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DATE

Thursday, Oct. 22, 2026

CALL PARTICIPANTS

• Chief Executive Officer - Patricia Kessler Poppe
• Executive Vice President and Chief Financial Officer - Carolyn J. Burke
• Vice President of Investor Relations - Jonathan Arnold

TAKEAWAYS

• Core EPS -- $0.41 for the third quarter and $1.24 for the first nine months, compared to $0.50 and $1.14 respectively in 2025, primarily driven by customer capital investment.
• GAAP EPS -- $0.34 for the quarter and $1.06 for the first nine months, compared to $0.37 and $0.89 respectively in the prior-year periods.
• 2026 Core EPS Guidance -- $1.64 to $1.66 per share, representing a 10% increase from 2025 at the midpoint.
• 2027 Core EPS Guidance -- $1.78 to $1.82 per share, reflecting a 9% increase at the midpoint.
• 2027 Capital Plan -- $11.4 billion, following a $2 billion reduction announced on Sept. 2 to address high financing costs.
• Rate Base Guidance -- Unchanged for 2027 despite capital deferrals, as many impacted projects have construction timelines extending into 2028 or later.
• Data Center Load -- 174 megawatts energized since 2024, with a multiyear pipeline targeting 1.8 gigawatts of projects online by 2030.
• Undergrounding Plan -- $16.6 billion proposed for 5,000 miles of electric lines between 2028 and 2037, expected to deliver $117 billion in long-term benefits.
• Nonfuel O&M Savings -- 2% to 4% annual reduction target, contributing $0.04 to earnings per share during the first nine months of the year.
• Methane Emission Reductions -- 62% reduction compared to the 2020 CPUC approved baseline, outperforming the company's 2030 target.
• Ignition Rate -- 74% decline in weather-normalized incidents since 2017, representing the fourth consecutive year without a major equipment-related wildfire.
• Interim Rate Recovery -- $456 million proposed for collection starting in Jan. 2027 to promote stable customer bills and align cash flow with costs.
• Non-Core Items -- $156 million after tax ($0.07 per share) for the quarter, including wildfire fund amortization and strategic repositioning costs.
• Wildfire Fund Amortization -- $102 million after tax for the third quarter, recorded association with the state's wildfire liability framework.
• Self-Insurance -- $1 billion in capacity maintained as part of the wildfire framework features established under SB 254.
• Transmission Assets -- 18,000 circuit miles with a $13 billion FERC rate base, supporting continued infrastructure investment.
• Generation Portfolio -- 7.8 gigawatts of capacity, including the hydro system and the Diablo Canyon nuclear power plant.
• Utility Debt Financing -- $4 billion to $5 billion planned for 2027, including approximately $1 billion in debt maturities.
• Credit Metrics -- Mid-teens FFO to debt ratio targeted by management to achieve investment-grade credit ratings.
• Equity Financing -- No new equity issuance expected through 2030 under any of the strategic options currently being evaluated.
• Customer Connections -- 4,240 electric customers and 3,000 electric vehicle charging ports connected to the grid during the third quarter.

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RISKS

• Poppe stated, "Fitch put us on negative outlook... inaction will continue to get increasingly expensive for our customers," referring to the lack of legislative wildfire policy reform.
• Poppe warned that the current wildfire liability framework is unsustainable and requires urgent legislative action to address tail risk and lower financing costs.
• Burke stated, "We are concerned that the proposed methodology would prevent undergrounding from reaching thousands of customers in high risk communities," regarding the benefit-cost ratio for utility undergrounding plans.

SUMMARY

PG&E Corporation (PCG -2.56%) reported third-quarter core earnings of $0.41 per share and reaffirmed its financial guidance for 2026 and 2027 while advancing a comprehensive strategic review. Management stated that this review evaluates options including corporate ring-fencing, asset sales, and business separations to mitigate wildfire risk discounts that currently burden all company assets. The company reduced its 2027 capital plan by $2 billion in response to sub-investment grade borrowing costs, though it continues to pursue a 10-year, 5,000-mile undergrounding initiative to enhance system safety. Operations focused on grid modernization to support 1.8 gigawatts of potential data center demand through 2030, which management noted could lower bills for existing customers through broader cost distribution.

• Management expects to announce the definitive outcome of the strategic review no later than summer 2027.
• The company is awaiting a CPUC report due Nov. 1, which management indicated will quantify the impact of the current wildfire liability framework on utility customers.
• CEO Poppe noted that the $2 billion capital reduction will delay clean energy resource connections and system expansion projects, including those supporting California housing.
• The company estimated that its sub-investment grade status since 2017 will cost customers an incremental $4 billion in interest expense over the life of that debt.
• CEO Poppe stated, "Today, a discount for wildfire risk burdens all of our assets including businesses with little or no exposure to that risk."
• Management reported that 4 million gas customers are currently paying sub-investment grade borrowing costs due to the parent company's wildfire exposure.

