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Pacific Gas Electric Co (75488) SEC Filing 10-Q Quarterly Report for the period ending Wednesday, March 31, 2021

Pacific Gas Electric Co

CIK: 75488

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Investor Relations Contact: 415.972.7080 | Media Inquiries Contact: 415.973.5930 | www.pgecorp.com
April 29, 2021

PG&E Corporation Reports First-Quarter 2021 Financial Results

Recorded GAAP earnings were $0.06 per share for the first quarter of 2021, compared to earnings of $0.57 per share for the same period in 2020.
Non-GAAP core earnings were $0.23 per share for the first quarter of 2021, compared to $0.89 per share for the same period in 2020.
2021 EPS guidance adjusted for GAAP earnings in the range of $0.07 to $0.21 and reaffirmed non-GAAP core earnings of $0.95 to $1.05 per share.

SAN FRANCISCO — PG&E Corporation (NYSE: PCG) recorded first-quarter 2021 income available for common shareholders of $120 million, or $0.06 per share, as reported in accordance with generally accepted accounting principles (GAAP). This compares with income available for common shareholders of $371 million, or $0.57 per share, for the first quarter of 2020.

GAAP results include non-core items that management does not consider representative of ongoing earnings, which totaled $367 million after-tax, or $0.17 per share, for the quarter. These results were primarily driven by costs related to 2019-2020 wildfire-related costs, prior period net regulatory recoveries, the amortization of wildfire insurance fund contributions under Assembly Bill (AB) 1054, 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), and investigation remedies.

“This is an exciting time for PG&E,” said Patti Poppe, CEO of PG&E Corporation. “With our full leadership team now in place, we are pursuing the important work that we have all committed to – delivering clean, reliable energy for the benefit of our customers and hometowns, and doing so safely. We will meet that objective through our triple-bottom-line focus on people, the planet, and California’s prosperity, underpinned by performance.”

Non-GAAP Core Earnings

PG&E Corporation’s non-GAAP core earnings, which exclude non-core items, were $487 million, or $0.23 per share, in the first quarter of 2021, compared with $576 million, or $0.89 per share, during the same period in 2020.

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 nuclear refueling outages, the timing of taxes, and wildfire mitigation costs above authorized, partially offset by the growth in rate base earnings.



The following information was filed by Pacific Gas Electric Co on Thursday, April 29, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedMarch 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission
File
Number
Exact Name of
Registrant
as Specified
in its Charter
State or Other
Jurisdiction of
Incorporation
IRS Employer
Identification
Number
1-12609PG&E CorporationCalifornia94-3234914
1-2348Pacific Gas and Electric CompanyCalifornia94-0742640
PG&E CorporationPacific Gas and Electric Company
77 Beale Street77 Beale Street
P.O. Box 770000P.O. Box 770000
San Francisco,California94177San Francisco, California 94177
Address of principal executive offices, including zip code
PG&E CorporationPacific Gas and Electric Company
415973-1000415973-7000
Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, no par valuePCGThe New York Stock Exchange
Equity UnitsPCGUThe New York Stock Exchange
First preferred stock, cumulative, par value $25 per share, 5% series A redeemablePCG-PENYSE American LLC
First preferred stock, cumulative, par value $25 per share, 5% redeemablePCG-PDNYSE American LLC
First preferred stock, cumulative, par value $25 per share, 4.80% redeemablePCG-PGNYSE American LLC
First preferred stock, cumulative, par value $25 per share, 4.50% redeemablePCG-PHNYSE American LLC
First preferred stock, cumulative, par value $25 per share, 4.36% series A redeemablePCG-PINYSE American LLC
First preferred stock, cumulative, par value $25 per share, 6% nonredeemablePCG-PANYSE American LLC
First preferred stock, cumulative, par value $25 per share, 5.50% nonredeemablePCG-PBNYSE American LLC
First preferred stock, cumulative, par value $25 per share, 5% nonredeemablePCG-PCNYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
PG&E Corporation:YesNo
Pacific Gas and Electric Company:YesNo
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
PG&E Corporation:YesNo
Pacific Gas and Electric Company:YesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
PG&E Corporation:Large accelerated filer
Accelerated filer
 
Non-accelerated filer  
 Smaller reporting companyEmerging growth company
Pacific Gas and Electric Company:Large accelerated filer
Accelerated filer
 
Non-accelerated filer
 Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
PG&E Corporation:
Pacific Gas and Electric Company:
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
PG&E Corporation:Yes
No
Pacific Gas and Electric Company:Yes
No
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
PG&E Corporation:
YesNo
Pacific Gas and Electric Company:
YesNo

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common stock outstanding as of April 26, 2021: 
PG&E Corporation:
1,985,105,703
Pacific Gas and Electric Company:
264,374,809

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PG&E CORPORATION AND
PACIFIC GAS AND ELECTRIC COMPANY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021
TABLE OF CONTENTS



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GLOSSARY

The following terms and abbreviations appearing in the text of this report have the meanings indicated below.
2019 Wildfire Mitigation Planthe wildfire mitigation plan for 2019 submitted by the Utility to the CPUC pursuant to SB 901, previously also referred to as the “2019 Wildfire Safety Plan”
2020 Form 10-KPG&E Corporation and Pacific Gas and Electric Company’s combined Annual Report on Form 10-K for the year ended December 31, 2020
ABAssembly bill
AFUDCallowance for funds used during construction
ALJAdministrative Law Judge
AROasset retirement obligation
ASUaccounting standard update issued by the FASB
Bankruptcy Codethe United States Bankruptcy Code
Bankruptcy Courtthe U.S. Bankruptcy Court for the Northern District of California
CAISOCalifornia Independent System Operator
Cal FireCalifornia Department of Forestry and Fire Protection
CCACommunity Choice Aggregator
CEMACatastrophic Event Memorandum Account
Chapter 11chapter 11 of title 11 of the U.S. Code
Chapter 11 Casesthe voluntary cases commenced by each of PG&E Corporation and the Utility under Chapter 11 on January 29, 2019
CHTcustomer harm threshold
Confirmation Orderthe order confirming PG&E Corporation’s and the Utility’s and the Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization, dated as of June 20, 2020 with the Bankruptcy Court
CPEcentral procurement entities
CPPMA
COVID-19 Pandemic Protections Memorandum Account
CPUCCalifornia Public Utilities Commission
CRRscongestion revenue rights
CUECoalition of California Utility Employees
DADirect Access
Diablo CanyonDiablo Canyon nuclear power plant
DTSCDepartment of Toxic Substances Control
Effective DateJuly 1, 2020, the effective date of the Plan in the Chapter 11 Cases
EMANI
European Mutual Association for Nuclear Insurance
EOEPEnhanced Oversight and Enforcement Process
EPSearnings per common share
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FERCFederal Energy Regulatory Commission
FHPMAFire Hazard Prevention Memorandum Account
Fire Victim Trusttrust established pursuant to the Plan for the benefit of holders of the Fire Victim Claims into which the Aggregate Fire Victim Consideration (as defined in the Plan) has been, and will continue to be funded
Formula Rate Proceedingsconsolidated proceedings for the TO18 and TO20 rate cases
FRMMAFire Risk Mitigation Memorandum Account
GAAPU.S. Generally Accepted Accounting Principles
GRCgeneral rate case
GT&Sgas transmission and storage
HFTDHigh Fire-Threat District
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HSMHazardous Substance Memorandum Account
IOU(s)investor-owned utility(ies)
IRSInternal Revenue Service
Lakeside Building300 Lakeside Drive, Oakland, California, 94612
LSEload serving entity
MW1 Megawatt (MW) = One thousand kilowatts
MWh1 Megawatt-Hour (MWh) = One megawatt continuously for one hour
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 2 of this Form 10-Q
MGP(s)manufactured gas plants
Monitorthird-party monitor retained as part of its compliance with the sentencing terms of the Utility’s January 27, 2017 federal criminal conviction
NAVnet asset value
NBCnon-bypassable charge
NEILNuclear Electric Insurance Limited
NEMnet energy metering
NRCNuclear Regulatory Commission
OIIorder instituting investigation
OIRorder instituting rulemaking
OSAOffice of the Safety Advocate, a division of the CPUC
PCIAPower Charge Indifference Adjustment
PERAPublic Employees Retirement Association of New Mexico
PODPresiding Officer’s Decision
PDproposed decision
Petition DateJanuary 29, 2019
the PlanDebtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization, dated June 19, 2020
PSPSPublic Safety Power Shutoff
RAresource adequacy
RAMPRisk Assessment Mitigation Phase Report
ROEreturn on equity
RSArestructuring support agreement (as amended)
RTBARisk Transfer Balancing Account
SBSenate Bill
SECU.S. Securities and Exchange Commission
Securities ActThe Securities Act of 1933, as amended
SEDSafety and Enforcement Division of the CPUC
SPDCPUC’s Safety Policy Division
SPVPG&E AR Facility, LLC
Subrogation RSARestructuring Support Agreement dated September 22, 2019 with certain holders of insurance subrogation claims, as amended
Tax ActTax Cuts and Jobs Act of 2017
TCCOfficial Committee of Tort Claimants
TCC RSARestructuring Support Agreement dated December 6, 2019 with the TCC and attorneys and other advisors and agents for certain holders of Fire Victim Claims (as defined therein), as amended
TOtransmission owner
TURNThe Utility Reform Network
UtilityPacific Gas and Electric Company
VIE(s)variable interest entity(ies)
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VMBAVegetation Management Balancing Account
WEMAWildfire Expense Memorandum Account
Wildfire Fundstatewide fund established by AB 1054 that will be available for eligible electric utility companies to pay eligible claims for liabilities arising from wildfires occurring after July 12, 2019 that are caused by the applicable electric utility company’s equipment
Wildfires OIIOrder Instituting Investigation into the 2017 Northern California Wildfires and the 2018 Camp Fire
WMBAWildfire Mitigation Balancing Account
WMCEWildfire Mitigation and Catastrophic Events
WMPWildfire Mitigation Plan
WMPMAWildfire Mitigation Plan Memorandum Account
WSDWildfire Safety Division

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are necessarily subject to various risks and uncertainties. These statements reflect management’s judgment and opinions that are based on current estimates, expectations, and projections about future events and assumptions regarding these events and management’s knowledge of facts as of the date of this report. These forward-looking statements relate to, among other matters, estimated losses, including penalties and fines, associated with various investigations and proceedings; forecasts of capital expenditures; estimates and assumptions used in critical accounting policies, including those relating to insurance receivables, regulatory assets and liabilities, environmental remediation, litigation, third-party claims, the Wildfire Fund, and other liabilities; and the level of future equity or debt issuances. These statements are also identified by words such as “assume,” “expect,” “intend,” “forecast,” “plan,” “project,” “believe,” “estimate,” “predict,” “anticipate,” “may,” “should,” “would,” “could,” “potential” and similar expressions. PG&E Corporation and the Utility are not able to predict all the factors that may affect future results. Some of the factors that could cause future results to differ materially from those expressed or implied by the forward-looking statements, or from historical results, include, but are not limited to:

