With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are mining, oil and gas exploration and services, pipelines, refining, and utilities.

Fortune Sector Leaders: Energy

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-160-PG&E

PG&amp;E is a major energy holdings company, providing electric and gas to 16 million customers across large swaths of northern and central California. The company has been ravaged by scandal in recent years, including criminal charges for inadvertently injuring six firefighters and endangering public health during a fire in 2019. In May, the company was hit with a nearly $150 million fine for neglect that caused wildfires and the mismanagement of power outages in recent years.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-189-PGE

The energy holding company owns the utility Pacific Gas &amp; Electric Company, which supplies energy to Northern and Central California. In January 2019, the utility and the holding company filed for Chapter 11 bankruptcy in the face of costs related to catastrophic wildfires in 2017 and 2018 that had been sparked by PG&amp;E power lines. Terms of a bankruptcy settlement were still under negotiation in mid-2020.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

World's Most Admired Companies

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Fortune Global 500

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The largest electric utility in California, Oakland-based PG&amp;E focuses on the northern and central portions of the massive state with 16 million customers across 70,000 square miles. With Silicon Valley in its region, PG&amp;E is forecasting demand growth from the data center construction boom potentially spreading throughout much of the state. Largely recovered from the 2019 bankruptcy filing resulting from wildfire-related liabilities, PG&amp;E is focused on transmission expansions and decarbonization. PG&amp;E manages a mix of hydropower, natural gas, solar, and battery storage assets.

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PG&E (PCG): Company Profile, Stock Price, News, Rankings

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PG&E

pg&e

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference Operator today. At this time, I would like to welcome everyone to the PG&E Corporation Second Quarter 2026 Earnings Release. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Jonathan Arnold, Vice President of Investor Relations. Jonathan, please go ahead.

Good morning, everyone, and thank you for joining us for PG&E's Second Quarter 2026 Earnings Call. With us today are Patti Poppe, Chief Executive Officer, and Carolyn 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 June 30th, 2026. With that, it's my pleasure to hand the call over to our Chief Executive Officer, Patti Poppe.

Thank you, Jonathan, and good morning, everyone. Our core earnings per share are $0.40 for the second quarter and $0.83 for the first half of 2026. These results reflect consistent, disciplined execution enhanced by our lean operating system and the durability of our simple, affordable model. Halfway through 2026, we're well on our way to extending our run of double-digit earnings growth for a fifth year, which supports my confidence in reaffirming our financial plan today, including our full year core EPS guidance of $1.64 to $1.66, which at the midpoint is up 10% over 2025. Our +9% annual EPS growth from 2027 through 2030. Our $73 billion capital plan through 2030, which does not require additional equity financing. Our target of reaching a 20% dividend payout by 2028 versus an implied 12% in 2026.

At the same time, we remain intensely focused on customer affordability for Californians we serve every day. We're committed to achieving our path to flat, targeting 0%-3% annual customer bill growth. A key enabler is electric load growth, and one of the most exciting opportunities in front of us is large load demand coming from our data center pipeline. As you'll see in a few minutes, we've updated our pipeline this quarter, folding in new projects from our 2026 cluster study. We continue to see our current plan as the best plan for our customers and for California. As we like to say, performance is power, and I'm proud of the improvements we're delivering for our customers across multiple dimensions. We've extended our safety performance on serious injuries and fatalities and have had zero public safety incidents from asset failures.

On affordability, our residential bundled electric rates are down 23% since January 2024 for our most vulnerable customers. On wildfire safety, we are in our fourth year of no major fires linked to PG&E equipment and no structures destroyed. On reliability, our performance has improved 23% year-to-date versus the same period last year, driven by fewer outages along with faster restoration times. As I'll discuss shortly, we're continuing to see significant load growth opportunities associated with data centers looking to locate in our service area, which includes Silicon Valley, home to the world's technology sector. Turning to slide four, we know that California wildfire liability reform is top of mind for investors, as it is for us. While important work remains, we're encouraged that California's leading policymakers have made it clear they recognize the need for a durable solution.

