Pacific Gas & Electric Q1 2026 Earnings Report

Pacific Gas & Electric EPS Results

• Actual EPS: $0.43
• Consensus EPS: $0.39
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.33

Pacific Gas & Electric Revenue Results

• Actual Revenue: $6.88 billion
• Expected Revenue: $6.20 billion
• Beat/Miss: Beat by +$676.43 million
• YoY Revenue Growth: +15.00%

Pacific Gas & Electric Announcement Details

• Quarter: Q1 2026
• Date: 4/23/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, April 23, 2026
• Conference Call Time: 11:00AM ET

Pacific Gas & Electric (NYSE:PCG) (NYSE: PCG) is an energy holding company whose principal subsidiary, Pacific Gas and Electric Company, provides regulated electricity and natural gas services. The utility delivers electricity through its transmission and distribution networks and supplies natural gas to residential, commercial, industrial and agricultural customers.

Pacific Gas and Electric Company serves a large portion of Northern and Central California, including the San Francisco Bay Area and the Central Valley. Its operations include maintaining electric and gas infrastructure, connecting customers to the grid, supporting wildfire-prevention and system-hardening programs, and advancing clean-energy and grid-modernization initiatives.

PG&E traces its utility history to the development of gas and electric services in California during the 19th century, while Pacific Gas and Electric Corporation was established in the 1990s as the parent company of the operating utility. The company is headquartered in Oakland, California, and operates under the oversight of the California Public Utilities Commission.

Pacific Gas & Electric Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: PG&E reported first-quarter core EPS of $0.43, reaffirmed full-year 2026 core EPS guidance of $1.64–$1.66 and 9%+ annual EPS growth through 2027–2030, and said no new common equity will be needed through 2030.
• Positive Sentiment: The company highlighted continued progress on affordability, implementing its fifth rate reduction since January 2024 — bundled rates down 23% for most vulnerable customers and 13% for other residential customers.
• Positive Sentiment: PG&E's continuous monitoring program prevented ~16 million unplanned customer outage minutes (12M in 2025, 4M in Q1 2026), produced 1,484 "good catches," and drove estimated savings (~$8M capital, ~$1M expense).
• Negative Sentiment: Wildfire liability reform remains a material uncertainty — executives warned that an insufficient legislative outcome could force a reevaluation of capital allocation and leave shareholders exposed to tail risk (including potential required contributions).
• Neutral Sentiment: Large-load momentum: 4.6 GW in final engineering, >10 GW of interest from the latest cluster study, and CAISO awarded ~$4.16B of transmission projects to PG&E, but timing and conversion to construction remain uncertain.

Presentation

[Operator]

Thank you for standing by. At this time, I would like to welcome everyone to the PG&E Corporation first quarter 2026 earnings release. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.

[Operator]

Today, we ask you to limit yourself to one question, one follow-up. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Jonathan Arnold, Vice President of Investor Relations. You may begin.

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

Good morning, everyone, and thank you for joining us for PG&E's first quarter 2026 earnings call. With us today are Patti Poppe, 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.

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

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. Some of the important factors which could affect our actual financial results are described on the second page of today's earnings presentation.

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

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 quarterly report on Form 10-Q for the quarter ended March 31st, 2026. With that, it's my pleasure to hand the call over to our CEO, Patti Poppe.

[Patti Poppe, CEO at PG&E]

Thank you, Jonathan. Good morning, everyone. I'm pleased to be with you this morning to report another quarter of strong progress on multiple fronts. Today, we announced core earnings per share for the first quarter of $0.43. This strong start puts us solidly on track to deliver again and reaffirm our full year 2026 core EPS guidance of $1.64-$1.66.

[Patti Poppe, CEO at PG&E]

At the midpoint, our guidance implies 10% growth over 2025 and would mark our fifth consecutive year of double-digit core earnings growth. Looking forward, we're reaffirming our EPS growth guidance for 2027 through 2030, which is unchanged at 9%+ annually.

[Patti Poppe, CEO at PG&E]

We're also reaffirming our five-year capital and financing plans, including zero new equity issuance needs through 2030. We continue to deliver for our customers on affordability. On March 1st, we lowered electric rates for the fifth time since January 2024.

[Patti Poppe, CEO at PG&E]

For our most vulnerable residential customers, bundled rates are now down 23%. For other residential customers, rates are down 13% over that same period. In February, our Diablo Canyon Nuclear Power Plant received the final state permit approvals needed to support extended operations through 2030, and in early April, the Nuclear Regulatory Commission granted Diablo Canyon a 20-year license extension.

[Patti Poppe, CEO at PG&E]

These actions underscore Diablo Canyon's critical role in supporting California's reliability and clean energy goals, although further action by the state is required in order to operate beyond 2030. Turning to slide 4. We remain focused on helping California build a durable, long-term wildfire solution. The CEA's report and recommendations provide a strong foundation as the legislature begins the next phase of this important work.

[Patti Poppe, CEO at PG&E]

We were encouraged to see the CEA emphasize the cost of inaction, noting that, and I quote, "Inaction perpetuates unaffordability for consumers and hinders the ability to attract the capital required to maintain safe, clean, and reliable infrastructure." End quote. This is a strong call to act for California policymakers.

[Patti Poppe, CEO at PG&E]

As we said last quarter, the CEA report marks the beginning of the legislative phase. With the session running through August, policymakers now have the opportunity to evaluate a menu of options across multiple pathways.

[Patti Poppe, CEO at PG&E]

We remain encouraged by the progress toward meeting the commitment made by the legislature last year to find and implement a long-term whole of society solution. That commitment began with last year's SB 254, followed by the Governor's executive order, the CPUC's submission to the CEA, and now the CEA's report.

[Patti Poppe, CEO at PG&E]

As I said last quarter, the status quo is neither sustainable nor affordable, and California needs a model that works for all stakeholders, whether they are those affected by wildfires, utility and insurance customers, communities, the state, and the capital providers needed to support a safe, reliable, and clean energy system.