PG&E Corporation’s and the Utility’s historical financial information not being indicative of future financial performance as a result of the Chapter 11 Cases and the financial and other restructuring recently undergone by PG&E Corporation and the Utility in connection with their emergence from Chapter 11;

the ability of PG&E Corporation and the Utility to raise financing for operations and investment;

the risks and uncertainties associated with appeals of the Confirmation Order;

the risks and uncertainties associated with the wildfire that began on October 23, 2019 northeast of Geyserville in Sonoma County, California (the “2019 Kincade fire”) and the wildfire that began on September 27, 2020 in the area of Zogg Mine Road and Jenny Bird Lane, north of Igo in Shasta County, California (the “2020 Zogg fire”), including the extent of the Utility’s liability in connection with the 2019 Kincade fire and the 2020 Zogg fire and whether the Utility will be able to timely recover related costs incurred therewith in excess of insurance; the timing of the insurance recoveries; the outcome of the criminal proceedings initiated against the Utility by the Sonoma County District Attorney in connection with the 2019 Kincade fire, including the assertion of 33 criminal charges; the timing and outcome of the referral of the Cal Fire report to the Shasta County District Attorney in connection with the 2020 Zogg fire; and potential liabilities in connection with fines or penalties that could be imposed on the Utility if the CPUC or any other enforcement agency were to bring an enforcement action in respect of either such fire;

the risks and uncertainties associated with any other wildfires that have occurred in the Utility’s service territory for which the cause has yet to be determined, including the extent of the Utility’s liability in connection with such fires;

the Utility’s Community Wildfire Safety Program’s ability to help reduce wildfire threats and improve safety as a result of climate-driven wildfires and extreme weather, including the Utility’s ability to comply with the targets and metrics set forth in its WMP; whether the Utility is able to retain or contract for the workforce necessary to execute its Community Wildfire Safety Program; and the cost of the program and the timing of the outcome of any proceeding to recover such costs through rates;

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the ability of PG&E Corporation and the Utility to securitize $7.5 billion of costs related to the multiple wildfires that began on October 8, 2017 and spread through Northern California, including Napa, Sonoma, Butte, Humboldt, Mendocino, Lake, Nevada and Yuba Counties, as well as in the area surrounding Yuba City (the “2017 Northern California wildfires”) in a financing transaction that is designed to be rate neutral to customers;

the impact of the Utility’s implementation of its PSPS program, including the timing and outcome of the OII to Examine the Late 2019 Public Safety Power Shutoff Events and Order to Show Cause Against the Utility Related to Implementation of the October 2019 PSPS Events and the purported Public Safety Power Shutoff class action filed in December 2019, and whether any fines, penalties or civil liability for damages will be imposed on the Utility as a result; the costs in connection with PSPS events, the timing and outcome of any proceeding to recover such costs through rates, and the effects on PG&E Corporation’s and the Utility’s reputations caused by implementation of the PSPS program;

whether the Utility may be liable for future wildfires, and the impact of AB 1054 on potential losses in connection with such wildfires, including the CPUC’s implementation of the procedures for recovering such losses;

the risks and uncertainties associated with the requirement under AB 1054 that the Utility maintain a valid safety certification pursuant to section 8389(e) of the California Public Utilities Code and the potential implications for accessing the Wildfire Fund and in related CPUC proceedings in the event the Utility fails to maintain a valid safety certification, which could also result in the appointment by the CPUC of an independent third-party monitor to oversee the Utility’s operations as part of the EOEP;

the risks and uncertainties associated with the Utility’s ability to access the Wildfire Fund, including whether the Wildfire Fund has sufficient remaining funds;

the risks and uncertainties associated with certain indemnity obligations to current and former officers and directors, as well as potential indemnity obligations to underwriters for certain of the Utility’s note offerings, in connection with three purported class actions that have been consolidated and denominated In re PG&E Corporation Securities Litigation, U.S. District Court for the Northern District of California, Case No. 18-035509, which has been enjoined as to PG&E Corporation and the Utility pursuant to the Plan with such claims to be resolved by the Bankruptcy Court as part of the claims reconciliation process in the Chapter 11 Cases;

the timing and outcome of future regulatory and legislative developments, including future wildfire reforms, inverse condemnation reform, and other wildfire mitigation measures or other reforms targeted at the Utility or its industry;

the severity, extent and duration of the global COVID-19 pandemic and its impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows, as well as on energy demand in the Utility’s service territory, the ability of the Utility to collect on customer receivables, the ability of the Utility to mitigate these effects, including with spending reductions, and the ability of the Utility to recover any losses incurred in connection with the COVID-19 pandemic, and the impact of workforce disruptions;

whether the Utility will be able to obtain full recovery of its significantly increased insurance premiums, and the timing of any such recovery;

whether the Utility can obtain wildfire insurance at a reasonable cost in the future, or at all, and whether insurance coverage is adequate for future losses or claims;

increased employee attrition as a result of the challenging political and operating environment facing PG&E Corporation and the Utility;

the timing and outcomes of the FERC TO18 and TO19 rate cases, 2018 CEMA application, WEMA application, WMCE application, future applications for cost recovery of amounts recorded to the FRMMA, CPPMA, WMPMA, VMBA, WMBA, and RTBA, future cost of capital proceedings, and other ratemaking and regulatory proceedings;

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the outcome of the probation and the Monitorship imposed by the federal court after the Utility’s conviction in the federal criminal trial in 2017, the timing and outcomes of the debarment proceeding, potential reliability penalties or sanctions from the North American Electric Reliability Corporation, or Western Electricity Coordinating Council, investigations that have been or may be commenced relating to the Utility’s compliance with natural gas- and electric- related laws and regulations, and the ultimate amount of fines, penalties, and remedial costs that the Utility may incur in connection with the outcomes including the costs of complying with any additional conditions of probation imposed in connection with the Utility’s federal criminal proceeding, such as expenses associated with any material expansion of the Utility’s vegetation management program, as well as the impact of additional conditions of probation on PG&E Corporation’s and the Utility’s ability to make distributions to shareholders;

the effects on PG&E Corporation’s and the Utility’s reputations caused by matters such as the CPUC’s investigations and enforcement proceedings and the Utility’s criminal guilty plea as described in Note 10 of the Notes to the Condensed Consolidated Financial Statements in Item 1. under the heading “District Attorneys’ Offices Investigations”;

the outcome of future legislative or regulatory actions as part of the EOEP or otherwise that may be taken, such as requiring the Utility to transfer ownership of the Utility’s assets to municipalities or other public entities, or implement corporate governance, operational or other changes;

whether the Utility can control its operating costs within the authorized levels of spending, and timely recover its costs through rates; whether the Utility can continue implementing a streamlined organizational structure and achieve project savings, the extent to which the Utility incurs unrecoverable costs that are higher than the forecasts of such costs; and changes in cost forecasts or the scope and timing of planned work resulting from changes in customer demand for electricity and natural gas or other reasons;

whether the Utility and its third-party vendors and contractors are able to protect the Utility’s operational networks and information technology systems from cyber- and physical attacks, or other internal or external hazards;

the timing and outcome in the Court of Appeals of the appeal of the FERC’s order denying rehearing on March 17, 2020 granting the Utility a 50-basis point ROE incentive adder for continued participation in the CAISO;

the outcome of current and future self-reports, investigations, or other enforcement proceedings that could be commenced or notices of violation that could be issued relating to the Utility’s compliance with laws, rules, regulations, or orders applicable to its operations, including the construction, expansion, or replacement of its electric and gas facilities, electric grid reliability, audit, inspection and maintenance practices, customer billing and privacy, physical and cybersecurity, environmental laws and regulations; and the outcome of existing and future SED notices of violations;

the impact of government regulations to which the Utility is subject, including environmental remediation laws, regulations, and orders; the ultimate amount of costs incurred to discharge the Utility’s known and unknown remediation obligations; and the extent to which the Utility is able to recover such compliance costs in rates or from other sources;

the impact of SB 100, signed into law on September 10, 2018, which increased the percentage from 50% to 60% of California’s electricity portfolio that must come from renewables by 2030; and establishes state policy that 100% of all retail electricity sales must come from renewable portfolio standard-eligible or carbon-free resources by 2045;

how the CPUC and the California Air Resources Board implement state environmental laws relating to greenhouse gas, renewable energy targets, energy efficiency standards, distributed energy resources, electric vehicles, and similar matters, including whether the Utility is able to continue recovering associated compliance costs, such as the cost of emission allowances and offsets under cap-and-trade regulations; and whether the Utility is able to timely recover its associated investment costs;

the impact of the California governor’s executive order issued on January 26, 2018, to implement a new target of five million zero-emission vehicles on the road in California by 2030 and the California governor’s executive order issued on September 23, 2020, requiring sales of all new passenger vehicles to be zero-emission by 2035 and additional measures to eliminate harmful emissions from the transportation sector;

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the ultimate amount of unrecoverable environmental costs the Utility incurs associated with the Utility’s natural gas compressor station site located near Hinkley, California and the Utility’s fossil fuel-fired generation sites;

the impact of new legislation or NRC regulations, recommendations, policies, decisions, or orders relating to the nuclear industry, including operations, seismic design, security, safety, relicensing, the storage of spent nuclear fuel, decommissioning, cooling water intake, or other issues; the impact of potential actions, such as legislation, taken by state agencies that may affect the Utility’s ability to continue operating Diablo Canyon until its planned retirement;

the impact of wildfires, droughts, floods, high winds, lightning or other weather-related conditions or events, climate change, natural disasters, acts of terrorism, war, vandalism (including cyber-attacks), downed power lines, and other events, that can cause unplanned outages, reduce generating output, disrupt the Utility’s service to customers, or damage or disrupt the facilities, operations, or information technology and systems owned by the Utility, its customers, or third parties on which the Utility relies, and the reparation and other costs that the Utility may incur in connection with such conditions or events; the impact of the adequacy of the Utility’s emergency preparedness; whether the Utility incurs liability to third parties for property damage or personal injury caused by such events; whether the Utility is subject to civil, criminal, or regulatory penalties in connection with such events; and whether the Utility’s insurance coverage is available for these types of claims and sufficient to cover the Utility’s liability;

the breakdown or failure of equipment that can cause damages, including fires, and unplanned outages; and whether the Utility will be subject to investigations, penalties, and other costs in connection with such events;

the outcome of future legislative developments in connection with SB 350 (the Golden State Energy Act), a bill which was signed into law on June 30, 2020 and authorizes the creation by the California governor of a new entity “Golden State Energy,” a nonprofit public benefit corporation, for the purpose of acquiring the Utility’s assets and serving electric and gas in the Utility’s service territory in the event that the CPUC revokes the Utility’s Certificate of Public Convenience and Necessity;

