Skip to content
    PCG
    Earnings call· Dec 2024(Q4 FY24)

    PG&E Corp PCG

    Feb 13, 2025 Source

    Executive summary

    PG&E Q4 FY24 — Strong Performance, Increased Guidance, and Data Center Load Growth

    PG&E delivered strong Q4 and full-year 2024 results, exceeding earnings guidance and demonstrating consistent performance. The company raised its 2025 EPS guidance and reaffirmed long-term growth targets, supported by significant nonfuel O&M savings and a fully funded capital plan. A key focus is the growing data center demand, which is expected to drive beneficial load growth and improve customer affordability. However, recent wildfires outside its service area have intensified market scrutiny on the AB 1054 framework and the adequacy of the Wildfire Fund, prompting ongoing discussions with policymakers for timely enhancements.

    Highlights

    5

    • Core EPS for FY24 reached $1.36, an 11% growth over 2023.

    • Updated 2025 EPS guidance range to $1.48 to $1.52, with the midpoint up 10% from 2024 actuals.

    • Nonfuel O&M costs reduced by 4% in 2024 over 2023, building on prior year savings.

    • Secured 5.5 GW of potential data center load in the pipeline, with 1.4 GW having passed preliminary engineering.

    • Completed $3 billion in equity funding, fully addressing equity needs for the $63 billion capital plan through 2028.

    Concerns

    2

    • Market concern regarding risk exposure beyond the $21 billion Wildfire Fund and implications for the utility liability cap under AB 1054 framework.

    • Uncertainty around the timing and nature of potential legislative/regulatory improvements to the AB 1054 construct following recent Southern California fires.

    Guidance & targets

    4
    CategoryTargetConfidence
    Core EPS
    $1.48 to $1.52
    high materiality
    High
    Core EPS Growth Rate
    at least 9%
    high materiality
    High
    Dividend Payout Ratio
    20%
    medium materiality
    High
    Rate Base Growth
    10%
    high materiality
    High

    Operational metrics

    26
    Core EPS
    $0.31
    Q4 FY24

    Reported core earnings per share for the quarter.

    Core EPS
    $1.36
    FY24

    Reported core earnings per share for the full year.

    Core EPS Growth
    11%over 2023
    FY24

    Growth in core EPS year-over-year.

    Core EPS Increase
    $0.13over 2023
    FY24

    Absolute increase in core EPS year-over-year.

    Capital Investment Contribution to EPS
    $0.26
    FY24

    Contribution to core EPS from higher customer capital investment.

    ROE
    10.7%
    2024

    Higher authorized ROE, which was redeployed.

    Nonfuel O&M Savings Contribution to EPS
    $0.07
    FY24

    Contribution to core EPS from nonfuel O&M savings.

    Redeployment for Customers
    $0.16
    FY24

    Amount redeployed for the benefit of customers, supporting risk mitigation programs.

    Nonfuel O&M Savings
    4%reduction over 2023
    2024

    Exceeded the 2% annual target.

    Nonfuel O&M Savings
    over $500 million
    2023

    Total O&M expense savings achieved.

    Nonfuel O&M Savings
    nearly $350 million
    2024

    Total O&M expense savings achieved.

    O&M Savings from Coworker Idea
    $50,000
    N/A

    Example of savings from a coworker identifying an efficiency in paving improvements.

    Annual Dividend Rate
    $0.10up from $0.04 in 2024
    2025

    Declared annual dividend rate.

    Equity Offering
    $2.75 billion
    Nov/Dec

    Equity offering completed taking advantage of favorable market conditions.

    Equity Funding Completed
    $3 billion
    FY24

    Combined funding completed, addressing equity needs through 2028.

    Parent Debt Paydown Commitment
    $2 billion
    N/A

    Commitment, not an obligation, to pay down parent debt, providing financial flexibility.

    Investment per GW for Data Centers
    $0.5 billion to $1.6 billion
    N/A

    Range of investment per gigawatt that allows for 1-2% customer bill savings.

    Customer Bill Savings from New Electric Demand
    1% to 2%
    N/A

    Estimated savings for customers for every 1,000 MW of new electric demand from data centers.

    DOE Loan
    —
    2025

    Loan closed in January; not included in current plans; disbursements expected later in 2026-2030 timeframe.

    PSPS Events
    6
    2024

    All executed without safety incidents, serving as a first layer of protection.

    Customers Impacted by PSPS
    approximately 50,000
    2024

    Impacted over the course of 6 PSPS events, thanks to system sectionalization.

    EPSS Deployment
    100%
    N/A

    Advanced technology in place, completing the third full year of deployment.

    PSPS Events
    3
    YTD 2025

    Utilized routinely as safety protocols when conditions warrant.

    70 kV Line Threshold Wind Speed
    55
    N/A

    Threshold for exercising PSPS on 70 kV lines.

    Down Conductor Device Technology
    over 1,500
    N/A

    New devices implemented in the system to prevent ignitions.

    EV Sales in California
    28%
    N/A

    Represents new electric demand that helps lower costs for customers and fund grid safety.