[Patti Poppe, CEO at PG&E]

Turning to slide five. Our focus on wildfire mitigations remains clear and unwavering. We know this work is never finished, which is why we continuously look for better and more effective ways to strengthen our mitigations.

[Patti Poppe, CEO at PG&E]

Our operational mitigations, including PSPS, EPSS, and continuous monitoring, are making us safer every day and position us to respond effectively whatever the weather conditions. Looking forward, our long-term infrastructure hardening plans will combine safety and improved reliability and lower maintenance costs.

[Patti Poppe, CEO at PG&E]

Undergrounding is an important driver of customer affordability too, reducing the need for and expense of annual inspections and vegetation management. As you heard on our last call, the CPUC has now provided a clear path for us to request additional undergrounding through a 10-year plan.

[Patti Poppe, CEO at PG&E]

We're still on track to make this filing with the OEIS in the third quarter, including our next approximately 5,000 miles and covering years 2028 through 2037. Combined with the 1,900 miles of undergrounding we expect to have completed by the end of 2027, plus an additional 4,000 miles of overhead hardening, this would result in nearly 11,000 miles of planned system hardening through 2037, or more than three-quarters of the high fire threat miles we plan to harden based on our current risk modeling.

[Patti Poppe, CEO at PG&E]

We'll provide more detail in our 10-year filing, but in the meantime, we calculate that our undergrounding to date, over 1,200 miles, has already allowed us to avoid more than $100 million of maintenance spend, which otherwise would have been paid by customers. That is exactly the kind of durable affordability we're working hard every day to deliver for our customers.

[Patti Poppe, CEO at PG&E]

Looking at slide 6, you'll see our simple, affordable model as amplified last quarter, giving us line of sight to customer bill growth of 0%-3%. We call that our path to flat, a destination our customers would love.

[Patti Poppe, CEO at PG&E]

As noted earlier, in March, we implemented our fifth reduction in electric rates in two years. That's real progress on affordability, and this progress matters most for customers who need it most. Since January 2024, electric rates for our most vulnerable customers are down 23%.

[Patti Poppe, CEO at PG&E]

For our other residential customers, rates are now down 13%, about $300 less per year. That is real money. Turning to slide 7, you can see the progress we're making in enabling rate-reducing load growth. Projects are moving through our development pipeline with our final engineering stage increasing to 4.6 gigawatts since our year-end update.

[Patti Poppe, CEO at PG&E]

This progression from application to preliminary engineering and on to final engineering is a natural and expected part of the project cycle and reflects healthy forward momentum. We also recently initiated our third cluster study, and the results reinforce that there's strong interest across our service area.

[Patti Poppe, CEO at PG&E]

In total, customer interest exceeded an additional 10 gigawatts spanning multiple regions, including Silicon Valley and the Central Valley. Importantly, this demand remains diversified. There's no single project driving these totals. We're committed to only adding load that is definitively rate-reducing.

[Patti Poppe, CEO at PG&E]

We simply need to get the pricing right. Projects from this latest cluster study, which meet the rate-reducing threshold, will move through preliminary engineering over the next six months, refilling the pipeline funnel from the top as earlier projects mature. Importantly, this growth is occurring alongside significant resource additions across California.

[Patti Poppe, CEO at PG&E]

Since 2020, CAISO load serving entities have added more than 33 gigawatts of new resources to the grid, including over 7 gigawatts in 2025 alone. In addition, the CPUC is continuing their practice of issuing new build procurement orders, which have resulted in 22 gigawatts under contract through 2029.

[Patti Poppe, CEO at PG&E]

This kind of growth is good for customers and good for California's economy. Every gigawatt of new data center load can contribute to affordability by reducing electric bills by 1% or more, while also supporting thousands of construction jobs and generating $hundreds of millions in additional tax revenue.

[Patti Poppe, CEO at PG&E]

Before I hand it over to Carolyn, I'd like to tie all this together with my story of the month. This quarter, that story is about continuous monitoring and how we are shifting from reactive maintenance to proactive, data-driven risk management. Continuous monitoring uses sensors, our smart meters, analytics, and machine learning models to identify emerging issues on the system before they turn into outages, ignitions, or safety events.

[Patti Poppe, CEO at PG&E]

It's allowing us to see developing conditions in real-time and intervene earlier, often before there's any customer impact. We're seeing tangible operational benefits from this approach. Continuous monitoring helped us avoid approximately 12 million unplanned customer outage minutes in 2025 and another 4 million minutes in the first quarter of 2026. In many cases, these interventions occurred before customers were even aware there was a problem.

[Patti Poppe, CEO at PG&E]

Since the beginning of last year, we've had 1,484 good catches where sensor data flagged developing weaknesses or active events on the grid. 23 of these could have become ignitions but didn't. Identifying stressed equipment early also allows us to fix issues at a lower cost and avoid more expensive emergency repairs down the road.

[Patti Poppe, CEO at PG&E]

In fact, over that same 5-quarter period, early detection of stressed equipment helped us save an estimated $8 million of capital spend through lower cost repairs and over $1 million in expense by reducing time spent responding to emergency asset failures.

[Patti Poppe, CEO at PG&E]

Continuous monitoring is also improving how our teams work in the field. More precise diagnostics mean our troubleshooters spend less time searching for problems and more time fixing them, improving both productivity and safety.

[Patti Poppe, CEO at PG&E]

Taken together, our continuous monitoring program is an important step forward and an example of how we manage risk, control costs, and deliver reliable service. With that, I'll turn it over to Carolyn.

[Carolyn Burke, EVP and CFO at PG&E]

Thank you, Patti, and good morning, everyone. Turning to slide 9, you can see our first quarter 2026 earnings walk. Core earnings for the quarter were $0.43, up $0.10 from the first quarter last year, putting us in position to once again deliver on our plan. Customer capital investments contributed $0.06.

[Carolyn Burke, EVP and CFO at PG&E]

Of that, $0.02 reflects ongoing execution of our capital plan and the associated return on rate base, including CPUC ROE. We also have a $0.04 benefit related to February's final commission decision in our 2023 WIMSE application.