INDUSTRY GLOSSARY

• CPUC: California Public Utilities Commission, the state agency that regulates privately owned electric, natural gas, and water companies.
• FERC: Federal Energy Regulatory Commission, an agency that regulates the interstate transmission of electricity, natural gas, and oil.
• FFO to Debt: Funds From Operations divided by total debt, a leverage ratio used by credit rating agencies to assess financial health.
• GRC: General Rate Case, a regulatory proceeding to determine the rates a utility can charge its customers.
• MW/GW: Megawatt and Gigawatt, units of electrical power where one gigawatt equals 1,000 megawatts.
• Rate Base: The value of property on which a utility is allowed to earn a specified rate of return as determined by regulators.
• Subrogation: The right of an insurance company to pursue a third party that caused an insurance loss to the insured.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. My name is Christa, and I will be your conference operator today. I would like to welcome everyone to the PG&E Third Quarter 2026 Earnings Release. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a Q&A session. Thank you. At this time, I would like to turn the conference over to Jonathan Arnold, Vice President of Investor Relations. Jonathan? Please go ahead.

Jonathan Arnold: Good morning, everyone, and thank you for joining us for PG&E's third quarter 2026 earnings call. With us today are Patricia Kessler Poppe, Chief Executive Officer and Carolyn J. Burke, executive vice president and chief financial officer. We also have other members of the leadership team here with us in our Oakland headquarters. First, I should remind you that today's discussion will include forward looking statements about our outlook for future financial results and other matters. These statements are based on management's current expectations, assumptions, and estimates. Some of the important factors which could cause our actual results to differ materially are described on the second page of today's earnings presentation. Today's discussion will also contain non GAAP financial measures.

The slides provide important information regarding these measures including reconciliations between non GAAP and GAAP. They can be found online at investor.pgecorp.com along with other relevant information. We also encourage you to review our quarterly report on form 10 q for the quarter ended 09/30/2026. With that, it is my pleasure to hand the call over to our CEO, Patty Poppe.

Patricia Kessler Poppe: Thank you, Jonathan. Good morning, everyone. Our core earnings per share were $0.41 for the third quarter and $1.24 for the first 9 months. Today, we are reaffirming our 2026 Core EPS guidance of $1.64 to $1.66 up 10% from 2025 at the midpoint. We are also reaffirming our 2027 core EPS guidance of 1.78 to $1.82 up 9% at the midpoint. While we are no longer providing guidance beyond 2027 during our strategic review, we already addressed our anticipated equity financing needs through 2030. On the common dividend, we typically set our annual rate for the upcoming year in December.

And for 2027, you should expect our recommended increase to be consistent with our prior stated Turning to slide 4, We know there are 2 topics that are top of mind today. Wildfire policy reform and our previously announced strategic review. First, on wildfire policy, comprehensive reform has not yet been enacted and action is needed to address the tail risk that exists under the current framework. At the same time, it is important to recognize that California's utility wildfire framework has evolved significantly from SB 901 in 2018 to AB 1.05 thousand in 2019 and most recently with SB 254 last year.

Along that journey, our state policymakers have established important and substantive features, including self insurance up to $1 billion, liquidity from the wildfire fund and continuation account, a revised prudency standard, a presumption of prudency for utilities meeting rigorous safety certification, limits on wildfire fund reimbursements if found imprudent, and precedent for securitization of claims exceeding fund capacity. Collectively, these protections have strengthened California's ability to compensate wildfire survivors while supporting safe, reliable, and affordable service. Yet, key voices have plainly acknowledged that there is more work to do. Including governor Newsom, the CPUC, the wildfire fund administrator, and the credit rating agencies.

We remain committed to working constructively with policymakers, and stakeholders to build on the progress California has made to date. We look forward to the governor's requested CPUC report due November 1st, which should further quantify the unsustainable impact of the current framework on California and utility customers. While legislative action has not materialized yet this year, we are moving forward to unlock value for customers, and investors. As you know, since 2020, we have been reinvesting nearly all of our earnings into the system to benefit customers. However, sustaining this level of investment requires a wildfire liability framework that supports affordable access to capital.

Reflecting current high financing costs, we previously announced a $2 billion reduction our 2027 capital plan and we recently began notifying customers whose projects may be delayed. These changes will affect the connection of new clean energy resources, system expansion to meet growing demand, and new or upgraded customer projects, including those supporting much needed housing in California. We do not take those impacts on our customers lightly. But our current financing cost is too expensive for them. With our strategic review, we have also taken the initiative to start exploring solutions which could add protections and unlock value for customers and investors.

As we announced on September 2nd, we are assessing the full range of options for how PG and E is organized and financed. A key foundational objective is to achieve investment grade credit ratings, which we view as critical to maximizing the value we can deliver for our customers. While policy reform through legislation remains the fastest and most effective solution, we are also evaluating other options. Including possible regulatory reforms, further reassessing our capital allocation priorities, and revisiting our corporate structure. On structure, options range from corporate ring fencing to sales and separations. Today, a discount for wildfire risk burdens all of our including businesses with little or no exposure to that risk.

