SOUTHERN CALIFORNIA GAS CO MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

This combined MD&A for Sempra, SDG&E and SoCalGas should be read in conjunction
with the Condensed Consolidated Financial Statements and the Notes thereto in
this report, and the Consolidated Financial Statements and the Notes thereto,
"Part I - Item 1A. Risk Factors" and "Part II - Item 7. MD&A" in the Annual
Report.

OVERVIEW

Sempra is a California-based holding company with energy infrastructure investments in North America. Our businesses invest in, develop and operate energy infrastructure, and provide electric and gas services to customers.

RESULTS OF OPERATIONS

We discuss the following in Results of Operations:

?Overall results of operations of Sempra;

?Segment results;

?Significant changes in revenues, costs and earnings; and

?Impact of foreign currency and inflation rates on results of operations.

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OVERALL RESULTS OF OPERATIONS OF SEMPRA

Sempra's overall results of operations for the three months ended March 31, 2023 and 2022 were as follows:

OVERALL RESULTS OF OPERATIONS OF SEMPRA
(Dollars and shares in millions, except per share amounts)


       [[Image Removed: 190]][[Image Removed: 191]][[Image Removed: 192]]

Our earnings and diluted EPS were impacted by variances discussed below in "Segment Results."

SEGMENT RESULTS

This section presents earnings (losses) by Sempra segment, as well as Parent and
other, and a related discussion of the changes in segment earnings (losses).
Throughout the MD&A, our reference to earnings represents earnings attributable
to common shares. Variance amounts presented are the after-tax earnings impact
(based on applicable statutory tax rates), unless otherwise noted, and before
foreign currency and inflation effects and NCI, where applicable.

SEMPRA EARNINGS (LOSSES) BY SEGMENT
(Dollars in millions)
                                                    Three months ended March 31,
                                                                              2023       2022
SDG&E                                                                        $ 258      $ 234
SoCalGas                                                                       360        334
Sempra Texas Utilities                                                          83        162
Sempra Infrastructure                                                          315         95
Parent and other(1)                                                            (47)      (213)
Earnings attributable to common shares                                      

$ 969 $ 612

(1) Includes intercompany eliminations recorded in consolidation and certain corporate costs.

SDG&E

The increase in earnings of $24 million (10%) in the three months ended March 31, 2023 compared to the same period in 2022 was primarily due to:

?$16 million higher CPUC base operating margin, net of operating expenses and $6 million from lower authorized cost of capital;

?$6 million higher net regulatory interest income;

?$5 million higher electric transmission margin; and

?$5 million lower income tax expense primarily from flow-through items; offset by

?$8 million higher net interest expense.

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SoCalGas

The increase in earnings of $26 million (8%) in the three months ended March 31, 2023 compared to the same period in 2022 was primarily due to:

?$66 million charge in 2022 relating to litigation pertaining to the Leak; and

?$10 million in penalties in 2022 related to energy efficiency and advocacy OSCs; offset by

?$18 million higher net interest expense;

?$13 million lower CPUC base operating margin, including $8 million from lower authorized cost of capital and net of operating expenses;

?$11 million lower income tax benefits primarily from flow-through items; and

?$8 million GCIM award approved by the CPUC in March 2022.

Sempra Texas Utilities

The decrease in earnings of $79 million (49%) in the three months ended March
31, 2023 compared to the same period in 2022 was primarily due to lower equity
earnings from Oncor Holdings driven by:

?write-off of rate base disallowances in 2023 resulting from the PUCT's final order in Oncor's comprehensive base rate review;

?higher depreciation expense and interest expense attributable to invested capital;

?higher O&M; and

?lower revenues from decreased customer consumption primarily attributable to
weather, offset by higher revenues from updates to base transmission billing
factors, transmission rate updates to reflect increases in invested capital, and
customer growth.

Sempra Infrastructure

The increase in earnings of $220 million in the three months ended March 31, 2023 compared to the same period in 2022 was primarily due to:

?$468 million earnings in 2023 compared to $14 million losses in 2022 from asset
and supply optimization driven by unrealized gains in 2023 compared to
unrealized losses in 2022 on commodity derivatives due to changes in natural gas
prices, and higher LNG diversion fees; and

?$21 million higher earnings from the transportation business in Mexico driven by a customer's early termination of firm transportation agreements; offset by

?$192 million earnings attributable to NCI in 2023 compared to $34 million earnings attributable to NCI in 2022 primarily due to an increase in SI Partners' net income and from the sale of a 10% NCI in SI Partners to ADIA in June 2022;

?$64 million unfavorable impact from foreign currency and inflation effects on
our monetary positions in Mexico, net of foreign currency derivative effects,
comprised of a $160 million unfavorable impact in 2023 compared to a $96 million
unfavorable impact in 2022; and

?$54 million higher net interest expense, including $27 million net unrealized
losses in 2023 on a contingent interest rate swap related to the PA LNG Phase 1
project and higher interest expense on committed lines of credit.

Parent and Other

The decrease in losses of $166 million in the three months ended March 31, 2023 compared to the same period in 2022 was primarily due to:

?$120 million deferred income tax expense in 2022 associated with the change in our indefinite reinvestment assertion related to our foreign subsidiaries;

?$7 million net investment gains in 2023 compared to $17 million net investment losses in 2022 on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation obligations; and

?$24 million higher income tax benefit from the interim period application of an annual forecasted consolidated ETR; offset by

?$10 million higher net interest expense.

SIGNIFICANT CHANGES IN REVENUES, COSTS AND EARNINGS

This section contains a discussion of the differences between periods in the
specific line items of the Condensed Consolidated Statements of Operations for
Sempra, SDG&E and SoCalGas.

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Utilities Revenues and Cost of Sales

Our utilities revenues include natural gas revenues at SoCalGas and SDG&E and
Sempra Infrastructure's Ecogas and electric revenues at SDG&E. Intercompany
revenues included in the separate revenues of each utility are eliminated in
Sempra's Condensed Consolidated Statements of Operations.

SoCalGas and SDG&E currently operate under a regulatory framework that permits:

?The cost of natural gas purchased for core customers (primarily residential and
small commercial and industrial customers) to be passed through to customers in
rates substantially as incurred and without markup. The GCIM provides for
SoCalGas to share in the savings and/or costs from buying natural gas for its
core customers at prices below or above monthly market-based benchmarks. This
mechanism permits full recovery of costs incurred when average purchase costs
are within a price range around the benchmark price. Any higher costs incurred
or savings realized outside this range are shared between core customers and
SoCalGas.

?SDG&E to recover the actual cost incurred to generate or procure electricity
based on annual estimates of the cost of electricity supplied to customers. The
differences in cost between estimates and actual are recovered or refunded in
subsequent periods through rates.

?SoCalGas and SDG&E to recover certain program expenditures and other costs authorized by the CPUC, or "refundable programs."

Because changes in SoCalGas' and SDG&E's cost of natural gas and/or electricity
are recovered in rates, changes in these costs are offset in the changes in
revenues and therefore do not impact earnings, other than potential impacts
related to the GCIM for SoCalGas that we describe above. In addition to the
changes in cost or market prices, natural gas or electric revenues recorded
during a period are impacted by the difference between customer billings and
recorded or CPUC-authorized amounts. These differences are required to be
balanced over time, resulting in over- and undercollected regulatory balancing
accounts. We discuss balancing accounts and their effects further in Note 4 of
the Notes to Condensed Consolidated Financial Statements in this report and in
Note 4 of the Notes to Consolidated Financial Statements in the Annual Report.

SoCalGas' and SDG&E's revenues are decoupled from, or not tied to, actual sales
volumes. SoCalGas recognizes annual authorized revenue for core natural gas
customers using seasonal factors established in applicable proceedings,
resulting in a significant portion of SoCalGas' earnings being recognized in the
first and fourth quarters of each year. SDG&E's authorized revenue recognition
is also impacted by seasonal factors, resulting in higher earnings in the third
quarter when electric loads are typically higher than in the other three
quarters of the year. We discuss this decoupling mechanism and its effects
further in Note 3 of the Notes to Consolidated Financial Statements in the
Annual Report.

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The table below summarizes utilities revenues and cost of sales.

UTILITIES REVENUES AND COST OF SALES
(Dollars in millions)
                                                                         Three months ended
                                                                              March 31,
                                                                                   2023                2022
Natural gas revenues:
SoCalGas                                                                       $    3,794          $    1,993
SDG&E                                                                                 622                 325
Sempra Infrastructure                                                                  30                  28
Eliminations and adjustments                                                          (34)                (26)
Total                                                                               4,412               2,320
Electric revenues:
SDG&E                                                                               1,031               1,120
Eliminations and adjustments                                                           (4)                 (3)
Total                                                                               1,027               1,117
Total utilities revenues                                                       $    5,439          $    3,437
Cost of natural gas(1):
SoCalGas                                                                       $    2,347          $      677
SDG&E                                                                                 379                 126
Sempra Infrastructure                                                                  (1)                  9
Eliminations and adjustments                                                          (42)                (10)
Total                                                                               2,683                 802
Cost of electric fuel and purchased power(1):
SDG&E                                                                                 135                 221
Eliminations and adjustments                                                          (21)                (16)
Total                                                                                 114                 205
Total utilities cost of sales                                               

$ 2,797 $ 1,007

(1) Excludes depreciation and amortization, which are presented separately on the Sempra, SDG&E and SoCalGas Condensed Consolidated Statements of Operations.