[Carolyn Burke, EVP and CFO at PG&E]

Non-fuel O&M savings contributed an additional $0.02, partially offset by our decision to redeploy $0.01 back into the business. Timing and other was a $0.03 tailwind in the quarter compared to the prior year.

[Carolyn Burke, EVP and CFO at PG&E]

As we look forward to the balance of 2026, you can count on us to remain focused on disciplined execution and delivering our guidance while taking a thoughtful approach to redeploying savings in ways that benefit customers and help to de-risk 2027 and beyond. On slide 10, there is no change to our five-year $73 billion capital plan through 2030.

[Carolyn Burke, EVP and CFO at PG&E]

We continue to see strong demand for customer beneficial investment across our transmission and distribution systems, and we still see at least $5 billion of incremental customer investment opportunity outside the current plan.

[Carolyn Burke, EVP and CFO at PG&E]

We have flexibility in how and when we may pursue these additional opportunities to ensure we're making the right decisions for customers and investors. Our preference today remains making the plan better by prioritizing bringing in investment, which enable new beneficial load and help lower rates for our core customers over time.

[Carolyn Burke, EVP and CFO at PG&E]

We could make the plan longer by extending the duration of our top-tier rate base growth. A third option, though not one we're considering right now, is to make the plan bigger by adding to our current $73 billion plan envelope. Taken together, these options give us confidence that we have flexibility in the plan and that we can continue to deploy growth capital in a disciplined way, while at the same time supporting affordability, growth, and long-term value creation for owners.

[Carolyn Burke, EVP and CFO at PG&E]

Turning to slide 11, our five-year financing plan is also unchanged from our prior call. The plan continues to be built on conservative assumptions, which align with the guideposts I've previously shared. First, our plan is built to require no new common equity through 2030. Second, we remain focused on achieving investment-grade ratings, including sustaining FFO to debt in the mid-teens.

[Carolyn Burke, EVP and CFO at PG&E]

Third, we continue to target ramping up to a 20% dividend payout ratio by 2028, then maintaining that level through 2030. In February, we took advantage of favorable market conditions to execute two financings. We issued $1 billion of parent-level junior subordinated notes, opportunistically starting to address 2027 parent funding needs.

[Carolyn Burke, EVP and CFO at PG&E]

There is no change to our guidance for a net $2 billion of financing from parent debt and other through 2030. At the utility, we issued $2.2 billion of first mortgage bonds covering roughly half of our 2026 utility debt needs, which remain unchanged.

[Carolyn Burke, EVP and CFO at PG&E]

From a capital allocation perspective, and in light of encouraging indications that the state is serious about pursuing additional wildfire reform, we continue to see our current plan as the right one for both customers and investors.

[Carolyn Burke, EVP and CFO at PG&E]

However, I'll reiterate that if we stop seeing progress towards reforming the wildfire risk model, you can be sure that we will actively reevaluate all aspects of our capital allocation plan. On slide 12, we continue to make steady progress toward investment-grade credit ratings, and I'm encouraged by the momentum we're seeing.

[Carolyn Burke, EVP and CFO at PG&E]

Following our fourth quarter call, Moody's revised their outlook to positive, reflecting continued improvement in our credit trajectory. Our focus on strong financial ratios, disciplined holding company leverage, and continued progress on wildfire mitigation directly supports the criteria for potential upgrades.

[Carolyn Burke, EVP and CFO at PG&E]

As I've noted before, achieving investment grade is a key milestone for us. It will lower our borrowing costs and translate into $hundreds of millions in customer savings over the life of the debt we issue, creating a durable affordability driver for customers not currently assumed in our plan.

[Carolyn Burke, EVP and CFO at PG&E]

On slide 13, we're reinforcing that we continue to see a path to deliver 2%-4% long-term reductions in non-fuel O&M even after absorbing inflation and other cost pressures. Executing against our simple, affordable model is how we keep our capital program affordable for customers.

[Carolyn Burke, EVP and CFO at PG&E]

Sustained reductions in non-fuel O&M are a key element, allowing us to grow our plan and fund the investments our system needs while also protecting customer bills. In addition to the great example of continuous monitoring Patti mentioned, we continue to innovate and drive efficiencies in our field operations by applying technology.

[Carolyn Burke, EVP and CFO at PG&E]

By leveraging satellite and Lidar, we're improving the quality and consistency of inspections while reducing the volume of patrols, lowering contractor reliance, and enhancing safety in the field. Taken together, these changes are expected to deliver $24 million in annual O&M savings this year alone.

[Carolyn Burke, EVP and CFO at PG&E]

This is another tangible example of how targeted technology investments support our long-term non-fuel O&M trajectory. Slide 14 highlights major regulatory and legislative milestones we're monitoring this year.

[Carolyn Burke, EVP and CFO at PG&E]

On the regulatory front, following our fourth quarter call, we received our 2025 safety certificate from the CPUC, which is valid for 12 months through early March 2027. Additionally, as Patti mentioned, we're on track to file our 10-year underground plan with the OEIS in the third quarter.

[Carolyn Burke, EVP and CFO at PG&E]

I'll end here on slide 15 by pointing out our differentiated story. We're proud of what we've accomplished, and we know there's still plenty of opportunity in front of us to continue delivering for our customers and our investors. We're focused on doing just that day in and day out. With that, I'll hand it back to Patti.

[Patti Poppe, CEO at PG&E]

Thank you, Carolyn. Before we take your questions, I'd like to recap where we stand as we're building California's energy future. We delivered a strong first quarter, putting us firmly on track for another year of double-digit earnings growth. Safety remains our highest priority. We continue to strengthen our wildfire layers of protection.

[Patti Poppe, CEO at PG&E]

We continue to make real progress on affordability with a 23% reduction for our most vulnerable customers since January 2024. At the same time, we're seeing good progression of our rate-reducing large load pipeline, and we're encouraged by California's focus on constructive wildfire reform. With that, operator, please open the lines for questions.

