PG&E (PCG) - 2024 Q3 - Quarterly Report

Units of Measurement This section defines various electricity, natural gas, and cubic feet units of measurement used in the report - This section defines various units of measurement, including Kilowatt (kW), Kilowatt-Hour (kWh), Megawatt (MW), Megawatt-Hour (MWh), Gigawatt (GW), Gigawatt-Hour (GWh), Kilovolt (kV), Megavolt Ampere (MVA), and cubic feet measurements (Mcf, MMcf, Bcf), primarily for electricity and natural gas[8] Glossary This section defines key company-specific and industry-specific terms and abbreviations for consistent understanding - Key terms and abbreviations, including regulatory bodies (CPUC, FERC, OEIS), financial terms (GAAP, EPS), and operational terms (WMP, PSPS, Wildfire Fund), are defined for clarity and consistent understanding[10][12] Forward-Looking Statements This section highlights forward-looking statements, which are subject to risks and uncertainties that may materially alter future results - The report includes forward-looking statements subject to risks and uncertainties, such as estimated losses, capital expenditures, cost savings, and critical accounting assumptions for insurance, regulatory assets/liabilities, environmental remediation, litigation, and the Wildfire Fund[13] - Future results may differ materially due to factors like the effectiveness of the Wildfire Fund and AB 1054 in mitigating wildfire liability, risks from specific wildfires (2019 Kincade, 2021 Dixie, 2022 Mosquito fires), and the Utility's cost recovery capabilities[13] - Significant risks also include the effectiveness of wildfire mitigation initiatives (e.g., undergrounding), operational safety, industry changes from decarbonization and electrification, cyber/physical attacks, severe weather, regulations, and outcomes of ratemaking and regulatory proceedings[13][14] Item 1A. Risk Factors This section details risks from PG&E Corporation's reliance on subsidiary dividends and restrictions on the Utility's fund distribution - PG&E Corporation, as a holding company, heavily relies on dividends, distributions, and other payments from the Utility to pay common stock dividends and meet debt obligations[18][19] - The Utility's ability to distribute funds is restricted by operating results, dividend limitations, financing covenants, and CPUC requirements prioritizing capital needs for customer service and prudent operations[19] - Deterioration in the Utility's income or assets could materially and adversely affect PG&E Corporation's ability to pay common stock dividends or meet other obligations[20] Part I. Financial Information This part presents the company's financial information, including management's discussion and analysis and condensed consolidated financial statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the financial condition and results of operations for PG&E Corporation and the Utility, highlighting key factors affecting financial results, detailed operating performance, liquidity, and significant regulatory and environmental matters Overview This overview discusses the key factors influencing PG&E Corporation's and the Utility's financial performance, including the significant impact of wildfires, the effectiveness and cost recovery of wildfire mitigation efforts, the timing and outcomes of regulatory ratemaking proceedings, and the ability to control operating and financing costs - Wildfires, mitigation costs, and cost recovery significantly impact financial results, with liabilities of $1.2 billion for the 2019 Kincade fire, $1.875 billion for the 2021 Dixie fire, and $100 million for the 2022 Mosquito fire as of September 30, 2024, before recoveries[23][28] - Regulatory ratemaking proceedings, including operating and capital cost recovery and the impact of memorandum and balancing accounts, are crucial for the Utility's financial outcomes, with increasing costs recorded in these accounts[33] - PG&E Corporation held substantial U.S. federal and California net operating loss carryforwards of approximately $32.9 billion and $32.6 billion, respectively, as of December 31, 2023[37] - The company's Amended Articles limit stock ownership increases to 4.75% to prevent an 'ownership change' under Section 382 of the IRC, which could limit tax attributes, and as of the report date, an ownership change is unlikely[38][39] Results of Operations This section provides a detailed analysis of the operating results for PG&E Corporation and the Utility for the three and nine months ended September 30, 2024, compared to the same periods in 2023 | (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Consolidated Total | $576 | $348 | $1,828 | $1,323 | | PG&E Corporation | (39) | (69) | (126) | (193) | | Utility | $615 | $417 | $1,954 | $1,516 | | (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total operating revenues | $5,941 | $5,888 | $17,788 | $17,387 | | Total operating expenses | $4,907 | $5,484 | $14,335 | $15,840 | | Operating Income | $1,034 | $404 | $3,453 | $1,547 | | Net Income | $618 | $420 | $1,964 | $1,526 | | Income Available for Common Stock | $615 | $417 | $1,954 | $1,516 | - The Utility's total operating revenues increased by $53 million (1%) for the three months and $401 million (2%) for the nine months ended September 30, 2024, driven by increased base revenues from the 2023 GRC, higher FERC formula rates, and interim rate relief from the WGSC proceeding[45][47] - Total operating expenses decreased by $577 million (10.5%) for the three months and $1.505 billion (9.5%) for the nine months ended September 30, 2024, primarily due to lower deferred expenses from WMCE decisions and reduced insurance costs from self-insurance adoption[44][55][58] - Wildfire-related claims, net of recoveries, increased by $106 million (331%) for the three months and $105 million (300%) for the nine months ended September 30, 2024, due to pre-tax charges for the 2021 Dixie fire and 2019 Kincade fire[62] - Wildfire Fund expense decreased by $80 million (37%) for the three months and $158 million (35%) for the nine months ended September 30, 2024, mainly due to less accelerated amortization and an increased estimated coverage period from 15 to 20 years[63] - Depreciation, amortization, and decommissioning expenses increased by $248 million (31%) for the three months and $249 million (9%) for the nine months ended September 30, 2024, primarily due to plant balance growth from capital additions and higher decommissioning expense[64] - The Utility's Income tax provision increased by $327 million (82%) for the three months and $1.1 billion (109%) for the nine months ended September 30, 2024, mainly due to reduced tax benefits from the Fire Victim Trust's sale of PG&E Corporation common stock and higher pre-tax income[68] Liquidity and Financial Resources This section details PG&E Corporation's and the Utility's liquidity and financial resources, including their ability to meet cash requirements through operating cash flows and capital markets - As of September 30, 2024, PG&E Corporation and the Utility had approximately $5.2 billion in total liquidity, including $712 million in Utility cash, $183 million in PG&E Corporation cash, and $4.3 billion in revolving credit facility availability[73] - The Utility completed several debt financings in 2024, including $2.25 billion in First Mortgage Bonds in February, **$1.75