Pacific Gas and Electric Company PFD 1ST 4.36%

2026/2027 outlook reaffirmed (core EPS) + no guidance beyond 2027 - Core EPS (2026): $1.64–$1.66, reaffirmed; ~+10% vs. 2025 at midpoint. - Core EPS (2027): $1.78–$1.82, reaffirmed; ~+9% at midpoint. - No guidance beyond 2027 due to the ongoing strategic review (how PG&E is organized/financed and its wildfire-liability-linked cost of capital). - PG&E says it has already addressed equity financing needs through 2030 and won’t issue equity at the current depressed valuation (also citing financing cost discipline).

Strategic review: goal = investment-grade credit ratings; exploring structural/regulatory options - Management’s stated foundational objective: achieve investment grade ratings, viewed as critical to lowering financing costs and unlocking value for customers and investors. - Policy reform via legislation is still the preferred/fastest path, but PG&E is evaluating other options if not achieved. - Structural options under review include ring-fencing and potentially sales/separations (so that businesses with little/no wildfire exposure are not burdened by the wildfire risk discount). - Timing: PG&E expects more definitive outcomes no later than next summer, but will communicate earlier if opportunities/filings emerge.

Wildfire policy reform remains the central bottleneck (and a direct credit constraint) - Management argues comprehensive wildfire liability reform has not yet been enacted, leaving California utility wildfire tail risk “unsustainable” under the current framework. - They highlight the framework evolution (e.g., SB 901 → AB 1.05 → SB 254) and protections (e.g., self-insurance up to $1B, wildfire fund/liquidity, revised prudency standard, presumption of prudency, securitization precedent). - However, leadership emphasizes key stakeholders acknowledge more work is needed (Governor, CPUC, wildfire fund administrator, rating agencies). - Fitch revised PG&E outlook to negative; S&P cited heightened risk—reinforcing that policy risk is the primary constraint on further rating improvement. - Upcoming catalyst: Governor-requested CPUC report due Nov 1, expected to quantify impacts of the status quo; multiple legislative hearings scheduled.