Pacific Gas and Electric Company PFD 1ST 5%

Core earnings + guidance reaffirmed (good) - Q3 core EPS: $0.41; Core EPS YTD (9 months): $1.24 vs $1.14 in same period prior year. - 2026 Core EPS guidance reaffirmed: $1.64–$1.66 (≈+10% YoY at midpoint). - 2027 Core EPS guidance reaffirmed: $1.78–$1.82 (≈+9% YoY at midpoint). - Beyond 2027: company is no longer providing guidance due to the ongoing strategic review.

Wildfire liability reform remains the central bottleneck driving cost of capital (key risk + downside) - Management says comprehensive wildfire policy reform has not yet been enacted; “action is needed” to address tail risk and the ongoing discount in PG&E’s valuation/financing costs. - Credit backdrop worsened at least at the margin: Fitch revised outlook to negative during the quarter; S&P highlighted heightened risk for California IOUs. - Company argues it meets investment-grade operational criteria but is constrained primarily by policy/liability risk.

Strategic review underway (opportunity, with uncertainty/risk) - Goal: achieve investment-grade credit ratings and unlock value for customers and investors. - What they’re evaluating (without pre-judging outcomes): - regulatory options, capital allocation changes, and corporate structure alternatives (e.g., ring fencing, sales/separations). - Objective is to reduce the “wildfire risk burden” currently faced by parts of the business with little/no wildfire exposure. - Timing: expects more definitive plan/outcome by “no later than next summer.” They will still update through earnings calls sooner if material developments occur. - Financing confidence through 2030: they say alternatives would still be designed to avoid needing new equity through 2030, and they would not issue equity at the current stock price (explicitly stated).