PG&E Q4 2024 Earnings Report

PG&E EPS Results

• Actual EPS: $0.31
• Consensus EPS: $0.31
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.47

PG&E Revenue Results

• Actual Revenue: $6.63 billion
• Expected Revenue: $7.29 billion
• Beat/Miss: Missed by -$655.67 million
• YoY Revenue Growth: N/A

PG&E Announcement Details

• Quarter: Q4 2024
• Date: 2/13/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 13, 2025
• Conference Call Time: 11:00AM ET

PG&E (NYSE:PCG) Corp. operates as a holding company, which engages in generation, transmission, and distribution of electricity and natural gas to customers. It specializes in energy, utility, power, gas, electricity, solar and sustainability. The company was founded in 1995 and is headquartered in Oakland, CA.

PG&E Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the PG and E Corporation Fourth Quarter twenty twenty four Earnings Release. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. As a reminder, today's call is being recorded. I will now hand today's call over to Jonathan Arnold, Vice President of Investor Relations.

[Operator]

Please go ahead, sir.

[Jonathan Arnold, VP - Investor Relations at PG&E]

Good morning, everyone, and thank you for joining us for PG and E's fourth quarter twenty twenty four earnings call. With us today are Patty Poppy, Chief Executive Officer and Carolyn Burke, Executive Vice President and Chief Financial Officer. We also have other members of the leadership team here with us in our Oakland headquarters. First, I should remind you that today's discussion will include forward looking statements about our outlook for future financial results. These statements are based on information currently available to management.

[Jonathan Arnold, VP - Investor Relations at PG&E]

Some of the important factors which could affect our actual financial results are described on the second page of today's earnings presentation. The presentation also includes a reconciliation between non GAAP and GAAP financial measures. The slides, along with other relevant information, can be found online at investor.pgecorp.com. We'd also encourage you to review our annual report on Form 10 ks for the year ended 12/31/2024. With that, it's my pleasure to hand the call over to our CEO, Patty Poppy.

[Patti Poppe, CEO at PG&E]

Thank you, Jonathan. Good morning, everyone. I know last month's heartbreaking fires in Southern California are on your mind, and we will address your concerns about them today. But first, please allow me to cover our fourth quarter and full year results. As we like to say, performance is power and in 2024 was another year of powerful performance at PG and E.

[Patti Poppe, CEO at PG&E]

On Slide three are some of our 2024 highlights. Our core earnings per share for the fourth quarter were $0.31 bringing us to $1.36 for the year, an 11% growth over 2023. We've updated our 2025 guidance range with the midpoint up 10% from our actual 2024 results. This bumps our 2025 range by a penny to $1.48 to $1.52 There's no change to our EPS growth guidance for 2026 through 2028, which remains at least 9% each year. As you saw from us in both 2023 and 2024, future year growth will continue to be based off our actual results.

[Patti Poppe, CEO at PG&E]

With our December issuance, the equity need to fund our $63,000,000,000 capital investment plan through 2028 is fully behind us. In December, we also provided you with clarity on our dividend plans. Our annual dividend rate for 2025 is $0.1 up from $0.04 in 2024. We also shared our intent to reach a dividend payout ratio of 20% of our core earnings per share by 2028 with consistent annual increases. Clearly, this implies a growth rate well in excess of our earnings.

[Patti Poppe, CEO at PG&E]

We continue to build our cost reduction muscle, saving 4% in non fuel O and M costs in 2024 on top of savings achieved in 2022 and 2023. And we're delivering on our affordability commitments. In fact, assuming similar usage, combined residential gas and electric bills remain flat for January 2025 compared to January 2024. Moving to Slide four, this should start to look familiar to you. 2024 is now our fourth consecutive year of delivering predictable premium results for you, our investors, while we are also delivering more for our customers through our simple affordable model.

[Patti Poppe, CEO at PG&E]

As you've seen, we've achieved or beaten our earnings guidance each year and we're building a track record of consistently rebasing future years off our actual results. The key to our delivery is the PG and E performance playbook coupled with conservative planning. Of course, there will always be ups and downs within a given year. Storms, regulatory outcomes, economic factors, our core capability is to weather these ups and downs delivering consistent, predictable premium results year in and year out. As Carolyn will discuss in a minute, in 2024, we were able to redeploy $0.16 for the benefit of our customers and deliver 11% earnings growth for our investors.

[Patti Poppe, CEO at PG&E]

Even though the recent devastating fires have been outside our service area and our equipment was not involved, they reinforce the importance of our stand that catastrophic wildfires shall stop. Based on the physical protections we have in place today, our system has never been safer, and we are working to make it even safer as we continue to implement our wildfire mitigation plan and learn from every ignition. Turning to Slide six, in addition to physical safety, we understand that you need to feel safe committing your clients' money to California. We know that they, PG and E shareholders and bondholders, are often Californians, including pension holders, teachers, firefighters and police. We want them to feel that their money is safe when invested in a California utility.

[Patti Poppe, CEO at PG&E]

While the utilities have made significant strides in risk mitigation, it seems clear that timely reforms are needed to extend the AB1054 framework given evolving views of a worst case fire. We hear loud and clear the market's concern about risk exposure beyond the $21,000,000,000 wildfire fund as well as implications for the utility liability cap under the current statute. You can be assured that building and improving upon the core AB1054 protections already in place is a critical priority for our team. At the same time, it's important to acknowledge that California's policymakers have established an industry leading model to meet the needs of investors and victims of catastrophic wildfires. In 2019, the legislature passed Assembly Bill ten fifty four, which built upon 2018 Senate Bill nine zero one, and the state continues to prove its resilience and ability to adapt.

