PACIFIC GAS & ELECTRIC Co

Previous wording

The discussions related to the results of operations and liquidity for the three and six months ended June 30, 2025 compared to the same periods in 2024 are incorporated by reference to Part I, Item 2: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in PG&E Corporation’s and the Utility’s combined Form 10-Q for the three and six months ended June 30, 2025, which was filed with the SEC in July 2025.

Current wording

The discussions related to the results of operations and liquidity for the three and nine months ended September 30, 2025 compared to the same periods in 2024 are incorporated by reference to Part I, Item 2: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in PG&E Corporation’s and the Utility’s combined Form 10-Q for the three and nine months ended September 30, 2025, which was filed with the SEC in October 2025.

Previous wording

•The Uncertainties in Connection with Wildfires, Wildfire Mitigation, and Associated Cost Recovery. PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows may be materially affected by the costs and effectiveness of the Utility’s wildfire mitigation initiatives; the extent of damages from wildfires that do occur; the financial impacts of wildfires; and PG&E Corporation’s and the Utility’s ability to mitigate those financial impacts with insurance, self-insurance, the Wildfire Fund, the Continuation Account, and regulatory recovery.

Current wording

•The Uncertainties in Connection with Wildfires, Wildfire Mitigation, and Associated Cost Recovery. PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows may be materially affected by the costs and effectiveness of the Utility’s wildfire mitigation initiatives; California’s wildfire liability framework; the extent of damages from wildfires that do occur; the financial impacts of wildfires; and PG&E Corporation’s and the Utility’s ability to mitigate those financial impacts with insurance, self-insurance, the Wildfire Fund, the Continuation Account, and regulatory recovery.

Previous wording

The financial impact of past wildfires has been significant. In addition to significant liabilities incurred for past wildfires, PG&E Corporation and the Utility have and will continue to incur substantial expenditures in connection with these initiatives. The extent to which the Utility will be able to recover these expenditures and other potential costs through rates is uncertain. The Utility could also face fines, penalties, enforcement action, or other adverse legal or regulatory consequences for noncompliance related to wildfire mitigation efforts.

Current wording

Despite extensive wildfire mitigation measures, the Utility still faces significant wildfire risk, which is exacerbated by climate change, severe weather events, aging infrastructure, and vegetation growth. Once an ignition has occurred, the Utility may be unable to control the extent of damages, which is determined primarily by environmental and vegetation conditions, third-party suppression efforts, and the location of the wildfire. The Utility can be liable for these damages and the costs of fire suppression efforts, the Utility’s own assets may be damaged or destroyed, and certain of the Utility’s wildfire mitigation costs are subject to reasonableness review. The extent to which the Utility will be able to recover these costs through rates is uncertain. The Utility will recover its wildfire-related claims in excess of available insurance and legal fees through rates only to the extent that the CPUC or the FERC, as applicable, determines that the Utility has met the applicable prudency standard. The Utility could also face fines, penalties, enforcement action, or other adverse legal or regulatory consequences for noncompliance related to wildfire mitigation efforts.

Previous wording

If the eligible claims for liabilities arising from wildfires were to exceed $1.0 billion in any Wildfire Fund or Continuation Account coverage year (“Coverage Year”), the Wildfire Fund or the Continuation Account, as applicable, may be available to reimburse the Utility such excess amount. The Utility’s ability to recover wildfire costs depends on the Wildfire Fund or the Continuation Account having sufficient remaining funds, and the Wildfire Fund or the Continuation Account may also be depleted more quickly than expected as a result of claims made by California’s other participating electric utility companies. Whether the Utility will be required to reimburse the Wildfire Fund or the Continuation Account depends on its ability to demonstrate to the CPUC that paid wildfire-related costs were just and reasonable.

