.

Speaker Change: Workshop and then.

Speaker Change: The goal is to get something issued in the next couple of months maybe September.

Speaker Change: The only thing I can really tell you right now about what we would potentially be building out of that plan until the plan is finalized as when you look at the scope of our operations and I often talk about what I'm talking about overall growth on our system, what's happening in West, Texas, and our stand loop in our <unk>.

Culberson loop given the.

Speaker Change: Scope of our operations those areas.

Speaker Change: The amount of substations or endpoints that we own that can be utilized under a $19 38 analysis.

Speaker Change: We would anticipate on really any plan coming out of this process that we would be a heavy participant.

Speaker Change: And that $13 to $15 billion depending on.

Speaker Change: Where it comes out.

Speaker Change: That's probably the best I can do on specifics on the Permian today, Jeff do you want to talk about growth overall.

Jeff: Just going back and I know.

Jeff: Some of this is already out there is in our earnings release, but I generally report on kind of the same categories every quarter and I'm going to try and break it down into four categories. This time, Jeff has already mentioned and we've talked about our very strong premise growth continues.

Jeff: 20000, new in the second quarter, we're still seeing about 2% annually about twice the national average.

Speaker Change: Second category of transmission points of interconnection, new request for the quarter. We had 80 I'm sorry, 98, new that's up about 7% over the same quarter last year.

Jeff: Total request are up 13% and then we always break those down into generation L. C&I.

Jeff: Generation is up seven 5%.

Jeff: Retail or the L. C&I is up 22% and as I mentioned last time, but I've got a little update here.

Jeff: About 25% of that total which is 341 request right now are large load customers that for us that's over 100 megawatts individually.

That group presently represents approximately 80 gigawatts of potential load.

Jeff: Of which about 74% or 59, Gigawatts would come from potential data centers, but the rest of it is fairly diverse from.

The type of customer so incredibly strong growth from.

Jeff: Transmission.

Jeff: On the L C&I or large customer.

Jeff: Perspective, I mentioned West, Texas earlier strong growth continues there far west, Texas, whether zone peak.

Jeff: Peak is up nine 3% over the 23 peak already this year.

Jeff: Culberson in Staunton are two loops transmission loops that we serve in the Permian and Delaware basins Culberson is up 15, 5% over the 23 peak.

Jeff: Stanton is up one 3% over the 23 peak so far this year and then the fourth category I mentioned in my opening remarks, but I think there is significant when you consider what we're facing.

Jeff: And the opportunities that we're seeing on our system. This new ERCOT study the load forecast coming out HP.

Speaker Change: <unk> 66, indicating a peak demand of.

Speaker Change: Approximately 152, Gigawatts by 2030 up from the 2011 Gigawatts. They predicted through 2029 as I've said before we believe we anticipate based on our analysis that around 40% of that load.

Speaker Change: It could be in our service territory and then the the Permian Basin study that we started with as I said, 13% to $15 billion by 2038.

Speaker Change: Given where our facilities are and how that analysis should work.

Speaker Change: We would expect to build a significant portion of whatever projects come out of that plan.

Speaker Change: So obviously all of that comes with Capex.

Speaker Change: Jeff has already indicated how we're going to approach that probably giving an update in.

Jeff: In Q4, but I think the significant part of our Capex. If you look at our $24 $2 billion plan over the next five which as I've said before approximately 70% is growth of 97% or so.

Jeff: Recoverable through our trackers.

Jeff: And that's all before the.

Jeff: The SRP, which we've announced a settlement in principle on today, which is approximately $3 billion again details to come in August.

Jeff: 16th approximately.

Jeff: Also before much of the investment that we would need to do in order to serve these large load customers that I just mentioned.

Jeff: That is before what we would get out of any Permian plan.

Jeff: And that is mostly before what we would need to spend to meet the revised ERCOT load forecast of 157 Gigawatts by 2030.

Jeff: So we will continue to analyze that we're going to work with our shareholders and our board like we always do and provide that update on the Q4 call.

Jeff: But we are we are very very excited about what we're seeing on our system. We think there's tremendous opportunities to invest throughout our system.

Alan: And we're looking forward to trying to meet those needs. Thank you Alan and currently the other point I mentioned and Alan called this out is that roughly 80% of that capital program is serving growth and thats important because it puts downward pressure on rate increases related to infrastructure investment and secondly, which is really almost unheard of in our industry roughly 60%.

Alan: That capital plan is associated with transmission. So just like in California, where we have the attack where transmission costs are socialized across all state consumers. The same thing takes place in Texas. So its a robust capital plan. It's a plan that is expected to continue to increase and the good news is is directly serving growth.

Alan: Without a lot of pressure on affordability and really serving the needs of Texas consumers.

