{"schemaVersion":1,"research":true,"symbol":"sre","name":"Sempra","topic":"moat","path":"/stock/sre/moat","status":"published","version":3,"updatedAt":"2026-10-17T23:49:37.126Z","locked":false,"publicFairValue":false,"fairValue":null,"moat":{"verdict":"narrow","summary":"Sempra has a narrow moat centered on established regulated utility infrastructure and regulatory cost-recovery mechanisms. SoCalGas’ extensive operating network supports an efficient-scale advantage, while actual authorized revenue increases demonstrate qualified pricing power. Regulation also limits that power: realized disallowances and lower authorized returns show that infrastructure ownership does not guarantee attractive recovery. Competitive infrastructure businesses, distributed energy alternatives and gas-transition risks limit the breadth and durability of the advantage.","advantages":[{"mechanism":"efficient_scale","claim":"SoCalGas’ established distribution, transmission and storage network across a large service territory creates an incumbent infrastructure advantage. Its physical asset base and regulatory recovery mechanisms support efficient scale, although the passages do not establish exclusive service rights or quantify competitors’ replication costs.","durability":"The existing network supports a durable current advantage, conditional on continuing customer dependence and economically adequate regulatory recovery. The evidence supports a narrow moat rather than exceptional or guaranteed durability.","risks":"Gas substitution and decarbonization could reduce network utilization or strand assets. Distributed generation, storage and competitive transmission development challenge other utility infrastructure. Actual cost disallowances and reductions in authorized returns demonstrate regulatory erosion. Pipeline and storage businesses compete on price, capacity and interconnections.","invalidation":"The thesis would fail if sustained substitution materially reduced network utilization without adequate recovery, repeated regulatory decisions prevented recovery of prudent investment and financing costs, or competing infrastructure displaced incumbent service sufficiently to undermine its economics.","competitors":[],"evidenceIds":["e1","e2","e3","e4","e5"],"counterEvidenceIds":["e6","e7","e8","e9","e10","e11","e12"]}],"evidence":[{"id":"e1","sourceId":"filing-1","location":"Business / SoCalGas operating network and service territory","excerpt":"2025 Form 10-K | 15 Table of Contents SoCalGas SoCalGas is a regulated public utility that owns and operates a natural gas distribution, transmission and storage system that delivers natural gas to a population of, at December 31, 2025, approximately 21.3 million, covering an approximate 24,000 square mile service territory that encompasses Southern California and portions of central California (excluding San Diego County, the City of Long Beach and the desert area of San Bernardino County)."},{"id":"e2","sourceId":"filing-2","location":"SoCalGas condensed balance sheets / property, plant and equipment","excerpt":"24 Table of Contents SOUTHERN CALIFORNIA GAS COMPANY CONDENSED BALANCE SHEETS (Dollars in millions) June 30, December 31, 2026 2025(1) (unaudited) ASSETS Current assets: Cash and cash equivalents $ 2 $ 14 Accounts receivable – trade, net 558 958 Accounts receivable – other, net 83 61 Due from unconsolidated affiliates 5 8 Inventories 232 294 Regulatory assets 175 328 Greenhouse gas allowances 172 175 Other current assets 74 91 Total current assets 1,301 1,929 Other assets: Regulatory assets 2,215 1,888 Greenhouse gas allowances 1,195 935 Right-of-use assets – operating leases 126 68 Other long-term assets 692 738 Total other assets 4,228 3,629 Property, plant and equipment: Property, plant and equipment 31,680 31,078 Less accumulated depreciation and amortization (9,282) (8,948) Property, plant and equipment, net 22,398 22,130 Total assets $ 27,927 $ 27,688 (1) Derived from audited financial statements."},{"id":"e3","sourceId":"filing-1","location":"Note 4 / regulatory asset recovery and authorized return mechanism","excerpt":"Upon the occurrence of a cash expenditure associated with a regulatory asset, the related amounts are recoverable through a regulatory account mechanism for which we earn a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate."