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<\/p>\nSan Francisco, CA…PG&E Corporation (NYSE: PCG) today provided an update on the expected financial impact of the 2018 Camp Fire and 2017 Northern California wildfires as part of the announcement of its full-year and fourth-quarter 2018 financial results. Although the cause of the 2018 Camp Fire is still under investigation, based on the information currently known to the company and reported to the California Public Utilities Commission (CPUC) and other agencies, the company believes it is probable that its equipment will be determined to be an ignition point of the 2018 Camp Fire.<\/p>\n
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PG&E\u2019s belief is based on information previously reported to the CPUC through two Electric Incident Reports (EIRs) and a supplemental letter, which stated:<\/p>\n
Based on these facts, the company is including a $10.5 billion pre-tax charge related to third-party claims in connection with the 2018 Camp Fire in its full-year and fourth-quarter 2018 financial results.<\/p>\n
The company is also recording a new $1.0 billion pre-tax charge related to the 2017 Northern California wildfires. The $1.0 billion charge is in addition to the previously recorded $2.5 billion charge in the second quarter of 2018. The new $1.0 billion charge relates to the 2017 Atlas and Cascade fires, which were not included in the prior $2.5 billion charge. The company has taken a total of $14.0 billion in pre-tax charges related to the 2018 Camp Fire and the 2017 Northern California wildfires to date, which reflects the lower end of the range of estimated losses the company faces from such wildfires. The charges represent a portion of the previously announced estimate of potential wildfire liabilities, which could exceed more than $30 billion.<\/p>\n
Enhanced Electric Transmission & Distribution Inspections<\/b><\/p>\n
To help further reduce wildfire risk, PG&E is inspecting its electrical equipment in areas at elevated (Tier 2) and extreme (Tier 3) wildfire risk based on the CPUC\u2019s\u00a0High Fire-Threat District Map<\/a>.<\/p>\n PG&E has completed more than two-thirds of the enhanced inspections (including visual, ground and climbing) of its 5,500 miles of transmission lines and approximately 50,000 transmission structures, including towers and poles, in high fire-threat areas. The company is taking action right away to address any issues that pose an immediate risk to public safety, in advance of this year\u2019s wildfire season.<\/p>\n The company expects to complete the remaining inspections of its electric transmission lines by the end of March 2019. Similar inspections of approximately 685,000 distribution poles across more than 25,000 miles of distribution lines began in February 2019. These enhanced distribution inspections are expected to be complete by the end of May 2019, pending any weather or access constraints.<\/p>\n In addition to providing the results to the company\u2019s regulator and other agencies, PG&E intends to provide a further update on its inspections to its customers and communities when they are completed.<\/p>\n \u201cWe recognize that more must be done to adapt to and address the increasing threat of wildfires and extreme weather in order to keep our customers and communities safe,\u201d said John Simon, Interim Chief Executive Officer of PG&E Corporation. \u201cWe are taking action now on important safety and maintenance measures identified through our accelerated and enhanced safety inspections and will continue to keep our regulators, customers and investors informed of our efforts.