PG&E Corp

PG&E Corporation’s and the Utility’s financial results can be affected by many factors, including estimates and assumptions used in the critical accounting estimates described in Item 7. MD&A, that can cause their actual financial results to differ materially from historical results or from anticipated future financial results. The following discussion of key risk factors should be considered in evaluating an investment in PG&E Corporation and the Utility and should be read in conjunction with Item 7. MD&A and the Consolidated Financial Statements and related notes in Part II, Item 8, Financial Statements and Supplementary Data of this 2024 Form 10-K. Any of these factors, in whole or in part, could materially affect PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.

Risk Factors Summary

The following is a summary of the principal risks that could adversely affect our business, operations, and financial results. These risks are discussed more fully below.

Risks related to wildfires, including risks related to:

•The extent to which the Wildfire Fund and revised recoverability standard under AB 1054 effectively mitigate the risk of liability for damages arising from catastrophic wildfires;

•The 2019 Kincade fire, the 2021 Dixie fire, the 2022 Mosquito fire, or future wildfires;

•Recovery of excess costs in connection with wildfires; and

•Implementation of wildfire mitigation initiatives.

Risks related to operations and information technology, including risks related to:

•The hazardous nature of the Utility’s electricity and natural gas operations;

•Changes in the electric power and natural gas industries;

•A cyber incident, cybersecurity breach, or physical attack;

•The operation and decommissioning of the Utility’s nuclear generation facilities; and

•Attracting and retaining specialty personnel.

Risks related to environmental factors, including risks related to:

•Severe weather events, extended drought, and climate change and events resulting from these conditions (including wildfires); and

•Extensive environmental laws.

Risks related to enforcement matters, investigations, and regulatory proceedings, including risks related to:

•The Enhanced Oversight and Enforcement Process;

•Legislative and regulatory developments;

•Outcomes of enforcement proceedings in connection with extensive regulations to which the Utility is subject;

•Outcomes of regulatory and ratemaking proceedings and the Utility’s ability to manage its costs; and

•Attempts to acquire the Utility's assets and customers through municipalization or bypass.

Risks related to financial conditions, including risks related to:

•PG&E Corporation’s and the Utility’s substantial indebtedness;

•Restrictions in indebtedness documents;

•Potential additional dilution to holders of PG&E Corporation common stock;

•Ownership and transfer restrictions associated with PG&E Corporation capital stock;

•The inability of PG&E Corporation to use some or all of its net operating loss carryforwards and other tax attributes to offset future income;

•PG&E Corporation’s reliance on dividends, distributions, and other payments from the Utility;

•The Utility’s ability to manage its costs effectively;

•Increased customer rates; and

•Inflation and supply chain issues.

Risks Related to Wildfires

The Wildfire Fund and other provisions of AB 1054 may not effectively mitigate the risk of liability for damages arising from catastrophic wildfires.

If the Utility does not have an approved WMP, the Utility will not be issued a safety certification and will consequently not benefit from the presumption of prudency or the AB 1054 disallowance cap. Under AB 1054, the Utility is required to maintain a safety certification issued by the OEIS to be eligible for certain benefits, including a cap on Wildfire Fund reimbursement and all aspects of the reformed prudent manager standard. The AB 1054 Wildfire Fund disallowance cap, which caps the amount of liability that the Utility could be required to bear for a catastrophic wildfire, is inapplicable if the Wildfire Fund administrator determines that the electric utility company’s actions or inactions that resulted in the applicable wildfire constituted “conscious or willful disregard for the rights and safety of others,” or the electric utility company fails to maintain a valid safety certification at the time the applicable wildfire ignited. In addition, if the Utility fails to maintain a valid safety certification at the time a wildfire ignites, the initial burden of proof in a prudency proceeding shifts from intervenors to the Utility. The Utility will be required to reimburse amounts that are determined by the CPUC not to be just and reasonable. For more information on the disallowance cap, see Note 14 of the Notes to the Consolidated Financial Statements in Item 8.

Furthermore, the Wildfire Fund will only be available for payment of eligible claims so long as there are sufficient funds remaining in the Wildfire Fund. Such funds could be depleted more quickly than PG&E Corporation’s and the Utility’s 20-year estimate for the life of the Wildfire Fund (see Note 2 of the Notes to the Consolidated Financial Statements in Item 8), including as a result of claims made by California’s other participating electric utility companies. For example, victims of wildfires in Southern California in January 2025 have filed lawsuits alleging that Southern California Edison’s equipment was associated with the ignition of such fires.

If the Utility is unable to maintain a safety certification or if the Wildfire Fund is exhausted, the ineffectiveness of the Wildfire Fund could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. Also, the Utility will not be able to obtain any recovery from the Wildfire Fund for wildfire-related losses in any year that do not exceed the greater of $1.0 billion in the aggregate and the amount of insurance coverage required under AB 1054.

In addition, there could be a significant delay between the occurrence of a wildfire and when the Utility recognizes impairment for the reduction in future coverage due to the lack of data available to the Utility following a catastrophic event, especially if the wildfire occurs in the service area of another participating electric utility. Participation in the Wildfire Fund is expected to have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows, and the benefits of participating in the Wildfire Fund may not ultimately outweigh the substantial costs of the Utility’s contributions to the Wildfire Fund.