Natural Gas Revenues and Cost of Natural Gas

The table below summarizes the average cost of natural gas sold by Sempra
California and included in cost of natural gas. The average cost of natural gas
sold at each utility is impacted by market prices, as well as transportation,
tariff and other charges.

SEMPRA CALIFORNIA AVERAGE COST OF NATURAL GAS
(Dollars per thousand cubic feet)
                                                          Three months ended March 31,
                                                                                   2023         2022
SoCalGas                                                                         $ 19.00      $ 6.80
SDG&E                                                                              20.22        7.81


In the three months ended March 31, 2023, our natural gas revenues increased by
$2.1 billion to $4.4 billion compared to the same period in 2022 primarily due
to:

?$1.8 billion increase at SoCalGas, which included:

•$1.7 billion increase in cost of natural gas sold, which we discuss below,

•$51 million higher recovery of costs associated with refundable programs, which revenues are offset in O&M,

•$18 million cost in 2023 compared to a $33 million credit in 2022 for the non-service components of net periodic benefit cost, which fully offsets in other income, net,

•$26 million higher franchise fee revenues, and

•$18 million higher CPUC-authorized revenues; and

?$297 million increase at SDG&E, which included:

•$253 million increase in cost of natural gas sold, which we discuss below,

•$18 million higher revenues from balanced capital projects, and

•$16 million higher recovery of costs associated with refundable programs, which revenues are offset in O&M.

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In the three months ended March 31, 2023, our cost of natural gas increased by
$1.9 billion to $2.7 billion compared to the same period in 2022 primarily due
to:

?$1.7 billion increase at SoCalGas primarily due to higher average natural gas prices; and

?$253 million increase at SDG&E primarily due to higher average natural gas prices.

Electric Revenues and Cost of Electric Fuel and Purchased Power

In the three months ended March 31, 2023, our electric revenues, substantially all of which are at SDG&E, decreased by $90 million (8%) to $1.0 billion compared to the same period in 2022 primarily due to:

?$86 million lower cost of electric fuel and purchased power, which we discuss below; and

?$58 million lower revenues in 2023 from the recognition of investment tax credits from standalone energy storage projects, offset in income tax expense; offset by

?$28 million higher revenues from balanced capital projects;

?$3 million cost in 2023 compared to an $8 million credit in 2022 for the non-service components of net periodic benefit cost, which fully offsets in other income, net;

?$9 million higher CPUC-authorized revenues; and

?$7 million higher revenues from transmission operations.

Our utility cost of electric fuel and purchased power includes utility-owned
generation, power purchased from third parties, and net power purchases and
sales to the California ISO. In the three months ended March 31, 2023, the cost
of electric fuel and purchased power decreased by $91 million (44%) to $114
million compared to the same period in 2022 primarily due to an $86 million
decrease at SDG&E, which included:

?$97 million higher sales to the California ISO due to higher market prices; and

?$61 million higher realized gains on fixed-price natural gas derivative contracts, which are entered into to hedge the cost of electric fuel; offset by

?$44 million higher utility-owned generation costs; and

?$34 million higher purchased power from the California ISO due to higher market prices, net of lower customer demand from departing load now served by CCAs.

Energy-Related Businesses: Revenues and Cost of Sales

The table below shows revenues and cost of sales for our energy-related businesses.

ENERGY-RELATED BUSINESSES: REVENUES AND COST OF SALES
(Dollars in millions)
                                                                                                       Three months ended
                                                                                                           March 31,
                                                                                                                 2023               2022
Revenues:
Sempra Infrastructure                                                                                        $   1,166          $     396
Parent and other(1)                                                                                                (45)               (13)
Total revenues                                                                                               $   1,121          $     383
Cost of sales(2):
Sempra Infrastructure                                                                                        $     193          $     135
Total cost of sales                                                                                          $     193          $     135


(1)  Includes eliminations of intercompany activity.

(2) Excludes depreciation and amortization, which are presented separately on Sempra's Condensed Consolidated Statements of Operations.

In the three months ended March 31, 2023, revenues from our energy-related businesses increased by $738 million to $1.1 billion compared to the same period in 2022 primarily due to:

?$683 million increase in revenues from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including:

•$590 million higher revenues primarily driven by $418 million unrealized gains in 2023 compared to $88 million unrealized losses in 2022 on commodity derivatives and $127 million from higher natural gas prices and volumes, and

•$84 million primarily from higher LNG diversion fees;

?$39 million higher revenues from TdM mainly due to higher power prices; and

?$31 million higher transportation revenues driven by a customer's early termination of firm transportation agreements.

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In the three months ended March 31, 2023, the cost of sales for our
energy-related businesses increased by $58 million (43%) to $193 million
compared to the same period in 2022 primarily due to higher prices and volumes
at TdM offset by lower LNG purchases, net of higher natural gas prices, related
to asset and supply optimization.

Operation and Maintenance

In the three months ended March 31, 2023, O&M increased by $123 million (11%) to $1.2 billion compared to the same period in 2022 primarily due to:

?$74 million increase at SoCalGas due to:

•$51 million higher expenses associated with refundable programs, which costs incurred are recovered in revenue, and

•$23 million higher non-refundable operating costs;

?$30 million increase at SDG&E due to:

•$19 million higher expenses associated with refundable programs, which costs incurred are recovered in revenue, and

•$11 million higher non-refundable operating costs; and

?$29 million increase at Sempra Infrastructure due to:

•$19 million higher development costs and purchased services, and

•$12 million higher operating cost due to remeasurement of operating leases at the refined products terminals in 2022, offset by

•$9 million lower operating costs at TdM from higher purchased materials and services due to scheduled major maintenance completed in March 2022.

Aliso Canyon Litigation and Regulatory Matters

In the three months ended March 31, 2022, SoCalGas recorded a $92 million charge relating to litigation pertaining to the Leak.

Other Income, Net

As part of our central risk management function, we may enter into foreign
currency derivatives to hedge SI Partners' exposure to movements in the Mexican
peso from its controlling interest in IEnova. The gains/losses associated with
these derivatives are included in other income, net, as described below, and
partially mitigate the transactional effects of foreign currency and inflation
included in income tax expense for SI Partners' consolidated entities and in
equity earnings for SI Partners' equity method investments. We discuss policies
governing our risk management in "Part II - Item 7A. Quantitative and
Qualitative Disclosures About Market Risk" in the Annual Report.

In the three months ended March 31, 2023, other income, net, increased by $3
million (8%) to $41 million compared to the same period in 2022 primarily due
to:

?$12 million net investment gains in 2023 compared to $13 million net investment losses in 2022 on dedicated assets in support of our employee nonqualified benefit plan and deferred compensation obligations;

?$6 million net gains in 2023 compared to $13 million net losses in 2022 from impacts associated with interest rate and foreign exchange instruments and foreign currency transactions, including:

•$11 million foreign currency losses in 2022 on a Mexican peso-denominated loan to IMG, which is fully offset in equity earnings, and

•$1 million gain in 2023 compared to $8 million losses in 2022 on other foreign currency transactional effects;

?$17 million higher net interest income on regulatory balancing accounts at SDG&E and SoCalGas; and

?$10 million in penalties at SoCalGas in 2022 related to energy efficiency and advocacy OSCs; offset by

?$25 million cost in 2023 compared to a $41 million credit in 2022 for the non-service components of net periodic benefit cost.

Interest Expense

In the three months ended March 31, 2023, interest expense increased by $123 million to $366 million compared to the same period in 2022 primarily due to:

?$68 million increase at Sempra Infrastructure primarily due to:

•$47 million interest expense in 2023 comprised of $33 million net unrealized
losses and a $14 million settlement on a contingent interest rate swap related
to the PA LNG Phase 1 project that we discuss in Note 7 of the Condensed
Consolidated Financial Statements, and

•$24 million higher interest expense on committed lines of credit;

?$29 million increase at SoCalGas from higher debt balances from debt issuances;

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?$14 million increase at Parent and other from higher debt balances from debt issuances; and

?$12 million increase at SDG&E from higher debt balances from debt issuances.

Income Taxes

The table below shows the income tax expense and ETRs for Sempra, SDG&E and SoCalGas.

INCOME TAX EXPENSE AND EFFECTIVE INCOME TAX RATES
(Dollars in millions)
                                                                                                Three months ended
                                                                                                    March 31,
                                                                                                          2023               2022
Sempra:
Income tax expense                                                                                    $     376          $     334

Income before income taxes and equity earnings                                                        $   1,329          $     665
Equity earnings, before income tax(1)                                                                       132                143
Pretax income                                                                                         $   1,461          $     808

Effective income tax rate                                                                                    26  %              41  %
SDG&E:
Income tax expense                                                                                    $       7          $      64
Income before income taxes                                                                            $     265          $     298
Effective income tax rate                                                                                     3  %              21  %
SoCalGas:
Income tax expense                                                                                    $      94          $      84
Income before income taxes                                                                            $     454          $     418
Effective income tax rate                                                                                    21  %              20  %

(1) We discuss how we recognize equity earnings in Note 6 of the Notes to Consolidated Financial Statements in the Annual Report.

