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California Senate Bill 254, the 2025 Wildfire Legislation, became effective Friday with the Governor’s signature, according to a press release statement from Sempra (NYSE:SRE) and its subsidiary San Diego Gas & Electric Company. The new law establishes the Wildfire Fund Continuation Account, providing up to $18 billion in additional liquidity to reimburse catastrophic wildfire-related claims for large California electric investor-owned utilities (IOUs) such as SDG&E.
The Continuation Account will become operative if all eligible California electric IOUs elect to participate within 15 days of the legislation’s effective date and certain funding criteria are met before December 31, 2028. SDG&E intends to submit its notice to participate by the deadline.
If activated, the Continuation Account will be funded by $9 billion in ratepayer contributions, financed through bonds issued by the California Department of Water Resources and secured by an extension of a non-bypassable ratepayer charge from 2036 to 2045, subject to approval by the California Public Utilities Commission (CPUC). Electric IOU shareholders would contribute $5.1 billion through fixed annual payments from 2029 to 2045, with an additional $3.9 billion in contingent contributions possible if needed. SDG&E’s expected share of the total shareholder contributions is $387 million through 2045.
The new account will only cover wildfire claims arising from incidents after the effective date of the legislation, and only for claims exceeding the greater of $1 billion or the required insurance coverage. The legislation maintains cost recovery standards, a cap on liability for IOUs found imprudent by the CPUC, and requires annual safety certifications. SDG&E’s current estimated liability cap is about $1.4 billion, based on its 2024 equity rate base.
The law also includes insurance subrogation reforms and establishes a task force to study future wildfire fund models, with a report due to the state legislature and governor by April 1, 2026.
This information is based on a press release statement included in a Form 8-K filing with the U.S. Securities and Exchange Commission. The company currently offers a 3.1% dividend yield and has increased its dividend for 14 consecutive years, demonstrating strong shareholder returns despite regulatory challenges. InvestingPro analysis indicates the stock is currently trading near its Fair Value, with analysts projecting continued profitability for the year ahead.
In other recent news, Sempra reported its Q2 2025 earnings, revealing adjusted earnings per share of $0.89, slightly surpassing the forecast of $0.87. However, the company’s revenue did not meet expectations, coming in at $3 billion compared to the anticipated $3.1 billion. Sempra also reaffirmed its full-year 2025 earnings per share guidance, indicating confidence in its strategic direction. Additionally, Sempra and EQT Corporation signed a 20-year agreement for the supply of liquefied natural gas from the Port Arthur LNG Phase 2 development project in Texas. This agreement involves the purchase of 2 million tonnes per annum of LNG. In another development, Sempra announced a quarterly dividend of $0.645 per share on its common stock and a semi-annual dividend on its preferred stock. Furthermore, California lawmakers reached a preliminary agreement to boost the state’s wildfire utility fund by $18 billion, a move affecting several utility stocks, including Sempra.
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