Energy (Utilities + LNG Infrastructure) · Deep dive

Sempra

The San Diego-based utility holding company (NYSE: SRE) that owns SoCalGas + SDG&E in California, an 80.25% stake in Oncor in Texas, and — until the KKR/CPP deal closes in Q3 2026 — 70% of Sempra Infrastructure's Cameron/ECA/Port Arthur LNG franchise, remaking itself in 2025-2026 into an almost-pure regulated utility with a record $65B 2026-2030 capital plan and 11% projected rate-base CAGR.

well positioned

The 2025 pivot — dropping Sempra Infrastructure to a 25% minority stake, exiting Mexican gas distribution, and re-underwriting the story around a $65B regulated Texas + California capital plan with 11% rate-base CAGR and 95% regulated earnings mix by 2030 — trades LNG-cycle beta for exactly the compounding, rate-base machine that public-market utility investors are paying up for right now, and the Oncor / Permian / data-center demand backdrop is the strongest structural tailwind in US utilities.

My take ★★ Very interesting ★ Interesting − Maybe ✗ Not interesting

Snapshot

Sempra (NYSE: SRE) is a San Diego utility holdco: $55-63B market cap (Sept 2026), three regulated utilities (SoCalGas, SDG&E, 80.25% of Oncor), and — for a few more months — 70% of Sempra Infrastructure (Cameron / ECA / Port Arthur LNG). FY2025: revenue $13.7B, adjusted EPS $4.69, $3.07B adjusted earnings. The 2026-2030 capital plan is a record $65B, taking rate base $57B to $97B, 11% CAGR, 95% regulated by 2030. What matters now is the Sep 22 2025 agreement to sell 45% of Sempra Infrastructure to a KKR + CPP consortium at $31.7B EV for $10B cash — a five-year unwind that repositions Sempra as an almost-pure Texas + California pipes-and-wires compounder.

Founding story

Sempra was formed June 26, 1998, when Pacific Enterprises (parent of SoCalGas, chartered 1867) and Enova (parent of SDG&E, chartered 1881) merged into a new Delaware holdco. Announced October 1996; cleared FERC June 1997, NRC August 1997, CA AG November 1997, CPUC 1998. PE shareholders got 1.5038 SRE per share; Enova one-for-one. Richard Farman (PE) was first chairman/CEO; Stephen Baum (Enova) succeeded in 2000 and ran the company through the 2000-2001 California energy crisis and FERC market-manipulation probe. Donald Felsinger and then Debra Reed followed. Reed — a SoCalGas engineer who joined in 1978 and became SoCalGas’ first female officer in 1988 — became CEO in June 2011, closed the $9.45B EFH acquisition March 9 2018, and retired weeks later. Jeffrey Martin (West Point graduate, ex-Army air-cavalry pilot, JD-lawyer-turned-finance-operator; joined Sempra 2004 as VP IR) took over May 1, 2018 ; still in the seat as of September 2026 with no announced retirement.

How it works

Sempra runs three regulated utilities and one infrastructure holding. SoCalGas is the largest US gas LDC (~21.9M people, ~103,000 miles of pipeline, ~5.9M meters) plus the Aliso Canyon storage complex whose October 2015 well failure produced the largest US methane leak and a $1.1B after-tax settlement in September 2021 (ratepayers not on the hook). SDG&E is a combined electric + gas utility for San Diego and southern Orange County (~3.7M people, ~1.5M electric meters) — the archetypal California high-wildfire-risk territory driving undergrounding, PSPS, and cost-of-capital design. Oncor is the largest T&D operator in Texas (~14M people, ~146,000 miles), 80.25% owned and ring-fenced from the holdco by PUCT protections inherited from the EFH bankruptcy; its Permian Basin Reliability Plan powers Sempra’s growth math. Sempra Infrastructure Partners holds Cameron LNG (12 Mtpa, Phase 2 permitted), ECA LNG (Phase 1 first cargo 2025), and Port Arthur LNG (Phase 1 building; Phase 2 FID Sep 22 2025 at ~$14B, 13 Mtpa). Post-close (Q3 2026), Sempra owns 25% equity-method minority, KKR-led consortium 65%, ADIA 10%.

