Release and Selected Exhibits
Presentation and Complete Earnings Exhibits
SAN FRANCISCO, Calif. — PG&E Corporation (NYSE: PCG) recorded third-quarter 2020 income available for common shareholders of $83 million, or $0.04 per share, as reported in accordance with generally accepted accounting principles (GAAP). This compares with losses attributable to common shareholders of $1.6 billion, or $3.06 per share, for the third quarter of 2019.
GAAP results include non-core items that management does not consider representative of ongoing earnings, which totaled $378 million after-tax, or $0.18 per share, for the quarter. These results were primarily driven by costs related to PG&E Corporation's and Pacific Gas and Electric Company's (Utility) reorganization cases under Chapter 11 of the U.S. Bankruptcy Code (Chapter 11). Other non-core items include the amortization of wildfire insurance fund contributions under Assembly Bill (AB) 1054, investigation remedies and delayed cost recovery, Kincade-fire related costs, and prior period net regulatory recoveries.
PG&E Corporation and Pacific Gas and Electric Company emerged from Chapter 11 on July 1, 2020 after successfully completing the restructuring process and achieving approval for its Plan of Reorganization confirmed by the United States Bankruptcy Court.
"We are focused on building a new PG&E that will deliver on our commitments to operate safely, reduce risk, and put our customers at the center of everything we do," said Bill Smith, Interim Chief Executive Officer, PG&E Corporation. "Given the many challenges facing California, from wildfires to COVID-19, we know that being a trustworthy partner is more important than ever. We will do that by continuing our important wildfire mitigation work, leveraging innovative technologies to help California meet its clean energy goals, and achieving our performance targets in all areas of our business."
Wildfire Mitigation Update
To further reduce the potential for wildfires associated with its electrical equipment in high fire-threat areas, PG&E is executing its 2020 Wildfire Mitigation Plan as submitted to the CPUC on February 7, 2020. The company is on track to meet its goals for each of the four categories of the 2020 Plan, which builds on the significant work completed in 2019. Wildfire Mitigation work during 2020 includes:
- System hardening, where we have exceeded our 2020 target, with 257 circuit miles either relocated underground or replaced with stronger poles and covered conductor, making PG&E's system more resilient.
- Enhanced vegetation management work, which is at 90% of our 2020 target. PG&E has reviewed more than 1,624 miles of distribution and lower-voltage transmission lines and taken necessary action to trim or remove hazards and expand rights-of-way.
- Situational awareness work, which is at 65% of our 2020 target, with 309 weather stations and 132 high definition cameras installed, despite some initial supply chain issues due to COVID-19 disruptions.
- Enhanced inspections are at more than 96% of our 2020 target. PG&E continues to inspect all assets in Tier Three miles and a third of the Tier Two miles annually, which gives greater insight into the health of the company's assets and information to act on for equipment requiring maintenance.
- Improved PSPS implementation. For two of the three events for which an analysis is available, PG&E's data shows that the number of customers affected was reduced by 56% when compared to the same set of conditions in 2019. For all three, service was restored for 94% of customers within 12 hours.
In addition, PG&E filed an application with the CPUC for approval to sell its San Francisco office complex. This fulfills the first step of its commitment set out in the Plan of Reorganization to sell its San Francisco office complex and to distribute the gain on sale to customers.
Non-GAAP Core Earnings
PG&E Corporation's non-GAAP core earnings, which exclude non-core items, were $461 million, or $0.22 per share, in the third quarter of 2020, compared with $590 million, or $1.11 per share, during the same period in 2019.
The decrease in quarter-over-quarter non-GAAP core earnings per share was primarily driven by the increase in shares outstanding, unrecoverable interest expense, the timing of 2020 General Rate Case cost recovery, and wildfire mitigation costs above authorized.
PG&E Corporation uses "non-GAAP core earnings," 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 non-core items. See the accompanying tables for a reconciliation of non-GAAP core earnings to consolidated earnings (loss) attributable to common shareholders.
PG&E Corporation is adjusting 2020 guidance for consolidated GAAP losses in the range of $1.00 to $1.06 per share, which includes non-core items. PG&E is updating 2020 non-core items guidance of approximately $3.3 billion after-tax for bankruptcy and legal costs, the amortization of wildfire insurance fund contributions, Kincade fire-related costs, investigation remedies and delayed cost recovery, partially offset by prior period net regulatory recoveries.
On a non-GAAP basis, the guidance range for projected 2020 core earnings is $1.60 to $1.63 per share. Factors driving non-GAAP core earnings include net below the line and spend above authorized items of $200 million to $225 million after tax and unrecoverable interest expense of $125 million after tax.
Guidance is based on various assumptions and forecasts, including those relating to future authorized revenues, expenses, capital expenditures, rate base, and certain other factors.
PG&E Corporation is adjusting 2021 GAAP earnings guidance in the range of $0.14 to $0.26 per share, which includes non-core items. PG&E is adjusting 2021 non-core items guidance to approximately $1.8 billion after-tax for a net securitization inception charge, amortization of wildfire insurance fund contributions, bankruptcy and legal costs, and investigation remedies and delayed cost recovery, partially offset by prior period net regulatory recoveries.
On a non-GAAP basis, the guidance range for projected 2021 core earnings is $0.95 to $1.05 per share, which is unchanged from the range provided in Q2 2020. Factors driving non-GAAP core earnings include net below the line and spend above authorized of up to $100 million after tax and unrecoverable interest expense of $275 million to $325 million after tax.
Guidance is based on various assumptions and forecasts, including those relating to authorized revenues, future expenses, capital expenditures, rate base, equity issuances, the potential Net Operating Loss (NOL) securitization, and certain other factors.
Supplemental Financial Information
In addition to the financial information accompanying this release, presentation slides have been furnished to the Securities and Exchange Commission (SEC) and are available on PG&E Corporation's website at: http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx.
Earnings Conference Call
PG&E Corporation will also hold a conference call on October 29, 2020, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to discuss its third quarter 2020 results. The public can access the conference call through a simultaneous webcast. The link is provided below and will also be available from the PG&E Corporation website.
What: Third Quarter 2020 Earnings Call
When: Thursday, October 29, 2020 at 11:00 a.m. Eastern Time
A replay of the conference call will be archived through November 5, 2020 at http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx.
Alternatively, a toll-free replay of the conference call may be accessed shortly after the live call through November 5, 2020, by dialing (800) 585-8367. International callers may dial (416) 621- 4642. For both domestic and international callers, the confirmation code 2646735 will be required to access the replay.
Public Dissemination of Certain Information
PG&E Corporation and the Utility routinely provide links to the Utility's principal regulatory proceedings with the CPUC and the Federal Energy Regulatory Commission (FERC) at http://investor.pgecorp.com, under the "Regulatory Filings" 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 http://investor.pgecorp.com, under the "Chapter 11," "Wildfire Updates" and "News & Events: Events & Presentations" 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.
About PG&E Corporation
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 http://www.pgecorp.com. In this press release, they are together referred to as "PG&E."
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 PG&E Corporation's earnings guidance for 2020 and 2021 and the 2020 Wildfire Mitigation Plan. 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's and the Utility's joint annual report on Form 10-K for the year ended December 31, 2019, their joint quarterly reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020, September 30, 2020, and other reports filed with the SEC, which are available on PG&E Corporation's website at www.pgecorp.com and on the SEC website at www.sec.gov. Additional factors include, but are not limited to, those associated with the Plan of Reorganization of PG&E Corporation and the Utility that became effective on July 1, 2020. 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.