Sempra Energy (SRE) Q4 2020 Earnings Call Transcript

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Sempra Energy (SRE 0.14%)
Q4 2020 Earnings Call
Feb 25, 2021, 12:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Sempra Energy Fourth Quarter Earnings Conference Call. [Operator Instructions]

At this time, I'd like to turn the conference over to Nelly Molina, Vice President of Investor Relations.

Nelly Molina -- Vice President of Investor Relations

Good morning, everyone, and welcome to our Fourth Quarter 2020 Earnings Call for Sempra Energy. A live webcast of this teleconference and its live presentation is available on our website under the Investors section. With us today on the line, we have several members of our management team, including: Jeff Martin, Chairman and Chief Executive Officer; Trevor Mihalik, Executive Vice President and Chief Financial Officer; Justin Bird, Chief Executive Officer of Sempra LNG; Kevin Sagara, Group President; Don Clevenger, Chief Financial Officer of Oncor; and Peter Wall, Senior Vice President, Controller and Chief Accounting Officer.

Before starting, I'd like to remind everyone that we'll be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in any forward-looking statements we make today. The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K filed with the SEC. All of the earnings per share amounts in our presentation are shown on a diluted basis and will be discussing certain non-GAAP financial measures. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. I'd also like to mention that the forward-looking statements contained in this presentation speak only as of today, February 25, 2021, and the company does not assume any obligation to update or revise any of these forward-looking statements in the future. Lastly, as you know, due to our filings in the U.S. and Mexico, we're limited in what we can say about the proposed IEnova's exchange over and will be unable to respond to questions about this transaction.

With that, please turn to slide four, and let me hand the call over to Jeff.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks a lot, Nelly, and thank you all for joining us today. To start, I'd like to take a moment to thank all of our employees and partners for their dedication and professionalism throughout 2020 in continuing to serve over 36 million consumers. I'd also like to briefly touch upon the extreme weather events that transpired last week. Our thoughts are with all those who have been impacted and the Oncor employees who are tirelessly working to maintain the integrity of the grid in Texas. We've often discussed our investment strategy and how it's focused on building 21st century energy networks where transmission and distribution investments that are essential to modern life, and the past year really highlights the importance of those essential services and why new investments will be needed to keep the grid growing and improving its resiliency. I'm pleased to report that in 2020, we also delivered strong financial and operating performance, creating positive momentum heading into 2021 as we build on our mission to be North America's premier energy infrastructure company.

Turning to the financial results. Earlier this morning, we reported full year 2020 adjusted earnings of $8.03 per share, the highest in our company's history. We also exceeded our previously increased 2020 adjusted EPS guidance range, which reflects our firm resolve to always try to meet or exceed our commitments. In line with this positive momentum, we're reaffirming our 2021 EPS guidance range. I'd also like to mention that this guidance range excludes impacts of the proposed IEnova exchange offer and the sale of a noncontrolling interest in Sempra Infrastructure Partners. Additionally, for the 11th consecutive year, we're raising our dividend. Our Board of Directors approved an increase to our annualized dividend to $4.40 per share from $4.18 per share. While future dividends are at the discretion of the Board, we plan to target a 50% to 60% dividend payout ratio. This demonstrates our commitment to generating value for our shareholders by continuing to grow the dividend while also reinvesting in the future growth of the business. Now please turn to the next slide, where I'll highlight some of our more notable accomplishments for the year.

Our strong performance is attributable to our strategic focus on value creation, a track record of disciplined execution and operational excellence. We're proud of our many accomplishments in 2020. We continue to advance our capital plan with approximately $7 billion spent in 2020, which continues to be anchored around safety and reliability investments at our U.S. utilities. We also completed the sale of our South American businesses in June amid the backdrop of a global pandemic and international travel restrictions. This was a terrific accomplishment and a credit to our talented team and marks the full completion of our multiyear strategic capital rotation program, which has allowed us to successfully reposition our business in what we believe to be the most attractive markets in North America. In line with our consistent focus on creating value for our shareholders, in December, we announced a series of integrated transactions intended to simplify our energy infrastructure businesses under one growth platform. This platform is also intended to create scale and strategic alignment while unlocking value by selling a noncontrolling interest to a strategic partner.

Trevor will provide an update on the progress later on in the presentation. Financially, we've achieved strong results, raising our 2020 adjusted EPS guidance range last June and today, significantly exceeding that increased range. Additionally, we made great progress on our five-year capital plan while also executing a $500 million share buyback program. Fundamentally, across our U.S. utilities and infrastructure platforms, we remain focused on investing and growing our businesses. And to a point that I've made previously, we're allocating capital into a lower-risk portion of the energy value chain in what we believe are the most attractive markets in North America. That really is the centerpiece of our strategy and is reflected in the strength of today's results. Please turn to the next slide. Our 2020 accomplishments are a testament to the remarkable growth we're continuing to see at our utilities. Our 2020 financial results were underpinned by strong performance grounded in safety and reliability.

We also ended the period with approximately $37 billion of total combined rate base, of which nearly 74% is from electric T&D investments. So the key takeaway here is our two-year capital rotation program was specifically designed to build out this position as a leader in our North American energy networks in order to improve the strength and consistency of our financial results, which has clearly been demonstrated over the last several years. Looking to the future, we believe our utilities platform will benefit from growth opportunities associated with serving the largest consumer base in the United States and operating in markets with the highest concentration of manufacturing and industrial production that, in combination, make up nearly 1/4 of the total GDP of the United States. In addition to growth, I also want to mention several other competitive advantages that allow our utilities to be successful in a variety of market conditions, such as decoupled revenues in California, constructive authorized ROEs averaging just over 10% and constructive regulatory environments that support serving growth and investing to meet bold sustainability goals that further our efforts to decarbonize energy and also improve the safety and reliability of our system. As an example, our California utilities have over 10 hydrogen research and development projects. We expect to showcase as well as other innovations that we have under way at our Investor Day later this spring.

Now please turn to the next slide, where I'll turn the call over to Trevor to provide both business and financial updates.

Trevor I. Mihalik -- Chief Financial Officer and Executive Vice President

Thanks, Jeff. We've made substantial progress on the announced Sempra Infrastructure Partners integrated transactions since our last business update call in December. As these transactions continue to advance, we wanted to reemphasize our key objectives and expectations. By simplifying the ownership structure of Sempra LNG and IEnova under Sempra Infrastructure Partners, we believe this new streamlined platform will offer scale benefits and portfolio synergies as we continue to grow the business by advancing investments in cross-border renewable opportunities, large-scale integrated LNG projects and other investments in energy networks. Overall, it's our expectation that these integrated transactions will simplify our business model, strengthen our balance sheet and highlight significant value in the underlying businesses. Please turn to the next slide, and I'll review the expected timing of this process. We continue to make good progress and I'd like to highlight that we plan to complete the exchange offer and announce the sale of the noncontrolling interest by the end of the second quarter.