},{"id":"e4","sourceId":"filing-2","location":"SoCalGas results / authorized base revenues, commodity costs and volumes","excerpt":"112 Table of Contents In the three months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ natural gas revenues decreased by $81 million (6%) to $1.2 billion primarily due to: ▪$101 million decrease in cost of natural gas sold, which we discuss below ▪$43 million lower revenues from a $21 million credit in 2026 compared to a $22 million cost in 2025 for the non-service components of net periodic benefit cost, which fully offsets in other income (expense), net ▪$14 million regulatory award approved by the CPUC in 2025 ▪$7 million lower regulatory revenues associated with the acceleration of self-developed software deductions, which are offset in income tax expense ▪$5 million lower regulatory revenues associated with refundable programs, which are fully offset in O&M Offset by: ▪$30 million higher CPUC-authorized base revenues ▪$29 million lower revenues in 2025 from disallowed regulatory recovery of COVID-19 costs ▪$20 million higher regulatory revenues primarily from lower gas repairs tax benefits ▪$14 million higher revenues from incremental and balanced capital projects In the three months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ cost of natural gas decreased by $101 million to $51 million due to: ▪$96 million lower average natural gas prices ▪$5 million lower volumes driven by weather In the six months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ natural gas revenues decreased by $373 million (11%) to $2.9 billion primarily due to: ▪$260 million decrease in cost of natural gas sold, which we discuss below ▪$142 million lower regulatory revenues associated with refundable programs, which are fully offset in O&M ▪$43 million lower revenues from a $43 million credit in 2026 compared to a negligible cost in 2025 for the non-service components of net periodic benefit cost, which fully offsets in other income (expense), net ▪$35 million lower regulatory revenues associated with the acceleration of self-developed software deductions, which are offset in income tax expense Offset by: ▪$66 million higher CPUC-authorized base revenues ▪$29 million lower revenues in 2025 from disallowed regulatory recovery of COVID-19 costs ▪$24 million higher revenues from incremental and balanced capital projects In the six months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ cost of natural gas decreased by $260 million (46%) to $307 million due to: ▪$190 million lower average natural gas prices ▪$70 million lower volumes driven by weather Operation and Maintenance In the six months ended June 30, 2026 compared to the same period in 2025, SoCalGas’ O&M decreased by $139 million (10%) to $1.2 billion primarily due to lower expenses associated with refundable programs, which costs are recovered in revenue."},{"id":"e5","sourceId":"filing-2","location":"SoCalGas results / base operating margin and realized cost disallowance","excerpt":"RESULTS OF OPERATIONS RESULTS OF OPERATIONS (Dollars in millions) In the three months ended June 30, 2026 compared to the same period in 2025, the increase in earnings of $23 million (27%) was primarily due to: ▪$25 million charge in 2025 from disallowed regulatory recovery of COVID-19 costs ▪$21 million higher income tax benefits primarily from flow-through items ▪$4 million higher CPUC base operating margin, net of operating expenses Offset by: ▪$11 million higher net interest expense ▪$10 million regulatory award approved by the CPUC in 2025 ▪$3 million lower AFUDC equity In the six months ended June 30, 2026 compared to the same period in 2025, the increase in earnings of $4 million (1%) was primarily due to: ▪$25 million charge in 2025 from disallowed regulatory recovery of COVID-19 costs ▪$10 million higher CPUC base operating margin, net of operating expenses Offset by: ▪$16 million higher net interest expense ▪$6 million lower AFUDC equity ▪$5 million lower income tax benefits primarily from flow-through items SIGNIFICANT CHANGES IN REVENUES AND COSTS Natural Gas Revenues and Cost of Natural Gas In the three months ended June 30, 2026 and 2025, SoCalGas’ average cost of natural gas per thousand cubic feet was $0.87 and $2.50, respectively."},{"id":"e6","sourceId":"filing-1","location":"SDG&E competition / distributed and local generation","excerpt":"Competition. SDG&E faces competition to serve its customer load from distributed and local power generation growth, including DER."