The paragraph is a transcript of the start of PG&E Corporation's Fourth Quarter 2024 Earnings Release conference call. The Operator introduces the call and informs participants about the mute function and Q&A session. Jonathan Arnold, Vice President of Investor Relations, welcomes everyone and introduces CEO Patty Poppe and CFO Carolyn Burke. He mentions that the discussion will include forward-looking statements and advises reviewing the earnings presentation and annual report for details. Patty Poppe begins her remarks, acknowledging recent fires in Southern California and stating that their financial performance in 2024 was strong.

The paragraph outlines the company's financial performance and future projections. In 2024, the company achieved core earnings per share of $1.36, marking an 11% growth from 2023. The 2025 earnings guidance is now set between $1.48 and $1.52. The dividend rate will increase from $0.04 in 2024 to $0.10 in 2025, with a target payout ratio of 20% by 2028. They are committed to cost reductions, with a 4% savings in non-fuel operating and maintenance costs for 2024. The company assures flat residential gas and electric bills for January 2025 compared to the previous year. This marks the fourth year of meeting or exceeding earnings guidance, driven by a performance playbook and conservative planning.

The paragraph highlights the company's capability to deliver consistent results despite challenges like storms and economic factors. In 2024, they achieved 11% earnings growth by reinvesting funds for customer benefit. Despite recent fires occurring outside their area, they emphasize their commitment to wildfire prevention and safety, noting improvements in their system and ongoing mitigation efforts. The paragraph also addresses investor concerns about safety investing in California utilities and stresses the need for reforms to enhance protections under the AB 1054 framework. The company acknowledges California's strong legislative efforts to address wildfire risks and investor needs, demonstrating the state's ability to adapt.

The paragraph discusses measures in place to address the impact of catastrophic wildfires in California, specifically through the AB 1054 framework. This framework aims to protect wildfire victims and ensure that utilities can continue to invest in safety and climate resiliency. It includes the State Wildfire Fund to compensate victims and supports the recovery of wildfire losses under California's strict liability laws. Utilities must have approved wildfire mitigation plans to receive safety certificates, with these plans being rigorously evaluated by the Office of Energy Infrastructure Safety. The framework shifts the focus from requiring utilities to prove prudence post-incident to establishing it upfront, aligning utilities with safety regulations for continuous improvement.

The paragraph discusses the efforts of PG&E's meteorology and operations teams in implementing a framework for wildfire mitigation and prudent utility operations in California. It highlights California's unique model, which includes annual safety certificates and financial support mechanisms like the Wildfire Fund. The writer acknowledges concerns about the model's resiliency due to recent events in Southern California and stresses the importance of upholding key legislation like AB 1054. The paragraph emphasizes California policymakers’ proactive approach and legislative actions that support the utilities' role in ensuring state safety and growth.

The paragraph discusses PG&E's efforts to build trust in communities by ensuring safe and reliable power operations amid changing climate conditions. It highlights the importance of situational awareness, driven by data and experience, in informing wildfire mitigation strategies and protective measures for both local distribution and high-voltage systems. The Public Safety Power Shutoffs (PSPS) serve as the first layer of protection during adverse conditions. In 2024, PG&E executed six PSPS events impacting approximately 50,000 customers without safety incidents. Full deployment of Enhanced Power Safety Settings (EPSS) in high-risk districts has been completed. PG&E aims to serve Northern and Central California residents, including the rising demand for power from data centers, large warehouses, electric fleets, and manufacturing, particularly around Silicon Valley. The progress on Beneficial Load, previously discussed in New York City, is also updated.

The paragraph discusses PG&E's efforts to manage and grow data center load demand in California using what it describes as a "Goldilocks approach" to ensure balanced growth without burdening residential customers. PG&E has received applications representing 5.5 gigawatts of new data center demand, with 1.4 gigawatts having progressed to the preliminary engineering phase. The company aims to bring most of this new load online by 2030, enhancing their service efficiency and responsiveness. To facilitate this, PG&E has submitted an application to the CPUC seeking approval for electric rule 30, which would allow upfront funding from large load customers to accelerate service. This approach lets large customers assume the risk if their projected demand doesn't materialize over a decade.

The paragraph discusses efforts by a company, likely PG&E, to protect customers from funding stranded assets and save on electricity bills with new data center demands. It highlights a partnership with data centers in California to make the grid safer and more resilient. The speaker, Carolyn Burke, outlines three topics: 2024 results, five-year capital and financing plans, and financial safety measures. The company's 2024 core earnings increased by 11%, mainly due to higher customer capital investment and non-fuel operational savings. The passage emphasizes the company's commitment to sharing financial benefits with customers and investors while investing in risk mitigation programs.

The paragraph discusses a company's strategy for managing future investments and financing. They have a $63 billion capital plan through 2028, with an additional $5 billion in potential investments. They are considering options for handling growing demand, including adding to the current plan, prioritizing new investments, or extending growth timelines. They completed a $3 billion equity offering to secure funding needs through 2028, aiming to maintain investment-grade ratings while focusing on affordable and resilient power for Northern and Central California. Their plan emphasizes prioritizing customer capital investment with a conservative approach.