While timing is important, getting to the right partner and the right value is what is driving this great initiative. Additionally, I want to emphasize that while these two integrated time lines are part of our overall execution plan, the exchange offer and the sale of the noncontrolling interests are advancing independently and are not contingent upon the other's timing. Please turn to the next slide. We've had several positive developments this past quarter at our U.S. utilities and infrastructure businesses. At our U.S. utilities, we executed record capital investments in 2020 of nearly $6 billion, continuing our focus on grid modernization. At SoCalGas, we're proud that we achieved approximately 20% methane reductions below 2015 levels, which is five years earlier than mandated. Moving to Oncor. We continue to see strong growth throughout the service territory. In the fourth quarter alone, Oncor connected approximately 18,000 new premises, which brought the full year total to approximately 77,000.

This is a 20% increase compared to 2019 connections, which is an amazing figure and reflects the best organic growth rate Oncor has ever experienced. This is particularly noteworthy considering the backdrop of the global pandemic. On the transmission side, Oncor set a record for interconnection requests in 2020, driven by continued strong development activity in utility-scale generation with a focus on the renewable and battery storage markets in their service territory. Also, Oncor completed six major transmission projects in West Texas, totaling approximately 260 circuit miles and approximately $300 million of investment. Shifting to our infrastructure businesses. ECA LNG Phase one reached final investment decision this past November, and we subsequently provided TechnipFMC with full notice to proceed under the EPC contract. The total expected capital investment is approximately $2 billion, which includes an equity contribution of approximately $250 million each from Sempra LNG and IEnova. And in December, an affiliate of Total took a 16.6% equity stake in the project.

Shifting to Mexico. We continue to advance our pipeline of construction projects focused on improving the country's energy security. The Don Diego Solar project reached commercial operations and recently, IEnova announced an agreement to acquire the remaining interest in ESJ. Additionally, last week, IEnova's CEO, Tania Ortiz, and Energy Minister Rocio Nahle, commissioned the Veracruz Refined Product Storage Terminal. As a reminder, the Veracruz Marine Terminal is situated in the largest Mexican port on the Gulf Coast and is expected to be one of the largest fuel terminals in the country, with the capacity to serve 2.1 million barrels of refined product. Please turn to the next slide, where I'll review our financial results. Earlier this morning, we reported fourth quarter 2020 GAAP earnings of $414 million or $1.43 per share. This compares to fourth quarter 2019 GAAP earnings of $447 million or $1.55 per share. On an adjusted basis, fourth quarter 2020 earnings were $553 million or $1.90 per share. This compares to our fourth quarter 2019 earnings of $447 million or $1.55 per share. Full year 2020 GAAP earnings were $3,764,000,000 or $12.88 per share. This compares to 2019 GAAP earnings of $2,055,000,000 or $7.29 per share. On an adjusted basis, full year 2020 earnings were $2,350,000,000 or $8.03 per share.

This compares favorably to our previous full year 2019 adjusted earnings of $1,911,000,000 or $6.78 per share. Please turn to the next slide. The variance in the full year 2020 adjusted earnings compared to last year was affected by the following key items: $146 million of lower earnings due to the sale of our Peruvian and Chilean businesses in April and June of 2020, respectively. This was offset by $284 million of higher equity earnings from Cameron LNG JV, primarily due to phase one commencing full commercial operations; $81 million of higher earnings at the California Utilities from higher FERC and CPUC base operating margins; $63 million of lower losses at parent and other due to lower net interest expense and higher income tax benefits; $57 million of higher earnings at the California utilities from the release of a regulatory liability in 2020 associated with an income tax expense memorandum account that track differences between actual and forecasted estimates from 2016 to 2018, partially offset by income tax benefits in 2019 from the release of a regulatory liability established in connection with 2017 tax reform for the excess deferred income tax balances that the CPUC directed to be allocated to shareholders in a January 2019 decision.

$51 million of higher equity earnings at Sempra Texas Utilities, primarily due to increased revenues from rate updates to reflect invested capital and Oncor's acquisition of InfraREIT in May 2019; and $41 million of higher earnings from Sempra LNG's marketing operations, primarily driven by changes in natural gas prices. Lastly, I'd like to highlight that we're making a few changes regarding our financial guidance going forward in 2021 and beyond. We're continuing to work on ways to provide you a cleaner and clearer view of our operational performance and financial results. And after various discussions with a number of our investors and sell-side analysts, starting in the first quarter of 2021, we will be adjusting out foreign currency and inflation effects as well as unrealized mark-to-market gains and losses. This change is incorporated into our reaffirmed 2021 guidance range. Reporting our earnings with these items adjusted out allows for greater focus on earnings from ongoing business activities, and we appreciate all the input we received on this change of convention.

Please turn to the next slide. Over the last three years, we've successfully narrowed our investment focus to T&D investments in what we believe are the most attractive markets in North America. And those of you who have followed us over the last three years have seen the difference this has made. Since 2017, we've transacted on approximately $27 billion in enterprise value while still growing our adjusted EPS annually by approximately 14%. Not only has our adjusted EPS growth been exceptional but the overall adjusted earnings quality has substantially increased, providing greater visibility into future cash flows. We're proud of where our business stands today and believe we're well positioned to continue providing strong financial results. With that, please turn to the next slide, where I will review our new five-year capital plan. Last year, we laid out our record five-year capital plan of $32 billion. And when rolling our plan forward this year, we continue to see robust opportunities to invest in our U.S. utilities and infrastructure businesses. In 2021 to 2025, the capital plan is anchored by $29 billion of U.S. utility investments, which represents over 90% of our total capital plan and is the largest utility program in the company's history.

For SDG&E and SoCalGas, safety and reliability continue to be at the forefront of our capital plan. We're making investments at both utilities to enhance our pipeline infrastructure through our risk assessment mitigation phase and risk spending accountability reporting. At SDG&E, we continue to advance our industry-leading wildfire mitigation program by investing in innovative and cutting-edge technologies to keep our communities safe. And at SoCalGas, we're making strides toward achieving our greenhouse gas emissions reductions and executing on a strategy to achieve at least 40% reduction in methane emissions by 2030. Additionally, at Oncor, the capital plan is attributable to tremendous organic growth that we're seeing. On the distribution side, Dallas-Fort Worth is the fastest-growing metropolitan area in the fastest-growing state in the country. This is coupled with continued investments on the transmission side, resulting from the increase in wind and solar generation as well as battery storage being interconnected into the ERCOT system.