[Patti Poppe, CEO at PG&E]

As CPUC President Alice Reynolds said in reference to the Southern California fires at a recent commission meeting, and I quote, I expect the state to move forward on further solutions as these ever dynamic challenges continue. Our model today was created first and foremost to provide important protections for the victims of catastrophic wildfires. The State Wildfire Fund assures compensation for victims of utility caused fires while helping to ensure that utilities can continue to raise capital efficiently and affordably, enabling needed investment in safety and climate resiliency. For those newer to the story or looking for a refresher, the AB1054 framework is based around an enhanced prudency standard, which supports the recovery of socialized wildfire losses incurred by utilities under California's no fault inverse condemnation strict liability construct. AB ten fifty four also provides a cap on utility reimbursements back to the wildfire fund in the unusual event that the utility is found to have been imprudent.

[Patti Poppe, CEO at PG&E]

A key statutory requirement for issuance of an annual safety certificate is having an approved wildfire mitigation plan. These WMPs are subject to approval by the Office of Energy Infrastructure Safety, our dedicated safety regulator. They're extremely comprehensive and subject to an intense and very public regulatory process. Getting one approved is no small undertaking, and rightly so, since they provide utilities with clarity on what's required of them to establish prudency upfront and also a yardstick to measure prudency if later challenged. This is a 180 degree change from the pre AB1054 world, where the onus was fully on the utility to establish prudency after the fact.

[Patti Poppe, CEO at PG&E]

Importantly, California's prudent manager standard is not a perfection standard. The model gives the utilities clear alignment with the safety regulator to continually improve upon mitigation strategies. Exactly what the industry leading meteorology and operations teams at PG and E strive to do each and every day. This model provides clarity around what constitutes prudent operations and a clearly defined framework for quantifying the consequences of failing to perform as required. You can see the proof points.

[Patti Poppe, CEO at PG&E]

Working as intended is the multi year wildfire mitigation plan process, the issuance of annual safety certificates, and our monthly Dixie liquidity draws from the wildfire fund facilitated through the California Earthquake Authority. In fact, our latest safety certificate was issued in December and came ahead of schedule. No other state has such a structure in place today and California's approach has allowed our utilities to become industry leaders in wildfire mitigation. At the same time, I appreciate that the financial community is asking important and urgent questions about the resiliency of the California model in light of recent events in Southern California. I know that our state leaders are hearing your concerns, and we'll keep advocating that key tenets of AB ten fifty four be upheld and enhanced.

[Patti Poppe, CEO at PG&E]

Ultimately, our construct is designed to serve the people of California in the event of loss, and it is this which gives me confidence that we will make the necessary timely improvements to ensure that our utilities remain in a strong position to efficiently finance continued investment in safety, growth, and other key state priorities. California policymakers have a track record of taking constructive action, especially when Californians benefit, as evidenced through SB901 in 2018, AB1054 in 2019, bills to extend operations at Diablo Canyon and support for undergrounding in 2022, and SB410 supporting accelerated cost recovery for energizations in 2023. These actions acknowledge the legislature's understanding of the instrumental role that California's investor owned utilities play in enabling our state's growth and prosperity. Meanwhile, we are building trust in our communities by continuing to operate the electrical system safely and develop the necessary infrastructure to meet changing climate conditions. As shown here on slide seven, our foundations of physical safety starts by understanding the risk each and every day.

[Patti Poppe, CEO at PG&E]

This situational awareness is propelled by data and experience. It informs our wildfire mitigation plans and our layers of protection, which importantly cover both our local distribution grid as well as our high voltage transmission system. I used to call public safety power shutoffs or PSPS our mitigation of last resort. In fact, PSPS is our first layer of protection when weather and fuel conditions demand a proactive de energization of our power system to keep customers safe. In 2024, PG and E called six PSPS events, all of them executed without safety incidents and four of which included some of our transmission system.

[Patti Poppe, CEO at PG&E]

Thanks to our efforts to sectionalize the system, only approximately 50,000 customers were impacted over the course of these events. We also just completed our third full year of EPSS deployment. This advanced technology is now in place on 100% of our distribution circuits in high fire threat districts and in select adjacent areas. As I said, it's upon this foundation of safety that we move forward. Ultimately, we are here to serve the residents of Northern And Central California, providing safe and reliable power to our customers, both big and small.

[Patti Poppe, CEO at PG&E]

As you know, it's not just the bread and butter new energization requests we're seeing. Like others, we're also seeing increasing demand to power data centers and perhaps surprisingly, other large loads like warehouses, electric fleet depots and manufacturing growth in our service area, including in and around Silicon Valley. Last June in New York City, we discussed beneficial load and said that we expected to provide an update on this call. Today, we're sharing our progress. This leads me to my story of the month here on Slide nine.

[Patti Poppe, CEO at PG&E]

Many of you have asked, how much of this demand is real? As of now, we have formal applications representing 5.5 gigawatts of new potential data center load moving through our pipeline. This is just the data center load. As I've said before, there's no one silver shovel. Ours is a no big bets load growth story.

[Patti Poppe, CEO at PG&E]

It's a thoughtful, deliberate process of pursuing load growth, what I call the Goldilocks approach, not so little that it doesn't matter and not so much that it results in cost shifts to residential customers. And we see a clear path to lowering customer bills as a result of adding what we call beneficial load. We're getting more calls every day as customers learn California and PG and E specifically are open for business. We too are learning a lot from this process. As of last week, of the 5.5 gigawatts in our pipeline, 1.4 gigawatts has passed through the preliminary engineering study phase, meaning these potential customers now have preliminary cost estimates and proposed time to power and have agreed to advance to the next phase.

[Patti Poppe, CEO at PG&E]

These 1.4 gigawatts come from 15 customers, including hyperscalers and developers and represent 27 unique sites. This beneficial load is projected to come online as early as 2026 and we forecast that over 90% will be online before the February, driven by customer requested time to power and PG and E's responsiveness. In order to more efficiently and uniformly address these electric service requests and improve our ability to meet customers' requested and service dates, last November, we proactively filed an application with the CPUC for approval of electric rule 30. Importantly, in this filing, we have proposed upfront funding from large load customers, something which they also support in the name of accelerating our ability to serve them. The premise is that the large customer takes the risk if their forecast load does not materialize over an initial ten year period, protecting our existing customers from having funded a stranded asset.