whether the Utility’s climate change adaptation strategies are successful;

the impact that reductions in Utility customer demand for electricity and natural gas, driven by customer departures to CCAs and DA providers, have on the Utility’s ability to make and recover its investments through rates and earn its authorized return on equity, and whether the Utility is successful in addressing the impact of growing distributed and renewable generation resources, and changing customer demand for its natural gas and electric services;

the supply and price of electricity, natural gas, and nuclear fuel; the extent to which the Utility can manage and respond to the volatility of energy commodity prices; the ability of the Utility and its counterparties to post or return collateral in connection with price risk management activities; and whether the Utility is able to recover timely its electric generation and energy commodity costs through rates, including its renewable energy procurement costs;

the amount and timing of charges reflecting probable liabilities for third-party claims; the extent to which costs incurred in connection with third-party claims or litigation can be recovered through insurance, rates, or from other third parties; and whether the Utility can continue to obtain adequate insurance coverage for future losses or claims, especially following a major event that causes widespread third-party losses;

the risks and uncertainties associated with any future substantial sales of shares of common stock of PG&E Corporation by existing shareholders, including the Fire Victim Trust;

the impact of the regulation of utilities and their holding companies, including how the CPUC interprets and enforces the financial and other conditions imposed on PG&E Corporation when it became the Utility’s holding company, and whether the uncertainty in connection with the Utility’s probation or enforcement matters will impact the Utility’s ability to make distributions to PG&E Corporation;

the outcome of federal or state tax audits and the impact of any changes in federal or state tax laws, policies, regulations, or their interpretation;

whether PG&E Corporation or the Utility undergoes an “ownership change” within the meaning of section 382 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), as a result of which tax attributes could be limited;

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changes in the regulatory and economic environment, including potential changes affecting clean energy and tax policy, as a result of the current federal administration and Congress; and

the impact of changes in GAAP, standards, rules, or policies, including those related to regulatory accounting, and the impact of changes in their interpretation or application.

For more information about the significant risks that could affect the outcome of the forward-looking statements and PG&E Corporation’s and the Utility’s future financial condition, results of operations, liquidity, and cash flows, see Item 1A. Risk Factors below and a detailed discussion of these matters contained in Item 2. MD&A. PG&E Corporation and the Utility do not undertake any obligation to update forward-looking statements, whether in response to new information, future events, or otherwise.

PG&E Corporation and the Utility routinely provide links to the Utility’s principal regulatory proceedings before the CPUC and the 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 “PG&E Progress,” “Chapter 11,” “Wildfire and Safety 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. The information contained on such website is not part of this or any other report that PG&E Corporation or the Utility files with, or furnishes to, the SEC. PG&E Corporation and the Utility are providing the address to this website solely for the information of investors and do not intend the address to be an active link.

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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

PG&E CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME


 (Unaudited)
Three Months Ended March 31,
(in millions, except per share amounts)20212020
Operating Revenues  
Electric$3,395 $3,040 
Natural gas1,321 1,266 
Total operating revenues4,716 4,306 
Operating Expenses
Cost of electricity590 545 
Cost of natural gas307 284 
Operating and maintenance2,336 1,967 
Wildfire-related claims, net of insurance recoveries172 — 
Wildfire Fund expense119 — 
Depreciation, amortization, and decommissioning888 855 
Total operating expenses4,412 3,651 
Operating Income304 655 
Interest income16 
Interest expense(408)(254)
Other income, net127 97 
Reorganization items, net— (176)
Income Before Income Taxes25 338 
Income tax benefit(98)(36)
Net Income 123 374 
Preferred stock dividend requirement of subsidiary
Income Available for Common Shareholders$120 $371 
Weighted Average Common Shares Outstanding, Basic1,985 529 
Weighted Average Common Shares Outstanding, Diluted2,131 648 
Net Earnings Per Common Share, Basic$0.06 $0.70 
Net Earnings Per Common Share, Diluted$0.06 $0.57 
See accompanying Notes to the Condensed Consolidated Financial Statements.


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PG&E CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (Unaudited)
Three Months Ended March 31,
(in millions)20212020
Net Income$123 $374 
Other Comprehensive Income
Pension and other post-retirement benefit plans obligations (net of taxes of $0 and $0, respectively)
— 
Total other comprehensive income — 
Comprehensive Income 124 374 
Preferred stock dividend requirement of subsidiary3 3 
Comprehensive Income Available for Common Shareholders
$121 $371 
See accompanying Notes to the Condensed Consolidated Financial Statements.

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PG&E CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 Balance At
(in millions)March 31, 2021December 31, 2020
ASSETS  
Current Assets  
Cash and cash equivalents$229 $484 
Restricted cash29 143 
Accounts receivable:
Customers (net of allowance for doubtful accounts of $212 million and $146 million at respective dates) (includes $1.61 billion and $1.63 billion related to VIEs, net of allowance for doubtful accounts of $211 million and $143 million at respective dates)
1,835 1,883 
Accrued unbilled revenue (includes $897 million and $959 million related to VIEs at respective dates)
991 1,083 
Regulatory balancing accounts2,249 2,001 
Other1,157 1,172 
Regulatory assets410 410 
Inventories:
Gas stored underground and fuel oil17 95 
Materials and supplies533 533 
Wildfire Fund asset464 464 
Other1,153 1,334 
Total current assets9,067 9,602 
Property, Plant, and Equipment
Electric68,054 66,982 
Gas24,548 24,135 
Construction work in progress2,895 2,757 
Other25 20 
Total property, plant, and equipment95,522 93,894 
Accumulated depreciation(28,261)(27,758)
Net property, plant, and equipment67,261 66,136 
Other Noncurrent Assets
Regulatory assets9,159 8,978 
Nuclear decommissioning trusts3,592 3,538 
Operating lease right of use asset1,659 1,741 
Wildfire Fund asset5,700 5,816 
Income taxes receivable68 67 
Other2,052 1,978 
Total other noncurrent assets22,230 22,118 
TOTAL ASSETS$98,558 $97,856 
See accompanying Notes to the Condensed Consolidated Financial Statements.

13


PG&E CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
(Unaudited)
 Balance At
(in millions, except share amounts)March 31, 2021December 31, 2020
LIABILITIES AND EQUITY  
Current Liabilities
  
Short-term borrowings$1,448 $3,547 
Long-term debt, classified as current1,522 28 
Accounts payable:
Trade creditors2,141 2,402 
Regulatory balancing accounts1,368 1,245 
Other708 580 
Operating lease liabilities534 533 
Interest payable290 498 
Disputed claims and customer refunds244 242 
Wildfire-related claims1,692 2,250 
Other2,270 2,256 
Total current liabilities12,217 13,581 
Noncurrent Liabilities
Long-term debt (includes $650 million and $1.0 billion related to VIEs at respective dates)
37,801 37,288 
Regulatory liabilities11,204 10,424 
Pension and other post-retirement benefits2,406 2,444 
Asset retirement obligations6,494 6,412 
Deferred income taxes1,468 1,398 
Operating lease liabilities1,125 1,208 
Other4,464 3,848 
Total noncurrent liabilities64,962 63,022 
Equity
Shareholders’ Equity
Common stock, no par value, authorized 3,600,000,000 shares at respective dates; 1,985,105,703 and 1,984,678,673 shares outstanding at respective dates
30,226 30,224 
Reinvested earnings(9,073)(9,196)
Accumulated other comprehensive loss(26)(27)
Total shareholders’ equity
21,127 21,001 
Noncontrolling Interest - Preferred Stock of Subsidiary252 252 
Total equity21,379 21,253 
TOTAL LIABILITIES AND EQUITY$98,558 $97,856 
See accompanying Notes to the Condensed Consolidated Financial Statements.


14


PG&E CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Three Months Ended March 31,
(in millions)20212020
Cash Flows from Operating Activities  
Net income$123 $374 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and decommissioning888 855 
Allowance for equity funds used during construction(32)(10)
Deferred income taxes and tax credits, net78 197 
Reorganization items, net (Note 2) (46)50 
Wildfire Fund expense119 — 
Other117 35 
Effect of changes in operating assets and liabilities:
Accounts receivable111 (22)
Wildfire-related insurance receivable(28)— 
Inventories14 
Accounts payable 143 245 
Wildfire-related claims(558)— 
Income taxes receivable/payable— — 
Other current assets and liabilities(175)(123)
Regulatory assets, liabilities, and balancing accounts, net340 (310)
Liabilities subject to compromise — 208 
Other noncurrent assets and liabilities104 103 
Net cash provided by operating activities1,198 1,605 
Cash Flows from Investing Activities  
Capital expenditures(1,778)(1,641)
Proceeds from sales and maturities of nuclear decommissioning trust investments551 533 
Purchases of nuclear decommissioning trust investments(578)(552)
Other
Net cash used in investing activities
(1,796)(1,655)
Cash Flows from Financing Activities  
Proceeds from debtor-in-possession credit facility
— 500 
Debtor-in-possession credit facility debt issuance costs
— (3)
Bridge facility financing fees— (66)
Borrowings under revolving credit facilities1,985 — 
Repayments under revolving credit facilities(4,440)— 
Proceeds from issuance of long-term debt, net of discount and issuance costs of $18
2,382 — 
Repayment of long-term debt(7)— 
Proceeds from sale of future revenue from transmission tower license sales, net of fees350 — 
Other(41)
Net cash provided by financing activities229 440 
Net change in cash, cash equivalents, and restricted cash(369)390 
Cash, cash equivalents, and restricted cash at January 1627 1,577 
Cash, cash equivalents, and restricted cash at March 31$258 $1,967 
Less: Restricted cash and restricted cash equivalents(29)(7)
Cash and cash equivalents at March 31$229 $1,960 

15


Supplemental disclosures of cash flow information  
Cash paid for:  
Interest, net of amounts capitalized$(550)$— 
Supplemental disclosures of noncash investing and financing activities
Capital expenditures financed through accounts payable$528 $326 
Operating lease liabilities arising from obtaining right-of-use assets13 
See accompanying Notes to the Condensed Consolidated Financial Statements.

16


PG&E CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except share amounts)Common
Stock
Shares
Common
Stock
Amount
Reinvested
Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Total
Shareholders’
Equity
Non-
controlling
Interest -
Preferred
Stock of
Subsidiary
Total
Equity
Balance at December 31, 20201,984,678,673 $30,224 $(9,196)$(27)$21,001 $252 $21,253 
Net income— — 123 — 123 — 123 
Other comprehensive income— — — — 
Common stock issued, net427,030 — — — — — — 
Stock-based compensation amortization— — — — 
Balance at March 31, 20211,985,105,703 $30,226 $(9,073)$(26)$21,127 $252 $21,379 

(in millions, except share amounts)Common
Stock
Shares
Common
Stock
Amount
Reinvested
Earnings
Accumulated
Other
Comprehensive
(Loss)
Total
Shareholders’
Equity
Non-
controlling
Interest -
Preferred
Stock of
Subsidiary
Total
Equity
Balance at December 31, 2019529,236,741 $13,038 $(7,892)$(10)$5,136 $252 $5,388 
Net income— — 374 — 374 — 374 
Other comprehensive loss— — — — — — — 
Common stock issued, net549,155 — — — — — — 
Stock-based compensation amortization— (3)— — (3)— (3)
Balance at March 31, 2020529,785,896 $13,035 $(7,518)$(10)$5,507 $252 $5,759 

See accompanying Notes to the Condensed Consolidated Financial Statements.

