Q1 2025 PG&E Corp Earnings Call

April 24, 2025

Patti Poppe: To 8.7GW. We are privileged to serve California, including the Bay Area, which has the fiber network enabling speed and reliability for data center customers and also the density of talent needed to maximize the potential of artificial intelligence. We have 1.4GW in final engineering comprised of 18 projects. To date, these have not been the mega data center projects designed to power large language models. Rather, the demand in our service area has been mostly from customers looking to power inference models, which are driving value for their businesses. True Goldilocks demand big enough to matter, not so big that it's a problem. What differentiates this opportunity in California is a diversified set of customers and projects, excess generation to power, incremental load in the near term, and a regulatory approach, which ensures that our existing residential customers will save money.

Patti Poppe: We continue to estimate that for every gigawatt of new electric demand from data centers, customers may save between 1% and 2% on their electricity bill. This is just some of the exciting work my team has been doing here at PG&E and we've got more to come. We know that to best capture this customer benefiting load growth, we will need to attract high quality, long term, low cost capital. We trust our policymakers to understand this and we want you to trust California policymakers too. Our team continues to work closely with key decision makers on wildfire policy improvements at a high level. We're looking to build on the already strong existing state legislative framework, rebuild investor confidence, and ultimately make the model even stronger.

We continue to estimate that for every gigawatt of new electric demand from data centers, customers may save between 1% and 2% on their electricity bill. This is just some of the exciting work my team has been doing here at PG&E and we've got more to come. We know that to best capture this customer benefiting load growth, we will need to attract high quality, long term, low cost capital. We trust our policymakers to understand this and we want you to trust California policymakers too. Our team continues to work closely with key decision makers on wildfire policy improvements at a high level. We're looking to build on the already strong existing state legislative framework, rebuild investor confidence, and ultimately make the model even stronger.

Patti Poppe: In our advocacy, we're making sure state leaders understand that addressing capital provider and rating agency concerns is critical to ensuring access to competitively priced long-term capital. Addressing these concerns is also critical to delivering the most affordable solutions for our customers. As the legislative process continues, let me remind you of our existing physical layers of protection in place and shown here on slide 8. We're building infrastructure for purpose, a system that is safer and more resilient every day. In early March we filed our 2026-2028 Wildfire Mitigation Plan.

In our advocacy, we're making sure state leaders understand that addressing capital provider and rating agency concerns is critical to ensuring access to competitively priced long-term capital. Addressing these concerns is also critical to delivering the most affordable solutions for our customers. As the legislative process continues, let me remind you of our existing physical layers of protection in place and shown here on slide 8. We're building infrastructure for purpose, a system that is safer and more resilient every day. In early March we filed our 2026-2028 Wildfire Mitigation Plan.

Patti Poppe: With this proposed plan, we will continue working to reduce wildfire risk attributable to vegetation or other objects contacting our power lines through both system resilience programs and operational programs, which reduce risk during periods of severe weather, and reduce the wildfire risk due to equipment failure through measures including pole-mounted sensors to catch outages and ignitions before they occur, as well as pole clearing. There's nothing more important than ensuring public and co-worker safety. Rebuilding PG&E's safety culture was one of the most important challenges when I joined the company in 2021. Back then, we were experiencing a co-worker or contractor fatality on the job every 90 to 100 days. That was truly shocking and a call for action. I'm very proud to share that.

With this proposed plan, we will continue working to reduce wildfire risk attributable to vegetation or other objects contacting our power lines through both system resilience programs and operational programs, which reduce risk during periods of severe weather, and reduce the wildfire risk due to equipment failure through measures including pole-mounted sensors to catch outages and ignitions before they occur, as well as pole clearing. There's nothing more important than ensuring public and co-worker safety. Rebuilding PG&E's safety culture was one of the most important challenges when I joined the company in 2021. Back then, we were experiencing a co-worker or contractor fatality on the job every 90 to 100 days. That was truly shocking and a call for action. I'm very proud to share that.

Patti Poppe: Today we are at 814 days without a fatality, and that is the longest run in over 25 years, and we are still going. The practical fact is that I can't be on every job site ensuring our safety procedures are being followed. Rather, every day my coworkers are showing up choosing to be safe, choosing to keep each other safe above all else. This is one of the most important proof points of the culture change that is happening at PG&E. Our system is safer, our hometowns are safer, and my coworkers are living our safety values every day on the job. That's a culture of safety you can believe in. However, we will never be satisfied when it comes to safety, and we continue to work it every day.

Today we are at 814 days without a fatality, and that is the longest run in over 25 years, and we are still going. The practical fact is that I can't be on every job site ensuring our safety procedures are being followed. Rather, every day my coworkers are showing up choosing to be safe, choosing to keep each other safe above all else. This is one of the most important proof points of the culture change that is happening at PG&E. Our system is safer, our hometowns are safer, and my coworkers are living our safety values every day on the job. That's a culture of safety you can believe in. However, we will never be satisfied when it comes to safety, and we continue to work it every day.

Patti Poppe: As you know, the safest job site is also the most productive one, and safety performance is a critical leading indicator for consistent financial performance. With that, I'll turn the call over to Carolynne.

As you know, the safest job site is also the most productive one, and safety performance is a critical leading indicator for consistent financial performance. With that, I'll turn the call over to Carolyn.

Carolyn Burke: Thank you, Patti, and good morning, everyone. Today I'm pleased to cover three main topics with you. First, our quarter-over-quarter results. Second, a reiteration of our sector-leading five-year capital plan and our de-risk financing plan. And third, our continued execution against the Simple Affordable Model. Starting here on Slide 9, we're showing you our Q1 2025 earnings walk. Our core earnings of $0.33 are down $0.04 over 2024. Recall last year in the Q1 we had some unexpected tailwinds, most notably the increase in ROE from 10% to 10.7%. We were committed to redeploying that upside to the benefit of both our customers and investors. And we did. Most of our redeployment came through in 2024.

Carolyn Burke: In later quarters, as we pulled work forward to de-risk 2025 without a similar tailwind this year, we are instead absorbing a lower ROE and dilution from our well-timed December equity issuance with line of sight on savings over the balance of the year. We fully expect to deliver our 2025 plan even while we look for opportunities to de-risk next year. This is what we mean when we say we ride the roller coaster so you don't have to. During Q1 2025, the main positive driver was higher customer capital investment.

In later quarters, as we pulled work forward to de-risk 2025 without a similar tailwind this year, we are instead absorbing a lower ROE and dilution from our well-timed December equity issuance with line of sight on savings over the balance of the year. We fully expect to deliver our 2025 plan even while we look for opportunities to de-risk next year. This is what we mean when we say we ride the roller coaster so you don't have to. During Q1 2025, the main positive driver was higher customer capital investment.

Patti Poppe: This contributed $0.02 and that's net of.

This contributed $0.02 and that's net of the reduction in the authorized return on equity related to the phase two cost of capital decision. That's 10.28% this year compared to the 10.7% in effect for 2024. Non-fuel O&M savings contributed $0.01 to our results, and you should expect to see this grow as we move throughout the year. These items are offset by redeploying $0.02 to various programs, including those supporting risk mitigation, $0.02 from equity dilution, and $0.03 of timing and other. Turning to slide 10, there is no change to our five-year $63 billion capital plan through 2028. There's no shortage of customer beneficial work on our transmission and distribution systems, and we still see an incremental at least $5 billion of investment needs. What's more, our growth is diverse with no single project accounting for more than 2% of the overall plan.

Carolyn Burke: The reduction in the authorized return on equity related to the phase two cost of capital decision. That's 10.28% this year compared to the 10.7% in effect for 2024. Non-fuel O&M savings contributed $0.01 to our results, and you should expect to see this grow as we move throughout the year. These items are offset by redeploying $0.02 to various programs, including those supporting risk mitigation, $0.02 from equity dilution, and $0.03 of timing and other. Turning to slide 10, there is no change to our five-year $63 billion capital plan through 2028. There's no shortage of customer beneficial work on our transmission and distribution systems, and we still see an incremental at least $5 billion of investment needs. What's more, our growth is diverse with no single project accounting for more than 2% of the overall plan.

Carolyn Burke: When it comes to incremental demand, it's important to remember we have a number of options or combinations thereof, we could add to our already robust plan. We could prioritize investment tied to connecting new load, what we're calling beneficial load growth, and/or we could extend the duration of our sector-leading rate-based growth story. In other words, we have opportunities to make our plan bigger, doing more for customers, make it better in terms of affordability, and longer in duration. Turning to Slide 11, we were very pleased to see the upgrade from Moody's in March, which brought the utility issuer's credit rating to investment grade.

When it comes to incremental demand, it's important to remember we have a number of options or combinations thereof, we could add to our already robust plan. We could prioritize investment tied to connecting new load, what we're calling beneficial load growth, and/or we could extend the duration of our sector-leading rate-based growth story. In other words, we have opportunities to make our plan bigger, doing more for customers, make it better in terms of affordability, and longer in duration. Turning to Slide 11, we were very pleased to see the upgrade from Moody's in March, which brought the utility issuer's credit rating to investment grade.

Patti Poppe: We have more work to do at each of the agencies to get the.

We have more work to do at each of the agencies to get the. Parent company to investment grade and that continues to be our focus. Our five-year financing plan remains unchanged as shown here on slide 12. This is a strong plan built to support achieving investment grade ratings and prioritizing customer capital investment. While our debt needs have not changed over the five-year period, we are modestly reducing our 2025 long-term debt guidance by $0.5 billion as some of that has now shifted to 2026 due to a term loan extension we closed on earlier this month. On the equity side, our December issuance put us back in compliance with our authorized regulatory capital structure ahead of schedule and prior to our cost of capital filing. We also benefit from our differentiated dividend payout.

Carolyn Burke: Parent company to investment grade and that continues to be our focus. Our five-year financing plan remains unchanged as shown here on slide 12. This is a strong plan built to support achieving investment grade ratings and prioritizing customer capital investment. While our debt needs have not changed over the five-year period, we are modestly reducing our 2025 long-term debt guidance by $0.5 billion as some of that has now shifted to 2026 due to a term loan extension we closed on earlier this month. On the equity side, our December issuance put us back in compliance with our authorized regulatory capital structure ahead of schedule and prior to our cost of capital filing. We also benefit from our differentiated dividend payout.

Carolyn Burke: We believe 20% by 2028 remains an appropriate target, allowing us to retain a significant majority of our earnings and prioritize needed customer capital investment on our system. I'll remind you, our five-year plan does not assume any savings from the DOE loan or achieving investment grade even though these are both near-term priorities. As Patti mentioned, both would be affordability benefits for our customers versus the base.

We believe 20% by 2028 remains an appropriate target, allowing us to retain a significant majority of our earnings and prioritize needed customer capital investment on our system. I'll remind you, our five-year plan does not assume any savings from the DOE loan or achieving investment grade even though these are both near-term priorities. As Patti mentioned, both would be affordability benefits for our customers versus the base plan.

Fox, to 8.7 gigawatts. We are privileged to serve California, including the Bay Area, which has the fiber network enabling speed and reliability for data center customers, and also the density of talent needed to maximize the potential of artificial intelligence.

Patti Poppe: Plan.

Carolyn Burke: Turning to slide 13, executing against our Simple Affordable Model is how we're making our industry-leading capital growth affordable for our customers. We work each element each and every day: O&M savings, where I'm particularly proud of our track record exceeding our annual 2% target, beneficial load growth, where the opportunity continues to grow, and efficient financing opportunities, which we aggressively pursue. Regarding our O&M cost reductions, we saved over $500 million in 2023 and another nearly $350 million in 2024, and as Patti noted, we're excited to incorporate these savings into our GRC filing. Our ability to achieve these savings after absorbing inflation and is a capability that is becoming more beneficial for our customers in the current uncertain economic environment. Our sourcing is primarily from domestic suppliers deploying our Performance Playbook.

