Pacific Gas & Electric Q1 Earnings Call Highlights

Key Points

• PG&E reported Q1 core EPS of $0.43 and reaffirmed full‑year 2026 core EPS guidance of $1.64–$1.66 (midpoint ~10% growth), while reiterating a longer‑term outlook of 9%+ annual EPS growth from 2027–2030.
• Management kept its five‑year capital plan unchanged at $73 billion through 2030, sees at least $5 billion of additional customer investment opportunity, and reiterated financing guideposts: no new common equity through 2030, a push for investment‑grade ratings, and a 20% dividend payout target by 2028; PG&E executed $1B of parent junior subordinated notes and $2.2B of first‑mortgage bonds while Moody’s moved its outlook to positive.
• Affordability and wildfire mitigation remain priorities: bundled rates for the most vulnerable customers are down 23% (others down 13%) since January 2024, and the company plans nearly 11,000 miles of system hardening through 2037 (including ~1,900 miles by end‑2027 and ~5,000 miles requested for 2028–2037).

Pacific Gas & Electric NYSE: PCG reported first-quarter 2026 core earnings per share of $0.43 and reaffirmed its full-year 2026 core EPS guidance range of $1.64 to $1.66, citing continued execution on wildfire mitigation, affordability initiatives, and capital deployment. Management said the company remains on track for what would be its fifth consecutive year of double-digit core earnings growth, and it reiterated its longer-term outlook for 9%+ annual EPS growth from 2027 through 2030.

Quarterly results and 2026 outlook

Chief Executive Officer Patti Poppe said the first quarter represented “another quarter of strong progress,” with the $0.43 core EPS result positioning the company to deliver on its annual plan. Poppe reiterated 2026 guidance of $1.64–$1.66 in core EPS and said the midpoint implies 10% growth over 2025.

Chief Financial Officer Carolyn Burke walked through key drivers of the quarter’s year-over-year change, noting that core EPS rose $0.10 versus the first quarter of the prior year. Burke said customer capital investments contributed $0.06, including $0.02 tied to ongoing execution of the capital plan and associated return on rate base (including CPUC ROE), as well as a $0.04 benefit related to February’s final commission decision in the company’s 2023 WIMSE application. She added that non-fuel O&M savings contributed $0.02, partly offset by a decision to redeploy $0.01 back into the business, while “timing and other” represented a $0.03 tailwind.

Capital plan, financing, and credit trajectory

Burke said there was “no change” to PG&E’s five-year $73 billion capital plan through 2030, and she reiterated management’s view that the company sees “at least $5 billion of incremental customer investment opportunity outside the current plan.” Burke described three potential levers for that incremental opportunity: making the plan “better” (prioritizing investment that enables new beneficial load and helps lower rates), making the plan “longer” (extending the duration of top-tier rate base growth), or making it “bigger” (adding to the $73 billion envelope), though she said the third option is not being considered “right now.”

On financing, Burke also said the five-year plan is unchanged and remains built on conservative assumptions. She reiterated three guideposts:

• No new common equity issuance through 2030.
• Focus on achieving investment-grade ratings, including sustaining FFO-to-debt in the mid-teens.
• Targeting a 20% dividend payout ratio by 2028, then maintaining that level through 2030.

Burke said PG&E executed two financings in February, issuing $1 billion of parent-level junior subordinated notes to “opportunistically” address 2027 parent funding needs, and issuing $2.2 billion of first mortgage bonds at the utility to cover roughly half of 2026 utility debt needs. She added that there is no change to guidance for net $2 billion of financing from parent debt and other through 2030.

Burke also highlighted credit momentum, saying Moody’s revised its outlook on the company to positive after the fourth-quarter call, reflecting “continued improvement in our credit trajectory.” She emphasized that achieving investment-grade status is a key milestone that would lower borrowing costs and “translate into $hundreds of millions in customer savings over the life of the debt we issue.”

Affordability actions and “simple, affordable model”

Poppe emphasized a focus on affordability, noting that the company lowered electric rates on March 1 for the fifth time since January 2024. She said bundled rates for the most vulnerable residential customers are now down 23% since January 2024, while rates for other residential customers are down 13% over that period.

Poppe also pointed to the company’s longer-term goal for customer bill growth of 0% to 3%, describing it as a “path to flat.” In response to questions about political scrutiny of utility returns and affordability, Poppe said, “performance is power,” pointing to the series of rate reductions as evidence the company can work with policymakers regardless of election outcomes.

Wildfire mitigation, undergrounding, and legislative reform focus

Poppe framed wildfire risk reform as a central topic for California policymakers, citing the California Economic Advisors (CEA) report and what she characterized as its emphasis on the “cost of inaction.” Poppe said policymakers have a “menu of options” as the legislative session runs through August, and she reiterated management’s view that “the status quo is neither sustainable nor affordable.”

