PG&E Corporation (PCG): A Bull Case Theory

Core Thesis - PG&E Corporation is viewed positively due to its progress in mitigating wildfire risks and potential regulatory clarity, which could lead to a revaluation of the company [1][5]. Company Overview - PG&E Corporation serves approximately 16 million customers in Northern and Central California, focusing on electric transmission and distribution as well as gas distribution [2]. - The company's earnings are largely determined by rates approved by the California Public Utilities Commission (CPUC), making regulatory outcomes crucial for long-term value [2]. Current Challenges - The stock trades at a discount due to ongoing concerns about wildfire liability, linked to PG&E's 2019 bankruptcy after its equipment was associated with catastrophic wildfires in 2017-2018 [3]. - Investor perception remains focused on wildfire risks, which pressures regulators to impose stringent safety standards and elevated costs, overshadowing operational improvements [3]. Mitigation Efforts - PG&E has made significant strides in reducing wildfire risk by undergrounding high-risk power lines, with approximately 1,000 miles completed by the third quarter of 2025, and deploying thousands of sensors and reinforced infrastructure [4]. - The demand for data centers, driven by AI, is expected to add up to 10 GW of incremental load over the next decade, enhancing grid utilization and economic activity [4]. Future Catalysts - The upcoming General Rate Case decision for 2027-2030 is anticipated to be constructive, as PG&E is requesting a modest revenue increase justified by wildfire mitigation and grid upgrades [5]. - Improving safety metrics, rising power demand, and potential regulatory clarity position PG&E as an undervalued regulated utility with a path toward earnings normalization and multiple expansion [5][7].