},{"id":"e7","sourceId":"filing-1","location":"SDG&E competition / storage and alternative delivery technologies","excerpt":"In addition, the electric industry is undergoing rapid technological change, and third party energy storage alternatives and other technologies may increasingly compete with SDG&E’s traditional transmission and distribution infrastructure in delivering electricity to consumers."},{"id":"e8","sourceId":"filing-1","location":"Competition / transmission projects open to independent developers","excerpt":"Certain FERC transmission development projects are open to competition, allowing independent developers to compete with incumbent utilities for the construction and operation of transmission facilities."},{"id":"e9","sourceId":"filing-1","location":"Demand and competition / Ecogas distribution zones","excerpt":"Demand and Competition. Ecogas faces competition from other distributors of natural gas in each of its three distribution zones as other distributors of natural gas construct or consider constructing natural gas distribution systems."},{"id":"e10","sourceId":"filing-1","location":"Pipeline and storage competition / price, capacity and interconnections","excerpt":"They compete primarily on the basis of price (in terms of storage and transportation fees), available capacity and interconnections to downstream markets."},{"id":"e11","sourceId":"filing-3","location":"Executive compensation / realized regulatory changes and LNG project delay","excerpt":"The 2025 target was lower than the 2024 ABP earnings target due to several factors, including (1) at Sempra California, the impact from regulatory outcomes in late 2024 that affected our forecasts for 2025, including the CPUC’s 2024 General Rate Case final decision, a CPUC decision resulting in lower authorized cost of capital for 2025, and an order by the Federal Energy Regulatory Commission resulting in lost eligibility for the additional return on equity for participating in the California Independent System Operator market; (2) at Sempra Texas, higher expected operating and maintenance costs and interest expenses, as well as the anticipated impacts from Oncor’s filing of a 2026 Proxy Statement 55 Table of Contents Executive Compensation new base rate review with the PUCT; and (3) at Sempra Infrastructure, the delay in the commercial operations date from 2025 to 2026 for the ECA LNG Phase 1 project under construction."},{"id":"e12","sourceId":"filing-2","location":"Forward-looking risk factors / affordability, gas transition and stranded assets","excerpt":"utility customer rates on our ability to obtain cost recovery from applicable regulators, our capital expenditure and other growth plans and our ability to advance statewide policies ▪the impact on affordability of customer rates, cost of capital and operating margin due to (i) volatility in inflation, interest rates, commodity prices, tariff rates, and foreign currency exchange rates and (ii) with respect to SDG&E’s and SoCalGas’ businesses, the cost of meeting the demand for lower carbon and reliable energy in California ▪the impact of air quality and climate-related policies, laws, rules, regulations, trends and required disclosures, including actions to reduce or eliminate reliance on natural gas, increased uncertainty in the political or regulatory environment for California natural gas distribution companies, the risk of nonrecovery for stranded assets, and uncertainty related to emerging technologies ▪weather, natural disasters, pandemics, accidents, equipment failures, explosions, terrorism, information system outages or other events, such as work stoppages, that disrupt our operations, damage our facilities or systems, cause the release of harmful materials or fires or subject us to liability for damages, fines and penalties, some of which may not be recoverable through regulatory mechanisms or insurance or may impact our ability to obtain satisfactory levels of affordable insurance 7 Table of Contents ▪the availability and reliability of electric power, natural gas and natural gas storage and transportation capacity, including disruptions caused by failures in the transmission grid or pipeline and storage systems or limitations on the injection and withdrawal of natural gas from storage facilities ▪Oncor’s ability to reduce or eliminate its quarterly dividends due to regulatory and governance requirements and commitments, including by actions of Oncor’s independent directors or a minority member director ▪other uncertainties, some of which are difficult to predict and beyond our control We caution you not to rely unduly on any forward-looking statements."