[Operator]

At this time, I would like to remind everyone in order to ask your one question and one follow-up, press star then the number one on your telephone keypad. Your first question comes from the line of Shar Pourreza with Wells Fargo Securities. Please go ahead.

[Patti Poppe, CEO at PG&E]

Morning, Shar.

[Shar Pourreza, Managing Director and Head of North American Power, Infrastructure and Utilities at Wells Fargo Securities]

Hey, guys. Good morning.

[Patti Poppe, CEO at PG&E]

Morning, Shar.

[Shar Pourreza, Managing Director and Head of North American Power, Infrastructure and Utilities at Wells Fargo Securities]

Morning, Patti.

[Patti Poppe, CEO at PG&E]

Hi.

[Shar Pourreza, Managing Director and Head of North American Power, Infrastructure and Utilities at Wells Fargo Securities]

Morning. Just you know, Patti, you've been vocal about not wanting to see the can kicked down the road on legislation. I mean, obviously, that would be a bad outcome in your view. I guess, how should we think about capital allocation, like the buybacks, in case some aspects of the CEA report get passed, but we don't get something that is all-encompassing.

[Shar Pourreza, Managing Director and Head of North American Power, Infrastructure and Utilities at Wells Fargo Securities]

Step in the right direction, but not the Goldilocks scenario. Is some progress a bad outcome if certain key aspects get pushed into 2027? I know it's obviously a tight window and California's dealing with a lot. Just get a sense there. Thanks.

[Patti Poppe, CEO at PG&E]

Yeah. Thanks, Shar. First and foremost, I would just reiterate that we're encouraged by the progress to date. We do think the right conversations are happening with the right folks, and we feel good and encouraged about that. I'll just offer that there's obviously minimum outcome to prevent additional costs being borne by shareholders and this tail risk being able to be measured and understood.

[Patti Poppe, CEO at PG&E]

We know that that's a very important floor for an outcome here. As we've been very clear, we've been reiterating far and wide the value of the investor-owned utility model. We've been advocating for the importance of the capital that we are able to attain from the capital markets, from our investors, and how important that is to making our infrastructure investments affordable for Californians.

[Patti Poppe, CEO at PG&E]

That as we spread out the cost of infrastructure over time because of the great capital that is deployed by our important owners, that is good for customers. An important outcome of SB 254 is that we can attract low-cost capital to invest in that infrastructure to help California grow and make our energy costs more affordable for customers here.

[Patti Poppe, CEO at PG&E]

I'll say all that backdrop to say that we feel like our capital allocation and our model is working. We're lowering rates while we're deploying our capital today. We think right now is not the time to change that plan. We know that the simple, affordable model is the best plan for customers and investors, and so we're very bullish on that.

[Patti Poppe, CEO at PG&E]

Now, to the ultimate heart of your question, if that doesn't occur, if we don't get a minimum outcome that's essential, then obviously we'll have to look at, and we will not avoid looking at our entire capital allocation plan, the whole financial plan.

[Patti Poppe, CEO at PG&E]

I'm not going to rack and stack how we would think about that here on this call, but I will just say that all aspects of the plan will have to be on the table, and we'll take a look at doing what's best in totality. For now, we are encouraged by the progress that's being made and the level of attention to the issue.

[Shar Pourreza, Managing Director and Head of North American Power, Infrastructure and Utilities at Wells Fargo Securities]

Got it. Perfect. I appreciate that, and good luck there. Patti, just lastly, I mean, I know obviously you keep highlighting the data center opportunity in the context of savings and bill reductions.

[Shar Pourreza, Managing Director and Head of North American Power, Infrastructure and Utilities at Wells Fargo Securities]

Probably that's the right messaging in this environment. Is there a point you can convert that into an earnings impact like some of your peers? I mean, 4.6 gigs in final engineering is somewhat material. I guess at what point does large load growth drive significant new transmission investments? Thanks.

[Patti Poppe, CEO at PG&E]

Well, I would say that it is, and we shared on our Q4 call that we've added more CapEx for transmission into our $73 billion capital plan. Given all of our circumstances, we think our $73 billion plan is the right plan.

[Patti Poppe, CEO at PG&E]

The idea that we would make that bigger would take some other changes, I would say, over time. Right now, as Carolyn has been very consistent in sharing, that we want to make the plan better. When we say better, what we mean by that is by pulling in that transmission and data center load growth, if it makes it more affordable for customers, that's better.

[Patti Poppe, CEO at PG&E]

We've been very disciplined about our cluster study work, and when we talk about final engineering, we're sharing real costs with our potential large load customers, and they're signing on for them that are absolutely not just from a soundbite or a marketing perspective, but an absolute rate-reducing new CapEx investment.

[Patti Poppe, CEO at PG&E]

That makes our capital plan even better. There will come a time, I think, particularly after SB 254 phase two resolution at the end of the legislative session, that we should look at if the conditions are such that we could make the plan bigger, but that's just not now.

[Shar Pourreza, Managing Director and Head of North American Power, Infrastructure and Utilities at Wells Fargo Securities]

Got it. Perfect. Thank you again. Appreciate it. See you soon.

[Patti Poppe, CEO at PG&E]

Yeah. Thanks, Shar.

[Operator]

Your next question comes from the line of Nicholas Campanella with Barclays. Please go ahead.

[Nicholas Campanella, Director and Senior Equity Research Analyst at Barclays]

Hey, good morning. Good morning. Thanks for all the updates. I just wanted to ask a follow-up on just the legislation and just there was a lot put forward by the CEA, like three separate phases. It's a big menu of things.

[Nicholas Campanella, Director and Senior Equity Research Analyst at Barclays]

I guess just where are you kind of drawing the line, and what is sufficient? Is it more about having some type of permanent cap, if I'm reading your response correctly? In the last legislative session, shareholders did have to participate in some instances there. How are you thinking about that for phase two? Thanks.

[Patti Poppe, CEO at PG&E]

Yeah. Thanks, Nick. The most important thing we think is the whole of society approach. We think the governor was clear and the CEA report reflects there are multiple aspects of wildfire liability reform that would be important for all Californians. Because remember, all fires in California are not caused by utilities.