\u201d<\/p>\n This enhanced inspection work is being performed as part of the company\u2019s Community Wildfire Safety Program, implemented following the 2017 Northern California wildfires as additional precautionary measures intended to further reduce wildfire risk. The accelerated inspection program is in addition to routine inspections and maintenance programs already performed in accordance with state and federal regulatory requirements. Considering the growing threat of extreme weather and wildfires, PG&E has enhanced the criteria used for inspections using a risk-based approach to identify components on electric towers and poles that have the potential to initiate fires.<\/p>\n \u201cAll 24,000 PG&E employees are public safety officers in the communities we have the privilege to serve. We have heard the calls for change and are committed to taking action by focusing our resources on reducing risk and improving safety throughout our system,\u201d said Simon.<\/p>\n Caribou-Palermo Electric Transmission Line<\/b><\/p>\n As previously noted, PG&E filed two EIRs on November 8 and 14, 2018, as well as a supplemental publicly-released letter dated December 11, 2018, concerning the Caribou-Palermo transmission line.<\/p>\n The 56-mile Caribou-Palermo electric transmission line has been de-energized since December 2018. Preliminary results from the enhanced inspections on this transmission line have identified some equipment conditions that require repair or replacement. As a result, this entire transmission line will remain out of service until it is verified to be fully safe or decommissioned. The 115 kV circuit runs from PG&E\u2019s Caribou Powerhouse in Plumas County to PG&E\u2019s Palermo Substation in Butte County.<\/p>\n Chapter 11 Reorganization<\/b><\/p>\n As previously announced, on January 29, 2019, PG&E Corporation and its subsidiary, Pacific Gas and Electric Company (the Utility), voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Throughout the Chapter 11 process, PG&E Corporation and the Utility remain committed to delivering safe and reliable electric and natural gas service to customers, and to continuing to make critical investments in system safety and maintenance. This includes PG&E Corporation\u2019s and the Utility\u2019s work to further reduce the risk of wildfire in the communities it serves, and to rebuild infrastructure in areas impacted by wildfires.<\/p>\n In addition, as previously announced, PG&E Corporation\u2019s and the Utility\u2019s respective Boards of Directors continue to actively assess the Utility\u2019s operations, finances, management, structure and governance\u2014and remain focused on improving safety and operational effectiveness.<\/p>\n Fourth-Quarter and Full-Year 2018 Results<\/b><\/p>\n PG&E Corporation\u2019s full-year net losses attributable to common shareholders were $6.9 billion, or $13.25 per share, as reported in accordance with generally accepted accounting principles (GAAP). This compares to net income available to common shareholders of $1.6 billion, or $3.21 per share, for the full year 2017. For the fourth quarter of 2018, GAAP results were net losses of $6.9 billion, or $13.24 per share, compared to net income of $114 million, or $0.22 per share for the same quarter in 2017. As noted above, in 2018, PG&E Corporation recognized wildfire-related pre-tax charges of $14.0 billion for third-party claims (consisting of $10.5 billion for the 2018 Camp Fire and $3.5 billion for the 2017 Northern California wildfires), partially offset by probable insurance recoveries of $2.2 billion.