},{"id":"e13","sourceId":"filing-1","location":"Low Carbon Solutions / operating renewable facilities with long-term PPAs","excerpt":"Renewable Power Generation. SI Partners develops, constructs, owns and operates renewable energy generation facilities that have long-term PPAs to sell the electricity they generate to their customers, which are generally load-serving entities and industrial and other customers."},{"id":"e14","sourceId":"filing-2","location":"SDG&E condensed statements of operations / first-half operating results","excerpt":"16 Table of Contents SAN DIEGO GAS & ELECTRIC COMPANY CONDENSED STATEMENTS OF OPERATIONS (Dollars in millions) Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (unaudited) Operating revenues: Electric $ 1,163 $ 1,034 $ 2,391 $ 2,098 Natural gas 205 228 524 584 Total operating revenues 1,368 1,262 2,915 2,682 Operating expenses: Cost of electric fuel and purchased power 135 106 229 179 Cost of natural gas 22 44 112 131 Operation and maintenance 407 403 830 843 Depreciation and amortization 331 323 675 643 Franchise fees and other taxes 119 98 242 208 Total operating expenses 1,014 974 2,088 2,004 Operating income 354 288 827 678 Other income, net 24 31 62 71 Interest income 3 2 4 2 Interest expense (152) (139) (299) (274) Income before income taxes 229 182 594 477 Income tax expense (39) (7) (108) (21) Net income/Earnings attributable to common shares $ 190 $ 175 $ 486 $ 456 See Notes to Condensed Financial Statements."},{"id":"e15","sourceId":"filing-2","location":"SoCalGas condensed statements of operations / first-half operating results","excerpt":"22 Table of Contents SOUTHERN CALIFORNIA GAS COMPANY CONDENSED STATEMENTS OF OPERATIONS (Dollars in millions) Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (unaudited) Operating revenues $ 1,187 $ 1,268 $ 2,915 $ 3,288 Operating expenses: Cost of natural gas 51 152 307 567 Operation and maintenance 619 622 1,240 1,379 Depreciation and amortization 276 251 549 493 Franchise fees and other taxes 72 62 153 141 Total operating expenses 1,018 1,087 2,249 2,580 Operating income 169 181 666 708 Other income (expense), net 41 (2) 84 40 Interest income 2 1 3 3 Interest expense (104) (89) (201) (179) Income before income taxes 108 91 552 572 Income tax expense — (6) (20) (44) Net income 108 85 532 528 Preferred dividends (1) (1) (1) (1) Earnings attributable to common shares $ 107 $ 84 $ 531 $ 527 See Notes to Condensed Financial Statements."},{"id":"e16","sourceId":"filing-1","location":"Schedule I / parent-only cash flows, investment funding, dividends and financing","excerpt":"2025 Form 10-K | S-4 Table of Contents SEMPRA CONDENSED STATEMENTS OF CASH FLOWS (Dollars in millions) Years ended December 31, 2025 2024 2023 Net cash provided by operating activities $ 1,007 $ 120 $ 1,576 Expenditures for property, plant and equipment (6) (3) (5) Proceeds from sale of assets — — 2 Capital contributions to investees (831) (933) (1,749) Distributions from investments 351 9 108 Purchases of trust assets (105) (63) (78) Proceeds from sales of trust assets 124 68 69 Increase in loans to affiliates, net (1,553) (117) (90) Other (9) (1) (1) Net cash used in investing activities (2,029) (1,040) (1,744) Common dividends paid (1,603) (1,499) (1,483) Preferred dividends paid (40) (44) (44) Redemption of preferred stock (900) — — Issuances of common stock, net 32 1,219 145 Repurchases of common stock (58) (43) (32) Issuances of debt (maturities greater than 90 days) 2,550 3,695 1,918 Payments on debt (maturities greater than 90 days) (750) (350) (672) Increase (decrease) in short-term debt, net 982 (365) (89) (Decrease) increase in loans from affiliates, net (595) (241) 220 Other (10) (38) (10) Net cash (used in) provided by financing activities (392) 2,334 (47) Effect of exchange rate changes on cash, cash equivalents and restricted cash — (1) — (Decrease) increase in cash, cash equivalents and restricted cash (1,414) 1,413 (215) Cash, cash equivalents and restricted cash, January 1 1,418 5 220 Cash, cash equivalents and restricted cash, December 31 $ 4 $ 1,418 $ 5 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES Accrued interest receivable capitalized to note receivable $ 18 $ 17 $ 16 Change in equity related to allocation of interests, net of tax 1,089 — — Preferred deemed dividends 11 — — Preferred dividends declared but not paid — 11 11 Common dividends declared but not paid 421 393 376 Common dividends issued in stock 52 54 — Equitization of amounts due from affiliates 56 110 92 See Notes to Condensed Financial Information of Parent."