Product and business overview

Sempra California (SoCalGas + SDG&E) is the historical core: rate-base-and-authorized-return, with capital going into pipelines, distribution, undergrounding, meters, storage integrity and wildfire mitigation. The Track 2 proceeding of November 14, 2025 partially disallowed $427M of SDG&E’s requested $1.15B for 2019-2022 wildfire mitigation, approving $721M — signal that CPUC discipline on wildfire is real. Sempra Texas (80.25% of Oncor) is the growth engine: the $36B 2025-2029 base plan has been revised >30% higher for 2026-2030, driven by ERCOT’s Permian Basin Reliability Plan and the large-load queue. Sempra Infrastructure (LNG plus remaining IEnova assets) flips to equity-method minority post-KKR/CPP. Proceeds (~$10B across 2026-2027) fund the utility capital plan without new common equity in the base case.

Business model and pricing

Utility revenue is authorized, not priced: California utilities file GRCs every four years and cost-of-capital every three (Oncor files with the PUCT). Authorized ROE runs ~10-10.5%; the November 2025 SDG&E Track 2 PD reaffirmed the 2022 California returns. Revenue = rate base × authorized ROE, grossed up for taxes, plus recoverable O&M and depreciation. Sempra Infrastructure is contracted differently — 20-year LNG SPAs at tolling economics: Port Arthur Phase 2 was underwritten by 10 Mtpa of 20-year offtake with ConocoPhillips, JERA, EQT LNG, and a Sempra affiliate before FID. Dividend is $2.63 annualized in 2026 (2.9-3.1% yield); raised for the 16th consecutive year in 2025, with 10/20-year CAGR above the S&P 500 Utilities median.

Traction over time

FY2023: revenue ~$16.7B, net income $3.03B. FY2024: $13.2B, adjusted EPS $4.65. FY2025: revenue $13.7B, GAAP $1.80B ($2.75 EPS), adjusted $3.07B ($4.69), ~$13B capex. Q1 2026: adjusted $991M / $1.51 (up from $942M / $1.44). 2026 adj EPS guidance $4.80-$5.30; 2027 $5.10-$5.70; 2030 outlook $6.70-$7.50. Rate base $57B (2025) to $97B (2030). Capital plan $65B for 2026-2030 (up from $56B) with $9B incremental. Headcount ~18,900-20,000.

Market analysis

US regulated utility rate base is ~$1.5-1.7T (2025), growing 6-8% annually. Texas T&D is the top-growth sub-segment: ERCOT projects 90.5-98 GW summer 2026 peak; its large-load queue jumped ~300% YoY to ~255-300 GW; Permian peak load is forecast to quadruple to 26.4 GW by 2038; a 765-kV backbone is being built. California utility capex is dominated by wildfire mitigation (undergrounding at $3-6M/mile), grid modernization, and electrification. Global LNG grew ~3-5% through 2024-2026; US exports are the fastest-growing sub-segment (Cheniere, Venture Global, Cameron, Port Arthur, Freeport); ECA on Mexico’s Pacific coast unlocks direct-to-Asia shipping bypassing the Panama Canal.

Competitive intel

NextEra (~$150B cap) is the reference regulated-plus-renewables comp; NEER outguns Sempra in generation; FPL is the rate-base benchmark. Edison International is the closest structural analogue — same CPUC and wildfire regime. PG&E is the wildfire-liability benchmark; investors read PG&E as leading indicator on CPUC discipline. Berkshire Hathaway Energy lost the Oncor bid in 2017 and remains the “next buyer” scenario. CenterPoint and AEP compete with Oncor for Texas capex and large-load slots. LNG side: Cheniere is the incumbent US exporter; Venture Global is the post-IPO fast-mover; Kinder Morgan and Williams compete for feeder-gas capital; AES for hyperscaler PPAs. Oncor’s data-center queue puts Sempra in direct competition with NextEra, CenterPoint, AES and IPPs for the same ERCOT slots.