That's great. Thank you so much for all that context.

Speaker Change: Just sticking in in Texas for one follow up I guess, how are you thinking about timing.

Speaker Change: For foregoing backend for another rate case, just as you think about in our recent rate cases in Texas Capex updates moving pieces on our insurance a lot of things going on so I would just love to get your updated thoughts there.

Speaker Change: Yes, there are some moving pieces I'll see if Alan wants to add anything to that same one of them is for example increase in insurance related to a wildfire towers, which I think is a common issue across the state. This is something that we continue to evaluate the good news is we've got the opportunity to either file for some of these selective cost increases on a one off basis.

Alan: Come back in for a rate case, I think alan's team hasn't made a definitive decision on that but Alan if you'd like to add anything. Please. Please go ahead, yes, you bet, Jeff just briefly we do we evaluate with our board annually.

Alan: Things like the topics you mentioned that might put pressures on us.

Speaker Change: But we are not required to come back in until the summer of 2027 will continue going through this process with our board if things change we will make a decision but right now we don't have to we are not required to come back and until the summer of 2027.

Speaker Change: Great. Thank you so much for all the comments and the color.

Speaker Change: Thanks, a lot Charlie for joining the call.

Speaker Change: Thank you and that is all the time, we have for questions today I would now like to turn the call over to Jeff Martin for closing remarks.

Jeff Martin: I would like to conclude if I could buy recap in several highlights from today's call number one I think it's important for our lifting the audience to know and understand that we're seeing an increased opportunity for investment in Texas I think Alan did a good job of outlines outlining some of the growth drivers. There also once the state I think it's the leading growth story in our sector and we can.

Jeff Martin: Continuing to be very bullish on our opportunities in Texas number two we're very pleased with our strong financial performance for the first half of the year. Karen mentioned this earlier, but we're trending ahead of our internal planning forecast and number three with travelers leadership and Scott Drew in Carolina win we continue to feel quite positive about the opportunity we haven't referred.

Speaker Change: All of us with the general rate cases here in California.

Speaker Change: We're continuing to make investments I think that are strongly aligned with the public policy mandates of the state.

Speaker Change: In combination we have great confidence in our financial commitments and are Reconfirming, our guidance ranges for both 2024 and 2025 as well as our long term growth rate of 6% to 8%. It continues to be an exciting time for our company. If you have any questions or follow ups from this.

Speaker Change: Today, please reach out to our IR team.

Speaker Change: Also note that we look forward to seeing many of you at the upcoming Citi and UBS conferences in the next few weeks and for those of you who are interested we also invite you to reach out and schedule a time to come visit <unk>, new wildfire and climate resiliency facility.

Speaker Change: I think youll find it to be time, well spent and come away with a very strong sense of our company's commitment to safety and operational excellence.

Speaker Change: This concludes our call.

Speaker Change: Thank you for your participation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Conference is being recorded at this time I'd like to turn it over to Glenn Donovan. Please go ahead.

Operator: Great. Thank you so much for all the comments and the color.

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

Operator: Thanks a lot, Carly, for joining the call.

Operator: Thank you and that is all the time we have for questions today. I would now like to turn the call over to Jeff Martin for closing remarks.

Speaker Change #101: We have several members of our management team with us today, including Jeff Martin Chairman and Chief Executive Officer.

Glen Donovan: Good morning, and welcome to Sempra's second quarter 2024 earnings call. A live webcast of this teleconference and slide presentation are available on our website under our events and presentations section.

Karen <unk>: Karen <unk> executive Vice President and Chief Financial Officer.

Glen Donovan: We have several members of our management team with us today, including Jeff Martin, Chairman and Chief Executive Officer; Karen Sedgwick, Executive Vice President and Chief Financial Officer; Trevor Mihalik, Executive Vice President and Group President, Sempra California; Justin Bird, Executive Vice President and Chief Executive Officer of Sempra Infrastructure; and Alan Nye, Chief Executive Officer of Encore.

Trevor Mihalik: Trevor Mihalik Executive Vice President and group President for California.

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

Trevor Mihalik: Allen Nye, Chief Executive Officer of Encore.

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

Glen Donovan: Before starting, I'd like to remind everyone that we'll be discussing four looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The actual results may differ materially from those projected in any forward-looking statement we make today. The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K and 10-Q filings with the SEC. Earnings per common share amounts in our presentation are shown on a diluted basis, and we'll be discussing certain non-GAAP financial measures. We also encourage you to review our 10-2 for the quarter ended June 30, 2024.

Speaker Change #104: 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.

Speaker Change #104: Actual results may differ materially from those projected in any forward looking statements we make today the.

Speaker Change #104: The factors that could cause our actual results to differ materially.

Speaker Change #104: Because the company's most recent 10-K and 10-Q filed with the SEC.