When compared to Sempra's capital plan we shared with you last spring, we've identified an increase of roughly $1.1 billion of incremental utility capex in 2021 and 2022 combined. Lastly, we plan to fund our robust capital plan with cash flows from operations as well as using some of the cash proceeds received from the proposed sale of a noncontrolling interest in Sempra Infrastructure Partners and other available sources. As we've historically done, we'll continue to be disciplined and evaluate all available financing sources based on the timing of our investments and what we believe is the most efficient for our shareholders. Please turn to the next slide, where I will review rate base projections. Our continued investment in safety and reliability provides strong projected rate base growth of approximately 9% annually from 2020 to 2025. By 2025, our combined total rate base is projected to be approximately $56 billion. Notably, over that period, our rate base mix does not change materially, with approximately 70% of total rate base from electric infrastructure, which reflects how well positioned we are to continue supporting strong trends in electrification.

Please turn to the next slide, where I will hand the call back over to Jeff to review our priorities for 2021.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks a lot, Trevor. As we turn our attention to the rest of 2021, we plan to continue our positive momentum. We've identified several priorities to capitalize on the critical role that energy infrastructure is providing in support of the energy transition. Our priorities include, among others: executing health and safety programs to help mitigate COVID-19 risk for our employees; maintaining a focus on safety and operational excellence across all of our companies; continue to execute on utility-centered capital plan; delivering strong financial results and completing the Sempra Infrastructure Partners' integrated set of transactions. I look forward to sharing more about how we're delivering on a sustainable future for all of our stakeholders at our Investor Day later this year. Please turn to the next slide. And finally, let me summarize for you our investment proposition, which we believe is differential to others in our industry and offers compelling value both in the near and long term. We're building a top-tier T&D infrastructure platform that is well positioned to succeed in attractive markets; continuing to execute a robust capital plan with significant expected growth in rate base; growing our EPS and improving our earnings visibility; maintain an attractive and growing dividend and remaining committed to innovation, sustainability and leadership.

Please turn to the final slide. In summary, 2020 was a record year for our company. Against the challenging economic and operating backdrop, we deployed a record amount of capital and produced the best financial results in our company's history, topping the prior year's record of adjusted earnings results by over $400 million. We look forward to continuing to execute on our value proposition in 2021 and remain committed to creating long-term shareholder value. And with that, this concludes our prepared remarks and we'll stop to take your questions.

Before opening the call to questions, however, I'd like to remind you that we will not be discussing the exchange offer.

Questions and Answers:

Operator

[Operator Instructions] We'll take our first question from Shar Pourreza with Guggenheim Partners.

Shar Pourreza -- Guggenheim Partners -- Analyst

Hey. Good morning, guys.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Good morning, Shar.

Shar Pourreza -- Guggenheim Partners -- Analyst

So as we're sort of thinking about the pending SIP sale, Jeff, I know proceeds could be somewhat substantial, just given sort of the prior comments around the potential transaction multiple. In terms of use of proceeds, you obviously have an opportunity to reinvest for the buyback and delever.

Any sort of priorities here? And how much do you sort of envision could be recycled at the utilities just from an equity standpoint? And how should we sort of be thinking about potential limits with efficient redeployment of the proceeds in the near term?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Appreciate the question, Shar. And I think the way we think about it is, we've gone through, in our prepared remarks, kind of what we think the critical success factors are for the transaction. And obviously, one of the things we've identified in that order of criteria is to create an accretive transaction.

So when you think about the use of proceeds, what I try to describe -- it's essentially dependent upon three factors: number one, how well you successfully execute the tender offer; number two, how well you execute the sell-down process, and that includes both the overall quantity of equity sold and the implied valuation; and to the point that you're getting to, the third part of that is a transaction, so to speak, is the use of proceeds. And one of the things we noted on the call is that you've seen not only the same $32 billion capital program roll forward, but you're also seeing a higher portion of capital in the five-year plan allocated toward the utility.

So last year's plan was roughly 85% to 86% utility spending over the five years. This year's plan's closer to 90%. And we did highlight for you that we think there's at least $1.1 billion of incremental capex just in our California Utilities in the next two years. And you've seen us raise the capex for Oncor by another $300 million over the five-year time frame. So we're going to look at both debt reduction. We're going to look at opportunities to fund additional utility capex. We will always test that against share repurchases. And there are scenarios where you could see us take in in-kind investments from investors, although it's probably a lower likelihood. So what we're going to try to do is manage all three of those things, the tender process, the equity sell-down and then efficient use of proceeds in a way that delivers all the critical success factors that we identified in our prepared remarks.

Shar Pourreza -- Guggenheim Partners -- Analyst

Got it. And I know just the amount of the sale kind of obviously remains unknown and we'll find out pretty soon where that stands. But should we be assuming sort of cash or a combo of cash and maybe an asset swap that could be like EBITDA-neutral or accretive to swapping EBITDA for EBITDA? So how do we sort of just think about that?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

So I wouldn't -- I mean, what we've said publicly is that we're going to sell a noncontrolling interest, and so we'll always have control of the entity going forward. We have a very robust view of this platform and what the value it can create over time.

But the most important thing is we're going to focus on doing those transactions, as I described to you, as efficiently as possible. And I would focus probably most likely on cash transactions, but we're not ruling out the idea that we could do an asset swap or allows them to contribute -- someone to contribute an asset is part of the overall value.

Shar Pourreza -- Guggenheim Partners -- Analyst

Got it. And then just one last housekeeping and I'll pass it off to someone else's. Obviously, you've kind of reiterated the '21 guidance, which I think from prior comments may have had some upside. Is that simply just, Jeff, a function of not jumping ahead of the pending SIP deal and the Analyst Day? So how do we sort of think about it?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

I think you probably summarized it better than I could. I think both of those points are accurate. And I think, Shar, you have followed our company for quite a while, and I would tell you that we went through a relatively thoughtful process with our Board in 2018 to make sure we have the right strategy.

And we really wanted to focus on North America and sell noncore assets, make sure we're in the right markets. And I will tell you, if anything, about last week in Texas and some of the challenges you're seeing in your industry, if it points to anything, it's really the value of investing in the grid. And as you recall from some of our prior conversations, we have specifically avoided the generation marketplace. We've avoided being exposed to commodities, and that's why being in a decoupled marketplace like California is so important. So you've seen, over the last three years, us be able to grow our EPS at about a 14% CAGR.

And as we think about 2021, I would probably go back and just mention to you that, think about how we did our guidance last year. I think it was on this call that we talked about our guidance last year, and some people were a little bit disappointed in the Q4 call of the 2020 guidance. And you'll recall, Shar, it was on the Q1 call that we guided to the high end of the range. And later in Q2, we went ahead and revised our guidance upward to $7.20 to $7.80. In the Q3 call last year in November, we guided to the high end of the range. And think about what we've done, right?

During a pandemic, probably the worst economic downturn in the history of our country Sempra Energy has produced record EPS. We've produced record earnings and all five business units, for the first time in the history of this company, each one of them produced record earnings results. So as we go into 2021, you should expect us to basically continue to look at getting the SIP transaction done, get further along in execution of our capital programs, specifically in our utilities and come back to you with a view toward trying to always under-promise and over-deliver.

Shar Pourreza -- Guggenheim Partners -- Analyst

Terrific. Thank you, Jeff. Thank you, Trevor. I'll jump back in the queue.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks a lot, Shar.