<\/p>\n GAAP results include items that management does not consider part of normal, ongoing operations (items impacting comparability), which totaled $8.9 billion after-tax, or $17.25 per share, for the year. This was primarily driven by third-party claims, net of probable insurance recoveries, and legal and other costs related to the 2018 Camp Fire and 2017 Northern California wildfires. This was partially offset by a reduction in natural gas-related capital disallowance estimates and 2017 insurance premium cost recoveries. Items impacting comparability for the year also include legal costs related to the 2015 Butte fire and costs to clear pipeline rights-of-way.<\/p>\n The company is facing extraordinary challenges relating to the 2018 Camp Fire and 2017 Northern California wildfires. Management has concluded that these circumstances raise substantial doubt about PG&E Corporation\u2019s and the Utility\u2019s ability to continue as going concerns, and their independent registered public accountants have included an explanatory paragraph in their auditors\u2019 report which states certain conditions exist which raise substantial doubt about PG&E Corporation\u2019s and the Utility\u2019s ability to continue as going concerns in relation to the foregoing.<\/p>\n Non-GAAP Earnings from Operations<\/b><\/p>\n PG&E Corporation\u2019s non-GAAP earnings from operations, which exclude items impacting comparability (IIC), were $2.1 billion, or $4.00 per share, for the full year of 2018. This is compared to $1.9 billion, or $3.68 per share, for 2017. For the fourth quarter of 2018, non-GAAP earnings from operations were $417 million, or $0.80 per share, compared to $327 million, or $0.63 per share, during the same period in 2017. For the full year and the fourth quarter of 2018, non-GAAP earnings from operations exclude, among other things, the impact of wildfire-related costs, net of probable insurance recoveries, in an aggregate after-tax amount of $8.9 billion (consisting of $6.8 billion for the 2018 Camp Fire and $2.1 billion for the 2017 Northern California wildfires) and $7.3 billion (consisting of $6.8 billion for the 2018 Camp Fire and $0.5 billion for the 2017 Northern California wildfires), respectively.<\/p>\n The increase in quarter-over-quarter non-GAAP earnings from operations was primarily driven by a reduction in short-term incentive compensation, growth in rate base earnings, timing of operational spend in 2017, and probable cost recoveries of insurance premiums incurred in 2018 above amounts included in authorized revenue requirements, partially offset by costs to perform enhanced vegetation management work and the timing of taxes.<\/p>\n PG&E Corporation discloses \u201cnon-GAAP earnings from operations,\u201d which is a non-GAAP financial measure, in order to provide a measure that allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items impacting comparability. See the accompanying tables for a reconciliation of non-GAAP earnings from operations to PG&E Corporation\u2019s earnings (loss) on a GAAP basis.<\/p>\n IIC Guidance<\/b><\/p>\n At this time, PG&E Corporation is not providing guidance for 2019 GAAP earnings and non-GAAP earnings from operations due to the continuing uncertainty related to the 2018 Camp Fire and the 2017 Northern California wildfires and the Chapter 11 proceedings. PG&E Corporation is providing 2019 IIC guidance of $670 million to $907 million after-tax for costs related to the 2018 Camp Fire and 2017 Northern California wildfires, electric asset inspections, and Chapter 11-related matters.<\/p>\n IIC guidance is based on various assumptions and forecasts related to future expenses and certain other factors.<\/p>\n Supplemental Financial Information<\/b><\/p>\n In addition to the financial information accompanying this release, presentation slides have been furnished on Form 8-K to the Securities and Exchange Commission and are available on PG&E Corporation\u2019s website at:\u00a0http:\/\/investor.pgecorp.com\/financials\/quarterly-earnings-reports\/default.aspx<\/a>.