[Patti Poppe, CEO at PG&E]

Insurance access in California is a real challenge to homeownership. We have a housing crisis in California, making sure that we have an insurable housing market is very essential for the state.

[Patti Poppe, CEO at PG&E]

Well beyond utility concerns, the CEA report reflects a whole of society approach. We think that's smart because we're Californians, too, and we care about what happens here and what happens to all Californians, not just those impacted by a utility wildfire.

[Patti Poppe, CEO at PG&E]

Now, that being said, I am the CEO of the utility, so I do have a point of view that we need to make sure that the tail risk of wildfire liability is one that shareholders and investors can model, can predict, and know how great the risk is so that you can feel comfortable investing your clients' pension funds and retirement funds into our infrastructure here in California.

[Patti Poppe, CEO at PG&E]

Our minimum is very important that we have ability to see and model and quantify what that tail risk is. Now, on shareholder contributions, as we're required in the SB 254 phase one, that is a question that's part of a total look of the value of the fix. The totality of the legislative action will determine whether there's any reason to make additional contributions. The package would have to be looked at as a package.

[Patti Poppe, CEO at PG&E]

If it doesn't improve the status quo, then contributions would be unacceptable. If there's a dramatic improvement to the status quo, we obviously would be in dialogue with policymakers.

[Nicholas Campanella, Director and Senior Equity Research Analyst at Barclays]

Thank you. That's very clear. I appreciate that. I just had another question because it's kind of come up to the fore recently, just the governor election in the state, for various reasons, has been more of a focus for folks.

[Nicholas Campanella, Director and Senior Equity Research Analyst at Barclays]

I know that there's been some calls from various candidates on returns and affordability, and maybe even notably a rate freeze, but I do recognize on slides in the simple affordable model, you're showing that you're pretty well-positioned against that.

[Nicholas Campanella, Director and Senior Equity Research Analyst at Barclays]

Just what's the strategy here to kind of make that resonate with new policymakers? I guess, just how high-graded is the plan if we were to go that way with some of the more draconian things that are being pitched right now?

[Patti Poppe, CEO at PG&E]

Yeah, look, the good news is this. Number one, whomever is elected governor of the state of California, we're going to want what they want, and that's affordable utility rates. The even better news is performance is power, and we are performing.

[Patti Poppe, CEO at PG&E]

As I mentioned, we've reduced rates five times in the last two years. Our most vulnerable customers' bills and rates are down 23%. That is meaningful progress that we can point to. Politicians have to say what they have to say, I guess, to get elected.

[Patti Poppe, CEO at PG&E]

When it comes down to brass tacks and we actually have to do what's promised, I think our performance is a key enabler to our ability to work with whomever is elected to do exactly what these politicians want. We want the same thing. We want a healthy, vibrant California powered by PG&E, and the IOU model is essential to the growth and prosperity of California.

[Nicholas Campanella, Director and Senior Equity Research Analyst at Barclays]

Okay. Thank you.

[Patti Poppe, CEO at PG&E]

Thanks, Nick.

[Operator]

Just a reminder, please limit your questions to one and one follow-up. Your next question comes from the line of Steve Fleishman with Wolfe Research. Please go ahead.

[Patti Poppe, CEO at PG&E]

Good morning, Steve.

[Carolyn Burke, EVP and CFO at PG&E]

Hi, Steve.

[Steve Fleishman, Equity Research Analyst at Wolfe Research]

Hey, good morning, Patti, Carolyn. I just think your comments are pretty clear on what you kind of want out of a law. Just when you look at the different proposals or structures that were in the wildfire report, are there any of the ones that best met what you want and you think other parties, stakeholders as well?

[Patti Poppe, CEO at PG&E]

Yeah, I think, Steve, I think this whole of society look is super important. The three pillars, looking at hardening our communities from spread, so important. It's one thing to prevent an ignition, but when the 100-mile-per-hour winds are here, we need to make sure that our communities are ready and that they are built for purpose.

[Patti Poppe, CEO at PG&E]

Just like in hurricane zones, making sure that we get those building codes and implementation of those codes, that'd be very important to de-risking our communities. Obviously that's a good thing.

[Patti Poppe, CEO at PG&E]

The liability limits and liability reform is something that we feel strongly should be looked at, particularly when a utility can demonstrate prudence and can demonstrate that through their wildfire mitigation plan, they are prudent. Then finally, any kind of state backstop obviously helps to manage that tail risk.

[Patti Poppe, CEO at PG&E]

What I'll tell you is there's lots of paths to Oz here. There are all sorts of vehicles and methods and mechanisms. The report I thought did a good job of outlining multiple paths. We don't need everything in that. In fact, some of them were intentionally this or that.

[Patti Poppe, CEO at PG&E]

I think now is the heavy lifting for the legislature to really consider what's the totality package, what is the state's ambition to truly create a wildfire liability construct that works for everyone and works best. We're, as I've said, encouraged by the conversations that have ensued so far.

[Steve Fleishman, Equity Research Analyst at Wolfe Research]

I guess one related question of just somebody brought up the governor election and obviously we had this shakeup occur. Is there any way to interpret whether that actually adds more impetus to address this wildfire law this year or the other way around? Is it disruptive to it? Just, yeah, any thoughts there?

[Patti Poppe, CEO at PG&E]

I would say the governor, Governor Newsom, has done incredible work over his time as governor to address these major fundamental issues with wildfire risk in the state. I think he's probably the leading governor in the nation who has taken and led his legislative bodies through major reform in this area on his watch.

[Patti Poppe, CEO at PG&E]

As he indicated, and we're just from the reports and the executive order that he issued, I think he's expressed interest in having a real fix, but he can't act alone. He's got to have the legislature with him. It's been good to see legislative leadership describing a desire to really get into this issue. I look forward to them being able to do their job.

[Patti Poppe, CEO at PG&E]

I think unrelated as much to the Governor's election, but for the fact that it's Governor Newsom's last year in office here in California, I think he's made it clear that he'd really like to see action on this.