Speaker Change #104: Earnings per common share amounts in our presentation are shown on a diluted basis, and we will be discussing certain non-GAAP financial measures.

Speaker Change #104: Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures.

Speaker Change #104: We also encourage you to review our 10-Q for the quarter ended June 32024.

Speaker Change #104: I'd also like to mention that forward looking statements contained in this presentation speak only as of today August six 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.

Speaker Change #104: With that please turn to slide four and let me hand, the call over to Jeff. Thank.

Jeff: Thank you Glenn and thank you all for joining us today as we close out the first half of the year. We continue our focus on safety and operational excellence and we're pleased with the strength of our financial performance. This actually it sets us up well in the second half of the year, while also supporting our confidence in our projected long term EPS growth rate of six.

Jeff: Went to 8% and more importantly, we think there's a lot to be excited about at central California. We continue to play a critical role in helping the state achieve its safety reliability and de carbonization goals.

That's why we continue to make important investments to improve safety modernize the grid and better support the delivery of cleaner forms of energy.

Jeff Martin: We also look forward to advancing our general rate cases here in the state and anticipate a proposed decision later this summer with a final decision expected before the end of the year. And it's coming from a wide range of industries, including manufacturing, technology and digital infrastructure. Annual premise growth, as one example, continues to trend around 2%, which is almost double the national average.

Jeff: We also look forward to advancing that general rate cases here in the state and anticipate that proposed decision later this summer with a final decision expected before the end of the year.

Jeff: The outcome of the JRC is expected to help our utilities better meet the state's public policy goals advanced reliability and community safety and improved visibility into our plan and execution through 2027.

Speaker Change #105: At Sempra, Texas Oncor continues to see remarkable growth and it's coming from a wide range of industries, including manufacturing technology and digital infrastructure.

Speaker Change #105: Premise growth as one example continues to trend around 2%, which is almost double the national average.

Jeff Martin: Allen will walk through how electricity demand is impacting the Texas grid and also driving the need for new capital investments all across Encore Service Territory. With the remarkable growth in the Encore Service Territory, we continue to expect to see higher levels of capital spending in the future, and this will be a key consideration in our financial planning process this fall. Finally, Sempra Infrastructure remains focused on advancing critical infrastructure investments that support the energy transition and enhance energy security, and we continue to see progress across several key development initiatives.

Speaker Change #105: Alan will walk through how electricity demand is impacting the Texas grid and also driving the need for new capital investments all across Oncor service territory.

Speaker Change #106: Against that backdrop, you recall that encore is currently executing on a record five year capital plan of roughly $24 billion with a pending regulatory filing to improve system resiliency by investing incremental capital of up to $3 billion from 2025 through two.

Speaker Change #105: <unk> thousand 27 with.

Speaker Change #105: With the remarkable growth in Oncor service territory, we continue to expect to see higher levels of capital spending in the future and this will be a key consideration in our financial planning process. This fall.

Speaker Change #105: Finally separate infrastructure remains focused on advancing critical infrastructure investments.

Speaker Change #105: <unk>, the energy transition and enhanced energy security and we continue to see progress across several key development initiatives.

Jeff Martin: Moving to our financial results for the quarter. Earlier this morning, we reported adjusted EPS of 89 cents and year to date adjusted EPS of $2.24. As a reminder, these results do not reflect the impact of a final California GRC decision, which we expect before year-end, with rates retroactively applied to January 1.

Speaker Change #107: Moving to our financial results for the quarter earlier. This morning, we reported adjusted EPS of <unk> 89, and year to date adjusted EPS of $2 24.

Speaker Change #107: As a reminder, these results do not reflect the impact of a final, California, Trc decision, which we expect before year end with rates retroactively applied to January one from my perspective, we've had a great start to the first half of the year as a result, we are affirming both our full year 2020.

Jeff Martin: From my perspective, we've had a great start to the first half of the year. As a result, we're affirming both our full year of 2024 adjusted EPS guidance range and our 2025 EPS guidance range. As a reminder, we view our corporate strategy as an opportunity to assert a competitive advantage in energy markets, and there are three key elements to our plan of execution. California and Texas, for example, give our utilities great exposure to increasing demand for new infrastructure investments, while Sempra infrastructure benefits from strong tailwinds around the reshoring of industry to North America and global demand for improved energy security associated with the export of liquefied natural gas from the United States.

Speaker Change #107: For adjusted EPS guidance range, and our 2025 EPS guidance range.

Speaker Change #107: Please turn to the next slide.