<\/p>\n Public Dissemination of Certain Information<\/b><\/p>\n PG&E Corporation and the Utility routinely provide links to the Utility\u2019s principal regulatory proceedings with the CPUC and the Federal Energy Regulatory Commission (FERC) at\u00a0http:\/\/investor.pgecorp.com<\/a>, under the \u201cRegulatory Filings\u201d tab, so that such filings are available to investors upon filing with the relevant agency. PG&E Corporation and the Utility also routinely post, or provide direct links to, presentations, documents, and other information that may be of interest to investors at\u00a0http:\/\/investor.pgecorp.com<\/a>, under the \u201cWildfire Updates\u201d and \u201cNews & Events: Events & Presentations\u201d tabs, respectively, in order to publicly disseminate such information. It is possible that any of these filings or information included therein could be deemed to be material information.<\/p>\n About PG&E Corporation<\/b><\/p>\n PG&E Corporation (NYSE: PCG) is a holding company headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, an energy company that serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California. Each of PG&E Corporation and the Utility is a separate entity, with distinct creditors and claimants, and is subject to separate laws, rules and regulations. For more information, visit\u00a0http:\/\/www.pgecorp.com<\/a>. In this press release, they are together referred to as \u201cPG&E.\u201d<\/p>\n Forward-Looking Statements<\/b><\/p>\n This press release contains forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of PG&E Corporation and the Utility, as well as forecasts and estimates regarding potential liability in connection with the 2018 Camp Fire and 2017 Northern California wildfires, the company’s Community Wildfire Safety Program, and PG&E Corporation\u2019s 2019 IIC guidance. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to various risks and uncertainties. In addition to the risk that these assumptions prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include factors disclosed in PG&E Corporation\u2019s and the Utility\u2019s annual report on Form 10-K for the year ended December 31, 2018 and other reports filed with the SEC, which are available on PG&E Corporation\u2019s website at\u00a0www.pgecorp.com<\/a>\u00a0and on the SEC website at\u00a0www.sec.gov<\/a>. Additional factors include, but are not limited to, those associated with the Chapter 11 cases of PG&E Corporation and the Utility that commenced on January 29, 2019. PG&E Corporation and the Utility undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise, except to the extent required by law.<\/p>\n
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PG&E CORPORATION<\/b><\/td>\n<\/tr>\n| CONSOLIDATED STATEMENTS OF INCOME<\/b><\/td>\n<\/tr>\n | (in millions, except per share amounts)<\/b><\/td>\n<\/tr>\n | <\/td>\n<\/tr>\n | <\/td>\n | <\/td>\n | Year ended December 31,<\/b><\/td>\n<\/tr>\n | <\/td>\n | <\/td>\n | 2018<\/b><\/td>\n | <\/td>\n | 2017<\/b><\/td>\n | <\/td>\n | 2016<\/b><\/td>\n<\/tr>\n | Operating Revenues<\/b><\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | Electric<\/td>\n | <\/td>\n | $<\/td>\n | 12,713<\/td>\n | <\/td>\n | <\/td>\n | $<\/td>\n | 13,124<\/td>\n | <\/td>\n | <\/td>\n | $<\/td>\n | 13,864<\/td>\n | <\/td>\n<\/tr>\n | Natural gas<\/td>\n | <\/td>\n | 4,046<\/td>\n | <\/td>\n | <\/td>\n | 4,011<\/td>\n | <\/td>\n | <\/td>\n | 3,802<\/td>\n | <\/td>\n<\/tr>\n | Total operating<\/b>\u00a0revenues<\/b><\/td>\n | <\/td>\n | 16,759<\/b><\/td>\n | <\/td>\n | <\/td>\n | 