17


PACIFIC GAS AND ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME


 (Unaudited)
Three Months Ended March 31,
(in millions)20212020
Operating Revenues  
Electric$3,395 $3,040 
Natural gas1,321 1,266 
Total operating revenues4,716 4,306 
Operating Expenses
Cost of electricity590 545 
Cost of natural gas307 284 
Operating and maintenance2,331 1,965 
Wildfire-related claims, net of insurance recoveries172 — 
Wildfire Fund expense119 — 
Depreciation, amortization, and decommissioning888 855 
Total operating expenses4,407 3,649 
Operating Income309 657 
Interest income16 
Interest expense(348)(252)
Other income, net133 93 
Reorganization items, net
(2)(93)
Income Before Income Taxes94 421 
Income tax benefit(83)(30)
Net Income177 451 
Preferred stock dividend requirement
Income Available for Common Stock$174 $448 
See accompanying Notes to the Condensed Consolidated Financial Statements.

18


PACIFIC GAS AND ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (Unaudited)
Three Months Ended March 31,
(in millions)20212020
Net Income $177 $451 
Other Comprehensive Income
Pension and other post-retirement benefit plans obligations (net of taxes of $0 and $0, respectively)
— — 
Total other comprehensive income  
Comprehensive Income $177 $451 
See accompanying Notes to the Condensed Consolidated Financial Statements.

19


PACIFIC GAS AND ELECTRIC COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 Balance At
(in millions)March 31, 2021December 31, 2020
ASSETS  
Current Assets  
Cash and cash equivalents$127 $261 
Restricted cash29 143 
Accounts receivable:
Customers (net of allowance for doubtful accounts of $212 million and $146 million
at respective dates) (includes $1.61 billion and $1.63 billion related to VIEs, net of allowance for doubtful accounts of $211 million and $143 million at respective dates)
1,835 1,883 
Accrued unbilled revenue (includes $897 million and $959 million related to VIEs at respective dates)
991 1,083 
Regulatory balancing accounts2,249 2,001 
Other1,161 1,180 
Regulatory assets410 410 
Inventories:
Gas stored underground and fuel oil17 95 
Materials and supplies533 533 
Wildfire Fund asset464 464 
Other1,139 1,321 
Total current assets8,955 9,374 
Property, Plant, and Equipment
Electric68,054 66,982 
Gas24,548 24,135 
Construction work in progress2,895 2,757 
Other 23 18 
Total property, plant, and equipment95,520 93,892 
Accumulated depreciation(28,259)(27,756)
Net property, plant, and equipment67,261 66,136 
Other Noncurrent Assets
Regulatory assets9,159 8,978 
Nuclear decommissioning trusts3,592 3,538 
Operating lease right of use asset1,655 1,736 
Wildfire Fund asset5,700 5,816 
Income taxes receivable67 66 
Other1,898 1,818 
Total other noncurrent assets22,071 21,952 
TOTAL ASSETS$98,287 $97,462 
See accompanying Notes to the Condensed Consolidated Financial Statements.

20


PACIFIC GAS AND ELECTRIC COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 Balance At
(in millions. except share amounts)March 31, 2021December 31, 2020
LIABILITIES AND EQUITY
Current Liabilities  
Short-term borrowings$1,448 $3,547 
Long-term debt, classified as current1,496 — 
Accounts payable:
Trade creditors2,140 2,366 
Regulatory balancing accounts1,368 1,245 
Other712 624 
Operating lease liabilities531 530 
Interest payable264 444 
Disputed claims and customer refunds244 242 
Wildfire-related claims1,692 2,250 
Other2,259 2,248 
Total current liabilities12,154 13,496 
Noncurrent Liabilities
Long-term debt (includes $650 million and $1.0 billion related to VIEs at respective dates)
33,206 32,664 
Regulatory liabilities11,204 10,424 
Pension and other post-retirement benefits2,295 2,328 
Asset retirement obligations6,494 6,412 
Deferred income taxes1,655 1,570 
Operating lease liabilities1,124 1,206 
Other4,502 3,886 
Total noncurrent liabilities60,480 58,490 
Shareholders’ Equity
Preferred stock258 258 
Common stock, $5 par value, authorized 800,000,000 shares; 264,374,809 shares outstanding at respective dates
1,322 1,322 
Additional paid-in capital28,286 28,286 
Reinvested earnings(4,208)(4,385)
Accumulated other comprehensive loss(5)(5)
Total shareholders’ equity25,653 25,476 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$98,287 $97,462 
See accompanying Notes to the Condensed Consolidated Financial Statements.

21


PACIFIC GAS AND ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Three Months Ended March 31,
(in millions)20212020
Cash Flows from Operating Activities  
Net income $177 $451 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and decommissioning888 855 
Allowance for equity funds used during construction(32)(10)
Deferred income taxes and tax credits, net92 202 
Reorganization items, net (Note 2) (15)(11)
Wildfire Fund expense119 — 
Other112 40 
Effect of changes in operating assets and liabilities:
Accounts receivable115 (30)
Wildfire-related insurance receivable(28)— 
Inventories14 
Accounts payable 107 221 
Wildfire-related claims(558)— 
Income taxes receivable/payable— — 
Other current assets and liabilities(150)(121)
Regulatory assets, liabilities, and balancing accounts, net340 (310)
Liabilities subject to compromise — 208 
Other noncurrent assets and liabilities102 114 
Net cash provided by operating activities1,283 1,612 
Cash Flows from Investing Activities
Capital expenditures (1,778)(1,641)
Proceeds from sales and maturities of nuclear decommissioning trust investments551 533 
Purchases of nuclear decommissioning trust investments(578)(552)
Other
Net cash used in investing activities
(1,796)(1,655)
Cash Flows from Financing Activities
Proceeds from debtor-in-possession credit facility
— 500 
Debtor-in-possession credit facility debt issuance costs
— (3)
Bridge facility financing fees— (30)
Borrowings under revolving credit facilities1,985 — 
Repayments under revolving credit facilities(4,440)— 
Proceeds from issuance of long-term debt, net of discount and issuance costs of $18
2,382 — 
Proceeds from sale of future revenue from transmission tower license sales, net of fees350 — 
Other(12)
Net cash provided by financing activities265 476 
Net change in cash, cash equivalents, and restricted cash(248)433 
Cash, cash equivalents, and restricted cash at January 1404 1,129 
Cash, cash equivalents, and restricted cash at March 31$156 $1,562 
Less: Restricted cash and restricted cash equivalents(29)(7)
Cash and cash equivalents at March 31$127 $1,555 

22



Supplemental disclosures of cash flow information
Cash paid for:
Interest, net of amounts capitalized$(467)$— 
Supplemental disclosures of noncash investing and financing activities
Capital expenditures financed through accounts payable$528 $326 
Operating lease liabilities arising from obtaining right-of-use assets 13 
See accompanying Notes to the Condensed Consolidated Financial Statements.

23


PACIFIC GAS AND ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in millions)Preferred
Stock
Common
Stock
Amount
Additional
Paid-in
Capital
Reinvested
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders’
Equity
Balance at December 31, 2020$258 $1,322 $28,286 $(4,385)$(5)$25,476 
Net income — — 177 — 177 
Balance at March 31, 2021$258 $1,322 $28,286 $(4,208)$(5)$25,653 

(in millions)Preferred
Stock
Common
Stock
Amount
Additional
Paid-in
Capital
Reinvested
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders’
Equity
Balance at December 31, 2019$258 $1,322 $8,550 $(4,796)$1 $5,335 
Net income— — — 451 — 451 
Balance at March 31, 2020$258 $1,322 $8,550 $(4,345)$1 $5,786 

See accompanying Notes to the Condensed Consolidated Financial Statements.

24


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

Organization and Basis of Presentation

PG&E Corporation is a holding company whose primary operating subsidiary is Pacific Gas and Electric Company, a public utility serving northern and central California.  The Utility generates revenues mainly through the sale and delivery of electricity and natural gas to customers.  The Utility is primarily regulated by the CPUC and the FERC.  In addition, the NRC oversees the licensing, construction, operation, and decommissioning of the Utility’s nuclear generation facilities.

This quarterly report on Form 10-Q is a combined report of PG&E Corporation and the Utility.  PG&E Corporation’s Condensed Consolidated Financial Statements include the accounts of PG&E Corporation, the Utility, and other wholly owned and controlled subsidiaries.  The Utility’s Condensed Consolidated Financial Statements include the accounts of the Utility and its wholly owned and controlled subsidiaries.  All intercompany transactions have been eliminated in consolidation.  The Notes to the Condensed Consolidated Financial Statements apply to both PG&E Corporation and the Utility.  PG&E Corporation and the Utility assess financial performance and allocate resources on a consolidated basis (i.e., the companies operate in one segment).

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP and in accordance with the interim period reporting requirements of Form 10-Q and reflect all adjustments that management believes are necessary for the fair presentation of PG&E Corporation’s and the Utility’s financial condition, results of operations, and cash flows for the periods presented.  The information at December 31, 2020 in the Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets in Item 8 of the 2020 Form 10-K.  This quarterly report should be read in conjunction with the 2020 Form 10-K. 

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Some of the more significant estimates and assumptions relate to the Utility’s regulatory assets and liabilities, wildfire-related liabilities, legal and regulatory contingencies, the Wildfire Fund, environmental remediation liabilities, AROs, insurance receivables, and pension and other post-retirement benefit plan obligations. Management believes that its estimates and assumptions reflected in the Condensed Consolidated Financial Statements are appropriate and reasonable. A change in management’s estimates or assumptions could result in an adjustment that would have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows during the period in which such change occurred.

NOTE 2: BANKRUPTCY FILING

Chapter 11 Proceedings

On the Petition Date, PG&E Corporation and the Utility commenced the Chapter 11 Cases with the Bankruptcy Court. Prior to the Effective Date, PG&E Corporation and the Utility continued to operate their business as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

On June 20, 2020, the Bankruptcy Court entered the Confirmation Order confirming the Plan filed on June 19, 2020. PG&E Corporation and the Utility emerged from Chapter 11 on the Effective Date of July 1, 2020.

Except as otherwise set forth in the Plan, the Confirmation Order or another order of the Bankruptcy Court, substantially all pre-petition liabilities were discharged under the Plan.