This is a critical moment for California. As the CEA emphasized clearly in their April report, the cost of inaction is too high to ignore. We couldn't agree more. A constructive outcome would accelerate our path to investment grade and lower financing costs for customers. Conversely, inaction would slow that progress and ultimately make the system more expensive to finance. That's why getting this right and getting it done this year matters so much for the long-term affordability of the California energy system, for the customers we serve, and for our investors. Our five-year plan assumes that California will follow through on the commitment made in SB 254 to strengthen the wildfire liability framework. For us, this means a durable and financeable framework that provides greater predictability and one that supports access to low-cost utility capital, thereby protecting customer affordability.

While our preferred path is to continue executing the plan we've laid out, we have a responsibility to investors and customers alike to ensure capital is allocated appropriately under whatever framework ultimately emerges. If the framework remains unresolved or insufficient, we would need to reevaluate our capital allocation priorities and long-term investment plans. Our objectives would remain unchanged: safely serve our customers, preserve affordability, and attract the low-cost capital necessary for any regulated utility to deliver the expectations of policymakers, regulators, customers and, of course, fulfill the expectations of those of you who have entrusted your capital to us. Turning to slide five, our continuous monitoring capabilities are a key driver of wildfire safety, reliability, and affordability. We are on track for a fourth consecutive year with zero structures destroyed. More broadly, our mitigation investments and disciplined execution continue to reduce risk and strengthen safety outcomes.

I was just at our command center on Monday. It is amazing. Since January 2025, our team has helped avoid nearly 20 million outage minutes, 28 ignitions in high fire risk areas, and over 5,000 emergency response hours while saving more than $11 million through lower cost repairs. We are in pursuit of the first completely predictive electric grid. No more waiting to see what breaks. Continuous monitoring is enabling our next level of extraordinary operational performance at PG&E. On slide six, we're showing once again our simple, affordable model, which continues to give us line of sight to our path to flat, keeping annual customer bill growth at 0%-3%. We're delivering results through disciplined execution across each of the levers in the model.

We've built a strong track record of exceeding our annual O&M cost reduction targets. That focus continues. For example, we've saved more than $40 million already this year through targeted sourcing and procurement initiatives. We aren't stopping there. At the same time, we're laying the groundwork for future load growth by advancing our data center pipeline and enabling new business connections. We're also continuing to pursue efficient financing, building on progress we've made toward restoring investment-grade credit, which will lower the cost for our customers of financing the needed long-term investments we're making on their behalf. We're working every day to bring this model to life for Californians, delivering better service to our customers at a lower cost, and demonstrating that affordability is enabled by investing in the right infrastructure. Looking forward, we remain confident in our ability to deliver affordable service for customers alongside consistent, high-quality results.

Turning to our data center pipeline on slide seven. We shared last quarter that we had over 10 GW of additional pre-application interest coming out of our 2026 cluster study, illustrating the strength and breadth of demand across our service area. This quarter, that demand is coming into focus with new projects moving into our pipeline, which now stands at over 12 GW. As we continue to build our pipeline, we're focusing not on size, but on quality. To that end, with today's update, we've refined how we categorize our projects, raising the threshold for inclusion in both the preliminary and final engineering stages. Assigned work performance agreement and the associated financial commitment, typically around 10% of overall project costs, are now prerequisites to be included in final engineering. We've also restated our March numbers so they are shown on a comparable basis.

At the same time, we remain very focused on pricing this load correctly, attractive to data center customers, but still rate reducing for our other customers. We support efforts to achieve this on a national level and believe that FERC's recent order to show cause is a positive step. We're collaborating with external stakeholders, including CAISO, to respond by next month's deadline. On the state level, we continue to engage with stakeholders and the CPUC on both Rule 30 and the commission's advanced rate design rulemaking. Our focus across all venues is simple: create clear, transparent, and durable frameworks for new large load customers while improving affordability for the customers we already serve. Done right, these efforts can help build a high confidence pipeline that lowers electric bills, drives economic growth, and keeps California at the forefront of technology and innovation. With that, I'll hand it over to Carolyn.

