PG&E Corp (PCG) — Q1 2026 Earnings Call Transcript

Good morning, everyone, and thank you for joining us for PG&E's First 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. These statements are based on information currently available to management. Some of the important factors which could affect our actual financial results are described on the second page of today's earnings presentation. The presentation also includes a reconciliation between non-GAAP and GAAP financial measures. The slides along with other relevant information can be found online at investor.pgecorp.com. We'd also encourage you to review our quarterly report on Form 10-Q for the quarter ended March 31, 2026. And with that, it's my pleasure to hand the call over to our CEO, Patti Poppe.

Thank you, Jonathan. Good morning, everyone. I'm pleased to be with you this morning to report another quarter of strong progress on multiple fronts. Today, we announced core earnings per share for the first quarter of $0.43. This strong start puts us solidly on track to deliver again and reaffirm our full year 2026 core EPS guidance of $1.64 to $1.66. At the midpoint, our guidance implies 10% growth over 2025 and would mark our fifth consecutive year of double-digit core earnings growth. Looking forward, we're reaffirming our EPS growth guidance for 2027 through 2030, which is unchanged at 9% plus annually. We're also reaffirming our 5-year capital and financing plans, including zero new equity issuance needs through 2030. We continue to deliver for our customers on affordability. On March 1, we lowered electric rates for the fifth time since January 2024. For our most vulnerable residential customers, bundled rates are now down 23%. For other residential customers, rates are down 13% over that same period. In February, our Diablo Canyon nuclear power plant received the final state permit approvals needed to support extended operations through 2030. And in early April, the Nuclear Regulatory Commission granted Diablo Canyon a 20-year license extension. These actions underscore Diablo Canyon's critical role in supporting California's reliability and clean energy goals, although further action by the state is required in order to operate beyond 2030. Turning to Slide 4. We remain focused on helping California build a durable, long-term wildfire solution. The CEA's report and recommendations provide a strong foundation as the legislature begins the next phase of this important work. We were encouraged to see the CEA emphasize the cost of inaction, noting that, and I quote, "Inaction perpetuates unaffordability for consumers and hinders the ability to attract the capital required to maintain safe, clean and reliable infrastructure." This is a strong call to act for California policymakers. As we said last quarter, the CEA report marks the beginning of the legislative phase. With the session running through August, policymakers now have the opportunity to evaluate a menu of options across multiple pathways. We remain encouraged by the progress toward meeting the commitment made by the legislature last year to find and implement long-term whole-of-society solutions. That commitment began with last year's SB 254, followed by the Governor's executive order, the CPUC submission to the CEA and now the CEA's report. As I said last quarter, the status quo is neither sustainable nor affordable, and California needs a model that works for all stakeholders, whether they are those affected by wildfires, utility and insurance customers, communities, the state and the capital providers needed to support a safe, reliable and clean energy system. Turning to Slide 5. Our focus on wildfire mitigation remains clear and unwavering. We know this work is never finished, which is why we continuously look for better and more effective ways to strengthen our mitigation. Our operational mitigations, including PSPS, EPSS and continuous monitoring, are making us safer every day and position us to respond effectively whatever the weather conditions. Looking forward, our long-term infrastructure hardening plans will combine safety and improved reliability and lower maintenance costs. Undergrounding is an important driver of customer affordability too, reducing the need for and expense of annual inspections and vegetation management. As you heard on our last call, the CPUC has now provided a clear path for us to request additional undergrounding through a 10-year plan. We're still on track to make this filing with the OEIS in the third quarter, including our next approximately 5,000 miles and covering years 2028 through 2037. Combined with the 1,900 miles of undergrounding we expect to have completed by the end of 2027, plus an additional 4,000 miles of overhead hardening, this would result in nearly 11,000 miles of planned system hardening