Under the IRA, beginning in 2023, the scope of projects eligible for investment
tax credits was expanded to include standalone energy storage projects. The IRA
also provided an election that prospectively permits investment tax credits
related to standalone energy storage projects to be returned to utility
customers over a period that is shorter than the life of the applicable asset.
Under this election, SDG&E recorded a regulatory liability to offset these
investment tax credits, which reduced SDG&E's and Sempra's ETR in 2023.

Sempra

In the three months ended March 31, 2023 Sempra's income tax expense increased by $42 million (13%) compared to the same period in 2022 primarily due to:

?$135 million income tax expense in 2023 compared to $70 million income tax expense in 2022 from foreign currency and inflation effects on our monetary positions in Mexico;

?$34 million income tax benefit in 2022 from the remeasurement of certain deferred income taxes; and

?higher pretax income; offset by

?$120 million deferred income tax expense in 2022 associated with the change in our indefinite reinvestment assertion related to our foreign subsidiaries; and

?income tax benefit in 2023 from the recognition of investment tax credits from standalone energy storage projects.

We discuss the impact of foreign currency exchange rates and inflation on income
taxes below in "Impact of Foreign Currency and Inflation Rates on Results of
Operations." See Note 1 of the Notes to Condensed Consolidated Financial
Statements in this report and Notes 1 and 8 of the Notes to Consolidated
Financial Statements in the Annual Report for further details about our
accounting for income taxes and items subject to flow-through treatment.

SDG&E

In the three months ended March 31, 2023, SDG&E's income tax expense decreased
by $57 million compared to the same period in 2022 primarily due to an income
tax benefit in 2023 from the recognition of investment tax credits from
standalone energy storage projects and lower pretax income.

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SoCalGas

In the three months ended March 31, 2023, SoCalGas' income tax expense increased
by $10 million (12%) compared to the same period in 2022 primarily due to higher
pretax income.

Equity Earnings

In the three months ended March 31, 2023, equity earnings decreased by $107 million (33%) to $219 million compared to the same period in 2022 primarily due to:

?$79 million lower equity earnings at Oncor Holdings due to lower revenues from
a write-off of rate base disallowances in 2023 resulting from the PUCT's final
order in Oncor's comprehensive base rate review, higher depreciation expense and
interest expense attributable to invested capital, higher O&M and decreased
customer consumption primarily attributable to weather, offset by higher
revenues from updates to base transmission billing factors, transmission rate
updates to reflect increases in invested capital, and customer growth; and

?$1 million equity losses in 2023 compared to $16 million equity earnings at IMG
due to foreign currency effects, including $11 million foreign currency gains in
2022 on IMG's Mexican peso-denominated loans from its JV owners, which is fully
offset in other income, net, and higher income tax expense.

Earnings Attributable to Noncontrolling Interests

In the three months ended March 31, 2023, earnings attributable to NCI increased
by $158 million to $192 million compared to the same period in 2022 primarily
due to:

?$94 million increase due to an increase in SI Partners' net income; and

?$64 million increase as a result of a decrease in our ownership interest in SI Partners.

IMPACT OF FOREIGN CURRENCY AND INFLATION RATES ON RESULTS OF OPERATIONS

Because our natural gas distribution utility in Mexico, Ecogas, uses its local
currency as its functional currency, revenues and expenses are translated into
U.S. dollars at average exchange rates for the period for consolidation in
Sempra's results of operations. We discuss further the impact of foreign
currency and inflation rates on results of operations, including impacts on
income taxes and related hedging activity, in "Part II - Item 7. MD&A - Impact
of Foreign Currency and Inflation Rates on Results of Operations" in the Annual
Report.

Foreign Currency Translation

Any difference in average exchange rates used for the translation of income
statement activity from year to year can cause a variance in Sempra's
comparative results of operations. In the three months ended March 31, 2023, the
change in our earnings as a result of foreign currency translation rates was $1
million higher compared to the same period in 2022.

Transactional Impacts

Income statement activities at our foreign operations and their JVs are also
impacted by transactional gains and losses, a summary of which is shown in the
table below:

TRANSACTIONAL GAINS (LOSSES) FROM FOREIGN CURRENCY AND INFLATION EFFECTS (Dollars in millions)

                                                                                                 Transactional gains (losses)
                                                           Total reported amounts                included in reported amounts

                                                                            Three months ended March 31,
                                                          2023                 2022                 2023                2022
Other income, net                                    $         41          $      38          $       6              $    (13)
Income tax expense                                           (376)              (334)              (135)                  (70)
Equity earnings                                               219                326                (31)                  (12)
Net income                                                  1,172                657               (160)                  (95)
Earnings attributable to noncontrolling interests            (192)               (34)                51                    20
Earnings attributable to common shares                        969                612               (109)                  (75)


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CAPITAL RESOURCES AND LIQUIDITY

OVERVIEW

Sempra

Liquidity

We expect to meet our cash requirements through cash flows from operations,
unrestricted cash and cash equivalents, borrowings under or supported by our
credit facilities, other incurrences of debt which may include issuing debt
securities and obtaining term loans, other financing transactions which may
include issuing equity securities, distributions from our equity method
investments, project financing and funding from minority interest owners. We
believe that these cash flow sources, combined with available funds, will be
adequate to fund our operations in both the short-term and long-term, including
to:

?finance capital expenditures

?repay debt

?fund dividends

?fund contractual and other obligations and otherwise meet liquidity requirements

?fund capital contribution requirements

?fund new business or asset acquisitions or start-ups

Sempra, SDG&E and SoCalGas currently have reasonable access to the money markets
and capital markets and are not currently constrained in their ability to borrow
money at market rates from commercial banks, under existing revolving credit
facilities, through public offerings of debt securities registered with the SEC,
or through private placements of debt supported by our revolving credit
facilities in the case of commercial paper. However, our ability to access the
money markets and capital markets or obtain credit from commercial banks outside
of our committed revolving credit facilities could become materially constrained
if economic conditions or disruptions to or volatility in the money markets and
capital markets worsen. These sources of funding have become less attractive due
to the recent rise in both short-term and long-term interest rates. In addition,
our financing activities and actions by credit rating agencies, as well as many
other factors, could negatively affect the availability and cost of both
short-term and long-term debt financing and equity financing. Also, cash flows
from operations may be impacted by the timing of commencement and completion,
and potentially cost overruns, of large projects and other material events, such
as the settlement of material litigation. If cash flows from operations were to
be significantly reduced or we were unable to borrow or obtain other financing
under acceptable terms, we would likely first reduce or postpone discretionary
capital expenditures (not related to safety/reliability) and investments in new
businesses. We monitor our ability to finance the needs of our operating,
investing and financing activities in a manner consistent with our goal to
maintain our investment-grade credit ratings.

Although we have not been impacted to date by the disruptions to the banking
sector and resulting financial market instability, we cannot predict the broader
or follow-on effects of recent bank failures. The disruption and uncertainty
impacting the banking industry may result in reduced access to capital and
increased costs of capital and could adversely affect our ability to secure
financing arrangements and facilities. In addition, if the liquidity of our
partners, customers or other counterparties is impacted by the disruptions in
the banking sector, it may have a material adverse impact on our liquidity.

Available Funds

Our committed lines of credit provide liquidity and support commercial paper.
Sempra, SDG&E and SoCalGas each have five-year credit agreements expiring in
2027 and Sempra Infrastructure has a three-year credit agreement expiring in
2024, committed lines of credit expiring in 2023, 2024 and 2030, and an
uncommitted revolving credit facility expiring in 2023.

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AVAILABLE FUNDS AT MARCH 31, 2023
(Dollars in millions)
                                             Sempra      SDG&E       

SoCalGas

Unrestricted cash and cash equivalents(1) $ 534 $ 336 $ 7 Available unused credit(2)

                   7,861       1,500            977


(1)  Amounts at Sempra include $149 held in non-U.S. jurisdictions. We discuss
repatriation in Note 8 of the Notes to Consolidated Financial Statements in the
Annual Report.

(2)  Available unused credit is the total available on committed and uncommitted
lines of credit that we discuss in Note 6 of the Notes to Condensed Consolidated
Financial Statements. Because our commercial paper programs are supported by
these lines, we reflect the amount of commercial paper outstanding as a
reduction to the available unused credit.

Short-Term Borrowings

We use short-term debt primarily to meet liquidity requirements, fund
shareholder dividends, and temporarily finance capital expenditures,
acquisitions or start-ups. SDG&E and SoCalGas use short-term debt primarily to
meet working capital needs or to help fund event-specific costs. Commercial
paper, lines of credit and a term loan were our primary sources of short-term
debt funding in the first three months of 2023.

We discuss our short-term debt activities in Note 6 of the Notes to Condensed Consolidated Financial Statements and below in "Sources and Uses of Cash."