Thank you, Patti, and good morning, everyone. Here on slide eight, we're showing our earnings walk for the first six months of 2026. Our core EPS of $0.83 is $0.19 higher than this point last year. As a reminder, prior year results through the first half were impacted by dilution from our December 2024 equity financing, as well as the CPUC cost of capital phase II decision from October 2024. The core drivers of this year's earnings growth are coming in as expected, with customer capital investment contributing $0.09 year-over-year and O&M savings and redeployment contributing a net $0.03.

While some of the remaining growth reflects timing related items that we expect to reverse over the remainder of the year, this quarter's performance reflects consistent underlying execution you've come to expect from our team and positions us well for the year. We look forward, we remain confident in delivering our 2026 core EPS guidance of $1.64 to $1.66. We continue to see opportunities across the business to drive efficiency and manage costs, supported by the same disciplined execution and operational vigor you heard Patti discuss earlier. On slide nine, there is no change to our five-year $73 billion capital plan through 2030. We continue to see at least $5 billion of customer beneficial investment opportunity that sit outside the plan.

These opportunities, largely for capital, have the potential to improve the plan by facilitating incremental rate-reducing load, which is consistent with our current preference, namely making our plan better in terms of affordability or longer in terms of duration, rather than making it bigger. Moving to slide 10. Our five-year financing plan remains unchanged from our prior call, and that includes reaffirming that our equity needs are fully satisfied through 2030. Additionally, our current dividend payout ratio enables us to grow earnings in line with rate base without the need for additional equity financing. This is allowing us to avoid as much as $10 billion of financing over the planning period versus if we had a typical utility payout ratio.

Our combination of a disciplined capital allocation program, a focus on affordability, and a self-funded growth profile positions PG&E to deliver premium results for both our customers and our investors well into the future. In June, we completed a $2.2 billion utility bond issuance, bringing our total utility debt financings to $4.4 billion for the year and covering the annual financing needs that we previously shared with you. We look ahead, our financing priorities remain unchanged. We continue to focus on achieving investment-grade ratings, sustaining FFO to debt in the mid-teens, and targeting a dividend payout ratio of 20% by 2028 and holding on that level through 2030. We believe our plan is the right plan for California and for our customers. That said, our plan is premised on achieving a constructive legislative outcome. On slide 11, we continue to make progress toward investment-grade credit ratings.

As shown, following our first quarter call, S&P upgraded our rating, bringing us to just one notch below investment grade. Importantly, S&P cited the progress we've made reducing wildfire risk through our mitigation efforts and operational execution. They noted that the improvements we've made in the last seven years, like PSPS, EPSS, system hardening, vegetation management, and the continuous monitoring that Patti talked about, all are meaningfully reducing the likelihood of utility-caused wildfires. That recognition reinforces an important point, that safety and financial performance go hand in hand, benefiting both customers and investors over the long term. Additionally, our underlying credit metrics continue to be at levels consistent with investment-grade ratings. Achieving investment grade remains a critical milestone because it enables more efficient access to capital, which in turn translates directly into lower borrowing costs and lower bills for our customers.

Both S&P and Moody's also continue to highlight the importance of a durable legislative solution to wildfire liability as the catalyst for additional upgrades. On slide 12, we remain on track to deliver 2%-4% annual reductions in non-fuel O&M. As our history shows, reducing costs while improving safety, reliability, and customer outcomes has become a repeatable capability at PG&E. Over the last several years, we've consistently exceeded our cost reduction targets, and we continue to see opportunities across the business by taking a systematic approach to eliminating waste, improving productivity, and finding ways to better serve our customers. While no single initiative drives the outcome, literally thousands of improvements, large and small, all across the company give us confidence in our ability to continue delivering both operational excellence and customer affordability. On slide 13, we're showing major regulatory and legislative milestones.

In our 2027 GRC, we're making steady progress with hearings and opening briefs taking place this quarter. We also filed for interim rate recovery effective January 2027, which, if approved, would help smooth customer rates. This request is consistent with our broader approach of pursuing every available lever to support affordability for our customers while making the investments needed to operate the system safely and reliably. On Kincade and Dixie, we continue to expect a proposed decision in November. As a reminder, this is the first wildfire recovery case where a utility had a valid safety certificate and a corresponding presumption of prudency. I'll close here on slide 14 by reiterating that our simple, affordable model is working. Our focus on affordability keeps customers at the center of our decision-making. Our capital plan is designed to deliver the right customer outcomes while offering premium growth and avoiding the need for equity. With that, I'll hand it back to Patti.