through 2037 or more than three-quarters of the high-fire threat miles we plan to harden based on our current risk modeling. We'll provide more detail in our 10-year filing. But in the meantime, we calculate that our undergrounding to date, over 1,200 miles, has already allowed us to avoid more than $100 million of maintenance spend, which otherwise would have been paid by customers. That is exactly the kind of durable affordability we're working hard every day to deliver for our customers. Looking at Slide 6, you'll see our simple affordable model as amplified last quarter, giving us line of sight to customer bill growth of 0% to 3%. We call that our "path to flat," a destination our customers would love. As noted earlier, in March, we implemented our fifth reduction in electric rates in two years. That's real progress on affordability, and this progress matters most for customers who need it most. Since January 2024, electric rates for our most vulnerable customers are down 23%. For our other residential customers, rates are now down 13%, about $300 less per year. That is real money. Turning to Slide 7. You can see the progress we're making in enabling rate-reducing load growth. Projects are moving through our development pipeline with our final engineering stage increasing to 4.6 gigawatts since our year-end update. This progression from application to preliminary engineering and on to final engineering is a natural and expected part of the project cycle and reflects healthy forward momentum. We also recently initiated our third cluster study, and the results reinforce that there's strong interest across our service area. In total, customer interest exceeded an additional 10 gigawatts, spanning multiple regions, including Silicon Valley and the Central Valley. Importantly, this demand remains diversified. There's no single project driving these totals. We're committed to only adding load that is definitively rate reducing. We simply need to get the pricing right. Projects from this latest cluster study, which meet the rate-reducing threshold, will move through preliminary engineering over the next six months, refilling the pipeline funnel from the top as earlier projects mature. Importantly, this growth is occurring alongside significant resource additions across California. Since 2020, CAISO load-serving entities have added more than 33 gigawatts of new resources to the grid, including over 7 gigawatts in 2025 alone. In addition, the CPUC is continuing their practice of issuing new-build procurement orders, which have resulted in 22 gigawatts under contract through 2029. This kind of growth is good for customers and good for California's economy. Every gigawatt of new data center load can contribute to affordability by reducing electric bills by 1% or more, while also supporting thousands of construction jobs and generating hundreds of millions of dollars in additional tax revenue. Before I hand it over to Carolyn, I'd like to tie all of this together with my story of the month. This quarter, that story is about continuous monitoring and how we are shifting from reactive maintenance to proactive, data-driven risk management. Continuous monitoring uses sensors, our smart meters, analytics and machine learning models to identify emerging issues on the system before they turn into outages, ignitions or safety events. It's allowing us to see developing issues in real time and intervene earlier, often before there's any customer impact. We're seeing tangible operational benefits from this approach. Continuous monitoring helped us avoid approximately 12 million unplanned customer outage minutes in 2025 and another 4 million minutes in the first quarter of 2026. In many cases, these interventions occurred before customers were even aware there was a problem. Since the beginning of last year, we've had 1,484 good catches where sensor data flagged developing weaknesses or active events on the grid. Twenty-three of these could have become ignitions but didn't. Identifying stressed equipment early also allows us to fix issues at a lower cost and avoid more expensive emergency repairs down the road. In fact, over that same five-quarter period, early detection of stressed equipment helped us save an estimated $8 million of capital spend through lower cost repairs and over $1 million in expense by reducing time spent responding to emergency asset failures. Continuous monitoring is also improving how our teams work in the field. More precise diagnostics mean our troubleshooters spend less time searching for problems and more time fixing them, improving both productivity and safety. Taken together, our continuous monitoring program is an important step forward and an example of how we manage risk, control costs and deliver reliable service. With that, I'll turn it over to Carolyn.