Turning to slide 13, executing against our Simple Affordable Model is how we're making our industry-leading capital growth affordable for our customers. We work each element each and every day: O&M savings, where I'm particularly proud of our track record exceeding our annual 2% target, beneficial load growth, where the opportunity continues to grow, and efficient financing opportunities, which we aggressively pursue. Regarding our O&M cost reductions, we saved over $500 million in 2023 and another nearly $350 million in 2024, and as Patti noted, we're excited to incorporate these savings into our GRC filing. Our ability to achieve these savings after absorbing inflation and is a capability that is becoming more beneficial for our customers in the current uncertain economic environment. Our sourcing is primarily from domestic suppliers deploying our Performance Playbook.

We have 1.4 gigawatts in final engineering, comprised of 18 projects.

To date, these have not been the mega data center projects designed to power large language learning models rather the demand in our service area has been mostly from customers looking to power inference models which are driving value for their businesses.

True Goldilocks demand. Big enough to matter, not so big that it's a problem.

With differentiates this opportunity in California is a diversified set of customers and projects, access generation to power incremental load in the near term, and a regulatory approach which ensures that our existing residential customers will save money.

We continue to estimate that for every gigawatt of new electric demand from data centers, customers may save between one to two percent on their electricity bill. This is just some of the exciting work my team has been doing here at PG&E when we've got more to come.

We know that to best capture this customer-benefitting load growth, we will need to attract high-quality, long-term, low-cost capital. We trust our policy makers to understand this, and we want you to trust California policy makers, too.

Carolyn Burke: We intend to offset tariff-related cost pressures and inflation as you've come to expect from us. Our goal is to manage through these ups and downs of the business, and this will continue to be our default and first line of defense. That said, we also operate under a constructive California regulatory model which has mechanisms specifically designed to address significant unanticipated items on a timely basis, including outside the rate case cycle. With respect to recession risk, our decoupled revenue model offers significant protection, and our investment plans aren't built around any particular large project. Net, net. California's regulatory construct combined with our lean operating system is a powerful buffer against economic headwinds. During Q1, the CPUC approved our settlement agreement to establish a non-wildfire self-insurance program.

We intend to offset tariff-related cost pressures and inflation as you've come to expect from us. Our goal is to manage through these ups and downs of the business, and this will continue to be our default and first line of defense. That said, we also operate under a constructive California regulatory model which has mechanisms specifically designed to address significant unanticipated items on a timely basis, including outside the rate case cycle. With respect to recession risk, our decoupled revenue model offers significant protection, and our investment plans aren't built around any particular large project. Net, net. California's regulatory construct combined with our lean operating system is a powerful buffer against economic headwinds. During Q1, the CPUC approved our settlement agreement to establish a non-wildfire self-insurance program.

Our team continues to work closely with key decision makers on wildfire policy improvements. At a high level we're looking to build on the already strong existing state legislative framework, rebuild investor confidence and ultimately make the model even stronger.

As the legislative process continues, let me remind you of our existing physical layers of protection in place and shown here on Fly Day.

We're building infrastructure for purpose, a system that is safer and more resilient every day. In early March, we filed our 2026-2028 wildfire mitigation plan.

Carolyn Burke: Assuming no claims, customers have the potential to save more than $600 million through 2030 under this program. This is another example of how we're working creative and innovative solutions on behalf of customers. We continue to see abundant opportunities to reduce costs in 2025 and beyond. Just take our capital to expense ratio.

Assuming no claims, customers have the potential to save more than $600 million through 2030 under this program. This is another example of how we're working creative and innovative solutions on behalf of customers. We continue to see abundant opportunities to reduce costs in 2025 and beyond. Just take our capital to expense ratio as one proof point.

Patti Poppe: As one proof point.

Carolyn Burke: While we've improved our ratio, we're still spending only $0.90 capital for every dollar of expense. Best in class is spending $2.40. This remains a huge opportunity for us as we continue to drive O&M savings and invest in the most affordable infrastructure for our customers. Turning to Slide 14 as I've said before, 2025 is a big year in terms of regulatory filings. During the first quarter we submitted our 2026 cost of capital application supporting an ROE of 11.3%. We expect a final decision by year end with the new authorized cost of capital going into effect 1 January 2026. Another constructive feature of California's regulatory model is the fact that our cost of capital is decided independently of our general rate case. As you know, we'll make the GRC proposal on 15 May covering the period 2027 through 2030.

While we've improved our ratio, we're still spending only $0.90 capital for every dollar of expense. Best in class is spending $2.40. This remains a huge opportunity for us as we continue to drive O&M savings and invest in the most affordable infrastructure for our customers. Turning to Slide 14 as I've said before, 2025 is a big year in terms of regulatory filings. During the first quarter we submitted our 2026 cost of capital application supporting an ROE of 11.3%. We expect a final decision by year end with the new authorized cost of capital going into effect 1 January 2026. Another constructive feature of California's regulatory model is the fact that our cost of capital is decided independently of our general rate case. As you know, we'll make the GRC proposal on 15 May covering the period 2027 through 2030.

Speaker Change: There's nothing more important than ensuring public and co-worker safety. Rebuilding PG&E's safety culture was one of the most important challenges when I joined the company in 2021.

Back then, we were experiencing a coworker or contractor fatality on the job every 90 to 100 days.

That was truly shocking and a call for action.

Speaker Change: I'm very proud to share that today we are at 814 days without a fatality and that is the longest run in over 25 years and we are still going.

Speaker Change: The practical fact is that I can't be on every job site ensuring our safety procedures are being followed. Rather, every day my co-workers are showing up choosing to be safe, choosing to keep each other safe above all else.

Carolyn Burke: Like Patti, I am very excited to prove out the Simple Affordable Model for the benefit of our customers. We'll be advocating for an outcome which enables the right infrastructure investment and the right customer affordability. We also plan to file our 10-year undergrounding proposal with our safety regulator before the end of the year. I strongly believe that performance is power. We've been delivering on our sector-leading capital growth plan, converting rate-based growth into earnings growth. Proving that what's good for customers is also good for investors. We continue to plan conservatively and deliver consistent, predictable results. We do what we say. And on that note, let me end here on slide 15 with a reminder of our value proposition.

Like Patti, I am very excited to prove out the Simple Affordable Model for the benefit of our customers. We'll be advocating for an outcome which enables the right infrastructure investment and the right customer affordability. We also plan to file our 10-year undergrounding proposal with our safety regulator before the end of the year. I strongly believe that performance is power. We've been delivering on our sector-leading capital growth plan, converting rate-based growth into earnings growth. Proving that what's good for customers is also good for investors. We continue to plan conservatively and deliver consistent, predictable results. We do what we say. And on that note, let me end here on slide 15 with a reminder of our value proposition.

Speaker Change: This is one of the most important proof points of the culture change that is happening at PG&E.

Speaker Change: Our system is safer, our home towns are safer, and my co-workers are living our safety values every day on the job. That's the culture of safety you can believe in. However, we will never be satisfied when it comes to safety and we continue to work it every day.

Speaker Change: As you know, the safest job site is also the most productive one, and safety performance is a critical leading indicator for consistent financial performance. With that, I'll turn the call over to Carolyn.

Carolyn: Thank you, Patty, and good morning, everyone. Today, I'm pleased to cover three main topics with you.

Carolyn: First, our quarter-over-quarter results. Second, a reiteration of our sector-leading five-year capital plan and our D-risk financing plan. And third, our continued execution against the simple, affordable model.

Carolyn Burke: Consistent predictable performance serving our customers and delivering for investors: 10% rate base growth through 2028, 10% core EPS growth in 2025, at least 9% core EPS growth each year from 2026 through 2028, and bill increases held between 2% to 4%. With that, I'll hand it back to Patti.

Consistent predictable performance serving our customers and delivering for investors: 10% rate base growth through 2028, 10% core EPS growth in 2025, at least 9% core EPS growth each year from 2026 through 2028, and bill increases held between 2% to 4%. With that, I'll hand it back to Patti.

Carolyn: Starting here on Slide 9, we're showing you our first quarter 2025 earning swap. Our core earnings of 33 cents are down 4 cents over 2024.

Carolyn: Recall last year, in the first quarter, we had some unexpected tailwind, most notably the increase in ROE from 10 to 10.7%. We were committed to redeploying that upside to the benefit of both our customers and investors, and we did.

Patti Poppe: Thank you, Carolyn. Our simple affordable model is how we're executing on an industry-leading capital growth plan serving California while stabilizing customer bills. Our proven wildfire risk mitigation performance that gets stronger still every day, and our culture of safety being lived day in and day out, is what gives me confidence that the culture we're creating here at PG&E is sustainable. We're excited about all the catalysts in front of us: resolving the AB 1054 uncertainty, realizing the promise of our simple affordable model through our upcoming GRC, reaching investment grade at the holding company, delivering on our growing large load story, drawing down on our DOE loan facility, extending our track record of O&M savings, and filing our 10-year undergrounding plan. I've never felt more confident in the PG&E team and our ability to deliver for our customers and our investors.

Carolyn: Most of our read deployment came through in 2024 in later quarters, as we pulled work forward to de-risk 2025. Without a similar tailwind this year, we are instead observing a lower ROE and dilution from our well-time December equity issuance.

Carolyn: With line of sight on savings over the balance of the year, we fully expect to deliver our 2025 plan even while we look for opportunities to de-risk next year. This is what we mean when we say we ride the roller coaster so you don't have to.

Carolyn: During the first quarter of 2025, the main positive driver was higher customer capital investment.

Carolyn: This contributed two cents, and that's net of the reduction in the authorized return on equity related to the phase two cost the capital decision, that's 10.28% this year compared to the 10.7% in effect for 2024.

Patti Poppe: With that, operator, please open the line for questions.

Carolyn Burke: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question and one follow up question. We have allotted 30 minutes for Q&A. Again, press star one to join the queue. Our first question comes from the line of Nicholas Campanella with Barclays. Your line is open.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question and one follow up question. We have allotted 30 minutes for Q&A. Again, press star one to join the queue. Our first question comes from the line of Nicholas Campanella with Barclays. Your line is open.

Carolyn: These items are offset by redeploying two cents to various programs, including those supporting risk mitigation, two cents from equity dilution and three cents of timing and other.

Carolyn: Turning to 510, there is no change to our 5-year $53 billion capital plan through 2028.

Carolyn: There's no shortage of customer beneficial work on our transmission and distribution systems and we still see an incremental at least $5 billion of investment needs.

Carolyn: and what's more, our growth is reversed, with no single project accounting for more than 2% of the overall plan.

Carolyn: When it comes to incremental demand, it's important to remember we have a number of options or combinations thereof. We could add to our already robust plan.

[Analyst]: Hey, good morning. Hope everyone's doing well.

Nicholas Campanella: Hey, good morning. Hope everyone's doing well.

Carolyn Burke: Good morning, Nick.

[Analyst]: Morning. So, a lot of questions on legislation. You know, Patti, you said you expect a constructive outcome this legislative session and this year. You know, can you maybe expand on why you're confident that that's indeed happening this year, just given the various things in front of the state legislature? And is there any chance that this is still kind of a multi year effort? You know, maybe you can kind of give us a flavor of what you're working towards. You know, whether it's an extension, an increase in the fund size or clarity in the liability cap, just what should we kind of be expecting here? Thanks.