Thank you, Carolyn. As you've heard this morning, we're continuing to deliver on our simple, affordable model. We're driving disciplined execution today while further advancing customer affordability, building on the five rate reductions we've already implemented in the past two years. That performance is showing up in our business. We've maintained a strong safety culture, improved reliability, and improved customer satisfaction across a wide spectrum of experiences, all while reducing rates. While we deliver continued execution and operational performance, we're encouraged to see the state continuing to do their part by working toward a constructive solution on SB 254 Phase 2. I'm confident that we have the right team, with the right plan, at the right time to deliver for the millions of Californians we serve. With the right wildfire liability framework, we can fully realize the benefits of that plan for our customers and for our investors. With that, Operator, please open the lines for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw that question, again, press star one. We do ask that you limit yourself to one question and one follow-up. For any additional questions, please re-queue. Your first question comes from Shar Pourreza with Wells Fargo. Please go ahead.

Morning. Just, Patti, on legislation, you've been clear, if you don't get what is needed from a legislative process, you'll rethink capital allocation priorities. That's a key message today that you've repeated. I guess, what are you looking for from legislation as we're approaching the tail end of this process? What's a fair outcome for you? Then how quickly can you pivot capital should the outcome not be adequate at the end of August? Thanks.

Yeah, it's a great question, Shar. Obviously, top of mind. We've been pretty clear that we need a durable, financeable, predictable, and affordable legislative framework for how to deal with wildfire liability. Obviously, that's a pro-affordability message at a time where that's topic in Sacramento. We think it needs to be affordable for customers, we think attracting low-cost capital from the equity and debt markets is an essential ingredient to affordability for customers. Whatever the final proposal is and legislative action is, it needs to make it attractive to the capital markets and affordable for customers. Now, pivoting on the capital plan, I think there's one thing for people to really understand. Look, there's no case for no action. In other words, if the legislature does not act or if they act and don't actually solve the problem, then we're going to have to take action.

We've been very clear about that. We'll look at, obviously, reallocating our capital plan. As I've said, I continue, this is not the right time for me to go into detail about what that looks like on this call. I have no intention of racking and stacking what we would do with that capital and how we would reallocate it. I want you to know that there will be action in the event of inaction on part of the legislature.

I think you would hear from us shortly after the legislative session about that.

Perfect. Appreciate that, Pat. Appreciate that, Patti.

Just on Dixie and Kincade cost recovery, the ALJ just set a settlement conference for July 31st, and evidentiary hearings are set for August 17th to the 20th. I guess, anything to read into this? Can you settle? What could a settlement look like? Thanks, guys.

That settlement conference date has been part of the schedule. That's just really standard in almost every case. As we've shared previously, we're always open to settlement, at this point in time, we're just very focused that we presented a very strong case. The next steps in the hearings, as you just talked about, the hearings are in August, briefs are in September, we still expect a PD in November.

Got it. Fantastic, guys. Thank you so much. See you soon.

Your next question comes from the line of Steve Fleishman with Wolfe Research. Please go ahead.

Hi. Good morning. Good morning. I think you made a pretty good case of how things are going well across the spectrum of kind of shareholders, customer rates coming down, improvement in operation performance, and the like. Do you feel like the policymakers are seeing this and understanding that these improvements are here and that they're subject to big changes? I don't know what plan B would be, some of these things could have to be changed if they don't do anything.

Well, Steve, we've worked hard to make the case that our simple, affordable model works. I think the proof has definitely been realized, perceptions lag actual performance. When we say performance is power, we know that it takes time for people to believe and see the consistency of that performance I can appreciate that my legislature still gets pressure from customers that they want more from PG&E, they have higher expectations of us, and we believe that we can live up to those expectations best with our current plan. We think our capital plan and our simple, affordable model absolutely is the right plan. We love our plan. We hope that they are noticing. We're certainly making the case.

