01—Abstract
Summary
Summary of the 10-Q filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.
PG&E Corporation and Pacific Gas and Electric Company (the Utility) filed a combined quarterly report for the three and nine months ended September 30, 2024.
Consolidated income available for common shareholders was $576 milliona for the third quarter of 2024, up from $348 million a year earlier, and $1.83 billion for the nine months, up from $1.32 billion. The third-quarter increase was driven largely by the absence of prior-year SB 901 securitization charges ($346 million in Q3 2023) and lower Wildfire Fund expense, partly offset by higher depreciation and interest expense. Nine-month diluted EPS was $0.85, compared with $0.62 in 2023.
Wildfire liabilities remain the central investor issue. The Utility's accrued liabilities are $1.2 billionb for the 2019 Kincade fire, $1.875 billion for the 2021 Dixie fire and $100 million for the 2022 Mosquito fire, before insurance and other recoveries. The filing records a $75 million Kincade charge and a $275 million Dixie charge in the third quarter.
Recorded receivables include a $875 millionc Wildfire Fund receivable for Dixie and $598 million of regulatory recovery receivables for Dixie. Total cumulative wildfire payments through September 30, 2024 were $2.19 billion. Management states that liabilities could exceed available recoveries.
Liquidity was about $5.2 billiond at September 30, 2024. The Utility completed substantial debt financings in 2024, including a $1.42 billion AB 1054 recovery bond issuance and $1.0 billion of junior subordinated notes at PG&E Corporation.
The Utility's ROE was reduced from 10.70% to 10.28% effective January 1, 2025, following an October 17, 2024 CPUC decision. The Utility also received $944 million of interim rate relief in the 2023 WMCE proceeding, subject to refund.
02—Key points
Key Highlights
- Consolidated income available for common shareholders rose to $576 million in Q3 2024 from $348 million in Q3 2023; nine-month diluted EPS was $0.85 versus $0.62.
- Wildfire liabilities: $1.2 billion (Kincade), $1.875 billion (Dixie) and $100 million (Mosquito), before insurance and other recoveries, with $300 million accrued for PG&E Corporation's wildfire-related securities claims.
- Recorded recovery receivables include $875 million from the Wildfire Fund and $598 million in regulatory recovery for the 2021 Dixie fire, plus insurance receivables of $430 million (Kincade), $525 million (Dixie) and $86 million (Mosquito).
- The CPUC's October 17, 2024 decision lowers the Utility's ROE from 10.70% to 10.28% effective January 1, 2025, and changes the cost of capital adjustment mechanism.
- The CPUC granted $944 million of interim rate relief in the 2023 WMCE proceeding on September 12, 2024, subject to refund; the remaining $914 million awaits a final decision.
- Financings in 2024 included $1.42 billion of AB 1054 recovery bonds (August 1), $1.0 billion of 7.375% junior subordinated notes at PG&E Corporation (September 11), and $1.75 billion of Utility bridge loan prepayments funded by bond sales.
- Liquidity of about $5.2 billion at September 30, 2024, and the Utility plans $10.8 billion of capital expenditures in 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 7, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $5.94B$5.89B | +0.9% |
| Operating Income | $1.03B$401.00M | +156.6% |
| Net Income | $579.00M$351.00M | +65.0% |
| EPS (Basic) | $0.27$0.16 | +68.8% |
| EPS (Diluted) | $0.27$0.16 | +68.8% |
| Shares Outstanding (Basic) | 2.14B2.11B | +1.2% |
| Shares Outstanding (Diluted) | 2.14B2.14B | +0.1% |
05—Questions
Frequently Asked Questions
How much has the company accrued for its major wildfire liabilities?
As of September 30, 2024, the Utility recorded aggregate liabilities of $1.2 billion for the 2019 Kincade fire, $1.875 billion for the 2021 Dixie fire and $100 million for the 2022 Mosquito fire, each before available insurance and, for Dixie and Mosquito, other probable cost recoveries. The filing says these amounts reflect the lower end of the reasonably estimable range of probable losses, and that losses could be greater.
What recoveries does the company expect for these wildfires?
The filing lists probable recoveries of $1,998 million for the 2021 Dixie fire and $146 million for the 2022 Mosquito fire, including legal costs. For Dixie these consist of $525 million insurance, $94 million FERC TO rates, $504 million WEMA and $875 million Wildfire Fund. The filing states that recovery is uncertain and that the CPUC could interpret the revised AB 1054 prudency standard differently.
Why did net income available to common shareholders increase in the third quarter?
Income available for common shareholders was $576 million in Q3 2024 versus $348 million in Q3 2023. The Utility's SB 901 securitization charges fell to $33 million from $346 million, and Wildfire Fund expense fell to $139 million from $219 million. These were partly offset by higher depreciation, amortization and decommissioning of $1,059 million (versus $811 million) and higher interest expense of $721 million (versus $594 million) at the Utility.
Will the company's dividends and funding be affected by the Utility's regulatory decisions?
The filing says PG&E Corporation depends on dividends from the Utility, which must first meet its own obligations and CPUC capital requirements. The CPUC's October 2024 decision lowers the Utility's authorized ROE to 10.28% effective January 1, 2025. The Utility declared common dividends to PG&E Corporation of $500 million in September 2024, and PG&E Corporation declared a quarterly dividend of $0.01 per share.
How much capital does the company plan to spend, and how will it be funded?
The Utility estimates $10.8 billion of capital expenditures in 2024. The filing says PG&E Corporation and the Utility expect capital expenditures, debt maturities and dividends to exceed operating cash flows, and they plan to fund the shortfall primarily through capital and credit markets. Liquidity was approximately $5.2 billion at September 30, 2024, and the Utility's credit ratings remain below investment grade.
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