The company emphasizes its financial strategy centered around maintaining a flexible approach to dividend payouts and debt reduction, aiming to secure an investment-grade credit rating. They highlight robust capital planning and increased operating cash flow as central to improving their balance sheet and credit metrics. The firm is actively working on achieving investment-grade ratings and is collaborating with policymakers to strengthen financial frameworks, ultimately benefitting customers. Their approach focuses on steady, manageable growth without taking on excessive risks, achieving operational savings, and enhancing competitive load growth.

The paragraph discusses PG&E's efforts in achieving efficient financing and operational cost savings. Despite not accounting for potential DOE loan savings or achieving investment grade in their five-year plan, the company has surpassed its operation and maintenance (O&M) savings targets, saving over $200 million annually for three years, with significant reductions in 2023 and 2024. These savings were achieved through improved inspection processes, contract optimization, and reduced insurance premiums. PG&E plans to reflect these savings in their upcoming general rate case application to benefit customers by stabilizing bills. The company's focus on delivering stable customer bills is noted as a method to build trust with regulators.

The paragraph discusses PG&E's plans and outlook for the future, highlighting key strategic initiatives and financial goals. PG&E plans to file a 2026 cost of capital application and a ten-year undergrounding plan. The company aims for a 10% rate base growth through 2028, along with a 10% core earnings per share (EPS) growth in 2025, and at least 9% annual core EPS growth from 2026 to 2028. Patty Poppe expresses confidence in PG&E's direction, emphasizing a culture of performance and improvement, supported by a regulatory environment favorable to utility infrastructure investment in California. She assures stakeholders of PG&E's vital role in the state's infrastructure, noting its growth potential and operational capabilities. The paragraph ends with an invitation for questions.

In the discussion between Shar Pourreza and Patty Poppe, they address the challenges posed by California wildfires, specifically the stress on the AB 1054 wildfire fund. They acknowledge the need for potential adjustments to the fund due to extreme fires and mention the appointment of Anne Patterson as senior counsel to the governor on wildfire issues, highlighting the state's recognition of the need for leadership. Additionally, they discuss the increasing demand on California's power grid due to data centers and question if further investments and regulatory measures, similar to SB 410 for distribution, are needed to support this growth.

The paragraph discusses the progress and optimism surrounding PG&E's ability to meet high demand for electricity, particularly from data centers. Since June, interest has grown from 3.5 to 5.5 gigawatts, with additional interest from non-data center customers. PG&E is completing cluster studies to streamline engineering and provide effective pricing, receiving positive responses from applicants. The major challenge is building transmission infrastructure, not new generation, for the initial 4 gigawatts of demand. With signed agreements facilitating progress to the final engineering and construction phases, PG&E is optimistic about meeting customer demand and having much of the planned capacity online by 2030.

In this paragraph, Steve Fleishman from Wolfe Research asks Patty Poppe about the legislative process concerning potential changes to AB 1054 and the urgency for certainty by the fall. Patty Poppe expresses optimism about making improvements by year-end, citing the importance of the wildfire fund for victims and the necessity of attracting capital to improve infrastructure. She stresses that the state understands the importance of adapting and enhancing the current structure, as demonstrated by past legislative actions like SB 901, AB 1054, and other energy-related initiatives, which showcase the state's commitment to supporting utility investment for California's growth and safety.

The paragraph discusses the considerations around wildfire mitigation related to transmission lines, specifically referencing the Eden fire. Patty Poppe notes that transmission lines have recently been included in wildfire mitigation plans and public safety power shutoffs, although the exact cause of the Eden fire is not known. She cites past instances of public safety power shutoffs involving transmission lines, emphasizing their importance in safety protocols. These protocols include using transmission power shutoffs proactively based on specific criteria, such as wind speed thresholds. Additionally, there has been an extensive focus on grounding retired or idle transmission lines as part of safety efforts.

The paragraph discusses the effectiveness and role of AB 1054 in mitigating wildfire risks and its financial protections. The speaker emphasizes their commitment to continuously improving their safety measures despite their confidence in the current system. They highlight how AB 1054 has successfully worked during events like the 2021 Dixie Fire by providing financial offsets through a wildfire fund. However, they acknowledge that while AB 1054 is functioning as intended, there are concerns from investors and the insurance industry about potential prolonged legislative processes to address wildfire risks. They stress their ongoing efforts to learn from incidents and enhance their risk mitigation strategies.

Patty Poppe discusses her confidence in achieving a preliminary resolution regarding wildfire-related issues in California within the year. She acknowledges the broader concerns, like the aftermath of the Palisades fire, and the need for the state to develop a framework for dealing with extreme weather events. Despite larger ongoing reviews, Poppe believes incremental progress is possible to maintain investor confidence and address concerns about the state’s approach. Nicholas Campanella asks about the impact of increased capital costs on an upcoming filing. Patty confirms their plan to file a strong case in March, without a wildfire adder, despite rising interest rates. She emphasizes the importance of cost of capital and expresses confidence in their preparation.

