01—Abstract
Summary
Summary of the 10-K filed February 10, 2022. Cited figures are marked; the original filing is the authoritative source.
PG&E Corporation (PCG) and its subsidiary Pacific Gas and Electric Company (the Utility) report a combined 2021 Form 10-K, filed February 10, 2022.
For 2021, PG&E Corporation reported a net loss attributable to common shareholders of $102 milliona, compared with $1.3 billion in 2020, and the Utility reported income available for common stock of $124 million, compared with $397 million in 2020. The 2021 results include a $1.15 billion pre-tax charge for the 2021 Dixie fire, partly offset by probable insurance, WEMA, FERC TO and Wildfire Fund recoveries. A $1.3 billion net-of-tax charge related to the grantor trust election for the Fire Victim Trust was recorded in 2020, and the 2021 income tax effective rate rose to 86.8% for the Utility, driven in part by a Fire Victim Trust DTA write-off.
The filing is dominated by wildfire exposure. The company recorded aggregate liabilities of $800 millionb for the 2019 Kincade fire, $375 million for the 2020 Zogg fire and $1.15 billion for the 2021 Dixie fire, before insurance and other recoveries. Criminal complaints from the Sonoma and Shasta County District Attorneys seek charges that the filing says would materially exceed the recorded amounts for Kincade and Zogg.
The Utility was placed in step 1 of the CPUC's Enhanced Oversight and Enforcement Process on April 15, 2021. Probation ended January 25, 2022, and the Utility received a 2021 AB 1054 safety certification on January 31, 2022. Management expects capital expenditures of $7.8 billion to $8.9 billionc in 2022, and the 2023 GRC requests revenue requirements of $15.46 billion.
Balance sheet and liquidity items include total assets of $103.3 billiond, long-term debt of $38.2 billion at PG&E Corporation consolidated level, $2.2 billion of total liquidity at December 31, 2021, and a $2.2 billion Utility regulatory balancing account position. Common dividends remain suspended, and PG&E Corporation may not pay common dividends until it recognizes $6.2 billion of Non-GAAP Core Earnings after emergence. The Utility authorized payment of $59.1 million of cumulative preferred dividends in February 2022.
02—Key points
Key Highlights
- PG&E Corporation's 2021 net loss attributable to common shareholders was $102 million, versus $1.3 billion in 2020; the Utility's income available for common stock was $124 million, versus $397 million.
- Recorded wildfire liabilities total $800 million (2019 Kincade fire), $375 million (2020 Zogg fire) and $1.15 billion (2021 Dixie fire), each before insurance and other recoveries.
- Criminal complaints filed by the Sonoma County and Shasta County District Attorneys could result in losses that the Utility states would materially exceed the recorded Kincade and Zogg amounts.
- Total capital expenditures were $8.6 billion in 2021, with forecasts of $7.8 billion to $8.9 billion for 2022 and $8.1 billion to $12.0 billion for 2026.
- Common dividends remain suspended; PG&E Corporation may not pay common dividends until it recognizes $6.2 billion of Non-GAAP Core Earnings after emergence from Chapter 11, and the Utility authorized $59.1 million of cumulative preferred dividends.
- The CPUC placed the Utility in step 1 of the Enhanced Oversight and Enforcement Process on April 15, 2021, and the Utility filed a 2023 GRC application requesting $15.46 billion of revenue requirements for 2023.
- As of December 31, 2021, the Utility had approximately $2.2 billion of total liquidity and $38.3 billion of outstanding indebtedness, and it recorded a $1.2 billion Dixie fire-related regulatory asset and recovery mix across insurance, FERC TO, WEMA and Wildfire Fund sources.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 10, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $20.64B$18.47B | +11.8% |
| Operating Income | $1.88B$1.75B | +7.3% |
| Interest Expense | $1.60B$1.26B | +27.1% |
| Net Income | -$88.00M-$1.32B | +93.3% |
| EPS (Basic) | $-0.05$-1.05 | +95.2% |
| EPS (Diluted) | $-0.05$-1.05 | +95.2% |
| Shares Outstanding (Basic) | 1.99B1.26B | +57.9% |
| Shares Outstanding (Diluted) | 1.99B1.26B | +57.9% |
05—Questions
Frequently Asked Questions
How much did PG&E lose in 2021, and why did results improve from 2020?
PG&E Corporation's net loss attributable to common shareholders was $102 million in 2021, compared with $1.3 billion in 2020. The 2020 results included $1.1 billion of Backstop Commitment Premium Shares expense and $452 million of Additional Backstop Premium Shares expense, which did not recur in 2021. The 2021 results were offset in part by a $1.3 billion charge, net of tax, from the grantor trust election for the Fire Victim Trust.
What wildfire liabilities has PG&E recorded, and what recoveries are expected?
As of December 31, 2021, PG&E recorded aggregate liabilities of $800 million for the 2019 Kincade fire, $375 million for the 2020 Zogg fire and $1.15 billion for the 2021 Dixie fire, before insurance and other recoveries. Recorded insurance receivables were $430 million for Kincade, $337 million for Zogg and $563 million for Dixie. The Dixie fire also had $448 million of regulatory recovery and $150 million of Wildfire Fund receivables recorded. The filing states there is no assurance these amounts will be recovered.
What are the main regulatory and enforcement risks the company faces?
The Utility was placed in step 1 of the CPUC's EOEP in April 2021, and it could face fines, penalties or further EOEP steps. Criminal charges from the Kincade and Zogg fires could lead to restitution the filing says would materially exceed recorded amounts, and the Utility does not expect its liability insurance to cover those restitution payments. The 2023 GRC and several other cost recovery proceedings, including the 2020 WMCE and 2021 WMCE applications, are pending with uncertain outcomes.
What are the dividend and capital structure constraints?
PG&E Corporation suspended common dividends in 2017 and may not pay them until it recognizes $6.2 billion of Non-GAAP Core Earnings after emergence. The Utility cannot pay common dividends until all cumulative preferred dividends are paid, and $59.1 million of such arrears existed as of January 31, 2022, which the Utility authorized for payment in May 2022. The CPUC requires the Utility to maintain at least 52% equity on average, subject to a temporary five-year waiver granted in May 2020.
What is the status of the Diablo Canyon nuclear plant and related liabilities?
The CPUC approved retirement of Diablo Canyon Unit 1 by 2024 and Unit 2 by 2025. The Utility's unrecovered investment in Diablo Canyon was $1.16 billion as of December 31, 2021, and it may record a material charge if operations cease early. The Utility may be required to pay up to $275 million per nuclear incident under federal law.
06—Continue