History and evolution

1867/1881: SoCalGas and SDG&E predecessors chartered. Oct 1996: PE + Enova merger announced. Jun 26 1998: Sempra Energy formed (NYSE: SRE). 2000-2001: California energy crisis; trading businesses drawn into FERC market-manipulation probe. 2004: FERC settlement. 2011: Reed named CEO. Oct 23 2015: Aliso Canyon SS-25 well fails; plugged Feb 12 2016. Aug 21 2017: Sempra outbids Berkshire Hathaway with $9.45B for EFH’s 80.25% Oncor stake. Mar 9 2018: Oncor closes at $18.8B EV. May 1 2018: Martin becomes chairman/CEO. 2020: Rebrands, drops “Energy.” Oct 1 2021: KKR buys 20% of SI for $3.37B. Sep 21 2021: Aliso Canyon $1.1B after-tax charge. Jun 1 2022: ADIA buys 10% of SI for $1.73B. 2025: ECA LNG Phase 1 first cargo. Apr 1 2025: Board approves capital-recycling program. Sep 22 2025: PA LNG Phase 2 FID ($14B) same day as $10B agreement to sell 45% of SI to KKR + CPP (post-close: KKR-led 65% / Sempra 25% / ADIA 10%). Nov 14 2025: CPUC Track 2 PD disallows $427M of $1.15B wildfire revenue. Feb 26 2026: $65B 2026-2030 capital plan unveiled. Aug 20 2026: Ecogas closes.

What people say

The case for. Sell-side reads the 2025-2026 pivot as a rare structural repositioning: transferring LNG cyclical risk to a KKR/CPP/ADIA consortium at $31.7B EV crystallises value and refocuses the equity on a $97B 2030 rate base compounding at 11% with almost no new equity. Utility Dive framed the $65B plan as the largest in company history; 2026 EPS guidance was affirmed on the Q2 print even after Ecogas closed. Glassdoor rates Sempra corporate 4.3/5 across 213 reviews (86% recommend); recurring positives are “great compensation” and “pension plus good benefits.” Aliso Canyon is paid; SDG&E cost-of-capital was reaffirmed November 2025; the Oncor ring-fence insulates Sempra from Texas retail volatility. Dividend has grown 16 consecutive years above the utility-index median.

The complaints. Recurring Glassdoor themes: “senior management out of touch,” restructures every 3-4 years, layoffs communicated poorly. SDG&E customer sentiment is measurably worse — KPBS and Union-Tribune have documented years of ratepayer anger over some of the highest residential rates in the continental US; 2025 rate hikes (electric +2.6%, gas +1.8%) landed on top of a 10.5% CPUC undergrounding hike from the prior cycle. The Nov 14 2025 Track 2 disallowance ($427M of requested wildfire revenue) shows regulators will not pass every dollar through. Oncor’s ~300 GW queue is being re-scored under Batch Zero — headline demand may prove too high. Post-close equity-method accounting on SI changes reported EBITDA character and complicates sum-of-parts.

Outlook: well positioned or at risk?

Well-positioned — with California as the tail risk. The 2025-2026 corporate action is exactly what generalist utility investors have wanted: pull LNG-cycle beta out at a full private-market multiple (KKR + CPP paid $31.7B EV for 65% of SI), commit proceeds and cash flow to regulated rate base in Texas and California, and glide to 95% regulated earnings by 2030. Oncor’s Texas franchise is the single best structural tailwind in US utilities right now — Permian demand, data-center load, ERCOT’s 765-kV backbone, and a supportive PUCT.

The at-risk case is California-shaped. SoCalGas + SDG&E is roughly a third of earnings and 100% of the wildfire, methane-emissions, gas-decarbonization, and rate-design risk. Track 2’s November 2025 disallowance signals CPUC will not simply pass wildfire spend; SoCalGas is politically vulnerable in a state committed to building electrification; Aliso Canyon is still under closure pressure; SDG&E rate anger is a live constraint. But those risks compress ROE at the margin — they do not break a $97B rate base compounding at 11%. Net: well-positioned.