Thank you, Patti, and good morning, everyone. Turning to Slide 9. You can see our first quarter 2026 earnings walk. Core earnings for the quarter were $0.43, up $0.10 from the first quarter last year, putting us in position to once again deliver on our plan. Customer capital investments contributed $0.06 — of that, $0.02 reflects ongoing execution of our capital plan and the associated return on rate base, including CPUC ROE. We also have a $0.04 benefit related to February's final commission decision in our 2023 rate case application. Nonfuel O&M savings contributed an additional $0.02, partially offset by our decision to redeploy $0.01 back into the business. Timing and other was a $0.03 tailwind in the quarter compared to the prior year. As we look forward to the balance of 2026, you can count on us to remain focused on disciplined execution and delivering our guidance while taking a thoughtful approach to redeploying savings in ways that benefit customers and help to de-risk 2027 and beyond. On Slide 10, there is no change to our 5-year $73 billion capital plan through 2030. We continue to see strong demand for customer-beneficial investment across the transmission and distribution systems, and we still see at least $5 billion of incremental customer investment opportunity outside the current plan. We have flexibility in how and when we may pursue these additional opportunities to ensure we're making the right decisions for customers and investors. Our preference today remains making the plans better by prioritizing bringing in investments which enable new beneficial load and help lower rates for our core customers over time, or we could make the plan longer by extending the duration of our top-tier rate base growth. A third option, though not one we're considering right now, is to make the plan bigger by adding to our current $73 billion plan envelope. Taken together, these options give us confidence that we have flexibility in the plan and that we can continue to deploy growth capital in a disciplined way while at the same time supporting affordability, growth and long-term value creation for owners. Turning to Slide 11. Our Five-Year Financing Plan is also unchanged from our prior call. The plan continues to be built on conservative assumptions, which align with the guideposts I've previously shared. First, our plan is built to require no new common equity through 2030. Second, we remain focused on achieving investment-grade ratings, including sustaining FFO to debt in the mid-teens. And third, we continue to target ramping up to a 20% dividend payout ratio by 2028, then maintaining that level through 2030. In February, we took advantage of favorable market conditions to execute two financings. We issued $1 billion of parent-level junior subordinated notes opportunistically, starting to address 2027 parent funding needs. There is no change to our guidance for a net $2 billion of financing from parent debt and other through 2030. At the utility, we issued $2.2 billion of first mortgage bonds covering roughly half of our 2026 utility debt needs, which remain unchanged. From a capital allocation perspective, and in light of encouraging indications that the state is serious about pursuing additional wildfire reform, we continue to see our current plan as the right one for both customers and investors. However, I'll reiterate that if we stop seeing progress towards reforming the wildfire risk model, you can be sure that we will actively reevaluate all aspects of our capital allocation plan. On Slide 12, we continue to make steady progress toward investment-grade credit ratings, and I'm encouraged by the momentum we're seeing. Following our fourth quarter call, Moody's revised their outlook to positive, reflecting continued improvement in our credit trajectory. Our focus on strong financial ratios, discipline to hold the company leverage and continued progress on wildfire mitigation directly supports the criteria for potential upgrades. As I've noted before, achieving investment grade is a key milestone for us. It will lower our borrowing costs and translate into hundreds of millions of dollars in customer savings over the life of the debt we issue, creating a durable affordability driver for customers not currently assumed in our plan. On Slide 13, we're reinforcing that we continue to see a path to deliver 2% to 4% long-term reductions in nonfuel O&M even after absorbing inflation and other cost pressures. Executing against our simple, affordable model is how we keep our capital program affordable for customers and sustained reductions in nonfuel O&M are a key element allowing us to grow our plan and fund the investments our system needs while also protecting customer bills. In addition to the great example of continuous monitoring Patti mentioned, we continue to innovate and drive efficiencies in our field operations by applying technology. By leveraging satellite and LiDAR, we're improving the quality and consistency of inspections while reducing the volume of patrols, lowering contractor reliance and enhancing safety in the field. Taken together, these changes are expected to deliver $24 million in annual O&M savings this year alone. This is another tangible example of how targeted technology investments support our long-term nonfuel O&M trajectory. Slide 14 highlights major regulatory and legislative milestones we're monitoring this year. On the regulatory front, following our fourth quarter call, we received our 2025 safety certificate from the CPUC, which is valid for 12 months through early March 2027. Additionally, as Patti mentioned, we're on track to file our 10-year undergrounding plan with the OEIS in the third quarter. I'll end here on Slide 15 by pointing out our differentiated story. We're proud of what we've accomplished, and we know there's still plenty of opportunity in front of us to continue delivering for our customers and our investors. We're focused on doing just that day in and day out. With that, I'll hand it back to Patti.

