Sempra's Q2 2026 GAAP EPS rose to $1.21 from $0.71 (adjusted $1.16 vs $0.89) as Oncor booked five months of new Texas rates and Infrastructure benefited from held-for-sale accounting, while a compressor fault pushed ECA LNG Phase 1 completion to Q4.
Revenue
$3.0B
-0.1% YoY
Net income
$796M
+72.7% YoY
Diluted EPS
$1.21
+70.4% YoY
Operating margin
27.8%
Headline
Sempra's second-quarter 2026 GAAP earnings rose 73% to $796 million ($1.21 per diluted share) from $461 million ($0.71). Revenue was flat at $2.997 billion. The increase came from three places: a rate-case catch-up at Oncor, its Texas electric utility; accounting and tax effects at Sempra Infrastructure, the LNG and Mexico business that is being partly sold; and a smaller gain in California. On Sempra's own adjusted basis, which strips out currency, derivative and tax items, earnings rose 31% to $762 million ($1.16 per share) from $583 million ($0.89).
Some terms used below:
A regulated utility's rate base is the value of the grid assets (poles, wires, pipes, substations) that regulators allow it to earn a set return on. The more it invests, the more it earns.
A rate case is the proceeding where regulators set the prices the utility may charge.
Most of what moved Sempra this quarter traces back to one or the other.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Total revenues
$2,997M
$3,000M
-0.1%
Operating margin (computed, see note)
27.8%
19.5%
+8.3 pts
GAAP earnings attributable to common shares
$796M
$461M
+72.7%
GAAP diluted EPS
Read 0 community reports on Sempra, or write your own.Write a report
Operating margin is not a line Sempra reports. It is computed here as revenues minus cost of gas, cost of electric fuel and purchased power, energy-related cost of sales, operation and maintenance, depreciation and franchise fees/other taxes, divided by revenues ($832M vs. $584M). It leaves out Oncor, which Sempra owns 80.25% of but reports only as a single "equity earnings" line below operating costs. That line was $547M this quarter, so this margin misses the fastest-growing part of the company.
First half 2026: GAAP EPS was $2.80 vs. $2.09 and adjusted EPS was $2.67 vs. $2.34 (+14%). For a utility, the six-month numbers give the better picture this year, because Q2 includes catch-up revenue that belongs partly to Q1 (explained below).
Why revenue was flat but profit jumped
Revenue at the California utilities is mostly a pass-through. The filing notes that changes in SDG&E's and SoCalGas' cost of natural gas and electricity "are recovered in rates" and "do not impact earnings." Natural gas revenue fell 7% to $1,364M, and cost of natural gas fell even more, from $183M to $63M. Electric revenue rose 12% to $1,158M. The two roughly cancelled out.
The profit growth happened below the revenue line:
Equity earnings rose $154M ($393M → $547M). This is Sempra's share of Oncor, which is not consolidated into revenue.
Energy-related cost of sales was a credit of $69M, compared with an $85M expense a year ago. This reflects unrealized gains on commodity derivatives, which are paper gains on contracts marked to current natural gas prices.
Depreciation fell $41M to $612M, mostly because Sempra Infrastructure stopped depreciating assets classified as held for sale.
Income tax expense fell to $112M from $172M.
Interest expense rose $71M to $430M. This is the cost of funding a record capital program.
Segment by segment
Sempra Texas Utilities (Oncor): +$138M, mostly a rate-case catch-up
In April 2026 the Public Utility Commission of Texas approved a settlement of Oncor's comprehensive base rate review. It raised Oncor's annual revenue requirement by about $560M (8.7%) to ~$6.97B. It also raised the authorized return on equity (the profit rate regulators allow on the shareholders' share of rate base) to 9.75% from 9.70%, and the equity share of the regulatory capital structure to 43.5% from 42.5%. New rates took effect June 1.
The 10-Q attributes Oncor's higher earnings first to "the surcharge resulting from the comprehensive base rate review, reflecting the difference between newly approved rates and previously effective rates for the period from January 1, 2026 to June 1, 2026." Other listed drivers were updates for Oncor's unified tracker mechanism (UTM) and SRP, the new base rates, rate updates for invested capital, and customer growth. Higher depreciation, interest and O&M were partial offsets.
Why this matters: part of Q2's +66% at Oncor is five months of retroactive revenue booked in one quarter, so it will not repeat at that pace. The first-half figure is cleaner: Texas earnings rose 46% ($354M → $517M). That is still strong, and the higher allowed return and equity share are permanent. Sempra's investment in Oncor also rose from $971M to $1,485M in the first half (+53%).
Sempra California (SDG&E + SoCalGas): +$38M (+15%)
Per the MD&A, the increase came from:
$29M higher income tax benefits from flow-through items
The absence of a $25M charge in 2025 for disallowed COVID-19 cost recovery
$21M higher CPUC base operating margin, net of operating expenses
$13M higher electric transmission margin, including the retroactive effect of the FERC-approved TO6 settlement (a base return on equity of about 10.28% for SDG&E's transmission business)
Offsets: $20M higher net interest expense, $10M lower AFUDC equity (a non-cash return credited on construction work in progress), and a $10M CPUC award that helped 2025 and did not recur.
Take out the tax benefit and the non-repeat of last year's charge, and underlying growth in California was small. First-half California earnings rose only 3% ($983M → $1,017M). Gas deliveries fell to 174 Bcf from 189 Bcf in the quarter. Gas volumes largely don't drive the utilities' earnings under California's decoupled rates, but they reflect the long-term policy pressure on gas distribution. SDG&E and SoCalGas filed their 2028 General Rate Case applications this quarter. Those cases will set California revenue from 2028.