I was with a legislator to be left unnamed, I said, "Are you aware that we have reduced our rates five times?" He said, "I am aware. I have gotten the message." I do think our communications have been breaking through the fog. All that to say, I think wildfire legislation is a complex subject, and I don't envy the amount of work that our legislature has on their table. They've given good signals that they obviously think that they need to find a path that works for customers. Look, the case for inaction is clear. The CEA study shared that wildfire-related charges now account for approximately $20-$40 per month, as much as 14%-19% of monthly bills. That's a legitimate cost of inaction. I do believe that's why we're seeing discussions happening, and we're very supportive and working close and resolute that a good outcome is absolutely possible. We're prepared in the event that it doesn't occur.

Okay. I guess two other questions. First, there are a number of different things that were mentioned in the CEA report, obviously we know what some of the utility and capital access issues are that need to be resolved. How about some of the other issues were mentioned on things like tort reforms and insurance reforms, things like that. Just any sense on progress in some of those other areas? Then the last question's just on maybe you could give us any takeaways from the investor letters that you sent in to the commission the other night.

Yeah. Great question. First of all, I think the tort reform and the insurance reforms, all of it is still on the table. Nothing's off the table yet. I believe that there's certainly conversations. I think what's important to us to be clear is what is an acceptable outcome for utility customers and utility investors, which when the governor did his executive order, specifically pointed to financial health of the utilities. Investment grade at the utilities is very important for customers, is very important for California, and particularly in this growth era that we're entering, the state needs us to have access to low-cost capital. I would say nothing's off the table, we've been really clear about the fix for attracting capital doesn't necessarily require the whole of society approach. There's very specific things that make it more durable, predictable, and affordable for investors.

We're not losing sight of that. As it relates to the investor letters, I really appreciated our investors speaking clearly, directly to us about what they see, and we felt it was important that the CPUC hear from them as well. I think the CPUC has been interested in hearing from the capital markets to understand what is the necessary steps to attract capital here in California. Those letters were a means of us being able to share what investors are saying directly to us with the CPUC.

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

Hey, good morning. Thanks for taking the time. Good morning. Just on the comments on reevaluating the plan, just understanding you have this GRC that's been filed, how does it intertwine with that? If you were to go to a plan B, would you come and materially update that? Are you too far along in that process? Would we expect that to get pushed to the right? Can you comment on that?

Yeah. Nick, that's a great question. As we look at the GRC in our filing and any kind of shift to the capital plan, obviously we'd have to integrate that. We don't know that it would require any kind of additional filing or filing modifications. Certainly, we would make sure that the capital that we're looking at still enables us to meet our first-order obligations and our obligation to serve safety and reliability are our key obligations, and compliance obligations we would certainly fulfill. That's the balance that we would have to seek. We don't think it necessarily would require any kind of change in our GRC filing, and we certainly wouldn't want it to affect GRC timing. I'll just remind you, Nick, two things. One, we always plan conservatively, so our filing does not necessarily represent what's in our plan because of our assumptions there. Two, just remember, FERC represents $20 billion of our $73 billion plan. It's not all CPUC capital.

That's great. In that spirit on the $73 billion, you have this big portion that's FERC. Is there just anything that you could offer on how much of the $73 billion is really on reliability and resilience versus, say, things that are more growth-oriented to facilitate economic development for the state or otherwise programs that could be looked at? Thank you.

Yeah, if you look in the appendix, we have a chart. There's about $16 billion related to resiliency, which is our system hardening, and then there's another $23 billion related to capacity and new business.

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

Good morning. Thanks for taking my questions. Just two on the data center pipeline updates that you guys provided. First is, how do you think about the potential of this cluster study load to move through the pipeline versus prior studies? I guess just kind of trying to get at the characterization of the quality of the projects and these applications.

Yeah, Carly. It's a great question. We learn every day further about which of these projects are the highest quality. I think there's a couple factors that will drive the quality. I don't think we can predict today which of them will flow all the way through. We know they won't all, our number one criteria is they must be rate-reducing, therefore, we have to price it right. It's actually quite simple. I know there's a lot of conversation about all of these matters, the bottom line is you get the pricing right, that can convert into the 1% per gigawatt of new load, a 1% rate reduction. Or more. We assess all of them first, that's why the cluster study process is powerful. It allows us to provide them adequate pricing visibility.

