PG&E (PCG) Risk Factor Changes

PG&E Corporation’s and the Utility’s business activities are concentrated in one industry (electric and gas utility) and in one region (Northern and Central California).

PG&E Corporation and the Utility have observed that prices for equipment, materials, supplies, employee labor, contractor services, variable rate debt, and other inputs have increased and may continue to increase more…

As of December 31, 2025, PG&E Corporation had net operating loss carryforwards for PG&E Corporation’s consolidated group for U.S.

•sell or dispose of all or substantially all of their property or business;

Under the terms of the agreements and indentures governing their respective indebtedness, PG&E Corporation and the Utility are permitted to incur additional indebtedness, some of which could be secured (subject to com…

PG&E Corporation and the Utility have a substantial amount of indebtedness, most of which is secured by liens on certain assets of PG&E Corporation and the Utility.

In addition, the CPUC considers affordability as it adjudicates the Utility’s rate cases, and concerns about affordability could cause the CPUC to approve lesser amounts in the Utility’s ratemaking or cost recovery pr…

The Utility has set a goal to increase its capital investments to meet safety and climate goals, while also achieving operating cost savings.

The Utility has been in the past, and may be in the future, required to pay for environmental remediation costs at sites where it is or may be identified as a potentially responsible party under federal and state envi…

Extreme weather, drought and shifting climate patterns have intensified the challenges associated with many of the other risks facing PG&E Corporation and the Utility, particularly wildfire management in California.

The Utility’s workforce is aging, and many employees are or will become eligible to retire within the next few years.

Operations at the Utility’s two nuclear generation units at DCPP could cease before their planned retirement dates in 2029 and 2030 as a result of new legislation, regulations, orders, or their interpretation, or as a…

Cyber attacks targeting utility systems are significant and are continuing to increase in sophistication, magnitude, and frequency.

•a motor vehicle or aviation incident resulting in serious injuries to or fatalities of the workforce or the public, property damage, or other consequences;

•an overpressure event occurring on natural gas facilities due to equipment failure, incorrect operating procedures or failure to follow correct operating procedures, or welding or fabrication-related defects, that ca…

These investigations or enforcement actions could result in a judgment against the Utility.

The Utility is a target of a number of investigations, in addition to certain investigations in connection with wildfires, which could result in enforcement actions.

The Utility is subject to extensive regulations and enforcement proceedings in connection with compliance with regulations, which could result in penalties.

For example, the Inflation Reduction Act includes a 15% corporate alternative minimum tax on the adjusted financial statement income (“AFSI”) of corporations with average AFSI exceeding $1.0 billion over a three-year…

PG&E Corporation, the Utility, and their operations are subject to extensive federal, state, and local laws, regulations, and orders.

PG&E Corporation and the Utility could be adversely affected by legislative and regulatory developments, including through increased compliance costs and penalties.

Risks Related to Regulatory Proceedings, Investigations, and Enforcement Matters

The Utility’s infrastructure is aging and poses risks to safety and system reliability.

PG&E Corporation’s and the Utility’s accrued losses for the 2019 Kincade fire and the 2021 Dixie fire of $1.325 billion and $2.15 billion exceed the amounts of available liability insurance coverage of $430 million an…

Additionally, under the doctrine of inverse condemnation, courts have imposed liability against utilities on the grounds that losses borne by the person whose property was damaged through a public-use undertaking shou…

Under California law (including Penal Code section 1202.4), if the Utility were convicted of any charges in connection with a wildfire, the sentencing court must order the Utility to “make restitution to the victim or…

Based on the facts and circumstances available as of the date of this report, PG&E Corporation and the Utility have determined that it is probable they will incur losses in connection with the 2019 Kincade fire, the 2…

PG&E Corporation’s and the Utility’s liabilities for the 2019 Kincade fire, the 2021 Dixie fire, the 2022 Mosquito fire, or the Wildfire-Related Securities Claims could exceed their estimated liabilities, or they coul…

In addition, there could be a significant delay between the occurrence of a wildfire and when the Utility recognizes accelerated amortization of the Wildfire Fund asset due to the lack of data available to the Utility…

If the Utility is unable to maintain a safety certification or if the Continuation Account is exhausted as a result of claims made by California’s other participating electric utility companies or otherwise, the unava…

The Wildfire Fund, Continuation Account, and other provisions of AB 1054 and SB 254 may not effectively mitigate the risk of liability for damages arising from catastrophic wildfires.

The CPUC considers affordability as it adjudicates the Utility’s rate cases, and concerns about affordability could cause the CPUC to approve lesser amounts in the Utility’s ratemaking or cost recovery proceedings.

Additionally, PG&E Corporation may be required to pay a material amount of cash with respect to allowed Subordinated Debt Claims (as defined in “Wildfire-Related Securities Claims—Claims in the Bankruptcy Court Proces…

On the Emergence Date, PG&E Corporation issued to the Fire Victim Trust a number of shares of common stock equal to 22.19% of the outstanding common stock on such date.

PG&E Corporation may be required to issue shares with respect to HoldCo Rescission or Damage Claims, which would result in dilution to holders of PG&E Corporation common stock, or pay a material amount of cash with re…

The Utility could be subject to additional regulatory or governmental enforcement action in the future with respect to compliance with federal, state, or local laws, regulations or orders that could result in addition…

The Utility is subject to extensive regulations, including federal, state, and local energy, environmental and other laws and regulations, and the risk of enforcement proceedings in connection with compliance with suc…

The Utility develops its capital plans based on forecasts, including those around load growth, gas system planning, and transportation electrification, which assume that California continues to pursue consistent envir…

Also, SB 100 (the 100 Percent Clean Energy Act of 2018) increased the percentage from 50% to 60% of California’s electricity portfolio that must come from renewables by 2030; and established state policy that 100% of…

The environmental rules to which the Utility’s operations are subject relate to air quality, water quality and usage, remediation of hazardous substances, and the protection and conservation of natural resources and w…

PG&E Corporation and the Utility are subject to federal and state privacy laws, which grant consumers rights and protections, including, among other things, the ability to opt out of receiving certain communications a…

PG&E Corporation and the Utility collect and retain certain personal information of their customers, shareholders, and employees in connection with their business.

PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected if the Wildfire Fund does not effectively mitigate the financial risk of liabilit…

PG&E Corporation and the Utility are subject to the Enhanced Oversight and Enforcement Process.

Risks Related to Other Enforcement Matters, Investigations, and Regulatory Proceedings

The CPUC has authorized the Utility to recover its environmental remediation costs for certain sites through various ratemaking mechanisms.

Environmental remediation costs could increase in the future as a result of new legislation or regulation, the current trend toward more stringent standards, or stricter and more expansive application of existing envi…

The Utility’s operations are subject to extensive environmental laws, and such laws could change.

The Utility also has an obligation to decommission its electricity generation facilities, including its nuclear facilities, as well as gas transmission system assets, at the end of their useful lives.

The Utility maintains cyber liability insurance that covers certain losses and damages caused by cyber incidents, but adequate insurance may not continue to be available at rates the Utility believes are reasonable, o…

The Utility also relies on complex information technology systems that allow it to create, collect, use, disclose, store, and otherwise process sensitive information, including the Utility’s financial information, cus…

The Utility’s electricity and natural gas systems rely on a complex, interconnected network of generation, transmission, distribution, control, and communication technologies, which can be damaged by natural events su…

•the release of radioactive materials caused by a nuclear accident, seismic activity, natural disaster, or terrorist act;

In addition, on a risk-informed basis, the Utility is making efforts to reduce the frequency and impacts of PSPS.

There have been numerous other wildfires in the Utility’s service area, of which the Utility has not been alleged or determined to be a cause.

Furthermore, the Wildfire Fund will only be available for payment of eligible claims so long as there are sufficient funds remaining in the Wildfire Fund.

•The Utility’s ability to manage its costs effectively;

•PG&E Corporation’s reliance on dividends, distributions, and other payments from the Utility;

•The inability of PG&E Corporation to use some or all of its net operating loss carryforwards and other tax attributes to offset future income;

•Ownership and transfer restrictions associated with PG&E Corporation capital stock;

•Potential additional dilution to holders of PG&E Corporation common stock;

•Restrictions in indebtedness documents;

•PG&E Corporation’s and the Utility’s substantial indebtedness;

Risks related to financial conditions, including risks related to:

•Attempts to acquire the Utility's assets and customers through municipalization or bypass.

•Outcomes of regulatory and ratemaking proceedings and the Utility’s ability to manage its costs; and

•Outcomes of enforcement proceedings in connection with extensive regulations to which the Utility is subject;

•Legislative and regulatory developments;

•The Enhanced Oversight and Enforcement Process;

•Severe weather events, extended drought, and climate change and events resulting from these conditions (including wildfires); and

Risks related to environmental factors, including risks related to:

•Attracting and retaining specialty personnel.

•The operation and decommissioning of the Utility’s nuclear generation facilities; and

•A cyber incident, cybersecurity breach, or physical attack;

•Changes in the electric power and natural gas industries;

•The hazardous nature of the Utility’s electricity and natural gas operations;

Risks related to operations and information technology, including risks related to:

•Implementation of wildfire mitigation initiatives.

•Recovery of excess costs in connection with wildfires; and

•The 2019 Kincade fire, the 2021 Dixie fire, the 2022 Mosquito fire, or future wildfires;

•The extent to which the Wildfire Fund and revised recoverability standard under AB 1054 effectively mitigate the risk of liability for damages arising from catastrophic wildfires;

Risks related to wildfires, including risks related to:

The following is a summary of the principal risks that could adversely affect our business, operations, and financial results.

Environmental remediation costs could also increase in the future as a result of new legislation or regulation.

The Utility’s environmental remediation costs could exceed its liability estimates.

PG&E Corporation’s and the Utility’s business activities are concentrated in one industry and in one region.

Any failure, interruption, or decrease in the functionality of the Utility’s operational networks could cause harm to the public or employees, significantly disrupt operations, negatively impact the Utility’s ability…

Physical attacks targeting the Utility’s physical assets or personnel have caused damage, disrupted operations, and caused injuries and could do so in the future.

PG&E Corporation and the Utility add, modify and replace information technology systems and technology vendors from time to time.

The systems and networks of PG&E Corporation and the Utility may also be damaged or disrupted by technology failures due to errors in software or platforms or the inability to appropriately support, update, expand, re…

The Utility relies on technology to operate its business, including complex operational, interconnected networks and information technology systems that support critical functions.

The Utility has been and could in the future be subject to regulatory or governmental enforcement actions with respect to its compliance with such rules.

PG&E Corporation and the Utility collect and retain certain personal information of their customers, shareholders, and employees in connection with operating their business and have certain obligations to protect this…

The Utility is subject to extensive federal, state, and local laws, regulations, and orders, including those regarding customer billing; customer service; affiliate transactions; wildfire mitigation initiatives and WM…

PG&E Corporation and the Utility may also be affected by changes in laws or regulations, or their application, which could impact their business model, rates, rate base, cost recoveries, revenues, or spending, which i…

An Enhanced Oversight and Enforcement Process proceeding could result in the Utility losing its license to operate as a utility.

Furthermore, for the Continuation Account to be available for payment of eligible claims, the Wildfire Fund administrator must determine that the Continuation Account is necessary, the CPUC must authorize extending th…