[Steve Fleishman, Equity Research Analyst at Wolfe Research]

Great. Thank you.

[Patti Poppe, CEO at PG&E]

Yep. Thanks, Steve.

[Carolyn Burke, EVP and CFO at PG&E]

Mm-hmm.

[Operator]

Your next question comes from the line of David Arcaro with Morgan Stanley. Please go ahead.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Oh, hi. Thanks so much.

[Patti Poppe, CEO at PG&E]

Hi, David.

[Carolyn Burke, EVP and CFO at PG&E]

Hi, David.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

I was wondering on the data center side of things, when might you expect to refill that bucket of application and preliminary engineering within the pipeline? Maybe more broadly, just what has been the pace of data center demand and conversations that you've been seeing?

[Patti Poppe, CEO at PG&E]

I would say, first of all, the cluster study that we've initiated, we call it Cluster 26, our third cluster study, initiated has shown significant demand. As we look at how we do the engineering, we do that over the next 6-8 months. We do parallel engineering of all the projects.

[Patti Poppe, CEO at PG&E]

This has been a real enabler to minimizing costs for any one project, maximizing shared infrastructure investment, and really getting a clear eye of where the capacity needs to be either added or leveraged where we have existing capacity. One of the, I would say, the big developments we're seeing lately is more interest outside of just the Bay Area. That's exciting.

[Patti Poppe, CEO at PG&E]

I'll just tell you, I was at a conference, an EEI key accounts conference with all our large customers, and I was on a panel with a, I'll just call it a Class A data center developer. As he and I were talking before we went on stage, he, and this is a major data center developer, was unaware we had additional capacity here in California.

[Patti Poppe, CEO at PG&E]

I think we still have a job to get the word out that California is open for business. We've added 33 GW of capacity to the California grid, and we've got 22 GW more under contract for the next 4 years. That is significant capacity being added on a grid that is underutilized because of our low air conditioning demand.

[Patti Poppe, CEO at PG&E]

We really have an opportunity to serve these large load customers, and I think word's getting out, and our third Cluster 26 really has demonstrated that. I would say as you can see, as we indicated, 10+ gigawatts showing interest, that's in the early phases of that cluster study. As we do the engineering, obviously some of that'll fall out.

[Patti Poppe, CEO at PG&E]

We've seen that over time, but as you can see, we continue to move closer and closer to actual construction and being online. We still expect to have about 1.8 gigawatts online by 2030.

[Patti Poppe, CEO at PG&E]

Again, these are multiple projects. No one silver shovel, as I like to say. This is, I just say all good for California, for California's tech industries, for the customers who leverage technology, and for all of the people who use the grid in California, this is a big win-win.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Oh, great. Yep, that's helpful. I guess, I think you kind of alluded to this also in that response, too, but I was just curious, you've got significant electric bill reduction coming as you start to bring this online.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Could you just help with a sense of when those data centers are coming online and when customers would end up seeing some of that bill reduction to kind of add on top of what you've been highlighting and achieving on the affordability side of things?

[Patti Poppe, CEO at PG&E]

So the 1.8 GW that will be online by 2030, we forecast that to be about a 1%-2% rate reduction for that time period. When you add that into our simple, affordable model, remember, this is the way that we've been reducing rates already. There's very limited large load that's contributed to the 23% rate reduction for our most vulnerable customers and 13% rate reduction to date.

[Patti Poppe, CEO at PG&E]

That's been delivered through the simple, affordable model. Converting our capital O&M ratio to a more capital, less O&M, reducing our maintenance costs through more efficient operations, and as Carolyn mentioned, $26 million of savings by transforming how we do inspections. Those inspections are all O&M. One of the secret sauces here at PG&E is our O&M reduction capacity, and that is the most beneficial, quickest way to lower rates for customers.

[Patti Poppe, CEO at PG&E]

Of course, investment-grade credit metrics would also help lower bills for customers, and large load as we transition forward is in the future years, our pathway, as we like to say, our path to flat, that is being driven by all of those factors, O&M reductions, more efficient financing, and large load, and the large load in the latter half of the plan.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Okay, perfect. Thanks so much.

[Patti Poppe, CEO at PG&E]

Thank you.

[Operator]

Your next question comes from the line of Anthony Crowdell with Mizuho. Please go ahead.

[Anthony Crowdell, Managing Director at Mizuho]

Hey, good morning.

[Patti Poppe, CEO at PG&E]

Hi, Anthony.

[Anthony Crowdell, Managing Director at Mizuho]

How's it going? A follow-up to David's question on the, I'm curious on the conversion from final engineering to construction, just your confidence in, obviously, you've had an increase there up to 140, just as that 4,600 now is in final engineering, confidence of converting that to the construction mode, and then I have a follow-up.

[Patti Poppe, CEO at PG&E]

Yeah. First of all, one thing to remember about how this large load gets approved and financed here in California, our generation capacity is driven through the California Energy Commission, CAISO, and the CPUC, and that's why we've added 33 gigawatts. That process is working really well.

[Patti Poppe, CEO at PG&E]

I know that some of the ISOs across the country are struggling to get new large load built. We're getting capacity added to the grid. In order to get one of these large load customers, they can leverage that capacity that's been added to the grid without having to do one-on-one contracts per se.

[Patti Poppe, CEO at PG&E]

When we talk about final engineering, we're predominantly talking about transmission and the transmission engineering that's required, because in a lot of cases, we're able to just do a direct connect dual feed with a backup online, on-site in order to deliver the reliability that these large data centers require.

[Patti Poppe, CEO at PG&E]

To answer your question specifically, Anthony, we think there's a high conversion, but we've not been at this stage with this volume before, and so we're buttoning up all the final details with our counterparties.

[Patti Poppe, CEO at PG&E]

The fact that they're moving forward, they're putting money on the table. These aren't final agreements, but they're awfully close, and they're putting real forecasted expectations for bringing load online. We'd say that process is working, but these will be important tests here, these 4 gigawatts, to see how much that actually goes to construction.