We've added in the final engineering, this WPA, which allows for more significant capital upfront. It's about a 10% fee that they pay, we have more and more confidence as the projects flow through this pipeline. When you see them in final engineering, they have higher probability, obviously, than pre-engineering. What we know right now, what we've been clear about is we expect about 1.8 GW to be online by 2030 of this pipeline. Some of these earlier projects have faster speed to power or have direct connect, for example, to our 500 kV in the Central Valley, things like that. That may enable us to increase that number by 2030. Right now, our real important planning assumption is about a 1.8 GW addition of load by 2030.

Great. That's super helpful. Just to follow up, as you think about the interconnection process, do you see any potential changes coming from CAISO's response to the FERC show cause order relative to what has been ongoing with the Electric Rule 30 process?

Yeah, it could be. I think our process has improved a lot here in California in the last several years. That is becoming less of a deterrent, I would say. It doesn't slow us down so much. I would say that we're looking forward to continuing to collaborate with CAISO and see what they file back to FERC. If there are improvements, that would be helpful. We can't help but think that AI can help us do more simultaneous engineering faster, I am hopeful that we could have some improvement to that interconnection process just in the engineering portion. That's just the portion that we own. We're looking forward to continuing to collaborate on that. Anything that we can do to reduce cost and improve speed in order to get that load growth, that rate-reducing load growth online faster feels great to us. We're very much dialed in on that objective.

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

Hey, good morning. Thanks for the time today. I'll stick with the data center topic and just working some of these newer disclosures, it looks like the number of projects for preliminary versus final engineering in the pipeline implies a much larger average size out of the latest cluster study. Can you speak a little bit more to the type of projects you're seeing now, if this is changing or if this is more reflective of where projects sit in the pipeline overall?

Yeah. We've started to get some interest on some of the larger projects. Until now, we've had a lot of, as I affectionately call them, Goldilocks projects. Lots of smaller expansion of existing facilities that are concentrated in the Bay Area and so constrained in geography and size and scope. As the cluster study process has become more visible, and as people realized that we have more capacity in California than they thought, and that we've been adding capacity, and we have transmission capacity, we've had more applications for these larger projects in the mix. We continue to be at the 1.5 GW or smaller size of projects, and the bulk of them, however, are the sub-gigawatt projects.

Got it. That's helpful context there. We touched on a few of these themes over the course of the Q&A, but circling back to, I guess, the rate case and your comments on perception of lagging performance, I'm curious how you're seeing the rate case process itself play out in this light. Any thoughts on sort of where you stand to date and particularly in light of the rate reductions versus affordability attention overall, how that's factoring into the GRC?

I think the GRC was well-received. Look, it's the lowest general rate case we'd filed in over a decade. If fully implemented with our full ask, rates would be flat from 2025 to 2027. That's a marked departure from this last decade of significant increases. Combined with our implementation of the simple, affordable model, it's enabling a much more, well, as you know, we're pursuing our path to flat, which is the 0%-3% annual increase, so obviously below inflation. I would say the case was well-received. We're in the process as we speak, and we've got upcoming dates. We've got reply briefs will be due tomorrow. We've got a proposed decision expected in March of 2027, and a final decision in May of 2027.

As you know, we've implied for interim rate relief so that we could have a better customer experience, smooth those rates out, because the implementation really should start in January versus mid-year of next year. We'd like to prevent the customers from having that price spike they experienced in the implementation of our last GRC. We're hopeful that the interim rate recovery will be considered and implemented.

Appreciate all the color. Thanks for the time.

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

Hey. Thank you. Good morning. Let's see. As you iterate on O&M cost reduction efforts, I was wondering, how do you see the sustainability of the 2%-4% savings and any potential areas of upside that you see emerging there?

Hi, David. It's Carolyn. I love this question. As I've said before, when I think about the numbers that we've put out there in terms of guidance, the O&M savings of 2%-4% is one that does not keep me up at night. We still have plenty of room for savings. If you look at our capital to expense ratio, we hit 1.0 last year, which was an improvement, and we're really proud of that, and we're looking to improve it further, but our peers are at well over two. We have some room for improvement and our O&M continues to be an area of high focus. The places where we see real potential are, in particular, strategic sourcing.