Our review is evaluating whether alternative structures could better reflect the value and risk profile of those businesses in order to lower financing costs for customers. We expect to share the outcome of our review and our plan forward with you no later than next summer. In the meantime, we plan to keep you updated on our progress through future earnings calls, or sooner if there are material developments to share. The important point is this, PG and E has more than 1 way to move forward and create value.

We have several attractive businesses with unique and hard to replicate assets providing essential electric and gas service to over 16 million people in a service area that includes the heart of the world's innovation economy. Turning to slide 5, the story here is simple. Our investments are producing measurable results. Today, our hazard awareness and warning center has real time visibility across our system through more than 700 AI enabled cameras and 1.6 thousand weather stations. The results are clear. We are now in our fourth year without a major wildfire associated with our equipment. And our weather normalized ignition rate has declined 74%. since 2017, to its lowest level since we began tracking the metric.

We are also seeing tremendous progress in our gas business. Where aerial and drone inspections have significantly improved leak detection of efficiency and safety performance. Additionally, we remain first quartile in both dig in performance and emergency response, with first responders arriving on-site in an average of 20 minutes. We are also on track to achieve a 62% reduction in annual methane emissions compared to the 2020 CPUC approved baseline. Continuing to outperform our 2030 target. We have made similar improvements across our large and growing transmission and power generation businesses, Our electric transmission system spans 18 thousand circuit miles with $13 billion of FERC rate base along with significant opportunity to increase investment in the future.

While our power generation portfolio includes 7.8 GW of capacity including our hydro system, and top performing Diablo Canyon nuclear power plant. Turning to Slide 6, we are continuing to build a high quality data center pipeline and providing visibility into how projects advance from application to energization. This quarter, we are showing a new category for megawatts that are now successfully connected to our system and receiving service. Since 2024, we have brought 174 megawatts of data center projects online. As we look to bring more of our pipeline into service, our focus will continue to be on doing so in a way that will improve affordability for existing customers.

We are focused on connecting the right projects pricing them right, and ensuring large load customers make meaningful financial commitments as they advance through the process. Turning to slide 7. there is a common thread across the themes I have discussed this morning. Whether it is continuing our transformation and strengthening our layers of protection, advocating for durable wildfire policy reform, advancing rate reducing load growth, or progressing our strategic review. We are guided by a simple principle. what is good for our customers is ultimately good for our investors and good for California.

We will continue to stay grounded in our customer first approach and pursue opportunities to deliver a safer, more reliable, and more affordable system so that our customers and shareholders can prosper. We are proud of the progress we have made, and we are ready to tackle the work ahead. With that, I will hand it over to Carolyn to cover our financials in more detail.

Carolyn J. Burke: Thank you, Patty, and good morning, everyone. Turning to slide 8. We are showing you our earnings walk for the first 9 months of 2026. Our core EPS year to date has reached $1.24, up from $1.14 in the same period last year. Keeping us on track to deliver on our full year core EPS guidance. As in prior quarters, customer capital investment continues to be the primary driver of our earnings growth. Contributing 12 cents over the first 9 months. We also continue to make steady progress on our O&M savings goal, with $0.04 year to date. This puts us on pace to deliver our savings guidance once again while redeploying $0.02.

Timing and other items reduced earnings by $0.04 year to date. This mainly reflects the benefit we realized in the third quarter of last year from implementing a tax method change. While we benefited from the method change in the third quarter of both years, last year's third quarter also included a catch up for the first and second quarter. Turning to slide 9. Our updated 2027 capital guidance of $11.4 billion reflects the $2 billion reduction we announced on September 2nd. You might have noticed that our 2027 rate base guidance remains unchanged. Many of the projects impacted by our capital deferral have longer development and construction timelines, and were not expected to enter service until after 2027.

Limiting the impact on next year's rate base. We also continue to see strong operational execution across the company. Including efficiently converting construction work in progress into rate base. We expect to finance our 2027 capital investments with cash from operations and $4 billion to $5 billion of utility debt financing, includes around $1 billion of maturities. Importantly, with our updated capital plan, we remain fully committed to executing our wildfire mitigation plan. Maintaining our annual safety certificate, and continuing the critical work required to operate our system safely every day.

On slide 10, we have made significant progress over the past several years improving our credit profile The rating agencies have recognized for some time that our financial metrics are consistent with investment grade performance. At the same time, they have also been clear that policy risk remains the primary constraint on further ratings improvement. That dynamic was reinforced during the quarter when Fitch revised its outlook on PG and E to negative. And S and P highlighted the heightened risk faced by California investor owned utilities. Together, these assessments reinforce the importance of a durable wildfire liability framework which would support investment grade ratings and more affordable access to capital the benefit of our customers.

On slide 11, we continue to execute our plan to reduce nonfuel O&M by 2% to 4% annually. Our results reflect the ongoing transformation underway at PG and E as we continue executing our performance playbook and eliminating waste. Turning to slide 12. We are highlighting several important regulatory and legislative milestones. In our 2027 general rate case, we received a favorable proposed decision that would authorize interim rate recovery of $456 million to be collected over 12 months starting in January. If approved, this would promote more stable customer bills better align cash flow with cost, and reduce financing expense. The commission may take up the PD as soon as next Thursday's voting meeting.

