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California Senate Bill 254, referred to as the 2025 Wildfire Legislation, became effective Friday with the Governor’s signature, according to a press release statement filed with the Securities and Exchange Commission by Sempra (NYSE:SRE) and its subsidiary San Diego Gas & Electric Company. The legislation establishes the Wildfire Fund Continuation Account, which is designed to provide up to $18 billion in additional liquidity to reimburse catastrophic wildfire-related claims for large California electric investor-owned utilities (IOUs), including SDG&E.
The Continuation Account will become operative if all large electric IOUs in California elect to participate within 15 days of the legislation’s effective date and if, before December 31, 2028, the original Wildfire Fund is projected to be depleted or a participating IOU anticipates more than $1 billion in eligible claims for wildfires ignited after the law’s enactment. SDG&E stated its intention to participate and submit notice by the deadline.
Funding for the Continuation Account would come from a combination of ratepayer and IOU shareholder contributions. Ratepayer contributions of $9 billion would be financed through new bonds issued by the California Department of Water Resources, secured by the extension of an existing wildfire-related charge through 2045, pending regulatory approval. IOU shareholder contributions would total $5.1 billion, with fixed annual contributions from 2029 to 2045 and up to $3.9 billion in contingent contributions if needed. SDG&E’s expected share is $387 million through 2045.
The new fund will only reimburse claims for wildfires ignited after the law’s effective date and only for claims exceeding $1 billion or the required insurance coverage. The legislation also continues certain provisions from previous wildfire laws, including a cap on IOU liability for wildfire costs deemed imprudently incurred, based on a percentage of the IOU’s equity rate base. SDG&E’s current estimated cap is about $1.4 billion.
The legislation also introduces insurance subrogation reforms and establishes a task force to evaluate future wildfire fund models. This information is based on a press release statement filed with the SEC. Trading at a P/E ratio of 20.15 with annual revenue of $13.3 billion, Sempra continues to maintain its position as a stable utility provider. For comprehensive analysis including Fair Value estimates and detailed financial metrics, investors can access the full Pro Research Report on InvestingPro, part of the platform’s coverage of over 1,400 US equities.
In other recent news, Sempra reported its Q2 2025 earnings with adjusted earnings per share (EPS) of $0.89, slightly surpassing the forecast of $0.87. However, the company’s revenue did not meet expectations, totaling $3 billion compared to the anticipated $3.1 billion. In legislative developments, California’s Senate Bill 254 became effective, establishing the Wildfire Fund Continuation Account to provide up to $18 billion in liquidity for catastrophic wildfire-related claims. Sempra’s subsidiary, San Diego Gas & Electric, plans to participate in this initiative. Furthermore, Sempra announced a 20-year liquefied natural gas supply agreement with EQT Corporation for its Port Arthur LNG Phase 2 project in Texas. The agreement involves the sale of 2 million tonnes per annum of LNG. Additionally, Sempra declared a quarterly dividend of $0.645 per share on its common stock and a semi-annual dividend on its preferred stock, both payable in October 2025. These recent developments reflect Sempra’s ongoing strategic initiatives and financial commitments.
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