25


Unresolved Chapter 11 Claims

PG&E Corporation and the Utility have received over 100,000 proofs of claim since the Petition Date, of which approximately 80,000 were channeled to the Subrogation Wildfire Trust and Fire Victim Trust. The claims channeled to the Subrogation Wildfire Trust and Fire Victim Trust will be resolved by such trusts, and PG&E Corporation and the Utility have no further liability in connection with such claims. PG&E Corporation and the Utility continue their review and analysis of certain remaining claims including asserted litigation claims, trade creditor claims, non-qualified benefit plan claims, along with other tax and regulatory claims, and therefore the ultimate liability of PG&E Corporation or the Utility for such claims may differ from the amounts asserted in such claims. Allowed claims are paid in accordance with the Plan and the Confirmation Order. Amounts expected to be allowed are reflected as current or noncurrent liabilities in the Condensed Consolidated Balance Sheets.

The Bankruptcy Code provides that the confirmation of a plan of reorganization discharges a debtor from substantially all debts arising prior to confirmation, other than as provided in the Plan or the Confirmation Order.

However, holders of certain claims may assert that they are entitled under the Plan or the Bankruptcy Code to pursue, or continue to pursue, their claims against PG&E Corporation and the Utility on or after the Effective Date, including but not limited to, claims arising from or relating to indemnification or contribution claims, including with respect to the wildfire that began on November 8, 2018 near the city of Paradise, Butte County, California (the “2018 Camp fire”), the 2017 Northern California wildfires, and the wildfire that began September 9, 2015 in Amador and Calaveras counties in Northern California (the “2015 Butte fire”).

In addition, Subordinated Debt Claims and Holdco Rescission or Damage Claims continue to be pursued against PG&E Corporation and the Utility in the claims reconciliation process in the Bankruptcy Court, and claims against certain former directors and current and former officers, as well as certain underwriters, are being pursued in the purported securities class action that is further described in Note 10 under the heading “Securities Class Action Litigation.”

Various electricity suppliers filed claims in the Utility’s 2001 prior proceeding filed under Chapter 11 of the U.S. Bankruptcy Code seeking payment for energy supplied to the Utility’s customers between May 2000 and June 2001. While the FERC and judicial proceedings are pending, the Utility pursued settlements with electricity suppliers and entered into a number of settlement agreements with various electricity suppliers to resolve some of these disputed claims and to resolve the Utility’s refund claims against these electricity suppliers. Under these settlement agreements, amounts payable by the parties, in some instances, would be subject to adjustment based on the outcome of the various refund offset and interest issues being considered by the FERC. Generally, any net refunds, claim offsets, or other credits that the Utility receives from electricity suppliers either through settlement or through the conclusion of the various FERC and judicial proceedings are refunded to customers through rates in future periods. At March 31, 2021 and December 31, 2020, respectively, the Condensed Consolidated Balance Sheets reflected $244 million and $242 million in net claims within Disputed claims and customer refunds. Pursuant to the Plan, on and after the Effective Date, the holders of such claims are entitled to pursue their claims against the Reorganized Utility as if the Chapter 11 Cases had not been commenced.

On September 1, 2020, PG&E Corporation and the Utility filed a motion with the Bankruptcy Court requesting that the court approve an alternative dispute resolution process for resolving disputed general unsecured claims and appoint a panel of mediators in the process. On September 25, 2020, the court approved the motion and appointed a panel of mediators. The mediators’ role will be to assist various claims through a Standard and Abbreviated Mediation Process.

On October 27, 2020, PG&E Corporation and the Utility filed a motion for entry of an order extending the deadline for PG&E Corporation and the Utility to object to claims, requesting an additional 180 days beyond December 31, 2020 to process claims. On April 5, 2021, the Bankruptcy Court entered an order further extending the deadline to object to claims through and including December 23, 2021, except for certain claims filed by Cal Fire, for which the deadline is September 30, 2021, in each case without prejudice to the rights of PG&E Corporation and the Utility to seek additional extensions thereof. By stipulation approved by the Bankruptcy Court, the objection deadline for certain claims asserted by the United States is July 30, 2021 or September 30, 2021, depending on the claim.

26


Reorganization Items, Net

Reorganization items, net, represent amounts incurred after the Petition Date as a direct result of the Chapter 11 Cases and are comprised of professional fees and financing costs, net of interest income and other. Cash paid for reorganization items, net was $29 million and $17 million for PG&E Corporation and the Utility, respectively, during the three months ended March 31, 2021 as compared to $57 million and $117 million for PG&E Corporation and the Utility, respectively, during the same period in 2020. Reorganization items, net for the three months ended March 31, 2021 and 2020 include the following:

Three Months Ended March 31, 2021
(in millions)Utility
PG&E Corporation (1)
PG&E Corporation Consolidated
Debtor-in-possession financing costs$— $— $— 
Legal and other(2)
Other(3)— (3)
Total reorganization items, net$2 $(2)$ 
(1) PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility.

Three Months Ended March 31, 2020
(in millions)Utility
PG&E Corporation (1)
PG&E Corporation Consolidated
Debtor-in-possession financing costs$$— $
Legal and other (2)
95 84 179 
Interest income(5)(1)(6)
Total reorganization items, net$93 $83 $176 
(1) PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility.
(2) Includes bridge loan facility fees.

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For a summary of the significant accounting policies used by PG&E Corporation and the Utility, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2020 Form 10-K.

Variable Interest Entities

A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any characteristics of a controlling financial interest. An enterprise that has a controlling financial interest in a VIE is a primary beneficiary and is required to consolidate the VIE.

Consolidated VIE

The SPV created in connection with the Receivables Securitization Program (as defined below in Note 5) in October 2020 is a bankruptcy remote, limited liability company wholly owned by the Utility, and its assets are not available to creditors of PG&E Corporation or the Utility. Pursuant to the Receivables Securitization Program, the Utility sells certain of its receivables and certain related rights to payment and obligations of the Utility with respect to such receivables, and certain other related rights to the SPV, which, in turn, obtains loans secured by the receivables from financial institutions (the “Lenders”). Amounts received from the Lenders, the pledged receivables and the corresponding debt are included in Accounts receivable and Long-term debt, respectively, on the Condensed Consolidated Balance Sheets. As of March 31, 2021, the aggregate principal amount of the loans made by the Lenders cannot exceed $1.0 billion outstanding at any time. The Receivables Securitization Program is scheduled to terminate on October 5, 2022, unless extended or earlier terminated.

27


The SPV is considered a VIE because its equity capitalization is insufficient to support its operations. The most significant activities that impact the economic performance of the SPV are decisions made to manage receivables. The Utility is considered the primary beneficiary and consolidates the SPV as it makes these decisions. No additional financial support was provided to the SPV during the period ended March 31, 2021 or is expected to be provided in the future that was not previously contractually required. As of March 31, 2021 and December 31, 2020, the SPV had net accounts receivable of $2.5 billion and $2.6 billion, respectively, and outstanding borrowings of $650 million and $1.0 billion, respectively, under the Receivables Securitization Program.

Non-Consolidated VIEs

Some of the counterparties to the Utility’s power purchase agreements are considered VIEs.  Each of these VIEs was designed to own a power plant that would generate electricity for sale to the Utility.  To determine whether the Utility was the primary beneficiary of any of these VIEs at March 31, 2021, it assessed whether it absorbs any of the VIE’s expected losses or receives any portion of the VIE’s expected residual returns under the terms of the power purchase agreement, analyzed the variability in the VIE’s gross margin, and considered whether it had any decision-making rights associated with the activities that are most significant to the VIE’s performance, such as dispatch rights and operating and maintenance activities.  The Utility’s financial obligation is limited to the amount the Utility pays for delivered electricity and capacity.  The Utility did not have any decision-making rights associated with any of the activities that are most significant to the economic performance of any of these VIEs.  Since the Utility was not the primary beneficiary of any of these VIEs at March 31, 2021, it did not consolidate any of them.

Pension and Other Post-Retirement Benefits

PG&E Corporation and the Utility sponsor a non-contributory defined benefit pension plan and cash balance plan.  Both plans are included in “Pension Benefits” below.  Post-retirement medical and life insurance plans are included in “Other Benefits” below.

The net periodic benefit costs reflected in PG&E Corporation’s Condensed Consolidated Financial Statements for the three months ended March 31, 2021 and 2020 were as follows:
Pension BenefitsOther Benefits
Three Months Ended March 31,
(in millions)2021202020212020
Service cost for benefits earned (1)
$147 $132 $16 $15 
Interest cost161 178 13 16 
Expected return on plan assets(261)(261)(35)(34)
Amortization of prior service cost(1)(1)
Amortization of net actuarial loss(8)(5)
Net periodic benefit cost47 49 (10)(5)
Regulatory account transfer (2)
37 34 — — 
Total$84 $83 $(10)$(5)
(1) A portion of service costs are capitalized pursuant to GAAP.
(2) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates.

Non-service costs are reflected in Other income, net on the Condensed Consolidated Statements of Income. Service costs are reflected in Operating and maintenance on the Condensed Consolidated Statements of Income.

There was no material difference between PG&E Corporation and the Utility for the information disclosed above.

28


Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss)

The changes, net of income tax, in PG&E Corporation’s accumulated other comprehensive income (loss) consisted of the following:
Pension
Benefits
Other
Benefits
Total
(in millions, net of income tax)Three Months Ended March 31, 2021
Beginning balance$(39)$17 $(22)
Amounts reclassified from other comprehensive income: (1)
Amortization of prior service cost (net of taxes of $0 and $1, respectively)
(1)
Amortization of net actuarial loss (net of taxes of $0 and $2, respectively)
(6)(5)
Regulatory account transfer (net of taxes of $0 and $1, respectively)
Net current period other comprehensive gain (loss)1  1 
Ending balance$(38)$17 $(21)
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs.  (See the “Pension and Other Post-Retirement Benefits” table above for additional details.)
Pension BenefitsOther
Benefits
Total
(in millions, net of income tax)Three Months Ended March 31, 2020
Beginning balance$(22)$17 $(5)
Amounts reclassified from other comprehensive income: (1)
Amortization of prior service cost (net of taxes of $0 and $1, respectively)
(1)
Amortization of net actuarial loss (net of taxes of $0, and $2, respectively)
(3)(2)
Regulatory account transfer (net of taxes of $0 and $1, respectively)
— 
Net current period other comprehensive gain (loss)   
Ending balance$(22)$17 $(5)
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs.  (See the “Pension and Other Post-Retirement Benefits” table above for additional details.)

There was no material difference between PG&E Corporation and the Utility for the information disclosed above.

Revenue Recognition

Revenue from Contracts with Customers

The Utility recognizes revenues when electricity and natural gas services are delivered.  The Utility records unbilled revenues for the estimated amount of energy delivered to customers but not yet billed at the end of the period.  Unbilled revenues are included in accounts receivable on the Condensed Consolidated Balance Sheets.  Rates charged to customers are based on CPUC and FERC authorized revenue requirements. Revenues can vary significantly from period to period because of seasonality, weather, and customer usage patterns.