[Patti Poppe, CEO at PG&E]

We estimate that for every thousand megawatts of new electric demand from data centers, customers may save between 1% to 2% of their electricity bill, creating the headroom to make our grid safer and more resilient at a lower cost. This turns my story of the month into our story of the next decade of growth. We are excited to be partnering with these customers, serving the innovation capital of the world and doing so in a way that positively impacts the people of California. This is a simple, affordable model picking up speed. With that, let me turn it over to Carolyn.

[Carolyn Burke, Executive VP & CFO at PG&E]

Thank you, Patty, and good morning, everyone. Today, I am pleased to cover three main topics with you. First, our full year 2024 results. Second, a reiteration of our five year capital and financing plans. And third, how we continue to build upon our foundation of financial safety and execute against our simple affordable model.

[Carolyn Burke, Executive VP & CFO at PG&E]

Starting here on Slide 10, we're showing you our 2024 earnings walk. Our core earnings of $1.36 are up 11% or $0.13 over 2023. The main driver was higher customer capital investment, which contributed $0.26 This includes the benefit of the higher 2024 ROE of 10.7%, which we previously told you we would redeploy, and we did. Non fuel O and M savings contributed $0.07 to our results and included savings achieved for various programs such as improving our inspections as well as lower contract spend enabled by strategic sourcing. We are all about the end here at PG and E and you can see that with our 2024 results.

[Carolyn Burke, Executive VP & CFO at PG&E]

We've been very clear about our commitment to share any upside with customers and investors. Our re deployment for the full year was $0.16 and went towards programs that support risk mitigation such as inspections, gas line corrosion mitigation and distribution maintenance. Redeployment also results in derisk in future years, helping us deliver consistent and predictable results for customers and investors. Turning to Slide 11, there is no change to our five year sixty three billion dollars capital plan through 2028 and we still see an incremental at least $5,000,000,000 of additional customer investment needs. As we've discussed before, there is no shortage of customer beneficial work on our transmission and distribution systems.

[Carolyn Burke, Executive VP & CFO at PG&E]

The second phase of our SB410 application is still pending. And as Patty discussed, large load demand applications are growing. Here's how we're thinking about this incremental demand. First, we could simply add to the $63,000,000,000 plan. Second, we could high grade or prioritize investment tied to new load, which can also improve customer affordability.

[Carolyn Burke, Executive VP & CFO at PG&E]

And third, we could extend the duration of our our sector leading rate based growth story. As we get approval for incremental capital, including in 2025 and 2026 through our pending SB410 filing, you can expect us to revisit the work plan and to carefully weigh up the merits of these three distinct options or a combination thereof. All three of them offer pathways to make an already strong plan even stronger. We have also not changed our five year financing plan as shown here on Slide 12. I am pleased to remind you that in November and early December, we took advantage of favorable market conditions to complete a $2,750,000,000 equity offering, as well as Equity Content Jr.

[Carolyn Burke, Executive VP & CFO at PG&E]

Subordinated notes. These combined completed the $3,000,000,000 equity funding shown here. With our equity needs through 2028 de risked, we can focus on providing affordable and resilient power to Northern And Central California. Our financing plan was built to support achieving investment grade ratings and prioritizing customer capital investment. Our brand of thoughtful conservatism is also built into this plan.

[Carolyn Burke, Executive VP & CFO at PG&E]

We maintain flexibility both with our low dividend and our commitment, not obligation, to pay down $2,000,000,000 of parent debt. In terms of financial safety, we've been laser focused on building a healthy balance sheet and reaching investment grade. Our December equity issuance put us back in compliance with our authorized regulatory capital structure ahead of schedule. We also benefit from our differentiated dividend payout. We believe 20% by 2028 is an appropriate sustainable level for us given our near term balance sheet priorities and need for customer capital investment on our system.

[Carolyn Burke, Executive VP & CFO at PG&E]

Our robust capital plan contributes to cash from operations, which in turn drives balance sheet health and investment grade supportive credit metrics. As you can see here on Slide 13, we more than doubled operating cash flow from 2022. The GRC has been a key driver of this improvement as well as the interim rate relief we've seen from the CPUC. We also reached our target of mid teens FFO to debt during 2024 and our forecast shows continuing cash flow growth in 2025 consistent with our strong rate base growth. Turning to Slide 14.

[Carolyn Burke, Executive VP & CFO at PG&E]

As you know, we're actively pursuing investment grade ratings and expect the recent and continuing improvements in our balance sheet and cash flow just discussed ultimately to be reflected in actions by rating agencies. As we consider ways to strengthen the AB1054 construct, we continue to reinforce with policymakers the role state policy can play in ensuring the financial health of the state's investor owned utilities, with customers being key beneficiaries. Our simple affordable model shown here on Slide 15 continues to deliver results for customers. It's how we make our industry leading capital growth affordable. As I've said before, it's a no big bets approach.

[Carolyn Burke, Executive VP & CFO at PG&E]

We work each element each and every day. O and M savings, where we continue to exceed our annual target. Beneficial load growth approached with a competitive mindset and efficient financing opportunities aggressively pursued, all on the behalf of our customers. You already heard from Patty how we're enabling beneficial load growth, the second element here. On the efficient financing element, lower interest expense from improving credit quality and other financing opportunities help make our critical customer investments more affordable.

[Carolyn Burke, Executive VP & CFO at PG&E]

I'll remind you, our five year plan does not assume the savings from the DOE loan nor achieving investment grade. Turning to Slide 16. I am very pleased to share with you that our 2024 non fuel O and M savings are a 4% reduction over 2023, again exceeding our 2% target. We've now saved over $200,000,000 in O and M expense in each of the past three years, including saving over $500,000,000 in 2023 and nearly another $350,000,000 in 2024. I am now confidently calling this a trend.