Jeff Martin: Second, we focused our investment strategy in a more narrow part of the energy value chain, namely transmission and distribution investment. And finally, we aggressively compete capital inside our company across all three growth platforms to help ensure we're delivering the best overall returns to our owners. At the end of the day, being good stewards of capital is a top priority, and has allowed us to continue delivering attractive risk adjusted returns. As an example, we've been successful in delivering a 10% adjusted EPF compound annual growth rate since 2018. Next, I'll turn the call over to Alan to walk through the improving growth story that continues to unfold in Texas, please turn to the next slide.

Speaker Change #107: As a reminder, we view our corporate strategy as an opportunity to a sort of competitive advantage in the energy markets and there are three key elements to our plan of execution.

Speaker Change #107: First we positioned our portfolio and some of the most attractive economic markets in North America.

Speaker Change #107: California, and Texas for example will give our utilities, great exposure to increasing demand for new infrastructure investments, while separate infrastructure benefits from strong <unk> around the re shoring of industries in North America, and global demand for improved energy security associated with the export of liquefied natural gas from the United.

Speaker Change #107: <unk> states.

Speaker Change #107: Second we focused our investment strategy in a more narrow part of the energy value chain.

Speaker Change #107: Namely transmission and distribution investments.

Speaker Change #107: By doing so we aim to improve the quality and recurring nature of our earnings and cash flows while reducing exposure to risk and price volatility. We believe this provides an improved risk reward profile for our owners.

And finally, we aggressively compete capital inside our company across all three growth platforms.

Speaker Change #107: Help ensure we are delivering the best overall returns to our owners at the end of the day being good stewards of capital is a top priority and has allowed us to continue delivering attractive risk adjusted returns as an example, we've been successful in delivering a 10% adjusted EPS compound annual growth rate.

Speaker Change #107: Since 2018.

Speaker Change #107: Next I will turn the call over to Allen to walk through the improving growth story that continues to unfold in Texas. Please turn to the next slide.

Allen Nye: Thank you Jeff I'd.

Alan Nye: I'd like to start by saying that growth continues at a rapid pace all across the state of Texas and especially in the Encore Service Territory. In the second quarter alone, we built, rebuilt, or upgraded approximately 1,050 miles of T&D lines, increased our premise count by approximately 20,000, and received approximately 100 new transmission POI requests, which has increased our active interconnection requests in our queue by 13% year-over-year. It's also important to note that we continue to make progress on the five-year capital plan that was announced earlier this year of approximately $24 billion.

Allen Nye: I'd like to start by saying that growth continues at a rapid pace all across the state of Texas, and especially in the Oncor service territory in the second quarter alone, we built rebuilt or upgraded approximately 1050 miles of T&D lines increased our premise.

Allen Nye: <unk> by approximately 20000 and received approximately 100, new transmission requests, which has increased our active interconnection requests in our queue by 13% year over year. It's also important to note that we continue to make progress on the five year.

Allen Nye: Capital plan that was announced earlier this year of approximately $24 billion as Jeff mentioned. This does not include the capital expenditures that may be approved as part of our system resiliency plan or SRP.

Alan Nye: As Jeff mentioned, this does not include the capital expenditures that may be approved as part of our System Resiliency Plan or SRP. Turning to our operating environment, Texas, like the nation as a whole, is seeing an increase in the frequency and intensity of severe weather events. The number of extreme storms, including ice, intense heat, and extremely high winds have shown us that we must be even more focused on reliability, resiliency, and response, along with the hardening of our system to prevent outages. Our proposed initiatives include a substantial opportunity to expand distribution automation to the legacy portions of our system. Today, newer facilities on our system have this technology.

Allen Nye: We filed our first SRP with the PUC in May of this year.

Allen Nye: Turning to our operating environment, Texas like the nation as a whole.

Allen Nye: Seeing an increase in the frequency and intensity of severe weather events.

Allen Nye: The number of extreme storms, including ice intense heat and extremely high winds have shown us that we must be even more focused on reliability resiliency and response.

Allen Nye: That's why our SRP identify seven measures with detailed programs and activities for each measure to address the wide range of resiliency events, we're seeing across our service territory.

Allen Nye: <unk> extreme weather.

Allen Nye: The risk of wildfires physical security threats and cyber security threats.

Allen Nye: Along with the hardening of our system to prevent outages are proposed initiatives include a substantial opportunity to expand distribution automation to the legacy portions of our system.

Allen Nye: We call this our flexible and self healing distribution grid measure.

Allen Nye: <unk> newer facilities on our system have this technology.

Allen Nye: Which allows us to automatically redistribute load two undamaged parts of our grid during extreme weather or other events significantly reducing or in some cases, eliminating lengthy outages for many of our customers. We recently provided some examples to the PCT of how this technology.

Allen Nye: Helped hundreds of our customers avoid what could have been de long outages from the severe storms we experienced in may.

Speaker Change #108: Among other areas are.