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Regulatory Balancing Account Revenue

The CPUC authorizes most of the Utility’s revenues in the Utility’s GRC and GT&S rate cases, which will be combined in the 2023 GRC.  The Utility’s ability to recover revenue requirements authorized by the CPUC in these rate cases is independent, or “decoupled,” from the volume of the Utility’s sales of electricity and natural gas services.  The Utility recognizes revenues that have been authorized for rate recovery, are objectively determinable and probable of recovery, and are expected to be collected within 24 months.  Generally, electric and natural gas operating revenue is recognized ratably over the year.  The Utility records a balancing account asset or liability for differences between customer billings and authorized revenue requirements that are probable of recovery or refund.

The CPUC also has authorized the Utility to collect additional revenue requirements to recover costs that the Utility has been authorized to pass on to customers, including costs to purchase electricity and natural gas, and to fund public purpose, demand response, and customer energy efficiency programs.  In general, the revenue recognition criteria for pass-through costs billed to customers are met at the time the costs are incurred. The Utility records a regulatory balancing account asset or liability for differences between incurred costs and customer billings or authorized revenue meant to recover those costs, to the extent that these differences are probable of recovery or refund. As a result, these differences have no impact on net income.

The following table presents the Utility’s revenues disaggregated by type of customer:
Three Months Ended March 31,
(in millions)20212020
Electric
Revenue from contracts with customers
   Residential$1,464 $1,242 
   Commercial1,013 1,007 
   Industrial327 341 
   Agricultural152 123 
   Public street and highway lighting17 17 
   Other (1)
(64)(66)
     Total revenue from contracts with customers - electric2,909 2,664 
Regulatory balancing accounts (2)
486 376 
Total electric operating revenue$3,395 $3,040 
Natural gas
Revenue from contracts with customers
   Residential$1,208 $1,066 
   Commercial245 234 
   Transportation service only326 348 
   Other (1)
(47)(22)
      Total revenue from contracts with customers - gas1,732 1,626 
Regulatory balancing accounts (2)
(411)(360)
Total natural gas operating revenue1,321 1,266 
Total operating revenues$4,716 $4,306 
(1) This activity is primarily related to the change in unbilled revenue and amounts subject to refund, partially offset by other miscellaneous revenue items.
(2) These amounts represent revenues authorized to be billed or refunded to customers.

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Initial and annual contributions to the Wildfire Fund established pursuant to AB 1054

The Wildfire Fund is expected to be capitalized with (i) $10.5 billion of proceeds of bonds supported by a 15-year extension of the Department of Water Resources charge to customers, (ii) $7.5 billion in initial contributions from California’s three large electric IOUs and (iii) $300 million in annual contributions paid by California’s three large electric IOUs for at least a 10 year period. The contributions from the IOUs will be effectively borne by their respective shareholders, as they will not be permitted to recover these costs from customers. The costs of the initial and annual contributions are allocated among the IOUs pursuant to a “Wildfire Fund allocation metric” set forth in AB 1054 based on land area in the applicable IOU’s service territory classified as high fire threat districts and adjusted to account for risk mitigation efforts. The Utility’s Wildfire Fund allocation metric is 64.2% (representing an initial contribution of approximately $4.8 billion and annual contributions of approximately $193 million).

On the Effective Date, PG&E Corporation and the Utility contributed, in accordance with AB 1054, an initial contribution of approximately $4.8 billion and first annual contribution of approximately $193 million to the Wildfire Fund to secure participation of the Utility therein. San Diego Gas & Electric Company and Southern California Edison made their initial contributions to the Wildfire Fund in September 2019. On December 30, 2020, the Utility made its second annual contribution of $193 million to the Wildfire Fund. As of March 31, 2021, PG&E Corporation and the Utility have eight remaining annual contributions of $193 million. PG&E Corporation and the Utility account for the contributions to the Wildfire Fund similarly to prepaid insurance with expense being allocated to periods ratably based on an estimated period of coverage.

As of March 31, 2021, PG&E Corporation and the Utility recorded $193 million in Other current liabilities, $1.3 billion in Other non-current liabilities, $464 million in current assets - Wildfire Fund asset, and $5.7 billion in non-current assets - Wildfire Fund asset in the Condensed Consolidated Balance Sheets. During the three months ended March 31, 2021, the Utility recorded amortization and accretion expense of $119 million. The amortization of the asset, accretion of the liability, and if applicable, impairment of the asset is reflected in Wildfire Fund expense in the Condensed Consolidated Statements of Income. Expected contributions recorded in Wildfire Fund asset on the Condensed Consolidated Balance Sheets are discounted to the present value using the 10-year US treasury rate at the date PG&E Corporation and the Utility satisfied all the eligibility requirements to participate in the Wildfire Fund. A useful life of 15 years is being used to amortize the Wildfire Fund asset.

AB 1054 did not specify a period of coverage; therefore, this accounting treatment is subject to significant accounting judgments and estimates. In estimating the period of coverage, PG&E Corporation and the Utility use a Monte Carlo simulation that began with 12 years of historical, publicly available fire-loss data from wildfires caused by electrical equipment, and subsequently plan to add an additional year of data each following year. The period of historic fire-loss data and the effectiveness of mitigation efforts by the California electric utility companies are significant assumptions used to estimate the useful life. These assumptions along with the other assumptions below create a high degree of uncertainty related to the estimated useful life of the Wildfire Fund. The simulation creates annual distributions of potential losses due to fires that could be attributed to the participating electric utilities. Starting with a 5 year period of historical data, with average annual statewide claims or settlements of approximately $6.5 billion, compared to approximately $2.9 billion for the 12-year historical data, would have decreased the amortization period to 6 years. Similarly, a ten percent change to the assumption regarding current and future mitigation effort effectiveness would increase the amortization period to 17 years assuming greater effectiveness and would decrease the amortization period to 12 years assuming less effectiveness.

Other assumptions used to estimate the useful life include the estimated cost of wildfires caused by other electric utilities, the amount at which wildfire claims would be settled, the likely adjudication of the CPUC in cases of electric utility-caused wildfires, the impacts of climate change, the level of future insurance coverage held by the electric utilities, the FERC-allocable portion of loss recovery, and the future transmission and distribution equity rate base growth of other electric utilities. Significant changes in any of these estimates could materially impact the amortization period.

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PG&E Corporation and the Utility evaluate all assumptions quarterly, or upon claims being made from the Wildfire Fund for catastrophic wildfires, and the expected life of the Wildfire Fund will be adjusted as required. The Wildfire Fund is available to other participating utilities in California and the amount of claims that a participating utility incurs is not limited to their individual contribution amounts. PG&E Corporation and the Utility will assess the Wildfire Fund asset for impairment in the event that a participating utility’s electrical equipment is found to be the substantial cause of a catastrophic wildfire. Timing of any such impairment could lag as the emergence of sufficient cause and claims information can take many quarters and could be limited to public disclosure of the participating electric utility, if ignition were to occur outside the Utility’s service territory. There were fires in the Utility’s and other participating utilities’ services territories since July 12, 2019, including fires for which the cause is currently unknown, which may in the future be determined to be covered by the Wildfire Fund. At March 31, 2021, there were no such known events requiring a reduction of the Wildfire Fund asset nor have there been any claims or withdrawals by the participating utilities against the Wildfire Fund.

Financial Instruments—Credit Losses

PG&E Corporation and the Utility have three categories of financial assets in scope, each with their own associated credit risks. PG&E Corporation and the Utility have incorporated forward-looking data in their estimate of credit loss as follows. Trade receivables are represented by customer accounts receivable and have credit exposure risk related to current economic conditions. Insurance receivables are related to the liability insurance policies PG&E Corporation and the Utility carry. Insurance receivable risk is related to each insurance carrier’s risk of defaulting on their individual policies. Lastly, available-for-sale debt securities requires each company to determine if a decline in fair value is below amortized costs basis, or, impaired. Furthermore, if an impairment exists on available-for-sale debt securities, PG&E Corporation and the Utility will examine if there is an intent to sell, if it is more likely than not a requirement to sell prior to recovery, and if a portion of the unrealized loss is a result of credit loss. During the three months ended March 31, 2021, expected credit losses of $76 million were recorded in Operating and maintenance expense on the Condensed Consolidated Statements of Income for credit losses associated with trade and other receivables. Of these amounts recorded during the three months ended March 31, 2021, $49 million and $7 million were deemed probable of recovery and deferred to the CPPMA and a FERC regulatory asset, respectively.

Sale of Transmission Tower Wireless Licenses

On February 16, 2021, the Utility granted to a subsidiary of SBA Communications Corporation (such subsidiary, “SBA”) an exclusive license enabling SBA to sublicense and market wireless communications equipment attachment locations (“Cell Sites”) on more than 700 of the Utility’s electric transmission towers, telecommunications towers, monopoles, buildings or other structures (collectively, the “Effective Date Towers”) to wireless telecommunication carriers (“Carriers”) for attachment of wireless communications equipment, as contemplated by a Master Transaction Agreement (the “Transaction Agreement”) dated February 2, 2021, between the Utility and SBA. Pursuant to the Transaction Agreement, the Utility also assigned to SBA license agreements between the Utility and Carriers for substantially all of the existing Cell Sites on the Effective Date Towers.

The exclusive license was granted pursuant to a Master Multi-Site License Agreement (the “License Agreement”) between the Utility and SBA. The term of the License Agreement is for 100 years. The Utility has the right to terminate the license for individual Cell Sites for certain regulatory or utility operational reasons, with a corresponding payment to SBA. Pursuant to the License Agreement, SBA is entitled to the sublicensing revenue generated by new sublicenses of Cell Sites on the Effective Date Towers, subject to the Utility’s right to a percentage of such sublicensing revenue.

The Utility and SBA also entered into a Master Transmission Tower Site License Agreement (the “Tower Site Agreement”), pursuant to which SBA received the exclusive rights to sublicense and market additional attachment locations on up to 28,000 of the Utility’s other electric transmission towers to Carriers for attachment of wireless communications equipment. The Tower Site Agreement provides for a split of license fees from Carriers between the Utility and SBA. The Tower Site Agreement has a licensing period of up to 15 years, depending on SBA’s achievement of certain performance metrics, and any sites licensed during such licensing period will continue to be subject to the Tower Site Agreement for the same term as the License Agreement.

