PG&E (PCG) Q1 FY26 earnings call: guidance and Q&A

How would PG&E's capital allocation, specifically buybacks, be affected if wildfire legislation makes some progress but isn't a 'Goldilocks scenario' or if key aspects are pushed to 2027?

Patti Poppe reiterated encouragement regarding current legislative progress and the importance of a minimum outcome that allows shareholders to model and quantify tail risk. She emphasized the value of the investor-owned utility model for attracting low-cost capital. While bullish on the current capital allocation plan, she stated that if a minimum outcome is not achieved, all aspects of the financial plan would be on the table for reevaluation, but did not specify which elements would be prioritized.

“if that doesn't occur, if we don't get a minimum outcome that's essential, then obviously, we'll have to look at and we will not avoid looking at our entire capital allocation plan, the whole financial plan.”

asked by Shahriar Pourreza · answered by Patricia Poppe

What specific aspects of the CEA report are sufficient for PG&E, particularly regarding a permanent cap on liability, and how does the company view potential shareholder contributions in Phase 2 of the legislative process?

Patti Poppe highlighted the importance of a 'whole of society' approach, including hardening communities and liability limits. She stressed that a minimum outcome for PG&E is the ability to model and quantify wildfire tail risk for investors. Regarding shareholder contributions, she stated that the totality of the legislative package would determine their acceptability; if it doesn't improve the status quo, contributions would be unacceptable, but a dramatic improvement would open dialogue with policymakers.

“if it doesn't improve the status quo then contributions would be unacceptable. But if there's a dramatic improvement to the status quo, we obviously would be in dialogue with policymakers.”

asked by Nicholas Campanella · answered by Patricia Poppe

Which specific proposals or structures within the CEA report best align with PG&E's objectives and are most likely to gain stakeholder support? Also, how might the governor's election impact the legislative process for wildfire law this year?

Patti Poppe emphasized the importance of the CEA's 'whole of society' approach, particularly the three pillars: hardening communities, liability limits (especially when prudence is demonstrated), and a state backstop to manage tail risk. She noted the report outlined multiple paths and not all elements are needed. Regarding the governor's election, she believes Governor Newsom has shown strong interest in a real fix and his last year in office might add impetus for action, independent of the election itself.

“I think he's made it clear that he'd really like to see action on this.”

asked by Steven Fleishman · answered by Patricia Poppe

When can PG&E expect to refill its pipeline of data center applications and preliminary engineering, and when will customers start to see the bill reductions from these new data centers coming online?

Patti Poppe stated that the third cluster study (Cluster '26) has already shown significant demand, and engineering for these projects will occur over the next 6-8 months. She noted that 1.8 GW of large load is expected online by 2030, forecasting a 1% to 2% rate reduction by that time. She clarified that current rate reductions (23% for vulnerable, 13% for others) are primarily driven by O&M reductions and efficient financing, with large load growth contributing more significantly to affordability in the latter half of the long-term plan.

“the 1.8 gigawatts will be online by 2030. We forecast that to be about a 1% to 2% rate reduction for that time period.”

asked by David Arcaro · answered by Patricia Poppe

What is the confidence level for converting the 4.6 GW in final engineering to construction, and how much of the $5 billion in incremental investment opportunities is dependent on the approval of the undergrounding plan?

Patti Poppe expressed high optimism for conversion of the 4.6 GW in final engineering, noting that these customers are moving forward with real costs and forecasted expectations, though it's a new volume level. She clarified that the $5 billion in incremental opportunities is unrelated to the undergrounding plan, which is already built into the $73 billion capital plan at about $1 billion per year. The incremental opportunities relate to accelerating reliability, new business connections, and transmission, and would require making the current plan 'better' rather than 'bigger' at this juncture.

“we think there's a high conversion, but we've not been at this stage with this volume before.”

asked by Anthony Crowdell · answered by Patricia Poppe

What is the outlook for summer weather and the upcoming wildfire season, and how does PG&E consider credit metrics when optimizing capital allocation under potential scenarios?

Patti Poppe stated that PG&E's strategy is to be prepared regardless of weather predictions, highlighting the confidence gained from continuous monitoring for proactive grid operations. Carolyn Burke explained that the current plan is built around no new equity, maintaining the common dividend, and modest parent-level debt, all while maintaining IG-level credit metrics. She added that if a different capital allocation scenario arises (e.g., due to wildfire reform outcomes), all elements of the financial plan would be reevaluated based on market conditions, stock price, and interest rates.

“our strategy is not to count on weather prediction, we count on being ready every day.”

asked by Ryan Levine · answered by Patricia Poppe