NEWS RELEASE                                  

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DALLAS (May 7, 2024) — Oncor Electric Delivery Company LLC (“Oncor”) today reported three months ended March 31, 2024 net income of $225 million compared to reported three months ended March 31, 2023 net income of $103 million. This $122 million increase was driven by higher revenues primarily due to updated interim rates to reflect increases in invested capital, increases in transmission billing units, higher customer consumption partially attributable to weather, new base rates implemented May 1, 2023 and customer growth, and the write-off of rate base disallowances recorded in the first quarter of 2023, partially offset by higher costs associated with increases in invested capital (primarily borrowing costs and depreciation) and higher operation and maintenance expense (primarily regulatory asset amortization and self-insurance reserve accrual recovery amounts in new base rates). Financial and operational results are provided in Tables A, B, C and D below.

"We are proud to announce Oncor's solid financial performance in the first quarter of 2024. Our continued focus on operational excellence is evident in our strong safety and reliability metrics during the quarter,” said Oncor CEO Allen Nye. “Our team worked hard to prepare our System Resiliency Plan filing. This strategic initiative, with almost $3 billion in capital expenditures and over $500 million in operation and maintenance expense earmarked for critical investments in system hardening and modernization, cybersecurity, wildfire mitigation, and other investments designed to make the grid more secure, reliable, and resilient, reflects our commitment to fortifying our infrastructure for the future. Pending approval from the Public Utility Commission of Texas, we anticipate launching these investments in 2025, to be rolled out over three years. This plan is not just an investment in infrastructure; it's an investment in creating a more secure and more intelligent grid that is better able to withstand and more quickly recover from the wide range of threats impacting our customers.”

System Resiliency Plan (“SRP”) Filed

Yesterday, Oncor filed its first SRP for Public Utility Commission of Texas (“PUCT”) approval. Oncor’s SRP (PUCT Docket No. 56545) requests approval of approximately $2.9 billion in capital investment and $520 million in operation and maintenance (“O&M”) expenses over a three-year period to enhance the resiliency of its transmission and distribution system. The three-year period will commence upon PUCT approval of the plan, but is anticipated to be for the years 2025 through 2027. The proposed SRP requests capital investment and O&M spend for the following key resiliency measures:

Overhead and Underground Resiliency and Modernization – Approximately $1.830 billion in proposed spend to modernize and harden legacy overhead system (poles, crossarms, lightning protection and capacity) and underground system with injection/replacement and switchgear automation;

Continued Optimization of Distribution Automation – Approximately $510 million in proposed spend to enable, expand and optimize distribution automation through new ties, capacity and intelligent switches;

Expanded Vegetation Management (“VM”) – Approximately $285 million in proposed spend to expand VM along laterals and leverage remote-sensing capabilities such as satellite and laser imaging, detection and ranging, commonly known as LiDAR;

Enhanced Cybersecurity Risk Mitigation – Approximately $525 million in proposed spend to enhance cybersecurity risk mitigation, enhance and secure Oncor’s digital backbone infrastructure and other measures;

Improved Physical Security – Approximately $80 million in proposed spend to improve physical security, including video and event correlation systems and asset protection; and

Enhanced Wildfire Mitigation – Oncor estimates that approximately $900 million of the total proposed spend under the SRP will enhance its wildfire mitigation efforts, consisting of $182 million in specific wildfire mitigation measures as well as the implementation of the overhead and underground resiliency and modernization and expanded distribution automation measures described above in areas at the highest risk for wildfires. The SRP offers Oncor an opportunity to advance and accelerate its wildfire mitigation strategies through additional investments in fire safe device deployment, advanced wildfire risk modeling, and strengthening, modernization and protection of assets in wildfire mitigation zones. 

Oncor further believes these measures will provide a substantial reduction in outage minutes for customers, while also expanding and accelerating Oncor’s efforts around wildfire risk mitigation, the security of the grid, vegetation management and the expanded deployment of smart grid technologies. These investments, if approved, are expected to enable Oncor’s transmission and distribution system to better withstand and more quickly recover from the wide range of extreme weather conditions and other risks Oncor experiences across its diverse service area. 

The statute provides that the PUCT will review and approve, modify or deny a filed plan within 180 days. Oncor cannot predict the outcome of the proceeding. To the extent Oncor’s SRP is approved by the PUCT, Oncor intends to recover distribution-related costs through its interim distribution cost recovery factor adjustments, with the unrecovered distribution-related O&M expenses, depreciation expenses and return on the capital to be recognized as a regulatory asset.