Long-Term Debt Activities

Significant issuances of and payments on long-term debt in the first three months of 2023 included the following:

LONG-TERM DEBT ISSUANCES AND PAYMENTS
(Dollars in millions)
                                                                                Amount at
Issuances:                                                                       issuance              Maturity
SDG&E 5.35% first mortgage bonds                                              $       800                      2053

Sempra Infrastructure variable rate notes (ECA LNG Phase 1 project)

            59                      2025

Sempra Infrastructure variable rate notes (PA LNG Phase 1 project)

           215                      2030

Payments:                                                                        Payments              Maturity

Sempra Infrastructure 6.3% notes (4.124% after cross-currency swap)

$       208                      2023

We discuss our long-term debt activities, including the use of proceeds on long-term debt issuances, in Note 6 of the Notes to Condensed Consolidated Financial Statements.

Credit Ratings

We provide additional information about the credit ratings of Sempra, SDG&E and SoCalGas in "Part I - Item 1A. Risk Factors" and "Part II - Item 2. MD&A - Capital Resources and Liquidity" in the Annual Report.

The credit ratings of Sempra, SDG&E and SoCalGas remained at investment grade levels in the first three months of 2023.

CREDIT RATINGS AT MARCH 31, 2023

                                          Sempra                              SDG&E                            SoCalGas
Moody's                         Baa2 with a stable outlook          A3 with a stable outlook           A2 with a stable outlook
S&P                             BBB+ with a stable outlook         BBB+ with a stable outlook          A with a stable outlook
Fitch                           BBB+ with a stable outlook         BBB+ with a stable outlook          A with a stable outlook


A downgrade of Sempra's or any of its subsidiaries' credit ratings or rating
outlooks may, depending on the severity, result in the imposition of financial
or other burdensome covenants or a requirement for collateral to be posted in
the case of certain financing arrangements and may materially and adversely
affect the market prices of their equity and debt securities, the rates at which
borrowings are made and commercial paper is issued, and the various fees on
their outstanding credit facilities. This could make it more costly for Sempra,
SDG&E, SoCalGas and Sempra's other subsidiaries to issue debt securities, to
borrow under credit facilities and to raise certain other types of financing.

Sempra has agreed that, if the credit rating of Oncor's senior secured debt by
any of the three major rating agencies falls below BBB (or the equivalent),
Oncor will suspend dividends and other distributions (except for contractual tax
payments), unless

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otherwise allowed by the PUCT. Oncor's senior secured debt was rated A2, A+ and A at Moody's, S&P and Fitch, respectively, at March 31, 2023.

Loans to/from Affiliates

At March 31, 2023, Sempra had $319 million in loans due to unconsolidated affiliates.

Inflation Reduction Act of 2022

The IRA was signed into law in August 2022. The IRA includes tax credits and
other incentives for energy and climate initiatives and introduces a 15%
corporate alternative minimum tax on adjusted financial statement income for tax
years beginning after December 31, 2022. We do not currently expect the IRA to
have a material adverse impact on Sempra's, SDG&E's or SoCalGas' results of
operations, financial condition and/or cash flows. We will continue to assess
the impacts of the IRA as the U.S. Department of the Treasury and the IRS issue
guidance on tax implementation, and the U.S. Environmental Protection Agency and
DOE issue guidance on energy and climate initiatives.

Sempra California

SDG&E's and SoCalGas' operations have historically provided relatively stable
earnings and liquidity. Their future performance and liquidity will depend
primarily on the ratemaking and regulatory process, environmental regulations,
economic conditions, actions by the California legislature, litigation and the
changing energy marketplace, as well as other matters described in this report.
SDG&E and SoCalGas expect that the available unused funds from their credit
facilities described above, which also supports their commercial paper programs,
cash flows from operations, and other incurrences of debt including issuing debt
securities and obtaining term loans will continue to be adequate to fund their
respective current operations and planned capital expenditures. SDG&E and
SoCalGas manage their capital structures and pay dividends when appropriate and
as approved by their respective boards of directors.

As we discuss in Note 4 of the Notes to Condensed Consolidated Financial
Statements in this report and in Note 4 of the Notes to Consolidated Financial
Statements in the Annual Report, changes in regulatory balancing accounts for
significant costs at SDG&E and SoCalGas, particularly a change between over- and
undercollected status, may have a significant impact on cash flows. These
changes generally represent the difference between when costs are incurred and
when they are ultimately recovered or refunded in rates through billings to
customers.

SDG&E

Wildfire Fund

The carrying value of SDG&E's Wildfire Fund asset totaled $324 million at March
31, 2023. We describe the Wildfire Legislation and SDG&E's commitment to make
annual shareholder contributions to the Wildfire Fund through 2028 in Note 1 of
the Notes to Consolidated Financial Statements in the Annual Report.

SDG&E is exposed to the risk that the participating California electric IOUs may
incur third-party wildfire costs for which they will seek recovery from the
Wildfire Fund with respect to wildfires that have occurred since enactment of
the Wildfire Legislation in July 2019. In such a situation, SDG&E may recognize
a reduction of its Wildfire Fund asset and record an impairment charge against
earnings when available coverage is reduced due to recoverable claims from any
of the participating IOUs. Pacific Gas and Electric Company has indicated that
it will seek reimbursement from the Wildfire Fund for losses associated with the
Dixie Fire, which burned from July 2021 through October 2021 and was reported to
be the largest single wildfire (measured by acres burned) in California history.
If any California electric IOU's equipment is determined to be a cause of a
fire, it could have a material adverse effect on SDG&E's and Sempra's financial
condition and results of operations up to the carrying value of our Wildfire
Fund asset, with additional potential material exposure if SDG&E's equipment is
determined to be a cause of a fire. In addition, the Wildfire Fund could be
completely exhausted due to fires in the other California electric IOUs' service
territories, by fires in SDG&E's service territory or by a combination thereof.
In the event that the Wildfire Fund is materially diminished, exhausted or
terminated, SDG&E will lose the protection afforded by the Wildfire Fund, and as
a consequence, a fire in SDG&E's service territory could have a material adverse
effect on SDG&E's and Sempra's results of operations, financial condition, cash
flows and/or prospects.

Off-Balance Sheet Arrangements

SDG&E has entered into PPAs and tolling agreements that are variable interests
in unconsolidated entities. We discuss variable interests in Note 1 of the Notes
to Condensed Consolidated Financial Statements.

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SoCalGas

Aliso Canyon Natural Gas Storage Facility Gas Leak

SoCalGas' future performance and liquidity may be impacted by the resolution of
legal, regulatory and other matters pertaining to the Leak, which we discuss
below and in Note 10 of the Notes to Condensed Consolidated Financial Statements
in this report and in "Part I - Item 1A. Risk Factors" in the Annual Report.

Insurance and Accounting and Other Impacts. Since 2015, SoCalGas has incurred
significant costs related to the Leak, including costs to defend against and
settle civil litigation arising from the Leak. Other than insurance for
directors' and officers' liability, we have exhausted all of our insurance for
this matter. We continue to pursue other sources of insurance coverage for costs
related to this matter, but we may not be successful in obtaining additional
insurance recovery for any of these costs. At March 31, 2023, $129 million is
accrued in Reserve for Aliso Canyon Costs and $3 million is accrued in Deferred
Credits and Other on SoCalGas' and Sempra's Condensed Consolidated Balance
Sheets.

Except for the amounts paid or estimated to settle certain legal and regulatory
matters, the accruals do not include any amounts necessary to resolve the
matters that we describe in "Litigation" and "Regulatory Proceedings" in Note 10
of the Notes to Condensed Consolidated Financial Statements, threatened
litigation, other potential litigation or other costs, in each case to the
extent it is not possible to predict at this time the outcome of these actions
or reasonably estimate the possible costs or a range of possible costs. Further,
we are not able to reasonably estimate the possible loss or a range of possible
losses in excess of the amounts accrued, which could be significant.

An adverse outcome with respect to (i) the litigation we describe in Note 10 of
the Notes to Condensed Consolidated Financial Statements under "Litigation,"
(ii) threatened or other potential litigation related to the Leak, (iii) the
Leak OII that we discuss in Note 10 of the Notes to Condensed Consolidated
Financial Statements, if approval of the negotiated settlement is not obtained,
or (iv) the unresolved proceeding pursuant to the SB 380 OII that we discuss
below, could have a material adverse effect on SoCalGas' and Sempra's results of
operations, financial condition, cash flows and/or prospects.

Natural Gas Storage Operations and Reliability. Natural gas withdrawn from
storage is important for service reliability during peak demand periods,
including peak electric generation needs in the summer and consumer heating
needs in the winter. The Aliso Canyon natural gas storage facility is the
largest SoCalGas storage facility and an important component of SoCalGas'
delivery system. In February 2017, the CPUC opened a proceeding pursuant to the
SB 380 OII to determine the feasibility of minimizing or eliminating the use of
the Aliso Canyon natural gas storage facility while still maintaining energy and
electric reliability for the region, including considering alternative means for
meeting or avoiding the demand for the facility's services if it were
eliminated.