At the end of September, we filed our 10-year electric undergrounding plan, or EUP, Proposing 5 thousand additional miles of undergrounding between 2028 and 2037. And building on the approximately 1.9 thousand miles we expect to have completed by the end of next year. The plan contemplates an investment of $16.6 billion. That investment is expected to deliver approximately $117 billion of long term customer benefits while also avoiding $6 billion of future vegetation management, operations, and maintenance costs. Our safety regulator, OEIS, has 9 months to review the filing, and if approved, we would then submit the plan and an application to the CPUC for approval of the cost. Which is also a 9-month review.

As a result, we expect to complete the approval process in the second quarter of 28. Separately, last week, the CPUC issued a proposed decision on the benefit cost ratio methodology for utility EUPs. We are evaluating the PD. And expect to submit comments by November 5th. Ahead for potential commission vote as early as November 19th. We are concerned that the proposed methodology would prevent undergrounding from reaching thousands of customers in high risk communities. Even where it offers the most effective means of reducing wildfire risk, improving reliability at the lowest cost. Next month, we anticipate a proposed decision in our Kincaid and Dixie cost recovery proceeding.

As a reminder, this is the first wildfire recovery case for a utility operating under the AB 1.05 thousand safety certificate. And benefiting from the associated presumption of prudency. Finally, turning to slide 13. The consistent execution operational improvements and financial discipline we have highlighted this morning demonstrate PG and E's differentiated story. Our continued transformation benefits customers and investors today. While strengthening the foundation for the future. With that, I will turn it to Patty.

Patricia Kessler Poppe: Thank you, Carolyn. The facts do not lie. The foundational operations of PG and E are strong and improving every day. Our performance playbook is doing what we designed it to do. Deliver for our customers. In the absence of wildfire liability reform, we will keep advancing our strategic review with the ambition of becoming a sustainable investment grade business that unlocks the full value of our company for our customers, our state, and our owners. With that, operator, please open the lines for questions.

Operator: Thank you. We will now begin the Q&A session. We do ask that you kindly limit yourself to 1 question and a single follow-up. For any additional questions, please re queue. And your first question comes from Steve Fleishman with Wolfe Research. Please go ahead.

Patricia Kessler Poppe: Morning, Steve. Hi, Steve.

Steve Fleishman: Hi. Good morning. So I guess just curious what signals, if any, you are getting on desire interest of the legislature to address the wildfire liability this year. I know there is assembly hearings and maybe some more. Maybe you could talk about what you have heard in those so far. Just any sense that the senate may want to look to do any hearings?

Patricia Kessler Poppe: Well, thanks, Steve. Obviously, top of mind for everyone. And look, we continue to see progress. The hearing this week, I think, was effective at continuing to make the case that the status quo is unacceptable. And you know, as long as nothing happens, no legislation is passed, our customers continue to pay. And it is a status quo that needs to be resolved. The job's not done yet. So we found you know, the hearings that are scheduled next week. Another 1 just got scheduled, so there is 2 next week. That I think are addressing the right questions and the right issues. And we are encouraged by that.

In the meantime, obviously, we continue to lean forward and move forward on other alternatives to unlock the value. Obviously, policy reform would be our No. 1 desired next step, but we have a lot of value that is-- I would suggest-- trapped In the company right now. And so we are working hard to create parallel paths and move forward. But we are hopeful that the legislature does continue to act. You know, the senate, we are looking to see if they will schedule any hearings that has not happened yet. But, obviously, these hearings are very public, and the information is clear.

And many people and many key leaders in the state continue to speak that action is absolutely required.

Steve Fleishman: And then, I guess, just related, just I think we are still. Are we still supposed to get the PUC report on this topic November 1st? And just any sense of what may come out of that?

Patricia Kessler Poppe: I think it will be another good case in why the status quo is unacceptable. I do not know how many different ways that people are going to be able to publish and say, but I expect the CPUC report to be substantive. They have asked really meaningful questions in their discovery, so we were providing very important information to them. It will be good for them to be able to share that November 1st at the request of the governor. We expect that is just another signal that the status quo is just unacceptable.

Steve Fleishman: Okay. Thank you.

Patricia Kessler Poppe: Yep. Thanks, Steve.

Operator: Your next question comes from the line of Shar Pourreza with Wells Fargo. Please go ahead.

Marcella: it is Marcella on for Shar.

Patricia Kessler Poppe: Oh, fine. Hi, Marcella.

Marcella: Hi. Thanks for taking my question. Thinking about the strategic review, and without asking you to prejudge any specific outcome, can you just frame kind of the criteria that you are using to evaluate potential pathways, specifically around weighing options, ability to unlock value, with their potential regulatory risk or, or reliance on processes out of your control?

Patricia Kessler Poppe: Great question, Marcella. Look, first and foremost, we wanna unlock value. We want to target investment grade business or businesses. To unlock that value for customers and owners. Obviously, feasibility and ability to execute a transaction is a priority. You know, a lot of people ask us about, PacGen and what was different about PacGen when the regulator did not approve. minority interest. You know, there was a totally different time and a different set of facts. During that time, we were, looking to raise cash and were unable to share benefits with customers.