In addition, the Utility and SBA entered into a Pipeline Cell Site Transaction Agreement pursuant to which the Utility and SBA established terms and conditions for adding additional cell sites under the License Agreement. Pipeline Cell Sites are locations where the Utility was in the process of locating a new Cell Site for a wireless carrier at the close of the transaction.
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In exchange for the exclusive license and entry into the License Agreement, SBA agreed to pay the Utility a purchase price of $973 million. SBA paid the Utility $946 million of such purchase price at the closing pursuant to the Transaction Agreement, which also contemplates the post-closing assignment of additional specified Cell Sites to SBA upon the satisfaction of certain terms and conditions, for which SBA will make additional purchase price payments to the Utility. The closing settlement also reflected an adjustment for an estimated amount of payments received by the Utility from Carriers in the pre-closing period that are allocable to licenses in the post-closing period. The purchase price is subject to further adjustment pursuant to the terms of the Transaction Agreement through June 30, 2021.

The Utility recorded approximately $365 million of the $946 million sales proceeds as a financing obligation, as this portion of the proceeds for existing Cell Sites represents a sale of future revenues. The Utility recorded approximately $106 million of the $946 million sales proceeds as a contract liability (deferred revenue), as a portion of proceeds with respect to the sublicensing of Cell Sites, as well as the Tower Site Agreement represents an upfront payment for access to space on the Utility’s assets. The Utility utilized a discounted cash flow model based on business assumptions and estimates to determine the allocation of the purchase price between the financing obligation and deferred revenue. The financing obligation and deferred revenue are presented within Other non-current liabilities on the Condensed Consolidated Balance Sheets.

The Utility recorded the remaining approximately $475 million ($471 million of which is noncurrent) of the sale proceeds to a regulatory liability, for the portion that is probable to be returned to customers in accordance with existing revenue sharing practices.

The Utility will amortize the financing obligation through Electric operating revenue and Interest expense on the Condensed Consolidated Statements of Income using the effective interest method and will amortize the deferred revenue balance through Electric operating revenue ratably over the 100-year term.

Recently Adopted Accounting Standards

Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which amends the existing guidance to reduce complexity relating to Income Tax disclosures. PG&E Corporation and the Utility adopted this ASU on January 1, 2021. There was no material impact to PG&E Corporation’s or the Utility’s Condensed Consolidated Financial Statements and the related disclosures resulting from the adoption of this ASU.

Accounting Standards Issued But Not Yet Adopted

Debt

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU will be effective for PG&E Corporation and the Utility on January 1, 2022, with early adoption permitted. PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their Condensed Consolidated Financial Statements and related disclosures.

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NOTE 4: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

Regulatory Assets and Liabilities

Regulatory Assets

Long-term regulatory assets are comprised of the following:
Balance at
(in millions)March 31, 2021December 31, 2020
Pension benefits (1)
$2,208 $2,245 
Environmental compliance costs1,038 1,112 
Utility retained generation (2)
168 181 
Price risk management228 204 
Unamortized loss, net of gain, on reacquired debt
46 49 
Catastrophic event memorandum account (3)
879 842 
Wildfire expense memorandum account (4)
393 400 
Fire hazard prevention memorandum account (5)
107 137 
Fire risk mitigation memorandum account (6)
58 66 
Wildfire mitigation plan memorandum account (7)
359 390 
Deferred income taxes (8)
1,075 908 
Insurance premium costs (9)
225 294 
Wildfire mitigation balancing account (10)
156 156 
General rate case memorandum accounts (11)
349 376 
Vegetation management balancing account (12)
594 592 
COVID-19 pandemic protection memorandum accounts (13)
132 84 
Other1,144 942 
Total long-term regulatory assets$9,159 $8,978 
(1) Payments into the pension and other benefits plans are based on annual contribution requirements. As these annual requirements continue indefinitely into the future, the Utility expects to continuously recover pension benefits.
(2) In connection with the settlement agreement entered into among PG&E Corporation, the Utility, and the CPUC in 2003 to resolve the Utility’s 2001 proceeding under Chapter 11, the CPUC authorized the Utility to recover $1.2 billion of costs related to the Utility’s retained generation assets.  The individual components of these regulatory assets are being amortized over the respective lives of the underlying generation facilities, consistent with the period over which the related revenues are recognized. 
(3) Includes costs of responding to catastrophic events that have been declared a disaster or state of emergency by competent federal or state authorities. As of March 31, 2021, $54 million in COVID-19 related costs was recorded to CEMA regulatory assets. Recovery of CEMA costs is subject to CPUC review and approval.
(4) Includes incremental wildfire liability insurance premium costs the CPUC approved for tracking in June 2018 for the period July 26, 2017 through December 31, 2019. Recovery of WEMA costs is subject to CPUC review and approval.
(5) Includes costs associated with the implementation of regulations and requirements adopted to protect the public from potential fire hazards associated with overhead power line facilities and nearby aerial communication facilities that have not been previously authorized in another proceeding. Recovery of FHPMA costs is subject to CPUC review and approval.
(6) Includes costs associated with the 2019 WMP for the period January 1, 2019 through June 4, 2019. Recovery of FRMMA costs is subject to CPUC review and approval.
(7) Includes costs associated with the 2019 WMP for the period June 5, 2019 through December 31, 2019 and the 2020 WMP for the period of January 1, 2020 through December 31, 2020 and the 2021 WMP for the period of January 1, 2021 through March 31, 2021. Recovery of WMPMA costs is subject to CPUC review and approval.
(8) Represents cumulative differences between amounts recognized for ratemaking purposes and expense recognized in accordance with GAAP.
(9) Represents non-current excess liability insurance premium costs recorded to RTBA and Adjustment Mechanism for Costs Determined in Other Proceedings, as authorized in the 2020 GRC and 2019 GT&S rate cases, respectively.
(10) Includes costs associated with certain wildfire mitigation activities for the period January 1, 2020 through March 31, 2021. Long-term balance represents costs above 115% of adopted revenue requirements, which are subject to CPUC review and approval.
(11) The General Rate Case Memorandum Accounts record the difference between the gas and electric revenue requirements in effect on January 1, 2020 and through February 28, 2021 as authorized by the CPUC in December 2020. These amounts will be recovered in rates over 22 months, beginning March 1, 2021.
(12) Represents costs from routine vegetation management and enhanced vegetation management activities previously recorded in the FRMMA/WMPMA, and tree mortality and fire risk reduction work previously recorded in CEMA. Recovery of VMBA costs above 120% of adopted revenue requirements is subject to CPUC review and approval.
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(13) On April 16, 2020, the CPUC passed a resolution that established the CPPMA to recover costs associated with customer protections, including higher uncollectible costs related to a moratorium on electric and gas service disconnections for residential and small business customers. The CPPMA applies only to residential and small business customers and was approved on July 27, 2020 with an effective date of March 4, 2020. As of March 31, 2021, the Utility had recorded an aggregate under-collection of $122 million, representing incremental bad debt expense over what was collected in rates for the period the CPPMA is in effect. The remaining $10 million is associated with program costs and higher accounts receivable financing costs. Recovery of CPPMA costs is subject to CPUC review and approval.

Regulatory Liabilities

Long-term regulatory liabilities are comprised of the following:
Balance at
(in millions)March 31, 2021December 31, 2020
Cost of removal obligations (1)
$7,035 $6,905 
Recoveries in excess of AROs (2)
452 458 
Public purpose programs (3)
983 948 
Employee benefit plans (4)
1,002 995 
Tower Licenses (5)
471 — 
Other1,261 1,118 
Total long-term regulatory liabilities$11,204 $10,424 
(1) Represents the cumulative differences between the recorded costs to remove assets and amounts collected in rates for expected costs to remove assets.
(2) Represents the cumulative differences between ARO expenses and amounts collected in rates.  Decommissioning costs related to the Utility’s nuclear facilities are recovered through rates and are placed in nuclear decommissioning trusts.  This regulatory liability also represents the deferral of realized and unrealized gains and losses on these nuclear decommissioning trust investments.  (See Note 9 below.)
(3) Represents amounts received from customers designated for public purpose program costs expected to be incurred beyond the next 12 months, primarily related to energy efficiency programs.
(4) Represents cumulative differences between incurred costs and amounts collected in rates for Post-Retirement Medical, Post-Retirement Life and Long-Term Disability Plans.
(5) Represents the portion of the net proceeds received from the sale of transmission tower wireless licenses that will be returned to customers. Of the $471 million, $333 million and $138 million will be refunded to FERC and CPUC jurisdiction customers, respectively. (See Note 3 above.)

Regulatory Balancing Accounts

Current regulatory balancing accounts receivable and payable are comprised of the following:
Receivable Balance at
(in millions)March 31, 2021December 31, 2020
Electric distribution$266 $— 
Gas distribution and transmission102 
Energy procurement346 413 
Public purpose programs309 292 
Fire hazard prevention memorandum account121 121 
Fire risk mitigation memorandum account
33 33 
Wildfire mitigation plan memorandum account161 161 
Wildfire mitigation balancing account29 27 
General rate case memorandum accounts468 313 
Vegetation management balancing account49 115 
Insurance premium costs157 135 
Other307 289 
Total regulatory balancing accounts receivable$2,249 $2,001 
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Payable Balance at
(in millions)March 31, 2021December 31, 2020
Electric distribution$— $55 
Electric transmission260 267 
Gas distribution and transmission280 76 
Energy procurement116 158 
Public purpose programs372 410 
Other340 279 
Total regulatory balancing accounts payable$1,368 $1,245 

For more information, see Note 4 of the Notes to the Consolidated Financial Statements in Item 8 of the 2020 Form 10-K.

NOTE 5: DEBT

Credit Facilities

The following table summarizes PG&E Corporation’s and the Utility’s outstanding borrowings and availability under their credit facilities at March 31, 2021:
(in millions)Termination
Date
Facility LimitBorrowings OutstandingLetters of Credit OutstandingFacility
Availability
Utility revolving credit facilityJuly 2023$3,500 
(1)
$— $979 $2,521 
Utility term loan credit facility (2)
January 20221,500 1,500 — — 
Utility receivables securitization program (3)
October 20221,000 
(4)
650 — 350 
(4)
PG&E Corporation revolving credit facilityJuly 2023500 — — 500 
Total credit facilities$6,500 $2,150 $979 $3,371 
(1) Includes a $1.5 billion letter of credit sublimit.
(2) On March 11, 2021, the Utility prepaid in full all amounts outstanding with respect to the $1.5 billion term loan due on June 30, 2021. The remaining $1.5 billion term loan due on January 1, 2022 remains outstanding.
(3) On October 5, 2020, the Utility entered into an accounts receivable securitization program (the “Receivables Securitization Program”), providing for the sale of a portion of the Utility's accounts receivable to the SPV, a limited liability company wholly owned by the Utility. For more information, see “Variable Interest Entities” in Note 3.
(4) The amount the Utility may borrow under the Receivables Securitization Program is limited to the lesser of the facility limit and the facility availability. The facility availability may vary based on the amount of accounts receivable that the Utility owns that are eligible for sale to the SPV and the portion of those accounts receivable that are sold to the SPV that are eligible for advances by the lenders under the Receivables Securitization Program from time to time. As of April 22, 2021, the Receivables Securitization Program had a maximum borrowing base of $888 million and was fully drawn.