Thank you, Carolyn. Before we take your questions, I'd like to recap where we stand as we are building California's energy future. We delivered a strong first quarter, putting us firmly on track for another year of double-digit earnings growth. Safety remains our highest priority. We continue to strengthen our wildfire layers of protection. We continue to make real progress on affordability with a 23% reduction for our most vulnerable customers since January 2024. At the same time, we're seeing good progression of our rate-reducing large load pipeline, and we're encouraged by California's focus on constructive wildfire reform. With that, operator, please open the lines for questions.

Patti, you've been vocal about not wanting to see the can kicked down the road on legislation. Obviously, that would be a bad outcome in your view. I guess, how should we think about capital allocation, like buybacks in case some aspects of the CEA report get passed, but we don't get something that is all-encompassing. So, if some progress occurs but not the Goldilocks scenario, or if key aspects get pushed into '27, how should we think about capital allocation?

Yes. Thanks, Shahriar. First and foremost, I would just reiterate that we're encouraged by the progress to date. We do think the right conversations are happening with the right folks, and we feel good and encouraged about that. I'll just offer that there's obviously a minimum outcome to prevent additional costs being borne by shareholders and this tail risk being able to be measured and understood. We know that that's a very important floor for an outcome here. And as we've been very clear, we've been reiterating widely and far the value of the investor-owned utility model. We've been advocating for the importance of the capital that we are able to attain from the capital markets from our investors and how important that is to making our infrastructure investments affordable for California as we spread out the cost of infrastructure over time. The great capital that is deployed by our important owners is good for customers. An important outcome of SB 254 is that we can attract low-cost capital to invest in that infrastructure to help California grow and make energy costs more affordable for customers here. So I'll say all that as backdrop to say that we feel like our capital allocation and our model is working. We're lowering rates while we're deploying our capital today. We think right now is not the time to change that plan; we know that the simple affordable model is the best plan for customers and investors. And so we're very bullish on that. Now to the ultimate heart of your question, if that doesn't occur—if we don't get a minimum outcome that's essential—then obviously, we'll have to look at and we will not avoid looking at our entire capital allocation plan, the whole financial plan. I'm not going to rack and stack how we would think about that here on this call, but I will just say that all aspects of the plan will have to be on the table, and we'll take a look at doing what's best in totality. But for now, we are encouraged by the progress that's being made and the level of attention to the issue.

Got it. Perfect. I appreciate that. And good luck there. Patti, just lastly, I know you keep highlighting the data center opportunity in the context of savings and bill reductions, which is the right messaging in this environment. But is there a point you can convert that into sort of an earnings impact like some of your peers? I mean, 4.6 gigawatts in final engineering is somewhat material. At what point does large load growth drive significant new transmission investments?

Well, I would say that it is. We are—and we shared on our Q4 call that we've added more CapEx for transmission into our $73 billion capital plan. Given all of our circumstances, we think our $73 billion plan is the right plan. The idea that we would make that bigger would take some other changes over time. And so right now, as Carolyn has been very consistent in sharing, we want to make the plan better. And when we say better, what we mean by that is by pulling in that transmission and data center load growth, if it makes it more affordable for customers, that's better. And so we've been very disciplined about our cluster study work. When we talk about final engineering, we're sharing real costs with our potential large load customers and they're signing on for them that are absolutely not just from a sound bite or a marketing perspective but an absolute rate-reducing new capital investment. And so that makes our capital plan even better. There will come a time, I think, particularly after SB 254 Phase II resolution at the end of the legislative session that we should look at if the conditions are such that we could make the plan bigger, but that's just not now.

I just wanted to ask a follow-up on the legislation; there was a lot put forward by the CEA, like three separate phases. It's a big menu of things. Where are you kind of drawing the line? What is sufficient? Is it more about having some type of permanent cap if I'm reading your response correctly? And then in the last legislative session, shareholders did have to participate in some instances there. So how are you thinking about that for Phase 2?

Yes. Nick, the most important thing, we think, is the whole-of-society approach. We think the governor was clear and the CEA report reflects that there are multiple aspects of wildfire liability reform that would be important for all Californians because remember, all fires in California are not caused by utilities. Insurance access in California is a real challenge to homeownership. We have a housing crisis in California; making sure that we have an insurable housing market is essential for the state. So well beyond utility concerns, the CEA report reflects a whole-of-society approach. We think that's smart because we're Californians too, and we care about what happens here and what happens to all Californians, not just those impacted by a utility wildfire. Now that being said, I am the CEO of the utility. So I do have a point of view that we need to make sure that the tail risk of wildfire liability is one that shareholders and investors can model, can predict and know how great the risk is so that you can feel comfortable investing your clients' pension funds and retirement funds into our infrastructure here in California. So our minimum is very important: that we have an ability to see and model and quantify what that tail risk is. Now on shareholder contributions, as were required in the SB 254 Phase I, that is a question that's part of a total look at the value of the fix. The totality of the legislative action will determine whether there's any reason to make additional contributions. The package would have to be looked at as a package. If it doesn't improve the status quo then contributions would be unacceptable. But if there's a dramatic improvement to the status quo, we obviously would be in dialogue with policymakers.