We think in this scenario, we have got a much more compelling case to make with our regulator, that for example, our gas business, our 4 million gas customers are paying sub investment grade borrowing costs because it is part of the holdco related to wildfire risk, and that seems like an issue that should be resolved 1 way or another, whether it is resolved through policy reform, which would be great. And if not there, then would we unlock that value and lower borrowing costs for our gas customers through a regulatory approved, spin or sale or separation of some kind?

Marcella: Got it. Appreciate that. And then you spoke a little bit about, you know, conversations around the current legislator and state leaders, but any sense of conversations with gubernatorial candidates or lawmakers who are running to be part of the next legislative body and how they are thinking about wildfire liability as potentially a day-1 priority?

Patricia Kessler Poppe: Yeah. it is you know, the governor's race is not over yet. We do know that Javier Becerra who is the leading in the polls by a pretty wide margin today, has stated publicly his support for action. I think he is hopeful like we are that it does not-- we do not kick the can down the road into next year. That is certainly a possibility. But, you know, he and he. So he is spoken publicly that he is supportive of reform. We are hopeful that reform does not wait for that.

Marcella: Got it. Thank you.

Patricia Kessler Poppe: Thank you, Marcella.

Operator: Your next question comes from the line of Nicholas Campanella with Barclays. Please go ahead.

Patricia Kessler Poppe: Good morning, Nicholas. Hi, Nick.

Nicholas Campanella: Good morning. Guess in the last legislative session, there was, you know, obviously heavy input from the insurance industry. Right at the end, and I am just curious if you could kind of elaborate on how conversations with that stakeholder has trended since then? Is there a possibility to kind of come to some type of agreement with them just to help to increase the odds of any kind of special session. Thanks.

Patricia Kessler Poppe: Yeah. You bet. So, look, the reality is nothing was passed. No law was passed at the end of the session as. And I am stating the obvious, but it. In the nuance of what does that mean to insurance, then that means insurance still needs to join in discussions about what is gonna occur to make sure that claims are limited and our customers are not the in infinite backstop for an insured properties. And so I would suggest that, conversations have been productive. They have continued Next week's hearing on the 29th is intended to discuss subrogation, my understanding is.

And so given that, I think we will hear continued discussions, with insurance as well as all of the state. there is a wide coalition of interested parties, our builders, our real estate agents, our plaintiff's attorneys, our environmental groups. There are large groups of stakeholders who are interested obviously, in making sure that this is an affordable framework. And that it is sustainable framework and so those. I would suggest those discussions continue and are constructive, and we will hear more publicly next week through the hearing process.

Nicholas Campanella: Thanks for those thoughts. And then I guess just you are telling folks that, you know, no later than summer, I guess, you would have an answer on the strategic review. Is this really that you guys are gonna take time to do the work and finalize the plan by then, or could you be actively kind of pursuing things today that could result in things happening to the corporate structure or maybe regulatory filings being made ahead of that summer date. Thanks.

Patricia Kessler Poppe: Yeah. We will definitely be updating through our normal quarterly process. And what we have said is we will have, more definitive determination by, next summer. But as things occur, we will obviously be communicating. And if there is something to be discussed between quarterly calls, we will certainly do that. We are moving with a sense of urgency. We see real opportunity here. These assets are extraordinarily valuable, and they are operated by the best in the world. Would argue we have incredible people who operate these assets. They become very valuable, and I think our ability to unlock that value could take a lot of different forms.

And as we have said, policy reform is our first preference, and so, hopefully, we could have some update on that. Sooner than next summer. But, otherwise, these other alternatives, as they materialize and as concepts and opportunities and potential filings become possible, we will we will do-- we are not going to stick to the timeline of. We have to wait till next summer. We are gonna work aggressively between now and next summer. We just wanted to be clear that there was a finish line in mind. Thank you very much. Yep. Thanks, Nick.

Nicholas Campanella: Thanks.

Operator: Your next question comes from the line of Ross Fowler with Bank of America. Please go ahead.

Patricia Kessler Poppe: Morning, Patty Poppe. How are you?

Ross Fowler: Good. Morning. So a couple of questions. Obviously, it seems like investment grade is sort of the foundational objective of the strategic review. So couple things on that. Kind of the realistic time to get there? Can you do it on your own? Does it depend on legislative and regulatory outcomes? And is 14% kind of what we should mark to an FFO to debt level?

Patricia Kessler Poppe: So I would say a couple things. We do think it is realistic. it is very realistic that this business be investment grade. The question is, what is the best framework and organization of these, of this business. The. Our lines of business that we have today to maximize the value for our customers as well as our owners And so, some things, you know, we can do on our own, like capital allocation strategy. That would be a strategy to unlock value. We have.

As you know, we have held back, on an aggressive dividend because we have been reinvesting in the business for the benefit of customers and for stabilizing, the financials of company and making our investment grade credit rating. We would look at capital allocation as a strategy. that is more. that is probably the most independent We would look at ring fencing. We would look at, as we have said, other corporate structures that would enable would enable unlocking that growth.