Trevor I. Mihalik -- Chief Financial Officer and Executive Vice President

Thanks, Shar.

Operator

Thank you. We'll take our next question from Steve Fleishman with Wolfe Research.

Steve Fleishman -- Wolfe Research -- Analyst

Hi, Steve. Hey, Trevor. Thank you. I've got a couple of questions. So first, just a clarification because I think on the comments, Trevor, you said, announced the SIP sell-down by Q2. But if you look at the slide on the time line, it has the announcement by the -- still by the end of Q1. So is it announced by the end of Q1 and closed Q2 or is it announced?

Trevor I. Mihalik -- Chief Financial Officer and Executive Vice President

I think the game plan is the slide is correct. We're going to look to announce the transaction and the sell-down next month. We hope to also launch our tender process next month, but both transactions, Steve, are geared to close in Q2.

Steve Fleishman -- Wolfe Research -- Analyst

Okay, great. And then just one other clarification in terms of the transaction being accretive. Would that also be ultimately to earnings per share accretive, not necessarily during '21 but just beyond, most likely?

Trevor I. Mihalik -- Chief Financial Officer and Executive Vice President

I'm sorry, Steve. I'm not sure I understood the question. We definitely believe that the transaction will be EPS accretive, if that's the nature of your question.

Steve Fleishman -- Wolfe Research -- Analyst

Great. That's all I -- yes, just want to clarify that. And then maybe, Jeff, you brought up a little bit on Texas. Could you talk a little to how you're thinking about what that event, if anything, means for Oncor and any investment needs? I know at times, there's been talk of the utilities maybe doing battery investments or other things that could help out. Do you see any political risk also to Oncor in this process, even though it was clearly not a distribution event? Thank you.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. Well, look, I would start to see by saying I think the events of last week, which were in the Midwest obviously, in Texas and obviously Northern Mexico as well, they also impacted California which we're also comfortable talking about, if you like to go into that. But it was the most important event in the energy markets globally last week. And we've always started by thanking our employees for their hard work in the Dallas community and across North Texas. And certainly, there's been a lot of people have been hurt by this and our hearts go out to all those folks.

But as for Oncor, you'll recall that their job is really as the grid operator is to execute the commands of ERCOT in terms of load shedding just to make sure there wasn't a complete failure of the grid. And I think one of the things that's taking place in Austin today is we're going through legislative hearings. Our CEO, Allen Nye, is going to also testify at those hearings. But I think the most important thing is Oncor stood tall during last week's event. I think they were one of the more positive participants in the overall marketplace. That's also a view shared by the governor, by the way.

I think what's important as we think about future reforms is I just want to be a little bit cautious, Steve, that we don't front-run the activities that are under way today at the state. There's going to be a full-scale investigation. The Railroad Commission will be involved, the PUCT, the governor's office and the PUCT, obviously, but -- and all the interveners in the marketplace. So I think what will happen from this is, you'll probably find opportunities for the state to improve its resiliency. There's also a lot of generation, as we've talked about on prior calls. It's in the interconnection queue. And we certainly expect that, that will lead to additional investments in the T&D space.

Look, I don't want to start talking about capital at this point. I just think that as you think about building that marketplace, which has the strongest economy, at least the growth economy in the country, we don't think they're going to be spending less capital. We think that spending more capital will certainly be part of the solution.

Steve Fleishman -- Wolfe Research -- Analyst

That's great. And just since you mentioned before, just -- I am curious kind of because I think gas got very expensive in Southern California, too, and I don't know if there's any issue in Mexico. But just could you talk about the impacts of that from last week?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. You'll recall that Texas took up most of the new cycle but they had a DC time, the Midwest that went down. Obviously, there were impacts all the way across into Louisiana, which had some temporary disruptions to our Cameron facility. Cameron's online and operating well. You'll also recall, at one point in time, the governor issued an order that natural gas in Texas had to stay in Texas to meet electric generation needs first before being exported. That obviously has impacts to Mexico. Mexico had rolling blackouts in four or five of its northern states.

So we were working very closely with Tania, and you'll recall that we've got seven pipelines where we've moved gas across the U.S.-Mexico exchange. And she was being quite helpful to Texas to make sure that people were not unnecessarily scheduling gas across that interchange, but she was also working very closely with CFE. So you think about our LNG facility in Baja, which is a giant storage facility, it was critical in that process of serving the needs of Northern Mexico and Southern California.

And again, the state of California called on our storage network at SoCalGas, which is a very critical piece of infrastructure here in the state. And what people sometimes forget, Steve, is that California sits at the western end of the pipeline system. We don't have much, if any, indigenous production of natural gas in the state, so we're very reliant on events outside the state, like you saw last summer, for us to import power from neighboring states, but also to import gas, particularly here in the wintertime. So it was a systemwide event in the Western United States.

And I think what we feel great about is, and we've really been hitting this pretty hard with our investment community, Steve, is we are the picks and shovels to the gold rush, right? We're the company that's investing in grids, we're investing in storage and we're a big part of the solution today. I think if you look at where the market is going, I think we've got the wind behind ourselves in terms of our investment thesis. And we should expect to see continued strong capital spending across our enterprise.

Steve Fleishman -- Wolfe Research -- Analyst

Okay. Thank you.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks, Steve.

Operator

We'll take our next question from Michael Lapides with Goldman Sachs.

Michael Lapides -- Goldman Sachs -- Analyst

Hi, guys. Thanks for taking my questions. Good morning. Two questions on regulatory or policy driven. First of all, can you talk about -- when you look at the rate base growth changes, meaning the old forecast and the new forecast, one of the things that stands out is the Oncor and the SDG&E kind of capital spend trajectory have pretty big step-ups relative to the one you gave last spring, the SoCalGas one much smaller, percentage-wise.

Can you talk about the opportunity set at SoCalGas, and especially given some of the legislative and policy pushes to limit the growth of the natural gas usage in the state of California?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. Thanks, Michael, for the question. I would tell you that we certainly think that the theme of electrification is a hard secular trend. And I think if you think back to the Oncor acquisition in March of 2018, it was really premised on that expectation that, that trend would continue. So as you see us lay out today, we've currently got 74% of our U.S. utility rate base is exposed to that dominant trend. But I would go back to a point I was making with Steve Fleishman, too, which is there is really an untold story of the criticality of natural gas to support the energy transition.

So Michael, 80% of the world's energy emissions today related to carbon come from oil and coal. And by the middle of next decade, the most dominant fuel in the world will be natural gas. In fact, Royal Dutch Shell came out just yesterday and forecasted that the LNG trade would double by 2040. So there is a strong recognition that the one country in the world that's got it right and has reduced emissions the most has been the United States.