That's very clear. I appreciate that. And then I just had another question because it's kind of come up recently. The governor's election in the state for various reasons has been more of a focus for folks. I know there have been calls from various candidates on returns and affordability and maybe even notably a rate freeze. You show in the simple affordable model that you're pretty well positioned against that. So what's the strategy to make that resonate with new policymakers? And how high grade is the plan if we were to go that way with some of the more draconian proposals being pitched right now?

Yes. Look, the good news is this. Number one, whomever is elected governor of the state of California, we're going to want what they want, and that's affordable utility rates. The even better news is performance is power, and we are performing. As I mentioned, we've reduced rates five times in the last two years. Our most vulnerable customers' bills and rates are down 23%. That is meaningful progress that we can point to. Politicians have to say what they have to say to get elected. But when it comes down to brass tacks and we actually have to do what's promised, I think our performance is a key enabler to our ability to work with whomever is elected to do exactly what these politicians want. We want the same thing. We want a healthy, vibrant California powered by PG&E and the IOU model is essential to the growth and prosperity of California.

Just, I think your comments are pretty clear on what you kind of want out of a law. When you look at the different proposals or structures that were in the wildfire report, are there any of the ones that best meet what you want and you think other stakeholders would as well?

Yes. I think Steve — I think this whole-of-society look is super important. So the three pillars, looking at hardening our communities from spread is so important. It's one thing to prevent an ignition, but when 100-mile-per-hour winds are here, we need to make sure that our communities are ready and that they are built for purpose, just like in hurricane zones. Making sure that we get those building codes and implementation of those codes would be very important to de-risking our communities. So obviously, that's a good thing. The liability limits and liability reform is something that we feel strongly should be looked at, particularly when a utility can demonstrate prudence and can demonstrate that through their wildfire mitigation plan they are prudent. And then finally, any kind of state backstop obviously helps to manage that tail risk. But what I'll tell you is there are lots of paths to odds here. There are all sorts of vehicles and methods and mechanisms. The report, I thought, did a good job of outlining multiple paths; we don't need everything in that. In fact, some of them were intentionally this-or-that. I think now is the heavy lifting for the legislature to really consider what's the totality package. What is the state's ambition to truly create a wildfire liability construct that works for everyone and works best. And we're, as I've said, encouraged by the conversations that have ensued so far.

And then someone brought up the governor election and obviously we had this shake-up occur. Is there any way to interpret whether that actually adds more impetus to address this wildfire law this year or the other way around? Is it disruptive to it? Any thoughts?

I would say Governor Newsom has done incredible work over his time as Governor to address these major fundamental issues with wildfire risk in the state. I think he's probably the leading governor in the nation who has taken and led his legislative bodies through major reform in this area on his watch. As he indicated, and from the reports and the executive order that he issued, I think he expressed interest in having a real fix but he can't act alone. He's got to have the legislature with him. So it's been good to see legislative leadership describing a desire to really get into this issue. I look forward to them being able to do their job. And I think unrelated as much to the governor's election, but for the fact that it's Governor Newsom's last year in office here in California, I think he's made it clear that he'd really like to see action on this.

I was wondering on the data center side of things. When might you expect to refill that bucket of application and preliminary engineering within the pipeline? And maybe more broadly, what has been the pace of data center demand and conversations that you've been seeing?

Yes. I would say, first of all, the cluster study that we've initiated, we call it Cluster '26 — our third cluster study — has shown significant demand as we look at how we do the engineering. We do that over the next six to eight months. We do parallel engineering of all the projects. This has been a real enabler to minimizing costs for any one project, maximizing shared infrastructure investment and really getting a clear eye of where the capacity needs to be either added or leveraged where we have existing capacity. One of the big developments we're seeing lately is more interest outside of just the Bay Area. That's exciting. I was at an EEI Key Accounts Conference with all our large customers, and I was on a panel with a Class A data center developer. As he and I were talking before we went on stage, he — a major data center developer — was unaware we had additional capacity here in California. I think we still have a job to get the word out that California is open for business. We've added 33 gigawatts of capacity to the California grid, and we've got 22 gigawatts more under contract for the next four years. That is significant capacity being added on a grid that is underutilized because of our low air conditioning demand. So we really have an opportunity to serve these large load customers and I think word's getting out. Our third cluster, Cluster '26, really has demonstrated that. So I would say, as you can see, as we indicated, 10-plus gigawatts showing interest. That's in the early phases of that cluster study. As we do the engineering, obviously some of that will fall out. We don't—we've seen that over time. But as you can see, we continue to move closer and closer to actual construction and being online. We still expect to have about 1.8 gigawatts online by 2030. These are multiple projects, no one silver shovel, as I like to say. This is all good for California, for California's tech industries, for the customers who leverage technology and for all of the people who use the grid in California; this is a big win-win.