},{"id":"e17","sourceId":"filing-1","location":"Parent debt and credit facility / committed and unused liquidity","excerpt":"NOTE 3. DEBT AND CREDIT FACILITY SHORT-TERM DEBT Committed Line of Credit At December 31, 2025, Sempra had capacity of $4.0 billion under a committed line of credit that expires in October 2030, which provides liquidity and supports its commercial paper program, with available unused credit of $3.0 billion before reductions of any unamortized discounts."},{"id":"e18","sourceId":"filing-3","location":"Board leadership discussion / reported historical rate-base growth, shareholder returns and planned divestiture","excerpt":"utilities, including through our acquisitions of interests in Texas-based utilities, we achieved a CAGR of nearly 15% for our rate base and delivered total shareholder return of 303%, meaningfully outperforming the S&P 500 Utilities Index, over this period.(1) Additionally, with input from the board, we accelerated our capital recycling efforts over the past year through, among other things, our planned sale of a 45% equity interest in SI Partners for $9.99 billion dollars.(2) With a strengthening balance sheet, a disciplined approach to capital deployment and a growing share of earnings expected to originate from our U.S."},{"id":"e19","sourceId":"filing-3","location":"Executive compensation / terms of annual incentives and January 2025 equity awards","excerpt":"Type Component Form Key Characteristics Fixed Base Salary Cash • Base salary is targeted to generally align to the median of our compensation peer group, which includes comparably sized general industry, utilities and energy peers Variable Performance-Based Annual Bonus Cash • Based on ABP Earnings (weighted at 80%), Safety Measures (weighted at 12%) and RBP Measures (weighted at 8%) • No bonus payment unless company meets threshold performance level for the year and maximum payouts are capped Long-Term Equity-Based Incentives(1) Equity • Performance-Based Restricted Stock Units (weighted at two-thirds collectively) • Relative TSR Performance-Based Restricted Stock Units (weighted at one-third): 3-year relative TSR, allocated as follows: – 70% relative TSR measured against S&P 500 Utilities Index; maximum payout requires performance at 90th percentile of S&P 500 Utilities Index peers(2) – 30% relative TSR measured against S&P 500 Index; maximum payout requires performance at 90th percentile of S&P 500 Index peers • EPS Growth Performance-Based Restricted Stock Units (weighted at one-third): 3-year adjusted EPS CAGR relative to the 3-year adjusted EPS CAGRs of S&P 500 Utilities Index peers; maximum payout requires performance at the 90th percentile • 3-year performance period for each performance measure • For all of our performance-based restricted stock unit awards, performance below threshold results in zero payout • Stock Options or Service-Based Restricted Stock Units (weighted at one-third):(3) Vest ratably over three years Table 3 (1) As used in this Compensation Discussion and Analysis, the term “long-term equity-based incentives” refers to the annual LTIP awards granted on January 2, 2025."},{"id":"e20","sourceId":"filing-3","location":"Share ownership / director and executive beneficial ownership","excerpt":"The shares of common stock beneficially owned by each of our directors and named executive officers and by our directors and executive officers as a group in each case total less than 1% of our outstanding shares of common stock."},{"id":"e21","sourceId":"filing-3","location":"Executive compensation / stated drivers of above-target 2025 bonus earnings","excerpt":"Our above-target performance was driven primarily by (1) at Sempra Texas, establishment of the Unified Tracker Mechanism, which is designed to improve the efficiency of recovery of capital investment costs and (2) at Sempra Infrastructure, enhanced optimization of transportation and supply contracts."},{"id":"e22","sourceId":"filing-3","location":"Corporate governance / annual selection and responsibilities of Lead Independent Director","excerpt":"During periods in which we do not have an independent Chairman of the Board, our Corporate Governance Guidelines require the independent directors to select annually an independent director to serve as the Lead Independent Director and prescribe certain functions and responsibilities of this role, in addition to any other duties the independent directors may assign to the Lead Independent Director from time to time as they deem appropriate."