So for the last two decades, we've led the world in emissions reductions: number one, by committing to renewable capacity; and number two, making sure that we fuel switch from coal to natural gas. So when you come back to California, clearly, Michael, we had blackouts last summer, and that was because we were over-reliant on imports. I think there's a recognition that natural gas is the natural partner to renewables. So I think we're going to have headwinds. We've got to tell a better story.

The most important thing we can do, and Trevor talked about this is, we have to make sure that natural gas plays the appropriate role. But it's incumbent upon us as a company to limit future emissions around methane. And that is very critical all across this country that we're on top of that. I expect to see the Biden administration likewise continue to regulate that area. But longer term, natural gas, which we think over time will be replaced by hydrogen and green molecules, that will be the best way to get after heavy-duty transportation and the industrial side of the equation. So electrification can take you so far but it will be moving from natural gas to hydrogen, we believe, and the green molecules that will support what we need to do to reduce emissions, both in industry and transportation.

So I think you're going to continue to see the type of rate base growth that you see in front of our utilities. And I will remind you and when we got our rate case at SoCalGas, it basically approved a record capital expenditures. Because as you go forward in time, Michael, you've got to make sure that you maintain the reliability of that system but also that it maintains it in a safe way. So we're going to definitely grow our electric side of our portfolio. And as you can see by the middle of this decade, we expect to have $55 billion in rate base across those three utilities. We're very excited about it.

Michael Lapides -- Goldman Sachs -- Analyst

Got it. Thank you, Jeff. One other question, Mexico. There's some interesting legislation that's been batted around there regarding reforms to the power sector. Seems like that would present some challenges to all privately held or nongovernment-owned power generation, renewable, conventional, etc. Can you just talk about that? Or can your team talk about that, whether they think that legislation actually happens and gets done and what the ramification would be for IEnova?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Sure, no problem. I think what the administration is looking to do is they proposed a set of reforms for the power industry. And there's a complex set of things that are embedded in the proposed law, but the one that's probably received the most press coverage is the attempt to really reorder the dispatch curve. So as you know, typically, market by market in the United States, lowest-cost generation dispatches first and particularly plants that have no or 0 fuel costs like nuclear or renewables. I think with the downturn in the global economy, you got to remember that Mexico is a member of OPEC+ so they're a participant in the oil marketplace.

And they have a little bit higher sulfur content in their fuel oil. So this is an opportunity for them to use more of their natural resources in power production. And what they're really trying to do is privilege in that dispatch curve that CFE's oil fire plants with dispatch first. And the one that impacts the most are the IPP market participants that are actually using oil or natural gas in a competitive format. We're not in that business line.

The only electric generation plant we have is connected to California. In fact, it's not even connected to the CFE grid and that provides support here in Southern California. It does impact our renewable portfolio. But keep in mind, they're net short in electricity so renewables will always dispatch. And this, I think our renewable business represents about 10% to 15% of the EBITDA in IEnova, and IEnova represents roughly 10% of the overall earnings of Sempra. But we think it's a manageable situation.

And I would also conclude on one thing, which is if the law is passed, and it clears the Senate chambers in the next two or three weeks, it's got three fatal flaws: number one, under the Mexican constitution, there's an implied covenant of fair dealings and open competition. So there will be constitutional challenges to the law; number two, under the USMCA agreement, there's also a requirement that governmental entities will not be privileged over state-owned entities; and then secondly -- I mean, thirdly, we also have arguments that you can't pass a law like that and then retroactively apply it to marketplace where you've got agreement. So we have tried not to be in the middle of that fight, Mike.

I think we've really set a course in Mexico to be an active participant in helping Lopez Obrador and his administration be successful. That's one of the reasons I think it was important that Trevor said in his prepared remarks that the Minister of -- Rocio Nahle joined us last week at the Veracruz Terminal. We also have senior officials joining us at other development projects. So our goal is to help Mexico be successful. They need more foreign direct investment. They have a deficit in their infrastructure. And this administration, fortunately, has been very committed to fiscal discipline. So I think our job is to make sure that we're working in partnership with the government to advance the government's goals. And it will be interesting to see how the legislation you referred to plays out.

Michael Lapides -- Goldman Sachs -- Analyst

Got it. Thank you, Jeff. Much appreciated.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you, Michael for joining us.

Operator

Thank you. We'll take our next question from Julien Dumoulin-Smith with Bank of America.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Hey. Good morning to you. Thanks for the time. So a couple of clarifications, if I can go back from the call here. So first off, with respect to your desires to this transaction and timing, when you say the timing is separate and parallel, you're not saying that you would close one and say, we're going to separate this out. You're just saying that, frankly, you can close on them in parallel but not -- or at least announce them separately but not necessarily close. SIP still encompasses this Mexican tender presumably, right? I just want to clarify that. And then separately, did I hear right that you sort of deemphasized taking assets in kind or some other kind of asset swap earlier?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Sure. I'll take both questions. The first is what we're trying to convey is that one transaction does not have to happen sequentially before the other one, right?

So these can be pursued in tandem but not quite logically committed to one methodology. We certainly are intent on closing both of them expeditiously. And I would also convey that they're going forward in the ordinary course. We've had no disruption to our expectation. It's probably taken a little bit longer than we might have forecasted before. And I was joking with some people on the team.

Rarely are we criticized for being overly optimistic when you think about our guidance. But in this case, I personally take responsibility for it. We thought we could get it done in Q1. But I think we have a high confidence level that will happen in Q2. And then the second part of your question, if you don't mind reminding me, Julien?

Julien Dumoulin-Smith -- Bank of America -- Analyst

Yes. Just -- will you try to deemphasize the asset swap side of this? Or do you think it's a cash proceed sale or otherwise?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

No. I think what I'm conveying to you is that we have talked to a broad list of investors. So you think about -- I think we've had this conversation before publicly. You think about focusing on people who are traditional infrastructure investors and you talk about focus on people who might characterize as strategics or strategic infrastructure investors. We're looking for people that can come forward and have an identity of interest with Sempra to build a very successful business.

We think this platform can grow and we think it can grow aggressively. And what we're really focused on is what investor out there has a shared view of the franchise value of Mexico and a shared view of the franchise value of LNG, and whatever consideration they bring forward, we're certainly open-minded. I would tell you that it's most likely a cash transaction. I've never signaled that a potential in-kind transaction was the most likely. Although there are opportunities for investors to contribute cash and in-kind investments, I don't see that as a high probability, but we're open-minded about it.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Got it, excellent. And lastly, sorry, if I clarify this as well. On the use of proceeds question again. You've raised your capex, nicely done with this announcement here. When you think about other uses, is there another uptick here in capex that we could see, I mean, potentially tied to the Texas annual rehash in the fall here? Or should we really think about whatever cash proceeds minus this $1 billion, that's principally going to be allocated toward, shall we say, debt buyback, dividend, etc?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Right. And I think the nature of your question goes to this issue of why we've raised in-kind assets before because as you think about use of proceeds, this entire discussion very much is geared to how much equity do you sell? What's the implied valuation? Because that creates a pool of capital. And is that all cash or is that cash and partly in kind? And I would tell you, when you think about using that capital, we've tried to think about all the different permutations of whether it's 50-50 incremental capex and debt reductions or some other ratio.