Current wording

The financial impact of past wildfires is significant. PG&E Corporation and the Utility may be able to mitigate the financial impact of wildfires in excess of insurance coverage or self-insurance through the Wildfire Fund, the Continuation Account, or cost recovery through rates. Each of these mitigations involves uncertainties, and liabilities could exceed available recoveries. For instance, the Utility’s ability to recover wildfire costs above $1.0 billion in a coverage year depends on the Wildfire Fund or the Continuation Account having sufficient remaining funds, and the Continuation Account may also be depleted more quickly than expected as a result of claims made by California’s other participating electric utility companies. Whether the Utility will be required to reimburse the Wildfire Fund or the Continuation Account depends on its ability to demonstrate to the CPUC that paid wildfire-related costs were just and reasonable. With respect to the Continuation Account, additional uncertainties include whether the Wildfire Fund administrator determines that the Continuation Account is necessary, whether the CPUC authorizes extending the non-bypassable charge, whether the administrator determines that additional contributions are needed and, if so, the timing of those contingent contributions.

Previous wording

With respect to the Wildfire Fund, PG&E Corporation and the Utility expect to re-evaluate the reasonableness of the currently estimated 20-year life and recognize accelerated amortization of the Wildfire Fund asset based on reliable, publicly available information. SCE has disclosed that a liability for the wildfire that began on January 7, 2025, in Eaton Canyon in Los Angeles County, California (the “Eaton fire”) is probable, but a range of losses that may be incurred is not reasonably estimable. In the first quarter of 2026, SCE has also disclosed losses of $1.3 billion and a Wildfire Fund receivable of $295 million based on their recent settlement activity. As of June 30, 2026, PG&E Corporation and the Utility continue to use an estimated 20-year life and recognized accelerated amortization of $78 million.

Current wording

With respect to the Wildfire Fund, PG&E Corporation and the Utility expect to re-evaluate the reasonableness of the currently estimated 20-year life and to recognize accelerated amortization of the Wildfire Fund asset based on reliable, publicly available information about the wildfire that began on January 7, 2025, in Eaton Canyon in Los Angeles County, California (the “Eaton fire”). SCE has disclosed probable losses of $1.6 billion and a Wildfire Fund receivable of $645 million for the Eaton fire, which represents the low end of the range of probable losses, and that the remainder of the probable losses are not reasonably estimable. As a result, PG&E Corporation and the Utility could reduce the estimated life to zero and incur up to $3.7 billion of accelerated amortization.

Previous wording

There has been increased California state legislative activity and political dialogue in recent years regarding wildfires, energy affordability, and related topics. The substance and timing of any legislation or other executive or regulatory measures relating to these matters, if such measures are implemented or if there is a failure to act on wildfire matters, could have a material impact on PG&E Corporation’s and the Utility’s business, cash flows, results of operations, and financial condition. In particular, California lawmakers are considering potential legislation in the legislative session scheduled to end August 31, 2026 that could impact PG&E Corporation and the Utility. If there is insufficient legislative action on wildfire matters, PG&E Corporation and the Utility could face persistent financial limitations and elevated risk, including challenges obtaining financing on acceptable terms or increased financing needs, which in turn may negatively impact their financial results and customer affordability. Without sufficient legislation, PG&E Corporation and the Utility may consider changes to their financial plan, including capital allocation priorities.

Current wording

There has been increased California state legislative activity and political dialogue in recent years regarding wildfires, energy affordability, and related topics. The substance and timing of any legislation or other executive or regulatory measures relating to these matters, if such measures are implemented or if there is a failure to act on wildfire matters, could have a material impact on PG&E Corporation’s and the Utility’s business, cash flows, results of operations, and financial condition. The California Legislature concluded its 2025-2026 legislative session without enacting additional legislation to modify the state's wildfire liability framework. As a result, PG&E Corporation and the Utility could face persistent financial limitations and elevated risk, including challenges obtaining financing on acceptable terms, increased borrowing costs and collateral posting requirements, or increased financing needs, which in turn may negatively impact their financial results and customer affordability.