Sempra reported solid Q1 2026 results, affirming full-year guidance and long-term growth targets. The call focused on the closing of the Sempra Infrastructure sale to KKR, the massive data center load growth in Texas, and improving regulatory outcomes for Encore. Encore's load pipeline for data centers has grown to 127 GW, up from 38 GW, and is considered a significant driver of future capex.
Sempra reported solid Q1 2026 results, affirming full-year guidance and long-term growth targets. The call focused on the closing of the Sempra Infrastructure sale to KKR, the massive data center load growth in Texas, and improving regulatory outcomes for Encore. Encore's load pipeline for data centers has grown to 127 GW, up from 38 GW, and is considered a significant driver of future capex.
Management expressed strong confidence in growth prospects, highlighted progress on key regulatory and strategic initiatives, and reaffirmed guidance.
Encore's load pipeline for data centers has grown to 127 GW, up from 38 GW, and is considered a significant driver of future capex.
ERCOT has begun awarding transmission projects (e.g., $2.9B in South Dallas) that are incremental to Encore's base plan.
The KKR transaction for Sempra Infrastructure is on track to close in Q2/Q3 2026, with several approvals already obtained.
Management discussed large load growth in Texas, largely driven by data centers, with 271 gigawatts of data center-related load in Encore's queue, and highlighted data center demand as a significant upside opportunity beyond the base capital plan.
Encore submits 122 GW of large load for RTP; 289 GW total queue. Management expressed strong confidence in growth prospects, highlighted progress on key regulatory and strategic initiatives, and reaffirmed guidance.
Sempra reaffirmed a record $65 billion capital plan, with a majority of rate base in Texas by the end of the decade, and identified approximately $9-10 billion of incremental capital opportunities primarily concentrated in Texas, driven by data center load and regional transmission needs.
Management expressed strong confidence in growth prospects, highlighted progress on key regulatory and strategic initiatives, and reaffirmed guidance.
“We expect the I squared will show up in continued levels of record capital spending at Encore well through the middle part of the next decade.”
“ERCOT did release those four gigawatts of South Dallas projects. And they had an estimated cost around those around $2.9 billion.”
“I anticipate our thresholds improving post-close to the project but probably closer to the end of the year once we reach some of those construction milestones.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| EPS | FY2026 | $4.80–$5.30 | $5.05 | MAINTAINED |
| EPS | FY2027 | $5.10–$5.70 | $5.40 | MAINTAINED |
Sempra is advancing the sale of Sempra Infrastructure to KKR, with approvals progressing and close expected in Q2/Q3 2026, which will allow Sempra to pay down debt and invest in utilities.
“Our relationship with KKR remains strong. We're working closely with them to close the transaction in Q2 or Q3.”
Hey, excuse me. Good morning. Sorry, a less exciting question. Just the SEMPRA infrastructure closing, what steps do you still have to achieve to close that?
Yeah, thank you, Jeff. And hello, Steve. So as Jeff said in the prepared remarks, we do remain on track for closing in the second or third quarter of this year. Thus far, we've gotten FERC approval, competition approval from Korea. We've reached the end of the HSR period. We've received antitrust approvals in Mexico, and we have received the majority of our third-party consents. We are currently working with the Cameron Partners and the Japanese export credit agencies who finance Cameron to get their consents. And, Steve, at the same time, our teams are working on finalizing the pre-transition and transition services with those closing activities remaining on track. So I'd say our relationship with KKR remains strong. We're working closely with them to close the transaction in Q2 or Q3. And I think we're in great shape, Steve.
Moody's has set conditions for improving Sempra's credit thresholds, including progressing on construction milestones post-close of the Sempra Infrastructure sale.
“For example, Moody's also wants to see some further progress on our construction projects.”
Okay, good. And then just to follow up on that, when you – I think – Karen mentioned just the rating agencies and completing their review after SEMPRA infrastructure potentially. Is that the key milestone or are there other things that the rating agencies are looking at related to the negative outlook maybe going away?
Yeah, so Steve, that's the main catalyst for some changes in our thresholds from the rating agencies. So we've spoken with all of them and they've all talked about improving our thresholds once the deal is done. But I don't expect that to be immediate. So it's not just that. For example, Moody's also wants to see some further progress on our construction projects. So they're tracking pipe installation and those things. So I anticipate our thresholds improving post-close to the project but probably closer to the end of the year once we reach some of those construction milestones, so it's the end of the year or early 27th.
Encore's 127 GW of qualifying load data center pipeline is described as similar in quality to the prior 38 GW figure and is incremental to a $10B upside capex bucket, potentially driving 'incremental to the incremental' growth. — Confirms that the Texas transmission buildout is accelerating beyond base plans, which is critical for utilities with large Texas exposure.