PG&E (NYSE:PCG) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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View the webcast at https://events.q4inc.com/attendee/408210508
Summary
PG&E reported first quarter core earnings per share of $0.43 and reaffirmed full-year 2026 core EPS guidance of $1.64 to $1.66, marking a projected 10% growth over 2025.
The company announced a 23% reduction in electric rates for its most vulnerable customers since January 2024, driven by its affordability initiatives.
PG&E is focused on wildfire mitigation, highlighting progress in undergrounding and continuous monitoring, which has helped avoid $100 million in maintenance costs.
The Diablo Canyon nuclear power plant received a 20-year license extension, supporting California’s clean energy goals.
PG&E’s five-year capital plan remains at $73 billion, with no new equity issuance required through 2030, and the company aims to maintain investment-grade credit ratings.
The company is optimistic about large load growth from data centers, with 1.8 gigawatts expected online by 2030, contributing to future rate reductions.
Management expressed confidence in legislative progress for wildfire liability reform, emphasizing the need for a whole-of-society approach.
Full Transcript
OPERATOR
Thank you for standing by. At this time, I would like to welcome everyone to the PG&E Corporation first 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 today. We ask you to limit yourself to one question one follow up.
Jonathan Arnold (Vice President of Investor Relations)
Good morning everyone and thank you for joining us for PG&E’s first quarter 2026 earnings call. With us today are Patty Poppy, 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 Patty Poppy.
Patty Poppy (Chief Executive Officer)
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 five-year capital and financing plans including zero new equity issuance needs through 2030. We continue to deliver for our customers on affordability. On March 1st 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. End quote. 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 a long term whole of society solution. That commitment began with last year’s SB254, followed by the governor’s executive order, the CPUC’s 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 mitigations 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 mitigations. 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 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 5000 miles and covering years 2028 through 2037 combined with the 1900 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 3/4 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 4.6g 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 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 conditions 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 1484 good catches where sensor data flagged, developing weaknesses or active events on the grid. 23 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.
Carolyn Burke (Executive Vice President and Chief Financial Officer)
Thank you Patty 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 6 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 4 cent benefit related to February’s final Commission decision. In our 2023 Wildfire Mitigation Safety Initiative application, non fuel O&M savings contributed an additional two cents, partially offset by our decision to redeploy one penny back into the business timing and other was a 3 cent 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 five year $73 billion capital plan through 2030. We continue to see strong demand for customer beneficial investment across our 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 plan 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 ownership. 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, disciplined holding company leverage and continued progress on wildfire mitigation directly supports the criteria for potential upgrades. …
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