PG&E Corp

The following discussion presents PG&E Corporation’s and the Utility’s operating results for the three and six months ended June 30, 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 and six months ended June 30, 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 and six months ended June 30, 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 increased by $696 million, or 13%, in the three months ended June 30, 2024, compared to the same period in 2023. These increases were primarily due to:

•approximately $650 million in increased base revenues authorized in the 2023 GRC in the three months ended June 30, 2024, as compared to the same period in 2023;

•approximately $275 million in interim rate relief authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the three months ended June 30, 2024, with no comparable revenues in the same period in 2023;

•approximately $130 million in interim rate relief authorized in the WGSC proceeding (see “Wildfire and Gas Safety Costs Recovery Application” below) in the three months ended June 30, 2024, with no comparable revenues in the same period in 2023; and

•an increase in revenues to recover the cost of electricity procurement, which increased by approximately $90 million in the three months ended June 30, 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” below.

•a decrease of approximately $180 million in revenues to recover the costs associated with the Risk Transfer Balancing Account (“RTBA”) in the three months ended June 30, 2024, as compared to the same period in 2023. For more information, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2023 Form 10-K;

•a decrease of approximately $80 million in revenues to recover the costs associated with the RUBA in the three months ended June 30, 2024, as compared to the same period in 2023. These revenues and associated costs are passed through to customers and do not impact net income. See Note 3 of the Notes to the Condensed Consolidated Financial Statements in Item 1; and

•a decrease in revenues to recover the cost of natural gas, which decreased by approximately $70 million in the three months ended June 30, 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 Natural Gas” below.

The Utility’s electric and natural gas operating revenues increased by $348 million, or 3%, in the six months ended June 30, 2024, compared to the same period in 2023. These increases were primarily due to:

•approximately $1.3 billion in increased base revenues authorized in the 2023 GRC in the six months ended June 30, 2024, as compared to the same period in 2023;

•approximately $550 million in interim rate relief authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the six months ended June 30, 2024, with no comparable revenues in the same period in 2023; and

•approximately $130 million in interim rate relief authorized in the WGSC proceeding (see “Wildfire and Gas Safety Costs Recovery Application” below) in the six months ended June 30, 2024, with no comparable revenues in the same period in 2023.

•approximately $585 million in revenues authorized in the final 2020 WMCE decision in the six months ended June 30, 2023, with no comparable revenues in the same period in 2024;

•a decrease in revenues to recover the cost of electricity procurement, which decreased by approximately $110 million and the cost of natural gas, which decreased by approximately $460 million in the six months ended June 30, 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;

•a decrease of approximately $260 million in revenues to recover the costs associated with the RTBA in the six months ended June 30, 2024, as compared to the same period in 2023. For more information, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2023 Form 10-K; and

•a decrease of approximately $135 million in revenues to recover the costs associated with the RUBA in the six months ended June 30, 2024, as compared to the same period in 2023. These revenues and associated costs are passed through to customers and do not impact net income. See Note 3 of the Notes to the Condensed Consolidated Financial Statements in Item 1.

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 increased by $91 million, or 14% in the three months ended June 30, 2024, as compared to the same period in 2023. These increases were primarily the result of lower CAISO market sales revenues and increased nuclear fuel amortization costs, partially offset by lower natural gas market prices included as fuel costs.

The Cost of electricity decreased by $110 million, or 9% in the six months ended June 30, 2024, as compared to the same period in 2023. These decreases were primarily the result of lower natural gas market prices included as fuels costs, partially offset by lower CAISO market sales 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 $70 million, or 26%, in the three months ended June 30, 2024, as compared to the same period in 2023. These decreases were primarily the result of lower natural gas procurement costs, due to lower natural gas market prices for the period.

The Cost of natural gas decreased by $457 million, or 38%, in the six months ended June 30, 2024, as compared to the same period in 2023. These decreases were primarily the result of lower natural gas procurement costs, partially offset by unfavorable price risk management results, both of which were due to lower natural gas market prices for the period.

