Press release·03/02/2025 01:55:45

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 the wildfire threat, 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 proceedings, such as actions by municipalities to acquire the Utility’s assets, can also impact PG&E Corporation’s and the Utility’s financial results. The Utility’s ability to control operating and financing costs is also a 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 on the acquisition or accumulation of PG&E Corporation’s stock to prevent an “ownership change” that could limit the use of these tax attributes.

Results of Operations

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

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

SB 901 securitization charges, net decreased significantly in 2024 due to the recognition of amounts refundable to ratepayers in 2023. Wildfire-related costs and Wildfire Fund expense also decreased in 2024.

The Utility’s income tax benefit decreased in 2024 compared to 2023, primarily due to a decrease in the tax benefit recognized related to the Fire Victim Trust’s sale of PG&E Corporation common stock and higher pre-tax income.

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 completed the planned equity financing for their $63 billion 2024 through 2028 capital expenditure plan. They have also engaged in various debt financings, including the issuance of first mortgage bonds, secured recovery bonds, and junior subordinated notes.

PG&E Corporation and the Utility pay dividends on their preferred stock and common stock, with PG&E Corporation announcing a new dividend policy targeting a payout ratio of approximately 20% of core earnings by 2028.

The Utility’s cash flows from operating activities increased in 2024, primarily due to increases in collections through rates and decreases in natural gas procurement costs. Cash used in investing activities increased, mainly due to higher purchases of self-insurance investments and customer credit trust investments. Cash provided by financing activities decreased, primarily due to higher net repayments under term loan credit facilities and lower net borrowings under credit facilities, partially offset by higher equity contributions from PG&E Corporation.

Litigation Matters and Regulatory Matters

PG&E Corporation and the Utility have significant contingencies arising from their operations, including contingencies related to enforcement and litigation matters and regulatory proceedings. The outcomes of these matters could have a material effect on their financial condition, results of operations, liquidity, and cash flows.

Key regulatory matters include cost recovery proceedings, wildfire mitigation and catastrophic events cost recovery applications, forward-looking rate cases, and other proceedings related to the Utility’s operations.

Environmental Matters and Risk Management Activities

PG&E Corporation and the Utility are subject to extensive environmental laws and regulations. They actively manage market risk through risk management programs, including the use of derivative instruments for commodity price risk, interest rate risk, and counterparty credit risk.

Critical Accounting Estimates

PG&E Corporation and the Utility use critical accounting estimates in areas such as contributions to the Wildfire Fund, loss contingencies, regulatory accounting, asset retirement obligations, pension and other postretirement benefit plans, and more. These estimates involve significant judgments and assumptions that could materially affect their financial condition and results of operations.