Sempra is a holding company that owns and operates energy utilities across California, Texas, and parts of North America. It makes money by delivering electricity and natural gas through pipes and power lines it owns, then charging customers regulated rates set by government agencies. SoCalGas delivers natural gas to about 21.3 million people across Southern California. San Diego Gas and Electric (SDG&E) delivers both electricity and natural gas to roughly 3.6 million people in San Diego and parts of Orange County. Oncor, a Texas company in which Sempra holds an 80.25% stake, delivers electricity to more than 4.1 million homes and businesses across Texas. A third segment called Sempra Infrastructure owns stakes in liquefied natural gas (LNG) export facilities and energy pipelines. Because regulators set what Sempra can charge, the company earns money steadily rather than from winning or losing against competitors. The diagram below traces where the money goes.

Five years of financial data tell a story about a company that collects large revenues and carries large debts, with cash generation that swings more than you might expect from a business described as steady. Revenue grew from $12.9 billion in 2021 to a peak of $16.7 billion in 2023, then fell back to $13.2 billion in 2024 and $13.7 billion in 2025. That rise and fall was partly driven by natural gas prices, which surged and then retreated. What did not fall was debt. Net debt climbed every single year, from $24.0 billion in 2021 to $33.1 billion in 2025.

Gross margin told an interesting story too. It jumped from roughly 69% in 2022 to 87% in 2024 and 85% in 2025. That jump reflects lower commodity costs passing through to customers rather than Sempra keeping more money for itself. Regulated utilities pass fuel costs directly to customers, so when gas prices fall, revenue falls but so does cost, leaving the margin percentage higher. Operating cash flow swung from $1.1 billion in 2022 up to $6.2 billion in 2023, then settled back to $4.9 billion in 2024 and $4.6 billion in 2025. The 2022 dip and 2023 spike were both tied to working capital swings from volatile energy prices. Earnings attributable to common shares dropped sharply, from $3.0 billion in 2023 to $2.8 billion in 2024 and then to $1.8 billion in 2025, partly because a decision to classify the Sempra Infrastructure subsidiary SI Partners as held for sale triggered $703 million in income tax expenses in 2025 alone.

The $48 billion, five-year capital spending plan is the engine behind the debt growth. In 2025 alone, Sempra invested $12.6 billion in capital expenditures and investments. That spending is meant to expand and modernize the grids and pipelines that customers depend on, which regulators then allow Sempra to earn a return on. The logic works as long as regulators keep approving the spending and setting rates high enough to cover costs and debt service.

Sempra faces several specific, documented threats right now. The California Public Utilities Commission (CPUC), which regulates SDG&E and SoCalGas, disallowed recovery of certain wildfire mitigation costs in 2025, forcing SDG&E to record a $651 million charge. That single ruling erased a meaningful chunk of earnings. Credit rating agencies placed Sempra and SoCalGas on negative outlook and downgraded SoCalGas in early 2025, meaning borrowing money will cost more if the situation does not improve.

The LNG business carries its own set of risks. New U.S. tariffs on steel, aluminum, and goods from Canada, Mexico, and China raise construction costs for LNG projects already underway. The Port Arthur LNG Phase 1 facility in Texas is still being built, with the first train targeted for late 2027 and the second in 2028. Retaliatory tariffs from other countries on U.S. LNG exports could reduce demand for what those facilities produce. Mexico also recently passed new energy laws giving the government more control over the energy sector there, adding uncertainty to Sempra's infrastructure operations and development plans in that country.

There is also a structural financial risk sitting in Sempra's balance sheet. The company has forward sale agreements covering 4.996 million shares that counterparties can force it to settle at any time. A forced settlement could mean issuing many new shares, which would dilute existing shareholders, or paying out significant cash. That kind of unpredictable obligation is difficult to plan around when the company is already carrying $33.1 billion in net debt.