17,135<\/b><\/td>\n | <\/td>\n | <\/td>\n | 17,666<\/b><\/td>\n | <\/td>\n<\/tr>\n | Operating Expenses<\/b><\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | Cost of electricity<\/td>\n | <\/td>\n | 3,828<\/td>\n | <\/td>\n | <\/td>\n | 4,309<\/td>\n | <\/td>\n | <\/td>\n | 4,765<\/td>\n | <\/td>\n<\/tr>\n | Cost of natural gas<\/td>\n | <\/td>\n | 671<\/td>\n | <\/td>\n | <\/td>\n | 746<\/td>\n | <\/td>\n | <\/td>\n | 615<\/td>\n | <\/td>\n<\/tr>\n | Operating and maintenance<\/td>\n | <\/td>\n | 7,153<\/td>\n | <\/td>\n | <\/td>\n | 6,321<\/td>\n | <\/td>\n | <\/td>\n | 7,326<\/td>\n | <\/td>\n<\/tr>\n | Wildfire-related claims, net of insurance recoveries<\/td>\n | <\/td>\n | 11,771<\/td>\n | <\/td>\n | <\/td>\n | \u2014<\/td>\n | <\/td>\n | <\/td>\n | 125<\/td>\n | <\/td>\n<\/tr>\n | Depreciation, amortization, and decommissioning<\/td>\n | <\/td>\n | 3,036<\/td>\n | <\/td>\n | <\/td>\n | 2,854<\/td>\n | <\/td>\n | <\/td>\n | 2,755<\/td>\n | <\/td>\n<\/tr>\n | Total operating<\/b>\u00a0expenses<\/b><\/td>\n | <\/td>\n | 26,459<\/b><\/td>\n | <\/td>\n | <\/td>\n | 14,230<\/b><\/td>\n | <\/td>\n | <\/td>\n | 15,586<\/b><\/td>\n | <\/td>\n<\/tr>\n | Operating Income (Loss)<\/b><\/td>\n | <\/td>\n | (9,700<\/td>\n | )<\/td>\n | <\/td>\n | 2,905<\/td>\n | <\/td>\n | <\/td>\n | 2,080<\/td>\n | <\/td>\n<\/tr>\n | Interest income<\/td>\n | <\/td>\n | 76<\/td>\n | <\/td>\n | <\/td>\n | 31<\/td>\n | <\/td>\n | <\/td>\n | 23<\/td>\n | <\/td>\n<\/tr>\n | Interest expense<\/td>\n | <\/td>\n | (929<\/td>\n | )<\/td>\n | <\/td>\n | (888<\/td>\n | )<\/td>\n | <\/td>\n | (829<\/td>\n | )<\/td>\n<\/tr>\n | Other income, net<\/td>\n | <\/td>\n | 424<\/td>\n | <\/td>\n | <\/td>\n | 123<\/td>\n | <\/td>\n | <\/td>\n | 188<\/td>\n | <\/td>\n<\/tr>\n | Income (Loss) Before Income Taxes<\/b><\/td>\n | <\/td>\n | (10,129<\/b><\/td>\n | )<\/b><\/td>\n | <\/td>\n | 2,171<\/b><\/td>\n | <\/td>\n | <\/td>\n | 1,462<\/b><\/td>\n | <\/td>\n<\/tr>\n | Income tax provision (benefit)<\/td>\n | <\/td>\n | (3,292<\/td>\n | )<\/td>\n | <\/td>\n | 511<\/td>\n | <\/td>\n | <\/td>\n | 55<\/td>\n | <\/td>\n<\/tr>\n | Net Income (Loss)<\/b><\/td>\n | <\/td>\n | (6,837<\/b><\/td>\n | )<\/b><\/td>\n | <\/td>\n | 1,660<\/b><\/td>\n | <\/td>\n | <\/td>\n | 1,407<\/b><\/td>\n | <\/td>\n<\/tr>\n | Preferred stock dividend requirement of subsidiary<\/b><\/td>\n | <\/td>\n | 14<\/td>\n | <\/td>\n | <\/td>\n | 14<\/td>\n | <\/td>\n | <\/td>\n | 14<\/td>\n | <\/td>\n<\/tr>\n | Income (Loss) Available for Common Shareholders<\/b><\/td>\n | <\/td>\n | $<\/b><\/td>\n | (6,851<\/b><\/td>\n | )<\/b><\/td>\n | <\/td>\n | $<\/b><\/td>\n | 1,646<\/b><\/td>\n | <\/td>\n | <\/td>\n | $<\/b><\/td>\n | 1,393<\/b><\/td>\n | <\/td>\n<\/tr>\n | Weighted Average Common Shares Outstanding, Basic<\/b><\/td>\n | <\/td>\n | 517<\/b><\/td>\n | <\/td>\n | <\/td>\n | 512<\/b><\/td>\n | <\/td>\n | <\/td>\n | 499<\/b><\/td>\n | <\/td>\n<\/tr>\n | Weighted Average Common Shares Outstanding, Diluted<\/b><\/td>\n | <\/td>\n | 517<\/b><\/td>\n | <\/td>\n | <\/td>\n | 513<\/b><\/td>\n | <\/td>\n | <\/td>\n | 501<\/b><\/td>\n | <\/td>\n<\/tr>\n | Net Earnings (Loss) Per Common Share, Basic<\/b><\/td>\n | <\/td>\n | $<\/b><\/td>\n | (13.25<\/b><\/td>\n | )<\/b><\/td>\n | <\/td>\n | $<\/b><\/td>\n | 3.21<\/b><\/td>\n | <\/td>\n | <\/td>\n | $<\/b><\/td>\n | 2.79<\/b><\/td>\n | <\/td>\n<\/tr>\n | Net Earnings (Loss) Per Common Share, Diluted<\/b><\/td>\n | <\/td>\n | $<\/b><\/td>\n | (13.25<\/b><\/td>\n | )<\/b><\/td>\n | <\/td>\n | $<\/b><\/td>\n | 3.21<\/b><\/td>\n | <\/td>\n | <\/td>\n | $<\/b><\/td>\n | 2.78<\/b><\/td>\n | <\/td>\n<\/tr>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n |
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