PG&E Corporation Reports Second-Quarter Results; On Track to Deliver Solid 2023

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Operating Revenues

Electric

$                3,852

$                3,690

$                7,971

$                7,848

Natural gas

1,438

1,428

3,528

3,068

Total operating revenues

5,290

5,118

11,499

10,916

Operating Expenses

Cost of electricity

672

780

1,194

1,282

Cost of natural gas

274

359

1,190

920

Operating and maintenance

2,436

2,291

5,113

5,401

SB 901 securitization charges, net

289

40

562

40

Wildfire-related claims, net of recoveries

(1)

145

(3)

144

Wildfire Fund expense

117

117

234

235

Depreciation, amortization, and decommissioning

997

941

2,074

1,913

Total operating expenses

4,784

4,673

10,364

9,935

Operating Income

506

445

1,135

981

Interest income

143

19

255

27

Interest expense

(640)

(411)

(1,242)

(830)

Other income (expense), net

66

(21)

151

128

Income Before Income Taxes

75

32

299

306

Income tax benefit

(335)

(328)

(683)

(532)

Net Income

410

360

982

838

Preferred stock dividend requirement of subsidiary

4

4

7

7

Income Available for Common Shareholders

$                   406

$                   356

$                   975

$                   831

Weighted Average Common Shares Outstanding, Basic

2,019

1,987

2,005

1,987

Weighted Average Common Shares Outstanding, Diluted

2,139

2,141

2,137

2,141

Net Income Per Common Share, Basic

$                  0.20

$                  0.18

$                  0.49

$                  0.42

Net Income Per Common Share, Diluted

$                  0.19

$                  0.17

$                  0.46

$                  0.39

Three Months Ended

June 30,

Six Months Ended

June 30,

Earnings

Earnings per
Common
Share

Earnings

Earnings per
Common
Share

(in millions, except per share amounts)

2023

2022

2023

2022

2023

2022

2023

2022

PG&E Corporation's Earnings/EPS on a GAAP basis

$  406

$  356

$ 0.19

$ 0.17

$  975

$  831

$ 0.46

$ 0.39

Non-core items: ⁽¹⁾

Amortization of Wildfire Fund contribution ⁽²⁾

84

84

0.04

0.04

169

169

0.08

0.08

Bankruptcy and legal costs ⁽³⁾

17

151

0.01

0.07

33

186

0.02

0.09

Fire Victim Trust tax benefit net of securitization ⁽⁴⁾

(65)

(173)

(0.03)

(0.08)

(139)

(308)

(0.07)

(0.14)

Investigation remedies ⁽⁵⁾

2

2

—

—

17

72

0.01

0.03

Prior period net regulatory impact ⁽⁶⁾

(6)

—

—

—

(12)

45

(0.01)

0.02

Strategic repositioning costs ⁽⁷⁾

1

3

—

—

2

3

—

—

Wildfire-related costs, net of insurance ⁽⁸⁾

55

112

0.03

0.05

64

178

0.03

0.08

PG&E Corporation's Non-GAAP Core Earnings/EPS ⁽⁹⁾

$  494

$  536

$ 0.23

$ 0.25

$  1,109

$  1,175

$ 0.52

$ 0.55

All amounts presented in the table above and footnotes below are tax adjusted at PG&E Corporation's statutory tax rate of 27.98% for 2023 and 2022, except for certain costs that are not tax deductible. Earnings per Common Share is calculated based on diluted shares, except as noted. Amounts may not sum due to rounding.

(1)

"Non-core items" include items that management does not consider representative of ongoing earnings and affect comparability of financial results between periods, consisting of the items listed in the table above. See Non-GAAP Financial Measures below.

(2)

The Utility recorded costs of $117 million (before the tax impact of $33 million) and $234 million (before the tax impact of $65 million) during the three and six months ended June 30, 2023, respectively, associated with the amortization of the Wildfire Fund asset and accretion of the related Wildfire Fund liability.

(3)

Includes bankruptcy and legal costs associated with PG&E Corporation's and the Utility's Chapter 11 filing, including legal and other costs and exit financing costs, as shown below.

(in millions)

Three Months Ended
June 30, 2023

Six Months Ended
June 30, 2023

Legal and other costs

$                                   14

$                                   29

Exit financing

9

18

Bankruptcy and legal costs (pre-tax)

$                                   23

$                                   46

Tax impacts

(6)

(13)

Bankruptcy and legal costs (post-tax)

$                                   17

$                                   33

(4)

Includes any earnings-impacting investment losses or gains, associated with investments related to the contributions to the Customer Credit Trust, the charge related to the establishment of the SB 901 securitization regulatory asset and the SB 901 securitization regulatory liability associated with revenue credits funded by Net Operating Loss monetization, and tax benefits related to the Fire Victim Trust's sale of PG&E Corporation common stock.