Operating and Maintenance

The Utility’s Operating and maintenance expenses increased by $322 million, or 13%, in the three months ended June 30, 2024, compared to the same period in 2023. These increases were primarily due to:

•approximately $275 million of previously deferred expenses authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the three months ended June 30, 2024, with no comparable costs in the same period in 2023;

•approximately $130 million in interim rate relief authorized in the WGSC proceeding (see “Wildfire and Gas Safety Costs Recovery Application” below) in the three months ended June 30, 2024, with no comparable costs in the same period in 2023;

•approximately $110 million of previously deferred expenses as a result of the 2023 GRC in the three months ended June 30, 2024, with no comparable costs in the same period in 2023;

•the write-off of approximately $60 million of costs as a result of the CPUC’s final decision denying the Pacific Generation application in the three months ended June 30, 2024, with no comparable costs in the same period in 2023. For more information, see “Regulatory Matters” below; and

•increased labor and benefit costs in the three months ended June 30, 2024, as compared to the same period in 2023.

•a decrease of approximately $125 million in insurance costs related to the Utility’s adoption of self-insurance in the three months ended June 30, 2024, as compared to the same period in 2023;

•a decrease of approximately $80 million in costs associated with the RUBA in the three months ended June 30, 2024, as compared to the same period in 2023. These costs are passed through to customers and do not impact net income. See Note 3 of the Notes to the Condensed Consolidated Financial Statements in Item 1;

•$50 million related to the civil stipulated judgement filed on May 31, 2023, by the Utility and the Shasta County District Attorney’s Office (“Shasta D.A.”) for the Shasta D.A. to dismiss with prejudice all criminal charges against the Utility in connection with the 2020 Zogg fire (the “Zogg Stipulation’), with no comparable costs in 2024; and

•increased operating cost efficiencies in the three months ended June 30, 2024.

The Utility’s Operating and maintenance expenses increased by $279 million, or 5%, in the six months ended June 30, 2024, compared to the same period in 2023. These increases were primarily due to:

•approximately $550 million of previously deferred expenses authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the six months ended June 30, 2024, with no comparable costs in 2023;

•approximately $220 million of previously deferred expenses as a result of the 2023 GRC in the six months ended June 30, 2024, with no comparable costs in 2023;

•approximately $130 million in interim rate relief authorized in the WGSC proceeding (see “Wildfire and Gas Safety Costs Recovery Application” below) in the six months ended June 30, 2024, with no comparable costs in the same period in 2023;

•the write-off of approximately $60 million of costs as a result of the CPUC’s final decision denying the Pacific Generation application in the six months ended June 30, 2024, with no comparable costs in the same period in 2023. For more information, see “Regulatory Matters” below; and

•increased labor and benefit costs in the six months ended June 30, 2024, as compared to the same period in 2023.

•approximately $420 million of previously deferred expenses authorized in the final 2020 WMCE decision in the six months ended June 30, 2023, with no comparable costs in 2024;

•a decrease of approximately $300 million in insurance costs related to the Utility’s adoption of self-insurance in the six months ended June 30, 2024, as compared to the same period in 2023;

•a decrease of approximately $135 million in costs associated with the RUBA in the six months ended June 30, 2024, as compared to the same period in 2023. These costs are passed through to customers and do not impact net income. See Note 3 of the Notes to the Condensed Consolidated Financial Statements in Item 1;

•the recognition of $50 million related to the Zogg Stipulation in the six months ended June 30, 2023, with no comparable costs in 2024; and

•increased operating cost efficiencies in the six months ended June 30, 2024.

SB 901 Securitization Charges, Net

The Utility’s SB 901 securitization charges, net decreased by $289 million, or 100%, and $562 million, or 100% in the three and six months ended June 30, 2024, compared to the same periods in 2023. In the three and six months ended June 30, 2023, the Utility recorded charges of $289 million and $562 million, respectively, 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 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%, and $78 million, or 33%, in the three and six months ended June 30, 2024, compared to the same periods 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 increased by $56 million, or 6%, and $1 million, or 0%, in the three and six months ended June 30, 2024, compared to the same periods in 2023. These increases were primarily due to the growth in plant balance from capital additions, partially offset by deferred depreciation expense for costs awaiting regulatory decisions, a decrease in decommissioning expense primarily 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 $59 million, or 42%, and increased by $83 million, or 33%, in the three and six months ended June 30, 2024, compared to the same periods 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 $197 million, or 36%, and increased by $331 million, or 31%, in the three and six months ended June 30, 2024 compared to the same periods 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 of recoveries for the periods presented.

Income Tax Provision (Benefit)

The Utility’s Income tax provision increased by $419 million, or 132%, and $798 million, or 125%, in the three and six months ended June 30, 2024, compared to the same periods in 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 as well as higher pretax book income in the three and six months ended June 30, 2024, compared to the same periods 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 in 2023. 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.