PG&E Corp

RESULTS OF OPERATIONS

The following discussion presents PG&E Corporation’s and the Utility’s operating results for 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:

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

Utility

The table below shows the Utility’s Consolidated Statements of Income for 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 $9 million, or 0%, in 2024 compared to 2023. These decreases were primarily due to:

•a decrease in revenues to recover the cost of electricity procurement (which decreased by $182 million) and the cost of natural gas (which decreased by $562 million) and the cost of public purpose programs (which decreased by approximately $50 million) in 2024. These costs are passed through to customers and do not impact net income. (See “Cost of Electricity”, “Cost of Natural Gas”, and “Operating and Maintenance” below);

•approximately $585 million in revenues authorized in the 2020 WMCE proceeding in 2023 with no similar amount in 2024;

•a decrease of approximately $345 million in revenues to recover insurance costs related to the Utility’s adoption of self-insurance in 2024;

•a decrease of approximately $310 million in revenues authorized in the 2021 WMCE proceeding (see “2021 WMCE Application” below); and

•a decrease of approximately $230 million in revenues to recover costs associated with a lower allowance for doubtful accounts from residential customers in 2024. (See Note 3 of the Notes to the Consolidated Financial Statements in Item 8).

•approximately $1.0 billion in increased base revenues authorized in the 2023 GRC;

•approximately $390 million in interim rate relief authorized in the WGSC proceeding (see “Wildfire and Gas Safety Costs Recovery Application” below) in 2024 with no similar amount in 2023;

•an increase of approximately $310 million in revenues authorized through the FERC formula rate;

•approximately $205 million in revenues authorized in the General Office Sale Memorandum Account (“GOSMA”) petition for modification final decision in 2024 with no similar amount in 2023;

•approximately $170 million in interim rate relief authorized in the 2023 WMCE application (see “2023 WMCE Application” below) in 2024 with no similar amount 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 2023 with no comparable refund in 2024.

Cost of Electricity

The Utility’s cost of electricity represents the cost of power and fuel used in the Utility’s generating facilities and purchased from third parties to serve customers. Cost of electricity includes fuel supplied to other third-party generating facilities, costs to comply with California’s cap-and-trade program, realized gains and losses on price risk management activities (see Note 10 of the Notes to the Consolidated Financial Statements in Item 8), and net power purchases from and sales to the CAISO electricity markets and directly from third parties. The cost of electricity decreased by $182 million in 2024 as compared to 2023. These decreases were primarily the result of lower natural gas market prices included as fuels costs for applicable Utility or third-party generating facilities, partially offset by lower net 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 10 of the Notes to the Consolidated Financial Statements in Item 8. The cost of natural gas decreased by $562 million in 2024 as compared to 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 $126 million, or 1%, in 2024 compared to 2023. These decreases were primarily due to:

•the recognition of approximately $420 million in previously deferred expenses authorized in the 2020 WMCE proceeding in 2023 with no similar amount in 2024;

•a decrease of approximately $345 million in insurance costs related to the Utility’s adoption of self-insurance in 2024;

•a decrease of approximately $230 million in costs associated with a lower allowance for doubtful accounts from residential customers in 2024. (See Note 3 of the Notes to the Consolidated Financial Statements in Item 8);

•a decrease of approximately $160 million in previously deferred expenses authorized in the 2021 WMCE proceeding (see “2021 WMCE Application” below) in 2023; and

•a decrease of approximately $50 million in pass-through costs related to public purpose programs in 2024. These costs are passed through to customers and do not impact net income (see “Operating Revenues” above).

•approximately $390 million in interim rate relief authorized in the WGSC proceeding (see “Wildfire and Gas Safety Costs Recovery Application” below) in 2024;

•approximately $210 million in costs related to a FERC order denying the capitalization of certain vegetation management costs and ordering the Utility to reclassify these costs to operating expense in 2024;

•approximately $175 million in revenues authorized in the GOSMA petition for modification final decision in 2024 with no similar amount in 2023;

•approximately $170 million in interim rate relief authorized in the 2023 WMCE application (see “2023 WMCE Application” below) in 2024 with no similar amount 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 2024; and

•an increase in labor and benefit costs in 2024.

SB 901 Securitization Charges, Net

The Utility’s SB 901 securitization charges, net decreased by $1.23 billion, or 97%, in 2024 compared to 2023. These decreases were due to the recognition of $1.27 billion in net SB 901 securitization charges, primarily 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 in 2023, with no comparable activity in 2024. For more information, see Note 5 of the Notes to the Consolidated Financial Statements in Item 8 below.

Wildfire-Related Claims, Net of Recoveries

Costs related to wildfires increased by $30 million, or 47%, in 2024 compared to 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 and $100 million related to the 2019 Kincade fire in 2023. The Utility recognized pre-tax charges of $325 million related to the 2021 Dixie fire offset by probable recoveries through the Wildfire Fund and $100 million related to the 2019 Kincade fire in 2024. Additionally, in 2024, probable WEMA recoveries increased by approximately $30 million due to a reclassification between WEMA and FERC recoveries, which are recorded as a reduction to regulatory liabilities and are not captured in Wildfire-related claims.

Wildfire Fund Expense

The Utility’s Wildfire Fund expense decreased by $184 million, or 32%, in 2024 compared to 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. See Note 2 and Note 14 of the Notes to the Consolidated Financial Statements in Item 8.

Depreciation, Amortization, and Decommissioning

The Utility’s Depreciation, amortization, and decommissioning expenses increased by $451 million, or 12%, in 2024 compared to 2023. These increases were primarily due to the growth in plant balance from capital additions 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 2023.

Interest Income

There was no material change to Interest income in 2024 compared to 2023.

Interest Expense

The Utility’s Interest expense increased by $296 million, or 12%, in 2024 compared to 2023. These increases were primarily due to an increase in long-term debt and higher interest rates paid on regulatory balancing accounts.

Other Income, Net

There was no material change to Other income, net in 2024 compared to 2023.

Income Tax Benefit

The Utility’s Income tax benefit decreased by $1.4 billion, or 93%, in 2024 compared to 2023. These decreases were 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 2024 compared to 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.