(in millions)

Three Months Ended
June 30, 2023

Six Months Ended
June 30, 2023

Rate neutral securitization charge

$                                288

$                                562

Net gains related to Customer Credit Trust

(3)

(22)

Fire Victim Trust tax benefit net of securitization (pre-tax)

$                                286

$                                539

Tax impacts

(80)

(151)

Tax benefits from Fire Victim Trust share sales

(270)

(527)

Fire Victim Trust tax benefit net of securitization (post-tax)

$                                 (65)

$                              (139)

(5)

Includes costs associated with the CPUC's OII into the 2017 Northern California Wildfires and 2018 Camp Fire, the system enhancements related to the locate and mark OII, and the restoration and rebuild costs for the town of Paradise, as shown below.

(in millions)

Three Months Ended
June 30, 2023

Six Months Ended
June 30, 2023

Wildfire OII disallowance and system enhancements

$                                     2

$                                     1

Locate and mark OII system enhancements

1

2

Paradise restoration and rebuild

—

21

Investigation remedies (pre-tax)

$                                     3

$                                   24

Tax impacts

(1)

(7)

Investigation remedies (post-tax)

$                                     2

$                                   17

(6)

Includes adjustments associated with the recovery of capital expenditures from 2011 through 2014 above amounts adopted in the 2011 GT&S rate case per the CPUC decision dated July 14, 2022.

(in millions)

Three Months Ended
June 30, 2023

Six Months Ended
June 30, 2023

2011-2014 GT&S capital audit

$                                   (8)

$                                 (16)

Prior period net regulatory impact (pre-tax)

$                                   (8)

$                                 (16)

Tax impacts

2

4

Prior period net regulatory impact (post-tax)

$                                   (6)

$                                 (12)

(7)

The Utility recorded one-time costs related to repositioning PG&E Corporation's and the Utility's operating model, including their workforce.

(in millions)

Three Months Ended
June 30, 2023

Six Months Ended
June 30, 2023

Operating model

$                                     1

$                                     3

Strategic repositioning costs (pre-tax)

$                                     1

$                                     3

Tax impacts

—

(1)

Strategic repositioning costs (post-tax)

$                                     1

$                                     2

(8)

Includes costs associated with the 2019 Kincade fire, 2020 Zogg fire, and 2021 Dixie fire, net of insurance, as shown below.

(in millions)

Three Months Ended
June 30, 2023

Six Months Ended
June 30, 2023

2019 Kincade fire-related costs

$                                     2

4

2020 Zogg fire-related costs

4

10

2020 Zogg fire-related insurance recoveries

—

(1)

2020 Zogg fire-related legal settlements

50

50

2021 Dixie fire-related legal settlements

6

12

Wildfire-related costs, net of insurance (pre-tax)

$                                   61

$                                  74

Tax impacts

(6)

(10)

Wildfire-related costs, net of insurance (post-tax)

$                                   55

$                                  64

(9)

"Non-GAAP core earnings" is a non-GAAP financial measure. See Non-GAAP Financial Measures below.

Undefined, capitalized terms have the meanings set forth in the PG&E Corporation and the Utility's joint quarterly report on Form 10-Q for the quarter ended June 30, 2023.

2023

EPS Guidance

Low

High

Estimated EPS on a GAAP basis

~

$        1.04

~

$        1.13

Estimated Non-Core Items: ⁽¹⁾

Amortization of Wildfire Fund contribution ⁽²⁾

~

0.16

~

0.16

Bankruptcy and legal costs ⁽³⁾

~

0.03

~

0.02

Fire Victim Trust tax benefit net of securitization ⁽⁴⁾

~

(0.09)

~

(0.12)

Investigation remedies ⁽⁵⁾

~

0.03

~

0.02

Prior period net regulatory impact ⁽⁶⁾

~

(0.01)

~

(0.01)

Strategic repositioning costs ⁽⁷⁾

~

—

~

—

Wildfire-related costs, net of insurance ⁽⁸⁾

~

0.03

~

0.03

Estimated EPS on a non-GAAP Core Earnings basis

~

$        1.19

~

$        1.23

All amounts presented in the table above and footnotes below are tax adjusted at PG&E Corporation's statutory tax rate of 27.98% for 2023, except for certain costs that are not tax deductible. Amounts may not sum due to rounding.

(1)

"Non-core items" include items that management does not consider representative of ongoing earnings and affect comparability of financial results between periods. See Non-GAAP Financial Measures below.

(2)

"Amortization of Wildfire Fund contribution" represents the amortization of the Wildfire Fund asset and accretion of the related Wildfire Fund liability.

2023

(in millions, pre-tax)

Low
guidance
range

High
guidance
range

Amortization of Wildfire Fund contribution

~

$         470

~

$         470

Amortization of Wildfire Fund contribution (pre-tax)

~

$         470

~

$         470

Tax impacts

~

(132)

~

(132)

Amortization of Wildfire Fund contribution (post-tax)

~

$         338

~

$         338

(3)

"Bankruptcy and legal costs" consists of legal and other costs associated with PG&E Corporation's and the Utility's Chapter 11 filing, and exit financing costs.