At March 31, 2023, the Aliso Canyon natural gas storage facility had a net book
value of $965 million. If the Aliso Canyon natural gas storage facility were to
be permanently closed or if future cash flows from its operation were otherwise
insufficient to recover its carrying value, we may record an impairment of the
facility, which could be material, or we could incur materially higher than
expected operating costs and/or be required to make material additional capital
expenditures (any or all of which may not be recoverable in rates), and natural
gas reliability and electric generation could be jeopardized.

Sempra Texas Utilities

Oncor relies on external financing as a significant source of liquidity for its
capital requirements. In the event that Oncor fails to meet its capital
requirements, access sufficient capital, or raise capital on favorable terms to
finance its ongoing needs, we may elect to make additional capital contributions
to Oncor (as our commitments to the PUCT prohibit us from making loans to
Oncor), which could be substantial and reduce the cash available to us for other
purposes, increase our indebtedness and ultimately materially adversely affect
our results of operations, financial condition, cash flows and/or prospects.
Oncor's ability to make distributions may be limited by factors such as its
credit ratings, regulatory capital requirements, increases in its capital plan,
debt-to-equity ratio approved by the PUCT and other restrictions and
considerations. In addition, Oncor will not make distributions if a majority of
Oncor's independent directors or any minority member director determines it is
in the best interests of Oncor to retain such amounts to meet expected future
requirements.

Capital Structure and Return on Equity

On April 6, 2023, the PUCT issued a final order in Oncor's comprehensive base
rate review. The final order sets Oncor's authorized ROE at 9.7%, a decrease
from its previously authorized ROE of 9.8%, and maintains Oncor's authorized
regulatory capital structure at 57.5% debt to 42.5% equity. The new rates became
effective on May 1, 2023. The PUCT order is subject to motions for rehearing and
appeals. On May 1, 2023, Oncor filed a motion for rehearing seeking
reconsideration of certain exclusions from rates and seeking certain technical
corrections.

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Off-Balance Sheet Arrangement

Our investment in Oncor Holdings is a variable interest in an unconsolidated entity. We discuss variable interests in Note 1 of the Notes to Condensed Consolidated Financial Statements.

Sempra Infrastructure

Sempra Infrastructure expects to fund capital expenditures, investments and
operations in part with available funds, including credit facilities, and cash
flows from operations of the Sempra Infrastructure businesses. We expect Sempra
Infrastructure will require additional funding for the development and expansion
of its portfolio of projects, which may be financed through a combination of
funding from the parent and minority interest owners, bank financing, issuances
of debt, project financing, partnering in JVs and asset sales.

In the three months ended March 31, 2023, Sempra Infrastructure distributed $43 million to minority shareholders and minority shareholders contributed $97 million to Sempra Infrastructure.

LNG and Net-Zero Solutions

Cameron LNG Phase 2 Project. Cameron LNG JV is developing a proposed expansion
project that would add one liquefaction train with an expected maximum
production capacity of approximately 6.75 Mtpa and would increase the production
capacity of the existing three trains at the Cameron LNG Phase 1 facility by up
to approximately 1 Mtpa through debottlenecking activities. The Cameron LNG JV
site can accommodate additional trains beyond the proposed Cameron LNG Phase 2
project.

Cameron LNG JV previously received major permits and FTA and non-FTA approvals
associated with the potential expansion that included up to two additional
liquefaction trains and up to two additional full containment LNG storage tanks.
In March 2023, the FERC approved Cameron LNG JV's request to amend the permits
to allow the use of electric drives, instead of gas turbine drives, which would
reduce overall emissions. The amendment also allows the design to be changed
from a two-train gas turbine expansion to a one-train electric drive expansion
along with other design enhancements that, together, are expected to result in a
more cost-effective and efficient facility, while also reducing overall GHG
emissions.

Sempra Infrastructure and the other Cameron LNG JV members, namely affiliates of
TotalEnergies SE, Mitsui & Co., Ltd. and Japan LNG Investment, LLC, a company
jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha, have
entered into an HOA for the potential development of the Cameron LNG Phase 2
project. The HOA provides a commercial framework for the proposed project,
including the contemplated allocation to Sempra Infrastructure of 50.2% of the
fourth train production capacity and 25% of the debottlenecking capacity from
the project under tolling agreements. The HOA contemplates the remaining
capacity to be allocated equally to the existing Cameron LNG Phase 1 facility
customers. Sempra Infrastructure plans to sell the LNG corresponding to its
allocated capacity from the proposed Cameron LNG Phase 2 project under long-term
SPAs prior to making a final investment decision. The HOA is a non-binding
arrangement. The ultimate participation in and offtake by Sempra Infrastructure,
TotalEnergies SE, Mitsui & Co., Ltd. and Japan LNG Investment, LLC remain
subject to negotiation and finalization of definitive agreements, among other
factors, and the HOA does not commit any party to enter into definitive
agreements with respect to the proposed Cameron LNG Phase 2 project.

Sempra Infrastructure, the other Cameron LNG JV members, and Cameron LNG JV have entered into a Phase 2 Project Development Agreement under which Sempra Infrastructure, subject to certain conditions and ongoing approvals by the Cameron LNG JV board, will manage and lead the Cameron LNG Phase 2 project development work until Cameron LNG JV makes a final investment decision.

Cameron LNG JV, upon the unanimous approval of the Cameron LNG JV board, awarded
two FEED contracts, one to Bechtel and the other to a joint venture between JGC
America Inc. and Zachry Industrial Inc. At the conclusion of the resulting
competitive FEED process, we expect to select one contractor to be the EPC
contractor for the proposed Cameron LNG Phase 2 project.

In connection with the execution of the Phase 2 Project Development Agreement
and the award of the FEED contracts, the Cameron LNG JV board unanimously
approved an expansion development budget to fund, subject to the terms of the
Phase 2 Project Development Agreement, development work necessary to prepare for
a potential final investment decision.

Cameron LNG JV has entered into an MOU with Entergy Louisiana, LLC, a subsidiary
of Entergy Corporation, to negotiate the terms and conditions for a new electric
service agreement intended to reduce Cameron LNG JV's scope 2 emissions from the
electricity it purchases from Entergy Louisiana, LLC. The MOU sets forth a
framework for Entergy Louisiana, LLC and Cameron LNG JV to finalize and sign a
minimum 20-year agreement for the procurement of new renewable generation
resources in Louisiana, subject to the ultimate approval of the Louisiana Public
Service Commission and Cameron LNG JV. The MOU is a non-binding arrangement. The
ultimate arrangement between Cameron LNG JV and Entergy Louisiana, LLC remains
subject to

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negotiation and finalization of definitive agreements, among other factors, and the MOU does not commit any party to enter into definitive agreements with respect to the proposed electric services agreement.

Sempra Infrastructure has entered into a non-binding HOA for the negotiation and
potential finalization of a definitive 20-year SPA with ORLEN for 2 Mtpa of LNG
offtake from the proposed Cameron LNG Phase 2 project. The ultimate
participation in and offtake from the proposed project remains subject to
negotiation and finalization of a definitive agreement, among other factors, and
the HOA does not commit any party to enter into a definitive agreement with
respect to the proposed project. Sempra Infrastructure also entered into a
non-binding HOA with Williams for the negotiation of potential LNG offtake from,
and feed gas supply to, the PA LNG Phase 2 project and Cameron LNG Phase 2
project that are under development, as well as a potential strategic JV related
to the existing Cameron Interstate Pipeline and the proposed Port Arthur
Pipeline Louisiana Connector. The term of this non-binding HOA ended in March
2023 and it terminated in accordance with its terms.

Expansion of the Cameron LNG Phase 1 facility beyond the first three trains is
subject to certain restrictions and conditions under the JV project financing
agreements, including among others, scope restrictions on expansion of the
project unless appropriate prior consent is obtained from the existing project
lenders. Under the Cameron LNG JV equity agreements, the expansion of the
project requires the unanimous consent of all the partners, including with
respect to the equity investment obligation of each partner. Working under the
framework established in the Phase 2 Project Development Agreement, Sempra
Infrastructure and the other Cameron LNG JV members have been targeting
completing the FEED work in the summer of 2023. We plan to invest additional
time upfront to reduce construction risk and project costs and optimize
construction timing. This process may take additional time beyond the summer,
and we would expect to be in a position to make a final investment decision
after completing both the FEED process and securing project financing. The
timing of when or if Cameron LNG JV will receive approval from the existing
project lenders to conduct the expansion under its financing agreements is
uncertain, and there is no assurance that Sempra Infrastructure will complete
the necessary development work or that the Cameron LNG JV members will
unanimously agree in a timely manner or at all on making a final investment
decision, which, if not accomplished, would materially and adversely impact the
development of the Cameron LNG Phase 2 project.

Development of the proposed Cameron LNG Phase 2 project is subject to numerous
risks and uncertainties, including securing binding customer commitments;
reaching unanimous agreement with our partners to proceed; obtaining and
maintaining permits and regulatory approvals; securing certain consents under
the existing financing agreements and obtaining sufficient new financing;
negotiating, completing and maintaining suitable commercial agreements,
including definitive EPC, tolling and governance agreements; reaching a positive
final investment decision; and other factors associated with this potential
investment. For a discussion of these risks, see "Part I - Item 1A. Risk
Factors" in the Annual Report.