[Carolyn Burke, Executive VP & CFO at PG&E]

In 2024, we achieved savings in our inspection program by utilizing a risk informed checklist to focus on conditions that lead to asset failure. We also found savings through contract rationalization and optimization, and we continue to save on insurance premiums. This is a core capability that we've built here at PG and E, which can deliver future savings year after year. I continue to see abundant opportunities in 2025 and beyond. We will file our general rate case application in May and I look forward to reflecting new savings in our forecast and passing future benefits on to our customers.

[Carolyn Burke, Executive VP & CFO at PG&E]

I see this upcoming filing as another opportunity to do what we say. By delivering on stabilizing bills, we continue to build trust with our regulators. Again, performance is power. In the meantime, customers are starting to see the impacts of our continued efforts to stabilize bills this year. Assuming similar usage, combined residential gas and electric bills remained flat January 2025 compared to January 2024.

[Carolyn Burke, Executive VP & CFO at PG&E]

Turning to Slide 17, we have an active filing year on the regulatory front. In addition to our GRC, this year, we also plan to file our 2026 cost of capital application as well as our ten year undergrounding plan. Lastly, here on Slide 18 is a reminder of our value proposition, consistent predictable performance, serving our customers and delivering for our investors. Ten percent rate base growth through 2028, '10 percent core EPS growth in 2025 and at least 9% core EPS growth each year from 2026 through 2028. With that, I'll hand it back to Patty.

[Patti Poppe, CEO at PG&E]

Thank you, Carolyn. I am confident about this next phase in our story here at PG and E. What was true about PG and E as we enter 2025 is still true today. We're building a culture of performance built on solid foundation of physical and financial safety. In a recent message to my coworkers, I reminded them that the most important thing for us to do today is keep doing our work really well and improving it every day.

[Patti Poppe, CEO at PG&E]

Given the previous actions taken by policymakers, affirmative statements from the CPUC Chair, and recognition that utility infrastructure investment is essential for California's future and safety of her people, I am confident that we, as a state, will reward your trust in California. We know that when you trust the California regulatory construct and the people who oversee it like I do, you will see that there is no other utility in the sector offering our customer focus, our growth, our operational capability and our valuation upside potential. We are a vital piece of California's infrastructure story and there is no one better positioned to serve our hometowns at this scale than this team. With that, operator, please open the lines for questions.

[Operator]

Your first question is from the line of Shar Pourreza with Guggenheim Partners.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Hey, guys. Good morning.

[Patti Poppe, CEO at PG&E]

Good morning, Shar.

[Carolyn Burke, Executive VP & CFO at PG&E]

Good morning.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Good morning. Patty, just starting off on the California wildfire construct, I mean, the fires in the South have created a potential stress for October. Is there a recognition of the wildfire funding problem? Or do you think we need to see more progress on investigations and while fund like payouts to start to get clarity if there is any constructs that need to be changed? So is the state currently working on any improvements regulatory or legislatively or are they taking a wait and see approach?

[Patti Poppe, CEO at PG&E]

Yes. Shar, thanks for the question. This definitely has hit the radar of our policymakers and leaders here in the state. I think we all agree that first of all AB ten fifty four fundamentally is a very good construct and it's industry leading and the only state in the nation who has this kind of comprehensive construct. However, the question about the fund and the longevity of the fund given this new potential of an extreme case fire has gotten the attention of all of us.

[Patti Poppe, CEO at PG&E]

And so we're in good discussions with people about that. I'm not sure maybe you've heard the news, but Anne Patterson, has a new role beginning March 3. Anne's gonna be the senior counsel to the governor on wildfire issues. I think that's a sign that the state recognizes there's importance and has been involved with AB ten fifty four from the beginning. We have a lot of confidence in her.

[Patti Poppe, CEO at PG&E]

She's very pragmatic problem solver, and and we're grateful for the the state's recognition that this issue needs a real leadership.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Okay, perfect. That's helpful color, Patty. And then just and you noted on the load expectations for data centers stepping up to 5.5 gigs, but some of that ramp times is in the current decade. I guess, what's driving that? Is there more investment needed on the grid side to accommodate the load?

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

And is there any regulatory constructs that could help accelerate some of that interconnection like SB410 did for distribution? Thanks.

[Patti Poppe, CEO at PG&E]

Yes, great. This is something obviously we're pretty excited about. When we talked in June, we had input or interest of 3.5 gigawatts, we're now up to 5.5 gigawatts and that's just the data centers. We have incremental interest from other types of customers non data center related. The stage that we're at, we've talked about our cluster study we've been doing.

[Patti Poppe, CEO at PG&E]

Of the 1.4 gigawatts, seven forty megawatts within that are from that cluster study, our ability to simultaneously engineer these demands and requests, the demand and requests allows us to better give indicative pricing, which we've had very positive response from the applicants. And so as the, as we continue to fill, that request and those complete the study, we have, moved forward and we're continuing to move forward. So the only limiting factor right now, particularly on the demand side is the ability to build up the transmission infrastructure. We don't see a need for new generation for the first about four gigawatts of demand. We'll be building out that infrastructure.

[Patti Poppe, CEO at PG&E]

We have agreed upon timing with the customers. And so it's really strictly driven by customer demand and their timing and our timing and, it's matching up really well. So, as we complete final engineering, then we move into construction. We'll have a key milestone will be interconnection requests that are signed, but we have signed agreements getting us into this final engineering phase. And so we're very optimistic and hopeful.