},{"id":"e23","sourceId":"filing-3","location":"Corporate governance / completed May 2025–January 2026 shareholder engagement","excerpt":"2025-2026 Engagement Cycle Outreach 61% Engagement 50% Director Participation 27% Our 2025-2026 engagement cycle ran from May 2025 through January 2026 We reached out to holders of approximately 61%(1)(2) of our outstanding shares of common stock We held meetings with holders of approximately 50%(1)(2) of our outstanding shares of common stock Our Lead Independent Director participated in meetings with holders of approximately 27%(1) of our outstanding shares of common stock (1) Percentages are calculated using estimates of the holdings of each shareholder included in our outreach and engagement, as applicable, and the number of outstanding shares of our common stock on December 31, 2025."},{"id":"e24","sourceId":"filing-3","location":"Board letter / combined Chairman and Chief Executive Officer role","excerpt":"We worked closely with our Chairman and Chief Executive Officer, Jeffrey Martin, and the senior management team to refresh the company’s mission, sharpen strategic focus and review key opportunities and challenges."}],"changes":["No comparable previous version."],"limitations":["Assessment uses only supplied issuer passages: the annual report filed February 26, 2026, proxy filed March 27, 2026, and quarterly report filed August 6, 2026. These are filing dates, not retrieval dates.","Competition passages identify generic competing technologies and infrastructure providers without naming direct competitors. Other named companies are not established as competitors; competitor arrays therefore remain empty.","Exclusive franchises, comparative replication costs, customer switching data, utility return spreads and comprehensive Oncor operating evidence are absent. The strongest structural evidence concerns SoCalGas rather than every Sempra business.","Long-term PPAs support committed demand but do not disclose renewal performance or pricing flexibility. LNG development and the planned SI Partners sale are not treated as completed achievements.","Historical rate-base growth and shareholder returns are issuer-reported; the supplied passage omits its referenced footnotes. Strategic and efficiency claims are not independent proof of superior management.","Proxy evidence establishes actual incentive arrangements and aggregate ownership limits, but detailed individual holdings and all governance protections are not supplied. Performance-award terms do not establish future vesting or payouts.","Generic risk factors describe potential erosion. Realized disallowances, reduced authorized returns and the disclosed project delay are distinguished from those possibilities."],"qualityAssessments":[{"category":"moat","checks":[{"criterion":"structural_advantage","grade":3,"rationale":"An operating utility network serving approximately 21.3 million people, substantial installed infrastructure and disclosed regulatory recovery support a strong incumbent efficient-scale advantage. Exclusivity and comparative investment returns are not established.","evidenceIds":["e1","e2","e3"]},{"criterion":"durability","grade":2,"rationale":"Installed infrastructure and regulatory recovery support persistence, but actual reductions in authorized returns and potential gas displacement constrain confidence in long-term economics.","evidenceIds":["e1","e3","e11","e12"]},{"criterion":"customer_dependency","grade":2,"rationale":"The operating delivery network and long-term renewable PPAs provide indirect evidence of continuing customer dependence and committed demand. Customer-level switching friction, exclusivity and renewal outcomes are not disclosed.","evidenceIds":["e1","e4","e13"]},{"criterion":"erosion_resilience","grade":2,"rationale":"Higher authorized base revenues and continuing utility earnings demonstrate some resilience. Realized recovery disallowances and lower authorized returns coexist with competitive technologies and transition risks.","evidenceIds":["e4","e5","e7","e11","e14","e15"]}]},{"category":"pricing_power","checks":[{"criterion":"realized_pricing","grade":2,"rationale":"SoCalGas realized $66 million higher CPUC-authorized base revenues in the first half of 2026. Total revenue declined