ECA LNG Phase 1 Project. SI Partners owns an 83.4% interest in ECA LNG Phase 1,
and an affiliate of TotalEnergies SE owns the remaining 16.6% interest. ECA LNG
Phase 1 is constructing a one-train natural gas liquefaction facility at the
site of Sempra Infrastructure's existing ECA Regas Facility with a nameplate
capacity of 3.25 Mtpa and an initial offtake capacity of 2.5 Mtpa. We do not
expect the construction or operation of the ECA LNG Phase 1 project to disrupt
operations at the ECA Regas Facility, and have planned measures to limit
disruption of operations should any arise. We expect the ECA LNG Phase 1 project
to commence commercial operations in the summer of 2025.

We received authorizations from the DOE to export U.S.-produced natural gas to
Mexico and to re-export LNG to non-FTA countries from the ECA LNG Phase 1
project. ECA LNG Phase 1 has definitive 20-year SPAs with an affiliate of
TotalEnergies SE for approximately 1.7 Mtpa of LNG and with Mitsui & Co., Ltd.
for approximately 0.8 Mtpa of LNG.

In February 2020, we entered into an EPC contract with Technip Energies for the
ECA LNG Phase 1 project. Since reaching a positive final investment decision
with respect to the project in November 2020, Technip Energies has been working
to construct the ECA LNG Phase 1 project. We estimate the total price of the EPC
contract to be approximately $1.5 billion, with capital expenditures
approximating $2 billion including capitalized interest and project contingency.
The actual cost of the EPC contract and the actual amount of these capital
expenditures may differ substantially from our estimates.

ECA LNG Phase 1 has a five-year loan agreement with a syndicate of seven
external lenders that matures in December 2025 for an aggregate principal amount
of up to $1.3 billion, of which $634 million was outstanding at March 31, 2023.
Proceeds from the loan are being used to finance the cost of construction of the
ECA LNG Phase 1 project. We discuss the details of this loan in Note 6 of the
Notes to Condensed Consolidated Financial Statements in this report and in Note
7 of the Notes to Consolidated Financial Statements in the Annual Report.

Construction of the ECA LNG Phase 1 project is subject to numerous risks and
uncertainties, including maintaining permits and regulatory approvals;
construction delays; negotiating, completing and maintaining suitable commercial
agreements, including definitive gas supply and transportation agreements; the
impact of recent and proposed changes to the law in Mexico; as we discuss in
Note 10 of the Notes to Condensed Consolidated Financial Statements, an
unfavorable decision on certain property

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disputes and permit challenges that could materially adversely affect
construction of this project; and other factors associated with the project and
its construction. An unfavorable outcome with respect to any of these factors
could have a material adverse effect on Sempra's results of operations,
financial condition, cash flows and/or prospects, including the impairment of
all or a substantial portion of the capital costs invested in the project to
date. For a discussion of these risks, see "Part I - Item 1A. Risk Factors" in
the Annual Report.

ECA LNG Phase 2 Project. Sempra Infrastructure is developing a second,
large-scale natural gas liquefaction project at the site of its existing ECA
Regas Facility. We expect the proposed ECA LNG Phase 2 project to be comprised
of two trains and one LNG storage tank and produce approximately 12 Mtpa of
export capacity. We expect that construction of the proposed ECA LNG Phase 2
project would conflict with the current operations at the ECA Regas Facility,
which currently has long-term regasification contracts for 100% of the
regasification facility's capacity through 2028. This makes the decisions on
whether, when and how to pursue the proposed ECA LNG Phase 2 project dependent
in part on whether the investment in a large-scale liquefaction facility would,
over the long term, be more beneficial financially than continuing to supply
regasification services under our existing contracts.

We received authorizations from the DOE to export U.S.-produced natural gas to
Mexico and to re-export LNG to non-FTA countries from the proposed ECA LNG Phase
2 project.

We have MOUs and/or HOAs with Mitsui & Co., Ltd., TotalEnergies SE, and
ConocoPhillips that provide a framework for their potential offtake of LNG from
the proposed ECA LNG Phase 2 project and potential acquisition of an equity
interest in ECA LNG Phase 2. These MOUs and HOAs are non-binding arrangements.
The ultimate participation in and offtake by these parties remains subject to
negotiation and finalization of definitive agreements, among other factors, and
the MOUs and HOAs do not commit any party to enter into definitive agreements
with respect to the proposed ECA LNG Phase 2 project.

Development of the proposed ECA LNG Phase 2 project is subject to numerous risks
and uncertainties, including securing binding customer commitments; obtaining
and maintaining permits and regulatory approvals; obtaining financing;
negotiating, completing and maintaining suitable commercial agreements,
including definitive EPC, equity acquisition, governance, LNG sales, gas supply
and transportation agreements; reaching a positive final investment decision;
the impact of recent and proposed changes to the law in Mexico; the property
disputes and permit challenges that we reference in the ECA LNG Phase 1 project
discussion above; and other factors associated with this potential investment.
For a discussion of these risks, see "Part I - Item 1A. Risk Factors" in the
Annual Report.

PA LNG Phase 1 Project. Since making a positive final investment decision in
March 2023, Sempra Infrastructure is constructing a natural gas liquefaction
project on a greenfield site that it owns in the vicinity of Port Arthur, Texas,
located along the Sabine-Neches waterway. The PA LNG Phase 1 project will
consist of two liquefaction trains, two LNG storage tanks, a marine berth and
associated loading facilities and related infrastructure necessary to provide
liquefaction services with a nameplate capacity of approximately 13 Mtpa and an
initial offtake capacity of approximately 10.5 Mtpa. We expect the first and
second trains of the PA LNG Phase 1 project to commence commercial operations in
2027 and 2028, respectively.

In April 2019, the FERC approved the siting, construction and operation of the
PA LNG Phase 1 project facilities, along with certain natural gas pipelines,
including the Port Arthur Pipeline Louisiana Connector and Texas Connector, that
could be used to supply feed gas to the liquefaction facility when the project
is completed. Sempra Infrastructure received authorizations from the DOE in
August 2015 and May 2019 that collectively permit the LNG to be produced from
the PA LNG Phase 1 project to be exported to all current and future FTA and
non-FTA countries.

Sempra Infrastructure has definitive SPAs for LNG offtake from the PA LNG Phase 1 project with:

?an affiliate of ConocoPhillips for a 20-year term for 5 Mtpa of LNG, as well as
a natural gas supply management agreement whereby an affiliate of ConocoPhillips
will manage the feed gas supply requirements for the facility.

?RWE Supply & Trading GmbH, a subsidiary of RWE AG, for a 15-year term for 2.25 Mtpa of LNG.

?INEOS for a 20-year term for approximately 1.4 Mtpa of LNG.

?ORLEN for a 20-year term for approximately 1 Mtpa of LNG.

?ENGIE S.A. for a 15-year term for approximately 0.875 Mtpa of LNG.

In February 2020, we entered into an EPC contract, as amended and restated in
October 2022, with Bechtel for the PA LNG Phase 1 project. On March 20, 2023, we
issued a final notice to proceed under the EPC contract, which has an estimated
price of approximately $10.7 billion after change orders. We estimate the
capital expenditures for the PA LNG Phase 1 project will be approximately $13
billion including capitalized interest at the project level and project
contingency. The actual cost of the EPC contract and the actual amount of these
capital expenditures may differ substantially from our estimates.

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As we discuss in Note 1 of the Notes to Condensed Consolidated Financial
Statements, on March 20, 2023, an indirect subsidiary of SI Partners completed
the sale of an indirect 30% NCI in the PA LNG Phase 1 project to an affiliate of
ConocoPhillips for aggregate cash consideration of approximately $265 million,
subject to customary post-closing adjustments. We intend to use the proceeds
from this sale for capital expenditures and other general corporate purposes. In
connection with this sale, both SI Partners and ConocoPhillips provided
guarantees relating to their respective affiliate's commitment to make its pro
rata equity share of capital contributions to fund 110% of the development
budget of the PA LNG Phase 1 project, in an aggregate amount of up to $9.0
billion. SI Partners' guarantee covers 70% of this amount plus enforcement costs
of its guarantee.

Also, on March 20, 2023, an indirect subsidiary of SI Partners entered into an
agreement for the sale to KKR Denali of an indirect interest of a minimum of 25%
and up to 48.65% in the PA LNG Phase 1 project for aggregate cash consideration
of a minimum of $64 million for a 25% indirect interest and up to $125 million
for the full 48.65% indirect interest, plus KKR Denali's pro rata equity share
of development costs incurred prior to the closing that exceed $439 million,
subject to customary post-closing adjustments. We intend to use the proceeds
from this sale for capital expenditures and other general corporate purposes. We
are targeting the closing of the sale of NCI to KKR Denali in the summer of
2023, subject to regulatory approvals and other customary closing conditions. If
the closing conditions are satisfied and KKR Denali fails to complete the
closing, then KKR Denali must pay a termination fee of $130 million.

Following completion of the sale of NCI to the ConocoPhillips affiliate and
subject to closing the sale of NCI to KKR Denali, Sempra would hold an indirect
interest in the PA LNG Phase 1 project of between 14.9% and 31.5%, depending on
the amount of KKR Denali's investment at closing.