2023

(in millions, pre-tax)

Low
guidance
range

High
guidance
range

Legal and other costs

~

$            65

~

$            40

Exit financing

~

35

~

25

Bankruptcy and legal costs (pre-tax)

~

$         100

~

$            65

Tax impacts

~

(28)

~

(18)

Bankruptcy and legal costs (post-tax)

~

$            72

~

$            47

(4)

"Fire Victim Trust tax benefit net of securitization" includes the impact of rate neutral (SB 901) securitization and tax benefits related to the Fire Victim Trust. Impacts of the SB 901 securitization include the establishment of the SB 901 securitization regulatory asset and the SB 901 regulatory liability associated with revenue credits funded by Net Operating Loss monetization. Fire Victim Trust tax benefits include tax benefits recognized upon the sale of shares of PG&E Corporation common stock by the Fire Victim Trust, which PG&E Corporation and the Utility have elected to treat as a grantor trust. Also included are any earnings-impacting investment losses or gains, associated with investments related to the contributions to the Customer Credit Trust. The low case includes tax benefits for the 180,000,000 shares of PG&E Corporation common stock sold in the aggregate by the Fire Victim Trust as of July 19, 2023, whereas the high case reflects an assumption that the Fire Victim Trust sells the remaining 67,743,590 shares during 2023.

2023

(in millions, pre-tax)

Low
guidance
range

High
guidance
range

Rate neutral securitization charge

~

$         910

~

$      1,265

Net gains related to Customer Credit Trust

~

(25)

~

(25)

Fire Victim Trust tax benefit net of securitization (pre-tax)

~

$         885

~

$      1,240

Tax impacts

~

(248)

~

(347)

Tax benefits from Fire Victim Trust share sales

~

(820)

~

(1,155)

Fire Victim Trust tax benefit net of securitization (post-tax)

~

$       (183)

~

$       (262)

(5)

"Investigation remedies" includes costs related to the Paradise restoration and rebuild, the Wildfires OII decision different, the settlement agreement with the Safety and Enforcement Division's investigation into the 2020 Zogg fire, and the locate and mark OII system enhancements.

2023

(in millions, pre-tax)

Low
guidance
range

High
guidance
range

Paradise restoration and rebuild

~

$            30

~

$            30

Wildfire OII disallowance and system enhancements

~

20

~

20

2020 Zogg fire settlement

~

10

~

5

Locate and mark OII system enhancements

~

5

~

5

Investigation remedies (pre-tax)

~

$            65

~

$            60

Tax impacts

~

(11)

~

(10)

Investigation remedies (post-tax)

~

$            54

~

$            50

(6)

"Prior period net regulatory impact" represents the recovery of capital expenditures from 2011 through 2014 above amounts adopted in the 2011 GT&S rate case.

2023

(in millions, pre-tax)

Low
guidance
range

High
guidance
range

2011-2014 GT&S capital audit

~

$          (35)

~

$          (35)

Prior period net regulatory impact (pre-tax)

~

$          (35)

~

$          (35)

Tax impacts

~

10

~

10

Prior period net regulatory impact (post-tax)

~

$          (25)

~

$          (25)

(7)

"Strategic repositioning costs" includes one-time costs related to repositioning PG&E Corporation's and the Utility's operating model, including their workforce, and costs associated with the potential sale of a minority interest in Pacific Generation LLC.

2023

(in millions, pre-tax)

Low
guidance
range

High
guidance
range

Operating model

~

$              5

~

$              5

Pacific Generation LLC minority interest sale

~

—

~

—

Strategic repositioning costs (pre-tax)

~

$              5

~

$              5

Tax impacts

~

(1)

~

(1)

Strategic repositioning costs (post-tax)

~

$              4

~

$              4

(8)

"Wildfire-related costs, net of insurance" includes legal and other costs associated with the 2019 Kincade fire, 2020 Zogg fire, and 2021 Dixie fire, net of insurance.

2023

(in millions, pre-tax)

Low
guidance
range

High
guidance
range

2019 Kincade fire-related costs

~

$            20

~

$            10

2020 Zogg fire-related costs

~

20

~

15

2020 Zogg fire-related insurance recoveries

~

(10)

~

(10)

2021 Dixie fire-related legal settlements

~

15

~

15

Wildfire-related costs, net of insurance (pre-tax)

~

$            95

~

$            80

Tax impacts

~

(27)

~

(22)

Wildfire-related costs, net of insurance (post-tax)

~

$            68

~

$            58

Undefined, capitalized terms have the meanings set forth in the PG&E Corporation and the Utility's joint quarterly report on Form 10-Q for the quarter ended June 30, 2023.

Non-GAAP Financial Measures

PG&E Corporation and Pacific Gas and Electric Company