largely through commodity and other offsetting items, so that decline is not direct evidence of discretionary price cuts. Prior disallowances and lower authorized returns show mixed pricing outcomes.","evidenceIds":["e4","e5","e11"]},{"criterion":"retention","grade":2,"rationale":"Continuing utility delivery and existing long-term PPAs indirectly support repeat demand. Weather-related gas volume declines do not establish customer losses. No retention rates or contract renewal record are supplied.","evidenceIds":["e1","e4","e13"]},{"criterion":"margin_resilience","grade":2,"rationale":"First-half SDG&E operating income increased, while SoCalGas operating income declined and net earnings remained broadly stable. Commodity-cost offsets and authorized base revenue increases cushion results, but interest costs and disallowances limit resilience. These results do not independently establish a moat.","evidenceIds":["e4","e5","e14","e15"]},{"criterion":"contractual_freedom","grade":1,"rationale":"Utility base revenues and recovery depend on regulatory authorization, with demonstrated disallowances and reductions in allowed returns. Competitive pipeline pricing and long-term PPAs do not establish broad unilateral repricing freedom elsewhere.","evidenceIds":["e3","e4","e5","e10","e11","e13"]}]},{"category":"strong_management","checks":[{"criterion":"capital_discipline","grade":2,"rationale":"Reported historical rate-base growth and shareholder returns support some successful allocation. Parent-only 2025 operating cash flow of $1.007 billion was below $1.603 billion of common dividends before investment funding, alongside substantial borrowing. Available credit provides liquidity, but parent cash flows cannot establish consolidated investment returns. The planned divestiture is not a completed outcome.","evidenceIds":["e16","e17","e18"]},{"criterion":"incentive_alignment","grade":3,"rationale":"Actual January 2025 awards use three-year relative shareholder-return and EPS-growth measures, threshold forfeiture and capped payouts; annual incentives also include safety. These are substantive alignment mechanisms, although adjusted earnings measures and collective ownership below 1% limit the strength of the ownership evidence. Future vesting is not assumed.","evidenceIds":["e19","e20"]},{"criterion":"execution","grade":2,"rationale":"Actual utility results and reported establishment of a capital-recovery tracker support delivery. The LNG commercial-operation delay and adverse regulatory outcomes make the record mixed. Utility financial results are indirect execution evidence, and the bonus-performance explanation is an issuer attribution.","evidenceIds":["e11","e14","e15","e21"]},{"criterion":"governance","grade":2,"rationale":"A formally required Lead Independent Director and completed shareholder engagement demonstrate functioning oversight mechanisms. The combined Chairman and CEO role concentrates leadership, and the passages do not establish exceptional oversight effectiveness or comprehensive shareholder protections.","evidenceIds":["e22","e23","e24"]}]}],"qualityPolicy":"quality-scores-2","basisHash":"db67adb72467c5b501033b08afd3143f5f340dd3e7da661346f3fc0504607a55","updatedAt":"2026-10-17T23:49:37.126Z","sources":[{"id":"filing-1","url":"https://www.sec.gov/Archives/edgar/data/86521/000103220826000010/sre-20251231.htm","publishedAt":"2026-02-26","sha256":"e9a5d37330aefb60257200053f242b331b8722f32a77029e272b8cd0cf7b8232","dateKind":"filed"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/1032208/000103220826000045/sre-20260630.htm","publishedAt":"2026-08-06","sha256":"c469f64615113fd522aeb503ef4f0062f0b224d0b1222e9cf1670d278ce3f3e6","dateKind":"filed"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/1032208/000119312526127603/d90144ddef14a.htm","publishedAt":"2026-03-27","sha256":"f3d5b57defa2e601515266da8e71219d77e869866de0c2cd686a6218c13c21d9","dateKind":"filed"}],"model":"gpt-6.1-sol","providerId":"codex:7e6299a5c7aef0b47ad83f37ff5162a6206db0932e9afde4ccea87e06a8944e8","usage":{"input_tokens":54642,"cached_input_tokens":20992,"cache_write_input_tokens":0,"output_tokens":3357,"reasoning_output_tokens":219}},"signals":[{"period":"2021","end":"2021-12-31","values":{"gross_margin":null,"operating_margin":null,"roic":null,"fcf_margin":-10.046248715313464,"sbc_revenue":0.539568345323741},"issues":{"peg":"TTM earnings per diluted share growth is zero or negative; 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