Pacific Gas and Electric Company

Earnings + guidance reaffirmed (core EPS) - 3Q 2026 core EPS: $0.41 - YTD (first 9 months) core EPS: $1.24 vs $1.14 in same period prior year (up) - 2026 core EPS guidance reaffirmed: $1.64–$1.66 (~10% growth at midpoint vs 2025) - 2027 core EPS guidance reaffirmed: $1.78–$1.82 (~9% growth at midpoint) - No guidance beyond 2027 due to the ongoing strategic review, but management says equity financing needs were already addressed through 2030. - Dividends: annual dividend rate is typically set in December; for 2027 expects the recommended increase to be consistent with prior “~20% by 2028” trajectory (i.e., no new near-term cut signal).

Strategic review: unlock value + reach investment-grade (timing + scope) - Management’s foundational objective: become a sustainable investment-grade business by improving how the company is organized/financed in relation to wildfire risk. - Expected timeline: share outcomes/plan no later than next summer (but will update sooner if material developments occur). - Options being evaluated (without prejudging): - regulatory reforms, capital allocation changes - corporate ring fencing - potential sale/separation structures - revisiting the corporate structure to better reflect risk/value of different businesses - Stated intent is to avoid issuing equity at the current stock price / “wrong cost of capital.” - Modeling target: maintain mid-teens FFO-to-debt and strong credit metrics, implying a path to investment grade even though policy risk is the key constraint.

Wildfire liability reform remains the #1 catalyst (and the central risk) - Management emphasizes that comprehensive wildfire policy reform has not yet been enacted, and continued “status quo” makes PG&E remain burdened by wildfire risk discounting, impairing access to cheaper capital. - They point to progress in the framework (SB 901 → AB 1.05 → SB 254), including protections like self-insurance up to $1B, liquidity sources, revised prudency standard, and securitization precedent—but says more work is required. - Key risk/negative: credit rating agencies continue to flag policy risk; in the quarter: - Fitch revised outlook to negative - S&P highlighted heightened risk - Upcoming policy deliverables: governor-requested CPUC report due Nov 1—expected to substantively reinforce that the current framework is “unsustainable” for customers and the utility model.