Great. That's helpful. You mentioned electric bill reduction coming as you start to bring this online. Could you help with when those data centers are coming online and when customers would end up seeing some of that bill reduction to add on top of what you've been highlighting on affordability?

Yes. So the 1.8 gigawatts will be online by 2030. We forecast that to be about a 1% to 2% rate reduction for that time period. When you add that into our simple affordable model, remember, this is the way that we've been reducing rates already. There's very limited large load that contributed to the 23% rate reduction for our most vulnerable customers and 13% rate reduction to date. That's been delivered through a simple, affordable model: converting capital-to-O&M ratios to more capital and less O&M, reducing our maintenance costs through more efficient operations. As Carolyn mentioned, $24 million of savings by transforming how we do inspections. Those inspections are all O&M. One of the secret sauces here at PG&E is our O&M reduction capacity and that is the most beneficial, quickest way to lower rates for customers. Investment-grade credit metrics would also help lower bills for customers and large load as we transition forward is in the future years — our pathway, as we like to say, our path to flat. That is being driven by all of those factors: O&M reductions, more efficient financing and large load in the latter half of the plan.

Follow-up to David's question on the conversion from final engineering to construction: what's your confidence in converting it to construction mode? You've had an increase there, up to 4.6 gigawatts now in final engineering. Confidence of converting it to construction mode? And then I have a follow-up.

Yes. So first of all, one thing to remember about how this large load gets approved and financed here in California: our generation capacity is driven through the California Energy Commission, CAISO and the CPUC. That's why we've added 33 gigawatts; that process is working really well. Some ISOs across the country are struggling to get new large load built. We're getting capacity added to the grid. In order to get one of these large load customers, they can leverage that capacity that's been added to the grid without having to do one-on-one contracts per se. When we talk about final engineering, we're predominantly talking about transmission and the transmission engineering that's required because in a lot of cases, we're able to just do a direct connect, dual feed with a backup online on-site to deliver the reliability these large data centers require. To answer your question specifically, Anthony, we think there's a high conversion, but we've not been at this stage with this volume before. We're buttoning up all the final details with our counterparties. The fact that they're moving forward, they're putting money on the table — these aren't final agreements, but they're awfully close — and they're putting real forecasted expectations for bringing load online. So we'd say that process is working, but these will be important tests: these final 4 gigawatts to see how much actually goes to construction. We're pretty optimistic that a lot of it will. That's why we forecasted 1.8 gigawatts by 2030. Right now, that's our expectation, but those numbers could change in the coming months.

Great. And then a follow-up on the $5 billion of incremental investment opportunities. I know in the third quarter you're going to file an undergrounding plan and the miles are subject to approval. How much of the $5 billion is dependent on approval for the undergrounding plan or is the undergrounding plan incremental to this $5 billion?

Unrelated. We built in a level of undergrounding around $1 billion a year in our $73 billion plan, and that's what's built into our assumptions. So when we talk about the $5 billion, we talk more about accelerating reliability improvements, accelerating new business connections, accelerating these large loads, including more transmission infrastructure investment in our plan. Right now, we're making trades between where best to deploy capital. We have plenty of capital to deploy, and we're really working from affordability and our balance sheet as key drivers to how much capital we deploy. That's why we love our plan. We think it's the best. It really threads the needle for customers and investors. Anything we add to the plan at this juncture means something else comes out. That's why we would say that the $73 billion incorporates all of those things.

I was wondering about settlement discussions in the rate case, if you've had any, and just your general thoughts on how that's going and whether settlement is at all likely?

I would say evidentiary hearings will be here throughout May, and I think that's an important step in the process. That may create an opportunity for settlement. We would never rule out settlement. Obviously, we've settled cases in the past. But we've also gotten pretty strong indications from the CPUC that they like to do a fully adjudicated GRC. So we're open to both. We think we filed a great case. Given our commitment to affordability and our follow-through on what we promised the commission, and they're watching it happen, I think we enter those discussions as a real, trusted counterparty. We look forward to the hearings throughout May.