Sempra Infrastructure: +$158M, mostly accounting and tax
This is where GAAP and underlying performance diverge most. Per the MD&A, the $158M increase included:
$46M swing in held-for-sale tax items: a $20M benefit this year vs. $26M expense last year, tied to the planned sale of 45% of Sempra Infrastructure Partners to KKR affiliates and the sale of Ecogas México
$37M lower depreciation "as a result of classifying SI Partners and Ecogas as held for sale." Held-for-sale assets stop being depreciated. This is an accounting effect, not an operating improvement, and it sits inside adjusted earnings too.
$34M from asset and supply optimization, driven by higher unrealized gains on commodity derivatives
$27M smaller hit from Mexican peso and inflation effects on monetary positions: a $71M unfavorable impact vs. $98M a year ago
Offsets: $26M higher income tax expense from other outside basis differences and tax allocations, and $11M lower revenues after an LNG storage and regasification agreement modification ended in December 2025.
Little of that increase comes from new LNG cash flow. Sempra excludes the derivative, FX and held-for-sale tax items from adjusted earnings, but the lower depreciation stays in.
GAAP vs. adjusted EPS
The gap is $0.05 this quarter ($1.21 GAAP vs. $1.16 adjusted). It is small because the items largely offset:
Unrealized PA LNG interest-rate swap gains: -$3M removed
A year ago the gap ran the other way ($0.71 GAAP vs. $0.89 adjusted), mainly because of a $97M Mexico FX loss and a $25M regulatory disallowance. This is why GAAP EPS grew 70% while adjusted EPS grew 30%. The 30% is the better read of the year-on-year trend, and the Oncor catch-up still inflates it.
Takeaway: Oncor's rate order explains most of the quarter's growth. Oncor earned 66% more because five months of new Texas rates were booked in Q2, on a settlement that raised its revenue requirement by ~$560M and its allowed return to 9.75%. California grew 3% for the half-year. Much of Infrastructure's jump came from held-for-sale accounting and derivative marks. Sempra's earnings growth now depends on Texas investment more than on California or LNG.
LNG projects: a setback at ECA
The 10-Q discloses a problem at ECA LNG Phase 1 in Baja California. The project exported its first cargo on July 7, 2026. During a planned inspection afterwards, the company found damage in the refrigerant compressors. Sempra now expects substantial completion in Q4 2026, "subject to completion of a root cause investigation" and remediation. Customers had a right to terminate their contracts if commercial operations did not start by February 24, 2026. As of August 3, none had given notice.
Port Arthur LNG Phase 1 in Texas remains on schedule, with trains 1 and 2 expected at or near the end of 2027 and in 2028. Its Louisiana Connector pipeline was placed into service in June 2026. Phase 2 (trains 3–4) is targeted for 2030 and 2031.
Outlook
Management guidance:
Full-year 2026 adjusted EPS guidance of $4.80–$5.30 reaffirmed
GAAP EPS guidance updated to $5.02–$5.55 to reflect first-half items and an expected $165–$205M pre-tax gain on the Ecogas sale
2027 EPS guidance of $5.10–$5.70 reaffirmed, along with a 7%–9% long-term EPS growth rate
Adjusted EPS of $2.67 in the first half is about 53% of the $5.05 guidance midpoint.
The sale of 45% of Sempra Infrastructure Partners to KKR affiliates is expected to close in Q3 2026, and management says it will be accretive. After closing, Sempra's capital plan assumes a 25% stake accounted for under the equity method.
Capital plan: Sempra's 2026–2030 plan totals about $65B. 95% goes to the Texas and California utilities, and Texas alone is 59% ($38.2B on Sempra's proportionate basis).
Texas demand:
ERCOT set an all-time peak load of 91 GW in July.
About 44 GW of large-load requests in Oncor's territory are expected to be eligible under ERCOT's "Batch Zero" interconnection process. That is 27 GW of base load and 17 GW of studied load, including 8 GW of existing large load still ramping up. Management said it would equal over 140% growth on Oncor's current 31 GW system peak if fully realized.
ERCOT has endorsed transmission projects needing more than $7B of investment, most of which Oncor expects to build, subject to approval.
The 10-Q also flags "heightened engagement from the public and state and local officials regarding costs" of data-center-driven buildout. The Batch Zero timeline "remains to be determined."
Our view:
Oncor's higher allowed return and equity share, plus a rate base that grows every time it connects new load, give Sempra a strong base for its 7%–9% growth target. The Texas numbers support it better than a year ago.
The Q2 Oncor surge includes a one-time catch-up, so expect Texas growth in Q3 and Q4 to slow toward the underlying rate-base pace.
There are three risks to watch:
Rising interest cost: interest expense rose 20% in the quarter as debt-funded capital spending outpaces rate recovery.
Texas policy: how quickly Texas regulators and politicians accept the cost of serving data centers.
ECA LNG timing: whether the compressor repair keeps ECA LNG Phase 1 on its Q4 2026 completion date.
California's 3% first-half growth means the 2028 rate cases matter less for near-term EPS than Oncor's grid investment does.
Sources: Sempra Form 10-Q for the quarter ended June 30, 2026 (financial statements and MD&A), and the Q2 2026 earnings release (Form 8-K Exhibit 99.1, Aug. 6, 2026) for the adjusted-earnings reconciliation and guidance.