PG&E Corp

The following discussion presents PG&E Corporation’s and the Utility’s operating results for the three and nine months ended September 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 nine months ended September 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 nine months ended September 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 $53 million, or 1%, in the three months ended September 30, 2024, compared to the same period in 2023. These increases were primarily due to:

•approximately $735 million in increased base revenues authorized in the 2023 GRC in the three months ended September 30, 2024, as compared to the same period in 2023;

•an increase of approximately $245 million in revenues as authorized through the FERC formula rate in the three months ended September 30, 2024, as compared to 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 September 30, 2024, with no comparable revenues in the same period in 2023; and

•approximately $85 million related to the 2021 NDCTP final decision that ordered the Utility to issue a refund of the Non-Qualified Trust to customers in the three months ended September 30, 2023 with no comparable refund in the same period in 2024.

•approximately $740 million in revenues authorized in the final 2021 WMCE decision (see “2021 WMCE Application” below) in the three months ended September 30, 2023, with no comparable revenues in the same period in 2024;

•approximately $270 million in interim rate relief authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the three months ended September 30, 2023, with no comparable revenues in the same period in 2024; and

•a decrease of approximately $140 million in revenues to recover the costs associated with lower allowance for doubtful accounts under-collections from residential customers in the three months ended September 30, 2024, as compared to the same period in 2023. See Note 3 of the Notes to the Condensed Consolidated Financial Statements in Item 1.

The Utility’s electric and natural gas operating revenues increased by $401 million, or 2%, in the nine months ended September 30, 2024, compared to the same period in 2023. These increases were primarily due to:

•approximately $2.2 billion in increased base revenues authorized in the 2023 GRC in the nine months ended September 30, 2024, as compared to the same period in 2023;

•an increase of approximately $270 million in interim rate relief authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the nine months ended September 30, 2024, as compared to the same period in 2023;

•an increase of approximately $260 million in revenues as authorized through the FERC formula rate in the nine months ended September 30, 2024, as compared to the same period in 2023;

•approximately $260 million in interim rate relief authorized in the WGSC proceeding (see “Wildfire and Gas Safety Costs Recovery Application” below) in the nine months ended September 30, 2024, with no comparable revenues in the same period in 2023; and

•approximately $85 million related to the 2021 NDCTP final decision that ordered the Utility to issue a refund of the Non-Qualified Trust to customers in the nine months ended September 30, 2023 with no comparable refund in the same period in 2024.

•approximately $740 million in revenues authorized in the final 2021 WMCE decision (see “2021 WMCE Application” below) in the nine months ended September 30, 2023, with no comparable revenues in the same period in 2024;

•approximately $585 million in revenues authorized in the final 2020 WMCE decision in the nine months ended September 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 $120 million and the cost of natural gas, which decreased by approximately $530 million in the nine months ended September 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 $295 million in revenues to recover the costs associated with the Risk Transfer Balancing Account (“RTBA”) in the nine months ended September 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 $280 million in revenues to recover the costs associated with lower allowance for doubtful accounts under-collections from residential customers in the the nine months ended September 30, 2024, as compared to the same period in 2023. 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 decreased by $11 million, or 1% in the three months ended September 30, 2024, compared to the same period in 2023. These decreases were primarily the result of lower natural gas market prices included as fuel costs.

The Cost of electricity decreased by $121 million, or 6% in the nine months ended September 30, 2024, 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 $69 million, or 44%, in the three months ended September 30, 2024, 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 $526 million, or 39%, in the nine months ended September 30, 2024, compared to the same period in 2023. These decreases were primarily the result of lower natural gas procurement costs, partially offset by less favorable 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 decreased by $458 million, or 15%, in the three months ended September 30, 2024, compared to the same period in 2023. These decreases were primarily due to:

•approximately $720 million of previously deferred expenses authorized in the 2021 WMCE decision (see “2021 WMCE Application” below) in the three months ended September 30, 2023, with no comparable costs in the same period in 2024;

•approximately $270 million of previously deferred expenses authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the three months ended September 30, 2023, with no comparable costs in the same period in 2024;

•a decrease of approximately $140 million in costs associated with lower allowance for doubtful accounts under-collections from residential customers in the three months ended September 30, 2024, as compared to the same period in 2023. See Note 3 of the Notes to the Condensed Consolidated Financial Statements in Item 1; and

•a decrease of approximately $40 million in insurance costs related to the Utility’s adoption of self-insurance in the three months ended September 30, 2024, as compared to the same period in 2023.