As we discuss in Note 6 of the Notes to Condensed Consolidated Financial
Statements, on March 20, 2023, Port Arthur LNG entered into a seven-year term
loan facility agreement with a syndicate of 21 external lenders for an aggregate
principal amount of approximately $6.8 billion and an initial working capital
facility agreement with four lenders for up to $200 million. The facilities
mature on March 20, 2030. Proceeds from the loans will be used to finance the
cost of construction of the PA LNG Phase 1 project. At March 31, 2023, $215
million of borrowings were outstanding under the term loan facility agreement.

Construction of the PA LNG Phase 1 project is subject to numerous risks and
uncertainties, including maintaining permits and regulatory approvals;
construction delays; negotiating, completing and maintaining suitable commercial
agreements, including definitive gas supply and transportation agreements; and
other factors associated with the project and its construction. An unfavorable
outcome with respect to any of these factors could have a material adverse
effect on Sempra's results of operations, financial condition, cash flows and/or
prospects, including the impairment of all or a substantial portion of the
capital costs invested in the project to date. For a discussion of these risks,
see "Part I - Item 1A. Risk Factors" in the Annual Report.

PA LNG Phase 2 Project. Sempra Infrastructure is developing a second phase of
the natural gas liquefaction project that we expect will be a similar size to
the PA LNG Phase 1 project. We are progressing the development of the proposed
PA LNG Phase 2 project, while continuing to evaluate overall opportunities to
develop the entirety of the Port Arthur site as well as potential design changes
that could reduce overall emissions, including a facility design utilizing
renewable power sourcing and other technological solutions.

In February 2020, Sempra Infrastructure filed an application, subject to
approval by the FERC, for the siting, construction and operation of the proposed
PA LNG Phase 2 project, including the potential addition of up to two
liquefaction trains. Also in February 2020, Sempra Infrastructure filed an
application with the DOE to permit LNG produced from the proposed PA LNG Phase 2
project to be exported to all current and future FTA and non-FTA countries.

Sempra Infrastructure has entered into a non-binding HOA for the negotiation and
potential finalization of a definitive SPA with INEOS for approximately 0.2 Mtpa
of LNG offtake from the proposed PA LNG Phase 2 project. The ultimate
participation in and offtake from the proposed project remains subject to
negotiation and finalization of a definitive agreement, among other factors, and
the HOA does not commit any party to enter into a definitive agreement with
respect to the proposed project.

Development of the proposed PA LNG Phase 2 project is subject to numerous risks
and uncertainties, including securing binding customer commitments; identifying
suitable project and equity partners; obtaining and maintaining permits and
regulatory approvals, including approval from the FERC; obtaining financing;
negotiating, completing and maintaining suitable commercial agreements,
including definitive EPC, equity acquisition, governance, LNG sales, gas supply
and transportation agreements; reaching a positive final investment decision;
and other factors associated with this potential investment. For a discussion of
these risks, see "Part I - Item 1A. Risk Factors" in the Annual Report.

Vista Pacifico LNG Liquefaction Project. Sempra Infrastructure is developing
Vista Pacifico LNG, a potential natural gas liquefaction, storage, and mid-scale
export facility proposed to be located in the vicinity of Topolobampo in
Sinaloa, Mexico, under an MOU with the CFE, which was subsequently updated in
July 2022, that contemplates the negotiation of definitive agreements that would
cover development of Vista Pacifico LNG and the re-routing of a portion of the
Guaymas-El Oro segment

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of the Sonora pipeline and resumption of its operations. The proposed LNG export
terminal would be supplied with U.S. natural gas and would use excess natural
gas and pipeline capacity on existing pipelines in Mexico with the intent of
helping to meet growing demand for natural gas and LNG in the Mexican and
Pacific markets.

Sempra Infrastructure received authorization from the DOE to permit the export
of U.S.-produced natural gas to Mexico and for LNG produced from the proposed
Vista Pacifico LNG facility to be re-exported to all current and future FTA
countries in April 2021 and non-FTA countries in December 2022.

In March 2022, TotalEnergies SE and Sempra Infrastructure entered into an MOU
that contemplates TotalEnergies SE potentially contracting approximately
one-third of the long-term export production of the proposed Vista Pacifico LNG
project and potentially participating as a minority partner in the project.

The MOUs related to the proposed Vista Pacifico LNG project are non-binding arrangements. The ultimate participation in and offtake from the proposed project remain subject to negotiation and finalization of definitive agreements, among other factors, and the MOUs do not commit any party to enter into definitive agreements with respect to the project.

Development of the proposed Vista Pacifico LNG project is subject to numerous
risks and uncertainties, including securing binding customer commitments;
identifying suitable project and equity partners; obtaining and maintaining
permits and regulatory approvals; obtaining financing; negotiating, completing
and maintaining suitable commercial agreements, including definitive EPC, equity
acquisition, governance, LNG sales, gas supply and transportation agreements;
reaching a positive final investment decision; the impact of recent and proposed
changes to the law in Mexico; and other factors associated with this potential
investment. For a discussion of these risks, see "Part I - Item 1A. Risk
Factors" in the Annual Report.

Hackberry Carbon Sequestration Project. Sempra Infrastructure is developing the
potential Hackberry Carbon Sequestration project near Hackberry, Louisiana. This
proposed project under development is designed to permanently sequester carbon
dioxide from the Cameron LNG Phase 1 facility and the proposed Cameron LNG Phase
2 project. In the third quarter of 2021, Sempra Infrastructure filed an
application with the EPA for a Class VI carbon injection well to advance this
project.

In May 2022, Sempra Infrastructure, TotalEnergies SE, Mitsui & Co., Ltd. and
Mitsubishi Corporation signed a Participation Agreement for the development of
the proposed Hackberry Carbon Sequestration project. The Participation Agreement
contemplates that the combined Cameron LNG Phase 1 facility and proposed Cameron
LNG Phase 2 project would potentially serve as the anchor source for the capture
and sequestration of carbon dioxide by the proposed project. It also provides
the basis for the parties to enter into a JV with Sempra Infrastructure for the
Hackberry Carbon Sequestration project.

Development of the proposed Hackberry Carbon Sequestration project is subject to
numerous risks and uncertainties, including securing binding customer
commitments; obtaining required consents from the Cameron LNG JV members;
identifying suitable project and equity partners; obtaining and maintaining
permits and regulatory approvals; obtaining financing; negotiating, completing
and maintaining suitable commercial agreements, including definitive EPC, equity
acquisition and governance agreements; reaching a positive final investment
decision; and other factors associated with this potential investment. For a
discussion of these risks, see "Part I - Item 1A. Risk Factors" in the Annual
Report.

Off-Balance Sheet Arrangements. Our investment in Cameron LNG JV is a variable
interest in an unconsolidated entity. We discuss variable interests in Note 1 of
the Notes to Condensed Consolidated Financial Statements.

In June 2021, Sempra provided a promissory note, which constitutes a guarantee,
for the benefit of Cameron LNG JV with a maximum exposure to loss of $165
million. The guarantee will terminate upon full repayment of Cameron LNG JV's
debt, scheduled to occur in 2039, or replenishment of the amount withdrawn by
Sempra Infrastructure from the SDSRA. We discuss this guarantee in Note 5 of the
Notes to Condensed Consolidated Financial Statements.

In July 2020, Sempra entered into a Support Agreement, which contains a
guarantee and represents a variable interest, for the benefit of CFIN with a
maximum exposure to loss of $979 million. The guarantee will terminate upon full
repayment of the guaranteed debt by 2039, including repayment following an event
in which the guaranteed debt is put to Sempra. We discuss this guarantee in
Notes 1, 5 and 8 of the Notes to Condensed Consolidated Financial Statements.

Energy Networks

Sonora Pipeline. Sempra Infrastructure's Sonora natural gas pipeline consists of
two segments, the Sasabe-Puerto Libertad-Guaymas segment and the Guaymas-El Oro
segment. Each segment has its own service agreement with the CFE.

A portion of the Guaymas-El Oro segment of the Sonora natural gas pipeline
crosses into territory owned by the Yaqui tribe who, with the exception of some
members living in the Bácum community, granted its consent and a right-of-way
easement agreement for the pipeline in its territory. Following the start of
commercial operations of the Guaymas-El Oro segment, Sempra

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Infrastructure reported damage to the pipeline in the Yaqui territory that has
made that section inoperable since August 2017. Legal challenges raised by
representatives of the Bácum community, which we discuss in Note 10 of the Notes
to Condensed Consolidated Financial Statements, have prevented Sempra
Infrastructure from making repairs to put the pipeline back in service. Such
legal challenges were definitively resolved in March 2023 based on the agreement
by the CFE and Sempra Infrastructure to re-route the portion of the pipeline
that is in the Yaqui territory.