Nicholas Campanella: Morning. So, a lot of questions on legislation. You know, Patti, you said you expect a constructive outcome this legislative session and this year. You know, can you maybe expand on why you're confident that that's indeed happening this year, just given the various things in front of the state legislature? And is there any chance that this is still kind of a multi year effort? You know, maybe you can kind of give us a flavor of what you're working towards. You know, whether it's an extension, an increase in the fund size or clarity in the liability cap, just what should we kind of be expecting here? Thanks.

Carolyn: We could prioritize investment tied to connecting new load, what we're calling beneficial load growth, and or we could extend the duration of our sector leading rate-based growth story.

Carolyn: In other words, we have opportunities to make our plan bigger during more for customers, make it better in terms of affordability and longer in duration.

Carolyn: Turning to 5-11, we were very pleased to see the upgrade from Moody to March, which brought the utility issuer at credit rating to investment grade. We have more work to do at each of the agencies to get the parent company to investment grade, and that continues to be our focus.

Patti Poppe: Yeah, Nick, thanks for the question. First, let me reflect what you said, that the legislature does have a lot on their plate and we respect their need to do a lot of different things in their roles. What makes me confident is how important it is to get this fixed. You know, the AB 1054 construct is so important for all the constituents. It's good for customers because it acts as a rate smoothing design, especially when you've got a prudent operator and therefore those costs are recoverable. The fund acts as a very good rate smoothing device. The fund also serves those who were harmed by wildfire.

Carolyn: Our five-year financing plan remains unchanged, as shown here on slide 12. This is a strong plan built to a support, achieving investment in grade ratings and prioritizing customer capital investment.

Carolyn: While our debt needs have not changed over the five year period, we are modestly reducing our 2025 long term debt guidance by a half billion dollars. As some of that has now shifted to 2026, due to a term loan extension we closed on earlier this month.

Patti Poppe: Given that we know that the legislature is attuned to the importance of AB 1054, we also know how important it is to attract high-quality, low-cost capital so that we can continue to improve the affordability of energy in California. That's what makes me confident it's too important not to do. We're confident that we can continue to help advocate for the right kind of surgical changes to the strong existing construct. You know, Nick, I would love to, you know, say more about what we think the changes are going to be, but this is a live ball and it's very important that we don't get out in front of our legislators. They've got a lot of work to do. I'm not going to, you know, address any specifics about how we think the construct is going to change.

Carolyn: On the equity side, our December issuance put us back in compliance with our authorized regulatory capital structure ahead of schedule and prior to our cost of capital filing.

Given that we know that the legislature is attuned to the importance of AB 1054, we also know how important it is to attract high-quality, low-cost capital so that we can continue to improve the affordability of energy in California. That's what makes me confident it's too important not to do. We're confident that we can continue to help advocate for the right kind of surgical changes to the strong existing construct. You know, Nick, I would love to, you know, say more about what we think the changes are going to be, but this is a live ball and it's very important that we don't get out in front of our legislators. They've got a lot of work to do. I'm not going to, you know, address any specifics about how we think the construct is going to change.

Carolyn: We also benefit from our differentiated dividend payout. We believe 20% by 2028 remains an appropriate target, allowing us to retain a significant majority of our earnings and prioritize needed customer capital investment on our system.

Carolyn: Aubrey Mindjou, our five-year plan does not assume any savings from the DOE loan or achieving investment grade, even though these are both near-term priorities.

Carolyn: As Patty mentioned, both would be affordability benefits for our customers versus the base plan.

Carolyn: Turning to slide 13, executing against our simple affordable model is how we're making our industry leading capital growth affordable for our customers.

Patti Poppe: But we do believe that a constructive outcome will happen this year. Absolutely.

But we do believe that a constructive outcome will happen this year.

We worked each element each and every day.

Nicholas Campanella: Absolutely. Understood on that. Then, you know, we're excited to see the rate case be filed here in the middle of May. You know, when we look at some of your peers and the rate cases that they filed to the south of you and the outcomes that they've kind of received there, or the ones that are still progressing, just maybe you can kind of talk about what you see as kind of the key differentiator in your upcoming case. Whether it's kind of the level of the ask or the amount of O and M that you're going to be able and efficiencies that you're going to be able to kind of flow back to customers. How does this kind of compare to other cases that we've seen in the state?

[Analyst]: Understood on that. Then, you know, we're excited to.

Carolyn: Owen M. Savings, where I'm particularly proud of our track record exceeding our annual 2% target.

Patti Poppe: See the rate case be filed here in the middle of May.

Carolyn: Beneficial Low Growth, where the opportunity continues to grow, and efficient financing opportunities, which we aggressively pursue.

[Analyst]: You know, when we look at some of your peers and the rate cases that they filed to the south of you and the outcomes that they've kind of received there, or the ones that are still progressing, just maybe you can kind of talk about what you see as kind of the key differentiator in your upcoming case. Whether it's kind of the level of the ask or the amount of O and M that you're going to be able and efficiencies that you're going to be able to kind of flow back to customers. How does this kind of compare to other cases that we've seen in the state?

Speaker Change: Regarding our ONM cost reductions, we saved over $500 million in 2023 and another nearly 350 million in 2024. And as Patty noted, we're excited to incorporate these savings into our GRC filing.

Speaker Change: Our ability to achieve these savings after observing inflation is the capability that is becoming more beneficial for our customers in the current uncertain economic environment.

Patti Poppe: Yeah, we're really excited about being able to bring forth our proposals for all the constituents. You know, we know this is a step in the process. Our General Rate Case proposal that we'll be filing on 15 May provides good choices for our decision makers to make. We know that our proposal will reflect the Simple Affordable Model. We know that our GRC must address a significant demand for infrastructure investments for a safer, reliable, clean energy system. And we know that by continuing to improve on our capital O&M ratio, that ends up being the most affordable path for customers and still improving their service every day. And so we are excited about passing along the O&M savings that we've delivered over the last several years. You know, that's how it works.

Speaker Change: Our sourcing is primarily from domestic suppliers. Deploying our performance playbook, we intend to offset tariff-related cost pressures and inflation.

Speaker Change: As you've come to expect from us, our goal is to manage through these ups and downs of the business, and this will continue to be our default and first line of defense.

Speaker Change: That said, we also operate under a constructive California regulatory model, which has mechanisms specifically designed to address significant unanticipated items on a timely basis, including outside the rate case cycle.

Speaker Change: With respect to recession risk, our decoupled revenue model offers significant protection and our investment plans aren't built around any particular large project.

Patti Poppe: When you file a general rate case, you can start to reflect the improved operations and maintenance expenses and even the unit costs on the capital work. And so we do feel like this proposal is going to be a mark in the sand of a new era. We're going to get away from these double-digit requests. We know that whatever we propose, the final outcome will be something less than what we propose. But we're prepared for that and we've planned conservatively, but we're going to put forward some really great options for our decision makers and great choices to best serve our customers and get the best suite of outcomes that reflects ample capital investment that's good for customers, that lowers their costs, as well as all the operations and maintenance savings.

When you file a general rate case, you can start to reflect the improved operations and maintenance expenses and even the unit costs on the capital work. And so we do feel like this proposal is going to be a mark in the sand of a new era. We're going to get away from these double-digit requests. We know that whatever we propose, the final outcome will be something less than what we propose. But we're prepared for that and we've planned conservatively, but we're going to put forward some really great options for our decision makers and great choices to best serve our customers and get the best suite of outcomes that reflects ample capital investment that's good for customers, that lowers their costs, as well as all the operations and maintenance savings.

Speaker Change: NetNet, California's regulatory construct combined with our lean operating system is a powerful buffer against economic headwind.

Speaker Change: During the first quarter, the CPUC approved our settlement agreement to establish a non-while-fired self-insurance program. Assuming no claims, customers have the potential to save more than $600 million through 2030 under this program.

Speaker Change: This is another example of how we're working creative and innovative solutions on behalf of customers.

Speaker Change: We continue to see abundant opportunities to reduce costs in 2025 and beyond. Just take our capital to expense for future as one proof point.

Speaker Change: While we've improved our ratio, we're still spending only 90 cents capital for every dollar of expense.

Patti Poppe: Now, one thing to remember, and this is good news for customers, is the GRC and what we'll be filing does not reflect the benefits of our DOE loan. It doesn't reflect the benefits of investment grade. It doesn't include the benefits of our beneficial load growth that we see coming. So all of those factors on top of what will be a very affordable proposal will be passed along over the coming years of the life of the general rate case. So we see bright skies ahead for our customers here at PG&E.

Now, one thing to remember, and this is good news for customers, is the GRC and what we'll be filing does not reflect the benefits of our DOE loan. It doesn't reflect the benefits of investment grade. It doesn't include the benefits of our beneficial load growth that we see coming. So all of those factors on top of what will be a very affordable proposal will be passed along over the coming years of the life of the general rate case. So we see bright skies ahead for our customers here at PG&E.

Speaker Change: Best in class is spending $2.40. This remains a huge opportunity for us as we continue to drive L&M savings and invest in the most affordable infrastructure for our customers.

Speaker Change: Turning to slide 14. As I've said before, 2025 is a big year in terms of regulatory filing.

Speaker Change: During the first quarter, we submitted our 2026 cost of capital application supporting an ROE of 11.3 percent.

Speaker Change: We expect a final decision by year end with the new authorized cost of capital going into effect January 1st, 2026.

[Analyst]: Thanks so much.

Nicholas Campanella: Thanks so much.

Patti Poppe: Thanks Nick.

Speaker Change: Another constructive feature of California's regulatory model is the fact that our cost of capital is decided independently of our general rate case.

Carolyn Burke: Our next question comes from Shahriar Pourreza with Guggenheim Partners. Your line is open.

Operator: Our next question comes from Shar Pourreza with Guggenheim Partners. Your line is open.

[Analyst]: Hi, good morning team. It's actually Constantine here for Shahriar.

Speaker Change: And as you know, we'll make the GRC proposal on May 15th, covering the period 2027 through 2030.

Patti Poppe: Hey Constantine.

Carolyn Burke: Good morning.

[Analyst]: Good morning. So, continuing the discussion on the GRC, how should we be thinking about the 5 billion of upside CapEx in the context of the upcoming filing? We anticipate that the upside categories will be included in the filing. Or do you see more incremental CapEx as part of separate recovery?

Speaker Change: Like Patty, I am very excited to prove out the simple affordable model for the benefit of our customers.

Speaker Change: We also plan to file our 10-year underground and proposal with our safety regulator before the end of the year.

Patti Poppe: Well, keep in mind that in our $63 billion capital plan we've got the first two years of the General Rate Case, and so then you've got subsequent years. So that would be an addition to the capital plan. But also keep in mind that our FERC jurisdiction transmission investments are also not reflected in the GRC. So as we continue to say, we'll add capital to the plan when it's affordable for customers. And we know that due to our O&M capital ratio, we know that the capital investments can be more affordable for customers than all the annual expense, as well as our reductions in O&M. So we can add capital to the plan, but we also need to get it approved.

I strongly believe that performance is power and power.

Speaker Change: We've been delivering on our sector leading capital growth plan, converting rate-based growth into earnings growth proving that what's good for customers is also good for investors. We continue to plan conservatively and deliver consistent, predictable results. We do what we say.

Speaker Change: And on that note, let me end here on slide 15 with a reminder of our value proposition, consistent, predictable performance, serving our customers and delivering for investors.

Patti Poppe: We want to make sure that we spend in a disciplined way, and that then we can finance that, that that work in the most affordable way. All of those factors are what will determine what the ultimate outcome is in our longer-term capital plan.

Speaker Change: 10% rate-based growth through 2028, 10% core EPS growth in 2025.

We want to make sure that we spend in a disciplined way, and that then we can finance that, that that work in the most affordable way. All of those factors are what will determine what the ultimate outcome is in our longer-term capital plan.