In those cases, the regulator obviously has an important decision making role to play in that, but we would only bring it to the regulator if it was truly in the best interest of customers and actually created real value for them that we can pass along to customers. And I think given our valuation today and the valuation of these assets, and their actual physical value, there is some real, arbitrage in that distance between the current valuation and what we think the true value of these assets are to provide benefits for customers. And so we would think that we would have a compelling case for our regulator.

So all that to say, I will I will just reiterate that the fastest way to unlock the value is policy reform, which, of course, we are not giving up on. Yeah. That would be awesome. Started.

Analyst: Go ahead, John.

Carolyn J. Burke: At Yeah.

Patricia Kessler Poppe: I would. And I will just add that as we look at all of the alternatives through a lens of investment grade, We want to continue to target that mid teens FFO to debt.

Carolyn J. Burke: So that is how we model things. that is how we look at things, and so that is the goal.

Ross Fowler: Yeah. It makes sense, Kyle. And then and then 1 more for me. I am just trying to square these 2 things. I mean, clearly, I know why there is no sort of guidance beyond 2027 at this point as you go through strategic review and look over everything as you get to next summer. You look at all the alternatives, in front of you pending where policy goes and all the other things. You are dealing with right now. But you have made declarative financing statements through 2030.

So what gives you the level of certainty that there is no equity needed business through 2030 when there is all the uncertainty related to cap rate base growth, earnings growth, guidance, etcetera, past 2027?

Patricia Kessler Poppe: So we funded our equity. Under our plan, our original plan of a $73 billion capital program. And so we know that our equity program supports that. And so any alternative and we love that plan. By the way. We absolutely love that plan and want to for our customers under that $73 billion plan. Any other alternative, would need to-- it would support that 73. Any other alternative that we are looking at. Is equal or is equal would be equal to trying to support the $73 billion plan as well. that is where we feel comfortable that under any other option that we are considering, that we would not need new equity through 2030.

Carolyn J. Burke: Yeah. And I will just reiterate. We would not issue equity at this current stock price or valuation.

Patricia Kessler Poppe: that is not an option for us. Yeah. that is the. that is certainly the wrong cost of capital. I would say. Yeah.

Carolyn J. Burke: I will just say as we continue to look forward on our financing plans, the principles that we have talked about before still hold under this strategic review. We plan conservatively, plan with customers at heart. We are always mindful of market conditions, in particular, our current value discount. Our primary focus continues to be IG supportive metrics.

Ross Fowler: Alright. That makes sense, Carolyn. And then you do talk about this amortization or the faster amortization of the wildfire fund. You are calling that out this quarter. That I mean, I do not think that accelerated amortization would that seems like an accounting consequence, I should say. Rather than an economic and credit consequence because I think it is pretty well known that might. That wildfire fund asset might change, given all the things going on in California. But I am just kinda-- I am just trying to check-in and make sure that really has no bearing on your finance plan credit objectives, strategic review analysis.

Carolyn J. Burke: that is right. It has no bearing. You are right. it is an accounting charge. We are just waiting for the right trigger. Yep.

Ross Fowler: Okay. Makes sense to me. Thank you.

Patricia Kessler Poppe: Thanks, Ross.

Operator: Your next question comes from the line of Carly Davenport with Goldman Sachs. Please go ahead.

Patricia Kessler Poppe: Good morning, Carla.

Carly Davenport: Good morning. So much for taking the questions. Appreciate the time. Maybe just 1 on the data center pipeline. Any guidance on how we should just think about the pace and the opportunity to connect data center load in the face of the reductions to the capital plan? Any guidance that you can share sort of on where the data centers may fall in the queue of projects that could be impacted by potential CapEx reductions?

Patricia Kessler Poppe: Yeah. So first of all, keeping in mind that our pipeline is a multi pipeline. And our capital reduction is today. Specifically for 2027. We have we see that our 1.8 GW of projects that we have previously signaled would be online by 2030 remain in that plan. You know, when we talk about our capital reset, we reduced $2 billion of capital, but we are still spending $11.4 billion of capital next year. So there is still obviously capital to deploy to our critical safety issues, our critical compliance issues, and projects, that are well on their way to reducing rates for customers, those are obviously very important to us.

As we think further on down the line during the strategic review, obviously, as we have said, capital allocation will be an area of focus, and we will look at how we can continue to help power California's prosperity and our growth. But, certainly, under this liability framework, we are limited in that way. that is why when Carolyn says we love our $73 billion plan, it can help fuel that growth and prosperity for customers and lower bills and bring jobs and new tax revenue to the state. I would just advocate strongly that a healthy PG and E, a wildfire reform, wildfire liability policy that enables us to grow, enables California to grow and prosper.

And so, we are we are fans of, our what we have referred to as our Goldilocks, data center pipeline. And our, ability to serve the tech industry of California is an honor and a privilege, but we need a liability reform that enables that to happen sustainably and for the long haul.

