Sempra shifts focus to Texas grid investments
Sempra is preparing to sell its Mexican natural gas assets along with a minority stake in Sempra Infrastructure in an effort to fund a major transmission buildout in Texas. This move is part of the company’s strategy to reduce its reliance on issuing new common stock as it executes a $56 billion capital investment plan.
According to CEO Jeff Martin, divesting these assets will help streamline the company’s focus on regulated utility operations and provide a more efficient source of funding for critical infrastructure projects. The decision comes as demand for electricity connections in Texas continues to surge, particularly from industrial sectors and data centers.
Texas grid demand fuels infrastructure push
Sempra’s subsidiaries in Texas are seeing a substantial increase in requests from potential customers looking to connect to the electric grid. Analysts have described the numbers as “huge,” with Oncor, Sempra’s Texas-based electric distribution utility, at the center of this activity.
The Electric Reliability Council of Texas (ERCOT) estimates that $32 billion to $35 billion in new transmission infrastructure will be needed to support an expected peak load of 150 GW by 2030. Karen Sedgwick, Sempra’s executive vice president and chief financial officer, noted that Oncor is well-positioned to build a significant share of this infrastructure. Sempra currently holds an 80% ownership stake in Oncor and is also expanding its energy portfolio, including its Mexican natural gas assets.
One of the cornerstone initiatives in this buildout is the Permian transmission project, which carries a price tag of $15 billion to $17 billion. Recently approved by the Public Utility Commission of Texas, the project is ERCOT’s first extra-high-voltage transmission development. While it was initially expected to stretch beyond 2030, recent regulatory decisions have accelerated the timeline, creating a more urgent need for capital.
Oncor sees historic load requests
Oncor continues to experience record growth in new connection requests, according to CEO Allen Nye. Since the start of the year, new inquiries have increased by 30%, with the customer queue now totaling 156 GW from data centers and an additional 22 GW from other industrial sectors.
Nye expressed strong confidence that 29.5 GW of this load will come online by 2031. The company has already signed interconnection agreements for another 9 GW of new load. This level of demand represents a backlog five times greater than Oncor’s current peak load, underscoring the urgent need for transmission investment to support ongoing economic growth in Texas.
Martin emphasized that the goal is to ensure the state has the infrastructure necessary to accommodate and sustain this growth—an effort aligned with Sempra’s broader commitment to energy reliability, which includes its expanding Mexican natural gas assets. Martin emphasized that the goal is to ensure the state has the infrastructure required to accommodate and sustain this growth.
Asset sale expected to stabilize earnings and reduce risk
The planned sale of Ecogas—Sempra’s Mexican natural gas assets along with a minority stake in Sempra Infrastructure, is expected to more efficiently fund the company’s capital needs. Sempra Infrastructure owns and operates natural gas and liquefied natural gas facilities, and the sale would also help shift the company’s earnings mix toward regulated utilities.
This transition would reduce portfolio risk and ensure that over 90% of the company’s earnings come from stable, regulated sources, Nye explained. He indicated that more information on the asset sales would be available by the end of the second quarter. Sedgwick added that initial interest from buyers has already been strong.
While industry analysts agree that focusing on regulated earnings is beneficial, they caution that Oncor must recover its rising costs. This will likely require a successful base rate case filing, which company executives confirmed is still planned for the second quarter.
Sempra’s strategic divestments reflect a broader shift toward reinforcing its regulated utility business and aligning with Texas’s rapidly expanding energy needs. The company’s realignment could have far-reaching implications for both its financial stability and the future of the state’s electric grid.
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