In Q&A, Poppe described the company’s “minimum” need from wildfire-related legislative action as the ability for shareholders and investors to “see and model and quantify what that tail risk is.” She also said shareholder contributions would depend on “the totality of the legislative action,” adding that if a package “doesn’t improve the status quo, then contributions would be unacceptable,” while a dramatic improvement could warrant dialogue with policymakers.

Poppe also discussed PG&E’s system hardening plans, including additional undergrounding. She said the CPUC has provided a path for PG&E to request more undergrounding via a 10-year plan, and the company expects to make a filing with the Office of Energy Infrastructure Safety (OEIS) in the third quarter covering the next approximately 5,000 miles for years 2028 through 2037. She said combined plans would include:

• 1,900 miles of undergrounding expected to be completed by the end of 2027,
• an additional ~5,000 miles requested for 2028–2037, and
• an additional 4,000 miles of overhead hardening,

Poppe said that would equate to “nearly 11,000 miles of planned system hardening through 2037,” which she said would represent more than three-quarters of high fire threat miles based on current risk modeling. She added that more than 1,200 miles of undergrounding completed to date has allowed PG&E to avoid more than $100 million in maintenance spending that would otherwise have been paid by customers.

Burke said PG&E received its 2025 safety certificate from the CPUC after the fourth-quarter call, valid for 12 months through early March 2027, and reiterated the timing of the 10-year undergrounding plan filing.

Load growth pipeline and transmission developments

Poppe highlighted progress in PG&E’s efforts to enable “rate-reducing load growth,” stating that projects in final engineering increased to 4.6 gigawatts since the year-end update. She said the company initiated its third cluster study, which indicated more than an additional 10 gigawatts of customer interest across multiple regions, including Silicon Valley and the Central Valley, with demand “diversified” and not driven by a single project.

Poppe said PG&E remains committed to adding load only if it is “definitively rate-reducing,” noting, “We simply need to get the pricing right.” She also said PG&E still expects about 1.8 gigawatts online by 2030 and forecast that level could contribute to a 1% to 2% rate reduction around that time period.

On conversion from final engineering to construction, Poppe said PG&E is “pretty optimistic” but acknowledged the company has “not been at this stage with this volume before,” calling the next several gigawatts an important test case. She said counterparties are “putting money on the table” and that agreements are “awfully close,” though not final.

Poppe also addressed transmission planning, saying CAISO completed a planning process and awarded 25 projects for 2025–2026 planning totaling $4.16 billion for PG&E. She said the projects are already included in the $73 billion capital plan.

Diablo Canyon license extension milestones

Poppe said PG&E’s Diablo Canyon Nuclear Power Plant received final state permit approvals in February needed to support extended operations through 2030 and that the U.S. Nuclear Regulatory Commission granted Diablo Canyon a 20-year license extension in early April. However, she said “further action by the state is required in order to operate beyond 2030.” In response to an analyst question, Poppe said it is up to the legislature whether the plant is extended beyond 2030, and she cited CPUC statements and an MIT study she said supported the view that keeping Diablo Canyon online could produce “billions of dollars” in customer savings.

Operational technology and cost efficiency focus

Poppe highlighted “continuous monitoring” as an example of PG&E’s shift from reactive maintenance to proactive, data-driven risk management, using sensors, smart meters, analytics, and machine learning models. She said continuous monitoring helped PG&E avoid approximately 12 million unplanned customer outage minutes in 2025 and another 4 million minutes in the first quarter of 2026. She also said that since the beginning of last year, the company recorded 1,484 “good catches” flagged by sensor data, including 23 that “could have become ignitions but didn’t.”

Poppe said early detection of stressed equipment saved an estimated $8 million of capital spending over a five-quarter period through lower-cost repairs and more than $1 million in expense by reducing time spent responding to emergency asset failures.

Burke reinforced the company’s longer-term cost focus, saying PG&E continues to see a path to 2%–4% long-term reductions in non-fuel O&M even after inflation and other pressures. She also cited technology-enabled inspection changes using satellite and Lidar, which she said are expected to deliver $24 million in annual O&M savings this year.

In closing remarks, Poppe said attention remains on Sacramento’s wildfire liability reform process, while emphasizing operational execution: “Our eyes are also on running a great utility.”

About Pacific Gas & Electric NYSE: PCG

Pacific Gas & Electric NYSE: PCG is an investor-owned utility holding company whose principal operating subsidiary, Pacific Gas and Electric Company, provides electricity and natural gas service in northern and central California. The company's core activities include the generation, procurement, transmission and distribution of electric power, as well as the transmission and distribution of natural gas. PG&E serves a broad mix of residential, commercial, and industrial customers across urban and rural communities within its California service territory.

PG&E's operations encompass utility infrastructure planning and construction, grid operations, customer service and energy procurement.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.