Two questions. One, how does the summer look for weather into wildfire season? And secondly, as you continue to look to optimize capital allocation into potential scenarios around CapEx, how do you look at what credit metrics to maintain on your holding company leverage?

On the forecast for weather, one thing I've learned is we have incredible scientists here at PG&E who are extraordinary weather predictors. But our strategy is not to count on weather prediction; we count on being ready every day. Regardless of conditions, we are in a position and posture to respond and to prevent. As I shared, continuous monitoring gives us the potential to move from reactive grid operations to proactive grid operations with visibility, knowledge and forethought before conditions materialize. Before a branch grows into a tree, before a line has any degradation, we can see it. Before a transformer might have early signals of failure, we are moving into a more predictive grid posture. We're not there yet, but we are making strong progress and continuous monitoring gives us confidence heading into this wildfire season that we have the posture required to prevent catastrophic wildfires. We're working hard to deploy those sensors and leverage that technology as quickly and as affordably as possible because it is so beneficial. I'll go ahead and kick it over to Carolyn for the credit metrics question.

Yes. Just as a reminder, our current plan is built around three things: no equity, particularly at today's low valuation; maintaining the common dividend, which provides us flexibility; and modest parent-level debt financing in the plan. We are building around maintaining investment-grade level credit metrics today. Post SB 254, if we said everything is on the table, all elements of that plan will be considered. You can count on us to look at market conditions. We'll be looking at the stock price, interest rates and the overall environment, and we'll come to a conclusion at that time.

I appreciate the sensitivity, but is there any color you could share around whether special dividends, ratable dividends or buybacks are scenarios we should consider?

Ryan, it's Patti. As I've said, we're not going to rack and stack the alternatives here today. We're going to make sure we do first things first, and that's to get a solid SB 254 outcome.

Given the transparency in the SB 254 Phase 2 process and the recent CEA report, do you expect any new look to the legislative process this summer, like earlier bill introduction or more debate on public text? Anything else that offers more external insight into where the process stands?

We don't know exactly how the legislature is going to approach this, but the Assembly Energy Committee Chair, Cottie Petrie-Norris, indicated she hoped to hold hearings sometime in May. We're hoping that gets followed through on. Hearings will be important because it's a complex subject, and we think the more legislators and committees—the energy and insurance committees and both chambers—understand the alternatives, the better. They'll see what the CEA report was conveying: that inaction is not an option. It's unaffordable and regressive. Our policymakers, when they understand that, will want to take appropriate actions. The CEA report provides multiple alternatives for consideration that would dramatically improve the status quo. We look forward to those hearings and the discussion as it transpires over the legislative session between now and the end of August.

On the CAISO transmission projects: could you give a sense of where things stand in terms of getting to a final approved status? Are there any projects you're more optimistic could clear the final iteration this year? And how should we think about the financing strategy for these projects?

We're excited to report the transmission planning process from CAISO has completed, and they've awarded 25 projects for the '25-'26 planning cycle, totaling $4.16 billion of projects for PG&E. This is a big improvement for PG&E. There was a period of time where the CAISO was not sure PG&E could follow through and do these transmission projects at this scale. Their determination has shown confidence: of 26 projects, 25 were awarded to PG&E. We're proud of that. All of those projects are currently built into our $73 billion capital plan, so no change to the plan there—just our ability to execute those.

And a quick follow-up on Diablo Canyon: now that you got the license renewal, how are you thinking about appetite from the state to keep the plant on longer term?

We're very happy with the NRC's 20-year license renewal; that was a big milestone for the team. They've earned it with their performance—their continued delivery of clean energy for the state of California—and it's one of the best-operated nuclear plants in the country. Now it is up to the legislature on whether the plant would be extended beyond 2030. The CPUC has been clear there's a real cost benefit and billions of dollars of savings for customers by having Diablo remain online. A recent study by MIT confirmed and validated the CPUC's forecast. With affordability top of mind, I leave it in the hands of the legislature to take the necessary actions to extend the life beyond 2030, but the economics certainly work.

Thank you. Thanks, everyone, for tuning in today. We know a lot of eyes, including ours, are on Sacramento and wildfire liability reform, and you can rest assured that our eyes are also on running a great utility. The PG&E transformation is on track. We have never been stronger or better positioned to serve, and it is our honor to do so. Thank you for joining us today. Stay safe out there.