[Patti Poppe, CEO at PG&E]

I think it's been a big change for PG and E. I think customers thought we weren't able to serve this kind of large load and our ability to complete the engineering studies and show our customers what we can do and have good indicative pricing that they like has been a real windfall I'd say. And I think we're excited about what it means both for what's in the pipeline today and an additional load that will come. And as we said, we expect about 90% of that 1.4 gigawatts to be online by 02/1930.

[Operator]

Your next question is from the line of Steve Fleishman with Wolfe Research.

[Steve Fleishman, Stock Analyst at Wolfe Research, LLC]

Hi, good morning. So I guess just following up first on it's great to hear Anne in that new role. Obviously, it would be helpful to get more certainty on dealing with maybe any changes on AB1054 by the fall and I guess the session goes usually till like August. Can you just talk about legislative process and timing and tense of urgency?

[Patti Poppe, CEO at PG&E]

Yeah. Steve, I, we are definitely not ruling out, improvements before year end. We know that there are, urgent, assurances that need to be made. The reason why I'm optimistic that we can find a forward action here in the state is that the funds specifically benefits those harmed by wildfire. And so it's important to our policymakers that those who are harmed have access to funds.

[Patti Poppe, CEO at PG&E]

I think that is an important piece of the logic and the state really clearly understands and demonstrated it by implementing AB ten fifty four in the first place that we need to attract a capital to build out the infrastructure. And so, the idea that, we would just let it be feels very unreasonable to me. I think that the idea that furthering and making the necessary adjustments to what's already a strong construct, is in the best interest of California. That's how we attract the infrastructure capital, so that we can make the system safer. That is the whole point.

[Patti Poppe, CEO at PG&E]

And, again, I point to the track record here in the state of all the legislative activity over the last several years, starting in, with SB901 and then AB1054 and then all the incremental legislative activity that's happened in the last couple of years supporting growth and energization and an extension of Diablo. These are all things that point to the state's recognition, our policymakers recognition that the investor owned utilities are important piece of attracting capital for necessary infrastructure here in California.

[Steve Fleishman, Stock Analyst at Wolfe Research, LLC]

Great. That's helpful, Patty. And just one other question just related to the Eaton Fire. The, I mean, the circumstances that have occurred seem to be kind of a bit abnormal set of circumstances if they did happen. And I guess first of all, it is related to transmission.

[Steve Fleishman, Stock Analyst at Wolfe Research, LLC]

It does seem to maybe be also related to an idle line that hadn't been used in a long time. Maybe you could just since we're always so focused on distribution and undergrounding and things like that, just talk about anything that you see related to what you've been doing in your wildfire mitigation that's kind of relevant to to know given these circumstances we've seen so far and anything you might change in terms of what you're doing?

[Patti Poppe, CEO at PG&E]

Yeah. You know transmission has always been a part of our wildfire mitigation plans and our public safety power shut offs. You know I shouldn't say always but in the recent years we've you know obviously focused on transmission. You know we don't know what happened on the Eaton fire yet and we're really, not going to, you know, speculate about that. We know what everybody knows and that's what's in the public domain.

[Patti Poppe, CEO at PG&E]

But what we know is that we have transmission safety protocols that we exercise. We know that in 2024, we had six PSPF events and four of them included transmission. We know already in 2025, we've had three PSPF events and they all include included transmission. These are safety protocols that we have had in place and we utilize routinely and we are not afraid to use transmission PSPS as a first line of defense when the conditions warrant. So, for example, in 2025 here, we had 70 kV line and a threshold wind speed of 55 miles per hour.

[Patti Poppe, CEO at PG&E]

That's our threshold. We exercised that PSPS for that reason. So I think what's important to know is, as we look at our systems, our practices, our processes, we do look at idle lines. We've done, extensive grounding of retired or transmission lines. So we use all of those practices as part of our holistic suite and our layers of protection, and we have a lot of confidence, in that.

[Patti Poppe, CEO at PG&E]

All that to say, we are never satisfied and we will not stop being curious about what else we can learn and when the investigation is complete, we will learn everything we can from that and implement those. I'll just close with this point. AB1054 is established because it recognizes we can't take risk to zero and we can't take risk to zero overnight. So, in the event of a catastrophic event that's when the protections of AB1054 kick in. AB1054 is working.

[Patti Poppe, CEO at PG&E]

If you point to the Dixie fire, you can see that we had, you know, in 2021, the second largest fire in the state's history and AB ten fifty four is working as it's supposed to. We've had offsetting receivables for every liability. We've been able to draw from the wildfire fund very routinely. The construct is working and I do want to reinforce that. I also want to be clear that we understand that, investors are concerned about a catastrophic event like Eaton and we'll learn and we'll make necessary changes to make our existing construct even stronger.

[Patti Poppe, CEO at PG&E]

That's really what our focus is Steve. In addition to all of our layers of physical protection that we continue to implement to keep our stand that catastrophic wildfires shall stop.

[Operator]

Your next question is from the line of Nicholas Cappanella with Barclays.

[Nick Campanella, Analyst at Barclays Capital]

Hey, good morning, everyone. Thanks for taking my questions. Good morning. So I just wanted to kind of clarify and follow-up on Steve's question there. Just it does seem like there's some competing interest from the insurance industry, which is also suffering losses and there is a protracted nature of wildfire drawdowns here.

[Nick Campanella, Analyst at Barclays Capital]

You mentioned in the meantime AB1054 is working exactly how it's intended to. Just what's the risk of this being like a multi year legislative effort rather than something that gets done at the August? Could you just kind of frame your confidence level there? Thanks.

[Patti Poppe, CEO at PG&E]

Yes. Thanks, Nick. We're not ruling out, at least, think of it as a stage one resolution here yet this year. We agree there are bigger issues that I think the state will be grappling with, in in response to, for example, the Palisades fire, that not all catastrophic wildfires relate to utility equipment. And so what is the state's posture for people who are harmed, in the event of these extreme weather condition driven events?

