Sempra Energy (SRE) Announces California Utilities' Settlement Agreement

February 7, 2017 4:58 PM EST

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Sempra Energy (NYSE: SRE) today announced that its California utilities – San Diego Gas & Electric (SDG&E) and Southern California Gas Co. (SoCalGas) – have entered into a Memorandum of Understanding (MOU) with other parties for a two-year extension for the utilities to file their next applications in the Cost-of-Capital proceeding at the California Public Utilities Commission (CPUC).

The MOU was entered into today by SDG&E, SoCalGas, Pacific Gas & Electric and Southern California Edison with the CPUC's Office of Ratepayer Advocates and The Utility Reform Network for the Cost-of-Capital application extension through 2018 and 2019.

The MOU calls for SDG&E to reduce its return on equity to 10.2 percent from 10.3 percent and SoCalGas to reduce its return on equity to 10.05 percent from 10.1 percent for 2018 and 2019. While the return on equity for both SDG&E and SoCalGas is fixed for 2018, the return on equity for 2019 is subject to a Cost-of-Capital adjustment mechanism. If approved, the terms of the MOU will not take effect until Jan. 1, 2018. These MOU terms are materially consistent with the Cost-of-Capital assumptions provided for SDG&E and SoCalGas in the five-year financial plan at Sempra Energy's 2016 Analyst Conference.

SDG&E, SoCalGas and the other parties to the MOU have filed a Joint Petition for Modification with the CPUC. The petition is subject to final approval by the CPUC.

The Cost-of-Capital proceeding determines utility rates of return on their investments.

Sempra Energy (NYSE: SRE), based in San Diego, is a Fortune 500 energy services holding company with 2015 revenues of more than $10 billion. The Sempra Energy companies' 17,000 employees serve more than 32 million consumers worldwide.

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