Discussions with the CFE regarding the future of the pipeline are underway in
accordance with a non-binding MOU announced in January 2022 that, among other
matters, addresses efforts to proceed with re-routing a portion of the pipeline,
which will require either an extension of the service start date, as discussed
below, or a separate definitive arrangement between Sempra Infrastructure and
the CFE concerning the restarting of service on the pipeline. In July 2022,
Sempra Infrastructure and the CFE entered into a Shareholders' Agreement that
establishes a framework for a JV between the parties to work on restarting
service on the pipeline, including the re-routing of a portion of the pipeline.
This agreement is subject to a number of conditions to be satisfied before it
becomes effective, including regulatory and corporate authorizations.

In September 2019, Sempra Infrastructure and the CFE reached an agreement to
modify the tariff structure and extend the term of the contract by 10 years.
Under the revised agreement, the CFE will resume making payments only when the
damaged section of the Guaymas-El Oro segment of the Sonora pipeline is back in
service. If the parties do not agree on a definitive arrangement to re-route a
portion of the pipeline or the parties do not agree on a new service start date
by May 31, 2023, Sempra Infrastructure retains the right to terminate the
contract and seek to recover its reasonable and documented costs and lost
profits.

At March 31, 2023, Sempra Infrastructure had $417 million in PP&E, net, related
to the Guaymas-El Oro segment of the Sonora pipeline, which could be subject to
impairment if Sempra Infrastructure is unable to re-route a portion of the
pipeline (which has not been agreed to by the parties, but is subject to
negotiation pursuant to a non-binding MOU and a Shareholders' Agreement, as
described above) and resume operations or if Sempra Infrastructure terminates
the contract and is unable to obtain recovery, which in each case could have a
material adverse effect on Sempra's business, results of operations, financial
condition, cash flows and/or prospects.

Construction Projects. In May 2022, Sempra Infrastructure substantially completed construction of a terminal for the receipt, storage, and delivery of refined products in Topolobampo, at which time commissioning activities commenced. We expect the Topolobampo terminal will commence commercial operations in the fourth quarter of 2023, subject to receipt of the CRE's approval of the regulated rates.

Sempra Infrastructure is also developing terminals for the receipt, storage, and delivery of refined products in the vicinity of Manzanillo and Ensenada.

The ability to successfully complete major construction projects is subject to a number of risks and uncertainties. For a discussion of these risks and uncertainties, see "Part I - Item 1A. Risk Factors" in the Annual Report.

Legal and Regulatory Matters

See Note 10 of the Notes to Condensed Consolidated Financial Statements in this
report and "Part I - Item 1A. Risk Factors" in the Annual Report for discussions
of the following legal and regulatory matters affecting our operations in
Mexico:

Energía Costa Azul

?  Land Disputes

? Environmental and Social Impact Permits

One or more unfavorable final decisions on these land disputes or environmental
and social impact permit challenges could materially adversely affect our
existing natural gas regasification operations and proposed natural gas
liquefaction projects at the site of the ECA Regas Facility and have a material
adverse effect on Sempra's business, results of operations, financial condition,
cash flows and/or prospects.

Regulatory and Other Actions by the Mexican Government

? Amendments to Mexico's Hydrocarbons Law

? Amendments to Mexico's Electricity Industry Law

Sempra Infrastructure and other parties affected by these amendments to Mexican
law have challenged them by filing amparo and other claims, some of which remain
pending. An unfavorable decision on one or more of these amparo or other
challenges, the impact of the amendments that have become effective (due to
unsuccessful amparo challenges or otherwise), or the possibility of future
reforms to the energy industry through additional amendments to Mexican laws,
regulations or rules (including through

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amendments to the constitution) may impact our ability to operate our facilities
at existing levels or at all, may result in increased costs for Sempra
Infrastructure and its customers, may adversely affect our ability to develop
new projects, may result in decreased revenues and cash flows, and may
negatively impact our ability to recover the carrying values of our investments
in Mexico, any of which may have a material adverse effect on Sempra's business,
results of operations, financial condition, cash flows and/or prospects.

SOURCES AND USES OF CASH

The following tables include only significant changes in cash flow activities for each of our registrants.

CASH FLOWS FROM OPERATING ACTIVITIES
(Dollars in millions)
Three months ended March 31,                                         Sempra             SDG&E            SoCalGas
2023                                                               $  1,980          $    372          $     326
2022                                                                  1,607               670                741
Change                                                             $    373          $   (298)         $    (415)

Change in net margin posted                                        $    601          $    (68)         $     (26)
Change in income taxes receivable/payable, net                          172               (42)

Higher net income, adjusted for noncash items included in earnings

                                                                167                47                100
Change in regulatory liabilities                                        (32)              (32)

Net decrease in Reserve for Aliso Canyon Costs, due to $90 lower accruals offset by $17 lower payments

                             (73)                                 (73)
Change in accounts receivable                                          (104)              (69)              (256)

Change in net undercollected regulatory balancing accounts (including long-term amounts in regulatory assets)

(178)                                (164)
Change in accounts payable                                             (268)             (118)
Other                                                                    88               (16)                 4
                                                                   $    373          $   (298)         $    (415)


CASH FLOWS FROM INVESTING ACTIVITIES
(Dollars in millions)
Three months ended March 31,                       Sempra       SDG&E       SoCalGas
2023                                             $ (1,895)     $ (613)     $    (458)
2022                                               (1,290)       (552)          (468)
Change                                           $   (605)     $  (61)     $      10

(Increase) decrease in capital expenditures      $   (626)     $  (72)     $      10
Other                                                  21          11
                                                 $   (605)     $  (61)     $      10


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CASH FLOWS FROM FINANCING ACTIVITIES
(Dollars in millions)
Three months ended March 31,                                    Sempra             SDG&E            SoCalGas
2023                                                          $    151          $    570          $     118
2022                                                             1,638               385                303
Change                                                        $ (1,487)         $    185          $    (185)

Lower issuances of long-term debt                             $ (2,693)

$ (403) $ (697) (Higher) lower payments for commercial paper and other short-term debt with maturities greater than 90 days

              (572)     

375

Higher payments on long-term debt and finance leases              (183)
Settlement of cross-currency swaps                                 (99)
Higher contributions from noncontrolling interests                  91
Lower repurchases of common stock                                  195
Higher proceeds from sales of noncontrolling interests             252

Higher issuances of short-term debt with maturities greater than 90 days

                                               656
Change in borrowings and repayments of short-term debt,
net                                                                888               196                508
Other                                                              (22)               17                  4
                                                              $ (1,487)         $    185          $    (185)

Capital Expenditures and Investments

EXPENDITURES FOR PP&E AND INVESTMENTS
(Dollars in millions)
                                 Three months ended March 31,
                                       2023                   2022
SDG&E                     $          624                    $   552
SoCalGas                             458                        468
Sempra Texas Utilities                85                         85
Sempra Infrastructure                744                        182
Parent and other                       4                          2
Total                     $        1,915                    $ 1,289

Having reached a positive final investment decision for the PA LNG Phase 1 project and Oncor having received a final order from the PUCT in its comprehensive base rate review, we have updated our expected capital expenditures and investments from what we disclosed in "Part II - Item 7. MD&A - Capital Resources and Liquidity" in the Annual Report.

From 2023 through 2027, and subject to the factors described below, which could
cause these estimates to vary substantially, Sempra expects to make aggregate
capital expenditures and investments of approximately $38.6 billion (which
excludes capital expenditures that will be funded by unconsolidated entities),
as follows: $11.6 billion at SDG&E, $9.8 billion at SoCalGas, $2.5 billion at
Sempra Texas Utilities and $14.7 billion at Sempra Infrastructure. Capital
expenditure amounts include capitalized interest and AFUDC related to debt.

In 2023, we expect to make capital expenditures and investments of approximately
$9.2 billion (which excludes capital expenditures that will be funded by
unconsolidated entities), which is an increase from the $5.7 billion projected
in "Part II - Item 7. MD&A - Capital Resources and Liquidity" in the Annual
Report. The increase is primarily attributable to an increase of $3.4 billion at
Sempra Infrastructure related to the PA LNG Phase 1 project and approximately
$100 million at Sempra Texas Utilities.

We expect the majority of our capital expenditures and investments in 2023 will
relate to transmission and distribution improvements at our regulated public
utilities, and construction of the PA LNG Phase 1 project, ECA LNG Phase 1
liquefaction project and natural gas pipelines at Sempra Infrastructure.

Our level of capital expenditures and investments in the next few years may vary
substantially and will depend on, among other things, the cost and availability
of financing, regulatory approvals, changes in U.S. federal tax law and business
opportunities providing desirable rates of return. See "Part I - Item 1A. Risk
Factors" in the Annual Report for a discussion of these and other factors that
could affect future levels of our capital expenditures and investments. We
intend to finance our capital expenditures in a manner that will maintain our
investment-grade credit ratings and capital structure, but there is no guarantee
that we will be able to do so.

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CRITICAL ACCOUNTING ESTIMATES

Management views certain accounting estimates as critical because their
application is the most relevant, judgmental and/or material to our financial
position and results of operations, and/or because they require the use of
material judgments and estimates. We discuss critical accounting estimates in
"Part II - Item 7. MD&A" in the Annual Report.

NEW ACCOUNTING STANDARDS

We discuss any recent accounting pronouncements that have had or may have a significant effect on our financial statements and/or disclosures in Note 2 of the Notes to Condensed Consolidated Financial Statements.

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