[Patti Poppe, CEO at PG&E]

How do we have a construct that works in California? And I do believe that's why, the state is looking to Anne to think about wildfire and Patterson to look at wildfire issues broadly, but I don't think that necessarily, you know, a bigger issue being reviewed does not necessarily mean that we cannot get an incremental fix, here in this calendar year, because we know it's important to attract investors invest, capital. We know it's important to regain the confidence of those who have, concerns about the California construct. So, that's certainly the position we'll be taking and really encouraging our policymakers, to have a timely response.

[Nick Campanella, Analyst at Barclays Capital]

I appreciate that. Thanks for that answer. And, clearly, just the cost of capital in the state has changed in the last month. And I'm just wondering if you can kind of talk about how that impacts your upcoming filing that's expected. And is there any scenario where that would maybe get pushed, pushed out or do you see yourself still coming in at this point?

[Nick Campanella, Analyst at Barclays Capital]

Thanks.

[Patti Poppe, CEO at PG&E]

Yeah. Our plan is to continue to file, a strong case here in March, and we'll be in line with our other IOUs. The state has indicated they don't want to have a wildfire adder, but there's no disputing that interest rates are up and the actual cost of capital is up. And so we'll be making a strong case. Obviously cost of capital is important proceeding and we feel like we'll be making a strong and effective case when we make that filing.

[Operator]

Your next question is from the line of Richard Sugarman with JPMorgan.

[Richard Sunderland, Analyst at JPMorgan Chase]

Hi, good morning. Thank you for the time today.

[Patti Poppe, CEO at PG&E]

Hi, Richard. Good morning.

[Richard Sunderland, Analyst at JPMorgan Chase]

And thinking more broadly about the fire issues, do you think the firefighting capabilities in the region are sufficient for growing wildfire risks? And are there ways you could invest capital in support of those efforts?

[Patti Poppe, CEO at PG&E]

Wildfire, fighting, is in the same, I would say, category with our, always commitment to continue to learn. Our firefighters here in the state are the best in the world. Our fleet is the best in the world. And where we fall short, we're going to continue to learn as a state. I don't think that we need to as a utility invest in wildfire fighting resources, but I do think that continuing to help our communities fire harden is an important priority and you know you've got the the risk of ignition is one thing, the risk of spread is a wholly different thing and the risk of spread needs to be mitigated certainly by our situational awareness because we give our AI cameras and our weather stations give early notification to those fire fighting resources so they can get on it earlier, which is always an advantage, but our communities need to be hardened.

[Patti Poppe, CEO at PG&E]

Our homes need to be built to codes that our fire prevented. We need to eliminate the hazards that surround our, our homes whether it's vegetation, whether it's fencing, whether it's, the the roof structure. I think, we here in California need to come to terms that, our citizens, have an obligation to make their structures safe so that our firefighters can do what they do, and do it better. So, we're this is we're all in this together and we stand for California being a place where, families can prosper and be safe and not be worried about, wildfire risk.

[Richard Sunderland, Analyst at JPMorgan Chase]

Great. Thank you. And then turning to the data center pipeline update, does the $500,000,000 to $1,600,000,000 of investment per gigawatt framework still hold? And is that the way to think about the 1.4 gigawatts identified in final engineering? I guess more broadly, just when do you think you'll have final clarity on the investment needed to support that?

[Patti Poppe, CEO at PG&E]

Yes. We do think that that construct holds. And let me just remind the rest of the listeners that the $500,000,000 to $1,600,000,000 is what we've said we could invest and still deliver then residential, the remaining customer cost savings in the 1% to 2% range, which is what makes us so excited about this as it fits into our simple affordable model. We can deliver this new large load beneficially for all customers and reduce rates for all. Now in that construct, we'll have each project gets reviewed to make sure that the costs are appropriately borne by the large load.

[Patti Poppe, CEO at PG&E]

And so our Rule 30 filing establishes our proposal is to establish and it was supported by the large load customers that large load customers bear the risk of any kind of stranded asset in the first ten years. So the load needs to materialize, they put the money upfront. Now as it relates to our capital plan, I'll let Carolyn hit on how we're going to, fit that new, additional capital into our plan.

[Carolyn Burke, Executive VP & CFO at PG&E]

Yes. As we look at these new projects, from data centers and the impact on our capital plan and it's very similar to how we're thinking about any, funding that might get approved from SB410. One thing to note, as we've said in the, we said this in the, in our earlier remarks, you should not assume that we would just add to our capital plan of $63,000,000,000 We have options. That is one option, but we have other options. And those other options include just thinking about how we would might reprioritize what we call high grade to plan and look at particularly the data center projects.

[Carolyn Burke, Executive VP & CFO at PG&E]

If they are impacting affordability, we might bring those in instead and replace another project. Or we could extend the duration of our, sector leading rate based growth plan of 9% to 10%. So those are the three options. And then I'll just remind you, on top of that, we have flexibility in our plan because we still have the $2,000,000,000 held code debt pay down in there, which is again, not an obligation, but just a commitment. So we've got plenty of flexibility and options.

[Operator]

Your next question is from the line of Julien Dumoulin Smith with Jefferies.

[Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group]

Hey, good morning team. Thank you guys very much for the time and patience for all the detail here. And maybe to follow-up and build off of hey, good morning. Thanks for the time. Maybe building up off of what's been said thus far, do you want to speak to the prospects of a new fund or recontributing to the fund?

[Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group]

It seems like a very difficult prospect to see IU stand up a new fund anew here. Can you speak to what other avenues might exist or how you see this coming together? I mean, municipals were not part of the initial conversation. I'm curious how that fits into the calculus today, especially given the more urban nature of what's just transpired. But I would love to like tailor in and fixate for a quick second on the fund and then I got a quick follow-up on that.

[Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group]

But thank you again.