Carly Davenport: Great. Very clear. Thank you. And then just a housekeeping item. On the dividend, is the shift in presentation there in the slides just a function of the strategic review? Or is there anything more explicit that you are messaging about the consistent growth versus the prior 20% payout guidance?

Carolyn J. Burke: No. I do not think it. is any new signaling there. As we have said before with our strategic review, everything's on the table, including the dividend policy. But we have also been very consistent that for 2027 in particular, we get a lot of questions, is that you should expect 2027 to be in line with our prior trajectory. Which is in line with the 20% by 2028. We have noted that it would be ratable Ultimately, our Board will set the dividend in December of this year, but that is what we were signaling. But everything's on the table under the strategic review.

Carly Davenport: Great. Thank you so much for the time.

Operator: Your next question comes from the line of Anthony Cordell with Mizuho. Please go ahead.

Patricia Kessler Poppe: Hey. Hey. Good morning, Sam.

Anthony Crowdell: Just a quick question, quick follow-up, I guess. 1 on the strategic review, is there a point you are very clear, you hope to have it no later than next summer, Is there a point where that review becomes more urgent, whether it is a you know, a credit rating action or another wildfire season, I guess, flexible is that date on external factors? And then I have a follow-up.

Patricia Kessler Poppe: Yeah. it is a great question, Anthony. You know, obviously, as we go through the reform, we will be watching current conditions and whatever, conditions within which we are operating. We will have an influence on our trajectory. But what we are really looking for is a long term sustainable business organization and financing model that delivers value. And we know that it can, and we know that this model works. We know that the investor owned utility model works, for customers. As well as, shareholders and investors and owners and financing entities.

And so we will we will just we will obviously respond to current conditions, but more importantly, have an eye on the horizon for what is our long term value proposition and actually unlock that value.

Anthony Crowdell: Great. And the follow-up, it may be more focused for the legislature, but I am just wondering, it seems like the cycle of decisions or when I think about the success of NB-10 54 and SB 254 were both after catastrophic events, and the legislature acted. This year, again, of the physical enhancements that companies have made across the state, really did not. You know, fortunately, did not have an event this year, but also were not as successful in legislature. I mean, what decouples that of, in order to get a supportive legislative action, We do not wanna have to have a catastrophic event.

Patricia Kessler Poppe: Well, I will remind us we did have a catastrophic event obviously significant 1 back in 2025, which is when this legislative package started. So this has been a 2 year package in response to the issues in 2025, and I would, just suggest that the PG and E remaining sub investment grade is a major issue that must be solved. And, you know, when Fitch put us on negative outlook, I think that really reiterated that inaction will continue to get increasingly expensive for our customers. In fact, for all of the debt that we have issued as our.

In sub investment grade, since 2017 will cost our customers an incremental $4 billion in interest expense over the life of that financing that is a cost that can be immediately remediated with good long term policy. So I would like to think Anthony that we have got a real sense of urgency because customers are paying today. And, our customers are waiting on our legislature to take the necessary actions to put us back in a position to be investment grade given we meet all of the criteria for investment grade but for California liability policy.

Anthony Crowdell: Great. that is all I had. Thanks for taking the questions.

Patricia Kessler Poppe: Thanks, Anthony.

Operator: Your next question comes from the line of David Arcaro with Morgan Stanley. Please go ahead.

Patricia Kessler Poppe: Good morning, David.

David Arcaro: Thank you. Good morning. Sorry if this is a little duplicative, but I was just wondering if there, you know, if there is no special session, if there were not legislation passed this year, would you consider that to be a potential catalyst for accelerating and taking additional actions within the strategic review?

Patricia Kessler Poppe: Well, it definitely is a driver for the fact that the strategic review has been initiated. And so we will continue to do the work of that strategic review. I will you know, reiterate that we did not just start thinking about the strategic review. We started our internal process. A year ago thinking about what would be response or what would be our actions that we could take in the event of inaction. And so we have been working on this for some time, so we are not starting from a standing start. We have got a lot of momentum. We have doing.

Been doing a lot of work, and so we wanna make sure that we continue to operate with a sense of urgency.

David Arcaro: Yeah. Good. Understood. Thanks. And then, you know, as you have had to make tough decisions around capital prioritization and deferring some of your CapEx. And I guess I was wondering with the undergrounding plan, very big amount of capital that you have proposed here, I guess, how do you think about that in the prioritization of within the strategic review, you know, how you how you prioritize capital. Is that something that, would be a kind of an anchor in your overall, you know, longer term CapEx, you know, intentions. And yeah, how important is that, in your overall thinking?

Patricia Kessler Poppe: Yeah. We think undergrounding is incredibly important, not for every mile. But for the most risky miles. And so our 5 thousand-mile plan, which we have spread out over 10 years, takes in mind spreading that cost out over a longer period of time. it is just over a billion dollars a year, throughout the life of that 10-year plan. We think it is a very important part of risk reduction and cost reduction. The annual cost for, in. Inspections and vegetation management for those miles, and the reliability impact and the cost of the reliability impact for our customers is real.