In the paragraph, Patty Poppe, responding to a question from Rich Sunderland, discusses the adequacy of firefighting capabilities in the region concerning growing wildfire risks. She expresses confidence in the state's firefighting resources and fleet but emphasizes the need for communities to become more fire resilient. Poppe highlights the importance of community-level efforts, such as fire-hardening homes and surrounding areas, to reduce wildfire spread risks. She also mentions using technology like AI cameras and weather stations for early fire detection. Poppe underscores the collective responsibility of citizens and communities in ensuring safety and preventing wildfires. Lastly, Rich Sunderland inquires about the investment framework for data centers, specifically whether the $0.5 to $1.6 billion investment per gigawatt still applies.

The paragraph discusses the investment needed for a 1.4 gigawatt project and the associated financial planning. Patty Poppe mentions that the project can be funded with $0.5 to $1.6 billion while maintaining customer cost savings of 1% to 2%. The goal is to ensure those costs are borne by large load customers, who also bear the risk of stranded assets for ten years. Patty indicates that large load customers will need to invest upfront, and Carolyn discusses how this new capital requirement could fit into their existing $63 billion capital plan. They might not increase the plan but instead reallocate resources by prioritizing data center projects if they impact affordability or by extending their rate-based growth plan timeline.

In the paragraph, the speaker, Patty Poppe, discusses the flexibility in their financial plan, mentioning a $2 billion debt paydown commitment that isn't obligatory. Responding to a question from Julian Demolinsmith, she addresses the possibility of creating or contributing to a new fund, emphasizing the challenges involved. She argues against shareholders contributing to the fund, highlighting that it contradicts principles of inverse condemnation, where recoverable costs for a prudent utility are expected. Poppe also refers to AB 1054's goal of attracting capital to the state, suggesting that increasing shareholder burdens could deter investment.

The paragraph discusses strategies to manage a fund aimed at supporting victims and ensuring investor interests by extending payment periods and involving multiple parties. Julien Dumoulin-Smith inquires about the company's efforts in managing wildfire risks, including undergrounding and urban protection strategies. Patty Poppe responds, emphasizing their wildfire mitigation plan focused on reducing ignition risk, enhancing situational awareness, and improving firefighting response times, supported by weather stations and cameras, which have led to significant improvements.

The paragraph discusses the company's commitment to continuously improving its industry-leading wildfire mitigation plan. It highlights the implementation of advanced technologies, such as down conductor devices and fault detection systems, to enhance customer safety and reduce ignition risks. Additionally, the speaker addresses a question from Anthony Crado about the company's credit rating, mentioning improvements in credit metrics and financial performance, including a December equity issuance. The company maintains a positive outlook and is focused on maintaining strong credit standings, especially following events in Southern California.

The paragraph discusses the company's progress on wildfire risk mitigation and its strong financial position, including a conservative dividend policy and supportive investment-grade ratings. Conversations with rating agencies have been positive, but they are waiting for signals from policymakers. The company is confident that their progress will be recognized in time, although a significant credit rating upgrade is unlikely. The discussion includes concerns about the wildfire fund and credit agency actions. Patty Poppe notes that an equity issuance at the end of the previous year has positively impacted the company's credit metrics, separate from wildfire risk issues.

The paragraph discusses financial improvements and operational efficiency at PG&E. The company plans to update its long-term and 2025 plans after its General Rate Case (GRC) filing, aiming to achieve ongoing savings in operations and maintenance (O&M) costs. Patty Poppe highlights the importance of efficiency in reducing costs and investing in infrastructure, citing a cost-saving initiative where in-house workers perform tasks typically outsourced to contractors. This initiative saved $50,000 in one service area by having workers on-site handle touch-up painting, reflecting PG&E's commitment to improving performance and reducing costs.

The paragraph discusses PG&E's plans for future growth and funding. With 28,000 employees generating innovative ideas, the company aims to enhance customer service and infrastructure cost-effectively, anticipating full capability in a few years. Their upcoming General Rate Case (GRC) filing will reflect these enhancements. Carly Davenport inquires about the DOE loan, which PG&E closed in January. Patty Poppe clarifies that the loan isn't currently part of their financial plans, with conventional financing options in place. They haven't requested any advances and expect disbursements to increase between 2026 and 2030. Greg Orell from UBS asks about the potential impact of SB 410 on CapEx and load growth, which could extend growth and improve the company, and Patty confirms it could raise their already industry-leading growth rate, indicating it's a relevant question.

The company is optimistic about its growth rate and plans to make it sustainable by aligning capital expansion with regulatory and customer needs. They aim to balance affordability for customers while integrating new electric demands like EV sales, which can help reduce costs and improve grid safety and resilience. The upcoming GRT filing will outline their capital plan and operational cost reductions, aiming to interrupt the trend of double-digit rate increases. The leadership remains confident in their progress and commitment to providing a safe, reliable, and clean energy system for California.

The paragraph outlines PG&E's commitment to serving the people of California, highlighting the unique capability of their team to deliver at scale. They express eagerness to engage with stakeholders at upcoming events and provide updates on their progress. The paragraph concludes by ending a call and thanking participants for joining.

This summary was generated with AI and may contain some inaccuracies.