Speaker Change: At least 9% core EPS growth each year from 2026 through 2028, and bill increases held between two to four percent.

Carolyn Burke: Yeah, I think I would just add Constantine as we think about that $5 billion. Remember as Patti noted, most of it is, or much of it does come in with transmission.

Carolyn Burke: Yeah, I think I would just add Constantine as we think about that $5 billion. Remember as Patti noted, most of it is, or much of it does come in with transmission. But you shouldn't assume, as we've said before that we would simply increase the size of our capital plan. We could look at making that plan better in terms of affordability so we could reprioritize other projects within that envelope. Or we could make it longer, meaning we could extend the duration of our sector leading 9% to 10% rate base growth. So think about that in terms of our capital plan as well.

And with that, I'll hand it back to Patty.

Patty: Thank you, Carolyn. Our simple, affordable model is how we're executing on an industry leading capital growth plan serving California while stabilizing customer bills.

Patti Poppe: But you shouldn't assume, as we've said.

Carolyn Burke: Before that we would simply increase the size of our capital plan. We could look at making that plan better in terms of affordability so we could reprioritize other projects within that envelope. Or we could make it longer, meaning we could extend the duration of our sector leading 9% to 10% rate base growth. So think about that in terms of.

Patty: Our proven wildfire risk mitigation performance that gets stronger still every day and our culture of safety being lived day in and day out is what gives me confidence that the culture we're creating here at PG&E is sustainable.

Patty: We're excited about all the catalysts in front of us, resolving the AB-1054 uncertainty.

Patti Poppe: Our capital plan as well.

[Analyst]: Understood. And that leads into the second question, which is the data center pipeline update. How quickly do you believe that preliminary engineering can convert into construction project? And maybe in other words, do you see the incremental data center related CAPEX moving into the 2030 CAPEX plan once the GRC is filed? Is that the right time frame for an update?

Patty: Realizing the promise of our simple affordable model through our upcoming GRC, reaching investment grade at the holding company, delivering on our growing large load story.

Patty: Drawing down on our DOE Lone Facility, extending our track record of ONM Savings and filing our 10-year undergrounding plan.

Patti Poppe: Yeah, great question. You know, we're as we look at the final engineering to construction, we're forecasting that about 90% of that 1.4GW will be built by 2030. So surely we'll have to be spending. But most of the spend in those areas are for transmission, so that gets filed to the FERC proceedings separate from the GRC. But we'll be building on, you know, building that pipeline through 2026 through 2030. And keep in mind what's wonderful about that new load growth is it actually helps to reduce rates. And so it's just such an important part of the story going forward that we can actually invest more capital and lower rates simultaneously. And I think that's a hard thing for some people to understand at first glance. But that's we're really excited about what beneficial load growth provides for our customers and the growth here in California.

Patty: I've never felt more confident in the PG&E team and our ability to deliver for our customers and our investors.

With that operator, please open the line for questions.

Speaker Change: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press card one on your telephone keypad to raise your hand and join the queue.

Speaker Change: If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Speaker Change: We do request for today's session, but you please limit to one question and one follow-up question.

Speaker Change: We have allotted 30 minutes for Q and A. Again, press star 1 to join the queue.

Speaker Change: And our first question comes from the line of Nicholas Campanella with Bartleez. Your line is open.

Patti Poppe: We do see that capital being built into the plan as we go forward.

We do see that capital being built into the plan as we go forward.

Hey, good morning. Hope everyone's doing well.

[Analyst]: More specific to the preliminary engineering volume, the 7.25GW, would that kind of start moving into the final engineering phase and essentially into that 2030 timeframe?

Good morning, Nick.

Nick: Morning. So a lot of questions on legislation. You know, Patty, you said you expect a constructive outcome, this legislative session in this year. You know, can you maybe expand on why you're confident that that's indeed happening this year, just given the various things in front of the state legislature?

Patti Poppe: Yeah, exactly.

Patti Poppe: Yeah, exactly Nick. Sorry, Exactly, Constantine. We do see the pipeline moving into final engineering, but keep in mind not all of it's going to go through. I think that's the part that we want to make sure it's clear that some of this falls out as we go, and we're not banking, frankly, on any of it in our financial plan. This is all upside to the financial plan and upside to the affordability for customers on top of what we're already talking about holding rates at 2% to 4%. So we will see that workflow in; some of it will be before 2030. In fact, we see substantial requests before 2030, but it goes on through 2035. This could be an ongoing engine of affordability for our customers going forward. Again, some of it is speculative. They put in their application.

Carolyn Burke: Nick.

Patti Poppe: Sorry. Exactly, Constantine. We do see the pipeline moving into final engineering, but keep in mind not all of it's going to go through. I think that's the part that we want to make sure it's clear that some of this falls out as we go, and we're not banking, frankly, on any of it in our financial plan. This is all upside to the financial plan and upside to the affordability for customers on top of what we're already talking about holding rates at 2% to 4%. So we will see that workflow in; some of it will be before 2030. In fact, we see substantial requests before 2030, but it goes on through 2035. This could be an ongoing engine of affordability for our customers going forward. Again, some of it is speculative. They put in their application.

Nick: And is there any chance that this is still kind of a multi-year effort? You know, maybe you can kind of give us a flavor of what you're working towards, you know, whether it's an extension and increase in the fun size or clarity and the liability cap. Just what should we kind of be expecting here? Thanks.

Speaker Change: Yeah Nick, thanks for the question. First let me reflect what you said that the legislature does have a lot on their plate and we respect their need to do a lot of different things in their roles. What makes me confident is how important it is to get this fixed.

Speaker Change: The AB-1054 Construct is so important for all the constituents.

Speaker Change: It's good for customers because it acts as a rate smoothing design, especially when you've got a prudent operator and therefore those costs are recoverable. The fund acts as a very good rate smoothing device and the fund also serves those who were harmed by wildfire.

Patti Poppe: They do have to pay a significant amount of money to be in an application phase. So it's not that there's no skin in the game. They've definitely put some skin in the game to apply. And as we provide them then their cost and timing, they'll make decisions. And we saw in our first cluster study that went through, we saw some fallout, but we ended up with then now our current final engineering of 1.4 gigawatts. And so we see that there is definitely appetite here in the Bay Area to build out this data center load.

They do have to pay a significant amount of money to be in an application phase. So it's not that there's no skin in the game. They've definitely put some skin in the game to apply. And as we provide them then their cost and timing, they'll make decisions. And we saw in our first cluster study that went through, we saw some fallout, but we ended up with then now our current final engineering of 1.4 gigawatts. And so we see that there is definitely appetite here in the Bay Area to build out this data center load.

Speaker Change: And so given that we know that the legislature is attuned to the importance of AB 1054, we also know how important it is to attract high quality low cost.

Speaker Change: Capital so that we can continue to improve the affordability of energy in California and so that's what makes me confident it's too important not to do and we're confident that we can continue to . . .

Speaker Change: to help advocate for the right kind of surgical changes to the strong existing construct. You know Nick, I would love to...

[Analyst]: Excellent. Hope that helps. Appreciate the color. Very helpful.

Carolyn Burke: Thanks, Constantine.

Patti Poppe: Thanks, Constantine.

[Analyst]: Thanks for taking the questions.

Nicholas Campanella: Thanks for taking the questions.

Carolyn Burke: Next question comes from the line of Richard Sunderland with J.P. Morgan Securities LLC. Your line is open.

Operator: Next question comes from the line of Richard Sunderland with J.P. Morgan Securities LLC. Your line is open.

Speaker Change: You know, say more about what we think the changes are going to be, but this is a live ball and it's very important that we don't get out in front of our legislators, they've got a lot of work to do. Let's go.

[Analyst]: Hey, good morning.

Richard Sunderland: Hey, good morning.

Speaker Change: and so I'm not going to address any specifics about how we think the construct is going to change, but we do believe that a constructive outcome will happen this year.

Carolyn Burke: Good morning. Good morning.

[Analyst]: Just following up on the data center questions. This is a significant jump in the application and preliminary engineering phase. Curious if you can share any feedback on what you're seeing on the ground. Really thinking about, I guess, the Cluster Study approach last year and if this is an acceleration of activity overall or some response those initial Cluster Study efforts.

Richard Sunderland: Just following up on the data center questions. This is a significant jump in the application and preliminary engineering phase. Curious if you can share any feedback on what you're seeing on the ground. Really thinking about, I guess, the Cluster Study approach last year and if this is an acceleration of activity overall or some response those initial Cluster Study efforts.

Absolutely, and understood on that.

Speaker Change: And then, you know, we're excited to see the rate case be filed here in the middle of May. You know, when we look at some of your peers in the rate cases that they file to the south of you and the outcomes that they've kind of received there are the ones that are still progressing just maybe you can kind of talk about what you see is kind of the key differentiator in your upcoming case, whether it's kind of the level of the ask. [inaudible]

Patti Poppe: Yeah, great question. You know, we are seeing on the ground. I do believe there was a misunderstanding that we were out of power in Northern California, and once they realized that we were able through Cluster Study 1 to serve their needs at the times that they wanted, that did open up a real interest and really communicate to the market that we were open for business. And that's been exciting for us here at PG&E. The team's been working really hard. Now we've actually got a second Cluster Study that is not reflected in that 8.7 gigawatts. It's incremental even to that, and that's multiple gigawatts of more applications. And so we're being pretty disciplined about what we're calling an application. The Cluster Study is not complete, and so we're not at the stage that we will add those gigawatts into the plan.

Speaker Change: or the amount of O&M that you're going to be able, and efficiencies that you're going to be able to kind of flow back to customers. How does this kind of compare to other cases that we've seen in the state?

Speaker Change: Yeah, we're really excited about being able to bring forth our proposals for all the constituents, you know, we know this is a step in the process.

Speaker Change: Our General Rate Case Proposal that we'll be filing on May 15th.

provides good choices.

for our decision-makers to make. We know that…

Speaker Change: Our proposal will reflect the simple affordable model. We know that our GRC must address a significant demand for infrastructure and investment.

Patti Poppe: But as we go through that second Cluster Study, we know that some of it will carry through. And what's exciting about Northern California, and this is why we call it Goldilocks, is that these are Inference Model-size data centers. The bulk of them are the 100MW or so Inference Model data centers. Imagine a data center that's designed to serve multiple tech companies who are using AI in their daily business. So they need more compute power. That's what we're able to serve. So these aren't single silver shovel projects as we talk about. These are a variety of smaller projects that will go through because that demand for compute power is real. Particularly here in the Bay Area where we have this density of technical talent who can leverage AI. So this trend is absolutely real for us.

But as we go through that second Cluster Study, we know that some of it will carry through. And what's exciting about Northern California, and this is why we call it Goldilocks, is that these are Inference Model-size data centers. The bulk of them are the 100MW or so Inference Model data centers. Imagine a data center that's designed to serve multiple tech companies who are using AI in their daily business. So they need more compute power. That's what we're able to serve. So these aren't single silver shovel projects as we talk about. These are a variety of smaller projects that will go through because that demand for compute power is real. Particularly here in the Bay Area where we have this density of technical talent who can leverage AI. So this trend is absolutely real for us.

Speaker Change: for a safer, reliable, clean energy system. And we know that by continuing to improve on our Capitol on M. Ratio, that ends up being the most affordable path for customers.

and still improving their service every day.

Speaker Change: And so we are excited about passing along the ONM savings that we've delivered over the last several years.

Speaker Change: You know, that's how it works. When you file a general rate case, you can start to reflect the improved operating maintenance expenses and even the unit costs on the capital work.

Speaker Change: and so we do feel like this proposal is going to be...