The amount of capital expenditures ultimately approved as part of Oncor’s SRP program, would be incremental to Oncor’s $24.2 billion of planned capex for the five-year period 2024-2028 announced earlier this year.

Operational Highlights and Growth

Throughout its operations, reliability and safety remain a primary focus at Oncor. For the industry’s primary benchmark for reliability, System Average Interruption Duration Index (non-storm), Oncor’s customers continued to see a decrease in the average minutes of outage in the twelve months ended March 31, 2024 compared to the twelve months ended March 31, 2023. On the safety front, Oncor’s Days Away, Restricted and Transferred Rate and Preventable Vehicle Accident Rate decreased 26% and 61%, respectively, in the first quarter of 2024 as compared to the first quarter of 2023.

Ongoing growth within Texas as a whole, and within Oncor’s service territory, continues to be a driver of operational activity. Oncor increased its premise count by 18,000 in the first quarter of 2024 as compared to 17,000 in the first quarter of 2023, and at the end of April reached a milestone in exceeding four million premises. Additionally, Oncor placed approximately $161 million of transmission projects into service in the first quarter of 2024 as compared to placing approximately $94 million of transmission projects into service in the first quarter of 2023. The continued growth across Oncor’s service territory resulted in the construction or upgrading of approximately 24 circuit miles of transmission lines and included 9 major substation projects and 3 major switching station projects, all being placed into service in the first quarter of 2024.

At March 31, 2024, Oncor had 781 active generation and large commercial and industrial (“LC&I” and also known as retail) transmission point of interconnection (“POI”) requests in queue, representing a 20% increase as compared to March 31, 2023. Of the 482 active generation POI requests in queue at March 31, 2024, 46% are solar, 42% are storage, 9% are wind and 3% are gas. LC&I requests come from customers across a diverse group of industries, including many with electricity loads that represent the potential for hundreds of megawatts of new electric load, such as data centers. Of the 299 active LC&I transmission POI requests in Oncor’s queue, more than 25% of the projects represent large load customers that in the aggregate represent over 40 gigawatts of potential load.

In order to address the increased growth in Texas, the Electric Reliability Council of Texas, Inc. (“ERCOT”) recently announced new load forecasting and planning processes. Relying on House Bill 5066 passed in the 2023 Texas legislative session, ERCOT now includes prospective load identified by transmission service providers like Oncor. As part of the new planning processes, ERCOT announced last month that it is studying load growth that could result in a peak demand of approximately 152 gigawatts in 2030. Previously, ERCOT had projected a peak demand of approximately 111 gigawatts by 2029. 

Oncor anticipates that approximately 40% of the 2030 load being studied by ERCOT is in Oncor’s service territory. Oncor’s current five-year capital plan of $24.2 billion (not including amounts approved in its SRP filings) was developed with the anticipation of some but not all of the capital investment that would be needed to support this growth. The number of generation and LC&I customers seeking interconnection has grown since the capital plan was developed.

As part of its annual renewal process, Oncor recently secured excess liability policies that maintain $300 million of coverage for wildfire for the period May 1, 2024 through May 1, 2025.

Liquidity

As of May 6, 2024, Oncor’s available liquidity, consisting of cash on hand and available borrowing capacity under its existing credit facilities, commercial paper program and accounts receivable facility (“AR Facility”), totaled $2.1 billion. Oncor expects cash flows from operations combined with long-term debt issuances and borrowings under credit agreements as well as availability under its existing credit facilities, commercial paper program and AR Facility to be sufficient to fund current obligations, projected working capital requirements, maturities of long-term debt and capital expenditures for at least the next twelve months.

Sempra Internet Broadcast Today

Sempra (NYSE: SRE) (BMV: SRE) will broadcast a live discussion of its earnings results over the Internet today at 12 p.m. ET, which will include discussion of first quarter 2024 results and other information relating to Oncor. Oncor Chief Executive Allen Nye will also participate in the broadcast. Access to the broadcast is available by logging onto the Investors section of Sempra’s website, sempra.com/investors. Prior to the conference call, an accompanying slide presentation will be posted on sempra.com/investors. For those unable to participate in the live webcast, it will be available on replay a few hours after its conclusion at sempra.com/investors.

Quarterly Report on Form 10-Q

Oncor’s Quarterly Report on Form 10-Q for the period ended March 31, 2024 will be filed with the U.S. Securities and Exchange Commission after Sempra’s conference call and once filed, will be available on Oncor’s website, oncor.com.