Sempra Energy NYSE: SRE expects to raise the five-year base capital plan for its Texas utility Oncor by approximately 20% and is guiding toward the high end of its 2026 adjusted earnings forecast after stronger third-quarter results.
Management also affirmed its 2027 earnings guidance on the Nov. 5 earnings call, while cautioning that pending regulatory outcomes could push results into the lower half of the range. A proposed California regulatory decision could weigh on the company’s utility earnings next year if it is not corrected, executives said.
Texas growth drives earnings and investment plans
Sempra reported third-quarter 2026 earnings of $877 million, or $1.34 per diluted share, compared with $77 million, or $0.12 per share, a year earlier. Adjusted earnings rose to $917 million, or $1.40 per share, from $728 million, or $1.11 per share.
Chief Financial Officer Karen Sedgwick said Sempra Texas contributed $154 million in higher equity earnings, driven by new base rates, regulatory mechanisms and higher customer consumption, primarily attributable to weather. Higher interest expense, depreciation and operating and maintenance costs partially offset those gains.
Chairman and CEO Jeff Martin said Oncor recently reached a system peak of 33 gigawatts, 6% above its prior record. Sempra expects to announce its 2027–2031 capital plan in February, including an approximately 20% increase from Oncor’s existing $47.5 billion base plan.
Oncor CEO Allen Nye said the expected increase reflects the addition of 2031 to the planning period, continued customer and load growth, and projects moving from an incremental opportunities list into the base plan. He said the increase is supported by projects approved by the Public Utility Commission of Texas or endorsed by the Electric Reliability Council of Texas.
Martin said the anticipated increase excludes certain potential projects, including the Eastern STEP 765-kilovolt projects and a system resiliency program. It also excludes projects associated with ERCOT’s Batch Zero large-load planning process from both the February base plan and the incremental opportunities list.
Nye said ERCOT was sending a second request for information to about 80% of large-load customers in Batch Zero because their responses did not adequately meet validation criteria. ERCOT was still aiming to complete validation in mid-December, he said.
California decision creates 2027 uncertainty
Sempra is guiding toward the high end of its 2026 adjusted earnings range of $4.80 to $5.30 per share. It affirmed its 2027 earnings range of $5.10 to $5.70 per share and its projected long-term earnings growth rate of 7% to 9%.
Martin said the California Public Utilities Commission issued a proposed decision denying Sempra’s petition to modify capital attrition rates in its 2024 general rate case. The company views its request as a correction to an error in how post-test-year capital investment was accounted for.
If the issue is not corrected, Martin said, Sempra California’s 2027 earnings would be expected toward the low end of its segment guidance range. Sedgwick said the revenue requirement at issue was $188 million and that the company would work to mitigate the impact if necessary.
Executives said the potential impact is limited to 2027 because new rates are expected to take effect in January 2028 under a pending rate case. Martin said the issue would have no impact on how the company guides to an updated long-term growth rate in February.
Asset sale and financing plan
Sempra expects to close the sale of a 45% equity stake in SI Partners within two weeks. Sempra Infrastructure CEO Justin Bird said the two remaining closing conditions were consent from Cameron partners and Japanese lending agencies, and that the company was “in great shape” on both.
Martin said the transaction is expected to help Sempra pay down debt, strengthen its balance sheet and narrow its focus toward regulated utilities. Sedgwick said the company is developing a financing plan for expected capital spending through 2031, with options that could include additional asset sales, transaction proceeds, its at-the-market equity program, and hybrid and debt financing.
Following the expected transaction closing, Bird will transition to Sempra’s chief financial officer role, while Sedgwick will become president and CEO of SoCalGas, Martin said.
About Sempra Energy (NYSE:SRE)
Sempra is a North American energy infrastructure company headquartered in San Diego, California. Formed in 1998 through the merger of Pacific Enterprises and Enova Corporation, the company develops and operates regulated utilities and energy infrastructure.
In California, Sempra’s utilities include San Diego Gas & Electric and Southern California Gas Company, which provide electricity and natural gas services to homes and businesses. In Texas, its operations include an ownership interest in Oncor, an electric transmission and distribution company.
Through its energy infrastructure business, Sempra has also developed and operated natural gas pipelines, storage facilities and liquefied natural gas projects in the United States and Mexico.
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