Speaker Change: Mark in the in the sand of a new era. We're going to get away from these double digit requests. We're going to get away from these double digit requests.

Speaker Change: We know that whatever we propose, the final outcome will be something less than what we propose but we're prepared for that and we've planned conservatively but we're going to put forward some really great options for our decision makers and great choices.

Patti Poppe: We're being conservative about how we're building it into the financial plan, but net and net, this will be so beneficial for our customers. And we're so excited about being able to power California's progress and lower rates by serving this new and growing large and compute power load.

We're being conservative about how we're building it into the financial plan, but net and net, this will be so beneficial for our customers. And we're so excited about being able to power California's progress and lower rates by serving this new and growing large and compute power load.

Speaker Change: to best serve our customers and get the best suite of outcomes that it reflects.

Speaker Change: Ample Capital, Capital Investment, it's good for customers that lowers their costs as well as all of the operating maintenance savings. Now one thing to remember, and this is good news for customers.

[Analyst]: Great, thanks for the color there. Shifting gears to the 10-year undergrounding plan filing later this year. I know it's been a little bit of a process and a journey to get to that point. Can you speak a little bit to what you're focused on in the run-up to that application? Maybe some recent learnings over the past year or two in work across your system and just how you think about that process going forward relative to expectations? You know, maybe at the start of all this.

Richard Sunderland: Great, thanks for the color there. Shifting gears to the 10-year undergrounding plan filing later this year. I know it's been a little bit of a process and a journey to get to that point. Can you speak a little bit to what you're focused on in the run-up to that application? Maybe some recent learnings over the past year or two in work across your system and just how you think about that process going forward relative to expectations? You know, maybe at the start of all this.

Speaker Change: A affordable proposal will be passed along over the coming years of the life of the general rate case. So we see bright skies ahead for our customers here at PG&E.

Patti Poppe: Yeah, look, we continue to stand that in the highest risk areas where they're most vegetation dense, undergrounding is the right permanent solution. It reduces 98% of the wildfire risk where it's deployed. And for example, we expect that it will save $465 million in O&M savings, and more than $280 million in vegetation savings will be realized over the life of our first 1,230 miles being underground during the GRC cycle, this existing GRC cycle. We want to continue to do that high value risk mitigating work. And so we have to continue to share those benefits and savings, and make sure that that is materially represented in our filing for our 10-year plan. And so we'll be making that plan. You know, it's undergrounding. Some people think that undergrounding is a driver for why our previous rates were going up.

Thank you so much.

Thanks, Nick.

Speaker Change: Our next question comes from the line of Shahr Pourreza with Guggenheim Partners. Your line is open.

Hi, good morning team, it's actually Carpentine here for Shahriar [inaudible]

Hey Cosmic Day, good morning.

Speaker Change: Good morning. So continuing the discussion on the GRC, how should we be thinking about the five billion of upside capex in the context of the upcoming filing, even anticipate that the upside categories will be included in the filing or do you see more incremental capex as far as separate recovering?

Speaker Change: Well, keep in mind that in our $63 billion capital plan, we've got the first two years of the general rate case and so then you've got a subsequent years so that would be in addition to the capital plan, but also keep in mind that our

Patti Poppe: I would tell you that only $1 a month of our customer's bill is undergrounding today. Yet $20 a month is vegetation management. That's the example of why that capital to O and M ratio is so important that we get that right here in California and get back on track with utility peers who understand that when.

I would tell you that only $1 a month of our customer's bill is undergrounding today. Yet $20 a month is vegetation management. That's the example of why that capital to O and M ratio is so important that we get that right here in California and get back on track with utility peers who understand that when.

Speaker Change: So, as we continue to say, we'll add capital to the plan when it's affordable for customers, and we know that due to our ONM capital ratio, we know that the capital investments can be more affordable for customers.

[Analyst]: You deploy capital, you can lower costs for customers. Great. Thank you for the time today.

You deploy capital, you can lower costs for customers.

Richard Sunderland: Great. Thank you for the time today.

Speaker Change: then all the annual expense as well as our reductions in on them so we can add capital to the plan but we also need to get it approved and we want to make sure that we spend in a disciplined way and that then we can finance that that work in the most affordable way.

Carolyn Burke: Next question comes from the line of Julien Dumoulin-Smith with Jefferies. Your line is open.

Operator: Next question comes from the line of Julien Dumoulin-Smith with Jefferies. Your line is open.

[Analyst]: Hey, good morning, Patti and team. Thanks very much for the time. I appreciate it. Picking back up on the wildfire mitigation conversation, maybe just a little nuance here, but you added some statistics on idled and abandoned line activity. Can you elaborate a little bit more on what you all have been doing on that? And more specifically, as you think about some of the recent events here, how does that change your anticipated filing? When you think about the safety certification review process and your future filings, how do you think about that all?

Julien Dumuolin-Smith: Hey, good morning, Patti and team. Thanks very much for the time. I appreciate it. Picking back up on the wildfire mitigation conversation, maybe just a little nuance here, but you added some statistics on idled and abandoned line activity. Can you elaborate a little bit more on what you all have been doing on that? And more specifically, as you think about some of the recent events here, how does that change your anticipated filing? When you think about the safety certification review process and your future filings, how do you think about that all?

Speaker Change: So all of those factors are what will determine what the ultimate outcome is in our longer term capital plan.

Speaker Change: Yeah, I think I would just add Constantine as we think about that $5 billion. Remember, Petty noted most of it is

Speaker Change: Or much of it does come in with transmission. But you shouldn't assume, as we've said before, that we would simply increase the size of our capital plan.

Speaker Change: We could look at making that plan better in terms of affordability so we could reprioritize other projects within that envelope or we could make it longer meaning we could extend the duration of our sector leading 9 to 10% rate based growth.

Patti Poppe: Yeah, thanks, Julien. You know, we have had a robust Induction Prevention Program. We delineate between de-energized lines and deactivated lines that are in place. So de-energized lines that have no future use, we remove them, and in fact we've removed 64 lines that were de-energized and had no future use. Now, there are cases where you have deactivated lines, but they remain in place because there may be a future use for those. Those are the ones that might be subject to induction risk. They don't always, they aren't always subject to induction risk because maybe they're not near another power line. So we continue to mitigate and confirm that we've got the grounding right on those that are remaining. And as a result of, you know, continual learning, every year we learn something new. Every incident we learn something new.

Speaker Change: So think about that in terms of our capital plan as well.

Speaker Change: Sunder said, and that leads into the second question, which is the data center pipeline update.

Speaker Change: How quickly do you believe that preliminary engineering can convert into construction projects and maybe in other words, you see this incremental data-fender related capex moving into the 2030 capex plan once the GRC is filed? So that's the right time frame for an update.

Speaker Change: Yeah, great question. You know, we're, as we look at the final engineering to construction, we're forecasting that about 90% of that 1.4 gigawatts will be built by 2030.

Speaker Change: So surely we'll have to be spending but most of the spend in those areas are for transmission so that gets filed to the FERC proceeding separate from the GRC but we'll be building on, you know, building that pipeline through 2026 through 2030.

Patti Poppe: We've been definitely reviewing those remaining lines and confirming that we've got the safest configuration to prevent ignitions.

We've been definitely reviewing those remaining lines and confirming that we've got the safest configuration to prevent ignitions.

Speaker Change: And keep in mind what's wonderful about that new load growth, is it actually helps to reduce rates?

[Analyst]: Got it. Excellent. Thank you for the nuance there. I appreciate it. And then just coming back a little bit to the conversation on data centers and kudos on making progress here. Can you talk a little bit more about linking that back to affordability? I mean, you know, you've put some meaningful move on the board against your earlier targets, right? This one gigawatt of demand, how does that put your bill increase target? Right. You talk about this 2% to 4%. You talk about data centers helping ameliorate that number. Any sense as it stands today, maybe even tentatively or as a sensitivity against that 2% to 4% based on what you're on track to do on data centers to push down bill numbers. I know you've alluded to it, but I just want to ask you more directly.

Julien Dumuolin-Smith: Got it. Excellent. Thank you for the nuance there. I appreciate it. And then just coming back a little bit to the conversation on data centers and kudos on making progress here. Can you talk a little bit more about linking that back to affordability? I mean, you know, you've put some meaningful move on the board against your earlier targets, right? This one gigawatt of demand, how does that put your bill increase target? Right. You talk about this 2% to 4%. You talk about data centers helping ameliorate that number. Any sense as it stands today, maybe even tentatively or as a sensitivity against that 2% to 4% based on what you're on track to do on data centers to push down bill numbers. I know you've alluded to it, but I just want to ask you more directly.

Speaker Change: and so it's just such an important part of the story going forward that we can actually invest more capital and lower rates simultaneously. And I think that's a hard thing for some people to understand at first glance, but we're really excited about what beneficial low growth provides for our customers.

Speaker Change: and the growth here in California. And so we do see that capital being built into the plan as we go forward.

Speaker Change: and more specific to the preliminary engineering volumes of 7.25 gigawatts.

Speaker Change: Would that kind of start moving into the final engineering phase and essentially into that 2030 timeframe?

Patti Poppe: Yeah, very directly. We have done the analysis that for a gigawatt of new demand, of data center demand, we can spend up to $1.6 billion to serve that demand and still reduce every customer's rates by 1%. And so as long as we are disciplined in how we invest in the infrastructure and that, we make sure that we get the cost allocation proper with the large load customer, we can pass along savings to customers. We have not built that in yet to our financial plan because we don't want to get ahead of ourselves. We want to plan conservatively, will deliver for customers. And as this new load materializes and gets final complete construction, those savings and that load then materializes on the system. Then those savings start to pass through to customers, which is what makes us so excited.

Speaker Change: What we're already talking about holding rates at two to four percent. [inaudible]

Speaker Change: and so we will see that workflow and some of it will be before 2030. In fact, we see substantial requests.

Patti Poppe: You know, we're going to be filing this General Rate Case and showing that our proposal reflects our Simple Affordable Model and keeping rate increases in the 2% to 4%. That does not reflect.

You know, we're going to be filing this General Rate Case and showing that our proposal reflects our Simple Affordable Model and keeping rate increases in the 2% to 4%. That does not reflect.

Carolyn Burke: This new large load.

This new large load.

Patti Poppe: And so even though we're going to be filing the lowest GRC ask in a decade, we still have more savings that we can pass along to customers as a result of the new large load, as well as the DOE loan, as well as our credit metrics improving and getting to investment grade. This is really we're interrupting the pattern here in California for affordability for customers. We know our customers don't feel that yet, so there is doubt that we can deliver on this. But we are able to deliver, and we've delivered this year. Our bills are lower this year over last year, and our bills are forecast to go down again in 2026. Then you convert over to this new general rate case, and you keep rates increasing only nominally, and then you add in beneficial load growth.

And so even though we're going to be filing the lowest GRC ask in a decade, we still have more savings that we can pass along to customers as a result of the new large load, as well as the DOE loan, as well as our credit metrics improving and getting to investment grade. This is really we're interrupting the pattern here in California for affordability for customers. We know our customers don't feel that yet, so there is doubt that we can deliver on this. But we are able to deliver, and we've delivered this year. Our bills are lower this year over last year, and our bills are forecast to go down again in 2026. Then you convert over to this new general rate case, and you keep rates increasing only nominally, and then you add in beneficial load growth.

Speaker Change: The study that went through, we saw some fallout, but we ended up with then now our current final engineering of 1.4 gigawatts and so we see that there is definitely appetite here in the Bay Area to build out this data center load.

Excellent. Hope that helps. Appreciate the color.

Thanks, Compton T. Thanks for taking the question.