Long-Term Debt Issuances and Redemptions

Utility

In March 2021, the Utility issued $1.5 billion aggregate principal amount of 1.367% First Mortgage Bonds due March 10, 2023, $450 million aggregate principal amount of 3.25% First Mortgage Bonds due June 1, 2031, and $450 million aggregate principal amount of 4.20% First Mortgage Bonds due June 1, 2041. The proceeds were used for (i) the prepayment of all of the $1.5 billion 364-day term loan facility (maturing June 30, 2021) outstanding under the Utility’s term loan credit agreement, (ii) the repayment of all of the borrowings outstanding under the Utility’s revolving credit facility pursuant to the revolving credit agreement and (iii) general corporate purposes.

PG&E Corporation

On June 23, 2020, PG&E Corporation obtained a $2.75 billion secured term loan (the “Term Loan”) under a term loan credit agreement (the “Term Loan Agreement”). The Term Loan matures on June 23, 2025, unless extended by PG&E Corporation pursuant to the terms of the Term Loan Agreement. In accordance with the Term Loan Agreement, PG&E Corporation is required to repay the principal amount outstanding on the Term Loan in an amount equal to $6.875 million on the last day of each quarter.

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On February 1, 2021, PG&E Corporation entered into a repricing amendment with the lenders under the Term Loan Agreement pursuant to which, among other things, the applicable margin was reduced from 450 basis points to 300 basis points and the LIBOR floor was reduced from 100 basis points to 50 basis points.

NOTE 6: EQUITY

Ownership Restrictions in PG&E Corporation’s Amended Articles

Under section 382 of the Internal Revenue Code, if a corporation (or a consolidated group) undergoes an “ownership change,” net operating loss carryforwards and other tax attributes may be subject to certain limitations (which could limit PG&E Corporation or the Utility’s ability to use these deferred tax assets to offset taxable income). In general, an ownership change occurs if the aggregate stock ownership of certain shareholders (generally five percent shareholders, applying certain look-through and aggregation rules) increases by more than 50% over such shareholders’ lowest percentage ownership during the testing period (generally three years). PG&E Corporation’s and the Utility’s Amended Articles of Incorporation (the “Amended Articles”) limit Transfers (as defined in the Amended Articles) that increase a person’s or entity’s (including certain groups of persons) ownership of PG&E Corporation’s equity securities to 4.75% or more prior to the Restriction Release Date without approval by the Board of Directors. The calculation of the percentage ownership may differ depending on whether the Fire Victim Trust is treated as a qualified settlement trust or grantor trust.

As of the date of this report, it is more likely than not that PG&E Corporation has not undergone an ownership change and consequently, its net operating loss carryforwards and other tax attributes are not limited by section 382 of the Internal Revenue Code.

In addition, the tax deduction recorded reflects PG&E Corporation’s conclusion as of March 31, 2021 that it is more likely than not that the Fire Victim Trust will be treated as a “qualified settlement fund” for U.S. federal income tax purposes, in which case the corresponding tax deduction will have occurred at the time transfers of cash and other property (including PG&E Corporation common stock) were made to the Fire Victim Trust. In January 2021, PG&E Corporation received an IRS ruling that states the Utility is eligible to make a grantor trust election for U.S. federal income tax purposes with respect to the Fire Victim Trust and addressed certain, but not all, related issues. PG&E Corporation believes benefits associated with “grantor trust” treatment, including, a potentially larger tax deduction related to the proceeds realized by the Fire Victim Trust from the sale of shares contributed to the Fire Victim Trust, could be realized, but only if PG&E Corporation and the Fire Victim Trust can meet certain requirements of the Internal Revenue Code and Treasury Regulations thereunder, relating to sales of PG&E Corporation stock. PG&E Corporation expects to elect grantor trust treatment if it is able to enter into a definitive agreement regarding the same with the Fire Victim Trust. On April 28, 2021, the Bankruptcy Court issued an oral ruling that it would approve the material terms of an agreement between PG&E Corporation, the Utility and the Fire Victim Trust that supports the election of the grantor trust treatment. There can be no assurance that the parties will execute a definitive agreement or that PG&E Corporation will be able to avail itself of the benefits of a grantor trust election. If PG&E Corporation makes a “grantor trust” election for the Fire Victim Trust, the Utility’s tax deduction will occur only at the time the Fire Victim Trust pays the fire victims and will be impacted by the price at which the Fire Victim Trust sells the shares, rather than the price at the time such shares were contributed to the Fire Victim Trust.

Dividends

On December 20, 2017, the Boards of Directors of PG&E Corporation and the Utility suspended quarterly cash dividends on both PG&E Corporation’s and the Utility’s common stock, beginning the fourth quarter of 2017, as well as the Utility’s preferred stock, beginning the three-month period ending January 31, 2018.

Subject to the dividend restrictions as described in Note 6 of the Notes to the Consolidated Financial Statements in Item 8 of the 2020 Form 10-K, any decision to declare and pay dividends in the future will be made at the discretion of the Boards of Directors and will depend on, among other things, results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Boards of Directors may deem relevant. As of March 31, 2021, it is uncertain when PG&E Corporation and the Utility will commence the payment of dividends on their common stock and when the Utility will commence the payment of dividends on its preferred stock.

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NOTE 7: EARNINGS PER SHARE

PG&E Corporation’s basic EPS is calculated by dividing the income available for common shareholders by the weighted average number of common shares outstanding.  PG&E Corporation applies the treasury stock method of reflecting the dilutive effect of outstanding share-based compensation in the calculation of diluted EPS.  The following is a reconciliation of PG&E Corporation’s income available for common shareholders and weighted average common shares outstanding for calculating diluted EPS:
Three Months Ended March 31,
(in millions, except per share amounts)20212020
Income attributable to common shareholders$120 $371 
Weighted average common shares outstanding, basic1,985 529 
Add incremental shares from assumed conversions:
Employee share-based compensation— 
Equity Units141 119 
Weighted average common shares outstanding, diluted2,131 648 
Total Income per common share, diluted$0.06 $0.57 

All potentially dilutive securities were excluded from the calculation of outstanding common shares on a diluted basis in periods where PG&E Corporation has incurred a net loss.

NOTE 8: DERIVATIVES

Use of Derivative Instruments

The Utility is exposed to commodity price risk as a result of its electricity and natural gas procurement activities.  Procurement costs are recovered through customer rates.  The Utility uses both derivative and non-derivative contracts to manage volatility in customer rates due to fluctuating commodity prices.  Derivatives include contracts, such as power purchase agreements, forwards, futures, swaps, options, and CRRs that are traded either on an exchange or over-the-counter.

Derivatives are presented in the Utility’s Condensed Consolidated Balance Sheets recorded at fair value and on a net basis in accordance with master netting arrangements for each counterparty.  The fair value of derivative instruments is further offset by cash collateral paid or received where the right of offset and the intention to offset exist.

Price risk management activities that meet the definition of derivatives are recorded at fair value on the Condensed Consolidated Balance Sheets. These instruments are not held for speculative purposes and are subject to certain regulatory requirements. The Utility expects to fully recover in rates all costs related to derivatives under the applicable ratemaking mechanism in place as long as the Utility’s price risk management activities are carried out in accordance with CPUC directives. Therefore, all unrealized gains and losses associated with the change in fair value of these derivatives are deferred and recorded within the Utility’s regulatory assets and liabilities on the Condensed Consolidated Balance Sheets. Net realized gains or losses on commodity derivatives are recorded in the cost of electricity or the cost of natural gas with corresponding increases or decreases to regulatory balancing accounts for recovery from or refund to customers.

The Utility elects the normal purchase and sale exception for eligible derivatives.  Eligible derivatives are those that require physical delivery in quantities that are expected to be used by the Utility over a reasonable period in the normal course of business, and do not contain pricing provisions unrelated to the commodity delivered.  These items are not reflected in the Condensed Consolidated Balance Sheets at fair value.

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Volume of Derivative Activity

The volumes of the Utility’s outstanding derivatives were as follows:
  Contract Volume at
Underlying ProductInstrumentsMarch 31, 2021December 31, 2020
Natural Gas (1) (MMBtus (2))
Forwards, Futures and Swaps219,348,075 146,642,863 
 Options17,080,000 14,140,000 
Electricity (MWh)Forwards, Futures and Swaps11,127,600 9,435,830 
Options588,800 — 
 
Congestion Revenue Rights (3)
264,206,953 266,091,470 
(1) Amounts shown are for the combined positions of the electric fuels and core gas supply portfolios.
(2) Million British Thermal Units.
(3) CRRs are financial instruments that enable the holders to manage variability in electric energy congestion charges due to transmission grid limitations.

Presentation of Derivative Instruments in the Financial Statements

At March 31, 2021, the Utility’s outstanding derivative balances were as follows:
 Commodity Risk
(in millions)Gross Derivative
Balance
NettingCash Collateral
Total Derivative
Balance
Current assets – other$50 $(3)$105 $152 
Noncurrent assets – other136 — — 136 
Current liabilities – other(41)17 (21)
Noncurrent liabilities – other(228)— (225)
Total commodity risk$(83)$ $125 $42 

At December 31, 2020, the Utility’s outstanding derivative balances were as follows:
 Commodity Risk
(in millions)Gross Derivative
Balance
NettingCash CollateralTotal Derivative
Balance
Current assets – other$33 $— $115 $148 
Noncurrent assets – other136 — — 136 
Current liabilities – other(38)— 15 (23)
Noncurrent liabilities – other(204)— 10 (194)
Total commodity risk$(73)$ $140 $67 

Cash inflows and outflows associated with derivatives are included in operating cash flows on the Utility’s Condensed Consolidated Statements of Cash Flows.

Some of the Utility’s derivatives instruments, including power purchase agreements, contain collateral posting provisions tied to the Utility’s credit rating from each of the major credit rating agencies, also known as a credit-risk-related contingent feature. Multiple credit agencies continue to rate the Utility below investment grade, which results in the Utility posting additional collateral. As of March 31, 2021, the Utility satisfied or has otherwise addressed its obligations related to the credit-risk related contingency features.

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NOTE 9: FAIR VALUE MEASUREMENTS

PG&E Corporation and the Utility measure their cash equivalents, trust assets, and price risk management instruments at fair value.  A three-tier fair value hierarchy is established that prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Other inputs that are directly or indirectly observable in the marketplace.

Level 3 – Unobservable inputs which are supported by little or no market activities.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets and liabilities measured at fair value on a recurring basis for PG&E Corporation and the Utility are summarized below. Assets held in rabbi trusts are held by PG&E Corporation and not the Utility.
Fair Value Measurements
March 31, 2021
(in millions)Level 1Level 2Level 3
Netting (1)
Total
Assets:
Short-term investments$228 $ $ $ $228 
Nuclear decommissioning trusts
Short-term investments29 — — — 29 
Global equity securities2,461 — — — 2,461 
Fixed-income securities953 812