We're really beginning to see some savings there, but there's still plenty of room to do in terms of how we source our significant materials and external services. Two is AI. We've really only just really started to scratch the surface of being able to implement some AI solutions to the way we do work. Places that we're excited about.

Got it. Absolutely. Okay, great. Thanks for that. I was also wondering if you could touch on just the current fire season, how it's shaping up so far in your service territory, what it looks like maybe through the rest of the year from where you sit today.

We would say that this year's conditions are, and actual ignitions and acreages have been similar to last year. As we look at it, we don't think about it that way. We think about it as being ready every day. We don't prepare. We are prepared. We are prepared 365 days a year, regardless of the conditions. As I shared, our continuous monitoring, it just has continued to improve our visibility to our system and all of the potential faults and failures. That continuous monitoring, already this year, we've had 1,076 good catches of potential outages. 13 of those could have been potential ignitions. We just see technology and innovation every single day from our wildfire team and our continuous monitoring center. I was just there this week. Excited about what it foretells, both on a wildfire prevention, ignition prevention.

The way it works is these sensors tell us when something is going to fail before it fails. That prevents the ignition. In fact, while I was standing in the continuous monitoring center, there was a fault alert that a pole was leaning. Now, come on, guys. We used to walk past a pole once a year. Now we have daily continuous monitoring of our poles with these sensors. I cannot overstate the safety enhancements and reliability and cost because now we can plan to address that pole on planned work, bundle it with other work, and lower the cost to resolve that issue before there ever is an issue. I can't overstate the value of that. I guess to your point, the fire conditions are what the fire conditions are. We're ready.

Excellent. Thanks so much for the color. Appreciate it.

Your next question comes from the line of Anthony Crowdell with Mizuho. Please go ahead.

How you doing? Jonathan and I thought we were going to say congrats for the big win, it didn't work out as well. Sorry.

Too soon. Not to ask anybody. Just two cleanup questions. I know you're not looking to talk about plan B, what that may exist, but just on slide 24, I think a follow-up from Nick's question. You do identify the buckets of your future capital plan. Would you be willing to tell us maybe what bucket of spending would be most at risk on a plan B?

I think the only thing we're willing to say about that is we have to evaluate all of it. We're never going to sacrifice safety or compliance or obligation to serve. Obviously, our customers' well-being is number one, but then number two, recognition of the capital that has come from the equity markets. It's your capital, and we need to think about how best to treat that.

Great. Then one follow-up to David's question. Carolyn, you talked about where the company is on a capital to expense ratio, where maybe the target of getting to two times or three times. I'm just wondering if you want to highlight maybe or talk about the timing that you think may require to get to that level.

Yeah. In our capital plan, if you look at our five-year plan, we get to 1.7 by 2030. I'd hope to beat that, to be honest. The teams, we're using our lean playbook. As I mentioned on our call, we have thousands of improvements coming from employees, from our coworkers that are working every day on behalf of our customers to become more efficient. They're exceeding our expectations every year. Right now it's 1.7 by 2030, but I'm hoping that we exceed that.

Great. Thanks so much for taking the questions.

Your next question comes from the line of Gregg Orrill with UBS. Please go ahead.

Yeah. Hi, good morning. Thank you. Regarding the rate case and the request for interim rates, what is your case there, and how does that affect the financial plan, whether you get it or not?

It doesn't affect the financial plan. It just affects the customer's experience. Given our rate-making construct here in California, whenever we get the final decision, we get to allocate those earnings that year. No earnings impact. What it does impact is customers would be paying both for the rate increase plus that which hadn't been collected yet. You can have a pancaking effect. That happened in our last GRC, and it was very notable for customers. In this affordability environment, we would prefer to see that rate collection spread throughout the year. We've made a proposal at 55%, 75%, and 85% of the total revenue as requested. We're hopeful that the Commission will see the value in doing an interim rate recovery. What happens is if we over collected, then we would do a return. Again, the total revenues are captured in the calendar year as per our regulatory accounting standards.

Your next question comes from the line of Ryan Levine with Citi. Please go ahead.

PG&E (PCG) Q2 2026 Earnings Call Transcript

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