Speaker Change: Next question comes from the line of Fritchard Sunderland with JP Morgan Securities, LLC. Your line is open.

Hey, good morning.

Good morning.

Speaker Change: following up on the data center questions. You know, this is the significant jump in the application and preliminary engineering phase.

Patti Poppe: Julien, things are bright here in California. We're going to really help our customers believe in us again and really trust that we can deliver higher service, higher quality service at a fundamentally lower cost. We can't wait for those numbers to start hitting the table.

Julien, things are bright here in California. We're going to really help our customers believe in us again and really trust that we can deliver higher service, higher quality service at a fundamentally lower cost. We can't wait for those numbers to start hitting the table.

Speaker Change: Curious if you can share any feedback on what you're seeing on the ground really thinking about I guess the cluster study approach last year and if this is an acceleration of activity overall or some response those initial cluster study efforts.

[Analyst]: All right, fair enough. Thank you, guys. All the best. I will see you shortly. Thank you.

Julien Dumuolin-Smith: All right, fair enough. Thank you, guys. All the best. I will see you shortly. Thank you.

Speaker Change: Great question. You know, we are seeing on the ground, I do believe there was a misunderstanding that we were out of power in Northern California.

Carolyn Burke: Thank you, Gillian. Our next question comes from the line of Anthony Crowdell with Mizuho. Your line is open.

Patti Poppe: Thank you, Gillian.

Operator: Our next question comes from the line of Anthony Crowdell with Mizuho. Your line is open.

Speaker Change: and once they realized that we were able through Cluster Study 1 to serve their needs at the times that they wanted

[Analyst]: Hey, good morning. Thanks for taking my question. Tough act to follow there with Julien. I just have one question, and I think maybe to Nick's question earlier, you talked about maybe all the things going on and the legislature may be working for a solution for the Wildfire Fund. Do you think it's helping the process or helping out, showing the urgency to the legislators on a cost of capital filing and also a rate case filing? I know it's a full plate, but clearly they're all intertwined. Do you think that's helping out the process maybe showing a sense of urgency to the legislators?

Anthony Crowdell: Hey, good morning. Thanks for taking my question. Tough act to follow there with Julien. I just have one question, and I think maybe to Nick's question earlier, you talked about maybe all the things going on and the legislature may be working for a solution for the Wildfire Fund. Do you think it's helping the process or helping out, showing the urgency to the legislators on a cost of capital filing and also a rate case filing? I know it's a full plate, but clearly they're all intertwined. Do you think that's helping out the process maybe showing a sense of urgency to the legislators?

Speaker Change: That did open up a real interest and really communicate to the market that we were open for businesses and that's been exciting for us here at PG&E. The team's been working really hard now.

We've actually got a second cluster study [inaudible]

that is not reflected in that 8.7 gigawatts.

Speaker Change: It's incremental even to that and that's multiple gigawatts of more applications and so we're being pretty disciplined about what we're calling an application the cluster study is not complete and so we're not at the stage that we will add those gigawatts into the plan. But as we go through that second cluster study, we know that some of it will carry through and what's exciting about Northern California and this why we call it Goldilocks. [inaudible]

Patti Poppe: Anthony, I think there is no doubt that affordability is job 1 and item 1A in Sacramento and here in Oakland, for all of us at PG&E, affordability is job one. So at first glance, when you see a cost of capital filing, when you see a general rate case, it can appear that we're tone deaf to what's happening for customers. We want to make sure that what we're reflecting is demonstrating how we can, in fact, lower costs for customers. That's why we actually have to sing it from the mountaintop that the bills are lower this year than last, that we are forecasting bills going down again next year. It's sometimes hard for people to understand that you can actually improve service, improve earnings, and investment in capital for customers and lower their bills.

Speaker Change: is that these are inference model size data centers. The bulk of them are the 100 megawatt or so inference model data centers. Imagine a data center that's. [inaudible]

Speaker Change: designed to do to serve a multiple tech companies who are using AI in their daily business so they need more compute power. That's what we're able to serve. So these aren't single silver shovel projects as we talk about. These are a variety of smaller projects that will go through because that demand for compute power is real, particularly here in the Bay Area where we have this density of technical talent who can leverage AI. [inaudible]

Speaker Change: So this trend is absolutely real for us. We're being conservative about how we're building it into the financial plan, but netting that this will be so beneficial for our customers and we're so excited about being able to power California's progress and lower rates by serving this new and growing large and compute power load.

Patti Poppe: Those two things absolutely can go together because we have our lean operating system, because we're reducing O&M and eliminating waste through our lean operating system every day. I think it's going to be really important that our General Rate Case proposals reflect number one choices that we can make, choices about how much we invest and in what we invest, but reflect the savings getting passed along to customers. And again, I just want to reiterate this. Our General Rate Case is going to be the lowest ask in a decade. We want that to be the new pattern and then layering in other affordability matters. When the legislature is looking at all of this simultaneously, it's pretty hard to absorb all of it at once.

Those two things absolutely can go together because we have our lean operating system, because we're reducing O&M and eliminating waste through our lean operating system every day. I think it's going to be really important that our General Rate Case proposals reflect number one choices that we can make, choices about how much we invest and in what we invest, but reflect the savings getting passed along to customers. And again, I just want to reiterate this. Our General Rate Case is going to be the lowest ask in a decade. We want that to be the new pattern and then layering in other affordability matters. When the legislature is looking at all of this simultaneously, it's pretty hard to absorb all of it at once.

Speaker Change: Great. Thanks for the color there. And then shifting gears to the 10-year undergrounding plan, filing later this year. And it's been a little bit of a process and a journey to get to that point. Can you speak a little bit to what you're focused on in the run-up to that application? Maybe some recent learnings over the past year to work across your system and just how you think about that process going forward relative to expectations, you know, maybe at the start of all this.

Speaker Change: Yeah, look, we continue to stand that in the highest risk areas where their most vegetation dense.

Patti Poppe: So it's important that we continue to just be an active conversation and make sure that we're sharing the information that we have and continuing to really demonstrate that we don't have to choose between customers and investors, that the business model of the regulated utility is in fact designed to serve customers through low cost, high quality investment, and that we can serve customers and investors simultaneously. We know that for people who aren't as close to our industry as everyone like you are, Anthony, and we all are, that sometimes that can be confusing. And so we're just working hard to send a clear message that we can in fact do more work for customers at a fundamentally lower cost.

So it's important that we continue to just be an active conversation and make sure that we're sharing the information that we have and continuing to really demonstrate that we don't have to choose between customers and investors, that the business model of the regulated utility is in fact designed to serve customers through low cost, high quality investment, and that we can serve customers and investors simultaneously. We know that for people who aren't as close to our industry as everyone like you are, Anthony, and we all are, that sometimes that can be confusing. And so we're just working hard to send a clear message that we can in fact do more work for customers at a fundamentally lower cost.

Speaker Change: Undergrounding is the right permanent solution. It reduces 98 percent of the wildfire risk where it's deployed.

and for example we expect...

Speaker Change: That it will $465 million in ONM savings and more than 280 million in vegetation savings will be realized over the life of our first 1,230 miles being underground during the GRC cycle, this existing GRC cycle.

Risk Mitigating Work Work.

Speaker Change: And so we have to continue to share those benefits and savings and make sure that that is materially represented in our filing for a 10-year plan.

[Analyst]: Great.

Anthony Crowdell: Great Thanks for taking the question, and I'll see you guys at AGA.

Patti Poppe: Thanks for taking the question, and I'll.

[Analyst]: See you guys at AGA.

Speaker Change: and so we'll be making that plan. Some people think that undergrounding is a driver for why our previous rates.

Patti Poppe: Awesome. Thanks, Anthony.

Carolyn Burke: Our next question comes from the line of Carly Davenport with Goldman Sachs. The line is open. Hey, good morning. Thanks for taking the questions. Maybe just one clarifying question for me. You had mentioned the tariff exposure in the prepared remarks. Is there any quantification on those impacts?

Operator: Our next question comes from the line of Carly Davenport with Goldman Sachs. The line is open.

Carly Davenport: Hey, good morning. Thanks for taking the questions. Maybe just one clarifying question for me. You had mentioned the tariff exposure in the prepared remarks. Is there any quantification on those impacts on the capital plan that you can provide?

Speaker Change: We're going up. I would tell you that only a dollar a month of our customers bill is under grounding today, yet $20 a month is vegetation management.

Speaker Change: That's the example of why that capital, the ONM ratio is so important that we get that right here in California and get back on track with utility peers who understand that when you deploy capital you can lower costs for customers.

Patti Poppe: On the capital plan that you can provide?

Carolyn Burke: Yeah, Carly, it's Carolynne. So when we looked at our sourcing company, our sourcing group first of all has done a really good scrub. The impact on tariffs.

Carolyn Burke: Yeah, Carly, it's Carolyn. So when we looked at our sourcing company, our sourcing group first of all has done a really good scrub. The impact on tariffs. When we look at our total materials.

Great, thank you for the time, today. [inaudible]

Patti Poppe: When we look at our total materials.

Next question comes from the line of Julien Dumoulin Smith with Jeffries. Your line is open.

Carolyn Burke: Supply spend, over 90% is domestic. The main categories in that spend that are better tariff exposed tend to be actually computer hardware, smart grid equipment, and electric equipment like transformers. Now I'll just remind you 1/3 of our transformers are sourced internationally from South Korea. That's at a, I think it's a 12% at this point in time. So that's $100 million of our total spend. Not really significant. On top of that, our sourcing group believes that the tariffs exposure is very manageable. I'll just remind you that over the last three years, with our lean operating system in play, and our O and M reductions, those reductions were on top of absorbing inflation. 2022 in particular was a high inflationary year. We absorbed that inflation and saw those savings.

Supply spend, over 90% is domestic. The main categories in that spend that are better tariff exposed tend to be actually computer hardware, smart grid equipment, and electric equipment like transformers. Now I'll just remind you 1/3 of our transformers are sourced internationally from South Korea. That's at a, I think it's a 12% at this point in time. So that's $100 million of our total spend. Not really significant. On top of that, our sourcing group believes that the tariffs exposure is very manageable. I'll just remind you that over the last three years, with our lean operating system in play, and our O and M reductions, those reductions were on top of absorbing inflation. 2022 in particular was a high inflationary year. We absorbed that inflation and saw those savings.

Speaker Change: Hey, good morning, Patty, a team thanks very much for the time. I appreciate it. Hey, maybe pick him back up on the wildfire mitigate. Hey, good morning.

Speaker Change: Taking back up on the Welfare Mitigation Conversation, maybe just a little nuance here but you added some statistics on idled and abandoned line activity. Can you elaborate a little bit more on what you all have been doing on that and more specifically as you think about some of the recent events here. How does that change your anticipated filing and you think about the safety certification review process and your future filing? How do you think about that all? [inaudible]

Speaker Change: Yeah, thanks, Julien. You know, we have had a robust induction prevention program. We...

Speaker Change: We delineate between de-energized lines and deactivated lines that are in place. So de-energized lines that have no future use, we remove them. And in fact, we've removed 64 lines that were de-energized and had no future use.

Patti Poppe: So we think our biggest tool in.

So we think our biggest tool in.

Carolyn Burke: Our toolkit right now is our lean operating system and our O and M savings. Great. Thank you so much for that.

Our toolkit right now is our lean operating system and our O and M savings.

Carly Davenport: Great. Thank you so much for that. I'll leave it there.

Speaker Change: Now, there are cases where you have deactivated lines, but they remain in place because there may be a future use for those.

Patti Poppe: I'll leave it there.

Carolyn Burke: Thanks, Carol. Next question comes from the line of Ryan Levine with Citi. Your line is open.