•an increase of approximately $250 million in costs related to VMBA in the nine months ended September 30, 2024, as compared to the same period in 2023;

•approximately $210 million in costs related to a FERC order denying the capitalization of certain vegetation management costs and ordering the Utility to record these as operating expense, resulting in an increase in operating expense in the three months ended September 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 September 30, 2024, with no comparable costs in the same period in 2023; and

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

The Utility’s Operating and maintenance expenses decreased by $179 million, or 2%, in the nine months ended September 30, 2024, compared to the same period in 2023. These decreases were primarily due to:

•approximately $720 million of previously deferred expenses authorized in the 2021 WMCE decision (see “2021 WMCE Application” below) in the nine months ended September 30, 2023, with no comparable costs in the same period in 2024;

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

•a decrease of approximately $280 million in costs associated with lower allowance for doubtful accounts under-collections from residential customers in the nine months ended September 30, 2024, as compared to the same period in 2023. See Note 3 of the Notes to the Condensed Consolidated Financial Statements in Item 1; and

•a decrease of approximately $340 million in insurance costs related to the Utility’s adoption of self-insurance in the nine months ended September 30, 2024, as compared to the same period in 2023.

•approximately $330 million of previously deferred expenses as a result of the 2023 GRC in the nine months ended September 30, 2024, with no comparable costs in 2023;

•an increase of approximately $270 million of previously deferred expenses authorized in the 2022 WMCE proceeding (see “2022 WMCE Application” below) in the nine months ended September 30, 2024, as compared to the same period in 2023;

•approximately $260 million in interim rate relief authorized in the WGSC proceeding (see “Wildfire and Gas Safety Costs Recovery Application” below) in the nine months ended September 30, 2024, with no comparable costs in the same period in 2023;

•an increase of approximately $250 million in costs related to VMBA in the nine months ended September 30, 2024, as compared to the same period in 2023;

•approximately $210 million in costs related to a FERC order denying the capitalization of certain vegetation management costs, ordering the Utility to reclassify these costs to operating expense in the nine months ended September 30, 2024, with no comparable costs in the same period in 2023; and

•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 nine months ended September 30, 2024, with no comparable costs in the same period in 2023. For more information, see “Regulatory Matters” below.

SB 901 Securitization Charges, Net

The Utility’s SB 901 securitization charges, net decreased by $313 million, or 90%, and $875 million, or 96%, in the three and nine months ended September 30, 2024, compared to the same periods in 2023. In the three and nine months ended September 30, 2023, the Utility recorded charges of $346 million and $908 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 as well as amortization of Wildfire Fund contributions under AB 1054, as compared to charges of $33 million in the three and nine months ended September 30, 2024 related to amortization of Wildfire Fund contributions under AB 1054. For more information, see Note 5 of the Notes to the Condensed Consolidated Financial Statements in Item 1 and “Wildfire Fund under AB 1054” in Note 10 below.

Wildfire-Related Claims, Net of Recoveries

The Utility’s Wildfire-related claims, net of recoveries increased by $106 million, or 331%, and $105 million, or 300%, in the three and nine months ended September 30, 2024, compared to the same periods in 2023. The Utility recognized pre-tax charges of $425 million related to the 2021 Dixie fire offset by probable recoveries through the Wildfire Fund and WEMA in the three and nine months ended September 30, 2023, as compared to pre-tax charges of $275 million related to the 2021 Dixie fire offset by probable recoveries through the Wildfire Fund and $75 million related to the 2019 Kincade fire in the three and nine months ended September 30, 2024.

Wildfire Fund Expense

The Utility’s Wildfire Fund expense decreased by $80 million, or 37%, and $158 million, or 35%, in the three and nine months ended September 30, 2024, compared to the same periods in 2023. These decreases were primarily due to less accelerated amortization of the Wildfire Fund asset and an 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 $248 million, or 31%, and $249 million, or 9%, in the three and nine months ended September 30, 2024, compared to the same periods in 2023. These increases were primarily due to the growth in plant balance from capital additions, an increase in depreciation expense for costs awaiting regulatory decisions, and an increase in decommissioning expense due to the reversal of approximately $175 million in accrued nuclear decommissioning expense as a result of the 2021 NDCTP final decision in the three and nine months ended September 30, 2023, with no comparable reversals in the same periods in 2024.

Interest Income

There was no material change to Interest income in the three months ended September 30, 2024.

The Utility’s Interest income increased by $85 million, or 21%, in the nine months ended September 30, 2024, compared to the same period in 2023. This increase was primarily due to higher interest rates earned on regulatory balancing accounts.

Interest Expense

The Utility’s Interest expense increased by $127 million, or 21%, and $458 million, or 27%, in the three and nine months ended September 30, 2024, compared to the same periods in 2023. These increases were primarily due to an increase in long term debt and short-term debt, reversals of interest expense cost deferrals recorded in prior periods, and higher interest rates paid on regulatory balancing accounts.

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 $327 million, or 82%, and $1.1 billion, or 109%, in the three and nine months ended September 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 pre-tax income in the three and nine months ended September 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 Tax Cuts and Jobs Act of 2017.

(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.