[Patti Poppe, CEO at PG&E]

Yes. I think there's lots of options that we'll be looking at on the fund. I think one thing to remember and we will continue to advocate strongly, we do not think there's, a good case that shareholders could, should contribute to that fund because it's contrary to the key principles of, inverse condemnation that a utility, when a utility is prudent, these are recoverable costs. In fact, Alice Reynolds reiterated that, at our recent commission meeting. So I think it's important that that is a principle that underpins, and the AB1054 objective was to attract capital, to the state.

[Patti Poppe, CEO at PG&E]

And so we would argue that, having more burden on shareholders will not attract additional capital to the state. So we'll be taking, you know, pretty strong point of view on that as we consider what happens to the fund. There are simple things that can be done to the fund as simple as extending the the, customer payment over a longer period of time, to more complex thing that includes other, parties. But all of those things will be considered and we'll be standing for the best outcome for those who have suffered loss because that's what the fund is, serves as well as, what's in best interest of investors because we need to attract that necessary capital to build our system. And don't forget the most important thing that that capital goes to is to make our system safe.

[Patti Poppe, CEO at PG&E]

And so when we invest in infrastructure with those capital dollars that our investment community contributes, that's the best use of investors' dollars to make our system safe.

[Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group]

Yes. I hear you loud and clear on those points. Maybe just a quick follow-up. I mean, how do you think about your own filings and efforts? I get that OEIS is involved here too, but how do you think about the totality of the wildfire undergrounding efforts today?

[Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group]

And then in parallel, how do you think about, you know, derisking, shall we say, more urbanized or quasi urbanized environments, you know, given maybe the nature of this last fire and and and rethinking your your investment plan here? I get that it's already in play.

[Patti Poppe, CEO at PG&E]

Yeah. You know, the focus of our wildfire mitigation plan, is to reduce ignition risk. We then have situational awareness that helps us identify and support the firefighting resources to get to where an ignition occurs as fast as possible. Again, our weather stations and our cameras. But our primary objective is to, prevent the ignition risk.

[Patti Poppe, CEO at PG&E]

We've had dramatic improvements in that. I would argue that we have one of the most industry leading wildfire mitigation plans and execution of that plan, but we're not finished and we're going to continue to be curious about how to make it better every single day and again remember the AB ten fifty four is not a perfection standard. It is you know, an expectation that we complete our work as we said and that our practices are, in line with standard best practices of a prudent utility operator. And we stand very firmly that we, extend well beyond being prudent. We would consider ourselves industry leaders in helping to keep our customers safe and reducing ignition risk and we will continue to be curious and implement new technologies.

[Patti Poppe, CEO at PG&E]

You know, we've implemented the down conductor device, technology on over 1,500 new devices in the system. We've got, additional technology that enables us to see faults even before they happen and failures of our equipment before they happen. This is industry leading technology we're deploying, to keep our customers safe and that's a very important part of our wildfire mitigation plan and we continue to learn about how best to prevent those ignitions.

[Operator]

Your next question is from the line of Anthony Craddow with Mizuho.

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

Hey, good morning. Thanks so much for taking the question. Just one quick one and then a follow-up. I guess on the IG rating where we thought Moody's typically puts it on a year review and I think it was positive outlook last February. I'm wondering if you could share any conversations you've had with Moody's following the events in Southern California?

[Carolyn Burke, Executive VP & CFO at PG&E]

Yes. Thanks, Anthony, for the question. That's one that's, top of mind for us as you can imagine. Maybe just purely on the merits as we think about, our position, we've seen our credit metrics obviously improve and we're really proud of our performance and our FFO to debt, has also improved. We did our December equity issuance.

[Carolyn Burke, Executive VP & CFO at PG&E]

We've made progress on the wildfire risk mitigation. We have strong growing cash flow. We have the conservative dividend policy, all extremely supportive investment grade ratings. We've had these conversations with the rating agencies. We've talked about our progress, and they seem to be taking a very measured approach and don't seem inclined to rush to action, which we appreciate given the circumstances.

[Carolyn Burke, Executive VP & CFO at PG&E]

They have a lot of the same questions that you as investors have and are looking for signals from, of policy maker support. And, we still remain confident after all those conversations that the rating agencies will recognize our progress in time. I, we were hoping maybe even for a two notch upgrade, we think that's absolutely off the table, But we do believe that, we will be recognized for our performance and the conversations have been productive.

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

Would it be fair to say that I think if all the questions earlier today are more on the wildfire fund, whether it's a size or a replenishment mechanism, that may have to be resolved prior to a credit agency action or I'm really jumping the gun with that.

[Carolyn Burke, Executive VP & CFO at PG&E]

Yes, I'm not sure. I think we need to talk to the rating agencies as to what their signal. I think they're looking for signals like we are, and like you are, and the policymakers, not necessarily, I think, an end solution.

[Patti Poppe, CEO at PG&E]

And we don't want this is Patty Anthony. We wouldn't want to forget though that that equity issuance that we executed at the end of last year had significant beneficial impact on our credit metrics. And so even that as Carolyn said stands on its own separate from the wildfire risk. We continue to be a few notches below other IOUs here in the state and so we can close the gap on our financial metrics as the state get determine you know as the state resolve the issue with the wildfire fund. I think our credit improvement, our balance sheet health and our other aspects of performance are being noted, by the credit agencies.

[Operator]

Your next question is from the line of Carly Davenport with Goldman Sachs.

[Carly Davenport, Analyst at Goldman Sachs]

Hey, good morning. Thanks so much for taking the question.

[Carolyn Burke, Executive VP & CFO at PG&E]

Hi, Carly.

[Carly Davenport, Analyst at Goldman Sachs]

Hey. Maybe just two quick ones for me.

[Carly Davenport, Analyst at Goldman Sachs]

First, just on the O and M reductions, those came in again strong north of the 2% that you have embedded in both the long term plan and the 2025 plan. I guess, how would you just think about cadence of potentially revisiting that assumption? Is that catalyst to GRC filing or anything else that you should be looking out for there?