Operator: Thanks, Carol. Next question comes from the line of Ryan Levine with Citi. Your line is open.

Speaker Change: Those are the ones that might have subject, might be subject to induction risk. They don't always, they aren't always subject to induction risk because maybe they're not near another power line.

[Analyst]: Good morning. Some of the prepared remarks focused on potential legislative solution, but outside of legislative solutions, do you see any progress in the conversation to revisit or change the attachment rate for the Wildfire Fund?

Ryan Levine: Good morning. Some of the prepared remarks focused on potential legislative solution, but outside of legislative solutions, do you see any progress in the conversation to revisit or change the attachment rate for the Wildfire Fund?

Speaker Change: We continue to mitigate and confirm that we've got the grounding right.

Speaker Change: on those that are remaining. And as a result of, you know, continual learning. Every year we learned something new. Every, every incident we learned something new. We've been definitely reviewing those remaining lines and confirming that we've got the safest configuration to prevent ignitions.

Patti Poppe: You know, Ryan, there's lots of ideas on the table. You know, as I mentioned earlier, I'm very hesitant to get out in front of the decision makers and the policymakers. I would just offer that there's a lot of ideas that are being discussed and reviewed, and we stand that we can get a constructive outcome this year that works for customers and investors. Okay, appreciate that.

Speaker Change: Got it. Excellent. Thank you for the nuance there. Appreciate it. And then just coming back a little bit to the conversation on data centers and kudos on making progress here. Can you talk a little bit more about linking that back to affordability? I mean

Speaker Change: You know, you put some meaningful move on the board against your earlier targets, right? This one gave a lot of the man. How does it put your bill increase target, right? You talk about this two to four percent. Thank you very much.

[Analyst]: And then just one follow up to an earlier comment. You had made around a 90% assumption around some of the data center projects that have already reached engineering study. How do you have or where is the 90% number coming from, and kind of what are the drivers, and how you're coming to these forecasts?

Ryan Levine: And then just one follow up to an earlier comment. You had made around a 90% assumption around some of the data center projects that have already reached engineering study. How do you have or where is the 90% number coming from, and kind of what are the drivers, and how you're coming to these forecasts?

You talk about data centers, I'm helping a newly rate that number.

Speaker Change: Any sense of the stance today may be even tentatively or as a sensitivity against that two to four percent based on what you're on track to do on data centers to push down bill numbers. I know you've alluded to it, but I want to ask you more directly. Thank you very much.

Patti Poppe: Yeah, so the 90% is in reference to the 1.4 gigawatts that's in final engineering. We expect 90% of that to be online by 20, by the end of 2030. We know that because we did the Cluster Study that had agreed timing and load, and so that when they move into construction, obviously that's where it'll get all the way to 100%. And so that's the basis for that. We have a lot of detailed engineering already complete and agreement signed with customers at that stage of the 1.4 gigawatts.

Speaker Change: Yeah, very directly. We have done the analysis for a gigawatt of new demand, of data center demand. We can spend up to $1.6 billion to serve that demand and still reduce every customer's rates by a percent.

Speaker Change: And so as long as we are disciplined in how we invest in the infrastructure and that we make sure that we get the cost allocation proper with the large load customer, we can pass long savings to customers. We have not built that in yet to our financial plan because we don't want to get ahead of ourselves. We want to plan conservatively, we'll deliver for customers. Thank you very much.

[Analyst]: Great. Thanks for the time.

Ryan Levine: Great. Thanks for the time.

Patti Poppe: Yeah, thanks, Ryan.

Carolyn Burke: Next question comes from the line of David Arcaro with Morgan Stanley. Your line is open.

Operator: Next question comes from the line of David Arcaro with Morgan Stanley. Your line is open.

Speaker Change: And as this new load materializes and gets final complete construction, those savings in that load then materializes on the system, then those savings start to pass through to customers, which is what makes us so excited, you know, we're going to be filing this general rate case and showing that there are proposals. So,

Patti Poppe: Hey, good morning.

David Arcaro: Hey, good morning. Thanks so much.

Carolyn Burke: Thanks so much. Hi, David.

Carolyn Burke: Hi, David.

[Analyst]: I was wondering where does the conversation with rating agencies stand at this point in terms of the path and timing potentially to get to investment grade?

David Arcaro: I was wondering where does the conversation with rating agencies stand at this point in terms of the path and timing potentially to get to investment grade?

Speaker Change: Reflex our simple affordable model and keeping rates rate increases in the two to four percent. That does not reflect this new large load.

Carolyn Burke: Yeah, thanks, David, for the question. So it's Carolyn here. We were really pleased this year that we last year really, that we've reached our FFO to debt target of mid-teens.

Carolyn Burke: Yeah, thanks, David, for the question. So it's Carolyn here. We were really pleased this year that we last year really, that we've reached our FFO to debt target of mid-teens. I'll just say we remain very focused on maintaining an IG balance sheet. Now we recognize the agencies are taking a measured approach with rating agencies. We were very pleased to see that Moody's upgraded the PG&E's utility rating. It was a great outcome, acknowledging our progress. But as you note, we're still below IG at the Holdco. The rating agencies are looking for the same signals from policymakers that you are. We remain confident that once AB 1054 uncertainty is addressed by the state, the rating agencies are going to take favorable action on our ratings. All our financial metrics are in line with IG and we continue to make good progress on wildfire mitigation.

Patti Poppe: I'll just say we remain very.

Speaker Change: and so even though we're going to be filing the lowest.

Carolyn Burke: Focused on maintaining an IG balance sheet. Now we recognize the agencies are taking a measured approach with rating agencies. We were very pleased to see that Moody's upgraded the PG&E's utility rating. It was a great outcome, acknowledging our progress. But as you note, we're still below IG at the Holdco. The rating agencies are looking for the same signals from policymakers that you are. We remain confident that once AB 1054 uncertainty is addressed by the state, the rating agencies are going to take favorable action on our ratings. All our financial metrics are in line with IG and we continue to make good progress on wildfire mitigation.

GRC Ask in a decade.

Speaker Change: We still have more savings that we can pass along to customers as a result of the new large load as well as the DOE loan as well as our credit metrics improving and getting to investment grade.

Speaker Change: This is really interrupting the pattern here in California for affordability for customers.

Speaker Change: We know our customers don't feel that yet, so there is doubt.

that we can deliver on this.

Speaker Change: But we are able to deliver and we've delivered this year our bills are lower this year over last year and our bills are forecast to go down again in 2026 and then you convert over to this new general rate case.

Patti Poppe: So I think it's that AB 1054.

So I think it's that AB 1054. Uncertainty that, as we express confidence that we're going to see action this year, and we think that rating agencies will then follow.

Speaker Change: and you keep rates increasing only nominally, and then you add in beneficial low-growth Julien.

Carolyn Burke: Uncertainty that, as we express confidence that we're going to see action this year, and we think that rating agencies will then follow.

Speaker Change: Things are bright here in California. We're going to really help our customers believe in us again and really trust that we can deliver higher service, higher quality service at a fundamentally lower cost. And we can't wait for those numbers to start hitting the table.

[Analyst]: Okay, excellent. Thanks for that. I was just curious if there's anything you'd be able to add on whether shareholder contributions would be a part of the future discussion around the AB 1054 framework and whether there's been any conversation or indications on that front.

David Arcaro: Okay, excellent. Thanks for that. I was just curious if there's anything you'd be able to add on whether shareholder contributions would be a part of the future discussion around the AB 1054 framework and whether there's been any conversation or indications on that front.

Speaker Change: All right Fair enough. Thank you guys all the best that we'll see you shortly.

Thank you. Thank you, Julien.

Speaker Change: Our next question comes from the line of Anthony Crowdell with Measual. Your line is open.

Patti Poppe: Yeah, David, you know, we continue to advocate that we don't think that there's a good case that investors should contribute to the fund. The fund is important. It plays an important role as a rate smoothing device and as a fund to make sure those harmed by wildfire have recoveries. But given inverse condemnation reflects that a prudent operator's costs are recoverable in rates. We don't think that there's a case to be made that investors should be contributing to that fund. And we'll continue to advocate for that. We know that no matter what, if you increase the cost of capital, that makes it less affordable for customers. And we're always standing for affordability for our customers. And we'll just continue to keep you updated as the legislative session continues.

Anthony Crowdell: Hey, good morning. Thanks for taking my question. Tough act to follow there with Julien. I just have one question. And I think maybe to next question, you talked about maybe all the things going on and the legislature maybe working for a solution for the wildfire fun. Thank you very much.

Speaker Change: Do you think it's helping the process or like, helping out, showing the urgency to the legislative, legislators on a cost of capital filing and also a rate case filing? I know it's a busy plate there, but clearly they're all intertwined. Is that, you think helping out the process may be showing a sense of urgency to the legislatures? Thank you very much.

Anthony Crowdell: Anthony, I think there is no doubt that affordability is job one and item one a in Sacramento and here in Oakland for all of us at PG knee affordability is job one.

[Analyst]: Okay, understood. Thanks so much. Appreciate it.

David Arcaro: Okay, understood. Thanks so much. Appreciate it.

Carolyn Burke: Thanks, David. Next question comes from the line of David Paz with Wolfe Research. Your line is open.

Patti Poppe: Thanks, David.

Speaker Change: So at first glance, when you see a cost of capital filing, when you see a general rate case, it can appear that we're tone deaf to what's happening for customers.

Operator: Next question comes from the line of David Paz with Wolfe Research. Your line is open.

[Analyst]: Hi, good morning.

Nicholas Campanella: Hi, good morning.

Patti Poppe: Morning.

We want to make sure that what we're reflecting

Carolyn Burke: Good morning.

[Analyst]: I know a lot has been covered, so maybe just one on IRA. Can you just remind me, please, on any IRA related items in your outlook, such as any transferability assumptions, tax rate deductions, and so forth?

David Paz: I know a lot has been covered, so maybe just one on IRA. Can you just remind me, please, on any IRA related items in your outlook, such as any transferability assumptions, tax rate deductions, and so forth?

Speaker Change: is demonstrating how we can, in fact, lower costs for customers. That's why we actually have to sing it from the mountaintop that the bills are lower this year than last, that we are forecasting bills going down again next year.

Speaker Change: It's sometimes hard for people to understand that you can actually improve service, improve earnings and investment in capital for customers and lower their bills.

Carolyn Burke: No. David, this is Carolyn. Thank you for the question. We really don't have significant exposure to the IRA.

Carolyn Burke: No. David, this is Carolyn. Thank you for the question. We really don't have significant exposure to the IRA. Way to think about this. First, PG&E currently does not have any utility-owned solar or storage projects under construction. So we really don't have any exposure there. We do, of course, have energy procurement cost and have a number of executed PPAs for solar and battery projects currently under development. And so we're in the market right now as well. In terms of buying some of that procurement, it remains to be seen how the pricing may be impacted by tariffs and the availability of those tax credits on those. But we're following the competitive solicitation process very closely, and we're very mindful of securing the very best commercial terms on behalf of our customers.

Patti Poppe: Way to think about this.

Carolyn Burke: First, PG&E currently does not have any utility-owned solar or storage projects under construction. So we really don't have any exposure there. We do, of course, have energy procurement cost and have a number of executed PPAs for solar and battery projects currently under development.

Patti Poppe: And so we're in the market right now as well. In terms of buying some of that.

Speaker Change: Number one, choices that we can make choices about how much we invest and what we invest but reflect the savings getting passed along to customers.

Carolyn Burke: Procurement, it remains to be seen how the pricing may be impacted by tariffs and the availability of those tax credits on those. But we're following the competitive solicitation process very closely, and we're very mindful of securing the very best commercial terms on behalf of our customers.

