Press release·03/02/2025 01:53:11

Overview

This is a combined report of PG&E Corporation and the Utility, which includes separate Consolidated Financial Statements for each of these two entities. PG&E Corporation’s and the Utility’s revenues vary based on the outcomes of ratemaking proceedings and the amount of pass-through costs incurred. Factors that cause costs to vary include the cost of purchased power and fuel, weather, criminal and regulatory charges for wildfires, and increases in interest expense.

Key Factors Affecting Financial Results

PG&E Corporation and the Utility believe their financial condition may be materially affected by the costs and effectiveness of the Utility’s wildfire mitigation initiatives, the extent of damages from wildfires, and their ability to mitigate financial impacts. The Utility has taken aggressive steps to mitigate wildfire risk, but the potential for the Utility’s equipment to be involved in future wildfires remains significant. The financial impact of past wildfires is also significant, with PG&E Corporation and the Utility recording substantial liabilities.

The timing and outcome of ratemaking and other regulatory proceedings also significantly impact PG&E Corporation’s and the Utility’s financial condition. The Utility’s ability to control operating and financing costs is another key factor.

Tax Matters

PG&E Corporation had significant net operating loss carryforwards as of December 31, 2024. The Amended Articles of Incorporation contain restrictions to prevent ownership changes that could limit the use of these tax attributes.

Results of Operations

PG&E Corporation’s consolidated results of operations consist primarily of the Utility’s results. The Utility’s electric and natural gas operating revenues decreased slightly in 2024 compared to 2023, primarily due to decreases in revenues to recover pass-through costs, partially offset by increases in base revenues and interim rate relief.

The Utility’s cost of electricity and natural gas decreased in 2024 due to lower commodity prices. Operating and maintenance expenses also decreased, mainly due to the recognition of previously deferred expenses in 2023 and the Utility’s adoption of self-insurance, partially offset by increases in interim rate relief and other costs.

The Utility’s interest expense increased in 2024 due to higher long-term debt and interest rates on regulatory balancing accounts. Income tax benefit decreased significantly due to lower tax benefits related to the Fire Victim Trust’s sale of PG&E Corporation stock.

Liquidity and Financial Resources

PG&E Corporation and the Utility expect to be able to generate and obtain adequate cash to meet their cash requirements. They rely on access to debt and equity markets and credit facilities to finance their capital requirements and support their liquidity needs.

PG&E Corporation and the Utility have access to approximately $6.7 billion of total liquidity as of December 31, 2024. Their credit ratings impact the cost and availability of short-term and long-term financing. They remain in compliance with financial covenants in their credit agreements.

PG&E Corporation issued common stock and mandatory convertible preferred stock in 2024 to fund its capital investment plan. The Utility also issued various debt securities and utilized its credit facilities to meet financing needs.

Dividends

The Utility paid common and preferred stock dividends in 2024. PG&E Corporation announced a new dividend policy targeting a payout ratio of approximately 20% of core earnings by 2028.

Regulatory Matters

PG&E Corporation and the Utility are subject to extensive regulation by various federal and state agencies. Key regulatory proceedings include the Utility’s wildfire mitigation and cost recovery applications, general rate cases, cost of capital proceedings, and transmission owner rate cases. The outcomes of these proceedings can significantly impact PG&E Corporation’s and the Utility’s financial condition.

Environmental Matters and Risk Management

PG&E Corporation and the Utility are subject to extensive environmental laws and regulations. They actively manage market risks associated with commodity prices, interest rates, and counterparty credit through various risk management programs and activities.

Critical Accounting Estimates

PG&E Corporation’s and the Utility’s critical accounting estimates include contributions to the Wildfire Fund, loss contingencies, regulatory accounting, asset retirement obligations, and pension and other postretirement benefit plans. These estimates involve significant judgments and assumptions that can materially affect their financial statements.