And we're pleased to be able to come forward today and mentioned the fact that even on our slides, just in two businesses, we've identified incremental capex of $1.1 billion at SDG&E and SoCalGas over the balance of this year and next year. We've talked about in the past, Julien, I think on the Q4 -- on the Q3 call, that Oncor raised its overall capital program from $11.9 billion to $12.2 billion. And this is something we're constantly assessing all the time. So I would not rule out the opportunity for us to source or identify additional capex as we go through the year.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Great. Excellent. Thanks so much. Best of luck.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you for joining us, Julien.

Operator

We'll take our next question from Jeremy Tonet with JPMorgan.

Jeremy Tonet -- JPMorgan -- Analyst

Hi. Good morning.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Hey, Jeremy.

Jeremy Tonet -- JPMorgan -- Analyst

With regards to SIP, is your goal to self-fund capex through SIP contemplate kind of like the full scope of potential LNG development opportunities there? Are there any other considerations here? And just lastly, just want to clarify, when you talked about the sell-down being accretive, if that was specific to 2021? Just wanted to clarify if that was your thought there.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

So what I would say is in terms of accretion, we've always said that the transaction is accretive. We haven't talked about years but I would just say, generally speaking, the transaction is accretive out of the box. Again, this turns on use of proceeds and the things I've outlined previously. And I'm sorry, the first part of your question was?

Jeremy Tonet -- JPMorgan -- Analyst

Just as far as -- if this JV could self-fund all the

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. Thank you for saying that. That is definitely one of our goals. They've got about over $1 billion of annual cash flow. So the whole goal of this transaction is to make sure that we continue to unburden Sempra's balance sheet to really grow aggressively our regulated utility platform, at the same time that we're freeing up the balance sheet of Sempra Infrastructure Partners to self-fund its growth.

So one of the things we've talked about, Jeremy, is making sure that we're working with the credit rating agencies, and we've been doing this since last summer, to -- when we complete this transaction that Sempra Infrastructure Partners will have an investment-grade balance sheet, and it will be able to self-fund all of these expected capital needs.

The one exception may be Port Arthur but it depends on how we approach funding out our obligations there, and we would even consider bringing in equity partners at the project level if needed.

Jeremy Tonet -- JPMorgan -- Analyst

Got it. That's very helpful. Thanks. And just the last 1, if I could. When you reaffirmed the 2021 guide there and you talked about switching out the FX and commodity mark-to-markets there, did that have any impact on 2021 at all? Just wanted to be clear on that.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Well, I would say, when you think about year-over-year, obviously in 2020, there were some earnings such as our discontinued operations, I think it was close to $93 million of contributions from our South American businesses before we sold those.

Generally, there are positive contributions from the items you just mentioned. But because they're onetime and they tend to inject a small amount of entropy into our earnings, I think in the conversations we've had with various owners, we think that it's not material. And I think anything we can do to keep doing what we've done over the last three years to improve our earnings quality is really important to our owners, and that's why we took that slight change.

Jeremy Tonet -- JPMorgan -- Analyst

Appreciate that and welcome the change as well. I was just curious, when you reaffirmed 2021, did that change impact your view on 2021 at all?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

No, it did not impact it.

Jeremy Tonet -- JPMorgan -- Analyst

Great. Thanks so much.

Operator

Thank you. We'll take our next question from Stephen Byrd with Morgan Stanley.

Stephen Byrd -- Morgan Stanley -- Analyst

Hey, thanks so much for taking my questions.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Good morning.

Stephen Byrd -- Morgan Stanley -- Analyst

Good morning. So yes, there's -- as you mentioned, there's a pretty compelling hearing going on in Texas as we speak. And I guess I wanted to revisit an area that you all focused on in the past, which was energy storage, and just get your latest thoughts, and we can certainly extend it beyond Texas, but just lessons learned in Texas as well as in California. Just wanted to make sure I had your latest thoughts on the potential role of storage. And then in Texas, specifically, how you're thinking about that.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. Look, there's no question that resiliency is becoming a more important theme all across the U.S. energy space, right? So you saw some of the challenges we had in California last summer. Obviously, the challenges that people met in Texas surprised a lot of people last week. I think what we really want to do is make sure that people understand the importance of gas storage. So Texas has a lot of geology that supports natural gas storage.

One of the things, Stephen that you've seen, particularly on the East Coast and the Northeast, as you've covered utilities, is the important sometimes of having liquid fuel on site. So peak shaving LNG is quite common on the East Coast. I think there's over 50 facilities. So as you think about future solutions for the state of Texas, I think part of it is to make sure that they've got a balanced energy strategy to continue to make investments in green energy, that will require future investments in transmission, but also making sure that not only are there existing natural gas and coal plants properly weatherized, and that includes a nuclear plant that went down last week, too, South Texas Power.

It also means making sure that you have reliability. And there's this old saying from someone who is an old-timer, who one time pointed to a cold stack outside a power plant and said, "That's what reliability looks like." I'm certainly not an advocate for coal. But I do think that by privileging natural gas storage and the geology that Texas has and looking at ideas either around electric storage or particularly LNG peak shading, one of the things you should expect to do is make sure that they've got the appropriate reserve margin and they've got fuel that is available and callable to meet the needs of the state during events like they had last week.

Stephen Byrd -- Morgan Stanley -- Analyst

That's helpful. And maybe just related on transmission. Obviously, your growth in Texas has been fantastic. It does look like the state could certainly use more transmission. I know in general, you're supportive of that. From a process point of view and just sort of next steps as we think about Texas and what could come out of all the lessons learned here from what happened last week, how can we sort of think about the potential for further enhancements of transmission, grid reliability upgrades?

I think we all appreciate that it's a general opportunity, but just sort of trying to connect the dots to figure out kind of where we go from here and what the process might look like.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. I said this in an earlier comment. I want to make sure that I don't front-run all the good folks in Texas are going to look at this thing fresh. We've got Don Clevenger, the CFO of Oncor on the line, and I'll pass it to him in a minute. But we've recently gone through a strategy session with our Board where we look at what it takes for the United States to get to net 0 by 2050. And one of the key issues is the most important thing is we march toward more renewables, green molecules like we talked about before and hydrogen is a significant expansion of our energy network.

So the biggest issue, and there's different studies out there, there's a principal study and other studies. Some of them even have the electric grid increasing by five times by 2050. So it doesn't matter what market you're in. This idea of electrification being a hard trend and the idea that distribution and transmission networks need to be expanded is really, really important. And I think we're as well positioned as anyone, given our footprint in Texas and California. But maybe, Don, if you won't mind talking about your thoughts on Texas. And I know you don't want to get in front of the regulators in terms of what you think might happen. But you may just talk about, Don, how well positioned you are with 1,100 different points on your system where generators will be connecting.