Speaker Change: Again, I just want to reiterate, our general rate case is going to be the lowest ask in a decade and we want that to be the new pattern and then layering in other affordability matters.

Speaker Change: When the legislature is looking at all of this simultaneously, it's pretty hard to absorb all of it at once, so it's important that we continue to just be an active conversation and make sure that we're sharing the information that we have and continuing to really demonstrate that we don't have to choose between customers and investors. So, thank you very much for your time.

Patti Poppe: But that's our exposure to the direct.

But that's our exposure to the direct. Exposure to the tax credits is limited.

Carolyn Burke: Exposure to the tax credits is limited.

[Analyst]: Great, thank you.

David Paz: Great, thank you.

Carolyn Burke: We will take our last question from Michael Lonegan with Evercore ISI. Your line is open.

David Paz: We will take our last question from Michael Lonegan with Evercore ISI. Your line is open.

Speaker Change: that the business model of the regulated utility is in fact designed to serve customers.

[Analyst]: Hi, good morning. Thanks for taking my question. So, as we think about the cost of capital application, what is embedded for your ROE and equity ratio and your current long term EPS growth forecast? And you know, are you looking for this application in the upcoming GRC filing, you know, as an opportunity to extend this growth rate or potentially raise it?

Michael Lonegan: Hi, good morning. Thanks for taking my question. So, as we think about the cost of capital application, what is embedded for your ROE and equity ratio and your current long term EPS growth forecast? And you know, are you looking for this application in the upcoming GRC filing, you know, as an opportunity to extend this growth rate or potentially raise it?

through low-cost high-quality investment. [inaudible]

Speaker Change: and that we can serve customers and investors simultaneously. We know that for people who aren't as close to our industry as everyone like you are Anthony and we all are that sometimes that can be confusing and so we're just working hard to send a clear message that we can in fact do more work for customers at a fundamentally lower cost.

Carolyn Burke: In terms of our plan, I will just reiterate that we always plan conservatively.

Patti Poppe: In terms of our plan, I will just reiterate that we always plan conservatively. So we have a cost of capital application out there at 11.3. We would not call that conservative in terms of what we're planning, but we haven't necessarily shared exactly the number that's in our plan at this point in this time, we aren't sharing that at this time.

Speaker Change: Great. Thanks for taking a question and I'll see you guys at AGA.

Patti Poppe: So we have a cost of capital.

Awesome. Thanks, Anthony.

Carolyn Burke: Application out there at 11.3. We would not call that conservative in terms of what we're planning, but we haven't necessarily shared exactly the number that's.

Speaker Change: Our next question comes from the line of Carly Davenport with Goldman Sachs.

Patti Poppe: In our plan at this point in.

Carly Davenport: Hey, good morning. Thanks for taking the questions. Maybe just one clarifying question for me. You had mentioned the terrific exposure in the prepared remarks. Is there any quantification on those impacts on the capital plan that you can provide?

Carolyn Burke: this time, we aren't sharing that at this time.

[Analyst]: Okay, great. And then secondly, you know, you talked about incremental capital, you know, making your base plan better or, you know, reprioritizing spend with it or extending the duration of rate base growth. Just wondering, as it pertains to the SB 410 filing, specifically the $2.8 billion of capital, do you have a narrower view of your approach to that?

Michael Lonegan: Okay, great. And then secondly, you know, you talked about incremental capital, you know, making your base plan better or, you know, reprioritizing spend with it or extending the duration of rate base growth. Just wondering, as it pertains to the SB 410 filing, specifically the $2.8 billion of capital, do you have a narrower view of your approach to that?

Yeah, Carly, it's Carolyn. Um.

Carolyn: So when we looked at our source and company, our source and group for us all has done a really good scrub.

of the Impact on Terror. [inaudible]

When we look at our turtle materials and supply spend.

Patti Poppe: Well, we're, you know, we're awaiting the proposed and final decisions on our supplemental SB 410 filings. Look, that just reflects a cap. And what's most important is that we connect these new customers. They want to be connected. They need electricity. And so we'll continue to advocate for that work to be able to have timely cost recovery. I think our continued growth of new business is reflected both in our current plan as well as will be reflected in the GRC. Great.

and over 90% is domestic. [inaudible]

Carolyn: and the main categories in that spend 10 better tariff exposed, tend to be actually computer hardware, smart grid equipment, and electric equipment like transformers. I'll just remind you a third of our transformers are sourced internationally from South Korea, and that's at I think it's a 12%.

Carolyn: Tara at this point in time, so that's a hundred million dollars of our total spend. So not really significant.

on top of that both our sourcing group. [inaudible]

Carolyn: I believe that the terrace exposure is very manageable, but I'll just remind you that over the last three years with our lean operating system in play and our ONM reduction, those reductions were on top.

Michael Lonegan: Great. Thanks for taking my question.

[Analyst]: Thanks for taking my question.

Patti Poppe: Yep. Thank you. Thank you, Michael.

Carolyn Burke: That concludes the question and answer session. I would like to turn the call back over to Patti Poppe for closing remarks.

Operator: That concludes the question and answer session. I would like to turn the call back over to Patti Poppe for closing remarks.

Patti Poppe: Thank you, Desiree. Hey, thanks everyone for joining us today. I will just remind you that we ride this roller coaster so you don't have to. We ride this roller coaster so that we can deliver consistent, high quality outcomes for customers, investors. That's what we're up to every day and can't wait to see AGA and talk more about it. Thanks so much for joining us today.

Carolyn: of Absorbing Inflation. In 2022, in particular, was a high inflation area year, and we absorbed that inflation and saw those savings. We think our biggest tool in our toolkit right now is our operating system in our ONM savings.

Carolyn: Great. Thank you so much for that. I'll leave it there.

Thanks, Carly.

Speaker Change: Next question comes from the line of Ryan Levine with City. Your line is open.

Carolyn Burke: Ladies and gentlemen. That concludes today's call. Thank you all for joining. You may now disconnect.

Operator: Ladies and gentlemen. That concludes today's call. Thank you all for joining. You may now disconnect.

Ryan Levine: Good morning. Some of the prepared remarks focused on potential legislative solution, but outside of legislative solutions, you see any progress in the conversation to revisit or change the attachment rate for the wildfire fund.

Ryan Levine: You know Ryan there's lots of ideas on the table and you know as I mentioned earlier I'm very hesitant to get out in front of the decision makers and the policy makers. I would just offer that there's a lot of ideas that are being discussed and reviewed and we stand that we can get a constructive outcome this year that works for customers and investors.

Ryan Levine: Okay, appreciate that. And then just one follow up to an earlier comment you had made around a 90% assumption around some of the data center projects that have already reached engineering study. Where is the 90% number coming from and what are the drivers and how you're coming to these forecasts?

and I signed with customers at that stage of the 1.4 gigawatts.

Great, thanks for the time.

Yeah, thanks Ryan.

Speaker Change: Next question comes from the line of David Arcaro with Morgan Stanley . Your line is open.

Big morning, thanks so much.

Hi, David.

Speaker Change: Hey, let me see. Oh, I was wondering where does the conversation with rating agency stand at this point in terms of the path and timing potentially to get to investment grid.

I'll just say, we remain...

Speaker Change: Very focused on maintaining an IT balance sheet. Now, we recognize the agencies are taking a measured approach with rating agencies. We were very pleased to see that Moodies upgraded the PG&E's Mutility rating. It was a great outcome acknowledging our progress. Thank you very much.

Speaker Change: But as you know, we're still below IG at the hold co. The rating agencies are looking for the same signal from policymakers that you are. Remain confident that once AB 1054 uncertainty is addressed by the state, the rating agencies are going to take favorable action on our ratings.

Speaker Change: All our financial metrics are in line with IG and we continue to make good progress on the wildfire of mitigation. So I think it's at AB 1054 uncertainty that as we express confidence that we're going to see action this year and we think that rating agencies will then follow.

and it was just curious.

that there's anything.

Speaker Change: Can you be able to add on whether shareholder contributions would be a part of the future discussion around the baby 1054 framework and whether there's been any conversation or indications on that front.

Yes.

Speaker Change: David, you know, we continue to advocate that we don't think that there is a good case that investors.

Speaker Change: Should contribute to the fund. The fund is important. It plays an important role as a rate-smoothing device and as a fund to make sure those harmed by wildfire have recoveries.

Speaker Change: But given inverse condemnation reflects that a prudent operator's cost are recoverable in rates. We don't think that there's a case to be made that investors should be contributing to that fund and will continue to advocate for that. We know that no matter what [inaudible]

Speaker Change: If you increase the cost of capital that makes it less affordable for customers and we're always standing for affordability for our customers and we'll just continue to keep you updated as the legislative session continues.

Okay, understood. Thanks so much. Appreciate it.

Thanks, David.

Hi, good morning. Thanks for your time.

Speaker Change: I know a lot has been covered, so maybe just one on IRA. Can you just remind me please on any IRA related items in your outlook, such as any transferability assumptions, tax rate deductions and so forth?

Speaker Change: No, David, this is Carolyn. Thank you for the question. We really don't have significant exposure to the IRA. The way we think about this first, PG need currently does not have any utility own solar or storage projects under construction. So we really don't have any exposure there. We do, of course, have energy procurement cost and have a number of executed PPAs for solar and battery projects currently under development. And so

Speaker Change: We're in the market right now as well as in terms of buying some of that procurement. It remains to be seen how the pricing may be impacted by tariffs and the availability of those tax credits on those, but we're following the competitive solicitation process very closely and we're very mindful of securing the very best commercial terms on behalf of our customers.

Speaker Change: But that's our exposure to the direct exposure to the tax crisis limited.

Speaker Change: We will take our last question from Michael Lonegan with Evercore ISI. Your line is open.

Michael Lonegan: Hi, good morning. Thanks for taking my question. So as we think about the cost of capital application, what is embedded for your RLE and equity ratio and your current long-term EPS growth forecast? And you know, are you looking for this application and the upcoming GRC filing, you know, as an opportunity to extend this growth rate or potentially raise it?

Speaker Change: In terms of our plan, I will just reiterate that we always plan conservatively. So we have a cost of capital application out there at 11.3. We would not call that conservative in terms of what we're planning, but we haven't necessarily shared exactly the number that's in our plan.

Michael Lonegan: at this point in time and aren't sharing that at this time.

Speaker Change: Okay, great. And then secondly, you know, you talked about incremental capital, you know, making your baseline better or, you know, reprioritizing span with it or sending the duration of rate-based growth.

Speaker Change: I'm just wondering as it pertains to the FB 410 filing specifically the 2.8 billion of capital. Do you have a narrower view of your approach to that? Yeah.

Speaker Change: Well, we're, you know, we're awaiting the proposed and final decisions on our supplemental SB410 filing.

Speaker Change: Look, that just reflects a cap. And what's most important is that we connect these new customers. They want to be connected, they need electricity. And so we'll continue to advocate for that work to be able to have timely cost recovery. It is, I think our continued growth of new business is reflected both in our current plan as well as we'll be reflected in the GRC.

Great, thanks for taking my question.

Thank you, Michael.

Speaker Change: That includes the question and answer session. I would like to turn the call back over to Patty Poppe for closing remarks.

Patty Poppe: Thank you, Desiree. Hey, thanks everyone for joining us today. I will just remind you that we ride this roller coaster so you don't have to.

Speaker Change: and we ride this roller coaster so that we can deliver consistent high quality outcomes for customers and investors. That's what we're up to every day and can't wait to see at AGA and talk more about it. Thanks so much for joining us today.

Speaker Change: Ladies and gentlemen, that includes today's call. Thank you all for joining and you may now disconnect.

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