    Industry KPIs

    3
    MetricValueDetails
    Ffo to debtmid-teens%
    Regulatory rate base growth10%%
    Contracted large load capacity esas loas5.5 GWGW

    Orderbook & backlog

    2
    Data center load pipeline5.5 GWQ4 FY24

    up from 3.5 GW in June

    Formal applications representing potential new data center load, excluding other large loads like warehouses, electric fleet depots, and manufacturing.

    Data center load passed preliminary engineering1.4 GWQ4 FY24

    From 15 customers, including hyperscalers and developers, representing 27 unique sites. Over 90% projected to be online before the end of 2030, as early as 2026.

    Capital programs

    1
    5-year Capital Investment Planunderway$63 billion
    Funding: equity needs fully behind us with December issuance

    The plan through 2028, with an incremental at least $5 billion of additional customer investment needs identified. The $3 billion equity funding completed in Nov/Dec 2024 fully addresses the equity needs for this plan.

    Risks & headwinds

    2
    Wildfire Fund AdequacyOngoing

    $21 billion (Wildfire Fund size)

    Mitigation: Ongoing discussions with policymakers for timely enhancements to AB 1054, including potential 'Stage 1 resolution' this calendar year; Ann Patterson appointed Senior Counsel to Governor on wildfire issues.

    Cost of CapitalNear-term, impacting upcoming filings

    interest rates are up and the actual cost of capital is up

    Mitigation: PG&E plans to file a strong case for its cost of capital application in March, arguing for recognition of increased rates.

    What to watch in Q1 FY25

    4

    AB 1054 Framework Enhancements

    By end of calendar year
    CurrentMarket concern about $21B Wildfire Fund and liability cap; discussions ongoing.
    Target"Stage 1 resolution" or incremental fix to AB 1054 construct.

    Why it matters

    Critical for attracting capital, ensuring utility financial health, and maintaining investor confidence in California's regulatory construct.

    Yes, Steve, we are definitely not ruling out improvements before year-end. We know that there are urgent assurances that need to be made.

    Q&A highlights

    7

    Is there recognition of the wildfire funding problem in CA, or is it a wait-and-see approach? Are state working on improvements?

    Patti Poppe stated that the issue has hit the radar of policymakers, and while AB 1054 is a good construct, the fund's longevity given extreme fires has gained attention. She cited Ann Patterson's new role as Senior Counsel to the Governor on wildfire issues as a sign of state recognition and leadership.

    “This definitely has hit the radar of our policymakers and leaders here in the state. I think we all agree that, first of all, AB 1054 fundamentally is a very good construct, and it's industry-leading and the only state in the nation who has this kind of comprehensive construct. However, the question about the fund and the longevity of the fund, given this new potential of an extreme case fire has gotten the attention of all of us.”

    asked by Shar Pourreza · answered by Patricia Poppe

    2 min read5 chapters

    Detailed Narrative

    01

    Wildfire Mitigation and AB 1054 Framework

    PG&E emphasized its commitment to wildfire safety, noting 2024 as the fourth consecutive year of predictable performance. The company highlighted the effectiveness of its wildfire mitigation plan, including 6 PSPS events in 2024 (4 involving transmission) impacting approximately 50,000 customers, and 100% EPSS deployment on high-fire threat distribution circuits. Despite recent fires outside its service area, PG&E reiterated confidence in the AB 1054 framework as an industry-leading model for victim compensation and capital attraction, while acknowledging market concerns about the $21 billion Wildfire Fund and liability cap.

    02

    Beneficial Load Growth from Data Centers

    The company reported a significant increase in potential data center load, with formal applications representing 5.5 GW. Of this, 1.4 GW from 15 customers across 27 sites has passed preliminary engineering, with over 90% projected to be online by the end of 2030, as early as 2026. PG&E is proactively filing for CPUC approval of electric Rule 30, proposing upfront funding from large-load customers to accelerate service and protect existing customers from stranded assets. This growth is expected to lower customer bills by 1-2% for every 1,000 MW of new demand.

    03

    Financial Performance and Capital Plan

    PG&E achieved 11% core EPS growth in 2024, driven by higher customer capital investment and nonfuel O&M savings. The $63 billion 5-year capital plan through 2028 remains unchanged, with an additional $5 billion in incremental customer investment needs identified. The company completed its $3 billion equity funding in late 2024, fully derisking its equity needs through 2028.

    04

    O&M Savings and Affordability

    PG&E continued to build its cost reduction capabilities, achieving a 4% reduction in nonfuel O&M costs in 2024 over 2023, exceeding its 2% target. This included over $350 million in savings in 2024 and over $500 million in 2023. These savings contribute to customer affordability, with combined residential gas and electric bills remaining flat for January 2025 compared to January 2024, assuming similar usage. The company plans to reflect these savings in its upcoming GRC filing in May.

    05

    Regulatory and Financial Safety

    PG&E is focused on strengthening its balance sheet and achieving investment-grade ratings, having reached mid-teens FFO to debt in 2024 and more than doubling operating cash flow since 2022. The company maintains flexibility with its low dividend and a commitment to pay down $2 billion of parent debt. Upcoming regulatory filings include the GRC in May, the 2026 cost of capital application, and a 10-year undergrounding plan.

    AI-generated summary of the company’s earnings call. Not investment advice.