How to attack it

The wedge is not competing with Oncor for T&D rate base — that needs franchise territory and $50B of patient capital. The wedge is wildfire mitigation as a software + services business, sold into the CPUC-regulated utility base. Track 2’s November 2025 disallowance told every California utility executive that undergrounding and PSPS spend will be disallowed unless the risk-reduction case is airtight; Sempra now needs vendor-priced, per-mile, auditable delivery. Overstory (vegetation imagery), Pano AI (fire-detection cameras), Rain (initial-attack drones), and Salience Labs (grid sensors) each own pieces. What does not exist is a full-stack “wildfire mitigation as a service” operator that will bid, deliver, and stand behind per-mile undergrounding with performance guarantees and CPUC-defensible data — Sempra’s own Q2 2026 commentary flagged rising undergrounding costs.

Weaknesses a well-funded attacker can exploit. (1) SoCalGas political fragility: the largest US gas LDC is on the wrong side of California’s building-electrification stack; heat-pump-plus-panel financers (Sealed, BlocPower) can pull residential revenue out one home at a time. (2) Aliso Canyon overhang: storage-integrity and methane-monitoring vendors (Distran, Baker Hughes) have a compliance-driven sale. (3) Behind-the-meter hyperscaler power: Oncor’s queue is being re-scored under Batch Zero; behind-the-meter gas + carbon capture, Fervo geothermal, SMRs, and grid-forming batteries (Base Power, Form Energy) can peel load out of the interconnection queue entirely. (4) CPUC data credibility: independent risk-analytics vendors with cross-utility data (Rhizome, Kettle) beat Sempra’s internal models. (5) Cultural inertia: Glassdoor’s “restructures every 3-4 years” theme signals execution risk on a $65B plan.

Adjacent-segment play

The reusable capability is large-scale regulated capital deployment — buying, funding, and integrating rate base under state regulators. Three adjacencies are plausible. First, water utility rollups: American Water, Essential Utilities, and Aqua America run the same regulated-ROE playbook in a far more fragmented industry; a Sempra-shaped consolidator has room. Second, regulated transmission-as-a-service: Oncor’s 765-kV expertise could be repackaged as a hybrid merchant/regulated developer for PJM, MISO, and SPP — LS Power, Grain Belt Express, and NextEra Transmission already own pieces. Third, industrial gas midstream in Mexico: post-Ecogas, IEnova relationships and Mexican regulatory scars are institutional knowledge a Fermaca, TC Energy Mexico, or PE midstream sponsor would value. Less attractive: retail electricity (2001-2004 crisis is a warning), renewable IPP (NextEra dominates), residential demand response (regulatory-model uncertainty). The 2025-2026 pivot argues Sempra should redeploy KKR/CPP proceeds only into Texas + California rate base — the market is currently paying it to do exactly that.

Sources and further reading

• Sempra Reports 2025 Financial and Business Results — Sempra newsroom, Feb 2026
• Sempra Announces Strategic Transactions Advancing Goal of Building Leading U.S. Utility Growth Business — Sempra newsroom, Sep 22 2025
• Sempra takes FID on 13 Mt/year Port Arthur LNG Phase 2 project — Enerdata, Sep 2025
• Sempra Energy acquires indirect interest in Oncor Electric, valuing Oncor at $18.8B — Jones Day, Mar 2018
• KKR to buy 20% stake in Sempra unit that includes North American LNG portfolio — S&P Global, Apr 2021
• Sempra Completes Sale of Non-Controlling Interest in Sempra Infrastructure Partners (ADIA 10%) — Sempra newsroom, Jun 2022
• SoCalGas Pays $119.5 Million For Aliso Canyon Gas Leak Settlement — Los Angeles County Counsel, Sep 2021
• Sempra Advances Strategic Capital Recycling Program with Sale of Ecogas — Sempra newsroom, Aug 2026
• CPUC Proposed Decision on SDG&E Track 2 Wildfire Mitigation — SEC 8-K, Nov 14 2025
• Sempra announces $56B capital plan amid rapid Texas growth — Utility Dive, Feb 2025
• Oncor weighs impact of Texas data center freeze on nearly 300-GW load pipeline — Utility Dive, 2026
• Sempra Reviews on Glassdoor (213 employee reviews)
• Sempra 2025 Annual Report
• Sempra Energy CEO Debra L. Reed To Retire; Jeffrey W. Martin Named Successor — Sempra, Sep 2016