[Patti Poppe, CEO at PG&E]

We're pretty optimistic that a lot of it will. That's why we forecasted 1.8 gigawatts by 2030. Right now, you can use that as simple math, but those numbers could change here in the coming months.

[Anthony Crowdell, Managing Director at Mizuho]

Great. A follow-up on the $5 billion of incremental investment opportunities. I know, I think third quarter, you're going to file an undergrounding plan, and the miles are kind of subject to approval. How much of the $5 billion of incremental opportunities is dependent on the approval for the undergrounding plan, or the undergrounding plan would be incremental to this $5 billion?

[Patti Poppe, CEO at PG&E]

Yeah. Unrelated. We built in a level of undergrounding and around $1 billion a year in our $73 billion plan, and that's what's built into our assumptions. When we talk about the $5 billion, we talk more about accelerating reliability improvements, accelerating new business connections, accelerating these large loads, including more and more transmission infrastructure investment in our plan.

[Patti Poppe, CEO at PG&E]

Because right now we're making trades between where best to deploy capital. We have plenty of capital to deploy, and we're really working from affordability and our balance sheet, our key drivers to how much capital we deploy, which is why we love our plan. We think it's the best. It really threads the needle for customers and investors. Anything we add to the plan at this juncture means something else is coming out.

[Patti Poppe, CEO at PG&E]

That's why we would say that the $73 billion incorporates all of those things.

[Anthony Crowdell, Managing Director at Mizuho]

Great. Thanks for taking my questions.

[Patti Poppe, CEO at PG&E]

Yeah. Thanks, Anthony.

[Operator]

Your next question comes from the line of Gregg Orrill with UBS. Please go ahead.

[Patti Poppe, CEO at PG&E]

Morning, Gregg.

[Carolyn Burke, EVP and CFO at PG&E]

Good morning.

[Gregg Orrill, Executive Director and Equity Analyst at UBS]

Yeah. Hi, good morning. Thank you for the question. I was wondering about settlement discussions in the rate case, if you've had any, and just your general thoughts on how that's going, and if settlement is at all likely. Thank you.

[Patti Poppe, CEO at PG&E]

Yeah. I would say, first of all, evidentiary hearings will be here throughout May, and I think that's an important step in the process. That may create an opportunity for settlement, and so we would never rule out settlement. Obviously, we've settled cases in the past. We've also gotten pretty strong indications from the CPUC that they like to do a fully adjudicated GRC. We're open to both.

[Patti Poppe, CEO at PG&E]

We think we've filed a great case. We think, given our commitment to affordability and our follow-through on what we promised the commission we would be doing with rates, and they're watching it happen, I think we enter those discussions as a real trusted counterparty, and we look forward to the hearings throughout May.

[Gregg Orrill, Executive Director and Equity Analyst at UBS]

Thank you.

[Patti Poppe, CEO at PG&E]

Thanks, Gregg.

[Operator]

Your next question comes from the line of Ryan Levine with Citi. Please go ahead.

[Ryan Levine, Equity Analyst at Citi]

Good morning.

[Patti Poppe, CEO at PG&E]

Hi, Ryan.

[Carolyn Burke, EVP and CFO at PG&E]

Morning, Ryan.

[Ryan Levine, Equity Analyst at Citi]

Hey. Two questions. One, just in general, how does the summer look for weather into wildfire season? Secondly, as you continue to look to optimize capital allocation into potential scenarios around CapEx, whether it's growth or something else, how do you look at what credit metrics to maintain on your holding company leverage?

[Patti Poppe, CEO at PG&E]

Well, I'll take the weather question, and then I'll pass off to Carolyn on the credit metrics. On the forecast for weather, look, one thing I've learned, we have incredible scientists here at PG&E who are extraordinary weather predictors, but our strategy is not to count on weather prediction.

[Patti Poppe, CEO at PG&E]

We count on being ready every day. Regardless of the conditions, we are in a position and a posture to respond and to be prepared and to prevent. As I shared in my prepared remarks, this continuous monitoring application to our grid is extraordinary.

[Patti Poppe, CEO at PG&E]

I cannot overstate how exciting it is to us here at the company to look at the potential of being able to move from a reactive grid operations to proactive grid operations with visibility, knowledge, and forethought before conditions materialize and before a branch grows into a tree, before a line has any kind of degradation.

[Patti Poppe, CEO at PG&E]

We can see it before a transformer might have early signals of failure. We are moving into a fully predictive grid posture. We're not there yet, but boy, oh boy, are we making progress, and this continuous monitoring gives us a lot of confidence heading into this wildfire season that we have the posture required to prevent catastrophic wildfires.

[Patti Poppe, CEO at PG&E]

We're working hard to make sure that we deploy those sensors and leverage that technology as quickly and as affordably as possible because it is so beneficial. I'll go ahead and kick it over to Carolyn for the credit question.

[Carolyn Burke, EVP and CFO at PG&E]

Yeah. Just as a reminder, stepping back, our current plan is certainly built around three things, as we've said. No equity, particularly at today's low valuation. We want to maintain the common dividend, which provides us with flexibility. We do have some modest parent level debt financing in the plan at the end, but we are maintaining that 10%.

[Carolyn Burke, EVP and CFO at PG&E]

That's all built around maintaining our IG level credit metrics today. Post SB 254, I think that's what you're getting at, and looking at a different capital allocation, as we said, everything's on the table at that point in time. All elements of that plan that I just went through will be on the table to be considered at that point in time.

[Carolyn Burke, EVP and CFO at PG&E]

What I'll say is that you can just really count on us to look at market conditions. We're going to be looking at what's going on with our stock price, what's going on with interest rates, what is the overall environment, and we'll come to that conclusion at that time.

[Ryan Levine, Equity Analyst at Citi]

Okay. I appreciate the sensitivity, but is there any color you could share around whether special dividends or ratable dividends or buybacks that we should consider in those type of scenarios?

[Patti Poppe, CEO at PG&E]

Hey, Ryan, it's Patti. Yeah, as I've said, we're just not going to rack and stack the alternatives here today. We're going to make sure that we do first things first, and that's to get a solid SB 254 outcome.

