San Diego-based Fortune 500 energy company Sempra released its first quarter financial figures Tuesday and filings with the U.S. Securities and Exchange Commission showed San Diego Gas & Electric earned $223 million in the first three months of the year.
That’s $35 million less than the first quarter of 2023, when SDG&E profits came to $258 million.
As part of a slide presentation with Wall Street analysts, the company attributed lower earnings of its Sempra California division — which includes SDG&E and Los Angeles-based Southern California Gas — to higher net interest expenses, lower operating margins set by the California Public Utilities Commission, reduced income tax benefits and other factors.
Overall, Sempra Chief Executive Officer Jeffrey Martin said the first quarter “sets us up well to provide strong financial performance for 2024.”
Critics of SDG&E took aim at the utility’s earnings, even though they were lower than in the first quarter of last year.
“We’re just paying a tremendous amount of profit to SDG&E,” said Bill Powers, chair of the Power San Diego Campaign that seeks to oust SDG&E and replace it with a municipally run electric utility within the city limits of San Diego. “That’s driving all sorts of infrastructure projects that we wouldn’t be building if we didn’t have that shareholder-focused profit motive in the middle.”
The Power San Diego Campaign is trying to gather enough signatures from voters to place the question on the ballot this November.
For the second straight quarter, SDG&E’s earnings were combined with those of SoCalGas in Sempra’s news release. The quarterly figures for each utility were available in a separate link, as part of the 10-K report Sempra submitted to the SEC.
Powers accused Sempra of “hiding the ball on SDG&E profits” with the new format, but company officials have denied that, saying that combining SDG&E and SoCalGas numbers into a single segment is a matter of simplicity given “the geographic and regulatory overlays between the two companies.”
As a whole, Sempra posted $854 million in adjusted earnings in the first quarter, down 7.4 percent compared to profits in the first three months of 2023.
However, the company’s utilities division in Texas, led by Dallas-based Oncor, posted healthy returns of $193 million. That’s up from $85 million in Q1 2023.
Texas has experienced rapid growth in the utility sector as the Lone Star State’s economy and population boom. The operator of the electrical grid in Texas, ERCOT, said last month that peak load is expected to reach 152 gigawatts by 2030, nearly double the record set last year of 85 gigawatts.
Sempra executives expect about 40 percent of the new load will come from Oncor’s service territory.
The earnings call also touched on another of Sempra’s subsidiaries — Houston-based Sempra Infrastructure — that has made significant investments in liquefied natural gas facilities that export LNG to energy markets around the world.
After prodding by environmental groups opposed to natural gas, the Biden administration earlier this year paused approvals of new LNG projects in the U.S. to review their effects on the climate.
The length of the pause and its potential impact have raised questions in the LNG sector.
The move affects one of Sempra’s projects — Phase 2 expansion of a massive LNG project on the Gulf Coast of Texas called Port Arthur LNG.
Rendering of Sempra’s proposed Port Arthur LNG facility on the Texas Gulf Coast.
(Sempra)
“We believe the permitting pause is temporary,” Martin said during the earnings call. He pointed to remarks U.S. Department of Energy Secretary Jennifer Granholm made March 21 at a major energy conference in Houston.
“I predict that as we sit here next year … this (pause) will be well in the rearview mirror,” Granholm said.
Sempra officials said its other LNG projects are moving apace.
The addition of an export component to Sempra’s existing facility near Ensenada, Mexico, called Energía Costa Azul, is 80 percent complete and is expected to open in the summer of 2025. It’s considered a lucrative proposition because a site on the Pacific can ship cargo to markets in Asia much faster than facilities based along the Gulf of Mexico. Plus, by being on the West Coast, ships don’t have to pay tolls to go through the Panama Canal.
Sempra has already built and is expanding its Cameron LNG facility on the Gulf Coast of Louisiana, and the first phase of the Port Arthur project is already pouring concrete and putting steel into the ground.
“We have quality LNG development projects,” Martin said. “They are geographically advantaged. There’s no other developer out there that has the opportunity to…
Read More: SDG&E made $223M in profits in first quarter, down $35M from last year