[Carolyn Burke, Executive VP & CFO at PG&E]

Yes. We expect to update our plans after the GRC filing. You're absolutely right.

[Patti Poppe, CEO at PG&E]

And we expect to continue delivering O and M savings for years and years and years to come, Carly. And this, we hope becomes part of the signature at PG and E. This is how the simple affordable model works. We create room in the plan by being more efficient and making sure that we're investing in infrastructure, reducing costs for customers. Our O and M track record I would say is picking up speed because we're getting more and more of our co workers trained and experienced in seeing.

[Patti Poppe, CEO at PG&E]

I'll tell you just a quick story. We're recognizing a coworker tomorrow at an all all coworker meeting. We call her a progress maker because she identified an idea that when we're out doing paving improvements that our team can do the touch up paint on the missed dig marks much cheaper and faster than a contractor. We saved in her in her case, just in her service area, $50,000 by doing some work that we were already there on the site and able and able to do. When we have 28,000 PG and E co workers each coming up with an idea like that, that's when we're really going to be, at full speed.

[Patti Poppe, CEO at PG&E]

We've got, you know, a couple years before we get into a case where all of our co workers have that kind of capability and that's going to be a key part of how we can serve customers the infrastructure they need at the lowest cost possible and we can't wait to reflect that in our GRC filing which we'll be making here in just a couple of months.

[Carly Davenport, Analyst at Goldman Sachs]

That's great to hear.

[Carly Davenport, Analyst at Goldman Sachs]

Thank you for that. And then maybe just one on the DOE loan. I know that you got that closed in January, but just kind of how are you thinking about the cadence of disbursements and any potential impacts from some of the, aims to sort of pause some of this IRA funding?

[Carolyn Burke, Executive VP & CFO at PG&E]

Yes. We did close that in January. I'll just remind you that the DOE loan, is not in our plans. We would simply finance with any normal course for, personal mortgage bond issuance, another option and flexibility that's built into our plan. Right now, we would expect 2025.

[Carolyn Burke, Executive VP & CFO at PG&E]

We have not just to be clear, we have not yet requested or received any advances from the loan. We do expect 2025 to be fairly slow, and, really just, to pick up later in the later 2026 through 02/1930 timeframe. But again, it's not included in our plan.

[Operator]

Our final question will come from the line of Greg Orrill with UBS.

[Gregg Orrill, Analyst at UBS Group]

Yes. Thank you. Hi, Patty. Hi, Carolyn.

[Carolyn Burke, Executive VP & CFO at PG&E]

Hi, Greg.

[Patti Poppe, CEO at PG&E]

Hi.

[Patti Poppe, CEO at PG&E]

How are you?

[Gregg Orrill, Analyst at UBS Group]

Good. Good. Just you talked about the potential to bring CapEx into the plan from SB410 and related to the load growth that you're seeing. And sort of the implications around that extending the runway of growth and high grading the company, how do you think about that as a possibility of raising the growth rate? I know it's already industry leading.

[Patti Poppe, CEO at PG&E]

Yes. I mean, Greg, I think that's the question. We think that our current industry leading growth rate is, the right growth rate. And we, as Carolyn mentioned, as we include or consider pulling in new CapEx, it would be to extend that for a longer period of time, to make it, more durable. We really want to always balance though to make the key criteria that it's affordable for customers and that we've got alignment with our regulators is really essential as we look at growing even further.

[Patti Poppe, CEO at PG&E]

And so, we're excited about what the growth means to us today, especially the large beneficial load and even EV loads, EV sales people. I know people are worried about EV sales. They've been flat year over year, and but still 28% of the state's vehicle purchases. That new electric demand enables us to lower costs for customers and helps fund making a grid that is safe and resilient. And I think, we really do look forward to our GRC filing later this year where you'll be able to see that in action.

[Patti Poppe, CEO at PG&E]

You'll be able to see our capital plan as well as O and M reductions that enable, a real interruption into what has been, double digit rate increases for last several, years and requests. We are very focused on interrupting, that pattern and demonstrating how the simple affordable model serves our customers, serves our state and enables this industry leading growth rate for investors. So, we'll, more to come on that.

[Gregg Orrill, Analyst at UBS Group]

Sounds good. Thanks.

[Patti Poppe, CEO at PG&E]

Thanks, Greg.

[Operator]

I will now hand today's call back over to Patty Poppy for any closing remarks.

[Patti Poppe, CEO at PG&E]

Thank you, Tamika. Well, thank you everyone for joining us today. We know you have a lot on your minds and it's a busy day, but we do want you to hear that we are very confident in our progress and our momentum. What was true about PG and E as we entered this year is still true today. We've got real catalyst to our growth story, real catalyst to our ability to best serve the people of California with the safest most reliable, system that meets our clean energy goals.

[Patti Poppe, CEO at PG&E]

That's our ambition and we're here to serve the people of California and we don't think there's another team who can deliver at scale like this team at this time. So, we hope to be in touch soon. I know the team's looking forward to seeing many of you in upcoming events in the coming week and month or weeks and month and we'll look forward to talking more as we continue our progress and our journey here at PG and E.

[Operator]

This does conclude today's call. Thank you for joining. You may now disconnect your lines.

Participants

Executives

• Jonathan Arnold, VP - Investor Relations
• Patti Poppe, CEO
• Carolyn Burke, Executive VP & CFO

Analysts

• Shar Pourreza, Senior Managing Director at Guggenheim Partners
• Steve Fleishman, Stock Analyst at Wolfe Research, LLC
• Nick Campanella, Analyst at Barclays Capital
• Richard Sunderland, Analyst at JPMorgan Chase
• Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group
• Anthony Crowdell, Managing Director at Mizuho Financial Group
• Carly Davenport, Analyst at Goldman Sachs
• Gregg Orrill, Analyst at UBS Group