Corporate Responsibility and Sustainability Report 2017

PG&E Overview

PG&E Corporation is a holding company whose primary operating subsidiary is Pacific Gas and Electric Company, an investor-owned public energy company that operates in Northern and Central California and delivers some of the nation’s cleanest energy. Throughout this report, when we refer to “PG&E,” we are discussing all of PG&E Corporation and its subsidiaries, including Pacific Gas and Electric Company. When we refer to the “Utility,” we are discussing Pacific Gas and Electric Company.

Headquarters Location

San Francisco, California

Service Area

70,000 square miles in Northern and Central California

Service Area Population

Approximately 16 million people

Customer Accounts (as of December 31, 2016)

5.3 million electric distribution accounts:

• 4.6 million residential
• 0.7 million commercial, industrial and other

4.4 million natural gas distribution accounts:

• 4.2 million residential
• 0.2 million commercial and industrial

Employees (as of December 31, 2016)

Approximately 24,000 regular employees

Approximately 14,000 employees are covered by collective bargaining agreements with three labor unions:

• International Brotherhood of Electrical Workers (IBEW), Local 1245, AFL-CIO,
• Engineers and Scientists of California/International Federation of Professional and Technical Engineers (ESC/IFPTE), Local 20, AFL-CIO and CLC, and
• Service Employees International Union (SEIU), Local 24/7.

System

• 7,691 MW of owned hydroelectric, nuclear, natural gas, solar and fuel cell generation,
• Approximately 106,700 circuit miles of electric distribution lines (about 25 percent underground and 75 percent overhead) and approximately 18,400 circuit miles of electric transmission lines, and
• Approximately 42,800 miles of gas distribution pipelines, 6,750 miles of backbone and local gas transmission pipelines, and three gas storage facilities.

• 1. Includes interdepartmental natural gas sales for the purpose of electric generation but excludes other interdepartmental natural gas sales. ^▲

System Investments

Approximately $5.7 billion in capital investments in 2016 to enhance PG&E’s infrastructure and improve safety and reliability

Contribution to State and Local Revenues

PG&E is a major contributor to the revenue that state and local governments depend on to fund critical public services. In addition to property taxes, PG&E pays franchise fees to cities and counties for the right to use public streets for gas and electric facilities.

Financial Performance

The financial information below is derived from PG&E Corporation’s Consolidated Financial Statements at December 31, 2015 and December 31, 2016, unless otherwise indicated, which include the accounts of PG&E Corporation, the Utility and other wholly owned and controlled subsidiaries.

• 1. This is combined information for PG&E Corporation and Pacific Gas and Electric Company (the “Utility”). PG&E Corporation’s Consolidated Financial Statements include the accounts of PG&E Corporation, the Utility, and subsidiaries, and have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”). All amounts presented in the table above are tax-adjusted at PG&E Corporation’s tax rate of 40.75% except for fines, which are not tax deductible. ^{▲ 1}
• 2. “Earnings from operations” is a non-GAAP financial measure and is calculated as consolidated income available for common shareholders less “Items impacting comparability” as described in Note (3) below. PG&E Corporation uses earnings from operations to understand and compare operating results across reporting periods for various purposes, including internal budgeting and forecasting, short- and long-term operating plans, and employee incentive compensation. PG&E Corporation believes that earnings from operations provide additional insight into the underlying trends of the business allowing for a better comparison against historical results and expectations for future performance. ^{▲ 2a, 2b}
• 3. “Items impacting comparability” represent items that management does not consider part of the normal course of operations and that affect comparability of financial results between periods. Items impacting comparability reconcile earnings from operations with consolidated income available for common shareholders as reported in accordance with GAAP. ^{▲ 3a, 3b}
• 4. The Utility recorded costs of $232 million, pre-tax, during the year ended December 31, 2016 associated with the Butte fire, net of insurance. This includes accrued charges of $750 million, pre-tax, related to estimated third-party claims in connection with the Butte fire, partially offset by $625 million, pre-tax, as probable of insurance recovery. The Utility also incurred charges of $107 million, pre-tax, for Utility clean-up, repair, and legal costs associated with the Butte fire. The Utility incurred costs of $498 million, pre-tax, during the year ended December 31, 2016 associated with fines and penalties. This includes costs of $412 million, pre-tax, associated with safety-related cost disallowances imposed by the California Public Utilities Commission (the “CPUC”) in its April 9, 2015 decision in the gas transmission pipeline investigations. The Utility also recorded $57 million, pre-tax, for disallowances imposed by the CPUC in its final phase two decision of the 2015 Gas Transmission and Storage (GT&S) rate case for prohibited ex parte communications. In addition, the Utility accrued fines of $26 million in connection with the final decision approved by the CPUC on August 18, 2016 in its investigation regarding natural gas distribution record-keeping practices and $3 million in connection with the maximum statutory fine imposed on January 26, 2017 in the federal criminal trial against the Utility. These fines are not tax deductible. Future fines or penalties may be imposed in connection with other enforcement, regulatory, and litigation activities regarding natural gas matters and regulatory communications. The Utility incurred costs of $113 million, pre-tax, during the year ended December 31, 2016 for pipeline related expenses incurred in connection with the multi-year effort to identify and remove encroachments from transmission pipeline rights of way. The Utility incurred costs of $72 million, pre-tax, during the year ended December 31, 2016 for legal and regulatory related expenses incurred in connection with various enforcement, regulatory, and litigation activities regarding natural gas matters and regulatory communications. The Utility incurred charges of $219 million, pre-tax, during the year ended December 31, 2016 for disallowed capital expenditures based on the CPUC final phase one decision dated June 23, 2016 in the 2015 GT&S rate case, including $134 million, pre-tax, for the disallowed portion of the 2011 through 2014 capital expenditures in excess of adopted amounts and $85 million, pre-tax, for the Utility’s estimate of 2015 through 2018 capital expenditures that are likely to exceed authorized amounts. As a result of the timing of the CPUCs’ final phase two decision in the 2015 GT&S rate case, the Utility recorded $325 million, pre-tax, in excess of the 2016 authorized revenue requirement during the twelve months ended December 31, 2016. ^{▲ 4a, 4b}
• 5. In accordance with Accounting Standard Update 2015-03, PG&E Corporation restated $105 million in 2015 of debt issuance costs. Total assets and liabilities were each reduced by this amount with no impact to net income or total shareholder’s equity previously reported. ^{▲ 5}

For more information, see PG&E Corporation’s and Pacific Gas and Electric Company’s 2016 Joint Annual Report to Shareholders or Annual Report on Form 10-K for year ended December 31, 2016, which have been filed with the U.S. Securities and Exchange Commission.

Forward-Looking Statements

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