Don Clevenger -- Chief Financial Officer

Yes. Sure, Jeff. Thanks. And that's exactly right. And if you just look at the ERCOT queue, putting aside the events of last week, there's 7,200 megawatts of gas under review. There's 26,000 megawatts of storage under review and that's ERCOTwide. In our system alone, there's 5,000 megawatts of storage along with 9,000 megawatts of wind and 25,000 megawatts of solar. So there's certainly a lot of opportunity for additional transmission and generation interconnection that's going to come out of that as that continues to develop.

And then when you look at just West Texas alone, 40% of the Delaware Basin, the oil and gas facilities -- 40% of the oil and gas facilities out there are on self-generation, waiting to be hooked up to the grid. So we're still catching up out there. And the big loops like the Culberson Loop out there continues to set peaks every year. So there's still a lot of demand out in that area, and we'll continue to build generation out there for the oil and gas as well as the renewables and the storage.

Stephen Byrd -- Morgan Stanley -- Analyst

Really helpful commentary. Thank you.

Operator

Thank you. We'll take our next question from Ryan Levine with Citi.

Ryan Levine -- Citi -- Analyst

Hi, everybody. Is there a way to quantify or frame the cash flow implications of the Texas freeze events on Oncor to the extent that there is any at Cameron?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

I'm sorry, would you mind saying that one more time, please?

Ryan Levine -- Citi -- Analyst

Is there a way to quantify or frame any of the working capital fluctuations or cash flow implications at Oncor from the events of the last two weeks?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. I would just go back and say one of the interesting things about Oncor, just to remind you, Ryan, is we're not involved in the commodity marketplace. As you see other participants that have an obligation to go procure gas or generate electricity or produce electricity, we're not involved in that business. So we don't have any direct bills that go to customers. We typically bill the retail energy providers.

Oncor finished the year, I think, their December 31 balance sheet had about $2 billion of liquidity. So we don't see any material issues of liquidity anywhere within the Sempra family of companies. I think, Ryan, this goes back to the point I've made a couple of times.

We're an infrastructure provider, right? We do not want to own generation. We do not want to be exposed to commodity, and we only participate in markets where we're decoupled from the volumetric exposure of a customer's consumption.

Ryan Levine -- Citi -- Analyst

Okay. So you're not seeing any change in your receivables related to the retail providers or any potential regulatory assets that may accrue related to that?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

So in Texas and in California, there's a moratorium on shutoff, right? And there's a regulatory process that allows you to record a regulatory assets. But in terms of liquidity, we don't see anything of significance. And if there is any issues with retailers, one of the things you're seeing in Texas is some of the retailers have raised their hand to be providers of last resort. And they tend to be the retailers, Ryan, that have a stronger balance sheet and also own generation.

We're not seeing anything of material concern. And if we do have any bad debt risk in the future, we certainly have a regulatory model in Texas and California where we can file for a regulatory asset.

Ryan Levine -- Citi -- Analyst

Okay. And then within Texas, it looks like you increased your capex guidance for 2022. What was the driver of that, it's like $100 million, $150 million worth of increase?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. So one of the things we talked about in our prepared remarks was that we see incremental capex in California of $1.1 billion. We've also seen, and you may recall this from our Q3 call, we raised our overall capex plan in Don's organization over five years by about $300 million. They went, Ryan, from $11.9 billion to $12.2 billion. But in terms of maybe providing a little bit more color, Don, about where you're seeing some of those increases in Texas, could you please supplement the response here, please?

Don Clevenger -- Chief Financial Officer

Yes, sure. Thanks, Jeff. Yes, when we raised that by $300 million, the main things we were looking at is continued growth in Texas that just continues to exceed what we project out in each five-year plan, and then an increased emphasis on maintenance as well, not only traditional maintenance but system hardening and resilience. We're always looking at what we need to do in that regard and cyber. Cyber is when we also continue to make a very hard look at.

Ryan Levine -- Citi -- Analyst

Okay. And then last question for me. Did the events of the last couple of weeks change the conversation around ECA in terms of its use as an import facility or any of the contracts there?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

No, it's interesting. You recall that we built that facility last decade as a regas facility, and it's fully contracted for 20 years. And those contracts are in place and will continue to serve its current role through 2028. And so I think this was just making sure that, that facility was available to support both markets in Mexico and the United States. And they have ongoing obligations and contracts with CFE down there.

But it does highlight something that's important, Ryan, which is the value of storage. So there's been a lot of, obviously, discussions around the value of electric storage, which I think has a great future. But the value of storage in California, I think the increasing importance of storage in Texas has really been highlighted in the last couple of weeks.

Ryan Levine -- Citi -- Analyst

Okay. Great. Thank you.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you, Ryan.

Operator

We'll take our next question from Anthony Crowdell with Mizuho.

Anthony Crowdell -- Mizuho -- Analyst

Hey. Good morning, Jeff. Good morning, Trevor. Hopefully, just two quick questions. If I could focus on California first, I guess, strong capex growth. You got, I guess, gas rate plan, I guess, in the decision in 2019 and 2020, I forgot, really supported the gas infrastructure and everything. But has there been any pushback on bills in California, given the wildfire spend and you guys are really helping with policy initiatives. Have there been any policymakers or parties involved that have pushed back on customer bills?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. It's interesting. Kevin Sagara is with us on the call as well. But when I was at SDG&E, I remember looking at some of the old strategy books from 1987 and 1990, and there was an embodying focus on making sure that bills did not get too high. This is something that we've been very focused on over multiple decades to make sure that the value of what we're providing is consistent with the value of what they're receiving. And I will tell you we have relatively high rates in California.

We expect those rates to go higher because of the need of capital spending. But what's most important, and people miss this sometimes, is our bills are well below the national average. That's largely because you have very moderate weather here. So many parts of the year, many parts of San Diego don't even have air conditioning. So because of the moderate weather, because of the commitment to energy efficiency across the state, you're incentivizing customers to use less. And as you do that, the per-unit cost of electricity goes up, right? So rates probably continue to go up. We try to do everything possible to make sure that we meet those needs with energy efficiency and come up with programs to help people save on their bills. But right now, the annual bill is below average for the United States.

Anthony Crowdell -- Mizuho -- Analyst

Great. And I guess, more of a high level. Just it seems like the Sempra model capital recycling may be selling noncontrolling interest is maybe getting replicated in the utility space. But I guess if I think of the utility space, Sempra may be one of the last -- or one of the last -- one of the few non pure-play utilities left. If I could just get your thoughts on being one of the last ones of not being a pure play? Just thoughts on that business mix.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Look, I think for a long period of time, we've tried to say that we want to have the right strategy, and we want to make investments that are consistent with areas where we can produce the best financial returns at the lowest risk for our utility investors. And we tend to focus on businesses that have substantially similar cost of capital and a model that provides substantially similar risk-adjusted cash flows.