And so on those 5 thousand miles, we think it is the most and best prudent, deployment of capital. Obviously, that has to be approved by the commission. As Carolyn mentioned in our prepared remarks, we are concerned with the current PD on the benefit cost ratio that would dramatically reduce the number of miles we would do. We have got a lot of talking to do here in the state. About that because we know that customers should not have to choose between being safe and being reliable and affordable. We think that undergrounding is the best answer in certain miles.

And so we would say even in a capital allocation, world that undergrounding is an important part of the plan. Now I will also say, when we think about our $73 billion plan that we have previously, declared, it was. it is a small part of the total plan. So the plan does not hinge on an underground. And I guess I just wanna say out loud for the world to hear, we are not doing undergrounding to meet our earnings numbers and to grow CapEx. We are doing undergrounding to keep people safe. So you know, as we think about the role that undergrounding plays, it is a key part of our safety investments on behalf of customers.

David Arcaro: Yeah. Great. Thanks for that. Really appreciate it.

Patricia Kessler Poppe: Yep. Thanks, David.

Operator: Your next question comes from the line of Richard Sunderland with Truist Securities. Please go ahead.

Patricia Kessler Poppe: Hey. Good morning, Richard.

Richard Sunderland: Hey. Good morning. Good morning. Thanks for the time. You know, I will follow-up on that last point around undergrounding and the methodology concerns. Could you speak a little bit more to how many miles of your filing would be impacted by that? Think you said significant potentially. But I guess more importantly, how that would impact the quantified benefits you laid out in your filing?

Patricia Kessler Poppe: Yeah. We are still working through that. On the exact number of miles that would result if we use this benefit cost ratio. I think the thing that we are concerned about is it does not match the standard that we use for all other investments benefit cost ratios that we make. And so, we are we are definitely concerned about the impact on our customers to that. So we are working through what those miles would be, and, obviously, it is a proposed decision. And, hopefully, we will we will see some movement.

Richard Sunderland: Got it. that is helpful. And then switching gears back to that November 1stst CPUC report, I know you addressed this earlier, but thinking about the strategic review context alongside that, I am curious if you have any sense of if this could have potential signals from the commission that could inform your strategic review or I guess, maybe putting this another way, do you see review opportunities that are logical to pursue put in front of your regulators even if there is legislative action later this year?

Patricia Kessler Poppe: that is a good question, Richard. You know, we are thinking about that as we do all of this analysis and we see the value of, our assets and the incredible people who operate them, you know, and the benefits to customers. If there is a customer beneficial outcome that even with legislative action would still be considered. We obviously will keep that on the table. We do know that the fastest way to unlock value is policy reform, and so if that were to occur here in the near term, we would be thinking hard about the scope and scale of the strategic review.

But, obviously, we are learning a lot about, where we think the full potential of our businesses are. Like any good management team and board of directors, we are looking at the best way to unlock that value for customers and investors.

Richard Sunderland: Very clear. Thanks for the time today.

Operator: Next question comes from the line of Aidan Kelly with JPM. Please go ahead.

Patricia Kessler Poppe: Morning, Aidan. Hi, Aidan.

Aidan Kelly: Hey, guys. Good morning. Thanks for the time today. Maybe just going on the, like, the debt front of the strategic review, Carolyn, I know you mentioned kind of mid teens FFO to debt is maybe a north star to think about long term. I think, like, previously, you also mentioned, like, holdco debt below the 10% of total debt. Is that also kind of intact as well, or is there kind of flexibility to revisit that threshold?

Carolyn J. Burke: Yeah. As I have. As we have said, everything's on the table. And so we are considering both our debt profile, our capital growth, and our capital return. So I would say that we are not necessarily indicating any target for parent debt at this point in time.

Aidan Kelly: Got it. And then just 1 kind of lingering question on the timing of the strategic review. I believe in the past, in September, you kinda mentioned there is, like, a maybe a default 12- to 18-month timeline, and now we are kinda seeing, you know, summer of 2027 as the target. Is there any kind of rationale behind, like, the acceleration in that timeline over the past month and a half that is. I know you kinda mentioned urgency. Is it just simple as taking that as the reason or is there anything kinda deeper to read into that?

Patricia Kessler Poppe: Yeah. When we had previously mentioned 12 to 18 months, Aidan, we were talking about that is typically what you would see from companies. We were not intending to signal our time line, so that is why we wanted to clarify today. We wanna be, we wanna really push to have a definitive direction forward that we can communicate by summer of next year.

Aidan Kelly: Understood. Understood. Well, appreciate it. Thank you.

Patricia Kessler Poppe: Yeah. Thank you.

Operator: Ladies and gentlemen, that does conclude our Q&A session. I would now like to turn the conference back over to Patty Poppe for closing comments.

Patricia Kessler Poppe: Thank you, Krista. Thank you, everyone, for dialing in today. Look, our electric, gas and generation businesses are strong. And they are operated well, and they are getting stronger every day. Now while legislative action is still possible this year, we are moving forward and we are advancing our strategic review We are evaluating all our available paths to unlock value for customers and owners. And you can imagine that we are doing that with a sense of urgency. We look forward to seeing you at EEI. Please stay safe out there.

Operator: And ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.