PG&E Corp

The following discussion presents PG&E Corporation’s and the Utility’s operating results for the three months ended March 31, 2024 and 2023. See “Key Factors Affecting Financial Results” above for further discussion about factors that could affect future results of operations.

The consolidated results of operations consist primarily of results related to the Utility, which are discussed in the “Utility” section below. The following table provides a summary of income (loss) attributable to common shareholders for the three months ended March 31, 2024 and 2023:

PG&E Corporation’s net loss primarily consists of interest expense on long-term debt.

Utility

The table below shows certain items from the Utility’s Condensed Consolidated Statements of Income for the three months ended March 31, 2024 and 2023. In general, expenses the Utility is authorized to pass through directly to customers (such as costs to purchase electricity and natural gas, as well as costs to fund public purpose programs) and the corresponding amount of revenues collected to recover those pass-through costs do not impact net income.

Operating Revenues

The Utility’s electric and natural gas operating revenues decreased by $348 million, or 6%, in the three months ended March 31, 2024, compared to the same period in 2023. These decreases were primarily due to:

•the recognition of approximately $585 million in revenues authorized in the final 2020 WMCE decision in the three months ended March 31, 2023, with no comparable revenues in 2024; and

•a decrease in revenues to recover the cost of electricity procurement (which decreased by approximately $200 million) and the cost of natural gas (which decreased by approximately $390 million) in the three months ended March 31, 2024, as compared to the same period in 2023. These costs are passed through to customers and do not impact net income. See “Cost of Electricity” and “Cost of Natural Gas” below.

•approximately $650 million in increased base revenues authorized in the 2023 GRC in the three months ended March 31, 2024, as compared to the same period in 2023; and

•approximately $275 million in interim rate relief authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the three months ended March 31, 2024, as compared to the same period in 2023.

Cost of Electricity

The Utility’s Cost of electricity includes the cost of power purchased from third parties (including renewable energy resources), fuel and associated transmission costs used in its own generation facilities, fuel and associated transmission costs supplied to other facilities under power purchase agreements, costs to comply with California’s cap-and-trade program, and realized gains and losses on price risk management activities. See Note 8 of the Notes to the Condensed Consolidated Financial Statements in Item 1. Cost of electricity also includes net energy sales (Utility owned and third parties’ generation) in the CAISO electricity markets and directly with third parties. The Utility’s total purchased power is driven by customer demand, net CAISO electricity market activities (purchases or sales), the availability of the Utility’s own generation facilities (including Diablo Canyon and its hydroelectric plants), and the cost-effectiveness of each source of electricity.

The Cost of electricity decreased by $201 million in the three months ended March 31, 2024 as compared to the same period in 2023. These decreases were primarily the result of lower natural gas market prices, which contributed to decreases in both fuel costs and CAISO market revenues.

Cost of Natural Gas

The Utility’s Cost of natural gas includes the costs of procurement, storage and transportation of natural gas, costs to comply with California’s cap-and-trade program and realized gains and losses on price risk management activities. See Note 8 of the Notes to the Condensed Consolidated Financial Statements in Item 1.

The Cost of natural gas decreased by $387 million in the three months ended March 31, 2024 as compared to the same period in 2023. These decreases were primarily the result of lower natural gas market prices.

Operating and Maintenance

The Utility’s Operating and maintenance expenses decreased by $43 million, or 2%, in the three months ended March 31, 2024, compared to the same period in 2023. These decreases were primarily due to:

•the recognition of approximately $420 million of previously deferred expenses authorized in the final 2020 WMCE decision in the three months ended March 31, 2023.

•the recognition of approximately $110 million of previously deferred expenses as a result of the 2023 GRC in the three months ended March 31, 2024, with no comparable costs in 2023; and

•the recognition of approximately $275 million of previously deferred expenses authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the three months ended March 31, 2024, with no comparable costs in 2023.

SB 901 Securitization Charges, Net

The Utility’s SB 901 securitization charges, net decreased by $273 million, or 100%, in the three months ended March 31, 2024, compared to the same period in 2023. In the three months ended March 31, 2023, the Utility recorded charges of $273 million representing the amounts that are refundable to ratepayers as a result of tax benefits realized within income tax expense related to the Fire Victim Trust’s sale of PG&E Corporation common stock, with no comparable charges in the same period in 2024. For more information, see Note 5 of the Notes to the Condensed Consolidated Financial Statements in Item 1.

Wildfire-Related Claims, Net of Recoveries

There was no material change to Wildfire-related claims, net of recoveries for the periods presented.

Wildfire Fund Expense

The Utility’s Wildfire Fund expense decreased by $39 million, or 33%, in the three months ended March 31, 2024, compared to the same period in 2023. This decrease was due to the increase in the estimated period of coverage of the Wildfire Fund from 15 to 20 years. For more information, see Note 2 of the Notes to the Condensed Consolidated Financial Statements in Item 1.

Depreciation, Amortization, and Decommissioning

The Utility's Depreciation, amortization and decommissioning expenses decreased by $55 million, or 5%, in the three months ended March 31, 2024, compared to the same period in 2023. These decreases were primarily due to the recognition of deferred depreciation expense in the first quarter of 2023 as a result of the 2020 WMCE final decision, a reduction to nuclear decommissioning expense as a result of the 2021 Nuclear Decommissioning Cost Triennial Proceeding final decision, and lower depreciation rates authorized in the 2023 GRC.

Interest Income

The Utility’s Interest income increased by $24 million, or 22%, in the three months ended March 31, 2024, compared to the same period in 2023. These increases were primarily due to higher interest rates earned on regulatory balancing accounts.

Interest Expense

The Utility’s Interest expense increased by $134 million, or 26%, in the three months ended March 31, 2024 compared to the same period in 2023. These increases were primarily due to an increase in long term debt with higher fixed interest rates and an increase in short-term debt with higher variable interest rates.

Other Income, Net

There was no material change to Other income, net for the periods presented.

Income Tax Provision (Benefit)

The Utility’s Income tax provision increased by $379 million in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to an decrease in the tax benefit recognized related to the Fire Victim Trust’s sale of PG&E Corporation common stock in the three months ended March 31, 2024, compared to the same period in 2023.

The following table reconciles the income tax expense at the federal statutory rate to the income tax provision:

(1)Includes the effect of state flow-through ratemaking treatment.

(2) Includes the effect of federal flow-through ratemaking treatment for certain property-related costs. For these temporary tax differences, the Utility recognizes the deferred tax impact in the current period and records offsetting regulatory assets and liabilities. Therefore, the Utility’s effective tax rate is impacted as these differences arise and reverse. The Utility recognizes such differences as regulatory assets or liabilities as it is probable that these amounts will be recovered from or returned to customers in future rates. These amounts also reflect the impact of the amortization of excess deferred tax benefits to be refunded to customers as a result of the TCJA.

(3) Includes the tax effect of the Fire Victim Trust’s sale of PG&E Corporation common stock. For more information, see “Tax Matters” in Item 7. MD&A and Note 6 of the Notes to the Consolidated Financial Statements in Item 8 of the 2023 Form 10-K.