[Ryan Levine, Equity Analyst at Citi]

appreciate the time. Thanks.

[Patti Poppe, CEO at PG&E]

Yep. Thank you.

[Operator]

Your next question comes from the line of Richard Sunderland with Truist Securities. Please go ahead.

[Richard Sunderland, Managing Director and Equity Research at Truist Securities]

Hey, good morning. Can you hear me?

[Patti Poppe, CEO at PG&E]

Yep, we can hear you.

[Carolyn Burke, EVP and CFO at PG&E]

Yep.

[Richard Sunderland, Managing Director and Equity Research at Truist Securities]

Thank you. Just one from me. Given the transparency in the SB 254 Phase 2 process, recent CEA report. Do you expect any new look to the legislative process this summer, like an earlier bill introduction or more debate on public debt, or I guess anything else that offers more external insight into where the process stands?

[Patti Poppe, CEO at PG&E]

Well, we don't know exactly how the legislature is going to approach this, but we do know that the Assembly Energy Committee chair, Cottie Petrie-Norris, had indicated that she had hoped to hold hearings sometime in May. She said that in public statements. We're hoping that gets followed through on.

[Patti Poppe, CEO at PG&E]

We do think hearings will be important because it's a complex subject, and we think the more our legislators and these important committees, both the insurance and the energy committees in the Senate and the Assembly, understand the alternatives, they'll see what the CEA report really was conveying, that inaction is not a good path forward.

[Patti Poppe, CEO at PG&E]

Inaction would be really just not an option. It's unaffordable. It's too expensive and too regressive. We know our policy makers, when they understand that, will want to take the appropriate actions.

[Patti Poppe, CEO at PG&E]

The good news is the CEA report provides multiple alternatives for consideration that would dramatically improve the status quo. We look forward to those hearings, and we look forward to the discussion and how it transpires here over the legislative session between now and the end of August.

[Richard Sunderland, Managing Director and Equity Research at Truist Securities]

Appreciate the thoughts. Thank you.

[Patti Poppe, CEO at PG&E]

Thanks, Rich.

[Operator]

Your next question comes from the line of Carly Davenport with Goldman Sachs. Please go ahead.

[Analyst at Goldman Sachs]

Hi.

[Patti Poppe, CEO at PG&E]

Good morning, Carly.

[Analyst at Goldman Sachs]

Good morning. Hi, good morning. This is Beatrice.

[Patti Poppe, CEO at PG&E]

Oh, hi, Beatrice.

[Analyst at Goldman Sachs]

for Carly, actually. Thanks for taking the question. Yeah, I had a question on the CAISO transmission project. Could you give us a sense of where things stand in terms of getting to a final approved status? Are there any projects that you're more optimistic could clear the final iteration this year? And then how should we think about the financing strategy for these projects? Thank you.

[Patti Poppe, CEO at PG&E]

Yeah. Thanks, Beatrice. Great questions. We're excited to report the transmission planning process from CAISO has completed, and they've awarded 25 projects for 2025, 2026 planning, totaling $4.16 billion of projects for PG&E.

[Patti Poppe, CEO at PG&E]

This is a big improvement for PG&E. I think there was a period of time where the CAISO was not sure that PG&E could follow through and do these transmission projects at this scale, and their determination certainly has shown that they have confidence that of 26 projects, 25 were awarded to PG&E, and we're proud of that. All of those projects are currently built into our $73 billion capital plan. No change to the capital plan there, just our ability to go ahead and execute those.

[Analyst at Goldman Sachs]

Thank you. That's great. A quick follow-up on Diablo Canyon. Now that you got the license renewal, how are you thinking about appetite from the state to keep the plant on longer term?

[Patti Poppe, CEO at PG&E]

Yeah. Well, thank you for asking this question. I always love talking about Diablo Canyon. Look, we're very happy with the NRC's 20-year license renewal, and that was a big milestone for the team. I think they've earned that with their performance, their continued delivery of clean energy for the state of California, one of the best-operated nuclear plants in the country.

[Patti Poppe, CEO at PG&E]

Proud of their performance, and we think their performance was essential in that license renewal. Now, it is up to the legislature on whether the plant would be extended beyond 2030.

[Patti Poppe, CEO at PG&E]

I think the CPUC has been very clear that there's a real cost benefit in the billions of dollars of savings for customers by having Diablo remain online. There's a recent study by MIT that confirmed and validated CPUC's forecast. I think with affordability top of mind, I leave it in the hands of the legislature to take the necessary actions to extend the life beyond 2030. The economics certainly work.

[Analyst at Goldman Sachs]

Great. Thank you so much.

[Patti Poppe, CEO at PG&E]

Yep, thanks.

[Operator]

This concludes the question and answer session. I will now turn the call back over to Patti Poppe for closing remarks.

[Patti Poppe, CEO at PG&E]

Thank you, Jeannie. Well, thanks everyone for tuning in today. We know a lot of eyes, including ours, are on Sacramento and wildfire liability reform, and you can rest assured that our eyes are also on running a great utility. The PG&E transformation is on track. We have never been stronger or better positioned to serve, and it is our honor to do so. Thank you for joining us today. Stay safe out there.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you again for all joining. You may now disconnect.

Participants

Executives

• Carolyn Burke, EVP and CFO

Analysts

• Anthony Crowdell, Managing Director at Mizuho
• David Arcaro, Executive Director, Equity Research at Morgan Stanley
• Gregg Orrill, Executive Director and Equity Analyst at UBS
• Jonathan Arnold, VP of Investor Relations at PG&E
• Nicholas Campanella, Director and Senior Equity Research Analyst at Barclays
• Patti Poppe, CEO at PG&E
• Richard Sunderland, Managing Director and Equity Research at Truist Securities
• Ryan Levine, Equity Analyst at Citi
• Shar Pourreza, Managing Director and Head of North American Power, Infrastructure and Utilities at Wells Fargo Securities
• Steve Fleishman, Equity Research Analyst at Wolfe Research
• Analyst at Goldman Sachs