I think we've been successful in doing that. And if you've covered the industry for the last couple of decades, you've seen people move into unregulated businesses and out of it. But the common denominator for people who have moved out of unregulated businesses, they've either had challenges growing those businesses in a way or they've got a stride or a stray on the issue of having a substantially similar cost of capital. And I think what you're seeing us do is, we've made a very clear statement.

We're going to be what we think is one of the most important owners of energy networks, specifically utility networks in the country. And we're going to be as well positioned as any other provider to take advantage of what we think is important trends around electrification. And what you're seeing us do with Sempra Infrastructure Partners is make sure that we source the lowest cost of capital to ensure that, that business can self-fund. And with self-fund, it really unlocks Sempra's balance sheet to continue to fund our priority, which is building out this network platform that we have in California and Texas. So as you see people who cannot grow outside the utility, they may hang a label of simplification on top of it. But you have to look back at how those changes in strategy has been helpful and not helpful to investors.

I'm very deferential to how other companies run it, but at our company, as long as we have an opportunity to add more value for our investors, I think it's something we want to continue to do. And I'll actually add something which I've been really intrigued by. When you look back over the last 12 months, you think about the fact that our stock is trading at about $160 on February 19 of last year and ask ourselves, have we added value to overall franchise, specifically including some of the diversified investments that you're referring to, we've been able to bring two trains at Cameron online. It's transformed our LNG business and led to record earnings last year.

We were able to sell both of our utilities in South America and derisked our business model and brined back $5.8 billion of pre-tax proceeds. We've been able to improve our credit metrics. Trevor talked about this and strengthened our balance sheet. We finished the year, we had a target of 16% FFO to debt and we finished with 17% and we're below a 50% threshold in debt to cap. We had record capital investments last year across both business lines, utilities and non-utilities of $7 billion. We raised guidance and exceeded guidance. We secured a 10.6% ROE at FERC on SDG&E's transmission assets. We bought back $500 million of stock. We took FID, the only FID in the world around LNG last year and we announced this 2-part SIP transaction.

So what you should expect us to do is be very active about derisking the model, always challenging ourselves about whether our unregulated businesses fit in our portfolio. And actually, this underpins our transaction of finding a co-investor that has a shared vision for that business, at the same time that we unlock Sempra's balance sheet and support our credit initiatives by ensuring that on a going-forward basis, Sempra Infrastructure Partner both has an investment-grade balance sheet and the capability to fund all of its development initiatives.

Anthony Crowdell -- Mizuho -- Analyst

Great. That was very helpful, Jeff. Thanks so much and hope everyone stays healthy.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks a lot. I appreciate you joined us.

Operator

We'll take our next question from Sophie Karp with KeyBanc.

Sophie Karp -- KeyBanc -- Analyst

Hi. Good afternoon. Thank you for taking my questions. Most of the topics have been discussed. I just had maybe a housekeeping question here. Could you give us some -- remind us on the status of the San Diego franchise negotiations, please?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yes. I've got our Group President of California with us, Kevin Sagara. And Kevin, perhaps you could update our audience on where we're at with the franchise.

Kevin C. Sagara -- Group President

Thanks, Jeff, and thanks for the question, Sophie. So as you will recall, last year, the city ran a process that culminated a bid from SDG&E. And in that process, there were no other bidders. Since then, we've got a new mayor, we got a new city council. And in the spirit of cooperation with that new government, we agreed to extend our franchise out to June one this year.

We believe the city's getting ready to issue a new ITV. We expect that to come out in the next month, hopefully. And they're tracking currently to the schedule that the mayor put out when he took office in January. So we feel constructive about the process. As Jeff has said many times before, we're going to put our best foot forward. We lead in all the areas the city wants us to be good in, which is safety, reliability, clean energy. And we firmly believe we're the right partner for the city. So we're just looking forward to the issuance of this next ITV and putting our best foot forward.

Sophie Karp -- KeyBanc -- Analyst

Thank you so much. That's all for me for today.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you, Sophie.

Operator

We'll take our next question from Jonathan Arnold with Vertical Research Partners.

Jonathan Arnold -- Vertical Research Partners -- Analyst

Good morning, gentlemen. Thank you for taking my call. A quick one on the capex that you're showing for infrastructure, the $3.1 billion green wedge. Does that assume your current ownership and proportionate? Or is there some kind of an assumption around the two transactions embedded there?

Trevor I. Mihalik -- Chief Financial Officer and Executive Vice President

Yes, Jonathan, that's completely external of the SIP transaction. So nothing has been put into this plan with regards to Infrastructure Partners. And so this really just represents the investments made at LNG and Mexico.

Jonathan Arnold -- Vertical Research Partners -- Analyst

Okay. And then if that's the case, then could you maybe just bridge the 2020 to '24 plan was, I think $4.4 billion between the two segments and now it's $3.1 billion. So just a reminder what's going on there, the bigger '25 than '20 or something else? Or is timing?

Trevor I. Mihalik -- Chief Financial Officer and Executive Vice President

Yes. So the difference there from last year to this year is we did put in place the Mexican terminals, so those projects have gone into operations, and so that's not reflected in this prospective plan. And then ECA is also now kind of layered in. And while we did have it in last year's plan, we've solidified with the EPC contractor and that's layered in here as well. But predominantly, it's just those projects in Mexico that came online.

Jonathan Arnold -- Vertical Research Partners -- Analyst

Okay. And on the current basis. Thank you.

Trevor I. Mihalik -- Chief Financial Officer and Executive Vice President

Thanks so much, Jonathan.

Operator

That will conclude our question-and-answer session. At this time, I'd like to turn the call back over to Mr. Martin for any additional or closing remarks.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Let me just conclude by saying we appreciate everyone attending our call. I'd like to acknowledge the challenges of the last 12 months and the significant impacts that everyone's had. We sincerely hope you all are staying safe and appreciate you taking the time to join us today. Per our convention, please feel free to reach out to our IR team with any additional questions. This concludes today's call. Thank you.

Operator

[Operator Closing Remarks]

Duration: 72 minutes

Call participants:

Nelly Molina -- Vice President of Investor Relations

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Trevor I. Mihalik -- Chief Financial Officer and Executive Vice President

Don Clevenger -- Chief Financial Officer

Kevin C. Sagara -- Group President

Shar Pourreza -- Guggenheim Partners -- Analyst

Steve Fleishman -- Wolfe Research -- Analyst

Michael Lapides -- Goldman Sachs -- Analyst

Julien Dumoulin-Smith -- Bank of America -- Analyst

Jeremy Tonet -- JPMorgan -- Analyst

Stephen Byrd -- Morgan Stanley -- Analyst

Ryan Levine -- Citi -- Analyst

Anthony Crowdell -- Mizuho -- Analyst

Sophie Karp -- KeyBanc -- Analyst

Jonathan Arnold -- Vertical Research Partners -- Analyst

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